Exclusion of Cost of Indemnity From Registered Mail Rate Payable by Federal Agencies

In a 1978 decision, GAO held that Federal agencies may use registered mail when necessary in order to obtain greater protection, and at the same time the agencies could refrain from obtaining the insurance coverage also offered by registered mail. However, Federal agencies are prohibited from using insured mail, since insured mail provides no special service aside from the indemnity offered. In a request for a clarification of the GAO decision, the General Services Administration questioned whether the cost of indemnity should be excluded from the registered mail rate payable by Federal agencies, leaving the resulting Federal agency rate based on the cost of providing the "special" service of greater protection in the handling and delivery of mail. Although GAO favors the exclusion of the cost of indemnity from the fee for registered mail as a cost savings to the Federal Government, GAO is not the appropriate forum for determining whether the U.S. Postal Service (USPS) has the authority to achieve this objective by establishing a special rate for Federal agencies only. A decision by GAO would not be legally binding on either the USPS or the Postal Rate Commission (PRC). It is therefore suggested that the USPS and the PRC can resolve the issue after providing for participation by the United States Government, as well as other users of registered mail, in a hearing on the record.