oversight

Mail Management: GSA Needs to Improve Support of Agency Programs

Published by the Government Accountability Office on 1990-08-07.

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

                  United   States   General   Accounting   Office       A.
                = Report to the Chairman, Subcommittee                       ’ i
                  on Federal Services, Post Office, and                        f
                  Civil Service, Committee on      ’
                  Governmental Affairs, U.S. Senate

August   1990
                  MAIL
                  MANAGEMENT
                  GSA Needs to Improve
                  Support of Agency
                  Programs                                          .




                                Not to be released outside the
                      Accounting Office unless specifically
                      d by the Office of Congressional



GAO/GGD-9049
General   Government   Division

B-238466

August 7, 1990

The Honorable David Pryor
Chairman, Subcommittee on Federal
  Services, Post Office and
  Civil Service
Committee on Governmental Affairs
United States Senate

Dear Mr. Chairman:

This report responds to your request that we evaluate the General Services Administration’s
(GSA) support to federal agencies in managing the cost of the agencies’ mail operations. It
assesses GSA'S role in supporting agency mail systems and opportunities for achieving cost
reductions through improved GSA support. It contains recommendations to the GSA
Administrator aimed at improving GSA'S leadership role in federal mail management.

As arranged with your office, unless you publicly announce the contents of the report
earlier, we plan no further distribution until 30 days from the date of the report. At that time
we will send copies to the Administrator, General Services Administration; the Director,
Office of Management and Budget; other interested congressional committees and
subcommittees; and other interested parties.

The major contributors to this report are listed in appendix IV. If you have any questions,
please call me at 275-8676.

Sincerely yours,




L. Nye Stevens
Director, Government Business
   Operations Issues
    Executive Summary


                       Federal agencies’ mail operations cost about $1.7 billion annually.
    Purpose            Postage alone cost the agencies $965 million in fiscal year 1988-an
                       increase of 52 percent from fiscal years 1979 to 1988. However, agen-
                       cies’ mail volume increased only 6 percent over that time. Large private
                       sector mailers systematically seek out ways to reduce mail costs.
                       Seeking out ways to reduce mail costs governmentwide is a role assigned
                       to the General Services Administration (GSA).

                       At the request of the Chairman, Subcommittee on Federal Services, Post
                       Office, and Civil Service, Senate Committee on Governmental Affairs,
                       ~-40 obtained information from GSA,the U.S. Postal Service (USPS),
                       agency mail program officials, and private industry to review the effec-
                       tiveness of GSAsupport to agencies in managing mail costs.

.
                       The Postal Reorganization Act of 1970 set a goal of self-sufficiency for
    Background         USPS.Federal agencies, like other mailers, are expected to pay USPSfor
                       services so that it can recover its operating costs. The Federal Records
                       Management Amendments of 1976 assigned GSAgovernmentwide leader-
                       ship for mail management. This statutory mandate sets a central man-
                       agement role for GSA.GAOdescribed a similar role for GSAin a recent
                       report.’ As discussed in that report, GSA’Scentral role in buildings man-
                       agement should include providing leadership, oversight, and help in
                       developing effective management programs throughout the government.
                       The report also said that GSAshould act as a central training source, do
                       research benefiting governmentwide activities, share expertise, and use
                       contractors rather than provide some services itself. GAObelieves fed-
                       eral mail costs could be reduced if GSAtook such an approach to its mail
                       management responsibilities. In this report, GAOdescribes a central
                       agency role that GSAcould fill in mail management.


                       GSAsupport for agencies’ mail programs has been reduced to a minimal
    Results in Brief   level and is not commensurate with agencies’ needs for central agency
                       leadership. GSAlargely ignores mail management in its oversight of agen-
                       cies’ information resources management programs, issues guidance that
                       is skimpy and untimely, provides no direct assistance and inadequate
                       training delivery, and fails to identify or advocate governmentwide con-
                       cerns As a result, GSAis not realizing opportunities to improve manage-
                       ment of governmentwide mail operations or help reduce agency mail

                       ‘General Services Administration: Sustained Attention Required to Improve Performance (GAO/
                           - 0_14, Nov. 1989).



                       Page 2                                                       GAO/GGD9O-49     Mail Management
                             Executive   Summary




                             costs through providing support such as expanded use of contracting.
                             GSA lacks a comprehensive plan for focusing its mail management pro-
                             gram, and it needs a carefully crafted strategy to obtain agency support
                             for a governmentwide mail program.



Principal Findings

Opportunities for Reducing   Agencies can obtain large reductions in mail program costs through con-
                             tracting led by GSA. Although GSA is administering an overnight mail con-
Agency Mail Costs            tract that reduced federal mailing costs by $55 million in fiscal year
                             1989, GAO believes that agencies could realize additional cost reductions
                             through expanded contracting. For example, agencies could realize cost
                             reductions of between $48 million and $73 million annually in postage
                             discounts by presorting mail, which, in many cases, could be supported
                             by contracts let by GSA. These savings, however, would be partially
                             offset by the costs of obtaining those discounts. For example, contrac-
                             tors typically claim 25 to 50 percent of discounts obtained. (See pp. 26
                             and 30.)


Resource Level Minimal       GSA  has dedicated 1 staff year or less annually to mail management over
                             the past several years. This low level inhibits GSA from helping agencies
                             realize major opportunities for cost savings. This resource level has not
                             been deliberately chosen, but stems from a generally constricted GSA
                             budget environment and the relatively low priority accorded to mail
                             management responsibilities. GSA has not developed a way to leverage
                             its own resources or make better use of expertise and experience at the
                             individual agency level. (See pp. 15 and 28.)


Agency Operations Not        In the past, GSA directed studies of agencies’ mail operations. However,
                             in 1982 GSA merged its agency mail review responsibilities with other
Reviewed                     elements of information resources management. Agency mail programs
                             have not been reviewed under this program. (See p. 16.)


Current Guidance Not         Agencies need comprehensive, timely guidance to take advantage of
                             competitive rates from commercial mailing services (such as parcel ship-
Timely or Adequate           ment services) and to be responsive to new requirements for federal
                             mail systems, such as changing to the new postage accounting system


                             Page 3                                         GAO/GGD9&49   Mail Management
                              Executive   Summary




                              that will be required by USPS.GSA’S guide for mail management is far less
                              useful than guidance developed by private industry and omits many
                              issues critical to managing mail costs. For example, GSA does not provide
                              detailed guidance for establishing and operating a mail department or a
                              reference guide describing vendor services. (See p. 19.)

                              By serving as an information focal point, GSA would eliminate agencies’
                              need to individually seek information and resolve concerns. For
                              example, agencies have a common need for guidance to adapt to USPS’
                              planned change from sampling as a basis for calculating postage costs to
                              per-piece accountability through such means as postage meters. GSA
                              could also disseminate “lessons learned” to agencies. (See p. 33.)


.                                 no longer provides on-site technical assistance to support changes to
    Technical Assistance No   GSA

    Longer Supplied           agency mail operations and has no plans to do so. According to an
                              agency official in 1982, GSA provided expertise that helped reduce
                              agency costs by millions of dollars. Most mail managers GAO interviewed
                              said that they would benefit from technical support. (See pp. 18 and 36.)


    Training Needs            GSA  mail training for agencies has recently been revised, but agencies
    Improvement and New       question its effectiveness and cost. Several agencies say videotaped
                              training oriented toward mail managers, mailroom employees, and other
    Delivery System           agency personnel would be very effective and make training accessible
                              at a reasonable cost. GSA could more effectively use its and agencies’
                              scarce resources by developing videotaped training that could be deliv-
                              ered on-site and at hours convenient to personnel, thereby eliminating
                              costs associated with off-site training. (See pp. 22 and 36.)


    Agency Concerns Need      GSA does not identify or advocate common agency mail management con-
                              cerns. Agencies need GSA to provide a consolidated federal position when
    Representation            there are proposed changes in postal regulations and rates, because indi-
                              vidual agencies do not have the resources to invest in preparing indi-
                              vidual positions and because a governmentwide position should be more
                              persuasive to USPSand the Postal Rate Commission. Agencies also need a
                              consolidated federal position before USPSwhen there are changes in
                              postal regulations affecting federal operations. (See pp. 21 and 35.)


    GSA Planning Inadequate   GSA   needs to develop a plan for meeting its mail management responsi-
                              bilities. The plan should provide a strategy for meeting federal agencies’


                              Page 4                                         GAO/GGD99-49   Mail Management
                            Executive   Summary




                            mail management needs while recognizing GSA'S evolving role as a cen-
                            tral management agency that issues policy and oversees agency opera-
                            tions. The plan should be developed in consultation with the agencies
                            and reflect their concerns. However, it should also recognize that GSA
                            will be able to devote only limited resources to the mail management
                            effort and that the agencies are responsible for managing their mail
                            operations effectively at least cost. (See pp. 25 and 28.)


                            GAO  recommends that the GSA Administrator, working in close coopera-
    Recommendationsto       tion with federal agencies, develop a plan clearly laying out a strategy,
    the GSA                 including an appropriate resource level, for meeting GSA’S statutory mail
                            management responsibilities. At a minimum, the strategy should ensure
    Administrator           that GSA
.
                        l obtains and expands competitive contracts related to agency mail opera-
                          tions, such as presort and overnight delivery;
                        . expands its Information Resources Management Review Program to
                          include reducing agency mail costs and monitoring agency improvement
                          efforts;
                        l develops timely and comprehensive written guidance that focuses on
                          opportunities for agencies to reduce their mail costs;
                        . makes on-site technical assistance in mail management available to
                          agencies using GSA’s and other agencies’ expertise as appropriate;
                        l develops training materials and a delivery system that better meet agen-
                          cies’ needs; and
                        . solicits and represents agencies’ common mail concerns and dissemi-
                          nates important information to the federal agencies.


    IAgency Comments
                            GAO’S findings make it clear that GSA must once again assume a leader-
                            ship role in federal mail management. The Administrator’s comments
                            are discussed on page 39 and reprinted in appendix III.




                            Page 5                                         GAO/GGD9@-49   Mail Management
    Contents


    Executive Summary
    Chapter 1                                                                                           8
    Federal Sector Mail      GSA Responsibilities Require a Leadership Role
                             Federal Agencies Hold Major Responsibilities
                                                                                                        8
                                                                                                       10
    Costs Highlight the      USPS Is Primarily a Vendor                                                11
    Need for Quality         Cost of Agencies’ Mail Operations Is Increasing                           11
                             Objectives, Scope, and Methodology                                        12
    Management
    Chapter 2                                                                                          15
    GSA Lacks an             Mail Management Resource Levels Have Declined
                             Agency Mail Operations Are Not Reviewed
                                                                                                       15
                                                                                                       16
.   Effective Strategy for   Value of Past Study Approach Is Questionable                              17
    Supporting Agency        On-Site Support Is No Longer Provided                                     18
                             GSA Guidance Has Not Been Timely or Adequate                              19
    Mail Management          Agencies Lack Support in Areas of Governmentwide                          21
                                  Concern
                             GSA Training Lacks Agency Support                                         23
                             GSA Lacks a Comprehensive Plan for Addressing Mail                        25
                                  Management Responsibilities
                             GSA-Negotiated Contracts Have Reduced Agencies’                           26
                                  Mailing Costs
                             Conclusions                                                                27

    Chapter 3                                                                                          28
    GSA’s Mail               The New GSA Strategy Should Leverage Resource Needs
                             Expanded GSA Contracting Effort Could Greatly Reduce
                                                                                                       28
                                                                                                       30
    Management Role:             Agency Mail Costs
    Proposals for the        Agency Mail Practices Could Be Improved Through IRM                        32
                                 Reviews
    Future                   Timely and Comprehensive Agency Guidance Is Essential                      33
                             GSA Mail Leadership Would Benefit From Interagency                         34
                                 Committee Support
                             Agencies Need Improved Representation                                      35
                             GSA’s Training Needs Improvement                                           36
                             Technical Support Would Help Implement Change                              36
                             Conclusions                                                                38
                             Recommendations to the GSA Administrator                                   39
                             Agency Comments and Our Evaluation                                         39




                             Page 6                                        GAO/GGD9O-49   Mail Management
                 Contents




    Appendixes   Appendix I: Mail Volume and Costs Have Generally                         40
                     Increased
                 Appendix II: First-Class Mail Rate History-1979 to 1988                  41
                 Appendix III: Comments From the General Services                         42
                     Administration
                 Appendix IV: Major Contributors to This Report                           43

    Glossary                                                                              44

    Table        Table 2.1: Summary of Contract Shipper Charges (Fiscal                   26
                     Year 1989)

.   Figures      Figure 1.1: Mail Costs, Fiscal Years 1979-1988                           40
                 Figure 1.2: Mail Volumes, Fiscal Years 1979-1988                         40




                 Abbreviations

                 COMP       Committee on Mail Policy
                 FMS        Financial Management Services
                 FRMA       Federal Records Management Amendments of 1976
                 Fss        Federal Supply Service
                 GSA        General Services Administration
                 IRM        information resources management
                 IRMS       Information Resources Management Service
                 MTAC       Mailers Technical Advisory Committee
                 OMB        Office of Management and Budget
                 PRA        Paperwork Reduction Act of 1980
                 PRC        Postal Rate Commission
                 USPS       United States Postal Service


                 Page 7                                       GAO/GGD9&49   Mail Management
Chapter 1

Federal Sector Mail Costs Highlight the Need for
Quality Management

                           Federal agencies’ mail management programs cost about $1.7 billion in
                           fiscal year 1988, the latest year for which verified information is avail-
                           able.’ In recent testimony the Postmaster General of the United States
                           Postal Service (USPS) said that
                           ,.    there probably are $200 million in savings if various Government departments
                           would just use the discounts that are available to them now. There are many Gov-
                           ernment agencies and departments     that don’t have a sophisticated method with
                           their mail.”

                           Mail management seeks the rapid handling and accurate delivery of the
                           government’s mail at the lowest possible cost. To achieve this goal, the
                           General Services Administration (GSA) has said that mail management
                           programs should provide for

                       . planning and monitoring agency mail operations;
                       . adhering to rules, regulations, and rates;
                       . training agency mailroom personnel and informing other agency per-
                         sonnel about sound mail practices;
                       l tracking, analyzing, and evaluating information on outgoing mail; and
                       l installing efficiently organized agency mail stations that promote effec-
                         tive mail operations.

                           GSA has said that, through these activities, the importance and advan-
                           tages of sound mail operations can be communicated to top agency man-
                           agement to gain their support for mail management.

                           How the government manages its mail and, thus, the amount it spends
                           on postage and mail operations is determined by the actions of GSA, fed-
                           eral agencies, and USPS.


                           Public Law 94-575, known as the Federal Records Management Amend-
GSA Responsibilities       ments of 1976 (FRMA),assigned GSA governmentwide leadership respon-
Require a Leadership       sibility for mail management, among other things.’ The FRMA made GSA
                           responsible for
Role

                           ‘Our use of the term “agencies” includes federal agencies and their subcomponents. There were about
                           220 federal postage accounts for penalty mail with USPS in fiscal year 1989.
                           ?GSA’sresponsibility for mail management extends to all executive agencies and any establishment in
                           the legislative or judicial branch of the government, except the Supreme Court, Senate, House of
                           Representatives, and Architect of the Capitol and any activities under the Architect’s direction.



                           Page 8                                                         GAO/GGD9049      Mail Management
  Chapter 1
  Federal Sector Mail Costs Highlight   the Need
  for Quality Management




  promoting economy and efficiency in mail operations;
  promulgating mail standards, procedures, and guidelines;
  studying ways to improve mail practices;
  serving as an information and training source;
  establishing appropriate interagency committees and boards to
  exchange mail management information;
. disseminating information on new technology in mail management; and
. publicizing the need for mail policies.

  The law does not require that GSA directly provide or operate mail ser-
  vices for federal agencies. It recognizes that GSA, as a central manage-
  ment agency, should exercise leadership in fostering good mail
  management practices in the agencies but should not itself assume
  responsibility for them.

  Our recent review of GSA’S management made clear, with reference to
  GSA’S central management role in buildings management, that GSA should
  provide leadership, oversight, and help in developing effective facilities
  management systems throughout the governmenLY In that review we
  also said that GSA should act as a central training source, do research
  benefiting governmentwide activities, and share expertise with the
  agencies. We also pointed out that when it is not feasible for GSA or the
  agencies to perform services, GSA should contract for those services.
  Also, in our management review of the Office of Management and
  Budget (oMB),’ we described how OMB, as a central management agency,
  established interagency councils to help achieve greater agency involve-
  ment in addressing crosscutting management issues.

  While it was a component of GSA, the National Archives and Records
  Service had been responsible for GSA’s mail management program.; How-
  ever, to get better control over information related activities, GSA trans-
  ferred this responsibility to its Information Resources Management
  Service (IRMS), which is responsible for other agency information man-
  agement elements, such as automatic data processing and telecommuni-
  cations. IRMS is one of four GSA Services, each of which is headed by a
  commissioner responsible for policy development, program direction,

  %eneral services Administration: Sustained Attention Required to Improve Performance (GAO/
      _ 0_14, Nov. 1989).

  .‘Mmaging
          the Government: Revised Approach         Could Improve OMB’s Effectiveness (GAO/
       _89 _65, May 1989).

  “In 1984, the service became an independent agency called the National Archives and Records
  Administration.



  Page 9                                                          GAO/GGIHO-49     Mail Management
                             Chapter 1
                             Federal Sector Mail Costs Highlight    the Need
                             for Quality Management




                             and funding. IRMS is responsible for providing overall direction and coor-
                             dination of comprehensive governmentwide programs for information
                             resources management (automated data processing, telecommunications,
                             and records management). It develops, coordinates, and implements
                             governmentwide policies, procedures, and regulations pertaining to
                             these activities.

                             As described in a GSA publication, GSA's mail management program was
                             at one time vertically integrated-a    single group was responsible for
                             mail management policy, guidelines, evaluation, training, and technical
                             assistance.” After GSA’S restructuring, however, mail management activi-
                             ties were horizontally diffused across GSA. For example, training activi-
                             ties were transferred to GSA’S Training Center, and GSA'S Federal Supply
                             Service (FSS)is currently administering a governmentwide overnight
                             mail7 contract that provides next-day delivery of small packages and let-
                             ters at a discount.


                             Federal agencies are fundamentally responsible for their mail manage-
Federal Agencies Hold        ment programs, but are entitled to GSA support. Federal Information
Major Responsibilities       Resources Management Regulation 201-45.107-2, published by GSA as
                             guidance to all federal agencies, describes mail management responsibili-
                             ties at the individual agency level. The regulation requires each federal
                             agency to implement a mail management program. Each agency is
                             required to

                         l   develop and implement standards and procedures for the receipt,
                             delivery, collection, and dispatch of mail;
                         l   implement the mail management standards set forth in GSA guidance;
                         l   obtain and review management information concerning the volume and
                             types of mail processed and the time requirements for internal delivery
                             of mail, in order to improve service and reduce program costs; and
                         l   review, on a continuing basis, agency mail practices and procedures to
                             find opportunities for improvement and simplification.




                             “Records Management Technical Assistance Study, Information Resources Management Service, GSA
                             (Dec. 1988).
                             ‘Overnight mail is the private mailing industry service equivalent to the USPS service called Express
                             Mail.



                             Page 10                                                         GAO/GGD90-49       Mail Management
                         Chapter 1
                         Federal Sector Mail Costs Highlight    the Need
                         for Quality Management




                         The Postal Reorganization Act of 1970 (Public Law 91-375) set a goal
USPSIs Primarily a       that USPSbecome self-sufficient. The act provides that postal rates and
Vendor                   fees be set so that postal revenues equal expenses as nearly as practi-
                         cable and requires that “. . . each class of mail or type of mail service
                         bear the direct and indirect postal costs attributable to that class or type
                         plus that portion of all other costs of the Postal Service reasonably
                         assignable to such class or type.” Federal agencies, like other mailers,
                         are expected to reimburse USPS for all services rendered to them.

                         Under FRMA,USPShas no specific federal agency mail management
                         responsibilities. It has a limited number of account representatives who
                         can assist agencies and provide mail management analyses as part of its
                         general services to its customers. However, as would be expected from
                         any vendor, USPSis not in the business of mail management from the
                         customer’s point of view. USPS assistance is focused on (1) how cus-
                         tomers can best make use of USPS services and (2) publicizing and sup-
                         porting work-sharing arrangements (such as presort,* ZIP + 4,!’ and
                         barcodingl” ) that reduce operating costs for USPS while providing dis-
                         counts to those entities that use these programs.


                         Total costs for federal mail programs can be divided into three catego-
Cost of Agencies’ Mail   ries-( 1) operating costs, (2) fees paid for commercial delivery services,
Operations Is            and (3) postage and fees paid to USPS.
Irkreasing               GSA   has estimated that federal agencies’ mailroom operating costs
                         amount to $500 million annually. On the basis of the best estimates we
                         could obtain from private vendors, we found that federal commercial
                         delivery services account for an estimated $250 million annually in
                         additional federal mail costs. Postage and fees paid to USPSrepresent the
                         largest portion of agencies’ mail costs. Federal agencies mailed about 3
                         billion pieces of mail through USPSat a postage cost of $965 million in

                         ‘A form of mail preparation that reduces USPS labor costs and qualifies mail for postage discounts.
                         The mailer groups pieces in a mailing by ZIP Code or other USPS-recommendedseparation in order to
                         bypass certain postal operations. Presort is a USPS trademark.

                         “The nine-digit code, established in 1981, composed of (1) the Initial Code-the first five digits identi-
                         fying the post office or metropolitan area delivery station associated with the address; (2) a hyphen;
                         and (3) the expanded code, including the additional four digits. The first two additional digits desig-
                         nate the sector (a geographic portion of a zone, a portion of a rural route, several city blocks or a
                         large building, part of a box section, or an official designation). The last two digits designate the
                         segment, a specific block face, apartment house bank of boxes, a firm, a floor in a large building, or
                         other specific location, ZIP + 4 is a USPS trademark.

                         “‘A series of vertical bars and half bars representing the ZIP Code printed underneath the address on
                         a mailpiece. The barcode facilitates automated processing by optical character reader equipment.



                         Page 11                                                            GAO/GGD90-49      Mail Management
                        Chapter 1
                        Federal Sector Mail Costs Highlight    the Need
                        for Quality Management




                        fiscal year 1988.” Together, these estimates indicate that government
                        agencies’ mail programs cost about $1.7 billion annually.

                        Postage rate increases have significantly increased federal agencies’
                        postage costs. These costs have increased 52 percent from fiscal year
                        1979 to 1988, while the volume of mail increased by only 6 percent over
                        the same period. USPS rates for first-class mail have increased 67 percent
                        due to four postage increases from 1979 to 1988.” The smaller increase
                        in federal postage costs compared to the increase in first-class postage
                        rates suggests that federal agencies have begun to take advantage of
                        postal discounts over the past 10 years (available for presorting and
                        using third- and fourth-class mail’:’ ).

                        USPShas also requested an increase in postage rates, to take effect by
                        early 1991, of about 19 percent to cover increases in operating costs.
                        However, large mailers who participate in USPS automation and other
                        mail preparation programs (for example, by barcoding their own mail)
                        can expect substantial discounts in their postage costs.

                        The cost of federal mail operations and anticipated postage increases
                        point strongly toward a need to achieve the lowest cost mailing
                        approach appropriate for federal agencies’ needs.


                        Concerned about GSA’S leadership of federal agency mail programs, the
Objectives, Scope,and   Chairman, Subcommittee on Federal Services, Post Office, and Civil Ser-
Methodology             vice, Senate Committee on Governmental Affairs, requested that we
                        review the effectiveness of GSA support to federal agencies in managing
                        the cost of their mail operations, and that we identify potential opportu-
                        nities for reducing the cost of agency mail operations. As requested, our
                        specific objectives were to determine whether GSA

                        allocates sufficient resources to the mail management program,
                        aggressively attempts to achieve program savings,
                        issues regular mail management guidance to agencies, and
                        currently has any plans for improving its mail management program.

                        ’ ‘A Congressional Research Service report for Congress (U.S. Congress Official Mail Costs: Fiscal
                        Year 1972 to Present, June 13,1989) provides detailed analyses of Congress’ mail.

                        ‘“Appendix I shows detailed annual cost and volume percentage increases (and decreases) of federal
                        agencies’ mail for fiscal years 1979 through 1988. Appendix II shows first-class postage rate
                        increases for 1979 through 1988.

                        ‘%ee glossary for definitions.



                        Page 12                                                          GAO/GGD4JO-49     Mail Management
Chapter 1
Federal Sector Mail Costs Highlight   the Need
for Quality Management




To respond to the Chairman’s request, this review focused on the effec-
tiveness of GSA support to agencies in managing mail costs and assessed
opportunities for reducing agencies’ costs. Although this report concen-
trates on GSA'S role in mail management, we also plan to report on the
quality of selected agencies’ mail operations in later phases of our
review.

Because GSA is charged with leadership responsibilities for mail manage-
ment programs in federal agencies, we focused our work on those agen-
cies, We did not review congressional mail operations.

We did our review at GSA and USPSheadquarters and at selected agen-
cies’ headquarters. We interviewed GSA officials responsible for adminis-
tering the mail management program. We reviewed GSA'S mail program
policies, procedures, regulations, guidance, and legislative history. We
interviewed USPSofficials and reviewed USPSrules, regulations, and rate
information. Using USPSdata, we analyzed federal agencies’ postage pay-
ments and mail volumes.

To determine the effectiveness of GSA'S mail management program and
to identify agencies’ mail needs, we interviewed mail program officials
in 10 government agencies that were major postage users. These agen-
cies were the Departments of Commerce, Housing and Urban Develop-
ment, Labor, and Veterans Affairs; the Government Printing Office; the
Farmers Home Administration; the Federal Aviation Administration
(within the Department of Transportation); the Financial Management
Service (FMS) and the Internal Revenue Service (within the Department
of Treasury); and the Social Security Administration (within the Depart-
ment of Health and Human Services).

USPSdata indicated that 5 of these 10 agencies (the Departments of
Labor and Veterans Affairs, FMS, the Internal Revenue Service, and the
Social Security Administration) were the largest civilian federal postage
users in fiscal year 1988, with postage expenditures between $50 and
$100 million each. The other five agencies and departments had postage
expenditures between $6 and $18 million each. Combined, these 10 enti-
ties spent almost $484 million in fiscal year 1988 and accounted for
about 50 percent of federal agencies’ $965 million fiscal year 1988
postage cost.

We also did telephone interviews with mail managers at 61 federal agen-
cies, each of which paid over $1 million in postage to USPSin fiscal year



Page 13                                          GAO/GGD90-49   Mail Management
Chapter 1
Federal Sector Mail Costs Highlight   the Need
for Quality Management




1988. These agencies’ postage charges were over $911 million-94 per-
cent of the total postage federal agencies paid to USPSin fiscal year 1988.

We also obtained opinions on GSA’S mail management role and agencies’
mail operations needs during the March 1989 Committee on Mail Policy
(COMP) meeting of the National Property Management Association. Rep-
resentatives of 11 agencies, responsible for approximately $513 million
of the 1988 federal mail payments to USPS, attended this seminar and
expressed opinions. Some of these agencies also participated in our tele-
phone interviews. We also attended COMP and Mailers Technical Advi-
sory Committee (MTAC) meetings to observe their activities and to better
understand federal and private industry mail managers’ concerns.

To gain insight into mail management concepts and the training cur-
rently available and to identify the kinds of training needed by federal
agencies, we attended mail training courses sponsored by GSA'S training
center and seminars conducted by a major commercial mail equipment
vendor, the Department of Agriculture, and USPS. We interviewed eight
mail service vendors and companies to determine the availability of mail
services and the capability of certain equipment and services to reduce
mail program costs.

Our review took place primarily between July 1988 and November 1989.
We obtained written comments from the Administrator of GSA, which are
discussed on page 39 and reprinted in appendix III. We did our work
primarily in metropolitan Washington, D.C., in accordance with gener-
ally accepted government auditing standards.




Page 14                                          GAO/GGD90-49   Mail Management
    GSA Lacks an Effective Strategy for Supporting
    Agency Mail Management

                          As defined by applicable laws and regulations (primarily the FRMA), GSA
                          is charged with providing leadership for agency federal mail manage-
                          ment programs. However, over the past decade GSA has reduced its lead-
                          ership of agency mail management programs to the point that current
                          activity is minimal. While GSA has recently emphasized strategic plan-
                          ning to meet several of its other responsibilities, it lacks a comprehen-
                          sive plan for its mail leadership responsibilities. Such a plan is essential
                          for successfully carrying out GSA'S leadership role in federal mail
                          management.


                          Hearings in February 1982 pointed to the potential cost reductions to be
    Mail Management       derived from improved support to agencies from GSA'S mail management
    ResourceLevels Have   program and highlighted the resource constraints that GSA faced in ade-
.
    Declined              quately supporting its responsibilities. During the hearing we said that
                          GSA should put mail management reviews “high in their scale of priori-
                          ties , . . making sure that the $60 million that [GSA] has estimated in 1979
                          as potential savings . . . is realized.” However, we added that fiscal year
                          1983 budget cuts would substantially reduce GSA'S efforts to assist agen-
                          cies in lowering their postage costs through better mail management.

                          At these hearings, the GSA official in charge of the mail management pro-
                          gram said that “. . . if there ever was an area where a small investment
                          can reap a large return, it is Federal mail management.” However, this
                          official also noted that, in the late 1970s about 20 employees were
                          working on GSA'S governmentwide mail and correspondence manage-
                          ment programs while by early 1982, only 4 employees were working on
                          these two governmentwide programs. Further, three of these four had
                          received reduction-in-force notices, leaving one experienced staff
                          member to work on the two governmentwide programs. An employee
                          involved in GSA'S mail management program at the time said that mail
                          management staff either left or were transferred from mail management
                          and replacements were not assigned to the area.

                          A senior GSA official said no GSA employee is currently assigned to work
                          solely on mail management. GSA officials said that over the past several
                          years, mail management activities have been diffused, but GSA has typi-
                          cally dedicated an aggregate of l/2 to 1 staff year to governmentwide
                          mail management responsibilities. This resource level has not been ade-
                          quate to sustain efforts begun in earlier years to reduce mail program
                          costs or to carry out an effective leadership role.




                          Page 15                                          GAO/GGD90-49   Mail Management
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                          first began inspections of agency records management programs in
Agency Mail          GSA
                     1964-18 years before mail management was incorporated into an
Operations Are Not   information resources management context in 1982.’ In the 1960s and
Reviewed             1970s GSA did on-site inspections that typically included on-site work,
                     briefings to the agency, a written report of findings, and follow-up to
                     validate changes to the program.

                     However, during this time GSA did not give adequate attention to records
                     management inspections at agencies. In 1975, we reported that GSA
                     should expand its records management inspections to ensure that fed-
                     eral agencies move their mail in the most economical manner.z We
                     reported in 1980 that although agency inspections are potentially one of
                     its most effective tools, GSA had not increased the time devoted to this
                     activity as recommended by the Commission on Federal Paperwork in
                     1977.:’ In 1981 we said that GSA's records management inspections were
                     only marginally successful in enforcing records management (which
                     included mail management) laws and regulations.’ GSA and OMB agreed
                     that more attention should be devoted to records management.

                     The Paperwork Reduction Act of 1980 (PRA) led to GSA merging its mail
                     management reviews with reviews of other agency information manage-
                     ment elements such as automatic data processing and telecommunica-
                     tions. The Information Resources Management (IRM) Review Programs
                     operate on a 3-year planning and reporting cycle. At the beginning of a
                     review cycle, GSA and OMB establish priority areas that they believe are
                     most in need of review from a governmentwide perspective. GSA officials
                     said that (1) agencies have never been asked to report on the quality of
                     mail programs through the priority setting process, (2) the agencies
                     have never reported mail program issues to them, and (3) GSA IRM
                     reviews have never included agency mail operations.

                     Mail management issues also were not reported in GSA’S March 1989
                     report to OMB for the first 3-year review cycle of agencies, which
                     included the Departments of Agriculture, Commerce, Education, Energy,

                     ‘The FRMA defines records management as the planning, controlling, directing, organizing, training,
                     promoting, and other managerial activities involved in records creation, records maintenance and use,
                     and records disposition. Federal agencies’ mail operations are included under “records maintenance
                     and use.” Mail management had been an element of GSA’s records management program.

                     ‘Federal Agencies Could Do More to Economize on Mailing Costs (GGD-75-99, Aug. 25, 1975)

                     ‘Program to Improve Federal Records Management Practices Should Be Funded by Direct Appropria-
                     tions (LCD-80-68, June 1980).

                     ‘Federal Records Management: A History of Neglect (PLRD81-2, Feb. 24, 1981).



                     Page 16                                                         GAO/GGD9049      Mail Management
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                      Health and Human Services, Interior, Justice, Labor, Transportation,
                      Veterans Affairs, and GSA. These agencies had combined fiscal year 1988
                      postage costs (not including operating and other mailing costs) of $396
                      million.

                      Lack of reporting on mail management in the IRM Review Program seems
                      inconsistent with GSA’S earlier assessments of agency mail programs. In
                      a 1981 report, we noted that GSA issued inspection reports to 33 agencies
                      between 1965 and 1970 on agencies’ records management programs.’ Of
                      the 33 agencies reviewed, GSA reported that 28 had mail management
                      programs that needed improvement, 3 had no existing mail management
                      program, and 1 had a good mail program. (One of the agencies’ mail pro-
                      grams was not evaluated.) According to 12 agency inspection reports
                      issued between 1975 and 1979,6 agencies needed “much improvement,”
                      3 agencies needed “some improvement,” and only 3 agencies had what
                      were described as “good programs.”


                      According to GSA officials, the IRM Review Program currently forms the
Value of Past Study   basis of GSA oversight of agency mail management. The FXMArequires
Approach Is           that GSA study agency mail operations to improve them and publicize the
Questionable          need for adequate mail management to federal agencies. In the past, GSA
                      directed studies of agencies’ mail operations. The last study of agency
                      mail operations was done in fiscal year 1986; the study was initiated by
                      a GSA challenge that 16 agencies responded to during fiscal year 1986.
                      The results of this study were published in September 1988.”

                      GSA cites this September 1988 report as an indicator of its mail manage-
                      ment success. GSA says in the report that “Overall, GSA’S mail initiative
                      prompted participating agencies to try to reduce their mailing costs in
                      one year by over $76.3 million.”

                      GSA'S claim that it prompted changes to agency mail programs is ques-
                      tionable. For example, $60 million of the $76 million in savings claimed
                      in the report was attributable to one bureau-m.         Although the report
                      says that agency savings were accomplished through GSA'S fiscal year
                       1986 initiative, an FMS official said that the $60 million in reported sav-
                      ings was accomplished through an FMSprogram that had been in place
                      since 1976. A GSA official said, however, that some agencies (such as the

                      “Federal Records Management: A History of Neglect (PLRD81-2, Feb. 24,lQSl.)
                      “Governmentwide     Mail Management Initiative: How 16 Federal Agencies Saved Over $76 Million in
                      Mailing Costs, Information Resources Management Service, GSA (Sept. 1988).



                      Page 17                                                        GAOp3GIbBMB       Mail Management
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                                National Aeronautics and Space Administration) that participated in the
                                study did attempt to improve their mail operations.

                                According to a former GSA employee who helped direct the 1986 mail
                                management study, GSA’S study approach essentially consisted of pro-
                                viding checklists of cost reduction techniques for mail management and
                                obtaining plans and savings reports from agencies. She said that, as a
                                result, agencies tended to regard the GSA study approach as simply a
                                burdensome data gathering and reporting obligation rather than a useful
                                initiative for accomplishing program improvements. Agency mail man-
                                agers we interviewed were also concerned about GSA’S study approach.

                                GSA  officials said that GSA has initiated no efforts since fiscal year 1986
                                to study agencies’ mail management programs and that GSA has no
.                               future plans for studies.


                                According to GSA officials, GSA has stopped providing on-site technical
    On-Site Support Is No       assistance to support changes to agencies’ mail operations. According to
    Longer Provided             a GSA official in 1982 hearings, GSA had been active in supporting agency
                                changes in the following instances:

                            l   In response to problems with its mailing lists, the Department of Health
                                and Human Services obtained the services of a     GSAanalyst to revise and
                                implement a new publications distribution system. The new system
                                reduced the agency’s mailing costs by $1.2 million annually.
                            l   The Department of Labor obtained a GSA analyst to support presorting
                                at the agency. Through      support, the Department obtained $1.2 mil-
                                                               GSA


                                lion in annual savings.

                                GSA  officials said that they currently have no plans to provide on-site
                                technical assistance to agencies. GSA officials said that the current
                                approach to providing technical assistance is limited to advice provided
                                in response to telephone contacts; other sources of advice (such as con-
                                sultants) are no longer provided. GSA officials could not recall an
                                example of when they had provided advice to agencies in recent years.




                                Page 18                                          GAO/GGDW-49   Mail Management
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                       The quality of GSA records management guidance (including mail man-
GSA Guidance Has Not   agement) to agencies has been a long-standing subject of concern. In
Been Timely or         1975, we reported that GSA needed to provide clear guidance on cost-
Adequate               effective mailing practices and that the instructions should be revised
                       periodically to reflect changes in the services available, along with
                       delivery times and costs.;

                       In 1976, the Commission on Federal Paperwork criticized GSA for not
                       issuing up-to-date handbooks on records management techniques on a
                       timely basis. The Commission reported that the average age of GSA hand-
                       books in 1976 was 6.8 years; GSA officials told the Commission that they
                       were trying to lower this average to less than 3 years by fiscal year
                        1978. In response to questions during its fiscal year 1980 appropriations
                       hearings, GSA said that the revised mail management handbook was
                       going to be developed in fiscal year 1980 and that it planned to issue the
                       revised handbook in fiscal year 1981. In attempting to explain why its
                       records management handbooks had become more outdated after the
                       Commission report, GSA officials said that the handbooks could not
                       6‘. . simply be updated by incorporating contemporary style or merely adding new
                       developments. [They reflect] inappropriate and narrow perspectives, outdated
                       thinking, and obsolete technologies, requiring the development of completely new
                       concepts. The handbooks are designed to provide the ‘how to’ to agency personnel in
                       implementing our regulations.” [Emphasis added.]

                       Despite statements that GSA would provide a revised mail management
                       handbook to federal agencies in fiscal year 1981, the published
                       product-called   a “guide” rather than a handbook-was      not published
                       until April 1989-18 years after the publication of its predecessor.

                       The April 1989 22-page guide essentially summarizes prior information
                       published on mail management. Its contents can be broken down as
                       follows:

                       two chapters and two appendixes on the mail management program,
                       a two-page appendix listing cost-saving techniques, and
                       a three-page appendix consisting of a glossary of terms used in mail
                       management.

                       If the goal of the April 1989 publication was to provide, in response to
                       criticism from oversight groups and GSA's 1980 testimony, the “how to”

                       7Federal Agencies Could Do More to Economize on Mailing Costs (aDi’S-99,   Aug. 25,1975).



                       Page 19                                                       GAO/GGD90-4@ Mail Management
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    for implementing GSA regulations, the guide omitted issues critical to
    managing costs of mail systems.

    One basis for comparing GSA performance is private industry activity in
    mail management. One private industry vendor, for example, publishes
    guidance (which is updated quarterly) that includes

l a 45page manager’s guide for establishing and operating a mail
  department;
l a 112-page reference guide describing vendor services; and
. a 744-page reference guide describing vendor mail schedules, rates, ser-
  vices available, and a listing of vendors available and the cities they
  deliver to.

    This vendor has also developed a reference guide to inform mailers
    about the variety of services and costs associated with different classes
    of mail. A recent 16-page update to the vendor’s guidance included
    information on

. training techniques (including videotapes and workshops);
. packaging instructions and information;
. managing office supplies;
l making international mailing easier, faster, and cost effective;
. changes in mail costs and operations by major vendors;
l computerized inventory management services;
. express mail evaluation by a vendor representative; and
. information about future mail management seminars.

    In the late 197Os, GSA issued two bulletins covering topics related to mail
    management. In response to our August 1975 report on agency mail
    operations, GSA in April 1976 issued Federal Property Management Reg-
    ulation Bulletin B-63 on avoiding unnecessary mail costs. In January
    1978, GSA issued Federal Property Management Regulation Bulletin B-
    75, which provided guidelines for properly preparing and economically
    dispatching federal mail. A GSA official said such bulletins are no longer
    issued by GSA.

    In January 1990, however, GSA officials provided us with a timetable for
    a mail operations handbook, which the officials said would serve as a
    supplement to the guide issued in April 1989 and would update informa-
    tion in the 1971 GSA handbook. Research for the handbook was sched-
    uled to begin in February 1990; printing is scheduled for July 1991.



    Page 20                                         GAO/GGD904   Mail biam@mat
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                        However, even if this schedule is met, GSA would have a 20-year gap
                        between the planned handbook and the 1971 handbook.


                        The FRMA requires GSA to serve as an information clearinghouse and to
Agencies Lack Support   establish interagency committees as necessary to improve mail manage-
in Areas of             ment. However, GSA is currently not providing support that agencies
Governmentwide          believe would be of benefit to the federal sector. GSA IRMS personnel are
                        currently not supporting or participating in any interagency committees
Concern                 on mail management. GSA is also not disseminating important informa-
                        tion that agency managers need to support their mail operations or
                        advocating common agency mail management concerns.

                        In response to both GSA'S current lack of leadership and the needs of
                        federal mail managers, the Committee on Mail Policy (COMP) was estab-
                        lished by several large federal agencies (primarily at the initiative of the
                        Departments of Agriculture, Commerce, Defense, and Veterans Affairs)
                        in 1988 to provide a forum for federal mailers. Several seminars have
                        been given covering subjects such as USPS' official mail accounting
                        system, personnel practices, and presort approaches. GSA’s IRMS was not
                        involved in organizing COMP and, to date, no IRMS representative is par-
                        ticipating in COMP’S activities.

                        Although GSA is currently paying membership dues for three members
                        (two members are non-GSAemployees and one is a GSA IRMS employee) to
                        participate in the USPS’Mailers Technical Advisory Committee (MTAC),~ it
                        is not disseminating the information derived from MTX to federal mail
                        managers. The GSA MTAC representatives also lack a forum for obtaining
                        input from agencies’ mail managers; such a forum would allow the GSA
                        MTAC representatives to present a governmentwide position on postal
                        issues.

                        Several issues were identified during this review that would warrant GSA
                        support. USPShas applied for a new rate structure for early 1991 that
                        could change opportunities for obtaining postal discounts. Information
                        from the MTAC meetings could be disseminated to agency mail managers
                        by GSA, and the agencies could begin acquiring appropriate equipment
                        and changing their mail systems to prepare for the new postal rates and
                        incentives.



                        %eeglossary foradescriptionofthiscommittee.



                        Page 21                                         GAO/GGD9049   Mail Management
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Since USPSis not satisfied with sampling to arrive at agencies’ final
postage cost, it plans to move agencies toward a system called direct
accountability,!’ which involves an array of procedures to verify the
total cost of federal agencies’ mailings. Some major agencies we inter-
viewed are concerned about this change because it will generate equip-
ment needs and changes in work processing.

Direct accountability will cause some agencies to completely change
their current mailing and postage accounting procedures and require a
major increase in equipment such as postage meters and associated
maintenance. To implement such a system, agencies will have to eval-
uate their mail programs and determine how to support their mailing
needs. Many managers said that GSA could be very valuable in preparing,
along with USPS,guidance to implement direct accountability so that the
hundreds of agencies affected by the new requirements would not have
to individually expend resources to create their own set of procedures.

GSA’s potential value as an information clearinghouse is also illustrated
by the frustration that major mail vendors have with providing product
information to federal agencies. One vendor we interviewed said that,
due to the large number of federal agencies and the amount of time that
must be invested in educating a wide range of managers about their
products and showing these products’ potential benefits, federal agen-
cies received the lowest priority for their schedules. The vendor said
that a single source (such as GSA), serving as a focal point for dissemi-
nating information about products and informing federal agencies of the
value of such products would generate a very high level of vendor
interest and support. Another vendor said that the difficulty of con-
tacting agencies, educating them, and obtaining their interest caused the
vendor to place federal agencies at the end of her list.

We believe that the vendors’ position indicates that the quantity and
quality of information about current products for supporting system
changes to obtain postal discounts and improve system management
would be greatly increased for agencies if GSA would take responsibility
for such an information sharing program.




“Any procedure in which verifiable actual mail volumes and/or postage costs for federal agencies are
recorded before or at the time of mailing to verify the agencies’ total mailing costs.



Page 22                                                         GAO/GGD9@49      Mail Management
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                         The average federal employee probably knows no more than the
GSA Training Lacks       average person about USPS and other vendors, the services they offer,
Agency Support           and how to use those services cost effectively. Considering that practi-
                         cally all federal employees are involved with federal mail in some
                         capacity-as either users or employees of the mail operation-and
                         therefore could benefit from training or information about good mail
                         practices, the number of employees receiving GSA training is not com-
                         mensurate with federal agency training needs.

                         There are three basic audiences for training in mail concepts in federal
                         agencies:

                     . Mail originators are non-mail program employees who use the mail
                       system. They directly affect the cost of mailings by creating the mail,
                       packaging it for mailing, and (typically) selecting the class of mail and
                       special services that are needed. They play a key role in mail systems
                       but normally know no more about classes of mail and other elements of
                       mail costs than the average person.
                     l Mailroom staff need to understand elements of USPSprocedures and
                       requirements. They determine the actual amount of postage required for
                       a particular piece of mail. These employees are typically lower graded
                       clerks who have had no prior postal training or experience, and
                       employee turnover in this job category is high.
                     . Mail managers, like mailroom clerical staff, need to understand elements
                       of USPSprocedures and requirements; they also need to understand the
                       concepts of cost-effective mail management practices. They are typi-
                       cally higher paid than mail clerks, but mail management is usually not
                       their primary duty. They usually do not have prior postal experience or
                       training.

                         GSA'S Training Center offers a 3-day course on mail management and a 2-
                         day course on mail operations, provided that enrollment levels allows
                         GSA to recover its costs. In October 1988, GSA contracted to revise the
                         mail training courses, and the revised courses were piloted in April
                         1989. Although GSA had offered earlier versions of these courses three
                         times during fiscal year 1988 and only in Washington, D.C., GSA offered
                         each course five times during fiscal year 1989 in several locations
                         nationwide.

                         Mail management officials we contacted at COMP and 8 out of 10 major
                         agency mail managers we interviewed expressed concerns about the
                         costs of course tuition and traveling to and attending the training. The
                         managers were also concerned that GSA lacks training that is in a format


                         Page 23                                        GAO/GGD90-49   Mail Management
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that can be delivered quickly and easily to agency employees-typi-
cally, the agency’s mail originators who select the class of mail to be
used.

They also expressed a need for mail training in subjects not included in
GSA'S current training. For example, GSA lacks training on government
mailing approaches (covering issues such as the Official Mail Accounting
System and direct accountability), which was training requested by
many mail managers contacted during our review. We also found that
GSA courses did not include adequate training on designing and imple-
menting an effective mail management system. Mail program officials
also expressed a need for this type of training.

Mail training is particularly important for mail clerks because they gen-
erally are the final control point in determining the amount of postage
placed on many agency mailings. Errors in judgment at this level can be
repeated many times and waste agency resources. However, because of
high turnover at these grades and because of limited training budgets
for mailroom personnel, agencies are reluctant to invest in sending lower
graded mail clerks to formal training outside of their immediate work
locations. The cost of sending agency employees (mail originators) to GSA
training would also be prohibitive to agencies. As a result, training is
frequently limited to on-the-job training for mailroom personnel.

GSA  records on the numbers of mail course attendees support our finding
that GSA’S training courses do not meet agencies’ needs or budgets.
Eighty-nine students attended the five courses given in fiscal year 1987
(three on mail management and two on mail operations). Two GSA
training courses scheduled for August 1989 were canceled because of
inadequate enrollment, and training offered in January and February
 1990 was also canceled because of inadequate enrollment. (However,
courses were conducted in April 1990, and courses planned for May
 1990 had adequate enrollment to proceed as scheduled.)

In response to concerns about the mail management training available
from GSA, the Departments of Defense and Agriculture, through COMP
support, have organized a 3-day training course for federal mailers and
plan to offer it in several locations nationwide during calendar year
1990.




Page 24                                         GAO/GGD90-49   Mail Management
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                      As discussed above, most elements of GSA’s records management respon-
GSA Lacks a           sibilities reside in IRMS According to GSA management, this reorganiza-
Comprehensive Plan    tion was done in order to merge all GSA IRM activities, which involve
for Addressing Mail   automatic data processing, telecommunications, and records manage-
                      ment. However, we found that there has been little planning, coordina-
Management            tion, or interaction with major federal agencies by GSA to arrive at an
Responsibilities      integrated, focused approach to support agency mail systems.

                      As we discussed in our November 1989 report on GSA'S management, GSA
                      began a new strategic approach to its central agency role in 1989.l” To
                      initiate actions and guide programs, GSA focused on its most critical and
                      strategic management issues. The approach will involve documenting
                      GSA'S mission, environment, current status, 5- and lo-year goals, current
                      and strategic issues, and strategies. Fiscal year 1990 performance plans
                      for top GSA management will be tied to the plan, and in the next budget
                      cycle, the planning and budget processes will be linked. GSA officials
                      believe that this new process will become an intrinsic part of GSA’S man-
                      agement approach. We found, however, that prior IRMS strategic plans
                      (dated August 1987 and March 1988) were oriented completely toward
                      automated data processing and telecommunications, with no reference
                      toward supporting GSA'S mail management responsibilities. IRMS officials
                      could provide evidence of only minimal activity on mail management.

                       In a discussion with us, an IRMS official said that for fiscal year 1989 a
                       few IRMS records management personnel spent about l/2 to 1 staff year
                      on mail management. In January 1990, IRMS officials provided a time-
                       table for starting a mail operations handbook (to supplement its man-
                       agement guide, as discussed previously) in February 1990; the handbook
                      is scheduled for printing in July 1991. An IRMS official said that this pro-
                      ject was the only mail management work planned by IRMS in fiscal year
                       1990. He also said that during the summer of each year, IRMS determines
                       the goals and objectives for the coming fiscal year and said mail man-
                       agement goals may or may not be in IRMS'S strategic plans for the next
                       fiscal year.

                      It is apparent that mail management is not a high IRMS priority. One GSA
                      official said that GSA and other government agencies concentrate on
                      highly visible programs; IRMS concentrates a high level of effort and



                      “‘General Services Administration: Sustained Attention Required to Improve Performance (GAO/
                           _90 _14, Nov. 1989).



                      Page 25                                                      GAO/GGD90-49     Mail Management
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                                         resources trying to reduce the cost of automated data processing pro-
                                         grams. According to this official, mail management is not a prominent
                                         element of GSA’S records management responsibilities.


                                              has successfully reduced agency mailing costs through the actions of
GSA-Negotiated                           GSA
                                         its Federal Supply Service (FSS).FSShas developed and maintained a
Contracts Have                           very successful overnight mail contract that has resulted in substantial
ReducedAgencies’                         cost reductions for agencies. According to an FSSofficial, FSSoriginated
                                         its overnight mail contract in response to an analysis done by the GSA
Mailing Costs                            Office of Inspector General in the early 1980s and FSShas managed the
                                         overnight mail contract since fiscal year 1984.

                                         FSSdata show that the contract shipper handled 271,455 overnight mail
                                         shipments for federal agencies in fiscal year 1984; the contract shipper’s
                                         government work load had increased to 2,970,403 overnight mail ship
                                         ments by fiscal year 1989. We estimate that the contract helped federal
                                         agencies obtain discounts from the vendors’ retail charges of about $35
                                         million in fiscal year 1987, $48 million in fiscal year 1988, and $55 mil-
                                         lion in fiscal year 1989.

                                         Table 2.1 shows FSScontract charges and cost reductions for fiscal year
                                         1989.

Table 2.1: Summary of Contract Shipper
Charges (Fiscal Year 1989)                                                                                       FSS
                                                                                                Retail      contract Government
                                         Shipment type                          Volume        charges       charges     discount
                                         Letters                               1,025,237   $14,652,857    $5,478,646     $9,174,211
                                         Overniahtcackaaes
                                                 ”




                                            1-2pounds                          1,141,533    28,841,306     6,334,037     22,507,269
                                           3-5pounds                             304,865    10,302,362     2,387,621      7,914,741
                                           6-10counds
                                            -   -r
                                                                                 145,045     63345,306     1,661,191      4684,115
                                            ll-99counds                          210,598    14,869,OOO     6,607,002      8,261,998
                                            100poundsplus                          8,523     31593,486     2,208,410      1,385,076
                                         Secondday                                   203         4,358         2,836           1,522
                                         International                            37,030     1,258,267     1,258,267               0
                                         Offshore/mist.                           97,369     2,518,963     1,196,561      1,322,402
                                         Total                                 2,970,403   $82,385,905   $27,134,571   $55,251,334
                                         SoLlrce~ FSS


                                         In aggregate, agencies using this contractor during fiscal year 1989 real-
                                         ized a price reduction of 67 percent from the vendor’s retail price.


                                         Page 26                                                    GAO/GGD9049    Mail Management
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                  activity to support agency mail systems has declined over the past
Conclusions   GSA
              decade to the point that GSA currently is doing very little to help agen-
              cies improve mail management programs and reduce mail costs. The
              only meaningful agency support from GSA is through FSS,which has
              proven the value of an overnight mail contract that it negotiated on
              behalf of the government.

              GSA no longer supplies on-site technical assistance to support changes to
              agency mail operations, although such assistance has generated major
              reductions in agency mail costs in the past.

              GSA'S  process for reviewing agency IRM practices has resulted in no
              reviews of agency mail systems by either the agencies or GSA, even
              though reviews done in the 1970s showed common deficiencies in
              agency programs. GSA studies, which are no longer done, were not highly
              regarded by agencies and lacked GSA technical support to accomplish
              meaningful mail system changes. The major savings attributed by GSA to
              its latest study (done in 1986) were unrelated to GSA'S initiative.

              GSA guidance to agencies does not provide information needed by agen-
              cies, and it does not provide updates that had been provided in the past,
              GSA guidance is inferior to the comprehensive, up-to-date guidance pro-
              vided by a private industry source.

              GSA’S Training Center has recently updated its mail training courses, but
              the relatively low level of training attendance indicates that the courses
              do not meet federal needs for training.

              GSA is not adequately representing federal agencies’ concerns before
              groups such as USPSor serving as an information clearinghouse for
              agencies.

              GSA  currently lacks adequate plans for supporting its responsibilities
              under the FRMA.Federal organizations have been left to manage their
              mail operations and resolve governmentwide mail system problems on
              their own.




              Page 27                                         GAO/GGD90-49   Mail Management
Chapter 3

GSA’s Mail Management Role: Proposals for
the Future

                    GSA  needs a new strategy for controlling agencies’ rising mail costs. This
                    strategy must be carefully thought out because GSA is working with very
                    limited resources. GSA and the agencies can realize major cost reductions
                    in agency mail operations by creating a program for managing mail
                    costs, sharing resources to support cost reduction actions, and moni-
                    toring improvements in agency mail operations.


                    -4s discussed earlier, GSA'S statutory responsibilities should be supported
The New GSA         through the central agency management philosophy described in our
Strategy Should     previously mentioned report on GSA management practices as follows: to
Leverage Resource   provide leadership, oversight, and help in developing effective govern-
                    mentwide management systems; act as a central training and research
Needs               source; and take action where there are demonstrated economic and
                    management advantages to having central agency management
                    involved, As outlined in that report, GSA'S role in mail management
                    should primarily involve policy guidance and oversight, but other
                    actions described in this chapter would also yield great benefits to fed-
                    eral mail operations.

                    In our report on OMB central management practices we suggest that, in
                    response to limited staff resources at OMB, a key to improving agency
                    conditions is that agencies must see reform initiatives as important if
                    they are to have a reasonable chance of succeeding.’ Agencies must also
                    be made to understand that they not only have incentives for supporting
                    governmentwide mail programs, but that they share a responsibility
                    with GSA for addressing federal mail system issues as described by the
                    FFMAand PRA Utilizing the input and expertise of other agencies will
                    allow a small nucleus of GSA personnel to obtain significant reductions in
                    federal mail costs.

                    To accomplish this goal, GSA needs to obtain the commitment of agency
                    management to support governmentwide improvements in mail systems.
                    This can be accomplished by communicating to agencies the incentives
                    (economic or other benefits) that exist in participating in a govern-
                    mentwide program to improve mail systems.

                    We understand that GSA has absorbed major staffing reductions through
                    fiscal year 1988. One GSA official said that in the 1980s records and mail
                    management were among the most reduced GSA areas.

                    ‘Mana S                                                         (GAO/
                    CXl5739-65, May1989).




                    Page 28                                         GA0/GGD9049Md      Management
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However, when mail management, along with other records manage-
ment functions, was transferred to IRMS in 1982, the functions, activities,
organizations, and resources were also transferred to support those
responsibilities. In theory, this should have resulted in at least mainte-
nance of mail management activity as it existed in the early 1980s; in
fact, IRMS gradually reduced its support of agency mail programs.

An IRMS official also said that they have difficulty obtaining resources
for new initiatives. Considering the current budget environment, we
agree that GSA would have difficulty justifying budget and staff
increases without substantial evidence of cost effectiveness. For this
reason, GSA may best improve support of its governmentwide mail man-
agement responsibilities through (1) a plan that would help “sell” pro-
gram initiatives to oversight and appropriations groups (i.e., a plan that
points out the value-particularly    in dollar savings-of such programs)
and (2) sharing agency expertise and resources where possible.

For example, as a central management agency OMB has used interagency
councils to achieve greater interagency involvement and address cross-
cutting management issues.? GSA’S role in mail management, as set forth
in the FRMA,is consistent with the principle described in the OMB
report-that   implementation of initiatives to address crosscutting man-
agement problems should be led by a central agency but supported by
executive branch agencies.

The level of federal information technology spending is one reason for
IRMS assigning a high priority to data processing. For example, GSA has
said in its strategic plan that federal expenditures for information tech-
nology will exceed $16 billion in 1987. However, on that same basis, IRMS
is responsible for supporting cost reductions to agency mail systems, for
which GSA has claimed a cost of $2.5 billion annually. (We reviewed
fiscal year 1988 postage and mail cost data and believe that this figure
is closer to $1.7 billion, as described in ch. 1.)

To minimize its resource costs, obtain an understanding of agency needs,
and use agency expertise, while simultaneously realizing maximum cost
reductions to federal mail systems, the following are elements that GSA
should consider when defining its support role for agency mail systems.



                        nt: Revised Approach Could Improve OMB’s Effectiveness (GAO/




Page 29                                                     GAO/GGD99-49     Mail Management
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                            GSA’s Mail Management      Role: Proposals   for
                            the Future




                            While GSA'S overnight mail contract has been very effective in obtaining
Expa endedGSA
A .                         reduced overnight mail costs, the cost of other elements of federal agen-
c;ontracting Effort         ties’ mail operations could also be greatly reduced by additional GSA
Could Greatly Reduce contracts.
Agency Mail Costs    By presorting first-class         mail, agencies can obtain a discount for each
                            qualified piece and higher discounts for other levels of sorting for first-
                            class mail (such as ZIP+4,ZIP+4 barcode, and carrier route presort
                            levels1 ). Since sorting requirements to obtain the discounts may be labor
                            intensive and many agencies are experiencing staffing constraints in
                            their mail operations, agencies may find it advantageous to obtain
                            presort savings through a presort contractor.

                            Some agencies have already obtained major cost reductions by
                            presorting their mail. For example,

                          . FMSis responsible for mailing payments for many elements of federal
                            operations. Its fiscal year 1988 postage cost was reduced by $15 million
                            as a result of using in-house automation to presort its mail.
                          . The Department of Veterans Affairs reduced its fiscal year 1988 postage
                            costs by about $1 million through use of in-house and contractor presort
                            for its first-class mail.
                          . The Department of Agriculture reduced its postage costs by $405,000
                            over a 2-year period (fiscal years 1988-89) by presorting its first-class
                            mail from headquarters and its National Finance Center.

                            If these measures are implemented nationally for all federal agencies,
                            the potential savings to the government would be significant. A USPS
                            official estimated that between 50 and 75 percent of nonpermit mail
                            could obtain a presort discount. On the basis of our analyses of fiscal
                            year 1988 federal postage costs, we believe that between $300 million
                            and $450 million of federal agencies’ fiscal year 1988 mail would have
                            qualified for a presort discount. Obtaining the basic presort discount for
                            this mail would reduce postage charges by 16 percent (between $48 mil-
                            lion and $73 million), and obtaining other types of discounts (such as
                            ZIP+4 and barcoding) would increase the amount of the discount. The
                            savings from these discounts would be partially offset by the labor and
                            equipment costs of obtaining the discounts. These costs would vary by
                            the agencies’ particular approaches to obtaining the discounts, such as
                            using in-house or contractor labor and equipment. Presort contractors,


                            :%e glossary for definitions.



                            Page 30                                            GAO/GGKHO-49   Mail Management
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GSA’s Mail Management   Role: Proposals   for
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for example, typically claim between 25 and 50 percent of presort dis-
counts obtained. Agencies also would then be able to sort mail to use
other mail classes (such as bulk third-class) and greatly reduce the cost
of mailings selected for such classes. For example, a 3-ounce piece sent
first-class would cost 65 cents if no discounts were obtained; however,
the same piece, if it obtained a five-digit presort discount, would cost 57
cents. The same piece could be sent third-class bulk at the five-digit ZIP
Code rate for 13.2 cents.

GSA  could also reduce agency mail costs by expanding the weight range
of its current overnight contract. The range of weights for a package
subject to the vendor discount in GSA’s current overnight contract is lim-
ited to packages weighing up to 50 pounds. According to an FSSofficial,
GSA has a verbal agreement that the vendor will reduce its price for
packages weighing more than 50 pounds. However, our analysis of the
FSScontract shipper charges for fiscal year 1989 indicates that the gov-
ernment realized a price reduction of 39 percent from the vendor’s retail
price for packages weighing over 100 pounds or more (compared to the
78-percent price reduction for packages in the I- to 2-pound range). The
government received no discount shipping items using the vendor’s
international mail, through which 37,030 packages were shipped at a
cost of about $1.3 million. While there are no data on the potential value
of expanding the competitive contract into these categories of mail, we
believe that such an action would help reduce the government’s mail
costs.

GSA  could also reduce agency mail costs by obtaining expedited package
contracts. Some packages do not need to be delivered overnight but need
to be delivered faster than USPSparcel post delivery time frames. These
packages can be shipped by commercial vendors to meet delivery
requirements without incurring high-cost overnight mail charges.
Although we could not obtain comprehensive figures for agencies’
ground package shipment costs, based on information we obtained from
private industry and federal mail managers, we found that federal agen-
cies spent over $41 million in fiscal year 1988 on ground package ship-
ment vendors. We believe that combining federal package and
international mail volumes under regional or national contracts could
establish potential for volume discounts and result in more responsive
vendor support. This approach would also eliminate the need for the
many federal agencies that could use these services to individually
obtain necessary contracts to support their mail systems.




Page 31                                         GAO/GGD99-49   Mail Management
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                            the Future




                            GSA and agency officials said there is a need for these types of contracts
                            and they believe cost reductions could be achieved from GsA-negotiated
                            contracts for use by federal agencies. In February 1990, FSS,working
                            with USPS,began a pilot program that would allow agencies to consoli-
                            date their international mail. The consolidated services vendor has indi-
                            cated that use of this service will reduce agencies’ mail costs (which
                            were $1.3 million in 1989) by 25 percent. Also, in April 1990 FSSreleased
                            a Request for Comments for an express package contract that will be
                            expanded up to 150 pounds.

                            GSA officials thought such contracts would be cost beneficial and saw no
                            legal reason they could not be implemented. Most agencies’ mail manage-
                            ment officials indicated such contracts would be beneficial if they were
                            easy to use.
.

                            Agencies and GSA could identify and take action to resolve problems
    Agency Mail Practices   with agencies’ mail systems through the IRM Review Program. GSA
    Could Be Improved       emphasis to agencies on the potential value of assessing mail operations
    Through IRM Reviews     through the IRM Review Program, supported by appropriate guidance
                            and expertise for discovering and implementing opportunities for cost
                            reduction, could serve as a catalyst for accomplishing major cost reduc-
                            tions in agency mail operations.

                            For example, through IRM reviews, agencies could ascertain whether
                            they were making appropriate use of GSA'S overnight mail contract car-
                            rier. While the retail value of agencies’ spending on the GSA contractor
                            for fiscal year 1989 was $82 million, one mail service vendor estimated
                            the cost of overnight mail deliveries provided to federal agencies by
                            noncontract vendors was over $100 million. While it cannot be assumed
                            that the GSA overnight mail vendor would be appropriate for all agen-
                            cies’ shipments, the amount of spending on the non-GSAvendor seems
                            disproportionately high. Mail managers at three major agencies
                            acknowledged that the GSA vendor was not adequately used.

                            Some agencies also clearly need to improve controls over their mail
                            operations. For example, we reported in July 1989 that the Department
                            of Energy sent 16,714 copies of a 26-pound environmental impact state-
                            ment regarding its super collider project by priority mail at a cost of
                            approximately $335,000.5 DOE officials said that they did not consider

                            “Information Dissemination: Cost of Mailing Environmental Impact statement for super Collider
                            (GAQ’GGD-89-104, July 1989).



                            Page 32                                                       GAO/GGD90-49 Mail Management
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                     other options. In this same report, we estimated that mailing the docu-
                     ment using United Parcel Service ground service would have offered a
                     savings of over $200,000 while obtaining roughly comparable delivery
                     times. We also testified in April 1990 that the U.S. Mint could reduce its
                     postage costs by at least $2.4 million by using third class for its mass
                     promotional mailingsi

                     Agency mail managers could also use such a process for identifying
                     needs for their mail operations to top agency management. For example,
                     work load volumes could be analyzed to assess whether the agency mail
                     operation needs additional resources or equipment.

                     Since GSA serves as a collection and review point for agency IRM reviews,
                     GSA could also use this process as a mechanism for identifying problems
                     common to more than one agency. Such a process could lead to addenda
                     or revisions to governmentwide guidance or development of new areas
                     for contracting support, for example.


                     We found that GSA’S new mail management guide (see p. ) does not ade-
Timely and           quately respond to agencies’ needs for guidance. Comprehensive gui-
Comprehensive        dance supplemented with regular updates, as provided by at least one
Agency Guidance Is   major vendor, clearly is closer to GSA’S goal of “providing the ‘how to’ to
                     agency personnel” than the current GSA guide.
Essential
                     On the basis of our interviews with agency mail managers and with mail
                     managers at the March 18, 1989, COMP meeting, we found that issues of
                     concern to federal mailers include a need for government policy direc-
                     tion on mail management, guidance on using the Official Mail
                     Accounting System and conversion to direct accountability, and a
                     method for controlling the rising costs of business reply mail. All of
                     these concerns would benefit from centralized guidance from GSA.

                     The need for timely guidance is also illustrated by the constantly
                     changing requirements and discounts offered by USPSand other vendors.
                     For example, USPSis testing equipment that will read barcodes in the
                     address lines of letters and plans to increase incentives for mailers to
                     barcode their mail during the next round of rate changes, which are
                     expected to be effective in early 1991. Also, a USPSofficial said that GSA


                     ‘Savings Opportunity for the United States Mint’s promotional Mailings (GAO/T-GGD-90-34. Apr.
                      1990).



                     Page 33                                                      GAO/GGD90-49     Mail Management
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                            GSA’s Mail Management       Role: Proposals   for
                            the Future




                            should provide guidance to federal agencies on appropriate mailing
                            practices to help ensure compliance with the private express statutes.”

                            GSA could also record and disseminate case studies of mail managers’
                            successes with implementing changes to mail operations. These case
                            studies should, at the least, address the typical obstacles to mail system
                            change and provide information on how agency mail managers over-
                            came those obstacles. For example, GSA could provide information on
                            how agencies converted major mailings from first to third class.;

                            In January 1990, IRMS officials gave us a timetable for issuing a mail
                            operations handbook. The revision is scheduled for publication in mid-
                            1991. It is unclear at this point whether the agency concerns described
                            above will be included in the revised guidance.
.

                            Through an organization such as COMP, GSA could carry out its leadership
    GSA Mail Leadership     role in addressing crosscutting management issues and ensuring that the
    Would Benefit From      agencies’ perspectives are considered in conducting improvement
    Interagency             efforts. COMP could be used to
    Committee Support   .   address the range of management issues requiring GSA involvement,
                        .   foster communication across the executive branch and with GSA,
                        .   build commitment to mail system changes, and
                        .   tap the talent within the agencies to resolve the government’s mail
                            system problems.

                            In our report on OMB’S management, we pointed out that OMB recognized
                            that the establishment of interagency councils helped achieve greater
                            agency involvement in addressing crosscutting management issues. The
                            councils ensured that an agency perspective was applied to govern-
                            mentwide management reforms and brought attention to the need for
                            improvements. The councils’ committees met monthly to foster ongoing
                            communications and to share perspectives on common problems. As a
                            result of these meetings, the councils initiated varied projects to tackle
                            management reform, such as using computer matching to combat entitle-
                            ment fraud. One council created consolidated administrative service




                            “See glossary for a description of the statutes.

                            ‘See glossary for definition.



                            Page 34                                             GAO/GGD90-49   Mail Management
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                 GSA’s MaiI Management       Role: Proposals   for
                 the Future




                 units to achieve economies in operations common among several agen-
                 cies, and another established governmentwide standards governing how
                 Inspectors General do investigations and evaluations.

                 Council participants told us that the councils had provided resources,
                 highlighted important issues, helped with legislation, and provided an
                 opportunity for coordination of projects and the cross-fertilization of
                 ideas. These types of results show that the councils were successful in
                 fostering necessary communication across the executive branch,
                 building commitment to change, tapping talent that existed within agen-
                 cies, keeping management issues in the forefront, and initiating impor-
                 tant improvement projects.

                 Major benefits could be realized if GSA used such an approach. For
                 example, a governmentwide presort project, focused on obtaining
                 presort discounts for agencies’ high-volume mail centers across the
                 nation, would be suitable for such a committee activity.


                 Most of the mail management officials in the 10 agencies we contacted
Agencies Need    said they would like representation of agencies’ interests before USPS
Improved         prior to changes in USPSregulations affecting their mailing interests. On
Representation   the basis of the information we obtained from agency mail managers, we
                 believe that individual agencies do not have the resources to invest in
                 preparing individual positions and a governmentwide position should be
                 more persuasive to USPSand the Postal Rate Commission. Such represen-
                 tation would also be useful for obtaining information about potential
                 changes to mailing requirements and regulations to allow for better
                 preparation for change by agencies. For example, USPS has requested an
                 increase in the discount for prebarcoded* letters in the current rate
                 filing, which will increase agencies’ incentives for purchasing appro-
                 priate in-house or contractor support. USPS is also working on new tech-
                 nology for barcoding mail larger than standard sized envelopes; agencies
                 make heavy use of nonstandard envelopes.

                 Agencies also need representation before USPSto provide a consolidated
                 federal position when there are USPS changes affecting federal opera-
                 tions, such as USPS’ ongoing program to move agencies toward use of
                 USPS’Official Mail Accounting System and changes to the fee system for
                 business reply mail.


                 “See glossary for definition.



                 Page 35                                             GAO/GGD-90-49   Mail Management
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                       the Future




                       Several of the 10 major agency mail management officials we inter-
GSA’s Training Needs   viewed mentioned that videotaped training material directed at specific
Improvement            agency groups (e.g., mailroom personnel, agency employees, and mail
                       managers) would be very effective and would make training accessible
                       at reasonable cost to the large numbers of employees that should be
                       informed about agency mail operations and requirements. Such tapes
                       could be presented on a repeated basis, which would be useful to agen-
                       cies that experience high turnover rates in mail management and opera-
                       tions. On-site training would also eliminate agency costs associated with
                       current training because the training would be delivered at locations and
                       during hours convenient to agency personnel (eliminating travel and
                       transportation costs). According to a major private vendor, videotapes
                       have been proven to be effective educational tools that can train,
                       inform, and motivate target audiences. A GSA Training Center official
                       said that the Center does not currently offer training in this format.

                       USPShas produced several videotapes about elements of its programs.
                       USPShas begun selling a set of videotapes to provide instruction about
                       managing a mail center covering topics such as mail center management,
                       improving mail center operations, personnel management, and cost
                       saving approaches. While these videotapes address some agency con-
                       cerns, USPSis not primarily in the business of mail management from the
                       agency’s point of view. Agencies need a wider variety of training to
                       cover all aspects of personnel training and the variety of vendor options
                       available to federal agencies.


                       In December 1988, GSA published a study on records management tech-
Technical Support      nical assistance.” This study concluded that
Would Help Implement
Change                 “the demand for additional records management technical assistance in agencies is
                       relatively small, and that the need can be adequately addressed by existing [GSA]
                       programs and services. There is no unmet demand of sufficient magnitude to war-
                       rant the creation of a new program.”

                       We believe that GSA has underestimated the level of demand for tech-
                       nical assistance, at least for agency mail systems. Mail managers at the
                       COMP discussion and 8 of the 10 major agency mail managers we inter-
                       viewed said that agencies needed on-site technical support.



                       “Records Management Technical Assistance Study, GSA, Information Resources Management Service
                       (Dec. 1988).



                       Page 36                                                    GAO/GGD90-49     Mail Management
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GSA’s Mail Management   Role: Proposala   for
the Future




However, GSA raised several important points about agency records
management programs in its study. For example, some concerns raised
in the GSA survey were that (1) agencies lacked funds for records man-
agement-related contracts and (2) supervisors provided little support
for agency records management programs. But the survey did show that
many records managers believed their agencies would become interested
in records management issues if some contracts were let for studies or
training. Both findings correspond to concerns expressed to us by
agency mail managers.

OMB’S experience in central agency management, as described in our
report on OMB’S central agency management role, can provide a model
for GSA’S role in supporting changes to agencies’ mail systems. In
response to mail and records managers’ concerns about obtaining top
management attention and support, GSA could provide the external influ-
ence and support useful to agency officials in overcoming circumstances
such as opposition from program managers over the appropriate class of
mail. GSA personnel could study agency operations, design new mail sys-
tems as appropriate (including necessary contract support), participate
in discussion of such problems with higher levels of agency manage-
ment, and provide support for mail managers’ positions.

Considering that there is currently no technical assistance provided for
agency mail systems, it is significant that the first recommendation of
the GSA study is that GSA should
‘8
     broaden its activities to include the provision of records management technical
     .


assistance which is not necessarily related to automated data processing or office
automation. [IRMS] already has personnel with the necessary records management
expertise and the office has broad experience in administering contracts for studies,
analyses, and system designs. These are precisely the areas in which some agencies
may require assistance.”

The study concluded that “. . . based upon the results of this study, the
additional workload would be very small and could be absorbed by [IRMS]
without increased staff.”

We believe that (1) GSA can better support agency mail management pro-
grams by providing on-site expertise that is responsive to agency
records managers’ concerns about funding and management support and
(2) GSA needs to be able to provide such expertise at no cost to agencies.
GsA-not the agencies-should operate a program to adequately fulfill
GSA’S technical assistance role set forth in the FRMA.It should do so




 Page 37                                              GAO/GGD99-49    MaLl Management
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              GSA’s Mail Management   Role: Proposals   for
              the Future




              through in-house staff, contractor support and/or sharing of expertise
              from other agencies.

              In discussion on this point, an IRMS official said that GSA should be reim-
              bursed for technical assistance. He also said that GSA has no incentive
              for providing such expertise to agencies, and that the agencies-which
              would realize all savings in improvements to their mail operations-
              should have responsibility for covering the costs of technical assistance.
              We also note that GSA’S usual practice is to charge for its services: GSA’S
              fiscal year 1988 program funding used only 3.6 percent of appropriated
              funds, while 96.4 percent of its funds were received from customer
              agencies for goods and services.

              However, we reported in 1980 that the National Archives and Records
              Service did not charge for records management technical assistance
              from the time it was assigned such a role in 1950 until 1964, when the
              number of requests for technical assistance services outgrew its staff
              capacity.l” In the same report, we said that supporting technical assis-
              tance through direct appropriations would eliminate many problems
              with GSA'S records management program and allow the National
              Archives and Records Service the flexibility to better direct its technical
              assistance program. We believe, moreover, that the personnel or con-
              tracting costs associated with free technical assistance to agencies are
              small compared with the potential returns associated with improve-
              ments to agencies’ mail systems. One federal mail management expert
              pointed out that without no-cost support to agencies, GSA would provide
              support only to agencies that would pay for GSA services. The expert
              said that if GSA would do so, agencies with contract funding could obtain
              support to help resolve minor concerns while agencies with major
              problems in their mail systems but lacking funds for contracts would not
              receive support.


Conclusions   problems within and across the agencies. In the face of staffing con-
              straints that are likely to continue, GSA needs to carefully plan a strategy
              that will use agencies’ expertise and resources to support its efforts to
              reduce federal mail costs. We believe that an effective leadership role
              for GSA includes a number of important actions for controlling rising fed-
              eral mail costs. These actions are (1) obtaining competitive contracts for

              “‘Program to Improve Federal Records Management Practices Should Be funded by Direct Appropria-
              tions (LCD80-68, June 20, 1980).



              Page 38                                                      GAO/GGD90-49     Mail Management
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                          the Future




                          mail services, (2) providing timely information and guidance to agencies
                          (through committees and governmentwide publications), (3) providing
                          the training and technical support needed for improving agency mail
                          operations, and (4) using the IRM review program to ensure that agen-
                          cies’ mail operations are cost effective.

                          Agencies should also recognize that they need to support GSA efforts by
                          actively participating in identifying governmentwide federal mail
                          system issues and working toward solving these concerns.


                          We recommend that the GSA Administrator, working in close cooperation
    Recommendationsto     with federal agencies, develop a plan clearly laying out a strategy-
    the GSA               including an appropriate resource level-for meeting GSA’S statutory
.   Administrator         mail management responsibilities. At a minimum, the strategy should
                          ensure that GSA

                          obtains and expands competitive contracts related to agency mail opera-
                          tions, such as presort and overnight delivery;
                          expands its Information Resources Management Review Program to
                          include reducing agency mail costs and monitoring agency improvement
                          efforts;
                          develops timely and comprehensive written guidance that focuses on
                          opportunities for agencies to reduce their mail costs;
                          makes on-site technical assistance in mail management available to
                          agencies, using GSA’s and other agencies’ expertise as appropriate;
                          develops training materials and a delivery system that better meet agen-
                          cies’ needs; and
                          solicits and represents agencies’ common mail concerns and dissemi-
                          nates important information to the federal agencies.


                          In a June 19, 1990, letter the Administrator of GSA provided written
    Agency Comments and   comments on a draft of this report and agreed with our findings. (See
    Our Evaluation        app. III.) Specifically, the Administrator said that GSA “must once again
                          assume a leadership role in the mail management area.” He also said
                          that he asked the Commissioner of GSA's IRMS to develop a strategy for
                          meeting GSA'S responsibilities for the mail management program and to
                          coordinate this activity with the Federal IRM Regulation Interagency
                          Advisory Council.




                          Page 39                                         GAO/GGD90-49   Mail Management
Appendix I                                                                                                  -
Mail Volume and Costs Have
Generally Increased

Figure 1.1: Mail Costs, Fiscal Years 1979-
1988
                                             1000   Dollarsin Million9



                                                                                                      r


                                             Source, USPS Annual Reports



Figure 1.2: Mail Volumes, Fiscal Years
i 979-i 988
                                                    Placea of Mall in Mllllom




                                             Source: USPS Annual Reports.




                                             Page 40                            GAO/GGD9049   Mail Management
Appendix II

First-Class Mail Rate History-1979                               to 1988


                                                                                     Percentage
                                                                      First ounce     over prior
                Effective date                                             (cents)          -rate
                July 15, 1979                                                   15
                March 22, 1981                                                  18          20 00
                November 1, 1981                                                20          11.11
                February 17, 1985                                               22          10.00
                April 2, 1988                                                   25          13.64
                Present rate tn comparison with July 1979 rate                              66.67




                Page 41                                          GAO/GGD90-49   Mail Management
Appendix III

Comments From the General
ServicesAdministration


                                                      Administrator
                                             General Services Administration
                                                Washington, DC 20405


               June    19,    1990


               The Honorable        Charles      A. Bowsher
               Comptroller       General     of the
                 United     States
               General     Accounting       Office
               Washington,       DC 20548

               Dear   Mr.     Bowsher:

               Thank you for the opportunity     to comment on the draft     General
               Accounting  Office  (GAO) report    No.  GAO/GGD-90-,   “Mail
               Management:    GSA Needs to Improve     Support  of Agency Programs."
               As the draft         report       indicates,        the General     Services
               Administration's             (GSA) Information            Resources    Management      Service
               (IRMS) has responsibility                   for Governmentwide         leadership      in mail
               management.          Over the years            IRMS has emphasized           its automated
               data processing            (ADP) and telecommunications                functions,
               expending        the bulk       of its      resources      on these    critical     program
               areas.       Quite     frankly,        the mail management          program      has not
               received      additional          attention       because     it has been overshadowed
               by ADP and telecommunications                     issues.
               The findings       in your draft       report,    however,        make it clear      that
               GSA must once again            assume a leadership       role      in the mail
               management     area.       For this    reason    I have asked the
               Commissioner,        Information      Resources    Management        Service,     to
               develop    a strategy        for meeting      our responsibilities            for the
               mail management         program     and to coordinate         this   activity     with
               the Federal      IRM Regulation         (FIRMR) Interagency          Advisory
               Council.
               I appreciate      the time and effort    expended    by GAO officials                     in
               developing     the draft    audit,  and I look forward    to continuing
               our joint    efforts     to improve  GSA operations.




               L.minis&ator




                      Page 42                                                         GAO/GGD9O-49      Mail Management
    Appendix IV

    Major Contributors to This Report


                              Larry A. Herrmann, Assistant Director, Government Business Opera-
    General Government          tions Issues
    Division, Washington,     B. Scott Pettis, Assignment Manager
                              Jacqueline E. Matthews, Evaluator-in-Charge
    D.C.                      Edwin J. Lane, Evaluator


    Philadelphia   Regional   Marilyn K. Wasleski, Site   &niOr


    Office


.




                              Page 43                                     GAOpJM9-49   Mail Management
    Glossary


    Account Representative      A USPSemployee who establishes and maintains communications with
                                customers to improve service, sell postal products, implement programs,
                                and present customer viewpoints to postal management.


    Barcode                     A series of vertical bars and half bars representing the ZIP Code. The
                                barcode facilitates automated processing by optical character reader
                                equipment.


    Barcode Sorter              A computer-controlled, high-speed machine that sorts letters on the
                                basis of an imprinted barcode. It consists of a mail feed and transport
                                unit, stacker module, and associated electronic equipment.
.

    Board of Governors          The nine-member group that directs the exercise of powers by USPS.The
                                Board directs and controls the expenditures and reviews the practices
                                and policies of USPS.


    Business Reply Mail         Specially printed cards, envelopes, cartons, and labels that may be
                                mailed without prepayment of postage. The postage and fees are col-
                                lected when the mail is delivered to the addressee. BRM may not be sent
                                to or from other countries.


    Classes of Mail             First-class, second-class, third-class, fourth-class, and express mail are
                                the five USPSclasses of mail.


    Direct Accountability       Any procedure in which verifiable actual mail volumes and/or postage
                                costs are recorded before or at the time of mailing.


    Domestic Mail Manual        A manual issued by USPSon a quarterly basis containing comprehensive
                                information on mail preparation and treatment within the United States
                                and its territories.


    Electronic Funds Transfer   The direct transfer or exchange of funds between computers. A method
    System                      of exchanging money electronically without using paper.




                                Page 44                                         GAO/GGD9049   Mail Management
                            Glossary




    Express Mail            An expedited, time-sensitive, guaranteed delivery class of mail pro-
                            viding overnight service for materials or letters weighing up to 70
                            pounds. There is a full postage refund for any shipment not delivered as
                            prescribed. Express Mail is a USPS trademark.


    Express Small Package   GSA’S FSSis currently administering a governmentwide contract that pro-
    Shipment Contract       vides next day delivery of small packages and letters at a discount.



    First-Class Mail        Letters, postcards, all matter wholly or partially in writing, and all
                            matter sealed or otherwise closed against inspection.


.   Fourth-Class Mail       Generally, parcels weighing 1 pound or more.


    Franked Mail            Official mail of Members of Congress and other elected officials and
                            members of the Supreme Court. This type of mail is authorized without
                            the prepayment of postage. Its counterpart for agency mailings is pen-
                            alty mail.


    Ground Package          An economical method of shipping packages the next day or the second
    Shipments               day without delivery guarantees.



    Indicium                A marking placed on an envelope or package to indicate the payment of
                            postage.


    Mail                    Letters, telecommunications, memoranda, postcards, documents, pack-
                            ages, publications, and other communications received for distribution
                            or dispatch.


    Mail Management         Mail management seeks the rapid handling and accurate delivery of mail
                            at the lowest cost. Processing steps are kept to a minimum, sound princi-
                            ples of work flow are applied, and modern equipment is used. Opera-
                            tions are kept simple to increase efficiency.




                            Page 45                                         GAO/GGD90-49   Mail Management
                           Glossary




Mailers Technical          A group that provides technical information, advice, and recommenda-
Advisory Committee         tions about postal services, programs, regulations, and requirements.
                           The members represent associations of large commercial mailing organi-
(MTAC)                     zations and related mailing services.


Mailroom                   A central area for agency mail functions. This area is the focal point for
                           the receipt or dispatch of mail and for further internal distribution or
                           entry into the USPS mail system.


Metered Mail               Mail for which postage has been paid through the use of a postage
                           meter. The privileges and conditions of stamped mail apply to metered
                           mail.


Official Mail              Mail authorized by law to be transmitted domestically without prepay-
                           ment of postage (e.g., franked and penalty mail).


Official Mail Accounting   An automated system that provides for the data entry of official mail
                           forms by the management sectional centers. USPS bills agencies based on
System (OMAS)              data from OMAS, and post offices get credit for the revenue. Agencies
                           use data from OMAS to control their postage costs.


Optical Character Reader   An automatic mail sorting system that locates the address written on
                           the face of an envelope and reads the city, state, and ZIP Code, prints a
                           barcode, and sorts the mail. It consists of a mail feed and transport unit,
                           stacker modules, and a computer with system control, video monitor,
                           and printer.


Overnight Mail             The private mailing industry service equivalent to the USPSservice
                           called Express Mail. (See Express Mail.)


Parcel Post                A certain type of domestic fourth-class mail for which rates are deter-
                           mined by weight and distance (zone rated). It also pertains to a type of
                           international mail service for parcels.




                           Page 46                                         GAO/GGD-96-49   Mail Management
                                Glossary




    Penalty Mail                Official agency mail authorized by law to be transmitted without the
                                prepayment of postage by departments and agencies of the government
                                and by specifically authorized individuals.


    Permit Mail                 Mail sent with a printed indicium instead of a stamp. The indicium indi-
                                cates that postage has been paid.


    Postage Meter               An electronic device for imprinting postage directly on envelopes or on a
                                gummed tape for application to letters and packages.


    Postal Rate Commission      An independent federal agency that makes recommendations concerning
                                USPSrequests for changes in postal rates and mail classifications. The
.   V-0                         five Commissioners are nominated by the President and approved by
                                the Senate.


    Postal Reorganization Act   The act requiring postal rates and fees to “. . . provide sufficient reve-
                                nues so that the total estimated income and appropriations. . . will equal
                                as nearly as practicable total estimated costs.” (Public Law 91-375,
                                signed August 12,197O.)


    Prebarcode                  Barcoding done by the mailer. (See barcode.)


    Presort                     A form of mail preparation that reduces USPSlabor costs and qualifies
                                mail for postage discounts. The mailer groups pieces in a mailing by ZIP
                                Code or other usps-recommended separation in order to bypass certain
                                postal operations. Presort is a USPStrademark.


    Private Express Statutes    The laws giving USPSexclusive right to carry letters over post routes.


    Rate Setting                The process by which rates are changed, which is a joint responsibility
                                of USPSand the Postal Rate Commission. USPS managers recommend pro-
                                posed rates for all mail classes to the Board of Governors. With the
                                approval of the Board of Governors, the proposed rates are sent to PRC,
                                which holds public hearings and issues a decision specifying the rates. If



                                Page 47                                        GAOpSGD90-49   Mail Management
                              Glossary




                              the governors find those rates unsatisfactory, they may modify them by
                              unanimous vote.


    Records Management        The planning, controlling, directing, organizing, training, promoting, and
                              other managerial activities involved in records creation, records mainte-
                              nance and use, and records disposition. Mail processing by federal agen-
                              cies is included under the term “records maintenance and use.”


    Sampling                  A statistical method that determines the reimbursement owed to USPS
                              for agency mailings.


.                             Newspapers, magazines, and other publications issued at regular
    Second-Class Mail
                              intervals.


    Third-Class Mail          Usually printed matter, such as circulars and pamphlets, and parcels
                              weighing less than 1 pound.


    ZIP (Zoning Improvement   Established in 1963, a system of five-digit codes identifying the indi-
                              vidual post office or metropolitan area delivery station associated with
    Plan) Code                the address. ZIP Code is a USPStrademark.


    ZIP+4                     The nine-digit code, established in 1981, composed of (1) the initial
                              code-the first five digits identifying the post office or metropolitan
                              area delivery station associated with the address; (2) a hyphen; and (3)
                              the expanded code, including the additional four digits. The first two
                              additional digits designate the sector (a geographic portion of a zone, a
                              portion of a rural route, several city blocks or a large building, part of a
                              box section, or an official designation). The last two digits designate the
                              segment, a specific block face, apartment house bank of boxes, a firm, a
                              floor in a large building, or other specific location. ZIP + 4 is a USPS
                              trademark.




    (014416)                  Page 48                                          GAO/GGD90-49   Mail Management