October 6, 2014

MEMORANDUM FOR: DAVID E. WILLIAMS, JR.

VICE PRESIDENT, NETWORK OPERATIONS

FROM: Robert J. Batta 

Deputy Assistant Inspector General

 for Mission Operations

SUBJECT: Management Alert – Lack of Service Standard Change 

Information in Area Mail Processing Feasibility Studies

(Report Number NO-MA-15-001)

This management alert presents our concerns with the Lack of Service Standard

Change Information in Area Mail Processing Feasibility Studies (Project Number 

14XG036NO001). The issue came to our attention during our audit of Area Mail 

Processing Consolidations (Project Number 14XG036NO000).

If you have any questions or need additional information, please contact James L. 

Ballard, director, Network Processing and Transportation, or me at 703-248-2100.

Attachment

cc: Corporate Audit and Response Management
Lack of Service Standard Change Information in Area 

 Mail Processing Feasibility Studies NO-MA-15-001

1 

Introduction

On June 30, 2014, the postmaster general announced the U.S. Postal Service’s plans 

to implement Phase 2 of the Network Rationalization Initiatives (NRI) by consolidating 

up to 82 facilities starting in January 2015. Specifically, the Postal Service completed 

Area Mail Processing (AMP)1 feasibility studies to move mail processing operations 

from 79 facilities to 95 existing facilities. This alert is to bring to your attention the need 

to complete and evaluate the service standard2

 impacts portions of the feasibility studies 

prepared for the Phase 2 consolidations. 

In the summer of 2012, the Postal Service executed Phase 1 of its NRI and announced 

its intention to implement revised service standards for market-dominant mail products3

on February 1, 2014. On January 24, 2014, the Postal Service postponed implementing 

the revised service standards and on August 1, 2014, announced the revised service 

standards for market-dominant mail products associated with Phase 2 of the NRI will be 

effective January 5, 2015. 

Postal Service officials testified before the U.S. Postal Regulatory Commission (PRC) 

that it was necessary to relax service standards, stating that the planned revisions 

would eliminate the availability of overnight service for a large portion of First-Class Mail 

and Periodicals. Management planned to shift mail no longer eligible for overnight 

service to a 2-day service standard and defer a substantial portion of mail currently 

subject to the 2-day standard to a 3-day standard. Furthermore, the revisions would 

allow for significant consolidation of the Postal Service’s processing and transportation 

networks, resulting in an infrastructure that better matches current and projected mail 

volumes, while achieving significant cost savings. 

Conclusion 

The Postal Service has not analyzed the impact of planned service standard changes or 

informed stakeholders of the changes related to Phase 2 consolidations. Specifically, 

management did not complete the service standard impacts worksheet in 91 of the 95 

AMP feasibility studies. The other four feasibility studies did not include updated service 

standard changes in the service standard impacts worksheet (see Appendix A). The 

worksheet should detail the upgrades and downgrades between 3-digit ZIP Codes4

 by 

class of mail5 and volume. 

 

1

The consolidation of all originating and/or designating distribution operations from one or more Post Office/facility

into other automated processing facilities to improve operational efficiency and/or service. Three of the 82 Phase 2 

consolidations did not require an AMP feasibility study because they are either an annex or a delivery distribution 

center (DDC). The three facilities are the Fayetteville, NC, and Jet Cove, TN, annexes; and the Seattle, WA, DDC.

2

The stated goal for service achievement for each mail class.

3

 First-Class letters, sealed parcels, cards, Periodicals, Standard Mail, single-piece Parcel Post, Media Mail, Bound 

Printed Matter, Library Mail, special services, and single-piece international mail.

4

A presort level in which all pieces in the bundle or container are addressed for delivery within the same first three 

digits of a 5-digit ZIP Code area.

5

 The classification of domestic mail according to content (e.g., personal correspondence versus print advertising) 

and other factors.
Lack of Service Standard Change Information in Area

 Mail Processing Feasibility Studies NO-MA-15-001

2

The first objective of an AMP feasibility study is to evaluate service standard impacts for 

all classes of mail.6The Postal Accountability and Enhancement Act,

7 which was 

enacted on December 20, 2006, impacts the feasibility study process. The Postal 

Service must: 

 Provide adequate public notice to communities affected by a proposed network 

rationalization decision.

 Make available information about any service changes in the affected communities, 

any affects on customers or Postal Service employees, and any cost savings.

 Afford affected persons ample opportunity to provide input on the proposed decision.

 Take public comments into account in making a final decision.8

The Postal Service did not complete the service standard impacts worksheets because 

the revised service standards for market-dominant mail products associated with Phase

2 of the NRI had not been finalized when the Postal Service conducted the AMP 

feasibility studies. A Postal Service official said that, as of August 20, 2014, the analysis 

required to complete the service standard impacts worksheets was not completed and 

the Postal Service anticipates publishing the worksheets online (www.usps.com) in the 

beginning of calendar year 2015, at the same time the consolidations are scheduled to 

begin.

Without completing and disclosing the analysis of planned service standard changes the 

Postal Service may experience:

 Degradation of service to communities, including delayed mail.

 Carriers delivering mail after 5 p.m. because of unexpected workload.

 Customer dissatisfaction, which could harm the Postal Service’s brand and affect 

future revenue.

Moreover, completing the feasibility studies based on the revised service standards will 

allow the Postal Service to accurately assess the reasonableness of the consolidations,

determine their impact on customers, better communicate the AMP results, and improve 

the probability of successful consolidations.

 

6 Handbook PO-408, Area Mail Processing Guidelines, Section 2-1, Purpose, dated March 2008.

7

Public Law 109-435.

8 Handbook PO-408, Section 4-3, Postal Service Accountability and Enhancement Act, dated March 2008.
Lack of Service Standard Change Information in Area

 Mail Processing Feasibility Studies NO-MA-15-001

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Recommendation

We recommend the vice president, Network Operations:

1. Complete the service standard impacts worksheet in all of the Area Mail Processing 

feasibility studies for Phase 2 Network Rationalization Initiatives scheduled to begin

January 5, 2015, and evaluate the impacts that revised standards will have on each 

affected community before implementing the consolidations.

Management’s Comments

Management partially agreed with the recommendation and, regarding the finding, 

stated that service standard impacts information is ordinarily included in individual AMP 

final decision packages. However, management made NRI consolidation decisions

during the proposal period for changing mail service standards for market-dominant 

products, therefore each AMP package they approved during this time included 

language necessary to provide transparency. Management disagreed that failure to 

complete and disclose the analysis of planned service standard changes may have a 

negative effect on delivery service quality.

Management agreed to compute the service standard impacts using the January 5, 

2015 standards as the starting point prior to beginning the consolidations on January 

10, 2015. 

See Appendix B for management’s comments, in their entirety.

Evaluation of Management’s Comments

The U.S. Postal Service Office of Inspector General (OIG) considers management’s 

comments responsive to the recommendation. 

Regarding management’s assertion that each AMP package approved during a specific 

period included language necessary to provide transparency, we agree that the majority 

of AMP feasibility studies include this language. However, the language did not provide 

sufficient transparency because the feasibility studies do not include details necessary 

to evaluate the service standard impacts for all classes of mail and the public did not 

have an opportunity to review the impacts and provide comments prior to the studies 

being approved. As stated in the alert, Postal Service policy states that the first 

objective of an AMP feasibility study is to evaluate service standard impacts for all 

classes of mail. Policy also requires the Postal Service to make information about any 

service changes in the affected communities available and take public comments into 

account when making a final decision. 

Regarding management’s assertion that incomplete analysis of planned service 

standard changes prior to consolidation will not have a negative effect on delivery 

service quality, our past audit work has shown that is not the case. 
Lack of Service Standard Change Information in Area

 Mail Processing Feasibility Studies NO-MA-15-001

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For example:

 We reported that, while there was a valid business case for consolidating the Lima, 

OH, Processing and Distribution Facility (P&DF) into the Toledo, OH, Processing 

and Distribution Center (P&DC), management did not ensure improvement or 

maintenance of on-time performance and customer service during the 

consolidation.9

 We reported that, while a business case existed to support the originating mail 

consolidation from the Huntsville, AL, P&DF into the Birmingham, AL, P&DC and the 

Postal Service generally followed AMP guidelines, we found nearly 70 percent of 

carriers were delivering mail after 5 p.m., which was a significant increase compared 

to pre-consolidation levels.10

Therefore, we believe it is critical that management complete and evaluate service 

standard impacts worksheets before implementing consolidations to ensure there is no 

negative impact on delivery service quality.

The OIG considers the recommendation significant, and therefore requires concurrence 

before closure. Consequently, the OIG requests written confirmation when corrective 

actions are completed. The recommendation should not be closed in the Postal 

Service’s follow-up tracking system until the OIG provides written confirmation that the 

recommendation can be closed.

 

9

Implementation of Lima, OH to Toledo, OH Area Mail Processing Consolidation (Report Number EN-AR-11-004, 

dated March 31, 2011).

10 Consolidation of the Huntsville, AL, Processing and Distribution Facility (Report Number NO-AR-14-005, dated May 

5, 2014).
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Appendix A: Details of Review of Area Mail Processing Feasibility Studies

Consolidating Facility Gaining Facility

Service Standard 

Impacts 

Worksheets11

Completed

1 Huntsville, AL, P&DF Birmingham, AL, P&DC No

2 Tucson, AZ, P&DC Phoenix, AZ, P&DC No

3 Eureka, CA, Customer

Service Mail Processing 

Center (CSMPC) Medford, OR, CSMPC No

4 Industry, CA, P&DC Santa Ana, CA, P&DC

Anaheim, CA, P&DC

No

No

5 North Bay, CA, P&DC Oakland, CA, P&DC No

6 Redding, CA, CSMPC West Sacramento, CA, P&DC No

7 Colorado Springs, CO,

P&DC Denver, CO, P&DC No

8 Southern Connecticut

P&DC

Hartford, CT, P&DC 

Springfield, MA, National

Distribution Center (NDC)

No

No

9 Stamford, CT, P&DC Westchester, NY, P&DC No

10 Gainesville, FL, P&DC Jacksonville, FL, P&DC No

11 Manasota, FL, P&DC Fort Myers, FL, P&DC 

Tampa, FL, P&DC 

Yes

Yes

12 Mid-Florida P&DC Orlando, FL, P&DC No

13 Athens, GA, P&DF North Metro, GA, P&DC No

14 Augusta, GA, P&DF Columbia, SC, P&DC

Macon, GA, P&DC

No

No

15 Pocatello, ID, CSMPC Salt Lake City, UT, P&DC No

16 Fox Valley, IL, P&DC South Suburban, IL, P&DC No

17 Gary, IN, P&DC South Suburban, IL, P&DC No

18 Kokomo, IN, P&DF Indianapolis, IN, P&DC No

19 Lafayette, IN, P&DF Indianapolis, IN, P&DC No

20 Muncie, IN, P&DF Indianapolis, IN, P&DC No

21 South Bend, IN, P&DC Fort Wayne, IN, P&DC No

22 Salina, KS, P&DF Wichita, KS, P&DC No

23 Campton, KY, CSMPC Louisville, KY, P&DC No

24 Lexington, KY, P&DC Louisville, KY, P&DC

Knoxville, TN, P&DC

No

No

25 Paducah, KY, P&DF Evansville, IN, P&DC No

 

11 We reviewed 95 service standard impacts worksheets. 
Lack of Service Standard Change Information in Area

 Mail Processing Feasibility Studies NO-MA-15-001

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Consolidating Facility Gaining Facility

Service 

Standard 

Impacts 

Worksheets 

Completed

26 New Orleans, LA, P&DC Baton Rouge, LA, P&DC No

27 Central Mass, MA, P&DC Boston, MA, P&DC

Middlesex Essex, MA, P&DC

No

No

28 Middlesex Essex, MA,

P&DC Boston, MA, P&DC No

29 Northwest Boston, MA,

P&DF

Boston, MA, P&DC

Middlesex Essex, MA, P&DC

No

No

30 Southern MD, P&DC Suburban, MD, P&DC No

31 Iron Mountain, MI, P&DF Green Bay, WI, P&DC No

32 Kalamazoo, MI, P&DC Grand Rapids, MI, P&DC No

33 Lansing, MI, P&DC Michigan Metroplex P&DC

Grand Rapids, MI, P&DC

No

No

34 Bemidji, MN, CSMPC Minneapolis, MN, P&DC No

35 Duluth, MN, P&DF Saint Paul, MN, P&DC No

36 Mankato, MN, P&DF Minneapolis, MN, P&DC No

37 Saint Cloud, MN, P&DF Minneapolis, MN, P&DC No

38 Cape Girardeau, MO,

P&DF St. Louis, MO, P&DC No

39 Springfield, MO, P&DF Kansas City, MO, P&DC No

40 Grenada, MS, CSMPC Jackson, MS, P&DC No

41 Gulfport, MS, P&DF Mobile, AL, P&DC No

42 Hattiesburg, MS, CSMPC Mobile, AL, P&DC No

43 Asheville, NC, P&DF Greenville, SC, P&DC No

44 Fayetteville, NC, P&DC Charlotte, NC, P&DC 

Raleigh, NC, P&DC 

No

No

45 Rocky Mount, NC, P&DF Raleigh, NC, P&DC No

46 Minot, ND, CSMPC Bismarck, ND, P&DC No

47 Grand Island, NE, P&DF Omaha, NE, P&DC No

48 Norfolk, NE, P&DF Omaha, NE, P&DC No

49 Elko, NV, CSMPC Salt Lake City, UT, P&DC No

50 Mid-Hudson, NY, P&DC Albany, NY, P&DC No

51 Queens, NY, P&DC Brooklyn, NY, P&DC No

52 Akron, OH, P&DC Cleveland, OH, P&DC No

53 Dayton, OH, P&DC Columbus, OH, P&DC Yes

54 Toledo, OH, P&DF Michigan Metroplex P&DC

Detroit, MI, P&DC

Columbus, OH, P&DC

No

No

No

55 Youngstown, OH, P&DF Cleveland, OH, P&DC No

56 Tulsa, OK, P&DC Oklahoma City, OK, P&DC No

57 Bend, OR, CSMPC Portland, OR, P&DC No

58 Eugene, OR, P&DF Portland, OR, P&DC No
Lack of Service Standard Change Information in Area

 Mail Processing Feasibility Studies NO-MA-15-001

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Consolidating Facility Gaining Facility

Service 

Standard 

Impacts 

Worksheets 

Completed

59 Pendleton, OR, CSMPC Portland, OR, P&DC No

60 Erie, PA, P&DF Pittsburgh, PA, P&DC

Rochester, NY, P&DC

No

No

61 Lancaster, PA, P&DF Harrisburg, PA, P&DC No

62 Scranton, PA, P&DF Lehigh Valley, PA, P&DC No

63 Florence, SC, P&DF Columbia, SC, P&DC No

64 Dakota Central, SD, P&DF Sioux Falls, SD, P&DC No

65 Chattanooga, TN, P&DC Nashville, TN, P&DC

Atlanta, GA, P&DC

No

No

66 Abilene, TX, CSMPC Austin, TX, P&DC

Midland, TX, P&DC

No

No

67 Corpus Christi, TX, P&DC San Antonio, TX, P&DC No

68 Provo, UT, CSMPC Salt Lake City, UT, P&DC

Grand Junction, CO, 

CSMPC

Las Vegas, NV, P&DC

No

No

No

69 Norfolk, VA, P&DC Richmond, VA, P&DC No

70 Roanoke, VA, P&DC Greensboro, NC, P&DC No

71 Tacoma, WA, P&DC Seattle, WA, P&DC No

72 Wenatchee, WA, CSMPC Spokane, WA, P&DC No

73 Eau Claire, WI, P&DF Saint Paul, MN, P&DC No

74 La Crosse, WI, P&DF Saint Paul, MN, P&DC No

75 Madison, WI, P&DF Milwaukee, WI, P&DC Yes

76 Wausau, WI, P&DF Green Bay, WI, P&DC No

77 Rock Springs, WY,

CSMPC Salt Lake City, UT, P&DC No

78 Beaumont, TX, P&DC North Houston, TX, P&DC No

79 Houston, TX, P&DC North Houston, TX, P&DC No

 Source: Postal Service Network Operations AMP.
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Appendix B: Management’s Comments
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