In-Office Cost System Follow-up
Background
The In-Office Cost System (IOCS) is the U.S. Postal Service’s primary probability sampling system used for estimating the cost of processing mail and parcels. The data collected from IOCS enables the Postal Service to allocate the labor costs from the handling of mail, parcels, and related activities performed by clerks, mail handlers, city carriers, and supervisors to all mail classes and rate categories. The Postal Service uses the data collected from IOCS to allocate about $21 billion per year in costs to mail products. The Postal Service uses the allocated costs to each mail category collected from IOCS to determine prices. Therefore, collecting consistent, accurate data is essential.
What We Did
Our objective was to evaluate whether corrective actions the Postal Service took in response to our recommendations related to IOCS sampling processes properly addressed the issues. Specifically, we followed up on whether corrective actions related to IOCS sampling improved processes for conducting readings, reiterated policies, and piloted an additional sampling methodology.
What We Found
We found that Postal Service management’s corrective actions sufficiently addressed our prior report’s findings and recommendations. Specifically, the Postal Service implemented the IOCS Cluster sampling methodology for city carriers, which reduced both rescheduled and cancelled readings and allowed better attribution of labor costs to products; reiterated policy that data collectors should verify sample employees’ work status in advance of scheduled IOCS readings; generally completed process reviews; and began piloting another IOCS sampling methodology that runs through fiscal year (FY) 2026 to more accurately attribute clerks’ and mail handlers’ labor costs. In addition, we identified potential cost savings of more than $6 million in FY 2024 based on the methods used to perform IOCS readings.
Recommendations and Management’s Comments
We made one recommendation to remedy the identified issue and the Postal Service agreed with the recommendation. The U.S. Postal Service Office of Inspector General considers management’s comments responsive to the recommendation as corrective action should resolve the issue identified in the report. Postal Service management’s comments and our evaluation are at the end of the finding and recommendation.