OIG: USPS Fails to Justify 19 Types of ‘Worksharing’ Discounts for Big Mailers

In a report issued Dec. 23, 2010, the USPS Office of Inspector General (OIG) echoed what the APWU has been saying for years: Worksharing discounts for large mailers mail are too high

The OIG study (Report Number MS-AR-11-001) paralleled the results of a March 2010 report by the Postal Regulatory Commission, which concluded that in many cases the Postal Service grants discounts to large mailers at a rate that exceeds the costs the USPS saves when it accepts pre-sorted mail.

The OIG found that the Postal Service’s “justifications for 19 workshare discounts that exceed avoided costs by approximately $104 million were not supported by detailed documentation.”

The OIG also concluded that the revenue loss may be even greater because “Postal Service cost avoidance models may not accurately reflect avoided costs for workshared mail.”

The APWU has long contended that the discounts are excessive and deprive the USPS of hundreds of millions of dollars in much-needed revenue. The union has also pointed out that excessive discounts violate the Postal Service’s obligation to provide “universal service at uniform rates” for all postal customers, and are illegal under the 2006 Postal Accountability and Enhancement Act (PAEA), which stipulates that postage discounts may not exceed “postal costs avoided.”

APWU President Cliff Guffey praised the report’s conclusion and called for an end to excessive discounts. “I am pleased that the USPS Inspector General has confirmed that many worksharing discounts fail to meet the standards established by federal law. The APWU has demonstrated time and again that the USPS can process mail in-house for a fraction of the cost at which discounts are set,” he said.

“The Postal Service simply cannot afford to give away money,” Guffey added.

“As we have said many times: Workshare discounts improperly reduce postage costs for big mailers at the expense of the USPS and undermine the Postal Service’s ability to serve citizens and small businesses in every American community.”

Noting that more than 80 percent of the mail the USPS delivered in Fiscal Year 2008 received workshare discounts totaling $15 billion, Guffey called for more comprehensive analysis of the problem.

“The big mailers have an army of lawyers and lobbyists that pressure the USPS and the Postal Rate Commission to retain and expand excessive discounts,” he said. “It’s time for the new Postmaster General to eliminate these giveaways.”