Background
The Postal Accountability and Enhancement Act (PAEA) divided postal products into two categories: market-dominant and competitive. The U.S. Postal Service uses a top-down product costing system to develop costs by product using expense, operational, and sampled data from the current fiscal year (FY). It also obtains supporting information essential to cost development through special studies. The Postal Service considers all its costs to be either attributable or institutional costs, neither of which fluctuated significantly from FY 2019 through FY 2023. PAEA empowered the Postal Regulatory Commission (PRC) with authority over the methods used to attribute Postal Service costs to products, and notes that the Postal Service shall analyze costs using such methodologies as the PRC prescribes by regulation. The Postal Service is a multi-product firm with a non-linear cost structure caused by economies of scale and scope occurring within its processing, transportation, and delivery network. The network’s design and functionality has been evolving since the Postal Service’s Delivering for America plan (DFA plan) was published in March 2021.
What We Did
We performed this audit as part of our mandate under PAEA to regularly audit Postal Service data collection systems and procedures used in collecting information to prepare annual reports to the PRC. Our objective was to assess the Postal Service’s processes for tracking and attributing costs for parcel-only processing facilities.
What We Found
We found the Postal Service can track and identify parcel-only processing facilities using system data, and currently there is only a very small fraction of the facilities in the network dedicated to processing parcels only. In addition, the Postal Service currently attributes costs for parcel-only processing facilities in accordance with methodologies established by the PRC, but these methodologies do not require cost attribution at the facility level.
Management’s Comments
Based upon the audit results, we did not make any recommendations. Postal Service management’s comments and our evaluation are at the end of the finding.