Postal Service:

Automation Is Restraining But Not Reducing Costs

GGD-92-58: Published: May 12, 1992. Publicly Released: May 12, 1992.

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Pursuant to a congressional request, GAO reviewed U.S. Postal Service's (USPS) automation program, focusing on: (1) automation's effect on postal costs; and (2) the prospect for future cost reductions.

GAO found that: (1) although it provides one of the best and most needed cost savings opportunities for USPS, automation is unlikely to be a panacea that will reverse the tendency for costs to outpace inflation; (2) in fiscal year 1991, USPS operating expenses were $295 million more than expected despite a decrease in career employment and additional automation; (3) the decrease in career employment was offset by increases in overtime and noncareer employees; (4) although USPS handled less mail in 1991 than it did in the previous year, it used more work hours; (5) the number of hours worked decreased in functions most directly affected by automation, but the 1-percent reduction over the previous year was only about about 65 percent of the planned amount due to an unexpected increase in work that directly supports mail distribution and a failure to capture savings in time spent by carriers preparing the mail for delivery; (6) overhead functions and work load subject to automation had increases that offset any savings; (7) work-hour savings are also being overwhelmed by annual increases in labor costs; (8) USPS audits of postal operations identified over $187 million in potential savings that were not captured due to inefficient personnel and equipment management in automation and related operations; and (9) the magnitude of management challenges compared to the work-year savings being captured by automation makes it unlikely that the automation program represents a breakthrough in changing the upward trend of overall postal costs.

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