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USPS OIG – Efficiency of Surface Transfer Centers in the Western Pacific Region

July 17, 2023
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Background

Surface Transfer Centers are facilities where mail and packages are received in containers for consolidation and staging to be loaded and transported to other facilities. These transfer centers also serve as a concentration point to consolidate mail volume and reduce the number of trips needed to transport mail. They are strategically located in a geographical region with the greatest opportunity to provide service to two – and three-day delivery areas. The transfer centers are operated by contract employees with management oversight by U.S. Postal Service officials.

What We Did

Our objective was to evaluate the efficiency and effectiveness of the Surface Transfer Centers in the Western Pacific Region. To accomplish our objective, we reviewed key performance indicators associated with the transfer centers and conducted site visits at the transfer centers in Southern California, Northern California, and Salt Lake City.

What We Found

The Postal Service has an opportunity to improve the efficiency and effectiveness of monitoring supplier performance at the transfer centers in the Western Pacific Region. Specifically, Postal Service officials were not consistently monitoring the suppliers’ performance and key performance indicators were missing in the Surface Transfer Center Report Card, which is used to monitor supplier performance. Additionally, Postal Service officials were not issuing and submitting corrective action forms to the suppliers and Postal Service headquarters management when the supplier did not meet performance targets. As a result, the supplier was not taking corrective action to bring performance into compliance with the contract and the Postal Service did not collect about $245,633 in penalties annually for missed performance targets. Furthermore, the Salt Lake City transfer center did not have key performance indicators in its contract. When the Postal Service does not include performance metrics in its contracts, suppliers cannot be held accountable and assessed penalties when they do not meet performance targets.

Recommendations

We recommended management (1) implement weekly performance reviews of the suppliers’ performance and assess penalties when performance targets are not met; (2) add all contractual Key Performance Indicators to the Surface Transfer Center Report Card; (3) submit corrective action forms to the supplier and headquarters management when performance targets are not met; and (4) include Key Performance Indicators in Surface Transfer Center contracts that are renewed or awarded to suppliers.

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