The Service expected that agreeing to use postal employees for remote barcoding would improve its relations with APWU. If the 6 percent cost differential and the current ratio of 89 percent transitional and 11 percent career workhours were continued, we estimated the in-house cost for this volume would be about $36 million more per year, not adjusted for inflation. If the cost differential we found continues, using postal employees would cost the Service about $86 million more per year, or 14 percent, not adjusted for inflation, when the required ratio of 70 percent transitional and 30 percent career workhours has been achieved. If this occurred, the cost of in-house barcoding would increase significantly. Objectives, Scope, and Methodology

Our objectives were to (1) compare, insofar as postal data were available, the direct costs of contracting out remote barcoding with the direct costs of having the work done by postal employees; and (2) identify possible advantages and disadvantages of using postal employees rather than contractors to do the work. III for the text of the Postal Service’s comments.) “3. “5. Comments From the U.S. 4. Rather, our report attributes to a Postal Service official the comment that a potential employee morale problem could result from the mix of transitional and career employees.
Why GAO Did This Study

Pursuant to a congressional request, GAO compared the direct costs to the U.S. Postal Service of contracting out for remote barcoding services versus having the work done by postal employees, focusing on the advantages and disadvantages of using postal employees for these services.

What GAO Found

GAO found that: (1) in-house barcoding would cost an estimated 6 percent more than using contractors, based on a mix of 89 percent transitional and 11 percent career employee workhours; (2) the cost differential is expected to increase to 14 percent annually to process 23 billion letters, based on an union agreement of 70 percent transitional and 30 percent career employee workhours; (3) if transitional employees receive benefits similar to career employees, as the union has requested, the cost differential would increase to 28 percent or $174 million annually; (4) using postal employees for barcoding would result in improved relations with the union; and (5) the postal union believes that using postal employees for barcoding provides the opportunity for the Postal Service and the union to cooperate in establishing and operating remote barcoding sites.