Our objective was to assess the effectiveness of the U.S. Postal Service’s management of Highway Contract Routes (HCR) and Postal Vehicle Service (PVS) trips operating more than four hours late.
The 2020 Annual Compliance Determination Report defines Postal Service trips that arrive more than four hours late as critically late trips (CLT). The Postal Service uses HCRs to transport mail and other products between plants and other designated stops for distances generally over 50 miles. PVS trips are internally operated by the Postal Service and are generally within a 50-mile radius of Postal Service facilities.
Surface Visibility Web (SVweb) provides the Postal Service with real-time data and reporting on the movement and delays of HCR and PVS trucks. When the Postal Service causes a late HCR trip, the origin facility issues a late slip for the HCR driver to receive compensation for the delay. When the HCR driver is at fault and arrives at the destination facility late, an irregularity form is automatically created in the Surface Transportation Automated Forms (STAF) application. There are no late slips or irregularity forms created for late PVS trips.
An Administrative Official (AO) is required to address all irregularities by following the HCR corrective action process in STAF. If the delay is significant enough or delays on the route continue, the HCR supplier faces the loss of all or part of the HCR.
Our audit was conducted during a challenging period for the Postal Service, as the number of employees available to work was lower than usual and the number of packages mailed increased significantly during the COVID-19 pandemic. We visited or conducted phone interviews with management at 13 mail processing facilities and surface transfer centers in the four logistics regions from May 3 to June 3, 2021. We also reviewed late trip and CLT data in SVweb and STAF. We reviewed trip data from fiscal year (FY) 2018 through 2021 Quarter 2, excluding December 2020, due to the anomalies created with peak season package volume and COVID.
The Postal Service has opportunities to improve its management oversight of CLTs by improving its processes for HCR CLTs (which are at risk of missing expected service commitments) and by ensuring the integrity of PVS data.
Oversight of HCR Critically Late Trips
We determined there were about 19 million late HCR trips for the period reviewed, including about 478,000 (about 2.5 percent) CLTs. While the percentage of CLTs compared to all late trips is small, they can significantly impact service performance.
The Postal Service’s management of these HCR CLTs could be more effective with increased oversight of HCR operations, AO irregularity duties, and day-to-day mail processing and dock operations.
The Postal Service determined the suppliers were at fault for about 294,000 (about 62 percent) of the CLTs and issued supplier irregularities, while 76,000 (about 16 percent) HCR CLTs occurred due to events such as inclement weather that were outside of both parties’ control. While the Postal Service took some actions to address CLTs deemed to be the fault of the supplier, those actions were less effective because:
The management instruction detailing the HCR corrective action process for late trip irregularities is vague about when AOs should pursue an HCR supplier for unsatisfactory service. Additionally, the management instruction does not address how often AOs should address irregularities, resulting in inconsistent management of late trips across the country.
There is limited oversight of AOs to ensure they addressed all HCR late trip irregularities in STAF, including CLTs. For example, between June 19 and July 19, 2021, about 496,000 HCR late trip irregularities were created. As of July 19, 2021, about 142,000 (or about 29 percent) had not been addressed by an AO.
The Postal Service uses the same process for reviewing late trips and CLTs. Specifically, Postal Service management does not prioritize CLTs over less severe late trips, even though CLTs have a greater impact on the Postal Service’s reliability and on-time delivery. When CLTs are not prioritized, they may go unnoticed because they are commingled with the irregularities of all late trips in STAF.
Postal Service management stated that they are limited as to what action they can take when an HCR supplier arrives late. Specifically, there is no language in HCR contracts allowing the Postal Service to assess liquidated damages for irregularities; therefore, there is limited incentive for contractors to be on time.
In addition, the Postal Service was at fault for about 108,000 (about 22 percent) HCR CLTs for the period reviewed due to dock and processing issues. When the Postal Service causes delays, it may have to compensate the HCR supplier. As a result, the Postal Service was at risk of having to pay suppliers over $4 million annually in compensation for delays.
CLTs can significantly impact service performance because the longer delays can cause mail to miss critical processing windows, as facility processing and transportation schedules need to be aligned. Improving management oversight should reduce HCR CLTs and support the Postal Service’s transportation initiatives to improve service performance.
PVS Data Integrity
We determined there were about 10.6 million late PVS trips reported in the system for the period reviewed, including about 159,000 (about 1.5 percent) CLTs. The Postal Service should have limited CLTs resulting from its PVS operations. Postal Service employees confirmed that CLTs from PVS operations rarely occur and that trip data in SVweb can incorrectly cause trips to appear to be critically late. Postal Service management has been addressing the issue by improving the data within SVweb. These efforts are reflected in the data which shows that PVS CLTs have decreased year over year from FY 2018 to FY 2020. However, the PVS CLT issue still exists. In the second quarter of FY 2021, Postal Service data showed about 10,000 PVS CLTs. Using inaccurate data to support management decisions puts the Postal Service at risk of making operational decisions that are incorrect and can affect facility driver complement levels.
We recommended management:
Update the management instruction for the HCR corrective action process to define when and how often AOs should pursue a supplier for unsatisfactory service in the STAF application, emphasizing critically late trips.
Develop procedures to monitor the AO’s duties and assign management oversight of AOs to a responsible official, specifically related to addressing irregularities in the STAF application.
Consider prioritizing critically late trips and requiring critically late trip irregularities to be pursued with suppliers in the STAF application.
Consider updating contracts to allow for the assessment of liquidated damages to HCR suppliers for critically late trips.
Verify that HCR trips that are routinely critically late are aligned with Postal Service operations and adjust the schedules as needed.
Develop procedures to routinely verify the accuracy of Postal Vehicle Service trip data in SVweb for trips that are critically late and correct any data integrity issues.
USPS Proposed Resolution
Update the management instruction for the Highway Contract Route corrective action process to define when and how often Administrative Officials should pursue a supplier for unsatisfactory service in the Surface Transportation Automated Forms application, emphasizing critically late trips.
Develop procedures to monitor the Administrative Official's duties and assign management oversight of Administrative Officials to a responsible official, specifically related to addressing irregularities in the Surface Transportation Automated Forms application.
Consider prioritizing critically late trips and requiring critically late trip irregularities to be pursued with suppliers in the Surface Transportation Automated Forms application.
Consider updating contracts to allow for the assessment of liquidated damages to Highway Contract Route suppliers for critically late trips.
Verify that Highway Contract Route trips that are routinely critically late are aligned with Postal Service operations and adjust the schedules as needed.
Develop procedures to routinely verify the accuracy of Postal Vehicle Service trip data in Surface Visibility Web for trips that are critically late and correct any data integrity issues.