Worksharing is a form of outsourcing where mailers perform activities for the Postal Service, such as mail processing or transportation, in exchange for reduced prices. For more than 30 years, the Postal Service has offered workshare discounts to mailers, but the discounts have inspired strong and opposing views.

To some, worksharing liberated the Postal Service’s supply chain to the private sector, increasing efficiency, growing mail volume, and allowing the Postal Service to tailor pricing to its customers’ needs. To others, worksharing exposed the Postal Service to revenue risks, provided subsidies to big mailers, and sacrificed postal jobs to unfair competition.

The Office of Inspector General’s Risk Analysis Research Center undertook an independent assessment of worksharing. The assessment found that in many ways worksharing has been a resounding success in the United States and a model for posts in other countries to emulate. Yet, there are still problems to be addressed and opportunities to be explored. The results appear in a recently released white paper. Some of the key findings are

Worksharing has rapidly grown to dominate the Postal Service’s business and today represents over 80 percent of mail volume.
• The Postal Service provided $15 billion worth of discounts for work that saved $14.8 billion in avoided costs in fiscal year 2008.
• The Postal Service’s ability to retain earnings may create an incentive to set discounts to be less than the Postal Service’s avoided costs, especially in areas where discounts greatly exceed mailer cost.
• The Postal Service’s worksharing program is recognized as the largest, most sophisticated, and most transparent in the world

The time is right for the Postal Service, the Postal Regulatory Commission, and the stakeholder community to reexamine and reevaluate certain principles supporting worksharing in order to prepare it for the next 30 years.

Preventing crimes against the U.S. Postal Service is a key goal of the Office of Inspector General (OIG). With the aid of modern technology, we’ve added a new feature to our website to help raise awareness of the work we do and possibly prevent crimes before they happen.  Our avatar Special Agent Dan Franklin is the host in a series of short video clips to raise OIG awareness. Our first video examines the cost of workers’ compensation fraud to the Postal Service. Stay tuned for more clips coming in the months ahead.

Is it time for a new objective approach for locating Post Offices that improves access, service, and convenience? The Postal Service has a vast legacy retail network that includes 36,000 Post Offices, stations, branches, and contract facilities. That’s more facilities than McDonalds, Starbucks, and Walmart combined. Yet the current network may not necessarily meet the needs of the way people live and work now.

The OIG worked with well-known real estate economist, Dr. Anthony Yezer, to analyze how the Postal Service’s retail network would look if it were optimally reorganized. The goal was to provide a thorough, objective, transparent modeling approach that would guide planners in making decisions about the network and allow stakeholders to review the decision process.

The model shows that, overall, the Postal Service’s network has too many retail facilities located too closely together. In the larger cities, the number and size of retail facilities seems to be just about right. But, interestingly, in some high-density downtown areas, there may be too few facilities. In smaller towns and rural areas, the misalignment is more acute. The model suggests there are too many facilities and they are too close together. The findings suggest that fewer larger facilities that are better staffed and are open longer hours could better serve the public while reducing cost.

Recent reports by the Postal Service and the Government Accountability Office have raised the issue of rethinking the provision of retail services. As the Postal Service and its stakeholders consider retail modernization, we hope Dr. Yezer’s model can make a useful contribution to the debate. The results of the study are described in the white paper, Analyzing the Postal Service’s Retail Network Using an Objective Modeling Approach