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Chapter 1 Compliance with Statutory Policies
B. REALTY ASSET MANAGEMENT
Realty asset management provides internal expertise to identify, analyze,
and maximize the return on underutilized and surplus real property assets
controlled by the Postal Service. It generates income by maximizing the
value of Postal Service property through its highest and best use, leasing
or subleasing excess space to government and public tenants, and selling
surplus property.
| Assets | Gross Revenues ($millions) |
|---|---|
| Leasing to private tenants | 33.5 |
| Leasing to government tenants | 22.4 |
| Sales of excess property | 91.4 |
| Total | $147.3 |
C. FACILITIES PROJECTS
| Projects | Completed During 2006 |
Ongoing as of End of 2006 |
|---|---|---|
| New construction, major renovations, expansion projects | 10 | 350 |
| Building purchases | 25 | 20 |
| New lease construction | 6 | 29 |
| Other lease actions (e.g.,alternate quarters, new leases, lease renewals) | 3,924 | 1,755 |
| Expense repair and alteration projects | 6,344 | 4,514 |
| Capital repair and alteration projects | 2,915 | 7,399 |
3. Supply Management
The Postal Service attributed nearly $814 million in cost benefits to supply chain management activities. This was accomplished by benchmarking industry best practices, such as leveraging volume, standardizing requirements, expanding eBuy (a paperless requisitioning and ordering system), and participating in strategic partnerships with suppliers.
A. SUPPLY CHAIN MANAGEMENT INITIATIVES
A national contract was awarded to provide body repair and painting for the postal vehicle fleet, replacing approximately 122 separate contracts. The national contract allowed the Postal Service to establish uniform processes, specifications, and standards for the work while reducing the amount of labor required.
The Postal Service awarded a contract to First Script under which expenses will be reduced for prescriptions issued by the Office of Workers Compensation (OWCP). Currently, the Postal Service spends approximately $62 million per year on these prescriptions. First Script contracts with a network of pharmacies at a reduced fee schedule for both
medications and dispensing fees. The company will pass savings to the Postal Service that accrue from workers compensation claimants use of the designated prescription network.
The Postal Service and Hallmark Custom Marketing, Inc., the supplier of ReadyPost packaging products sold in Post Offices, successfully implemented a Point of Sale Replenishment system in 2006. This is a perpetual inventory system by which item level orders to replenish product stock are placed electronically. ReadyPost sales revenue exceeded $110 million, a result due in part to implementation of this system.
The Postal Service has increased the use of reverse auction software and conducted nearly 917 reverse auctions with an estimated contract value of nearly $191 million with $33 million in savings. More than 1.5 million local purchases were made through leveraged savings from existing national contracts using the eBuy catalog-ordering tool.
B. PURCHASING REFORM
The Postal Service completed its program of purchasing reform by publishing Supplying Principles and Practices, available to the public at http://usps.com/purchasing/purchasingpubs/pubsmenu.htm. The new principles and practices complement the purchasing regulations that the Postal Service adopted in 2005. These regulations focus on purchasing quality goods and services at fair prices and providing an expedited and inexpensive means of resolving supplier disagreements.
C. PURCHASES RELATED TO SECURITY AND ENVIRONMENTAL NEEDS
To address purchasing during emergencies, the Postal Service drew upon its experience from September 9/11, the anthrax attacks of 2001, and Hurricanes Katrina, Rita, and Wilma in 2005. Two contracts were awarded to implement a national-level all hazards approach to proactively prepare for emergency response and recovery needs.
D. MAJOR PURCHASES
The Postal Service awarded a new shared network air transportation contract to FedEx. This 7-year contract, expiring in 2013, replaced the FedEx 2001 contract which had been scheduled to expire in August 2008. Terminal handling services contracts that support the network were extended for an additional year.
Seven new 5-year air transportation contracts were awarded to commercial airlines. In a departure from past practice, in order to compete for an award, air carriers were required to prequalify before submitting bids. Past performance weighed heavily in the selection process and only the highest performers were invited to submit pricing and negotiate final contracts.
A contract for $102.3 million was awarded to design and construct a new 803,000 square foot building, the Northeast Michigan Processing and Distribution Center (PDC). The contract amount includes more than $19.8 million in mechanization for processing mail within the facility.
A contract for $77.4 million was awarded to design and construct a new 830,000 square foot building; the Oklahoma PDC and its adjacent service buildings; a 29,684 square foot vehicle maintenance facility; and a 12,000 square foot storage building.