by Matt Rosenberg February 28th, 2011
SUMMARY: A recently-issued audit by the Inspector General’s office of the United States Postal Service finds that in the Seattle District, covering Washington and Idaho, mail volume has dropped 22 percent in the last five years and more than 800,000 excess square feet of facility space should be disposed of, saving $26 million over the next 10 years. The USPS Western Area, of which the Seattle District is part, could similarly save $173 million over 10 years. The audit also found that the USPS needs to improve its real estate management system to better identify and dispose of excess property, partly by tracking how long space is underused or vacant, what its condition is, and by marketing it to tenants including other federal agencies.
BACKGROUND: From fiscal years 2005 through 2010, combined mail volume in the five districts of the Western Area of the United States Postal Service has dropped by 20 percent, and 22 percent in the Seattle District, which covers Washington and Idaho. This prompts the need to identify and inventory excess space. To do that in the current audit the USGS Inspector General’s office used Real Estate Risk Model metrics it developed including ratios of interior square footage at each facility to mail volume, revenue, employees, and total expense. A series of August, 2010 USPS IG audits of other major service jurisdictions found savings from disposal of excess space could by FY 2020 equal $446 million in the New York District, $157 million in the Northern New Jersey District and $23 million in the Chicago District.
KEY LINK: “Audit Report – Facility Optimization, Western Area,” United States Postal Service, Office of the Inspector General, February 7, 2011
- The Seattle District of the United States Postal Service has 800,601 square feet of excess space it currently owns or leases. The district could save $26,358,203 by the end of fiscal year 2020 if it sold or leased the excess space.
- The entire Western Area of the USPS – made up of the Alaska, Central Plains, Mid-America, Northland and Seattle districts – has 3,592 facilities with 24 million indoor square feet; 4.5 million of those square feet are excess space and if sold or leased could save the postal service $173,835,881 by the end of fiscal 2020.
- The audit recommends that USPS Western Area and district officials do a better job identifying and disposing of excess space, and work with other federal agencies, who are prospective tenants for at least some of the excess space. According to the audit, “…the Postal Service has not capitalized on the priority status it has for filling other federal agencies’ space needs.”
- The USPS’s facility management system doesn’t include how long space is underused or vacant and its condition, although this would help officials set and meet priorities in disposing of excess space. Additionally, USPS should adopt other real estate performance metrics used by the U.S. General Services Administration such as facility revenue, operating costs, vacancy, net operating income and return on equity.
- The USPS’s Western Area currently plans to dispose of just 1.4 million of the 4.5 million in excess square feet identified by the USPS Inspector General. Officials in the Western Area will also examine another almost 26,000 square feet for possible disposal.
- Western Area operations officials respond in the audit that they agree with the findings generally but disagree with the calculations on amount of excess space and how it was valued. The Inspector General’s office finds their objections largely unsupported and to accent compliance, asks for written confirmation when they have completed the recommended corrective steps of better tracking and disposing of excess space. The IG audit of the Western District states, “Älthough it has made progress, the Postal Service can do more to dispose of excess interior space more quickly.
- Potential renters of of excess space at USPS facilities include other federal government agencies. The amount of excess postal service space across the Western District equals 30 percent of the space leased by the federal realty agency The General Services Administration, for other U.S. government departments within the boundaries of the USPS’s Western Area. Within the Seattle District, excess USPS space equals 25 percent of that leased elsewhere within the district by the GSA. Square footage at USPS facilities is typically valued at one-half to one-third of what’s paid for GSA-leased space. However, not all USPS excess space – in its current configurations – would be suitable for all federal agencies.