OIG Audit: USPS could save $342 million By Replacing Some Vehicles Instead of Repairing Them

In a recent OIG audit report  on USPS delivery vehciles:

The Postal Service has approximately 189,000 delivery vehicles made up of minivans, sport utility vehicles (SUVs), flex fuel, and long-life vehicles (LLVs). The majority of the
Postal Service’s delivery fleet are nearing the end of their 24-year life expectancy. Because of limited capital resources, the Postal Service has delayed its planned purchase of delivery vehicles until fiscal year (FY) 2018. The Postal Service faces the same capital challenges after 2018, as forecasts show continuing shortfalls

The Postal Service has successfully maintained its LLV delivery vehicle fleet in safe, working condition for over 20 years. They attribute this success to a robust preventive maintenance program, as well as a “fix as fails” strategy that we found to be operationally viable and generally cost effective. However, analysis of delivery vehicle costs shows that this strategy would not be cost-effective for fleet vehicles the Postal Service will have to replace soon. These vehicles consist of 19,257 LLVs, with an average annual maintenance cost in excess of $5,600 for FYs 2008 and 2009. Incurring maintenance costs at this rate, the “fix as fails” strategy costs $342 million1 more than it would cost to purchase new vehicles.

This opportunity exists because the strategy as implemented often circumvents the service life and maintenance reinvestment guidelines.2 These guidelines require that before initiating any extensive vehicle repair, Vehicle Maintenance Facilities (VMFs) must assess maintenance reinvestment by providing complete documentation of expected maintenance costs, the condition of all major components, and a cost analysis justifying the decision to repair. This information is to be documented on Postal Service (PS) Forms 4587, “Request to Repair, Replace, or Dispose of Postal Service-Owned Vehicles”, and it is to be submitted for district management approval before the repair is made. We found that this control was circumvented and costly repairs were made because the assessments were not complete and lacked district management approval. In addition, the Handbook PO-701 does not require that cumulative maintenance reinvestments are monitored beyond district levels. Without this control, maintenance intensive vehicles are not apparent to area and headquarters managers.

We recommend the vice president, Engineering:
1. Replace maintenance intensive vehicles beginning in fiscal year 2011.
2. Reemphasize to vehicle maintenance and district managers the reinvestment threshold, the importance of completing PS Forms 4587 to include cumulative costs, and the need to obtain required approvals as detailed in Handbook PO-701.
3. Monitor maintenance intensive delivery vehicles at the area level.

Read the full OIG report.

One thought on “OIG Audit: USPS could save $342 million By Replacing Some Vehicles Instead of Repairing Them

  1. This would work if we were a commercial operation, but we are not, we are a bureaucracy as such, simple common sense does not prevail. First, we used a customized vehicle, right hand drive, this is because of ware mail boxes have been installed for years and for safety, drivers do not have to exit vehicle into traffic. If you analyzed accident date were our delivery vehicles have been hit on the left side and then substitute a life or limb in addition the body damage cost would be substantially higher. Completing the 4587 is a waste of time for the simple fact that even if the repairs exceeded the replacement cost their is no way to buy a replacement vehicle, ware can you buy a right hand drive vehicle. While delivery could possible change the way mail is delivered, they are not able to absorb the increase in delivery time which would in evitable reduce delivery’s on a route, there by increasing routes, more vehicles. If we want to save money increase hiring of mechanics as internally we are over 60% cheaper than contacting out the repairs even when overtime is factored in. Commercial labor rates exceed $85 up to $120 an hour. Then you factor in the parts that are no longer available in the normal commercial supply chain and down time would increase substantial, which then necessities a increase in fleet size. The VMF operations are performing miracles now and instead of criticizing and asking for useless paper work we need support, increase in manpower, we need to bring computers and new software all the way down to the shop floor. With better software mangers could make better decision faster and mechanics could spend more time on repairs. Take a good look how and what support, tools, equipment and computers support Cox Cable gives is field tech’s, we should be so lucky. And as for the 24 year planned life span, that was a pipe dream by someone how spent to much time looking at a spreadsheet in his mahogany lined office, oh and long retired, when we mechanics first looked at the LLV, we laughed at the 24 year expected life span. Lets remember that the LLV came with engine that regularly burned down Pontiac Fiero’s, transmissions that could even hold up in a Chevette, wear are those cars now!!!!, an aluminum body that was riveted together, which means when in accidents you couldn’t repair you had to replace and then you had to find a repair person that knew aluminum riveting, airplane mechanics.

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