Automating mail sorting with state-of-the-art technology is at the core of Postal Service initiatives to provide efficient, economically priced mail service. Mail addressed accurately and in the Postal Service’s standardized format is more compatible with these automated processes. However, the Manager of Address Management at Postal Service headquarters said that the single greatest barrier to the Postal Service’s effort to automate mail processing is “the poor quality of the address on the mail piece.” Mail addressed incorrectly or inadequately cannot be processed and delivered as quickly and efficiently as properly addressed mail. When mail is misaddressed, the Postal Service incurs added costs for sorting, transporting, delivering, and, in some cases, disposing of that mail. Of the 177 billion pieces of mail the Postal Service handled in 1994, nearly 5 billion pieces were addressed incorrectly. The Postal Service estimated that it incurred a cost of about $1.5 billion a year in compensating for poor address quality. However, the Postal Service had no information on the portion of this cost associated with a change of address. Because accurate addressing is essential for efficient mail service, the Postal Service and its predecessor, the Post Office Department, have provided address-correction services since 1924. These services, among other things, assist mailers in obtaining and using accurate, properly formatted addresses that are automation compatible. In 1986, the Postal Service implemented the NCOA program, which extends the Postal Service’s use of mail forwarding information to update business mailers’ address lists. The NCOA program is administered by the NCOA program office within the National Customer Support Center, which is located in Memphis, TN. The Center’s Director reports to the Manager, Address Management, under the Vice President for Operations Support. Before introducing this program, the Postal Service notified business mailers of changed addresses after their mail had been sent out and forwarded, returned, or discarded. The NCOA program, however, confronts this problem before the mail piece enters the mail stream by using contractors licensed by the Postal Service to provide business mailers updated change-of-address information. “Except as specifically provided by law, no officer or employee of the Postal Service shall make available to the public by any means or for any purpose any mailing or other list of names or addresses (past or present) of postal patrons or other persons.” Subsequently, in 1974, Congress passed the Privacy Act (5 U.S.C. 552a) to more broadly protect individuals from the unauthorized use of records that federal agencies maintain about them and to give them right of access to those records. Subsection (n) of this act also applies to address correction but, in contrast to related provisions of the 1970 Act, restricts certain uses of a name and address as follows: “An individual’s name and address may not be sold or rented by an agency unless such action is specifically authorized by law.” In 1991 and again in 1992, Congress held hearings addressing the privacy implications of the Postal Service’s address-correction services. These hearings focused on public concerns about the increasing volume of mail generated through the use of mailing lists, and raised questions about (1) the legality of certain Postal Service address-correction processes and (2) the adequacy of Postal Service oversight of the NCOA program to ensure compliance with the privacy provisions in federal law. A bill (H.R. 434) introduced in January 1995 would, among other provisions, allow any person notifying the Postal Service of a change of address to deny it permission to disclose such information. The objectives of our review were to determine (1) how the Postal Service collects, disseminates, and uses NCOA program data to provide mailers with accurate change-of-address information and (2) whether the Postal Service adequately oversees the release of NCOA data in accordance with privacy provisions of relevant federal laws. Because we were asked to review only the NCOA program, we did not review other Postal Service address-correction programs. To meet our first objective, we interviewed Postal Service headquarters officials in the Office of Address Management Systems, Operations Support Division, and officials and technical support staff at the National Customer Support Center and the NCOA program office in Memphis, TN. We also reviewed relevant records provided by these officials on the NCOA data gathering and dissemination process, including some correspondence from licensees on how they used NCOA data. To meet our second objective, we obtained and reviewed federal laws, legislative histories, congressional hearings, and other pertinent literature on privacy issues to better understand Congress’ concerns about U.S. citizens’ privacy rights and their relation to the name and address records the Postal Service uses to provide address-correction services. As we did in responding to objective one, we met with Postal Service representatives in Memphis to discuss and document how NCOA program oversight is maintained and what controls the Postal Service uses to ensure that the release of NCOA address information complies with applicable statutory constraints. Additionally, we reviewed files and other records of Postal Service NCOA program oversight activities; however, finding them to be incomplete, we relied more on information obtained from our interviews of Postal Service officials. Finally, we obtained written explanations from the Postal Service’s Chief Counsel for Ethics and Information Law regarding privacy issues pertinent to our second objective. To meet both objectives, we met with representatives of TRW Target Marketing Services, located in Allen, TX—which in 1994 was one of the NCOA program’s largest licensees in terms of volume of client address records processed. In this meeting, we obtained information and company views on how the NCOA program works, as well as on the Postal Service’s oversight of the program. On May 30, 1996, the Postmaster General provided written comments on a draft of this report, which are discussed beginning at page 20 and reprinted as appendix II. Our review was conducted from August 1994 through October 1995 in accordance with generally accepted government auditing standards. Since its implementation, the NCOA program has effectively reduced the volume of misaddressed mail processed through the Postal Service’s Computerized Forwarding System, according to the program manager. Before 1986, the volume of such mail was increasing annually, along with the overall volume of all mail. However, during the period in which the NCOA program has been operational, the volume of mail processed through the forwarding system has remained relatively constant, averaging about 2.4 billion pieces annually, while the total mail volume has continued to increase—by about 27 percent from late 1985 to 1995. The address-correction process begins when a postal customer submits a signed Change of Address Order (Postal Service Form 3575) to a local post office to have mail forwarded. (See app. I for a copy of the July 1995 form). Post office employees are to verify that the form is complete and then pass it on to one of 212 Computerized Forwarding System units located in the United States and Puerto Rico. These units are to convert the data to electronic form for use in the mail forwarding process and in the NCOA program. Using the completed change-of-address form, the Postal Service follows a policy of forwarding first-class mail to new addresses for 1 year. Although filing a change-of-address order is voluntary, customers who want their mail forwarded after moving must submit the form and must accept that the Postal Service will further disseminate the new addresses to commercial mailing list holders through the NCOA program. Each workday, the National Customer Support Center collects change-of-address data from the forwarding units. These data are then to be standardized into the Postal Service’s “preferred address with ZIP + 4 code” format and used to update a centralized database of change of address records—i.e., the master NCOA file. This file contains more than 110 million permanent change-of-address records. It covers the most recent 36-month period based on the move dates that customers report. Newly reported moves are to be added and those dated over 36 months are to be deleted biweekly. The computer programs used to maintain the master NCOA file and all data released from it are to be controlled by the National Customer Support Center. The Postal Service has licensed, for a fee paid by the licensees, the master NCOA file to a limited number of companies, which in turn use the file to correct addresses on their mailing lists and sell address-correction services to other businesses. As of December 1995, 24 companies were licensed, including some of the nation’s largest firms in the direct marketing and credit reporting industries, such as Donnelly Marketing, Inc., a leading direct mail marketing company; TRW Target Marketing Services, which operates primarily in the direct marketing industry; and Metromail Corporation, which primarily provides address services for direct marketing purposes. In 1995, 22 companies each paid $80,000, and the remaining 2 each paid $120,000, to the Postal Service under the licensing agreements. Each licensee is responsible for maintaining a complete and current NCOA file. Every 2 weeks, the NCOA program office within the National Customer Support Center is to provide licensees with a copy of the NCOA file update tapes, which on average contain about 1.1 to 1.5 million change-of-address records. Licensees are to use these tapes, which include address deletions, additions, and changes, to update the NCOA files they maintain. Licensees then use the NCOA files and address-matching logic designed into their computer software to update addresses on their customers’ mailing lists as well as their own mailing lists. Since all records in the NCOA file are to be in the Postal Service’s standardized address format, licensees must convert customers’ mailing lists, to the extent possible, into the same standardized address format before any matching occurs. This initial step may also identify and correct incomplete or inaccurate addresses on the licensee’s list.