156 Stations and Branches Remain Under Review For Possible Consolidation Under the Stations and Branches Optimization and Consolidation Initiative as of March 2010. 144  Stations and Branches were reported by USPS in February 2010.  

PostalReporter note:
Top five states with facilities on possible consolidation list:
Ohio – 25
California -19
Florida- 14
Pennsylvania – 11
New York – 11

“Both federal law and postal policies prescribe a Post Office discontinuance process. In contrast, the Postal Service uses an expedited process to close stations and branches, which is not specifically covered by statute. Absent future legislative changes, the two discontinuance processes are warranted to promote a flexible, agile Postal Service to adapt to changing mailing preferences and to increase the opportunity to consolidate redundant retail facilities.”
 
“While the Postal Service developed an expedited process for closing stations and branches, it is primarily subjective and qualitative in nature. Management stated they are developing a decision tree-based retail discontinuance model to mitigate the inconsistency and subjectivity identified in our review. The project is currently in the design phase. Management plans to complete and deploy this model in FY 2011.”

OIG Audit Report – Stations and Branches Optimization and Consolidation Initiative (excerpts)

This report presents the results of our review of the U.S. Postal Service’s efforts to optimize the retail network (Project Number 10XG021EN000). Our objective was to
assess the Stations and Branches Optimization and Consolidation (SBOC) Initiative for discontinuance of classified stations and branches.1 This self-initiated audit addresses strategic, financial, and operational risks. This is the first in a series of retail optimization reviews. See Appendix A for additional information about this audit.

The Postal Service’s current retail network of approximately 32,000 facilities reflects a time when practically all retail revenue was generated through window transactions at
“brick and mortar” Postal Service facilities, mail volume was robust, and there was less alternate access to postal services. Congress recognized in the Postal Accountability
and Enhancement Act of 20062 that the Postal Service has more facilities than it needs and strongly encouraged streamlining the network. These factors, combined with its
current financial challenges, have made it incumbent upon the Postal Service to review the number and location of stations and branches to determine whether or not there is
excess capacity in the network.

While a station or branch is similar in many ways to a PO, there are some meaningful differences, particularly from the Postal Service’s perspective and administrative
standpoint. POs are established and maintained at locations to ensure that complete postal services are available to all customers within specified boundaries of named
geographic places. Stations and branches are subordinate units within the service area of POs. Operations at stations and branches are directed by each facility’s supervising
PO.

The SBOC Initiative is a viable option for the Postal Service to reduce costs in the retail network, but opportunities exist to improve the process. The Postal Service could have
enhanced the planning and management of the initiative by improving communication and coordination with stakeholders3 and developing accurate and reliable data on its
facilities. In addition, the Postal Service needs to raise stakeholders’ confidence that it will make decisions in a transparent, equitable, and fact-based manner by integrating a
strategic approach (top-down) and establishing clear criteria for evaluating discontinuance decisions.

The Postal Service has not posted a status update on the SBOC Initiative on its external website (usps.com) since February 2010. Postal Service Headquarters (HQ) did provide
an updated list (dated March 2010) showing that 156 facilities remained under consideration for discontinuance. Based on our fieldwork, we determined that district
offices forwarded 144 proposals6 recommending discontinuance of operations to HQ. However, management has made no decisions regarding which, if any, of these
facilities it will close through the time of our report. Management stated other initiatives, including 5-day delivery,7 have taken priority over the SBOC Initiative. As a result, the Postal Service spends about $425,000 per month to maintain operations at 28 of the 144 facilities we randomly selected for review. The Postal Service could realize cost
savings of over $1.7 million in fiscal year (FY) 2010 if they approve discontinuance of operations for the 28 facilities after HQ Retail Operations has completed its predecisional
review of the proposals.

Postal Service Actions – Management stated they are developing a decision tree-based retail discontinuance model to mitigate the inconsistency and subjectivity identified in
our review. The project is currently in the design phase. Management plans to complete and deploy this model in FY 2011.

Management added that they have initiated, in coordination with the Continuous Improvement Office, a Lean Six Sigma8 (LSS) study of the discontinuance process for
POs and other retail facilities. The project scope, milestones, and completion date had not been established at the time of our report.

Station and Branch Discontinuance Process Issues

While the station and branch discontinuance process was developed to provide the Postal Service with greater flexibility to aid in decision-making, postal policies do not
contain detailed procedures to ensure the process is fairly and consistently applied. This is partially because the SBOC Initiative was a unique project the Postal Service
implemented quickly. Management used PowerPoint presentations to document, communicate, and train its employees on the SBOC Initiative discontinuance process. Appendix F provides a timeline showing the SBOC Initiative from concept development to current status. Appendix G provides a flowchart of the SBOC Initiative discontinuance
process.

While presentations provide a swift means to communicate changes and updates to the existing process, we believe they should not be a substitute for formal policies and
procedures. On April 6, 2010, during an interview with the OIG, the former program manager for the Post Office Discontinuance Program acknowledged that Handbook PO-
101 should have step-by-step instructions. During other interviews, field managers expressed a need for detailed discontinuance instructions.

Resistance to Retail Network Changes
The Postal Service faces strong resistance to closing and consolidating retail facilities from local communities, employees, and lawmakers. While alternate access channels
are more widely available, some customers resist changing long-standing habits. Management needs to improve communication strategies and work with stakeholders to
overcome resistance. These strategies should include adding an alternate retail access channel expansion plan and educating stakeholders on the availability of these
convenient services. The Postal Service must explain its plans and decisions to stakeholders in an open, transparent, and timely manner

The Post Office Discontinuance Tracking System (PODTS) tracked PO and other retail unit discontinuance. However, management stated in the September 30, 2009 Official Transcript of Proceeding Before the PRC that the data in the system was inaccurate. Based on PODTS data, management reported to the PRC that they closed a total of 96 stations and branches between FYs 2005 and 2008. Management later found a number of data entry errors in PODTS, including misidentification of facilities. Subsequently, management filed a
correction and revised the number of closures from 96 to 21 for the same period.

APPENDIX C: MONETARY IMPACT
The OIG identified $2,773,043 in funds put to better use17 related to untimely discontinuance decisions and missed opportunity to reduce lease costs. The Postal
Service spends about $425,000 per month to maintain operations at 28 facilities we randomly selected for review. District management forwarded proposals recommending
discontinuance of operations for these 28 facilities to HQ. Although HQ Retail Operations completed pre-decisional reviews of the 28 proposals in February 2010, no
final agency decisions have been made through the time of our report due to other priorities. We estimated the Postal Service could realize cost savings of over $1.7
million from March 1 to September 30, 2010, if they approved discontinuance of operations for the 28 facilities after completing pre-decisional reviews18 (see Table 5).

In addition, the amount the Postal Service could save should it terminate leases at the Atlanta Civic Center, Tower Grove, and Southwest Stations is $1,055,320.19 District
management removed these stations from discontinuance consideration and cited “no termination clause” as the only non-feasible justification. However, the OIG review
found that lease agreements for these stations contain termination clauses that provide the Postal Service the option to terminate the leases with proper written notice. We
estimated the present value using October 1, 2010, as the start date to begin the termination notice period for each facility (see Table 6).

Read full report from the Office Of USPS Inspector General

The organizations say they have tried to resolve this matter since Feb. 5, 2010 — the date ratings were published to employees, but to no avail. The organizations sent a letter to USPS Labor Relations VP Doug Tulino on August 6, 2010 but received no response. The National Association of Postal Supervisors (NAPS) has filed a similar request with the OIG.

Here is the text of the letter:

Postmasters sent letter to USPS OIG requesting investigation into PFP

source: National Association of Postmasters Of the United States (NAPUS)

Excerpts:
Consistent with other retiree benefit obligations, the Postal Service is being unfairly burdened for its share of the FERS pension obligation. The OPM projected a $6.8 billion surplus in the Postal Service’s FERS obligation at the end of FY 2009. The OPM acknowledged that the federal government’s FERS obligation, excluding the Postal Service, was unfunded by $7.4 billion at the end of FY 2008.The funding status for the Postal Service, as well as the federal government, is calculated by subtracting the pension assets from the actuarial accrued liability. A higher liability results in an unfunded status, while a lower liability results in a surplus. According to the OPM, the liability is a projection for current and future benefit obligations and considers contributions paid into and disbursements from FERS. Overall, the liability is based on estimated demographics for the entire federal government, including the Postal Service.

However, the Postal Service’s benefits paid represent actual demographic behavior, such as early career turnover, and not the aggregate, resulting in a surplus status for the Postal Service and an unfunded status for the federal government.

Based on this data, the Postal Service’s overfunding issue is even larger than we previously reported. Similar to what we have noted in other OIG retiree benefit reports, Postal Service Based on this data, the Postal Service’s overfunding issue is even larger than we previously reported. Similar to what we have noted in other OIG retiree benefit reports, Postal Service ratepayers continue to pay more than their fair share of retiree benefits. It is important that the trend of overpayments does not continue. The Postal Service faces a challenging future and its responsibilities and the true cost of funding postal operations needs to be absolutely clear. To address that challenge, the Postal Service is making operational changes to bring costs in line with revenue projections. Additionally, it is pursuing legislative changes to address concerns raised about pension and retiree health benefit payments. We believe management should also consider the FERS overfunding issue as the Postal Service pursues legislative changes.

Having retirement expenses commingled with the federal government’s budget, while being expected to operate as an efficient business, puts the Postal Service in a precarious position. The surplus in the CSRDF effectively subsidizes appropriated tax dollars when it could be used to offset the Postal Service’s current and future business expenses.

Conclusion:

The Postal Service has opportunities to use at least $5.5 billion of the $6.8 billion in FERS surplus funds to address its current and future financial condition. We found the Postal Service continues to overfund its retirement obligations and there is no present legislation to resolve surpluses. Further, it is vital that the Postal Service’s responsibilities be clearly delineated and separated from those of the rest of the federal government. The overcharges associated with CSRS obligations, coupled with the FERS surplus discussed in this report, have adversely affected the Postal Service’s financial position, hindered its ability to operate efficiently in a business-like matter, and hindered its transformation under the Postal Accountability and Enhancement Act (PAEA). Action is needed to prevent a repeat of historical trends in the overfunding of Postal Service retiree benefits.

Read the full USPS OIG report.

This management advisory presents the results of our review of the eIDEAS program
(Project Number 10YG023DA000). Our objective was to identify opportunities for the
U.S. Postal Service to enhance the timeliness of the eIDEAS process and transparency
of the resulting management actions. We conducted this self-initiated review based on a
hotline complaint. See Appendix A for additional information about this review.
The eIDEAS program is a web-based application that allows Postal Service employees
to submit ideas online or at one of the kiosks located in processing plants. The Postal
Service encourages employees to contribute constructive ideas to improve customer
satisfaction, generate revenue, increase productivity, and improve competitiveness.
Given the current financial condition of the Postal Service, it is appropriate to evaluate
the timeliness and transparency of the eIDEAS program to help management identify
those ideas with tangible benefits.

Conclusion
We found the eIDEAS program was not timely and management’s resulting actions
were not transparent. Specifically, while the eIDEAS program guide stipulates
evaluators assess ideas within 7 days of submission, we found level 1 evaluators took
an average of 2.2 years to process employee ideas, while level 2 and level 3
evaluators1 took an average of 1.1 years and .57 years, respectively, to process ideas.
Additionally, we noted that while the number of ideas submitted has grown by 26
percent from fiscal years (FY) 2004 to 2009, the number and value of awards has
declined by more than 88 percent. Although, we did not assess the quality of employee
suggestions received, this trend suggests further evaluation is warranted by
management to measure program success.

1 Level 1 idea evaluation is typically performed by the supervisor, postmaster, or manager to whom the submitter
reports. Level 2 evaluation is performed by the submitting organization’s executive (or designee). Level 3 evaluation
is performed by a representative of the headquarters functional area to which the idea most closely relates.

Our survey of employees who submitted ideas revealed that untimely evaluations,
insufficient management commitment and communication, and insufficient program
transparency were perceived as inhibitors to the program’s success. Program
management indicated that system limitations such as electronic reminders and
employee separations contributed to the backlog in open statuses. These challenges
prevent the full realization of the eIDEAS program’s purpose, which is to improve
customer satisfaction, generate revenue, increase productivity, and enhance
competitiveness.

In our benchmarking analysis, we found that federal and private entities have similar
idea programs. The National Aeronautics and Space Agency (NASA), the Department
of Defense (DOD), and the state of Washington evaluate and/or reward ideas within 20
to 45 days of submission. The DOD considers a benefit-to-award ratio when
implementing its ideas program. NASA, the DOD, and the state of Washington also use
a committee to evaluate ideas.

In regard to the hotline compliant, Postal Service Engineering developed a solution to
the Delivery Barcode Sorter (DBCS) problem with damaged stacker gates that was field
tested and repair kits were procured. Additionally, the Postal Service Maintenance
Technical Support Center (MTSC) is currently working on a maintenance bulletin to
inform field sites of the fix. The OIG hotline office will communicate with the complainant
as appropriate. See Appendix B for our detailed analysis of this topic.

We recommend the executive vice president, chief Human Resources officer, in
coordination with participating vice presidents:

1. Re-evaluate the Postal Service’s level of commitment to the eIDEAS program and
implement program modifications as appropriate.

2. Take action to improve the timeliness of the evaluation process and the
transparency of resulting management actions.

full report

Archive: Postal Employee Idea Not Returned To Sender

In December 2006, the U.S. Postal Service approved a (redacted) project to develop,purchase, and deploy 100 FSS machines, which are designed to sort flat mail in the precise order in which it is delivered. The first two contract requirements tests of FSS machines (designed to ensure functionality, quality, and compliance with specifications) have shown shortfalls in expected performance. Typically, when there is a First Article Test (FAT) failure, Postal Service acquisition guidelines call for retests before beginning deployment. However, in this case, the Postal Service has decided to deploy FSS machines despite major performance shortfalls in order to capture savings earlier; however, deploying FSS machines that do not meet contract requirements could reduce
expected savings. Although the Postal Service has adjusted its savings expectations and project assumptions have changed, it has remained optimistic when communicating expected financial outlooks.

Conclusion
The Postal Service’s revised performance projections in Quarter 1 (Q1) of fiscal year (FY) 2010’s Investment Highlights report do not use current actual machine performance and its projection of a gain of at least $872 million from FSS appear optimistic. In addition,there have been significant changes in assumptions for FSS machines and measurement criteria since the 2006 approval of the original investment. For example, flats volumes have decreased significantly, expected throughput rates have not been met, planned FSS sites have increased, the program schedule has changed by a year, and additional savings for transitional employees (TE) have been introduced to the investment return.These changes make it challenging for the Postal Service to measure project success as initially defined.

Particularly, we believe adding TE savings to the evaluation of FSS program success is questionable for several reasons. First, these savings were never considered as part of the original investment decision. Second, 44 percent of TEs are not in districts that will eventually host FSS machines. Lastly, management claimed these savings prior to FSS deployment and has the option of reducing TE complements for volume declines irrespective of the FSS program’s success. Thus, much of the savings from these employees will likely not be associated with FSS deployment.The Postal Service’s Q1, FY 2010 Investment Highlights report shows a projected gain for the FSS program of at least $872 million and a return of at least 27 percent. Using current actual performance data for the highest performing machine and operational target metrics, we calculated four financial scenarios for measuring program status and progress
against program goals. These scenarios were at least $431 million lower than the scenarios the Postal Service presented. Such a large difference exists because the Postal Service used more optimistic performance assumptions rather than actual machine performance or operational target results.
Our analysis shows that using current FSS performance data to calculate projected savings results in a net present value (NPV) of $215 million (a rate of return of 14.49 percent). If we remove the questionable TE savings, the NPV decreases to a negative $311 million (a rate of return of 5.18 percent). Assuming the FSS machines reach the operational target metrics, we calculate gains from FSS to be $441 million (rate of return of 19.26 percent). If we remove the questionable TE savings, there is a projected NPV of a negative $85 million (a rate of return of 8.54 percent).

The Postal Service’s Handbook F-661 requires accurate analysis and reporting of program impact. One purpose of the Investment Highlights report is to show the progress of large-scale programs within the Postal Service. Reporting program performance based on actual and operational target data is critical so that key decision-makers (such as the Board of Governors) have sufficient information to monitor program progress on projects of significant duration. See Appendix B for our detailed analysis of this topic.

We recommend the vice president, Engineering:
1. Use actual machine performance and operational target data to more accurately report the progress of the Flats Sequencing System program’s financial outcomes in compliance reports such as the Investment Highlights report.

1 General Investment Policies and Procedures (November 2005, updated with Postal Bulletin revisions through October 11, 2007) provides a single source overview of investment projects.

Management’s Comments
While management agreed with the recommendation to use actual machine performance data for compliance reports, they took exception to certain findings and our recommendation to use operational target data. Specifically, the Postal Service will include an additional FSS financial scenario when reporting outcomes in Investment Highlights reports. Management will take this action in time for the Q3, FY 2010 Investment Highlights report. The reported scenario will represent the Postal Service’s most current assessment of actual machine performance. In reference to using operational target data,the Postal Service does not believe they are representative of long-term expectations and elected not to present them in future Investment Highlights reports.

Management also said the financial outcomes presented in the report do not recognize:
- Throughput improvements demonstrated during tests in November 2009 and April 2010.
- Performance improvements over the 10-year program life and performance levels already achieved by the first article machine.
- Over 17 hours of daily runtime for unconstrained machines.

- The relevance of TEs, their strategic use, and the resulting savings attributable to the FSS program.
- Scheduling adjustments that address lower mail volumes.
- Additional savings related to delivery unit space reductions and vehicle capital investment and maintenance avoidance.
Thus their lower bound outcomes represent the likely worst case scenario. We have included management’s comments, in their entirety, in Appendix D.

full report from the USPS Office Of Inspector General

The U.S. Postal Service intended its Summer Sale to increase volume during a typically light mail volume period and increase revenue. The program ran from July 1 through September 30, 2009. At the end of this period, the Summer Sale provided a 30 percent credit to customers for additional volume mailed over a specified threshold.

Conclusion
The Postal Service reported both volume and revenue increases resulting from the FY 2009 Summer Sale.1 However, the processes used to calculate the reported
increases may result in misleading reported revenue and volume impacts. While the Postal Service used actual, verifiable mailing data in many cases, the additional data
essential to calculations supporting the reported increases is less precise. These data included various assumptions related to mail thresholds,2 negotiated mail volumes
based on customer input, and incomplete or unconsidered employee cost data. Postal Service outsiders — including the PRC’s public representatives3 — have also
questioned the Postal Service’s methods for calculating reported revenue and volume increases. The public representatives found that using methods more closely aligned
with those initially considered by the PRC in approving the Summer Sale suggests the Postal Service may actually have lost money on the FY 2009 program.

A Postal Service official stated that the benefits gained from conducting incentive programs like the Summer Sale outweigh their potential financial uncertainties. The
official said the Summer Sale program should be viewed as an investment in the future of the Postal Service, creating long-term customer satisfaction and building its
reputation. While these goals are commendable, a stated objective of the FY 2009 Summer Sale was to increase revenue and volume. It is uncertain whether the Postal
Service achieved that objective. We believe the Postal Service needs solid data and complete cost information in order to make well-informed decisions on the programs it initiates or conducts, particularly considering the critical financial predicament it is currently facing.

Revenue and Volume Increases Reported for Summer Sale May be Misleading

Overall, the Postal Service did not always have independent, reliable, and complete data upon which to calculate the $24.1 million in net revenue contribution and increased volume resulting from the FY 2009 Summer Sale. This occurred because the Postal Service relied on certain customer-provided data to determine customer thresholds and this data was a key component in evaluating revenue and volume increases. In addition, the method the Postal Service used to determine customer mail volume without a Summer Sale — commonly referred to as “loyalty growth” — differs from the PRCapproved method. The Postal Service’s calculation of “loyalty growth” considered trends in volume, whereas the PRC’s public representatives applied a measure of price sensitivity to volumes actually mailed during the Summer Sale to calculate “loyalty growth.” As a result, the Postal Service provided $67.8 million in rebates to customers who exceeded the established threshold volumes that may have been inaccurate. We consider the $67.8 million to be assets at risk.

A key component in calculating net revenue and volume increases was determining customers’ mail volume thresholds. To determine thresholds, the Postal Service provided mailing data that established a threshold for all its customers who were eligible to participate in the Summer Sale. While 324 customers agreed with this threshold figure, 129 others did not. Customers who disagreed with the threshold met with a Postal Service analyst from the Business Customer Intelligence (BCI) Department to discuss and negotiate the changes. Postal Service officials stated that BCI analysts researched the requested changes; however, they were not able to provide documentation to support the changes made or the validation process.

Furthermore, Postal Service outsiders have questioned the validity of the calculation of the “loyalty growth.” The PRC’s public representatives8 found that using the PRC’s method for “loyalty growth,” the Summer Sale lost $39.6 million of revenue. This is in contrast to the Postal Service’s reported $24.1 million net revenue growth. These varying calculations illustrate the difficulty in determining the results and effect of the Summer Sale.

see full report from the Office Of Inspector General:

note: another postal website really likes stealing my headlines.

How is it that the US Postal Service Office of Inspector General (USPS OIG) cannot get Robert F. Bernstock prosecuted? The OIG has gathered enough evidence on this Postal Official to send it to the District Attorney and yet the case was turned down? Why?

What in the world is going on here? I know of front line supervisors fired for doing route inspection paperwork with their postmaster, carriers who were fired for letting their child sit in daddy’s jeep, and clerks who have been investigated for having Government pens at their homes. Yet this guy, Robert F. Bernstock isn’t even prosecuted? If I were an OIG Agent, I’d be pissed and embarrassed. The OIG cannot get Robert F. Bernstock to court? There are some big dogs stealing and wasting millions for their own personal gain. The boys and girls in the OIG set out instead to chase a few craft employees for pennies.

Read full text of letter via Congress.org

INDIANAPOLIS – Casey D. Armstrong, 35, Lawrenceville, Ill., was sentenced to three years of probation today by U.S. District Judge William T. Lawrence following her guilty plea to misappropriation of Postal funds. This case was the result of a investigation by the United States Postal Service – Office of the Inspector General.

From January 2008 through December 2008, the Vincennes (Indiana) United States Post Office experienced over $2000 in retail losses. Beginning in November 2008, the United States Postal Service – Office of the Inspector General conducted an investigation to determine the source of the losses at the Vincennes Post Office. Video surveillance was set up of the postal clerks selling postage stamps. Casey D. Armstrong, the Defendant who was employed as a clerk, was observed mishandling customer transactions on 28 occasions, in which she underreported stamp sales into the cash register and then kept the resulting overage. Armstrong was interviewed and admitted to not ringing up all the stamp sales. She admitted keeping $2,000 or more of those proceeds for her own use. From the time Armstrong began working at the Vincennes post office in the fall of 2007, through the day she left, December 16, 2008, total losses were $3,796.

According to Assistant U.S. Attorney A. Brant Cook, who prosecuted the case for the government, Judge Lawrence ordered that Armstrong is to make restitution in the amount of $3,796 to the United States Postal Service. In addition to the standard conditions of probation,Armstrong is required to perform 60 hours of community service.

The U.S. Postal Service’s former top marketing executive repeatedly used government staff — and at least two business associates he hired with sole-source contracts — to manage his personal finances and outside business interests, according to a new report. Robert Bernstock, who resigned June 4, admitted to Office of Inspector General investigators that he had used postal resources and staff to handle his personal business while on the agency’s time. The report, released today, said his use of Postal Service employees and property to conduct personal business was improper. The report also raises questions about Postal Service general counsel Mary Anne Gibbons’ apparent failure to report Bernstock’s improper use of postal staff. download the entire report by clicking here. 

USPS President Under Fire For Directing Postal Contracts To Former Associates Resigns

While the lack of stamp vending machines has resulted in widespread customer frustration and a surprising number of newspaper articles, the problems are particularly acute in economically depressed areas. In these areas, customers may go to the post office to purchase only one or a few stamps. As staffing is partially based on revenue and a single stamp is a very low revenue transaction, lines in these areas may be particularly long. Although Automated Postal Centers (APCs) provide many services including the sale of stamps, APCs require credit cards, which people in economically depressed areas often do not have. In addition, some customers find APCs to be intimidating to use. Finally, APCs sell only booklets of stamps or individual stamps in denominations of $1 or more, yet many disadvantaged customers want to buy just one First-Class Mail stamp.

click here to visit USPS OIG blog to vote