Voyager Card Program – Capping Report
Background
Since 2005, the U.S. Postal Service has been providing Highway Contract Route (HCR) contractors with Voyager fleet transaction cards to purchase fuel for HCRs. The Postal Service has spent $5.1 billion on fuel purchases of 1.6 billion gallons for the HCR Voyager Card Program, since its start in fiscal year (FY) 2005 through FY 2013. It is a complex program, consisting of over 400 contractors and more than 4,000 contracts using over 12,000 active Voyager cards.
Our objective was to assess the HCR Voyager Card Program (summarizing our prior work in this area) and identify viable fuel management program alternatives.
What the OIG Found
The HCR Voyager Card Program implemented by the Postal Service is not effective and other options should be considered.
Specifically, our prior work found the Postal Service did not establish adequate controls over the program and safeguard the cards against fraud, waste and abuse; establish an infrastructure to manage the program including systems and resources to monitor activities; or take advantage of technological best practices to increase miles per gallon achieved.
Highlights The HCR Voyager Card Program implemented by the Postal Service in 2005 is not effective and other options should be considered. Voyager Card Program – Capping Report Report Number NO-MA-14-007 1 The Postal Service pays for all the purchased fuel under the HCR Voyager Program for its contractors’ use so there is no incentive for contractors to conserve fuel. FUEL FUEL We also identified inherent program weaknesses including a lack of incentives for contractors to obtain the cheapest fuel, maximize their miles per gallon efficiency, and ensure fuel purchases are for postal purposes only. Since 2011, we have reported on a pattern of diminished program controls and management recognized they were unable to enforce pooling policies. Our initial investigative work from FY 2006 to FY 2013 identified 63 cases of significant program fraud by both companies and individuals. Our investigation continues, but it has become increasingly difficult because of the weak controls, processes, and practices associated with the HCR Voyager Card Program.
Furthermore, the Postal Service has incurred more in program costs than what it expected to save. This is contrary to the Postal Service’s claim that the program saves $50 million a year ($17 million from unused gallons and $33 million from discounts and rebates). Based on our prior work, beginning in FY 2011, we questioned about $489 million in expenditures associated with this program due to significant control weaknesses. Moreover, we estimate that the Postal Service has incurred and will continue to incur about $10.7 million annually in additional costs because of these control weaknesses.
The HCR Voyager Card Program is not manageable given the level of risk and the significant resources required for providing enhancements and critical oversight. Based on industry best practices, one viable alternative is a variation of a fuel price-indexing model. Indexing includes setting reasonable miles per gallon and a base price per gallon at contract inception, then automatically adjusting the price periodically. Unlike the HCR Voyager Card Program, this option requires less administrative oversight, provides increased control over contract payments (reducing the risk of fuel overpayments), incentivizes contractors to reduce their carbon footprint, and improves mileage per gallon efficiency.
Management has taken recent actions. In FY 2014, the Postal Service initiated a comprehensive study of its HCR contracting model to identify innovative cost saving strategies, which included integrating fuel types, contract types, business models, and technology platforms. This study is still ongoing and no decisions or results of this study have been announced. In addition, the Postal Service has conducted an internal review of its pooling policy and determined overages could not be collected because of their own non-compliance with the policy. Finally, the Postal Service took corrective action on employee misconduct, identified by the OIG that was associated with the administration and oversight of HCR contracts and the HCR Voyager Card Program.
What the OIG Recommended
We recommended management consider fuel management program options other than the HCR Voyager Card Program. We also recommended that management consider fuel management best practices as appropriate to obtain the best value for the Postal Service.