Postal Service: Progress in Implementing Supply Chain Management Initiatives Page: 2 of 31
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Accountability- Integrity Reliability
Highlights of GAO-04-540, a report to the
Chairman and Ranking Member, Special
Panel on Postal Reform & Oversight,
Committee on Government Reform,
House of Representatives
Why GAO Did This Study
The Postal Service is on the cusp of
a major transformation to improve
its fiscal outlook. One part of this
procurement. The Postal Service is
homing in on supply chain
management, a process that has
helped successful private-sector
companies leverage their buying
power and identify more efficient
ways to procure goods and
To assist congressional efforts to
enact fundamental postal reform,
GAO was asked to determine
(1) the extent to which the Postal
Service has been successful in
implementing and realizing savings
from its supply chain management
initiatives and (2) whether these
initiatives have had an effect on
GAO is recommending that the
Postal Service improve
implementation of its bulk fuel
program, consider adjustments to
reverse auction procedures, and
focus more attention on small
businesses in carrying out supply
chain management initiatives. In
written comments on a draft of this
report, the Postal Service generally
agreed with our recommendations
and stated that it will consider
reestablishing small business
targets if current achievements
begin to slip. GAO believes the
Postal Service should have a
mechanism in place to ensure
accountability and transparency
in its small business contracting.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact David Cooper
at (202) 512-4841 or firstname.lastname@example.org.
Progress in Implementing Supply Chain
What GAO Found
The Postal Service has had mixed success in implementing the supply chain
management initiatives we reviewed: the bulk fuel program; reverse auctions
for transportation contracts; and national contracts for boxes, custodial
supplies, labels, retail packaging, and tires. The Postal Service reported over
$78 million in fiscal year 2003 savings and revenue from these initiatives.
However, the Postal Service has been unable to recover millions of dollars in
potential savings because of implementation problems with the bulk fuel
program. For other savings initiatives, baseline data used to calculate
savings were, in some cases, inaccurate or could not be validated because
the Postal Service lacks a system for harnessing annual spending data.
Three Major Savings Initiatives Have Encountered Difficulties
Bulk fuel program
Service's buying power
of millions of gallons of
diesel fuel purchased by
who deliver mail to U.S.
contractors to compete
for contracts by using
contracts for goods and
services into large,
Postal Service projected $18 million in annual
savings but reported only $1.1 million in savings
for fiscal year 2003; many highway contractors
have been reluctant to participate in the program;
millions of dollars will not be recouped due to lack
of automated system to accurately adjust fuel
Over $5.9 million in savings were reported for
fiscal year 2003; $2.1 million of this amount is
questionable because of incorrect baseline data;
some auction procedures may not elicit best price.
$71.1 million in savings and revenue were reported
for fiscal year 2003 under the national contracts
GAO reviewed; GAO could not validate this
amount because the Postal Service has no
accurate baseline information on how much was
spent on these commodities prior to the supply
chain management initiative.
Source: GAO's analysis of Postal Service data.
Since the Postal Service started using the national contracts GAO reviewed,
the number of small business suppliers has dropped dramatically.
Acquisition plans for most of these contracts did not address small business
participation, either at the prime or subcontractor level. GAO could not
determine the effect that the bulk fuel program and reverse auctions have
had on small businesses because Postal Service contracting officers and
contractors have been using incorrect business size standards, and, as a
result, the reported small business accomplishments are not accurate.
Further, the Postal Service's new supplier diversity policy does not establish
targets for contracting with small businesses. Therefore, the Postal Service
will have difficulty gauging the effect of supply chain management initiatives
on these businesses and holding contracting officers accountable for
implementing the policy's objective of ensuring improvement in the Postal
Service's relationships with small businesses.
United States General Accounting Office
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United States. General Accounting Office. Postal Service: Progress in Implementing Supply Chain Management Initiatives, report, May 17, 2004; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc300585/m1/2/: accessed December 16, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.