Audit Reports

Objective

Our objective was to assess the efficiency of the Postal Service’s manual mail processing operations.

Mail is processed manually when its dimensions or address quality prevent it from being processed on mail processing equipment or to meet service standards when machines are at capacity.

Processing mail manually is less productive (which is calculated by dividing mailpieces processed by workhours charged) and more costly than processing mail on machines, impacting overall efficiency. Specifically, the Postal Service’s automated processing is six times more productive for letters and flats and nearly four times more productive for packages than processing manually.

The Postal Service has policies and procedures to help ensure that machinable mail – mail that meets certain standards, such as size and shape, to be sorted on mail processing equipment – stays in automated processing. This includes requiring facilities to maintain a “gatekeeper” employee who ensures machinable mail is not manually sorted in manual letter operations and requiring employees at mail processing equipment to re-run rejected mail prior to sending it to manual operations.

This audit is a follow-up, in part, to the U.S. Postal Service Office of Inspector General (OIG) fiscal year (FY) 2020 audit of U.S. Postal Service’s Processing Network Optimization and Service Impacts. In that audit, we found that the Postal Service had been less efficient at processing manual mail each year since FY 2014, as mail processing workhours had not decreased at a rate consistent with decreased mail volume. From FY 2014 through FY 2019, the Postal Service’s productivity in the number of mailpieces processed manually decreased by 21 percent.

This audit was designed to further determine the causes of this decreased efficiency and included the review of manual processing operations across letters, flats, and packages. We reviewed manual mail processing productivity data — including volume and workhours — and employee availability data from October 1, 2019, through June 30, 2021. We judgmentally selected sites with low performing manual letter, flat, or package operations compared to nationwide productivity. In total, we performed reviews at nine mail processing facilities nationwide.

Finding

We found the Postal Service is not processing manual mail at optimal efficiency as productivity in the Postal Service’s manual operations continued to trend downward. Productivity decreased nationwide by 8 percent between FY 2019 to FY 2020, and by 10 percent during the first three quarters of FY 2021 compared to the first three quarters of FY 2020. During our site observations and interviews, we found inefficiency in manual mail processing can be attributed, in part, to lack of management oversight and employee availability and staffing issues.

Management Oversight

Postal Service management did not use all available tools to oversee the efficiency of its manual mail operations. For example:

• At seven of the nine mail processing facilities, Postal Service management did not use its own productivity data on manual operations to oversee their efficiency. Several managers simply considered manual operations to be productive if all mailpieces were cleared daily. As a result, they were unaware of the below-average productivity in their manual operations.

• At seven of the nine mail processing facilities, Postal Service management did not know the productivity targets for manual operations and management at the remaining two did not find productivity targets to be useful or realistic; therefore, productivity targets were not communicated to Postal Service employees. In addition, the Postal Service evaluates its productivity targets each year based on the prior year average actual performance, but targets are normally only raised to meet new performance expectations, not lowered. As a result, productivity targets may not have been aligned with actual performance.

Additionally, management did not always implement policies and procedures to properly account for volume and workhours in manual operations, and did not always keep mail that could be run on mail processing machines out of the operation. For example, management did not always:

• Properly account for manual workhours as employees moved between manual and automated processing operations.

• Ensure packages were scanned to capture the number of pieces sorted manually.

• Update manual letter and flat volume estimates yearly. Facilities use an estimated volume of manually sorted letter and flat mail that is based on a percentage of actual pieces processed on machines. This estimated manual volume is then compared against actual workhours to measure productivity.

• Maintain a “gatekeeper” within manual letter operations to identify letter mail that could be run on mail processing machines or identify machinable mail within manual flat and package operations and prevent it from being processed manually.

• Re-run mail rejected on mail processing machines prior to sending to manual operations.

As a result, manual operations are likely not operating efficiently and machinable mail is being processed at a lower productivity rate and higher cost.

Employee Availability and Staffing

Postal Service management at all nine mail processing facilities identified employee availability and staffing issues stemming from the COVID-19 pandemic and hiring freeze as factors impacting efficiency in manual operations.

From October 1, 2019, through June 30, 2021, employee availability at all nine facilities ranged between 66.9 and 79.9 percent. Employee availability nationwide for mail processing career employees has been below 80 percent since January 2020.

In addition, mail processing operations nationwide were consistently short-staffed in FY 2020 through Quarter 3, FY 2021, by an average of 1,135 career employees, or 1.5 percent. Further, as of June 2021, the Postal Service had 366 vacancies for mail processing manager and supervisory positions, with an average vacancy lasting 235 days.

As a result of employee availability and staffing issues, Postal Service management is challenged with properly staffing mail processing operations to meet operational needs and providing sufficient supervision over manual operations. The Postal Service’s 10-Year Plan, issued March 2021, announced strategies to promote career development and employee retention over the next ten years. In addition, OIG has several recent and ongoing audits that recommend the Postal Service implement actions to address staffing and employee availability issues. We will continue to monitor and track the Postal Service’s implementation of these strategies and recommendations during future audits.

The Postal Service needs effective and efficient operations to fulfill its mission of providing prompt, reliable, and affordable mail service to the American public. The trend of declining productivity in manual mail processing may continue if inefficiencies are not addressed. Addressing causes impacting manual productivity will increase operational efficiency, help reduce costs, and better support the goals outlined in the 10-Year Plan.

We estimate that addressing the issues identified in this report would allow the Postal Service an opportunity to increase efficiency in manual processing operations by reducing 9.8 million workhours, resulting in savings of about $395.6 million.