OIG: USPS Spent $35 Million Using FedEx Needlessly
OIG Report: Federal Express – Transportation Agreement – Northeast Areas
On August 2, 2006, the U.S. Postal Service signed a new 7-year agreement with FedEx. FedEx transports time sensitive mail for the Postal Service, including Express Mail®, Priority Mail®, and First-Class Mail® (FCM). FedEx transportation is usually more expensive than commercial air carrier or surface transportation, and Postal Service policy requires transportation managers to balance service and cost in determining the best transportation mode.
It was more effective and economical in some cases for the Capital Metro, Eastern, Great Lakes, and Northeast Areas to use ground transportation and domestic air carriers as well as to sort mail at Postal Service plants than to use FedEx to perform these functions.1 Because the areas used FedEx, the Postal Service incurred about $35.3 million in unnecessary costs. If these areas implement our recommended changes, we estimate the Postal Service could save $170.6 million over a 10-year period.
We concluded that in some cases using ground transportation was more advantageous than using FedEx. By flying surface mail on FedEx instead of using cheaper ground transportation, the Postal Service spent about $32.1 million more than necessary during fiscal years (FYs) 2007 and 2008. This occurred because plant employees did not properly segregate surface mail classes from FCM and Priority Mail. By using ground transportation, the Postal Service could lower overall FedEx lift requirements and save about $138.3 million over 10 years.
Full Report Here: