USPS OIG Audit Report: Iron Mountain, MI, P&DF Consolidation

The U.S. Postal Service uses Area Mail Processing (AMP) guidelines to consolidate mail processing functions and increase productivity through more efficient use of equipment, facilities, staffing, and transportation. These consolidations are intended to reduce costs and maintain quality service.

Consolidating mail processing operations from the Iron Mountain, MI, Processing and Distribution Facility (P&DF) into the Green Bay, WI, Processing and Distribution Center (P&DC) was scheduled for July 25, 2015. However, the Postal Service announced on May 27, 2015, that it was deferring all planned consolidations until 2016.

U.S. Senator Debbie Stabenow

U.S. Senator Debbie Stabenow

This report responds to a request from U.S. Senator Debbie Stabenow to review mail processing consolidations in Michigan. In a separate audit originating from the same congressional request, we reviewed consolidation of the Kalamazoo, MI, and Lansing, MI, P&DCs.

Our objectives were to determine whether a business case existed for consolidating Iron Mountain, MI, P&DF mail processing operations into the Green Bay, WI, P&DC and to assess compliance with established AMP guidelines.

What the OIG Found
A business case exists to support consolidating mail processing operations from the Iron Mountain P&DF into the Green Bay P&DC. We estimated the consolidation should save about $4.5 million annually, and we found the Green Bay P&DC has machine capacity to process the additional mail volume from the Iron Mountain P&DF.

The Postal Service reported 2,410 net downgrades in customer mail service associated with the Iron Mountain P&DF consolidation and the national service standard revisions implemented on January 5, 2015. The national service standard revisions significantly relaxed the service standards nationwide. The majority of the downgrades were not attributed to the consolidation. In fact, the consolidation should result in a net of 2,756 service standard upgrades. The consolidation should not substantially impact the community and the Postal Service does not plan to lay off career employees.

Finally, the Postal Service generally complied with established AMP guidelines. However, we found the Postal Service overstated annual cost savings by about $837,000. Specifically, it overstated transportation savings as well as management and mail processing craft workhour savings.

What the OIG Recommended
We recommended the vice president, Network Operations, re-evaluate transportation and workhour savings in the Iron Mountain AMP feasibility study and make adjustments during the first post-implementation review.

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Source: Iron Mountain, MI, Processing and Distribution Facility Consolidation | USPS Office of Inspector General

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