Our objective was to evaluate the effectiveness of U.S. Postal Service Mail Recovery Center (MRC) operations and identify opportunities for improvement.
The MRC is the Postal Service’s “lost and found” department, serving a vital customer service role by processing undeliverable and lost items. The MRC receives items deemed “undeliverable” from Postal Service facilities throughout the country, including post offices, delivery units, and distribution centers. These items may be designated as undeliverable because of incomplete addresses, damaged mailing labels, etc. The MRC received about 67 million items in fiscal year (FY) 2019.
MRC staff conduct preliminary assessments of items arriving at the MRC within a seven-day window and determine how each item will be handled as follows:
- Returned: Pieces that are eligible to be returned to the sender or delivered to the intended recipient. This mail could either have been improperly sent to the MRC, or MRC staff were able to find a sender/recipient after opening and examining the item.
- Inventoried/Stored: For certain mailings where MRC staff cannot initially determine the sender/recipient but deem the item to have some material value (e.g., parcels of sentimental value or worth $25 or more), MRC staff inventory and hold these items and await customer inquiries. The MRC can store items from 30 days to indefinitely, depending on the contents, mail class or special services purchased. At the end of these designated hold periods, unclaimed items are sold at auction, donated, recycled or destroyed.
- Analyzed Further: Certain items (such as First‑Class Mail) are further analyzed via automation and manual verification as they can potentially contain cash, checks, gift cards or money orders.
- Disposed: Other items, such as those confirmed as undeliverable or not eligible for return, delivery or inventory (e.g., Marketing Mail) are recycled or destroyed.
We completed our fieldwork before the President of the United States issued the national emergency declaration concerning the novel coronavirus disease outbreak (COVID-19) on March 13, 2020. The results of this audit do not reflect process and/or operational changes that may have occurred as a result of the pandemic.
MRC processing operations were not always effective. Specifically, items received at the MRC were not processed in a timely manner, as the MRC did not meet its seven-day acceptance processing goal from December 2017 to September 2019. We found some mail had not been processed for more than two months during our January 2020 observations. These delays occurred because of the following:
- Incorrectly Sent Items: MRC staff spent additional time processing items that should not have been sent per Postal Service policy, such as deliverable mail, undeliverable Marketing Mail, and recyclable materials (such as batteries). These items were sent from various Postal Service facilities across the country.
- Lack of Accurate Data Regarding Arriving Trucks: MRC staff were unaware of the number of trucks arriving each day because Surface Visibility data was not always accurate. Our analysis of data from December 2019 through February 2020 showed the number of trucks dispatched to the MRC did not match the number of arriving trucks for 90 percent of the days. The data issues occurred because staff at the various originating facilities were not accurately inputting data into Surface Visibility. As a result, MRC managers did not have accurate information to most efficiently allocate staff and resources.
Handling these improper and unplanned workloads drove ineffective acceptance and processing operations at the MRC. These conditions were exacerbated by understaffing at the MRC during FYs 2018, 2019, and 2020. For example, the MRC had 84 clerks while it was authorized 104 as of November 2019.
We also determined MRC staff were not opening and examining all undeliverable First‑Class Mail in accordance with Postal Service policy. After reviewing 200 First‑Class mailpieces cleared by MRC staff for recycling, we found 16 pieces (8 percent) contained cash, checks, and gift cards totaling $1,692 —these items should have been originally identified upon examination by MRC staff. MRC management stated they were unaware of this policy.
MRC staff were also not effectively disposing of batteries and gift cards as follows:
- Batteries: We found 30 containers of batteries incorrectly stored at the MRC, some for as long as two years. Postal Service policy states that batteries should be promptly recycled, but MRC managers stated that disposal funding was not provided. While $75,000 was eventually provided during our audit and the MRC disposed of the current battery inventory, uncertain funding mechanisms could result in a future accumulation of batteries that could pose a safety threat to MRC staff.
- Gift Cards: We found about 39,000 gift cards not promptly disposed at the MRC. MRC management attributed these delays to a lack of guidance on how they should be disposed (e.g., auctioned, sold, destroyed, etc.).
We also noted a variety of opportunities to strengthen internal controls over cash, inventory of items being stored, and returning insured items:
- Cash Reconciliation: MRC clerks were not recording all occurrences of cash when removed from undeliverable mail. The MRC’s processes also do not validate the complete record of funds extracted from the mail or allow a final reconciliation between the funds extracted from the mail and those eventually deposited.
- Inventory: MRC staff did not maintain an accurate physical inventory of items being stored. During our inventory tests, we noted 20 of 21 (95 percent) high-value watches remained in the inventory but were incorrectly marked as “Disposed.” The Postal Service does not have a process to conduct periodic inventories where such discrepancies could be identified and resolved.
- Returning Insured Items: MRC staff returned 63 items to customers for which indemnity claims totaling $6,619 had already been paid in FY 2019. These deficiencies occurred because the MRC did not have a process to verify if an indemnity claim had already been paid on the item (prior to its return).
During our audit, MRC management established a procedure to limit the number of trucks received daily and staffed their operation at full complement. As such, we will not make recommendations related to these issues.
We recommended management:
- Develop and implement strategies to:
- Identify and prevent postal facilities from incorrectly sending items to the MRC.
- Ensure all trucks sent to the MRC are accurately recorded in Surface Visibility.
- Ensure MRC staff are aware of and complying with Postal Service policy for opening and examining all undeliverable First‑Class Mail.
- Develop and implement a mechanism to ensure funding for prompt disposal of batteries at the MRC.
- Develop and formalize guidance on the disposal of gift cards at the MRC.
- Establish and implement an additional process to accurately record cash removed from undeliverable mail and periodically reconcile this amount against the total cash deposited.
- Establish and implement processes to maintain an accurate physical inventory and conduct periodic reviews.
- Develop and implement an additional process to verify whether an indemnity claim has been paid on an item prior to its return.