OIG: USPS lacks strategy to protect revenue

From a recent report by the USPS Office of Inspector General:

uspsoigThe Postal Service does not have a comprehensive, strategic approach to revenue protection. Revenue protection is provided by various groups whose missions and focuses are limited. For example, the Financial Testing and Compliance group tests internal controls to ensure the accuracy of financial statements, the Field Remediation group identifies and mitigates Sarbanes-Oxley weaknesses, and the Postal Inspection Service Revenue, Product, and Global Security group identifies systemic risk from weak revenue protection controls.

The Postal Service lacks a permanent group dedicated to coordinating and overseeing revenue protection activities. The existing Revenue Assurance group consists of employees on temporary assignment who have other responsibilities in addition to revenue assurance, and the group’s future is uncertain. Industry best practices suggest that agency-wide coordination is critical in reducing unnecessary overlap of key revenue protection activities. Identifying a permanent group to oversee revenue protection activities would mitigate gaps in and duplication of revenue protection activities, leverage Postal Service resources and increase the effectiveness of revenue protection efforts.

The Postal Service also lacks critical information on the amount and sources of shortpaid postage. Prior U.S. Postal Service Office of Inspector General audit reports identified Postal Service internal controls were inadequate to identify shortpaid and unpaid postage. The Postal Service continues to address revenue protection through technological initiatives; however, revenue leakage will continue to occur until automated verification procedures replace current manual processes.

Postal Service officials explained that the process for identifying shortpaid is difficult and cost-prohibitive and that no single group is responsible for this effort.

The first step in mitigating revenue leakage, including shortpaid postage, is to identify its source and magnitude. Currently, the Postal Service uses data provided by Statistical Programs from Origin Destination Information System-Revenue, Pieces and Weight tests to project shortpaid postage of $432 million in fiscal year (FY) 2013. However, the data are not considered statistically valid for shortpaid estimates and are only used to gauge potential revenue leakage. Further, this estimate does not include commercial mail.

This lack of data impedes the Postal Service from developing effective revenue protection rules and measuring program effectiveness. Applying the Universal Postal Union’s 5 percent estimate to business and retail mail that was not verified for sufficient postage through automation in FY 2013, we estimate that $1.2 billion of revenue was at risk of revenue leakage.

What The OIG Recommended

We recommended the Postal Service develop a strategy to coordinate revenue protection efforts and explore cost effective methods for estimating shortpaid revenue for business mail.

  • Tad

    And whose fault is that?? Duh

  • RouteAbolished

    This would be a useful vocation for some of the overhead at the USPS. Many a carrier gets chastised for taking a few seconds to mark up a stamp that did not get cancelled. That is revenue protection. If you do not touch the mail you are overhead (unnecessary).

  • paul

    Since we are in a business similar to our competitiors, UPS and FedEx, seems to me that we could ask what method(s) they employ to monitor this problem. I’m bettting their systems are better than ours.

  • pichaname

    They are too busy worried about missed MSP scans.

  • Ned the window tech

    We used to have revenue protection clerks who would randomly check pieces of mail for insufficient or accurate postage, but NO,they took those jobs away. Nowadays, with Click N Ship and other forms of creating your own postage, counterfeit, duplicated misweighed and whatever is running rampant, costing the PO a fortune…but again, postal management looks the other way. We need “boots on the ground” to check mail pieces, not some bogus management group who is more concerned about missing scans and a clerk wasting 20 seconds of time on the window. We also need to have some way to shut down problem customers who continue to cheat the PO and hand out some punishment. Like and Inspector told me years ago, letting customers print their own postage was the wrong thing to do.

  • Designed to fail

    Time to appoint more executive Vice Presidents and coordinators who know absolutely nothing. We window clerks have been complaining about short postage and remedys for years. We could solve it easy but then there would be no diverse group of managers to appoint and get bonuses!

  • Postal person

    How about first offense a warning, second a fine, third your click and ship days are over. I invite all window clerks to post their favorite mailer scam and suggested remedy. I’ll begin: a customer falsely labels an item “media” after window clerk explains what media consist of
    charge them with fraud and theft by deception.

  • Sonic

    Donahoe: This can’t be done at the local level. We will need to promote no less than 30 managers to oversee the revenue leakage stuff. That will include raises, moving expenses to the DC area and a huge welcoming ceremony.

  • Guest

    I believe other carriers apply surcharges in addition to additional postage when customers understate package weights. We really should be able to do that. Misweighed packages require more work regardless of if it’s found at drop-off or if it has to be sent on postage due, and yet the customer still receives a discount since clerks use proper weight retail price minus stated weight retail price even though the customer did not pay the retail price. I brought this up to district management and they were too dim to understand. No reason that someone doing an online transaction can’t accept a terms of agreement stating understated weights will receive a surcharge.

  • Wondering

    So you want to get rid of the people who process the paychecks, work on the vehicles, pay the bills to keep the offices open, etc? Just because someone does not “touch the mail” does not mean their job is unimportant or unneeded. I agree their is too much overhead but just because you don’t touch the mail on a daily basis does not mean your job should be elimated. That is naive at best.

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  • MailHawk

    Just as an FYI “Wondering” it is there, not their. Now for the revenue issue. USPS management and Donahoe will never fix the revenue leakage problem since they are the problem. Commercial mailers cost the USPS millions if not billions per year in non machineable mail. The DPV or delivery point validation mandate is convoluted at best, much of the mail given to the USPS(up to 30% by their own mandated tolerance) will not DPV and is then considered “Pre sort” mail, 3 tenths of a cent more expensive than automation rates. All this non DPV pre sort mail is handled in the same manner as single piece of mail at full postage. So riddle me this, if the USPS is discounting mailers for mail that is destined to more expensive processing and delivery, why do they continue to provide the discounts? because money talks and b.s. walks. I’ve personally been involved in OIG investigations where mailers continuously present dirty mail expecting discounts because the industry knows that USPS management is too stupid to figure out where the bleeding is occurring. Don’t get me started about the pre sort houses either. mail that was outsource in the 80’s and 90’s during the transition to automation should be brought back to USPS processes and eliminate the fallacy of work sharing. Margins nowadays are so tight vendors have every opportunity to benefit and profit from the USPS’s inability to balance their own costs or enforce ill-conceived solutions.

  • seabird

    Is this because they can’t do it or won’t do it? Since there is so much incompetence within the management level….I’m assuming that is a huge possibility. Doh.