This week there was a lot of hand wringing in the press about the U.S. Postal Service which lost almost $200 million last year. The USPS simultaneously blamed technology for the loss saying that more people are using e-mail and the dot.com implosion hampered growth in junk mail. The truth is actually a bit simpler — the USPS wasted $1.4 billion dollar over the last four years on projects that would have gotten private sector managers fired in an instant.
In fact the USPS is so mismanaged that the Government Accounting Office this week placed the postal service on its list of “high risk” government agencies that are the most susceptible to fraud and waste (which is quite an accomplishment given the general level of fraud and waste at government agencies).
While it raises prices for sending a letter through its first class mail monopoly, it was doling out ridiculous levels of largesse to its managers. ABC reports, for example, that former USPS CFO Richard Porras was paid $167,000 in moving expenses to relocate a mere 15 miles! USPS managers routinely used limousines for their personal use.
The USPS also apparently lacks a well defined infrastructure plan, spending tens of millions of dollars for buildings it never actually uses. In Seattle it bought a building that it never bothered to inspect prior to the purchases. After the purchase it learned the building would require $23 million in repairs. In Virginia it paid $4.2 million to lease a building for 20 years, but never actually used the building. It lay empty for two years before the USPS subleased it to another company.
The USPS’ efforts to branch out in areas where it lacks a monopoly have, not surprisingly, turned out to be a financial disaster. It has lost $84 million on programs to sell items ranging from phone cards to postal clothing.
Why doesn’t the U.S. Justice Department focus on breaking up this monopoly with the same vigor it focused on Microsoft?
Source:
Postal Waste: Stamp Prices Up Amid Postal Budget Bloat. ABC News, April 4, 2001.
Saturday Mail Delivers Could End. David Ho, Associated Press, April 4, 2001.