USPS IG: Postal Service Would Benefit From Its Own Workers Comp Program
USPS IG says Federal Employees Compensation Act (FECA) has become a ‘lucrative retirement plan’
The USPS Office of the Inspector General David C. Williams prepared testimony for April 13, 2011 hearing before the Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy Committee on Oversight and Government Reform House of Representatives on “Federal Employees’ Compensation Act: A Fair Approach? (1:30 PM – 3:30 PM).”
Mr. Chairman and members of the subcommittee, thank you for the opportunity to discuss workers’ compensation issues and reform. The Federal Employees Compensation Act (FECA) requires federal agencies to participate in the Department of Labor’s (DOL) FECA program. DOL bills each agency annually for compensation paid and non-appropriated agencies also must pay DOL an annual administrative fee.
Eligible disabled employees receive 66 2/3 percent (or 75 percent with dependents) of their basic salary, tax-free plus, medical-related expenses. Also, FECA places no age limit on receiving benefits. This is substantially more than other employees receive when they retire. Though unintended, FECA has become a lucrative retirement plan.
The Postal Service is the largest FECA participant, paying more than $1 billion in benefits and $60 million in administrative fees annually, creating a long-term liability of $12.6 billion. As of February 2011, the Postal Service had about 15,800 disabled employees. Over 8,700 were at least age 55, about 3,100 were at least age 65, and about 900 were between age 80 and 98.
Certain aspects of the program make it susceptible to fraud:
* The claimant’s ability to change their story until their claim qualifies;
* The claimant’s ability to hire a physician rather than use a plan physician to assess their injuries and condition;
* The program incentivizes DOL to collect larger fees if they approve more claims and lose budget dollars if they deny them;
* The lack of effective DOL case management; and
* Employers not being allowed to present or respond to evidence at hearings.
DOL has some fraud detection responsibility, but it’s unclear to what extent. They advise agencies to actively manage their own programs, while still charging administrative fees. There is not a clear delineation of responsibility between (1) agency program managers and (2) their OIGs and (3) DOL and (4) its OIG in detecting fraud. Accordingly, there is significant risk that program oversight will be duplicative or not done.
Since October 2008, we have removed 476 claimants based on disability fraud, recovered $83.5 million in medical and disability judgments, and halted significant future losses. In one investigation, a fraudulent claimant received $142,000 in benefits while she was working as a real estate agent, and we had pictures of her hiking and bungee jumping. She even bought a boat named “Free Ride.” Other investigations have found fraudulent claimants working as martial arts instructors, landscapers, hairdressers and mechanics.
Working with DOL is difficult. They control needed documents, but are often not responsive when we investigate cases. Additionally, they do not take timely action when told that a claimant no longer qualifies for benefits. Even when a claimant is convicted, DOL is slow to terminate benefits.
* We gave DOL an investigative report in 2006 which found a claimant was exceeding his limitations. Even though the employee was willing to return to work, DOL did not reduce his benefits until 2011.
* Fourteen months ago we gave DOL an investigative report containing evidence of fraud by a disability claimant and a subsequent medical exam confirmed the claimant was able to return to work with no restrictions. Despite requests, DOL has taken no action and continues to pay benefits.
* Over a 5-year period one claimant submitted $190,000 in unsupported mileage reimbursements that DOL paid without question.
Stress claims in particular are at high risk for fraud. If a doctor sees a correlation between stress and a claimant’s work, the claim is often approved. In one instance, a claimant’s emotional reaction to a change in work schedule was enough for DOL approval.
The OIG also investigates medical providers involved in criminal matters, including disability fraud and we have recovered $78.5 million since FY 2009. Unfortunately, DOL provides no standardized billing guidelines for doctors, making it difficult to hold them accountable for fraudulent billings. If DOL instituted a system similar to Medicare’s, prosecutors would be more inclined to take these cases. From our reviews, the Postal Service would benefit from having its own workers’ compensation program. Savings would be in the areas of reduced administrative fees, accurate assessment of claims by plan physicians, buyout options, mandatory retirements, immediate access to records, and improved accountability over case management.
From our reviews, the Postal Service would benefit from having its own workers’ compensation program. Savings would be in the areas of reduced administrative fees, accurate assessment of claims by plan physicians, buyout options, mandatory retirements, immediate access to records, and improved accountability over case management.
FECA is in need of significant reform. Such reform could reduce the substantial risk for fraud and improve program efficiency and effectiveness, while protecting reasonable benefits for legitimate claimants.
USPS OIG Recommends Use Of Part-Time “Delivery Unit Assistants” For Carrier Duties
USPS OIG Report: Management Advisory – Benchmarking Mail Distribution to Carriers
A few excerpts:
The Postal Service and industry carriers are similar in that individuals perform some sorting of volumes for delivery, load their own vehicles, and assume additional delivery points when a colleague is absent or mail volumes require it. However, the Postal Service is unique among the companies we visited in that carriers deliver a more varied mix of mail, including letters, flats, and parcels; and must comply with a Universal Service Obligation. If the Postal Service incorporated the assignment of some delivery unit activities to part-time employees, additional savings could be achieved.
Workforce Flexibilities
The Postal Service may have opportunities to improve operations by adopting some industry best practices for distributing mail to carriers. We noted commercial delivery businesses have staffing flexibilities, such as the ability for employees to work across craft assignments, which allow managers to more efficiently match workhours with workload and offset overtime by using more part-time employees. See Appendix B for our detailed analysis of this topic
Flexible Delivery Unit Assistants
Postal Service city delivery carriers have office time allowances built into their 8-hour days to case and prepare mail for their route. Based on workload trends, vacancies,absences, and mail volume, the carrier may perform these activities for other routes. A small percentage of delivery units use full-time carrier craft “routers” to case and prepare the mail for delivery exclusively; Postal Service management stated the use of routers is declining. Routers typically case and prepare the mail prior to the assigned carrier’s arrival; routers may or may not perform street duties later in the day, depending on need. See Appendix B for our detailed analysis of this topic.
If the Postal Service used part-time delivery unit assistants to perform most in-office work, these employees could absorb all carrier morning activities except loading and driving delivery vehicles. Having part-time employees case and prepare mail within delivery units could result in annual reduced workhour costs between $621 million and $2.3 billion and greater flexibility for the Postal Service. Additional savings could be generated from carrier route adjustments resulting in longer routes and less office time for the carriers. See Appendix C for our analysis of monetary impacts.
We recommend the vice president, Delivery and Post Office Operations:
1. Pursue a delivery unit assistant initiative to have transitional employees or part-time flexible employees perform in-office activities including casing and preparing mail for carriers.
Management disagreed with the recommendation because of the complexity of labor relations and existing contractual issues with the National Association of Letter Carriers (NALC). Management further stated that the Postal Service is currently working with NALC to examine how city delivery routes might be structured in the future. The parties are working on a test that will attempt to separate the casing and delivery functions to the extent possible while operating within the current work rules.
USPS OIG: Benchmarking Mail Distribution to Carriers
USPS OIG: OPM’s Long History Of Miscalculations Involving USPS Benefit Funds
Today, the USPS Office Of Inspector General responded to the OPM Office Of Inspector General’s “A Study of the Risks and Consequences of the USPS OIG’s Proposals to Change USPS’s Funding of Retiree Benefits”
OPM’s study concluded:
While we understand that the USPS is having financial difficulties, the OPM’s administration of the law has not caused this situation. The OPM has complied with the law as written on all accounts. To say otherwise is both inaccurate and obscures the true causes of USPS’s current crisis.
We believe that these proposals would have a lasting negative impact upon the retirement programs and trust funds but have little, if any, positive impact upon the USPS’s ultimate long-term profitability. Instead, the result of these proposals would be to shift costs from USPS ratepayers to the American taxpayers.
But the USPS OIG tells a different story:
Our reports focused on the latest of OPM’s long history of miscalculations involving Postal Service benefit funds:
• In 2002, the Postal Service’s pension fund was found to be overfunded by $78 billion. Congress corrected this in 2003.
• In 2003, OPM attempted to make the Postal Service responsible for $27 billion in military service pension obligations for Postal Service employees. Congress refused to accept this attempt.
• In 2009, we found that the OPM used an exaggerated 7 percent health care inflation forecast instead of the 5 percent industry standard, resulting in an overpayment of $13.2 billion by 2016. Congress ordered OPM to review it and they changed it.
• The Postal Service has been overcharged $75 billion for its share of the CSRS pension payments. In essence, for 40 years the Postal Service paid its own and the federal government’s inflationary costs.
OPM typically responded to these findings with initial denial followed by major corrections. In such a history of errors, one would expect to see some balance.
• Errors are normally random, but without exception these have disadvantaged the Postal Service.
• Self discovery by OPM of such substantial miscalculations should have occurred.
• Self correction by OPM, charged with fund administration, would also have been expected.
This is not about the financial condition of the Postal Service, but that the Postal Service was overcharged and subsequently overpaid into benefit funds. In the Unites States there is the rule of law and the accounts must be settled. This issue is fundamentally about righting an inequity.
Read USPS OIG’s full response
U.S. Postal Services OIG’s Response‐‐‐ OPM OIG Issues Study on USPS OIG’s Proposals Regarding the Funding of USPS Retiree Benefits.
Thank you for the opportunity to respond to the OPM Inspector General’s study reviewing our recent reports about the mischarges and overfunding of the Postal Service’s benefit obligations. Both the postal pension and health funds are administered by OPM and are accounted for separately from the federal government’s benefit funds.
Our reports focused on the latest of OPM’s long history of miscalculations involving Postal Service benefit funds:
- In 2002, the Postal Service’s pension fund was found to be overfunded by $78 billion. Congress corrected this in 2003.
- In 2003, OPM attempted to make the Postal Service responsible for $27 billion in military service pension obligations for Postal Service employees. Congress refused to accept this attempt.
- In 2009, we found that the OPM used an exaggerated 7 percent health care inflation forecast instead of the 5 percent industry standard, resulting in an overpayment of $13.2 billion by 2016. Congress ordered OPM to review it and they changed it.
- The Postal Service has been overcharged $75 billion for its share of the CSRS pension payments. In essence, for 40 years the Postal Service paid its own and the federal government’s inflationary costs.
OPM typically responded to these findings with initial denial followed by major corrections. In such a history of errors, one would expect to see some balance.
- Errors are normally random, but without exception these have disadvantaged the Postal Service.
- Self discovery by OPM of such substantial miscalculations should have occurred.
- Self correction by OPM, charged with fund administration, would also have been expected.
Regarding the matter that was reviewed in the OPM report, the Postal Service Office of Inspector General has the following observations:
Our reports concerning the mischarges and overfunding of Postal Service benefits relied on the work of an actuarial firm that was under contract to the OIG. That firm had previously done work for OPM in the benefits fund area. Our work was independently reviewed by a second actuary employed by the Postal Regulatory Commission (PRC). In contrast the OPM characterizes their study as an analysis based on the work of others, but without independent actuarial assistance.
The OPM study makes the following points in their review:
1. The taxpayers will sustain losses if the funds are restored to the Postal Service.
2. The Postal Service would use the returned funds to subsidize operations and not for benefit funds.
3. OPM is unable to correct the overcharges because of their limited authority.
4. The study endorses 100 percent prefunding requirement for Postal Service benefit funds.
In response to the OPM, we have some observations on each of their points:
1. The Postal Service benefit funds are funded entirely by postal employees and postage from American citizens and businesses. Postal Service contributions should not supplement federal employee contributions and federal employee contributions should not supplement Postal Service contributions.
2. If benefit fund overpayments were returned, the money would not be used for Postal Service operations. The proposal is to use the surplus to make annual benefit payments. Using
employee money for postal operations would be as wrong as putting it in the federal employee benefit fund; both are improper.
3. The Postal Inspector General and Senator Collins believe that OPM could correct this funding issue using their own authority. OPM has responsibility for accurately and fairly administering these funds.
4. OPM recommended 100 percent funding levels for both the Postal Service’s retirement and healthcare funds. However, the report is silent on the adequacy of OPM’s government
prefunding level of 40 percent for retirement and 0 percent for healthcare.
This is not about the financial condition of the Postal Service, but that the Postal Service was overcharged and subsequently overpaid into benefit funds. In the Unites States there is the rule of law and the accounts must be settled. This issue is fundamentally about righting an inequity.
source: National League Of Postmasters Of US
OPM IG Releases Study On USPS OIG’s Proposals to Change USPS Funding of Retiree Benefits
Filed under: fehb, oig, opm, postal, postal news, press releases, usps
Press Release from the OPM Office Of Inspector General
Study of the Risks and Consequences of the USPS OIG’s Proposals to Change USPS’s Funding of Retiree Benefits: Shifting Costs from USPS Ratepayers to Taxpayers’
Washington, DC – (Feb. 28, 2011) Today, the U.S. Office of Personnel Management (OPM), Office of the Inspector General (OPM OIG), issued a study analyzing certain proposals issued by the United States Postal Service (USPS), Office of Inspector General (USPS OIG), regarding changes in the manner by which the USPS funds both its retiree annuity and health benefit obligations. The OPM OIG paper, A Study of the Risks and Consequences of the USPS OIG’s Proposals to Change USPS’s Funding of Retiree Benefits: Shifting Costs from USPS Ratepayers to Taxpayers, reviews the impact that the proposals would have upon the trust funds and the Federal benefit programs administered by OPM.
In a series of reports containing these proposals, the USPS OIG has estimated that the USPS has “overpaid” these trust funds by as much as $142 billion. The proposals generally envision changing the law governing the manner in which the USPS’s retiree benefit liabilities are determined and funded.
“We felt that the issues surrounding the USPS OIG’s proposals had not been fully explored,” said Inspector General Patrick E. McFarland. “It was important for us to examine not only the effects that the proposals would have upon the USPS, but also their impact upon the Federal retirement system as a whole. We were also concerned that there was a public perception that OPM may have inappropriately calculated the USPS’s liabilities. In fact, our analysis revealed that OPM has fully complied with the law.”
The OPM OIG study also concludes that generally the proposals would have a lasting negative effect upon the retirement programs and trust funds and have little, if any, positive impact upon the USPS’s ultimate long-term profitability. In addition, the result of these proposals would be to shift costs from USPS ratepayers to the American taxpayers.
While the USPS’s financial situation must be addressed, the OPM OIG study cautions against using the Federal retirement program as a vehicle through which to implement policy objectives unrelated to the Federal retiree benefit programs. “The resolution of the USPS’s financial situation should be fully transparent rather than providing an indirect subsidy from the Federal benefits system,” said Inspector General McFarland.
“While our findings do not support the USPS OIG’s proposals,” stated Inspector General McFarland, “we think that our work, combined with theirs, will help the Congress, the Administration, and the USPS to develop the most efficient and effective resolution of the USPS’s current problems.”
Here’s an interesting little tidbit from the report:
Under the FEHB Program, a portion of a retiree’s health care insurance premium is paid for by the Federal Government (or, in the case of USPS retirees, the USPS) through contributions to the Employees Health Benefits (EHB) Fund.The Federal or USPS retiree contributes the remaining amount of the premium to the fund.
As the USPS OIG’s reports have repeatedly pointed out, the Federal Government does not prefund it s retiree health obligations. Instead, the employer and employee contributions pay only for the costs of the program for that particular year. Consequently, the EHB Fund maintains only a small amount of reserves and thus does not have significant assets that remain in the fund from year to year.
It is unclear, however, what the effect would be upon USPS employees’ or retirees’ rights if the USPS ceased making its required payments into the EHB Fund because the fund does not contain sufficient reserves that could be used to “replace” the USPS’s contributions. Consequently, the fund’s assets would be exhausted very quickly.
In such a scenario, the insurance companies would still be legally entitled to the full amount of the premium negotiated under the contract. The OPM would have to take some sort of action because without the USPS’s contributions, the fund simply would not have enough money to pay every FEHB Program participant’s premium.
Absent an emergency appropriation from Congress, it is possible that the OPM would have to exercise its regulatory authority to disenroll USPS employees and retirees as a class in order to continue providing health care coverage to all other FEHB Program participants.
USPS’s Financial Outlook
While various parties have worked diligently to develop business and operational initiatives geared towards improving the USPS’s business model and financial condition, we have yet see a report that contain s viable projections that it will improve its financial situation.
OPM OIG Study of USPS OIG Proposals Feb 28 2011
USPS Pay-for-Performance: Fair And Balanced Or Subject To Manipulation
Ask postal employees about the Postal Service’s Pay-for-Performance (PFP) program and you’ll hear a wide range of opinions as to why they think the program is not working. Many believe the program is unfair and can be subject to manipulation.
According to Postal Service officials, the PFP program’s foundation is a balanced scorecard of objective, independently verifiable measures of service, employee engagement, and financial performance. Performance indicators are measured at national, district, business unit, and individual levels.
In its 2010 Comprehensive Statement of Postal Operations and Annual Report, the Postal Service stated the PFP program continued to drive organizational achievement as measured by a 2.2 percent increase in Total Factor Productivity (TFP) in 2010 compared to 2009.This marked the ninth year of positive TFP growth since 2000. The current PFP program evolved over a 12-year period and became the only basis for annual salary increases and lump sum awards for executive and administrative employees beginning in 2004. In implementing its PFP program, the Postal Service joined the ranks of many private sector firms where pay for performance is a standard feature for management and executives.
The OIG plans to initiate a review of the Postal Service’s PFP program. We would like to hear more about your thoughts on the subject.
Read the entire story and Take the poll at USPS OIG’s website
Anti-Labor Group Says Postal Workers ‘Still Partying Like It’s 1999′
Hmm.. I wonder if the anti-labor group is talking about pop artist Prince’s 1982 song…Noooo, they can’t be talking about his purple highness’ song.
The Citizens Against Government Waste issued the following press release supposedly ”Outraged at USPS’ Lavish Expenditures While Fiscal Outlook Worsens”. But yet the body of the release talks about Unions and a lot of other crazy conclusions.
By the way, “still partying like it’s 1999″ may refer to a phrase which means companies who had failed due to excesses in the style or operations.
Businesswire
WASHINGTON — Citizens Against Government Waste (CAGW) today expressed outrage on behalf of taxpayers at new reports of United States Postal Service (USPS) employees using business credit cards for personal travel, to expense adult entertainment parties, purchase personal computers, and pay their mortgages. The Washington Post’s Ed O’Keefe details the contents of the USPS Office of Inspector General’s report, “Over a two-year period, some postal workers used credit cards meant for travel and lodging expenses to buy family members flights to Spain and Italy, purchase Apple computers and make more than 50 purchases at ‘adult entertainment’ stores…All told, the mail agency could have saved more than $600,000 in excessive travel costs during fiscal 2009 and 2010 if it had cracked down on non-compliant workers, the report said.”
The inappropriate expenses occurred even while the USPS posted $8.5 billion in losses in 2010. It is on track to blow past its $15 billion statutory debt ceiling in September 2011 and is threatening to default on some of its financial obligations later this year after posting a loss of $329 million in the first quarter of 2011. The USPS is again lobbying for a change in the way it funds its retirees’ pension and healthcare benefits in order to forestall further declines in its financial condition. However, in 2009, Congress cut USPS’s retiree health benefit payment by $4 billion to address a significant shortfall, and USPS still recorded a loss of $3.8 billion. In addition, members of Congress have stymied the USPS’ attempts to close unnecessary facilities. Postal management is currently engaged in tense negotiations with one of its unions, the American Postal Workers Union. Union representatives have stated publicly that the union has no intention of relinquishing any of its lavish compensation or benefits, which are the most generous of all federal employees. USPS compensation and benefits comprise 80 percent of its total costs.
“Any proposal to tinker with the funding mechanism for retiree pension and health insurance liabilities, which are around $90 billion, is another example of USPS kicking the proverbial fiscal can down the road,” said CAGW President Tom Schatz. “The agency is locked into a smothering cost structure that prevents it from streamlining and restructuring to meet the steady decline in postal volume. The Government Accountability Office stated in April, 2010 that the agency’s business model is obsolete. Yet, postal management tolerate employees who are still partying like it’s 1999. Congress must follow the lead of many other countries, including the United Kingdom, Sweden, and New Zealand, and privatize the postal service,” concluded Schatz.
OIG Paper: Fundamental Questions for the Future of the Postal Service
The U.S. Postal Service is facing a set of critically important decisions. The combined effects of the economic downturn, the disruptive consequences of electronic diversion, and a burdensome and flawed retiree health care prefunding schedule have contributed to $20 billion of losses in the past 4 years. The Postal Service expects that it will not have enough cash to meet its payment obligations in 2011.
Less urgently, but of more importance in the long term, communications and parcel delivery have undergone radical transformation in recent years, yet the Postal Service has not modernized or been permitted to update important aspects of its mission to reflect the impact of globalization and the digital age. Instead, the Postal Service has been required to stand still in the middle of a revolution in the access and use of information.
In this emerging environment, neither the Postal Service’s traditional functions nor digital age infrastructures offer perfect solutions to Americans’ needs. Both information services and physical delivery are important, and determining the right course for the Postal Service’s next 10 or 20 years is difficult. Nevertheless, decisions about the Postal Service’s future will be required very soon, and debates have yielded few definitive
conclusions.
We believe there is a need to step back from the immediate issues and take a deeper look at unanswered foundational questions concerning the role of the Postal Service. The answers to these questions can serve as beacons to navigate into the future. The Postal Service faces an array of conflicting and even contradictory mandates. Without a solid foundation to guide the transformation of the postal system, there is a risk of further piecemeal changes that will simply add to the confusion.
This paper poses eight fundamental questions that we believe are critical for determining the role of the Postal Service in the 21st century. We discuss some alternatives for responding to these questions, but we purposefully do not suggest answers. There are many possible answers. Policymakers, especially elected officials representing Americans, should engage in a disciplined, deliberative process to reach decisions about these foundational issues. The questions and some alternatives appear in Table 1. Clear and decisive responses to these fundamental questions are needed to develop a coherent, consistent postal policy for the present and the future. A failure to reach agreement will frustrate efforts to find a long-term strategy for the Postal Service. Any plan will lack the stability of consensus consensus and fall prey to the same endless historical debates.
These questions cannot be answered in isolation. Each is best considered in relationship to others. For example, an answer to whether the Postal Service should be organized as a profit-maximizing business or a national infrastructure will be influenced by decisions on the Postal Service’s universal service obligation, social responsibilities, and optimal role in the digital age. In turn, the nature of the Postal Service’s mission will influence its governance model, financing method, and placement in the competitive marketplace. Finding a consensus among stakeholders and policymakers on the answers to these questions will not be an easy process, but if agreement is reached on the role of the Postal Service, developing a business model that will place the Postal Service on a sustainable path to provide vital services to the American people in the 21st century will be possible.
OIG: What can the Postal Service do to reduce workers’ compensation costs?
The USPS Office Of Inspector General asked readers the following question:
What can the Postal Service do to reduce workers’ compensation costs?
In fiscal year 2009, the Postal Service workers’ compensation expense was approximately $2.2 billion, an 81 percent increase from $1.2 billion in FY 2008. These costs include $55 million in DOL administrative fees for FY 2009. About 72 percent ($718 million) was a non-cash charge related to changes in the estimated discount and inflation rates used to calculate the liability for future payments. At the end of FY 2009, the Postal Service estimated the total liability for future workers’ compensation cost was over $10 billion.
One of the contributing factors to the high cost of workers’ compensation payments is that FECA does not mandate a cut-off age for workers’ compensation benefits. Thus, injured workers can continue to receive workers’ compensation benefits well past the legal retirement age of 65, and in some cases employees over the age of 90 are still receiving workers’ compensation benefits.
Fraudulent workers’ compensation claims also result in higher overall costs. To combat workers’ compensation fraud the OIG launched its crime prevention and awareness campaign in September 2009 and a joint year-long initiative with the U.S. Postal Inspection Service in February 2010. The successful investigative efforts saved the Postal Service more than $400 million for fiscal years 2009 and 2010 combined.
Submit answers to poll at the USPS OIG blog
Related links:
USPS OIG, USPIS Launch Workers’ Comp Fraud Initative (January 18, 2010)
Senator Susan Collins Seeks Reforms To Federal Workers’ Comp Program (January 12, 2011)
OIG: USPS Northern Virginia District Used More Workhours Than Necessary To Deliver Mail
Filed under: letter carriers, oig, postal, postal news, usps
Highlights from the USPS OIG Audit Report – City Delivery Efficiency Review – Northern Virginia District
Background
Delivery operations are the Postal Service’s largest operational function, accounting for approximately 45 percent of salary expenses and workhours. Despite an annual increase of approximately 1 million delivery points, delivery operations used 36.5 million fewer workhours in fiscal year (FY) 2009, because of effective growth management, increased use of automation, standardization of best practices, and improved productivity. Although delivery operations used fewer workhours, workhour reduction has not kept pace with declining mail volume. Nationally, city delivery mail volume declined by 3.9 percent in FY 2010. During this same period, mail volume declined in the Capital Metro Area by 2.4 percent, while workhours declined by 2.8 percent. The Northern Virginia District mail volume declined by 2.7 percent in FY 2010, while workhours declined by 3.2 percent
Audit
The U.S. Postal Service is delivering fewer pieces of mail to a growing number of addresses as new households and businesses are added to the delivery network each year. The Postal Service must achieve unprecedented levels of efficiency to accommodate this new growth while facing financial losses from declining mail volumes and rising costs.
The Northern Virginia District was not operating at peak efficiency and could reduce city delivery operating costs. Our benchmarking comparison determined the Northern Virginia District used approximately 16 minutes more per day than the national average for each carrier route, compared to the standard for that route. This equated to more than 103,000 workhours annually. The measurement for this factor, called percent to standard,2 was 123.24 – about 17 percentage points above the national average of 105.95 percent.
Although numerous factors were involved, our review of 20 randomly selected delivery units confirmed these inefficiencies and determined Northern Virginia District management did not always (1) provide sufficient review and oversight of unit offices’ operating efficiencies and (2) coordinate with the mail processing facility to ensure mail was timely received and in a condition that promoted operating efficiency. Eliminating time-wasting practices and increasing focus on efficiency could allow management to reduce workhours.
Some examples include ensuring that:
• Management provides sufficient oversight of morning and afternoon office operations.
• Vehicle inspection process is efficient.
• Carriers are timely and correctly clocking into afternoon (p.m.) office time.
• Units receive the proper mix from the processing facility per the integrated operating plan (IOP).3
• Carriers spend less time waiting for mail.
• Clerks and carriers do not unnecessarily re-handle unshelved mail transport containers to identify and retrieve delivery point sequence4 (DPS) mail.
Consequently, the Northern Virginia District used more workhours than necessary to deliver the mail. Adjusting its operations would increase the Northern Virginia District’s overall efficiency by reducing 103,160 workhours, resulting in savings of more than $3.2 million annually or about $32 million over 10 years. See Appendix C for additional information about this issue.
We recommend the district manager, Northern Virginia District:
1. Reduce the Northern Virginia District’s workhours by 103,160 to achieve an associated economic impact of about $32 million over 10 years.
2. Require processing facility managers and delivery managers to coordinate, review, and update all integrated operating plans to ensure mail arrives timely and in the condition necessary to promote office efficiency.
Management’s Comments
Management agreed with the findings, recommendations, and opportunities to capture monetary impact.
In response to recommendation one, management agreed to reduce city carrier office hours. Management’s action plan includes reducing carrier inefficiencies in the office by implementing and monitoring standard operating procedures (SOPs); increasing operational audits for compliance with established best practices; providing additional training for supervisors on managing office time; flexing carrier start times for tours; and improving on-time mail arrival profiles. Management plans to implement action by February 2011.
Managing Morning and Afternoon Office Operations
Supervisors did not provide sufficient oversight of morning operations. Specifically, the vehicle inspection process was not always efficient. Our observations disclosed that delivery units lost several minutes per day because of carriers searching for vehicles before inspection. Five of the 20 delivery units lost time because parking spaces were unassigned.
In four other delivery units, carriers waited in line to get vehicle keys. Postal Service policy states employees should park vehicles near the dock in assigned spaces identified by individual route numbers. In addition, policy states employees should conduct vehicle inspections promptly after clocking in for the morning. The policy also requires vehicle keys to be located adjacent to time-recording equipment (see Illustration 1).
In addition, supervisors did not always effectively manage afternoon office time at 11 of the 20 delivery units observed. Some carriers spent 10 minutes or more in the office after returning from their routes. Postal Service policy allows a standard 5 minutes for carriers to perform afternoon office duties. We also observed some carriers not clocking directly to “office time” upon returning to the unit in the afternoon, resulting in much of this additional office time” being included in street operations time.
Adjusting its operations would increase the Northern Virginia District’s overall efficiency by reducing approximately 103,160 workhours, resulting in savings of more than $3.2 million annually or about $32 million over 10 years.
USPS OIG Audit Report – City Delivery Efficiency Review – Northern Virginia District
USPS OIG Seeking Contractor To Renovate Its Headquarters For $5 Million
The USPS Office Of Inspector General posted the following on the Federal Business Opportunities website:
The United States Postal Service (USPS) Office of Inspector General (OIG) plans to issue a Firm Fixed Price Contract for a multi-phased Office Renovation to their Headquarters facility located at 1735 N Lynn Street, Arlington, VA. The work includes all labor and materials necessary to complete the renovations in accordance with USPS OIG approved specifications and drawings. Proposers should recognize the building is occupied and the project will be completed in multiple phases to avoid disruption of facility operations. The estimated cost of the project is between $4.8 million and $5.6 million, with construction completion within 365 calendar days from receipt of notice to proceed for the total project. The project consists of renovating 123,126 interior sf in an existing 12-story commercial office building. Work includes demolition and new work on 6 floors. Demolition work includes but is not limited to, interior partitions, casework, acoustical ceilings, lighting, mechanical diffusers and plumbing fixtures. All mechanical ductwork shall remain. New work includes new gypsum board partitions, new finishes throughout including; acoustical ceiling tiles, gypsum bulkheads, painted walls, broadloom carpet and vinyl tiles. Work also includes new lighting, electrical and IT wiring throughout and limited mechanical, plumbing and sprinkler work. This is a privately owned facility, leased by the USPS. All necessary permits will be required.
As part of a recent lease renewal, the landlord may fund payment requests related to this project. All payment requests will be submitted to the USPS OIG for approval, and then they may be forwarded to the lease management company for payment by the landlord.