OIG: USPS may be overpaying $42 million a year in HCR fuel charges

From a new audit by the USPS Office of Inspector General:

Background

uspsoigSince 2005, the U.S. Postal Service has been providing Highway Contract Route (HCR) suppliers with Voyager fleet transaction cards from U.S. Bank Voyager Fleet Systems, Inc. to purchase fuel (known as the HCR Voyager Card Program). In fuel year July 1, 2012–June 30, 2013, the Postal Service paid over $665 million for close to 170 million gallons of fuel under the program.

The Postal Service’s Fuel Management Program document provides policy to suppliers and the Postal Service on the HCR Voyager Card Program. It also includes guidance on pooling authorized fuel. It allows HCR suppliers to combine or “pool” authorized gallons for contracts in rare cases where there is an operational need to do so. Otherwise, suppliers are required to reimburse the Postal Service for all fuel used in excess of the contracted gallons by individual contract route. Our objective was to assess the Postal Service’s fuel pooling practices.

What The OIG Found

The Postal Service has not effectively implemented and managed fuel pooling for HCR suppliers under the HCR Voyager Card Program. It intentionally allowed all HCR suppliers with multiple HCRs to pool their authorized fuel gallons (called aggregate pooling) without regard for supplier operational needs (such as the use of the same equipment on multiple routes) or cost benefits for the Postal Service. This widespread pooling occurred because the policy was relaxed over time and is now inadequate. Also, aggregate pooling became common practice because agreements that would not have allowed it were either missing or lacked consistency.

Consequently, the Postal Service may be paying more in fuel costs than necessary. We estimate the risk of unrecoverable fuel overpayments at $42.5 million annually. Without corrective actions, financial assets of about $42.5 million are also at risk for the July 1, 2014–June 30, 2015, fuel year.

What The OIG Recommended

We recommended management ensure that pooling agreements clearly demonstrate an operational need and that pooling is consistently applied. We also recommended that management eliminate the practice of aggregate pooling. Finally, management should ensure timely identification and recovery of overpayments for the July 1, 2014– June 30, 2015, fuel year and any subsequent periods.

Voyager Card Program for Highway Contract Routes — Pooling Policy Concerns and Related Overpayments | Office of Inspector General.

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