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.

-

.

to be 28 percent, the savings at the lower ZIP+4 level would be calculated at 28/57 = 49

percent of the installed and

USPS estimate.

Beyond 1989,

operational,

OTA

estimated

when the

single-line

savings

by using

OCRs would be fully the USPS curve of

clerk/carrier

savings

versus

ZIP+4

use.

Option B: Multi-line OCR with ZIP+4. Here, OTA assumed that for the next three years, 1985-1987, only Phase I single-line OCRs would be in operation, and the Phase I cost and savings estimates apply. The Phase I single-line OCRs would be converted to multi-line at an estimated conversion cost of $200,000 each, with the cost spread equally over three years, 1988-90, based on best available engineering judgment.

OTA estimates that the cost of Phase II multi-line OCRs would be $850,000 each (capital and expense), again based on engineering judgment, and compares to the USPS-estimated unit cost (capital and expense) of $750,120 for Phase 11 single-line

OCRs. OTA assumed that 1988-90, which reflects a

the cost of multi-line OCRs would

3-year

delay

period

(1985-87)

be spread overthrew years, for release-loan tests,

competitive bidding, and contract award, and that the total number of OCRs would be the same, whether single- or multi-line. OTA assumed an additional multi-line OCR cost of $5 million per year for 3 years, 1985-87, to cover any further research and development and the release-loan testing of multi-line OCRs prior to procurement. The

$5 million equates to about one-fifth of the 1983 USPS R&D budget. Otherwise, OTA assumed that Phase II equipment costs (bar code sorters, electronic ZIP retrofits, site preparation, address directory information update, and contingency) would be the same as for single-line (Option A).

OTA assumed that savings from the multi-line OCRs would phase in over the 1988-90 period and that full savings would begin in 1991, the year following full

38

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