Cost-savings from new technologies and other programs have proven elusive.
Case in point: Dynamic Route Optimization (DRO), a technology-based initiative to reduce miles and costs for surface transportation. The U.S. Postal Service did not save the $22.4 million it projected for fiscal years (FYs) 2017 and 2018, our recent audit report found.
DRO allows Highway Contract Routes (HCRs) to change from a fixed-price contract with set, or static, routes to a rate-per-mile contract with varying departure times, travel plans, and mail types transported based on mail volume. This “dynamic” approach allows the Postal Service to optimize routes to reduce mileage and transportation costs – critical for containing costs in the overall HCR program, which moves mail between post offices and other designated stops. In FY 2018, the Postal Service spent $4.3 billion on HCR transportation.
The Postal Service awards DRO contracts for sites selected for conversion from static to dynamic contracts and uses an approved commercial off-the-shelf software and a web application to generate weekly dynamic manifests at the DRO sites.
But USPS didn’t identify and resolve program issues before national rollout of DRO and thus fell short of planned savings. Despite spending $32.7 million in total investments on DRO in FYs 2017 and 2018, most of the sites were still running static routes. Only five of the 34 sites were fully optimized and only one was operating dynamically.
Our audit found that the commercial software and web-based application the Postal Service used for its national rollout required continual re-configuration. We also found management and oversight of the program needed better controls. We noted that USPS has initiated improvements to the program this fiscal year, including appointing an acting national program manager for DRO.
What suggestions do you have on how the Postal Service could improve the DRO program?