The U.S. Postal Service has spent about $7.6 million since fiscal year (FY) 2010 on its Logistics Condition Reporting System (LCRS). The system was intended to collect and report Highway Contract Route (HCR) Global Positioning System (GPS) data and monitor HCR performance. Because of inaccurate data reporting and system compatibility issues the Postal Service is replacing the LCRS and the GPS devices.
Our prior audit work identified that the Postal Service did not develop a strategic framework for the GPS program or a detailed implementation plan.
The Postal Service manages a trailer fleet of 3,600 owned trailers, 8,500 leased trailers, and a changing number (from 40,000 to 50,000) of HCR contracted trailers. Management identified that accounting for trailers has been a problem and has resulted in missing or lost trailers, as well as excess trailers at some facilities and not enough at other facilities. The Postal Service plans to use GPS trailer tracking to measure usage, location visibility, and estimated time of arrival; and to optimize travel routes.
In June 2016, the Postal Service initiated a new GPS technology solution to manage trailers. This technology solution will rely on new GPS equipment and a new hardware and software system known as Enterprise Transportation Analytics (ETA). The ETA system will include three modules for managing owned, leased, and HCR contracted trailers. Management is modeling the hardware and software on the Delivery Management System currently used to manage delivery routes.
The Postal Service is using a two-phased approach for implementation beginning with owned and leased trailers in April 2017, and then HCR contracted trailers in July 2017. Management projects the GPS units and the ETA system to be fully operational by July 2017, with a FY 2017 cost of about $18.5 million.
Our objective was to assess the Postal Service’s plan to improve its management of trailers by using GPS data.
What the OIG Found
The Postal Service’s plan to improve its management of trailers by using GPS data was insufficient. Specifically, management did not develop a plan with metrics to show how benefits would be achieved, did not use analysis to substantiate savings, and did not identify associated savings and operational benefits for leased and HCR-contracted trailers.
The Postal Service developed system requirements and plans for GPS unit procurement, but did not develop performance metrics to measure the achievement of intended GPS initiative benefits for all trailer categories. This occurred because management tested ETA system functionality using hand-held mobile device scanners as opposed to using actual trailer-mounted GPS units. Additionally, management has not established a schedule to pilot the GPS units prior to deployment. As a result, management could not obtain sufficient data to set operational baselines and metrics.
In June 2016, management approved about $2.4 million in funding for ETA system hardware and software, along with the GPS units for owned trailers. The approval projected annual savings of over $1.2 million by increasing the utilization of Postal Service-owned trailers and reducing the number of leased trailers. Management based the projected savings on institutional knowledge rather than analysis, making it impossible to substantiate the projected annual savings.
Additionally, the Postal Service plans to purchase about 47,000 GPS units costing about $16 million for its leased and HCR-contracted trailers (at $2.4 and $13.6 million, respectively) in FY 2017. However, management did not identify any associated savings or operational benefits from this purchase because they consider it to be a current operating expense.
Consequently, without sufficient planning, we estimate that the Postal Service incurred about $2.5 million in unsupported questioned costs in FY 2017.
What the OIG Recommended
We recommended that management suspend GPS implementation — except for the ETA systems module development — and establish initiative milestones in the following sequence:
- Test and validate the ETA system when all modules are fully operational;
- Conduct a pilot program with the fully operational ETA system and the GPS trailer units to validate the complete technology solution;
- Develop a plan with established and validated performance metrics using the ETA system and GPS data; and
- Deploy the remaining GPS units based on decision points from the above analytics.
Additionally we recommended management identify and validate specific cost savings to support the GPS technology investment of about $18.5 million.