OIG Studies Support APWU Position
Subcontracting Fails Workers, Consumers, and the USPS
(This article first appeared in the May/June 2008 issue of The American Postal Worker magazine.)
Postal Service outsourcing practices often prove to be wasteful and inefficient, resulting in poor customer service and undermining the USPS.
Recent reports by the USPS Office of Inspector General (OIG) support the APWU position that mail processing, transportation, and retail services often cost the Postal Service more than if the work were kept in-house.
Costly and Inefficient
Flagrant abuses by Highway Contract Route vendors are part of a long tradition of USPS outsourcing policies.
In addition to noting that private, for-profit contractors are allowed to store equipment on USPS property at no charge, the APWU has objected to the Postal Service habit of awarding mail-transportation contracts at one price, and shortly thereafter accepting highly escalated costs without going through a bidding process.
“The Postal Service has routinely accepted amendments increasing the costs of contracts that have been bid upon and finalized,” APWU President William Burrus said in a Feb. 22, 2008, letter to USPS Inspector General David Williams. Burrus also made note of the practice that allows contractors to park their vehicles on postal property without cost, calling it a high-value perk that obscures the true cost of subcontracting.
Current USPS contracting procedures “tip the scales in favor of subcontractors at the expense of postal employees,” APWU Motor Vehicle Service Division Director Robert Pritchard said. “And the costs to the Postal Service and the mailing public are exorbitant.”
Absolutely, Positively Wasteful In February, an OIG report found that the USPS Pacific Area wasted approximately $17.8 million by using “expensive FedEx transportation to move mail that could have been moved on low-priced surface transportation or on less costly passenger airlines.”
“The Postal Service also paid FedEx to sort mail when they could have avoided those costs by sorting the mail or properly preparing it for transport before giving it FedEx,” the OIG added (report NL-AR-08-002). The February report estimated that the Pacific Area USPS could save approximately $45 million over the next 10 years by eliminating such unnecessary expenditures.
The Postal Service first entered into the FedEx air transportation contract in 2001. On Aug. 2, 2006, the USPS announced that it had truncated the original contract and signed a new seven-year agreement that included an “immediate price reduction in all contract categories. ”The revised contract also allowed the Postal Service to continue outsourcing terminal-handling services.
Other recent revelations by the OIG show that Postal Services managers were unable to account for at least $33 million in outsourced facilities-repair and vehicle operations during 2007, indicating a troubling lack of oversight of contractors’ work.
An OIG analysis released in March (report SA-AR-08- 004), found that the USPS managers could not explain what they got for the $27.6 million they paid contractors in the 33 states the investigation covered, in part because supervisors claimed they were not aware they were responsible for overseeing expenses. “The safety, security and serviceability of Postal Service facilities, employees and customers are at increased risk,’’ the report said. The lack of control in dealing with contractors means “an increased risk of fraud and abuse.”
Another audit, released a day later, found that postal vehicles on city routes in 15 states had more than $5.8 million in questionable costs, with logbook entries showing that some had traveled millions of miles in a single accounting period, while others were recorded as having gone negative distances.
Public Security at Risk
“Allowing contractors to certify that their employees meet Postal Service security requirements,” a Feb. 12 OIG report noted, “could expose Postal Service employees, customers, the mail, and critical assets to unnecessary risk.”
Postal unions and national lawmakers frequently question whether allowing private contractors to conduct mail sorting, transportation, and maintenance work makes the mail stream more vulnerable.
After all, private-contractor employees are not sworn under the law to protect the mail, and they lack the training and experience necessary to protect the mail and the public from biohazards, explosives, and other dangers.
Furthermore, vendors’ employees are not subject to the same rigorous hiring standards as career postal workers, who undergo extensive government background checks.