• on Jan 20th, 2014 in Post Offices & Retail Network | 4 comments

    Add “upkeep of postal facilities” to the list of tasks that get increasingly difficult to do under a budget crunch. Yet, Americans are passionate about their post offices, so it seems maintenance should be a priority.

    However, the U.S. Postal Service’s financial challenges have made it hard to maintain facilities. During fiscal years 2009-2012, the Postal Service experienced a $382 million decrease in its budget for facility repairs, alterations, and capital improvements, resulting in incomplete repairs or unmet capital improvements. Our recent audit report found about half of the incomplete repairs represent safety or security issues and potential future major repairs. 

    Future costs for these unfunded repairs could reach $1.4 billion. In addition, our work determined that some of these repairs were potential Occupational Safety and Health Administration violations.

    The Postal Service operates 32,000 facilities throughout the country with 280 million square feet of space, and it includes post offices, mail processing facilities, and annexes. The Postal Service’s Facilities Department says employees and customers are not in danger, as it prioritizes repairs based on the safety and security of Postal Service property. Still, the Postal Service’s capital spending freeze initiated in 2009 has clearly had an impact on the ability to upgrade and repair facilities. The Postal Service spent 29 percent below the industry average on facility repairs in FY 2012. Lower priority repairs and improvements are less likely to occur, potentially leading to a longer-term cost.

    Our audit found the Postal Service lacking in developing a strategy to complete all necessary repairs and it did not always accurately prioritize repairs. We recommended it develop a strategy, reallocate funds to complete repairs, and reconcile its prioritization list annually.

    We welcome your thoughts.

    • How best can the Postal Service make the necessary repairs to its facilities while operating under budget constraints?
    • Will people be interested in buying or leasing Postal Service buildings that haven't been well maintained? Or could it affect the value of the properties?
    • Are there issues other than decreased funding that prevent the Postal Service from completing necessary repairs? 
  • on Aug 12th, 2013 in Finances: Cost & Revenue | 6 comments

    Performance-based contracting lets government agencies acquire services using contracts that define what is to be achieved, not necessarily how the work is done. The idea is that contractors have the freedom to define how they will achieve the objectives, which allows them to use innovative approaches. The government benefits by receiving best-value products and services.

    Procurement professionals believe performance-based contracting makes acquisitions better by helping government procurement officials be good stewards of taxpayer dollars — which government contracting is all about. At first glance, it might appear that performance-based contracting transfers a large share of responsibility from government to contractor by requiring the contractor to come up with the actual solution to meet the government agency’s metrics. However, the government procurement official’s responsibilities are not less, they are just different. Performance-based contracting has four attributes: a statement of objectives that describes the desired outcome, measurable performance metrics, a quality assurance plan to monitor the contractor’s performance, and incentives to encourage better performance. Government officials need to be educated in methodologies and metrics to ensure success.

    The U.S. Postal Service uses performance-based contracting for some of its contracts, but not all. A recent Office of Inspector General audit found that the Postal Service does not have adequate controls to oversee performance-based contracts and it does not track this method in its data systems. Thus, it does not always take advantage of the benefits of performance-based contracting. Although officials did not track these contracts, our audit identified six performance-based contracts with incentives valued at $602 million. We also identified two additional contracts that could have been awarded as performance-based contracts but were not, even though postal policy encourages their use because of the potential benefits, such as cost reduction and revenue generation.

    The Postal Service has worked to streamline and improve its procurement process to create a more business-like approach to purchasing and to reduce purchasing costs. The performance-based contracting approach gives the Postal Service an opportunity to further the goals of streamlining and reinvention because it gives contractors more latitude for determining methods of performance, with more responsibility for performance quality.

    What do you think is the best way for the Postal Service to monitor contract performance? How should the Postal Service determine what to monitor and how frequently? What other ways could the Postal Service improve the procurement process?

  • on Jul 19th, 2013 in Labor | 40 comments

    Matching workforce to workload has been a long-term struggle for the U.S. Postal Service. In its banner years, when volume was increasing, the Postal Service often found it difficult to quickly reduce workhours to offset seasonal dips in mail volume. Over the past 6 years, as volumes have steadily declined, the Postal Service has done a better job of matching its work hours to its workload. It has its lowest number of career employees in 25 years and productivity has seen steady cumulative improvement.

    Yet finding that perfect match remains elusive. In recent years, the difficulties are evident in an increased use of overtime hours. In a recent audit report, our auditors found three districts with their highest overtime rates during the past five years, and one district where employees received the highest overtime dollars. In this latter district, the Postal Service paid seven mail handlers between $65,000 and $76,000 each for overtime workhours in FY 2012, resulting in their salaries more than doubling. Overall, overtime hours accounted for more than 7 percent of total workhours in both fiscal years (FY) 2011 and 2012. The rate is well above the Postal Service’s target rate of 5 percent. The Postal Service’s paid overtime costs have been steadily increasing the past 4 years. They totaled $3.5 billion in FY 2012 compared to $2.5 billion in FY 2009.

    The Postal Service uses overtime hours to provide flexibility and meet operational requirements without having to increase overall staffing levels. This has been a useful tool over the past few years, as the Postal Service has consolidated and closed facilities, and seen the departure of thousands of employees. Overtime usage has allowed the Postal Service to quickly adjust its workforce as it transitions to a leaner network and makes the necessary organizational changes.

    Still, the OIG found opportunities for tighter controls on overtime usage. The OIG review of the four districts determined that the Postal Service could reduce overtime usage by establishing a plan to address staffing vacancies, better aligning workforce to workload, and implementing plans that align mail arrival times with carrier schedules so carriers aren’t waiting on mail to arrive at delivery units, then spending overtime hours delivering the mail.

    Please share your thoughts on the Postal Service’s use of overtime. Is it the best tool for managing workhours during consolidations, closures, and realignments?  If not, are there better tools and approaches? What steps do you think the Postal Service could take to  minimize use of overtime pay?

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