Postage Stamp Production:

Private Sector Can Be a Lower Cost Optional Source

GGD-93-18: Published: Oct 30, 1992. Publicly Released: Nov 2, 1992.

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Pursuant to a congressional request, GAO reviewed the United States Postal Service's initiative to procure postage stamps from the private sector, focusing on the: (1) private sector's production capacity; (2) comparative price of Bureau of Engraving and Printing and private-sector stamps; and (3) relationship between the Bureau of Engraving and Printing and the Postal Service.

GAO found that: (1) the private sector had sufficient postage stamp production capacity to provide adequate competition; (2) the number of companies competing for postage stamp contracts has increased, and private-sector stamp production capability and capacity has expanded; (3) sufficient overlap in similar products existed between the government and private sector which made cost comparisons possible; (4) since 1987, all 21 stamp procurements have had two or more competing contractors; (5) in 1992, the Postal Service estimated that 57 billion stamps will be purchased; (6) private-sector limitations included complex printing and stamp finishing capacities; (7) the adjusted cost of procuring stamps from the private sector ranged from $.13 to $8.18 per 1,000 stamps; (8) the Bureau will continue to play a signigicant role in postage stamp production because of its work-force stability and experience; (9) the private sector and the Bureau had similar quality deficiency rates; and (10) due to a formal interagency agreement, the business relationship between the Postal Service and the Bureau has improved, and the Bureau will remain the principal provider of postage stamps.

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