oversight

More Effective Use of Manpower and Machines Recommended in Mechanized Post Offices

Published by the Government Accountability Office on 1971-05-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

Post Office Department




BY THE COMPTROLLER    GENERAL
OF THE UNITED  STATES
                    COMPTROLLER      GENERAL         OF      THE       UNETED     STATES
                                  WASHINGTON.         D.C.         20548




     B-114874




     To the     President      of the Senate     and the
     Speaker      of the    House    of Representatives

             This is our report                 on more   effective                   use of manpower
     and   machines   recommended                   in mechanized                     post offices,

              Our review    was made pursuant   to the Budget  and AC-
     counting    Act,  1921 (31 U.S.C. 531, and the act of September                                    2,
     1960 (39 U.S.C.     2206).

              Copies     of this report     are being       sent to the Director,
     Office    of Management         and Budget,       and to the Postmaster
     General.       Copies     are  also   being    sent   to each member         of the
     United    States    Postal    Service     Board     of Governors    and the
     Postal    Rate Commission.




                                                                     Comptroller           General
                                                                     of the United         States




-4
                             5OTH ANNIVERSARY                              1921 - 1971
       .


COMPTROLLER
          GENERAL'S                                         MORE EFFECTIVE USE OF MANPOWER AND MACHINES
REPORT
     TO THE CONGRESS                                        RECOMMENDED IN MECHANIZEDPOST OFFICES
                                                            Post Office  Department B-114874


DIGEST
-_----

                                                                               5“a,
WHYTHEREVIEWWASMADE
           Because of the cost of operating    post offices,     the General  Accounting
           Office   (GAO) has made a review  to ascertain    whether  the Post Office    De-
           partment    has been making the most effective    use of manpower   and machines
           in processing    mail.

           In fiscal      year    1970    the      fiscal     situation         for      the     Department      was:

                                                                    Billion

                                 Expenditures                           $8.1
                                 Income                                  6.5

                                         Result                         $1.6    (deficit)

           The Department         had    722,000        employees         in   fiscal         year    1970.

           GAO's review      was made at three                mechanized    post offices--Detroit,         Michi-
           gan; Los Angeles,       California;               and Seattle,    Washington.         These post of-
           fices   handled    about 4 percent                of the Nation's     85 billion        pieces of mail
           in fiscal     year 1970.       (See p.            5.)

           Detroit  is the most highly       mechanized   post office     in the Nation,     having
           22 of the Department's     total    of 278 letter   sorting      machines,   nine parcel
           sorters,   15 miles   of conveyor     belts, and other     machinery.      (See p. 8.)


FINDINGSAND CONCLUSIONS
           The Department         has not       made the         best     use of        its     manpower      and machinery
           in processing         mail.

           Handling of first-cZass                 mai2
           Efforts      to expedite    processing                and delivery  of              all first-class          mail   re-
           sult    in   costly   and inefficient                 use of manpower               and machines.

           The Department     strives             to cancel,         postmark,     and sort   first-class        letters
           within   90 minutes      after           their     arrival      at the post offices.           Business
           firms  tend to concentrate                   their    mailings,      which account       for 75 percent


Tear   Sheet

                                                                                               &3;AY27,1971
                                                             1
of the mail,     at the end of each business                               day.  Therefore               the     Department        /
processes    most of each dq's    mail between                              4 and 9 p=m.                                           I
                                                                                                                                   I
                                                                                                                                   I
Studies    have shown that      such expeditious      handling     is not necessary     to                                         I
                                                                                                                                   I
meet mailers'    needs.       Businessmen    in Detroit,       Los Angeles,  and Seattle                                           I
told    GAO that  a significant       part of their      mailings    was not urgent.                                               I

Two of        the    results      of   the    expediting          follow.

   --Costly          machines      stood   idle       for      long    periods             after   the    peak     mail
      volume         had been      processed.

   --Nearly          three   fourths   of the clerks    and mail handlers                                worked      at
      night         and received     a lo-percent    pay differential.
                                                                                                                               I
The Department     is studying        the possibility     of giving to mailers       of                                            I
first-class    mail a choice         between  two types of service      (1) priority                                               I
                                                                                                                                   I
service,    at a higher      postage     rate and (2) nonpriority     service,      under                                          I
which mail would be processed--the              next day if necessary--on      machines                                            I
that now are idle       during     the day shift.      (See pp* 10 to 15.)

I-land sorting          of mail
                                                                                                                               I
On a typical    day Detroit      sorted                4 million  letters    by hand and only                                   I
2 million    by machine,    although                 its machines     were idle  nearly    70 percent                          ;
of the time.     Similar    situations                  were found in Los Angeles       and Seattle.                           ,
                                                                                                                               I
The cost of hand sorting                     1,000   letters          is    $4.20,          and the      cost     of machine   i
sorting  1,000 letters   is                  about   $3.42.                                                                    I
                                                                                                                               I
About 2 million     letters     are hand sorted                        daily         for     neighborhood         mailmen      I
in Detroit.     GAO estimates       that machine                       sorting             could result         in savings     ;
of $487,000    a year.      (See p. 19.)                                                                                       I


Centralizing           mai 2 processing

GAO concluded           in 1966 that outgoing          mail being hand sorted        at smaller                                I
                                                                                                                               I
post offices          in the Detroit      area could be funneled           into  Detroit    for                                I
machine      sorting       at estimated     savings     of $500,000     a year.    GAO believes                                I
                                                                                                                               I
that    this    potential       for savings      still   exists    in the Detroit      area and                                I
that    centralization         of mail processing          at other   locations    could produce                               1
                                                                                                                               I
additional        savings.        (See p. 25.)                                                                                 I


Canceling           and postmarking          by hand

Much of the mail must be canceled           and postmarked      by hand because      (1) it                                    I
is too bulky     to be machine    processed     or (2) many post offices          do not                                       I
have postmarking     and canceling      machines.     Canceling     stamps and postmark-                                       ;
ing letters    by hand cost $360,000        a year in Detroit.         GAO believes     that                                   ,
canceling   stamps by hand may not be justified.               For example,     to offset                                      I

the savings    that would result      from discontinuing        the hand canceling        and                                  I



                                                     2
       .

           postmarking      at Detroit,     6 million    stamps would have to be reused.                                More-
           over,    means are available        to discourage     reuse--for example,    stronger
           glue.     A possibility      for  reducing     hand cancellation   is precanceled
           stamps.      (See pp. 28 and 29.)

           Recruiting         md retaining            manpmer

           Department  studies    showed,      and GAO's review         confirmed,       serious      difficulty
           in hiring  and retaining       employees.       Reasons for the difficulty                 include
           recruiting  weaknesses,      slow and burdensome           hiring     practices,        outdated
           wage and advancement      policies,       and uncertain        work schedules         for new em-
           ployees.   A Department      study     showed that       employee     turnover      in 1966 cost
           about $14.5 million,      primarily       for recruiting         and training.          (See pp. 31
           and 32.)

           Cost of mcmagement reports

           The Department       expects     to spend about $59 million         and to use about 4,600
           man-years    in fiscal      year 1971 to operate       its many management     reporting
           systems.     GAO   believes      that  substantial    sums  could    be saved by  consoli-
           dating    or eliminating       some management     reports.      (See pp. 40 to 43.)


RECOMMENDATIONS
              OR SUGGESTIONS

           The Post         Office      Department      should

               --expedite       its study of           a priority        classification          of first-class         mail
                  and initiate      appropriate           changes        to the existing          mail-processing
                  system     (see p. 18);

               --reassess      the possibility             of    using    machines       to sort     letters        now being
                   hand sorted     (see p. 24);

               --expand,    where feasible     and as rapidly                  as possible,          its     program    under
                  which mail from smaller        post offices                is consolidated               at mechanized
                  post offices    for processing      (see p.               26);

               --explore      alternatives            to existing      procedures         for    hand-canceling          and
                  postmarking       mail       (see     p. 29);   and-

               --expedite       its review         of management     reports,            eliminate   unnecessary
                   ones,     and simplify        reporting   requirements               (see p. 45).


AGENCYACTIONS AND UNRESOLVEDISSUES

           GAO is aware              that the Department    is actively                seeking     to improve      posta 1
           operations.               For example,   the Department      is           studying      the possibility


Tear   Sheet
       of impIementirg      (; priority     sy=+,Ler;i for handling       first-ciass       mail to
       spread   the p rocessit:g      work load more evenly         throughout        daylight    hours.
       This system 5hwid         achi e v e better     use cf manpower          and machines.       GAO
       believes     that the Department        should     implement     the system       as expeditiously
       as feasible.      (See p. il.)

       The Postr~:aster      General  said that   there were problems        that might make the
       present    proportion      of hand and machine     sorting    the most efficient     way to
       process     the mail.      GAO believes  that   the problems      can be overcome    and
       that    the volume of mail being hand sorted             can be substantially    reduced.
       (See pp- 19 to 24.)

       A program      to consolidate       outgoing        mail from associate        offices       for proc-
       essing    at sectional       center    facilities           had been implemented       in    only
       nine of the 554 sectional            center       facilities       by January    1971.       GAO be-
       lieves    that    the Department       should       expand the program        as rapidly        as
       feasible.        (See p* 26.)

       The Department        is exploring        alternatives         to existing    postmarking        and
,:
   !   stamp-canceling         practices     but mailers         strongly      favor keeping     the local
 I.
       community      postmark.        GAO believes        that    the Department     should     continue
       to seek alternatives            to existing       practices.        (See pp. 29 and 30.)

       The Postmaster       General    said that   the Department      had improved     its person-
       nel policies      over the past year and that           it could make further       substan-
       tial  improvements       under the climate      established     by the Postal      Reorganiza-
       tion Act.      (Th e act, which      takes full    effect   July 1, 1971, will        abolish
       the Post Office       Department     and create    the United    States   Postal    Service,
       an independent       agency in the executive         branch  of the Federal      Government.)
       (See pp* 9 and 39.)

       He said also that           the Department      had taken many steps recently                   to reduce
       the cost of paper work,              to improve    information        systems,      and to eliminate
       duplication        and that     program    managers     were continually          reviewing        report-
       ing requirements          to eliminate      unneeded     reports.        GAO believes         that
       further     strengthening         of the Department's         management       reporting        system
       is needed and that the Department                should      expedite      its review       of reports.
       (See p. 45.)




       The problems       in providing    efficient        postal       services,   as discussed          in
       this  report,      are of continuing         concern    to     the Congress.




                                                    4
                       Contents
                                                          Page

DIGEST                                                      1

CHAPTER

  1       INTRODUCTION                                      5
              Los Angeles Post Office                       8
              Detroit Post Office                           8
              Seattle Post Office                           8

  2       GIVE EXPEDITIOUS PROCESSING TO PRIORITY MAIL
          ONLY                                             10
              Agency comments and GAO evaluation           16
              Recommendation to the Postmaster Gen-
                eral                                       18

  3       REDUCE HAND SORTING                              19
             Agency comments and GAO evaluation            19
              Recommendation to the Postmaster Gen-
                eral                                       24

   4      CENTRALIZE MAIL PROCESSING                       25
             Agency comments and GAO evaluation            26
              Recommendation to the Postmaster Gen-
                eral                                       26

   5      PRACTICES OF CANCELING STAMPSAND POSTMARK-
          ING LETTERS                                      28
              Recommendation to the Postmaster Gen-
                eral                                       29
              Agency comments and GAO evaluation           30

   6      IMPROVE PERSONNELPOLICIES                        31
              Recruiting and hiring                        32
              Turnover                                     35
              Agency comments and GAO evaluation           39

   7      REVAMPTHE UNWIELDY MANAGEMENTINFORMATION
          SYSTEM                                           40
              Recent actions  taken to improve the man-
                agement information   system               43
                                                                 Page
CHAPTER

                 Recommendation to the Postmaster Gen-
                   eral                                            45
                 Agency comments and GAO evaluation                45
  8        SCOPEOF REVIEW                                          46
APPENDIX

  I        Letter   dated October 13, 1970, from the Post-
             master General to the General Accounting
             Office                                                 49

  II       Principal     management officials    of the Post
              Office    Department responsible    for adminis-
              tration    of activities   discussed in this
              report                                                52

                            ABBREVIATIONS

GAO        General Accounting Office
LSM        Letter  sorting machine
COMPTROLLIFR
           GENERAL~'S                              MORE EFFECTIVE USE OF MANPOWER AND MACHINES
                                                   RECOMMENDED IN MECHANIZED POST OFFICES
                                                   Post Cffice  Department B-114874


DIGEST
_-----

WHYTHE REVIE'WWASMADE

    Because of the cost of operating     post offices,     the General  Accounting
    Office   (GAO) has made a review  to ascertain     whether  the Post Office    De-
    partment    has been making the most effective     use of manpower   and machines
    in processing    mail.

    In fiscal      year    1970     the   fiscal     situation         for      the     Department      was:

                                                           Billion

                          Expenditures                        $8.1
                          Income                               6.5

                                                              $12      (deficit)

    The Department        had 722,000          employees         in   fiscal         year   1970.

    GAO's review      was made at three      mechanized    post offices--Detroit,         Michi-
    gan; Los Angeles,       California;    and Seattle,     Washington.        These post of-
    fices   handled    about 4 percent     of the Nation's      85 billion        pieces of mail
    in fiscal     year 1970.       (See p. 5.)

    Detroit  is the most highly       mechanized   post office     in the Nation,     having
    22 of the Department's     total    of 278 letter   sorting      machines,   nine parcel
    sorters,   15 miles   of conveyor     belts, and other     machinery.      (See p. 8.)


FINDINGS AND CONCLUSIONS

    The Department         has not        made the     best      use of        its     manpower      and machinery
    in processing         mail.

    Handling       of first-class          mail

     Efforts      to expedite    processing          and delivery  of                 all first-class          mail   re-
     sult    in   costly   and inefficient           use of manpower                  and machines.

    The Department      strives     to cancel3        postmark,     and sort   first-class        letters
    within   90 minutes       after   their    arrival      at the post offices.           Business
    firms  tend to concentrate           their    mailings,      which account       for 75 percent
 of the mail,     at the end of each business                              day.   Therefore              the     Department
 processes    most of each day's mail between                               4-and 9 p*m.

 Studies    have shown that      such expeditious      handling     is not necessary     to
 meet mailers'    needs.       Businessmen    in Detroit,       Los Angeles,  and Seattle
 told    GAO that  a significant       part of their      mailings    was not urgent.

 Two of       the    results    of    the    expediting          follow.

   --Costly          machines      stood    idle     for      long        periods          after   the    peak        mail
      volume         had been      processed.

   --Nearly          three   fourths   of the clerks    and mail handlers                                worked        at
      night         and received     a lo-percent    pay differential.

The Department     is studying        the possibility    of giving   to mailers       of
first-class    mail a choice         between  two types of service       (1) priority
service,    at a higher      postage     rate and (2) nonpriority      service,      under
which mail would be processed--the              next day if necessary--on       machines
that now are idle       during     the day shift.     (See ppm 10 to 15.)

Hand sorting            of mlxil

On a typical    day Detroit      sorted                4 million  letters    by hand and only
2 million    by machine,    although                its machines      were idle  nearly    70 percent
of the time.     Similar    situations                  were found in Los Angeles       and Seattle.

The cost of hand sorting                    1,000   letters          is     $4.20,          and the      cost        of machine
sorting  1,000 letters   is                 about   $3.42.

About 2 million    letters     are hand sorted                        daily          for     neighborhood             mailmen
in Detroit.     GAO estimates      that machine                       sorting              could result         in     savings
of $487,000 a year.        (See p. 19.)

Centralizing           mai     processing

GAO concluded           in 1966 that    outgoing      mail being hand sorted       at smaller
post offices          in the Detroit     area could be funneled          into  Detroit     for
machine      sorting      at estimated     savings     of $500,000    a year.    GAO believes
that    this    potential      for savings      still   exists   in the Detroit       area and
that    centralization         of mail processing         at other  locations     could produce
additional        savings.       (See p. 25.)

-Cmeeling           and postmarking         by hcmd

Much of the mail must be canceled            and postmarked      by hand because      (1) it
is too bulky     to be machine     processed     or (2) many post offices          do not
have postmarking     and canceling       machines.     Canceling     stamps and postmark-
ing letters    by hand cost $360,000         a year in Detroit.         GAO believes     that
canceling   stamps by hand may not be justified.                For example,     to offset
the savings    that would result       from discontinuing        the hand canceling        and



                                                    2
    postmarking      at Detroit,     6 million   stamps would have to be reused.                               More-
    over,    means are available       to discourage    reuse--for example,    stronger
    glue.     A possibility      for reducing    hand cancellation   is precanceled
    stamps.      (See pp. 28 and 29.)

    Reemiting          md retaining          manpouer

    Department  studies    showed,      and GAO's review        confirmed,       serious      difficulty
    in hiring  and retaining       employees.      Reasons for the difficulty                 include
    recruiting  weaknesses,      slow and burdensome          hiring     practices,        outdated
    wage and advancement      policies,      and uncertain        work schedules         for new em-
    ployees.   A Department      study showed that          employee     turnover      in 1966 cost
    about $14.5 million,      primarily      for recruiting         and training.          (See pp. 31
    and 32.)

    Cost of mcmagement reports
    The Department       expects    to spend about $59 million       and to use about 4,600
    man-years    in fiscal      year 1971 to operate      its many management   reporting
    systems.     GAO believes       that substantial    sums could be saved by consoli-
    dating    or eliminating       some management   reports.     (See pp* 40 to 43.)


RECOMMENDATIONS
              OR SUGGESTIONS

    The Post        Office      Department     should

       --expedite      its study    of        a priority        classification         of first-class          mail
          and initiate     appropriate           changes        to the existing          mail-processing
          system    (see p. 18);

       --reassess      the possibility            of    using    machines      to sort      ?etters        now being
           hand sorted     (see p. 24);

       --expand,    where feasible     and as rapidly    as possible,                       its     program    under
          which mail from smaller        post offices  is consolidated                            at mechanized
          post offices    for processing      (see p. 26);

       --explore      alternatives          to existing     procedures           for   hand-canceling           and
          postmarking        mail      (see p. 29);     and

       --expedite        its  review       of management     reports,          eliminate   unnecessary
           ones,      and simplify       reporting   requirements             (see p. 45).


AGENCYACTIONS AND UNRESOLVEDISSUES

    GAO is aware             that the Department    is actively              seeking     to improve      postal
    operations.              For example,   the Department      is          studying     the possibility




                                                        3
     of implementing         a priority    system for handling         first-class       mail to
     spread   the processing          work load more evenly       throughout       daylight   hours.
     This system       should    achieve   better    use of manpower         and machines.       GAO
     believes     that    the Department      should    implement    the system       as expeditiously
     as feasible.         (See p. 71.)

     The Postmaster        General  said that   there were problems        that might make the
     present    proportion      of hand and machine     sorting    the most efficient     way to
     process     the mail.      GAO believes  that   the problems      can be overcome    and
     that    the volume of mail being hand sorted             can be substantially    reduced.
     (See pp. 19 to 24.)

     A program      to consolidate       outgoing        mail from associate        offices    for proc-
     essing    at sectional       center    facilities           had been implemented       in only
     nine of the 554 sectional            center       facilities       by January    1971.    GAO be-
     lieves    that    the Department       should       expand the program        as rapidly     as
     feasible.        (See p. 26.)

     The Department        is exploring        alternatives         to existing    postmarking        and
     stamp-canceling         practices     but mailers         strongly      favor keeping     the local
     community      postmark.        GAO believes        that    the Department     should     continue
     to seek alternatives            to existing       practices.       (See pp. 29 and 30.)

     The Postmaster       General    said that   the Department      had improved     its person-
     nel policies      over the past year and that it could make further                 substan-
     tial  improvements       under the climate      established     by the Postal      Reorganiza-
     tion  Act.     (The act, which       takes full    effect   July 1, 1971, will        abolish
     the Post Office       Department     and create    the United    States   Postal    Service,
     an independent       agency in the executive         branch  of the Federal      Government.)
     (See pp. 9 and 39.)

    He said a?so that the Department               had taken many steps             recently       to reduce
    the cost of paper work,             to improve    information        systems,       and to eliminate
    duplication        and that    program    managers     were continually           reviewing       report-
    ing requirements          to eliminate     unneeded     reports.        GAO believes         that
    further     strengthening        of the Department's         management       reporting        system
    is needed and that the Department               should      expedite      its review       of reports.
    (See p. 45.)


MATTERS
_I_-    FOR CONSIDERATIONBY THE CONGRESS

    The problems       in providing    efficient        postal      services,   as discussed          in
    this  report,      are of continuing         concern    to    the Congress.




                                                 4
                               CHAPTER 1

                             INTRQDUCTIQN

       To cope with the NationIs      mail volume--about     85 billion
pieces in fiscal   year 1970-- the Post Office        Department    em-
ployed about 722,000 people and operated about 32,000 post
offices.    Revenue totaled    about $6.5 billion,      and expenditures
 to process and deliver     the mail totaled      about $8.1 billion.
Almost one fourth   of the mail, or about 20 billion          pieces,
was handled by the 10 largest        post offices.     About 3.7 bil-
'lion pieces of mail were collected         by the Detroit,   Los
Angeles, and Seattle    Post Offices      in fiscal   year 1970--about
4 percent of the Nation's      total   mail volume.

      The Department uses machines for processing        mail.  These
machines require   concentrations     of fairly  large volumes of
mail for efficient   operation     and generally   are used in only
the larger postal   installations.

        At September 1, 1970, the Department had 278 letter            sort-
ing machines (LSMs) in 118 post offices.             Besides sorting
letters    faster   than by hand,    the  LSM'reduces    the number of
handlings     because of the greater      number of separations      made
in each sort.       By hand, letters     are normally    sorted into 49
separations      at the rate of about 30 letters       a minute.     (See
photograph on pa 6,)        Each LSM operator,     however, can sort
to as many as 300 separations          at an average of up to 60 let-
ters a minute.        An LSM may require    six, eight,     or 12 opera-
tors.     (See photograph on p. 7.)

       As of September 1, 1970, the Department had 15 of its
LSMs equipped with optical       scanners which can electronically
sort up to 42,500 letters       an hour and which require    only two
rather    than 12 operators,     The optical   scanners, however,
will   not sort letters    unless addresses have been typewritten
in a certain    format and are located in a certain      position  on
the envelopes.      Generally   optical  scanners are used to pro-
cess mail prepared by large-volume        mailers.

      Another time- and money-saving machine used by the De-
partment   is the facer-canceler.   At the rate of 30,000 letters
an hour, this machine automatically    locates  and cancels the

                                      5
I
                                                      LSM QPERATION
Photo   furnished   by the Post Office   Department
                                                           7
    stamp, postmarks the letter,     and stacks the letters    with all
    addresses facing the same direction      and the stamps in the
    same position.     As of September 1,   1970,  the Department had
    installed   639 of these machines in 243 post offices      and had
    contracted    for the purchase of 61 additional    machines.

           Also, the Department uses other equipment,      such as sack
    sorters,    parcel sorters,  edger-stackers,  and conveyor sys-
    tems which, like the machines previously      described,   require
    concentrations     of large volumes of mail for efficient     opera-
    tion.

              Following   is general information    relating   to the post
    offices       included in our review.

    LOS ANGELES POST OFFICE

           The Los Angeles Post Office,     one of the Nation's       largest,
    operates out of three terminals.        In fiscal    year 1970 Los
    Angeles employed about 14,100 people, collected           about 2.1 bil-
    lion pieces of mail, and had revenues of about $144 million.
    Mechanization     at Los Angeles consists    of 13 LSMs (two equipped
    with optical    scanners),  14 sack sorters,      21 edger-stackers,
    17 facer-cancelers,     and 6-l/2 miles of conveyor belts.           In
    addition   to having three terminals,     Los Angeles has 64 sta-
    tions and branches and four vehicle garages.

    DETROIT POST OFFICE

           The Detroit       Post Office   is also one of the Nation's
    largest.       In fiscal    year 1970 Detroit      employed about 9,000
    people, collected         1.1 billion   pieces of mail, and had reve-
    nues of about $70 million.            Detroit   is the Nation's    most
    highly mechanized post office,            having 22 LSMs (two equipped
    with optical      scanners),      nine parcel sorters,     seven sack
    sorters,    11 edger-stackers,        17 facer-cancelers,      and about
    15 miles of conveyor belts.            In addition    to having the main
    post office,      Detroit    has 39 stations      and branches,   one air-
    mail facility,       a warehouse, and three vehicle         garages.

    SEATTLE POST OFFICE
i
           Somewhat smaller than the Detroit  and Los Angeles Post
    Offices,   the Seattle Post Office employed 4,450 employees

                                          8
and collected   0.5 billion     pieces of mail and had revenues of
about $36 million    in fiscal     year 1970. Seattle has four
LSMs, five edger-stackers,        six facer-cancelers,   and about a
mile of conveyor belts.        Seattle   also has an airmail  facility
and 34 stations    and branches.



      The Detroit,     Los Angeles, and Seattle Post Offices           serve
as sectional    center facilities.       A sectional     center facility
is a centralized      mail-processing    facility    for mail origi-
nating in, and for delivery         by, several post offices     within
a designated    area.

      The Postal Reorganization    Act (84 Stat. 719; Pub. L. 91-
375), approved August 12, 1970, provides       for abolishing     the
Post Office Department and for creating      the United States
Postal Service --an independent establishment       in the executive
branch of the Government --to provide postal services         through-
out the United States.     This act provides     the Board of Gov-
ernors of the Postal Service with broad authority         to carry
out postal operations.     In accordance with a resolution        by
the Board of Governors of the Postal Service (36 F. R. 785),
all provisions   of the act are to be in effect       as of July 1,
1971.




                                     9
      GIVE EXPEDITIOUS PROCESSING TQ PRIORITY HAIL ONLY

        Striving to expeditiously     process and deliver       all first-
 class mail results    in costly    and inefficient       use of manpower
and machines.      Such expeditious     handling,     for the most part,
 is not necessary to meet mailers'         needs, as evidenced by
 studies made in 1968 for the President's            Commission on
Postal Organization     and in 1969 by the Department which re-
vealed that 75 to 80 percent of first-class              mail was not
urgent and did not require        expeditious     processing   and de-
livery,

       In the three cities      where we made our review, we dis-
cussed the need for expeditious        mail processing    and delivery
with representatives        of 32 large business firms--banks,      man-
ufacturers,     insurance companies, and retail      companies.     The
representatives       of the banks considered that most of the
banks' mailings were urgent and required         expeditious    delivery.
The representatives       of the other companies considered      that
a significant      part of their mailings was nonurgent.

        The Department has a formidable     task in achieving      its
goal of expeditiously      processing  all first-class     mail--
striving    to complete processing    (canceling,     postmarking,     and
sorting)    within   90 minutes after arrival     at the originating
post office.       Since businesses,  which generate about 75 per-
cent of the total mail volume, tend to deposit most of their
mail at the close of each business day, the Department must
process most of each dayjs mail during an evening peak pe-
riod from about 4 p.m. to about 9 p.m.

       At the three post offices       included in our review, ex-
peditious    processing of first-class       mail had the following
impact.

      --Costly  machines stood idle for long periods after the
         peak mail volume had been processed.  (See pp. 12 and
         13.1
      --Nearly  three fourths   (8,800) of the clerks and mail
        handlers yniorked at night and received a lo-percent
        night differential    wage premium.

                                    10
      --Premium pay of nearly $600,000 was paid annually to
         nightworkers for handling second-, third-,   and
         fourth-class mail to keep them busy after first-class
         mail had been processed.    (See pe 14 for man-hours
         consumed on a typical   day at Detroit.)

      --Over $700,000 was paid annually to employees for un-
         productive  time resulting     from shifting    employees be-
         tween work locations    within    the post offices   because
         of the uneven work load.

      --Generally   the least experienced  employees worked at
         night when the mail volume was heaviest,   because em-
         ployees with more seniority--thus   more experience--
         worked during the day when mail volume was lightest,

       To overcome such problems, the Department is studying
a two-tier     system for first-class      mail which would give to
mailers a choice between two postage rates and two types of
service --priority      and nonpriority.      Under such a system,
only priority      mail would be expeditiously        processed and
delivered     and the processing      of nonpriority    mail would be
spread evenly throughout        the daylight     hours.

       We believe that limiting      expeditious        processing     and de-
livery   to priority     mail. would significantly         reduce or elim-
inate many of the costs and inefficienctes               described pre-
viously.    For example, nonpriority         first-class       mail which
is now being given preferential         handling at night would be
held over and processed on machines that are idLe during
the day shift.       Also, costs for night differential             premium
pay would be reduced because fewer employees would be needed
to work at night.

        We discussed with officials     of each of the three post
offices    the effect   that a more even flow of mail under a
two-tier     systa   would have on the mail-processing     capabili-
ties of the offices.        We were informed that a two-tier      sys-
tem would enable Seattle       to process more than double its
average daily volume, would enable Detroit         to process nearly
double its average'daily       volume,   and would enable Los Angeles
to process about one-third        more than its average daily volume.



                                       11
                              NUMBER OF LETTER SORTING MACHINES
                                   USED DURING I-HOUR PERIODS
                                  AT DETROIT  ON A TYPICAL DAY
                          (PREPARED    BY GAO FROM DEPARTMENT  DATA)


Number
of LSMs

 22
 21
 20
 19
 18
 17
 16
 15
 14
 13
 12
 11       Average number of
 10       machines    used during
          l-hour   periods
  9
                                  \
  8
  7
  6
  5
  4
  3
  2
  1
  0


        910    11121          2   3   4   5   6   7    8   9   1011121          2   3   4   5   6   7   8
      a.m.             p.m.                                              a.m.
                                          HOURLY PERIODS


      -           NUMBER OF MACHINES USED



                                                  12
                              HOURS OF USE OF THE
                  22 LETTER    SORTING MACHINES   AT DETROIT
                                ON A TYPICAL  DAY
                 (PREPARED    BY GAO FROM DEPARTMENT     DATA)


Hours                        HOURS OF USE OF THE
 of                 22 LETTER _SORTING
                   -_--        _- -      MACHINES AT DETROIT
                                                        - ._-
                               ON   A TYPICAL
                                .._____-       DAY
                                         ___- --.
UZ
                    (PREPARED BY GAO FROM DEPARTMENTDATA)

24
23
22
21
20
19       (Post office recommended
18           maximumusage)
17                         \
16
 15
 14
 13
 12
 11
 10      (Average hourly use
              per machine)
     9
     8
     7
     6
     5
     4
     3
     2
     1
     c

                      LETTER SORTING MACHINES

                                        13
                               MANPOWER   USE AT DETROIT
                                   ON A TYPICAL DAY
                     (PREPARED   BY GAO FROM DEPARTMENT       DATA)


Man-hours
 16,00C
                             Man-hours      spent processing
 15,ooa                      first-class      mail and air mail.

 14,000
                             Man-hours spent processing
                             other than first-class  mail
 13,ooa                      and air mail.

 12,000

 11,000
                                                                      1142:
 10,000

  9,000

  8,000

  7,000

  6,000


  5,000

                                                                      w
  4,000                                                5271           .'/ j'
                                                                         'f/
                                                                      'j/,
                                                                      '//
  3,000                                                               .'/,'
                                                                      '0'/,''/
                    2140                                              '/
                                                                       / /'/
  2,000                                                               ' 000j/
                                                                      *"/'0;
                                                                      '/j, '0 0
  1,000                                                                 j/ /
                                                                       :0&j J
                                                                      4543

                                                    III               ALL
            (8 a.m. tF4    p.m.> (12 to 8 a.m.> (4 p.m. to 12)
                                     WORKTOUR

                                           14
         Seattle postal officials        stated that they anticipated
no significant        problems in operating        a two-tier       system,
Officials       at Detroit    and Los Angeles said that they antici-
pated a problem in identifying             and separating       priority       mail
from nonpriority        mail.    We noted, however, that the Depart-
ment had resolved a similar           problem of separating            airmail
from other first-class          mail.    Airmail    is usually       identified
by a special       stamp and is processed separately              from other
mail and given priority          handling.      We believe that similar
arrangements       could be made for processing          priority       and non-
priority      mail  under a two-tier       system.

         The Department is experimenting              with adapting facer-
canceler machines to separate airmail                  letters     from other
first-class        letters     by means of a special-ink           stamp.    A
facer-canceler          machine is ‘used to face letters--turn              all
letters     upright       and face them in the same direction--and
to postmark the letters              and to cancel the stamps,            We be-
lieve that facer-canceler              machines might also be adapted to
distinguish        priority      mail from nonpriority         mail through the
use of special-ink            stamps,     Also, existing       collection    facili-
ties,     such as airmail          and other first-class        mail deposit
slots in post offices              and at other locations,         could be des-
ignated      priority       and nonpriority        to assist    the Department
in making the separation.               Moreover, since businesses gen-
erate most of the mail volume and often deliver                       volume mail-
ings directly          to post offices,       their   cooperation       in making
the separation          prior    to deposit could help to minimize the
problem for post offices,

        The Department has attempted to distribute             the mail-
processing     work load more evenly throughout           the daylight
hours through its Nationwide        Improved Mail Service Program.
This program prcvides       for obtaining       the cooperation     of
mailers    in reducing the volume of mail deposited              in post
offices    after   5 p.,m. and thereby reduces the evening proc-
essing peak.       According to the Department,         this program has
been successful      in reducing the volume of mail deposited
after 5 p.m.       The Department's    efforts,      however, have not
eliminated      the evening processing      peak.     The implementation
of a two-tier      system, unlike   the Nationwide        Improved Mail
Service Progrm9 would not be dependent upon changing the
publicss    mailing habits to eliminate           the evening processing
peak.

                                         15
AGENCY COMMENTSAND GAO EVALUATION

       The Postmaster         General stated in his letter          to us of
October 13, 1970 (see app. I), that the Department's                     exist-
ing system was designed to give priority                 service to airmail,
then to first-class           letters,    and then to circulars       and other
classes of mail.           He also said that the Department was study-
ing the possible          implementation     of a priority      system for
handling      first-class      mail to assist      the Department in spread-
ing the work load evenly throughout                the daylight     hours in-
stead of processing          all first-class       mail in a few hours at
night.       The Postmaster General said also that the Managed
Mail Program was producing             substantial     savings in night
differential         pay.

ManaPed Mail     Program

       In the past, at a typical            large city post office,    two
mail-processing        peaks occurred during a 24-hour period.            The
most significant        peak occurred during evening hours--4          to
9 p.m .--when mail originating            in an area served by a certain
post office      (originating       mail) was collected     and processed.
All originating        mail for delivery        by another post office    re-
ceived a primary sort,          during which some of the mail was usu-
ally sorted by final          destination      (city).   A part of the re-
maining mail which has been sorted only by State or general
area in the primary         sort may be given a secondary sort by
final   destination.        The second, but much smaller,        processing
peak occurred between 4 and 6 a.m. when mail was received
from other cities        and States for delivery.

      The Managed Mail Program began in February 1970 and, as
of September 1970, had been implemented at the 554 sectional
center facilities   and at about 30 additional    post offices
which performed   secondary distribution   of outgoing letters.
This program provides    that

      --first-class    letters   going beyond normal range           of over-
          night surface delivery     be transported by air,

      --first-class   letters receive only a single,    primary
          sort on LSMs at the originating office,   and



                                      16
     --further   sorts be made at post offices       in the States
         to which the letters are addressed,

For example, mail originating       in Philadelphia,    Pennsylvania,
for delivery    to various cities     in Michigan is no longer
sorted at Philadelphia     to the destination      city or sectional
center of delivery     in Michigan.     Instead,   this mail is sorted
only to Michigan and is sent to Detroit          where the mail is
further   sorted to the cities     of delivery.
     According to the Department,       the Managed Mail    Program
has the following advantages.

      --Since  the processing    steps at the originating    office
         have been reduced, mail can be processed faster         and
         the mail can be dispatched     more quickly   to the office
         which will deliver   the mail.

      --More mail sorting      for out-of-town      mail can be per-
         formed in originating     offices    prior   to 6 p.m. and
         thereby reduces the cost for overtime premium man-
         power usage and makes available         more desirable  work
         hours for more employees.

      --Because the destination       State post office    employees
         are more familiar     with distribution  patterns    than orig-
         inating   post office    employees, fewer sorting    errors
         and delivery   delays occur.

      Also, Detroit     Post Office officials    told us, and our re-
view confirmed,     that the Managed Mail Program had resulted
in (1) increased use of ISMs, machines now sorted mail that
was previously   not available     for sorting  during the daylight
hours, (2) reduced hand sorting       of mail going to other States,
and (3) reduced night premium pay because of the transfer           of
over 200 employees from the night shift        to the day shift.



      We recognize   that the Managed Mail Program should re-
sult in reducing the mail-processing    work load during peak
periods by eliminating    the secondary sort of originating      mail
and in reducing the cost of night differential     pay.     This
program, however, does not distinguish     between the mail which

                                   17
requires expeditious   processing    and delivery     and the mail
which does not require    such treatment.

RECOMMENDATIONTO THE POSTMASTERGENERAL

         In view of the significant   economies that can result
from spreading the mail-processing        work load more evenly, we
recommend that the Department expedite completion              of its
study of a priority       system of handling  first-class       mail and
initiate      appropriate  changes to the existing      mail-processing
system.




                                  18
                             CHAPTER 3

                       REDUCE HAND SORTING

        Because of the variety      of size, shape, and content of
all letter     mail, about 15 percent cannot be machine sorted,
At the three post offices        included in our review, of the
mail that could be machine sorted--about           85 percent of the
letter    mail processed --more letters       were sorted by hand
than by machine,      For example, on a typical        day Detroit
sorted twice as many letters         by hand as by machine--4 mil-
lion compared to 2 million--        although its machines were idle
nearly 70 percent of the time,           Total time used in hand
sorting    mail at Detroit   was more than three times the amount
used in machine sorting,         (See p* 20.) In Seattle and Los
Angeles we noted similar       situations.

      The report of the PresidentIs      Commission on Postal Or-
ganization    shows that the cost of hand sorting      1,000 let-
ters is $4.20 and that the cost of LSM sorting         1,000 let-
ters is about $3.42, or about 78 cents less than hand sort-
ing.    On the basis of this data, we believe that Detroit
could realize    substantial  savings each year by increasing
the proportion    of letter  mail processed by the existing
LSMS. Because9 at Los Angeles and Seattle,         LSMs are idle
and because over half their      letters  are hand sorted, we be-
lieve also that these offices       could realize  significant    sav-
ings,

      We believe that substantial      savings could be achieved
if the Department used LSMs to sort mail to carriers,             For
example, at Detroit    about 2 million     letters    are hand sorted
daily to delivery   carriers.     If these 2 million      letters  were
machine sorted,   costs could be reduced by as much as
78 cents a thousand, or $1,560 daily,,          On the basis of a
6-day workweek, the annual savings could be about $487;000.

AGENCYCOMHEMTSAND GAO EVALUATION

       We proposed to the Postmaster General that the Depart-
ment reduce the hand sorting      of mail at highly mechanized
post offices,      The Postmaster General stated that, for the
following    reasons, the present proportion    of hand sorting
and machine sorting might well be the most efficient

                                  19
                   COMPARlSON       OF EMPLOYEES     fvlACHlME SOR-nNG
                  TO EMPLOYEES       HAND SORTING      A-i- DETROlT   ON A
                                        BYPlCAR  DAY
                   (PREPARED       BY 6~0 FROM OEPAR-~~~~           DATA)


800,


760

720,

680_             Employees     hand         sorting
                 letters   (total           hours--8202)
640,

600,

560-




240
200.

160,

120

80 I

40 .
   0


      9 10 11 12 1 2    3      4   5    6      7      8      910   1112     1 2   3   4   5   6   7   LI
   a.m.          p.m.                                                     a.m.
                                   HOURLY          PERIODS


                                                    20
considering     the present flow of mail       and the need to meet
dispatches    to other locations.

      --Machine sorting         to carrier    routes was found ineffi-
         cient because of constantly            changing carrier-route
         schemes.      This factor was very important          because such
         distribution       represented    70 to 80 percent of all des-
         tination     mail distribution.         He said that the Depart-
         ment was attempting         to correct    this problem by sta-
         bilizing     carrier-route      designations.

      --Effective     machine utilization    for distribution      to
         carrier   routes would still     be marginal because of
         the limited    volume of mail available      for individual
         ssheme assignments (only about 1,500 letters           for each
         route-- 50 routes for each scheme).

        We noted that carrier    routes were adjusted periodically
to reflect     changes in mailing patterns      and the resulting
changes in work load on carrier        routes.,   For example9 if the
work load on carrier      route A increased and the work load on
carrier    route B decreased9 an adjustment       would be made in
the carrier-route      schemes to equalize the work load.         The
changes in carrier-route       schemes must be memorized by clerks
so that mail will be sorted to the correct          carriers    or box-
delivery     sections.

      We agree that stabilizing     carrier    routes would make
machine sorting more practicable.         We believe,    however, that
the problem of carrier-route    designations       might be resolved
by use of the module concept,     irrespective      of whether the
Department is able to stabilize      carrier-route      designations.

        Under the module concept,        letters    would be sorted to
carrier     routes by the main post office          without  regard to
carrier-route      changes.    At stations       and branches9 these let-
ters would be sorted as they are now, to street addresses in
order of delivery       by carriers    responsible      for specific    geo-
graphic areas.        Depending on the daily volume of mail for
each geographic area, a carrier            may not deliver     all mail
that he sorts,       or he may deliver       some mail sorted by another
carrier.      After the mail. has been sorted,          each carrier    would
be given enough mail for a normal dayIs delivery,                  As il-
lustrated      in the diagram that follows,         on days when

                                     21
carrier   A's volume is high, some of the mail he sorts would
be given to a carrier    (carrier B) for delivery    in an adjoin-
ing area.    Conversely,  on days when carrier    Ags volume is
low, he would be given mail to deliver      in an adjoining  area,


                         LETTER DISTRIBUTION CASE


   I     I   I      I   I        I                                   i,
                                     I     I   I   :




                 Mail   sorted           $@.s)88@@@
                                                  Mail   delivered


       Concerning the limited  volume of mail available        for in-
dividual   scheme assignment,  a Department official       said that
a carrier   route normally had an average daily volume of
1,500 letters    amd that, in sorting  to carrier    routes,     a
clerk would normally be expected to have a scheme knowledge
to enable him to sort to about 50 routes.         Therefore    the
average daily volume of mail to be sorted for a scheme would
be 75,000 letters,

      He explained that this meant that an LSM could be op-
erated only a relatively   short period and then would have
to be shut down, that the sorted mail would have to be with-
drawn from the bins located in back of the LSM, and that the
machine would have to be reprogrammed to sort mail for other
schemes.

        LSMs are normally operated by six, eight,             or 12 opera-
tors.     A 12-operator  LSM is capable of sorting            about

                                          22
36,000 letters    an hour,    Assuming a maximum volume of about
75,000 letters    (50 routes times 1,500 letters),       an LSM could
be operated about 2 hours on a scheme run before being re-
programmed for another scheme run.         We noted that LSM opera-
tors were allowed a 15-minute break every hour as a normal
practice.    Also, LSMs are normally shut down for 15 minutes
every 2 hours to withdraw the sorted mail,          It does not ap-
pear to us, therefore,     that the Department official's      impli-
cation that LSMs would be inefficient        because they would be
operated for only a relatively       short period is a valid rea-
son for not using LSMs to sort mail to carrier         routes.

        Moreover9 as illustrated    on page 13, the 22 LSMs at
Detroit    were used an average of only about 7 hours a day at
the time of our fieldwork.       Five LSMs were used an average
of less than 2 hours a day.       It is apparent,    therefore,    that
there is sufficient      unused LSM capacity  for other mail-
processing uses, such as sorting       mail to carrier     routes.

       The Department official   advised us that the Department
had recently   purchased 24 single-position       LSMs and was
planning to acquire more of these machines,           A single-
position   LSM is operated by one person and sorts mail to
ioo separations,    whereas a-multiposition      LSM may have up to
12 operators   and  sorts  mail up  to   300 separations.      He also
said that it was intended that the single-position           LSMs
would be used to sort mail to carrier        routes.

       We believe that, in addition  to using single-position
LSMs, the Department should reassess the feasibility        of
using multiposition    LSMs to sort mail to carrier   routes
since the Department has substantial    unused capacity     on
multiposition    LSMs,

     The Postmaster General stated that efficient             machine
     utilization      required    a continuing    minimum volume suf-
     ficient     to offset     the higher service costs of machine
     operations      and that backlogging      mail to accumulate suf-
     ficient     volume for machine distribution        was usually   not
     feasible      because of potential      missed dispatches   and the
     resultant      delay to mail.

     As pointed out in chapter          2, most first-class       mail is
not urgent and does not require          expeditious     processing   and

                                   23
     delivery.     We believe that, by limiting        expeditious proc-
     essing and delivery      to priority     mail, the Department would
     be able to defer processing          nonpriority  mail and to accumu-
     late a sufficient     volume of nonpriority      mail for machine
     distribution,
L.


‘I               The Postmaster General stated that,    despite these ob-
                 stacles,   the Department had actively  pursued the goal
                 of minimizing   hand sorting and had made considerable
I                progress in recent years as exemplified     by the Managed
                 Mail Program.

          We recognize   that this program appears to have certain
     advantages and should help to reduce hand sorting.            (See
     ppO 16 through I$.>     This program, however, does not affect
     the hand sorting  of letter     mail to carrier    routes, which
     accounts for a major part of all hand sorting.            For example,
     at Detroit,  hand sorting   letters    to carrier   routes accounts
     for about one half of all hand sorting        of letters.



            Because of the extensive hand sorting     of mail that ex-
     ists --even at mechanized post offices--and      because of the
     availability   of multiposition LSMs to sort mail, we believe
     that the Department has an opportunity      to realize  substantial
     savings by making greater use of existing      LSMs to process
     mail.

     RECQ~ENDATIQN To THE POSTMASTERGENERAL

          We recommend that         the Department reassess the potential
     for using multiposition         LSMs to sort letter  mail rather than
     to sort it by hand.




                                          24
                                 CWTER 4

                     CENTRALIZE MAIL PROCESSING

       On the basis of a review conducted during fiscal                  year
1966, we concluded that letters           sorted by hand at post of-
fices within     a 20-mile radius of Detroit            could be sorted on
idle LSMs at Detroit          at an estimated     savings of $500,000 a
year.     We expressed the belief       that substantial         economies
and improvements in service could be realized                 through con-
solidation    of the mail-processing         operations      of post offices
throughout    the country.       Cur most recent review showed, how-
ever, that Detroit      still    had substantial       unused LSM capacity
and that nearby associate         post offices      still    sorted letters
by hand. We believe that costly 'hand sorting                 of letters     at
many small outlying      post offices      at other locations         could
be greatly    reduced or eliminated        if their machinable mail
were funneled into large mec'hanized post offices.

        Detroit!s     LSMs--which,     on the average3 were idle
nearly 70 percent of the time--were               not used to full capac-
ity,    even   during   the  Christmas     mail   rush when Detroit     pro-
cessed up to PO million          pieces daily,       nearly double an av-
erage day's volume of 5.4 million              pieces.     Although the De-
partment could not provide us with documentation                  on the
justification       for installing      the large number of LSMs at
Detroit,      we were told by Detroit        officials     that the Depart-
ment had anticipated         centralizing      mail from the smaller out-
lying offices       at Detroit     for processing,

       In fiscal      year 1966 the average daily volume of let-
ters at 25 nearby post offices           available   for centralizing
at Detroit      was about 887,000.       Cur test of the mail volume
in fiscal      year 1969 at six of these offices,            which ac-
counted for about 'half the total          volume of the 25 post of-
fices,     indicated    little increase,     if any, from fiscal          year
1966.      Since that time, 'however, Detroit's         annual mail vol-
ume 'has decreased slightly--from          about 1.2 billion         pieces
in 1966 to about 1.1 billion          in 1970.     We  still     believe,
therefore,       that mail could be centralized        at Detroit,

     Since 1964, mail from many outlying    post offices      'has
been centralized   and sorted in Seattle.   Seattle   officials
told us that sorting   this mail on machines had enabled more
                                       2.5
efficient processing.     We believe that the Department
should consider centralization      (1) for other major mecha-
nized post offices,   such as Detroit,     and (2) when planning
new post offices.

AGENCY COMMENTSAND GAO EVALUATION

         We suggested that the Department forward mail from the
many smaller outlying          post offices--now     sorting   mail by
hand--to     large mechanized post offices          better equipped for
mail processing.          The Postmaster General stated that the
Department had recognized,          in its Area Mail Processing Pro-
gram, the problem as typified            by our comment that at Detroit
"machines could be used to sort most of the mail now hand-
sorted at nearby nonmechanized post offices,"                 He said that,
in line with our suggestion,           the Area Mail Processing Pro-
gram had been designed to consolidate              outgoing mail from
associate      offices    for processing     in the sectional     center
facility     offices     and that this change had resulted         in bet-
ter utilization        of the mechanization      previously    installed
and in better        service being provided.

Area Mail     Processing     Program

        Under the Area YkG.1 Processing Program, all mail orig-
inating    within      a sectional     center area--a designated area
normally encompassing several post offices--is                    consolidated
at the sectional          center facility--a      designated mail-
processing      facility     within    the sectional     center area--for
complete preparation           and processing     for outgoing transpor-
tation.      The objectives        of the program are to achieve more
efficient     processing       through the use of mechanization,            bet-
ter utilization          of existingandplanned        facilities,     and bet-
ter utilization          of manpower,

      As of January 1971, however, this program, had been
implemented in only nine of the 554 sectional   center facil-
ities  throughout  the United States.

RECOMMENDATIONTO THE POSTMASTERGENERAL

     In view of the significant     potential   economies that
are available in operations     as disclosed  in our 1966 review
and because our most recent review showed that the same

                                       26
conditions    found in 1966 still        existed at Detroit,   we rec-
ommend that the Department expand the Area Mail Processing
Program and similar       programs to Detroit,       and other loca-
tions,   w'here feasible,     as rapidly     as possible.




                                    27
                               CHAPTER 5

                  PRACTICES OF CANCELING STKHPS

                     AND POSTMARKINGLETTERS

       Prior to the use of postage stamps, postmasters          indi-
cated payment of postage by marking letters         "paid.'"    They
also stamped the name of the town and date mailed on the
letter --a practice    which apparently    evolved into the current
practice    of postmarking.    When stamps were introduced       in
1847, the practice     of canceling   was begun to prevent reuse
of the stamps.      Today, although canceling     and postmarking
machines are available      at most larger   post offices,    much of
the mail must be canceled and postmarked by hand since (1)
many post offices     do not have canceling     and postmarking
machines or (2) the mail is of a type that cannot be machine
processed because, for example, it is too hulky.

      Although we did not make an in-depth  study of the need
for canceling  and postmarking, we believe that the cost of
hand canceling  postage stamps may not be justified.   We
found, for example, that:

     --Although    many of the larger post offices            had machines
        for canceling    and postmarking,       all letters     could not
        be machine processed.        At Detroit,    employees spent
        250 man-hours a day canceling        and postmarking        by hand
        about 74,000 items which could not be machine pro-
        cessed.    We estimate    that this procedure costs Detroit
        $360,000 a year.      Using the existing        6-cent postage
        rate,   about 6 million     stamps would have to be reused
        before the loss of revenue would offset             the savings
        that would result     from eliminating      hand canceling      and
       hand postmarking.

     --Many post offices   did not have automatic  facer-
        canceler machines because of their   low mail volume
        and therefore  canceled and postmarked all their   let-
        ters by hand.

     --Stamped letters   which had been bundled and faced by
        mailers  before deposit were unbundled so they could
        be canceled and postmarked.   If this operation  were

                                    28
        not performed,     this faced mail could be sent directly
        to a sorting   operation.     We believe that this could
        result  in significant     savings, especially  at Christ-
        mas when many mailers face and bundle their Christmas
        cards.

       During the 1969 Christmas season, the Department con-
ducted an experiment designed to reduce processing          costs
through the use of precanceled     stamps,    In four cities,
mailers used precanceled     stamps and faced and bundled their
mail so that it could bypass the canceling        and postmarking
operation.    Although the final   results  were not available
at the time of our review, preliminary      reports   indicated
that the program succeeded in gaining mailer cooperation,
in reducing manpower costs, and in speeding mail process-
ing.

       A Detroit    official     stated that,    in his opinion,    prob-
able losses through improper reuse of stamps would be more
than offset      by savings resulting        from elimination    of the
postmarking      and canceling      operations.    We believe that the
problem of reusing stamps might be overcome by designing
stamps in such a way that they would probably be mutilated
or destroyed      if attempts were made to improperly          reuse them,
for example, better          adhesive and mass perforation       when
printed.

      In addition,      the Department eliminated      the postmark of
some smaller offices        when it consolidated     mail processing
for those offices,       with few complaints     from mailers.     The
hour and date of cancellation         also has been eliminated       from
postmarks.     In those instances       in which a record of the
time of mailing is essential,         for example, important      business
transactions,    certified     or registered    mail can be used.

RECOMMENDATIONTO THE POSTMASTERGENERAL

       We recommend that the Department explore alternatives,
such as the use of precanceled      stamps, to existing    hand-
canceling    and postmarking practices    to reduce mail-processing
costs,




                                     29
AGENCY COI$MENTSAND GAO EVALUATION

     The Postmaster   General stated that precanceled      stamps
     would be used again during the 1970 Christmas        season
     and that the precanceled     stamp program would be ex-
     panded to 875 million    stamps to be used in the entire
     Boston Postal Region and in selected cities        in the
     other postal regions.     He said that the Department
     concurred with us in the belief       that the precanceled
     stamp program could result      in significant  savings,
     especially   at Christmas when many mailers     face and
     bundle Christmas cards.

     The Postmaster      General stated also that,      in the large
     cities,    facing and canceling were performed in one pro-
     cess.     He said that,    concerning   the elimination     of
     postmarks,     mailers had strongly     opposed an identifica-
     tion of other than their       local community.      He added,
     however, that the Department was continuing             to explore
     alternatives     to existing   postmarking   practices.

       Because of the significant      cost of hand canceling  and
postmarking    letters,   we believe that the Department should
continue    to seek alternatives     to the existing practices  of
hand canceling      and postmarking.




                                  3cl
                                  CHAPTER 6

                      IMPROVE PERSONNELPOLICIES

       In fiscal  year 1970 the Department had over 722,000 em-
ployees,    which made it the largest    single nonmilitary   Gov-
ernment employer.       Personnel costs were about $6 billion     for
fiscal   year 1970 --the    equivalent of about 92 percent of
postal revenues.      Problems with this vital   and costly   re-
source obviously     can have a major impact on operations.

       Studies by the Department showed, and our review con-
firmed,    that the Department was somewhat handicapped by the
basic personnel problems of hiring    and retaining  qualified
people.

      --Of the 63,000 persons applying for clerk,                carrier,     or
         mail handler jobs in fiscal          year 1969 at the three
         post offices       included in our review,       only 3,960
         (6 percent)      were hired.      (An additional     1,860 persons
         were hired,       but they had applied before fiscal            year
         1969.)     Conversely,      during fiscal    year 1969, 7,000
         clerks,    carriers,      and mail handlers--including          1,300
         persons hired only for the summer or Christmas period--
         terminated      their   employment.

       --Of the total   persons hired (5,820),    our analysis  of
          the records of a sample of 300, exclusive      of seasonal
          help s showed that  164 (55 percent)   had terminated
          employment by February 1970.     Of these, 124 persons
          worked less than 6 months.

       The employee turnover             problem is of even greater         sig-
nificance       nationwide.         In 1966, 132,000 persons left         the
postal      service,      and during fiscal       year 1969 the number who
left   increased to 155,000.               The report    on a study made by
the Department's           Internal     Audit Division,       Bureau of the
Chief Postal Inspector,               of the employee turnover       problem
contained various recommendations                 to reduce the high rate
of employee turnover.               The study showed that turnover          in
1966 had cost about $14.5 million,                  or about $110 a person
 (primarily       recruiting       and training     costs),     Using $110 a
person, we estimated             that turnover      in fiscal    year 1969 had
cost the Department about $17 million.

                                        31
          Also using $110 a person, we estimated         that the turn-
    over of 5,700 employees who left       the three offices     (7,000
    less the 1,300 seasonal help) had cost the Department about
    $627,000.   This cost would be increased        to the extent that
    lower productivity     resulted   from hiring   new employees to
    replace some of the more experienced         employees who left,
    In our computations     of turnover   costs, we excluded the cost
    of the turnovers    resulting   from deaths and retirements.

           According to the Assistant    Postmaster   General, Bureau
    of Personnel,    the Department-wide   separation   rate is
    23.2 percent a year of the total      number of employees.    We
    found, however, as discussed on page 35, that turnover        was
    much higher among new employees-- those with less than 2 years
    seniority.     Thus the Department

          --spent   millions  of dollars    recruiting     and training     em-
             ployees who left   after    a short time     and

          --operated    at less than desired productivity  because of
             the continual    influx of new employees, many of whom
             worked during the heavy mail volume evening periods.

           We believe that the high turnover   rate could be signif-
    icantly    reduced by certain corrective  actions relating      to
    recruiting    weaknesses, slow and burdensome hiring     practices,
    outdated wage and advancement policies,      and uncertain     work
    schedules for new employees.

0   RECRUITING AND HIRING

R         The Civil   Service Commission and the Department have
    had joint  responsibility      for recruiting  qualified  employees.
    Following  is a brief     description   of the complex recruiting
    and hiring   procedures.

          --In Detroit       and Seattle   the recruiting   effort     is lim-
              ited primarily     to posting announcements of Civil Ser-
             vice Commission examinations         in various public build-
              ings.    In Los Angeles the major recruiting          effort   is
             the distribution      of similar   announcements to homes by
             letter    carriers.    The announcements include such in-
             formation     as the job title    and brief   description,      the
              salary,    and where to apply.     No other orientation        is

                                         32
       given until    a person is hired.    A Civil Service Com-
       mission official     told us that, as a result,   many per-
       sons did not fully      comprehend the nature of the job
       before applying and became dissatisfied       soon after
       employment.

     --A person must first   apply to the Civil Service Com-
        mission where he is told to return,     usually  in about
        8 days, to take a test.    At the three post offices
        included in our review, however, we found that 60 per-
        cent of the 63,000 applicants    in fiscal   year 1969 did
        not return.

      *-Those persons who return and take the test must then
        wait until   (1) their tests are graded, (2) their
        scores-- if passing-- are ranked with others who have
        taken the test,     and (3) those with higher scores have
        been offered    a job.     Data at the three post offices
        included in our review showed that this waiting             pe-
        riod ranged from several weeks to several months,
        the length of time depending on the number of appli-
        cants, the number of job openings,         and the applicant's
        test score.     Although the lack of job openings for
        successful   applicants     may account for some time lapse,
        a considerable     portion    of such time can be attributed
        to the system itself.         Our review showed that it usu-
        ally took about 8 days to schedule the test,           about
        28 days to grade the test,        and about 10 days to hire
        the successful     applicants    who were still   available
        for work--a total      of 46 days,

      For more than one third of the 300 persons included in
our sample, more than 3 months elapsed from the date that
they took the test until     the date that they were hired.      Of
the 16,500 persons who passed the test at the three post of-
fices included in our review, only 3,960--or        24 percent--
accepted a job with the Department.       We believe that this
time lag contributes    to the Department's   problem of recruit-
ing qualified   employees.

      Only 3,960 (6 percent)  of the 63,000 applicants    were
hired at the three post offices,     while during the same pe-
riod 5,700 employees left,   excluding    those hired for summer
or Christmas work.

                                   33
       To help minimize the Department's    difficulty     in re-
cruiting   and hiring  qualified people,   we believe    that the
Department should:

      -Expand the orientation    given to applicants     before they
       are tested and hired to include a detailed        explana-
       tion of what they may expect from the jobs.         We be-
       lieve that such orientation     would tend to screen out
       beforehand those prospective      employees who might la-
       ter become disenchanted     and resign from the postal
        service because of such factors     as the requirements
       for working at night and on weekends.

     --Implement    a direct   hire program to help reduce the
        long time lapse from application      to job offer.  Under
        such a program, the Department could administer      and
        grade its own tests for employment in the postal      ser-
        vice,   We believe that this change could reduce the
        B-day waiting    period between application   and the test
        and could reduce the longer time lapse between the
        test and the job offer.




                                34
       Why do so many people leave the postal service?            To
find the answer, we first        had to find out to which employee
category-- new (less than 2 years seniority)       or senior em-
ployees-- most of the turnover was attributable.         Because
over 80 percent of postal employees are clerks,         carriers,
or mail handlers,     we limited    our analysis to these catego-
ries,     At the three post offices     included in our review, we
found that only 21 percent of the employees in these cate-
gories were new; however, 72 percent of the 5,700 cler'ks,
carriers,    and mail handlers that left were new, which iPLus-
trated the high rate of turnover        among new employees.

        Local post offices,      in accordance with Department pol-
icy, hire new employees-- including            college graduates--on       a
substitute      basis only, either     as career or temporary sub-
stitutes,       Career substitutes     are converted to regular        full-
time employees after 1 to 2 years; temporary substitutes                   are
converted after longer periods.            The workday of substitutes
may vary from 2 to 12 hours,            Substitutes    are not paid over-
time until      they have worked 40 hours in a week.           They are
not guaranteed 40 hours of work a week.               They are called in
as needed and they often work the night shift               and weekends.
Thus it is not surprising          that in fiscal     year 1969 the
turnover     rate for new employees hired at Detroit           ranged from
a low of 36 percent for career substitute              mail handlers to
a high of 132 percent for temporary substitute               carriers,
whereas senior (regular)         employee turnover      ranged from only
5 percent for carriers        to 9 percent for clerks,          (See p0 36.)

      Although some of the 5,700 employees who left were dis-
missed, separated,  or transferred,  73 percent simply quits
We found that generally   they quit because of:

      --Low wages, For example, data furnished     by the De-
         partment showed that starting  salaries  in 1969 were
         20 to 25 percent below comparable industrial    jobs in
         Detroit.  (This gap was lessened by the recent 6 and
         8 percent wage increases given to postal employees.)

      --Lack of advancement,     Eighty percent of postal em-
         ployees retired  from the postal service at the same
         grade level they were hired.    Employees, including

                                     35
                  TURNOVER    RATE AS A PERCENTAGE   OF EMPLOYEES
                         AT DETROIT   FOR FISCAL YEAR 1969
                    (PREPARED   BY GAO FRQM DEPARTMENT     DATA)




                                                                                              Average




                                      I                    Average




Clk.     ~lhr.   Carr.   All   Clk.       PIlhr.   Cart.     AS.1        Clk.     hu-c.carr.  All   Total
                                                                                TEMPORARYAND
       -we -REGUAJ,R-- _ _     ----SUBSTITUTE---                     -----        p&j-RT TIME __-_-
       college graduates,      are not eligible        to take a test
       for a supervisory      position    until  they accumulate
       2 or 3 years of service,          Detroit   officials       told us
       that,   of those who passed this test,            seniority      rather
       than the test score usually was the overriding                   fac-
       tor influencing     promotion.      Moreover, transfers            be-
       tween installations       to advance to a higher level su-
       pervisory     or management position      were extremely           rare,
       because of a traditional        rule of appointment           from
       within    a given installation.

     --Uncertain  work schedules,    Because new employees
        were not guaranteed steady employment, their work
        hours were erratic  and take-home pay varied,

     --Returning     to school.    Many temporary employees were
        college students who resigned when schools reopened
        in September,      (See p* 38.) Detroit   officials     stated
        that,    because of the 2- or 3-year prerequisite        for
        the supervisory     test and because of the influence        of
        seniority    on promotion,   college students     seldom re-
        turned to postal service after graduation,

     --Domestic  problems,   such as lac'k of babysitters,       preg-
        nancy, and family  illness.     Nationally,      the Depart-
        ment employed 117,427 female clerks,        carriers,   driv-
        ers, and mail handlers     in June 1970.

     --Inability      to meet job    requirements.      Many employees
         could not memorize the        extensive   and complex list    of
         information    needed to    sort mail at an acceptable
         speed.     This required    considerable    study at home,

       We believe that, without   corrective    action, the high
employee turnover will   continue to hinder the postal ser-
vice.    We suggested to the Postmaster General that the fol-
lowing actions might contribute      toward reducing employee
turnover   and helping to maintain     the present level of ex-
pertise.

     --Develop  area wage scalesfor  high income areas and
        thus make Department wages more competitive   with in-
        dustry and postal service more attractive,    (Recent
        action by the Congress to raise wages and to reduce

                                     37
                               RESBGNATIQNS    OF CLERKS, MAIL HANDLERS
                                       AND CARRIERS    AT DETROIT
                                        DURING FISCAL YEAR 1969
                             (PREPARED    BY GAO FROM DEPARTMENT     DATA)



 Number
  of
employees




                         SEPTEPIBER                    JANUARY                      MAY




               1244567                                 7-8- 8     9      10    11   12    13
                                    ACCOUNTINGPERIODS
   I - - - -
                    REGULAR B)oB~~o@~
                                    SUBSTITUTE (Career) ,,TEMPORARYANDPART                TIME

                aReported   data overlapped    accounting    periods    7 and 8.


                                                  38
        the time necessary to reach the top pay rate in each
        grade should also make postal employment more attrac-
        tive.)
     --Expand the Department's          management intern program at
        headquarters    and at the regions to include local post
        offices.     The management intern program is designed
        to train   selected college graduate employees to as-
        sume responsible      positions     in Department headquarters
        and regional    offices.      This would give college gradu-
        ates more incentive       for pursuing a postal career by
        offering   more opportunity       for faster advancement.
     --Extend the all-regular           hiring     policy,   which would give
        dependable full-time          employment to new employees
        rather than hire new employees as substitute                  or tem-
        porary employees,           (Temporary and substitute         employ-
        ees are not guaranteed full-time               employment,)     We
        believe that, since many new employees leave within
        6 months, hiring         them as regular employees would sig-
        nificantly      reduce turnover        during this critical      pe-
        riod.      Also, leveling      of the mail-processing         work
        load resulting        from a two-tier       system--priority      and
        nonpriority      mail --as previously         discussed in chap-
        ter 2, should greatly          reduce the need to hire tempo-
        rary help (except perhaps at Christmas)                 and thus fa-
        cilitate      an all-regular      hiring    program.
AGENCY COMMENTSAND GAO EVALUATION
      The Postmaster General stated that the Department was
aware of the personnel needs which we identified         and that
improvements had been undertaken during the past year.            He
stated also that the new legislation     would give the Depart-
ment the climate to make further     substantial    improvements
in hiring  methods, to initiate   career development programs,
to minimize fluctuating   work schedules,     and to reduce em-
ployee turnover,
      In view of the provisions    of the Postal Reorganization
Act which give the Department authority       over certain person-
nel matters which should help the Postal Service to ma'ke
needed improvements in its personnel program, we are not
making any recommendations    on this matter,     We will review
the Postal Service's  measures after they have been imple-
mented,


                                    39
          XEVAMPTHE UNWIELDY l%U'tAGEmP$TINFORMATION SYSTEM

           Managing an annual b,udget of about $8 billion,           super-
    vising    722,000 employees, and operating        32,000 post offices
    obviously     require many decisions which must be based on
    timely and reasonably       accurate information,       To provide
    this information      the Department has many different        report-
    ing systems, each generating        reports used by management to
    formulate    policy,    to control  and evaluate performance,       and
    to improve operations.         The Department estimates     ,that oper-
    ation of these systems during fiscal         year 1971 will require
    about 4,600 man-years and will cost $59 million.

            At each of the three post offices         included in our re-
    view, we found that the finance,          personnel,    and maintenance
i   offices    together   prepared over 200 different        reports mder
    four information      systems.     In fiscal   year 1969 these post
    offices    used a total    of more than 105 man-years and spent
    $1 million     in preparing    these reports.

          Our review of 200 Department reports prepared             at the
    three post offices   showed instances of overlapping            and un-
    needed reports   as discussed below.

          --The Operation Analysis Report (POD Form 3499)--pre-
             pared on a daily,      weekly, and an accounting       period
              (4-week) bases --contains      such information     as hours
             worked and volume of mail processed by each opera-
             tion and is distrib,uted      locally,   regionally,    and to
             Department headquarters.         At each of the three post
             offices,    at least four other major reports         (POD
             forms 2312, 3970, 227-x, and 4829) are prepared from
             the information      on POD form 3499 and, in some in-
             stances,    are distributed    to those receiving      POD form
             3499 * For example, at Detroit,         POD form 3970 is
             prepared daily and is distributed         to many local of-
             ficials   receiving    POD form 3499, the information         is
             telephoned     into the Chicago Regional Controller's
             Office,   and a copy is forwarded to the Controller's
             Office the next day, We estimate that Detroit's


                                       40
       preparation    of POD form 3970, which Detroit            officials
       agreed could be eliminated    by consolidation            with
       other reports,    costs over $4,600 a year.

     --The Personnel Analysis Report, prepared biweekly at
        Detroit,      is distributed     to 17 local officials        only.
        At Least four other reports--two             prepared biweekly,
        one every 4 weeks and one annually--contain                 essen-
        tially     the same information       as the Personnel Analysis
        Report.       These reports receive generally          the same
        distribution      locally;     however, each report is also
        forwarded to the regional          office.      We believe that,
        with minor format modification,            the Personnel Analy-
        sis Report could serve the purposes of the other four
        reports,      both locally     and regionally.      Detroit    offi-
        cials generally        agreed.

     --Both Detroit       and Los Angeles prepare two reports--
        the Minority      Status Report and the Equal Employment
        Opportunity      Report-- which contain basically      the same
        information.       At Los Angeles both reports are pre-
        pared quarterly.         At Detroit    one is prepared quarterly
        and the other is prepared semiannually.             At both lo-
        cations the two reports         receive the same local dis-
        tribution      and one is also forwarded to the regional
        office,      It appears that these two reports        could be
        consolidated.

        The following  table,  based on the frequency1   and dis-
tribution     of 87 of the reports examined at Detroit,     shows
the number of reports      that selected management officials     at
Detroit    receive each year.




1Excludes   semiannual    and annual      reports.

                                     41
                                                                                      for
                           Daily   Weekly      Biweekly   Monthly      Quarterly      year
Postmaster                    2       4            7         14             4        a ,094
Director,   Management
   Procedures Division        2       4            5          9             1          970
Director,   Operations
   Division                   5       5            6         12            3         1,872
Director,   Installa-
  Lions        Services
   Division                   2       3            5         13            3           974
Director,     Office of
   Finance                    6       5            7         14            4         2,186
Assistant     Director,
   Distribution               3       5            6          9            3         1,316
Budget and Cost Of-
   ficer                      4       6            3         11            3         1,574
Analysis and Allow-
   ances Assistanf:           4       6            3         12            3         1,586

      Many of these          and other reports are also distributed
to various persons           at the region and headquarters   levels.

       Various Department officials   at the local and head-
quarters    Bevels made the following  comments to us concerning
the lack of control    over the management information  system.

          --Two reports often contained the same information    in
             different forms simply because of personal prefer-
             ence.

          --A mass of material     was being provided that probably
             was not as functional    as it ought to have been.

          --Many reports       were not ,understood.

          --   "Black market" forms which were not authorized  were
               circulating  in the system and were prepared because
               somebody at some level wanted them.

          --Forms made obsolete by system changes were often
             continued because no one reviewed them to determine
             if they were still needed.

          --Persons were on report distribution                lists      although
             they did not really need the report.


                                          42
     An official    of the Department!s     Reports and Records
Management Division    acknowledged that there were many prob-
lems in the reporting     system including:

      --little     coordination   between headquarters     and the
          field   and

      --overlapping    duties at headquarters       which tend to
         cause overlapping    reporting.

       In July 1969 the Internal    Audit Division,    Bureau of the
Chief Postal Inspector,    recommended that the Department's
Bureau of Research and Engineering       make a detailed    study of
its management information     system to ensure that the system
provides management with timely9 accurate,        and essential
information.

        Also, the National Archives and Records Service, Gen-
eral Services Administration,            in a March 1970 report issued
to the Post Office Department,             commented that the history
of reports management within           the Department had been highly
unsatisfactory.        The report stated that, because Department
officials     resented centralized         controls  as an infringement
on their     operating   prerogatives,       a formal reports management
program was discontinued         several years ago.        The report con-
cluded that,      as a result,     the Department"s     reports manage-
ment had been fragmented and ineffectual,

       We believe that, because of the problems and the time
and money involved        in reporting,     the Department should re-
view and evaluate       its management information       systems, should
consolidate     reports where possible,        and should eliminate
duplicate   or unneeded reports.           Because a recent Department
study indicated      that elimination       of one report saved more
than $2 million      a year, we believe that the potential          for
savings through further         elimination    of unnecessary reports
might be significant,

RECENT ACTIONS TAKEN TO IMPROVE
THE MAGEMENT INFORMATION SYSTEM

      Recognizing  the need for significant          improvement in its
control  and coordination  of information,         the Department has


                                    43
initiated   or has planned a number of corrective  actions.
These actions,   according to an official  of the Reports and
Records Management Division,   include:
      --A planned nationwide     study of existing  reports pre-
         pared at local post offices.     This study, however,
         has not been initiated.

      --Revision    of the Postal Manual to delete the overlap-
         ping responsibilities        for records and reports manage-
         ment.   The   addition    of   a new section to the manual
         will provide for coordination           of all records and re-
         porting  responsibilities         in the Reports and Records
         Management Division.         A target    date of July 1970 had
         been set for completion         of this revision,     As of
         February 1971, however, the proposed revision            had
         not occurred,

      --Preparation      of a reports   inventory,      including   the
         related    cost of preparing     each report.       Since this
         inventory    will be used as a basis for assigning            costs
         to organizational      units requesting      that management
         information     reports be prepared,      the Department be-
         lieves that it could discourage duplicative              or 'unnec-
         essary reporting.

      --Establishment        of coordination        responsibility        for var-
         ious reports and forms at each of the six postal data
         centers.     A postal data center is a facility                 which
         uses automated data processing              equipment to process
         various Department data, such as payroll                    and other
         cost data,      for  postal   facilities      within      a  designated
         area.    About October 1969 the Reports and Records
         Management Division         began this effort         and anticipated
         that eventually       there would be a Reports Management
         Officer   in each data center,           in each of the 15 postal
         regional    offices,     and in each of the 750 largest               post
         offices.

       It appears that these steps, if effectively      implemented,
will improve the management reporting       systems.   We believe,
however, that,    to permanently   correct  acknowledged reporting
system deficiencies,     the Department must assess its manage-
ment information     needs and must evaluate existing    reports
in light   of those needs.
                                  44
RECOMMENDATIONTO THE POSTMASTERGEKJERAL

       We recommend that the Department expedite       its efforts
to review existing      reports with the objective   of eliminating
unnecessary reports       and of consolidating  and simplifying
reporting    requirements    where feasible.

AGENCYCOMMENTSAND GAO EVALUATION

      The Postmaster General stated that the reports manage-
      ment program was not concerned with preparation            of re-
      ports but was concerned with furnishing         information      on
      the availability      of data and providing    assistance     in
      determining      data requirements,    He stated that,     by
      screening proposed reports against the inventory            of
      existing    reports,    the Department could prevent dupli-
      cation.

      The Postmaster General stated also           that recently      the
      Department had taken many steps to           reduce the cost of
      paper work, to improve information           systems, and to
      eliminate  duplication   and that the        Department's      program
      managers were continually     reviewing        reporting    require-
      ments in their    areas of responsibility          to identify     re-
      dundancy and obsolescence of forms           or reports.

       We agree that screening proposed reports              can res,ult in
detecting    the duplication     of existing     reports,      and we rec-
ognize that the Department has made efforts               to improve its
reports management program.           A Department official        advised
'us, however, that as of February 1971 the Department had
not completed its inventory         of reports     and had not initiated
a planned study of the reports used by post offices.                   We
believe that our review shows a need for the Department to
expedite   its efforts     to further    strengthen     the Department's
management reporting       system and that our views are supported
by the comments of local and headquarters              officials    of the
Department and the National         Archives and Records Service
 report of March 1970.




                                    45
                                 CHAPTER 8

                             SCOPE OF REVIEW

       During the period July 1969 to July 1970, we made a re-
view of operations      at major mechanized post Qffices            in De-
troit,   Michigan;    Los Angeles, California;         and Seattle,    Wash-
ington.     Our review principally        covered postal activities
during fiscal     year 1969.      Also, we reviewed pertinent         records
and discussed postal      activities      with officials    at Department
headquarters     in Washington,      D.C.

      We did not     make in-depth      studies of the matters pre-
sented in this      report.     We believe,    however, that our scope
was sufficient      to make recommendations       for the correction
of the problems       reported,   subject to further     study by the
Department.

         We discussed problems associated           with mail processing,
recruiting       and hiring,     and management reporting        with officials
at each of the three post offices             included in our review and
 solicited     ideas as to how the problems might be resolved.
We observed mail-processing           operations      and analyzed mail
volume statistics          and other pertinent      records furnished      by
postal officials.           We also interviewed       officials    of 32 se-
lected local businesses generating              significant     volumes of
first-class       mail and, by use of questionnaires,            accumulated
pertinent      statistical     data on the type and quantity          of mail
prepared by these firms.

        In addition,   at the Detroit     Post Office we observed
mail-processing      activities    during peak volume periods,       flow-
charted operations,        and evaluated   detailed  mail-processing
statistics    for a typical     day.

       We considered     the nature and scope of prior reports   on
postal   activities    issued by our Office,   the report of the
President's      Commission on Postal Organization,    the March 1970
report   of the National     Archives and Records Service,   and Post
Office   internal   audit reports.
APPENDIXES




  47
                                                                                 APPENDIX I




                                      October      13, 1970



Dear Mr. Neuwirth:

We are pleased to have the opportunity to review your proposed report
to the Congress on "Summary Results of Survey of Use of Resources in
Mechanized Post Offices."

Many of your recommendations reflect        the results    of our own studies
on which we have already taken corrective         action by initiating    new
programs.     For example, the Kanaged Mail Program, under which more
first-class    mail is being sorted during daylight       hours at destination
offices,    is already producing substantial      savings in night differential
hours and is reducing hand sorting.         Further,   our Area Mail Processing
Program is being expanded, resulting        in more intensive    use of mechan-
ized equipment.      A priority   mail system has also been proposed and is
being studied.      Additionally,   our test program for using precanceled
stamps will be expanded this Christmas.

More specific  comments follow         regarding      the recommendations     on pages
4 and 5 of your draft report.

REDUCEX4-4NDSORTING

We have taken particular    note of your comments (transmittal        letter  and
page 3) that at the three offices      surveyed, Detroit,   Seattle,     and Los
Angeles, over 50 percent of the letter       volume is sorted by hand even
though letter   sorting machines are idle much of the time.          For several
reasons, however, this proration     of hand and machine sorting may well
be the most efficient    considering   the present flow of mail and our
need to meet dispatches    of value.

First,     about 15 percent of all letter          mail is nonmachinable       because of
content.      Second, and more important,          we have found that efficient
machine utmion             requires a continuing         minimum volume sufficient
to offset     the higher service costs of machine operations.                 Backlogging
mail to accumulate sufficient            volume for machine distribution          is usually
not feasible      due to potential       missed dispatches      and the resultant        delay
to mail.      Third
              -J       machine    sortatinn    to  carrier    routes  has   been   found   to be
inefficient      because of constantly        changing schemes. This factor            is very
important     because such distribution          represents    70 to SO percent of all
destination      mail distribution.         We are attempting      to correct    this problem




                                             49
APPENDIX I



    by stabilizin;:           carrier         mute    designations,           However,      effectiv?      machine
    utilizatio!~         for distribution             to carrier       routes      would still        b,e marginal
    due to the limited                volume available           for individual          scheme assignments
     (only      about    15,000       letters      per route--50         routes     per scheme).
     [See GAO note 1, p. 511
    Despite        there    obstacles,          we have actively           pursued     the goal of minimiz-
    ing hand sorting             to the maximum           extent     possible,       and have made consid-
    erable       progress      in recent         years as exemplified             by our Planaged piail
    Program        and Area Mail           Processing       Program     mentioned       above.

    GIVE    EXFCnITIOL-S       PMLL FROCCSSIYG           OKLY TO PRIORITY           >14II;:

    Our present     system is designed         to give priority     service     to (1) airmail,
    then (2) first-class        letters,      and then (3) circulars        and other   mail
    classes.    \,!e are also     considering      a priority   system designed       to handle
    regular   mail,    as recognized        in the comments on page 7 of your draft
    report.

    GENTRALIZE       l$YCL PROCESSIKG

    We had already          recognizcd,in         our Area Mail Processing            Program,      the
    problem      typified      by your comments          (transmittal     letter       and page 4) that
    at Detroit,         "machines      could    be used to sort most of the mail now hand-
    sorted     at nearby       nonmechanized         post offices."      This Program            is de-
    signed     to consolidate         outgoing       mail from associate         offices       for proces-
    sing intheScctiona1              Center     Facility      offices,  as you suggested.               With
    this    chanGe,czchanization             previously       installed   is being        better    utilized,
    and we are achieving             better     service.

    $ZJAKGE PRACTICE
               I--           OF CAKELIXG          STAMPS AND POSTPL4FXING LETTERS

    Precanceled      stamps will          be used again this          Christmas,        and this   program
    will   be expanded      to 875        million    stamps to be used in the entire                 Boston
    Region     and in selected          cities     in our 14 other         regions.        We, too, believe
    that   this   could   result        in significant        savings,       especially      at Christmas
    when many mailers         face      and bundle      their    Christmas       cards.



                                [See     GAO note 2, p. 51.1
                                                                                 In the large
    cities,     whcrr      the bulk of letter    mail  is processed,       machines    face and
    cancel    letters        as one process.   Under the Area Mail Processing              Program,
    automatic       facing     and canceling  machines    will    face and cancel      letters
    for all     the squall post offices       within   designated      areas.




                                                          50
                                                                                                           APPENDIX I

  As to ttle elimination            of postmarks,      mailers    have strongly        opposed an
  identification          of other      than the local      community.      llowcvcr , vc arc: con-
  tinuing        to cxplorc    alternatives       to present    postmarking        procedures.

  --IMI'ROV'E PERSCXIKL         l'@LTCIES

  We are aware of the personnel               needs identified         (pages     19-27)   and have
  undertaken      improvements        over the past year.           The new legislation           will
  give us the climate          CO make further        substantial        improvements      in hiring
  methods,   initiating        career     development     programs,       minimizing     fluctuating
  work schedules,        and reducing        employment     turnover.



 As to our management               reports,        we must take exception                  to your comment
 (page 28) that           there     is'"little         or no control           over their          preparation.'*
 All Postal        Service      reports        are prepared         by responsible             officials,         with
 generally       stringent        controls.           The Reports         Managcmcnt          Program      is not
 concerned      with preparation               of reports       but with         furnishing          information
 on the availability              of data and providing                assistance           in determining           data
 requirements.            By screening           newly proposed           reports       against        the inventory
 of existing         reports,       we can prevent           duplication.             Our program          managers
 continually         review     reporting          requirements        within        their     areas of respon-
 sibility      to identify          redundancy         and obsolescence             of forms or reports.
 We have taken Imany steps recently                        to reduce        the cost of paperwork,                  im-
 prove our information                systems,        and eliminate           duplication.




                                             [See       GAO note          2-j




  We are pleased        to note your conclusion         (page 4) that   "The Post Office
  is actively      seeking    to improve   postal     operations."     We believe     the
  record    shows that we have taken action             to make more efficient      use of
  existing     resources,     and WC shall    continue       to do so in the future.

                                                             Sincerely,



                                                            Winton        M. Blount

  Mr. Wax A. Neuwirth
  Associate   Director,      Civil           Division
  U. S. General     Accounting              Office
  Washington,    D. C. 20548

GAO notes:
  1. A Department                 official       advised             us that   the number of
     letters   per              route      should     have           been 1,500 rather    than
     15,000.
  2.    The deleted   comments      related      to                       matters        which       are      not
        discussed   in this   final      report.



                                                           51
APPENDIX II


              PRINCIPAL MANAGEMENTOFFICIALS OF

                THE PQST OFFICE DEPARTMENT

       RESPONSIBLE FOR ADMINISTRATION OF ACTIVITIES

                 DISCUSSED IN THIS REPORT


                                           Tenure of office
                                           From            -To
POSTMASTERGENERAL:
   Winton M. Blount                 Jan.      1969     Present
   W. Marvin Watson                 Apr.      1968     Jan.    1969

DEPUTY POSTMASTERGENERAL:
   Vacant                           Jan.      1971    Present
   Elmer T. Mlassen                 Feb.      1969    Jan.    1971
   Frederick C. Belen               Feb.      1964    Jan.    1969                .




                                                     U.S.   GAO   Wash.,   D.C.

                             52