To obtain information on the reasons for the cost overruns at the new Chicago Main Post Office, we interviewed USPS officials; submitted written questions to the Postal Service; reviewed documentation of the cost estimates for the facility, including justifications for cost increases, project planning documents, and Board of Governors meeting minutes; and reviewed Postal Inspection Service reports on the project. We obtained information on the policies and procedures that the Postal Service implemented to prevent a recurrence of cost overruns in similar, future capital investment projects. To determine why the USPS Board of Governors approved some of the budget increases for the new Chicago Main Post Office in closed, rather than open, meetings, we questioned Postal officials and submitted written questions to the Postal Service. Cost Overruns at the New Chicago Main Post Office

In March 1990, the USPS Board of Governors approved $199.7 million for the construction of a new Chicago Main Post Office. The Postal Service responded that at the time of those two meetings, USPS was negotiating with the architectural firm and general contractor on change orders, and it would not have been in the Postal Service’s best interest to disclose the amounts being requested for various changes. Your office indicated that service provided by the Graceland station, which is part of the Chicago Postal District, was particularly problematic and asked us to compare the performance of Graceland station to that of a similar station in another city with a higher EXFC score than Chicago’s to attempt to determine the causes of problems at Graceland. They said that the new Chicago Main Post Office, for example, would not be responsible for misdelivery of mail. The Postal Service has implemented several process changes that could reduce the likelihood of cost overruns in future capital investment projects, such as more Inspection Service involvement earlier in construction projects and the establishment of an early warning system to alert the Board of Governors to problems. Our comparison of data provided for the two stations confirmed that differences existed in terms of the performance indicator results but also showed that the data provided were not informative about the causes of problems with mail service at Graceland or in Chicago. This was partly due to the differences in the types of deliveries made by both stations and uncertainty about whether the total number of complaints was accurately reported. 1. 2. 4. 5. 6. 1. 2. 3. 4. Physical Condition of Postal Facilities in the Ninth Illinois Congressional District

In November 1996, Postal officials offered to review the physical condition of postal facilities in Congressman Yates’ district.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed: (1) the reasons for the $133 million in cost overruns incurred at the new Chicago Main Post Office; (2) the list of procedures the United States Postal Service (USPS) has established to prevent a recurrence of cost overruns experienced with the new Chicago Main Post Office in similar, future capital investment projects; (3) why the USPS Board of Governors approved some of the budget increases for the new Chicago Main Post Office in closed, rather than open, meetings; (4) the performance indicators for the Graceland postal station in Chicago, as compared to those at a similar station in another city with a higher first-class, overnight delivery (EXFC) score; and (5) the results of a 1997 USPS survey of the physical condition of postal facilities in the ninth congressional district of Illinois.

What GAO Found

GAO noted that: (1) the cost overruns that were incurred in the construction of the new Chicago Main Post Office appeared to be due primarily to inadequate planning; (2) USPS has implemented procedures aimed at reducing the likelihood of cost overruns occurring in similar, future capital investment projects, including earlier notification of problems to the Board of Governors and more Inspection Service involvement with review of facilities construction; (3) USPS officials indicated that budget increases for the new Chicago Main Post Office were approved in closed meetings because it would not have been in USPS' best interest to disclose the amounts requested while negotiating change orders with contractors and because the Postal Inspection Service was investigating the project; (4) comparison of performance data between the Graceland station in Chicago and the Brookline station in Boston, Massachusetts, confirmed that differences existed in terms of performance indicator results, and also showed that the data provided were not informative about the causes of problems with mail service at Graceland or in Chicago; (5) analysis of this performance data did not suggest that Brookline's performance would be informative for Graceland; (6) this was compounded by the high number of variables affecting the performance indicators, such as the differences in the types of deliveries made by both stations and uncertainty about whether the total number of complaints was accurately reported; and (7) the 1997 USPS review of postal facilities in the ninth congressional district of Illinois indicated that the facilities were meeting operational needs.