“This capping report summarizes the results of past U.S. Postal Service Office of Inspector General (OIG) audits conducted on U.S. Postal Service network optimization initiatives between fiscal year (FY) 2004 and FY 2011.”
We determined a valid business case exists for 31 of the 32 AMPs (97 percent) we reviewed. These business cases were supported by adequate capacity, increased efficiency, reduced workhours and mail processing costs, and improved service standards.
Since fiscal year 2004, the Postal Service has improved the AMP process by updating feasibility studies and stakeholder communications. This resulted in better data consistency, planning, and implementation; and a better review process. We believe the AMP process could be further enhanced by improving communication with stakeholders.
We noted the projected AMP annual savings for the 33 completed post-implementation reviews (PIRs) was approximately $94 million. The PIRs indicate the Postal Service realized annual savings of approximately $323 million. A variance of over $229 million occurred because concurrent initiatives’ savings were included with AMP consolidation savings. We noted that five of the 33 PIRs (15 percent) did not achieve projected savings, resulting in an approximate $9.7 million annual savings shortfall. Finally, there are 14 PIRs past due.
WHAT THE OIG RECOMMENDED:
We recommended the vice president, Network Operations, establish a plan to improve communication with stakeholders concerning the consideration of stakeholder input provided to the Postal Service and improve the timeliness of conducting PIRs.
Of the 32 audits performed, there was a net overstatement of $3.8 million in workhour savings due to errors in the worksheets. Specifically, there were five proposed AMPs with overstated workhour savings totaling $7.8 million and one PIR with understated workhour savings totaling $4 million. The reported worksheet errors did not impact the business decision to consolidate mail processing operations.
Even though the Postal Service made significant improvements to the AMP Communications Plan, stakeholders continued to express concerns related to AMP communications. We conducted 16 AMP audits because of Congressional requests related to complaints from constituents about inadequate transparency and the lack of Postal Service responsiveness.
The Postal Service updated Handbook PO-408 in March 2008, incorporating our recommendations from past audits; however, improvements are still needed. Specifically, guidelines do not include the AMP worksheet business rules15 used to calculate projected workhours. For example, our audit of the Oshkosh, WI AMP16 found that the business rules which cap the productivity achievement at no greater than 5 percent was changed. Instead 10 percent was used. causing a projected overstatement of $857,000 in workhour savings. However, management said the business rules are not included in Handbook PO-408 to allow the flexibility to adjust the rules — depending on operating conditions — and to manage mail processing consolidation activities.