The following are excerpts from the U.S. Postal Service Office of Inspector General’s Audit Report on Pasadena, California, Processing and Distribution Center Consolidation:

See full USPS OIG Audit Report - Pasadena, California, Processing and Distribution Center Consolidation

At management’s request, the U.S. Postal Service Office of Inspector General reviewed the Area Mail Processing proposal to consolidate outgoing mail processing operations from the Pasadena, California, Processing and Distribution Center into Santa Clarita, California, and Industry, California Processing and Distribution Centers. U.S. Postal Service management projected the consolidation would result in cost savings of approximately $1.3 million during the first year. Our objective was to assess the justification and impact of the consolidation.

The workhour cost analysis included in the AMP proposal was supported and additional OIG analyses in the productivity and capacity areas provided confirming evidence for the consolidation. Specifically the Postal Service determined that approximately 42,00 workhours could be eliminated if outgoing mail processing operations were transferred from the Pasadena P & DC to the Santa Clarita and Industry P & DCs.

However in the development approval and implementation of this AMP Postal Service management did not always comply with processes outlined in Handbook PO-408 and as a result, some AMP proposal data was inaccurate, incomplete or unsupported. We found discrepancies with the AMP proposal in the area of transportation costs, the number of employees affected and changes in service standards. Because of these discrepancies, the cost savings as projected in the AMP may be significantly overstated and the service impacts are not fully described. Additionally the approval process was not consistently followed, notifications to stakeholders were not issued in a timely manner and implementation of the AMP differed from the proposal. Finally supporting documentation for the AMP proposal was not always available,.

Transportation Costs District and area management had not finalized transportation costs at the time we conducted our review, but the costs included in the approved AMP proposal appeared to be significantly understated The additional costs associated with implementation of the AMP proposal were projected at $12,500 annually. However, during our review, the estimated costs had increased by over $550,000 annually.

Employees Impacted
The number of employees needed to process the mail transferred to the Industry P & DC may be understated. AMP documentation indicated that six additional employees were needed; however the workhours transferred indicated that 13 full-time equivalents were needed to process this mail. As a result, the Industry P & DC could be understaffed for processing the mail it received.

Approval of the AMP Proposal
The signature page of the AMP proposal documents approvals by the initiating offices in June 2005, the Pacific Area Vice President on July 22, 2005, and headquarters on October 7, 2005.The AMP proposal was changed as it made its way through the approval process; however, we could not determine which changes had been reviewed and approved by various levels of management.

Signatures of some key officials including the Industry P & DC Manager, the District Manager, and the Senior Plant Manager, were missing from the AMP proposal, which the Senior Vice President, Operation, approved on October 7, 2005. Therefore we could not determine of these officials had the opportunity to review details in the AMP proposal or the changes made to figures developed earlier. We also could not determine of these officials had the opportunity to review and approve changes before final approval by headquarters.

The Pasadena AMP proposal was changed without rejecting and reinitiating the process and signatures of key officials were missing from the document. The AMP policy did not outline the steps to be taken when changes are made during the approval process.

Notification to Stakeholders
Letters notifying key stakeholders of intent to conduct an AMP feasibility study were issued late. These included letters to members of Congress and union officials. The letters were sent in early September 2005, over 2 months after the AMP proposal had been approved by the district and over one month after it had been approved at the area level. At the time these notifications of intent were issued, the approval process of the AMP proposal was almost complete. The AMP was approved by headquarters on October 7, 2005, approximately 1 month after the notification about the feasibility study. [link added by PostalReporter.com]

See full USPS OIG Audit Report - Pasadena, California, Processing and Distribution Center Consolidation