Federal Manager's Daily Report

The guidelines the Postal Service uses for consolidating delivery units are not adequate for processing unit-optimization proposals with projected financial losses, and management does not always comply with the guidelines, the USPS inspector general has said.

USPS began consolidating delivery operations into centralized facilities in 2010 under a delivery unit optimization, or DUO, initiative in 2010, revising its guidelines in 2013. However, management continues to approve DUOs with projected financial losses without documenting the justification for doing so, according to the IG.

It said management did not fully support a business case for implementing 41 of the DUO consolidations, and that eight DUO proposals lacked sufficient support for $584,797 of savings reflected on the DUO worksheets and some DUOs before and after cost studies were not performed as required.

These shortcomings were due to insufficient management oversight and management’s belief that they needed data from a longer period to adequately assess the consolidation, the IG said, questioning costs of over $906,000 because post-implementation studies were not performed.

The IG recommended updating DUO guidelines to require a savings threshold for consolidations and justifications for DUO proposals that do not reach the threshold and reinforce to the DUO coordinators that they provide justification and support on the DUO worksheet, among other recommendations.