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95–388 PDF 2015

ISSUES FACING CIVILIAN AND POSTAL SERVICE 

VEHICLE FLEET PROCUREMENT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

GOVERNMENT OPERATIONS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MAY 21, 2015 

Serial No. 114–28 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 


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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

JASON CHAFFETZ, Utah, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

JIM JORDAN, Ohio 

TIM WALBERG, Michigan 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

CYNTHIA M. LUMMIS, Wyoming 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

RON DESANTIS, Florida 

MICK MULVANEY, South Carolina 

KEN BUCK, Colorado 

MARK WALKER, North Carolina 

ROD BLUM, Iowa 

JODY B. HICE, Georgia 

STEVE RUSSELL, Oklahoma 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GLENN GROTHMAN, Wisconsin 

WILL HURD, Texas 

GARY J. PALMER, Alabama 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MATT CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

BRENDA L. LAWRENCE, Michigan 

TED LIEU, California 

BONNIE WATSON COLEMAN, New Jersey 

STACEY E. PLASKETT, Virgin Islands 

MARK DeSAULNIER, California 

BRENDAN F. BOYLE, Pennsylvania 

PETER WELCH, Vermont 

MICHELLE LUJAN GRISHAM, New Mexico 

SEAN MCLAUGHLIN, Staff Director 

DAVID RAPALLO, Minority Staff Director 

JEFFREY POST, Deputy Staff Director of the Subcommittee on Government Operations 

ALEXA ARMSTRONG, Professional Staff Member 

JULIE DUNNE, Senior Counsel 

MELISSA BEAUMONT, Clerk 


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SUBCOMMITTEE ON GOVERNMENT OPERATIONS

MARK MEADOWS, North Carolina, Chairman 

JIM JORDAN, Ohio 

TIM WALBERG, Michigan, Vice Chair 

TREY GOWDY, South Carolina 

THOMAS MASSIE, Kentucky 

MICK MULVANEY, South Carolina 

KEN BUCK, Colorado 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GLENN GROTHMAN, Wisconsin 

GERALD E. CONNOLLY, Virginia, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

WM. LACY CLAY, Missouri 

STACEY E. PLASKETT, Virgin Islands 

STEPHEN F. LYNCH, Massachusetts 


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C O N T E N T S 

Page 

Hearing held on May 21, 2015 ............................................................................... 1 

WITNESSES 

Mr. Joseph Corbett, Chief Financial Officer and Executive Vice President, 

U.S. Postal Service 

Oral Statement ................................................................................................. 3 

Written Statement ............................................................................................ 5 

Mr. William Toth, Jr., Director, Office of Motor Vehicle Management, General 

Services Administration 

Oral Statement ................................................................................................. 9 

Written Statement ............................................................................................ 11 

Ms. Kate M. Viganeau, Director of Professional Development, NAFA Fleet 

Management Association 

Oral Statement ................................................................................................. 16 

Written Statement ............................................................................................ 18 

Mr. Lori Rectanus, Director, Physical Infrastructure Issues, U.S. Government 

Accountability Office 

Oral Statement ................................................................................................. 25 

Written Statement ............................................................................................ 27 

APPENDIX 

Responses from Mr. Joseph Corbett, USPS to questions for the record from 

Chairman Mark Meadows ................................................................................... 62 


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ISSUES FACING CIVILIAN AND POSTAL 

SERVICE VEHICLE FLEET PROCUREMENT 

Thursday, May 21, 2015 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT OPERATIONS, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, D.C. 

The subcommittee met, pursuant to call, at 10:05 a.m., in Room 

2154, Rayburn House Office Building, Hon. Mark Meadows [chairman of the subcommittee] presiding. 

Present: Representatives Meadows, Jordan, Walberg, Mulvaney, 

Buck, Carter, Grothman, Connolly, Norton, Plaskett. 

Also Present: Representatives Huffman and Lawrence. 

Mr. MEADOWS. The Subcommittee on Government Operations 

will come to order. 

And, without objection, the chair is authorized to declare a recess 

at any time. The Federal Government spends more than $4 billion per year 

on its 650,000-vehicle fleet. With a responsibility to deliver more 

than 150 million addresses, 6 days a week, the Postal Service relies 

on a fleet of nearly 200,000 vehicles to deliver mail and parcels. 

Even small changes in the fleet management practices can save 

significant amounts of money. Private and public fleet management 

best practices seem to support a rolling replacement of vehicles as 

the most cost-effective strategy in the long term. The goal of a rolling replacement strategy is to make incremental improvements to 

a fleet so that technical, safety, and energy-efficiency upgrades are 

made more frequently than once every other decade or once every 

20 years. 

Additionally, technologies like telematics are enabling organizations to better track vehicle use. The use of these best practices 

and new technologies has already enabled the government to save 

millions in costs, but there is still much more to do. That is why 

it’s puzzling to me in a recently issued request for information, the 

Postal Service seems to suggest that it has planned to eventually 

select one supplier to build 180,000 identical new vehicles over the 

next 5 to 7 years, putting essentially all their eggs in one basket, 

so to speak. 

So to help put this in perspective. The UPS operates the second 

largest commercial fleet in the Nation with about 90,000 vehicles. 

And despite a fleet of less than half the size of the Postal Service, 

UPS is able to successfully secure favorable pricing terms using a 

rolling replacement model, despite only procuring less than 10,000 

vehicles per year. 


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By any measure, the Postal Service must begin to replace its vehicle fleet. I think we all understand that. The Postal Service has 

140,000 older models, right-hand drive delivery vehicles with an 

average age of about 23 years, and at the end of—most of them and 

certainly are at the end of their useful service life. 

According to the Postal Service inspector general, 22 percent of 

these delivery vehicles require annual maintenance worth about 

$8,300 or more. A new fleet is expected to cost in excess of $5.4 billion if the Postal Service lacks the liquidity to fully fund this cost. 

Even without a new vehicle fleet, the agency projects its cash 

flow position to grow worse over the next several years. And so another hurdle is the diversity of the Postal Service’s business. Some 

mail delivery routes are hundreds of miles long, others less than 

10 miles, some routes have dozens of packages per day, while others only a few. Does this mean that it makes sense to have multiple new vehicles, or does volume pricing make one vehicle the better choice? 

I’m pleased to see that Mr. Corbett’s testimony suggests a greater sense of flexibility, Mr. Corbett, on the part of the Postal Service. I appreciate that. 

This flexibility, as well as an increased reliance on the lifecycle 

cost analysis will be vital in ensuring that the Postal Service 

makes the best long-term choices for its fleet. 

I hope that today we will be able to hear the lessons that the private and public sector have learned about fleet management and 

how those lessons can be applied to achieve incremental improvements through the GSA and transformational improvements for 

the Postal Service. 

Finally, I would like to thank the witnesses for their time today. 

I look forward to your testimony. 

Mr. MEADOWS. And as we are about to embark, what I’m going 

to do is reserve the time for the gentleman from Virginia, the ranking member, for his opening statement when he gets here. 

I would ask unanimous consent that our colleagues Mr. Huffman 

and Ms. Lawrence be allowed to fully participate in today’s hearing. 

Without objection, so ordered. 

I will hold the record open for 5 legislative days for any members 

who would like to submit a written statement. We will now recognize our panel of witnesses. 

I’m pleased to welcome Mr. Joe Corbett, Chief Financial Officer 

of the United States Postal Service, welcome; Mr. William Toth, 

Jr., the Director of the Office of Motor Vehicle Management at the 

GSA or General Services Administration; and Ms. Kate Vigneau, 

director of professional development at NAFA Fleet Management 

Association; and Ms. Lori Rectanus, Director of Physical Infrastructure Issues at the GAO as well. 

Welcome to you all. 

Pursuant to committee rules, all witnesses will be sworn in before they testify. So if you would please rise and raise your right 

hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 


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Let the record reflect that all the witnesses have answered in the 

affirmative. 

And thank you. You may be seated. 

In order to allow time for discussion, please limit your testimony, 

your oral testimony to 5 minutes. Your entire written statement 

will be made part of the record. 

So I will go ahead and recognize our first witness, Mr. Corbett, 

for 5 minutes. 

WITNESS STATEMENTS 

STATEMENT OF JOSEPH CORBETT 

Mr. CORBETT. Good morning, Chairman Meadows, and Members 

of the Subcommittee, and thank you for calling this hearing. Again, 

my name is Joe Corbett, and I’m Chief Financial Officer and Executive Vice President of the Postal Service. I’m pleased to be here 

today to discuss our next-generation delivery vehicle acquisition 

program and to explain why upgrading the vehicle fleet is considered an investment necessary to the organization’s future. 

We currently maintain a diverse fleet of vehicles including longlife vehicles as well as delivery vans and light trucks. Going forward, the Postal Service continues to require vehicles capable of 

operating in a full range of climates, regions, and operational conditions. 

The planned useful life of the existing long-life vehicles when acquired was 24 years. The fleet has continued to provide needed delivery service but at very high maintenance costs and increasing 

risk of part shortages and structural fatigue. Replacing the aging 

delivery fleet, which is on average over 23-years-old, will not only 

help to reduce operating and repair costs; it will also improve delivery operations efficiencies. 

In fact, both the Postal Regulatory Commission and the GAO 

have recognized our immediate need to invest in a new delivery 

fleet. The goal of this acquisition program is to secure new purposebuilt, right-hand drive delivery vehicles that will accommodate a 

diverse mail mix, enhance safety, improve service, reduce emissions, and produce savings. 

Letter carriers and vehicle maintenance employees were asked to 

submit their ideas for improved vehicle features and design, and 

feedback informed the proposed specifications. Additionally, a comprehensive third-party requirements analysis was conducted, and 

we solicited input from perspective suppliers through the request 

for information process. Specifications were updated based on vehicle industry feedback. 

We arrived at a general layout which would meet the delivery demands on 99 percent of our existing routes. However, our business 

and available vehicle technology are changing and will continue to 

change. Our process is to designed to allow us to remain flexible 

and to make adjustments as our needs evolve. 

Prospective suppliers were required to submit their qualifications 

and capabilities to develop vehicle prototypes and to produce, deliver and provide for national deployment up to 180,000 vehicles. 

The Postal Service pre-qualified suppliers, including both traditional and alternative fuel manufacturers, who responded to the 


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open request for information. Pre-qualified suppliers are eligible to 

receive the request for proposal for a competitive prototype development. 

We were inclusive in our process, pre-qualifying firms with a 

range of power train expertise in order to evaluate wide product offerings from the market. The list of pre-qualified suppliers includes 

firms that specialize in unleaded fuel, electric, compressed natural 

gas, flex-fuel and hybrid vehicles. 

We plan to release our request for proposal for the prototypes in 

the near future. The design, build, and testing of vehicle prototypes 

will take over 2 years to complete. A second request for proposal 

planned for 2017 will solicit our production requirements and explore our financing options. We remain open to and encourage innovative designs and the potential for a mixed delivery-vehicle 

fleet. 

While economies of scale and operational benefits associated with 

a large standardized fleet point toward the selection of only one 

supplier. We remain open to all possibilities. Also, as we finalize 

the production requirements, we are open to considering leasing or 

other financing proposals. Our business case analysis will address 

and evaluate the best value for the Postal Service relative to all aspects of the program. 

Questions regarding our decision to pursue a new fleet, given our 

finance challenges, continue to surface. We believe the correct question is, how can we afford not to make this investment as we fight 

to ensure that we remain viable and fully able to perform our obligation to provide prompt, reliable, and efficient Postal Services for 

the Nation? Of course, given we are a self-funded organization we 

must be fiscally responsible. Therefore, the lifecycle operating costs 

of the new fleet are an important consideration. 

Thank you, Mr. Chairman, for this opportunity to testify. 

I welcome any questions that you and committee members may 

have. 

[Prepared statement of Mr. Corbett follows:] 


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Mr. MEADOWS. Thank you, Mr. Corbett. 

Mr. Toth. 

STATEMENT OF WILLIAM TOTH, JR. 

Mr. TOTH. Good morning, Chairman Meadows, Ranking Member 

Connolly, and members of the subcommittee. I appreciate the opportunity to speak with you today regarding the General Services 

Administration’s role—— 

Mr. MEADOWS. Is your mic on? 

Mr. TOTH. It says—— 

Mr. MEADOWS. Move it a little closer to you then, pull the whole 

box there. 

Mr. TOTH. How’s that? 

Mr. MEADOWS. Ah. 

Mr. TOTH. My name is Bill Toth and I am the Director of the 

GSA’s Office of Motor Vehicle Management. I’ve been the Director 

for the past 8 years and with GSA for 25 years. The mission of 

GSA’s Office of Motor Vehicle Management is to deliver safe, reliable, and low-cost vehicle solutions that allow Federal agencies to 

effectively and efficiently meet their missions. 

The Federal fleet can be broken down into three categories of 

roughly equal size: One-third is owned by GSA and leased to eligible entities; a second third is owned and maintained by the United 

States Postal Service; and the final third is owned and maintained 

by non-Postal Service Federal agencies. 

GSA’s status as a mandatory source for vehicle purchasing, with 

the exception of the Postal Service, guarantees that all Federal 

agencies benefit from the government’s buying power inherent in 

having a single strategically sourced point of purchase. In fact, in 

fiscal year 2014, GSA’s negotiated discount on these vehicles averaged 17.6 percent below dealer invoice. Given GSA’s fiscal year 

2014 procurement of 58,050 vehicles, this discount saved the American taxpayer an estimated $315 million. 

As a full-service vehicle leasing option for Federal agencies GSA 

drives down costs for Federal customers by providing end-to-end 

fleet management services at an all-inclusive rate. The leasing program has demonstrated savings year after year by leveraging the 

government’s buying power and consolidating redundant fleet management functions duplicated in many different agencies. 

GSA’s motor vehicle program provides customers with a comprehensive fleet solution that includes vehicle acquisition; maintenance and accident management; a fleet services car with a dedicated waste, fraud and abuse protection team; and many other solutions as outlined in my written testimony. 

GSA fleet leasing supports over 15,000 unique customers who 

collectively lease over 204,000 vehicles. To demonstrate our commitment to provide customers with the best possible value, GSA 

decreased its leasing rates over the past 2 fiscal years by 1 percent 

and 2 percent respectively. 

In addition to the leveraged buying power and governmentwide 

administrative cost savings inherent in a centralized fleet management program, GSA prioritizes helping customers make smart decisions about the composition and size of their leased fleet. 


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While GSA is proud of the progress it has helped customers 

make in optimizing a fleet size and composition, Federal agencies 

themselves are empowered to analyze their mission needs and, accordingly, make the final decision about how many vehicles they 

need to successfully fill the mission tasked to them by Congress. 

Ultimately, authority for vehicle purchasing and operating decisions remain with each Federal agency. 

GSA partners with its customer agencies to help them stretch 

limited resources and maximize their mission impact. Each year, 

GSA replaces eligible vehicles in its leased fleet with new, safe, 

fuel-efficient vehicles. Vehicles added to the lease fleet in fiscal 

year 2014 had an average of 20.5 percent higher miles per gallon 

rating than the vehicles they replaced. 

In addition, GSA launched hybrid and electric initiatives and to 

date has funded over 7,000 hybrid sedans and 300 electric vehicles. 

Two other unique solutions available to all Federal customers include GSA’s short-term rental program for vehicle and equipment 

rentals and GSA’s dispatch and reservation module, which is an 

electronic car-sharing program for scheduling vehicle reservations 

and generating utilization reports. 

As a motor vehicle leasing provider, GSA assumes responsibility 

for providing solutions that save the American taxpayer money. 

Our strategy for meeting these goals involves maintaining vehicles 

in superior condition, thus decreasing the need for costly maintenance and repair and vehicle down time. 

GSA replaces vehicles on schedules designed to maintain a safe, 

modern, dependable, and fuel-efficient fleet while taking advantage 

of manufacturer warranties to minimize maintenance costs. Used 

vehicles are actively remarketed to the public to ensure highest 

possible proceeds are captured upon the sale of each vehicle. 

Through these and other solutions outlined in my written testimony GSA is able to reduce the need for administrative overhead 

across the government by centralizing operational and administrative fleet support functions. 

We also offer the opportunity to consolidate agency-owned vehicles and commercially leased vehicle requirements into the GSA 

fleet to reduce governmentwide costs and redundancies. 

I appreciate your support of GSA’s concerted efforts to drive continuous improvements in the Federal fleet and your partnership in 

delivering best value to the American taxpayer. Thank you for the 

opportunity to testify today. I look forward to answering your questions. 

Thank you. 

[Prepared statement of Mr. Toth follows:] 


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Mr. MEADOWS. Thank you, Mr. Toth. 

Ms. Vigneau. 

STATEMENT OF KATE M. VIGNEAU 

Ms. VIGNEAU. Good morning, Chairman Meadows, and subcommittee members. My name is Katherine Vigneau. And I’ll be 

testifying on behalf the NAFA Fleet Management Association, 

which is the world’s primary not-for-profit association for professionals who manage fleets of all types of vehicles around the globe. 

I’m going to concentrate my testimony today in five areas, 

lifecycle costs, long-term capital replacement planning, centralization of fleet management functions, the use of the vehicle selector 

lists and alternate fuels and sustainability. 

So, first, lifecycle cost analysis, which we have already heard 

mentioned from the chairman. Vehicles and equipment should be 

replaced at various points in their service lives depending on vehicle type, nature, and intensity of use and a variety of other factors. 

The optimal point at which to replace any vehicle asset from an 

economic perspective is when the total cost of owning that asset is 

at its lowest. That is when the combined cost of ownership or depreciation, capital costs, and operating costs, particularly maintenance are at a minimum just before those costs begin to increase 

significantly. 

So these lifecycle costs analysis should be used not only to choose 

the optimal replacement point of a vehicle but also for lease-versusbuy analysis, for alternate-fuels analysis, and for any decision 

whether to go with a custom or off-the-shelf solution. 

In terms of capital replacement planning, all fleets should create 

multiple-year replacement vehicle capital forecasts. And, from this, 

they should have capital budget approved and centralized capital 

funds created solely for vehicle acquisition. Best practice in replacement planning is to smooth the peaks and valleys of fleet replacement so there is a predictable annual requirement allocated for vehicle replacement. 

In terms of centralization, a dominant trend over the past 25 

years is the consolidation of fleet management functions into a centralized service-like organization. This move toward centralization 

in the industry can be traced to the increasing cost and complexity 

of fleet management as well as an increase in emphasis on savings 

and efficiency. Not only that, there is a recognition that fleet management requires training and expertise to do well, and there are 

also liability concerns. 

Vehicle selectors, organizations should use a formal process to 

decide what type of vehicle best meets all requirements. In order 

to avoid a lengthy selection process for every vehicle replacement 

decision, they should have an approved selector list of frequently 

purchased assets. 

Finally, the fleet industry in general has a unique to make considerable environmental impact. In fact, NAFA has recently released a sustainable fleet accreditation program to track improvements in environmental impact for individual organizations’ fleets. 

But sustainability does not mean only alternative fuel sources, it 

can also be achieved through a host of other initiatives, including 

purchasing smaller vehicles, reducing speed, better route planning, 


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smaller engine sizes, and driver behavior encouraging ecofriendly 

driving. In all alternative-fuel decisions the cost-benefit analysis 

using total cost or lifecycle costs should always be undertaken. 

In looking at the OIG report and a variety of public documents 

available, lifecycle costs analysis has definitely been used by the 

Postal Service to demonstrate that they are operating costs are rising significantly. This methodology should further be extended to 

analyze custom versus commercial purchase options and alternate 

fuel options. 

The OIG report also mentions weaknesses in long-term replacement strategies. The strategy should envision a smooth replacement cycle with regular predictable capital requirements. This 

should also look to provide a long-term solution to avoid being in 

this position we are in now at the end of these vehicles’ lifecycle 

in 25 or 30 years. 

Fleet management should be centralized. Individuals responsible 

should be trained in best practice. A selector list should be built 

that considers lifecycle costs as well as safety and the environment, 

and finally, alternative fuels and other sustainable initiatives 

should be considered in the acquisition decision and throughout the 

life of the vehicle. 

Thank you for your attention. That concludes my testimony 

today. 

[Prepared statement of Ms. Vigneau follows:] 


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Mr. MEADOWS. Thank you, Ms. Vigneau. 

Ms. Rectanus, you are recognized for 5 minutes. 

STATEMENT OF LORI RECTANUS 

Ms. RECTANUS. Thank you. 

Chairman Meadows and members of the subcommittee, I’m 

pleased to be here today to discuss Federal fleet management practices. 

As the chairman noted, fleet investment is significant. Given this 

investment, there’s continued focus on making sure Federal fleets 

are managed effectively. In that respect, in 2011 the President 

issued a memo that called for executive agencies to determine their 

optimal fleet size and achieve those targets by this year. 

Today, I will highlight our past work that identified leading practices for effective fleet management as well as some specific challenges the Postal Service has faced for replacing its aging delivery 

vehicles. The first leading practice entails having a comprehensive 

fleet management information system that allows managers to 

monitor fleet performance. Among other information, this system 

should include data on direct costs, such as fuel, repairs and vehicle depreciation, as well as indirect costs, such as personnel, office 

supplies, building rental and utilities. The system should also include utilization information, such as vehicle milage or whatever 

metric the agency is using to justify the vehicle. 

The second leading practice involves lifecycle costs to inform procurement decisions. Lifecycle analysis captures vehicle costs from 

the beginning to the end of vehicle ownership and can help agencies make the best investment decisions. For example, lifecycle 

analysis can show if an agency can extend the use of a vehicle 

without causing operational problems or whether it would be better 

to replace that vehicle, such as when maintenance costs begin to 

outweigh the retail value. It could also show whether an agency 

should own or lease the vehicle. 

The third leading practice involves optimizing fleet size and composition, which means reducing a fleet size to the fewest number 

of the right type of vehicles needed to meet the agency’s mission. 

To support this, GSA recommended that agencies establish specific 

utilization criteria for each vehicle and assess actual utilization 

against that criteria. Through this process, agencies can determine 

the optimal number and type of vehicles they need and identify underutilized vehicles. One of the ways agencies can get the needed 

information is by using telematics, which can monitor vehicle locations, idle time, and miles traveled, among other things. For example, when installed in a vehicle, telematics can show that a vehicle 

is being driven fewer miles each year than the criteria would require, thus allowing the manager to potentially eliminate that vehicle. 

Turning to the Postal Service, as we reported in 2011, the Postal 

Service’s delivery fleet was aging well beyond its 24-year expected 

operational life. However, the negative financial condition for the 

Postal Service prevented it from replacing or refurbishing those vehicles. 

The Postal Service selected not to replace its fleet as that would 

cost about $5 billion. It also chose not refurbished the vehicles, 


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which would have cost about $3.5 billion, although that may have 

extended vehicle life by 15 years. Instead, the agency chose to focus 

on maintenance while planning how to address its longer term 

needs. 

While understandable, this approach has had tradeoffs. For example, there have been high yearly maintenance costs, about $750 

million at the time of our review, and it is about $1 billion today. 

There have also been operational costs such as overtime costs when 

vehicles broke down and needed to be repaired. We recommended 

that the Postal Service develop a strategy that addressed its fleet 

needs in light of operational and legal requirements. 

As noted, earlier this year, the Postal Service issued a request 

for information for its new-generation delivery vehicle. For potential purchase of about 180,000 vehicles, the Postal Service could 

spend between $4.5 billion and $6.3 billion. While we are encouraged to see this effort, it would be critical for the Postal Service to 

conduct the necessary work to ensure this investment is sound. 

In summary, effective fleet management relies on a complete and 

integrated information system, the use of lifecycle cost analysis and 

appropriate decisions about fleet size and composition. When these 

practices are done well, agencies can make sound decisions about 

their fleets and provide assurance that the fleets are meeting missions in the most cost-efficient manner possible. 

Chairman Meadows and Members of the subcommittee, this concludes my prepared statement. I’m pleased to respond to any questions. 

[Prepared statement of Ms. Rectanus follows:] 


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Mr. MEADOWS. Thank you so much. 

Thank all of you for your testimony. I’d like to recognize the gentleman from Virginia, the ranking member, Mr. Connolly, for his 

opening remarks. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

And forgive me for being late, but we had multiple commitments 

at the same time, and I do not have the gift of bi-location, though 

I pray for it. Thanks so much for calling this hearing to examine 

the Postal Service’s next-generation delivery vehicle acquisition 

program. The United States Postal Service owns and operates one 

of the largest vehicle fleets in the country, approximately 190,000 

vehicles collecting and delivering mail across all 50 States. 

Many Americans are no doubt familiar with the flagship USPS 

delivery vehicle as the 142,000 Grumman long-life vehicles have 

been ubiquitous in American communities since 1986. In many respects, these custom vehicles have been a success, enabling letter 

carriers to fulfill the universal service obligation at what had been 

a reasonable cost, but that has to come to an end. 

As the USPS Office of Inspector General’s recent audit on fleet 

replacement warned, our analysis of the delivery vehicle inventory 

and motorized routes showed the Postal Service could sustain delivery operations nationwide until fiscal year 2017. That’s a year 

away. 

As these vehicles begin to exceed their expected service life, it’s 

neither cost effective nor sustainable to operate them without some 

kind of timetable in mind. I’m disappointed that, under the prior 

leadership, the Postal Service repeatedly delayed making critical 

long-term capital investments such as replacing its antiquated 

fleet. In fact, I recall a conversation spurred by Ruth Goldway, the 

head of the Postal Regulatory Commission back in 2009, in which 

we sat down with the Postmaster General to discuss the possible 

replacement of the fleet by using some of the economic recovery 

money. We could have looked at, at that time a budget of about $3 

billion to purchase hybrid and electric vehicles primarily. It could 

have been a win-win. We could have infused the capital the Postal 

Service didn’t have. We could have helped jump-start the electric 

car market here in the United States, and we could have saved a 

lot on the cost Ms. Rectanus just talked about in terms of maintenance. 

And in what I’m afraid was a typical response to any kind of innovative thought the Postmaster General Donahue at that time 

said, ‘‘Well, we don’t want to go into that; we don’t went to be guinea pigs,’’ even though the competition UPS and FedEx are in fact 

exploring and using those vehicles. The Postal Service hardly 

would have been a guinea pig, and we lost that opportunity if we, 

in, fact, have had it. So now we have to look at how we find the 

capital. One of the things we have to do it seems to me in Congress 

if we’re going to unlock some capital is to get rid of the onerous 

prepayment burden that Congress back in 2006 put on the Postal 

Service. It is a $5 billion sword of Damocles over our head. It is 

actually more than that; the sword comes down actually. And only 

Congress can really address that. We have a scoring problem that’s 

a technical problem, but a real one. But that prepayment makes no 

sense. It’s is terrible burden that is unique to the Postal Service, 


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and it distorts the ledger page. And, it actually is an opportunity 

cost because we could figure out some capital here to address in a 

more accelerated way than needs of the Postal Service in terms of 

its vehicular fleet. 

So I thank the witnesses for being here today. Mr. Chairman, I 

know you share my concern about innovation and making the Postal Service more efficient. This hearing is very useful in that regard, 

and I look forward to working with you. I’m and trying to find common ground for solutions. Thank you. 

Mr. MEADOWS. I thank the gentleman. 

The chair now recognizes the vice chair of the subcommittee, the 

gentleman from Michigan, Mr. Walberg. 

Mr. WALBERG. Mr. Chairman, I thank the witnesses for being 

here today. I always like to make a statement when we look at the 

Postal Service, having experienced the lack of ability to have good 

postal service at other places in the world, we have become accustomed to a Postal Service that, to a great degree, works. Our letters get there. Our packages get there—generally not squashed unless you let the gorilla out for a day. But generally it makes it 

there. We put checks, we put cash, valuable things in the mail. It 

gets there. 

We have postal workers that take their job seriously. Surely my 

rural postal carrier takes it very seriously even taking time—I 

hope I don’t get her in trouble—for attending to my mother, my elderly mother’s needs at times in special ways. So we appreciate 

that fact. I also know that Shirley right now does not like the postal vehicle she has been assigned. As a rural carrier, taking away 

her four-wheel-drive vehicle that was her own vehicle and giving 

her that little mini box truck that causes her to be stuck along the 

postal routes many times these past several winters. So I appreciate the fact you’re looking at something new. How we get it done 

is the question. That’s why I am glad you are all here today. 

Let me start with a question to Mr. Corbett. Initially, it seemed 

like it was almost a done idea that you were going to go for a purchase of 180,000 vehicles in one solid, put-together purchase agreement. Now it appears that you have some deviation from that to 

allow some flexibility and consideration. Why was that, and why is 

that now? 

Mr. CORBETT. Thank you, Congressman. 

The request for information that we put out in January specked 

an initial vehicle that would accommodate up to almost 99 percent 

of our existing routes. It was never our intention to go and buy 

180,000 vehicles at that time, but we wanted to make sure that 

whoever responded to the RFI and who was pre-qualified to respond to the RFP had the ability to go up to the maximum number 

of vehicles that we would—— 

Mr. WALBERG. Even if ultimately it was leased, is that what 

you’re saying? That they could produce those vehicles, but if there 

was a lease agreement or some other arrangement, you are concerned that the vehicles would be theirs? Is that what you’re saying? 

Mr. CORBETT. Yes. Mostly on a production side, the ability to actually have the facilities, the management and track record to 

produce that number of vehicles, as that would be the outside maxVerDate Sep 11 2014 10:26 Oct 29, 2015 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 F:\95388.TXT APRIL

AKING-6430 with DISTILLER
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imum number of vehicles we would purchase under this procurement. 

Mr. WALBERG. Was there in that RFI, was there a request to 

show that they could upgrade and keep up with technology during 

the course of that production so that the starting vehicle may have 

been the best the industry has to offer, but you would be assured 

that in future years, there would be a vehicle that had been upgraded technologically, electronically, power train, and all of that? 

Mr. CORBETT. The RFI did not focus on that. The RFP, which 

will go out for the prototype vehicles, will focus very much on those 

aspects, the ability to continually keep pace with technology and 

make the changes necessary. 

Mr. WALBERG. Okay. 

Ms. Vigneau—close, I hope— is it standard practice in the private sector to use the same vehicle for every delivery service 

throughout the country? And, in other words, do companies look to 

match the type of vehicle with geographic demands? 

Ms. VIGNEAU. Yes. 

Mr. WALBERG. We’ll go on then. 

Ms. VIGNEAU. Certainly. You have to balance the benefits of fleet 

standardization, which are many, which come from driver training, 

mechanic training, spare parts delivery, overall cost efficiency, with 

the unique demands and requirements. So what you see a lot of 

large fleets doing is going for some kind of common chassis, common vehicle type with variance that take into account the need for 

four-wheel drive, for example, left hand versus right hand. Working 

with the United Nations on common specifications for agencies 

around the world. This is exactly what they have pursued. 

Mr. WALBERG. So it doesn’t necessarily mean that the one vehicle 

would work in Boston or in Tipton, Michigan, but it would have the 

variance that makes sense for the place that it’s at. 

Ms. VIGNEAU. In a best case situation, that—— 

Mr. WALBERG. Can most users of these vehicles, including the 

Postal Service, could we assume that that would work, that type 

of approach of having multiple platforms or a platform with multiple uses and multiple component parts to make it useful in varied 

areas, would work even for the Postal Service? 

Ms. VIGNEAU. I have not looked in detail at the specific requirements of the U.S. Postal Service so my testimony is really on industry best practice. So I’d like to say that for large fleets operating in North America, that that solution can be very successful. 

Mr. WALBERG. Thank you. 

My time has expired. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentleman from Virginia, the ranking 

member for 5 minutes of questioning. 

Mr. CONNOLLY. Mr. Chairman, some of my colleagues got here 

before me, and I would like to defer to them. 

Mr. MEADOWS. All right. 

Well, the chair would recognize Ms. Plaskett from the Virgin Islands. 

Ms. PLASKETT. Thank you. Thank you, Mr. Chairman. 

Mr. Ranking Member, you’re so gracious. Good morning everyone. 


AKING-6430 with DISTILLER
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Mr. CONNOLLY. I just want a free trip to the Virgin Islands. 

Ms. PLASKETT. Always, it is America’s paradise, your paradise. 

Good morning, everyone. I heard a number of concerns about the 

Postal Service’s RFI, and I wanted to talk a little bit with you, Mr. 

Corbett, right. 

Mr. CORBETT. Correct. 

Ms. PLASKETT. About the financial challenges that the Postal 

Service is facing as a result of its aging fleet. You talk a little bit 

about the extremely high maintenance cost to a fleet at the Postal 

Service. Can you give us a rough estimate on how much the Postal 

Service spends a year on maintenance and repair costs? 

Mr. CORBETT. Yes, as it relates to our long-life vehicles, the vehicles we are looking to replace, the annual maintenance cost is approximately $700 million, and that has grown over $200 million 

over the last 7 years. And the line is just like this so that we’ve 

got to replace them quickly because the cost continues to escalate. 

Ms. PLASKETT. Now the cost escalating, what is attributing to 

that? 

Mr. CORBETT. As the vehicles gets older, of course, just like your 

personal cars, they continue to break down. You have to replace 

parts to keep them in service. 

Ms. PLASKETT. But this is not a cost that is incrementally higher 

than it would have been 10 years ago or something, this is just a 

cost because the size and the depth of the Postal Service, that it 

continues to grow or is there something happening that causes that 

number to change? 

Mr. CORBETT. Yes, the wear and tear on the vehicles causes—has 

caused that number to continue to increase each year, on a per-vehicle basis as well as fleet wide. As the vehicles get older, they require more maintenance, more parts being replaced, et cetera. That 

contributed to the $200 million increase we’ve seen since 2007 in 

the overall cost. 

Ms. PLASKETT. I’m going to get back to that statement. But you 

discussed supply problems and structural fatigue. What are you referring to by that? 

Mr. CORBETT. In terms of continuing to maintain a fleet, which 

is on average 23-years-old, it’s becoming more expensive. And to 

get suppliers to continue manufacturing those parts, they know we 

are going to replace them and so they don’t invest in their own 

business to be able to manufacturer the parts that we ideally need 

to maintain the older vehicles. 

In terms of fatigue, we’re really referring to not just engine parts 

and transmission parts but also the fatigue in terms of the actual 

frame of the vehicle and chassis of the vehicle, which after running 

for over 100,000 miles can tend to crack, and it is very difficult 

with an aluminum body to actually fix that. 

Ms. PLASKETT. Okay, that’s very interesting. You know, of 

course, this goes back maybe to our investment in our roads as well 

as our transportation and our infrastructure, which probably 

causes a lot more wear and tear on the road—on the vehicles themselves that are traversing the roads here in the United States. 

Do you find that there is more wear and tear on the—how do you 

distribute that? My question is, is there more wear and tear on 

those vehicles which are in rural areas as opposed to those that are 


AKING-6430 with DISTILLER
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primarily within cities or urban areas or those areas that have better roads, per se? How do you determine which areas get that? And 

do you find—have you done in analysis of the rural areas to determine whether or not that wear and tear is more on them? 

Mr. CORBETT. I don’t have that information broken down. 

Ms. PLASKETT. Do you think that’s been done? 

Mr. CORBETT. Excuse me? 

Ms. PLASKETT. Do you think that has been done? You don’t have 

it with you, but do you know if this is an analysis which has been 

done? 

Mr. CORBETT. I don’t know, actually, but I am glad to look into 

it and bring that back to the committee or to you. 

Ms. PLASKETT. Okay. And the reason I’m asking, of course, it is 

for self information for my own district’s information. Because we 

are a rural area, our roads are not that great. But, more importantly, we also have issues, environmental issues, like salt blasts, 

which affects our vehicles probably at a higher rate in terms of corrosion of the metals because of those wonderful beaches and the 

sand and sea that we face that we have structural damage. And, 

you know, before this hearing, I went and called our postal unions 

and others, and we have not had a purchase of a new vehicle in 

over 10 years. 

And so I was wondering how you determine which areas—my 

next question then would be which areas then get the new vehicles, 

and how is that distribution done? What’s the analysis that’s done 

in determining which areas get new vehicles? 

Mr. CORBETT. We have not purchased new vehicles, new delivery 

vehicles, for quite some time now. And so it actually precedes when 

I joined the Postal Service. I actually couldn’t answer what the policy was. 

Ms. PLASKETT. Well how long have you been there? What does 

that time mean? 

Mr. CORBETT. Six years. 

Ms. PLASKETT. Okay. 

Mr. CORBETT. So but what we’re doing—and we agree with all 

the experts here that it’s been too long. We have to get on with the 

purchase of new vehicles. We clearly have not done this in a bestpractice way. In 2009 alone, the Postal Service lost $7 billion in 

revenue. We nearly ran out of cash, and we clawed our way back 

to a point now where we can begin replacing the vehicles. 

In terms of the allocation of resources today, we’re essentially replacing the vehicles as they deteriorate and just keeping them 

maintained. We’re not putting new vehicles out—right-hand-drive 

vehicles out— anywhere in the country. 

Mr. MEADOWS. I thank the gentlewoman for her questions. 

The chair recognizes the gentleman from South Carolina, Mr. 

Mulvaney. 

Mr. MULVANEY. Mr. Chairman, thank you. 

I thank all of the panelists for doing this. It is very helpful. I’m 

going to follow up on a line of questioning that Mr. Walberg started 

regarding, Mr. Corbett, the type of vehicles. Did I hear you correctly say that you’re going to put out a request for proposal on a 

single type of vehicle that would meet 99 percent of your needs? 


AKING-6430 with DISTILLER
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Are you going to essentially going to have one standardized vehicle 

nationwide? 

Mr. CORBETT. No. Sorry, if that’s what I said, I apologize. Absolutely not. But we did put in the RFI very specific specifications of 

a vehicle that would satisfy 99 percent of our delivery routes. 

Mr. MULVANEY. Okay, I think we’re saying the same thing. So 

I guess to Mr. Walberg’s question, do you intend to use the same 

vehicle in New York City as you do in suburban South Carolina as 

you do for rural Colorado? 

Mr. CORBETT. We haven’t made a determination. That will be— 

the next phase will be a request for proposal for prototype vehicles. 

We will encourage manufacturers to look at, for example, fourwheel-drive versus two-wheel-drive vehicles. For example, your 

flex-fuel, your CNG, hybrid vehicles, and unleaded vehicles, et 

cetera. 

Mr. MULVANEY. So you’re open to the concept of a different type 

of vehicle in different service areas. 

Mr. CORBETT. We absolutely are, yes. 

Mr. MULVANEY. Okay. 

And Ms. Vigneau mentioned, and I think it makes perfect sense, 

that one of the things you analyze when you are making these type 

of fleet decisions is the benefits of having a specific use or a tailored use versus the cost savings that come from a uniform platform, from an identical platform. 

Let me ask you, Ms. Vigneau, you mentioned large fleets. When 

you managing a large fleet, that’s one of the things you look at. 

How big is a typical—how big do you have to be to be a large fleet? 

Ms. VIGNEAU. NAFA has different bans that classifies fleets as 

small fleet. First of all, to be a fleet, you have to have more than 

five vehicles. 

Mr. MULVANEY. Okay, we are pretty much beyond that. 

Ms. VIGNEAU. We are definitely beyond that. I think our large 

fleet designation is actually 500 vehicles or more. 

Mr. MULVANEY. So I guess my point is this, and I would encourage Mr. Corbett to consider this, as they look at the weigh in the 

benefits of having a somewhat tailored vehicle versus the cost savings of the economies of scale, it sounds like you might be able to 

get some of the economies at the fleet of 500 vehicles or more and 

that the post offices can have such a large fleet, they could have 

seven different types of vehicle that qualify by themselves as large 

fleets, right? 

Ms. VIGNEAU. Yes. But then you still have a disadvantage of the 

multiple training programs for mechanics, for drivers, multiple 

parts—— 

Mr. MULVANEY. Sure, you do, but if all vehicles in New York City 

are a particular type, yeah, you might not be able to send them to 

Colorado to get their training, but you are still big enough at 500 

vehicles to get some economies of scale. Yet, I’m not trying to 

micromanage what you pick. I’m glad to hear Mr. Corbett is openminded to the possibility of having different types of vehicles in different areas. I just don’t think makes sense to have the same vehicle that serves such Colorado, South Carolina, and New York City, 

but again, maybe the cost savings are there. 


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I want to talk to you, Mr. Corbett, about finances, if I can, because I don’t understand very much about how the post office 

works. You all are buying a lot of vehicles. How are you going to 

pay for them? 

Mr. CORBETT. That’s yet to be determined because we have not 

gotten to the stage where we will be evaluating financing proposals. Again, the next stage is a request for proposal for prototype 

vehicles. 

Mr. MULVANEY. Right. When do you expect to start taking delivery on these? In a best case scenario, what is your ball park, 2017? 

Mr. CORBETT. Early 2018. 

Mr. MULVANEY. And yet you tell me you haven’t decided yet 

whether you will pay for them out of operating revenues or debt. 

How do you all typically pay? 

Mr. CORBETT. We would typically—again, we haven’t bought vehicles, this level of vehicles, in the past, in the recent past anyway—typically we finance from our own cash and borrowings. 

Mr. MULVANEY. Okay. Quick question, again, I very little about 

the Postal Service. When you all borrow money, is it guaranteed 

by the government? 

Mr. CORBETT. Excuse me? 

Mr. MULVANEY. Is it guaranteed by the Federal Government? 

When you go to the bank and say, would you please lend us 

$20,000 to buy this truck, does that carry an implicit or explicit 

government guarantee, or are you just standing on your own balance sheet when you borrow that money? 

Mr. CORBETT. The government does not guarantee. We also do 

not have any third-party borrowings. All of our borrowings to date 

have been from the Federal Finance Bank of the U.S. Treasury. 

Mr. MULVANEY. Okay, all right. Okay. I’ve got some other questions, but maybe I’ll wait on the other ones. 

Thank you very much, Mr. Chairman. 

Mr. MEADOWS. Mr. Corbett. 

Mr. CONNOLLY. I am so sorry. I was just going to ask my friend, 

Mr. Mulvaney, if you would yield for a second. 

Mr. MULVANEY. I would be happy to. 

Mr. CONNOLLY. I think both the chairman and I would love to 

work with you on this because I think there is concern that too 

much uniformity can actually, with the best of intentions, actually 

not work out all that well. We would like to work with you in making sure that as we replace the fleet, which is a huge fleet, we’re 

taking into account the differences in routes, urban, rural, suburban, et cetera. And to make sure that we also are getting the best 

bang for our buck from an environmental point of view as well. 

Mr. MULVANEY. If the gentleman will yield, my followup questions—I do want to continue this conversation about whether or 

not—how many companies can deliver 180,000 of the same type of 

thing? Does it open up for more competition if we have three or 

four different types of vehicles. Maybe we can explore that later. 

Mr. MEADOWS. The chair recognizes the gentlewoman from 

Michigan, Ms. Lawrence, for 5 minutes. 

Mr. CONNOLLY. Mr. Chairman, before her time starts, I believe 

Ms. Lawrence knows more about this than anybody. She is a 30- 


AKING-6430 with DISTILLER
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year veteran of the U.S. Postal Service and retired 7 years ago as 

a letter carrier so—— 

Mr. MEADOWS. Welcome. 

Mr. CONNOLLY. She’s our expert. 

Mr. MEADOWS. It’s good to have an expert. Sometimes we lack 

that here on the dais. So you go ahead with your 5 minutes of 

questioning. 

Mrs. LAWRENCE. Thank you. 

Mr. Corbett, I have a number of questions. As stated, I started 

my career in the Postal Service as a letter carrier so I’ve driven a 

number of the vehicles, 1 tons, LLVs, the minivan thing; I went 

through that with Chrysler. So while you’ve been there 6 years, I 

actually have driven some of those vehicles. 

The concern I have in having lived through the deployment when 

we brought in the LLV vehicles, there was this massive movement 

of old vehicles moving from one station to another. You bring in the 

new ones, and then you move them down the road. So we’re talking 

about starting in 2018, and I’m very concerned when you say you 

have not—you don’t have the numbers because to incorporate a 

new fleet of vehicles, there are costs—and Ms. Vigneau—that she 

stated. There is the mechanical training. There is the actual impact 

on moving vehicles in, moving vehicles out. So there’s some major 

questions I have for you. 

If we are already in a crisis mode and you gave us the numbers, 

how can we sustain our fleet until 2018? Because understand, this 

is bigger than fleet; this is delivery standards. And, in the morning, 

I can tell you in Michigan, where I live, those cold mornings and 

those old trucks do not start. And that is an immediate impact on 

delivery standards because you’re trying to find ways to get trucks 

from other places so that you can get the mail out of the door. So 

how are we going to be able to survive between now and 2018? 

What is the plan? 

Mr. CORBETT. Thank you for your question, Congresswoman. The 

same way we’re surviving today, and we will get through it. We 

will continue to repair and, in some cases, overhaul our existing vehicles until such time as we have a replacement vehicle for it. In 

your example, that’s very common in cold-weather States to have 

vehicles with either aging batteries or problems with the starter, 

and we will replace that if those problems occur. We also do maintain spares to the extent that it takes longer than a day to repair 

a vehicle. 

Mrs. LAWRENCE. I was a delivery supervisor. I’m very much 

aware of that. 

So we’re saying that we—the current conditions of our 142,000 

LLVs have extended their service life, but you’re saying that between now, 2015, 3 more years, we will be able to continue to just 

repair them and maintain standards? 

Mr. CORBETT. That’s correct. Everything on the vehicle—other 

than the frame really, which is aluminum and is very difficult, if 

it cracks, to replace—can be replaced or repaired as we sit here 

today. In terms of the overall aluminum frames, our analysis and 

assisted by an outside party also indicates that those frames should 

last for another 10 years on average. 


AKING-6430 with DISTILLER
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Mrs. LAWRENCE. I am—I heard the number 2007 until now has 

been a critical period for our vehicles. And we are constantly 

hounded by our delivery standards that that is the ultimate goal 

of the Postal Service is to have a standard that we can maintain. 

And these vehicles and I can tell you as they age becomes a critical, critical deterrent to getting to that point. And I won’t even go 

into the discussion of how we can say that we keep kicking the can 

down the road when we know that it is having an impact on our 

delivery standards? 

I am very concerned that when you as a chief financial officer, 

you’re challenged with the numbers that it would take. You have 

not reached that point of, what would it cost to be able to replace 

the fleet? It seems like—and I know how the government works— 

so if we’re still at the point we haven’t designed the vehicle, we 

don’t know what it’s going to cost and there’s additional internal 

costs that would immediately come on to the Postal Service when 

we bring in these fleets, how can you sit here today and say that 

we can purchase these vehicles? Because when we went through 

this crisis before—and I was there—we literally had to stop purchasing vehicles because we ran out of money, when we did the 

minivan thing. And we had this whole plan, and we couldn’t implement it. 

Mr. Corbett? 

Mr. MEADOWS. The gentlewoman is out of time, but you can, 

please, answer that question. 

Mr. CORBETT. Yes, Congresswoman. 

We, as we sit here today, the Postal Service from nearly a zero 

balance just 6 years ago in terms of cash and with all our borrowing capacity taken up, we now sit here today with about $6 billion of cash. It’s gotten to the point where the replacement of the 

vehicles has got to start now. I believe there is almost universal 

agreement of that. We have got to move as quickly as we possibly 

can to do that, and we have to make it a priority to fund that from 

the cash that’s available and from operating cash in the future. 

Mrs. LAWRENCE. When will you have numbers? 

I’m sorry, Mr. Chairman, when will you have a budget, and when 

will you have numbers that you can actually talk about? 

Mr. CORBETT. Well, I can tell you now that we’ve done the anal- ysis, and we’re looking at somewhere in the neighborhood of $4.5 

billion to $6.5 billion depending upon the nature of the vehicles 

that we buy. 

Mrs. LAWRENCE. Thank you, Mr. Chair. 

Mr. MEADOWS. I thank the gentlewoman. 

The chair recognizes the gentleman from Colorado, Mr. Buck. 

Mr. BUCK. Thank you, Mr. Chairman. 

Mr. Corbett, I haven’t been here this long, but let me give you 

a warning, never tell Members of Congress that you have $6 billion 

in reserves because that money will be spent in some other way. 

I have a question for you, every time I hear the prices are going 

up at the post office, I hear folks from the post office and also analysts talk about that if Congress just allowed the post office to compete in the free market, the post office would do much better. If 

you were made king tomorrow, what regulations, what laws, what 

would we take off, what burdens would we take off the post office 


AKING-6430 with DISTILLER
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to allow you to compete in a way that would really encourage the 

purchase of these vehicles more quickly or give you the flexibility 

you need to deliver the kind of service—and I have to tell you, I 

have worked in the Federal Government and have been very impressed that postal inspectors I worked with as a prosecutor and 

very impressed with the post office personally and professionally. 

So I’m big fan. I just would like to know what can we do to help 

you in the area of competition? 

Mr. CORBETT. Thank you, Mr. Congressman. 

Mr. MEADOWS. Please hit your mic. 

Mr. CORBETT. Let me, please, first put the $6 billion in perspec- tive. The Postal Service spends almost $3 million a day. So you can 

see that this is just a less than a month of operating cash. Having 

said that, we have got to prioritize our expenditures and our priority has go to be to invest in these vehicles; we cannot wait any 

longer. 

Now, in terms of the additional flexibility the Postal Service 

seeks, for 4 years now, we’ve been working on comprehensive legislation and many of the asks if you were have been embedded in 

the previous Senate bill, et cetera. But the largest, by far, combination we need is to integrate Medicare with our retiree health benefit plan, which would save almost $5 billion a year in terms of the 

required payments for the Postal Service. 

In addition to that, we seek a refund and a reduction in the 

amount we pay into to the Federal Employee Retirement System. 

Our account overfunded, and we are looking for that. 

Third, in terms of priority most likely is pricing flexibility. As 

many of the members probably know today, we have a price increase back in January of 2014, and our regulator has determined 

that we need to roll back our prices, even though we’re continuing 

to lose money, that we need to roll back that price increase beginning some time toward the end of July or early August. That date 

has not yet been determined. 

In addition to help with the exigent price increase, we need more 

pricing flexibility. Also the ability to go into new products and services that may be related to our delivery business—and most cases 

are—or maybe something different. For example, just a shipment 

of beer, wine and spirits. There are hundreds of millions of dollars 

that can be earned from that, but we are precluded by law from 

doing that today. And so those are some of the main items that we 

seek help with. 

Mr. BUCK. I represent a rural district. I’m just wondering what 

the burden is. I have four members of the Postal Service in my office right now talking about the need to maintain post offices in 

rural areas. 

Is that a burden compared to the issues that you’ve just mentioned? Where does it fit on the sort of the cost analysis? 

Mr. CORBETT. First, let me say, we have no plans to close any 

post offices that we’ve been discussing internally, so I’m not sure 

the nature of the discussions you’re having. 

And so we are planning on keeping those open. So the things I 

mentioned are—all of them are worth more in terms of dollar value 

in terms of getting us back to financial stability than closing post 

offices, for example. 


AKING-6430 with DISTILLER
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Mr. BUCK. Thank you. 

I yield back, Mr. Chairman. 

Mr. MEADOWS. I thank the gentleman. 

Mr. Corbett, I want to verify one thing, because we’ve talked 

about a cash-on-hand and then you talked about prefunding just 

now. But it’s my understanding that the reason you have so much 

cash on hand is because you haven’t been paying the prefunding. 

Is that correct? 

Mr. CORBETT. That is correct. 

Mr. MEADOWS. So to say we’ve got cash just means that you 

haven’t been paying an obligation you’re required to. And the ranking member and I are willing—I’m willing to invest political capital 

in terms of prefunding. You know, as we start to look at this, I 

really am willing to invest, but I think we need to be transparent 

to indicate that you have this cash, really it’s because you haven’t 

been paying for 4 years on other obligations. Is that correct? 

Mr. CORBETT. That’s correct, chairman. In fact, let me even underscore that more. It’s not just the fact that we’ve been missing 

that payment. On our balance sheet and off our balance sheet, we 

have a—our liabilities and underfunded—our liabilities recorded on 

our balance sheet and underfunding of our retirement and health 

plans, the liabilities exceed our assets by $90 billion. So by no 

stretch was I trying to imply that our balance sheet is in good 

shape and this cash has been generated through peer profits. 

Mr. MEADOWS. So if you were CFO in the private sector, your 

company would be in deep trouble? 

Mr. CORBETT. Correct. 

Mr. MEADOWS. All right. Thank you. 

I recognize the gentleman from California, Mr. Huffman, for 5 

minutes. 

Mr. HUFFMAN. Thank you, Mr. Chairman, and Mr. Ranking 

Member, for allowing me to participate in this hearing. 

I especially want to thank Ranking Member Connolly, who has 

been a champion on this issue. Almost 2 years ago, he and I started working together on a bill that came to be called the FLEET 

Act, Federal Leadership and Energy Efficient Transportation. We 

introduced that bill because the need for modernization of the postal fleet was very obvious as we looked at the age of the vehicles, 

as we looked at this snowballing cost for maintenance, as we looked 

at the embarrassing fuel economy of this fleet, one of the largest 

fleets in the Nation. 

And we also were interested because we know you only have the 

opportunity to replace a fleet like this once a generation or so. And 

so we wanted to get it right. We wanted to be a model for this 

country and for the world. 

And so, Mr. Corbett, it sounds like you’re hearing a chorus of 

guidance from both parties that this one-size-fits-all approach that 

some of us bristled at a little bit from the RFI should evolve to a 

more nimble, flexible approach, and I was really pleased to hear 

your openness to looking at different vehicle types to meet different 

needs throughout your service areas. 

I just want to ask you in that regard, since your competitors are 

certainly fielding very nimble fleets with different types of vehicles 

for different purposes, what you are going to be doing to sort of 


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identify your opportunities in that regard? You could come up with 

lots of different scenarios, but one that comes immediately to my 

mind are concentrated, densely populated urban areas where an 

electric vehicle would seem to be well within its range and could 

meet your needs. Now, that might not be, you know, a standardized vehicle, and conventional wisdom might say that you would 

have to train people to handle special maintenance costs, but anyone who has an electric vehicle knows they require almost no maintenance. You pretty much put air in the tires and windshield wiper 

fluid in that part of it, and you don’t have to do a lot of maintenance on these vehicles. They’re wonderfully economical. 

So, tell me, if you could, what you’re doing to think about the 

ways in which you could have a nimble fleet that could be opportunistic in taking advantages of technologies like that. 

Mr. CORBETT. Sure. Thank you, Congressman. 

Yes. There’s a number of things we’re doing. We have a number 

of ongoing programs, and also I also will comment on what we’re 

doing in the RFP, in order to gather more information as to the 

prospects for alternative-fuel vehicles. 

We have, today, alternative-fuel vehicles in our fleet. We have 43 

electric vehicles. We have been testing vehicles along with five 

manufacturers. Three have dropped out. They didn’t have the ability to continue with our testing. We have over 41,000 flex-fuel vehicles. We have almost 600 compressed-national-gas vehicles. We 

have about a thousand hybrid vehicles, and we even have one fuelcell-hydrogen vehicle we’re testing out. So we continue to look at 

the possibility of alternative-fuel vehicles. 

And one of the principle aspects of our RFP for the prototype vehicles is going to be to encourage the industry to be creative and 

to propose to us how they can work with us to bring the most efficient vehicle, also keeping in mind our requirements on emissions 

and greenhouse gas, et cetera. We have various different things we 

need to balance here. 

At the end of the day, we’ll balance those all against the lifecycle 

cost of replacing a substantial percentage of our 180,000 vehicles. 

I don’t have that information right now, so I really can’t tell you 

what our response would be, but we’ll evaluate it again against the 

criteria of lifecycle total cost, including the cost of the infrastructure and the maintenance cost, both near term and long term, and 

also balance that out against emissions standards and greenhouse 

standards. 

Mr. HUFFMAN. Thank you. I’ll just leave you with two quick 

questions. If you’re able to tell us anything you’re beginning to 

learn from those pilots, I would appreciate it. The flex fuel, I’m 

aware you’ve got a lot of vehicles, but the information I’ve received 

is that you’re not really using the alternative fuel. So I don’t know 

really what we’re gaining by having that flex-fuel technology that 

doesn’t get used. 

I just want to, last, end by asking you about California. Now, our 

Air Resources Board has all sorts of incentives in California to 

work with fleets. They are working with local government fleets to 

put in hydrogen charging stations, for example, where the economies of scale can make that work. And if ever there’s a fleet big 


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enough where they might qualify as a partner for the State of California to do something like that, it would be the Postal Service. 

Have you reached out to the State or other States to see if there 

may be partnering opportunities like that that could be a win-win 

for you? 

Mr. CORBETT. Yes, we definitely have. I cannot comment on the 

conversations because I don’t have that knowledge. But we have a 

sustainability office. They work with various State administrations 

in terms of ways that we can, again, reduce our emissions or greenhouse gases and other nonvehicle-related ecology things. 

Mr. HUFFMAN. Thank you, Mr. Chairman. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentleman from Georgia, Mr. Carter. 

Mr. CARTER. Thank you, Mr. Chairman. 

And thank all of you for being here today. Mr. Corbett, I spent 

all last night preparing these questions, and then you say something that arouses my curiosity here. 

I’m a pharmacist. The number one drug problem we have in the 

country right now is prescription drug abuse. If you can mail prescriptions, and you can send controlled substances, but you cannot 

send beer, wine, and spirits through the mail? 

Mr. CORBETT. That’s correct. 

Mr. CARTER. Amazing. Amazing. 

Okay. I’ll get on to the questions that I prepared last night. 

I want to talk, just briefly, about the maintenance part of this. 

And let me preface this by saying that I was a mayor at one time, 

and I had to manage fleets. And we used the best practices. We 

made sure that we were buying so many fleet vehicles every year, 

so many maintenance vehicles every year, so that we weren’t hit 

with this kind of situation, and I understand that. But we also 

found that sometimes it was better for us to go to the private sector 

to have maintenance and repairs done on our vehicles. 

How do you handle repairs and maintenance on your vehicles? 

Mr. CORBETT. Yes. Of the $700 million a year for our long-life vehicles maintenance costs, about $200 million of that is spent in private industry for parts and service, and the remainder of that is 

done internally by our folks. 

Mr. CARTER. So you do utilize some private sector facilities? 

Mr. CORBETT. Yes, we do. 

Mr. CARTER. How many maintenance facilities does the post office operate? 

Mr. CORBETT. I’m afraid I can’t give you that number. I believe 

it’s in the neighborhood of 500 across the country. 

Mr. CARTER. Okay. That’s close enough to what I’ve got. How 

many employees do you have in those facilities? 

Mr. CORBETT. I’m sorry. I also don’t have that information. 

Mr. CARTER. Okay. Can you get that for me? 

Mr. CORBETT. I’ll be glad to get it to you. 

Mr. CARTER. Okay. I appreciate that. Do you ever put RFPs out 

to see if the private sector can do the maintenance for you? 

Mr. CORBETT. Yeah. We looked at this very carefully. And the— 

one area of our business where it’s fully competitive, really, with 

the private sector is the wages paid for mechanics. Mechanics are 

paid quite a high wage in the private sector, and so in—on balance, 


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we’re actually, assuming all other things are equal, we are better 

using internal labor in a lot of cases rather than—— 

Mr. CARTER. Okay. So you’re saying that the laborers in the post 

office that are employed by the post office are not paid comparable 

wages? 

Mr. CORBETT. What I’m saying is—and, again, it does vary by 

market, and that’s why we spend some on the outside and some on 

the inside. But we actually have found that in a number of cases 

when we evaluate whether we should outsource versus continue to 

use our union labor, that the union wages that we pay are consistent with, or in a lot of cases, competitive—— 

Mr. CARTER. The $700 million that you gave us as a figure, does 

that include labor cost? 

Mr. CORBETT. Yes. That’s all labor, parts, both internal and external, for the maintenance—— 

Mr. CARTER. And it includes employee benefits and everything 

else? 

Mr. CORBETT. Correct. 

Mr. CARTER. Obviously, because you haven’t bought any new vehicles lately, you’re having an increase in the amount that you’re 

having to spend on maintenance, and that is understandable because you haven’t used best practices to buy vehicles and to try to 

keep your fleet up to date. Do you have any idea how much per 

vehicle you’re spending now? 

Mr. CORBETT. Yes. I think, in 2014, we spent an average of about 

$4,200 per vehicle, for the long-life vehicles, in maintenance, which 

is way too high. 

Mr. CARTER. As you’ve been going through this process of trying 

to get your financial affairs in order, have you looked at possibly 

doing away with your maintenance facilities and going to the private sector, how much that might save you and how much it might 

work more efficiently? 

Mr. CORBETT. Again, on a market-by-market basis, we have 

looked at this. And it’s relatively neutral as to where you will save 

money versus pay more. And it’s, again, market by market. 

Mr. CARTER. So you have looked at this? So you’ve got facts and 

figures. Can you provide that to us? Do you mind doing that? 

Mr. CORBETT. Sure. I’d be happy to provide that information. 

Mr. CARTER. Okay. Well, that’s essentially all I had on that line 

of questions. But, again, I want to end with what I started with. 

I find it highly hypocritical that you cannot spend beer, wine, and 

spirits through the mail, yet you send controlled substances 

through the mail every day. And the number one growing problem 

in our Nation is prescription drug abuse. 

Thank you, Mr. Chairman. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the ranking member for 5 minutes. 

Mr. CONNOLLY. I thank the chair. 

Ms. Rectanus, if I can begin with you. In 2011, GAO issued a report on the Postal Service’s delivery fleet. Are you familiar with 

that report? The report stated that 54 percent of the Postal Service’s flex-fuel vehicles run exclusively, however, on gasoline. So, in 

other words, even though the vehicles had the capability to run on 


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alternative fuels, many of them were still running exclusively on 

gasoline. Is that correct? 

Ms. RECTANUS. Yes. 

Mr. CONNOLLY. Can you explain how that could be the case? 

Ms. RECTANUS. What we found in our report is the Department 

of Energy does a lot of waivers to agencies if they are unable to 

use their alternative-fuel vehicles with alternative fuel. And so the 

Postal Service had gotten a waiver from DOE because they met the 

criteria. In other words, there was not sufficient fueling stations 

available, or they were not available within a certain mileage. And 

so they were able to get a waiver for that 54 percent. 

Mr. CONNOLLY. Do you think circumstances have improved with 

regard to that since that 2011 report was issued? 

Ms. RECTANUS. We have not looked at it since that point, so I 

don’t have an answer to that. 

Mr. CONNOLLY. We would welcome an update. 

Ms. RECTANUS. Okay. Sure. 

Mr. CONNOLLY. Mr. Corbett, based on my reading of the request 

for information, the next-generation delivery vehicles should be an 

alternative-fuel vehicle either dedicated or dual-fuel vehicle, as defined in 42 U.S.C. 13211. Is that correct? 

Mr. CORBETT. Excuse me, Congressman. 

Mr. CONNOLLY. You have to turn on your mic. 

Mr. CORBETT. Excuse me, Congressman. I’m not familiar with 

the exact cite you just read. But, yes, in general that is the—— 

Mr. CONNOLLY. I’m quoting from the RFI. 

Mr. CORBETT. Okay. 

Mr. CONNOLLY. My concern here is that’s a noble goal, but in 

light of the exchange I just had with Ms. Rectanus, I’m concerned 

that you are going to continue—those new vehicles would continue—if they are dual-use vehicles, would continue to run on gasoline. What are we doing to try to take advantage of the technology 

to use alternative fuels, including hybrids and electric? Because, 

right now, even with vehicles that are designed to use alternative 

fuels, 54 percent of them are exclusively or mostly using gasoline 

in your current fleet. 

Mr. CORBETT. That’s correct, at least at the time of the study. 

And, again, I’ll underscore, the reason for that was that there was 

not a filling station within a reasonable distance in order to drive 

those vehicles to get the flex fuel. So, in other words, you’d be 

using more fuel and more emissions to go fuel up with flex fuel, 

and that was contrary to our overall goal. So we wouldn’t do that. 

In terms of the evaluation for the new vehicles, whether it would 

be electric, flex, CNG, et cetera, or hybrids, that is still open. We’re 

open to all proposals that we receive. I would point out, as with the 

flex fuels, the biggest hurdle with the flexible-fuel vehicles is not 

the vehicles themselves but, rather, the infrastructure to maintain 

those vehicles at an added cost. So we’re looking for people to be 

creative, aggressive, and to give us proposals that make sense from 

a lifecycle cost perspective. 

Mr. CONNOLLY. And that gets back to the idea of not having one 

size fits all because there may be places where alternative fuels are 

readily available, and the infrastructure exists; there may be other 


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parts of the country where that’s a much more difficult proposition. 

You would agree? 

Mr. CORBETT. Yes. Absolutely. 

Mr. CONNOLLY. I would bring to your attention a letter that I circulated, along with Mr. Huffman, on this very subject, and it’s 

signed by a number of Members of Congress, dated May 6. It’s addressed to the Postmaster General on the process of replacing the 

aging mail-delivery vehicle fleet, and it talks about the RFI and the 

need for looking at—well, avoiding the one size fits all with respect 

to vehicles. Have you seen this letter? Are you aware of it? 

Mr. CORBETT. Yes, I am, Congressman. 

Mr. CONNOLLY. Any idea when the Postmaster General intends 

to respond to it? 

Mr. CORBETT. I’m afraid I don’t know the status of that. 

Mr. CONNOLLY. Okay. We’d ask, for the record, if you could bring 

back the request. I understand it’s only been a little over a week, 

but we think it’s kind of important and very relevant to the subject 

at hand. So, yeah. 

Mr. CORBETT. Out of all respect, we had our National Postal 

Forum this year, which is an annual event. It’s in California, and 

so most of—the Postmaster General and the senior team have been 

out on the West Coast this week. 

Mr. CONNOLLY. Okay. Well, especially in light of this hearing, 

perhaps this hearing could help inform the response. I thank you. 

And, with that, I yield back, Mr. Chairman. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentleman from Wisconsin, Mr. 

Grothman, for 5 minutes. 

Mr. GROTHMAN. Thank you. 

And, Mr. Corbett, I recently did a drive-along with some of the 

local Postal Service guys—at least in Wisconsin, becoming more 

widespread nationwide—collecting food for the local food pantries 

along with the regular route. And I’d like to thank you guys for 

doing that, and there’s certainly hard-working guys and gals, and 

it was a very enjoyable experience. 

One of the things you said to Congressman Carter, just—my 

hearing a little bit now. We’re talking about buying another 

180,000 vehicles. Are most of those the type of vehicles—or how 

many of those the types of vehicles that you use, you know, the 

kind of small vehicles that you see driving around the streets all 

the time? 

Mr. CORBETT. Actually, again, it’s unlikely we’ll buy 180,000 of 

the same vehicle, but up to was the specification. And it actually 

is a vehicle that we expect—at least the body; the drivetrain is still 

wide open—but there are certain aspects of this that will enhance 

safety and improve service and reliability. And as it relates to our 

employees, the safety aspect is critical. So this vehicle will be taller 

than our existing vehicles. It will be longer than our existing vehicles. It will allow the letter carriers to actually walk between the 

shelving where they pick the mail and the packages off so they’re 

not bending over and having accidents, et cetera. 

But it will be roughly, in terms of cargo space or in terms of internal space, about twice the size of the existing vehicles. That 


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would be—we would need those on certain routes, and then we’ll 

continue to look at other modifications as need. 

Mr. GROTHMAN. Great. About how many of those do you anticipate buying? 

Mr. CORBETT. Until we will get to the RFP and complete our 

analysis, I really can’t specifically respond to that, what number. 

One thing that I am certain is that there will be some number of 

vehicles that size that we need because the majority of our routes 

can be accommodated by that vehicle. 

Mr. GROTHMAN. I’m not trying to catch you on anything. It’s just 

the notes we have here says 180,000, but that just could be 100, 

could be 50, could be 150. I don’t know. 

Mr. CORBETT. Again, it’s premature to know to how many would 

be exactly at spec. 

Mr. GROTHMAN. That’s fine. You just said you’re spending $4,200 

bucks a year on maintenance. Is that really just on maintenance 

per vehicle? 

Mr. CORBETT. That’s correct. 

Mr. GROTHMAN. What are they doing? It just seems to me it’s 

kind of a high number. That’s all. I wasn’t planning on asking it. 

Congressman Carter asked you. I don’t spend $4,200 on my car. I 

just wonder, what do they do for $4,200 bucks? 

Mr. CORBETT. Again, I want to underscore the fact that the average vehicle is 23-years-old. So virtually every component of that vehicle, other than the frame and the chassis, has been replaced at 

some point in its life and continues to fail as it’s used longer and 

longer. So, yes, it is a high number. It underscores the fact that 

we need to move as quickly as possible to replace these. 

Mr. GROTHMAN. Yeah. I’m just wondering. I mean, you know, I 

realize it’s not like you’re doing highway miles either. It’s start and 

stop all day long. I just wondered, for $4,200 bucks a year, what 

are you doing every year on a vehicle? It just seems to be a high 

number. I just wondered. 

Mr. CORBETT. I’m sorry. Could you repeat the question, please? 

Mr. GROTHMAN. Yeah. You said you’re spending $4,200 a year 

per vehicle. Usually, I think what I spend on my vehicle each year, 

I can think of things that had to be replaced, maybe you need new 

tires and new brakes every year. I don’t know. You’re starting and 

stopping all the time. I’m just saying, $4,200, it’s a kind of a high 

number. In an average vehicle, what are you doing every year that 

you working your way up to $4,200 on average? 

Mr. CORBETT. As I said, I don’t have a component-by-component 

answer for you. So if you are looking for that, I’d be glad to provide 

that. But when you think about it, our vehicle—some of our vehicles are turned on and off, stop and start, 600 times a day. So you 

can imagine we go through, for example, starters, very, very quickly in those vehicles, even when they’re young. And as they get 

older, that need continues. Transmissions, more wear and tear in 

terms of start and stop. Brakes, more wear and tear than any normal vehicle in terms of stop and start. So pretty much every component of the vehicle is subject to stress. 

Mr. GROTHMAN. That’s what I mean. Maybe you put a new starter in every year. I don’t know. Final question I have for you, how 

many miles on your average vehicle you’re replacing? And, again, 


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I realize it’s stop, starting. It’s not like you’re putting a million 

miles on highway. 

Mr. CORBETT. The average right-hand drive vehicles, the LLVs, 

long-life vehicles we’re talking about here, drive about 19 miles per 

day. So they don’t go very far on a daily basis. But when you have 

163,000 of them out there, that accumulates to quite a number of 

mileage. 

Mr. GROTHMAN. Okay. So maybe 6,000, 7,000 miles a year? 

Mr. CORBETT. That’s about right. Yes. 

Mr. GROTHMAN. Okay. Thanks for coming over and answering all 

the questions. 

Mr. CORBETT. Thank you. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentlewoman from the District of Columbia for 5 minutes. 

Ms. NORTON. Thank you very much, Mr. Chairman. 

I thank all of the witnesses for being here. 

I have a question for Mr. Corbett. 

Mr. Corbett, as laymen, we are taught to buy—and the way you 

appear to be buying these vehicles—bulk purpose purchase, larger 

size, if you lease, you lease for longer periods of time; that saves 

money; you’re leasing for shorter periods. And I’m going to say, if 

the reason for this bulk purpose purchase has to do with a condition Congress has left the post office, that would be altogether understandable. You’re at the end of one lifecycle, awful lot of vehicles, all your vehicles, virtually. 

Was it cheaper to buy bulk the last time, even when you considered the replacement parts—what was it—that my colleague asked 

for, the $4200 per vehicle? Was it cheaper? Was the bulk purchase 

cheaper, all things considered, than doing annual or some other 

form of purchase? 

Mr. CORBETT. Yes. Let me clarify. When we talk to up to 180,000 

vehicles, we will be looking at procuring about 25,000 vehicles per 

year. So we would not receive all 180,000. So you are talking about 

a 7- or 8-year effort. In addition to that, some of those vehicles may 

be redesigned during that period of time. 

Ms. NORTON. I’m sorry. How many are you purchasing at a time, 

bulk purchase? 

Mr. CORBETT. In our RFP, we’ll ask the suppliers for pricing 

schedules based on, for example, the quantity we would purchase 

from them because they need to achieve certain economies of scale 

and return on the facility they put in place to build these and the 

annual number of vehicles we would actually take delivery. 

Ms. NORTON. At any one time? The annual number that they 

would be manufactured at the same time? 

Mr. CORBETT. Correct. They would need to know what sort of facility they need to put in place and what the workforce looks like 

and how constant that flow of work will be so that they can determine how to price the overall supplies. 

Ms. NORTON. When you decided to do another bulk purchase, as 

you did last time, did you consider other forms of purchase, compare prices, or compare other ways that might be advantageous to 

the Postal Service? 


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Mr. CORBETT. There are kind of two ways to answer your question. One is that because we had a bulk purchase 20 years ago, 

we’re almost forced to have a bulk purchase this time around. However, we’re going to spread that purchase over 7 or 8 years so that 

it starts to elongate in terms of when you need to replace these in 

the next cycle. 

Ms. NORTON. But does that mean that the vehicles, though, are 

any different? I mean, isn’t the same bulk purchase, the same vehicles, the same technology; it’s just one when you bring them on? 

Mr. CORBETT. No. I’m sorry. Earlier in the hearing, we were addressing some of the design issues. And let me go back over it real 

briefly. In the RFP we were putting out for our prototype vehicle, 

we were encouraging the suppliers to come with us with innovative 

designs and that can, in often cases, will differ from the specifications we put out for the main vehicle. 

Ms. NORTON. So, year by year, purchase by purchase, that come 

on to the Postal Service, they could be different vehicles? 

Mr. CORBETT. They could be. I would expect it to be, you know 

a few years one type of vehicle, and as they’re developing the next 

vehicle or next technology, which may or may be able to be integrated with the platform that they have with—— 

Ms. NORTON. And they put those in for the same price, same 

costs to you because you’ve made a single purchase request? 

Mr. CORBETT. I would anticipate that if they proposed two different vehicles or three different vehicles over a 7- or 8-year period, 

that they would all be at different costs. 

Ms. NORTON. So you might not get a single bulk cost for all of 

the vehicles because you may have to upgrade the technologies, 

there may be differences in them, just like there are differences in 

the cars we buy every day that cost us more? 

Mr. CORBETT. That’s correct. I mean, I would anticipate a large 

number of vehicles being from an essentially bulk purchase over a 

number of years, but also with the flexibility, for example, if they 

can propose this for a new drivetrain, a new technology, a new 

safety method, et cetera, to be able to integrated into the existing 

fleet as well as into the newer vehicles. 

Ms. NORTON. Now, that’s interesting. So you think you’re getting 

the advantages of bulk purchase along with differences, innovations that may occur along the way as you accept these purchases. 

Is that correct? 

Mr. CORBETT. That, for us, is utopia, and that’s where we’re 

pushing the suppliers. How well they’ll be able to stimulate that 

and give us a competitive bid is yet to be seen, but we’re encouraging them to be aggressive. 

Ms. NORTON. Well, considering the number of vehicles you are 

ordering, it seems to me you may be using the government’s advantage here to good measure. 

I just want to ask one more question, Mr. Chairman, if I could 

because the Office of Inspector General did indicate in its report, 

apparently before you put this purchase in: Fleet management best 

practices involve investing predictable and consistent sums annually to renew the fleet continuously and allow adoption of new technologies. 


AKING-6430 with DISTILLER
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Well, your answer to me just now appears to say, you’re trying 

to build that into bulk purchase. Are you trying to build what the 

inspector general says you get by investing in smaller numbers into 

your bulk purchase because you are investing so much that there 

may be an advantage in price to the manufacturer in changing the 

technologies we’re giving you, at least some of the advantages of a 

bulk purchase? 

Mr. CORBETT. That’s correct. 

Ms. NORTON. Thank you very much, Mr. Chairman. 

Mr. MEADOWS. I thank the gentlewoman. The chair recognizes 

himself for 5 minutes. 

I want to go ahead and follow up and ask a few different things, 

perhaps, not as much specific questions, Ms. Vigneau. But what I 

would like to ask you to provide this committee, that if you were 

to do this as managing a large fleet, if I were a private individual, 

how would you best let me maximize my dollar in terms of lifecycle 

costs and the number of vehicles? There has to be a sweet spot in 

terms of the number of vehicles that you purchase at a particular 

time, and so if any of you can speak to that and submit that in 

writing to the committee, it would be extremely helpful if you 

would do that. 

Mr. Corbett, let me come back to you because one of the concerns 

that I have is the ranking member and I have been in a number 

of meetings with different stakeholders that have a real interest in 

terms of the long-term viability of the Postal Service. There are 

competing measures there, and what you’ve done this morning is 

you’ve added this 180,000-vehicle bombshell, as I would say, because it’s a huge amount of money, on top of what we’re already 

having to do. And what I don’t want to do is look at inefficiencies 

in terms of vehicle acquisitions that may affect the postal workforce. Because you mentioned prefunding, I told you that we’re 

more than happy to look at that and address that. But that doesn’t 

get us all the way home. You’re the CFO. You know the type of 

problems that we have. 

Your testimony today does not really align with the RFI or potentially the RFP that you’re talking about, just because you keep 

talking about having multiple options, but you talk about a prototype. And when you mention a prototype or the prototype that you 

have on several occasions, it would indicate to me that you’re looking at one vehicle type with maybe three different engines, you 

know, an E85 engine, an electric engine, but it becomes one vehicle. So is that really what you’re talking about, a one size fits all 

to handle 99 percent of what you’re talking about with different engines or transmissions as a prototype? 

Mr. CORBETT. We, again, are wide open in terms of the RFP. 

We’re soliciting—— 

Mr. MEADOWS. But your RFI doesn’t indicate—I mean, it’s been 

very specific what you’re asking for. You’re asking for a prototype 

with the potential of delivering 180,000 of those, which would say, 

one vehicle 180,000 times. Am I misreading the RFI? 

Mr. CORBETT. The RFI said that this is our general specification, 

and we were very specific especially about the body of the actual 

vehicle in terms of the square footage and the height, et cetera. 


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Mr. MEADOWS. So, based on that square footage, what percentage 

of packages would the Postal Service be delivering? I mean, obviously, you figured for the next 20 years, Postal Service is going to 

have X number of first class, X number of packages in order to design this prototype, so what percentage of packages did the Postal 

Service figure in for the size of the vehicle? 

Mr. CORBETT. Currently, today, for roundtrip packages that we 

pick up and deliver—rather, that go—an origin to destination and 

we deliver those, we have about 20 percent of the package market. 

Mr. MEADOWS. I know the numbers. I’ve talked to the Postmaster General, I’ve talked to a number of them. I’m saying, in 

your design that you’re designing for the next 20 years, I guess, 

what percentage did you figure that to be? Say it’s 20 percent? Because nobody in the Postal Service believes it’s going to stay at 20 

percent. 

Mr. CORBETT. We believe that our market share will grow, and 

we’ve accommodated that in the size of these vehicles, and we believe that the overall market will grow—although it’s growing 

hyper in terms of e-commerce today—we believe the overall market 

will grow closer to 6 percent per year. 

Mr. MEADOWS. All right. So your analysis says that your packages on the Postal Service is going to grow at 6 percent? 

Mr. CORBETT. That’s correct. 

Mr. MEADOWS. So, again, I guess my question is, how many 

packages, what percentage of the packages versus first class—I 

guess what I’m saying is, are we going to buy a van that is primarily for packages, or are we going to buy a van that is primarily 

for mail? What’s the mix? Is it 50–50? Is 75–25? Where, obviously, 

you get in the prototype, you have to define that. 

Mr. CORBETT. Well, the size of the actual body of the van is not 

very price elastic. In other words, you could chop off 3 feet off the 

back of a 15-foot van and you would probably save somewhere in 

the neighbor of $500. Plus, it’s just an aluminum wrap over the actual vehicle, working on the same chassis and working on the same 

sort of internal components, whether it be alternative vehicle or 

unleaded. But the reason for the procurement is not related to 

package solely. It’s actually enhanced safety. We have 20,000 accidents per year—20,000 accidents per year. We’ve got to improve 

the ergonomics of the overall vehicle so our employees are not put 

in harm’s way. We don’t have air bags. We don’t have automatic 

braking when you get up off the seat. Things today that people 

take—we don’t have backup cameras. Things like this really need 

to be made available. The service and reliability. The reliability is 

impacted by this. 

Mr. MEADOWS. Again, and I appreciate all those things, and 

those are important things to look at. But if you were only looking 

at those items, you would get a postal vehicle that is very similar 

to the one you have today with just all those bells and whistles on 

there. So I guess what I’m looking at is, when will the design, after 

the prototype, be approved? 

Mr. CORBETT. The actual design and selection of the vehicles 

from the prototype stage could be as much—almost 2 years from 

today when we’ll make that final decision. 


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Mr. MEADOWS. All right. So I guess my question then is, how do 

you do an RFP before that when you’re not assured of what the design is going to look like? You know, you’ve got to have the design 

before you actually do an RFP. If not, you’re doing an RFP that has 

so many qualifiers that it’s meaningless. 

Mr. CORBETT. The RFP, the next RFP that was—— 

Mr. MEADOWS. Is for prototypes. I’ve got that. 

Mr. CORBETT. Yes. 

Mr. MEADOWS. So when does the postmaster, when will she sign 

off on the design, the DAR? 

Mr. CORBETT. Before we go out with the RFP for the actual production vehicles. 

Mr. MEADOWS. All right. And what I’m hearing, and I want to 

make sure that I’m correct, that design is actually going to be more 

of a one-size-fits-all in terms of what it looks like on the outside 

that may have a number of different engines. Is that correct? 

Mr. CORBETT. I don’t want to pre-conclude that, so I can’t confirm that. 

Mr. MEADOWS. Okay. Let me be more specific. I live in a rural 

area. When I get stuff delivered to me, I may get a big UPS brown. 

I may get a small UPS brown, depending on what it is logistically. 

And that’s just at my one location in North Carolina. And what I’m 

having a hard time with, with all the questions that have been on 

both sides of this, is how we’re going to do a design for 180,000 

units that may have a different engine or this or that, but, yet, it’s 

a one size fits all. And I guess I want to encourage you to reevaluate that and perhaps slow that down and do it in buckets of 40,000 

or buckets of 50,000 based on needs because in Mr. Connolly’s district, you could do it with electric vehicles extremely well. In my 

district, as you start to go up the mountain, I can assure you that 

it won’t work nearly as well as it does in Mr. Connolly’s. And both 

of them are 11th Congressional Districts, but they have very different geographical components. 

So I really want to encourage you to go back and look at, perhaps, slowing down the process but also making it smaller for two 

reasons: One is technology is going to change because, really, what 

we’re looking at here is you’re going to make a bulk purchase over 

the next 5 to 7 years, maybe 5 to 8 years, based on your testimony, 

but the RFI says 5 to 7 years. So you are going to make a bulk 

purchase. We’re not going to make another bulk purchase, then, for 

20 more years. You know, based on that, technology is changing 

very much. You know, I have an iPhone in my pocket. Twenty 

years ago, I had a bag phone that I put on the outside of my car 

to try to make it. And so we need to understand that technology 

is changing rapidly, and to do that, do I have your commitment 

that you’re willing to relook at that and put it in smaller buckets 

before the RFP goes out? 

Mr. CORBETT. In the prototype RFP, we’re going to encourage, 

again, the suppliers—and we have 15 prequalified suppliers, so we 

should get a range of alternatives—to propose not only our base vehicle but other vehicles based—and they’re going to have knowledge on our delivery routes. They are going to have knowledge on 

economic data, the package growth over the country, and other 

types of things. And we’re going to ask them for their input as well 


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as input we already have that we received from our third-party 

consultants. And we’re going to assimilate that and decide how 

many, which vehicle to put out for the production RFP. So I think 

it’s premature for me to commit to tranches of 50,000 or 40,000 or 

some other number because I just don’t have the data to make that 

equipment. I’m sorry. 

Mr. MEADOWS. Well, if you don’t have the data to make that 

commitment, Mr. Corbett, then you don’t have the data to make 

the commitment that 180,000 is correct either because if you can’t 

make the commitment that a smaller one is accurate, you don’t 

have the same data that would say that 180,000 is accurate. You 

follow my logic there? You either have it, or you don’t. 

Mr. CORBETT. Excuse me, Mr. Chairman. What I was saying was 

that in terms of the 180,000, we know—— 

Mr. MEADOWS. You know you have to replace 180,000 vehicles. 

I understand that. But what I’m saying is in terms of the needs 

of those individual vehicles, you wouldn’t know, if you don’t know 

the buckets to put it in, whether 180,000 works or whether it’s 20 

or 50. 

Mr. CORBETT. I see what you’re saying. But both of these matters 

will be a lot more clear after the prototype phase, when we actually 

get the data from these suppliers and are able to assimilate that. 

Mr. MEADOWS. Well, perhaps we just have—I don’t understand 

how you do a prototype for something that you’re designing that 

you’re not sure what you’re designing for other than—well, we’ll go 

on. I’ll close with this. 

I’ll yield to the ranking member for his closing statement. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

I just have a couple of CFO-related questions to get on the 

record, if I may. 

Mr. Corbett, can you name a single company in the United 

States that has 100 percent health prepayment requirement? 

Mr. CORBETT. No, I cannot. 

Mr. CONNOLLY. Can you name a single Federal agency that has 

that requirement? 

Mr. CORBETT. No. I’m not aware of any. 

Mr. CONNOLLY. So the requirement put upon USPS, the 100-percent requirement, is unique? 

Mr. CORBETT. I believe so, yes. 

Mr. CONNOLLY. And if we had repealed that prefunding requirement, what’s the annual saving? 

Mr. CORBETT. Approximately $5 billion a year. 

Mr. CONNOLLY. $5 billion a year. Is it accurate that, had we done 

that last year, you would have actually shown an operating profit? 

Mr. CORBETT. Last year, with that and factoring in other noncontrollable, noncash Workers’ Compensation adjustments, yes, we 

would have shown an operating profit. 

Mr. CONNOLLY. To the chairman’s earlier questioning, although 

you’re not paying it—you’re not meeting that obligation. It’s not 

like it’s to an external entity. So it’s a bookkeeping matter at the 

moment. But, from a bookkeeping point of view, what is the cumulative obligation with respect to prepayment? 

Mr. CORBETT. I think it’s approximately $27 billion. 


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Mr. CONNOLLY. And there’s another item, isn’t there, a FERS 

overpayment that’s been identified? 

Mr. CORBETT. That’s correct. 

Mr. CONNOLLY. Is that overpayment about $8 billion. 

Mr. CORBETT. No, I don’t believe so any longer. At one point it 

was, but my understanding is that OPM’s actuaries have reevaluated that, and that overpayment now stands at somewhere in the 

neighborhood of $1.5 billion. 

Mr. CONNOLLY. But that could be some relief for you, obviously, 

from a ledger point of view. Is that correct? 

Mr. CORBETT. That’s correct. 

Mr. CONNOLLY. Okay. One final point. You were talking to Ms. 

Lawrence about the hydraulics of certain vehicles and the need, because of stop-and-go traffic, there’s more wear and tear on some vehicles than on others. 

Were you familiar with the fact that UPS and FedEx actually did 

avail themselves of some recovery money back in 2009 and 2010 

and used it for sort of innovative vehicles and trucks, and they 

showed a real improvement in miles per gallon, emission reduction, 

and lower maintenance costs? Are you familiar with the vehicles 

they purchased? 

Mr. CORBETT. I’m vaguely familiar, but not with the specific vehicles, Mr. Connolly. 

Mr. CONNOLLY. This is the program I was trying to get USPS to 

avail itself of. It didn’t, but your competitors did. And it apparently 

lived up to the promise. So it might be worth looking at how they 

did it and whether we can learn from that or not. 

With that, I thank you all for being here today. 

And thank you, Mr. Chairman for the hearing. 

Mr. MEADOWS. I want to thank each of you for the testimony. 

Mr. Corbett, my questioning of you being very direct is really one 

out of caution. We are at a critical stage from an investment standpoint. I think all of us want the Postal Service and system not only 

to be efficient but be what we’ve always—what we’ve grown up 

with it to be, is, you know, neither rain, nor snow, nor sleet. You 

know, when we think of that, I thought the Postal Service could 

go through almost anything, and that’s what we want to see it in 

the future. 

Unfortunately, here, today, the real stumbling block is a changing in the way that we do business both from first class mail, to 

a tough economy, to e-commerce, and everything else, and its managing through there. 

I need you to be transparent. And the ranking member talked 

about some of those prefunding issues where, you know, there are 

very few other areas that would have the same requirement. But 

I also need you to be transparent. There are some of those areas 

where we’re not funding properly. And, as a good CFO, I need you 

to help me with those and be cautious in the way that we look at 

this acquisition, not because of the vehicle or the lack of the vehicle 

need that we have but really because there are hundreds of thousands of postal workers that we need to take care of. 

And I’m committed to the ranking member to work diligently to 

make sure that we come up with postal reform that does exactly 

that. And, yet, at the same time, if you go out and purchase 


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180,000 vehicles the way that it’s set to do, it makes it very constrained for us as we start to look at where do we give, what do 

we do, and we need to look at technology. 

So I’m asking you that today, and my pointed questions is really 

one out of caution just because I’ve heard so many different things 

from so many different groups. And we do have some expertise 

here. I talked to Mr. Lynch just yesterday because he’s got a family 

of letter carriers and postal workers. 

And so I said: You’ve got real credibility. I want you to help me 

on some of these other areas. 

And so, with that, if your pledge to this committee is that you’re 

willing to be open and honest, I can tell you that you will find a 

bipartisan support that you’ve never seen before as we start to try 

to really address this in a real way. 

For the others of you that have come today, I thank you for your 

testimony. I know there will be followup questions that we will ask 

you to respond to the committee on. 

And, with that, if there is no further business, this committee 

stands adjourned. 

[Whereupon, at 12:00 p.m., the subcommittee was adjourned.] 


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