Background

The U.S. Postal Service has one of the largest material handling systems in the world for moving mail. It uses more than 8,500 pieces of mail processing equipment to sort over 153 billion mailpieces annually.

Since fiscal year (FY) 2014, the Postal Service has, on average, invested about $36 million annually in field material handling (FMH) projects. FMH projects are generally needed to address safety concerns, sustain operations, or create workhour savings from more efficient mail processing.

When an FMH investment is based on workhour savings, it should improve mail processing operations and provide a return on investment (ROI). The ROI is calculated by comparing total anticipated benefits to the investment amount. The benefits are typically realized from reducing labor costs by replacing manual processing with automation.

Postal Service Headquarters Finance develops and allocates a workhour budget to the seven area vice presidents annually. These budgets establish the fiscal year workhour plan. When an FMH investment has labor savings, headquarters Finance should reduce the impacted area’s workhour budget to ensure the Postal Service meets workhour reductions.

We initiated this audit based on a Postal Service briefing that reported FMH projects completed in FY 2016 had reduced workhours by over .

Our objective was to determine if the Postal Service achieved its anticipated ROI for field material handling projects completed in FY 2016.

What the OIG Recommended

We recommended management reduce workhour budgets for the projects that should have had budget reductions; develop and implement a financial policy to apply consistent allocation of savings for FMH projects; update Postal Service policy for all investments, including FMH projects; and provide oversight to ensure project performance tracking.

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