New USPS service performance reports show significant delays in delivering the mail

May 13, 2015

The Postal Service has released its service performance reports for the second quarter of the fiscal year, January 1 to March 31, 2015.  They show that it's not just your imagination — the mail has been slowing down, and in some cases, by a lot.  The reports can be found on the USPS website here, and a more complete data set can be downloaded from the PRC website here.

This is the first period during which the new service standards were in effect.  These standards, which began on January 5, eliminated overnight delivery and added about a day to most delivery times.  The new reports show that even with slower standards the service performance has gone down compared to both the previous quarter and the same period last year.  The scores also fall well short of the Postal Service’s own targets. 

The results shown in the reports will come as no surprise.  According to a Washington Post article on April 27 by Lisa Rein, “Preliminary internal data shows that the Postal Service did not meet even its lower targets for first-class mail during the first seven weeks of 2015, with letters that are supposed to take three days … arriving on time just 54 percent to 63 percent of the time.” 

As it turns out, in some cases the performance for the full second quarter was even worse than the preliminary data revealed.  For example, for New York, only 44 percent of single-piece First Class mail was successfully delivered within the 3-to-5 day window. That's compared to 82 percent for the same quarter last year.  Two-day delivery performance for New York fell from 93 percent in Q2 2014 to 74 percent for Q2 2015.  (A table comparing Q2 2015 and Q2 2014 for single-piece First Class mail is here.)

Overall, the national score for single-piece mail for the 3-to-5 day service standard went down from 84 percent to 63 percent, a decline of over 21 points — and more than 32 percentage points short of the target.  

As the following table shows, in every category service performance for the second quarter of 2015 was down from the previous period last year, sometimes by a significant amount, and in no case did the score meet the target.  In some cases, it wasn't even close.

In the narrative accompanying the data, the Postal Service provides two explanations for the poor scores — bad winter weather and the operational changes at mail processing plants that went into effect on January 5th.

The weather may explain the performance problems in some places, like Chicago and Boston, where the amount of mail successfully delivered within the 3-to-5-day window was 51 and 53 percent, respectively.  But it can’t explain what happened in places like South Florida and Los Angeles, where only 48 percent of the mail was delivered within the 3-to-5 day service standard.

In most cases, the weather probably wasn't the problem.  The delays were caused by the changes in mail processing operations.  

As the Postal Service acknowledges in each performance report, “The mail processing operational window change that was made as part of the Network Rationalization plan was one of the most significant operational changes since automation implementation. These changes impacted the schedules for nearly all processing and transportation activities nationwide.”

The new reports may be viewed as particularly troublesome because the service standards themselves represent slower delivery times.  Mail that had been delivered overnight now takes two days, and much of the mail that used to take two days now takes three to five.  The latest performance reports show that a significant portion of the mail isn’t even making these more relaxed standards.

The Postal Service says that it is working on “stabilizing operations” in order to meet its new service performance standards.  But at many plants, the consolidation process has not even been fully implemented.  It’s possible that we will see even more delays over the coming months.

Amidst concern about these delays, the APWU will be holding a National Day of Action on May 14.  There's more information about the protests here, and a list of locations where protests will be held can be found here.  For more about how the new service standards are slowing down the mail, see this previous post.

(Photo credit: Mail processing, Washington Post)

DC Court remands barcode case back to PRC

May 12, 2015

Today the U.S. Court of Appeals, District of Columbia, issued a decision on the Postal Service’s challenge to a ruling by the Postal Regulatory Commission involving barcoding and a rate increase.  The ruling is here.

The decision was a mixed bag.  The Court ruled partly in favor of the PRC and partly in favor of the Postal Service, and both sides will probably find something in the decision to be happy about.  But the bottom line is that the case has been remanded back to the Commission for reconsideration.

The origins of the case go back to April 2013, when the Postal Service changed its policies about mail preparation requirements for automation discounts. 

Since 2009, there have been two different Intelligent Mail standards and two different discounted rates.  Basic-service Intelligent Mail requires mailers to affix a barcode to each mailpiece containing some basic information about the shipment.  Full-service Intelligent Mail uses a barcode with more detailed information, as well as other requirements, so it gets a bigger discount.

In spring 2013, the Postal Service changed its policy such that mail pieces prepared according to the basic-service Intelligent Mail standard would no longer be eligible for a discounted rate.

In the fall of 2013, the Postal Service filed a request for a rate increase under the inflation-based price cap rules.  Such increases are typically granted, but in this case things got a little more complicated.

The mailers argued that the change in mail preparation requirements constituted a rate increase that should be counted against the Postal Service’s price cap.

In response, the Postal Service claimed that mail preparation changes which did not actually alter the posted prices should not be seen as “changes in rates” or “classification changes.”   In its view, the changes in policy about barcode requirements were thus excluded from consideration under the price cap, and the Commission had no authority to include the changes in its decision about the price-cap rate increase.

In November 2013, the Commission decided in favor of the mailers.  It approved most elements of the request for a rate increase because they conformed to the price cap limitations, but held that "certain mail preparation requirements were governed by restrictions on rate increases set forth in 39 USC 3622(d)."  

A few weeks later, the Postal Service took the Commission to court.  Now, almost a year and a half later, the Court has issued its decision.

In today’s ruling, the Court says that the Postal Service was wrong about the scope of the Commission’s authority.  According to the Court, the law about rate increases is ambiguous on this issue, and in such cases, it’s necessary to defer to the administrative body charged with implementing the law — in this case, the PRC.

This is called “Chevron deference,” after a 1984 Supreme Court decision which found that even if a court finds that another interpretation of a law is reasonable, deference is due to the agency responsible for administering the law.

While the Court said that the Commission therefore had authority to rule on the issue, it found that the Commission’s decision was “arbitrary and capricious.”  That’s because according to the Commission’s reasoning, all mail preparation requirements could be considered as changes in rates. 

The Commission had assured the Postal Service that it would not “indiscriminately treat all new mail preparation requirements as rate adjustments,” but the Court found the language used by the Commission to define which operational changes would count as rate adjustments was “cryptic, to say the least.”

According to the Court, “the standard enunciated by the Commission to determine when requirements changes are ‘changes in rates’ seems boundless and, thus, unreasonable.”

The Court therefore remanded the case to the Commission “to enunciate an intelligible standard and then reconsider its decision in light of that standard.”  In the meantime, the changes to the Domestic Mail Manual will be held in abeyance pending the outcome of the remand.

(To read more, the relevant documents include PRC Order 1890, the Postal Service's response, and its initial court filing.)

(Image credit: Barcode graphic)

Historic Houston post office headed for demolition

May 8, 2015

Next week the Postal Service will close the post office and processing center on Franklin Street in downtown Houston.  It’s a historic building, eligible for the National Register of Historic Places, but it looks as though it is headed for demolition.  

In a "memorandum of agreement" about the disposal, the Postal Service states that it "anticipates demolition of the Houston PO/P&DC in association with transfer of the property."

The Postal Service first offered the property for sale in 2009, and there was talk then about turning it into a public park, an outdoor amphitheater for festivals and performances, or a mixed-use development with housing, a hotel, and entertainment venues.

The Postal Service didn’t accept any of the bids that were offered at the time, and the property has been on and off the market since.  At one point it seemed that the city might buy the building and convert into a criminal justice complex.  Developers argued that there were better potential uses for the property without the building.

The downtown post office is currently listed on the USPS-CBRE Properties for Sale website.  The sales flyer doesn't have much to say about the building.  The flyer focuses on the 16.4 acres of “highly visible” development property with “exceptional views” and a location "in the heart" of Houston’s Central Business District.  

The CBRE website doesn’t list an asking price.  Back in 2009 a real estate expert said that before the market meltdown the site could have sold for more than $35 million.  Property values have recovered, but media reports don't mention any estimates for the property's current value.

Built in 1962, the Franklin Street post office was designed in the Brutalist style by Wilson, Morris, Crain & Anderson, the architects who did the Houston Astrodome, which is currently experiencing its own issues, sitting in limbo, awaiting demolition.

The Franklin Street post office is an iconic building in Houston.  Stephen Fox, an architectural historian and fellow of the Anchorage Foundation of Texas, has called the post office a “distinguished work of 1960s modern architecture by an important Houston architecture firm.” 

At this point, the building is more than 50 years old and eligible for the National Register of Historic Places.  In order to dispose of it, the Postal Service was therefore required to go through a Section 106 process under the National Historic Preservation Act.  

The Postal Service determined that the disposal would have an “adverse effect" (not surprising, considering plans to raze the building), so the Postal Service proceeded to work out a Memorandum of Agreement with the Texas State Historic Preservation Officer, the Advisory Council on Historic Preservation, and other parties.

The Agreement states clearly that “USPS anticipates demolition of the Houston PO/P&DC in association with transfer of the property, thus negating efforts to provide preservation protections or restrictions.”

While the building be demolished, the Agreement still requires the Postal Service to complete a National Register Multiple Property Documentation (MPD) Form identifying other Modernist buildings in the area. 

The Agreement also promises that several historic elements of the building — some stainless steel legged customer tables, a metal eagle hanging in the Caller Service transom, a stylized stone/cast stone eagle sculpture located in the front plaza — will be relocated to other post offices in the area.

In addition to going through a Section 106 process to dispose of the property, the Postal Service was required to go through two other procedures in order to consolidate the processing operation and close down retail services.

In July 2010, a public meeting was held as part of the process for consolidating the mail processing operations with another facility on the north side of Houston.  The consolidation process has been underway for some time, and it will be completed on May 15.

It’s not clear when the Postal Service also went through the required process for discontinuing or relocating retail services.  Some sort of town hall meeting was held in March 2015, but if that meeting was intended to fulfill the Postal Service’s legal obligation to discuss the closure with the public, it was strictly for show.  The decision to shut down the facility had been made long before. 

In any case, according to the Houston Chronicle this week, the retail operation, including PO boxes, is being relocated to the Midtown carrier annex on Hadley Street. 

And that will be that for the downtown post office.

In 1984, the Franklin Street facility was renamed the Barbara Jordan Post Office after the first African American congresswoman to come from the Deep South.  Last year Congresswoman Sheila Jackson Lee expressed concern about the "dignity" of dumping a building named for the Houston icon.

It will be injury to indignity on the day the wrecking ball strikes.

UPDATE: May 12, 2015: The reports that the Postal Service "appears to be close to finding a buyer" for the property.  Spokeswoman Dionne Montague said the most recent bid solicitation period has closed and the postal service is “in the process of negotiations,” which may be finalized by the end of the year.  Montague said she was not permitted to provide any additional details “as it may compromise the negotiations.”

(Photo credit: Barbara Jordon Post Office)

OIG recommends terminating the USPS-CBRE contract and refers cases for criminal investigation

April 30, 2105

The Postal Service’s Office of Inspector General has issued its fourth report criticizing the Postal Service’s oversight of the contract with its real estate broker, CBRE.  It’s entitled “Postal Service Management of CBRE Real Estate Transactions.”

The OIG finds fault with both the leasing deals and the sales of postal property, and it recommends terminating the contract with CBRE.  The OIG has also turned several cases over to the OIG’s Office of Investigations to determine if laws have been broken.

The possibility that illegalities occurred involves both the lease negotiations and sales.  The OIG examined about 4,700 leases that had been negotiated by CBRE and found 57 where there was a huge rate increase — 200 percent or more than the previous lease rate.  Considering that the average increase was about 8 percent, that looks suspicious. 

The OIG also found many cases where the lessors said that CBRE was including commission fees in rents paid by the Postal Service, which is contrary to the contract, so this matter has also been referred to the Office of Investigations. 

Finally, in the case of several property sales, the OIG found potential relationships between the buyer and CBRE.  Those cases have been referred to the Office of Investigations as well.

Given these and many other problems in the arrangement with CBRE, the OIG has recommended that the Postal Service terminate the current contract with CBRE and “recompete” it, i.e., put it out for bid again with a new "request for proposals."

The OIG leaves it to the Postal Service to decide whether the new contract should be with CBRE, another contractor, or a group of contractors (the GSA’s model) — or if Postal Service personnel should do more of the work (as in years past).  Whatever happens, says the OIG, “the idea of terminating the current contract is to ensure that future lease and sale negotiations are done with the Postal Service’s best interest in mind.”

The Postal Service has already rejected the idea of terminating the CBRE contract.  In his letter responding to a draft of the OIG’s report, Mr. Tom Samra, USPS Vice President of Facilities, says that the Postal Service has hired a consultant to evaluate the leasing program with CBRE against industry best practices. 

Pending review of the consultant’s report, Mr. Samra says that the Postal Service has insufficient personnel to manage all the lease renewals.  Besides, Mr. Samra says he doesn't think CBRE is doing anything wrong.


The sales

The sales of postal properties came under scrutiny in 2013, when investigative journalist Peter Byrne published Going Postal: U.S. Senator Dianne Feinstein’s husband sells post offices to his friends, cheap.  (Available on Amazon here.)

Byrne’s year-long research into over 50 sales (concluded from May 2010 to April 2013) indicated that about 80 percent of the properties had been sold below their assessed value, sometimes to CBRE’s clients and business partners. 

The discovery was particularly troubling because the chairman of CBRE at the time was Richard Blum, the husband of California Senator Feinstein.  (He’s still a major stockholder and remains on the Board of Directors.)

The OIG looked at 21 sale transactions, “judgmentally selected” from the 48 sales that were conducted by CBRE between January 2012 and September 2013.  The OIG found problems with 14 of the 21 sales.

The period of the OIG’s study overlaps with the timeframe examined by Byrne, so the OIG and Byrne looked at many of the same sales, but the OIG report does not list which sales it reviewed, so it’s not possible to determine if the OIG included the more egregious examples that Byrne uncovered.

The OIG compared the sale prices with the appraised values obtained by CBRE, not the assessed value that Byrne used, so the two reports don’t examine the same data, but they come to many of the same conclusions.

Actually, Byrne had submitted a FOIA request to the Postal Service for the appraisals on the properties he was examining, but it was denied, so he spent months researching the 52 properties to determine their assessed value.

A word here on the terminology.  The assessed value is the most recent sale price for a property, adjusted to reflect local market trends.  The appraised value is an estimate of the fair market value of a property based on comparables, market trends, potential rental revenues, etc.  Normally, property values go up, so the appraised value is usually higher than the assessed value.

That’s why when Byrne found that properties were being sold below assessed value, it was compelling evidence that they were being sold below their market value.  Now it seems that there’s even more to the story: The appraisals are themselves a problem.

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