The Government Accountability Office (GAO) recently released a report titled U.S. Postal Service: Reviews of Proposed Facility Consolidation Costs Met Some Best Practices but Could More Robustly Analyze Risks (GAO-25-107630), evaluating the U.S. Postal Service’s (USPS) Mail Processing Facility Review (MPFR) process. The report highlights both the strengths and shortcomings of USPS’s approach to consolidating mail processing facilities and underscores critical gaps in risk and uncertainty analysis.

USPS’s facility consolidation efforts are part of its broader Delivering for America 10-year strategic plan, which aims to modernize mail processing and delivery networks to improve efficiency and financial sustainability. Since initiating the MPFR process in July 2023, USPS has conducted 59 reviews to assess the potential impact of consolidations on costs, employees, and service performance. However, concerns from Congress and the public led USPS to pause in-process reviews in May 2024, delaying further evaluations until January 2025. During this pause, the scope of 16 ongoing MPFRs was adjusted, with USPS deciding to keep certain local mail processing operations at their original facilities instead of relocating them.

GAO’s assessment found that while USPS’s cost estimates for facility consolidations aligned with some best practices, they fell short in key areas. Specifically, USPS fully or substantially met best practices related to ensuring that estimates included relevant costs, were reviewed by management, and contained minimal errors. However, it failed to properly document cost-influencing assumptions, lacked detailed explanations of its estimating methodologies, and did not perform essential sensitivity and risk analyses. GAO emphasized that without these critical components, USPS decision-makers and oversight bodies might have an incomplete or overly optimistic view of expected cost savings.

For federal contractors, especially those engaged in logistics, infrastructure, and mail transportation, the findings of this report have significant implications. USPS’s restructuring efforts create opportunities for contractors who can provide technology solutions, analytics, and logistical support to enhance the efficiency of mail processing. However, the lack of robust cost and risk assessments in USPS’s MPFR process suggests a level of financial and operational uncertainty that could impact contract performance and payment reliability. Contractors working with USPS should closely monitor ongoing facility consolidations and anticipate potential delays or scope changes, as evidenced by USPS’s decision to modify 16 MPFRs during the review pause.

The report also underscores the importance of transparency and accountability in cost estimation, an issue that resonates beyond USPS. Federal contractors, particularly those bidding on government projects, must ensure that their cost proposals include clearly documented assumptions, risk assessments, and sensitivity analyses. Given that GAO criticized USPS for failing to adequately document estimating methodologies, contractors can distinguish themselves by adhering to best practices in cost estimation and risk analysis when engaging with federal agencies.

While USPS disagreed with GAO’s recommendations, asserting that additional sensitivity and risk analyses were unnecessary, the report highlights broader concerns about financial oversight and operational efficiency within the agency. As USPS moves forward with its network transformation, contractors should expect continued scrutiny from Congress and stakeholders regarding cost estimates and service impacts. Understanding USPS’s evolving approach to mail processing facility consolidations will be crucial for businesses seeking to provide services or technology to support its modernization efforts.

Disclaimer: This summary is for informational purposes only and does not constitute legal or financial advice. The accuracy of the information is not guaranteed, and readers should refer to the original GAO report for authoritative details.