Background
The U.S. Postal Service seeks to extend the convenience and reach of its products and services by locating them near where customers live, work, and shop. In August 2013, the Postal Service started a 1-year pilot program with Staples, in which the retailer sold only Postal Service shipping products and services and not those of its competitors. During the pilot, the American Postal Workers Union expressed various concerns with the Postal Service’s partnership with Staples. Due to mounting union protests, the Postal Service ended the pilot in August 2014. Staples then joined the Approved Shippers Program.
Approved shippers are package and shipping retailers that enter into agreements with the Postal Service to offer postal products and services along with the products of its competitors. They do not receive direct compensation from the Postal Service; rather, they get pricing discounts for postal products and can add a surcharge above established postal retail prices to generate profits.
In fiscal year 2014, the Postal Service partnered with over 6,400 approved shippers across the U.S. and generated over [redacted] in revenue from the program.
Our objectives were to determine whether there was adequate oversight of the Approved Shippers Program and evaluate whether the new Staples Approved Shipper Agreement is consistent with others in the program.
What The OIG Found
The Postal Service can improve oversight of the Approved Shippers Program. We determined the Postal Service did not conduct quarterly performance reviews as required for 84 of 107 (79 percent) approved shippers we evaluated. Also, although approved shippers on average had shorter wait times than post offices, the shippers did not always adhere to mail security and signage requirements. Specifically, of the 107 approved shippers we evaluated:
■ Eighty-one (76 percent) did not ask the required mail security questions.
■ Eighty-eight (82 percent) were willing to or did accept packages without knowing the contents.
■ Thirty-three (31 percent) did not examine packages for mailing standards.
■ Nine (8 percent) did not secure mail away from public access.
■ Twenty-nine (27 percent) did not display signage offering postal products and services.
Without formal guidance and oversight, the Postal Service cannot ensure approved shippers are promoting postal products and meeting mail security requirements. This can increase the risk of hazardous materials entering the mailstream and customers purchasing products and services from competitors. This could affect employee and public safety as well as the Postal Service’s mail delivery operations, goodwill, and brand.
We calculated [redacted] for potential damages to postal facilities if hazardous mail were to enter the mailstream. This amount does not include payments for injuries to Postal Service employees or customers.
Finally, we determined the Staples agreement was consistent with other approved shipper agreements and included provisions to protect the Postal Service and increase customer access to its products and services. Specifically, the agreement addressed mail safety and security, compensation and discounts, sharing of customer information, and advertising. We also found the Postal Service’s partnership with Staples did not result in the Postal Service increasing its office supply purchases from Staples. The purchases were divided evenly among three suppliers.
What The OIG Recommended
We recommended management develop formal policies and procedures for overseeing the Approved Shippers Program including roles, responsibilities, and a verification process for performing reviews of approved shippers.