United States General Accounting Office

GAO Report to the Honorable

Sidney R. Yates, House of

Representatives

October 1997 U.S. POSTAL SERVICE

Chicago Main Post

Office Cost Overruns

and Graceland Station

Mail Service

GAO/GGD-98-11

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-276037 

October 31, 1997

The Honorable Sidney R. Yates

House of Representatives

Dear Mr. Yates:

In recent years, the United States Postal Service (USPS) has attempted to

improve the mail service in Chicago, IL, which has experienced some of

the lowest ratings in the nation on the percentage of overnight mail

delivered on time. One action USPS took was to construct a new main post

office in Chicago, a project that experienced a $133 million cost overrun

during construction.

This report responds to your request that we (1) determine the reasons for

the $133 million in cost overruns incurred at the new Chicago Main Post

Office; (2) provide a list of procedures that USPS has established to prevent

a recurrence of cost overruns experienced with the new Chicago Main

Post Office in similar, future capital investment projects; and (3) inquire

why the USPS Board of Governors approved some of the budget increases

for the new Chicago Main Post Office in closed, rather than open,

meetings. You also asked us to review issues relating to complaints you

have received regarding mail service in your district (the Ninth

Congressional District of Illinois).

With regard to service, you specifically asked us to (1) compare the Postal

Service’s performance indicators for the Graceland postal station in

Chicago to those at a similar station in another city with a higher

First-Class, overnight delivery (EXFC) score1

 than Chicago’s; and (2) report

the results of a 1997 Postal Service survey of the physical condition of

postal facilities in your district. Graceland station’s customer service was

particularly problematic in the Chicago District. Your objective in having

us compare the performance indicators of the two stations was to attempt

to determine potential causes of problems at Graceland.

Results in Brief Based on our review of the events that occurred and the results of an

investigation conducted by the Postal Inspection Service, the $133 million

in cost overruns that were incurred in the construction of the new Chicago

Main Post Office appeared to be due primarily to inadequate planning. The

1

The Postal Service currently uses a measurement known as External First-Class Measurement System

(EXFC) as a means of indicating how well it is serving its customers. The quarterly EXFC,

administered by Price Waterhouse, measures the delivery time of First-Class mail from deposit to

delivery (collection box to mail slot).

Page 1 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Postal Service approved construction on a site that was opposed by the

city of Chicago and then used a cost estimate for an alternative site that

did not adequately reflect the complexity and cost of building over active

railroad tracks and other factors. Further, management’s incorporation of

increased automation plans into the facility while it was being constructed

resulted in costly design changes. The Postal Service has implemented

procedures aimed at reducing the likelihood of cost overruns occurring in

similar, future capital investment projects, including earlier notification of

problems to the Board of Governors and more Inspection Service

involvement with review of facilities construction.

Postal officials indicated that the USPS Board of Governors approved some

of the budget increases for the new Chicago Main Post Office in closed,

rather than open, meetings, because it would not have been in the Postal

Service’s best interest to disclose the amounts requested while negotiating

change orders with contractors. An additional reason cited was that the

Postal Inspection Service was investigating the project.

At your request, we asked the Postal Service to provide performance data

on Chicago’s Graceland station, which has been the focus of constituent

complaints, and on a station in another city with a higher EXFC score than

Chicago’s that also served a densely populated area with many high-rise

residential units. The Postal Service identified Boston’s Brookline station

and provided data for performance indicators that the USPS maintains on

workload, workforce, timeliness, and complaints during two, 1-week

periods in September 1996 and January 1997 for the Graceland and

Brookline stations. Those two periods were chosen to compare whether

the performance had changed over time, starting with the week that a new

manager started working at Graceland and 4 months later.

Our comparison of data provided for the two stations confirmed that

differences existed in terms of the performance indicator results, and it

also showed that the data provided were not informative about the causes

of problems with mail service at Graceland or in Chicago. Postal Service

records showed that Graceland delivered about 20 percent more mail than

Brookline during the week reviewed in September 1996, but both stations

delivered about the same amount of mail during the week reviewed in

January 1997. Regarding workforce issues, from September 1996 through

January 1997, the number of part-time and temporary carriers increased

from 17 to 37, or 118 percent, at Graceland; the number increased from 17

to 20 at Brookline, or 18 percent. In September 1996, Graceland incurred

Page 2 GAO/GGD-98-11 Chicago Mail Service
B-276037 

more carrier overtime and sick leave than Brookline, but it incurred less

than Brookline in January 1997.

With respect to the timeliness indicators provided, for both time periods,

Graceland station had more bulk business mail2

 that was delayed (which

occurs when bulk business mail takes more than 48 hours to leave the

station) and curtailed (which is mail that is not yet scheduled for delivery)

than Brookline. More carriers at Graceland left the station late (foot

carriers leaving more than 10 minutes after their scheduled departure

times) during the week in September 1996 than at Brookline (17 vs. 9).

However, during the week in January 1997, considerably more carriers at

Brookline left the station late than at Graceland (48 vs. 15). For the quarter

that included the week in September 1996 in our review, Boston’s EXFC

scores were 3 percentage points higher than in Chicago (87 vs. 84), but

Boston’s score was only 1 percentage point higher than Chicago’s for the

quarter that included the week in January 1997 that we reviewed (91 vs.

90).

Brookline received more delivery-related customer complaints than

Graceland for the quarters that included the two, 1-week periods reviewed

in September 1996 and January 1997. However, Postal officials cautioned

that the number of complaints reported may not be reliable and could

have been affected by several factors not related to actual performance,

such as the availability of customer complaint cards in the station lobbies.

Our analysis of the performance data provided by the Postal Service on

the two stations did not suggest that Brookline’s performance would be

informative for Graceland. This was compounded by the high number of

variables affecting the performance indicators, such as the differences in

the types of deliveries made by both stations and uncertainty about

whether the total number of complaints was accurately reported.

The 1997 USPS review of postal facilities in the Ninth Congressional District

of Illinois indicated that the facilities were meeting operational needs.

2

The Postal Service refers to bulk business mail as periodical mail; “Standard A” mail (letters, flats, and

parcels that do not require the security of First-Class mail or the speed of Priority Mail); and “Standard

B” mail (parcels and bound printed matter), formerly called second-, third-, and fourth-class mail.

Page 3 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Background Chicago’s new Main Post Office, located at 433 W. Harrison Street, opened

in May 1996.3

 The Main Post Office contains a two-floor mail processing

facility, seven floors of office space, and a retail sales operation. It

replaced the old Main Post Office, which was located across the street

from the new facility. The old Main Post Office was completed in 1932 and

consisted of nine floors of workroom space. In 1990, the USPS Board of

Governors approved a plan to construct the new Main Post Office as a

means of improving mail service in Chicago, which until this year had EXFC

scores that were significantly below the national average.

The new Main Post Office was part of the Postal Service’s 1987 Greater

Chicago Area Facility Plan, which called for decentralizing postal

operations in the Chicago area to accommodate population and mail

volume shifts from the city to the suburbs. The new Main Post Office was

to be a state-of-the-art mail processing facility, which would be

supplemented by six new or expanded mail processing facilities

throughout the Chicago area.4

 Although construction of the new Post

Office originally was estimated to be complete by April 1993, the new

facility did not open until May 1996. In addition, in September 1997,

renovation of an annex called the “Sugar House” was completed—work

that was done after the Postal Service discovered that the new Main Post

Office would not be large enough to house all operations that the Postal

Service planned to move into the new facility and that the new facility

would not meet operational needs.

About 5,300 employees work at the new Main Post Office, including about

4,900 mail processing and distribution staff, 300 district support staff, and

about 100 Postal Inspection Service employees. The new Main Post Office

has automated mail handling equipment and occupies about 900,000

square feet of space, compared to about 2.3 million square feet of space at

the old facility.

In March 1990, the USPS Board of Governors initially approved

$199.7 million for construction of the new Main Post Office. From

December 1991 through February 1996, the Board of Governors approved

3

The new Main Post Office is formally called the Chicago Central Processing and Distribution Center.

The move into the new facility began in May 1996 and was completed in September 1996.

4

These included new Processing and Distribution Centers in Palatine, IL; Carol Stream, IL; Aurora, IL;

and at Irving Park Road in Chicago, plus expansions of the Chicago Bulk Mail Center in Forest Park,

IL; and the Processing and Distribution Center in Bedford Park, IL.

Page 4 GAO/GGD-98-11 Chicago Mail Service
B-276037 

four additional funding requests totaling $133.2 million. The facility’s final

projected cost was $332.9 million, including the annex renovation.5

Your congressional district, which consists of the northern part of Chicago

and adjacent suburbs, is served by both the Chicago and Northern Illinois

postal districts, 2 of 85 nationwide postal districts.6

 The Chicago Postal

District, headquartered in the new Main Post Office, serves ZIP Codes

beginning with 606, 607, and 608, including the Chicago portion of your

congressional district and part of Niles, IL. The Northern Illinois Postal

District, headquartered in Carol Stream, IL, serves ZIP Codes beginning

with 600, 601, 602, 603, 610, and 611, including the cities of Evanston, Golf,

Lincolnwood, Morton Grove, and Skokie and parts of Harwood Heights

and Glenview. Appendix I shows which ZIP Codes are served by the two

postal districts in the Ninth Illinois Congressional District. Figure 1.1

shows which portions of the Ninth Congressional District are served by

the Northern Illinois and Chicago postal districts.

5

The Postal Service recovered $5 million of this amount from the Chicago Union Station Company.

6

In addition to 85 districts, the Postal Service is further organized into 95 “performance clusters,”

which are organizational units used to track performance data. In Boston and Chicago, the postal

districts are also performance clusters.

Page 5 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Figure 1.1: Postal Service Provided by the Chicago and Northern Illinois Postal Districts Within the Ninth Congressional

District of Illinois

Chicago

postal district

Northern Illinois

postal district

Chicago

(downtown) Chicago

(downtown)

WI

MI

IL IN

Detailed enlargement

Source: USPS.

Mail for your constituents who are served by the Chicago Postal District is

processed by the Irving Park Road facility in Chicago, rather than by the

new Main Post Office. The Irving Park Road facility, which opened in 1994,7

7

The move into the Irving Park Road facility began in June 1994 and was completed in September 1996.

Page 6 GAO/GGD-98-11 Chicago Mail Service
B-276037 

handles an average of 3.5 million pieces of mail a day, and the Main Post

Office handles an average of 5.1 million pieces of mail a day. Constituents

who are served by the Northern Illinois Postal District receive mail

processed in Palatine, IL, which processes about 5.5 million pieces of mail

a day.

You indicated that your constituents have complained about mail service

in your district for many years. In conversations with your office, we were

told that many of the complaints focused on service provided by the

Graceland postal station in Chicago. The complaints related to the delivery

of mail, including misdelivery and nondelivery, as well as problems with

forwarding of mail. Graceland station serves a densely populated area of

Chicago that contains many high-rise residential units. According to the

Postal Service, Graceland station handles the second-highest volume of

mail in Chicago and makes about 40,000 deliveries daily.

Complaints about mail service in Chicago were discussed during USPS

appropriations hearings before Congress in 1987 and were the subject of a

separate congressional hearing in 1996. In 1990, at your request, we

reviewed Postal Service management and operations in your district. This

work involved reviewing a lengthy record of correspondence between you

and the Postal Service. Letters from the Postal Service contained

descriptions of numerous commitments and promised actions that were

unfulfilled or did not have a lasting impact on the mail delivery problems.

At that time, mail service problems focused on the high-growth areas of

your district, such as Lincoln Park. We identified three potential causes of

the problems: inadequate postal facilities; improper mail processing and

delivery practices; and incomplete addresses on mail, coupled with

incomplete information on customers’ mail boxes.8

 In response to our

work, the Postmaster General provided a list of corrective steps that we

believed at the time would address the problems if they were properly

implemented.9

However, in 1994, continuing complaints about mail service in Chicago

prompted the Postmaster General to visit the city and establish a task

force to address the problems. The task force found mail that was late,

lost, or had been thrown away; a “bunker mentality” when it came to

interacting with customers; and facilities without telephone service for

customers and staff ill-equipped to answer and respond to simple

inquiries. The task force worked to address these problems by helping

8

Letters from GAO to the Postmaster General, dated February 26, 1990, and March 27, 1990.

9

Letter dated March 15, 1990, from the Postmaster General to GAO.

Page 7 GAO/GGD-98-11 Chicago Mail Service
B-276037 

management staffs plan their daily workloads; hiring additional carriers;

streamlining processes; and increasing employee training. In addition, a

new management team was installed in Chicago.

EXFC scores for Chicago have improved considerably in recent years. The

percentage of First-Class, overnight mail delivered on time increased from

66 percent in the second quarter of fiscal year 1994 to 90 percent in the

third quarter of fiscal year 1997, 2 percent below the national average. The

Chicago Postal District Manager said the improved EXFC scores were the

result of (1) more automation, (2) new and expanded facilities throughout

the Chicago area, (3) more and better training of employees, (4) better

management and more accountability, and (5) dismissal of poor

performers and recognition of good employees.

In recent years, the Postal Service has also undertaken a major effort to

automate its operations and reduce labor costs, including using more

temporary and part-time employees.

Scope and

Methodology

In June 1996, you requested that we review the reasons for the cost

overruns at the new Chicago Main Post Office. You also indicated that

Chicago has been heavily criticized for its poor mail service. In

December 1996, we briefed your office on the results of our work to date.

At that time, you requested that we perform additional work regarding

Graceland station, which is located in your congressional district.

To obtain information on the reasons for the cost overruns at the new

Chicago Main Post Office, we interviewed USPS officials; submitted written

questions to the Postal Service; reviewed documentation of the cost

estimates for the facility, including justifications for cost increases, project

planning documents, and Board of Governors meeting minutes; and

reviewed Postal Inspection Service reports on the project.10 We also met

with Chicago postal officials, including the Great Lakes Area Operations

Vice President, Chicago District Manager, Chicago District Senior Plant

Manager, and a Postal Inspection Service official; and we toured the new

Main Post Office. We questioned Postal officials about the sequence of

events regarding the project and related issues, but we did not repeat work

that had already been done by the Inspection Service.

10From November 1994 to May 1995, the Postal Inspection Service conducted an extensive review of

the Chicago Main Post Office project and presented it to the Board of Governors on May 1, 1995. In

addition, from 1993 through 1994, the Chicago Division of the Inspection Service prepared six reports

on different aspects of the project.

Page 8 GAO/GGD-98-11 Chicago Mail Service
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We obtained information on the policies and procedures that the Postal

Service implemented to prevent a recurrence of cost overruns in similar,

future capital investment projects. We did this by reviewing

recommendations made by the Inspection Service and Board of

Governors’ Capital Improvement Committee and by interviewing Postal

officials.

To determine why the USPS Board of Governors approved some of the

budget increases for the new Chicago Main Post Office in closed, rather

than open, meetings, we questioned Postal officials and submitted written

questions to the Postal Service.

During the course of our review, Chicago Postal Service officials offered

to review the physical condition of postal facilities within your

congressional district. This review was performed from February to

May 1997 by two teams of operational, retail, and administrative staff from

the Chicago and Northern Illinois postal districts serving the Ninth Illinois

Congressional District. The teams were supported by a real estate

specialist, a design and construction specialist, and an operations analyst

from the Chicago Facilities Service Office. In addition, an outside

architectural/engineering firm was retained to assist in the review. We

reviewed the report that resulted from this facility survey.

To obtain performance data on the Graceland station, we first interviewed

postal officials to determine what performance data and indicators are

maintained by the Postal Service. We then asked Postal officials to provide

data pertaining to workload/workforce issues (the number of deliveries,

routes, and carriers, volume of mail delivered, amount of carrier sick leave

and overtime); timeliness (EXFC scores, the number of routes with delayed

mail, amount of curtailed and delayed mail, and the number of carriers

leaving the station late); and the number of delivery-related complaints

received during the weeks of September 14 through 20, 1996, and

January 18 through 24, 1997.11 We chose these 2 weeks to compare

Graceland station’s performance when a new station manager began

working there and its performance 4 months later12 to determine whether

change had occurred. According to the Postal Service, the data provided

were the best performance measures available on the two stations.

11The Postal Service compiles complaints received by quarter, rather than by week.

12Graceland’s current station manager was detailed to the station on September 14, 1996. She was

promoted to permanent station manager on March 4, 1997.

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B-276037 

To compare Graceland’s performance with a similar station in another city

with a higher EXFC score than Chicago’s, we reviewed the EXFC scores for

1996 in other U.S. cities and contacted the Postal District Managers in

three Northern cities (Philadelphia, New York, and Boston) where the

weather conditions and population densities were similar to those in

Chicago. We provided the Postal District Managers in those three cities

with data on the volume of mail processed and the number of business and

residential deliveries at Graceland station and asked them to identify any

similar stations in their districts serving densely populated areas with

many high-rise residential units. The Boston Postal District Manager

identified the Brookline, MA, station and provided performance data on

that station for the two time periods in our review. The Postal District

Managers in Philadelphia and New York did not identify any stations in

their districts that were comparable to Graceland.13

We recognized certain limitations of comparing performance data on two

stations. These limitations included the number of variables that affect

mail delivery, such as the makeup of residential, business, and curbside

deliveries being made and the type of terrain covered. We attempted to

minimize these limitations by selecting a station similar to Graceland that

also served a densely populated area serving many high-rise residential

units and, to approximate weather conditions, was located in another

northern city.

We also interviewed the Graceland station manager and the Chicago

Postal District Manager about mail service complaints and plans for

improvement and questioned the Northern Illinois Postal District Manager

about mail service in his district.

We did not verify the station workload, workforce, timeliness, and

complaint data provided by the Postal Service and the results of its facility

review or validate the EXFC scoring system and data.

We did our work in Washington, D.C., and Chicago, IL, in accordance with

generally accepted government auditing standards. We did our work from

September 1996 through July 1997.

On September 11, 1997, we requested comments on a draft of this report

from the Postmaster General. On October 17, 1997, he provided written

comments, which are contained in appendix VI and discussed on page 25.

13Although the New York Postal District Manager identified a station in his district that was similar to

Graceland, we determined that it was not comparable, since Graceland had about 10 times the volume

of delivered mail as the New York station.

Page 10 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Cost Overruns at the

New Chicago Main

Post Office

In March 1990, the USPS Board of Governors approved $199.7 million for

the construction of a new Chicago Main Post Office. The Board also

approved four subsequent funding requests totaling $133.2 million, for a

total authorization of $332.9 million.14 Appendix II summarizes the

changes in funding for the facility and the reasons provided to the Board

of Governors for making the requests.

Initial Funding When the Board approved initial funding in March 1990, it authorized the

facility to be built at either a developer-owned site on Clark Street in

Chicago at a cost of $211.6 million or at an alternative USPS-owned site on

Harrison Street at a cost of $199.7 million. The estimates for the two sites

differed because the developer-owned Clark Street site included

$39 million for land, while the Harrison Street site had no land acquisition

costs because it was owned by the Postal Service. However, compared to

the Clark Street site, construction costs were higher on Harrison Street

because it was a smaller site,15 and the structure had to be built on piers

above the railroad tracks.

The Postal Service preferred constructing on the Clark Street site and only

considered the Harrison Street site as an alternative. However, the city of

Chicago was opposed to constructing the postal facility on the Clark Street

site because it conflicted with the city’s long-range plans for the area.

Postal officials said that the Board was aware of the city’s opposition to

constructing on the Clark Street site when it approved the initial funding,

but the Board was informed by the Assistant Postmaster General for

Facilities that he hoped the Postal Service could solve its problems with

the city and conclude negotiations on the Clark Street site.

December 1991 Increase In December 1991, the Postal Service approved an additional $41.7 million

in funding for the new Main Post Office to cover increased costs

associated with constructing the facility on the alternative, Harrison Street

site, rather than on Clark Street. According to the USPS Decision Analysis

Report (DAR) that was used to justify the funding increase to the Board,

negotiations with the city to construct the facility on the Clark Street site

were unsuccessful, forcing the Postal Service to build on Harrison Street.

The $41.7 million in additional funding increased the total cost of the

project from $199.7 million, which the Board had approved for the

Harrison Street site in March 1990, to $241.4 million. The December 1991

14The Postal Service recovered $5 million of this amount from the Chicago Union Station Company.

15The Harrison Street site was about 16 acres in size, and the Clark Street site was over 37 acres.

Page 11 GAO/GGD-98-11 Chicago Mail Service
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DAR indicated that an additional $41.7 million was needed to cover

construction costs at the Harrison Street site that were not considered

adequately in the initial estimate. The DAR stated:

“While the building planned for the Harrison Street site is functionally very similar to the

facility planned on Clark Street, there is a marked difference in the site conditions and,

therefore, the structure of the building and associated docks, maneuvering area, and

parking. The Harrison Street site is interlaced with active railroad tracks, located in the

middle of the property. The tracks in question are located two blocks south of Union

Station, which handle all commuter rail lines serving the southern and western portions of

the city and suburbs. Amtrak also uses the same tracks for interstate passenger service.

While we were cognizant that construction on the Harrison Street site would pose some

constraints on our ability to keep costs within budget, the extent to which the tracks and

overall railroad operation would impact construction was not fully appreciated when initial

estimates were made.”

Further, the Harrison Street site was located next to the Chicago River.

The DAR indicated that the city opposed constructing the new postal

facility along the waterfront portion of the site at Harrison Street to permit

space for future high-rise retail and office buildings along the river.

The December 1991 DAR did not break out the additional costs at the

Harrison Street site associated with constructing over railroad tracks and

away from the riverfront. However, it indicated that construction over the

tracks was prohibited during peak rail traffic times, adding an estimated 11

months to the overall length of construction. Further, the DAR indicated

that building the facility away from the waterfront increased the

complexity of the building structure and therefore its construction cost.

April 1994 Increase In April 1994, the Board approved another funding increase, raising the

total project budget from $241.4 million to $286.8 million. According to the

DAR, $45.4 million more was needed to complete construction:

(1) $14.3 million for operational changes to accommodate the relocation of

mail processing for 17 ZIP Code areas of South Chicago; (2) $14 million in

construction changes resulting from solicitation of bids prior to design

completion; (3) $7.8 million to repair the adjacent Polk Street bridge; and

(4) $9.3 million in contingency and other fees needed to complete

construction.

The Postal Service’s 1987 Greater Chicago Area Facility Plan called for 17

ZIP Code areas to be transferred from downtown Chicago to the South

Page 12 GAO/GGD-98-11 Chicago Mail Service
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Suburban facility in Bedford Park, IL. However, in December 1993, the

Postal Service decided to retain mail processing for the 17 ZIP Codes in

the new Main Post Office because of political concerns about moving jobs

out of the city. According to the April 1994 DAR, about 60 percent of the

new Post Office’s construction was complete at that time. The DAR

indicated that the decision to incorporate processing for the 17 ZIP Codes

and automated mail processing plans16 into the new facility required a

complete redesign of the workroom layout. Further, the DAR said that

because of incomplete and poor quality contract drawings, the project’s

structural, mechanical, and electrical costs significantly exceeded original

estimates.17 Other unanticipated costs involved dealing with a water tunnel

and an abandoned freight tunnel under the site that were found after

construction began.

The DAR also indicated that the adjacent Polk Street bridge, which was

closed by the city in 1993 because of safety concerns, was needed to

provide access to the new facility. Postal officials believed that the

Chicago Union Station Company, an Amtrak subsidiary, took

responsibility for maintaining the bridge when it acquired the property.

The DAR indicated that the Postal Service was in the process of negotiating

an agreement for repairing the Polk Street bridge, that it was confident of

recovering the repair costs from the Chicago Union Station Company, and

that work on repairing the bridge should proceed to ensure truck access to

the new Main Post Office by the time the facility was completed.18

June 1995 Increase In June 1995, the Board approved a third cost increase for the new Main

Post Office. The Board approved an additional $30.1 million for the

project, increasing the total budget from $286.8 million to $316.9 million.19

According to the June 1995 additional funding request, the costs of

incorporating automation plans and mail processing for 17 postal stations

into the facility, which required changes and redesign of the workroom

and building systems, were underestimated. The funding request said that

the workroom changes in turn affected the layout of office and support

space that had to be relocated to provide additional workroom space. The

changes required revisions to the heating, ventilation and air-conditioning,

16The Postal Service’s Corporate Automation Plan, issued in January 1990, set a goal of barcoding all

mail by 1995.

17The solicitation for construction contract was issued in July 1991 and was based on scope documents

with incomplete design and allowances. The construction contract was awarded in March 1992.

18According to the Postal Service’s Facility Manager in Chicago, in 1996, the Postal Service recovered

$5 million from the Chicago Union Station Company in reimbursement for the bridge repair costs.

19The Board approved $30.1 million of $40.9 million requested.

Page 13 GAO/GGD-98-11 Chicago Mail Service
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lighting, and electrical systems. The request also included about $7 million

for a conveyor system and related mail processing equipment. The June

1995 funding request also said that in retrospect, the April 1994 DAR should

not have been submitted until operational systems layout, design, and

definitive construction cost estimates had been completed, but the request

also said if that had been done, construction would have stopped, and

greater delay claims would have been incurred.

The June 1995 funding request also noted that a special task force had

identified a 141,000-square-foot deficiency in the new Main Post Office,

which was attributed to the decision to include mail processing for the 17

ZIP Code areas and to incorporate automation plans. As a result, the

funding request said that space planned for use in the new Post Office for

carriers and parcel post operations would need to be identified and

relocated.

February 1996 Increase Finally, in February 1996, the Board approved an additional $16 million to

renovate an aging postal annex adjacent to the old Main Post Office called

the “Sugar House” to house space for carriers and parcel post operations

originally planned for the new Post Office. The Sugar House renovation

was needed to accommodate the 141,000-square-foot space deficiency

identified in the June 1995 funding request. The renovated Sugar House

facility, which was completed in September 1997, is also to contain

operations that were not originally intended for the Main Post Office,

including the Inspection Service Forensic Laboratory and stamp

depository functions. The Postal Service also decided to retain the

second-class and third-class mail transfer operations and stamp registry

located in the Sugar House.

Postal Inspection Service

Review Found Many

Reasons for Cost Overruns

In November 1994, at the request of the Board of Governors, the Postal

Inspection Service began a review of the cost overruns at the new Chicago

Main Post Office. The purpose of the review was to determine whether

there was any evidence of fraudulent activity connected with the project;

identify process deviations or questionable decisions made by USPS

officials in connection with the project; and to make recommendations for

improvement. According to the Inspection Service, its review involved

over 8,000 investigative hours and interviews with 114 individuals; as well

as the review of 6 prior Chicago Division Inspection Service reports on the

project and contracts, architect/engineering files, and related documents.

Page 14 GAO/GGD-98-11 Chicago Mail Service
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In May 1995, the Inspection Service presented the results of its review to

the Board of Governors. Although the Inspection Service found no

evidence of fraud concerning the project, it identified several reasons for

the overruns. These reasons included (1) the city of Chicago’s opposition

to allowing construction on the preferred site and the lack of a separate

DAR for the alternative site; (2) increased costs resulting from having the

Postal Service build over active railroad tracks at the alternative site;

(3) construction during major changes in Postal Service structure,

operations, and management personnel; (4) proceeding with construction

despite incomplete designs and automation plans; and (5) an overall lack

of coordination between USPS headquarters and the field.

In addition, the Inspection Service reported that continuous turnover of

decisionmakers at the Postal Service diminished overall accountability for

the project. It also indicated that automation requirements developed by

USPS headquarters were not incorporated in the new facility in a timely

manner. Further, the Inspection Service said information that had been

presented to the Board of Governors in budget requests was inadequate

and minimized negative aspects of the project.

In its May 1995 presentation to the Board, the Inspection Service made the

following four recommendations20 about future major capital projects:

(1) an on-site Project Manager should be assigned responsibility for all

aspects of projects from start to finish; (2) the validation process for large

projects should include a thorough review and approval by personnel

familiar with operations, equipment, and fixed mechanization issues;

(3) recommendations made by the Board of Governors’ Capital

Improvement Committee should be followed;21 and (4) the Inspection

Service should selectively review projects costing under $10 million.

The Postal Service indicated that in response to the report, it has made the

following changes: (1) a Facility Activation Manager was selected to

oversee large projects; (2) the review and validation process for large

20According to the Postal Service, the first three recommendations were management

recommendations that were already under way and subsequently reported by the Inspection Service.

21In 1993, the Board of Governors formed the Capital Improvement Committee to examine the review

and approval process for capital investment projects. In February 1995, the committee made 10

process improvement recommendations and 4 accountability improvement recommendations, which

are listed in appendix III. A postal official said that two of those recommendations had the greatest

potential for preventing cost overruns similar to those experienced with the Chicago Main Post Office

in future projects—(1) more frequent project updates on capital investment projects and (2) the

implementation of an “early warning system” that provides the Board of Governors with prompt and

early notification of problems to avoid surprises. The Postal Service’s Office of Inspector General also

has been given authority to audit facilities construction projects costing over $10 million.

Page 15 GAO/GGD-98-11 Chicago Mail Service
B-276037 

projects has been enhanced through meetings with operating managers,

functional staff, and headquarters executives; and (3) the Postal Service is

adhering to the recommendations made by the Board of Governors’

Capital Improvement Committee (see app. III). With regard to the fourth

recommendation, the inspector in charge of the review told us that the

Inspection Service began selectively reviewing projects costing under

$10 million in fiscal year 1997 and is now more involved in monitoring

major capital projects early in the process, such as by reviewing

preliminary DARs, than it was during the new Chicago Main Post Office

project.

We asked the Postal Service why the additional funding requests in

April 1994 and June 1995 were presented in closed, rather than open,

sessions of the Board of Governors. The Postal Service responded that at

the time of those two meetings, USPS was negotiating with the architectural

firm and general contractor on change orders, and it would not have been

in the Postal Service’s best interest to disclose the amounts being

requested for various changes. An additional reason cited by the Postal

Service for closing the meetings was that the Inspection Service was

conducting an ongoing investigation of the project.

We also asked Postal officials whether they believed they would have

proceeded with the project or pursued an alternative, such as renovating

the old Main Post Office, had they initially known the new facility’s final

cost. An official who was involved in the facility’s planning said that the

old Main Post Office was too old and large to be feasibly renovated. In a

written response, the Postal Service said that it could not speculate what

alternatives management and the Board would have chosen in 1990 had

the final costs been known at the time. However, USPS indicated that there

were not many alternatives, and it could be assumed that the renovation

costs for the old Main Post Office, estimated at $250 million in the

March 1990 DAR, were understated, since full engineering studies had not

been done.

Mail Service in the

Ninth Illinois

Congressional District

Your request also concerned complaints from constituents about the

quality of mail service in your district for many years. Your office indicated

that service provided by the Graceland station, which is part of the

Chicago Postal District, was particularly problematic and asked us to

compare the performance of Graceland station to that of a similar station

in another city with a higher EXFC score than Chicago’s to attempt to

determine the causes of problems at Graceland. The Postal District

Page 16 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Manager for Boston identified the Brookline, MA, station as being similar

to Graceland in terms of the type of area served (a densely populated area

with many high-rise residences) and volume of mail delivered.

We asked the Postal Service to identify what indicators it compiles

regarding the performance of postal stations. Postal Service officials said

they did not measure the accuracy of mail delivery. It provided what data

it did have on workload/workforce issues (the number of deliveries,

routes, carriers, volume of mail delivered, amount of carrier sick leave and

overtime); timeliness (EXFC scores, the number of routes with delayed

mail, amount of curtailed and delayed mail, and the number of carriers

leaving the station late); and the number of delivery-related complaints

received. However, the Postal Service’s Manager of Delivery Policies and

Programs, who provided some of the data, said that measuring the

performance of one station against another was affected by variables other

than the actual performance of the stations. These other variables include

the differences between the makeup of residential, business, and curbside

deliveries made and the type of terrain covered. Appendix IV compares the

performance measures between Graceland and Brookline stations.

Workload/Workforce

Measures

As of May 1997, Graceland station had 37,981 possible daily residential

deliveries and 2,026 possible daily business deliveries, or a total of about

40,000 possible daily deliveries. Also as of May 1997, Brookline had 26,085

possible daily residential deliveries and 1,549 possible daily business

deliveries, or a total of about 27,600 possible daily deliveries.22

We asked USPS to provide workload and performance data on the two

stations as of September 14 though 20, 1996, and January 18 through 24,

1997. For both time periods, Graceland had 81 mail routes and Brookline

had 80. During the week of September 14 through 20, 1996, Graceland

delivered about 8,000 feet of mail, or about 20 percent more than

Brookline, which delivered about 6,700 feet of mail. Graceland delivered

about the same amount of mail as Brookline during the week of January 18

through 24, 1997 (about 6,500 feet vs. about 6,400 feet). During the week

reviewed in September 1996, Graceland employed 108 full-time carriers

and 17 part-time and temporary carriers, compared to 128 full-time and 17

part-time and temporary carriers at Brookline. From September 1996

through January 1997, the number of permanent carriers increased by two

at Graceland and by eight at Brookline. However, from September 1996 to

22The Postal Service does not maintain historical data on the number of possible deliveries, so we

could not obtain data for the two periods we selected for review. The Chicago and Boston Postal

Districts provided data on the number of possible deliveries in May 1997.

Page 17 GAO/GGD-98-11 Chicago Mail Service
B-276037 

January 1997, the number of part-time and temporary carriers working at

Graceland increased from 17 to 37, or 118 percent; the number of part-time

and temporary carriers at Brookline increased from 17 to 20, or

18 percent.

In response to our request for performance data, the Postal Service also

provided data on the amount of carrier overtime and sick leave incurred

for the two time periods at Graceland and Brookline.23 During the week of

September 14 through 20, 1996, daily overtime averaged about 15 percent

of workhours at Graceland, compared to 12 percent at Brookline. For the

week of January 18 through 24, 1997, daily overtime averaged about

10 percent at Graceland and 19 percent at Brookline.

During the week of September 14 through 20, 1996, the amount of daily

average sick leave incurred at Graceland was about 2 percent, compared

to about one-half of 1 percent at Brookline. For the week of January 18

through 24, the amount of daily average sick leave incurred was about

1 percent at Graceland and nearly 4 percent at Brookline.

Timeliness Measures The Postal Service collects data on on-time delivery of First-Class,

overnight mail in 95 major U.S. metropolitan areas, including Chicago and

Boston, and assigns EXFC scores, but it does not break down the scores by

ZIP Code. Therefore, the Postal Service could not provide EXFC scores for

individual ZIP Codes within the Ninth Congressional District of Illinois.

For both time periods reviewed, Boston had a higher EXFC score than

Chicago. For the first quarter of fiscal year 1997, Chicago had an EXFC

score of 84 and Boston had a score of 87, compared to the national

average of 91.24 For the second quarter of fiscal year 1997, Chicago had an

EXFC score of 90 and Boston had a score of 91, compared to the national

average of 91.25

Nearly half of the ZIP Codes within the Ninth Congressional District of

Illinois are served by the Northern Illinois Postal District. The Northern

23According to a Postal Service headquarters official, standards for sick leave and overtime usage are

set at the postal district level. In Chicago, the standard is 3.86 percent of total workhours for sick leave

and 7.5 percent for overtime at postal stations. In Boston, the standard is 3.5 percent for sick leave and

less than 10 percent for overtime usage.

24The Postal Service’s first quarter of fiscal year 1997 ran from September 14, 1996, through December

6, 1996.

25The Postal Service’s second quarter of fiscal year 1997 ran from December 7, 1996, through

February 28, 1997.

Page 18 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Illinois Postal District had an EXFC score of 86 for both the first and second

quarters of fiscal year 1997.

In recent years, EXFC scores for the Chicago and Northern Illinois postal

districts have improved considerably, as has the national average. For

Chicago, EXFC scores increased from a low of 66 in the second quarter of

fiscal year 1994 to 90 in the third quarter of fiscal year 1997. For the

Northern Illinois Postal District, the scores increased from 77 in the

second quarter of fiscal year 1994 to 91 in the third quarter of fiscal year

1997. The national average also increased from 79 in the second quarter of

fiscal year 1994 to 92 for the third quarter of fiscal year 1997.

Since 1994, Boston’s EXFC scores have been an average of 3 percentage

points higher than Chicago’s. As shown in table 1.1, Boston had a higher

EXFC score than Chicago in 13 of the last 15 quarters surveyed.

Table 1.1: Overnight EXFC Scores for the Boston, Chicago, and Northern Illinois Postal Districts and the National Average

From FY 1994 Through the Third Quarter of FY 1997

Q1

FY 94

Q2

FY 94

Q3

FY 94

Q4

FY 94

Q1

FY 95

Q2

FY 95

Q3

FY 95

Q4

FY 95

Q1

FY 96

Q2

FY 96

Q3

FY 96

Q4

FY 96

Q1

FY 97

Q2

FY 97

Q3

FY 97

Boston 81 73 81 81 82 82 86 83 83 80 87 88 87 91 88

Chicago 76 66 75 71 78 79 82 82 81 85 86 80a 84 90 90

No. IL 81 77 80 82 82 82 82 84 83 85 89 90 86 86 91

National

average 84 79 83 83 84 85 87 87 88 87 90 91 91 91 92

aChicago Postal officials attributed the 6 percentage point decline in the EXFC score for the fourth

quarter of fiscal year 1996 to the impact of moving into the new Main Post Office from May

through September 1996.

Figure 1.2 shows the EXFC scores from fiscal year 1994 through the third

quarter of fiscal year 1997 for the Boston, Chicago, and Northern Illinois

Postal Districts and the national average.

Page 19 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Figure 1.2: Overnight EXFC scores for the Boston, Chicago, and Northern Illinois Postal Districts and the National Average

From FY 1994 Through the Third Quarter of FY 1997

EXFC scores

65

70

75

80

85

90

95

Q1 FY

1994

Q2 FY

1994

Q3 FY

1994

Q4 FY

1994

Q1 FY

1995

Q2 FY

1995

Q3 FY

1995

Q4 FY

1995

Q1 FY

1996

Q2 FY

1996

Q3 FY

1996

Q4 FY

1996

Q1 FY

1997

Q2 FY

1997

Q3

FY

1997

Quarters surveyed

National average

Boston Postal District

Northern Illinois Postal District

Chicago District

Source: USPS.

The Chicago Postal District Manager said the improved EXFC scores were

the result of (1) more automation, (2) new and expanded facilities

throughout the Chicago area, (3) more and better training of employees,

(4) better management and more accountability, and (5) dismissal of poor

performers26 and recognition of good employees.

In response to our request for performance indicators on Graceland and

Brookline stations, the Postal Service provided data on the number of

26The Postal Service provided data showing that in 1996, 122 of its 13,397 Chicago Postal District

career employees were dismissed, or about 0.9 percent of its workforce. In Boston, 27 of 8,645 career

employees were dismissed in 1996, or 0.3 percent. Nationally, 2,181 career employees were dismissed

in 1996 out of 755,475 employees, or 0.3 percent.

Page 20 GAO/GGD-98-11 Chicago Mail Service
B-276037 

routes with delayed mail, amount of curtailed and delayed mail, and

number of carriers leaving the station late. For both time periods in our

review, Graceland had more routes with delayed mail than Brookline. Bulk

business mail is considered delayed if it takes more than 48 hours to leave

the station. First-Class mail is considered to be delayed if it does not leave

the station on the same day it arrives. During the week of September 14

through 20, 1996, Graceland had a daily average of 26 routes with delayed

mail and Brookline had 1. During the week of January 18 through 24, 1997,

Graceland had a daily average of six routes with delayed mail, and

Brookline had none. For both time periods, Graceland station had more

curtailed or delayed bulk business mail than Brookline. Mail is curtailed if

it is not yet scheduled for delivery—for example, to coincide with a

mailing advertiser’s sale, or if the workload is heavy on a particular day.

During the week of September 14 through 20, 1996, Graceland had a daily

average of 135 feet of curtailed bulk business mail and 171 feet of delayed

bulk business mail, compared to a daily average of 120 feet of curtailed

mail and no delayed mail at Brookline. During the week of January 18

through 24, 1997, Graceland had a daily average of 211 feet of curtailed

bulk business mail and 93 feet of delayed bulk business mail, compared to

no curtailed or delayed bulk business mail at Brookline.

Graceland averaged more carriers leaving the station late during the week

of September 14 through 20, 1996, than Brookline (17 vs. 9). However,

during the week of January 18 through 24, 1997, Brookline averaged

considerably more carriers leaving the station late than Graceland (48 vs.

15). A carrier is considered leaving the station late when a foot carrier

leaves more than 10 minutes after the scheduled departure time or a

motorized carrier leaves the station more than 20 minutes late.

Complaints The Postal Service compiles complaints received at the station, district

office, or USPS headquarters. Postal Service complaint data showed that the

Brookline station received more delivery-related customer complaints

than Graceland during the quarters that included the 2 weeks we

reviewed.27 For the first quarter of fiscal year 1997, Brookline received 71

delivery-related complaints, compared to 32 for Graceland. For the second

quarter of fiscal year 1997, Brookline received 47 delivery-related

complaints, and Graceland had 14. Many complaints for both stations

concerned delayed and nonreceipt of mail and change of address

problems. However, Postal officials cautioned that the number of

complaints reported may not be reliable and could be affected by several

27The Postal Service collects data on complaints by quarter, rather than by week.

Page 21 GAO/GGD-98-11 Chicago Mail Service
B-276037 

factors other than performance, such as whether customer complaint

cards in the station lobbies were available, whether the station manager

accurately reported the number of complaints to the Postal Service, and

whether certain customers were more likely to register complaints when

they experienced problems.

Service-Related

Improvement Efforts at

Graceland

We asked the Graceland station manager, who was assigned temporarily

to the station in mid-September 1996 and selected permanently for the

position in March 1997, what actions she had taken to improve mail

service. She said that she has tried to improve customer service by

keeping the same substitute carriers on routes, implementing an improved

mail-sorting process, and soliciting feedback about service from citizen

advisory councils and local officials. She also said that she regularly goes

out into the community on Saturdays to meet with customers about their

mail service, has established a phone center to receive complaints, and has

taken disciplinary action against poor-performing employees. In addition,

the District Manager said a new late-night shift to sort mail was added at

Graceland in December 1996, and two new supervisors were transferred to

the station to monitor carriers.

In April 1997, the Chicago Postal District distributed 39,000 customer

surveys to measure the level of service improvement at Graceland during

the previous 3 months. Of the surveys delivered, 2,295 were returned, or

about 6 percent. The respondents rated the level of improvement as

follows: major improvement, 6 percent; significant improvement,

13 percent; some improvement, 26 percent; little improvement, 16 percent;

and no improvement, 39 percent. The surveys also contained 442

comments, including 90 complaints about misdelivery; 58 about delayed

delivery; 31 about nondelivery; and 18 about change of address problems.

The rest were reports of multiple problems (92), employee compliments

(11), miscellaneous matters such as damaged or tampered mail (11), and

131 that were not identified in the survey results.

Facilities Review During the course of our review, Chicago Postal Service officials offered

to review the physical condition of postal facilities within your

congressional district. This review was performed during the period from

February through May 1997 by two teams of operational, retail, and

administrative staff from the Chicago and Northern Illinois Postal Districts

serving the Ninth Illinois Congressional District. The teams were

supported by a real estate specialist, a design and construction specialist,

Page 22 GAO/GGD-98-11 Chicago Mail Service
B-276037 

and an operations analyst from the Chicago Facilities Service Office. In

addition, an outside architectural/engineering firm was retained to assist

in the review. We reviewed the report that resulted from this facility

survey.

The report indicated that the condition of all facilities enabled USPS to

meet operational needs. The report identified miscellaneous repairs and

alterations and items for customer convenience that could be made at the

facilities. The report did not indicate the cost of making the identified

improvements; however, it did say that the facilities would have to

compete with other sites in the area for very limited funds. With regard to

Graceland station, the facilities review team said that signs in and around

the station should be replaced and that the station should be upgraded to

Postal Store standards, but with closed, rather than open, shelf

merchandising of postal products.28 Appendix V shows the results of the

review, by facility.

Postal Service officials said that complaints regarding mail service may not

necessarily be caused by facilities problems. They said that the new

Chicago Main Post Office, for example, would not be responsible for

misdelivery of mail. In addition, they said that more money would not

solve problems at the Graceland station, problems they attributed

primarily to employee nonperformance.

Conclusions Based on our review of the events that occurred and the Postal Inspection

Service’s investigation, the cost overruns at the Chicago Main Post Office

appeared to be due primarily to shortcomings in planning the construction

project. The Postal Service approved construction on a site that was

opposed by the city of Chicago and then used a cost estimate for an

alternative site that did not adequately reflect the complexity and cost of

building over active railroad tracks and other factors. Further,

management’s incorporation of increased automation plans into the

facility while it was being constructed resulted in costly design changes.

The Postal Service has implemented several process changes that could

reduce the likelihood of cost overruns in future capital investment

projects, such as more Inspection Service involvement earlier in

construction projects and the establishment of an early warning system to

alert the Board of Governors to problems.

28The Postal Store is the Postal Service’s name for its new retail operations in post offices offering a

variety of postal products, such as sheets and books of postage stamps, mailing supplies, and

postal-themed merchandise, which are displayed on open shelves for customer pick-up and selection.

Page 23 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Our comparison of data provided for the two stations confirmed that

differences existed in terms of the performance indicator results but also

showed that the data provided were not informative about the causes of

problems with mail service at Graceland or in Chicago. This was partly

due to the differences in the types of deliveries made by both stations and

uncertainty about whether the total number of complaints was accurately

reported.

Although recent EXFC scores suggest that mail service is improving in

Chicago, the Postal Service has no way of knowing whether this

improvement will be sustained. Further, postal problems that have

plagued Chicago, and Graceland station in particular (which receives the

second-highest mail volume in the city), have been long-standing.

The Postal Service has made efforts to improve mail service in Chicago by

installing a new management team, investing in new facilities and

equipment, and taking measures to improve employee performance, and

EXFC scores are improving. However, the city of Chicago’s EXFC score still

could be improved. Further, because EXFC scores are not compiled at the

individual ZIP Code level, they do not necessarily reflect whether the

quality of service being provided within the Ninth Congressional District

of Illinois is improving. Also, whether the current, apparent increased

performance will be sustained remains to be seen.

In view of the history of problems experienced at the Graceland station

and the limitations of the EXFC scores, which are compiled for the Postal

Service by an independent contractor and do not measure individual

station performance, it seems appropriate for an entity independent of the

Chicago Postal Service management to monitor the performance of the

Graceland station to ensure that problems that may arise are identified

and resolved.

Recommendation We recommend that the Postmaster General have an entity independent of

Chicago Postal Service management monitor the quality of mail service at

the Graceland station by reviewing relevant performance data for the next

2 years. The independent entity should periodically report progress and

any problems identified, along with corrective actions taken, to

appropriate Postal Service officials.

Page 24 GAO/GGD-98-11 Chicago Mail Service
B-276037 

Agency Comments The Postmaster General provided written comments on a draft of this

report, which are printed in appendix VI.

The Postmaster General said that the report accurately summarized the

circumstances and actions that caused the cost overruns at the new

Chicago Main Post Office. He also said that the Postal Service has

instituted a number of safeguards to strengthen the review process and

ensure more management involvement and accountability for large-scale

capital investment projects. With respect to mail service in Chicago, the

Postmaster General noted that Chicago’s EXFC score for the fourth quarter

of fiscal year 1997 was 92—a record score for the city. He also said that he

will instruct the Inspection Service, as well as postal managers in Chicago

and Washington, to periodically review Graceland station’s performance

and report its findings to appropriate officials. Other Postal Service

officials provided clarifying comments, which were incorporated

throughout the report, as appropriate.

This review was done by John S. Baldwin, Sr., Assistant Director; and

Robert Homan, Evaluator-in-Charge. If you have any questions about this

report, please call me on (202) 512-8387.

Sincerely yours,

Bernard L. Ungar

Director, Government Business

 Operations Issues

Page 25 GAO/GGD-98-11 Chicago Mail Service
Contents

Letter 1

Appendix I 

ZIP Codes and Postal

Districts Within the

Ninth Congressional

District of Illinois

30

Appendix II 

Summary of Cost

Overruns at the New

Chicago Main Post

Office

31

Appendix III 

USPS Board of

Governors’ Capital

Improvement

Committee

Recommendations for

Process

Improvements

32

Appendix IV 

Workload and

Performance

Indicators of

Graceland and

Brookline Stations

33

Page 26 GAO/GGD-98-11 Chicago Mail Service
Contents

Appendix V 

Physical Condition of

Postal Facilities in the

Ninth Illinois

Congressional District

36

Appendix VI 

Comments From the

Postal Service

39

Tables Table 1.1: Overnight EXFC Scores for the Boston, Chicago, and

Northern Illinois Postal Districts and the National Average From

FY 1994 Through the Third Quarter of FY 1997

19

Table I.1: ZIP Codes of the Ninth Congressional District of Illinois 30

Table II.1: Changes in Funding for the New Chicago Main Post

Office

31

Table III.1: USPS Board of Governors’ Capital Improvement

Committee Recommendations for Process Improvements

32

Table III.2: USPS Board of Governors’ Capital Improvement

Committee Capital Investments Accountability Improvement

Recommendations

32

Table IV.1: Comparison of Selected Workload and Performance

Indicators for Graceland Station in Chicago and Brookline

Station in Boston for the September 14 Through 20, 1996, Period

33

Table IV.2: Comparison of Selected Workload and Performance

Indicators for Graceland Station in Chicago and Brookline

Station in Boston for the January 18 Through 24, 1997, Period

34

Table V.1: Repairs/Alterations Identified for Chicago Postal

District Facilities Serving the Ninth Congressional District of

Illinois

36

Table V.2: Repairs/Alterations Identified for Northern Illinois

Postal District Facilities Serving the Ninth Congressional District

of Illinois

38

Figures Figure 1.1: Postal Service Provided by the Chicago and Northern

Illinois Postal Districts Within the Ninth Congressional District of

Illinois

6

Page 27 GAO/GGD-98-11 Chicago Mail Service
Contents

Figure 1.2: Overnight EXFC scores for the Boston, Chicago, and

Northern Illinois Postal Districts and the National Average From

FY 1994 Through the Third Quarter of FY 1997

20

Abbreviations

DAR Decision Analysis Report

EXFC External First-Class Measurement System

USPS United States Postal Service

Page 28 GAO/GGD-98-11 Chicago Mail Service
Page 29 GAO/GGD-98-11 Chicago Mail Service
Appendix I 

ZIP Codes and Postal Districts Within the

Ninth Congressional District of Illinois

The Ninth Congressional District of Illinois is served by two USPS districts:

the Chicago District and the Northern Illinois District. Table I.1 shows

which ZIP Codes within the congressional district are served by the two

postal districts.

Table I.1: ZIP Codes of the Ninth

Congressional District of Illinois

Chicago Postal District

Northern Illinois

Postal District

60613a 60025a

60626 60029

60630a 60053

60631a 60076

60640a 60077

60645 60201

60646a 60202

60648a 60203

60656a 60204

60657a 60208

60659a 60209

60660 60251

60701

60714a

60799

aNeighboring congressional districts also include these ZIP Codes.

Source: USPS.

Page 30 GAO/GGD-98-11 Chicago Mail Service
Appendix II 

Summary of Cost Overruns at the New

Chicago Main Post Office

From December 1991 though February 1996, the Postal Service Board of

Governors approved four requests totalling $133.2 million for additional

funding for the new Chicago Main Post Office. Table II.1 summarizes the

major reasons for the funding modifications.

Table II.1: Changes in Funding for the New Chicago Main Post Office

Date of Board

approval

Additional

amount

approved

(in millions)

Total project

funding

(in millions) Major reasons for modification

March 1990 N/A $199.7 Original estimate

December

1991

$41.7 $241.4 The city of Chicago opposed construction on the preferred site. The cost estimate

for the alternative site, which involved construction over railroad tracks and

restrictions on building near the waterfront, was not based on then-current and

complete engineering estimates. Facilities management did not disclose to the

Board of Governors that an in-depth analysis was not performed on the Harrison

Street site when it was presented for approval.

April 1994 $45.4 $286.8 USPS decided to incorporate processing for 17 ZIP Code areas, originally planned

for another facility, into the new Main Post Office, requiring a complete redesign of

the workroom; and assumed responsibility for repairing the Polk Street bridge,

which provided truck access to the new facility.a

June 1995 $30.1 $316.9 USPS underestimated the costs of adding the 17 postal stations to the facility.

USPS also noted a 141,000-square-foot deficiency in the facility caused by adding

the 17 stations.

February 1996 $16 $332.9 USPS decided to renovate the adjacent Sugar House building to fulfill the

141,000-square-foot space deficiency caused by adding the 17 stations to the new

Main Post Office.

aOf the $7.8 million estimated cost to repair the bridge, the Postal Service recovered $5 million in

1996 from the Chicago Union Station Company, an Amtrak subsidiary.

Source: USPS.

Page 31 GAO/GGD-98-11 Chicago Mail Service
Appendix III 

USPS Board of Governors’ Capital

Improvement Committee Recommendations

for Process Improvements

In 1993, the USPS Board of Governors formed the Capital Improvement

Committee to examine the review and approval process for capital

investment projects. In February 1995, the Committee made 10 process

improvement recommendations and 4 accountability improvement

recommendations, which are listed in tables III.1 and III.2. The Postal

Service indicated that these recommendations have been implemented.

Table III.1: USPS Board of Governors’

Capital Improvement Committee

Recommendations for Process

Improvements

Process improvement recommendations

1. Management should standardize Decision Analysis Reports and improve the quality of

information provided for management and Board review.

2. Management should ensure that the facility contracting process and contracting

documents fully and consistently protect the interests of the Postal Service.a

3. Management should ensure that the process for participation by minority contractors is

followed.

4. The Finance Department should look at the capital investment process in other

organizations to see if any outside processes could be applied within the Postal Service.

5. Management should continue to use the Inspection Service audit functions to

determine if the process can be strengthened in any way.

6. Project sponsors should carefully consider closed vs. open Board meetings when

presenting capital investment projects to ensure that the procurement function is not

harmed by disclosure of data.

7. Project sponsors should provide the Decision Analysis Report to the Board for

discussion in the first month and request a vote in the next or a subsequent month.

8. Project sponsors should provide preliminary briefings to the Board on complex

projects.

9. Management should continually examine the review and approval process for capital

projects so that it can act upon continual improvement opportunities.

10. The Board of Governors should retain the $10 million approval authority.

aAccording to a Postal official, this recommendation was made to address a concern about too

many people being involved in facilities contracting. At the time, facilities contracting was done

by both the facilities and procurement offices. As a result of this recommendation, facilities

contracting was consolidated in the procurement office.

Table III.2: USPS Board of Governors’

Capital Improvement Committee

Capital Investments Accountability

Improvement Recommendations

Accountability improvement recommendations

1. Implementing managers should provide more frequent project updates to the Board

on the status of projects approved by the Board.

2. Management should ensure that an “early warning system” exists to alert the Board of

any problems that occur on projects.

3. Finance should provide data to the Board on projects costing under $10 million and

determine if any process improvements are needed for such projects.

4. Management should reinforce procedures requiring prior approval before funds are

reallocated within a project.

Source: USPS Board of Governors.

Page 32 GAO/GGD-98-11 Chicago Mail Service
Appendix IV 

Workload and Performance Indicators of

Graceland and Brookline Stations

We compared the performance of Graceland station to a similar station in

another city with a higher EXFC score than Chicago’s. The Postal Service

identified Boston’s Brookline station as being similar to Graceland in

terms of serving a densely populated area with many high-rise residential

units. At our request, the Postal Service provided workload/workforce

measures (the number of deliveries, routes, and carriers, volume of mail

delivered, amount of carrier sick leave and overtime); timeliness measures

(EXFC scores, the number of routes with delayed mail, amount of curtailed

and delayed bulk business mail, and the number of carriers leaving the

station late); and the number of delivery-related complaints received

during the weeks of September 14 through 20, 1996, and January 18

through 24, 1997, at the Graceland and Brookline stations. We chose these

2 weeks to compare the Graceland station’s performance for the week

when the new manager began working at the station and for 4 months

later.29 Tables IV.1 and IV.2 compare the performance of the two stations

during the two time periods.

Table IV.1: Comparison of Selected Workload and Performance Indicators for Graceland Station in Chicago and Brookline

Station in Boston for the September 14 Through 20, 1996, Period

Graceland Brookline

Workload/workforce

Number of possible residential deliveries (May 1997) 37,981 26,085

Number of possible business deliveries (May 1997) 2,026 1,549

Number of routes 81 80

Volume of mail delivered (in feet) 8,012 6,701

Number of permanent carriers 108 128

Number of part-time and temporary carriers 17 17

Carrier overtime (percent of workhours)a 15.32 11.99

Carrier sick leave (percent of workhours)a 2.1 0.55

Timeliness

Rate of on-time overnight delivery of First-Class mail for city (EXFC score) 84

(first quarter FY 1997

for Chicago)b

87

(first quarter FY 1997

for Boston)

Number of routes with delayed maila,c 26 1

Feet of curtailed bulk business maila,d 135 120

Feet of delayed bulk business maila 171 0

Number of carriers leaving the station latea,e 17 9

Number of complaintsf (first quarter FY 1997)

Delayed mail 12 22

(continued)

29Graceland’s current station manager was assigned temporarily to the station on September 14, 1996.

Page 33 GAO/GGD-98-11 Chicago Mail Service
Appendix IV 

Workload and Performance Indicators of

Graceland and Brookline Stations

Graceland Brookline

Misdelivery 4 6

General service complaints 4 2

Daily delivery time variation 1 15

Change of address problems 1 7

Improperly returned mail 3 5

Improper delivery/mode of delivery 1 5

Nonreceipt of mail 6 9

Total delivery-related complaints 32 71

aDaily average.

bThe EXFC score for the Northern Illinois Postal District, which serves part of the Ninth

Congressional District of Illinois, was 86 for the first quarter of fiscal year 1997.

cFirst-Class mail is considered delayed if it does not leave the station the same day it is received.

Bulk business mail is considered delayed if it takes more than 48 hours to leave the station.

dMail is curtailed if it is not yet scheduled for delivery—for example, to coincide with a mailing

advertiser’s sale, or if workload is heavy on a particular day.

eA carrier is considered as leaving the station late when a foot carrier leaves more than 10

minutes after the scheduled departure time, or a motorized carrier leaves the station more than 20

minutes late.

f

Delivery-related complaints received at the postal station, district office, or USPS headquarters.

The “delayed mail” and “general service complaints” categories could include some other types

of complaints that are not delivery related. Nondelivery complaints are those concerning no

delivery of any mail, whereas nonreceipt of mail pertains to a complaint about a specific piece of

mail not being received.

Source: USPS.

Table IV.2: Comparison of Selected Workload and Performance Indicators for Graceland Station in Chicago and Brookline

Station in Boston for the January 18 Through 24, 1997, Period

Graceland Brookline

Workload/workforce

Number of possible residential deliveries (May 1997) 37,981 26,085

Number of possible business deliveries (May 1997) 2,026 1,549

Number of routes 81 80

Volume of mail delivered (in feet) 6,540 6,428

Number of permanent carriers 110 136

Number of part-time and temporary carriers 37 20

Carrier overtime (percent of workhours)a 9.84 18.66

Sick leave (percent of workhours)a 1.49 3.69

Timeliness

(continued)

Page 34 GAO/GGD-98-11 Chicago Mail Service
Appendix IV 

Workload and Performance Indicators of

Graceland and Brookline Stations

Graceland Brookline

Rate of on-time overnight delivery of First-Class mail for city (EXFC) 90

(second quarter FY

1997 for Chicago)b

91

(second quarter FY

1997 for Boston)

Number of routes with delayed maila,c 6 0

Feet of curtailed bulk business maila,d 211 0

Feet of delayed bulk business maila 93 0

Number of carriers leaving the station latea,e 15 48

Number of complaintsf (second quarter FY 1997)

Delayed mail 2 13

Misdelivery 0 3

General service complaints 1 1

Daily delivery time variation 1 3

Change of address problems 1 6

Improperly returned mail 2 4

Nondelivery 0 1

Improper or attempted delivery 2 4

Hold order problem 0 2

Nonreceipt of mail 5 10

Total delivery-related complaints 14 47

aDaily average.

bThe EXFC score for the Northern Illinois Postal District, which serves part of the Ninth

Congressional District of Illinois, was 85 for the second quarter of fiscal year 1997.

cFirst-Class mail is considered delayed if it does not leave the station the same day it is received.

Bulk business mail is considered delayed if it takes more than 48 hours to leave the station.

dMail is curtailed if it is not yet scheduled for delivery—for example, to coincide with a mailing

advertiser’s sale, or if workload is heavy on a particular day.

eA carrier is considered as leaving the station late when a foot carrier leaves more than 10

minutes after the scheduled departure time, or a motorized carrier leaves the station more than 20

minutes late.

f

Delivery-related complaints received at the postal station, district office, or USPS headquarters.

The “delayed mail” and “general service complaints” categories could include some other types

of complaints that are not delivery related. Nondelivery complaints are those concerning no

delivery of any mail, whereas nonreceipt of mail pertains to a complaint about a specific piece of

mail not being received.

Source: USPS.

Page 35 GAO/GGD-98-11 Chicago Mail Service
Appendix V 

Physical Condition of Postal Facilities in the

Ninth Illinois Congressional District

In November 1996, Postal officials offered to review the physical condition

of postal facilities in Congressman Yates’ district. This review was

performed by two teams of operational, retail, and administrative staff

from the Chicago and Northern Illinois Postal Districts serving the Ninth

Illinois Congressional District. The teams were supported by a real estate

specialist, a design and construction specialist, and an operations analyst

from the Chicago Facilities Service Office. In addition, an outside

architectural/engineering firm was retained to assist in the review. Tables

V.1 and V.2 summarize the review findings, by postal facility, in the

Chicago and Northern Illinois Postal Districts, respectively.

Table V.1: Repairs/Alterations Identified for Chicago Postal District Facilities Serving the Ninth Congressional District of

Illinois

Postal facility and ZIP Code(s) Repairs/alterations identified, comments

Niles Branch, Niles, IL, 60714 New signage needed to identify the facility from the street.

Minor repairs needed.

A new Postal Store is planned.a

Harwood Heights Branch,

Chicago, 60656

Recommend converting existing facility into a carrier annex.b

Incorporate safety items into carrier annex conversion.

Recommend relocation of finance portion into a finance unitc to include a Postal Store, with open

merchandising.d

Norwood Park Branch, Chicago,

60631

Provide exterior signage to better identify facility from the street.

Minor interior repairs are needed.

New Postal Store completed in March 1995.

Edgebrook Finance Station,

Chicago, 60646

Facility is served by an adjacent carrier annex, which has noticeable overcrowding.

Facility needs interior housekeeping.

New Postal Store with open merchandising was completed in July 1995.

Jefferson Park Finance Station,

Chicago, 60630

The facility is supported by a leased garage that services postal vehicles.

Exterior repairs and remodeling are needed.

Facility is served by a carrier annex and a parking lot, which is located across the street.

Customers park at the carrier annex.

Major remodeling for a new Postal Store with open merchandising is planned for completion in the

spring of 1998.

Ravenswood Station, Chicago,

60625

Additional objective is to relocate post office boxes into this facility from the detached post office

box unit,e which is located across the street from this station.

Provide new exterior signage.

Minor interior repair and alterations.

This facility is also served by a second detached post office box unit in the delivery area.

Consider conversion to Postal Store with open merchandising.

Station Q, Chicago, 60625 Add exterior signage.

Minor repairs and alterations.

Convert to Postal Store standards with closed merchandising.

Uptown Station, Chicago, 60640 Minor roof repairs are needed.

Add stamp vending in customer service lobby.

Upgrade appearance of interior customer and support areas.

(continued)

Page 36 GAO/GGD-98-11 Chicago Mail Service
Appendix V 

Physical Condition of Postal Facilities in the

Ninth Illinois Congressional District

Postal facility and ZIP Code(s) Repairs/alterations identified, comments

Northtown Station, Chicago,

60645/59

Provide new exterior signage.

Reconfigure post office box lobby stamp vending.

Reconfigure rest rooms.

Install modified Postal Store with open merchandising.

Rogers Park Station, Chicago,

60626/60

Station recently expanded for carrier and retail operations.

New Postal Store with open merchandising was completed in May 1995.

Repairs and upgrading of the flooring and lighting are currently under way in this facility.

Recommend working with the city to increase customer street parking.

Make minor repairs and alterations.

Provide exterior signage.

Station M, Chicago, 60626/60 Relocate finance unit and upgrade to Postal Store standards with closed merchandising.

Station F, Chicago, 60626/60 Upgrade entrance accessibility.

Provide exterior signage.

Add Postal Store with closed merchandising.

Lakeview Station, Chicago, 60613 Minor exterior and interior repair and alterations are needed.

Add Postal Store with open merchandising to the lobby.

Graceland Finance Station,

Chicago, 60657

Replace exterior signage.

Add pylon sign at Ashland Ave.

Upgrade lobby signage.

Upgrade to Postal Store standards with closed merchandising.

Lincoln Park Finance Station,

Chicago, 60614

Replace exterior signage.

Provide safety devices on mechanical lifts.

Customer parking is provided by validated parking across the street.

aThe Postal Store is the Postal Service’s name for its new retail operations in post offices offering a

variety of postal products, such as sheets and books of postage stamps, mailing supplies, and

postal-themed merchandise, which are displayed on open shelves for customer pick-up and

selection.

bA carrier annex is a facility that houses the carrier routes without a retail or post office box

operation. Retail and post office boxes are provided at finance stations.

cA finance unit is a nondelivery postal branch or station for financial services and acceptance of

mail.

dOpen merchandising refers to displaying items for sale on open shelves, rather than behind the

counter.

eA detached Post Office Box Unit is usually established to augment a station or branch post office

where additional post office boxes are needed to satisfy customer demand for this service. Stamp

vending is also provided at these locations so that customers can purchase stamps.

Page 37 GAO/GGD-98-11 Chicago Mail Service
Appendix V 

Physical Condition of Postal Facilities in the

Ninth Illinois Congressional District

Table V.2: Repairs/Alterations Identified for Northern Illinois Postal District Facilities Serving the Ninth Congressional

District of Illinois

Postal facility and ZIP Code(s) Repairs/alterations identified, comments

Morton Grove, IL, Main Post

Office, 60053

Add building signage.

Minor interior and exterior repairs needed.

Asphalt repairs in parking lot and maneuvering area needed.

Consider conversion to Postal Store.

Golf, IL, Main Post Office, 60029 Add post office boxes.

Consider conversion to Postal Store.

Glenview, IL, Main Post Office,

60025

Make needed safety improvements.

Replacement facility currently in progress. 

Facility is supported by leased parking and a detached post office box unit.

Skokie, IL, Old Orchard Branch,

60077

New Postal Store recently completed.

Modify rear door hardware.

Skokie, IL, Main Post Office,

60076

Upgrade safety items.

Interior repairs needed.

This facility is supported by leased parking and a detached post office box unit.

Consider conversion to Postal Store, which would enlarge lobby.

Evanston, IL, Main Post Office,

60201

Refurbish historic lobby.

Remodel rest rooms.

This facility is supported by leased parking and a detached post office box unit, as well as a vehicle

maintenance facility.

Consider adding merchandising cases.

Evanston, IL, South Station, 60202 Contact lessor to perform deferred maintenance on the facility.

Remodel dock.

Make safety improvements.

Consider converting to Postal Store standards.

Evanston, IL, North Station, 60201 Upgrade building systems and address deferred maintenance.

Consider converting to Postal Store standards.

Source: USPS.

Page 38 GAO/GGD-98-11 Chicago Mail Service
Appendix VI 

Comments From the Postal Service

(240232) Page 39 GAO/GGD-98-11 Chicago Mail Service
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