Inadequate Consideration of Economies Possible Through Consolidating Operations and Reorganizing Service Areas:

Post Office Department

B-114874: Published: Dec 7, 1964. Publicly Released: Dec 7, 1964.

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Our review of the establishment, discontinuance, and consolidation of certain postal installations by the Post Office Department disclosed that the Department had failed to adequately consider economies possible in these cases through consolidation of postal operations and reorganization of postal service areas when planning new or expanded postal facilities and when postmaster vacancies occurred. Because of improved means of transportation, establishment and extension of delivery services, changes in mail processing concepts, and changes in the characteristics of the communities served, less costly means of operation can often be established by consolidating the operations of many of the independent post office. Our review disclosed that in certain Post Office Department proposals for acquiring additional facilities to meet expanding space requirements consideration was not given to the potential reductions in operating costs, including manpower and rental costs, of more than $1 million a year that could be achieved through consolidation of postal operations in the areas. Since our examinations encompassed only a few of the more than 44,600 postal installations, significant reductions appear to be possible in the overall annual operating costs of over $4 billion. In a letter dated May 21, 1964, the Postmaster General advised us that the Department's procedures for developing new facilities and modernizing existing facilities take into consideration the feasibility of reorganizing service areas and merging operations and indicated that the Department is consolidating mail handling activities through the establishment of numerous sectional centers across the nation.

Our review disclosed that the Department had reorganized service areas and consolidated operations in some instances. However, the records made available to us by the Department pertaining to the locations commented on in this report did not show any evidence that consideration was given to reorganizing the particular service areas or consolidating operations therein. Further, under the sectional center concept the Department was achieving only a part of the cost reductions possible through reorganization of service areas. Accordingly, we are recommending that, in connection with the planning for each new or expanded facility, the Postmaster General emphasize the need for a specific determination of the feasibility of reorganizing service areas and consolidating operations therein and that such changes be effected whenever more efficient and economical operations would result. Our review also showed the need for more effective management action by the Department to determine whether post offices at which postmaster vacancies occur should be discontinued and the service provided by more efficient means. Our review in 4 of the 15 postal regions disclosed that the Department disapproved without adequate operational justifications regional recommendations to substitute less costly means of service for independent post offices. As a result, the Department failed to take advantage of potential savings of about $112,000 a year in those four regions.