The U.S. Postal Service operates one of the largest real-estate portfolios in the federal government, including tens of thousands of post offices, processing facilities and other properties scattered across the country.
Managing all that property is expensive. Keeping track of it apparently has been another matter.
A new audit from the U.S. Postal Service Office of Inspector General found weaknesses in how the Postal Service manages its enormous portfolio of leased properties, including discrepancies involving thousands of lease actions, questionable data used to oversee contractor compensation, inconsistent rent-negotiation practices and records that were still being maintained on paper rather than in the agency’s electronic facilities system.
The numbers alone make the findings significant.
The Postal Service operates 31,551 properties nationwide. Of those, 22,734 are leased, representing nearly 87 million square feet of space and costing more than $1 billion annually.
That makes lease administration a billion-dollar business operation before the Postal Service ever delivers a single envelope from the buildings involved.
According to the OIG’s September 28 report, however, auditors found that the Postal Service could not adequately validate some of the information supplied by the outside real-estate contractor involved in administering those leases.
From 2021 through 2025, the contractor’s annual reports identified 7,966 lease actions. Postal Service records identified 10,198.
That is a difference of 2,232 lease actions.
The discrepancies did not end with the number of leases.
Auditors identified 519 leases containing inaccurate gross lease values. Of those, 178 showed a gross lease value of zero. Another 341 had total lease values that were somehow lower than the annual value of the same lease.
The OIG also found 260 active leases without lease terms, including 184 without start or end dates. Seventeen contained an even more impressive chronological accomplishment: their ending dates preceded their starting dates.
These are not merely untidy database entries.
The contractor receives compensation through fees and commissions associated with leasing activities, and the OIG found that the Postal Service lacked an adequate process for independently validating the contractor’s annual reports used to calculate commissions and rebates.
Postal Service officials told auditors that they conduct high-level reasonableness reviews, particularly for larger transactions, but acknowledged limitations in independently verifying the information.
Management disagreed with portions of the OIG’s monetary-impact calculation, arguing that the audit methodology overstated questioned costs. But the Postal Service agreed that its review process should be strengthened and said additional controls would be incorporated into its next real-estate service provider contract, expected to be awarded in the third quarter of fiscal year 2027.
Then there are the expired leases.
Auditors examined 127 leases in “holdover” status, meaning the original lease had expired but the Postal Service remained in the property while determining what to do next.
The OIG found that monthly rental payments on those properties continued to include amounts associated with contractor commissions, even though auditors said they found no evidence that the contractor performed additional negotiations or significant administrative services during those periods.
Postal Service management disputed that conclusion, saying the real-estate provider continues to lead negotiations during holdovers and that such arrangements represent only about 1 percent of leasing transactions. Management also maintained that the payments were supported by the underlying lease agreements.
The OIG stood by its finding.
More striking was how long some supposedly temporary holdovers had lasted.
One-third of the sampled holdover leases had continued for more than a year.
The longest had continued for more than a decade.
Auditors found additional problems when examining how Postal Service officials determined proposed rents during lease negotiations.
Among 87 leases requiring negotiations, more than half lacked required written explanations documenting why particular comparable properties had been selected to establish proposed market rents.
Different regional leasing teams were also using different methodologies. One incorporated commissions into its rent calculations while another did not, a difference the OIG attributed to national policy that did not clearly establish which approach should be used.
For an organization spending more than $1 billion annually on leased space, determining what constitutes a reasonable rent would seem like one of the more important pieces of the operation to standardize.
But perhaps the most fitting finding involved the records themselves.
The Postal Service maintains an electronic Facilities Management System intended to house pertinent lease documentation. Auditors found that supporting documents, analyses and decisions were not always stored there.
Instead, records were being maintained in hard copy at four facilities around the country.
Postal Service officials told auditors that employees kept some of the records on paper to avoid the administrative burden associated with saving them electronically.
That decision created another administrative burden.
The auditors had to travel.
OIG personnel visited facilities in San Francisco, Greensboro and Denver to examine documentation that was not available electronically.
The Postal Service generally agreed with the OIG’s recommendations, including strengthening procedures for validating contractor reports, reviewing commission payments involving holdover leases, standardizing rent-negotiation procedures and ensuring lease documentation is retained electronically.
The audit does not establish that the Postal Service’s billion-dollar leasing portfolio is riddled with improper leases or fraudulent payments. It establishes something more basic, and potentially more consequential for oversight: the Postal Service did not always have the controls, consistent methodologies or accessible records necessary to demonstrate that the sprawling operation was being managed as intended.
Nearly 23,000 leased properties, 87 million square feet and more than $1 billion in annual rent constitute a substantial real-estate enterprise.
And when federal auditors arrived to determine how well that enterprise was being managed, some of the evidence was still sitting in filing cabinets.
Read the USPS Office of Inspector General’s full Facility Lease Management audit report.
