Federal Manager's Daily Report

The Postal Service has had mixed success with supply chain

management initiatives it began in 2002 aimed at improving


its financial outlook and updating operations, the General

Accounting Office has said.

It said similar management efforts have enabled private

sector corporations to leverage buying power and more

efficiently procure goods and services, but that the Postal

Service has fallen short of fully realizing benefits.

The Postal Service reported $78 million of savings and

revenue in fiscal 2003 through its bulk fuel program, reverse

auctions for transportation contracts, national contracts

for boxes, custodial supplies, labels, retail packaging and

tires, but fell millions short of fully realizing savings,

according to GAO, even as it said the figure was derived

from questionable data.

It said highway contractors have turned away from the bulk

fuel program designed to leverage buying power for diesel

fuel used to ship mail to distribution centers. That was

projected to save $18 million but yielded just $1.1 million

in fiscal 2003 savings — funds will not be recouped, partly

because there is no automated system to adjust fluctuating


Although the Postal Service said it saved $5.9 million

through reverse auctions enabling it to select contractors

through online bidding, $2.1 million of that was based on

incorrect or unverifiable baseline data, said GAO, also

citing the lack of a “system for harnessing annual spending


It said another problem had to do with small business

contracting — neither contracting officers nor contractors

used correct size standards, making it impossible to judge

the effect of the supply chain management initiatives on

small business contracting.