Background

The U.S. Postal Service uses the Area Mail Processing study to determine whether it should consolidate Postal Service facilities. The Huntsville, AL, Processing and Distribution Facility (P&DF) consolidation consisted of two phases: the originating mail consolidation (mail sent from Huntsville) and the destinating mail consolidation (mail delivered to Huntsville). The Postal Service completed the originating consolidation on December 31, 2011, but has not fully implemented the destinating consolidation. This report responds to a congressional request for a review of the consolidation.

Our objectives were to determine whether a business case existed for consolidating mail processing operations from the Huntsville, AL, P&DF into the Birmingham, AL, Processing and Distribution Center and assess compliance with Area Mail Processing guidelines.

What the OIG Found

A business case existed to support the originating mail consolidation and the Postal Service generally followed Area Mail Processing guidelines. Overall, cost savings were about $4.9 million annually, or about $3.1 million higher than estimated. However, the Postal Service has not yet fully implemented the destinating mail consolidation because the overnight service standards were not revised as anticipated. Without these revisions, the Birmingham Processing and Distribution Center has insufficient machine capacity to process all of Huntsville’s destinating letter mail. Consequently, some letter mail still has to be processed at the Huntsville P&DF. The Postal Service has taken corrective action by postponing future consolidations that require overnight service changes.

Revisions to the service standards would allow the Postal Service more time to process letter mail at the Birmingham Processing and Distribution Center and to move all mail processing operations out of the Huntsville P&DF. Following the partial move of destinating letter mail, we found that customer service scores did not significantly change, productivity increased, and delayed mail decreased. However, we also found nearly 70 percent of carriers were delivering mail after 5 p.m., which is a significant increase compared to pre-consolidation levels.

What the OIG Recommended

We recommended the vice president, Network Operations, continue processing Huntsville’s delivery point sequence mail at the Huntsville P&DF. We also recommended to re-evaluate staffing and resources at the Huntsville P&DF to ensure timely processing of delivery point sequence mail so fewer carriers return after 5 p.m.