Breast Cancer Research Stamp: Effective Fund-Raiser but Better Reporting and Cost-Recovery Criteria Needed
Published: 2003-09-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In America, breast cancer is reported as the second leading cause of cancer deaths among women. Given this statistic, the importance of finding a cure cannot be overemphasized. To supplement the billions of federal dollars being spent on breast cancer research, Congress passed legislation creating the Breast Cancer Research Semipostal (BCRS) to increase public awareness of the disease and allow the public to participate directly in raising funds for such research. Since the BCRS was the first semipostal issued by the Postal Service, Congress mandated, and GAO issued, a report in April 2000 on the BCRS' cost, effectiveness, and appropriateness as a fund-raiser. After the report, Congress extended the BCRS sales period through 2003. As mandated, this report updates GAO's prior work as Congress considers another extension to the BCRS sales period.
section_title: What GAO Found
paragraphs: Although the U.S. Postal Service (the Service) has not tracked or estimated all costs associated with the BCRS program, it reported that the bulk of BCRS costs, from inception through May 16, 2003, were about $9.5 million. In April 2000, GAO recommended that the Service issue BCRS cost-recovery regulations and make available cost data and analyses to provide postal ratepayers assurance they were not involuntarily subsidizing BCRS costs. The Service issued regulations in July 2000, but it has not yet submitted the recommended data and analyses to Congress. Service officials attributed the lack of providing Congress with this information to administrative oversight and other factors, but said they would provide Congress with this information as soon as practicable. In 2001, the Service amended its BCRS regulations stating that cost-recovery determinations would be made using baseline costs for comparable commemorative stamps. GAO, however, is concerned that the regulations can be interpreted as not requiring the Service to provide for baseline comparisons for certain BCRS costs, e.g., printing, sales, and distribution, although the Stamp Out Breast Cancer Act states that reasonable costs attributable to the BCRS in these areas should be recouped. The Service has not established baseline costs for these categories. Without these baselines, the Service lacks assurance that it is identifying and recouping excess costs from BCRS surcharge revenue. The BCRS continues to be an effective means of raising funds for breast cancer research. Sales have fluctuated, but the BCRS has raised over $30 million for research since it was issued in July 1998. NIH and DOD--recipients of research funds generated by the BCRS--are not subject to the same statutory reporting requirements as agencies that are to receive funds generated by semipostals issued under the Semipostal Authorization Act. Such agencies are required to submit an annual report to Congress on the amount of funds received, how the funds were used, and accomplishments. The public and key stakeholders GAO spoke with believe it is appropriate for the Service to issue semipostals.

section_title: Letter
paragraphs: In the United States, breast cancer is reported as the second leading cause  of cancer deaths among women. There are more than 2 million women  today in the United States who have been diagnosed with breast cancer,  and it has been reported that another 1 million women do not know they  have it. Annually, nearly $7 billion is spent on the treatment of breast  cancer. Given these statistics, the importance of research to find a cure for  breast cancer cannot be over emphasized. In the past 5 years alone, the  federal government has spent about $3 billion on breast cancer research.  To supplement these federal dollars, Congress passed legislation creating  the Breast Cancer Research Semipostal (BCRS) to increase public  awareness of the disease and allow the public to participate directly in  raising funds for such research.
This report, mandated by Congress, is a follow-up to our April 2000 report  on the Postal Service’s Breast Cancer Research Semipostal. The Stamp Out  Breast Cancer Act, Public Law 105-41, August 13, 1997, mandated our 2000  report. The act required that we issue a report to Congress on the BCRS’s  effectiveness and appropriateness and the U.S. Postal Service’s (the  Service) costs associated with carrying out the act. In general, we reported  that the BCRS had been an effective fund-raiser, and most of the public and  key stakeholders viewed the BCRS as an appropriate way of raising funds  for a nonpostal purpose. We expressed some concerns, however, about the  Service’s identification and recovery of costs associated with carrying out  the act.
Soon after we issued our April 2000 BCRS report, Congress enacted the  Semipostal Authorization Act, Public Law 106-253, dated July 28, 2000.  Among other things, the act requires that we update Congress on the BCRS  and address at least the same matters we addressed in our earlier report.  This report responds to that mandate and addresses   the monetary and other resources the Service has expended in operating  and administering the BCRS program,  the effectiveness of using the BCRS as a means of fund-raising, and   the appropriateness of using the BCRS as a means of fund-raising.
We also provide information on the status of recommendations made to the  Postmaster General in our April 2000 BCRS report. In essence, we  recommended that the Service issue regulations formalizing its criteria for  making BCRS cost-recovery decisions and make BCRS cost data and  analyses available to assure postal ratepayers that they were not  involuntarily contributing funds to breast cancer research.
The BCRS was the first semipostal ever issued by the Postal Service. It  currently sells for 45 cents, and is valid for the 37-cent, First-Class postage  rate, leaving 8 cents as surcharge revenue. The Stamp Out Breast Cancer  Act provides that the Service is to deduct from the surcharge revenue its  reasonable costs incurred in carrying out the act. In general, the Service  has interpreted reasonable costs to mean costs incurred that are over and  above the costs normally incurred with a comparable commemorative  stamp. After deducting its reasonable costs, the Service is to remit the  remaining proceeds from the BCRS surcharge revenue to the National  Institutes of Health (NIH) and the Department of Defense (DOD) for breast  cancer research. Seventy percent of the net proceeds go to NIH, with the  remaining 30 percent going to DOD’s medical research program.
The use of semipostals to raise funds for specific purposes is on the rise.  Since our April 2000 BCRS report, Congress has twice extended the sales  period for the BCRS, required the introduction of two more semipostals,  and given the Service specific authority to consider and issue future  semipostals. Additionally, as of August 2003, Congress was considering  legislation that would require introduction of two more semipostals and  extend the sales period of the BCRS past its scheduled end date of  December 31, 2003.
In doing this work, we reviewed and updated the information included in  our April 2000 BCRS report to reflect the current situation. For this report,  we mainly focused on the Service’s efforts to identify and recoup its  reasonable costs from the BCRS surcharge revenue and ensure that postal  ratepayers were not subsidizing the BCRS. We also identified postal staff  resources devoted to the BCRS and interviewed key stakeholders regarding  the effectiveness and appropriateness of using the BCRS as a means of  fund raising. Additionally, we commissioned a survey to obtain the public’s  opinion regarding the BCRS, and semipostals in general; and we  interviewed NIH and DOD officials about how funds generated from BCRS  sales are being used for breast cancer research. Finally, we researched the  U.S. Code and Postal Service regulations to identify changes that have  occurred since our April 2000 report that either affected the BCRS directly  or the semipostal program in general. Appendix I contains more  information on our objectives, scope, and methodology.
We requested comments on a draft of this report from the Postmaster  General. The Service’s comments are discussed at the end of this letter and  reprinted in appendix IV.
subsections: section_title: Background
paragraphs: The Stamp Out Breast Cancer Act (Pub. L. No. 105-41, Aug. 13, 1997)  required that the Postal Service issue its first-ever semipostal—the BCRS.  The Service issued the BCRS on July 29, 1998. The act required that the  BCRS be available for sale for 2 years, but Congress has since extended the  sales period through December 31, 2003.
Semipostals are stamps sold with a surcharge above the First-Class postage  rate with the net surcharge amount going to a designated cause. The act  stipulated that the BCRS surcharge was not to exceed 25 percent of the  First-Class postage rate, which, at the time of issuance, was 32 cents. The  act further stipulated that after recovering its reasonable costs, the Service  was to transfer 70 percent of the remaining surcharge revenue to NIH and  30 percent to DOD for breast cancer research. The Service’s presidentially  appointed governors initially set the price of the BCRS at 40 cents—32  cents for First-Class postage plus the maximum 25-percent surcharge of  8 cents. Since that time, the price of First-Class postage has increased to 37  cents, and the price of the BCRS is currently 45 cents.
On the day the initial sales period for the BCRS was to end, the Semipostal  Authorization Act (Pub. L. No. 106-253, July 28, 2000) was enacted, which  extended the sales period for the BCRS through July 29, 2002, and granted  the Service authority to issue future semipostals of its own choosing.  Additionally, the act required that the Service issue regulations governing  future semipostals aside from the BCRS.
Another act, the Breast Cancer Research Stamp Act of 2001 (Pub. L. 107-67,  Nov. 12, 2001) further extended the sales period for the BCRS and  established new requirements governing the sales price of the BCRS. That  act extended the BCRS’ sales period through December 31, 2003, and  replaced the maximum 25 percent surcharge with a minimum 15 percent  surcharge that, when added to the First-Class postage rate, is evenly  divisible by five. That is, the BCRS must be sold for an amount evenly  divisible by five and must cost at least 15 percent more than First-Class  postage. Specifically, the BCRS is currently sold for 45 cents, which is  evenly divisible by 5; with the 8-cent surcharge, it costs about 22 percent  more than the 37-cent First-Class postage rate. Additional legislation is  currently pending that would extend the sales period for the BCRS through  December 31, 2005.
Since the BCRS was issued in 1998, Congress has passed legislation  establishing two additional semipostals. One semipostal is to provide  assistance to the families of emergency relief personnel killed or  permanently disabled in the line of duty in connection with the terrorist  attacks against the United States on September 11, 2001—commonly  referred to as the Heroes of 2001 semipostal. The Service began selling the  Heroes of 2001 semipostal on June 7, 2002, and its sales are scheduled to  end no later than December 31, 2004, in accordance with the semipostal’s  authorizing legislation. The other semipostal—commonly referred to as  the Stop Family Violence semipostal—is to help fund domestic violence  programs. Legislation requiring introduction of the Stop Family Violence  semipostal specifies that sales are to begin no later than January 1, 2004,  and end no later than December 31, 2006. Legislation was also pending in  Congress at the end of August 2003 to establish semipostals to help  promote childhood literacy and the Peace Corps. As of August 2003, the  Service had issued no semipostals that had not been congressionally  mandated.
Images of the BCRS, Heroes of 2001, and Stop Family Violence semipostals  are reproduced as figures 1, 2, and 3, respectively. The Service plans to  begin selling the Stop Family Violence semipostal in November 2003.
For more details about the BCRS and its background, see our April 2000  BCRS report. That report also includes information on semipostals issued  by foreign postal administrations.
section_title: Reported Monetary and Other Resources Devoted to the BCRS Program
paragraphs: The full cost of the BCRS program is not known. The Service reported that  the bulk of BCRS costs from inception through May 16, 2003, were about  $9.5 million, most of which were recovered through the First-Class postage  portion of the BCRS. The Service does not track BCRS costs that it  considers to be inconsequential, such as invoices less than $3,000. The  Service also does not identify costs that it would have incurred whether or  not the BCRS program had been established, such as overhead.  Additionally, the Service reported that no staff have been hired because of  the BCRS program, nor have any staff been dedicated to work full-time on  the program.
In response to a recommendation in our April 2000 BCRS report, the  Service issued BCRS cost-recovery regulations in July 2000 and reported  using these regulations, and amendments, to track and allocate BCRS  costs. We are concerned, however, that the regulations can be interpreted  as not requiring the Service to provide baseline comparisons for certain  BCRS costs, e.g., printing, sales, and distribution, although the Stamp Out  Breast Cancer Act specifically states that reasonable costs in these areas  attributable to the BCRS should be recouped from the BCRS’ surcharge  revenue. Additionally, in our April 2000 report, we recommended that the  Service make available to Congress the BCRS cost data and analyses  necessary to provide assurance that postal ratepayers are not involuntarily  contributing funds to breast cancer research. Although the Service  committed to Congress to provide it with the data and analyses, Service  officials told us that for a number of reasons the Service has not yet done  so. In August 2003, Service officials said that they plan to reexamine their  BCRS regulations and, as soon as practicable, provide Congress with  current BCRS data and analyses.
subsections: section_title: Full BCRS Program Costs Unknown
paragraphs: Although the full cost of the BCRS program is not known, the Service  reported that the bulk of the program’s costs, from inception through May  16, 2003, were about $9.5 million. These costs do not include (1) direct  costs for items the Service considers to be inconsequential, such as the  cost of items that do not exceed $3,000 per invoice and (2) indirect costs  that the Service would have incurred whether or not the BCRS program  had been established, such as overhead. Additionally, the $9.5 million does  not include any staffing-related costs because, according to postal officials,  no staff were hired for the BCRS program nor were any staff dedicated full- time to work on the program. These officials told us that all work  associated with the BCRS was absorbed by existing staff and staff budget— i.e., the Service incurred no additional staffing-related expenses because of  the BCRS. They also told us that the Service, with the exception of the law  department, has not tracked staff hours devoted to the BCRS because it  was not cost-effective to quantify and recoup inconsequential costs  associated with the BCRS. Because all costs associated with the BCRS  were not identified and tracked, the full cost of operating and  administering the BCRS program is not known.
The reported costs of the BCRS through May 16, 2003, are shown in table 1,  broken down by type of cost. In addition to these costs, the Service could  incur additional costs associated with the BCRS before its sales period  ends, which is currently scheduled for December 31, 2003.
section_title: Allocation of BCRS Program Costs between the Postage Portion and Surcharge Revenue
paragraphs: Under the cost-recovery regulations the Service applies to the BCRS, the  Service determined that $8.7 million, about 91 percent, of the $9.5 million in  BCRS costs were recovered through the First-Class postage rate. The  Service also determined that the remaining $853,000 in costs were not  those normally incurred with a comparable commemorative stamp and  therefore were recovered through the BCRS’ surcharge revenue. That is,  about 9 percent of BCRS program costs were recovered through the  surcharge revenue. Table 2 identifies, by cost item, the Service’s reported  cost of operating and administering the BCRS program, from inception  through May 16, 2003; and the allocation of those costs between those  covered by the First-Class postage rate and costs that were recouped from  the BCRS’ surcharge revenue.
section_title: Service’s Approach to Cost Recovery Has Evolved
paragraphs: In response to a recommendation in our April 2000 BCRS report, the  Service issued BCRS cost-recovery regulations in July 2000, which it  subsequently amended in 2001. At the time of our April 2000 report, the  Service was using informal, evolving criteria to make decisions about  which costs would be recouped from the BCRS’ surcharge revenue and had  not issued regulations in this area. In July 2000, the Service issued a  revision to its Administrative Support Manual (ASM) that specified a  “Cost Recovery Policy for the Breast Cancer Research Semipostal Stamp.”  The ASM provisions, which are viewed by the Service as part of its  regulations, specified that the Service was to recover BCRS costs that are  determined to be incremental costs from its surcharge revenue. The  regulations described some types of costs that the Service had determined  to be incremental to the BCRS. Examples of such costs included (1) design  and production costs in excess of the cost to produce equivalent stamps;  (2) packaging costs in excess of the cost to package equivalent stamps; and  (3) printing costs for items other than stamps that are specific to the BCRS,  such as flyers and special receipts.
In June 2001, the Service published in the Federal Register its regulations  covering semipostals issued under the Semipostal Authorization Act.  Among those regulations was 39 C.F.R. 551.8, which established  procedures for determining costs to be offset from semipostal differential  revenue. On December 27, 2001, the Postal Service published a similar  version of this regulation in section 645 of the ASM. The ASM regulations  were made applicable to semipostals issued under the Semipostal  Authorization Act, as well as the BCRS. The December 2001 revision to the  ASM (hereafter referred to as regulations) no longer refer to “incremental  costs,” as was done in the July 2000 version. The December 2001  regulations state that the Service is to recover BCRS costs that are  determined to be in excess of the costs normally incurred for  commemorative stamps having similar sales; physical characteristics; and  marketing, promotional, and public relations activities. These regulations  prescribe that on the basis of judgment and available information, the  Service is to identify stamp(s) comparable with the BCRS and create a  profile of selected cost characteristics, thereby establishing a baseline for cost comparison purposes. According to the regulations, BCRS costs that  exceed the baseline costs for comparable commemorative stamps are to be  recovered from the BCRS’ surcharge revenue. In May 2003, we asked the  Service to provide us the baseline costs for the comparable stamps being  used to determine what costs are to be recovered from the BCRS’  surcharge revenue. In July 2003, the Service provided us with what it  referred to as costs above comparable stamp costs that were recouped  from the BCRS’ surcharge revenue and updated that information in August  2003. However, the Service did not provide us with the actual baselines  used in making the determinations about which costs were to be recouped  from the BCRS’ surcharge revenue.
The Service’s December 2001 regulations provide guidance regarding its  BCRS cost-recovery criteria. The regulations state that cost items  recoverable from the BCRS’ surcharge revenue may include, but are not  limited to, the following:   packaging costs in excess of the cost to package comparable stamps,  printing costs of flyers and special receipts,  costs of changes to equipment,  costs of developing and executing marketing and promotional plans in  excess of the cost for comparable stamps, and  other costs specific to the BCRS that would not normally have been  incurred for comparable stamps.
In addition, the Service’s regulations state that BCRS costs that meet the  following criteria will not be tracked:  costs that the Service determines to be inconsequentially small, which  include those cost items not exceeding $3,000 per invoice;  costs for which the cost of tracking would be burdensome (e.g., costs  for which the cost of tracking exceeds the cost to be tracked);  costs attributable to mail to which the BCRS is affixed (i.e., costs that  are attributable to the appropriate class and/or subclass of mail); and  administrative and support costs that the Service would have incurred  whether or not the BCRS program had been established.
The regulations further identify the following BCRS costs—those the  Service would normally incur for comparable stamps—as recovered  through the First-Class postage portion of the BCRS stamp price.  Therefore, baselines have not been established for these costs, which are  as follows:      stamp design (including market research);  stamp production and printing;  stamp shipping and distribution;  estimated training for field staff, except for special training associated   stamp sales (including employee salaries and benefits);  withdrawal of the stamp issue from sale;  destruction of unsold stamps; and  incorporation of semipostal images into advertising for the Postal  Service as an entity.
section_title: BCRS Cost-Recovery Regulations May Not Allow the Service to Identify and Recoup All Costs Attributable to the BCRS
paragraphs: The Stamp Out Breast Cancer Act specifically recognizes that printing,  sales, and distribution costs attributable to the BCRS are among the types  of reasonable costs the Service should recover from the BCRS’ surcharge  revenue. Section 414 (c) (2) of the act states that the Service must recover  from the BCRS’ surcharge revenue “an amount sufficient to cover  reasonable costs . . . in carrying out this section, including those  attributable to the printing, sale, and distribution of stamps under this  section.” The Service has determined, and we have no basis to challenge its  discretion in this regard, that “reasonable costs” are costs in excess of  those normally incurred for a comparable stamp. However, we are  concerned that the regulations the Service issued to implement this  requirement can be interpreted as not requiring the Service to provide  baseline comparisons for certain BCRS costs, e.g., printing, sales, and  distribution, although the Stamp Out Breast Cancer Act specifically states  that reasonable costs in these areas attributable to the BCRS should be  recouped from the BCRS’ surcharge revenue. Our concerns with the  regulations include the following: BCRS printing costs: The Service’s December 2001 regulations can be  interpreted as not requiring baseline comparisons for BCRS printing costs.  The regulations could be interpreted to mean that all BCRS printing costs  are covered by the First-Class postage portion and comparisons with  baseline costs are not necessary. This interpretation is supported by the  fact that, as of August 2003, the Service had not established a baseline cost  for comparable stamps against which to compare BCRS printing costs. The  Service did, however, provide information showing that the BCRS’ printing  costs between 1998 and 2003 ranged from $3.35 per thousand stamps to  $7.39 per thousand. The Service also provided information on printing  costs for the three stamps that it considers comparable with the BCRS. The  printing costs for these three stamps ranged from $11.52 per thousand in  1999 to $14.34 per thousand in 1997. Additionally, the Service provided  printing costs for various commemorative stamps in 1998 through 2002.  That information would tend to support the view that printing costs for the  BCRS have not exceeded the printing costs for other commemoratives.  Nevertheless, the Service did not establish a baseline for making BCRS  printing cost comparisons. Therefore, the Service has not demonstrated  that its regulations establish an adequate process for ensuring that excess  semipostal costs are identified and recouped from surcharge revenues.  Following its regulations, the Service reported that it did not recoup from  the BCRS’ surcharge revenue any of the $3,597,000 it incurred in BCRS  printing costs. Without a comparison between actual BCRS printing costs  and the baseline printing costs for comparable stamps, the Service lacks  assurance that it is identifying and recouping excess costs from BCRS  surcharge revenue.
BCRS sales costs: The Service’s December 2001 regulations can be  interpreted as not requiring baseline comparisons for BCRS sales costs.  The regulations can be interpreted to mean that all BCRS sales costs are  covered by the First-Class postage portion and comparisons with baseline  costs are not necessary. As of August 2003, the Service had not established  a baseline cost for comparable stamps against which to compare BCRS  sales costs. Unlike BCRS printing costs, the Service reported that it did not  track BCRS sales costs because they were “minimal,” but it was unable to  provide documentation supporting this position. The Service has reported  that the BCRS was available for sale at over 27,000 post offices across the  country, where salaries and benefits for its clerks average about $30 per  hour. Service officials told us that no staff were hired for the BCRS  program nor were any staff dedicated full-time to work on the program.  However, the Service commented in July 2003 that each semipostal  generates sales costs that it would not incur for commemorative stamps,  such as time spent responding to customer questions about the fund-raising  involved. In addition, the Service has reported that stamp sales costs are 24  cents per dollar for stamps sold at the window, compared with 14 cents for  stamps sold at vending machines. However, the Service has more recently  taken the position that stamp sales costs are substantially less than  previously calculated. In September 2003, the Service was in the process of  reviewing its stamp sales costs, but revised stamp sales figures were not  yet available. Therefore, it is unclear whether the Service has incurred sales  costs for the BCRS that are greater than those incurred for comparable  commemorative stamps. Without a comparison between actual or  estimated BCRS sales costs and the baseline sales costs for comparable  stamps, the Service lacks assurance that it is identifying and recouping  excess costs from surcharge revenue.
In addition to these examples, we have similar concerns regarding other  BCRS costs that are being handled in a manner similar to that described for  BCRS printing, as well as sales. These other costs include stamp design,  shipping, and distribution; estimated training for field staff, except for  special training associated with the BCRS; withdrawal of the stamp issue  from sale; destruction of unsold stamps; and incorporation of BCRS images  into advertising for the Postal Service as an entity.
We discussed our concerns about the Service’s cost-recovery regulations  and their impact with Service officials, especially in light of statements  made by Service officials in June 2001 that the issuance of multiple  semipostals at the same time could significantly increase the administrative  burden on the Service and ultimately burden existing staff and limited  resources. Service officials said that their overriding concern in developing  the cost-recovery regulations was to avoid having to establish cost-tracking  systems that would cost more to develop and implement than the  surcharge revenue to be collected from semipostals, including the BCRS.  We pointed out that the Service already performs a number of cost-related  studies that could possibly be used or modified to capture or estimate  incremental semipostal costs, or that new approaches to capture or  estimate such information might be possible and not be cost prohibitive.  Service officials also said that in developing the regulations, they had not  intended to preclude the Service from recovering excess costs in the  printing, sales, and distribution categories, and they believe they can do so  under the existing regulations. However, we remain concerned that the  regulatory provisions do not require the Service to do so. In fact, the  Service has not established baseline costs that would allow it to identify  and recoup excess costs for printing, sales, and distribution. Therefore, we  continue to believe that a reassessment of the regulatory provisions would  be warranted. In view of our concerns, Service officials told us, in August  2003, they were planning such a reassessment.
section_title: The Service Has Not Yet Met Its Commitment to Congress to Provide It with BCRS Cost Data and Analyses
paragraphs: In our April 2000 BCRS report, we recommended that the Service make  available the data and analysis showing which BCRS costs have been  recovered through the First-Class postage rate to provide assurance that  postal ratepayers are not involuntarily contributing funds to breast cancer  research. In a letter addressed to Chairman John M. McHugh of the former  Subcommittee on the Postal Service, House Committee on Government  Reform, the Service committed to provide, within 60 days of the  conclusion of the BCRS’ initial 2-year sales period (i.e., September 28,  2000), an analysis of the BCRS costs that the Service recovered through the  base First-Class Mail, single-piece, first-ounce postage rate. The letter  further stated that the analysis would demonstrate that the BCRS’  incremental costs have been recovered solely from the surcharge revenue,  and that its nonincremental costs have been recovered through the base  postage rate.
As of August 12, 2003, the Service had not yet provided the recommended  BCRS cost data and analysis to Congress. Service officials explained that  an administrative oversight, as well as subsequent events, led to the  Service’s not making this information available to Congress. The officials  acknowledged that a consultant had drafted an internal paper that  presented and analyzed fiscal year 1999 cost data on the BCRS. However,  the officials noted that this paper had not been reviewed by postal  management and was drafted more than 2 years ago, before the Service  issued its current regulations on BCRS cost recovery. As we previously  recommended, we continue to believe that the Service should prepare and  make available the data and analyses of BCRS costs in order to provide  ratepayers assurance that they are not involuntarily contributing funds to  breast cancer research. Further, we believe that making available current  data and analyses are even more important now than before, given that  additional semipostals have been authorized; and more semipostals are  likely in the future. More specifically, Congress has authorized two  additional semipostals; and in August 2003, it was considering legislation  authorizing two more semipostals and extending the sales period for the  BCRS. Congress has also given the Postal Service specific authority to  issue semipostals of its own choosing. Service officials told us in August  2003 they were planning a reassessment of the earlier BCRS internal paper  and would provide Congress and us with the results of that reassessment as  soon as practicable.
section_title: Effectiveness of the BCRS as a Fund-Raiser
paragraphs: The BCRS has continued to be an effective means of raising funds for  breast cancer research. Although neither the Stamp Out Breast Cancer Act  nor amendments to the act provide quantitative measures for evaluating  the effectiveness of the BCRS as a fund-raiser, the act did provide that the  BCRS was to provide the public a voluntary and convenient way of raising  funds for breast cancer research. We reported in April 2000 that the BCRS  had been successful to those ends. Since then, the BCRS has continued to  be a voluntary and convenient way for the public to contribute millions of  dollars for breast cancer research. BCRS sales have fluctuated over time;  however, the BCRS has raised over $30 million for breast cancer research  since it was issued in July 1998. Additionally, most key stakeholders told us  that for the most part, they viewed the BCRS as an effective fund-raiser;  and the public’s view of the BCRS was generally positive, as reflected in the  results from our survey. As of September 2003, the Service had transferred  to NIH and DOD about $30.8 million from funds raised by the BCRS for  breast cancer research. These federal organizations reported to us that  they have established programs to fund innovative breast cancer research  conducted by various research institutions. NIH and DOD are not required  to issue reports to Congress detailing how BCRS-generated funds were  used or the accomplishments that resulted from the BCRS-funded  research.
subsections: section_title: The BCRS Remains Voluntary and Convenient and Has Raised Millions of Dollars for Research
paragraphs: The BCRS has remained voluntary and convenient, as provided for by the  act, and has raised over $30 million for breast cancer research since it was  issued in July 1998. Postal patrons have the choice of purchasing regular  First-Class postage stamps at 37 cents each or contributing to breast cancer  research by purchasing the BCRS at 45 cents each. The BCRS remains  convenient in that it is available for purchase from a variety of postal  sources, including post offices, although two stakeholders reported  instances when some post offices in their areas did not have the BCRS  when they visited. Figure 4 shows the various sources from which the  BCRS can be purchased.
Our public opinion surveys—including our current 2003 survey and our  earlier 1999 survey, both conducted by the same firm—indicate that about  70 percent of the public views semipostals as a convenient way to  contribute to designated causes. These and other estimates from our 2003  survey are subject to sampling errors of less than +/- 6 percentage points  (95 percent confidence level), as well as to additional errors of unknown  magnitude due to the 89 percent nonresponse rate for the survey as  discussed in appendix I.
As envisioned by the act, the BCRS has raised a substantial amount of  money for breast cancer research. Postal officials report that since the  BCRS was issued on July 29, 1998, the Service has sold over 450 million of  this semipostal, generating over $30 million, net of costs, for breast cancer  research. If BCRS sales continue at the rate it has been selling in fiscal year  2003, about 486 million will have been sold by the time BCRS sales are  scheduled to end on December 31, 2003—generating approximately  $35 million in surcharge revenue.
subsections: section_title: BCRS Sales Have Fluctuated Over Time
paragraphs: Quarterly BCRS sales fluctuated considerably between 1998 and 2003 but  have generally trended lower after reaching a high point of almost 40  million sales in quarter 3, 2000. During the early years that the BCRS was  for sale—quarter 4, 1998 through quarter 4, 2000—quarterly sales varied  from a low of 18.3 million to a high of 39.8 million, with average quarterly  sales of 26.4 million. During the latter years—from quarter 1, 2001, through  quarter 3, 2003, sales ranged from 14.9 million to 27.8 million, with average  quarterly sales of 19.5 million. To help shed additional light on the  continued effectiveness of the BCRS as a means of fund-raising, we also  looked at quarterly sales data for the Heroes of 2001 semipostal to see if  there was a discernable decline in BCRS sales during the quarters when  both semipostals were being sold simultaneously.
Although sales of the BCRS trended somewhat lower during the 4 quarters  the Heroes semipostal was for sale, postal officials and other stakeholders  did not believe there was a strong correlation. Postal officials pointed out  that although BCRS sales declined during the period from quarter 4, 2002,  through quarter 2, 2003, they did not drop nearly as precipitously as the  sales of the Heroes semipostal—which fell from 45.4 million in quarter 4,  2002, to 11.0 million in quarter 3, 2003. Also, some postal officials and other  stakeholders believed that over the long term, postal patrons who  repeatedly purchase semipostals tend to support causes that have  organized, nationwide support bases. For example, some postal officials  and other stakeholders believe many people who purchase BCRSs know  someone who is fighting breast cancer or fought it in the past. Likewise,  postal patrons who repeatedly purchase BCRSs are likely to be aware that  the BCRS is supported by many of the national breast cancer organizations  or their affiliates.
However, some postal officials and other stakeholders speculated that the  Heroes of 2001 semipostal may have initially been purchased by a large,  diverse population eager to provide assistance to the families of emergency  relief personnel killed or permanently disabled in connection with the  terrorists attacks on September 11, 2001. However, these postal officials  and other stakeholders suspected that large initial sales figures for the  Heroes semipostal were not sustainable because that semipostal did not  benefit from the support of a long-established, well-organized, nationwide  network of organizations to keep the Heroes semipostal in the pubic eye.  Figure 5 shows the number of BCRSs sold since date of issuance through  quarter 3, 2003, as well as the number of Heroes of 2001 semipostals sold  from date of issuance through quarter 3, 2003.
section_title: Key Stakeholders Believe the BCRS Has Been an Effective Fund-Raiser
paragraphs: The key stakeholders we spoke with that expressed a view about the  effectiveness of the BCRS believed it had been effective in raising funds for  breast cancer research. Some of the stakeholders who did not express a  view on the effectiveness of the BCRS provided other comments about  semipostals.
subsections: section_title: Opinions of Key Stakeholders Who Expressed View That the BCRS Has Been an Effective Fund-Raiser
paragraphs: Key stakeholders who believed the BCRS has been an effective fund-raiser  included the Postal Service; Dr. B.I. Bodai (the individual credited with  conceiving the idea for the BCRS and who, along with Ms. Betsy Mullen,  lobbied Congress for the BCRS); Ms. Betsy Mullen (the Women’s  Information Network Against Breast Cancer), the Susan G. Komen Breast  Cancer Foundation; the American Cancer Society; and the American  Philatelic Society.
According to postal officials, the effectiveness of the BCRS as a means of  fund-raising is self-evident for two particular reasons. First, the BCRS has  raised over $30 million for breast cancer research since it was issued in  July 1998. Second, more than 450 million BCRS’s had been sold through  quarter 3, 2003, making the BCRS very popular when compared with the  Service’s best-selling commemorative stamps. Postal officials note that  although BCRS sales have periodically waxed and waned, yearly sales  totals have remained strong since the BCRS was issued.
Dr. B.I. Bodai believed the BCRS has been a more effective, consistent  fund-raiser than expected. He said no one anticipated that the pennies  generated from the sale of each BCRS across the country would, over time,  total well over $30 million.   Dr. Bodai said the BCRS was popular with  families affected by breast cancer, but he believed sales could have been  significantly higher if the Service and the various breast cancer  organizations had even more vigorously and consistently promoted the  BCRS over the past 5 years.
Ms. Betsy Mullen of the Women’s Information Network Against Breast  Cancer stated she believed the BCRS had been a very effective fund-raiser.  Further, she noted that the BCRS’ effectiveness wasn’t just limited to  raising funds, but was also extremely effective at raising awareness of  breast cancer and the fight to eradicate it. Ms. Mullen also stated that the  Women’s Information Network Against Breast Cancer had worked very  closely with Congress to ensure that money raised by the BCRS not  supplant congressional appropriations for breast cancer research, and she  believed money raised by the BCRS had not been used to supplant  congressional appropriations to NIH and DOD for breast cancer research.    She stated that from an educational perspective, the BCRS has been  “priceless” in its role of promoting breast cancer awareness as a women’s  health issue. She said she believed that because of the BCRS, many more  women have gotten mammograms than otherwise would have, and many  lives therefore have been saved.
The Susan G. Komen Breast Cancer Foundation stated that the BCRS has  consistently been an effective means of raising funds since it was issued in  1998. The foundation expressed the belief that over the years, the BCRS has  proven to be even more successful than anyone had initially anticipated.  The foundation reiterated its earlier position that the BCRS has been a  unique and innovative fund-raising tool and has raised breast cancer  awareness on a global scale. Further, the foundation stated that if anything,  it has become an even stronger supporter of the BCRS over the years. The  foundation and its 118 affiliates across the country have found the BCRS to  be not only a great means for raising awareness, but also an excellent  promotional tool that has helped stimulate breast cancer organizations’  fund-raising activities—particularly at the local level.
The American Cancer Society believed that time has proven the BCRS to be  an effective means of raising funds for breast cancer research.   As we  reported in 2000, the American Cancer Society’s position had been that it  was too early to label the BCRS as either effective or ineffective. However,  the society stated that the BCRS has since shown that it has effectively  raised money for breast cancer research. Society officials recalled that they  had previously been concerned that the BCRS might take momentum away  from federal funding for breast cancer research or adversely affect fund- raising organizations’ ability to raise research funds. They stated, however,  that they had seen no evidence, over the past 5 years, to indicate that the  BCRS had taken momentum away from federal funding for breast cancer  research or adversely affected the American Cancer Society’s ability to  raise research funds. The society said that it still believes vigilance is in  order to ensure that the BCRS does not affect research funding or fund- raising, but otherwise it has no concerns about the BCRS. Society officials  said that the BCRS fits well with the society’s goals—one of which is to  increase awareness of breast cancer. The society stated that it supports the  BCRS.
American Philatelic Society officials stated that they had been surprised at  stamp collectors’ acceptance of the BCRS in particular, and semipostals in  general. As we reported in 2000, the society was opposed to semipostals  and believed they were a tax on the hobby of stamp collecting. Over time,  however, the society has come to believe that the BCRS’ strong sales  indicate that semipostals are now widely accepted, making them effective  fund-raisers. Nevertheless, the officials cautioned that although stamp  collectors are now accepting of semipostals, they do not want to see more  than one or two new semipostal issues per year. Otherwise, stamp  collectors would be forced to buy too many of the higher priced semipostal  issues each year in order to maintain complete stamp collections.
section_title: Comments Made by Other Key Stakeholders
paragraphs: The National Breast Cancer Coalition (NBCC) stated that its position on  the BCRS had not changed since our April 2000 BCRS report. Officials  stated that NBCC still believes there are more effective ways of raising  money for research than using semipostals. NBCC stated that a better  gauge of the BCRS’ effectiveness would be how well the surcharge revenue  was spent on research rather than simply how much money the BCRS  raised. NBCC continues to believe that effectively lobbying Congress holds  the most promise for raising significant amounts of money for breast  cancer research.
The Chairperson of the Citizen’s Stamp Advisory Committee stated that it  was outside the scope of the committee’s role to evaluate or take a position  on the effectiveness of the BCRS. The Citizen’s Stamp Advisory Committee  is a 15-member group of citizens appointed by and serving at the pleasure  of the Postmaster General for the primary purpose of providing the Postal  Service with a “breadth of judgment and depth of experience in various  areas that influence subject matter, character and beauty of postage  stamps.” Under Postal Service regulations implementing the Semipostal  Authorization Act, the committee is also responsible for reviewing eligible  semipostal proposals and making recommendations to the Postmaster  General on worthy cause(s) and executive agency(ies) eligible to receive  funds raised by semipostals. The Chairperson emphasized that Postal  Service management decides policy, administrative, and operational  matters related to semipostals—not the Citizen’s Stamp Advisory  Committee. She stated that the committee’s primary function is to review  proposals for stamps and select subjects for recommendation to the  Postmaster General that are both interesting and educational.
section_title: Survey Respondents View Semipostals in a Positive Light
paragraphs: To determine the public’s awareness of the BCRS and its view of  semipostals in general, we included pertinent questions in our survey of the  public. We asked the same question about awareness of the BCRS that we  asked in our August 1999 survey to look for evidence about whether the  public had become more aware of the BCRS over time.
The survey results suggest that about 29 percent of adults were aware of  the BCRS at the time of our recent inquiry—which occurred almost 5 years  after the BCRS was issued. About 37 percent of women and about 19  percent of men were aware of the BCRS. The survey results from our  August 1999 survey, which was conducted about 1 year after the BCRS  went on sale, indicated that about 24 percent of adults were aware of the  BCRS at that time. About 29 percent of women and about 18 percent of  men were aware of the BCRS in 1999. We are unable to determine whether  the changes in our awareness estimates are due to genuine changes in  awareness or to sampling errors and other nonsampling errors related to  the 89 percent nonresponse rate, as discussed in appendix I.
To help gauge the public’s experience with the BCRS, we also asked the  survey participants whether they had ever purchased a BCRS. About 12  percent report they had purchased the BCRS. We did not ask a similar  question in our 1999 public opinion survey.
section_title: Transfers of Surcharge Revenue to NIH and DOD for Breast Cancer Research
paragraphs: As of September 2003, the Service had transferred to NIH and DOD about  $30.8 million from funds raised by the BCRS for breast cancer research.  NIH and DOD reported to us that they have established programs to award  funds for innovative breast cancer research conducted by various research  institutions.
As noted in our April 2000 BCRS report, the act specifies that after  deducting its reasonable costs, the Service is to transfer 70 and 30 percent  of the remaining surcharge revenue generated by the BCRS to NIH and  DOD, respectively. The act also specifies that such transfers be made at  least twice yearly under arrangements as agreed to between the Service  and those agencies. Further, the act specifies that NIH and DOD are to use  transferred BCRS surcharge revenues for breast cancer research. Unlike  any agency that was to receive funds generated from semipostals issued  under the Semipostal Authorization Act, NIH and DOD are not subject to  annual reporting requirements. Agencies that receive funds from  semipostals issued under the Semipostal Authorization Act are required to  submit annual reports to Congress that include (1) the total amount of  funds received during the year; (2) an accounting of how the funds were  allocated or otherwise used; and (3) a description of any significant  advances or accomplishments made during the year that were funded, in  whole or in part, out of amounts received.
Information currently reported to Congress on NIH’s and DOD’s use of  research funds generated by the BCRS does not adequately support  congressional oversight. As mandated, our periodic reports to Congress  focus primarily on the BCRS’ costs, effectiveness, and appropriateness; not  on how NIH and DOD use BCRS surcharge revenues for breast cancer  research and the accomplishments resulting from such research. To help  manage their respective BCRS funded research programs, NIH and DOD  require award recipients to provide periodic reports on the progress being  made and breakthroughs achieved. This is the same information that  Congress requires of agencies receiving surcharge revenues generated by  semipostals issued under the Semipostal Authorization Act; and this readily  available information could be, if required, submitted by NIH and DOD to  Congress on an annual basis.
To date, the Service has complied with the requirements in the Stamp Out  Breast Cancer Act regarding the transfers of BCRS surcharge revenue to  NIH and DOD. NIH and DOD are using BCRS surcharge revenue  transferred to them to fund breast cancer research. Table 3 shows the  transfers, by fiscal year, that have been made since the BCRS was issued in  July 1998.
NIH and DOD officials said that, as required by the Stamp Out Breast  Cancer Act, they have been using transferred BCRS surcharge revenue to  fund breast cancer research. NIH officials said that revenue received from  the BCRS surcharge revenue has been used to fund breast cancer research  under the National Cancer Institute’s (NCI) “Insight Awards to Stamp Out  Breast Cancer” initiative. The officials said that this program was designed  to fund high-risk exploration by scientists who are employed outside the  federal government and conduct breast cancer research at their  institutions. They reported that 86 awards had been made as of April 2003,  and most of the awards were for 2-year periods with several projects still  alive. Discounting a single, one-time supplement for $4,300, individual  awards ranged from $47,250 to $142,500 and averaged about $111,000. The  officials stated that these insight awards were innovative and high-risk  projects; and many have been successful in leading to new insights and  approaches in the biology, diagnosis, and treatment of breast cancer. The  officials stated that NCI is currently considering additional research  projects to be funded using BCRS surcharge revenue not yet committed.  Detailed information provided by NIH/NCI on breast cancer research  awards funded with proceeds from BCRS surcharge revenue is reprinted in  appendix II.
DOD officials told us that revenue received from the BCRS’ surcharge  revenue had been used to fund “DOD Breast Cancer Research Program  Idea Awards,” which are administered by the U.S. Army Medical Research  and Materiel Command. Idea Awards are intended to encourage innovative  approaches to breast cancer research. DOD officials told us that 19 awards  had been made as of April 2003. Individual awards ranged from $5,000 to  $578,000 and averaged about $356,500. These awards have focused on  research into such areas as the biology of cancer cell growth and tumor  formation, immunotherapy, and new areas of breast cancer detection. The  officials stated that DOD plans to continue investing money received from  BCRS surcharge revenue into programs that will encourage innovative  approaches to breast cancer research. The officials also stated that about  $256,000 of the transferred funds had been used for management expenses.  Detailed information provided by DOD on breast cancer research awards  funded with proceeds from BCRS surcharge revenue is reprinted in  appendix III.
section_title: Appropriateness of Using Semipostals as a Means of Fund-Raising
paragraphs: Most of the key stakeholders we spoke with and the public believe it is  appropriate for the Postal Service to sell the BCRS, as well as other  semipostals, to raise funds for worthwhile causes. When we issued our  April 2000 report, the BCRS was the only semipostal available from the  Postal Service. However, since that time, Congress has passed legislation  mandating two additional semipostals and is currently considering  legislation requiring two more semipostals and extending the sales period  for the BCRS.
subsections: section_title: Opinions of the Postal Service, Key Stakeholders, and Others Regarding Appropriateness
paragraphs: The Service, NBCC, and the Citizens Stamps Advisory Committee generally  viewed using semipostals to raise funds for designated causes as  inappropriate; Dr. B.I. Bodai, Ms. Betsy Mullen, the Susan G. Komen Breast  Cancer Foundation, the American Cancer Society, and the American  Philatelic Society viewed using semipostals to raise funds as appropriate.  The public also believes that it is appropriate to use semipostals as fund- raisers.
subsections: section_title: Views of the Postal Service and Other Key Stakeholders
paragraphs: The Postal Service has historically been opposed to semipostals. The  Service believes that fund-raising through the sale of semipostals is an  activity outside the scope of the Service’s mission as defined by the Postal  Reorganization Act. The Service also remains concerned that the  popularity of the BCRS does not necessarily portend the success of future  semipostals, whether mandated by Congress or initiated by the Postal  Service, and that future semipostals might generate only modest amounts  of revenue while still requiring substantial postal expenditures. Postal  officials are further concerned that too many semipostals not be on the  market at the same time. The BCRS, initially slated for a 2-year sales  period, has been twice extended by Congress and has been on sale for over  5 years. Postal officials worry that if semipostals are mandated but not  retired, the market for semipostals might become oversaturated to the  detriment of individual semipostals as well as the semipostal program in  general.
The Susan G. Komen Breast Cancer Foundation stated that the BCRS was  appropriate when issued and remains appropriate today. The foundation  continues to support the BCRS wholeheartedly. Further, the foundation  believed that the BCRS provides an easy and convenient way for the public  to support and contribute to breast cancer research. The foundation stated  that during the 5 years the BCRS has been for sale, it has become “a  unifying symbol of the fight to find a cure for breast cancer which has  become woven into the fabric of America.” When feasible, the foundation  uses the BCRS on both mass mailings and individual pieces of  correspondence.
The American Cancer Society continues to believe that it is appropriate to  use the BCRS as a means of fund-raising. The society has held this opinion  since the BCRS was first issued.
The American Philatelic Society stated that its position on the  appropriateness of the BCRS has moderated over time. The society no  longer believes it is inappropriate for the Service to issue semipostals,  changing its view because of the wide public acceptance of the BCRS.  Society officials also told us that although BCRS costs are not identified  and tracked with precision, they are in the ballpark given the regulations  that the Service has issued for tracking and allocating costs.
NBCC stated that its opinion regarding the appropriateness of using the  BCRS as a means of fund-raising had not changed since our April 2000  BCRS report. NBCC still had reservations about the appropriateness of the  BCRS, and officials stated that they were still concerned that the BCRS  might be more of a symbolic gesture, on Congress’ part, than an all-out  commitment to fund whatever research is needed to eradicate breast  cancer in the shortest possible time.
The Chairperson of the Citizen’s Stamp Advisory Committee stated that the  committee’s position has always been that semipostals are inappropriate  because fundraising is outside the scope of the Postal Service’s mission.  The Chairperson noted that the committee had been against the Semipostal  Authorization Act. The act mandated that the Service establish a  semipostal program, and select causes to be represented by semipostals  and agencies to receive funds raised through the sale of semipostals. The  committee found it interesting that after giving the Service responsibility  for selecting semipostals, Congress has continued to mandate additional  semipostals. The committee is concerned that if Congress continues to  mandate new semipostals without retiring old ones, a situation could  eventually develop where semipostals, which are essentially  commemorative stamps with a surcharge, might begin to “crowd out” the  Service’s regular commemorative stamp program. This could present a  nationwide problem in post offices because there is limited space in  window clerks’ stamp drawers for different stamp issues. Because the  Service requires that semipostals be available in all post offices at all times,  the number of regular commemorative stamp issues might have to be  limited to accommodate semipostals unless the number of semipostals for  sale at any one time is limited.
Dr. B.I. Bodai reiterated his belief that using the Postal Service to issue  semipostals for worthy, nonpostal causes is very appropriate and is an  example of what good government is all about. Dr. Bodai stated that the  BCRS has not only been appropriate from the standpoint of raising money  for breast cancer research but has also been extremely valuable as a tool  for raising breast cancer awareness on a nationwide basis. He noted that  the BCRS is so popular that some states, such as Georgia, have  incorporated its image into specialty automobile license plates.
Ms. Betsy Mullen of the Women’s Information Network Against Breast  Cancer believes that the BCRS is very appropriate, as would be other  semipostals that raise funds for worthwhile causes. Ms. Mullen believes  that the Service can successfully sell two or more semipostals at the same  time. She said that the Service has a long and successful history of  concurrently selling multiple commemorative stamps, and the American  public has demonstrated over the years its philanthropic support for  multiple worthwhile causes. She also said that concurrently selling two or  more semipostals is not a detriment to the semipostal program, but rather  an enhancement because multiple semipostals cross-promote each other’s  sales. She noted that the Service is cross-promoting the sale of the BCRS  and Heroes semipostals through its advertisements of these semipostals at  post offices. Finally, she stated that the Women’s Information Network  Against Breast Cancer uses the BCRS on all of its correspondence, and,  because of the BCRS, research is now being done that otherwise would not  have been done.
section_title: The Public’s View
paragraphs: The public continues to believe that it is appropriate to use semipostals to  raise funds for nonpostal purposes. Our public opinion survey conducted  by International Communications Research (ICR) indicated that about 71  percent believe it is very or somewhat appropriate to use semipostals  issued by the Postal Service, such as the BCRS, to raise funds for nonpostal  purposes and about 23 percent believe it is somewhat or very  inappropriate. Six percent had no opinion, said they didn’t know, or  volunteered the answer that it would depend on the cause for which the  semipostal was being used to raise money. Statistically, these opinions  about the appropriateness of semipostals are not large enough to be  significantly different from the findings of our 1999 survey.
section_title: Statutory Authorities and Constraints
paragraphs: On the legislative front, several laws have been enacted since our April  2000 BCRS report that affect the BCRS specifically or semipostals in  general. These laws have (1) twice extended the sales period for the BCRS,  (2) authorized two additional semipostals, and (3) authorized the Service to  issue future semipostals. Also, as of August 2003, Congress was  considering legislation establishing two more semipostals and extending  the sales period for the BCRS until December 31, 2005. As of August 2003,  the Service had not issued any semipostals of its own choosing and had no  plans to do so until the sales period for congressionally mandated  semipostals have ended. We believe this position is consistent with the  discretion afforded the Service under the Semipostal Authorization Act.
section_title: Conclusions
paragraphs: We are concerned that the Service’s BCRS regulations can be interpreted as  not requiring the Service to provide baseline comparisons for certain BCRS  costs, e.g., printing, sales, and distribution, although the Stamp Out Breast  Cancer Act specifically states that reasonable costs in these areas  attributable to the BCRS should be recouped from its surcharge revenue.  Although the Service has provided printing costs for various  commemorative stamps, it has not established baseline costs for certain  BCRS costs. Without these baselines, the Service lacks assurance that it is  identifying and recouping excess costs from the BCRS’ surcharge revenue.  If the Service does not recoup costs for items that exceed those of  comparable stamps, the Service could be subsidizing BCRS costs.  Furthermore, without having baseline cost information for comparable  stamps for the cost categories that the Service does track for the BCRS, it is  impossible to determine whether the Service has recouped all reasonable  costs of the BCRS that exceed those for comparable stamps in such cost  categories. Further, the Service has not met its commitment to Congress to  provide it with BCRS cost data and analyses, as we had previously  recommended, to assure postal ratepayers that they are not involuntarily  contributing to breast cancer research. Without current BCRS cost data  and analyses, Congress and the public continue to lack assurance that  postal ratepayers are not involuntarily contributing funds to breast cancer  research.
Nearly all of the stakeholders that we spoke with consider the BCRS to be a  success, particularly given its sales performance to date. According to NIH  and DOD, millions of dollars in BCRS surcharge revenue have contributed  to important new insights and approaches in the biology, diagnosis, and  treatment of breast cancer, as well as in other areas of research. NIH and  DOD provided us information regarding their use of BCRS surcharge  revenue as well as advances or accomplishments they achieved. However,  NIH and DOD are not required to submit annual reports to Congress like  agencies that are to receive funds from semipostals issued under the  Semipostal Authorization Act. Congress has twice extended the sales  period for the BCRS and is currently considering a third extension.  Therefore, establishing annual reporting requirements for NIH and DOD,  similar to the statutory reporting requirements established for any agency  that would receive funds from semipostals issued under the Semipostal  Authorization Act, would prove valuable by providing information on the  amount of funds received, how the funds were used, and any  accomplishments resulting from the use of those funds, should Congress  decide to further extend the BCRS sales period.
section_title: Matter for Congressional Consideration
paragraphs: If Congress decides to extend the sales period for the BCRS past its  scheduled end date of December 31, 2003, it may wish to consider  establishing a requirement that NIH and DOD annually report to Congress,  similar to the requirement for agencies that are to receive surcharge  revenues generated from semipostals issued under the Semipostal  Authorization Act.
section_title: Recommendations for Executive Action
paragraphs: We are reaffirming our recommendation made in April 2000 that the  Postmaster General direct postal management to make available the cost  data and analyses showing which BCRS costs have been recovered through  the First-Class postage rate to provide assurance that postal ratepayers are  not involuntarily contributing funds to breast cancer research.
We also recommend that the Postmaster General reexamine and, as  necessary, revise the Service’s December 2001 cost-recovery regulations to  ensure that the Service establishes baseline costs for comparable  commemorative stamps and uses these baselines to identify and recoup  excess costs from the BCRS’ surcharge revenue. As part of that process,  the Postmaster General should publish the baseline costs it is using. This  would help provide assurance that the Service is recouping all reasonable  costs of the BCRS from the surcharge revenue.
section_title: Agency Comments and Our Evaluation
paragraphs: The Postal Service provided comments on a draft of this report in a letter  from the Senior Vice President, Government Relations dated September 10,  2003. These comments are summarized below and are reprinted as  appendix IV. Postal officials also provided technical and clarifying  comments, which we have incorporated into the report where appropriate.
The Senior Vice President indicated that the Service plans to take  appropriate actions to address our specific recommendations. He stated  that the Service never intended that its BCRS cost-recovery regulations be  interpreted as not requiring establishment of adequate baselines for  comparing certain categories of costs. However, he acknowledged that the  regulations might need to be revised to make the Service’s intent clearer.  Regarding the establishment of baselines, he noted that comparisons  between the BCRS and comparable commemoratives could involve  different facets in various areas. For example, he noted that printing cost  comparisons could be difficult because they may involve differing time  periods, different graphic designs, and different print runs. Nonetheless, he  said that the Service would reexamine its semipostal regulations with a  view toward proposing revisions about what costs are to be identified and  recouped from surcharge revenues.
In commenting on our reaffirmed recommendation that the Service make  available BCRS cost data and analyses, the Senior Vice President stated the  Service plans to reassess the earlier analysis it had commissioned on  recovery of BCRS costs through the First-Class Mail postage rate in light of  the cost-recovery issues raised in our report. He stated that the Service  would provide Congress and us with the results of that reassessment upon  completion.
We are sending copies of this report to the Chairman and Ranking Minority  Member, Subcommittee on Health, House Committee on Energy and  Commerce; and to the Chairman and Ranking Minority Member,  Subcommittee on National Security, Emerging Threats, and International  Relations, House Committee on Government Reform because of their  involvement in passage of the Stamp Out Breast Cancer Act. We are also  sending copies of this report to Senator Dianne Feinstein and  Representative Joe Baca because of their expressed interest in the BCRS;  the Postmaster General and Chief Executive Officer, United States Postal  Service; the Chairman of the Postal Rate Commission; and other interested  parties. Copies will also be made available to others upon request. In  addition, this report will be available at our Web site at http://www.gao.gov.
Key contributors to this report are listed in appendix V. If you or your staffs  have any questions about this letter or the appendixes, please contact me at  (202) 512-2834 or E-mail at ungarb@gao.gov.
section_title: Objectives, Scope, and Methodology
paragraphs: Our objectives for this report were to fulfill our legislative mandate to  update Congress on (1) the monetary and other resources the Postal  Service has expended in operating and administering the Breast Cancer  Research Semipostal (BCRS) program, (2) the effectiveness of using the  BCRS as a means of fund-raising, and (3) the appropriateness of using the  BCRS as a means of fund-raising. We also provide information on the status  of recommendations made to the Postmaster General in our April 2000  BCRS report. In essence, we recommended that the Service formalize its  criteria for making BCRS cost recovery decisions and make BCRS cost data  and analyses available to assure postal ratepayers that they were not  involuntarily subsidizing BCRS costs.
To describe the monetary and other resources the Service has expended in  operating and administering the BCRS program, we updated pertinent  information presented in our April 2000 report to reflect current  conditions. To do this, we interviewed officials in the Service’s Offices of  Stamp Services and Finance responsible for administering the BCRS  program and tracking its costs. We gathered and analyzed data on the  surcharge revenue raised by the BCRS as well as data on the costs and  resources the Service used in operating and administering the BCRS  program. We also identified and reviewed the Service’s criteria for  determining which costs are to be recouped from the BCRS’ surcharge  revenue and, as necessary, discussed with finance officials the application  of the Service’s criteria for certain cost items.
To determine if the BCRS has been an effective means of fund-raising, we  obtained and analyzed BCRS sales data and discussed with finance and  stamp services officials how certain events may have affected sales. We  obtained similar information for the Heroes of 2001 semipostal and  compared sales for the two semipostals. We also obtained information on  how much BCRS generated funds had been transferred to the National  Institutes of Health (NIH) and Department of Defense (DOD) for breast  cancer research, and obtained information on how the money was being  used to further breast cancer research. We did not evaluate or assess NIH’s  and DOD’s process for determining who would be awarded BCRS research  funds, nor did we evaluate any of the individual awards. Additionally, we  did not independently verify any of the financial data provided by NIH and  DOD. Further, we interviewed all but one of the key stakeholders that we  had interviewed for our April 2000 report to determine if their views on the  BCRS’ effectiveness as a fund-raiser have changed since our last report.  The key stakeholders interviewed included representatives of (1) the  American Cancer Society, (2) the National Breast Cancer Coalition  (NBCC), (3) the Susan G. Komen Breast Cancer Foundation, (4) Dr. B. I.  Bodai, and (5) the American Philatelic Society. We did not interview the  current Curator of the Smithsonian Institution’s National Philatelic  Collection for this report. We had interviewed the former Curator for our  April 2000 report, but the current Curator said that it was not within his  personal expertise to evaluate the effectiveness or appropriateness of the  BCRS, or semipostals in general, and it would not be proper for him to  comment in his role as an official of the Postal Museum. For this report, we  also interviewed Betsy Mullen, who is the founder of the Women’s  Information Network Against Breast Cancer, and who, along with Dr. B.I.  Bodai, lobbied Congress to pass legislation creating the BCRS. Further, we  interviewed the Chairperson of the Citizens Stamp Advisory Committee  because, since our last BCRS report, the committee has been given the  responsibility for reviewing semipostal candidates and making  recommendations to the Postmaster General. We did not update the  information included in our April 2000 report on foreign postal  administration’s semipostal activities because of the time and resources  that such work would have required and the limited new information that it  likely would have yielded.
To determine if the BCRS has been an appropriate means of fund-raising,  we interviewed the same key stakeholders identified above to solicit their  current views on the appropriateness of using the BCRS to raise funds. We  also researched and analyzed applicable sections of the U. S. Code and  Postal Service regulations to identify changes that have occurred since our  April 2000 report that either affected the BCRS directly or the semipostal  program in general. Additionally, we identified and analyzed pending  legislation that would affect the Service’s semipostal program.
We conducted our review at Postal Service Headquarters in Washington,  D.C., from February through August 2003 in accordance with generally  accepted government auditing standards.
subsections: section_title: Public Opinion Survey
paragraphs: To obtain the public’s opinion of the BCRS in 2003, we contracted with  International Communications Research (ICR) of Media, Pa. ICR included  five questions about the BCRS and semipostals in its national omnibus  telephone survey, conducted on 5 days, from June 27 and July 1, 2003  (Friday through Tuesday). Omnibus surveys of this type also collect  demographic information and include questions for other clients on other  topics. For our previous survey in 1999, ICR followed the same survey  procedures when it asked four of the five questions that we used in 2003. In  2003, interviews were completed with respondents at 1,038 of the  estimated 9,046 eligible sampled households, for a response rate of about  11 percent. These survey procedures yield a nonprobability sample of  members of the population of the contiguous United States (48 states and  the District of Columbia) who are 18 years or older, speak English, and  reside in a household with a residential, land-based telephone. The 89  percent nonresponse rate means that estimates in the report are subject to  nonsampling errors of unknown magnitude.
subsections: section_title: Selection of Households and Respondents
paragraphs: Random digit dial (RDD) equal probability selection methods were  followed to identify telephone numbers using the GENESYS Sampling  System. The GENESYS system draws numbers from those active banks of  telephone exchanges that have at least two household numbers listed and  are accessed through land lines. Exchanges assigned to cellular telephones  are not included.
The interviewers selected a member from each household, using a mixture  of random and systematic procedures. Because adult males are more  difficult to contact and interview in telephone surveys, ICR took the  following measures to meet the specification of at least 500 completed  male interviews, or approximately half of the sample. An interviewer first  attempted to interview the adult male (aged 18 or older) with the most  recent birthday. If that male was not present in the household at the time of  the telephone call, then any other male present in the household at that  time was selected; if no male was present, then an adult female was  selected, with first preference being for the female present with the most  recent birthday. Because the specifications were still not met, only males  were interviewed during the closing phase of the survey. Although routine  procedures specify five attempts to locate a respondent in each household,  many households did not receive five calls and had not been contacted by  the end of the interview period after one or more calls ended in a busy  signal, no answer, or inability to complete a callback attempt. The  respondent selection procedures eliminated interviewer judgment from the  selection process, but did not yield a random, probability sample of the U.S.  population. For example, these procedures exclude females who are  present in households at the time when a willing male is present. The  procedures also exclude any household members who are not at home at  the time the interviewer contacts the household.
Survey respondents are weighted in our analyses so that age, sex,  education, and regional estimates from our survey will match U.S. data  from the March 2002 Current Population Survey (CPS) on these  demographic characteristics for the adult population (18 years of age and  older) of the 48 contiguous states and the District of Columbia. The number  of telephone numbers in the household and number of household members  were also considered in the weighting process.
section_title: Sampling Errors
paragraphs: As with all sample surveys, this survey is subject to both sampling and  nonsampling errors. The effects of sampling errors, due to the selection of  a sample from a larger population, can be expressed as confidence  intervals based on statistical theory. The effects of nonsampling errors,  such as nonresponse and errors in measurement, may be of greater or  lesser importance, but cannot be quantified on the basis of the available  data.
Sampling errors occur because we use a sample to draw conclusions about  a much larger population. The survey’s sample of telephone numbers is  based on a probability selection procedure. As a result, the sample was  only one of a large number of samples that might have been drawn from the  total telephone exchanges throughout the country. If a different sample had  been taken, the results might have been different. To recognize the  possibility that other samples might have yielded other results, we express  our confidence in the precision of our particular sample’s results as a 95  percent confidence interval. For all the percentages presented in this  report, we are 95-percent confident that when only sampling errors are  considered, the results we obtained are within +/- 6 percentage points or  less of what we would have obtained if we had surveyed the entire study  population. For example, our survey estimates that 70 percent of the  population feels that it is very or somewhat convenient to use special  stamps to raise funds. The 95 percent confidence interval due to solely  sampling errors for this estimate is between approximately 66 percent and  73 percent.
section_title: Nonsampling Errors
paragraphs: In addition to the reported sampling errors, the practical difficulties of  conducting any survey introduce other types of errors, commonly referred  to as nonsampling errors. For example, questions may be misinterpreted,  some types of people may be more likely to be excluded from the study,  errors could be made in recording the questionnaire responses into the  computer-assisted telephone interview software, and the respondents’  opinions may differ from those of people in the sampled households we did  not successfully interview.
For this survey, the 11 percent response rate is a potential source of  nonsampling error; we do not know if the respondents’ answers are  different from the 89 percent who did not respond. With the available  information we cannot estimate the impact of the nonresponse on our  results. Our results will be biased to the extent that the people at the 89  percent of the telephone numbers that did not yield an interview have  different opinions about or experiences with the BCRS than did the 11  percent of our sample who responded.
Once a respondent agreed to participate, the nonresponse for any  particular item was low. Unless otherwise noted, less than 4 percent of the  weighted answers to each question are in the category of not knowing an  answer or refusing to answer the particular question.
section_title: BCRS Questionnaire
paragraphs: The section of the questionnaire that obtained information on BCRS issues,  including the introduction and the five survey questions, follows: Since 1998, at the direction of Congress, the U.S. Postal Service has been  selling a Breast Cancer Research stamp at a price above the First-Class  postage rate. The stamp currently sells for 45 cents, with 37 cents covering  the First-Class postage rate and most of the remaining 8 cents going to  breast cancer research. This stamp is available at post offices, postal  stores, special breast cancer fund-raising events, and from rural carriers  and some postal vending machines. In order to provide the Congress with  the public’s views on this topic, we would like to ask you some questions.
BC-1. Prior to hearing what I just told you about the 45-cent Breast Cancer  Research stamp, were you aware that the Postal Service was selling such a  stamp? 1   Yes  2   No  D  (DO NOT READ) Don’t Know  R  (DO NOT READ) Refused BC-2. In your opinion are special stamps with an added cost—such as the   45-cent Breast Cancer Research stamp—a convenient way for you to  contribute to a special purpose?  (READ LIST. ENTER ONE ONLY)  4  Definitely yes  3  Probably yes  2  Probably no  1  Definitely no  D (DO NOT READ) Don’t know/No opinion  R (DO NOT READ) Refused BC-3.  In your opinion, how appropriate or inappropriate is it to use special  stamps issued by the Postal Service to raise funds nonpostal purposes?   (READ LIST. ENTER ONE ONLY)  4  Very appropriate  3  Somewhat appropriate  2  Somewhat inappropriate  1  Very inappropriate  5  (DO NOT READ) Would depend on cause/purpose  D (DO NOT READ) Don’t know/No opinion  R (DO NOT READ) Refused (IF Q 3 = SOMEWHAT INAPPROPRIATE OR VERY INAPPROPRIATE,  CONTINUE; ELSE SKIP TO Q 5)
section_title: National Institutes of Health Breast Cancer Research Awards Funded with Proceeds from the BCRS’ Surcharge Revenue
paragraphs: As of April 2003, the National Cancer Institute (NCI) reported that it had  funded 86 breast cancer research awards using money transferred to NIH  by the Postal Service from the BCRS’ surcharge revenue. The awards  totaled about $9.5 million and covered research areas that included  prevention, nutrition, biology, diagnosis, treatment, prognosis, metastasis,  tumorigenesis, and mutagenesis. Discounting a single, one-time  supplement for $4,300, individual awards ranged from $47,250 to $142,500  and averaged $111,395. Thirty-two of the 86 awards were noncompetitive  continuations of previous BCRS funded awards. According to NIH officials,  they were in the process of awarding the remaining funds that had been  transferred to NIH for breast cancer research. Table 4 identifies pertinent  information about each award, including the amount of the award, research  area, principal investigator, sponsoring institution, and the fiscal year of the  award.
section_title: Department of Defense Breast Cancer Research Awards Funded with Proceeds from the BCRS’ Surcharge Revenue
paragraphs: As of April 2003, the U.S. Army Medical Research and Materiel Command  reported that it had funded 19 breast cancer research awards using money  transferred to DOD by the Postal Service from the BCRS’ surcharge  revenue. The awards totaled about $6.8 million and covered research areas  that included genetics, imaging, biology, epidemiology, immunology, and  therapy. Individual awards ranged from $5,000 to $578,183 and averaged  $356,478. According to DOD officials, about $256,000 of the transferred  funds had been used for management expenses, and DOD was in the  process of awarding the remaining funds. Table 5 identifies pertinent  information about each award, including the amount of the award, research  area, principal investigator, sponsoring institution, and the fiscal year of the  award.
section_title: Comments from the U.S. Postal Service
section_title: Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: Alan N. Belkin, Kathleen A. Gilhooly, Kenneth E. John, Stuart M. Kaufman,  Roger L. Lively, Jill P. Sayre, and Charles F. Wicker made key contributions  to this report.
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