Draft SOW - Mail Volume White Paper.pdf

United States Postal Service (USPS) Office of Inspector General (OIG)

Research and Insights Solution Center (RISC)

Statement of Work (SOW) Projecting Mail Volume: Future Trends and Implications for the Postal Service

1. Introduction

The USPS OIG is awarding a contract to a Supplier who will provide an analysis of how the Postal Service’s mail volume may change over the next 10 years (between Fiscal Year (FY) 2025 and FY 2035). The analysis will (1) develop a set of scenarios to project the Postal Service’s mail volume through FY 2035, and (2) explore the implications of these projections for the Postal Service’s business model and the US postal legal and regulatory framework.

The contract type is Firm Fixed Price (FFP).

2. Background

The USPS OIG is an independent federal law enforcement agency providing oversight to the U.S. Postal Service (USPS) and the Postal Regulatory Commission (PRC). Its mission is to:

• conduct and supervise objective and independent audits, reviews, and investigations relating to Postal Service and PRC programs and operations,

• promote economy, efficiency, and effectiveness within the Postal Service and PRC, and

• inform the Postal Service Governors, Postal Service management, PRC Commissioners and Congress of problems, deficiencies, and corresponding corrective actions.

The Research Directorate of RISC (Research and Insights Solutions Center), a division within the OIG, conducts research on economic, business, and policy issues related to the USPS. It issues public white papers available on its website (uspsoig.gov).

Since 2006, the Postal Service has experienced declining mail volumes – first in correspondence and transactional mail and, more recently, advertising mail volumes. Over the years, the USPS has used and published multiple mail forecasts in annual integrated Financial Plans, 5-year strategic plans, and, in 2021, in its 10-year Delivering for America (DFA) plan. The DFA base case scenario projected that in FY 2030, total letter mail volume would be approximately 75 billion pieces, a decrease of 37 percent from FY 2020.

The OIG has researched the future of mail in several white papers. In 2016, the OIG developed its own scenarios for the future of correspondence mail and advertising mail. The OIG’s Research group has recently completed research into historical mail volume. Building on this past work, the OIG would like to further the discussion about the future of mail in light of ongoing and future trends. The OIG is not looking to develop a long-term econometric approach, rather the overall goal of the project is to develop plausible future scenarios and explore their implications for the Postal Service.

3. Scope of Work

The Supplier shall:

• Develop three to five alternative projections of future volume of mail for First Class Mail (FCM), Marketing Mail, and Periodicals to encompass FY 2025 to FY 2035, reflecting different sets of assumptions about the continuation of different historical trends and the emergence of new trends.

• Review the implications of the different scenarios for the Postal Service in terms of their possible impacts on the Postal Service’s costs, revenue, and operations.

Review the risks and opportunities each scenario may present for the US Postal Service and the potential implications for the U.S. postal legal and regulatory framework.

In order to accomplish the above scope, the Supplier shall perform the following tasks:

Phase I — Analysis of future drivers of mail volume

1. Gather relevant data and studies about past and recent mail forecasts and drivers of mail volume developed in the United States by the Postal Service and other stakeholders. While the OIG will strive to obtain non-public studies and data from the Postal Service, the Supplier shall collect publicly available datasets as appropriate.

2. For each segment (FCM, Marketing Mail, Periodicals), develop assumptions about how historical trends and any “new” trends and drivers may impact FCM and Marketing Mail volume from FY25-35. Drivers discussed may include factors typically considered in past research (such as electronic diversion, demographic changes, trends in the advertising market, the economy, prices), potential changes to the postal legal and regulatory framework, and/or any other driver the Supplier may wish to take into account. The analysis will explain why a driver is important, and differences (if any) between its historical and future impacts on mail volume. To minimize the project budget, the Supplier is not expected to conduct quantitative surveys of mailers and consumers.

3. Research Note 1. At the end of this phase, the Supplier will prepare a research note presenting analysis and findings regarding drivers and their impact on volume. The analysis will include references to all sources used (data, studies…) and links to these sources. The preferred format for Research Note 1 is a written Word document.

Phase II — Scenario development

4. Based on the Phase 1 analysis of drivers, the Supplier will develop three to five differentiated hypothetical scenarios of FCM, Marketing Mail, and Periodicals volume over FYs 2025-2035, including detailed narratives for each of them. The supplier will seek the OIG’s feedback throughout this phase to allow alignment around the number and contents of the scenarios. The narratives will describe how different combinations of drivers could lead to different mail volume outcomes and why.

5. Quantification of the impacts. As already mentioned, the OIG is not looking for a model based on econometric demand equations. For each segment (First-Class

Mail, Marketing Mail, Periodicals) and each scenario, the Supplier will provide year-by-year mail volume quantification. Quantifications are meant to be reasonable and realistic forecasts but are not meant to be precise. To the extent possible, the Supplier will develop separate estimates for Single-Piece and

Presort First-Class Mail volume.

6. Research Note 2. At the end of Phase 2, the Supplier will prepare a research note outlining detailed narratives for each scenario, explaining how they have been developed, presenting the assumptions behind the quantitative forecasts, and presenting detailed forecasts (and visualizations) for each scenario and class of mail considered. The format for Research Note 2 may be a written Word document or a slide deck.

7. Supporting materials. The Supplier will provide Excel spreadsheets including the detailed forecasts, calculations, all source materials used, external links to these sources (as available), and a “user guide” allowing the OIG to reproduce and verify the Supplier’s calculations for quality control purposes.

Phase III — Implications for the Postal Service

8. The Supplier will first discuss high level operational impacts of each scenario on the main aspects of Postal Service’s business model, including costs, operations, revenue, and workforce. This analysis will be supported by key data, ratios, or indicators aimed at comparing and contrasting the operational implications of each scenario. While this analysis should be based on publicly available volume, cost, or revenue data, the OIG does not expect the Supplier to develop a cost or revenue model.

9. Research Note 3. At the end of Phase 3, the Supplier will prepare a Research note presenting its analysis of the implications of each scenario for the Postal

Service. The preferred format for Research Note 3 is a written Word document.

Any supporting calculation will be presented in a separate spreadsheet, including references to sources and a “user guide” allowing the OIG to reproduce and verify Supplier’s calculations in Excel.

4. Expected deliverables

The Supplier shall deliver the following supplies and/or services, by the dates specified in the table below:

Deliverable Number

Description Due Date(s) Reference

SOW Section

Kick off meeting Date to be mutually agreed upon, after contract approval.

MS Teams

Project meetings

Every week or as mutually agreed upon. In addition to status update meetings, longer meetings may be needed to discuss and agree methodology and assumptions, and for each Research Note, to present findings.

1 Research Note 1 At the end of Phase 1 Task 3

2 Research Note 2 At the end of Phase 2 Task 6

2a Spreadsheets supporting Research Note 2

At the end of Phase 2 Task 7

3 Research Note 3 At the end of Phase 3 Task 9

Closeout meetings

After approval of all final deliverables.

The Supplier will maintain working papers that document all work performed, support conclusions reached, and are in accordance with the Council of Inspectors General on Integrity and Efficiency (CIGIE) Quality Standards for Inspection and Evaluation requirements and USPS OIG Policy 234.5.A (Documentation Preparation) as listed in Appendix A below. These working papers must include a description of the Supplier’s internal quality control mechanisms and provide documentation to show that those mechanisms were properly implemented. For more information, please see Appendix A below.

https://www.ignet.gov/sites/default/files/files/committees/inspect-eval/iestds12r.pdf

The USPS OIG may incorporate insights from the Supplier and from any of the deliverables provided in the tasks above into a publicly issued White Paper. In the White Paper, the USPS OIG may quote directly from the Supplier and / or Supplier-provided deliverables.

APPENDIX A

As described in the statement of work, the Supplier will maintain working papers that document all work performed, support conclusions reached, and are in accordance with CIGIE Quality Standards for Inspection and Evaluation requirements and OIG Policy 234.5.A (Documentation Preparation).

234.5 Documentation Preparation

A. Documentation must contain the following elements:

1. Heading (project title and number).

2. Purpose for performing the work.

3. Source and date of information.

4. Scope identifying the parameters under which the information was obtained, such as a specific time period and the procedures used to gather information.

5. Results and/or conclusions that describe the outcome of tests, analyses or observations; or findings including condition, criteria, cause, impact, and recommendations.

6. Explanation of the methods used to quality check and verify work.

7. Details and methodology.

8. Signature of preparer and date prepared.

9. Signature of reviewer and date reviewed.

10. Index reference that identifies the work paper and links it to the appropriate survey/review steps.

Working papers and Policy 234.5 are considered confidential documents for the purposes of this contract and may not be disclosed to third parties without the OIG Contracting Officer’s permission. This confidentiality obligation binds the parties indefinitely, including after the completion, expiration, or termination of this contract.

Working papers must be available for review by the OIG Contracting Officer’s Representative (COR) upon request. All working papers and reports will become the property of the OIG upon completion, expiration, or termination of the contract. Upon request, the Supplier must submit the working papers electronically to the OIG COR, along with other required deliverables such as draft reports or other documentation as defined in the SOW.

https://www.ignet.gov/sites/default/files/files/committees/inspect-eval/iestds12r.pdf