‘.REcEIVED
BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20268-0001
POSTAL RATE AND FEE CHANGES, 1997
RUG12
5 00 PM ‘9-l
Docket No. R97-1
j
RESPONSE OF UNITED STATES POSTAL SERVICE
WITNESS TAYMAN TO INTERROGATORIES
OF
THE DIRECT MARKETING ASSOCIATION, INC.
(DMAIUSPS-TS-I-10)
The United States Postal Service hereby provides responses of ‘witness Tayman
to the following interrogatories
T9-l-10,
of the Direct Marketing Association,
Inc.: DMAIUSPS-
filed on July 29, 1997. A partial objection to interrogatory
DMA/USPS-G(c)
was filed on Augusf 8, 1997. A declaration will be provided shortly.
Each interrogatory
is stated verbatim and is followed by the response,
Respectfully
submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux, Jr.
Chief Counsel, Ratemaking
Scott L. Reiter
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-l 137
(202) 268-2999; Fax -5402
August 12, 1997
-
RESPONSE OF WITNESS TAYMAN TO INTERROGATORIES
THE DIRECT MAIL MARKETING ASSOCIATION
DMA/USPS-TS-1.
OF
Please refer to page 82 of Library Reference H-12.
a.
For 1997, personnel related other programs comprise 8,613 work years
and for 1998 9,933 work years. Please describe the work that these
personnel will be performing by cost segment.
b.
Please provide supporting detail for the basis for your work year
estimates.
RESPONSE:
a.
The workyears
referenced
a., of LR H-12. A narrative description
requirement
b.
LR H-l 0.
are detailed by program in Chapter V, Section
of each program and the basis for the resource
is contained in LR H-IO.
Supporting
detail for each program’s resource requirement
is contained in
RESPONSE OF WITNESS TAYMAN TO INTERROGATOFLIES
THE DIRECT MAIL MARKETING ASSOCIATION
DMAIUSPS-TS-2.
a.
OF
Please refer to page 83 of Library Reference H-12
For 1997, work years for HQ and service wide personnel-related other
prograrns personnel are 62,235 and for 1998 they are 84,257 work years,
Please describe the work that these personnel will be performing by cost
segment and provide supporting detail for the basis for your work year
estimates.
RESPONSE:
a.
As specified on page 83 of LR H-l 2, the numbers you have referenced
are expressed in thousands
calculations,
of dollars, not workyears.
Program names, supporting
and the number of workyears related to these costs can be found in
Chapter V, secti0ns.c. and f. A narrative description
the resource requirement
is contained in LR H-l 0,
of each program and the basis for
RESPONSE OF WITNESS TAYMAN TO INTERROGATOR.lES
THE DIRECT MAIL MARKETING ASSOCIATION
DMA/USPS-TS-3.
OF
Please refer to pages 89 and 90 of LR H-l 2.
a.
For all costs on these sheets which are greater than $lCl million, please
describe the programs that these costs support.
b.
Please provide the basis of your estimate.
RESPONSE:
a.
Program names and dollar amounts can be found in Chapter V, sections
b. and e. of LR H-12 Supporting
and corporatewide
calculations
for headquarters
activities, and depreciation
and e. of LR H-12. A narrative description
resource requirement
administered
programs
can be found in Chapter VI, Sections a.
of each program and the basis for the
is contained in LR H-l 0.
b. Please see my response to part a., above.
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RESPONSE OF WITNESS TAYMAN TO INTERROGATOF:IES
THE DIRECT MAIL MARKETING ASSOCIATION
DMAIUSPS-T9-4.
OF
Please refer to page 98 of LR H-12.
a.
For all costs on this sheet which are greater than $10 million, please
describe the programs that these costs support
b.
Please provide the basis of your estimate.
RESPONSE:
a.&b.
Please see my response to DMAJUSPS-T-9-3.
RESPONSE OF WITNESS TAYMAN TO INTERROGATOF!IES
THE DIRECT MAIL MARKETING ASSOCIATION
DMAIUSPS-TS-5.
OF
Please refer to page 100 of LR H-l 2.
a.
For all costs on this sheet which are greater than $10 miillion, please
describe the programs that these costs support
b.
Please provide the basis of your estimate
RESPONSE:
a.&b.
Please see my response to DMAIUSPS-T-9-3
RESPONSE OF WITNESS TAYMAN TO INTERROGATORIES
THE DIRECT MAIL MARKETING ASSOCIATION
OF
DMAIUSPS-TS-6.
Please confirm that page 101 of LR H-12 shows non personnel
other program costs of $248,264,000 in FY 97 and $867,243,000 in FY 98. That page
lists “Program/Functional
Managers” as the sources of these cost estimates,
a.
Are there any work papers supporting these estimates?
provide them.
If so, please
b.
When did the managers provide these estimates?
C
Please provide the names and titles of each of the managers who
provided the estimates together with the component number for which
they provided the estimates.
d.
Please describe the activities that these costs will be incurred for.
RESPONSE:
Confirmed.
a.
FY 97 program estimates reflect the approved budget which resulted from
the Postal Service’s budget process and FY 98 estimates reflect prelilminary amounts
from the FY 98 budget process.
Workpapers
similar to those typically provided to the
Commission
in support of most aspects of the rate filing which calculate the
development
of budgetary amounts are not available.
The formulatioln of budget
amounts is not based simply on mechanical calculations
set of workpapers.
contained in a comprehensive
Instead, budgets are established through a complex management
process that has incorporated
the Postal Service’s CustomerPerfect!
philosophy.
As a
result, budget targets involve negotiation, judgment, linkage to and support of operating
goals, and the tactical allocation and re-allocation
of resources to organizational
units
and programs.
b.
Estimates were provided for use in the Docket R97-1 rate case at various
times between March and June 1997.
C.
A partial objection to this interrogatory
was filed. Please refer to the
attached schedule for the titles of the managers who provided the program estimates
specified, and the component numbers to which they apply.
d.
requirement
A narrative description
of each program and the basis for the resource
can be found in LR H-12.
Attachment
to DMAIUSPS-TS-6
The titles of the “Program/Functional
Managers” who provided the non-penonnel
other program estimates specified. are listed below by the applicable components
Title
Manager, Operations Network Redesign
Manager, Marketing Infrastructure
Manager, Field Computing Service Centers
Manager, Stamp Distribution Network
Assistant Inspector General for Employee Investigations
Manager, Mail Transport Equipment
Manager, Service Center Operations
Manager, POS I
Manager, Expedited 8 Package Information Services
Manager, Workload 8 Productivity Analysis
Act. Manager, Operating Budget
Manager, Environmental Management Policy
Manager, lnplant Operations
Manager, International Operations
Manager, Financial Administration Services
Act. Manager, Opera!ions Process Redesign
Manager, Year 2000 Program
Manager, Expedited 8 Package Services
Manager, Service Management Policies
Manager, Information Technology Plans and Standards
Manager, Address Management
Manager, Delivery Policies 8 Programs
Act. Manager, Vehicle Maintenance
Manager, Payroll Accounting/Records
Manager, Safety 8 Risk
Manager, Business Mail Acceptance
Manager, Logistics
Components
107
165. 167,
167. 168.
180,248
108. 165.
165, 175,
165, 167,
168 174
196’
’
210
170
169
1246, 81,
142, 143,
177
177
174
187
177,174
174
177
177
99
174
174. 169
174
174
168, 174, 1177.246, 211
174, 177, ;!I0
168, 174. 1177.211
177
168. 170, I77
177 169,211
’
165. 167. ‘168, 169, 177
146
RESPONSE OF WITNESS TAYMAN TO INTERROGATORIES
THE DIRECT MAIL MARKETING ASSOCIATION
DMAIUSPS-TS-7.
OF
Please refer to page 194 of LR H-12.
a.
Over what period of time does the Postal Service deprec,iate Mail
Processing Equipment?
b.
Over what period of time does the Postal Service deprec.iate Real
Property?
C.
Over what period of time does the Postal Service depreciiate Motor
Vehicles?
d.
Over what period of time does the Postal Service deprec:iate Customer
Service Equipment?
e.
Over what period of time does the Postal Service deprec:iate Postal
Support Equipment?
f.
What is the useful life of the equipment in a. through e. above?
RESPONSE:
a.
The Postal Service depreciates
mail processing equipment over 10 years.
b.
The Postal Service depreciates
real property over 40 ye,ars.
C.
Depending
on the make and model, the Postal Service clepreciates
vehicles over periods ranging from 8-l 2 years.
d.
Depending
on the type of equipment, the Postal Service depreciates
customer service equipment over periods ranging from 5-10 years.
e.
Depending
on the type of equipment, the Postal Service depreciates
postal support equipment over periods ranging from 3-l 0 years.
f.
The depreciation
periods used by the Postal Service are based on the
estimated useful life of the equipment.
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--__
RESPONSE
OF WITNESS TAYMAN TO INTERROGATORIES
MARKETING ASSOCIATION
OFTHE DIRECT MAIL
DMAIUSPS-TS-8.
Please refer to page 519 of LR H-12. The Septemlber 30, 1996
Balance Sheet shows assets of $25,463.9 million for property and equipment.
a.
Please disaggregate the allowances for depreciation and amortization
$9,157.‘7 million to the amount for buildings, for equipment, and for
leasehold improvements.
of
b.
Please provide a listing showing the valuation on the books for all
buildings that The Postal Service owns in Washington, D.C., New York
City, San Francisco, Los Angeles. For each building, please also
indicate the year the Postal Service acquired the building
C.
Please provide any information the Postal Service has pertaining to the
market ‘value of each of the buildings under b. above.
RESPONSE:
a.
depreciation
b.
Please see pages 528-536 of LR H-12 for the amount of accumulated
and amortization
by type of property and equipment
Please refer to the attached listing of owned buildings for the information
requested
C.
accumulated
Postal Service buildings are carried on the books at histmorical costs net of
depreciation
Principles (GAAP).
in compliance with the Generally Accepted Accounting
The Postal Service does not maintain information
market value of its buildings since they are critical components
infrastructure
and not intended for sale,
related to the
of our operating
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RESPONSE
OF WITNESS TAYMAN TO INTERROGATORIES
MARKETING ASSOCIATION
DMAIUSPS-TS-9
OF THE DIRECT MAIL
Please refer to page 525 of LR H-12.
a.
Of the $21.9 million written off between September 30, 1!396 and
September 30, 1995, how much of the write-off was from other
government agencies?
b.
Please disaggregate
C.
Of the $26.2 million Provision for Doubtful Accounts, how much is from
other government agencies?
d.
Please disaggregate
the amount in a. above by agency.
the amount in c. above by agency.
RESPONSE:
a.
None of the amounts written off in FY 1996 related to go’vernment
agencies.
b.
Please see my response to a.
C.
The FY 1996 provision for doubtful accounts includes $5.4 million related
to the U.S. Government.
d,
This amount represents that portion of the revenue foregone
appropriation
receivable for FY 1997 that was not included in the 199’7 appropriation
authorization
(Public Law No. 104-208).
The Postal Service subsequlsntly received this
amount in June, 1997, and the accounting records and financial statelments have been
adjusted accordingly.
RESPONSE
OF WITNESS TAYMAN TO INTERROGATORIES
MARKETING ASSOCIATION
DMAIUSPS-TS-10
OF THE DIRECT MAlL
Please refer to page 525 of LR H-12.
a.
Could the Postal service reduce uncollectibles by reviewing an aging
listing of accounts receivable (AR) more often than twice a year?
b.
Has the Postal Service performed any studies on the costs and benefits of
more frequent AR review? If so, please provide a copy of any such
studies.
RESPONSE:
a.
frequently
The Postal Service currently reviews its accounts receivable more
than twice a year. An aged accounts receivable listing is prepared and
reviewed every accounting
receivables,
b.
period (28 days).
Based on this ongoing analysis of
the provision for doubtful accounts is adjusted twice a ye;x
Please see my response to part a.
CERTIFICATE
OF SERVICE
I hereby certify that I have this day served the foregoing document
participants
of record in this proceeding
in accordance
upon all
with section I:2 of the Rules of
Practice.
Scott L. Reiter
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-I 137
August 12, 1997
-.