USPS OIG – Facility Lease Management

Background

Due to a variety of cost and service considerations, the U.S. Postal Service leases nearly 23,000 of its 31,000 real properties nationwide, at an annual cost of more than $1 billion. While Postal Service staff manage leases and rent payments, a third-party contractor helps negotiate terms and submits annual reports with key financial and operating data. Facility-related lease costs rose since 2021 due to higher commercial rents. The Postal Service’s financial position, the cost and service challenges of relocating, and vulnerability to rental rate fluctuations make strong lease management essential to minimizing cost risks.

What We Did

Our objective was to assess the Postal Service’s management of facility leases. We reviewed policies, data, and documentation, and interviewed Postal Service officials.

What We Found

While leased facilities are crucial to providing nationwide service, the Postal Service’s management of these leases puts costs at risk. We found unreliable data, such as leases with no value, underpinning the third-party contractor’s annual financial report. We estimated questionable contractor commission-related costs between calendar years 2024-2025, because the Postal Service did not have an approach to verify this financial and operational information. We also found some questionable payment amounts for leases that were in holdover status at some point in fiscal year (FY) 2025 (whereby the lease expired, but the Postal Service continued occupancy and rent payments pending a subsequent lease decision). These payment irregularities resulted in questioned costs during FY 2025. We also found insufficient documentation and inconsistent methods for determining rental rate proposals, and non-centralized storage of lease records.

Recommendations and Management’s Comments

We made five recommendations to address the issues identified in the report. We consider management’s comments responsive to all five as corrective actions should resolve the issues identified. Postal Service management’s comments and our evaluation are at the end of each finding and recommendation.

Related posts