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B-114874 1 (1974-11-12)

handle is hein.gao/gaobaaeyl0001 and id is 1 raw text is: R.S .-. CTF ro .... te AcOVS snwlic approval by thOf,4 A A',3lNG OFFICE WASHINGTON, D.C. 20548 SRELEASED DWZVS EON NOV 12 1974 )3-114874 The Honorable H. R. Gross House of Representatives Dear Mr. Gross: By letter dated Jul- 30, 1974, you asked us to provide ycu with information on certain costs associated with the implementation of the National Bulk Mail System (NBMS). You expressed a desire that the development of these costs should not be a time-consuming process and that the information be provided as soon as possible. Accordingly, the information contained herein is based on data provided to us by the Postal Service since extensive work would have been required to inde- pendently develop answers to your questions. The Service contracted with a private company to perform an eco- nomic analysis to determine the economic desirability of implementing and operating NBMS versus the present bulk mail processing system. Such an analysis should consider both the capital and operating costs of both systerhs. On the basis of this analysis, the Service estimated that a capital investment of $950 million in NBMS would yield annual benefits of about $500 million by 1984. We are enclosing our No- vember 1, 1974, report to the Congress (B-114874) which discusses our evaluation of the planning of the NBMS. STARTUP COSTS The Service estimates that startup costs--associated primarily with relocating and training employees--for NBMS will amount to about $63.3 million, as follows- Fiscal year Amount 1973 $ 805, 000 (Actual) 1974 17,922,000 (Actual) 1975 44, 539, 000 (Estimate) Total $63,266,000 This cost estimate is a revision to the Service's original estimate of about $72 million which you referred to in your letter. Postal Ser- vice officials told us that these costs were not included in the economic % 7/ /---- ----- ----

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