Congress Reviews Federal Vehicle Fleet Procurement
House subcommittee questions use of postal vehicle maintenance facilities.
The U.S. House Oversight and Government Reform Committee’s Government Operations Subcommittee held a hearing May 21 on “Issues Facing Civilian and Postal Service Vehicle Fleet Procurement.” There has been much congressional interest in the financial condition of the U.S. Postal Service (USPS) and how it has dealt with strategies to reduce federal outlays. The subcommittee called the following witnesses:
• Joseph Corbett, chief financial officer and executive vice president of the U.S. Postal Service.
• Katherine Vigneau, director of Professional Development, NAFA Fleet Management Association.
• Lori Rectanus, director of Physical Infrastructure Issues, Government Accountability Office (GAO).
• William Toth Jr., director of the Office of Motor Vehicle Management, General Services Administration (GSA).
Sen. Mark Meadows, R-N.C., subcommittee chairman, opened the hearing with members raising concerns about the Postal Service’s management. Rep. Brenda Lawrence, D-Mich., a 30-year veteran of the USPS, asked many informed questions, directed primarily to Corbett, about how the USPS could justify another total vehicle replacement strategy. The Postal Service’s purchase of approximately 180,000 vehicles over a relatively short amount of time has been the focus of bipartisan opposition.
In the past, the Postal Service has used a total periodic replacement strategy to replace its delivery vehicles, and it has now come to the Committee’s attention that this strategy is inferior to a rolling replacement strategy, which would allow faster adoption of technological improvements and also minimize risks for USPS employees and their vehicles.
Federal agencies are responsible for developing maintenance plans for vehicles owned by the government. The GSA is responsible for the maintenance of leased vehicles under its leasing program.
Rep. Earl “Buddy” Carter, R-Ga., broached the issue of USPS vehicle maintenance centers when questioning Corbett on the agency’s spending with regard to its postal fleet. Carter began by asking Corbett for an explanation of the Postal Service’s current methods of handling maintenance for its fleet, which consists of vehicles of varying types and ages. Corbett explained that because of the size of the fleet, it’s forced to use about 500 USPS-owned vehicle maintenance centers.
A decade ago, the Postal Service reported that its vehicle maintenance centers numbered 322. Of the $700 million in USPS vehicle repairs each year, $500 million of that figure is performed by the USPS-owned vehicle maintenance facilities, and about $200 million in repairs are contracted out to independent shops.
GAO noted that there were additional costs from delayed vehicle purchases in 2011. For example, there were high maintenance costs (including unscheduled maintenance costs) that resulted at that time in about $750 million a year for maintenance, which also impacted the operations budget in increased overtime costs when vehicles broke down and needed to be repaired.
We recommended that the Postal Service develop a strategy to address its delivery fleet needs and consider the effect of operational changes, legislative requirements and other factors. In response, the Postal Service stated that it is developing a strategy to address immediate and long-term needs of its delivery fleet.
In 2015, the Postal Service issued a request for information from potential suppliers to develop a next-generation delivery vehicle to meet future capacity needs and delivery operation requirements such as an increase in package volume. To potentially purchase 180,000 vehicles, the Postal Service estimates it might need to spend between $4.5 and $6.3 billion.
That estimate led Carter to ask for further explanation of the cost differences between the USPS vehicle maintenance facilities and private sector, independent vehicle repair shops. Specifically, he asked, were there cost analyses available that compared the USPS maintenance facilities with the private sector? Corbett responded that USPS wages “… cannot compete with the private sector market…” and that average annual spending at the Postal Service for maintenance on each vehicle is about $4,200.
Carter followed up by asking Corbett if the USPS has calculated how much money it would save if vehicle maintenance were performed in the private sector, and Corbett responded that the potential savings would vary market-by-market. Carter then asked that Corbett report back to the committee on potential savings if the federal vehicle maintenance facilities were closed and repairs were made by independent shops.
The majority of the committee’s questions were directed toward Corbett, who consistently suggested that the lack of concrete evidence to support the use of a total fleet replacement strategy was overwhelming, and made it almost impossible for him to respond to many of the questions regarding the purchase of new postal vehicles.
One of the most notable moments in the hearing was when Lawrence commented that as a 30-year veteran of the USPS, she would need much more explanation about how the USPS could justify another total replacement strategy.
Carter, in suggesting that the USPS consider the potential cost savings of closing hundreds of federal government vehicle maintenance facilities and outsourcing vehicle repairs to the private sector, said: “I was a mayor at one time, and I had to manage fleets of vehicles similar to the postal fleet. We used best practices and found that sometimes it was more cost-efficient to go to the private sector to have maintenance and repairs done on our vehicles.
“The USPS, especially in its current fiscal situation, must also be responsible stewards of the dollar and ensure the repairs on their fleet are done in the most cost-efficient way.”
One of the key takeaways from the hearing was that the USPS has limited numerical evidence to justify its spending strategy for fleet vehicle replacement or current vehicle maintenance programs.
The committee will likely continue to review the Postal Service’s planned fleet vehicle replacement strategy. The USPS committed to provide more data to the committee, relative to the exact number of USPS vehicle maintenance facilities in the United States and additional information, including the location of these maintenance facilities, number of technicians, labor rates, etc.