Postal Service

The U.S. Postal Service (USPS) has spent nearly $80 million to buy two properties in Queens, New York, for mail facilities. One site, an old metals refinery, has never been used because of hazardous waste and asbestos contamination. If the former owners are unable or unwilling to clean up the property, USPS may have to pick up the tab to make the site usable. Construction costs at the other site, a former AT&T manufacturing facility, have soared. The $65 million paid for the AT&T site was 44 percent more than the appraised market value of the property. The cost of acquiring and renovating this property, once pegged at $116 million, has now risen to more than $128 million, and another funding request for building improvements is pending.

GAO found that: (1) one site that USPS purchased was unusable because of hazardous waste contamination; (2) USPS removed the contingency on hazardous waste cleanup prior to title transfer, although the seller was still contractually responsible for the cleanup; (3) the cleanup has not been completed; and (4) additional asbestos contamination has been found and the seller has been unwilling to assume removal responsibility, making use or disposal of the property questionable and costly. GAO also found that: (1) the price USPS paid for another site was 44 percent more than its fair market value; (2) USPS justified that acquisition by citing operational savings, competition, and cost savings over the first site; and (3) the original cost estimate for the second site has been surpassed, and USPS has requested additional funding.