Mail Transport Equipment Service Centers – Nationwide Assessment
Background
The U.S. Postal Service’s Mail Transport Equipment Service Center (MTESC) network is composed of 15 contractor-operated centers that handle, supply, and transport mail transport equipment (MTE), such as tubs and trays, to mail processing facilities and customers. Fiscal year (FY) 2014 processing costs for all 15 MTESCs were about $43 million.
We previously conducted audits at four of the 15 MTESCs and reviewed internal controls and dedicated transportation. Our objective for this capping report was to assess MTESC network controls and transportation from a nationwide standpoint, which included the remaining 11 MTESCs.
What the OIG Found
We found that Postal Service Headquarters management needs to enforce nationwide compliance and oversight of MTESC operations and transportation. Specifically, Postal Service facilities did not always properly prepare excess MTE before dispatching it to the MTESCs. We found that for 13 of 15 MTESCs, less than 50 percent of trays and tubs received from facilities contained the correct number and type of MTE and were properly stacked and shrink-wrapped. The percentage of excess MTE that was properly prepared ranged from 0.20 percent to 45.41 percent for the 13 facilities. Properly prepared MTE would reduce processing and transportation costs and improves employee safety concerns.
Conversely, we found some facilities used best practices, such as management oversight to enforce procedures, to prepare MTE for distribution to the MTESCs. For example, about 84 percent of the MTE at Seattle, WA, MTESC received from facilities was properly prepared.
Further, we found Postal Service management did not adequately control contractor performance for processing, invoicing, and repairs, or ensure contractor premises were secured. Also, facilities did not always inspect empty MTE for mail before dispatching it to the MTESCs or mailers to help prevent delayed mail to customers.
These conditions occurred because Postal Service Headquarters did not provide sufficient oversight and assign adequate resources to ensure compliance with its excess MTE policies and procedures. The policy states that any excess MTE dispatched to MTESCs should be properly prepared. However, headquarters officials stated the intent of the policy was to have 50 percent of excess MTE prepared and dispatched to the MTESCs.
As a result, the Postal Service incurred about $2.5 million and $2.4 million in unnecessary processing costs at the remaining 11 MTESCs for FYs 2013 and 2014, respectively. It could also avoid about $2.4 million annually in costs over the next 5 years by improving controls and implementing best practices for preparing MTE.
What the OIG Recommended
We recommended management reinforce and monitor its facilities’ performance for properly preparing MTE and thoroughly inspecting it for any residual mail before dispatching it to the MTESCs or mailers. Additionally, we recommended management evaluate and implement best practices for preparing MTE and ensure adequate resources are assigned.
We also recommended management establish adequate controls over contractor performance, including the processing, invoicing, repair, and handling of MTE; and ensure adequate security is in place at all MTESCs.