GAO Report: U.S. POSTAL SERVICE Projected Capital Spending and Processes for Addressing Uncertainties and Risks
What GAO Found
6/28/18 – The United States Postal Service (USPS) projects increased capital spending over the next 10 years. According to USPS, this spending will support its mission and improve its financial position. USPS projects average annual capital cash outlays of $2.4 billion from fiscal years 2018–2028—about 70 percent more than the $1.4 billion average from fiscal years 2007–2017 (see figure). For example, USPS plans to acquire a new fleet of delivery vehicles starting in 2019 to replace its aging existing fleet and plans to purchase new mail-processing equipment to increase efficiency.
However, USPS faces a serious financial situation with insufficient revenues to cover expenses. This uncertainty may result in USPS’s making capital-spending prioritization decisions that can lead to tradeoffs across planned capital projects and potentially between capital spending and other organizational needs such as operational expenses. Such prioritization could lead to USPS’s undertaking less capital spending than currently projected in the absence of increased revenues or decreased expenses. (continues below)
U.S. Postal Service’s Historical (2007–2017) and Projected (2018–2028) Capital Spending
USPS has processes that help it identify the uncertainties and risks that may affect its capital spending and adjusts its capital spending accordingly, in line with internal control standards adopted by USPS. For example, USPS identifies organizational uncertainties, such as mail volumes and revenues, as part of its strategic planning process and considers them when creating its capital spending budget. It also identifies individual project risks through a project review process, and considers tradeoffs inherent in different project scenarios. USPS’s processes also allow it to respond to these uncertainties and risks. Specifically, USPS sets a capital-spending budget in its overall financial plan, to help ensure that spending is in line with expected resources. USPS’s process also allows it to shift funds if needed, such as to repair a facility damaged during a natural disaster. USPS also reviews individual capital projects during implementation and can change specifications or time frames based on changing circumstances.
Why GAO Did This Study
USPS faces significant financial challenges as it continues to experience declining mail volumes and revenues. Capital spending is needed to support USPS’s operations, but can be affected by various uncertainties and risks, such as those related to future business activities and revenues. In the past, USPS has reduced its capital spending in response to declining revenues.
GAO was asked to review USPS’s capital-spending plans and examine how its capital-spending processes address uncertainties and risks. This report: (1) describes USPS’s projected capital spending over the next 10 years and (2) assesses whether USPS’s processes support its ability to address uncertainties and risks that affect its capital spending.
GAO reviewed USPS data and information on actual capital spending from fiscal years 2007 to 2017 and projected capital spending for fiscal years 2018 through 2028. GAO also reviewed USPS reports on 14 approved capital projects in fiscal years 2017 and 2018, selected to provide a mix of project type and value; examined documentation related to USPS’s processes that affect capital spending and compared USPS’s processes to internal control standards adopted by USPS; and interviewed USPS officials.
On a draft of this report, USPS provided technical comments, which GAO incorporated as appropriate.
In its latest projection of capital spending, covering fiscal years 2018 through 2028, USPS projects an annual average of roughly $821 million on capital spending for vehicles, primarily driven by a multi-year acquisition of new delivery vehicles starting in fiscal year 2019. According to USPS officials, USPS decided a number of years ago to defer purchasing new delivery vehicles and instead continued using and maintaining its existing fleet. Because USPS started acquiring most of its existing delivery fleet in 1987, the majority of its delivery vehicles are several decades old. USPS officials said these vehicles incur high maintenance costs, averaging about $4,500 per vehicle annually.
In acquiring new vehicles, USPS plans to take a number of steps to ensure that the vehicles best meet the organization’s needs. According to USPS officials, it will spread the acquisition over multiple years to avoid a large cash outlay in any given year and to enable USPS to modify the vehicle purchases over time to take advantage of any technological changes, such as advances in alternative fuel technologies. Officials added that USPS is considering vehicles that will encourage operational efficiencies. For example, USPS is considering taller vehicles that will better allow carriers to handle trays of mail and packages. The officials
also noted that USPS may consider different vehicle designs for different market needs.21 The officials said that USPS is currently testing various vehicle prototypes and has not decided on any one vehicle design at this time. In total, USPS projects that its acquisition of new delivery vehicles will require about $5.7 billion in capital-spending cash outlays distributed over a number of years.
In addition to its planned future acquisition of delivery vehicles, USPS has also conducted smaller acquisitions of vehicles in recent years. According to USPS officials, in the past few years USPS has been replacing most of its non-delivery vehicles and will have done so by 2019, while also purchasing a small number of delivery vehicles to replace ones that have exceeded their useful life or will serve route growth.22 For example, in April 2017 USPS approved a capital spending project to purchase more than 2,000 cargo vans used to transport large volumes of mail from postal plants to post offices and other facilities, and about 375 spotter vehicles used to move trailers among docks at processing facilities.23 In May 2017 USPS approved a capital spending project to purchase approximately 8,000 off-the-shelf delivery vehicles needed to serve route growth and replace existing high-maintenance-cost vehicles.
the p&dc I work at had a commercial kitchen installed in the cafeteria that’s never been used…it’s been collecting rust for the past 20 years.
Wish I could post pics….come August 10th these clowns will be finally held accountable for this fraud.
socialism/communism always fail when they run out of other peoples money! no, we did not hire or promote people with college or MBA’s……we promoted stupid, low IQ diversity people with GED’s……..now why are they bankrupt? you reap what you sow! capitalism…..the strong survive, the weak get weeded out-as it should be! cry me a river on your altar of pc bs!
As long as that idiot Trump doesn’t sell us down the river. If we need a bailout the idiot Trump supporters will crucify us
hey fair is fair! Democrat Jimmy Carter and his 1978 Airline Deregulation Act destroyed over 600,000 good union paying jobs, thousands more had to take up to a 50% pay cut. Pan Am, Eastern, TWA, People Express, Air Florida etc went belly up because of Democrat Jimmy Carter. I say we have a Republican Donald Trump 2018 Postal Circus Deregulation Act and lets see what happens. Carter did it for better airline service…..Trump can do it in the name of better delivery service……and why not Demonrats! whats good for the goose is good for the gander! I mean Democrat Jimmy Carter was out for the little guy! right? or was it out to screw him? how about an Illegal Immigration Deregulation Act or a Roe vs Wade Deregulation Act……boy oh boy that Democrat peanut farmer was on to something!
AMZN $1701 a share. Trump! he shoots…..he scores! 2020 oh baby more good American Supreme’s! out with the commies!
Mr. D. Trump thinks Trump is a beautiful President? He is nothing but a cave man! He treats people like dirt. He made the statement on Larry King Live ” Rich people are better than poor people” He once mocked a disabled reporter. Told his mob once” Beat the crap out of him I’ll pay your legal bills”. Sounds just like the Nazis at Nuremberg, Germany. Why did he have to pay 25 million because of trump University? Good ol President D. Dump!
God Bless our Beautiful President Trump!!! He will tell management slugs your FIRED!!!!
Well We Tu Lo, If you hate the Socialist, Commie Regressive Post Service so much why did you decide to work for the place? You don’t believe in Socialist programs, I bet you make the dumb tax payers pay to educate, entertain, provide sports, and transport your children to the Commie school.You would never go so low and pay for your children’s schooling? Why should you when you can suck off the evil tax payer! You won, even though you lost by 2,800,000 votes. And the nation lost by the caveman we have leading us. And as for eating you, who would want to eat a RATPUBLICAN?
FDX & UPS do large shipments……..it is called Air Freight. AMZN purchased 125 new Boeing airplanes so they will be able to do it too. how does a Model T Ford Postal Business Model compete with a brand new 747 Business Model-it does not? if you had an MBA from a University you understand it can not. President Trump has an MBA from the Ivy League Wharton Business School, Muffin Megan was a 6 month IOD mailman……….it is not too hard too figure out if you take out the drama and emotion of a failing business. 135 Billion loss since 2007 cannot go on forever. The Public will not bail the postal circus out.
How about the $50 million (estimate) loss due to discrimination against injured employees in the Sandra McConnell case? How come the media NEVER reports this case? Someone tell Trump about the case!
I will take Dump over the Bath House!
I love the story I heard about a Postal employee that voted for President Dump. He wants t retire now, however he now knows his hero wants to cut is retirement. He knows he will take a big hit. Too bad, he knew others would be hurt and didn’t care. As lone as it didn’t affect him it didn’t matter. Now it’s a different story! He shouldn’t worry. He can always get a job at a Trump gulf course or hotel. After all the cuts the employees that are still working will work for as little as possible. It’s the race to the bottom. Don’t worry the rich will share their hoard of money. And in time of war they will let you die for them.
Bottom line is the Post Office is operating in a very old business model which is further being choked out by a congress that ties their hands and a Union who is choking the life out of them with unreasonable contractual models preventing an efficient workplace.
There is no way to privatize this organization as is because no business in their right mind would deliver ADVO at a rate of 5 cents per piece, or a non profit mailing for 12 – 15 cents per piece of Amazon drop ships for $200 a package. Business and Standard mailing prices are creating an undue burden on the system causing it to maintain a large fleet to cover every home, every day. No other company would ever do this. So the choice is clear, either we eliminate this pricing scheme and charge one rate for everyone, or the government subsidizes the current system which is not profitable or and no longer capable of breaking even. Those are the only choices, no amount of efficient machines are going to do the trick and the Union is never going to give up it’s stranglehold against flexibility.
The middle management wonks are terrified of the review coming in August. They know a whole lot of them will be shown the door when the lid is ripped off. A 25% increase in EAS and a 40% decrease in craft will tell the story. An offer of , carry the mail or get out, would be fitting.
Dear Jeff Bezos,
Would you please buy USPS, from the federal government.
It’s a “non-profit”, so it should be cheap.
Fire all the dead wood (useless schmuck employees) , can the unions and offer a livable wage with incentives. You could also make the employees part owners of the new Postal Service, creating a caring, hardworking and knowledgeable work force .
I guess all the boo birds will come out railing against the evil 1%……….well my thought on that is the company unions conned you into thinking a 1% yearly raise was the cats meow. I guess 1% ain’t so evil after all lol. po mismgt & company unions skimmed the cream…….you got the dregs and now it is over, it had a good run for them, so so for you, fold your cards, leave the table, and stop crying like girly men!
I smell a big BUYOUT coming……not from the corrupt po mismgt & company union thugs but from President Trump. that is why I voted for him, that and the supreme court judges that will roll back this evil liberal/regressive/socialist/commie/pc diversity crap. roe vs wade is not settled law! we won you lost….to bad on you! eat me!
Lean Six Sigma is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste; combining lean manufacturing/lean enterprise and Six Sigma to eliminate the eight kinds of waste (poda): defects, overproduction, waiting, non-utilized talent, transportation, inventory, motion, extra-processing (abbreviated as “DOWNTIME”). What are the postal service doing with the one’s they have……………nothing! It’s such a broken system they run and all they do is go through the motions. How long have we been hearing ” financially we are not doing as well as we would like”… Every machine they have brought in for processing has caused more man hours, production, and overtime. Start at the top that’s where you’ll find your problems. The so called decision makers!
The end is coming. Trumpie bear is lurking.
Big business is just waiting to pounce. good luck
everyone.
your a day late and a dollar short. UPS & UPS have freight divisions…..so will Amazon. 99% of po mismanagement has no University education……dummies in dummies out. from smart minds come sharp products……..from stupid morons comes drek! how stupid you must be to lose $135 Billion since 2007. not paid the pre-funding bill to the tune of $50 Billion since 2009 and owe the US Taxpayers, by way of US Treasury, $15 Billion Dollars. Harvard Business School is where the smart people go……the dummies go into po mismanagement. do I hear an amen!
Study the successful ones like FedEx, Amazon, etc. The one advantage the USPS has over the others is that the USPS has the most dropoff points. USPS was never smart enough to figure out how to use that to their advantage. Hint: Permit to deliver larger items. Don’t you think the most successful Truck Delivery Company wished they had all your pickup and dropoff locations? Something to ponder. I retired after 36 years in the USPS and always wondered, since the letter and small parcels volume was dropping off, why were we not gradually shifting over to bigger items.
As usual we hear how broke the Postal Service is at contract renewal time.
1 PO mismanaging bureaucrats salary will buy 3 delivery trucks…..President Trump get out your chainsaw!
Imagine the billions that would be saved annually if mgmt. would simply follow the labor contracts, which by signing, they agreed to do.
But they choose not to.
And eliminate the massive corruption that occurs with each and every postal contract vendor.
But until mgmt. is held accountable for the graft, fraud, and massive waste of postal funds they do every year, nothing will change.
And yet, mgmt will STILL be receiving bonuses while crying how broke the USPS is. Guess all those plant closures, craft harassment, etc. aren’t doing the trick, eh postal mgmt.
Liars, crooks, and thieves; all that mgmt. is.