U.S. Postal Service Facilities: Improvements in Data Would Strengthen Maintenance and Alignment of Access to Retail Services
Published: 2007-12-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Continued financial challenges and increased competition call for the U.S. Postal Service to manage its 34,000 facilities as efficiently and cost-effectively as possible. GAO and others have identified key facility management challenges, including the need to (1) capture and maintain accurate facility data, (2) adequately maintain facilities, and (3) align retail access with customer needs. This report assesses Postal Service efforts to overcome these challenges and implement leading federal practices. To conduct this study, GAO analyzed postal data and documents, visited 58 facilities, and interviewed postal officials.
section_title: What GAO Found
paragraphs: To address the challenge of capturing and maintaining accurate facility management data, the Postal Service developed the Facility Database, but the database does not conform to the Postal Service's goals or to leading federal practices; specifically, it does not include data needed to measure performance on managing facilities or have the capacity to track such data over time. Further, a database analysis by GAO revealed data reliability problems, including duplicative and contradictory data. In addition, major Postal Service departments do not use the database as a consolidated data source for managing postal facilities. The Postal Service has attempted to improve the database, but many problems remain. To address the challenge of maintaining its facilities, the Postal Service has begun assessing the condition of the facilities but has neither determined the extent of its maintenance projects nor strategically prioritized the projects. A Postal Service inspection of 651 randomly selected postal facilities revealed that two-thirds were in less than "acceptable" condition, but the Postal Service had not documented the full extent of its maintenance projects backlog. After the inspection, the Postal Service initiated a program to assess the condition of all of its facilities--a necessary first step to improving their condition. In addition, the Postal Service lacks the data needed to implement leading federal practices, such as considering a facility's importance and value when prioritizing its maintenance projects. Due to funding constraints, the Postal Service currently focuses exclusively on emergency and urgent repairs--at the expense of a less costly preventive maintenance approach. To address the challenge of aligning access to postal retail services with customer needs, the Postal Service has expanded access in underserved areas but has done less to address overserved areas. Leading federal practices identify criteria for "rightsizing" facility networks--such as considering facilities' importance and utilization--but the Postal Service does not consider these criteria. GAO's analysis shows wide variation in the number of postal retail facilities among comparable counties, and a number of facilities GAO visited appeared to merit consideration for closure based on one or more of the federal criteria. If the Postal Service begins collecting data that reflects criteria based on leading federal practices, it may be able to close facilities and adjust access to retail services according to customer needs.

section_title: Letter
paragraphs: With about 34,000 owned and leased facilities, the U.S. Postal Service is  the third-largest landholding entity in the federal government. Most of its  facilities provide retail services, such as mail and package delivery,  consistent with its mission to make postal services accessible to everyone  in the country. Other facilities house the Postal Service’s mail processing,  mail delivery, vehicle maintenance, and administrative functions. This  expansive facility network is costly to operate and poses significant  property management challenges. Changes in mail volumes, increasing  employee compensation and benefits costs, a more competitive  marketplace, and legislative reforms enacted in December 2006 have  necessitated that the Postal Service increase its efficiency and cut costs.  The Postal Accountability and Enhancement Act, enacted in December  2006, provided tools and mechanisms that can be used to establish an  efficient, flexible, and financially sound Postal Service, but also introduced  a rate cap for many postal services. Traditionally, the Postal Service set  rates based on costs, but now an annual limitation will be placed on  percentage changes in rates for market-dominant (as opposed to  competitive) products, linked to the change in the Consumer Price  Index—All Urban Customers.
Real property management is a challenge not only for the Postal Service  but also for other federal agencies. In 2004, an executive order established  the Federal Real Property Council (Federal Council)—an interagency  group of federal landholding agencies—to collect and disseminate  information on leading practices for managing federal facilities. One such  leading federal practice requires federal agencies bound by the executive  order to establish a current and reliable inventory of their facilities.  Furthermore, these agencies are required to capture and report  performance-related data about their facilities in four areas: (1)  importance to achieving the agency’s mission, (2) utilization rate (extent  to which the facility is fully utilized), (3) physical condition, and (4) annual  operating costs. These data, termed “facility management performance  measures,” are used to measure an agency’s performance in managing its  facilities. Although not bound by the executive order, the Postal Service  has voluntarily assigned a representative to the Federal Council and  adopted some leading federal practices. Additional information on the  executive order and the Federal Council is available in appendix I.
Previous analyses by GAO and others have identified a number of key  challenges to managing federal facilities, including a lack of reliable and  useful data on facilities, facilities in disrepair, and facility networks that  are not properly aligned with customer needs. You requested that we  analyze these challenges as they apply to the Postal Service. Accordingly,  this report addresses the Postal Service’s efforts to (1) capture and  maintain accurate facility data, (2) adequately maintain the condition of  postal facilities, and (3) align access to retail services with its customer  needs. This report identifies the Postal Service’s goals and actions for  managing each of these challenges and assesses the Postal Service’s  progress in overcoming the challenges and, as applicable, its  implementation of leading federal practices.
To accomplish our objectives, we visited 58 postal facilities, interviewed  postal officials to learn about postal facility management, reviewed  relevant postal documents, and assessed the Postal Service’s  implementation of relevant leading federal practices for managing its  facilities. The observations derived from our site visits cannot be  generalized to the population of postal facilities nationwide. We chose the  facilities we visited to achieve balance with regard to geographic location,  area demographic trends, facility type, revenue, and physical condition.  Our work also included the following:    To assess the Postal Service’s progress in overcoming the challenge of  capturing and maintaining accurate data on its facilities, we analyzed the  Postal Service’s Facility Database (FDB) and assessed the reliability of the  data it contained on two dates—October 5, 2006 and July 7, 2007. To  assess FDB data, we interviewed postal officials to obtain an  understanding of the data, the structure of the database, the sources of the  data, and known database issues and limitations; reviewed related Postal  Service documents and reports by the Postal Service’s Office of the  Inspector General (Postal OIG); and electronically tested the database for  completeness, obvious errors, and inconsistencies. In addition, we  attempted to verify selected facility data as of October 5, 2006, during our  visits to 58 postal facilities. Our assessment of FDB data as of July 7,  2007—our second assessment—was designed, in part, to determine the  impact of the Postal Service’s efforts to improve FDB.
To assess the Postal Service’s progress in overcoming the challenge of  maintaining its facilities in adequate condition, we analyzed maintenance  data nationwide and attempted to validate maintenance data at the 58  facilities that we visited.
To assess the Postal Service’s progress in overcoming the challenge of  aligning access to its retail services with customer needs, we assessed the  extent to which the number of retail postal facilities varies among counties  with similar attributes. To do so, we first identified the number and  location of Postal Service retail facilities at the county level. Then, we  statistically compared the number of postal retail facilities in each county,  given the county’s population, land area, and degree of urbanization, with  the number of retail facilities in comparable counties. The variation in the  number of postal retail facilities was determined by subtracting the  number of retail facilities in a county with the number of facilities in  comparable counties, as determined by the statistical comparison.  However, we excluded counties without an urban center of at least 10,000  people from the output of our analysis because the Postal Service may  need to maintain more postal retail facilities in these counties to fulfill its  mission of providing universal access to postal services. Our statistical  analysis explains almost 80 percent of the variation in the number of retail  postal facilities among the counties.
We conducted our work from July 2006 through December 2007 in  accordance with generally accepted government auditing standards.  Appendix II contains additional information on our scope and  methodology.
subsections: section_title: Background
paragraphs: To provide, consistent with its mission, postal services to everyone in the  United States, the Postal Service operates an expansive network of  facilities throughout the nation. Our analysis of Postal Service data shows  there are approximately 34,000 active owned or leased postal facilities,  most of which provide retail services. The Postal Service 2006 annual  report indicates that its facilities are valued at approximately $21 billion.  In addition, according to the Postal Service, it paid approximately $860  million for capital projects and maintenance repairs in fiscal year 2006.  About three-fourths of postal facilities are leased, and in fiscal year 2006,  the Postal Service paid over $1 billion to lease these facilities. The Postal  Service is responsible for maintaining all of its owned facilities and many  of its leased facilities, but maintenance responsibilities vary with the  specific lease and can change when a lease is renegotiated.
Employees at postal retail facilities provide services related to First-Class  Mail, Insured and Registered Mail, Parcel Post, Priority Mail, and other  services, such as post office box rentals and money-order purchases. Some  retail facilities also provide space for other functions, such as receiving  and sorting mail for delivery. Retail facilities—whether owned or leased— fall into one of three categories: (1) main post offices, where local  postmasters oversee retail operations in the geographic area; (2) postal  stations located within a municipality’s corporate limits; and (3) postal  branches located outside a municipality’s corporate limits. According to  Postal Service data, main post offices account for almost 75 percent of all  retail facilities, but in large communities there may be more stations and  branches. The Postal Service also operates nonretail facilities, such as mail  processing facilities, vehicle maintenance facilities, and administrative  offices. Figure 1 provides information on the different types of postal  facilities.
Besides the retail facilities it owns or leases, the Postal Service reported in  its 2006 annual report that it operates about 3,950 privately owned and  operated facilities, known as either “contract postal units” or “community  post offices,” which provide retail postal services. Contract postal units  are operated by nonpostal employees in privately operated businesses,  such as convenience stores, grocery stores, greeting card stores, and  pharmacies. Community post offices are contract postal units that are  located in small communities and function as main post offices. The Postal  Service reported that there were 3,014 contract postal units and 937  community post offices throughout the nation. The Postal Service has no  responsibility for maintaining these privately operated retail facilities.
Responsibility for managing postal facilities is distributed across the  Postal Service.
Three Postal Service departments in headquarters share responsibility for  managing data on postal facilities—(1) Delivery and Retail, (2) Facilities,  and (3) Intelligent Mail and Address Quality. Each of these departments  tracks different data on postal facilities depending on its needs. Delivery  and Retail manages FDB, which was developed to consolidate information  on all postal facilities. Facilities manages the Facility Management System,  which is used to manage facility acquisitions and capital and expense  projects. Intelligent Mail and Address Quality administers the Address  Management System, which contains the addresses of about 160 million  delivery locations nationwide, including postal facilities. Both of these  systems feed information directly into FDB.
The Postal Service’s Vice President for Facilities oversees the maintenance  of facilities nationwide in conjunction with eight regionally based  Facilities Service Offices, which manage the maintenance activities in the  Postal Service’s areas.
The Postal Service’s Vice President for Delivery and Retail—in  conjunction with the nine area vice presidents, 80 district managers, and  almost 24,000 local postmasters throughout the country—has nationwide  responsibility for aligning the Postal Service’s retail network with  customer needs (see fig. 2). The district managers are responsible for  making recommendations to open or close a postal retail facility, while the  Vice President for Delivery and Retail is responsible for acting on the  recommendations.
In 2001, we placed the Postal Service on our list of agencies and programs  designated as high risk due to, among other factors, financial and  operational challenges. The Postal Service responded by issuing a plan to  “transform” its operations—the 2002 Transformation Plan. Specific  strategies outlined in the plan called for the Postal Service to align its  retail network with customer needs by promoting alternative access to  retail services and closing “low-value, redundant” postal retail facilities in  overserved areas. To obtain information needed to align access to retail  services with customer needs, the Postal Service indicated that it would  establish a national facility database and develop a criteria-based  methodology to determine which facilities to close. The criteria were to  include factors, such as a facility’s proximity to other postal facilities, the  number of households and delivery points in a community, and indicators  of retail productivity. In 2004, we reported that the Postal Service had not  yet developed criteria for making changes to its retail facility network,  including facility closures and consolidations. The Postal Service updated  its Transformation Plan in 2005 for fiscal years 2006 through 2010,  indicating that it intended to reduce its long-term facility repair costs by  doing more focused, routine facility assessments and preventive  maintenance.
The postal reform legislation enacted in December 2006 provided  additional opportunities to address the challenges the Postal Service faces  in adapting to an increasingly competitive environment. The act provides  tools and mechanisms to help control costs, including the costs of aligning  its facility network with its customer needs. The act also requires the  Postal Service to develop a plan by June 2008 to “rationalize” its network  of facilities, remove excess capacity from the network, and identify  anticipated cost savings and other benefits associated with network  rationalization. In 2007, we removed the Postal Service’s high-risk  designation because the Postal Service addressed several concerns we  raised when we originally placed the Postal Service on the high-risk list in  2001 and because of the passage of postal reform legislation.
section_title: FDB Does Not Meet the Postal Service’s Goal or Leading Federal Practices for Capturing and Maintaining Accurate Facility Management Data
paragraphs: Developed in 2003, FDB has not achieved the Postal Service’s anticipated  goal or conformed to a leading federal practice that calls for a  consolidated source of accurate facility data because the data entered into  FDB are not reliable. As a result, the Postal Service indicated that several  major Postal Service departments do not use FDB for aggregate facility  information, partly because of concerns about its reliability. These  concerns result from, among other things, inaccurate data entered into the  systems that feed into FDB, problems with how the systems are linked to  form an FDB facility entry, and mistakes in entering data directly into  FDB. The Postal Service has taken steps to improve the database, but  systemic problems remain. In addition, FDB does not meet leading federal  practices for tracking facility management performance and trends  because FDB does not include facility management performance measures  or provide for tracking trends over time.
subsections: section_title: FDB Does Not Meet the Postal Service’s Goal Because the Data Are Not Reliable
paragraphs: While the Postal Service created FDB in 2003 to achieve its goal for a  consolidated source of accurate facility data, it has not achieved that goal  due to data reliability problems. According to the Postal Service, it  established FDB because its prior use of multiple databases caused  confusion, data inaccuracies, problems in decision making, and higher  costs. However, based on our analysis of selected data fields, FDB data  problems make it unreliable as a centralized source of aggregate facility  data even after performing data-cleaning techniques on the raw data.  Specifically, our assessment revealed the following nationwide problems  with the data’s reliability as of October 5, 2006:    145 facility entries were exact duplicates of another facility entry (all data  fields were the same);   1,931 facility entries had multiple retail facilities listed at the same address  (e.g., a main post office and a station were listed with the same address);   1,288 facility entries had different amounts of square footage listed for the    892 facility entries had conflicting information on whether the facility is    1,216 facility entries had conflicting data on the amount of the facility’s    509 facility entries listed as having staffed more retail windows than  reportedly exist at the facility.
The Lubbock (Texas) Main Post Office illustrates several of the data  reliability problems we found. Specifically, in FDB data reported as of July  2007, the main post office is listed four times—each with different (1)  square footage amounts, (2) ownership information, and (3) lease payment  amounts. Except for information on the annual rent—which the Postal  Service considers sensitive—table 1 displays these FDB fields for the  Lubbock Main Post Office.
We discussed several specific examples of the data reliability problems we  found with postal officials who, after researching multiple data sources,  provided explanations for the specific examples we found. For example,  with respect to the Lubbock Main Post Office, postal officials said that the  first entry in table 1 is correct while the other three entries actually  represent other postal facilities at different locations in Lubbock. In  addition, using another data source, they told us that entry 2 is actually a  carrier annex; entry 3 is a warehouse; and entry 4 is a postal vending  machine. Using other data sources, the Postal Service officials also  provided explanations for other specific problems we identified. However,  without additional site visits, we cannot determine whether the  explanations provided were accurate.
We also identified incorrect FDB information for 24 of the 58 postal  facilities we visited. For example, during our sites visits, we found that  information on vacant leasable square footage, which the Postal Service  asks local employees to document, was inaccurate in FDB. At least six of  the facilities we visited had vacant space that local employees said could  be leased, but these facilities were not listed as having vacant, leasable  space in FDB. These facilities and their vacant space are shown in figure 3.  Postal officials acknowledged our examples and noted there are few  incentives for local officials to report facilities’ vacant, leasable space in  FDB.
Postal officials acknowledged that the Postal Service has not analyzed the  reliability of FDB data but expressed confidence that the problems we  found affect a small percentage of the Postal Service’s facilities. While we  cannot definitively determine the overall magnitude of FDB’s data  reliability problems, the cumulative effect of the problems we found could  significantly distort the reporting of aggregate facility statistics. For  example, conflicting ownership data in FDB, as illustrated for the Lubbock  facility in table 1, could cause the Postal Service’s annual rent obligation in  FDB to vary by as much as $82 million, or more than 8 percent of the  Postal Service’s reported rent obligation for fiscal year 2006. Inaccurate  ownership data are of particular concern because the Postal Service used  FDB for its aggregate ownership statistics in its 2006 annual report.
subsections: section_title: Postal Officials Do Not Rely Exclusively on FDB for Reporting on the Postal Service’s Facilities
paragraphs: Although the Postal Service developed FDB over 5 years ago to provide a  consolidated source of facility data, the Postal Service continues to  operate and use various facility data sources. Furthermore, while postal  officials acknowledged that postal staff did not use FDB initially because  the data were not reliable, our analysis demonstrates that FDB is still not  sufficiently reliable for use as a consolidated data source for postal  facilities. The Postal Service indicated that several major Postal Service  departments do not use FDB for aggregate facility information, partly  because of concerns about its reliability. Thus, as shown in figure 4,  instead of exclusively relying on FDB for facility information in its 2006  annual report, the Postal Service used multiple sources of data, including  its Address Management System, for quantifying its retail and delivery  facilities by type.
We found that FDB’s data reliability problems were caused by (1) errors in  the systems that feed into FDB, (2) problems with how the systems are  linked to form an FDB facility entry, and (3) errors in inputting FDB data.  First, as stated earlier, some information is fed directly from both the  Address Management and Facility Management systems into FDB, causing  errors in either system to automatically feed into FDB. While we did not  fully evaluate the Address Management System—the Postal Service’s  database for all delivery points in the country—we found errors in the  Address Management System data that the Postal Service used in its 2006  annual report. Specifically, we found instances of (1) duplicate entries for  the same facility; (2) multiple facilities with the same function (e.g., main  post office) listed at the same address; and (3) contractor and Postal  Service-operated facilities listed at the same address. During our site visits,  we also found that the address contained in the Address Management  System and fed into FDB for the O’Hare Terminal 2 Finance Station in  Chicago, Illinois, was incorrect. In addition to containing errors, in  December 2006, the Postal OIG reported that the Address Management  System was incomplete because it did not contain information on all  postal facilities. During our site visits, we also found errors that were fed  directly into FDB from the Facility Management System. For example, the  square footage in FDB for the Colleyville Main Post Office in Texas was  incorrect because it did not reflect the sale of a significant portion of land  that occurred 3 years prior to the entry. Postal Service officials  acknowledge that errors in the Address Management and Facility  Management systems feed directly into FDB.
Second, many of the FDB errors we found resulted when facility entries in  the Address Management and Facility Management Systems were  incorrectly linked to create an FDB facility entry. FDB facility entries are  created by linking facility entries in the Address Management and Facility  Management Systems. However, these systems do not use the same  convention for naming facilities, and therefore, they cannot be linked  automatically to create an FDB facility entry. Instead, according to Postal  Service officials, postal employees must manually link facility entries in  the two systems. In some instances, the manual process resulted in linkage  errors which, according to postal officials, caused some of the duplicate  facility entries and contradictory information in FDB that we identified.  For example, the Cumberland Main Post Office in Maryland, which we  visited, had four entries in FDB—one for the Main Post Office and the  other three for other postal facilities in Cumberland that were incorrectly  linked to the main post office’s address. The Postal Service corrected the  FDB entry for this facility when we brought this problem to the Postal  Service’s attention, but the problem remains at other locations. For  example, the Lubbock Main Post Office, which was discussed previously  (see table 1), was incorrectly linked to multiple facility entries within the  Facility Management System. The error occurred because FDB lacks  internal controls, such as edit checks, to prohibit postal staff from linking  an FDB facility to multiple facility entries in the Facility Management  System. According to Postal Service officials, there were 762 facilities in  FDB as of September 2007 that were mistakenly linked to multiple Facility  Management System facility entries.
Third, we found that some of the errors in FDB were caused by local  employees entering incorrect information directly into FDB. Although  information on a facility’s address, size, and ownership is fed  automatically into FDB from the Address Management and Facility  Management Systems, other data are entered manually into FDB by local  postal employees. For example, local employees enter the number of retail  windows (e.g., sales areas) at each facility and the number of those  windows that are typically staffed. Our analysis revealed that local  officials make numerous mistakes entering this and other information into  FDB. For example, 509 retail postal facilities are listed in FDB as staffing  more retail windows than reportedly exist at the facility. Implementing an  edit check in FDB would eliminate this type of reporting error. As shown  in figure 3, FDB data on vacant, leasable space entered by local employees  are also often in error.
section_title: The Postal Service Has Taken Actions to Improve FDB Data, but Problems Remain
paragraphs: While postal officials are aware of errors in FDB and have taken several  actions to improve the quality of the data, these actions have not yet  corrected all of the problems we identified. First, in response to a 2006  recommendation by the Postal OIG, the Postal Service has started  requiring local employees to validate and correct FDB data periodically for  their facilities. While this validation process could, in our view, help  identify and correct some of the errors we found, the Postal Service’s  validation completed in February 2007 was not entirely successful for a  number of reasons. Specifically, mistakes that could have been corrected  locally were often not corrected. For example, the retail postal facility  data available as of May 2007, that had been validated by a postal  employee on February 7, 2007, indicated the facility staffed twice as many  retail windows as exist at the facility. We discussed this data discrepancy  with Postal Service officials, and they corrected the facility’s FDB entry.  While this specific discrepancy was corrected, our assessment of FDB  data as of July 7, 2007, identified 354 instances of this problem. However,  even if local employees corrected these and other inaccuracies, problems  would remain because local employees cannot correct errors in FDB fed  directly from other systems, such as Facility Management System data on  square footage and ownership status. Errors of this type can only be  corrected by personnel administrating the Facility Management or Address  Management Systems.
Second, to avoid manual linking errors and to improve the accuracy of the  linkage used to create FDB facility entries, postal officials are planning to  automatically link the Address Management and Facility Management  Systems’ facility entries. According to the Postal Service, Address  Management System administrators must first apply the standard facility  naming convention used by the Facility Management System and thus  create a unique identifier for linking facility entries in the Address  Management and Facility Management Systems. Automation could help  reduce the frequency of future linking mistakes, but the Postal Service  must correct existing errors before automating the process. Postal officials  had expected to begin correcting existing errors in October 2006; however,  as of September 2007, the effort has not yet begun.
Finally, the Postal Service responded to a Postal OIG recommendation  for improving the quality and completeness of data entered into FDB by  completing field training sessions for FDB users and issuing a new FDB  user’s guide in 2007. These actions are too recent to gauge their  effectiveness.
section_title: The Postal Service’s Facility Data Do Not Meet Leading Federal Practices for Tracking Facility Management Performance and Trends
paragraphs: Even if the data in FDB were reliable, they would not meet leading federal  practices for facility data because FDB (1) does not contain fields for the  four performance measures recommended by the Federal Council—a  facility’s importance, utilization rate, condition, and annual operating  costs—and (2) does not allow for tracking trends. The federal leading  practices are intended to, among other things, help agencies measure their  progress in managing their facilities and identify properties for disposal or  investment. Postal Service officials said none of the Postal Service’s  facility databases, including FDB, were designed for these purposes. In  addition, they noted the Postal Service is not bound by the executive order  on federal real property asset management and, consequently, is not  required to adopt leading federal practices, such as the implementation of  performance measures. Even if the Postal Service collected data on its  performance, it could not measure its performance over time because it  does not retain or archive FDB data at regular intervals (e.g., annually).
section_title: The Postal Service Has Initiated Actions to Assess the Condition of Its Facilities but Lacks a Strategic Approach for Prioritizing Maintenance Projects
paragraphs: The Postal Service has initiated actions to assess the condition of its  facilities, but has not yet assessed the magnitude of its maintenance  backlog or strategically prioritized its maintenance projects—a leading  federal practice. According to postal officials, the Postal Service has  historically underfunded its maintenance needs, resulting in the  deterioration of its facilities. While there is some evidence that many  postal facilities are in less than acceptable condition, the magnitude of the  challenge is unknown. To learn more about the condition of all its  facilities, the Postal Service has started implementing self-assessments  conducted by local employees for small facilities and more intensive  assessments for larger facilities. Numerous Postal Service officials told us  that insufficient funding has caused the Postal Service to focus solely on  urgent repairs—instead of routine, preventive maintenance—which could  lead to more costly repairs over time. Consistent with a leading federal  practice, agencies can maximize the value of maintenance funding by  using facility management performance data to identify and prioritize their  greatest maintenance needs, but the Postal Service cannot adopt this  practice because it does not systematically capture the necessary data.
subsections: section_title: The Postal Service Does Not Currently Know the Extent of Its Maintenance Needs but Has Initiated Actions to Assess the Condition of Its Facilities
paragraphs: The Postal Service has not comprehensively assessed the condition of its  facilities, but the amount it has recently spent on facility maintenance— $712 million from fiscal year 2003 through fiscal year 2006—has been  insufficient, postal officials said, to address its facility maintenance needs.  Postal officials also said several years of underfunding have caused postal  facilities to deteriorate and many are in need of repairs. Evidence  supporting the officials’ statements includes a 2005 assessment conducted  by a contractor of 651 randomly selected owned and leased postal  facilities. According to this assessment, two-thirds of the facilities were in  less than “acceptable” condition, including 22 percent that were in “poor”  condition. However, the Postal Service will not know the magnitude of  the deterioration or the extent of its maintenance backlog until it fully  assesses the condition of all its facilities.
In 2007, to begin assessing the condition of its facilities, the Postal Service  requested local employees to conduct self-assessments of their facilities.  Local employees responded to the request by assessing over 29,000  facilities and identifying 73,500 maintenance needs estimated to cost $236  million. While these assessments provide additional information on the  condition of postal facilities, they are not comprehensive because  thousands of facilities were not assessed and the local employees are not  formally trained to conduct facility assessments.
Over the next 3 years, the Postal Service plans to conduct a more  comprehensive, three-part program to assess the condition of all its  facilities. The first part of the program involves facilities that are less than  6,500 square feet. For these facilities, the Postal Service plans to ask local  employees to complete annual self-assessments similar to the ones  completed in 2007. The second part of the program involves facilities with  6,500 to 100,000 square feet of interior space. For these facilities, the  Postal Service plans to conduct more detailed condition assessments once  every 3 years using contract building inspectors beginning in the summer  of 2007. According to Postal Service officials, the Postal Service  established the 6,500-square-foot threshold because the most complicated,  important facilities are generally larger. The third part of the program  involves the Postal Service’s largest mail processing facilities. For these  facilities, the Postal Service plans to use on-site postal maintenance staff  to conduct annual physical assessments of the buildings and, once every 5  years, employ architectural and engineering firms to conduct more  thorough assessments.
According to the plans for the program, local Postal Service employees or  facility inspectors will enter information collected from each assessment  into a new database called the Infrastructure Condition Assessment  Model, which will allow contract facility inspectors to estimate the  urgency and cost of each identified repair project. The new database will  feed into the Postal Service’s existing maintenance tracking system and,  according to postal officials, will be used to budget and prioritize urgent  maintenance projects for repair. Figure 5 illustrates the Postal Service’s  three-part facility condition assessment program.
section_title: The Postal Service Reacts to Emergency and Urgent Maintenance Issues but Recognizes the Need for More Preventive Maintenance
paragraphs: Postal Service officials with responsibility for facility maintenance at the  national, area, and district levels said that the Postal Service has  underfunded its maintenance for years and suspects that this  underfunding has resulted in deteriorating facilities and a large  maintenance backlog. Postal officials told us that this insufficient funding  has caused the Postal Service to focus exclusively on reactive  maintenance—that is, “emergency” and “urgent” repairs—at the expense  of routine repairs. In addition, according to the Postal OIG, insufficient  funding for repairs and maintenance may be hampering the Postal  Service’s ability to adopt a preventive maintenance approach. A 2000  Postal OIG report described the Dallas Downtown Station in Texas as  deteriorated and attributed its deterioration to deferred maintenance that  “increased the risk of injury to Postal Service employees and customers,  and has compromised Postal Service property and the safety and security  of the mail.” The Postal OIG recommended immediate evacuation of the  facility until needed repairs could be made. When we visited the Dallas  Downtown Station in 2007, the Postal Service had repaired the facility at a  cost of $12 million. The Postal Service may have avoided some of those  costs if it had done more preventive maintenance. Other facilities we  visited had not yet been repaired—including facilities with chronically  leaking roofs and visible interior and exterior damage. Figure 6 illustrates  maintenance issues we observed during our site visits  In its Strategic Transformation Plan for 2006 through 2010, the Postal  Service established a goal of reducing its repair costs “through more  focused routine building assessments and better planning to fix small  problems as soon as possible.” In a May 2007 report, the Postal OIG  concurred with this approach, recommending that the Postal Service  adopt more preventive maintenance practices by, among other things,  regularly assessing postal facilities to identify repair needs and better  leverage the Postal Service’s limited financial resources. This approach is  consistent with a recommendation made by the National Research Council  of the National Academies in 1990 that suggested federal agencies  regularly assess the condition of their facilities and do preventive  maintenance to avoid costly future repairs. A reactive maintenance  approach is ultimately more expensive, partly because it shortens the  useful life of equipment and facilities and necessitates, among other  things, more costly future repairs. To that point, a 2004 National Research  Council study cited an estimate that each dollar in deferred maintenance  results in a long-term liability of $4 to $5 for future repair costs.
section_title: The Postal Service Has Not Established a Strategic Facility Maintenance Approach in Accordance with Leading Federal Practices
paragraphs: The Postal Service bases maintenance priorities on urgency. For example,  roof issues take priority over nonstructural interior maintenance needs.  While urgency is important for prioritizing maintenance spending, leading  federal practices consider other important measures, such as a facility’s  (1) importance to an agency’s mission, (2) utilization rate, (3) condition,  and (4) annual operating costs. The Postal Service’s three-part assessment  program will provide data on the condition of its facilities, but the Postal  Service will not be able to prioritize repairs strategically since it does not  capture data on its facilities’ importance, utilization rate, and annual  operating costs to inform its maintenance decisions. For example, a Postal  Service official who is responsible for managing maintenance throughout a  large geographic area told us that he cannot consider a facility’s  importance to the Postal Service’s mission when prioritizing maintenance  projects because the Postal Service does not capture this information.
Furthermore, the Postal Service does not currently know the replacement  value of its facilities—essential information for evaluating a facility’s  overall condition. Adopting federal facility management performance  measures would help the Postal Service establish a strategic approach to  facility maintenance by allowing the agency to better identify its most  important facilities, prioritize its maintenance needs, and allocate its  maintenance funds accordingly. The consequences of not considering a  facility’s importance, utilization rate, and annual operating costs were  evident at the Downtown Fort Worth Station in Texas, which we visited.  The Postal Service spent about $1 million to repair it in fiscal year 2006  even though the station remains in deteriorating condition, is largely  vacant, and does not appear critical to the Postal Service’s mission since  the remaining retail and carrier functions could be housed elsewhere in a  smaller facility. Local postal officials said the Postal Service has  considered disposing of the station for years but, instead, repaired it  because no decision had been made on whether to retain it. Figure 7  illustrates the size, condition, and utilization of the Downtown Fort Worth  Station at the time of our visit.
section_title: The Postal Service Has Expanded Alternative Access to Its Services but Lacks Performance Data to Identify Potentially Unneeded Retail Facilities for Closure
paragraphs: To address the challenge of aligning retail access with customer needs, the  Postal Service has expanded alternative access to its services in  underserved areas but has done less to curtail services in overserved  areas. Our analysis shows wide variation in the number of postal retail  facilities among counties of similar population, land area, and degree of  urbanization—demonstrating the Postal Service’s challenge of placing  facilities where they are needed. To address this challenge in underserved  areas, the Postal Service has expanded access to retail services through  alternative access options and has set goals for the use of these options.  However, the Postal Service has not actively pursued a goal in its 2002  Transformation Plan to proactively identify and close unneeded retail  facilities in overserved areas. This inaction does not conform to leading  federal practices, which suggest that an agency consider closing facilities  that are not critical to achieving the agency’s mission, are in poor  condition, are not fully utilized, or are costly to operate relative to their  revenue.
subsections: section_title: Number of Postal Retail Facilities Varies among Counties with Similar Characteristics
paragraphs: The number of facilities that provide postal retail services varies widely  among counties of similar population, land area, and degree of  urbanization, according to our statistical analysis of the distribution of  postal retail facilities nationwide. Specifically, we developed a regression  model to determine the average number of post offices for counties of  comparable population, land area, and degree of urbanization. To  determine the extent of variation among counties, we compared the actual  number of post offices in each county with the averages derived from our  regression analysis. While our analysis was not intended to consider all  relevant factors, including retail sales volumes or the capacity of postal  retail facilities, it does explain almost 80 percent of the variation in the  number of retail postal facilities between counties. According to our  analysis, some counties have far fewer or far more postal retail facilities  than other counties of comparable population, land area, and degree of  urbanization. For example, Hoke County, North Carolina, has 1 retail  postal facility, whereas the average comparable county has 10 such  facilities. Conversely, Fayette County, Pennsylvania, has 63 postal retail  facilities—over 400 percent more retail facilities than the average county  of comparable population, land area, and degree of urbanization. The wide  variability in the number of retail postal facilities in comparable counties  suggests that access to postal services among comparable counties also  varies. Such variation is inconsistent with the Postal Service’s  Transformation Plan goal and the leading federal practice of aligning  access to facilities with customer and service needs. Figure 8 shows the  distribution of owned, leased, and contracted postal retail facilities by  county based on population, land area, and degree of urbanization.
section_title: The Postal Service Has Expanded Access to Alternative Retail Options in Underserved Areas
paragraphs: Aware that some communities, particularly in growing areas, have  insufficient access to postal retail services, the Postal Service established  a goal in 2002 for increasing access to postal services through alternative  options. The Postal Service favors alternative retail options over building  new postal-operated facilities because the Postal Service does not incur  construction or operating costs when providing services through these  alternative access options. Thus, in its 2006 annual report, the Postal  Service indicated it had contracts with almost 4,000 private operators to  provide access to postal retail services. While contract postal units are  not always located in underserved areas, our analysis shows that their  presence increased access to postal services in hundreds of counties  nationwide. Without contract postal units, these counties would have had  fewer retail facilities than the average for counties of comparable  population, land area, and degree of urbanization. For example, Butler  County, Ohio, had 16 retail facilities operated by the Postal Service—7  fewer than the average for comparable counties. However, the Postal  Service’s agreement to operate seven contracted facilities there brought  the total number of retail postal facilities in the county to 23, which was  the average for comparable counties. Figure 9 shows a variety of examples  of privately owned businesses that contract to provide postal services.
Other alternative retail access options include the Postal Service’s    stamps on consignment program, which allows businesses, such as drug  stores and grocery stores, to purchase stamps from the Postal Service and  retain a share of the proceeds;    package pickup and stamps sold online, which are available through the  Postal Service’s Web site; and   automated postal centers, which provide access to most postal services  from 2,500 centers located in postal-operated retail facilities; some  automated postal centers are available 24 hours a day, 7 days a week,  as indicated by the signage for the automated center shown in figure  10.
To improve its efforts to increase retail access for communities with  insufficient access, the Postal Service is developing a model that will  identify underserved areas—called the Model to Optimize Retail  Effectiveness. According to Postal Service officials, the Postal Service  developed the model in response to our 2004 recommendation that it  develop criteria for making changes to its retail network and expects to  finalize the model by the end of 2007. Postal Service officials also said the  model will take several factors into consideration—including the relative  location of competitors, costs, the extent of customer satisfaction, and  population growth—in order to target areas that would benefit most from  increased access to postal services. According to postal officials, FDB is  an important source of information for this effort, which suggests FDB  data reliability problems could adversely affect the model’s output. Postal  officials said the local Postal Service employees would verify the model’s  findings to ensure their accuracy.
Once it identifies and verifies the underserved areas, the Postal Service  could decide to, among other actions, increase facility hours, expand  advertising of existing alternative access options, add automated postal  centers, or contract with a private business to open a contract postal  facility. While the Postal Service could also acquire new postal retail  facilities, Postal Service officials said this is the least preferable option  given the high costs of traditional postal facilities. To emphasize the  importance of expanding alternative options for postal services, the Postal  Service set a goal to accomplish at least 40 percent of its retail  transactions through alternative access options by 2010.
section_title: Postal Service’s Actions to Align Retail Access in Overserved Areas Are Limited to Closing Some Vacated Facilities and Reducing Staff
paragraphs: From 2002 through the end of 2006, the Postal Service closed 795 facilities  after placing them on emergency suspension. The Postal Service places a  facility on emergency suspension when, among other reasons, severe  maintenance problems create health or safety risks to employees and  customers that require the Postal Service to vacate the facility. Other  reasons for an emergency suspension include the retirement or resignation  of a community’s sole postal employee; a building owner’s decision not to  renew the Postal Service’s lease; or a forced evacuation due to fire, flood,  or other natural disaster. When a postal retail facility is placed on  emergency suspension, the district has 90 days to decide whether to  reopen, close, or consolidate the facility. However, the actual closure can  take years. Specifically, 44 of the 159 facilities under emergency  suspension that were slated for closure as of May 2007 have had their  operations suspended for more than 5 years. In addition, it is not clear  what criteria local managers apply when deciding whether to reopen or  close a facility that is on emergency suspension. We visited one of these  stations, the McKeesport Central Station in Pennsylvania, which had been  on emergency suspension for over a year following a partial roof collapse  in December 2005 (see fig. 11). The local postmaster told us the Postal  Service planned to reopen the station once the landlord repaired the roof,  even though the sole employee assigned to the station has been  reassigned, customers have not complained about the lack of service, the  station had low revenue, and the station is located approximately 1 mile  from the McKeesport Main Post Office.
In locations where demand for postal services is low (as measured by low  revenue), the Postal Service sometimes chooses to reduce operating costs  by reducing the staffing to just one postal employee—an approach that  could place postal employees at risk unless the Postal Service installs  needed security upgrades. We visited some single-employee facilities that  had not received upgrades the Postal Service identified as necessary in  order to protect the safety of its employees and customers. For example,  when staffing at the two postal stations we visited in Indiana was reduced  to one employee, the Postal Service inspected the facilities and identified  numerous security deficiencies at both. More than 6 months after the  inspections, however, none of the identified security upgrades had been  completed and several of the upgrades were listed as deferred. The sole  employee at another postal station we visited in Indiana complained in a  2001 letter to her supervisor about the lack of postal-identified security  measures, such as security cameras, at her facility. Six years later, no  actions have been taken to install additional security measures, such as a  video-monitoring system or a pull-down gate to help secure the front  register when the employee goes to other areas of the station. According  to the manager of the station, who is located at a nearby postal retail  facility, installing security systems at the station would increase costs—a  result that would be incompatible with the goal of decreasing the station’s  operating costs.
section_title: Lack of Criteria and Facility Management Data Limits the Postal Service’s Ability to Proactively Identify Unneeded Retail Facilities for Possible Closure
paragraphs: In 2002, the Postal Service established a goal of reducing the number of  “redundant, low-value” retail facilities in order to lower its operating costs.  Establishing such a goal suggests that these facilities are less important to  the Postal Service’s mission of providing universal access to postal  services than other facilities. To implement this goal, in 2002, the Postal  Service lifted a moratorium on closing retail postal facilities but has not  (1) provided a definition for “redundant, low-value” retail facilities; (2)  established a goal for their reduction; or (3) identified unneeded facilities  for possible closure, including those with low revenue. According to  Postal Service officials, pursuing retail facility reductions is difficult  because of legal restrictions on and political pressures against closing  retail facilities. For example, legal restrictions preclude the Postal Service  from closing a small post office solely because it is operating at a deficit.  To close a post office, the Postal Service is required to, among other  things, formally announce its intention to close the facility, analyze the  impact of the closure on the community, and solicit comments from the  community.
While the Postal Service closes some retail facilities placed on emergency  suspension, its reliance on other factors, such as the loss of a lease or  severe maintenance problems, to drive decisions about closing retail  facilities is inconsistent with leading federal practices which call for a  targeted, criteria-based approach to closure decisions. More specifically,  leading federal practices require applicable agencies to “rightsize” their  facility holdings by, among other things, closing facilities that are (1) not  critical to their mission, (2) in poor condition, (3) not fully utilized, or (4)  costly to operate relative to their revenue. While considering these criteria  is essential for rightsizing a facility network, the Postal Service cannot  consider them because it does not capture the data needed to do so.  During our review, we visited a number of postal facilities that appeared to  merit consideration for closure based on one or more of these criteria.  Furthermore, none of these facilities housed carriers or mail processing  functions and each had low sales and was located near other retail  facilities. Our site visits included the following types of facilities in urban  locations:    Facilities that contribute little to the Postal Service’s mission of  providing universal access to postal services. For example, Station C in  downtown Dallas, Texas, provides access to postal services only for the  people that work in the secured federal building, and the station is located  just 1 half-mile from another retail facility in downtown Dallas.  Consequently, Station C’s annual retail sales of about $282,000 in fiscal  year 2007 ranked among the lowest in the Dallas District.
Facilities in poor condition. We observed maintenance issues at a  number of postal stations that do not appear critical to the Postal Service’s  mission based on their low revenue and proximity to other retail facilities.  For example, the Postal Service recently renewed the lease for the  Wilkinsburg Station in Pittsburgh, Pennsylvania, even though the facility’s  façade is starting to pull loose from the building, the roof has numerous  leaks, and sewage backs up throughout the facility’s plumbing system.  Postal Service officials said the Postal Service did not consider closing the  station before renewing the lease, even though it does not appear  critical—as it earns below-average revenue and is located about 2 miles  from another retail facility in Wilkinsburg.
Facilities not fully utilized. One example is the Downtown Station in Fort  Worth, Texas—a large, four-story building where the Postal Service  conducts retail and carrier operations on the main floor but does not use  the other floors (see fig. 6).
Facilities that are costly to operate relative to their value. We visited  several postal stations with annual sales below $200,000, which is  approximately what the Postal Service requires from each of the 2,500  automated postal centers located within postal retail facilities. For  example, the Gary Downtown Finance Station, Indiana, which is one of  seven postal retail units operating in the city, had annual revenue of  $163,000 in fiscal year 2006. Exclusively retail, this station does not  support any mail delivery functions beyond some post office boxes.
Facilities with high operating costs relative to their revenue. For  example, the “Store of the Future” in the Pittsburgh International Airport,  Pennsylvania (see fig. 12), costs more per square foot ($95) for the Postal  Service to lease than any other facility in the Pittsburgh District, yet it has  below-average sales revenue. Postal Service officials said the facility’s  revenue is low because it is located behind airport security check points.
section_title: Conclusions
paragraphs: The Postal Accountability and Enhancement Act has significant near- and  long-term financial implications for postal operations. Consequently, it is  imperative that the Postal Service manage its facilities as efficiently and  cost-effectively as possible. However, the Postal Service cannot begin to  overcome its facility management challenges until it improves the quality  of its facility data. To date, FDB has failed to serve as a reliable system for  inventorying postal facilities or for measuring their performance, and its  weaknesses are so great that it cannot be reliably used for basic facility  management purposes, such as the Postal Service’s annual reporting.  While efforts are under way to improve FDB, it remains unreliable and  unusable for measuring performance. Instead of solving the Postal  Service’s problem of having multiple, overlapping databases, FDB appears  to have compounded the problem by adding an additional data source to  those already available.
Postal officials with responsibility for facility maintenance at the national,  area, district, and local levels said that the Postal Service has underfunded  its maintenance for years and suspects that this underfunding has resulted  in deteriorating facilities and a large maintenance backlog. However, the  Postal Service does not know the extent of the problem because it has not  comprehensively tracked and analyzed data on the condition of its  facilities. This situation may be changing because the Postal Service has  recognized the importance of compiling data for facility maintenance and  has initiated a comprehensive facility assessment. Conducting a  comprehensive facility assessment is a necessary first step toward  improving the condition of postal facilities, but it will initially add tens of  thousands of new maintenance projects to the Postal Service’s  maintenance backlog. Funding constraints will require the Postal Service  to take an incremental approach in order to reduce the backlog. The  Postal Service will have to make difficult choices about what repairs to  make and what repairs to defer. These choices would be easier if the  performance data on the Postal Service’s facilities, such as a facility’s  importance, utilization rate, or costs, were reliable.
One way to minimize maintenance costs is to reduce the number of  facilities that must be maintained. In locations where new services are  needed, the Postal Service is developing alternative access options to  avoid new facility costs, but it has not identified or closed unnecessary  postal retail facilities. Moreover, although the Postal Service has set a goal  of shifting 40 percent of its retail sales to alternative access options, it has  not set any similar targets for reducing its vast network of post offices,  stations, and branches. Instead, it relies on emergency suspensions and  staffing reductions to curtail operations at some facilities. However, this  approach does not conform to leading federal practices because the  closures are not linked to the facilities’ performance. In addition, the  staffing reductions potentially place the remaining postal employees at  risk. The expected increase in the use of alternative access options,  combined with financial necessity, suggests the need to consider  additional closures of brick-and-mortar postal facilities. To properly  consider the closure opportunities, the Postal Service will need to know  which retail facilities to retain and which facilities are no longer important  to its retail mission. With improved facility data, the Postal Service could  assess a facility’s importance and information on other relevant factors,  such as a facility’s utilization rate and condition, to identify closure  possibilities and justify any closure decisions.
section_title: Recommendations for Executive Action
paragraphs: To improve the Postal Service’s management of its facilities, we are  making the following six recommendations:    To strengthen the reliability and usefulness of the Postal Service’s facility  data, the Postmaster General should (1) direct the Vice President of  Delivery and Retail to determine, in consultation with the Vice Presidents  of Facilities and Intelligent Mail and Address Quality, whether it is more  cost-effective to make FDB a reliable source for consolidated data on its  facilities or to replace it with a new, more reliable database. If the Postal  Service decides to retain FDB, the (2) Postal Service should take steps to  improve its reliability and usefulness by establishing internal controls,  such as edit checks, to preclude obvious mistakes.
To conform to leading federal practices, the Postmaster General should  direct the Vice President for Delivery and Retail to (3) measure facility  management performance consistent with the spirit of those developed by  the Federal Council; and (4) begin tracking facility management  performance trends.
To improve facility management and reduce long-term facility costs, the  Postmaster General should, consistent with leading federal practices, (5)  direct the Vice President for Facilities to prioritize maintenance projects  based on a facility’s overall performance, including measures consistent  with the spirit of those developed by the Federal Council; and (6) direct  the Vice President for Delivery and Retail to institute a proactive, criteria- based approach to assist in identifying unneeded retail facilities for  possible closure as part of the June 2008 facility plan required by the  Postal Accountability and Enhancement Act.
section_title: Agency Comments and Our Evaluation
paragraphs: The Postal Service provided its written comments on a draft of this report  by letter dated November 19, 2007. These comments are summarized  below and are included, in their entirety, as appendix III to this report. The  Postal Service agreed with our two recommendations to improve FDB’s  reliability; agreed, in principle, with our recommendation to prioritize  maintenance projects based on a facility’s overall performance; but  disagreed with our three remaining recommendations. In separate  correspondence, the Postal Service also provided minor technical  comments, which we incorporated, as appropriate.
In agreeing with our two recommendations regarding FDB, the Postal  Service indicated that it had already determined that it is in its best  interest and more cost-effective to retain FDB rather than to replace it  with a new, more reliable database. Second, while the Postal Service  believes FDB is, as a whole, very reliable, it agreed to establish additional  controls to improve its reliability and usefulness. Furthermore, although  the Postal Service stated that it prioritizes maintenance projects  adequately, it agreed, in principle, with our recommendation to prioritize  maintenance projects based on a facility’s overall performance. The Postal  Service also reiterated actions it has taken, including the initiation of its  Facility Condition Assessment program, to better identify and prioritize  the agency’s maintenance workload and budget.
The Postal Service disagreed with our three remaining recommendations,  including our two recommendations to conform to leading federal  practices by measuring facility management performance and tracking  performance trends. Regarding these two recommendations, the Postal  Service noted that it considers leading federal practices developed by the  Federal Council, but reiterated that it is not required to adopt them. The  Postal Service also noted that its mandate to provide universal mail  service on an almost daily basis and its provision of services and products  that are in direct competition with the private sector pose unique  challenges for the Postal Service. Thus, the agency indicated that it had  concerns about adopting leading federal practices. We continue to believe  that measuring and tracking performance in such areas as a facility’s  importance, utilization, condition, and operating costs are critical to  effective facility management. We also recognize the uniqueness of the  Postal Service’s business and mission. Consequently, we revised these  recommendations to emphasize that the Postal Service should develop and  track performance measures that may better meet its needs—as long as  the measures are consistent with the spirit of those developed by the  Federal Council.
Finally, the Postal Service disagreed with our recommendation to institute  a criteria-based approach to identify and close unneeded retail facilities as  part of the June 2008 facility plan required by the Postal Accountability  and Enhancement Act. The Postal Service stated that it had purposely  removed mention of retail facility closures from its 2005 update of its  Transformation Plan due to its difficulty in establishing criteria that could  be applied to all retail locations. Instead, the Postal Service indicated that  it intends to continue to assess its retail facilities on a case-by-case basis.  We agree that developing criteria for identifying unneeded retail facilities  is difficult and that such criteria cannot be uniformly applied to the  universe of all postal retail facilities. As a result, we clarified our  recommendation to indicate that the results of a criteria-based approach  would “assist” the Postal Service in identifying candidate retail facilities  for possible closure. The Postal Service further indicated that the focus of  its forthcoming facility plan is on its mail processing network, not its retail  facilities. While the Postal Service does not currently envision developing  such a criteria-based approach as part of its congressionally required  facility plan, we continue to believe that doing so would provide an  excellent opportunity for the agency to begin pursuing its 2002 goal of  identifying and closing redundant, low value retail facilities.
We are sending this report to the congressional requesters and their staffs.  We are also sending copies to the Postmaster General and other interested  parties. We will make copies available to others upon request. In addition,  the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staffs have any questions regarding this report, please  contact me at siggerudk@gao.gov or (202) 512-2834. Contact points for our  Office of Congressional Relations and Public Affairs may be found on the  last page of this report. GAO staff that made key contributions to this  report are listed in appendix IV.
section_title: Appendix I: Executive Order 13327: Federal Real Property Asset Management
paragraphs: In 2004, the President signed Executive Order 13327: Federal Real  Property Asset Management in response to our designation of federal real  property as a governmentwide high-risk area. The executive order and the  initiative to implement the order were intended to ensure that agencies  maintain facility inventories appropriate to their needs, cost, and physical  condition to support each agency’s mission and objectives. This order  applies to 24 executive departments and agencies, but not to the Postal  Service. The executive order established the Federal Real Property  Council (Federal Council), which includes representatives from the Office  of Management and Budget and applicable agencies. The Federal Council  develops guidance, serves as a clearinghouse for leading federal practices,  and facilitates agency efforts to implement the executive order. Although  not bound by the executive order, the Postal Service has voluntarily  adopted some of the Federal Council’s leading practices. Specifically, the  Postal Service submits some data to the General Services Administration  for its annual real property inventory and has designated an individual to  represent the Postal Service on the Federal Council.
The Federal Council has developed guidance that, among other actions,  requires applicable agencies to collect 24 data elements for transmission  to the General Services Administration to use in compiling an annual  inventory of federal facilities. This data collection is intended to, among  other things, provide agencies with data needed to assess their  performance based on four key performance measures and determine  whether their facilities are properly aligned with customer and service  needs. The following four performance measures are intended to help  agencies determine if the continued use of each of their facilities is  justified based on their  1. importance to achieving the agency’s mission;  2.  utilization rate (extent to which the facility is used);  3.  physical condition as measured by a “condition index”; and  4.  annual operating costs, including the recurring maintenance and repair  costs for each facility in an agency’s inventory.
section_title: Appendix II: Objectives, Scope, and Methodology
paragraphs: Our overall objectives were to identify the Postal Service’s efforts to  address three key facility challenges related to (1) capturing and  maintaining accurate facility data, (2) adequately maintaining postal  facilities, and (3) aligning access to retail services with customer needs.  Specifically, this report identifies the Postal Service’s goals and actions for  managing each of these challenges and assesses its progress in  overcoming the challenges and, as applicable, in implementing leading  federal practices.
To address these objectives, we visited 58 postal facilities and 4 contract  postal facilities in nine districts covering three of the Postal Service’s nine  areas. The observations derived from our site visits cannot be generalized  to the population of postal facilities nationwide. We chose these locations  to achieve geographic balance and to include areas with growing and  declining populations. We chose the specific facilities within these areas to  achieve a range in the type, revenue, condition (indicated by the number  of open maintenance requests in the Postal Service’s maintenance tracking  system), and size. This selection process led us to visit of each of the  following types of postal facilities: main post office, postal station, postal  branch, contract postal facility, carrier annex, processing and distribution  center, air mail center, bulk mail processing center, vehicle maintenance  facility, and administrative facility. We toured each facility, interviewed  local employees, and collected data on facility operations. Table 1  identifies the specific areas, districts, and cities we visited.
To assess the Postal Service’s progress in overcoming the challenge of  capturing and maintaining accurate facility data, we analyzed all facility  entries (over 36,000) contained in the Facility Database (FDB) as of  October 5, 2006, and assessed the reliability of the data it contains. To  assess the reliability of FDB data, we (1) interviewed Postal officials to  obtain an understanding of the data, the database structure, the sources of  the data, known issues or limitations in the database, and relevant Postal  Service documentation; (2) reviewed related reports by the Postal Service  Office of Inspector General (Postal OIG); and (3) performed electronic  testing of the database for completeness, obvious errors, and  inconsistencies. We also attempted to verify the data in FDB during our 58  facility visits. Prior to our visits, we identified potential data reliability  problems and, during our visits, documented information related to the  existence and causes of those problems. In addition, we corroborated our  observations on FDB reliability issues through interviews with and  documentation obtained from postal officials in the Delivery and Retail  department. To determine the reasons for the data reliability issues in  FDB, we interviewed Postal Service personnel in the Delivery and Retail  department responsible for managing the facilities data, local postal  officials, and postal officials from the Postal OIG. We also reviewed key  Postal Service documents related to the facilities data, including the FDB  user’s guide, the Postal Service’s 2002 and 2006 Transformation Plans, and  reports issued by the Postal OIG and GAO. Our analysis was based  principally on the FDB data as of October 5, 2006, but we also analyzed  FDB data obtained on July 7, 2007, in part, to assess the impact of the  Postal Service’s efforts to improve FDB since October 6, 2006. To identify  examples of leading federal practices related to our objectives, we  reviewed Executive Order 13327: Federal Real Property Asset  Management, related documentation from the Federal Council, and  previous GAO reports. We also interviewed a Federal Council official and  attended a Federal Real Property Association conference in 2006 that  focused on the implementation of the executive order.
To assess the Postal Service’s progress in overcoming the challenge of  maintaining its facilities in adequate condition, we analyzed data drawn  from the Postal Service’s maintenance tracking system (the Facility Single  Source Provider) as of March 7, 2007. We assessed the reliability of the  data by (1) interviewing knowledgeable Postal Service officials and (2)  validating the accuracy of the data at the facilities we visited. We also  observed conditions at the 58 facilities we visited and interviewed local  postal officials. Additionally, we analyzed key Postal Service documents  related to facility maintenance, including the Postal Service’s Strategic  Transformation Plan for 2006 through 2010, presentations related to its  facility assessment effort, and an audit report issued by the Postal OIG.
To assess the Postal Service’s progress in overcoming the challenge of  aligning access to retail services with customer needs, we assessed the  variance in access to retail postal facilities among similar counties using  an ordinary-least squares regression model. We designed the model to  predict the number of postal retail facilities (main post offices, stations,  branches, and contract units) in each U.S. county based on each county’s  population (in 2000), land area (in square miles), and degree of  urbanization (as defined by the U.S. Census Bureau). First, we determined  the number of retail facilities in each county by conducting a unique  address analysis, which counted only one retail facility at each address  within FDB to avoid counting the same retail facilities more than once.  The regression coefficients from the regression model are presented in  table 2.
The R-squared statistic, an indicator of model fit or explanatory power,  was 0.79. This means the model explains 79 percent of the variation in the  number of post offices between counties. We performed various model  specification and diagnostic tests to determine the appropriateness of our  model specifications (e.g., interaction effects and degree of urbanization  as dummy variables), as well as to determine the existence and influence  of outliers. We identified two potential outliers, but did not eliminate them  from our analysis because they did not materially affect our results.
To determine the variation in the number of postal retail facilities between  counties, we examined the residuals from the ordinary-least squares  regression model. The residuals consist of the difference between the  actual number of postal retail facilities and the number predicted by the  model. The number predicted by the model can be considered the average  number of facilities offering postal retail services in counties of similar  population, land area, and degree of urbanization because the model, in  deriving the estimates, considers these factors across all 3,213 counties in  the United States and Puerto Rico. We then rank ordered the counties on  the difference between the actual and the predicted number of postal  retail facilities from low to high (i.e., from fewer than predicted to more  than predicted). For the map in figure 7, we considered the top 10 percent  of counties in this rank order as having more post offices than comparably  sized and populated counties and the bottom 10 percent of counties as  having fewer post offices than comparable counties. We limited this  portion of our analysis to counties with an urban center of at least 10,000  people—defined as metropolitan and micropolitan areas—because the  Postal Service may need to maintain more postal retail facilities in these  areas to fulfill its mission of providing universal access to postal services.  We interviewed postal officials at the facility, district, area, and  headquarters levels about how retail facilities are aligned with customer  needs and obtained documentation relating to alternative service options  and emergency suspensions that resulted in facility closures. We also  reviewed key Postal Service documents, including the policies and  procedures for closing postal facilities, federal regulations governing  postal facility closures, the Postal Service’s 2002 and 2005 Transformation  Plans, audit reports issued by the Postal OIG, and previous GAO reports.
We conducted our work from July 2006 through December 2007 in  accordance with generally accepted government auditing standards.
section_title: Appendix III: Comments from the Postal Service
paragraphs: The following are GAO’s comments on the Postal Service’s letter dated  November 19, 2007.
subsections: section_title: GAO Comments
paragraphs: 1.  The Postal Service stated that FDB is a repository of facility  information and that it was never intended to be a single, consolidated  source for information on facilities. The agency’s September 2006 FDB  briefing to us appears to dispute this point. At that time, postal officials  indicated that the agency had intended to create “one source of  information for tracking all aspects of our  facilities” to address,  among other matters, the high cost of maintaining inaccurate and  redundant databases. Notwithstanding our prior understanding, we  clarified our report, indicating that FDB was intended to be a  “consolidated” source for accurate facility data—not a “single,”  consolidated data source.  2.  The Postal Service questioned a statement in our report which  indicated that several internal (postal) organizations “do not use FDB  for aggregate facility information, partly because of concerns about its  reliability.” More specifically, the agency inquired whether we had  drawn this conclusion on the basis of the various data sources used to  compile the Postal Service’s 2006 annual report. While the variety of  data sources used in the annual report—none of which were  exclusively FDB—is illustrative of our point, our statement was  principally based on interviews with numerous officials throughout the  Postal Service’s major departments.  3.  The Postal Service correctly noted that, after researching multiple data  sources, its staff was able to provide explanations for specific  examples of data reliability issues—including reasons for identified  mistakes—that we brought to their attention. Although these  explanations appeared plausible, as discussed in our report, without  additional site visits, we cannot determine whether their explanations  were accurate. Most importantly, however, regardless of whether the  identified mistakes could be explained using other data sources—the  fact remains that FDB contains errors that need to be corrected if it is  to retained and used as a reliable source of agency data.  4.  The Postal Service indicated that it would benefit tremendously if we  shared information on all of the specific examples of data reliability  issues we used in this report. We appreciate the Postal Service’s desire  to improve the reliability and usefulness of FDB and, therefore,  suggest that the Postal Service replicate our statistical analyses on  current data by, among other standard analytical methods, sorting its  current FDB data according to each facility’s name, address, and type  in order to identify duplicate facility entries. If needed, we could also  meet to further discuss our analytical methods for analyzing the Postal  Service’s data.  5.  As discussed in the body of this report, we continue to believe that  measuring and tracking performance in such areas as a facility’s  importance, utilization, condition, and operating costs are critical to  effective facility management. Nevertheless, because we also  recognize that the Postal Service’s business and mission are unique, we  revised these recommendations to emphasize that the Postal Service  should develop performance measures that may better meet its  needs—as long as the measures are consistent with the spirit of those  developed by the Federal Council.  6.  The Postal Service disagreed with our statement that it focuses “solely  on urgent repairs at the expense of routine, preventive maintenance.”  While we removed “solely” from the applicable sentence in this report,  this statement was based on evidence obtained during interviews with  numerous postal employees involved with facility maintenance at the  national, area, and local levels. All of these individuals stated that  resource constraints have forced the Postal Service to focus on urgent  repairs and to defer routine or preventive maintenance projects.  Furthermore, the interviewees’ comments were consistent with  findings in a prior Postal OIG review which found that insufficient  budgeting for repairs and maintenance may be hampering the Postal  Service’s ability to proactively manage its maintenance.  7.  As discussed in the body of this report, we agree that developing  criteria for identifying unneeded retail facilities is difficult and that  such criteria cannot be uniformly applied to the universe of all postal  retail facilities. As a result, we clarified our recommendation to  indicate that the results of a criteria-based approach would “assist” in  identifying candidate retail facilities for closure. Furthermore,  although the Postal Service does not currently envision developing  such a criteria-based approach as part of its congressionally required  facility plan, we continue to believe that doing so would provide an  excellent opportunity for the agency to begin pursuing its 2002 goal of  identifying and closing redundant, low value retail facilities.  8.  We are not intending to imply that in order to be viable, a facility must  meet minimum revenue thresholds established for the Postal Service’s  Automated Postal Centers. As discussed in our report, this threshold  was $198,000 in fiscal year 2007. We included information on this  threshold simply as context for the amount of revenue generated by  some of the postal retail facilities we visited—all of which were in  urban areas. While we agree that the threshold the Postal Service  applied to the deployment of automated postal centers is not  necessarily applicable to its retail facilities, the Postal Service has not  established criteria based on revenue or any other criteria for  analyzing the performance of its retail facilities. The absence of such  action is among the reasons we are recommending that the Postal  Service institute a proactive, criteria-based approach to help identify  and close unneeded retail facilities.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Kathleen Turner, Assistant  Director; Michael Armes; Richard Bakewell; Keith Cunningham; Bess  Eisenstadt; Kathy Gilhooly; Brandon Haller; Anne Izod; Dorothy Yee  Leggett; Josh Ormond; and Minette Richardson made key contributions to  this report.