USPS Can’t Rationalize ‘Network Rationalization’

Echoing APWU criticisms, a recent audit by the USPS Office of the Inspector General (OIG) concluded that after more than five years of initiatives aimed at streamlining the mail-processing network, the Postal Service has failed to establish criteria for identifying consolidation opportunities. The USPS has made only limited progress in implementing Area Mail Processing consolidations in the Processing & Distribution network, the Jan. 7 report says.

“Stakeholder opposition” and resistance to service downgrades were the primary factors that delayed or resulted in the disapproval of Area Mail Processing (AMP) studies, the report concludes. Although the economic downturn is a problem, additional challenges include “facilities with long-term leases, workforce inflexibilities, facility data consistency and reliability, and lack of a comprehensive network plan,” the audit says.

There is a “lack of specific criteria” the Postal Service can consistently apply nationwide, the report notes. “Additionally, the Postal Service has cancelled some AMPs without providing their rationale.”

The OIG’s Audit Report on the Postal Service’s Network Rationalization Initiatives is a study of the “effort to streamline mail processing and transportation infrastructure” between Fiscal Years 2005 and 2009. The OIG says that the USPS has made progress, but acknowledges that stakeholders are likely to question the credibility of the program.

“We have questioned the validity of the so-called ‘right-sizing’ programs from Day One,” said APWU President William Burrus. “The plans have had many different names, from ‘Evolutionary Network Design’ to ‘Network Integration Alignment,’ to ‘optimization’ to ‘realignment.’ Now the OIG has found that the latest version, the ‘Rationalization Initiative,’ can’t be rationalized.”

The audit reports that 13 AMP consolidations have taken place, including two facility closures during the period in question. Sixteen others have been “approved,” while 39 proposed consolidations have been cancelled. Another 30, some of them announced nearly four years ago, are listed as “active,” which means a final decision has not been made.

“Between FY 2005 and 2009, the Postal Service made progress in its efforts to streamline its mail processing and transportation infrastructure; however, management has been unable to adjust resources to fully offset mail volume declines, resulting in a deteriorating financial condition,” the report says.

In response to a decrease of approximately 35 billion pieces during the period, the report says the USPS has:

• Reduced approximately 205.2 million work hours — the equivalent of 117,273 employees — with the majority in mail processing and customer service functions.
• Reduced 37 million highway contract route (HCR) miles, (but overall transportation expenses increased by $1.5 billion).
• Closed 68 Airport Mail Centers and 12 Remote Encoding Centers.
• Realigned the Bulk Mail Center (BMC) operations with no BMC closures, and 
• Consolidated 13 Processing & Distribution Centers, including two plants that have been closed.

Postal management agreed with the OIG findings, the report concludes, and agreed “to re-evaluate and document the criteria used to identify consolidation opportunities annually.”

“USPS consolidation programs have not been designed with service in mind,” said APWU Vice President Cliff Guffey. “The APWU will continue to point out the negative effect closures and consolidations will have on mail service to the public.”

After a lull for most of 2008, postal management began initiating AMP studies in great numbers at the end of the year and through 2009.