Best Laid Plans: Another USPS IG Report, Another Failed Attempt to Save Money | Citizens Against Government Waste

Best Laid Plans: Another USPS IG Report, Another Failed Attempt to Save Money

The WasteWatcher

As has been pointed out repeatedly in the past few years, United States Postal Service (USPS) management continues to struggle mightily to enact efficiencies or carve out savings from its operations.  And this continues to be the case despite the dramatic drop in mail volume and USPS Postmaster General (PMG) Megan Brennan’s regular declarations and testimony before Congress that her team is aggressively managing the business.  The USPS has had nearly thirteen consecutive years of losses, and those losses are accelerating.  PMG Brennan predicts the agency will run out of money in five years.   

The latest example is a September 17, 2019 IG report that serves as a roundup of some of the agency’s most noteworthy failures.  It recaps USPS’s persistent pattern of announcing bold initiatives to tighten operations, announcing big savings projections, and then failing to achieve them.  The IG reports that:

“…the Postal Service had planned on savings of $1.9 billion over fiscal 2014-2018 from its ‘Ready Now/Future’ initiative, but achieved savings of only $339.1 million; it reported no savings in 2018 from facilities consolidations carried out earlier; and auditors were able to verify only $90.7 million in savings from 2016 to 2017 from the Operational Window Change initiative that lowered first-class mail service standards, which had been projected to save $1.6 billion in that time.”

According to the postal watchdog, even though mail volume has decreased by 8.8 billion pieces, or 5.7 percent during the last five years, USPS costs associated with processing, transporting, and delivering mail have climbed by almost $5 billion dollars, or 13 percent.  This occurred even though USPS also lowered its service standards, eliminating single-piece overnight first-class mail delivery and redefining on-time delivery for other mail from two-days to a slower three-day benchmark.

More worrying still is the fact that USPS isn’t missing its savings and productivity targets by a little, they are missing them by a mile.  Multiple IG reports have exposed the fact that the USPS is not operating like any large, private-sector logistics company, especially one that is facing daunting disruptions in its industry, more than $100 billion in unfunded pension and retiree healthcare liabilities, and a $15 billion debt. 

USPS has difficulties even measuring the outcomes of its initiatives and the stark realities contained in these reports reveal that, no matter how often its executives proclaim the agency is very much like a going private-sector concern, the place operates more like a sluggish, sclerotic government bureaucracy, top heavy, unresponsive, lacking in the flexibility to innovate, modernize, and reposition itself to function in today’s swiftly evolving logistical environment. 

Even as volume decreased, the IG found that USPS employee overtime costs in mail processing increased $327 million, or 43 percent; overtime and penalty overtime costs in delivery increased about $576 million, or 26 percent; mail processing delays increased 43 percent, late trips increased almost 60 percent and extra transportation trips have increased 90 percent. The USPS reported these trips cost $140 million in fiscal year (FY) 2018.

While it is true that the agency is hamstrung by congressional mandates and statutory constraints, and that Congress has been promising and failing to deliver postal reform for years, it is also hard to square PMG Brennan’s claims that the agency is making the best use of the management tools currently under its control when it consistently fails to enact cost-saving measures or productivity gains. 

On August 1, 2019, with the confirmation of three additional board members, the USPS’s Board of Governors finally achieved a quorum for the first time since 2014.  Earlier in the summer, details of the USPS’s long-overdue Ten-Year Business Plan began to leak into press reports.  Reforms contained in the Ten-Year Plan reportedly include realizing $5 billion in savings by combining postal employees’ sick and vacation leave into one pool and having postal employees contribute more toward their pension plans, estimated to save $7 billion.

However, based upon the litany of lapses contained in the IG’s reports about USPS’s manifest inability to implement cost-savings programs, or even measure the outcomes of previous operational initiatives, there is every reason to question whether the current operational and management structure will be able to implement future reforms to get the agency out of the red and safeguard taxpayers from a postal bailout.