Our objective was to determine whether the Postal Service’s mixed delivery and collection vehicles acquisition achieved the performance metrics, expected costs, and savings.
The mixed delivery and collection vehicle fleet primarily supports Postal Service operations such as mail collection, mixed package delivery routes, and relay drop-offs for city carriers. However, the existing fleet of vehicles had aged beyond its planned life, requiring frequent repairs.
To address these issues, the Postal Service made an investment to replace 6,533 vehicles and completed their deployment in December 2017.
As part of the investment review process, in December 2014, the Postal Service approved funding totaling [redacted] million for the 2015 Vehicle Acquisition - 6533 Mixed Delivery and Collection Vehicles Decision Analysis Report (DAR).
The DAR contained four performance metrics (vehicle maintenance facility (VMF) labor, contract labor, parts and materials, and fuel) to measure the success of the program.
What the OIG Found
We found the Postal Service achieved three of the four performance metrics for the investment. Specifically, management met the VMF labor, parts and materials, and fuel performance metrics, but did not meet the contract labor performance metric.
We found the Postal Service spent about $[redacted] million less than the original projected [redacted] million to acquire the new vehicles. According to management, they obtained a lower cost through contract negotiations and did not use the contingency funding.
However, the Postal Service did not budget the correct expected net savings for this investment. The Postal Service budgeted net savings of $[redacted], rather than the expected savings of [redacted] million in fiscal years (FY) 2016 and 2017. Management stated the budget reduction was miskeyed as [redacted], rather than $[redacted] in FY 2016. This clerical error was not detected, resulting in $[redacted] million in funds that could be put to better use.
As a result of our audit, management took corrective action by implementing a formal control process to ensure savings and costs from DARs are entered correctly into the budget. Therefore, we are not making a recommendation to address this issue at this time.
In addition, the Postal Service did not always track and report DAR performance metrics throughout the investment as required. This occurred because management believed they could not meet the requirement until after full deployment. In a prior May 2018 OIG report, we identified the same issue and recommended that Delivery Operations management develop and implement a review process to track and report performance metrics for investments. Management agreed with our prior recommendation; therefore, we are not making a recommendation to address this issue at this time.
Without adequate controls for tracking and reporting, management cannot evaluate achieved benefits and savings, which could cause stakeholders to lose confidence in the value of the program.