.
.
BEFORE THE
POSTAL RATE COMMlSSlON
WASHINGTON, D.C. 20268-0001
RRElVF[,
50 12
I
POSTAL RATE AND FEE CHANGES, 1997
Docket No. R97-1
i
IRESPONSE OF UNITED STATES POSTAL SERVICE
WITNESS DEGEN TO INTERROGATORIES
OF
TIME WARNER, INC.
(TW/USPS-T12-18-23)
The United States Postal Service hereby provides responses of witness Degen to
the following interrogatories
of Time Warner, Inc.: lW/USPS-T12-18-23,
filed on
August 29, 1997
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
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-I 137
(202) 268-2992; Fax -5402
September 12, 1997
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
Degen
TWNSPS-Tl2-18.
Table Tl2-18, attached to this interrogatory,
presents a
breakdown of the mail processing costs attributed by Your costiing method.
The first three columns show cost group number, short name alnd variability
factor, as given in Table 4 of your testimony.
The remaining columns break
down the attributed costs within each cost group by major groupings of
activity codes, based on the data You submitted in spreadsheet TW-3e. as
part of your response to TV//USPS-T1 2-3e. The activity code glroups used
are: (I) direct (codes 0010-4950);
(2) mixed mail (codes 5300,.5750);
(3)
breaks/personal
needs (code 6521); (4) clocking in/out (code 6!j22); (5)
empty equipment (code 6523); and (6) all other (codes 50205180,
6000651 9 and 6570-6660).
a. Please confirm that the data in table Tl2-18 are consistent with your
testimony.
If you cannot confirm, please provide the necessary
corrections and explain why they are necessary.
b. Please confirm that if for a given cost group with non-zero variability and
a given set of activity codes one divides the volume variable costs by the
group variability factor, one gets the total mail processing tally costs
corresponding to the given cost group and set of activity coides. If you
cannot confirm, please explain.
c. Please confirm that if one divides the mixed mail costs for each group in
Table Tl Z-18 with the corresponding variability factor, for all groups
with non-zero variability, and then adds up the results, one gets total
mixed maiil tally costs equal to $2.839.462
million. Please adso confirm
that in the LIOCATT output used for the FY96 CRA report the total
mixed mail costs for segment 3 (including some non-mail processing
costs) are only $2,670.726
million. Additionally, please expllain why
your method seems to lead to higher costs for activity code:; 5300-5750,
even though it presumably is based on the same raw IOCS tallies as
those used in the FY96 CRA. In particular, please identify cases where
some tallies may have been assigned mixed mail activity codes under one
method but not under the other, and any differences in the weighting of
individual tallies that may have contributed to this apparent discrepancy.
d. Please provide an activity code breakdown of the $148.358 million nonvariable costs that Your Table 4 associates with cost group 36 (LD48
Adm).
e. Please cornfirm that if one divides the ‘all other” costs for each group in
Table Tl2-18 with the corresponding variability factor, for all groups
with non-,zero variability, and then adds up the results, one !gets total “all
other” tally costs equal to $1,130.957
million. Please also confirm that
in the LIOCATT output used for the FY96 CRA report the costs for these
activity codes listed under mail processing are only $599.160 million.
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
Degen
f.
Please describe the distribution keys used, in your methodology,
to
distribute costs associated with each of the following activity codes:
5020-6519 and 6570-6660.
Are each of these activity codes distributed
separately within each cost group. In particular:
1. Are costs with activity code 6231 (Express Mail) distributed based
on direct tally costs within each cost group, or simply attributed to
Express Mail? If neither, please explain.
2. Are costs with Window Service activity codes (51 lo-5?95 and
6000-6200).
recorded under mail processing cost groups, distributed
based on direct tally costs within each cost group, evento mail
subclass that generally do not sue window service? If no, please
explain.
3. Are costs with activity codes 6220 and 6230 (Special Delivery and
Registry) distributed based on direct tally costs within each cost
group, or simply attributed to Special Delivery and Registry? If
neither, please explain.
g. Under your methodology for distributing mail processing costs, is there
any difference in the way that you distribute:
(1) non-handling costs
associated with a mixed mail activity code (5300-5750);
(2) costs
associated with activity code 6521; (3) costs associated with activity
code 6522; or (4) costs associated with activity codes 5020-5180,
6000-6519
and 6570-6660?
If yes, please explain what the differences
are.
TW/USPS-T12-18
a. Confirmed.
spreadsheet
extent.
Response.
However,
TW-3e,
and thus allso
reflect the new costing method only to a limited
Please see my response to ADVOIUSPS-T12-1,
b. Not confirmed.
variability
Table 6 of my testimony,
factor,
for discussion.
If one divides a cost pool’s volume variable costs by its
one obtains the “cost pool costs”
(i.e., accrued costs)
from Table 4, USPS-T-l 2. These are not the same as the tally costs
derived from the F9250 variable.
a given operation
The tally costs and cost pool costs for
group differ because the cost weighting
system (see
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
LR-H-21) computes
Degen
F9250 based on craft and CAG rather than cost
pool.
c. Not confirmed
that IOCS tally costs are $2,839.462
can be interpreted
as an estimate
with the 5300-5750
for Cost Segment
changed
activity
discrepancy.
The following
First, the arithmetic
million figure was calculated
to the relatively
in table T12-18
factors
have
are distlributed
explain the applarent
exercise by which the $2839.462
does not produce
stated in part b of this response.
distributecl
The issue is not that the tally base
rather the implicit tally weiights
because the costs reported
volume variable costs.
That figure
of volume variable costs associated
codes.
3 has changed,
million.
IOCS tally costs, as
Second, LDC 15 costs have been
small number of tallies (including
mixed-mail
tallies) assigned to the LDI 5 cost pool, so the implicit dollar weight
mixed-mail
tallies in this pool is higher than the tally costs based on the
F9250 variable.
non-MODS
(including
of
Third, most activity
code 6521 costs in the BMC and
office groups have been redistributed
mixed-mail
of non-6521
volume-variable
codes
codes), which increases the implicit dollar weights
tallies in those pools.’
d. Please see Attachment
e. Not confirmed.
to other activity
1 to this response.
The “new methodology”
costs to the ‘other”
costs are a distribution
activity
of
codes, not the IIOCS tally
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
costs.
Also note that some “other”
processing
component.
tally costs have migrated
As mentioned
f.
in the “old methodology”
to the mail
in my response to ADVOIUSPS-
T12-1 part d, some such costs were, in fact, redistributed
processing
De!gen
to mail
CRA.
Please see my response to MPAAJSPS-T12-I.
1.
Activity
distributed
2.
based on direc,t and
tally costs in each cost pool.
costs are distributed
based on direct and (distributed
tally costs in each cost pool.
The specified
mixed-mail
g. No.
mixed-mail
The specified
mixed-mail
3.
code 6231 costs are distributed
costs are distributed
based on direct and (distributed
tally costs in each cost pool.
Tablr T12-18: hlnil Processing Costs Per Cost Group And Acthih’
Co&
\‘arinb. ) Dir&
1 h4issd 1 Breaks 1 ln:Otrt /Emo~ EC?.
J-x-r
0th
3 1.666
IiJO.-l7R
69.137
20.478
2.321
21.-156
lS.(JRS
66.916
122.965
5.922
44.8Oo
100 300
R2.900
72.6Oo
65.J”o
52.6°0
72.(J”o
74. IO0
72.6Oo
82 900
79.70 0
7X.6oo
78.b”a
-14.800
79 700
78 6Oo
78~6Oo
2Y
SO
15.300
78.6Oo
YI .OOO
YI.(J”o
82.CJ”a
8,2.000
45 O”o
lJ.fJ°C
15.3Oo
15 301-l
91 .ooo
40.02;
199.7-e
8.76 I
2.368
88.721
16.OJ6
166.-103
7-1.537
59.33-l
lOO.422
12.977
3.345
930
I O.-l57
81)
5.566
I I.258
6.667
39.014
6.750
YJ7
189.763
6O.SYS
271
0
5.247
4.985
121.731
j 4.99-4.54 I
24.463
99.247
88.058
9.349
1.181
13.225
10.221
76.002
165.513
3.893
3.255
1I.866
11.352
I.010
I-18
2.131,
947
IO.088
26.21 I
478
1.52:
54.~5:
25.27’
7.181
1.32’
lO.J7:
4.90(
28.54:
40.90
3.171
25.341
17.35:
Y4.46(
50.47(
21.75:
8.13:
2.07:
1.7.si
46.36 I
28.7Ui
37.30t
16.715
162.60-1
94.88-I
42.537
66.915
3 16.576
101.56i
132.355
62.803
1.8%
3.235
2.996
2.368
5.801
3.670
5.544
3.8X1
78
0
6.275
5.262
26.121
10.337
1.6-17
2.396
18.6S2
13.321
6.286
1.711
2Y7
354
77.008
68.3jO
13.sx-l
I I.364
43
130
IJ
0
842
1.594
2.00-1
2. I90
5.737
32.846
3.847
8.297
.667.060
176.887
54.055
101
55.805
0
0
15.659
12.927
0
14.816
0
7.442
0
160.704
101
36.326
312.27-1
.1-10.038 .213.314
2.162
3.684
790
12
3.157
2.108
IS.OlY
7.569
14.254
8.610
369
233
550
635
0
1.238
I.456
234
97-l
309
16
7.852
1.53x
28
0
179
358
4.067
1.514
57.220
0
0
0
(I
0
0
0
4.353
61.573
11.13(
18.01:
4.16’1
99:
14.9%
13.08,;
81.1JU
36.55’;
1 10.04.L
5O.Si!(
65;
634
ZS.l:!F
1.413
41
1.2-K
6.516
73s
4.886
I .008
IS3
40.7ii2
4.SSR
1-l
0
394
1.3’71
5.615
2.607
68933 I
15.8~?
23.3109
919
I.076
R.SR5
3.314
52.8~
132.182
874.3z
-
-.-
7.62’
2.471
8.531
7.371
2.04i
281
1.62:
33
6.8M
23.18:
94’
3.66’ 7;
17.16(I
4.50: 2
1.13: I
6.2% j
3.751i
16.6ST7
S.15; ,
44.58; ,
8.321
5.85-1I
2.668
3.13C1
13.556,
91
88.283
47.0x I
7.7413I
9.848
NJ9,
2(JO
43.963
12.525
955
0
8.037
8.604
59.621
68.506
554.066
4.773
I.369
0
(I
0
0
6.142
98.530
658.739
1
Attachment 1, Response lo TWAJSPS-TlZ-16 part d
IOCS tally costs ($000) assigned
and bask function
Class/
Basic
to LD48-Adm
cost pool, by subclass/activity
Activity Code Function LD48 Adm
1
1st L&P
1.274
1st L&P
;
4,929
1st L&P
3
58
1st L&P
5
280
PreL
1
478
PreL
2
1.607
PreL
3
,O
PreL
5
78
PCds
1
0
PCds
2
0
PCds
3
0
PCds
5
0
Cds
0
1
Cds
2
152
Cds
3
0
Cds
5
0
PreC
1
0
PreC
2
53
PreC
3
0
PreC
5
0
Priority
1
111
Priority
2
730
Priority
3
0
Priority
5
4
Express
1
561
Express
2
500
Express
3
0
Express
5
0
Mailgrams
0
1
Mailgrams
2
0
Mailgrams
3
0
0
Mailgrams
5
2nd IC
1
0
2nd IC
2
0
2nd IC
3
0
2nd IC
5
0
1
0
Reg
2
3667
Reg
49
3
Reg
5
63
Reg
1
0
NP
NP
2
80
NP
3
0
NP
5
0
CL
1
0
0
CL
2
3
0
CL
Page 1 of 9
code
Attachment 1, Response to TWIUSPS-TlZ-18 part d
IOCS tally costs ($000) assigned
and basic function
Class/
Basic
Activity Code
-.
Function
cost pool, by subclars/activlty
LD48 Adm
LL
5
3rd SP
1
3rd SP
3rd SP
3rd SP
2
3
5
BRCRT
BRCRT
BRCRT
BRCRT
SRO
BRO
BRO
BRO
NPCRT
NPCRT
NPCRT
NPCRT
NPO
NPO
NPO
NPO
4lh ZPP
4th ZPP
4th ZPP
4th ZPP
BPM
BPM
EPM
BPM
SPC
SPC
SPC
SPC
LIB
LIB
LIB
LIB
USPS
USPS
USPS
USPS
Free
Free
Free
to LD48-Adm
1
2
3
5
1
2
3
5
1
2
3
5
1
2
3
5
1
2
3
5
1
2
3
5
1
2
3
5
1
2
3
5
1
2
3
5
1
Free
2
3
5
lntl
lntl
2
1
0
51
190
0
0
49
479
0
0
316
804
0
211
51
186
0
0
98
299
0
59
0
283
0
0
0
107
0
0
0
89
0
0
0
0
0
0
100
51
0
101
0
0
0
0
57
160
Page 2 of~~__
9
code
Atlachment 1, Response to TWUSPS-T12-18 part d
IOCS tally costs ($000) arrignmd
and basic function
Class/
Basic
to LD48-Adm
cost pool, by subclass/activity
Activity Code Function LD48-Adm
lntl
3
IJ
lnll
5
Registry
1
Registry
2
Registry
3
22
Registry
179
5
Certified
1
469
Certified
995
2
Certified
0
3
Certified
51
5
Insurance
1
62
Insurance
0
2
Insurance
3
0
Insurance
5
0
COD
0
1
COD
293
2
0
COD
3
5
COD
0
Sp Delvry
1
0
Sp Delvry
0
2
Sp Delvry
3
0
Sp Delvry
0
5
0th SS
1
330
1,784
Dth SS
2
0th SS
3
0
0th SS
5
394
5301
1
0
5301
0
2
5301
0
3
5301
5
0
0
5302
1
5302
2
0
5302
3
0
0
5302
5
0
5303
1
5303
0
2
5303
3
0
5303
0
5
0
5331
1
0
2
5331
0
3
5331
5331
0
5
0
1
5340
0
2
5340
0
3
5340
0
5
5340
0
1
5341
____
Page 3 of 9
-
code
Atlachment l.ResponsetoTVWUSPS-T12-18
IOCS tally costs ($000) assigned
and basic function
parid
to lD48-Adm
cost pool, by subclasslactlvlty
code
Class/
Basic
AdivliyCode
Functlon LD48 Adm
5341
2
0
5341
3
0
5341
5
0
5345
1
0
5345
2
0
5345
3
0
5345
5
0
5460
1
0
5460
2
0
5460
3
0
5460
5
0
5461
1
0
5461
2
0
5461
3
0
5461
5
0
1
5610
288
5610
2
1,603
5610
3
0
5610
5
53
0
5620
1
5620
2
103
5620
3
0
5620
5
0
5700
1
51
5700
46
2
5700
3
0
0
5700
5
1
1.093
5750
5750
2
2,666
5750
3
82
5750
5
1,017
5020
1
0
5020
0
2
3
0
5020
5020
5
211
0
5040
1
5040
0
2
0
5040
3
5040
5
4,625
1
0
5050
0
5050
2
0
5050
3
51
5050
5
0
5060
1
0
5060
2
0
5060
3
0
5060
5
Page4of9
~-
-----
.---
Attachment 1. ResponseioTWNSPS-T12-laparid
IOCS tally costs ($000) arslgned
and basic function
Class-!
Basic
to LDM-Adm
cost pool, by subclass/activity
Adivity Code Function LD46-Adm
5070
1
0
5070
0
2
3
5070
0
5
5070
277
5080
1
0
5060
2
0
5060
3
0
5
5080
340
1
5090
0
5090
2
0
5090
3
0
5090
5
59
5110
1
0
0
5110
2
3
0
5110
5
104
5110
1
5120
0
2
5120
0
0
5120
3
5
358
5120
1
5130
0
0
5130
2
3
0
5130
0
5
5130
1
5170
0
0
5170
2
0
5170
3
5170
5
130
1
0
5180
5180
2
0
5160
3
0
5
5180
0
1
6000
0
6000
0
2
0
3
6000
5
6000
1.302
1
6010
0
0
6010
2
3
6010
0
6010
2.376
5
0
6020
1
0
6020
2
3
0
6020
5
1.044
6020
1
0
6030
0
6030
2
0
6030
3
Page5of9
~--
co’da
-.
Attachment 1, Response to TWUSPS-TlZ-18
IOCS tally costs (SOW) sssipned
and basic function
Class/
Basic
part d
to LD48L\dm
cost pool, by subclasshctivlty
Activity Code Function LD48 Adm
5
6030
1,105
6040
1
0
6040
2
0
3
6040
0
6040
5
602
8045
1
0
6045
2
0
6045
3
0
5
6045
305
6050
1
0
6050
2
0
3
0
6050
6050
116
5
6070
1
0
8070
2
0
3
0
6070
6070
571
5
1
6073
0
2
0
6073
3
6073
0
6073
342
5
1
0
6080
2
6080
0
3
6080
0
5
6080
270
6110
1
0
2
6110
0
3
6110
0
6110
50
5
6120
0
1
6120
0
2
0
3
6120
681
5
6120
0
1
6130
0
2
6130
0
3
6130
Ill
5
6130
6140
0
1
0
6140
2
0
3
6140
5
0
6140
0
6170
0
6170
:
0
6170
3
13.931
6170
5
0
6180
1
0
6180
2
- ---..
_,-- -_
Page 6 of 9
-~
code
Attachment l,ResponsetoTbWJSPS-TIZ-1.3
IOCS tally costs ($000) assigned
and basic function
Class/
Basic
partd
to LD48Adm
cost pool, by subclass/activity
Activity Code Fundion LD48 Adm
6180
3
0
6180
5
70
1
0
6200
6200
0
2
0
6200
3
5
6200
676
1
0
6210
6210
2
244
0
3
6210
0
5
6210
68
6220
1
0
6220
2
3
0
6220
5
132
6220
1
6230
270
344
6230
2
3
0
6230
5
6230
589
1
148
6231
181
6231
2
0
3
6231
5
345
6231
1
80
6240
450
6240
2
0
6240
3
262
6240
5
6270
1
0
0
6270
2
0
6270
3
5
83
6270
0
1
6320
0
6320
2
0
6320
3
5
2,461
6320
0
6330
1
6330
162
2
0
6330
3
2.409
6330
5
0
6420
1
150
6420
2
0
3
6420
981
6420
5
0
1
6430
2.725
6430
2
0
6430
3
5
2,233
6430
0
1
6460
--
Page 7ofQ
code
Attachment 1. ResponsatoTWNSPS-T12-18
IOCS tally costs ($000) assiQnrd
and bask function
Class/
Basic
partd
to LD48Adm
cost pool, by subclasslactivlty
co’de
Activity&de
Function LD46 Adm
6460
2
0
6460
3
0
6460
5
294
6480
1
0
6480
2
0
6460
3
0
6460
5
424
6495
1
0
6495
2
0
6495
3
0
6495
5
329
6500
1
0
6500
2
0
6500
3
0
6500
5
99
es11
1
0
6511
2
0
6511
3
0
6511
5
49
6512
1
0
6512
2
0
6512
3
0
5
0
6512
1
0
6514
6514
0
2
6514
3
0
6514
0
5
6516
1
0
6516
2
0
3
0
6516
6516
5
46
1
0
6519
0
6519
2
6519
3
0
6519
5
399
6521
1
0
6521
2
50
0
6521
3
12.536
6521
5
0
6522
1
0
2
6522
0
6522
3
6522
5
1,405
6523
1
890
1.669
6523
2
48
3
6523
tlz!
0523
5
---_
Attachment l,ResponsetoTWUSPS-TlZ18partd
IOCS tally costs ($000) assigned
and basic function
Class/
Basic
to LD48-Adm
cost pool, by subclass/activity
ActivityCode
Function LO46 Adm
6570
1
178
6570
2
96
6570
3
0
6570
5'
992
6560
1
0
1.146
6580
21
6560
3
0
5
6560
534
6610
1
0
6610
i!
0
6610
3
0
ti
2.061
6610
1
6620
0
6620
0
2
3
0
6620
!j
6620
5,762
6630
1
166
2
6630
222
3
6630
0
!j
6630
46,630
'I
0
6640
6640
:2
0
6640
3
0
1,449
6640
!5
1
6650
0
2
0
6650
3
0
6650
5
9,920
6650
1
6660
0
2
0
6660
3
6660
0
5
6660
052
PageQof9
coda
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
Degen
TWNSPS-Tl Z-19.
According to Your spreadsheet TW-3e, and Table T1218 included with TWNSPS-T12-18,
the only costs associated with
“breaks/personal
needs” at BMC’s are $0.101 million in the ‘BMC Platform”
cost group. Yet, according to Table VII.2 in LR-H-146, BMC costs
associated with “breaks/personal
needs” were $114.666 million, of which
$74.419 million were volume variable.
a. Please confirm that the above reflects a correct interpretatioln of LR-H146 and of the data given in spreadsheet TW-3e. If not confirmed,
please explain.
b. Please provide a breakdown, by activitY code, cost group and basic
function, as those codes are used in spreadsheet TW-7, for .the BMC
costs that according to Table VII.2 in LR-H-146 are volume variable
“breaks/personal
needs” costs.
c. Of the sl”635.727
million mail processing costs and $2.0091.809 million
segment 3 costs shown under activity code 6521 (‘breaks/personal
needs”) in the FY96 LIOCATT, what portions were incurred <at BMC’s?
d. When an IOCS clerk observes a BMC employee on “breaks/personal
needs”, will he record the employee as being on “breaks/personal
needs?”
e. Please explain as fully as possible the apparent discrepancy referred to
above between Table VII.2 in LR-H-146 and the data in TW-,3e.
TWIUSPS-T12-19
Response.
a., e. Please see my responses
3, part c. As I indicated
Table 6, TW3e.
processing
in my response to Advo, the distributed
costs in Table 5 of my testimony,
of variation
interrogatories
and ADVONSPS-T12costs in
and TW-7 are llet used as inputs to the BY 1996 mail
costs were reported
data.
to MPAIUSPS-T12-2
USPS-T-l 2. Tlhe Table 6
because they were used to compute
and confidence
limits reported therein.
the coefficients
Several
have pointed out small errors in the TW-3e and TW-7
Revised versions
of these spreadsheets
have been filed as TW-
-
Response
3er.xls
of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
and TW-7r.xls
TW-19.xls,
involves
in LR-H-260.
Also, LR-H-260
Degen
include:s spreadsheet
which is similar in form to TW-7.xls/lW-7r.xls
no cost redistribution
of any sort.
but which
I believe that TW-19.xls
may
be more useful for the types of analyses for which you have attempted
to use TW-3e and TW-7.
consistent
with TW-3er
b. The break/personal
therefore
initially
Essentially
and TW-7r is attached
assigned to the ‘Z Breaks”
are in the “incoming”
not affect
the tallies’ activity
basic function.
c. The following
the figures
with activity
TW-;l.xls).
with
The
does
so the variable
on page VII-6 of LR-H-146,
code 6521 and (neglecting
are
the 0.04%
basic function.
table contains
the requested
stated in the question,
data.
To be comparable
all are IOCS tally costs in millions
dollars:
-__--
BMC12.
The redistribution
code or basic function,
break costs for each pool in Table Vll.2,
the ‘other”
pool in program
(see the revised spreadsheet
remaining
‘incoming”)
code 6521 and are
of BMC break variable costs are associated
basic function
all associated
2 that is
to this response.
needs tallies all have activity
all (99.96%)
the ‘other”
A version of Table 6 from USPS-T-l
---
with
of
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
IOCS Tally costs,
Category
Mail processing
Total CIS 3
d. Yes.
activity
code 6521
BMC costs
114.827
134.684
All offices costs
1,635.727
2,009.829
Degen
Table 6 (version for TW-19a)
Table 6: Fy 1996 Clerks and Mailhandlers - Mail Processing
Estimated Costs and Associated Confidence Limits By Direct Cost Category (NEW methodol~y) -_.
REVISED
I-
Direct Cost Category
Est. Cost
Est Coefficient
Variation
of
Lower 95%
Confidence Limit
Upper 95%
Confidence Limit
FYrst Class
Letters and Parcel
Presort Letters and Parcel
Postal Card
Private Mailing Card
Presort Card
F‘riority
E&press
hnailgrams
Eiecond Class
Wrthin Count Y
Outside County
Regula ,r
OutsIde County - Non Prof it
Outside County
Classroor n
T‘hlrd Class
Third Single Piece Rat1e
Bulk - Regular Garner Rout1
Bulk _ Regular Othe ‘r
Bulk - Non Profit Carrier Rout1 e
Bulk - Non Profrt Othe r
F ourth Class
Parcels
Zone Rat{
Bound PrInted Matte ,r
Special RatI
Library Rat{
L ISPS
F ree for BllndlHandicapped
II lternatlonal
R‘eglstry
c ,ertlfled
lr ,surance
C,OD
S p Delvry
Clther Special Serwces
h,lwed Mail
CIther
-IT
I
2,463.776
536,176
1.660
76,216
23,069
161,903
24,627
50
0.54%
1.54%
19.70%
4.10%
11.72%
1.65%
4.77%
95 20%
2.437,535
521,966
1,019
71,929
17,769
156,026
22,507
-43
2.490,017
7,710
202,156
36,466
2,103
12.93%
1.75%
4.30%
30.13%
5,756
195,227
33,395
661
9,664
209,090
39,541
3,346
37,763
120,210
750,199
12,166
161,672
5.64%
3.57%
1.09%
6.66%
2.37%
33,443
111.606
734,215
10.546
173,237
42.062
126.613
766,162
13.624
190,108
56,414
31,996
32,344
7,174
39.580
4,119
66,660
21,150
13,666
547
1,565
146
50,944
2,142,534
2.60%
4 17%
3.74%
8.69%
7.17%
11.01%
3.96%
5.16%
7.60%
37.66%
25.49%
44.37%
5.90%
0.61%
0.44%
2.907.299
10.042.530
55,207
29,379
29,976
5,952
34,020
3,231
81.795
19.009
11,620
143
783
19
45,051
2.117.062
2.662,312
554,364
2,301
64,507
28,369
167.761
27,146
144
61,620
34.614
34,713
8.396
45,140
5,006
95,565
23,290
15,957
951
2,347
273
56,836
2.167,987
2,932,286
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
Degen
TW/USPS-T12-20
a. Is it correct to interpret the table on page VII-8 of LR-H-146 as saying
that total segment 3 volume variable ‘breaks/personal
needs” costs in
Non-MODS facilities were $248.145 million, of which $164.152 million
were mail processing related? If no, please explain and give the correct
figures.
b. Is it correct to interpret the data in TW-3e as showing only $36.326
million in activity code 6521 (‘breaks/personal
needs”) in Non-MODS
facilities? If no, please explain and provide the correct figum.
c. Please explain the apparent discrepancy between chapter VII of LR-H146 and TW-3e regarding “breaks/personal
needs” costs in Non-MODS
facilities.
Please also provide an activity code breakdown, by basic
function, of the costs that are indicated as “breaks/personal
needs”
costs in chapter VII of LR-H-146 but as something else in TW3e.
d. Is it correct to interpret the overhead cost data given in chapter VII of
LR-H-146 as giving an overall mail processing overhead factor
(“breaks/personal
needs”, clocking in/out and empty equipmlent costs
divided by all other costs) equal to 31.86%?
If no, please provide the
figure you believe to be correct. Additionally, please explain how the
overhead data given in LR-H-146, part VII, are used in this docket.
TW/USPS-T12-20
Response.
a. Yes.
b. Yes.
However,
the $36.326
figure reflects a redistribution
of most of
the non-MODS
6521 costs.
Please see my response to MPA/USPS-T12-
2 for an explanation.
c. The total Cost Segment
comparable
because the latter are for mail processing
the redistribution
reconciled
3 costs and the costs from TW-3e would not be
Because of
of costs in TW-3e. the 6521 costs therein cannot be
with page VII-8 of LR-H-146.
MPA/USPS-T12-2
only.
for an explanation.
Please see my response to
The “missing”
6521 costs are
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
distributed
function
in proportion
to the non-MODS
shown in TW3e.
6521 total in spreadsheet
redistribution
costs by activity
Please note that the non-MODS
TW-19 in LR-H-260,
was performed,
Breaks/Personal
Degen
activity
code
in which no c:ost
agree with the $164.152
Needs in the mail processing
code/basic
million figure for
line of the tablse on page
VII-8.
d. Please see my response to OCA/USPS-T12-35
actual use of program
reference
NONMODEL
“overall
reported
in part VII of LR-H-146,
following
in this docket.
I cannot verify the computations
31.86%
mail processing
for an explanation
overhead
a specific
by which you det:ermined the
factor.”
the calculation
page results in a factor of 32.31%.
Without
of the
Based om data
in the table on the
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
Development of “overall
146, part VII.
total MODS mail
processing costs
excluding overhead, all
pools (LR-H-146 p. VII-
mail processing
5,801,461
overhead factor”
Degen
from data in LR-H-
total MODS mail
processing costs
including overhead,
all pools (LR-H-146
7.824,336
p. VII-5)
total BMC mail
processing costs
excluding overhead, all
pools (LR-H-146, table
VII.1)
273,339
total non-MODS mail
processing costs
excluding overhead
(LR-H-146, page VII-81
1.541.111
Total mail processing
costs excluding
overhead
Overhead factor (costs
including overhead I
costs excluding
overhead)
7.615.911
1.3231
total BMC mail
processing costs
including overhead,
all pools (LR-H-146,
table VII. 1, total
columns e and f)
total non-MODS
mail processing
costs including
overhead (LR-H146, page VII-8,
numerator of
“overhead factor”
fraction)
Total mail
processing costs
including overhead
401,190
1.851.110
10,076,636
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
Degen
TW/USPS-T12-21.
Please refer to Attachment
1 in your response to
UPS/USPS-T1 5-3, in which you show total activity code 6523 (empty
equipment) costs equal to $1,894.604
in million.
a. Are these costs the volume variable or total 6523 costs?
b. Please confirm that in the FY96 LIOCAlT output, used in the FY96 CRA
report, total code 6523 costs are shown as $1,071.751
million for mail
processing and $1,136.949
for all of segment 3.
c. Please confirm that in TW-3e total volume variable code 6523 costs are
shown as $874.325 million, and that if one divides the code 6523 costs
in each cost group with the cost group variability and then adds the
results, one gets total code 6523 costs equal to $1 ,166.197 million. If
you cannot confirm, please explain and give the figures you believe to be
correct.
d. Are all the $1,,894.804 million code 6523 costs that you gave in the
response referred to above empty equipment costs? If no, please
explain. If yes, please provide a complete activity code breakdown, by
cost group, of these costs.
e. Please explain fully the apparent discrepancy between the different
estimates of code 6523 costs referred to above.
TW/USPS-T12-21
a. The intended
Response.
contents
of the attachment
to USPS-T1 5-3 were IOCS tally
costs (based on the F9250 variable) for activity
code 6523, and the table
was labeled as such.
b. Confirmed,
noting that the cost totals reported
in the question
are IOCS
tally costs, not volume variable costs.
c. Confirmed.
$1,166.197
dollars.
Note, per my response to TW/USPS-T12-18
million figure does not correspond
part b, that the
to the total IOCS tally
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
d. No. The attachment
to UPS/USPS-l
Degien
5-3 was in error and a corrected
version has been filed.
e. As mentioned
in part d, the response to UPS was in error.
inevitably
between
be some discrepancy
processing
discussed
TW-3e and the LIOCAlT
mail
tally costs because the LIOCATT report uses the “old
methodology”
processing
There will
definition
of mail processing
rather than the new mail
cost pools, and because of the tally weighting
in my response to TWIUSPS-T12-18
---~
issues
parts b and c:.
-.
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
Degien
TW/USPS-Tl2-22
a. Please confirm that code 6522 (clocking in/out) costs at BMC’s are zero
according o the data in spreadsheet TW-3e. but equal to $10.034 million
according to chapter VII of LR-H-146, and explain the difference.
b. Please confirm that code 6522 (clocking in/out) costs at Non-MODS
facilities are $4.353 million according to the data in spreadsheet TW-3e,
but equal to $24.601 million according to chapter VII of LR-H-146, and
explain the difference.
c. Please confirm that on W/S 3.1.1 in witness Alexandrovich’s
WP-B
$10.037 [sic] in BMC clocking in/out costs and $24.598 [sic] in NonMODS clocking in/out costs are M
to the total volume variable mail
processing costs indicated in your testimony, giving a total aIf
$10,077.165
million in volume variable mail processing costs. Please
also explain how this is possible, given that you presumably analyzed the
whole IOCS data base, including any clocking in/out tallies that might
have been recorded in BMC’s and Non-MODS faciliiies.
d. Are the $4.353 million in Non-MODS clocking in/out costs shown in TW3e, which already form part of your estimate of volume variable mail
processing costs, distinct and separate from the Non-MODS clocking
in/out cost indicted in LR-H-146 and in the Alexandrovich
workpapers?
Please explain your answer.
e. Of the $288.280 million segment 3 clocking in/out costs indicted in the
FY96 LIOCAlT, what portion represents clocking in/out coslt at BMC’s?
f. If the BMC and Non-MODS clocking in/out costs shown in LIR-H-146 are
in fact part of the total volume variable costs that you show in TW-3e.
then please provide a breakdown of these costs by activity code, cost
group and basic function, as those codes are used in spreadsheet TW-7.
TWIUSPS-T12-22
a. Clocking
Response.
in/out tallies are assigned IOCS operation
tallies are classified
clocking
as administrative
in program
code ‘lo’,
BMC12,
in/out amount in Table VII.1 of LR-H-146
redistribution
processing
of 6522 costs from the administrative
component
which is performed
so such
LFI-H-146.
The
is based on a
to the mail
as part of the CFIA process.
Response
of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
This redistribution
testimony
was not performed
or interrogatory
b. The volume-variable
TW-3e
of disaggregating
to page VII-8.
no cost redistribution,
non-MODS
Spreadsheet
indicates
mail processing
c. Confirmed.
clocking
to the correct
worksheets
methodology,
of TW-3e,
TW-19
pool, consistent
which applies
with page Vlf-8,
LR-H-146.
code 6522 Costs-
and window
component
components.
The redistribution
service
based on the IOCS
is carried out in the
which develop the CRA for Cost Segment
in/out of MODS operations
cost pools at EMCs and non-MODS
are still formed
of 6522 costs is necessary,
in the CRA worksheets
3. In the new
is correctly
included
tally sets, so no redistribution
6522 costs is needed for the MODS office group.
performed
be
assigned to 6522 tallies, and must be redistributed
the MODS cost pools and associated
redistribution
and cannot
in LR-l-i-260,
all activity
under the administrative
clocking
costs in
the costs from Table 6 of
in/out of mail processing
code (‘10’)
The refereniced
are
that there are zero 6522 tallies in the
In the old methodology,
operations-fall
operation
cost pool.
2 to cost pool for the production
compared
including
in/out costs at page VII-8 of LR-H-146
administrative
are a byproduct
USPS-T-l
for any of the tables in my
responses.
clocking
part of the non-MODS
Degen
in
of
The mail processing
in such .a way that a
and a cost redistribution
es noted in the question.
is
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
d. They are distinct
separate
and separate,
from the production
e. The following
table contains
IOCS Tally costs, activity
BMC costs
18.626
f.
offices
reported
and are part of an analytical
activity
exercise
of the base year CRA.
the requested
data.
code 6521
( All offices costs
1288.280
The redistributed
Degen
1 % BMC
1 6.46%
1
code 6522 costs for the BMCs and non-MODS
are not part of the cost pool costs or volume variable
in Table 4 of USPS-T-l 2, TW-3e.xls,
or TW-7.~1~.
costs
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
Degen
TWNSPS-Tl2-23.
Please assume that a clerk or mailhandler, at the time
when he is intercepted by an IOCS clerk, is logged into a mail pirocessing
operation, as defined in MODS, and that he is not on a break or in the
process of logging in or out. Assume also that the IOCS clerk enters all
information about this employee correctly in the CODES system.
a. Under the above assumptions, please describe the IOCS activity codes
that will result, assuming the employee is engaged in each of the
following activities
1.
2.
3.
4.
moving one or more empty nutting truck(s);
standing or walking with nothing in his hands;
hanging empty sacks at a pouching rack;
placing an empty hamper or other container to be used as a
receptacle for mail at an opening unit;
5. placing destination labels at empty hampers, pouches or other
receptacles to be used at opening or pouching units;
6. sweeping the floor;
7. disposing of emptied sacks that will be reused;
8. disposing of emptied pallets that will be reused;
9. disposing of trash;
10. moving an opening belt;
11. drinking coffee;
12. looking at a computer monitor;
13. attending a meeting; or
14. watching a football game on TV.
To the extent that different activity codes might result under the costing
methodologies used in FY96 and BY96, please describe these differences.
Also, if the activity code may differ depending on what type of ‘operation
the employee is at (e.g. at a letter or flat operation), then please state the
activity codes that will result at each type of operation.
b. Part II of LR-H.-l46 describes the steps used under your methodology to
distribute IOCS tally costs. Please identify the steps under which the
costs corresponding to each of the activities listed in part a above are
distributed, and the program(s) used to perform the distribution.
Please
also state which activities lead to respectively “uncounted/empty
single
‘unidentified
container”
and
‘nlot
handling”
item”, “identified container”,
costs, as you use those terms.
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
TWIUSPS-T12-23
Response.
a. There is no difference
FY96 and BY96.
in how IOCS activity
The complete
found in the programs
ALB105.
activity
in LR-H-21,
Several activities
particularly
11, and the hardcopy
documentation
because the activities
would be performed
activities,
unlikely to be observed
Activity
2.
An activity
activity
category
especially
to
chapter
or maintenance
(per the
clear how a data collector
described
in subparts
11 ancl 14 are
not on break or personal needs.
code 6523 should be assigned.
code cannot be determined
activities
(LR-H-49,
from the information
that fits the operation
ALB040
in favor of a labor
to which the employee
and ALB105
codes could be assigned,
given.
p. 66) are to ignore certain
of the sampled employee
Based on the program
activity
correspond
code cannot be unambiguously
of an employee
CODES IOCS instructions
incidental
and
in some c,ases
by custodial
it is not necessarily
Finally, the activities
1.
to LR-H-23),
ALB040
the available CODES IOCS options to classifY certain
so the resulting
specified.
18-21 (see LR-H-49,
logic may be
Even if there are no data quality problems
preamble to the question),
would interpret
programs
listed above do not directly
in questions
instead.
codes are assignled between
code assignment
CODES IOCS options
workers
Degen
including
is assigned.
logic, a variety of
activity
codes 5610,
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
5620,
5700,
5750 and various 6XxX
code 5610 results if the employee
Activity
code 5620 results if the employee
we have information
independently
via the MODS and BMC cost pools.
program
If the question
handling
ALB040,
20/21
4.
Activity
question
the activity
This can happen if the
response indicates that the employee
without
If
code that results is 57501.
indicating
is handling
or if the data collector
18d part 2 with option ‘H’ (“Obtaining
an operation...“)
is
IBd, part 2 response is ‘F’
empty hamper or other container,
question
mapping.
code 6523 would be assigned.
code 6523 should be assigned.
20/21
See I-R-H-21,
response indicates that the employee
not, then assuming the question
sacks”),
is at a flat
on the type of operation
for a comprehensive
an empty sack, activity
(“Hanging
19
Of course, in the new
methodology,
especially
activity
at a letter case, OCR,
based on the question
case, FSM, or fiat facerlcanceler.
3.
For instance,
is observed
BCS, LSM, or letter facerlcanceler,
response.
codes.
Degen
a container
responds to
equipment
handling
an
for use in
in questions
20/Z 1.
5.
There is no CODES IOCS response corresponding
directly
activity.
that tihe employee
is handling
If the question
20/21 response indicates
an empty item or container,
activity
to this
code 6523 would be
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
assigned.
If the employee
equipment,
6.
is not handling a piece of empty
and assuming the data collector
the question
18c options,
If a clerk or mailhandler
maintenance
activity
mail processing
appropriate
activity
an incidental
(say, for safety purposes)
with one of
custodial
or
while clocked into a
then the data collector
labor category
response to subpart
responded
code 5750 would be assigned.
were performing
operation,
Degen
and not the incidental
should record the
activity.
See my
2. Note also that there is no CODES IOCS
response that corresponds
directly to this activity
for clerks and
mailhandlers.
7.
See the response to subpart 4.
8.
See the response to subpart 4.
9.
See the response to subpart
10
See the response to subpart 6.
6.
11. There is no CODES IOCS response corresponding
activity.
If the employee
recorded
in question
directly
to this
is on an official break, that should be
18g, in which case the tally would receive
activity
code 6521.
allowed
in work areas, so the scenario you describe should not
occur.
My understanding
is that food and drink are not
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
12. As in subparts
of incidental
contains
2 and 11, “looking
activity.
at a computer
If the employee
monitor”
see the response to subpart
189 options
is a type
is looking at a monitor
a status display for a piece of automated
equipment,
Degen
which
mail s,orting
2. A number of question
could also fit, which would result in a 6XXX activity
code.
13. If the employee
is observed
(other activities),
observation
the activity
in question
at a safety meeting in question
code is 6430.
A ‘meeting,-other”
189 would be assigned activity
code 6630.
14. I am not aware of any work areas that include television
may be televisions
in break rooms.
189
Employees
sets.
should olnly be in the
break room while on official breaks or while passing through
personal
needs, in which case the employee
break/personal
activity
b. In subparts
needs in question
for
would be observed
on
189 and the tally would receive
code 6521.
1 and 4, the tally would be distributed
container.”
The LR-H-146
NONMOD
(step 3). In the “handling”
programs
8, the tally would be distributed
The LR-H-146
NONMODl2
There
programs
are MOD3CONT.
8MC3, and
scenario under subparts
as an ‘uncounted/empty
are MOD2lTEM.
(step 2). Otherwise,
as an “unidentified
MOD22lTM.
3, 7 and
single item.”
BMC12,
the tally would be distribulted
and
as ‘not-
Response of United States Postal Service Witness
to Interrogatories
of Time Warner, Inc.
handling.”
The LR-H-146
NONMOD
(step 4).
programs
are MOD4DIST.
Degen
BMC4, and
DECLARATION
I, Carl G. Degen, declare under penalty of perjury that the foregoing
answers
are true and correct,
and belief.
to the best of my knowledge,
infolrmation,
1
.
CERTIFICATE
OF SERVICE
I hereby certify that I have this day served the foregoing document
participants
of record in this proceeding
in accordance
with section 12 of the Rules of
Practice.
Eric P. Koetting
475 L’Enfant Plaza West, SW.
Washington, D.C. 20260-I 137
September 12, 1997
upon all