The act—designed to improve energy efficiency— requires that 75 percent of light-duty vehicles acquired for federal fleets in  major metropolitan areas be capable of using alternative fuels. USPS’s Delivery Fleet Primarily Consists of LLVs That Are Approaching the End of Their 24-Year Expected Operational Lives

		LLVs, Flex-Fuel Vehicles, and Minivans Are the Principal Components of USPS’s Delivery Fleet

The number of half ton and smaller vehicles in USPS’s delivery fleet— mostly LLVs, flex-fuel vehicles (FFV), and minivans—has remained  relatively constant over the past 5 fiscal years, ranging from 182,517 to  189,712 vehicles, despite about 13,400 fewer delivery routes. 2). Most of USPS’s minivans are E85-capable, meaning that they can operate  on either E85 or gasoline. According to USPS officials, while USPS has  a variety of pilot programs underway to explore other alternative fuel  vehicle technologies (other than E85-capable vehicles), almost all of its  other alternative fuel vehicles are capable of using compressed natural gas  in addition to gasoline. USPS Has Acquired Alternative Fuel Vehicles in Response to Requirements, but Has Experienced Challenges

		USPS Has Acquired E85- Capable Vehicles and Increased E85 Use, but Has Not Always Used E85 because of Logistical and Cost Issues

Since 2000, USPS has consistently purchased E85-capable delivery  vehicles to satisfy the legislative requirement that at least 75 percent of its  vehicle acquisitions be alternative fuel vehicles, and it had a total of 39,149  E85-capable vehicles in its delivery fleet as of September 30, 2010. 5). However, Vehicle Programs officials  acknowledged that, due to operational requirements and cost issues, this  latter requirement is not always followed. USPS’s Approach for Addressing Its Delivery Fleet Needs Has Financial, Operational, and Environmental Trade- offs

		USPS’s Approach Is to Maintain Its Current Vehicles While Planning How to Address Its Longer Term Delivery Fleet Needs

USPS’s current approach is to sustain operations of its delivery fleet— through continued maintenance—for the next several years, while  planning how to address its longer term delivery fleet needs. Other federal agencies also face challenges complying with fleet  requirements. According to USPS Finance officials, USPS incurred about $1.05  billion in maintenance and fuel costs for its delivery fleet in fiscal year  2010—which comes to about $18 per vehicle per day. To reduce  operational costs, USPS, like other fleet operators, attempts to minimize  unscheduled maintenance. However, according to a September 30, 2010, VMAS report,  about 31 percent of USPS’s annual maintenance costs were for  unscheduled maintenance—11 percentage points more than USPS’s goal. Specifically, because USPS does not currently  have the funds available to acquire new custom-built, right-hand-drive  vehicles, it now has 22,100 left-hand-drive minivans in its delivery fleet. Without Significant Improvement in USPS’s Financial Condition, There Are No Clear Options to Fund a Major Vehicle Replacement

		USPS’s Financial Condition Poses a Significant Barrier to Funding a Delivery Fleet Replacement

USPS’s financial condition poses a significant barrier to its ability to fund a  major acquisition of its delivery fleet—a cost USPS recently estimated  would be about $5.8 billion to replace about 185,000 delivery vehicles with  new gasoline-powered custom-built vehicles, at a cost of about $31,000 per  vehicle (in 2011 dollars). USPS and Others See Little Potential to Finance a Fleet Replacement through Grants or Partnerships, Including Joint Procurements

By statute, USPS is generally not subject to federal contracting and  budgeting laws. However, depending on the specific actions adopted,  USPS’s follow-up, and the results, such an agreement could help enable  the funding of a major acquisition of delivery vehicles. As we have reported, Congress and USPS need to reach agreement on a  package of actions to restore USPS’s financial viability, which will enable  USPS to align its costs with revenues, manage its growing debt, and  generate sufficient funding for capital investment, including the inevitable  replacement or refurbishment, of its delivery fleet. USPS agreed with our findings and recommendation to  develop a strategy and timeline for addressing its delivery fleet needs. Our custom query of VMAS  showed about $497 million in direct maintenance costs in fiscal year 2010,  or about $2,600 per vehicle. Table 4 identifies the nonfederal organizations whose  representatives we interviewed.
Why GAO Did This Study

The United States Postal Service (USPS) has the world's largest civilian fleet, with many of its delivery vehicles reaching the end of their expected 24-year operational lives. USPS is subject to legislative requirements governing the federal fleet, including a requirement in the Energy Policy Act of 1992, which provides that 75 percent of USPS's vehicle acquisitions be alternative fuel vehicles, capable of operating on a fuel other than gasoline. USPS is also facing serious cost pressures in maintaining a national network of processing and retail operations. Asked to review USPS's delivery fleet, GAO (1) profiled the fleet; (2) assessed USPS's response to alternative fuel vehicle requirements and described its experiences with these vehicles; (3) identified USPS's approach for addressing its delivery fleet needs, including trade-offs; and (4) determined options to fund a major acquisition of delivery vehicles. GAO analyzed USPS data; visited USPS facilities in three locations; and interviewed officials from USPS, the Department of Energy, and other organizations, including fleet operators and manufacturers.

What GAO Found

USPS's delivery fleet is largely composed of custom-built, right-hand-drive vehicles designed to last for 24 years, including about 141,000 gasoline-powered vehicles 16 to 23 years old and 21,000 flex-fuel vehicles capable of running on gasoline or 85-percent ethanol (E85) that are about 10 years old. The fleet also includes 22,000 left-hand-drive minivans, many of which are also capable of running on E85, and 3,490 delivery vehicles capable of running on other alternative fuels. Delivery vehicles are driven an average of about 17 miles per day and cost about $1 billion to maintain and fuel in fiscal year 2010. USPS met the 75 percent acquisition requirement for alternative fuel vehicles by purchasing about 40,000 flex-fuel vehicles and minivans that can operate on E85 or gasoline. However, USPS does not always use E85 in these vehicles because E85 is not readily available and can cost more to use due to less fuel efficiency, according to USPS officials. USPS has a variety of limited experiences with other alternative fuel vehicles, such as compressed natural gas and plug-in electric vehicles, most of which have higher life-cycle costs than gasoline vehicles. USPS's approach for addressing its delivery fleet needs is to maintain its current fleet until it determines how to address its longer term needs. USPS has incurred small increases in direct maintenance costs over the last 5 years, which were about $2,600 per vehicle in fiscal year 2010. However, it is increasingly incurring costs for unscheduled maintenance because of breakdowns, which can disrupt operations and increase costs. In fiscal year 2010, at least 31 percent of USPS's vehicle maintenance costs were for unscheduled maintenance, 11 percentage points over USPS's 20 percent goal. USPS's financial challenges pose a significant barrier to a major delivery vehicle replacement or refurbishment, estimated to cost $5.8 billion and (in 2005) $3.5 billion, respectively. USPS and other federal and nonfederal officials see little potential to finance a fleet replacement through grants or partnerships. GAO has reported that Congress and USPS need to reach agreement on a package of actions to move USPS toward financial viability. Depending on the specific actions adopted, USPS's follow-up, and the results, such an agreement could enhance its ability to invest in new delivery vehicles. USPS should develop a strategy for addressing its delivery fleet needs that considers the effects of likely operational changes, legislative fleet requirements, and other factors. USPS agreed with GAO's recommendation.