October 1, 1999 - March 31, 2000

Semiannual Report to Congress 

Including Significant Activities of the Inspection Service

OFFICE OF INSPECTOR GENERAL 

April 1, 2000 - September 30, 2000

Semiannual Report to Congress Semiannual Report to Congress 

Including Significant Activities of the Inspection Service

A Message from the

Inspector General

KARLA W. CORCORAN

Inspector General

As our fourth year as an independent Inspector General office within

the Postal Service comes to a close, we are proud to report that this

agency has continued to grow and thrive. This fiscal year, we

achieved a return on investment of almost four to one. As a result of our findings and recommendations, we also provided the Postal Service with our

insight into critical areas such as executive relocation benefits, contracting,

computer security, new product development, eCommerce projects, and labor

management relations. At the same time, we increased our staff by more than

one-third between March 31, 2000, and July 30, 2000 and reached our hiring

goal of 648. We are confident that we are more capable and better equipped

than ever to assist the Postal Service in addressing the unparalleled challenges

and opportunities that present themselves in this new century.

We recognize that maintaining our independent status is essential to

ensure that our reports and investigations add value. Therefore, our most

important challenge this period was to address proposed changes to Government Auditing Standards. Under the proposed changes, this office would not

have been considered organizationally independent under generally accepted

Government Auditing Standards, and each of our reports would be required

to note this lack of independence. Despite the independence provided by the

Inspector General Act, the proposed changes could have left our stakeholders with the perception that the work of our office was not independent.

After the proposal was issued, we voiced our concerns and obtained an independent legal opinion which questioned the proposal, including its constitutionality. Our efforts were rewarded in September, when the proposal was

revised and clarified that this Office of Inspector General was independent.

Another notable event was the change of Deputy Inspectors General.

We were sorry and yet proud to see one of our senior management members

leave. Richard F. Chambers, Deputy Inspector General, was appointed in

August as Inspector General at the Tennessee Valley Authority. We believe

this appointment is a testament to the influential and beneficial high-level

work Mr. Chambers helped this office perform since its inception. I am

pleased that Sylvia L. Owens has agreed to serve as my new Deputy Inspector General. Ms. Owens, a career criminal investigator, has been with the

Office of Inspector General since its inception, and brings to the job unique

insight and knowledge that will serve us well. 

Also during this period, we reorganized the office to better align it to

serve the Postal Service. Our reorganization included the establishment of

an Assistant Inspector General for eBusiness, which combined our technology teams to reflect the crucial role technology plays in Postal Service

operations. We also reorganized and renamed other areas to better reflect

the needs of our customers. Because of this reorganization and the new

Deputy Inspector General, we recently promoted the following executives:

Debra Ritt, Assistant Inspector General for Audit (Business Operations);

and Billy Sauls, Assistant Inspector General for Investigations (Business

Protection), among others.

The Challenge of Maintaining Independence
The Postal Service also continues to undergo changes in its upper management. We look forward to working with John E. Potter, Chief Operating Officer & Executive Vice President, and

Richard J. Strasser, Jr., Chief Financial Officer & Executive Vice President.

This Semiannual Report to Congress details our significant activities and accomplishments, as

well as those of the Inspection Service, from April 1, 2000, to September 30, 2000. Submission of

this report fulfills our reporting requirement under the Inspector General Act as well as the Deceptive Mail Prevention and Enforcement Act of 1999. This report presents a comprehensive status

on the work of this office and the Inspection Service in combating fraud, waste, abuse, and mismanagement within the Postal Service.

In this reporting period, we issued 129 audit reports, including 47 contract audits performed for

us by a contract audit agency, and 145 management advisory reports and other products. Our investigative efforts resulted in 13 arrests, 11 indictments, 3 convictions, and about $10 million in fines,

restitution, and recoveries. These efforts resulted in about $200 million in questioned costs and

funds to be put to better use. The work of approximately 2,000 postal inspectors included 184 audits

and 40 expenditure, financial, service, and revenue investigative reports that identified over $1 million in questioned costs and funds to be put to better use. Our combined efforts resulted in 498 written products to strengthen Postal Service programs and operations and $211 million in monetary

benefits.

As we move forward into fiscal year 2001, we are committed to assisting the Postal Service in

overcoming the challenges it faces in a marketplace increasingly fueled by electronic commerce.

Our independent status and the recognition of this independence by Postal stakeholders enables us

to continue to add value to the Postal Service, the Governors, and Congress. We look forward to

continuing to provide accurate and objective information that will be used to make decisions that

affect the Postal Service’s future.

Sincerely,

Karla W. Corcoran

October 31, 2000

PAGE2 A MESSAGE FROM THE INSPECTOR GENERAL
PAGE3

Table of Contents

EXECUTIVE SUMMARY............................................................................................5

POSTAL SERVICE REPORTED ACCOMPLISHMENTS ................................................9

MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE ..........................13

GOALS AND STRATEGIES ....................................................................................19

Office of Inspector General ........................................................................20

Inspection Service........................................................................................23

ORGANIZATIONAL DYNAMICS ............................................................................25

Office of Inspector General ........................................................................26

◆ An Independent Voice............................................................................26

◆ Notable OIG Achievements ..................................................................28

◆ Challenges Facing the OIG ....................................................................29

Inspection Service........................................................................................32

ORGANIZATIONAL STRUCTURE ..........................................................................35

Office of Inspector General ........................................................................36

◆ OIG Field Locations................................................................................39

Inspection Service........................................................................................40

CUSTOMER SERVICE ............................................................................................41

Office of Inspector General ........................................................................42

◆ External Communications ......................................................................42

◆ Internal Communications ......................................................................44

◆ Specialized Services ................................................................................45

Inspection Service........................................................................................46

◆ External Communications ......................................................................46

◆ Specialized Services ................................................................................46

PERFORMANCE REVIEWS......................................................................................49

Office of the Inspector General..................................................................50

◆ Accepting and Processing ......................................................................50

◆ Transportation..........................................................................................51

◆ Delivery ....................................................................................................52

◆ Marketing ................................................................................................53

◆ Legislative and Regulatory Reviews ......................................................53

Inspection Service........................................................................................55

◆ Mail Theft ................................................................................................55

◆ Service Investigations..............................................................................55

FINANCIAL MANAGEMENT REVIEWS ..................................................................57

Office of Inspector General ........................................................................58

◆ Financial-Related Reviews......................................................................58

◆ Contracting and Facilities Reviews........................................................60

◆ Legislative and Regulatory Reviews ......................................................64

Inspection Service........................................................................................65

◆ District and Installation Financial Audits ............................................65

◆ Revenue Investigations............................................................................65

◆ Embezzlements ........................................................................................66
PAGE4 TABLE OF CONTENTS

TECHNOLOGY REVIEWS ......................................................................................67

Office of Inspector General ........................................................................68

◆ Developmental Reviews..........................................................................68

◆ Computer Security ..................................................................................69

◆ Electronic Commerce..............................................................................70

◆ Computer Intrusion Detection Activities..............................................70

◆ Legislative and Regulatory Reviews ......................................................71

Inspection Service........................................................................................73

◆ Electronic Commerce..............................................................................73

LABOR MANAGEMENT REVIEWS ........................................................................75

Office of Inspector General ........................................................................76

◆ Violence in the Workplace ....................................................................76

◆ Workplace Climate..................................................................................77

◆ Health Care..............................................................................................77

◆ Legislative and Regulatory Reviews ......................................................78

Inspection Service........................................................................................79

◆ Workplace Climate..................................................................................79

◆ Postal Robberies ......................................................................................79

◆ Drugs in the Workplace ..........................................................................79

◆ Workers’ Compensation..........................................................................79

OVERSIGHT OF THE INSPECTION SERVICE ..........................................................81

Office of Inspector General ........................................................................82

◆ Oversight of the Inspection Service ......................................................82

◆ Legislative and Regulatory Reviews ......................................................83

OTHER SIGNIFICANT REVIEWS............................................................................85

Office of Inspector General ........................................................................86

◆ Executive Investigations..........................................................................86

◆ Subcommittee Request............................................................................86

◆ Legislative and Regulatory Reviews ......................................................86

Inspection Service........................................................................................88

◆ Physical Security ......................................................................................88

◆ Narcotics Offenses and Trafficking ........................................................88

◆ Child Exploitation ..................................................................................88

◆ Prohibited Mail ........................................................................................89

◆ Postal Burglaries ......................................................................................89

◆ Mail Fraud ................................................................................................89

◆ Money Laundering ..................................................................................91

APPENDICES ........................................................................................................93

Appendix A - Reports Issued to Postal Management ..............................94

Appendix B - Findings of Questioned Costs ..........................................109

Appendix C - Recommendations That Funds Be Put to Better Use....111

Appendix D - Unresolved Reports ..........................................................112

Appendix E - Criminal Statistics ............................................................117

Appendix F - Summary of Postal Service Investigative 

Activities Under 39 USC § 3013 ......................................................118

Appendix G - Closed Congressional Inquiries........................................120
Executive Summary

PAGE 5

Does the OIG have access to all Postal

Service documents and information? 

Yes. The Inspector General Act specifically

provides that the Inspector General is

authorized “to have access to all records,

reports, audits, reviews, documents, 

papers, recommendations, or other material.” 

DID YOU 

KNOW?
EXECUTIVE SUMMARY

This Executive Summary provides a brief

synopsis of the work reported during this

six-month period. This issue of our

Semiannual Report addresses Postal Service

reported accomplishments, the major challenges facing the Postal Service as it enters the

21st century and the many projects performed

by the OIG and the Inspection Service that

help improve postal operations. 

The OIG conducts audits and investigations, while the Inspection Service conducts

reviews and investigations—independently and

jointly—that play a vital role in helping the

Postal Service make improvements. Work performed by both the OIG and the Inspection

Service is included in this report in order to present Congress and the Governors a unified

report of the Postal Service’s efforts to combat

fraud, waste, abuse, and mismanagement. 

In this, the OIG’s eighth Semiannual

Report, the work has been categorized into

seven subject areas: performance, financial

management, technology, labor management,

oversight of the Inspection Service, other significant reviews, and customer service. We believe

presenting the OIG work in this format provides

a clear understanding of where our work falls

within the following major management and

program challenges facing the Postal Service:

◆ Reforming the regulatory environment

◆ Managing affordability by controlling

costs

◆ Growing and protecting revenues

◆ Improving workplace climate and labor

relations 

◆ Maintaining a safe and healthy workplace 

◆ Developing measures and assessing performance 

◆ Ensuring data integrity and reliability 

◆ Leveraging technology 

◆ Maintaining computer security

◆ Increasing customer service and satisfaction

The following highlights the accomplishments of the OIG and Inspection Service under the specific subject areas:

(1) The area of organizational dynamics focuses on the OIG and the Inspection Service

vision, value, culture, and diversity that assists

with providing value-added service to the Postal

Service.

(2) The area of organizational structure

focuses on the OIG and the Inspection Service.

(3) The area of customer service focuses on the

OIG and the Inspection Service efforts to provide customer service, including support functions to enhance service to internal customers.

(4) The area of performance focuses on the

critical core business processes needed to succeed in a competitive environment. The OIG

conducted 24 reviews in this area, including

projects that will help save the Postal Service

about $84 million in current and future years.

A few examples of OIG work in this area

included: 

◆ Working with Postal Service management to develop an alternative plan for

transporting Christmas surge mail that

could reduce the cost of the dedicated air

network by about $8 million annually.

◆ Determining that the Postal Service paid

contractors $5.2 million in commissions

based on unverified reported revenue.

◆ Determining that processing facilities

management did not consistently capture

and retain performance data on the $37.7

million pedestal robot system. 

◆ Disclosing that Postal Service revenue

deficiency assessments were issued up 

to two years after mail acceptance and

sometimes were attributable to incorrect

information provided by Postal

employees.

The Inspection Service conducted numerous

investigations in the area of mail theft, which

PAGE6 EXECUTIVE SUMMARY

This Executive Summary highlights the

Office of Inspector General (OIG) and

Inspection Service accomplishments from

April 1, 2000, through September 30,

2000, that are contained in this

Semiannual Report to Congress. 

The OIG Management Committee is 

comprised of the Inspector General,

Deputy Inspector General, General

Counsel, Assistant Inspectors General,

and Executive Field Representives.
PAGE7

resulted in arrests of almost 2,800 employees

and nonemployees.

(5) The area of financial management incorporates financial-related reviews, financial

opinion work, and contracting and facilities

reviews. The OIG completed 130 reviews and

conducted investigations resulting in 3 convictions, 13 arrests, 11 indictments, and recoveries

and restitution of over $10 million, which

included: 

◆ Identifying over $56 million in contract

costs that were questioned, or considered

unsupported.

◆ Identifying two former Postal Service

managers who devised a scheme to

defraud the Postal Service of several million dollars.

◆ Investigating a contract with a large

telecommunications contractor resulting

in a recovery of $9.2 million in this

reporting period, for a total recovery of

$12.2 million to date.

◆ Determining that two senior executives

who moved about 20 miles with no

change in job location were paid

$250,000 in relocation benefits.

In addition to other work, the Inspection

Service reported:

◆ The results of 175 financial installation

and District Accounting Office audits

and 4 contract audits, for a total of 179

audits, that identified over $1 million in

questioned costs.

◆ The results of 16 revenue investigations

during the reporting period, which identified losses of $27.2 million to the Postal

Service.

(6) The area of technology encompasses

reviews of developmental systems, computer

security, and electronic commerce, in addition

to computer intrusion detection activities. The

OIG performed 13 reviews in this area. Some

of the more significant OIG activities included:

◆ Issuing a comprehensive report on the

state of computer security in the Postal

Service.

◆ Assessing the justification, management

controls, funding, and integration of the

$2.3 billion Information Infrastructure.

◆ Determining whether the $500 million

retail system being deployed met all

contract requirements.

◆ Assessing the security and privacy

aspects of the Postal Service’s online bill

presentment and payment system to

facilitate the success of this new venture.

◆ Evaluating the functional capabilities,

consistency, and reliability of a preproduction system designed to automate the

acceptance and verification of bulk

business mail.

◆ Assisting in the installation of detection

devices to determine whether Postal systems are being intentionally compromised

or crippled by external or internal users.

In addition to other work, the Inspection

Service reported:

◆ Developing and conducting training on

computer crimes and providing guidance

on online investigations.

◆ Reviewing security clearance requirements for the Postal Service’s online bill

presentment and payment system.

(7) The labor management area focuses on

issues related to violence in the workplace,

workplace climate, health care, and workplace

safety. During this reporting period, the OIG

conducted 55 reviews in this area, which

included:

◆ Arresting four individuals who allegedly

fabricated or stole employee health insurance information to generate $20 million

in fraudulent claims.

◆ Evaluating the Postal Service’s Violence

Prevention and Response Program.

◆ Reviewing allegations of hostile working

environments and abusive management

styles in a New York Metro Area facility.

◆ Reviewing the Economic Value Added

Variable Pay Program, under which

bonuses are calculated for approximately

84,000 executives and administrative

employees each year.

◆ Assessing a New York Metro Area district’s administration of the injury compensation process.

DID YOU 

KNOW?

Who investigates procurement

fraud within the Postal 

Service? 

The OIG investigates all 

procurement fraud within the

Postal Service.
PAGE8

The Inspection Service work included:

◆ Conducting numerous workers’ compensation investigations, resulting in

$95.5 million in long-term and continuation-of-pay cost savings for this fiscal year

◆ Arresting seven individuals for selling

drugs on postal property, nine individuals

for workers’ compensation fraud, and 211

individuals for assaults and threats

against Postal Service employees.

(8) In the area of oversight of the Inspection

Service, the OIG completed 17 reviews of the

Inspection Service, which included:

◆ Determining that senior forensic

scientists lacked parity in salaries when

compared to their federal counterparts.

◆ Determining that FY 2000 budgetary

resources were not appropriately linked

to performance-related goals and functions when developing the Inspection

Service’s operating budget.

(9) Other significant reviews include projects

that do not readily fall into the other six categories. The OIG completed 35 reviews of other

significant issues including reviews of Postal

Service Career Executive Service employees.

The Inspection Service conducts numerous

investigations covering significant issues in the

areas of physical security, narcotics offenses and

trafficking, child exploitation, prohibited mail,

postal burglaries, and mail fraud. 

EXECUTIVE SUMMARY
Is the OIG part of Postal Service 

Management? 

No. The OIG is not part of Postal 

Service management. However, OIG

employees are Postal Service employees.

DID YOU 

KNOW?

PAGE 9

Postal Service Reported

Accomplishments
POSTAL SERVICE

REPORTED 

ACCOMPLISHMENTS

The OIG’s goal is to work in concert with

the Postal Service to help ensure the

American public receives the best mail

delivery service in the world. Highlighting the

Postal Service’s accomplishments provides context to OIG and Inspection Service activities.

During the past six months, the Postal Service

has continued to make strides in achieving

CustomerPerfect! goals. In addition, the Postal

Service announced the following accomplishments, which the OIG has categorized in the

areas of performance, financial management,

technology, and labor management.

PERFORMANCE

◆ Delivered the largest household mailing

ever—350 million census letters—which

was attributed to employee commitment,

postal technology, and a close working

relationship with the Census Bureau,

even though approximately one-third of

the letters were misaddressed.

◆ Achieved a score of 94 percent for ontime delivery of local overnight FirstClass Mail in the last quarter of FY 2000.

This marks the 12th consecutive quarter

that national overnight delivery scores

have reached or exceeded 93 percent.

◆ Launched a Spanish-language version of

its website to meet the needs of the

rapidly-growing Hispanic population in

the United States. 

FINANCIAL MANAGEMENT

◆ Formed a strategic partnership with a

major communications company to handle its requirements for two-way radio

equipment nationwide. This contract is

expected to save the Postal Service $1.7

million annually.

◆ Implemented the Money Order Image

Delivery System to provide enhanced

images of Postal Service money orders

and reduce workload at the St. Louis

Accounting Service Center.

◆ Implemented the Electronic Travel

Voucher System pilot program to provide

an online web-based travel voucher system, thus reducing the amount of paper

travel vouchers and speeding the travel

voucher reimbursement process.

TECHNOLOGY

◆ Partnered with a leading commercial corporation in the electronic billing and

payment services industry to launch

USPS eBillPay. This service allows consumers to pay their bills online through a

central, secure site from the Postal Service’s website.

◆ Implemented an Electronic Postmark service for email that provides an official

time and date, like a regular mail postmark. The Electronic Postmark also

authenticates the sender and receiver of a

message and can be attached to any

Internet communication to detect tampering. 

◆ Launched Post Electronic Courier Service, a global electronic document delivery service that allows users to securely

send documents via the Internet. It

allows for tracking and tracing, proving

delivery, and authenticating the sender

and receiver. Some of its optional features include encryption, password protection, and use of the Postal Service’s

Electronic Postmark for added security. 

◆ Initiated a nationwide experimental program called Mailing Online. This service

makes bulk mailings quick and easy for

customers who want to send their messages electronically over the Internet and

have the Postal Service retrieve and

deliver them near the point of delivery.

◆ Received recognition at the World Mail

Awards 2000 ceremony in Paris for Electronic Merchandise Return Service and

FASTForward service.

LABOR MANAGEMENT

◆ Reduced formal complaints by nearly 20

percent annually through the Resolve

Employee Disputes, Reach Equitable

Solutions Swiftly (REDRESS) program.

The success of the REDRESS program

continues with the merger of the

REDRESS program and the Equal

PAGE10 POSTAL SERVICE REPORTED ACCOMPLISHMENTS
PAGE11

Employment Opportunity process. This

merger will help facilitate the settlement

of complaints.

◆ Ranked in the Top 10 of Fortune magazine’s “50 Best Companies for Minorities”

list.

◆ Successfully finalized the implementation

of the enhanced Grievance and Arbitration Tracking System.

◆ Completed a workplace safety study1

that reported Postal Service employees

were no more likely to be victims of

violence than employees in the national

workforce.

1 Report of the United States Postal Service Commission on a Safe and Secure Workplace, August 2000, prepared

by the National Center on Addiction and Substance Abuse at Columbia University.
PAGE12 POSTAL SERVICE REPORTED ACCOMPLISHMENTS
Major Management Issues

Facing the Postal Service

Why does the Postal Service need an OIG in

addition to the Inspection Service? 

In a word - Independence. The Inspection Service,

headed by the Chief Postal Inspector, is part of Postal

management. The OIG, headed by the Inspector

General is independent from Postal management, and

is under the general supervision of the Governors. By

law, Postal management may not direct OIG work. 

DID YOU 

KNOW?

PAGE 13
MAJOR MANAGEMENT

ISSUES FACING THE

POSTAL SERVICE

The Postal Service is entering a new era.

For the first time in five years, the Postal

Service did not achieve a positive net

income even though it has reported the highest

labor productivity ever. In addition, the Postal

Service expects declines in some of its core business areas in the coming years making its future

outlook uncertain. The growth of the Internet,

electronic communications, and electronic

commerce all have the potential to substantially

affect mail volume and traditional revenue

streams. As a result, the Postal Service will be

challenged to maintain its position in a dynamic

communications and delivery environment. 

In the emerging electronic age, in which

some segments of the population are changing

the way they communicate and do business, the

Postal Service must continue to respond to new

customer requirements to meet its mission.

Additionally, proposed legislative reforms could

alter the fundamental regulatory framework

that provides for the structure of the Postal

Service’s current operations. These developments make it imperative for the Postal Service

to (1) reform the regulatory environment; (2)

manage affordability by controlling costs; (3)

grow and protect revenues; (4) improve workplace climate and labor relations; (5) maintain

a safe and healthy workplace; (6) develop measures and assess performance; (7) ensure data

integrity and reliability; (8) leverage technology; (9) maintain computer security; and (10)

increase customer service and satisfaction. 

These issues, their significance, and the key

OIG projects that address the major management issues are included in this section. In the

OIG Goals and Strategies section these ten

issues have been consolidated for audit planning

purposes into four major areas.

REFORM THE REGULATORY

ENVIRONMENT

The Postal Service believes it is imperative

to have the statutory authority to adapt to new

conditions and demands due to rapid changes in

electronic communications, coupled with the

nation’s now mature and highly-competitive

shipping and express mail industry. The

Postmaster General has stated that competitors

of the Postal Service can move faster, act more

agilely, and better respond to the changing marketplace. The Postal Service lacks the flexibility to control its labor costs because binding

arbitration is generally used to set labor rates.

To compete effectively and in concert with the

needs of its customers, the Postal Service

believes it needs commercial freedoms, including market-based pricing, the ability to generate

income for investment, and the flexibility to set

labor rates. Unlike many of the foreign posts

that have been privatized or deregulated, the

Postal Service is limited by legal restrictions in

its ability to invest, enter into forward-looking

pacts with labor, or seek new alliances and new

markets. 

While many stakeholders agree that reform

of our nation’s postal laws is needed, identifying

and implementing the right changes presents a

difficult challenge. Legislative initiatives would

give the Postal Service greater freedom to compete, while establishing new rules to ensure fair

competition and protect the public interest.

Postal Service management is working with the

House Subcommittee on the Postal Service to

amend the Postal Reorganization Act to move

the mailing industry forward, while providing

the Postal Service with competitive pricing in

an effort to strengthen the value and relevance

of the mail and respond to customer needs.

Postal reform continues to be one of the greatest challenges facing the Postal Service. 

To assist the Postal Service with addressing

this challenge, we:

◆ Reviewed the Economic Value Added

program

◆ Responded to numerous Congressional

inquiries

MANAGE AFFORDABILITY BY

CONTROLLING COSTS

The Postal Service’s ability to ensure universal mail service at affordable rates is dependent upon controlling costs, strengthening

internal controls, and improving productivity.

Most importantly, aggressive cost management

will be necessary to mitigate historic cost trends

that drive rate increases. To control costs, the

Postal Service has launched an initiative to

PAGE14 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
PAGE15

eliminate $4 billion in expenses by FY 2004.

The majority of these reductions will come from

breakthroughs in productivity in postal operations. Further, the Postal Service has taken

steps to strengthen internal operating controls

to avoid unwarranted costs. While these

actions are important, they will not guarantee

success unless the Postal Service ensures there

are adequate controls in future programs and

initiatives. Effective management of the Postal

Service’s capital investments is also critical if

the Postal Service is to achieve its projected

return on investments. Because the Postal

Service plans to spend billions of dollars on

automation projects over the next few years, it

must be prepared to meet the critical challenges

of effectively implementing automation projects within budget, obtaining planned savings

on schedule, and improving overall productivity. 

Despite efforts to control costs and increase

productivity, the Postal Service requested rate

increases in January 2000 to cover its rising

operating costs in several areas. Such increases

would allow the Postal Service to support its

operations solely through sales of its products

and services. The ratemaking process also

affords the Postal Service the opportunity to

pursue classification changes that would benefit

mailers. However, many Americans have the

perception that the Postal Service raises rates

more frequently than it actually does, and without regard to customers’ concerns and input.

For this reason, the Postal Service continues to

face challenges from its competitors as mailing

groups and members of the public argue before

the Postal Rate Commission against the Postal

Service’s proposed rate increases. 

To assist the Postal Service with addressing

this challenge, we:

◆ Evaluated a $3 Billion Telecommunications Contract and the Contractor’s

Accounting and Billing Process 

◆ Issued a report describing the complexPostal Ratemaking Process

GROW AND PROTECT REVENUES

In the coming years, the Postal Service will

be challenged to grow substantial new revenues

to replace the expected loss of revenues from

electronic diversion of the mail and other marketplace competition. Beginning in FY 2003,

the Postal Service expects that electronic alternatives to the mail will begin to affect the volume of First-Class and Standard Mail (A). The

General Accounting Office estimates that FirstClass Mail volumes will decline at an annual

rate of 2.5 percent from FY 2003 to FY 2008.

Such a decline would be unprecedented in the

Postal Service’s history and would likely create

financial and performance challenges.

The Postal Service has also encountered

increasing competition from the private sector

and foreign posts. Increased competition places

billions of dollars of postal revenues at risk. The

Postal Service believes that over the next five

years, substantial revenues must be generated

from new services and products. Efforts by the

Postal Service to introduce new products and

services have frequently met with opposition

and have caused controversy. Competitors and

others have questioned whether it is appropriate

for a government entity with monopoly protection to provide nontraditional products and services in competition with the private sector. 

In addition to generating new revenues,

the Postal Service must ensure that postage and

fees for its products and services are collected.

However, the Postal Service has not always had

effective controls to protect its revenues. With

bulk mail business accounting for a substantial

portion of the Postal Service’s annual revenue,

the Postal Service will need to strengthen its

controls to improve the efficiency of its revenue

assurance process. Recent efforts to tighten

controls have met with resistance from the

mailing industry and have been subject to congressional scrutiny.

To assist the Postal Service with addressing this challenge, we: 

◆ Audited Revenues and Commissions

Paid to a Sales Force Contractor 

◆ Reviewed the Revenue Assurance

Process 

IMPROVE WORKPLACE CLIMATE

AND LABOR RELATIONS

In competitive markets where customers

face a myriad of choices, improving service and

reducing costs are crucial to providing value and

maintaining a competitive edge. The Postal

Service will succeed only if it can effectively

DID YOU 

KNOW?

How does the Postal Service

transport mail? 

The Postal Service uses a wide

variety of transportation methods

to ensure mail delivery to every

postal customer. Daily, 15,000

commercial airline flights,

179,000 over-the-road vehicles,

railroad lines, boats, and even a

mule train, deliver and pick up

the mail from such far-flung

places as the top of the Empire

State building and the bottom of

the Grand Canyon.
partner with its employees and their unions and

management association leadership. However,

labor management relations remain one of the

Postal Service’s major challenges in meeting its

goals and maximizing performance. With about

900,000 full and part-time employees, a healthy

work environment is key to maximizing

employee and organizational performance. The

Postal Service must develop recruitment, training, communication, incentive, and other support systems that help employees realize the

connection between their efforts and the results

desired by customers. 

The Postal Service has been hampered by

persistent labor management problems, such as

adversarial relationships, inadequate performance measurement systems, and management

styles that have a negative impact on productivity. Labor management problems have also

been perpetuated by numerous unresolved

grievances that have impaired initiatives to

automate and improve the efficiency of postal

operations. These problems have created barriers that have often prevented agreements

between the Postal Service and its labor unions. 

In August 2000, the United States Postal

Service Commission on a Safe and Secure

Workplace, released a study on workplace violence which had been requested by the

Postmaster General. The Commission’s report

concluded that Postal Service workers are no

more likely to be victims of violence than

employees in the national workforce. The

Postal Service will work closely with the

Commission to review the findings and insights

presented in the report. 

Additionally, employees sometimes view

management attempts to achieve incentives

under the Postal Service’s Economic Value

Added Variable Pay Program as adversarial.

The Postal Service will need to address those

perceptions in order to resolve persistent labor

management problems. 

To assist the Postal Service with addressing

this challenge, we:

◆ Assessed the Implementation of the Violence Prevention and Response Program 

◆ Explored allegations of Hostile Working

Environments

MAINTAIN A SAFE AND HEALTHY

WORKPLACE

Another significant challenge the Postal

Service faces is maintaining a safe and healthy

workplace. Further reinforcing the importance

of this issue, the recent passage of legislation

requires the Postal Service to comply with

Occupational Safety and Health Act requirements for private sector employers.

Accordingly, the Postal Service may now face

citations and monetary penalties for noncompliance. The Postal Service has been assessed

with over $429,000 in fines for FY 2000.

Challenges associated with meeting the requirements of the act include: (1) modifying existing

automated systems; (2) developing and implementing training programs on judicial and other

processes that previously were not applicable to

the Postal Service for safety personnel, legal

staff, and key operations staff; and (3) revising

the Postal Service’s financial systems to track

expenses associated with implementing the new

requirements. 

The Injury Compensation Program also

poses additional management challenges.

Workers’ compensation medical costs under the

Postal Service’s Injury Compensation Program

have risen dramatically between FY 1999 and

FY 2000, and exceeded budgeted estimates.

The Postal Service is particularly concerned

about the recent program-wide 20 percent

increase experienced in medical costs. 

To assist the Postal Service with addressing

this challenge, we:

◆ Evaluated the process for administering

Continuation-of-Pay leave benefits

◆ Investigated billing practices of health

care providers 

DEVELOP MEASURES AND

ASSESS PERFORMANCE

The Postal Service’s ability to maximize

performance in the face of changing customer

demands and choices calls for establishing

processes to accurately assess performance

results. While the Postal Service has previously

issued three annual performance plans, this year

the Postal Service published its first annual performance report on achievement of goals under

the Government Performance and Results Act.

This report should help the Postal Service,

PAGE16 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
PAGE17

Congress, and other stakeholders assess the

Postal Service’s performance in the past fiscal

year against the goals in its performance plan.

In this regard, it will be important for the Postal

Service to continue to make tangible progress

toward implementing a complete set of performance measures and targets for its critical functions and program areas. 

For example, in FY 2000, the Postal

Service intends to develop new measures to

assess the timeliness of the delivery of international mail, publications, and bill payments sent

through the mail. Additionally, the Postal

Service will need to establish indicators for

strengthening labor management relations,

improving the consistency and accuracy of mail

delivery, and measuring employee proficiency.

These measures will help the Postal Service

fully assess its progress toward meeting its goals. 

To assist the Postal Service with addressing

this challenge, we:

◆ Appraised Revenues and Evaluated Performance Measures for Stamp Fulfillment

Services 

◆ Analyzed the Inspection Service Budget

Process

ENSURE DATA INTEGRITY AND

RELIABILITY

Accurate measurement of mail delivery is

key to the Postal Service’s efforts to improve

and sustain service performance. However,

questions have been raised concerning the

integrity of data used to measure the timeliness

of overnight First-Class Mail delivery. Reliable

data is also a key to effective decisionmaking.

In many instances, the OIG has found that the

Postal Service does not capture the necessary

data to support effective decisionmaking. 

A recent contractor study on data reliability, which was commissioned by Postal Service

management, concluded that the increasing

pace of change in the environment and technology emphasized the need for accurate data in

the ratemaking process. Given the importance

of data quality to setting postal rates, the Postal

Service must continue demonstrating to

Congress, the Postal Rate Commission, stakeholders, and the public that it is making

progress in improving the quality of its cost

data. 

To assist the Postal Service with addressing

this challenge, we:

◆ Audited the Point of Service One Retail

System

◆ Reviewed the Preventive Maintenance

Program for Mail Processing

LEVERAGE TECHNOLOGY

The Postal Service is seeking ways of leveraging technology to improve its service, productivity, and profitability. While it depends on

technology to deliver more than 650 million

pieces of mail every day, the Postal Service must

continue to quickly adapt to each new wave of

technology to maintain its competitive position. Customers will expect complete tracking

capabilities and a full set of business transactions that can be completed on their personal

computers at the office or at home. To address

changing customer needs, the Postal Service is

developing an “information platform” to help

ensure better data management, tracking of

mail piece information, communications

between the Postal Service and its customers,

and activity-based costing. 

The large size and diversity of the Postal

Service customer base will also present technology challenges and demand that solutions are

simple, easy to use, and competitive. To be successful, the Postal Service must also ensure that

the corresponding cost savings projected

through technology investments are realized by

efficiently redeploying the resources replaced by

the new technology. 

To assist the Postal Service with addressing

this challenge, we:

◆ Assessed the performance of a New Bulk

Business Mail System 

◆ Examined the Information Infrastructure

for Integrating the Postal Service’s Business Processes

MAINTAIN COMPUTER SECURITY

Computers and electronic data have

become indispensable to the critical operations

of the Postal Service. However, this reliance on

automated systems increases the risk of fraud,

inappropriate disclosure of sensitive data, and

disruption of critical operations and services.

The same factors that enhance operations—
PAGE18 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

speed and accessibility—also make it possible

for individuals and organizations to interfere

with or eavesdrop on operations, possibly for

purposes of fraud or sabotage. Recent, highlypublicized attacks on major electronic commerce websites revealed a computer security

breach can harm brand integrity and lead to

revenue loss. Threats of such actions are

increasing, in part, because the number of individuals with computer skills is increasing and

because intrusion or “hacking” techniques have

become readily available through magazines and

computer bulletin boards. In addition, natural

disasters and inadvertent errors by authorized

computer users can have devastating

consequences if information resources are

poorly protected. 

The Postal Service’s systems are as vulnerable to these risks as all other businesses. To

combat these risks and protect the critical information infrastructure, comprehensive computer

security programs must be developed. The

Postal Service is currently taking steps to

address these risks; however, resolving them on

a lasting basis, as with any organization, will

require substantial ongoing management attention. Because the Postal Service is positioning

itself as a major participant in electronic commerce, the importance of adequate computer

security to operate such programs cannot be

overemphasized. 

To assist the Postal Service with addressing

this challenge, we:

◆ Evaluated the Computer Security Within

the Postal Service

◆ Reviewed the Security and Privacy

Requirements for the Postal Service’s

Online Bill Presentment and Payment

System

INCREASE CUSTOMER SERVICE

AND SATISFACTION

In today’s marketplace, customers have

choices about how they conduct transactions,

transmit messages, and deliver merchandise.

Increasing service delivery and customer satisfaction will be key to maintaining and building

customer loyalty and growing new business.

However, recent criticisms about the manner in

which the Postal Service recovers revenue deficiencies from mailers threatens critical partnerships the Postal Service has worked to establish

with its mailers. As the Postmaster General

indicated at a recent conference, the success of

the Postal Service depends on strengthening its

partnerships with the mailing industry. 

The Postal Service also views its access to

the American household as a unique asset that

it can leverage as it faces increasing competition. While this gateway to the household has

been an asset, the Postal Service must also continue to develop products and services that

retain their relevancy and value for customers

with changing needs. Customer needs will also

have to be satisfied in an increasingly complex

manner, and the Postal Service will need to

reshape the way it views its traditional role. It

must quickly begin building the capabilities to

succeed in this environment before the window

of opportunity closes. 

To assist the Postal Service with addressing

this challenge, we:

◆ Examined the network for processing

International Mail

◆ Assessed Delayed Mail
Goals and Strategies

What are the OIG’s “values?” 

The OIG’s values are teamwork,

leadership, creativity, communication, and conceptualization, and are

incorporated into a 360-degree

employee evaluation system called

“TLC3.” 

DID YOU 

KNOW?

PAGE 19
OFFICE OF INSPECTOR

GENERAL

STRATEGIC GOALS

To assure long-term success, the OIG

assesses Postal Service operations and

activities, broadly defines realistic goals,

sets priorities in line with business vision, and

conceives effective strategies and action plans.

In January 1998, the OIG issued its first

Five-Year Strategic Plan, which was aligned

with each of the Postal Service’s

CustomerPerfect! goals: Voice of the Customer,

Voice of the Employee, and Voice of the

Business. The five-year goals are designed to

enhance the Postal Service’s: 

◆ Customer Service and Value. 

◆ Employee and Workplace Environment. 

◆ Financial Integrity and Business

Resources.

OIG PLANNING PROCESS

CustomerPerfect! goals play a crucial role in

the OIG’s planning process. The planning

process has three interrelated components: the

project universe, the annual performance plan,

and the annual audit workload plan. This year,

the OIG identified a universe of more than

1,800 projects for consideration. Projects from

the universe, which is the first component, are

selected on the basis of risk and OIG resources

available for the year. As part of the selection

process, the OIG considers the project’s potential impact on:

◆ Postal Service labor and capital resources.

◆ Postal-wide operations and goals.

◆ Public trust.

The OIG selected the highest priority projects for inclusion in the annual performance

plan, the second component of the planning

process. The third component is the OIG

annual audit workload plan, which is extracted

from the annual performance plan. This audit

workload plan is presented to the Postal Service

Governors each year. The plan may be adjusted

as the OIG work reveals new issues or the Postal

Service encounters new challenges.

OIG FY 2001 AUDIT WORKLOAD

PLAN

In the previous section of this Semiannual

Report, the ten major management issues facing

the Postal Service were discussed. These ten

issues were consolidated into four major areas

along with the oversight of the Inspection

Service for the purpose of audit planning.

In FY 2001, the OIG will focus its audit

attention on the following areas to help address

major challenges facing the Postal Service: 

◆ growing revenues and competing in a

rapidly changing market;

◆ maintaining affordability by controlling

costs;

◆ improving the workplace climate and

labor relations; 

◆ leveraging technology to enhance

productivity; and

◆ overseeing the Inspection Service. 

The following presents each of the five

areas and the focus of our audit efforts.

Growing Revenues and Competing in a

Rapidly Changing Market

Increasing competition from electronic

commerce and other competitors has slowed

the growth of Postal revenue and is expected to

have a continuing impact on the Postal

Service’s financial viability. Electronic commerce threatens to reduce First-Class Mail,

putting at risk as much as $33 billion in revenue

over the next nine years. In addition, foreign

postal services have recently set up offices in the

United States, siphoning away millions of

dollars in outbound international mail.

Consequently, the Postal Service is being

challenged to find new revenue sources at the

same time the Postal Service is being challenged

to fulfill its core mission of delivering mail in a

PAGE20 GOALS AND STRATEGIES

This section describes the OIG and

Inspection Service vision and goals for

assisting the Postal Service in achieving its

operational, performance, and financial

goals in the 21st century. In addition, this

section describes the process by which the

OIG translates its vision into an annual

performance plan. In order to differentiate

between the OIG and the Inspection

Service, the pages concerning the Inspection

Service have been color screened.

Planning System

Interrelationships

AUDITS & AUDIT RELATED PROJECT

INVESTIGATIONS

OTHER PROJECTS

INTERNAL ENABLING FUNCTIONS

POSTAL 

PROJECT

UNIVERSE

ANNUAL

PERFORMANCE

PLAN

AUDIT 

WORKLOAD

PLAN

CONSULTING

QUICK RESPONSE

FACT-FINDINGS

AUDITS & AUDIT RELATED PROJECTS

INVESTIGATIONS

OTHER PROJECTS

INTERNAL ENABLING FUNCTIONS

POSTAL 

PROJECT

UNIVERSE

ANNUAL

PERFORMANCE

PLAN

AUDIT 

WORKLOAD

PLAN
PAGE21

timely manner and improving customer service. 

To assist with this challenge, the OIG is

assessing how the Postal Service develops new

products and services to grow revenue,

enhances core business processes to improve

customer service, and maintains the public’s

trust. OIG audits will focus on the following:

◆New products and services:

◆ Justification and approval

◆ Marketing and sales

◆ Return on investment

◆Leveraging traditional operations:

◆ Strategic alliances

◆ Marketing 

◆ Financial initiatives

◆ International mail

◆Service performance and customer 

satisfaction: 

◆ Timeliness and reliability of service 

◆ Measurement systems

◆ Postal rates

◆ Re-engineering

◆Public trust:

◆ Brand integrity

◆ Employee integrity

Maintaining Affordability by

Controlling Costs

With over $60 billion in operating

expenses each year, the Postal Service needs

strong management controls to mitigate historic trends that drive rate increases and to

ensure its ability to provide universal mail service at affordable rates. Controlling costs

requires strong contract administration, effective program oversight, and sound budget

processes to make informed decisions. OIG

audits will focus on the following:

◆Financial system integrity:

◆ Financial statement 

◆ Field installations

◆ Cost and revenue analyses

◆ Treasury-related issues

◆Budget:

◆ Planning

◆ Execution

◆ Systems

◆Contracting activities:

◆ Fair and reasonable contract pricing

◆ Reasonableness and allowability of 

incurred costs

◆ Adequacy of contractor systems

◆ Contract administration

◆Facilities and real estate:

◆ Justification, approval, and budgeting

◆ Construction management

◆Logistics:

◆ Transportation systems and operations

◆ Materiel management

◆Health care:

◆ Workers’ compensation program 

administration

◆ Provider billing

Improving the Workplace Climate and

Labor Relations

The Postal Service, with approximately

800,000 career and 100,000 non-career employees, has characterized labor management relations as one of its most formidable challenges in

achieving its goals in the 21st century. To

operate effectively in a rapidly changing environment, the Postal Service has recognized that

it will need to give employee issues a higher

priority and enhance each employee’s contribution to organizational performance. Labormanagement partnerships are also critical if the

Postal Service is to achieve its overall financial

goals. However, employees sometimes view

management attempts to achieve incentives

under the Postal Service’s Economic Value

Added Variable Pay Program as adversarial.

The Postal Service will need to address those

perceptions in order to resolve persistent labor

management problems. 

Since its inception, the OIG has been

working with the Postal Service to address these

issues. However, labor management relations

continues to be one of the toughest areas to adequately address. To date, the OIG has received

over 2,800 individual labor management complaints. Because of the emotional involvement,

potential financial impact, and the length of

time to resolve these issues for the employee,

management, and Postal Service, it is important

that OIG’s involvement in this area be mean-
ingful and positive. Therefore, in order to deal

with the sheer magnitude of complaints, the

OIG focuses primarily on systemic issues and

conducts Postal-wide reviews. These reviews

are designed to identify and prevent potential

problems that can detract from a healthy and

productive work environment. OIG audits

focus on the following:

◆Workplace climate:

◆ Conflict prevention and resolution

◆ Threat assessment programs

◆ Occupational safety and health

◆Employee management:

◆ Training and development

◆ Succession planning

◆ Workforce planning

◆ Performance and compensation

◆ Diversity

Leveraging Technology to Enhance

Productivity

The Postal Service is seeking ways to leverage technology to improve its service, productivity, and profitability. While it depends on

technology to deliver more than 650 million

pieces of mail every day, the Postal Service must

continue to adapt quickly to each new wave of

technology to maintain its competitive position

in the market. The unprecedented growth in

computer interconnectivity and Internet usage

is revolutionizing the way the nation communicates and conducts business and is reshaping

customer expectations. 

To address these technology challenges, the

Postal Service plans to invest approximately

$17 billion through FY 2005 on capital investments, some of which are technology-related

investments. These investments are intended

to automate and modernize mail processing and

acceptance, enhance communications and

access to information, and extend the Postal

infrastructure to better support core business

processes and electronic products and services.

In addition, the Postal Service continues to

focus on eBusiness and computer security to

protect these investments. OIG audits focus on

the following: 

◆Information systems:

◆ Information infrastructure and 

architecture

◆ System performance and integrity

◆ Systems development and 

implementation

◆Computer security:

◆ Access

◆ Data protection

◆ Data integrity

◆Developmental:

◆ Automation of core functions

◆ Process re-engineering

◆eCommerce:

◆ Business partnerships and joint ventures

◆ Brand integrity

◆ Justification, cost, budgeting, and risk

Overseeing the Inspection Service 

Enabling legislation requires the OIG to

conduct oversight of the Inspection Service in

addition to OIG’s audit and investigative

responsibilities. As a law enforcement agency, it

is essential that the Inspection Service be held

to the highest standards of conduct to maintain

the public’s trust and the Postal Service’s reputation of reliability. 

OIG audits focus on the following:

◆Public trust:

◆ Function and role

◆ Operational effectiveness

◆ Management controls

PERFORMANCE RESULTS

Each year, the OIG establishes annual performance goals to support its strategic goals.

During FY 2000, the OIG accomplished nearly

90 percent of its plan. For FY 2001, the OIG is

redesigning its annual performance goals to

include a new measurement system.

PAGE22 GOALS AND STRATEGIES
PAGE23

INSPECTION SERVICE

The Inspection Service continues to support the Postal Service’s CustomerPerfect! model,

which consists of three voices—Voice of the Customer, Voice of the Employee, and Voice of the

Business. The management cycle of planning, implementation, and review provides a practical

and tangible method for establishing Inspection Service goals. As a result of this process, the

Inspection Service identified five goals and ten indicators for FY 2000 as shown below:

GOALS INDICATORS

Inspection Service 

FY 2000 Goals and Indicators

CUSTOMER

Increase Customer Confidence 

in the Security & Integrity of the Mail

◆ Customer Satisfaction Measurements-

 Residential

◆ Volume Thefts

EMPLOYEE

Ensure Employee Safety

Enhance the Workplace Environment 

to Improve Organizational Performance

◆ Number of Robberies

◆ Robbery Solution Rate

◆ Number of Assaults

◆ Number of Credible Threats

◆ Performance Management Profiles

◆ Recruitment

BUSINESS

Prevent Loss of Revenue

and Assets

◆ Fraudulent Schemes Involving 

 Underpayment of Postage

◆ Fraudulent Compensation 

 Costs Avoided

Reduce Costs
PAGE24 GOALS AND STRATEGIES
Organizational Dynamics

What is the OIG’s primary

responsibility? 

The primary responsibility of the OIG is

to conduct audits and investigations to

prevent, detect, and report fraud, waste,

and abuse, and to promote efficiency in

the programs and operations of the Postal

Service.

DID YOU 

KNOW?

PAGE 25
PAGE26 ORGANIZATIONAL DYNAMICS

OFFICE OF INSPECTOR

GENERAL

AN INDEPENDENT VOICE

The OIG is an independent agency

within the Postal Service and is under

the general supervision of nine presidentially-appointed Postal Service Governors.

From 1988 until the establishment of the OIG

in 1997, the Chief Postal Inspector performed

dual roles as the Inspector General and Chief

Postal Inspector and reported to the Postmaster

General. In January 1997, Karla W. Corcoran

was appointed the first independent Inspector

General of the Postal Service. The OIG, in carrying out its responsibility under the Inspector

General Act:

◆ Provides Congress, the Governors, and

Postal Service management with timely,

objective, and complete information and

analysis of Postal Service operations.

◆ Conducts audits and investigations of all

Postal Service operations and activities,

including ratemaking, contract administration, labor management, computer

intrusion, electronic commerce, computer security, and marketing.

◆ Maintains oversight of Inspection Service

operations and performs independent

reviews of complaints against its

employees.

◆ Facilitates audit resolution, which provides a mechanism for resolving findings

and recommendations where the OIG

and Postal Service management disagree.

◆ Adds value to Postal Service operations,

contributes to a more economical and

efficient organization, and helps the

Postal Service maintain its integrity

through independent investigations,

audits, and reviews.

◆ Serves as an objective venue for all

Postal Service employees and other

stakeholders to report fraud, waste, abuse,

mismanagement, and other improprieties

and concerns, with protection from management retaliation.

◆ Identifies cost savings, enhances contract

and program administration, and

increases employee integrity and program

efficiency.

To improve Postal Service programs and

operations, the OIG provides objective information, analysis, and recommendations. The

OIG is continuing to work with Postal Service

management to inform them of the duties and

responsibilities of an independent OIG and

demonstrate how the OIG adds value to Postal

Service processes.

OIG SUCCESSFULLY DEFENDS ITS

INDEPENDENT STATUS

As described in OIG’s last semiannual

report, the OIG faced challenges to its independent status in February 2000, when the General

Accounting Office issued an “Independence

Preliminary Views” document for comment.

This document proposed changes to generally

accepted government auditing standards.

According to the proposed changes, Inspectors

General who are appointed by an agency head

would not be considered organizationally independent, and their reports would be required to

identify their lack of independence. Thus,

despite the independence provided by the

Inspector General Act, these proposed changes

had the potential of leaving OIG stakeholders

and the public with the misperception that the

work performed by the OIG was influenced by

management. If the changes were incorporated,

Congress, the Governors, and the public might

question the credibility and objectivity of OIG

reports.

The OIG voiced its concerns to the

General Accounting Office, Congress, and

other members of the federal and nonfederal

audit community about the preliminary views

document. In addition, the OIG obtained an

independent legal opinion and provided written

comments to the General Accounting Office.

This section describes the OIG and the

Inspection Service organization visions,

values, culture, and diversity that assist

with providing value added service to the

Postal Service. In order to differentiate

the work reported by the OIG and

Inspection Service, the pages containing

the work reported by the Inspection Service have been color screened.

0

50

100

150

200

250

300

9/30/98 3/31/99 9/30/99 3/31/00 9/30/00

Number of OIG Products

In Last Five Semiannual Periods

64

101

139

191

274
PAGE27

The Inspector General also met with the

Comptroller General in July 2000 to discuss the

proposed changes and the detrimental effect

they might have on how the OIG’s work is perceived. The OIG’s efforts were successful, and

in July 2000, the Comptroller General advised

the OIG that it would continue to be viewed as

organizationally independent. Subsequently,

the preliminary views document was modified

to recognize the independence of the Postal

Service OIG, as well as all other Inspector

General offices.

OIG VISION AND VALUES

The vision of the OIG is “A Constellation

of Talented People Making a Difference.” This

vision reflects the OIG’s mission to shed light

on problems and opportunities by emphasizing

five fundamental values:

◆ Teamwork—synergy derived from people with diverse backgrounds and ideas

working together to achieve more effective results.

◆ Leadership—applying interpersonal

influence to inspire others to move in a

meaningful direction with competence

and commitment.

◆ Creativity—taking an innovative

approach to business problems or questioning and challenging the quality of

conventional work, with the goal of

improving Postal Service operations.

◆ Communication—providing open, positive and honest exchange of information

and ideas while showing respect for the

contributions and opinions of others.

◆ Conceptualization—visualizing the big

picture and understanding how an individual action affects the bottom line or

ultimate goal of the organization by

“keeping one’s eye on the ball.”

OIG CULTURE AND EMPLOYEES

Value and Benefit of a Diverse Culture

The OIG’s culture is defined by the diversity of its employees, who share the organization’s core values of teamwork, leadership,

creativity, communication, and conceptualization. The OIG is committed to creating and

maintaining a workplace that is enriched by the

talents, contributions, and full participation of

all of its employees that reflect the tremendous

diversity of the Postal community. Diversity is

a tool for achieving the OIG’s mission and

enhancing its organizational effectiveness by

using the creative energies of employees who

contribute different approaches, solutions, and

innovations. 

The OIG workforce is diverse in age, race,

ethnicity, gender, and background, as well as

education, professional accomplishments, work

experience, and work style. The OIG workforce includes Certified Public Accountants,

Certified Internal Auditors, Certified Fraud

Examiners, Certified Information Systems

Auditors, and Certified Acquisition Auditors.

OIG employees also hold law enforcement specialty certifications in areas such as polygraph

examinations. In addition, many OIG employees have undergraduate or advanced degrees,

while other employees are continuing to work

towards professional and academic achievements. OIG teams include auditors, evaluators,

criminal investigators, lawyers, technicians, and

administrative personnel formerly from federal

and state government agencies, private industry, non-profit organizations, and the Postal

Service.

During the past six months, the OIG carried out an aggressive hiring initiative to staff

the organization with additional highly-skilled

employees. As of September 30, 2000, OIG

had 656 employees, an increase of 40 percent

from March 31, 2000. Of the 656 employees,

50 percent were women and 47 percent were

minorities. The senior staff is composed of 39

percent women and 28 percent minority. Based

on the latest U.S. Bureau of Census estimates,

the OIG has met or exceeded the U.S. percentage of total population for women, and for each

minority group, except for Hispanics and

Native Americans.

Employee Advisory Council

To help ensure a productive, high-quality,

and positive workplace, OIG created an

Employee Advisory Council in September 2000

to partner with OIG management. The

Council consists of a broad cross-section of

non-management employees from headquarters

and field offices. Council members represent

employees’ perspectives by providing a communications link between employees and senior

OIG Values

The OIG created an Employee Advisory

Council in September to partner with OIG

management to help maintain a productive, high quality, and positive work place

environment.
management and making recommendations on

OIG policies, procedures, and programs. 

Building, Funding, and Supporting the

OIG’s Workforce

The Postal Service Governors recently

approved the OIG FY 2001 budget of $113 million, which will allow the OIG to increase its

staff to 725 employees. The Governors also

approved the opening of four new field offices in

Tampa, Florida; Boston, Massachusetts;

Pittsburgh, Pennsylvania; and Portland,

Oregon. 

NOTABLE OIG ACHIEVEMENTS

OIG RECEIVES AWARDS OF

EXCELLENCE

The OIG received seven Awards of

Excellence and 21 Honorable Mentions Awards

from the President’s Council on Integrity and

Efficiency and the Executive Council on

Integrity and Efficiency. The following OIG

teams were recognized with Awards of

Excellence: 

◆ The Transportation Team for exemplary

reporting and auditing of transportation

issues and identifying over $200 million

in savings to the Postal Service. 

◆ The Corporate Call Management

Program Team for their identification 

of nearly $1 billion in potential cost

avoidance. 

◆ The Video Audit Team for the production of the first video audit report to

Postal Service management.

◆ The International Stamp Collection

Program Team for their quick response

cost and benefit analysis, which

identified a $3.9 million loss and led to

the cancellation of the Postal Service’s

International Stamp Collection Program.

◆ The Telecommunication Cost Avoidance

and Recoveries Team for their identification of approximately $108 million in

cost avoidance and recoveries in the

Postal Service’s telecommunications program. 

◆ The OIG Recruitment and Staffing Team

and OIG Diversity Outreach Team for

efficiently and effectively completing a

major staffing initiative in a timely manner, and for exceptional work and accomplishments in ensuring diversity during

that hiring initiative. 

◆ The Designation of Functions Team for

their work in revising the designation of

functions between the OIG and the

Inspection Service to better serve the

interests of the Postal Service. 

These awards represent about one-fifth of 

the total awarded to the entire OIG community and more than one-half of those awarded

to the Executive Council on Integrity and 

Efficiency community. 

OIG ATTENDS INTERNATIONAL

AUDIT BENCHMARKING

SYMPOSIUM

The Assistant Inspector General for Audit

and other OIG staff attended the international

symposium for Postal Service Audit

Departments in Ottawa, Canada. The meeting

brought together heads of postal audit departments from several countries to benchmark

audit practices. The OIG made presentations

on two of its best practices, and found that OIG

audit methods and coverage were more

advanced in several areas. For example, the

OIG proactively identifies computer security

issues by conducting intrusion tests as part of

information systems audits. The OIG also distinguishes itself through its fraud detection and

prevention activities, which other audit departments have only recently considered as an audit

assurance function. 

OIG TECHNOLOGY AT ITS BEST

The OIG successfully completed implementation, deployment, and testing of its Wide

Area Network as follows:

◆ The OIG implemented network services

at all existing OIG offices for high-speed

network connectivity. These network

services include access to OIG Intranet,

Internet, Postal Service mainframes, and

OIG internal business applications.

◆ The OIG deployed a secured remote dialin access to OIG Local and Wide Area

Network to provide staff and temporary

offices network connectivity with existing workstation architecture.

PAGE28 ORGANIZATIONAL DYNAMICS

OIG employees received a special award

for their work on the Designation of

Functions between the OIG and the

Inspection Service which will better

serve the interests of the Postal Service.
PAGE29

◆ The OIG tested its existing internal digital network, which is used to support

computer applications, for voice communications. This will enable the OIG to

leverage existing technology and save

money. 

OIG PARTICIPATES IN A PILOT

TRAINING PROGRAM

OIG personnel assisted with a pilot technical investigative equipment program to train

law enforcement agents attending the Federal

Law Enforcement Training Center. The program has successfully taught the basics of technical investigations, such as laws, safety, and

consensual monitoring techniques, to agents

pursuing this area as a collateral duty. To date,

two classes were held and 20 special agents from

the OIG community have graduated.

OIG PARTICIPATES IN AN INTERNATIONAL PROGRAM IN RUSSIA 

The OIG was invited to join forces with

the Department of State, the Department of the

Treasury, the Bureau for International Narcotics

and Law Enforcement Affairs, the Federal Law

Enforcement Training Center, and the Russian

Department of the Interior. This group presented a training program entitled

“International Banking and Money

Laundering” at the Kazan Law Institute in

Russia and provided examples of investigative

and legislative efforts used to combat money

laundering in the United States.

OIG PARTICIPATES IN LAW

ENFORCEMENT COMMUNITY

ACTIVITIES

On May 12, 2000, OIG employees participated in the National Police Challenge 50, a

50-kilometer road relay race held in the District

of Columbia. The annual event benefited a

nonprofit organization, Concerns of Police

Survivors, which assists family members of

police officers who were killed in the line of

duty. The competition drew over 48 law

enforcement teams from the Washington

Metropolitan area. 

On June 8, 2000, OIG employees participated in the Special Olympics Law

Enforcement Torch Run. The employees

proudly carried the OIG banner during their leg

of the run.

CHAIRMAN OF THE BOARD OF

GOVERNORS VISITS OIG 

The Chairman of the Postal Service Board

of Governors visited the OIG at its open house

in St. Louis, Missouri. Guests included representatives from federal, state, and local audit

and investigative organizations. In addition,

the Chairman provided a keynote address for

the OIG financial statement team during its

annual training and planning conference. 

OIG PARTICIPATION IN THE

COMBINED FEDERAL CAMPAIGN

The OIG’s Dallas, Texas office recently

received the highly prestigious “Pacesetter”

award for the 1999 Combined Federal

Campaign. Each year, the Combined Federal

Campaign presents awards to organizations that

increase their donations by at least 5 percent

over the previous year. The participation rate in

the Dallas office for the 1999 campaign was 54

percent. The award was presented during the

kick-off meeting for the 2000 Combined

Federal Campaign in the Dallas regional office. 

CHALLENGES FACING THE OIG

As an independent entity within the Postal

Service, the OIG faces numerous challenges as

it looks to the future. The key challenges

include: 

ASSUMING ADDITIONAL

RESPONSIBILITIES

Under the revised Designation of

Functions with the Inspection Service, the OIG

will perform all audits within the Postal Service,

and the Inspection Service will discontinue performing audits. The OIG will investigate all

procurement fraud within the Postal Service,

and the Inspection Service will discontinue procurement/expenditure investigations, except

cash and money orders. The OIG also will

investigate thefts of Postal funds resulting from

improper expenditures, including compromise

of program integrity. The Inspection Service

will conduct all revenue investigations, and

embezzlements where there is no formal contract and payments are made in cash or money

orders.

An OIG employee provided training on

Money Laundering and International

Banking to Russian National police officers at the Kazan Law Institute in Russia.

OIG employees participated in the annual

“Law Enforcement Torch Run” which

benefits Special Olympics.
PAGE30 ORGANIZATIONAL DYNAMICS

OFFICE OF

INSPECTOR GENERAL INSPECTION SERVICE

JOINT FUNCTIONS

Designation of Functions

as of May 2000

• AUDIT

– All audits

• DISBURSEMENT INVESTIGATIONS

– Contract/procurement fraud

– Improper expenditures except cash 

and money orders

– IMPAC Card

• HEALTH CARE FRAUD - USPS NEXUS

– Provider and contractor fraud

– Health benefit program fraud

• EMPLOYEE CORRUPTION

– Bribery

– Gratuities

– Conflict of Interest

• COMPUTER INTRUSION

• FRAUD AWARENESS BRIEFINGS 

RELATED TO OIG RESPONSIBILITIES

• SECURITY PROGRAMS

– Employment backgrounds (as requested by the Board of Governors)

• EXECUTIVE INVESTIGATIONS

– Excludes crimes of violence

• QUI TAM

• TORT CLAIM FRAUD

• INSPECTION SERVICE OVERSIGHT

• RESPONSIBILITY FOR 

– e-business/e-commerce will be

determined in accordance with the

principles set forth in this document.

• FUTURE E-COMMERCE ACTIVITIES WILL BE

REVIEWED JOINTLY BY THE OIG AND

INSPECTION SERVICE ON AN ONGOING

BASIS.

• REVENUE/FINANCIAL INVESTIGATIONS

– Theft or embezzlement of postal cash and

money orders by employees and others 

where there is no formal contract

– Fraudulent activity relating to mailings,

postage, and meters

• FRAUDULENT WORKERS’ COMPENSATION

• FRAUD AGAINST CONSUMERS, BUSINESS,

AND GOVERNMENT (NON-POSTAL)

• HEALTH CARE FRAUD - OTHER

• SECURITY CONSULTATION ON ELECTRONIC

PRODUCTS AND SERVICES

• CRIME PREVENTION AND SECURITY

• CRIMES OF VIOLENCE

• DRUGS IN THE WORKPLACE

• MAIL THEFT

• PROHIBITED MAILINGS

– Child Exploitation

– Bombs

– Drugs

• ROBBERIES

• BURGLARIES

• MONEY ORDERS, FINANCIAL

INSTRUMENTS, AND POSTAL PROPERTY

CRIMES

• SECURITY PROGRAMS

– Facilities, Mail, and Products 

– Employee Background Investigations

– Emergency Preparedness

– International Security

– Service Investigations

• ASSET FORFEITURE PROGRAM
PAGE31

ADAPTING TO CHANGES IN

STAFF AND FIELD OFFICES

During the last six months, the OIG

increased its staff from 470 to 656 employees.

Adding nearly 200 new employees and four new

field offices has been a challenge, requiring the

OIG to rely on state-of-the-art technology to

communicate with its field offices and headquarters. Communication, one of the OIG’s

core values, is crucial to maintaining the flow of

information. The OIG has already made great

strides in this area—its September All Hands

meeting held in Rosslyn, Virginia, was broadcast

to field offices via videoconferences, and was

also shown on the OIG’s Intranet.

REORGANIZING TO BETTER

SERVE THE POSTAL SERVICE

The OIG revised its internal structure to

better reflect Postal Service business processes

and the new designation of functions. To help

the OIG better respond to customer needs, the

Inspector General named a Deputy Inspector

General to work closely with the Inspector

General on day-to-day operations. In addition: ◆ An Assistant Inspector General for

eBusiness was named to recognize the

significant role that technology plays in

the Postal Service. 

◆ Audit responsibility was consolidated for

the Postal Service’s core business

processes under the Assistant Inspector

General for Business Operations. 

◆ Revenue Protection was renamed

Business Protection to reflect the new

designation of functions.

◆ Internal enabling functions were consolidated under the Assistant Inspector

General for Internal Business. 

◆ Oversight and Business Evaluations was

restructured to place greater emphasis on

oversight of the Inspection Service and

labor-management. 

◆ Executive field liaisons were established

to quickly address issues unique to the

field. 
PAGE32

INSPECTION SERVICE 

F

or more than two centuries, the role of the

Inspection Service has been to preserve

the public trust in the Postal Service. The

Inspection Service enforces over 200 statutes

related to crime against the mail, the Postal

Service, Postal Service employees, and customers. The Inspection Service’s mission has

been refined over the years by statutes related to

the mail, creation of an independent OIG, and

the needs and requirements of the Postal

Service and its customers. The Inspection

Service provides an essential service to the

American public and the Postal Service by

ensuring the security and sanctity of the mail

and the safety of Postal Service employees. The

Inspection Service has almost 4,300 employees,

including approximately 2,000 Postal

Inspectors, about 1,400 uniformed Postal Police

Officers, and about 900 professional support

associates. 

The national headquarters of the

Inspection Service is organized into functional

groups that report to the Deputy Chief

Inspectors for Business Investigations, Criminal

Investigations, Professional Standards and

Resource Development, and Administration.

The Inspection Service includes 18 field divisions, which report directly to two Deputy Chief

Inspectors for Field Operations. Five

Operations Support Groups also support the

field offices. 

The Inspection Service Forensic

Laboratories, located at five sites, support field

office investigations and provide state-of-the-art

technology. Inspection Service offices are

linked nationally through electronic systems

with online connections to the National Crime

Information Center and the National Law

Enforcement Telecommunications System. 

Postal Inspectors conduct criminal investigations and arrest violators for postal offenses,

serve warrants and subpoenas, and present evidence to prosecutors for action. Inspectors

respond to emergencies involving Postal

Service crimes, natural disasters, and other

problems that affect the Postal Service. With

the completion of the FY 2000 financial installation audits, the Inspection Service will no

longer perform audits. 

Uniformed Postal Police Officers provide

security around the clock at postal facilities.

The Postal Police Officers at facility control

centers monitor burglar alarms to provide protection for Postal Service employees, property,

and assets. The Postal Police Officers also provide escorts for the Postal Service for high-value

shipments, such as certain registered mail and

postal remittances. 

Postal Inspectors work cooperatively

nationwide with the OIG, the Department of

Justice, and other federal, state, and local law

enforcement agencies on joint efforts. The

expertise of the Inspection Service is recognized

internationally, with Postal Inspectors assigned

to the U.S. National Central Bureau of Interpol

in the District of Columbia and to Interpol

Headquarters in Lyon, France. The Inspection

Service has a leading role in the Postal Security

Action Group, a committee within the

Universal Postal Union, which has established

the following priorities: 

◆ Prevent injuries to customers resulting

from dangerous goods in the mail. 

◆ Prevent the loss or theft of mail entrusted

by customers to world postal administrations. 

◆ Prevent revenue and asset losses of world

postal administrations.

◆ Preserve customers’ confidence in the

mail.

Postal Inspectors are active members in

councils and groups, such as the:

◆ Financial Crimes Enforcement Network.

◆ Organized Crime Council. 

◆ International Policy Committee of the

International Association of Chiefs of

Police. 

◆ International Association of Financial

Crimes Investigations.

◆ Securities and Commodities Fraud

Working Group. 

◆ Economic Crimes Council. 

◆ National Health Care Anti-Fraud

Association. 

◆ National Law Enforcement Explorers’

Committee.

◆ Asset Forfeiture Policy Advisory Group. 

Postal Police Officers, the uniformed

branch of the Inspection Service, provide security at Postal Facilities. 

ORGANIZATIONAL DYNAMICS
PAGE33

Postal Inspectors also work with the following

organizations regarding child pornography

cases: 

◆ The Child Exploitation and Obscenity

Section of the Department of Justice. 

◆ The National Center for Missing and

Exploited Children. 

◆ The Standing Working Party on Offenses

Against Minors, which is an international organization sponsored by Interpol. 

The Inspection Service’s forensic specialists and technical financial analysts play a vital

role in supporting investigative, audit, and

security functions of the Inspection Service.

These professional technical employees perform a variety of tasks, which include:

◆ Providing forensic examinations. 

◆ Developing, procuring, and deploying

electronic security and surveillance

equipment. 

◆ Providing photography, video, and

graphics support.

◆ Publishing policies, reports, manuals,

handbooks, and consumer publications. 

◆ Developing and maintaining management systems.

◆ Providing direct contact with Congress

and the public.

◆ Supplying administrative support.

The following are examples of Inspection

Service proactive efforts in the area of international mail security:

◆ The International Security Group targets

initiatives to improve the safety, security,

and reliability of international mail products for the Postal Service. The group

also develops security strategies and initiatives to improve the quality of service

and security of the mail for the 189 member countries of the Universal Postal

Union. The Postal Security Action

Group continually focuses on contemporary problems and issues that affect the

safety, security, and integrity of international communications products.

◆ Postal Inspectors coordinated

International Mail Quality

Assurance/Airport Security Reviews in

Australia, Colombia, and Japan to

identify opportunities to improve quality

of service and security of mail at international airports.

◆ The Chief Postal Inspector chaired the

19th meeting of the Postal Security

Action Group in Switzerland. This

group is comprised of postal security

experts from 48 member and 28 observer

countries in the Universal Postal Union,

who address key security programs and

issues. 

The Inspection Service’s new seal 

incorporates the Postal Service eagle in 

a five-pointed star.
PAGE34 ORGANIZATIONAL DYNAMICS
Organizational Structure

What is the background of OIG’s

staff?

The OIG staff includes auditors, evaluators, criminal investigators, lawyers,

technicians, and administrative personnel from federal and state government

agencies, private industry, nonprofit

organizations, and the Postal Service.

DID YOU 

KNOW?

PAGE 35
PAGE36 ORGANIZATIONAL STRUCTURE

Inspector General

Karla W. Corcoran

ASSISTANT INSPECTOR GENERAL

AS

S

SI TANT

INSPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

Audit

(BUSINESS OPERATIONS)

AIG–Debra Ritt (Acting)

Deputy AIG Robert E. Emmons

Deputy AIG John M. Seeba (Acting)

Directors:

Accepting & Processing – Stew Dorris

Support Operations – Gwen Johnson

Delivery – Chris Nicoloff

Financial – John Cihota (Acting)

 Sheila Bruck

Marketing – Larry Chisley

Transportation – Joe Oliva

Deputy 

Inspector General

Sylvia L. Owens

Directors:

Congressional & Public Relations – Laura Whitaker

Quality Assurance/Internal Affairs – George Davis

Strategic Planning/Internal Quality – Russ Barbee

Thomas Coogan

Investigations

(BUSINESS PROTECTION)

AIG–Billy Sauls

Deputy AIG Daniel O'Rourke

Deputy AIG Ronald K. Stith

Directors:

Business Integrity – Dennis Riley

 Michael Shiohama

Contracts – Kim Stroud

Facilities – Anthony T. Cannarella

Health Care Fraud – Katherine K. Johnson

Oversight and 

Business Evaluations

AIG–Debbie Pettitt (Acting)

Deputy AIG Vacant

Directors:

Hotline – Bob Pemberton

Labor Management – Bennie Cruz

 Joyce Hansen General Counsel Oversight – Cathleen Berrick

Deputy General Counsel Ronnie Wainwright

Director:

Legal Services – Gladis Griffith

eBusiness

AIG–Norm Hancock

Deputy AIG Donna Edsall

Directors:

Computer Intrusion – Howard Cox

Developmental – Tracy LaPoint

Electronic Commerce – Robert Batta

Forensic & Technical Services – Tommy Hampton

Information Systems – Dave Berran

Information Technology – David Sidransky

Field Liaison

Colleen McAntee

Ronald Merryman

Atlanta New York

Chicago Minneapolis

Dallas Raleigh

Denver San Mateo

Los Angeles St. Louis

EXECUTIVE REPRESENTATIVE

Internal Business

AIG–Kirt West

Deputy AIG Wayne Goleski

Directors:

Administrative Resources – Steve Spratt

Communications & Policy – Jim Nugent

Human Resources – Eufemia Lucero

Workplace Enhancement – Sharon Solomon

Office of Inspector General

Organizational Structure

(as of September 30, 2000)
PAGE37

OFFICE OF INSPECTOR

GENERAL

The OIG supports the Postal Service’s

business and public policy objectives. It is a

unique, nontraditional, diverse organization

that conducts audits, evaluations, investigations, and other core functions identified by the

Inspector General Act of 1978, as amended.

The OIG’s core values of teamwork, leadership, communication, creativity, and conceptualization are demonstrated by teams that

focus on improving Postal Service business

processes and overall organizational achievement. The following section describes the OIG

organizational structure as of September 30,

2000.

DEPUTY INSPECTOR GENERAL 

Sylvia L. Owens - assists the Inspector

General and the OIG Management Committee in leading the organization. 

CONGRESSIONAL AND PUBLIC RELATIONS TEAM

Director, Laura Whitaker- serves as liaison

and responds to requests from Congress, the

Board of Governors, and the media; and coordinates congressional testimony and presentations.

QUALITY ASSURANCE/INTERNAL

AFFAIRS TEAM

Director, George Davis - conducts internal

reviews of OIG operations and procedures to

ensure that they are effective and appropriate

and reviews allegations against OIG employees.

STRATEGIC PLANNING/INTERNAL

QUALITY TEAMS

Director, Russ Barbee – anticipates and

plans for current and future changes in the

Postal Service, the OIG operations, and technology by identifying workload, providing

research and statistical analysis, informing

Postal Service employees and customers about

the OIG mission, and promoting the vision of

the OIG.

GENERAL COUNSEL TO THE

INSPECTOR GENERAL 

Thomas Coogan

Deputy General Counsel, 

Ronnie Wainwright

LEGAL SERVICES TEAM

Director, Gladis Griffith - provides legal

advice to the Inspector General and the OIG

staff on criminal, civil, and administrative

issues; processes subpoenas; responds to Freedom of Information Act and Privacy Act

requests; serves as liaison with the Postal Service Law Department and the Department of

Justice legal staffs; and manages compliance

with Office of Government Ethics regulations.

ASSISTANT INSPECTOR GENERAL

FOR AUDIT 

(BUSINESS OPERATIONS)

Debra Ritt (Acting)

Deputy Assistant Inspectors General,

Robert E. Emmons and 

John M. Seeba (Acting)

ACCEPTING & PROCESSING TEAM

Director, Stew Dorris - conducts audits and

reviews focusing on mail acceptance and collection operations, and mail processing and distribution processes. 

SUPPORT OPERATIONS TEAM

Director, Gwen Johnson - provides investigative support to all performance teams and

conducts audits and reviews of Postal Service

support operations, including general counsel,

quality, government relations, and customer

service.

DELIVERY TEAM

Director, Chris Nicoloff - conducts audits

and reviews to enhance delivery processes and

operations and improve customer satisfaction.

FINANCIAL TEAMS

Directors, John Cihota (Acting) and 

Sheila Bruck - conducts audit work in support

of independent public accounting firm’s annual

financial audit opinion and conducts other

DID YOU 

KNOW?

This section describes the organization of

the OIG and the Inspection Service. In

order to differentiate between the OIG and

the Inspection Service, the pages concerning

the Inspection Service have been color

screened.

Is employee diversity important to OIG? 

The OIG is proud of the diverse

talents, skills, and professional

experience of our staff. The OIG

believes diversity has enhanced

our work environment.
financial-related audits to identify areas for

improvement.

MARKETING TEAM

Director, Larry Chisley - examines and

evaluates the major sources of revenue from

marketing, advertising, stamp services, and

retail and international mail business operations, as well as monitors Postal Service rate

cases.

TRANSPORTATION TEAM

Director, Joe Oliva - conducts audits and

reviews of domestic and international transportation and logistics operations, specifically

addressing Postal Service fleet operations and

contracts for air, highway, and rail services.

ASSISTANT INSPECTOR GENERAL

FOR INVESTIGATIONS 

(BUSINESS PROTECTION)

Billy Sauls

Deputy Assistant Inspectors General,

Daniel O’Rourke and Ronald K. Stith 

BUSINESS INTEGRITY TEAMS

Directors, Dennis Riley and Michael

Shiohama - investigate bribery, kickbacks,

embezzlements, and other cases involving

expenditures and contract fraud, such as defective pricing, product substitution, and cost mischarging.

CONTRACTS TEAM

Director, Kim Stroud - conducts audits and

investigations of purchasing activities and

operations to improve Postal Service contracting.

FACILITIES TEAM

Director, Anthony T. Cannarella - conducts audits, management reviews, and investigations of all aspects of postal facilities, including repair, renovation, and new construction.

HEALTH CARE FRAUD TEAM

Director, Katherine K. Johnson - identifies and investigates medical providers that

have falsely billed the Postal Service for workrelated injury claims; investigates allegations

about medical providers under contract with

the Postal Service; and conducts audits of systemic issues involving the Workers’ Compensation Program.

ASSISTANT INSPECTOR GENERAL

FOR INTERNAL BUSINESS 

Kirt West

Deputy Assistant Inspector General,

Wayne Goleski

ADMINISTRATIVE RESOURCES TEAM

Director, Steve Spratt - provides the OIG

staff with facilities, procurement, financial,

budget, and other services necessary to accomplish the OIG mission. 

COMMUNICATIONS & POLICY TEAM

Director, Jim Nugent - provides graphics,

writing, and editorial services; coordinates and

publishes OIG reports as well as other documents for Congress, Governors and Postal Service management; and manages development

of internal policies and procedures.

HUMAN RESOURCES TEAM

Director, Eufemia Lucero - provides fullservice human resources programs to the OIG

in the areas of employee relations, pay and benefits, retirement, awards, performance management, counseling, and training.

WORKPLACE ENHANCEMENT TEAM

Director, Sharon Solomon - provides support and services to the OIG on internal work

life, organizational climate, diversity, equal

employment opportunity, and other workplacerelated issues.

ASSISTANT INSPECTOR GENERAL

FOR OVERSIGHT & BUSINESS

EVALUATIONS 

Debbie Pettitt (Acting)

Deputy Assistant Inspector General,

(Vacant)

HOTLINE TEAM

Director, Bob Pemberton - operates the

OIG Hotline to provide a vital and confidential communications link for Postal employees,

other stakeholders, and the public to report

fraud, waste, abuse, and mismanagement in the

Postal Service.

LABOR MANAGEMENT TEAMS

Directors, Bennie Cruz and 

Joyce Hansen - conduct audits and reviews of

labor management and employee relations

PAGE38 ORGANIZATIONAL STRUCTURE

The OIG Human Resources Team provides

a variety of important pay and benefit

services by using the talents of a diverse

and highly qualified staff.
PAGE39

MONTREAL

RALEIGH, NC

NEW YORK, NY

MINNEAPOLIS, MN

ST. LOUIS, MO

ATLANTA, GA

SAN MATEO, CA

LOS ANGELES, CA

DALLAS, TX

ROSSLYN, VA CHICAGO, IL

DENVER, CO

OIG Locations Nationwide 

issues within the Postal Service to assist in

maintaining a healthy and safe organizational

climate for employees and improving operational efficiency.

OVERSIGHT TEAM

Director, Cathleen Berrick - conducts

audits and reviews to provide oversight of

Inspection Service programs and operations.

ASSISTANT INSPECTOR GENERAL

FOR eBUSINESS 

Norm Hancock

Deputy Assistant Inspector General,

Donna Edsall 

COMPUTER INTRUSION TEAM

Director, Howard Cox - detects and investigates computer hacking and other high-technology crimes involving Postal Service computers and telecommunications systems; and

assists in identifying vulnerable computer systems so that appropriate counter measures may

be implemented.

DEVELOPMENTAL TEAM

Director, Tracy LaPoint - conducts audits

and reviews of new or redesigned Postal Service

systems, programs, and operations that are

under development.

ELECTRONIC COMMERCE TEAM

Director, Robert Batta - conducts audits

and reviews in the emerging field of electronic

commerce, focusing on new electronic business

initiatives and revenues.

FORENSIC & TECHNICAL SERVICES

TEAM

Director, Tommy Hampton - provides technical support in such areas as surveillance,

videography, evidence recovery, firearms, computer forensics, and polygraph examinations;

and maintains close liaison with technical

experts in the law enforcement community.

INFORMATION SYSTEMS TEAM

Director, Dave Berran - audits and reviews

major automated Postal management information systems to determine whether general and

application controls are properly established

and systems are designed to provide accurate

data to management; and provides computerassisted audit techniques for data retrieval and

analysis in support of the OIG administrative,

audit, and investigative staff.

INFORMATION TECHNOLOGY TEAM

Director, David Sidransky - manages computer operations and telecommunications

within the OIG; operates the local and widearea networks; provides computer security and

technical support to the OIG staff; and manages agency-wide information systems.

EXECUTIVE REPRESENTATIVE

FOR FIELD LIAISON 

Colleen McAntee and 

Ronald Merryman

Provides senior-level communication links

between the OIG Headquarters and its ten field

offices, and all Postal Service field operations.

OIG FIELD LOCATIONS

As depicted in the chart below, the OIG

opened five new field offices, for a total of

eleven offices. Field offices supporting headquarters in Rosslyn, Virginia, are located in San

Mateo and Los Angeles, California; Denver,

Colorado; Atlanta, Georgia; Chicago, Illinois;

Minneapolis, Minnesota; St. Louis, Missouri;

New York, New York; Raleigh, North Carolina

and Dallas, Texas. In FY 2001, the OIG will

open four additional offices in Tampa, Florida;

Boston, Massachusetts; Portland, Oregon and

Pittsburgh, Pennsylvania. 
PAGE40

INC

Information Technology

R. COCCIA

INC

Corporate Information

Management

R. LUERS

INC

Computer Crimes &

Commerce

J. EASLEY

INC

International Security

D. HILL

INC

Security

T. DENNENY

INC

Fraud, Child Expl., 

Asset Forfeiture & 

Money Laundering

L. MAXWELL

INC

Mail Theft & 

Violent Crimes

A. CLEMMONS

INC

Revenue & Asset 

Protection Prog.

S. SCHMERBECK

INC

Forensic & Tech. 

Services

R. GEFFEN

INC

Strategic Plng. & 

Management Process

J. STINCHFIELD

INC

Career Development 

Division

K. BOND

INC

Finance & 

Adm. Services

M. MUNLEY

Manager

Newark ISOSG

V. BELLINGER

Manager

So. San Francisco 

ISOSG

K. PARAMORE

Manager

Exec. Resources &

Leadership Dev.

VACANT

Manager Workforce

Strategic Plng.

N. ARROYO

Manager Training

Assessment

S. CLARK

Manager Employee

Development

N. JOHNSON

Inspectors in Charge

Florida - 

M. GREY

Mid Atl. - 

A. CRAWFORD

NY Metro - 

J. SKIDMORE

No. Jersey/Caribbean - 

K. BURKE

Northeast - 

K. JONES

Philadelphia Metro - 

B. CHAMBERS

Southeast - 

I. CARLE

Washington Metro - 

J. ROWAN

W. Allegheny - 

J. BIRCH

Inspectors in Charge

Gulf Coast -

R. DODD

Michiana - 

W. MITCHELL

Midwest - 

R. BOWDREN

No. Ca - 

A. KIEL

No. Illinois - 

I. GILLIS

Northwest - 

R. MORGAN

Rocky Mountain - 

M. COBOS

So. Ca - 

J. FREEMAN

Southwest - 

A. HOLMES

Inspector in Charge

Office of Counsel

L. KATZ

Inspector in Charge

Office of Inspections

J. SOMERSET

Inspector in Charge

Congressional & 

Public Affairs

D. MIHALKO

ORGANIZATIONAL STRUCTURE

INSPECTION SERVICE

At the end of FY 2000, the Inspection Service completed a realignment of reporting relationships among field divisions. Over the last

few years, 30 Inspection Service Field Divisions

have been consolidated to 18. This has resulted

in increased efficiency and effectiveness. The

consolidation of specific support functions, the

availability of additional staff resources for

emergency response, and a more uniform span

of control among division Inspectors-in-Charge

will enhance the Inspection Service’s ability to

address its goals. The Inspection Service

remains committed to the ongoing evaluation

of organizational performance, employee development, and customer service with the goal of

continuous improvement.

Inspection Service Organizational Structure

Chief Postal Inspector

KEN C. WEAVER

INC - Inspector in Charge

ISOSG - Inspection Service Operations Support Group

Chief Postal Inspector 

Kenneth C. Weaver

Deputy Chief Inspector

Security/Technology

J. BELZ

Deputy Chief Inspector

Investigations

K. NEWMAN

Deputy Chief Inspector

Professional Standards & Resource Development

D. WRIGHT

Deputy Chief Inspector

Field Operations - East

L. HEATH

Deputy Chief Inspector

Field Operations - West

M. AHERN
Customer Service 

OFFICE OF INSPECTOR GENERAL

External Communications

Internal Communications

Specialized Services

INSPECTION SERVICE

External Communications

Specialized Services

PAGE 41
PAGE42 CUSTOMER SERVICE

OFFICE OF INSPECTOR

GENERAL

EXTERNAL COMMUNICATIONS

The OIG is legally responsible for keeping

Members of Congress and the Postal

Service Governors fully and currently

informed. The OIG keeps Congress informed

by issuing the Semiannual Report to Congress,

testifying at oversight and other hearings, and

briefing Members and their staffs on issues

related to the Postal Service. The OIG keeps

the Governors informed through regular briefings at monthly Board meetings, a monthly

activity report from the Inspector General, and

responses to requests for information. The OIG

also regularly provides Congress and the

Governors with copies of audit and management advisory reports.

CONGRESSIONAL TESTIMONY

Each year, the Inspector General has testified before Congress on the OIG’s work. The

Act authorizes the OIG to conduct independent audits, investigations, and reviews of Postal

Service programs and operations to identify and

deter fraud, waste, abuse, and mismanagement. 

OIG Statement on Electronic

Commerce 

On September 7, 2000, the Inspector

General provided a written statement on electronic commerce initiatives of the Postal

Service to the Subcommittee on International

Security, Proliferation, and Federal Services,

Senate Committee on Governmental Affairs.

The Inspector General highlighted challenges

that the Postal Service faces in implementing

electronic commerce initiatives to offset the

projected $32.9 billion decrease in First-Class

Mail revenue over the next nine years. Those

challenges included the need for:

◆ centralizing and involving senior

management at early stages of project

planning;

◆ comprehensive, integrated planning and

setting priorities for new marketing

initiatives;

◆ effectively planning the budget and

allocating resources;

◆ improving systems development, including projections of return on investment,

data reliability, and functionality, while

keeping pace with installation schedules;

◆ controlling and providing oversight of

contracting activities; and

◆ placing a greater emphasis on comprehensive, integrated computer security.

OIG Testimony at Oversight Hearing 

On September 19, 2000, the Inspector

General testified before the Subcommittee on

the Postal Service, House Committee on

Government Reform. The Inspector General

discussed the progress made in building the

organization as the OIG concludes its fourth

year, and highlighted how the OIG has helped

the Postal Service address significant management challenges in four critical areas:

◆ competing in a rapidly changing marketplace and improving customer service

while introducing new products and

services to generate revenue;

◆ controlling costs through improved

contract administration, budget planning, and program oversight;

◆ improving the workplace climate and

relations among labor, management, and

unions; and 

◆ using technology to automate and modernize mail processing and acceptance,

improve communications, and support

core business processes and electronic

products and services.

This section describes the OIG and

Inspection Service’s efforts to provide

Customer Service including initiatives by

support functions to enhance service to

internal customers. Customer satisfaction and service is the underlying creed of

most successful organizations and businesses. In order to differentiate work

reported by the OIG and the Inspection

Service, pages concerning the Inspection

Service have been color screened.

Inspector General Corcoran unveils for

the Governors of the Postal Service the

OIG Hotline video which provides an

overview of the Hotline operations.
PAGE43

RESPONDING TO REQUESTS

FROM CONGRESS AND THE

POSTAL SERVICE GOVERNORS

One of the OIG’s highest priorities is to

provide accurate and timely responses to

Congress and the Postal Service Governors.

The OIG responds to many of these requests by

conducting individual reviews and providing

responses. However, the OIG does not normally perform an audit or investigation when

the allegation involves an individual employee

issue that can be resolved through contractual

grievance-arbitration procedures or the Equal

Employment Opportunity process. In those

cases, the OIG incorporates individual concerns

into a database to identify systemic issues based

on the information from Congress and the

Governors. When systemic issues have been

identified, the OIG conducts independent

audits and investigations of Postal Service programs and operations to help ensure their efficiency and integrity. 

During this six-month reporting period, the

OIG completed 50 congressional inquiries.

Appendix H of this report lists the OIG

responses to these inquiries by subject area.

Narratives describing significant OIG work in

response to congressional requests appear in subsequent sections. 

HOTLINE PROVIDES A VITAL

AND CONFIDENTIAL

COMMUNICATION LINK

The OIG Hotline provides a vital and confidential communication link between the OIG

and individuals who contact the Hotline to

report allegations of fraud, waste, abuse, and

mismanagement.

Promoting Hotline Awareness 

A video representing the OIG Hotline

operations has been developed to increase OIG

Hotline awareness for Congress, the Governors,

the Postal Service, and the public.

Previously, the OIG developed a Hotline

poster that heightened stakeholder awareness to

report incidents of fraud, waste, abuse, and mismanagement. On August 3, 2000, the

Postmaster General directed that the poster be

permanently and prominently displayed for all

employees. In addition, an article announcing

the Postmaster General’s directive was published in Postal Bulletin, September 21, 2000. 

During this reporting period, the OIG

developed a wallet-sized card depicting the

poster. The card contains the Hotline’s toll-free

phone number, email address, toll-free fax, and

mailing address. These cards will be distributed

to employees and other stakeholders.

Responding to Hotline Inquiries

The Hotline receives complaints from

employees, customers, and the general public

concerning alleged violations of laws, rules, or

regulations; mismanagement; waste of funds;

abuse of authority; or danger to public health

and safety. Complaints and allegations received

by the Hotline are analyzed to identify systemic

issues affecting the Postal Service. 

The OIG considers all Hotline contacts

when planning audits and projects. However,

the Hotline is not a replacement for formal

avenues of problem resolution such as grievance

arbitration or Equal Employment Opportunity

processes. During this reporting period, the

Hotline received more than 10,000 contacts, of

which:

◆ eight percent were referred internally to

OIG for resolution or information, and

pertained to allegations of fraud, waste,

abuse, and mismanagement, or violations

of health and safety rules;

◆ thirty-four percent were referred to the

Inspection Service and involved allegations of criminal activity, including

threats of violence, mail theft, vandalism,

or mail tampering;

◆ eleven percent were customer service

matters that were referred directly to the

Postal Service Consumer Advocate; 

◆ forty-five percent were related to miscellaneous requests for information such as

ZIP Codes, postage meters, and other

Postal Service-related matters; and

◆ two percent were related to operational

and human resource issues that were

referred to Postal Service management.

The OIG Hotline is staffed from 7:00 a.m.

to 7:00 p.m., Eastern Time, Monday through

Friday (except federal holidays). Calls can be

made 24 hours a day, 7 days a week. Threats

The OIG Hotline poster must be posted in all

Postal facilities. 
and any other potentially violent work situations are routed immediately to the Postal

Police Control Center for action 24 hours a day

either by an OIG Hotline analyst or through a

caller-directed menu system. Anyone interested in contacting the Hotline can call, tollfree, 1-888-USPS-OIG (1-888-877-7644);

write to the United States Postal Service, OIG,

ATTN: Hotline, 1735 North Lynn Street,

Arlington, VA 22209-2020; email the OIG at

hotline@uspsoig.gov; or fax information tollfree to (866) 756-6741.

REVIEWING LEGISLATION AND

REGULATIONS

As required by the Inspector General Act,

the OIG monitors legislative and regulatory

developments to advise Congress and the

Governors of the impact such legislation and

regulations could have on Postal Service programs and operations. During the six-month

period, the OIG evaluated 51 legislative proposals and 31 regulatory initiatives. Highlights of

the legislative and regulatory proposals are

included at the end of the appropriate section

that describes the OIG and the Inspection

Service reviews performed in the last six

months.

FREEDOM OF INFORMATION

AND SUBPOENA REQUESTS

The OIG responds to many requests for

reports and other information under the

Freedom of Information Act. In addition, the

Inspector General is authorized under the

Inspector General Act to issue subpoenas for

audits and investigations, and in support of

selected investigations for the Inspection

Service. In the last six months: 

◆ The OIG received 87 requests for information, 69 that the OIG could respond

to—8 were answered in full, 1 was withheld totally, 53 were partially withheld, 1

was referred to the Inspection Service,

and 6 were referred outside the OIG.

The OIG issued 188 subpoenas—137

supporting Inspection Service

investigations and 51 supporting OIG

investigations. 

To comply with the Electronic Freedom

of Information Act, the OIG redesigned

its webpage -www.uspsoig.gov - to allow

the public easy access to its reports.

OIG reports that have been released can

be found by clicking on “Audit &

Management Advisory Reports” or

“Freedom of Information Act” on the

OIG webpage. The webpage also contains the OIG Freedom of Information

Act Reference Guide and links to other

useful reference material pertaining to

disclosure of information, as well as

instructions on requesting OIG reports

that are not posted on the webpage.

INTERNAL COMMUNICATIONS

In addition to responding to official

requests by Congress and the Governors for

information, the OIG responds to Postal

Service management and other agency requests. 

RESPONDING TO MANAGEMENT

REQUESTS FOR OIG REVIEWS

The OIG is committed to providing timely

and accurate information and recommendations to Postal Service management. The OIG

asked Postal Service managers to identify operations and emerging issues that would benefit

from the OIG’s review. Their suggestions are

considered during the annual planning process

and, to the extent practical, are given priority

consideration for inclusion in the OIG’s Annual

Work Plan, which is summarized in the Goals

and Strategies section of this semiannual report.

This process creates a unique opportunity to

provide independent analysis and information

that will assist management officials in fulfilling

their responsibilities.

MONITORING COMPUTER

MATCHING REQUESTS FOR

POSTAL INFORMATION

Under the Privacy Act, a matching program is defined as any computerized comparison

involving the automated federal system of

records of two or more agencies. Information

contained in a system of records may be disclosed to a recipient agency for use in a computer matching program pursuant to a written

agreement between the source and recipient

agencies, and after publication in the Federal

Register. The Postal Service receives requests

from other government agencies for Postal

Service data that are used in computer matchPAGE44

The public can access electronic versions of OIG reports by visiting the OIG

webpage at www.uspsoig.gov

CUSTOMER SERVICE

◆

◆
PAGE45

ing programs for a variety of purposes, including

statistical studies and law enforcement activities. Pursuant to the Privacy Act, the Postal

Service Data Integrity Board reviews requests

for information needed to perform computer

matches. The Inspector General is a member of

the Data Integrity Board, along with the Postal

Service Vice President, Employee Resources

Management; Vice President, General Counsel;

Chief Financial Officer and Executive Vice

President, Finance; and the Chief Postal

Inspector. 

During this six-month period, the

Inspector General, as a member of the Data

Integrity Board, reviewed and approved the following requests for computer matching data

from the Postal Service.

◆ A request from the OIG to approve a

computer matching agreement with the

Department of Labor Office of Workers’

Compensation Programs to determine

whether current Postal Service automated and manual procedures for monitoring Federal Employees Compensation

Act benefit payments made to employees

who have returned to work are adequate;

and to identify those employees who may

have received dual benefits in violations

of the Act.

◆ Separate requests from state employment

agencies in Arkansas, Louisiana, Texas,

California, and North Dakota asking for

information to identify Postal Service

employees who are former students of the

respective education systems. Each state

will determine whether Postal job duties

of former students relate to their

education. 

SPECIALIZED SERVICES

USING COMPUTER FORENSICS 

The OIG Computer Forensics Team is

staffed by specialists trained and certified in the

seizure of computers and the recovery of electronic evidence. Their mission is to provide

technical support to extract data to help identify individuals who use computers for criminal

purposes, generally in one of three ways. First,

a computer may be the target of the offense. In

these cases, the criminal’s goal is to steal information from or cause damage to a computer.

Second, the computer may be a tool of the

offense. This occurs when an individual uses a

computer to facilitate some traditional offense,

such as fraud. Third, computers are sometimes

incidental to the offense but significant to law

enforcement because they contain evidence of

a crime.

PROVIDING POLYGRAPH

SERVICES

The OIG polygraph program aids criminal

investigators and is an effective tool to assist in

proving guilt as well as innocence. OIG polygraph examiners represent the OIG within the

polygraph community and on the Federal

Polygraph Executive Committee.

ASSISTING IN DATA ANALYSES

The OIG’s Computer Assisted Assessment

Techniques (CAATs) team uses automated

methods and tools to extract and analyze electronic data located on over 900 Postal systems

in support of OIG audit and investigative

efforts. The CAATs team has supported several

significant OIG efforts during this reporting

period, including:

◆ Collecting and analyzing telecommunications invoice data in support of the

Facilities Team, resulting in the identification and recovery of $9 million of

overcharges, with an additional $96 million in cost avoidance.

◆ Assisting the Health Care team in an

ongoing investigation in identifying over

31,000 fraudulent medical billing records

effecting over $2.6 million of billings to

date.

◆ Conducting extensive analysis of the

delivery confirmation program to support

the Delivery team in assessing the accuracy of delivery status information at five

Postal Facilities.

The OIG forensic staff provides technical

support to OIG auditors and investigators.
INSPECTION SERVICE

The Inspection Service has adopted

numerous initiatives to improve customer service. The Inspection Service alerts consumers

and businesses to current crimes by attracting

media attention to Postal crime trends, publicizing positive law enforcement accomplishments,

circulating media releases, and hosting crime

prevention presentations.

EXTERNAL COMMUNICATIONS

The Inspection Service is responsible for

communicating its law enforcement and crime

prevention achievements to the American public, Congress, the Postal Service, and the law

enforcement community.

PROVIDING CONGRESSIONAL

LIAISON 

Members of the Inspection Service

attended or testified at the following

Congressional hearings relating to Postal

Service and Inspection Service issues:

◆ The House Subcommittee on Treasury,

Postal Service, and General Government

sponsored a hearing that covered a wide

range of topics. Topics included H.R. 22,

the Within Worldwide Customs study,

Customs and the Postal Service’s handling of incoming mail, searching outbound mail without a search warrant,

Commercial Mail Receiving Agencies,

eCommerce, drugs in the mail, and personnel reduction.

◆ The Committee on Government Reform,

Subcommittee on Government

Management, Information and

Technology, sponsored a hearing that

focused on proposed legislation to establish a Commission for the

Comprehensive Study of Privacy

Protection.

◆ The Chairman, House Subcommittee on

Criminal Justice, Drug Policy and

Human Resources held a hearing on

drugs in the mail. The subcommittee

heard about the Inspection Service’s initiatives and stance on the U.S. Customs

Service’s efforts to search outbound mail

without warrants. The Inspection

Service’s efforts to restart a multi-agency

antidrug initiative were also highlighted.

The Deputy Chief Inspector for Criminal

Investigations testified at the hearing.

ENSURING CONSUMER

PROTECTION 

In an effort to maintain the integrity of the

mail and to ensure the confidence and trust that

government agencies, businesses, and Postal

Service customers place in the Postal Service,

the Inspection Service conducts mail fraud

investigations that focus on a variety of

schemes. Because of their complexity and farreaching implications, mail fraud investigations

are often conducted jointly with other federal

and local law enforcement agencies to take

advantage of the expertise of each agency and to

maximize resources. Postal Inspectors also work

with other law enforcement agencies and consumer groups in prevention efforts to raise

awareness of fraud. 

ANNUAL REPORT OF

INVESTIGATIONS 

The 1999 Annual Report of Investigations

of the Inspection Service was released in March

2000. The accomplishments described in the

report are intended to inform the Governors,

the Postmaster General, Postal Service managers, and employees about Inspection Service

activities and give greater insight into the value

and benefits provided by the Inspection Service.

SPECIALIZED SERVICES

PROVIDING FORENSIC SERVICES 

Inspection Service forensic analysts provide expert examinations and testimony on evidence submitted by Postal Inspectors for

document, fingerprint, chemical, and physical

evidence analyses. Laboratory personnel are

available to respond to the most critical criminal investigations of violent crimes to assist in

processing and evaluating evidence. During

this reporting period, over 655 sets of fingerprints were matched on Automated Fingerprint

Identification System searches yielding 59 identifications. 

USING TECHNICAL SERVICES 

Technical services personnel assist and support field division staff in the acquisition and

use of various sophisticated equipment and services to make their job easier and safer. The

PAGE46 CUSTOMER SERVICE

DID YOU 

KNOW?

Are mailboxes considered

federal property? 

Yes. Federal law (18 USC §

1705) makes it a crime to

vandalize mailboxes (and to

injure, deface, or destroy any

mail deposited in them).

Violators can be fined up to

$250,000 or imprisoned for up 

to three years for each act of 

vandalism.
PAGE47

unit utilizes Postal Inspectors, security technicians, and communications specialists to meet

program objectives. Programs include radio and

electronic surveillance and mail screening.

Information relating to each program follows:

◆ Installed electronic surveillance equipment to assist Postal Inspectors in identifying suspects in an identity takeover and

subsequent murder.

◆ Installed long-range surveillance cameras

to transmit video footage via microwave

to Postal Inspectors observing an individual suspected to have filed fraudulent

workers’ compensation claims.

◆ Screened over 500 pieces of mail at a

judicial conference of federal judges,

which was considered high-risk because

two judges under the U.S. Marshal’s protection received threats. One suspect

package was identified and subsequently

cleared by Postal Inspectors.

PROVIDING POLYGRAPH

SERVICES 

Polygraph examinations have proven effective in resolving cases involving employee

assaults, registered and other mail thefts, allegations of assault, and misappropriation of Postal

funds or property. An example of effective use

of polygraph examinations follows:

◆ An audit of a post office disclosed a discrepancy in accounting records of a

postal clerk. A polygraph examination of

the clerk regarding the discrepancy led to

the clerk admitting to “borrowing” funds

from the Postal account. The clerk also

admitted to altering accounting records

to cover missing stamp stock. 

RECOVERING DIGITAL EVIDENCE 

Inspection Service personnel also preserve,

access, retrieve, and recover evidence stored on

computers, and conducts forensic examinations

of audio and video media. This reporting

period, the Inspection Service received 141 new

requests and completed 23 requests. Examples

of the use of digital evidence follow:

◆ Program managers and analysts nationwide assisted in searches related to fraud

in the insurance settlement industry.

Postal Inspectors and program managers

are continuing to assist with processing

this data.

◆ Analysts provided testimony in federal

court relating to an individual’s use of a

personal computer to commit identity

fraud and pass counterfeit checks. The

individual was found guilty. 
PAGE48 CUSTOMER SERVICE
OFFICE OF INSPECTOR GENERAL

Accepting and Processing

Transportation

Delivery

Marketing

Legislative and Regulatory Reviews

INSPECTION SERVICE

Mail Theft

Service Investigations

PAGE 49

Performance Reviews
OFFICE OF INSPECTOR

GENERAL

To deliver world-class service, businesses

and government agencies must excel in

performing their core business processes.

For the Postal Service, these core business

processes and systems encompass accepting,

processing, transporting, and delivering the mail

as well as marketing postal products and services

worldwide. During the past six months, the

OIG has completed 24 reviews of key and

emerging issues relating to the Postal Service’s

performance of core business processes. The

reviews identified opportunities to save about

$84 million during current and future years. 

ACCEPTING AND PROCESSING

On average, over 650 million pieces of mail

are accepted each day by the Postal Service in a

variety of ways, including collections from more

than 300,000 blue collection boxes and residential and business collection mailboxes. Express

Mail, First-Class Mail, and some Priority Mail

and periodicals are sorted at the more than 300

processing and distribution plants, while

Standard Mail is generally handled at the

21 bulk mail centers. In order to ensure timely

and accurate delivery of mail, accepting and

processing procedures must be state-of-the-art.

Situations that result in delayed mail processing

must be vigorously evaluated and the underlying causes must be promptly resolved. The

Postal Service continues to explore ways to

enhance the acceptance and processing of mail

through innovative automation. During the

past six months, the OIG issued seven reviews

in the accepting and processing area. Some of

the more significant audits are discussed below.

ROBOTIC TRAY HANDLING

EQUIPMENT WAS NOT

OPTIMIZED

The OIG audited the $37.7 million

pedestal robot system designed to lift bundled

letter mail trays to containers for dispatching.

The audit disclosed that 24 of 42 facilities could

not achieve the full benefits of the robot

because they lacked tray-feeding mechanisms

that were essential to its success. Although this

project was an organizational initiative, some

managers either refused to install or removed

the pedestal robot because funding was not provided for the tray feeding mechanisms.

Additionally, 18 managers spent an additional

$7.2 million to install tray-feeding mechanisms

to complete the system. The audit also disclosed that facility managers did not consistently capture and retain operational data on

system performance needed to assess the benefits of the robots. The OIG recommended, but

management did not agree, that a tray feeding

mechanism was necessary for every robot.

However, management agreed to form a task

force to identify where tray feeding mechanisms

could be installed, which met the intent of our

recommendation. The OIG also recommended

and Postal Service management agreed to

ensure that system performance data is retained

and analyzed to assess the impact on mail processing operations. (OIG AC-AR-00-004)

REVENUE ASSURANCE PROCESS

COULD BE IMPROVED

As a result of a congressional request, the

OIG audited the Postal Service’s revenue assurance process to determine whether the Postal

Service addressed government and business

mailers’ concerns about the identification, adjudication, and collection of revenue deficiencies.

The revenue assurance process allows postal

managers to identify lost revenue resulting from

misclassified and uncollected postage and fees.

The audit disclosed that revenue deficiency

assessments were issued up to two years after

mail acceptance and sometimes were attributable to incorrect information provided by postal

employees. The audit also showed that the

Postal Service did not place enough emphasis

on preventing and correcting deficiencies and

devoted substantial resources to the collection

of immaterial deficiencies. While the Postal

PAGE50 PERFORMANCE REVIEWS

This section highlights audits, reviews,

and investigations performed by the OIG and

the Inspection Service in the Performance

area. Report numbers are shown in parentheses after the narrative, as appropriate. Also,

the OIG legislative and regulatory reviews are

included at the end of this section. In order to

differentiate the work reported by the OIG

and Inspection Service, the pages containing

the work reported by the Inspection Service

have been color screened.

The OIG evaluated the performance of

the robotic tray handling system.
Service started several initiatives to address

mailers’ concerns, such efforts did not fully

address all the issues. The OIG recommended

and Postal Service management agreed to train

mail acceptance employees, provide mailers

with a notice of problems and recommended

solutions, and revise revenue deficiency instructions. However, Postal Service management

did not agree with OIG’s recommendation to

develop a comprehensive management information system and to realign the revenue assurance reporting structure within districts. The

OIG and Postal Service management plan to

resolve the recommendation through the audit

resolution process. (OIG AC-AR-00-003)

PREVENTIVE MAINTENANCE

MAY NOT ALWAYS BE

PERFORMED 

At the request of the Postal Service’s Chief

Operating Officer and Executive Vice

President, the OIG audited the Preventive

Maintenance Program for mail processing

equipment to evaluate the data included in the

maintenance management information system

and to determine whether preventive maintenance was performed as scheduled. The

Preventive Maintenance Program is designed to

improve and prolong equipment life, avoid

unplanned maintenance activity, and decrease

the overall maintenance costs. The audit disclosed that the system did not always provide

reliable data necessary to successfully manage

this program. As a result, Postal Service officials could not ensure that preventive maintenance was always performed as scheduled, mail

processing interruptions were minimized, and

unsafe working conditions were avoided. The

OIG recommended and Postal Service management agreed to evaluate the current maintenance reporting and scheduling system and

assess its usefulness. (OIG AC-AR-00-001)

PROCESSING OF INTERNATIONAL MAIL NEEDS IMPROVEMENT

The Postal Service established a network

of International Service Centers to process

international mail. For FY 1999, the Postal

Service reported that it received $1.6 billion

from international mail services, which

accounted for 2.7 percent of the $60.4 billion in

total revenues. The OIG conducted two audits

of international mail as follows:

◆ In the first audit, the OIG assessed the

condition of international mail, determined the accuracy of mail condition

reports, and evaluated the operational

status of a new International Service

Center. The review disclosed that over

200,000 pieces of international mail,

some of which was unprotected, rain

soaked, and soiled, was delayed and/or

unprocessed for several days to three

weeks. In addition, mail condition

reports did not include accurate quantities or the age of mail on-hand. Also,

the new International Service Center

Network was not ready to accept and

process mail. As a result, customer complaints increased from about three per

week to three per day. The OIG recommended and Postal Service management

agreed to stage and house mail in covered areas, and that the new International Service Center would be responsible

for processing all international mail. 

(OIG AC-MA-00-002)

◆ The OIG’s second audit assessed the

process of establishing International Service Center Networks and the impact of

the Economic Value Added Variable Pay

program on the processing of international mail. The audit of this $535 million project disclosed that Postal Service

management significantly revised the

project scope without requesting Board

of Governors approval. The audit also

determined that international mail was

not considered in determining manager

performance awards under the Economic

Value Added Variable Pay program. The

OIG recommended and Postal Service

management agreed to modify the project funding request to reflect all significant scope changes and report these

modifications to the Board of Governors.

Management also agreed to examine the

development of goals and measurement

systems for international mail.

(OIG AC-AR-00-005)

TRANSPORTATION

Transportation of mail is a vital part of the

Postal Service’s mission of binding the nation

together by providing prompt, reliable, effiPAGE51

Examples of unprocessed, unprotected,

and damaged international mail identified

during an OIG audit. 
cient, and universal mail delivery. To fulfill this

mission, the Postal Service spends in excess of

$4.4 billion annually to transport mail by air,

rail, and highway transportation. Most transportation is provided by contractors, however,

the Postal Service operates its own trucks for

some highway routes. During the past six

months, the OIG performed five transportation-related audits, the most significant of

which are highlighted below:

PROPOSED CHRISTMAS AIR

NETWORK COULD SAVE AN

ADDITIONAL $8 MILLION

Based on a request from Postal Service

management, the OIG audited the dedicated

Christmas Air Network to evaluate its effectiveness and potential for cost savings. This

$137 million dedicated network is contractoroperated and is intended to provide consistent,

timely, and reliable two-day service during the

Christmas season. The audit identified opportunities to achieve an additional $8 million in

savings annually beyond that being proposed in

a current management initiative. The audit

also offered an alternative plan that selectively

replaced air routes between origin and hub, or

hub and destination, without bypassing the

Christmas hubs. The Postal Service expressed

concern that the OIG’s plan did not meet the

same parameters as their plan; however, they

agreed to fully analyze the OIG’s proposal for

potential implementation during Christmas

2001. (OIG TR-AR-00-011)

EXPENDITURES FOR HIGHWAY

TRIPS COULD BE REDUCED

During this reporting period, the OIG conducted two audits of expenditures for extra

highway trips: one audit for a facility in the

Southwest Area and one audit in the Mid

Atlantic Area. The audits determined that the

Postal Service could reduce its expenditures by

using the proper equipment to optimize trailer

space, increasing oversight of transportation

operations, and ensuring that expenditures are

charged to the correct facilities. In addition, in

the Mid Atlantic Area, the OIG determined

that three major processing centers could save

about $2.5 million over five years by eliminating

trips to move unprocessed mail and equipment

and by discontinuing the payment of special

rates for route diversions. Postal Service management agreed with OIG’s recommendations

to charge extra trip costs to originating centers,

provide adequate equipment, conduct dispatch

reviews, renegotiate diversion rates, and use regular trips for transporting equipment. 

(OIG TR-AR-00-008 and 

OIG TR-AR-00-009)

IMPROPER EXECUTIVE USE OF

CHAUFFEURS AND POSTAL

VEHICLES 

The OIG audited the use of chauffeurs and

Postal vehicles by Postal Service executives to

determine whether the executives complied

with federal law and postal policy. The audit

disclosed improper use of official vehicles and

chauffeurs involving nine executives. These

misuses continued over prolonged periods

because controls over vehicle use, such as daily

logs, were either inadequate or nonexistent.

The OIG recommended and Postal Service

management agreed to implement controls over

administrative vehicles. In addition, management advised the OIG that they would update

current guidance emphasizing federal law and

postal policy. Further, the OIG provided a separate letter requesting that the Deputy

Postmaster General take administrative action,

including restitution, as appropriate. 

(OIG TR-AR-00-010)

DELIVERY

Universal service—delivering mail to

everyone, everywhere in America, at uniform

rates—is the cornerstone of the Postal Service’s

mission. To fulfill this mission, the Postal

Service developed a delivery network of approximately 233,000 mail routes that are serviced by

nearly 300,000 letter carriers and 200,000 delivery vehicles. During FY 1999, the Postal

Service delivered over 200 billion pieces of mail

to 130 million homes and businesses—an average of 1,500 pieces of mail for every household

and business in America. During the last six

months, the OIG issued the following report:

MAIL DELIVERY DELAYS IN THE

SOUTHWEST AREA 

In response to an employee allegation, the

OIG audited mail delays at three Southwest

Area postal facilities and found 75,000 pieces of

unprocessed time-sensitive mail, such as tax

PAGE52 PERFORMANCE REVIEWS

The OIG audited the Postal Service’s 

use of highway contractors to transport mail.
PAGE53

documents, insurance policies, and medical and

educational information. Mail accumulated

because managers did not complete daily

reviews. The audit also identified uncollected

postage and fees caused by managers not reviewing accumulated mail on a daily basis to ensure

proper processing and delivery.

The OIG suggested and Postal Service

management agreed to take immediate action

to correct these deficiencies. The OIG also suggested and management agreed to determine

whether the conditions observed during this

review existed in other Southwest Area facilities. (OIG DE-MA-00-001)

MARKETING 

The Postal Service operates in a competitive environment. The Postal Service’s ability

to maintain or increase its market share is essential to provide universal service at affordable

rates. During this reporting period, the OIG

performed eight reviews of marketing, including

stamp operations. The most significant marketing-related reviews are highlighted below: 

REVENUES AND COMMISSIONS

PAID TO A SALES FORCE

CONTRACTOR COULD NOT 

BE VERIFIED

The OIG audited the Postal Service’s use of

a sales force contractor to sell Postal Service

expedited mail products to small and mediumsized businesses. The audit disclosed that the

Postal Service paid the contractor over $5 million in commissions based on unverified

reported revenue. The revenue could not be

verified because the Postal Service did not have

an accurate system to determine whether the

number of products reported by the contractor

were actually mailed through the Postal

Service. The OIG recommended and Postal

Service management agreed to recover commissions for unsupported revenues, establish controls to ensure contractor-reported revenue

increases are verified, and limit program expansion until internal controls are established. 

(OIG MK-AR-00-002)

REVENUES FROM STAMP

FULFILLMENT SERVICES COULD

BE INCREASED

The OIG audited Stamp Fulfillment

Services and determined that the Postal Service

could increase revenues by $6 million annually

by charging the full rate of shipping and handling costs for philatelic products sold by mail,

telephone, or the Internet. In addition, the

OIG found that the Stamp Fulfillment Service’s

performance measures were generally consistent

with industry standards and accurately assessed

fulfillment operations with one exception.

Improvements were needed to integrate the

order entry and automated fulfillment systems

to provide consistent and timely processing of

customer orders to help ensure organizational

goals always meet industry standards. 

The OIG recommended that Postal

Service management increase shipping charges

to cover actual costs, establish order entry processing goals that meet industry standards, take

steps to process orders more efficiently, and

expand access to customer service representatives. Management agreed to reevaluate shipping and handling charges, but did not agree to

establish goals for order entry that are consistent

with industry standards. Further, management

agreed with the remaining findings and recommendations and proposed responsive solutions

to address concerns identified in the report.

(OIG MK-AR-00-001)

POSTAL RATEMAKING PROCESS

SIMPLIFIED FOR CUSTOMERS

The OIG issued a report on the Postal

ratemaking process to provide interested readers

with an easy to read guide describing the complex ratemaking process. The process is built

around an independent Postal Rate

Commission, which receives proposed new

rates from the Postal Service Board of

Governors. The Commission conducts formal

hearings, submits opinions, and recommends

rates for postal products and services to the

Governors for final approval. 

(OIG MK-LA-00-002)

LEGISLATIVE AND REGULATORY

REVIEWS

ENACTED LEGISLATION

Public Law 106-253 - Semipostal

Authorization Act 

During this reporting period, the President

signed into law the Semipostal Authorization

Act. The Act authorizes the Postal Service to

The OIG reviewed the operations of the

Postal Service’s Philatelic Center located

in Kansas City, Missouri. 
PAGE54

issue semipostal stamps as fundraisers for various

charitable causes, and extends the Breast

Cancer Research Stamp until July 29, 2002.

Semipostals are stamps that sell for more than

face value. The difference between the face

value and the stamp’s selling price, less the costs

of producing and distributing the stamp, is

given to the cause depicted on the stamp. The

OIG has evaluated the Breast Cancer Research

Stamp program, and expects to review future

semipostal programs to ensure their integrity

and efficiency.

PROPOSED LEGISLATION

Semipostal Stamp Legislation

Since OIG’s last Semiannual Report to

Congress, several bills providing for the

issuance of semipostal stamps have been introduced in Congress, as follows:

◆ H.R. 5269 -

National Parks Preservation Stamp Act

◆ H.R. 5043 - 

Book Stamp Act

◆ H.R. 4872 / S. 2870 - 

Vanishing Wildlife Stamp Act

◆ H.R. 4492 / S. 2932 - 

Establishment of a World War II

Memorial 

◆ H.R. 4659 - 

Stamp Out Domestic Violence Act 

of 2000 

◆ H.R. 4526 - 

American Battle Monuments 

Commission

Each of these bills requires the Postal

Service to establish a special rate of postage no

higher than 125 percent of the current FirstClass rate. A stamp for this amount would then

be issued to publicize a worthy cause. Postal

patrons who desire to support the cause

depicted on the stamp would pay the higher

rate to purchase the stamp. The Postal Service

would give the charitable organization the

amount it received over the First-Class rate, less

any reasonable costs it incurred in printing, selling, and distributing the stamps. 

The OIG has conducted an audit that

raised concerns about the Postal Service’s ability to accurately account for its costs in producing and marketing semipostal stamps. The

Postal Service needs adequate controls in place

to ensure that other ratepayers are not subsidizing the costs for semipostal stamps.

H.R. 4636 / S. 2686 -

Nonprofit Relief Act of 2000

This legislation would modify rates on

nonprofit mailings. In January 2000, the Postal

Service Board of Governors proposed postage

rate increases for all classes of mail. The rate

request is currently pending before the Postal

Rate Commission. Under the current rate

request, rates for nonprofit mail would surpass

rates for corresponding commercial mail. The

Postal Service has proposed legislation to correct the rate anomaly. The OIG will consider

including appropriate steps in future reviews to

develop independent and objective information to assist Congress in its decisionmaking. 

PERFORMANCE REVIEWS

DID YOU 

KNOW?

Are all Hotline complaints confidential? 

The identities of the people who

make complaints or provide information regarding alleged wrongdoing are kept confidential unless

the individual gives permission for

disclosure or if disclosure is

required.
PAGE55

The Inspection Service enforces over

200 statues related to crime against the

U.S. mail, the Postal Service, and Postal

employees and customers.

INSPECTION SERVICE

The Inspection Service is responsible for

investigations that ensure the sanctity of the

mail. This section describes some of its work in

the areas of mail theft and service investigations. 

MAIL THEFT

Postal Inspectors are committed to reducing mail theft to maintain the public’s confidence in the Postal Service and preserve the

sanctity of the mail. Postal Inspectors are currently working with major mailers to prevent

mail theft and related problems. During this

reporting period, Postal Inspectors arrested

nearly 2,800 employees and non-employees or

contractors for mail theft. Mail theft targets

include not only items of obvious value in the

mail, such as jewelry, computers, cash, credit

cards, and checks, but mail containing personal

and financial information. The following are

examples of reviews reported in the last six

months.

NON-EMPLOYEE MAIL THEFT

Thieves frequently concentrate on targets

that offer a large volume of mail. Inspection

Service efforts are continuing to lessen the vulnerability of such targets to attack. There has

been a 48 percent decrease in collection box

attacks over the same period last year. Examples

of case activity related to mail theft by nonemployees are highlighted below:

◆ Members of a Mail Theft Task Force

searched the residence of a gang leader

and recovered approximately 2,500 pieces

of mail. Included in this mail were over

100 credit cards and thousands of blank

personal checks. Postal Inspectors developed information during the search indicating that the gang was responsible for

nearly 75 attacks at postal facilities in the

Texas area. To date, one member of the

gang has been arrested and warrants are

pending for others.

◆ Members of an organized crime task force

arrested a foreign national at a commercial mail receiving agency. The individual who was arrested assumed the identity

of a resident and opened several fraudulent credit card and business checking

accounts. Through the use of this scam, 

this individual was able to obtain funds

exceeding $150,000.

◆ Postal Inspectors and Federal Bureau of

Investigations agents arrested two foreign

nationals for selling credit card convenience checks that were stolen from the

mail. The arrests were based on information obtained through undercover buys of

convenience checks by federal law

enforcement agents. These convenience

checks, which were previously reported

stolen prior to delivery to postal customers, led to the arrest of a postal

employee for mail theft. The employee

admitted to stealing credit cards from the

mail and selling them to the suspects.

The investigation further revealed the

two foreign nationals who were arrested

had been associated with credit card convenience check losses that exceeded $3

million.

EMPLOYEE MAIL THEFT

The overwhelming majority of Postal

Service employees work conscientiously to

move the nation’s mail to its proper destination,

and they take their responsibilities seriously.

Unfortunately, a small number of employees

abuse the public’s trust. It is the job of the

Inspection Service to identify these individuals

and take steps to have them prosecuted and

removed from the Postal Service. An example

of case activity related to mail theft by employees follow:

◆ Postal inspectors arrested a mail handler

at an airmail facility for theft and possession of U.S. Treasury checks. The

employee admitted to selling checks after

they were obtained from an airline

employee who had access to mail destined to various states throughout the

United States.

SERVICE INVESTIGATIONS

Service investigations are conducted to

address localized service-related concerns or to

verify the accuracy and timeliness of reports of

mail processing conditions or delivery services.

For example, the Inspection Service reviewed

the Census 2000 mailing at selected sites and

identified opportunities for improving the efficiency of the Census 2010 mailing.
PAGE56 PERFORMANCE REVIEWS
Financial Management

Reviews

OFFICE OF INSPECTOR GENERAL

Financial-Related Reviews

Contracting and Facilities Reviews

Legislative and Regulatory Reviews

INSPECTION SERVICE

District and Installation Financial Audits

Revenue Investigations

Embezzlements

PAGE 57
OFFICE OF INSPECTOR

GENERAL

The Postal Service is a $65 billion business that relies on strong financial management controls to maximize revenue

and minimize costs. In the past six months, the

OIG has completed 130 financial management

reviews. These efforts resulted in about $116

million in questioned costs and funds put to better use. In addition, the OIG has conducted

investigations resulting in 3 convictions, 13

arrests, 11 indictments, and investigative recoveries and restitution of about $10 million.

These projects add value to the Postal Service

by identifying opportunities for cost savings and

improving financial management, contracting,

and facilities practices.

FINANCIAL-RELATED AUDITS 

Financial-related audits examine areas that

have significant financial implications and offer

the Postal Service an opportunity to save

resources. The OIG has taken a proactive

approach to identify areas that offer potential

cost savings and improve Postal operations. In

the past six months, the OIG has completed

over 44 financial-related audits and investigations. The most significant reviews and investigations are highlighted below:. 

EXECUTIVE RELOCATION

EXPENSES SCRUTINIZED

In response to requests by Congress and the

Board of Governors, the OIG conducted several

audits on relocation benefits paid to Postal

Service executives and employees. Two OIG

reviews disclosed that relocation payments were

not in the best interest of the Postal Service.

For example, the Postal Service:

◆ Paid approximately $250,000 in relocation benefits to two senior executives

who moved 20 miles with no change in

job location. The OIG questioned

whether these relocation benefits were

used to augment the salary of these executives and exceeded the statutory pay

cap. As a result, the Board of Governors

recently passed a resolution that

strengthened controls by adding relocation benefits to the list that require

Board approval. (OIG FR-FA-00-010) 

◆ Paid its executives miscellaneous relocation expenses of $10,000 or $25,000

without having to document expenses

incurred. Through benchmarking, the

OIG found that the Postal Service paid

executives up to five times more for miscellaneous expenses than private industry

and other government agencies. Postal

Service management agreed to develop

and modify criteria used for requesting

payments and to review the expense

allowance for miscellaneous payments.

However, management did not agree to

withhold miscellaneous payments until

after the executive relocates. The OIG

and the Postal Service plan to resolve

this recommendation through the audit

resolution process. (OIG FT-AR-00-001)

◆ In addition, another OIG audit found

that the Postal Service made equity loss

payments to executives in accordance

with postal relocation policy. 

(OIG FT-AR-00-004)

CONTINUED INVESTIGATION OF

DINERO SEGURO PROGRAM

LEADS TO MORE ARRESTS

Dinero Seguro (translation: “Sure Money”)

is a program that enables customers to wire

money electronically from 870 post offices in

California, Texas, and Illinois to recipients at

any Bancomer (the Postal Service’s Mexican

banking partner in this program) branch in

Mexico. Following the audit of the Dinero

Seguro money transfer program, which was

reported in the previous Semiannual Report to

Congress, OIG personnel continued using

sophisticated computer analysis techniques to

PAGE58

This section highlights audits, reviews,

and investigations performed by the OIG

and the Inspection Service in the financial

management area. Report numbers are

shown in parentheses after the narrative,

as appropriate. Also, the OIG legislative

and regulatory reviews are included at the

end of this section. In order to differentiate the work reported by the OIG and

Inspection Service, the pages containing

the work reported by the Inspection Service

have been color screened. 

PAGE58 FINANCIAL MANAGEMENT REVIEWS

DID YOU 

KNOW?

Why does the OIG include

inspection Service activity in

the Semiannual Report to Congress? 

Including Inspection Service

activity in the Semiannual Report

to Congress provides a complete

accounting to stakeholders on

efforts within the Postal Service

to combat fraud, waste, abuse, and

mismanagement.
PAGE59

OIG identified unsecured money 

order imprinters at a Material 

Distribution Center.

review more than 500,000 transactions to identify suspicious activity. The review identified a

series of suspicious transactions by various

senders. This led to a joint investigation by the

OIG and other federal law enforcement agencies, which uncovered a scheme involving drug

traffickers using the Dinero Seguro money

transfer program to wire drug proceeds from the

United States to Mexico. During this reporting

period, four additional arrests have been made

for distribution of controlled substances, conspiracy, and money laundering. The following

items were seized: 40 kilograms of cocaine, over

15 kilograms of methamphetamines, 2 vehicles,

and over $27,000 in cash. 

CONTROLS OVER MONEY

ORDERS NEED TO BE IMPROVED

During FY 1999, the Postal Service sold

approximately 221 million money orders to its

customers. The OIG conducted the following

audits to assess controls over money orders:

◆ The OIG audited internal controls over

the accounting for blank money order

destruction at an accounting service center. The OIG found that center personnel did not promptly update the records

showing the destruction of blank money

orders. As a result, the opportunity to

detect fraud was delayed at least 21

weeks. (OIG FT-FA-00-001)

◆ The OIG audited controls over the storage of blank money orders and imprinters

and found they were not properly inventoried or safeguarded. Postal Service

management agreed to implement better

internal controls over money orders.

(OIG FT-FA-00-001)

◆ An OIG audit disclosed the Postal Service’s processes and procedures for international list service money orders did not

comply with the Bank Secrecy Act,

which was enacted to deter money laundering. Specifically, controls and procedures were not in place to ensure that

personnel complied with requirements

for recordkeeping and reporting to the

Department of the Treasury. The OIG

recommended and Postal Service management agreed to restrict expansion of

the service until it is compliant with the

Bank Secrecy Act.

(OIG FT-AR-00-002)

FINANCIAL OPINION WORK

CONTINUING

The OIG is continuing to conduct financial opinion work at three accounting service

centers and the headquarters. These audits support the independent public accounting firm’s

overall opinion of the Postal Service’s financial

statements. The results of the adjustments will

be reported in the next Semiannual Report to

Congress. In addition, the OIG served as cocontracting officer’s representative with Postal

Service Finance for the work performed by the

independent public accounting firm.

COST AND REVENUE 

ANALYSIS DATA GENERALLY 

IN COMPLIANCE

The OIG conducted audits to observe statistical tests for the Postal Service’s FY 2000

Cost and Revenue Analysis in 33 districts. The

tests are used to validate the costs and revenues

supporting Postal rates. Although the OIG

found that the data collectors generally conducted the tests in accordance with postal policies and procedures, 17 had test errors and

minor weaknesses in management controls.

The OIG issued individual reports to address

the errors and weaknesses noted and will issue a

summary report providing Postal Service management with recommendations to address systemic issues. (OIG FF-FA-00-001 through 

OIG FF-FA-00-033)

OIG ASSISTS WITH COMBATING

POTENTIAL TERRORISM

The OIG assisted the Federal Bureau of

Investigations and the Immigration and

Naturalization Service in the investigation of

individuals suspected of smuggling cigarettes to

raise money for the Hezbollah, an armed Islamic

group in Lebanon that the United States has

designated as a terrorist group. The group put

aside several thousand dollars in cash for the

Hezbollah from the trafficking of cigarettes and

from fund raising activities. The investigation

led to the execution of 18 search warrants and

17 arrests. The individuals were charged in federal court with mail fraud, money laundering,

and immigration violations.

OIG financial-related reviews support the

external auditors opinion.
PAGE60

2 Incurred cost audits evaluate the reasonableness of costs incurred by contractors; proposal audits evaluate the reasonableness of contractor cost estimates; defective pricing audits are performed to determine whether contract prices significantly increased because of defective contractor pricing data; and contractor systems, such as accounting, estimating, and billing systems are reviewed to determine their adequacy to account for contract costs.

TORT CLAIMANT ARRESTED AND

CHARGED WITH PERJURY

As a result of an OIG investigation, a tort

claimant was indicted on perjury charges stemming from a $1 million lawsuit the claimant

filed against the Postal Service. The claimant

filed the lawsuit as a result of a car accident with

a Postal vehicle. Although the claimant’s car

sustained only $63.55 in property damage, the

claimant later alleged physical and emotional

trauma totaling $1 million as a result of the accident. However, the claimant failed to disclose a

prior car accident occurring the month before in

which the claimant suffered substantial injuries.

Sentencing is pending. 

POSTAL CHECK DIVERTED FOR

PERSONAL USE

The OIG investigated the diversion and

alteration of a Postal Service check in the

amount of about $192,000 issued to a contractor. The investigation determined that the

check was diverted to an individual, altered

with a new payee name, and deposited into a

mutual fund account. Based on OIG investigative efforts, the corporation holding the mutual

fund account refunded the amount to the Postal

Service. 

BULK MAILER RETURNS POSTAL

SERVICE FUNDS

The OIG and Inspection Service investigated a bulk mailer to whom the Postal Service

inadvertently issued a check for about $32,000.

Bulk mailers are offered lower postage rates

based on the weight and number of pieces

mailed. These bulk mailers have an account

with the Postal Service in which funds are

deducted for postage. If there is a credit balance

in the account, the Postal Service can issue a

refund check to the mailer. In this case, the

Postal Service issued a check to the wrong

mailer and the mailer cashed the check. When

the Postal Service demanded the money back

via certified mail, the mailer signed for the mail

but made no attempt to contact the Postal

Service. Due to the investigative efforts of both

agencies, the mailer reimbursed the Postal

Service for the full amount.

CONTRACTING AND FACILITIES

REVIEWS

In FY 2000, the Postal Service purchased

$7.2 billion in supplies and services, equipment,

transportation, and facilities. Contracts for

these services included over $572 million in

noncompetitive purchases and $348 million in

credit card purchases. The Postal Service is also

one of America’s largest owners, developers, and

managers of real estate, committing over $1 billion in FY 2000 for repair, renovation, and new

construction of facilities, and paying $780 million in rent.

The OIG is responsible for contract audits

designed to assist Postal Service contracting

officers in determining fair and reasonable contract prices, as well as providing them with

reviews of contractor accounting systems. In

the past six months, the OIG conducted

86 reviews of contracting and facilities-related

issues with the assistance of a contract audit

agency, which specializes in pre-award and

post-award contract audits. Also, the OIG has

many open criminal investigations targeting

fraud and corruption in these areas. The most

significant contracting and facilities reviews are

highlighted below. 

CONTRACT AUDITS IDENTIFIED

OVER $56 MILLION IN

QUESTIONED COSTS

In the past six months, the OIG completed

47 contract audits, resulting in over $56 million

in questioned and unsupported costs. The

audits focused on whether contractors had: 

◆ Incurred costs and cost proposals that

were allowable and reasonable.

◆ Submitted defective pricing data. 

◆ Accounting and billing systems that were

adequate for allocating costs to the Postal

Service. 

◆ Estimating systems that were adequate for

preparing reasonable cost proposals. 

The chart in the margin shows the number of

audits, by type, completed in this reporting

period2

.

In addition to raising questions about costs,

the audits disclosed that some major Postal

FINANCIAL MANAGEMENT REVIEWS

7

14

5

16

4

1

DEFECTIVE 

PRICINGS

CLAIMS

PROPOSALS

INCURRED COSTS

SYSTEMS

OTHER

Types2 and Number of 

Contract Audits Initiated
PAGE61

Service contractors did not have adequate

accounting, estimating and billing systems.

Following is a summary of 11 significant contract audits completed in the last six months:

◆ Audits of three cost proposals submitted

by a contractor valued at $80 million

disclosed questioned and unsupported

costs of $15.1 million. The audit agency

also audited the contractor’s estimating

system and determined that it was not

adequate for developing reliable cost estimates due to a lack of written policies

and procedures, adequate cost development procedures, adequate training for

estimating personnel and independent or

self-governance quality assurance

reviews. The contractor agreed with

these findings regarding the estimating

system and agreed to correct the deficiencies. The OIG recommended that

the Postal Service insert a clause in any

contracts negotiated based on these proposals to allow the Postal Service to

recover excess costs if the contractor’s

actual costs were less than it had proposed. Postal Service contracting officers

were still in the process of determining

whether to withhold questioned costs

identified by these audits. 

(OIG CA-CAR-00-031,

OIG CA-CAR-00-041,

OIG CA-CAR-00-054, and

OIG CA-CAR-00-065) 

◆ An audit of a second contractor’s $294.1

million proposal disclosed $17.7 million

in questioned costs primarily due to

overstated materials and the costs of

purchased parts. The OIG again recommended that the Postal Service include a

clause in any negotiated contract based

on the proposal to allow recovery of

excess costs if it is later found that the

company’s actual costs were less than its

proposed costs. Postal Service contracting officers were still in the process of

determining whether to withhold

questioned costs identified by this audit.

(OIG CA-CAR-00-064) 

◆ An audit of another contractor’s $224.6

million proposal disclosed $10.6 million

in questioned costs. The company’s cost

and pricing data was considered inadequate because some of its cost estimates

were not based on proper budget data.

However, the proposal was prepared in

accordance with Postal procurement

requirements and is therefore considered

acceptable to negotiate a fair and reasonable contract price. Postal Service contracting officers were still in the process

of determining whether to withhold

questioned costs identified by this audit.

(OIG CA-CAR-00-055) 

◆ Four audits of about $2 million in costs

submitted for payment by a Postal Service construction contractor resulted in

the full amount being questioned as to

reasonableness and allowability because

the contractor did not have adequate or

complete accounting records or systems

to support the costs. Consequently, there

was no assurance that the contractor’s

costs were chargeable to the Postal Service. The Postal Service contracting

officer agreed with OIG’s recommendation to withhold payment of these costs.

(OIG CA-CAR-00-020,

OIG CA-CAR-00-022,

OIG CA-CAR-00-023, and 

OIG CA-CAR-00-025)

◆ An audit of a subcontractor’s proposal in

the amount of $3.3 million for three

million mail trays resulted in the full

amount of the proposal being questioned,

because the subcontractor refused to

provide records to support the proposed

costs. The Postal Service contracting

officer advised us that based on the audit,

the subcontractor was no longer being

considered as a source for the mail trays.

(OIG CA-CAR-00-051)

◆ A review of a contract initially issued for

$1.7 billion disclosed that the contractor

had no official estimating system in place

for preparing reasonable costs proposals.

At the end of this reporting period, the

OIG was reviewing the reasonableness

and allowability of additional cost claims

submitted by the contractor totaling

about $160 million. The OIG is also

working with Postal Service management to determine how much of an additional $265 million in claims from this

contractor will be audited.

DID YOU 

KNOW?

What is the OIG’s web address? 

The OIG’s web address is

www.uspsoig.gov. It also can be

accessed on the Postal web address,

www.usps.com, by first clicking on

“About USPS,” and then clicking

on “Office of Inspector General.”
PAGE62

TELECOMMUNICATIONS

CONTRACTOR PAYS AN

ADDITIONAL $9.2 MILLION

SETTLEMENT

An OIG investigation and review of a $3

billion telecommunications contract and the

contractor’s accounting and billing process

resulted in the Postal Service recovering

$9.2 million for outage credits3, overcharges,

and costs for defective and substandard materials and incomplete work during this semiannual

reporting period, bringing the total recoveries to

over $12.2 million. Also, Postal Service management agreed to implement OIG recommendations, which could avoid up to $96 million in

overcharges over the remaining eight years of

the contract. (OIG FA-MA-00-007)

$23 MILLION IN REPAIRS NOT

DETECTED PRIOR TO PURCHASE

An OIG audit, conducted at the request of

the vice president, Facilities, disclosed that the

Postal Service could have avoided $23 million

in roofing, heating, and air conditioning repairs

that were not detected at the time the building

was purchased for a Western Area processing

and distribution center. This occurred because

the Postal Service had not conducted the

required detailed engineering study before it

purchased the building. Postal Service management agreed to define the requirements for engineering studies and to establish controls to

ensure that required studies are conducted

before future acquisitions of major facilities. 

(OIG FA-AR-00-005)

USE OF INDUSTRY CONTRACT

MODIFICATION STANDARDS

COULD REDUCE COSTS

The OIG audited the Postal Service’s

major construction contracting process and

found the Postal Service incurred $19 million in

excess costs because it had not used industry

standards for modifying contract costs. These

standards require that modifications of the original contract price should not exceed 5 percent

for new construction and 15 percent for alteration projects. Postal Service management

agreed with the OIG’s recommendations to

identify the cause for contract modifications

and reduce the dollar amount of future modifications when possible. However, management

did not agree that $19 million could have been

saved because the modifications were necessary

to successfully complete the project. 

(OIG FA-AR-00-004) 

WARRANTY CLAIMS FOR $1.8

MILLION NOT SUBMITTED FOR

REIMBURSEMENT

An OIG audit of the Postal Service Tractor

Warranty Repair Program determined that the

Postal Service had not been reimbursed over

$1.8 million for warranty repair work performed

by its Vehicle Maintenance Facilities. Postal

Service officials stated that this occurred

because a Postal-wide claims processing system

had not been implemented due to computer

design and implementation problems. Postal

Service management agreed with the OIG’s recommendations to recover these costs as appropriate and to establish a system to ensure that

tractor repair costs under warranty are recovered

in the future. (OIG CA-AR-00-001)

2002 WINTER OLYMPICS

RENOVATION PLANS WERE

INCOMPLETE 

Based on the results of the OIG review of

the Atlanta Olympics facilities plan, Postal

Service management requested that the OIG

review the Western Area district facilities portion of the 2002 Winter Olympics Plan. The

audit disclosed that the costs for work to be performed at 24 facilities were not accurately represented in the project funding document.

Because the appropriate level of approval is

dependent upon the cost of the work, the project funding document may not have been

approved at the appropriate level. In addition,

the project was being implemented without a

purchase plan or project code and related costs

had not been properly identified. Postal Service

management agreed with the OIG’s recommendations to accurately report the facilities work

needed and related costs. 

(OIG FA-AR-00-002)

CONTRACTING OPPORTUNITIES

INCREASED FOR SMALL,

WOMEN-OWNED, AND

MINORITY BUSINESSES

In response to a request from the Ranking

Minority Member, House Postal Subcommittee,

FINANCIAL MANAGEMENT REVIEWS

3 Outage credits are amounts due the Postal Service because of system failures.
PAGE63

the OIG conducted a review of the Postal

Service’s process for award of $150 million in

advertising contracts. The review disclosed

that the Postal Service did not require companies to provide a plan to show how they would

subcontract their advertising work to provide

additional opportunities to minority companies. As a result of this review, Postal Service

management agreed to require companies to

submit these plans. Thus, contracting opportunities could increase for small, minority, and

women-owned businesses. Further, for the

$150 million in advertising contracts awarded,

management agreed to include a clause that

would allow the Postal Service to reduce contract prices as appropriate, based on OIG’s

audits of contractors’ cost proposals. 

(OIG CA-LA-00-001)

POSTAL MANAGERS INDICTED

ON MONEY LAUNDERING

CHARGES

A joint investigation by the OIG, the

Inspection Service, and the Internal Revenue

Service disclosed that two former Postal Service

managers devised a scheme to defraud the

Postal Service of several million dollars. The

Postal employees allegedly conspired with the

owner of two computer companies to submit

fraudulent invoices to the Postal Service for

computers and supplies not received. While

under investigation, the couple fled the United

States to Venezuela. The Inspection Service

working with the Venezuelan authorities apprehended them in Caracas where they had been

traveling under false Venezuelan identification

documents. The Venezuelan government

immediately deported them to the United

States where they were arrested in Florida. The

couple laundered almost a half million dollars

of their ill-gotten gains to banks in Venezuela

and the Bahamas. As of September 30, 2000,

the OIG has recovered over $496,000 in cash

from both countries. In addition, OIG special

agents recovered high-quality multi-carat diamond rings and earrings, gold necklaces, pearl

necklaces, expensive watches, gold coins, gold

pens, and imported crystal. As a result of the

international investigation, the couple was

indicted on conspiracy, money laundering, and

fraud charges.

ADDITIONAL $151,000

ADJUSTMENTS MADE TO

AUTOMATION CONTRACT

During an investigation into the production and use of a flat sorting machine, the OIG

identified potential overcharges pertaining to a

claim submitted by the contractor. After negotiations with contractor representatives, the

contract was reduced by $151,000. Including a

credit of $35,000, which was reported in the

previous Semiannual Report to Congress, the

total amount reduced to date is over $185,000.

CONTRACTORS’ CHARGES

QUESTIONED

The OIG conducted several investigations

and reviews that questioned contractor charges:

◆ An OIG investigation disclosed that due

to a discrepancy in billing rates, a

telecommunications company overcharged the Postal Service. The overcharges occurred as a result of the Postal

Service being billed for the contractor’s

commercial rates rather than contractual

government rates. The contract was

adjusted to reflect credit for the billing

discrepancy. 

◆ The OIG investigated an architectural

engineering company for billing the

Postal Service for work not performed.

The company agreed to settle the case by

reimbursing the Postal Service, including

interest for almost four years.

◆ An OIG investigation identified overpayments to a contract airline carrier

that charged the Postal Service incorrect

transportation rates on mail. As a result,

the airline reimbursed the Postal Service

for the entire amount.

CONTRACTORS

SUSPENDED/DEBARRED

Two OIG investigations reported the following contractor suspensions and debarments:

◆ As the result of a multi-agency task force

investigation led by the OIG, 35 environmental services contractors were suspended from doing business with the

government. The investigation revealed

that the contractor submitted false testing data on underground storage tanks to

the Postal Service, Department of

Defense, and other federal agencies. 

Some of the expensive jewelry items

seized by OIG agents in a fraud investigation.
PAGE64

◆ Based on a Congressional referral, the

OIG found that a contractor breached

the terms and conditions of its contract

for the construction of a new post office.

The contractor failed to adhere to generally acceptable construction and quality

control practices. The contractor was

debarred for three years from conducting

business with the Postal Service. 

TERMINATING FACILITY LEASE

COULD SAVE OVER $2 MILLION 

An OIG review confirmed allegations that

the Postal Service was renting a building under

a 20-year lease that was not being used. The

review disclosed that the Postal Service could

save over $2 million by terminating the lease for

the building, which had remained vacant since

lease inception. Postal Service management

agreed with the OIG’s recommendation and

requested approval to sublease the unused building. (OIG FA-MA-00-004)

OPPORTUNITY TO ENHANCE

INTERNAL CONTROLS OVER

PROPERTY DISPOSAL

At the request of a Postal Service

Governor, the OIG reviewed property disposal

at a Great Lakes Area postal facility and disclosed that Postal Service officials may not have

properly accounted for the property because

they had not conducted an inventory since

1990. In addition, the review identified opportunities to improve information on the location

of capital property. The results of the review are

being considered for a more comprehensive

property audit. (OIG FA-LA-00-002)

POSTAL MANAGER ARRESTED

FOR VEHICLE REPAIR SCAM

A Postal manager in the Northeast Area

was arrested by OIG special agents on embezzlement charges. Postal vehicles are usually

repaired by Postal vehicle maintenance facilities; however, vehicle maintenance managers

are authorized to have contractors perform the

work when necessary. The manager conspired

with a contractor to repair the family’s vehicles

at government expense. Between 1995 and

1998, the contractor inflated bills for Postal

vehicles by $87,000 to cover the costs of repairs

to the manager’s personal vehicles. Judicial

action is pending.

POSTAL CONTRACTS

TERMINATED FOR DEFAULT

An OIG investigation determined that a

contractor produced substandard cabinets for

the Postal Service that did not meet contract

specifications. As a result, eight contracts have

been terminated for default. The estimated loss

to the Postal Service is over $285,000. 

LEGISLATIVE AND REGULATORY

REVIEWS

During this reporting period, the OIG did

not identify any significant legislation or regulations affecting Postal Service financial management, contracting, and facilities areas. 

FINANCIAL MANAGEMENT REVIEWS
PAGE65

INSPECTION SERVICE

Within the financial management area,

the Inspection Service performed District

Accounting Office and financial installation

audits as well as revenue investigations and

embezzlement actions. (Note: As a result of

the Designation of Functions between the

Inspection Service and the OIG, the Inspection

Service will no longer perform financial audits

as of October 1, 2000.)

DISTRICT AND INSTALLATION

FINANCIAL AUDITS

The Inspection Service conducted District

Accounting Office audits to evaluate controls

over district accounts and the security over

district computer systems. Inspectors also

conducted financial installation audits to

review the adequacy of internal controls at

the installation level. During this reporting

period, the Inspection Service reported the

results of 175 financial installation and District Accounting Office audits. Two examples are noted below:

◆ A financial audit of a Processing and

Distribution Center identified deficiencies in trust fund management. The

audit identified a $498,000 variance in

accounting systems in trust funds for

postage due business reply mail. District

and local employees were unaware of the

variance, its source, or how long the

system had been out of balance. Postal

Service management agreed with the

findings and recommendations to

strengthen internal controls over the

management of customer trust funds.

◆ A financial audit of a Business Mail

Entry Unit identified over $14,000 in

revenue deficiencies. Postal Inspectors

found that procedures were insufficient

to ensure that mailing statements were

controlled, required reviews were conducted, bypass mailings were identified,

and revenues were collected. Improved

procedures and regular review of Periodicals, First-Class, and Standard Mail

would prevent revenue losses caused by

errors. Postal Service management

agreed with Inspection Service

recommendations and began an action

plan to improve internal controls and

collect revenue deficiencies.

REVENUE INVESTIGATIONS

The Inspection Service conducts revenue

investigations to help ensure that Postal Service

revenue is properly assessed and collected.

Priority is given to investigations of alleged

schemes to avoid payment of postage and to

identify, pursue, and seek prosecutive actions

against violators through civil, administrative,

and criminal remedies.

Postal Inspectors focus on revenue investigations where there is customer intent to

defraud the Postal Service. In the last six

months, there were 26 arrests and 9 successful

criminal prosecutions resulting from revenue

investigations. Also, Inspectors reported the

results of 16 revenue investigations during this

reporting period, which identified $27.2 million

in revenue deficiencies. Examples of revenue

investigations follow:

◆ The president and the production manager of a presort company were indicted

on charges of mail fraud. The indictment alleged that the two individuals

defrauded the Postal Service through a

series of postage schemes. Because the

two individuals represented a potential

flight risk, the U.S. Attorney’s office

ordered their arrest the day following the

indictments. In addition to the criminal

charges involved, the government also

filed a civil suit against the individuals,

seeking damages and penalties of over

$23 million.

◆ The owner of an area mailing service was

arrested for tampering with a postage

meter, resulting in losses to the Postal

Service of $2.1 million. The owner

made a counterfeit key that provided

access to the meter’s inner workings.

The owner pled guilty to an 18-count

indictment, and sentencing is pending. 

◆ The president and owner of a presort

company was indicted on charges of mail

fraud, false statements, and conspiracy.

The indictment charged that the owner

deliberately disguised large volumes of

mail, resulting in losses to the Postal

Service of $1.3 million.

DID YOU 

KNOW?

What should you do if you

receive a mailing promising you

a free prize, or if you have been

victimized in a free prize promotion through the mail? 

You should contact your local postmaster or the nearest Inspection

Service office.
PAGE66

◆ A direct mail company executed a 13-

month meter-tampering scheme, which

caused the Postal Service to lose at least

$547,000. One of the company’s

employees created a special tool to defeat

the meter’s security features. A civil suit

filed against the company’s owner

resulted in the recovery of $450,000.

EMBEZZLEMENTS

Embezzlement is fraudulently appropriating

property for individual gain. Within the Postal

Service, under the revised Designation of

Functions, embezzlements under the primary

jurisdiction of the Inspection Service include

stealing from cash drawers by Postal Service or

contractor employees; kiting schemes involving

postal money orders or falsified financial

records; and the theft of merchandise from retail

stores.

Postal Inspectors investigated 97

employee embezzlements this reporting period,

which documented losses of $1.9 million.

Examples of Inspection Service embezzlement

activities follow:

◆ An analysis of trust fund revenue

accounts and deposits at a post office disclosed a possible embezzlement of funds

by the postmaster. An investigation conducted by Postal Inspectors identified the

postmaster as the subject responsible for

the embezzlement of more than $672,000

over a period of 14 years. The postmaster admitted purchasing seven new personal vehicles and a condominium with

the postal funds.

◆ A postal clerk pled guilty to misappropriation of funds and income tax evasion in

an embezzlement case where the Postal

Service lost $725,000. The Postal

employee manipulated the postage validation imprinter accounts in the Integrated Retail Terminal system. The

employee resigned from the Postal Service and has made full restitution to the

Postal Service in the amount of

$725,000.

◆ A federal grand jury returned a 12-count

indictment against a former postmaster

for mail fraud, embezzlement and making

false entries when issuing postal money

orders. The former postmaster was

charged with embezzling over $60,000 in

money order. The postmaster pled guilty

and was sentenced to six months home

detention, three years probation, and a

fine.

FINANCIAL MANAGEMENT REVIEWS
OFFICE OF INSPECTOR GENERAL

Developmental Reviews

Computer Security

Electronic Commerce

Computer Intrusion Detection Activities

Legislative and Regulatory Reviews

INSPECTION SERVICE

Electronic Commerce

PAGE 67

Technology Reviews
PAGE68

OIG reviewed a new Point of Service ONE

System which replaced aging and obsolete integrated retail terminals.

OFFICE OF INSPECTOR

GENERAL

The Postal Service recognizes that technology, including electronic commerce, is key to

productivity and affordability. Through technology, the Postal Service is able to deliver more

than 650 million pieces of mail every day and

maintain its network of over 38,000 post offices

and facilities. Its technology strategy is to provide convenient access to all customers on a

daily basis through increasingly sophisticated

retail systems, expansion in new electronic

access channels, and electronic linkages that

integrate customer and postal processes. In

addition, the Postal Service is using modern

technology (eCommerce initiatives) to improve

and build on its existing services and relationships with customers, to continue filling the

needs that the Postal Service has traditionally

served.

OIG technology reviews encompass

developmental systems, computer security, and

electronic commerce, in addition to computer

intrusion detection activities. In the past six

months, the OIG performed thirteen reviews in

the technology area. Significant reviews are

highlighted below:

DEVELOPMENTAL REVIEWS

The Postal Service is developing numerous

business systems and types of mail processing

equipment that will improve performance,

enhance service, and reduce operating costs.

The OIG understands the importance of

reviewing these systems as they are developed

and has completed six audits of major projects

currently under development during the reporting period. Some of the most significant reviews

are highlighted below: 

INFORMATION INFRASTRUCTURE

DOES NOT SUPPORT STRATEGIC

GOALS 

The OIG audited the Postal Service’s

efforts to develop and integrate its information

infrastructure in early planning phases to assess

the justification, management controls, funding, and integration. The infrastructure, estimated at $2.3 billion, integrates the core

business areas of receiving, processing, transporting and delivering mail for resource management and decisionmaking. 

The audit disclosed that the Program was

not fully aligned with the Postal Service’s strategic goals and plans, expected benefits were not

adequately supported, a comprehensive funding

strategy was not completed, and other business

areas impacting the Program were not appropriately integrated. Postal Service management

agreed with the OIG’s recommendations to

enhance management of the Information

Platform Program. (OIG DA-AR-00-004)

RETAIL SYSTEM NOT 

PERFORMING AS PLANNED

The OIG conducted a series of audits on

developing and deploying the $500 million

Point of Service ONE system. The Point of

Service ONE system, which has been implemented in stages, is the new Postal Service retail

system intended to replace aging and outdated

integrated retail terminals at the windows of

post offices. During the last six months:

◆ The OIG audited the stage two deployment of the Point of Service ONE system

and found that the Postal Service has

made significant progress in developing,

deploying, and improving the Point of

Service ONE system since OIG’s previous audit. However, the system being

deployed has not met all contract

requirements or the functionality originally envisioned. The OIG recommended and Postal Service management

agreed to incorporate lessons learned

from the project in future retail systems

development, develop a contingency

TECHNOLOGY REVIEWS

This section highlights audits, reviews,

and investigations performed by the OIG

and the Inspection Service in the

technology area. Report numbers are

shown in parentheses after the narrative,

as appropriate. Also, the OIG legislative

and regulatory reviews are included at

the end of this section. In order to

differentiate the work reported by the

OIG and Inspection Service, the pages

containing the work reported by the

Inspection Service have been color

screened. 
PAGE69

plan for network failures, and record help

desk calls. However, management did

not agree with the OIG’s recommendation to provide electronic backup of

retail transactions. The OIG and Postal

Service plan to resolve this recommendation through the audit resolution process.

(OIG DA-AR-00-006)

◆ The OIG evaluated the deployment of

the Point of Service ONE system to

determine its impact on the financial

accounting system used to report retail

discrepancies. The audit disclosed that

the accounting system contained over

62,000 unresolved adjustments that

totaled $61.8 million and were up to 11

years old. These adjustments were generated at both Point of Service ONE and

integrated retail terminal sites. The

adjustments resulted from untimely clearance of discrepancies before deploying

the new system and delays in resolving

clerks’ discrepancies that could not be

cleared until grievance-arbitration cases

were resolved. In addition, because the

system automatically detects discrepancies, the number of accounting adjustments increased. Postal Service management agreed with the OIG’s recommendations to review the best method for

resolving accounting adjustments and

communicate the results of grievancearbitration cases to district accounting

officials. (OIG DA-AR-00-005)

NEW SYSTEM FOR VALIDATING

BULK MAIL COULD BE

IMPROVED

The OIG audit evaluated the functional

capabilities, consistency, and reliability of the

preproduction of the Postal Service’s system

designed to automate the acceptance and verification of bulk business mail, known as the

Mailing Evaluation, Readability, and Lookup

Instrument (MERLIN). The audit disclosed

that the system should be generally successful

and provide a consistent and reliable technology for mail acceptance. However, improvements are needed to avoid erroneous reporting

and the potential loss of postal revenue. Postal

Service management agreed to work with the

vendor to address the OIG’s issues. 

(OIG DA-AR-00-003) 

COMPUTER SECURITY 

The Postal Service relies on a massive

computer infrastructure to accomplish and

streamline operations, manage one of the

largest civilian workforces in the world, and

move billions of pieces of mail each year. To

bolster its position as a major participant in

electronic commerce, the Postal Service has

initiated several information technology projects to enhance efficiency and revenue.

However, computer security needs to be maintained and improved to reduce the risk of fraud,

inappropriate disclosure of sensitive data, and

disruption of critical operations and services. A

comprehensive review is highlighted below:

COMPUTER SECURITY REQUIRES

HIGHER PRIORITY

The OIG audited the Postal Service’s computer security program to determine whether a

comprehensive program has been established to

protect automated assets and sensitive data.

The audit disclosed that managers needed to

develop a more comprehensive integrated computer security program and make computer security a higher priority. The audit also disclosed

that Postal Service managers were not fully

aware of their responsibilities for computer security and did not place emphasis on planning and

budgeting for computer security. Further, policies and procedures for computer security were

not developed, implemented, and kept current.

Finally, the OIG identified technology and

staffing issues involving the lack of background

clearances and experience levels and the difficulty in attracting and retaining qualified security personnel because of salary constraints. In

this report, the OIG agreed to management’s

alternative proposal to a six-month trial placement of the national security group within the

office of the Chief Technology Officer. The

national security group is the corporate-level

organization responsible for the creation, and

administration of computer security policy

postal-wide. The OIG originally recommended

placing that group within the office of the

Deputy Postmaster General. Therefore, the

OIG plans to conduct a follow up security

review to determine whether the agreed upon

actions address the issues identified in this

report. (OIG IS-AR-00-004)

OIG’s audit identified strengths and recommended improvements for the MERLIN

system.
ELECTRONIC COMMERCE 

Businesses worldwide are facing threats and

opportunities presented by electronic commerce. Like many other businesses, the Postal

Service is expecting little or no growth in its traditional markets (e.g., First-Class Mail) and recognizes the need to add new revenue sources

and provide systems and services to meet supplier and customer needs. 

One major initiative the Postal Service

recently implemented is called eBillPay, which

allows customers to pay their bills online

through a central, secure Internet website. The

Postal Service recently launched other initiatives such as Electronic Postmark and Post

Electronic Courier Service, and continues to

build a strong Internet presence in hopes of

becoming the carrier of choice for merchandise

purchased on the Internet. The Postal Service,

however, faces a formidable challenge in implementing electronic commerce strategies for the

new century. Clearly, the advent of electronic

commerce will forever change the way the

Postal Service conducts business.

The OIG is committed to helping the

Postal Service meet this challenge. The OIG

has established a separate electronic commerce

team directly involved in day-to-day consultation and review of electronic commerce initiatives, and has a number of other teams available

to perform related reviews and investigations.

The OIG will continue to evaluate the Postal

Service’s efforts to move successfully and

securely into the electronic marketplace of the

21st century. The most significant review is

highlighted below: 

NEW ONLINE PAYMENT SYSTEM

REVIEWED FOR SECURITY AND

PRIVACY REQUIREMENTS

The OIG audited the implementation of

the Postal Service’s online bill presentment and

payment system, to determine whether the

Postal Service met information system security

and federal privacy requirements. The audit disclosed that the Postal Service should adjust its

policies and procedures to meet the needs of

electronic commerce partnerships and alliances

and better address computer and network security and privacy issues. Postal Service management generally agreed with the OIG’s

recommendations and initiated corrective

actions during the audit. (OIG EC-AR-00-001)

COMPUTER INTRUSION 

DETECTION ACTIVITIES

The OIG Computer Intrusion Team investigates violations of federal law pertaining to

computer activity, such as the Computer Fraud

and Abuse Act. Law enforcement activities

include developing and implementing intrusion

detection systems for law enforcement purposes,

working with Postal management in responding

to computer-based attacks, and conducting

criminal investigations of attacks. 

OIG ASSISTS IN INSTALLING

INTRUSION DETECTION SYSTEMS 

The OIG worked with Postal Service management to install Intrusion Detection Systems

within Postal Service networks in order to

determine whether Postal systems are being

intentionally compromised or crippled by external or internal users. These systems will allow

management to identify threats and assist the

OIG to quickly respond to threats related to traditional mail operations as well as sophisticated

eBusiness applications containing sensitive customer information. 

OIG TESTS SECURITY OF POSTAL

COMPUTERS

The OIG began testing postal networks

and eBusiness applications to ensure they are

reasonably secure. The OIG uses proven software, hardware, and hacker tools that report

both the security holes and the ways to fix them.

These tests are designed to identify unauthorized modems, which can allow new ways to

gain unauthorized access to a computer network. Once vulnerabilities are known, the OIG

informs Postal Service management of the vulnerabilities so they can make business decisions

about the level of risk they are willing to tolerate on a network or application. Rigorous testing of eBusiness computer systems prior to their

exposure to the Internet is a routine exercise for

prudent businesses. 

PAGE70

The USPS webpage at usps.com

provides information on the new

eBillPay program and other emerging

electronic commerce initiatives.

TECHNOLOGY REVIEWS
PAGE71

OIG ASSISTS THE POSTAL

SERVICE WITH DEVELOPING 

A COMPUTER INCIDENT

RESPONSE TEAM

The OIG has assisted Postal Service management with developing a Postal Computer

Incident Response Team as well as the processes

to support the Response Team’s handling of

computer security incidents. The Response

Team, based at the National Systems Security

Center, will prioritize incidents as they occur

and engage the OIG’s team of computer intrusion investigators when criminal activity is suspected. As the Response Team continues to

become the focal point for protecting the

integrity, confidentiality, and availability of

Postal networks, Postal Service operations and

eBusiness initiatives will remain successful even

as the number of network security incidents

continue to rise across the Internet. 

LEGISLATIVE AND REGULATORY

REVIEWS

ENACTED LEGISLATION

Public Law 106-229 - The Electronic

Signature in Global and National

Commerce Act 

Congress recently enacted the Electronic

Signature in Global and National Commerce

Act, which promotes the use of electronic signatures and enacts a federal law prohibiting

states from discriminating against entities conducting business using electronic communication and signatures. Government agencies are

encouraged to use electronic records and signatures, but can still require paper documents and

written signatures if they establish a compelling

governmental interest relating to law enforcement or national security. 

This law does not apply to the Postal

Service. However, the Postal Service anticipates a decline in postal revenue as more individuals and businesses use electronic

communications instead of First-Class Mail.

This legislation calls for a study on the effectiveness of electronic delivery versus documents

delivered via the mail, which could highlight

the potential loss in First-Class Mail revenues as

a result of increasing reliance on electronic

commerce. The OIG will continue to monitor

this law and include appropriate steps in future

reviews to develop independent and objective

information to assist Congress in its decisionmaking.

PROPOSED LEGISLATION

S. 1912 - Electronic Commerce Technology Promotion Act

This legislation is designed to facilitate the

growth of electronic commerce and to signal

strong support of the electronic commerce market by promoting its use within federal government agencies and small and medium-sized

businesses. This legislation does not apply to

the Postal Service. However, it has the potential to diminish postal revenue as more individuals and businesses use electronic

communications instead of First-Class Mail.

The OIG will continue to monitor this legislation and will include appropriate steps in future

reviews to develop independent and objective

information to assist Congress in its decisionmaking.

H.R. 4516 - Treasury/Postal Appropriations Bill

This legislation, in addition to the routine

postal appropriation for free and reduced rate

mail and prior year losses, requires Inspectors

General to submit a report to Congress disclosing agency activity on using computer software

cookies. Cookies collect, review, or create lists

containing personally identifiable information

about individuals who access the agency’s

Internet website. The report to Congress would

also include whether the agency entered into

any agreements with third parties to obtain personally identifiable information. The OIG has

initiated an audit to determine how the Postal

Service collects and uses sensitive information

from customer web-based transactions. 

S. 1993 - Reformation of Government

Information Security by Strengthening

Information Security Practices

Throughout the Federal Government

This proposed legislation amends the

Paperwork Reduction Act. Although the

Paperwork Reduction Act does not apply to the

Postal Service, a specific provision, referencing

the Government Performance and Results Act,

would require the Postal Service to mention its
PAGE72 TECHNOLOGY REVIEWS

information security efforts in its annual strategic plan. The OIG will continue to monitor

this legislation and take appropriate steps once

it is enacted.

OFFICE OF MANAGEMENT AND

BUDGET REQUESTS

eGovernment Initiative 

The Office of Management and Budget

recently solicited comments from federal agencies at the request of the Chairman and the

Ranking Member of the Senate Governmental

Affairs Committee, regarding various

eGovernment initiatives. The OIG commented

on one of the initiatives, “Free Digital

Certificate Availability for All Citizens,” which

stated that the Postal Service had developed a

digital certification process that would allow

certificate holders to send and secure electronic

mail free of charge. 

The OIG is unaware of any Postal Service

plan to provide this free service. Further, the

OIG suggested that any digital signature program proposed by the federal government must

include the implementation of a public key

infrastructure to enable the digital signature to

effectively replace handwritten signatures.

Without a reliable infrastructure, the authenticity of digital signatures could be in doubt.

The OIG believes that the Inspector

General community should generally support

eGovernment initiatives as a way to provide

greater access to government information and

service. However, the program should be carefully reviewed to determine whether the transition from paper-based to electronic transactions

has unintentionally compromised or removed

critical internal controls that are designed to

detect and deter fraud in government programs.

DUAL ROLES

The OIG is responsible for conducting

audits and reviews of developmental programs,

eCommerce, and overall information systems of

the Postal Service. In addition, the OIG investigates violations of federal law pertaining to

computer activity. The Inspection Service is

responsible for assuring the security of the Postal

Service’s products and services that involve

technology. 

DID YOU 

KNOW?

Does the OIG investigate

individual labor management

complaints? 

Generally, the OIG does not

review individual employee

complaints; however, the OIG

has conducted reviews of some

complaints to develop an understanding of the postal culture and

employee concerns.
PAGE73

INSPECTION SERVICE

The Inspection Service plays an important

role in the support of Postal Service eCommerce

initiatives and technical applications. The

Inspection Service monitors and reviews the

security of individual systems before and after

implementation, this includes eCommerce initiatives.

ELECTRONIC COMMERCE

The Inspection Service monitors the development of new postal electronic products and

services and consults with Postal Service managers on the capabilities for security, loss prevention, revenue protection, and data retention.

Members of the Inspection Service have developed and conducted training on computer

crimes, particularly those involving the Internet,

and provide program management and guidance

to field divisions conducting online investigations.

The Inspection Service continues to review

security clearance requirements for the Postal

Service’s new electronic product, eBillPay. The

Inspection Service is evaluating the risks associated with contractor employees having access to

sensitive customer information. 
PAGE74 TECHNOLOGY REVIEWS
OFFICE OF INSPECTOR GENERAL

Violence in the Workplace

Workplace Climate

Health Care

Legislative and Regulatory Reviews

INSPECTION SERVICE

Workplace Climate

Postal Robberies

Drugs in the Workplace

Workers’ Compensation

PAGE 75

Labor Management

Reviews
PAGE76

The Postal Service has prepared a

Crisis Management Plan to help postal

managers prepare for and handle

crisis situations.

LABOR MANAGEMENT REVIEWS

OFFICE OF INSPECTOR

GENERAL

The Postal Service has characterized labor

management as one of the most important challenges in achieving its goals in the 21st century.

To operate effectively in a rapidly changing

environment, the Postal Service has recognized

the need to give employee issues a higher priority and enhance each employee’s contribution

to organizational performance. The OIG supports the Postal Service in its overall goal of fostering an inclusive and welcoming workplace

consistent with the Postal Service values of fairness, opportunity, safety, and security. 

The labor management area includes issues

involving workplace violence, workplace climate, workplace safety, and health care. While

the OIG has worked diligently and closely with

the Postal Service and Congress to address these

issues, labor management continues to be one of

the OIG’s greatest challenges. The OIG has

received over 2,800 individual labor management complaints since its inception. Because of

the emotional involvement, potential financial

impact, and the length of time it takes to resolve

these complaints, the OIG’s involvement in this

area must be meaningful. During this reporting

period, the OIG conducted 55 reviews in the

labor management area.

VIOLENCE IN THE WORKPLACE

Both the OIG and the Postal Service are

dedicated to preventing violence and consider

early intervention and cooperation with management and employee groups essential.

Recognizing that workplace stress was an issue

and comprehensive steps were needed to

improve the work environment, the Postal

Service commissioned a workplace safety study.

The study reported that Postal Service employees believed they were at greater risk than the

average worker in the United States to be a victim of workplace violence; however, they were

no more likely to be victims of violence than

employees in the national workforce. The OIG

contributed to the study by providing the

Commission with information and other assistance as requested. The study reinforced and

referenced many of the OIG’s findings regarding

workplace violence and recommendations to

prevent violence and improve the work environment. During this reporting period, the

OIG completed 12 reviews of workplace violence issues, several of which are presented

below:

IMPROVEMENTS COULD BE

MADE IN THE VIOLENCE

PREVENTION AND RESPONSE

PROGRAM 

In a series of reviews, the OIG examined

the Postal Service’s Violence Prevention and

Response Program to assess the adequacy of program criteria and the program’s implementation

in six Southeast Area districts and one

Southwest Area district. These reviews disclosed that the criteria were adequate to assist

management in reducing the risk of workplace

violence and to effectively respond to workplace

disruptions. However, the reviews disclosed

that although all seven district offices had established threat assessment teams, two of the districts did not establish violence prevention

programs and threat assessment teams until two

years after the implementation date. In addition, four districts did not have customized

threat assessment plans at each facility to fully

monitor individual threats through resolution.

The OIG recommended and Postal Service

management generally agreed to improve controls to ensure the effectiveness of the violence

prevention and response programs. 

(OIG LB-AR-00-003 through 

OIG LB-AR-00-010) 

OIG EVALUATES ALLEGATIONS

OF HOSTILE WORKING

ENVIRONMENTS

The OIG reviewed several allegations of

This section highlights audits, reviews, and

investigations performed by the OIG and

the Inspection Service in the labor

management area. Report numbers are

shown in parentheses after the narrative,

as appropriate. Also, the OIG legislative

and regulatory reviews are included at the

end of this section. In order to differentiate

the work reported by the OIG and

Inspection Service, the pages containing

the work reported by the Inspection Service

have been color screened.
PAGE77

hostile working environments at Postal Service

facilities.

◆ An OIG review of a district facility work

environment identified a confrontational

and hostile workplace climate that had

the potential for violence. Specifically,

the OIG found evidence of confrontational communication styles, verbal

abuse, and aggressive management practices, including threatening and intimidating behavior. Management agreed to

provide training to improve communications, work with union officials to

improve labor management relations,

provide diversity training, and continue

assessing workplace climate issues

through meetings with facility management and employees. 

(OIG LB-FR-00-001)

◆ A separate OIG review at a district facility confirmed allegations that a supervisor

was harassing employees. However, the

OIG found that district and local management had already investigated the

allegation and had disseminated information to the facility to raise awareness and

enforce postal policy regarding inappropriate behavior. (OIG LR-LA-00-002)

WORKPLACE CLIMATE

The Postal Service believes that signs of

workplace stress are present and that comprehensive steps are needed to improve the workplace

climate, including aligning human resources with

business requirements. In addition, the Postal

Service implemented the Postal Employees’

Safety Enhancement Act in September 1998 to

comply with Occupational Safety and Health

Act requirements, which include monetary

penalties for noncompliance. To assist the Postal

Service in this area, the OIG conducted several

reviews of workplace climate and conditions, one

of which is highlighted below:

ECONOMIC VALUE ADDED

VARIABLE PAY PROGRAM

REVIEWED

The OIG reviewed the Economic Value

Added Variable Pay Program, under which

bonuses are calculated for approximately 84,000

executive and administrative employees each

year. The OIG disclosed that Postal Service

managers estimated that bonuses might be

about $325 million at the same time the Postal

Service is requesting a rate increase, projecting

a negative net income, and considering a reduction in workforce. The OIG is continuing to

analyze the reasonableness of the formula used

to calculate bonus payments under the variable

pay program. (OIG LB-AR-00-001)

HEALTH CARE

In FY 2000, the Postal Service paid over

$670 million for employee injury claims, a $90

million increase over the $580 million paid in

FY 1999. Controlling injury claims costs continues to be a key to the Postal Service’s financial well-being because the Postal Service is

self-insured for workers’ compensation costs and

makes payments out of operating funds, which

directly affects the Postal Service’s net income. 

The OIG assists in protection of the health

and welfare of the Postal Service’s workforce by

conducting audits and investigations to prevent

and detect fraud, waste, abuse, and mismanagement related to Postal Service health care program costs. As part of its investigative program,

the OIG has initiated proactive projects to

identify improper billing practices, such as false

claims and false statements by health care

providers. OIG audit efforts include evaluating

the increase in medical costs within the injury

compensation program. In the past six months,

the OIG completed ten reviews. Some of the

OIG’s more significant initiatives in this area

are highlighted below:

HEALTH CARE SWINDLERS

PROSECUTED

As a result of a task-force investigation that

included the OIG, four individuals were

arrested during this reporting period and

charged in state court for violations related to

health care fraud. The individuals allegedly

fabricated or stole employee health insurance

information from the Postal Service and the

state of Florida government to generate and

submit fraudulent claims to the Federal

Employees’ Health Benefits Program, the

Florida State Medicaid Program, and other private insurance companies. These claims

resulted in payments to the individuals of $20

million. In addition, under the federal asset forfeiture laws, the OIG seized a 1996 sports utility

To assist Postal managers in responding to threats of violence, the Postal

Service has issued guidance on how to

prepare for and handle these difficult

situations.
PAGE78 LABOR MANAGEMENT REVIEWS

vehicle that had been purchased with ill-gotten

gains. Three individuals have pled guilty.

Judicial action is pending against the remaining

individual.

PSYCHOTHERAPY SERVICES

RENDERED BY UNLICENSED

PROVIDER

An OIG joint investigation resulted in the

indictment and arrest of a health care provider

for billing psychotherapy services the physician

was not licensed to perform. The investigation

determined that the provider falsely claimed

that a physician provided or supervised the psychotherapy sessions.

INJURY COMPENSATION

PROCESS COULD BE IMPROVED 

Based on a congressional inquiry, the OIG

identified opportunities for improving the

Postal Service limited duty program in one of its

districts by providing training to supervisors,

explaining the importance of completing injury

claim forms properly, and segregating payment

responsibilities for contract physicians. While

the limited duty program was generally effective, district officials agreed with OIG recommendations to establish procedures to improve

the program. (OIG LB-AR-00-002)

HEALTH CARE PROVIDER REIMBURSES THE POSTAL SERVICE

The OIG and the California Department

of Insurance conducted a joint investigation

concerning health care providers who billed the

Postal Service for workers’ compensation

claims. During the investigation, an overpayment to a provider was identified. The provider

reimbursed the Postal Service and the investigation is ongoing.

LEGISLATIVE AND REGULATORY

REVIEWS

PROPOSED LEGISLATION

H.R. 4362 -

Equal Employment Opportunity 

Complaint Data Disclosure Act

This bill specifically includes the Postal

Service in its definition of “Federal executive

agency.” It directs each agency to post on its

public website specified summary statistical data

relating to equal employment opportunity complaints filed with the agency by employees, former employees, or applicants for employment

with the agency.

This legislation directs the Equal

Employment Opportunity Commission to post

on its website summary statistical data relating

to: (1) hearings requested before an administrative judge of the Commission on complaints

involving the agency, and (2) appeals filed with

the Commission from final agency actions on

such complaints. This legislation, which is not

expected to have a major impact on the Postal

Service, will be monitored by the OIG and considered for inclusion in future reviews. 

H.R. 3842 / S. 2703 -

Postmasters Fairness and Rights Act

This bill amends the provisions of Title 39,

United States Code, relating to the manner in

which pay policies, schedules, and fringe benefit

programs for postmasters are established. The

legislation would require the Postal Service to

propose changes in pay policies, schedules, and

fringe benefit programs for postmasters, within

45 days of the date on which a collective bargaining agreement is made with the largest

Postal union. The bill provides for arbitration

should the postmasters and the Postal Service

be unable to reach agreement. The bill also

defines “postmaster” and “postmasters’ organization” and gives the postmasters’ organizations

the right to participate in the planning and

development of pay policies and schedules,

fringe benefit programs, and other programs

relating to supervisory and other managerial

employees. This legislation is expected to have

an impact on Postal Service negotiations with

management associations.

DUAL ROLES

The OIG has investigative and oversight

authority for issues involving health care within

the Postal Service, including the Workers’

Compensation Program. Unlike other federal

agencies, the Postal Service pays workers’ compensation claims from postal revenues versus

appropriations, thereby affecting the Postal

Service’s net income. The OIG investigates

allegations involving provider fraud. The

Inspection Service assists the OIG by investigating fraudulent claims and receipt of benefits

by individual employees.

OIG agents seize a sport utility vehicle

under the federal asset forfeiture laws

during a health care fraud investigation.
INSPECTION SERVICE

The Inspection Service reviews a number

of labor management relations areas, including

workplace climate, postal robberies, drugs in the

workplace, and workers’ compensation investigations.

WORKPLACE CLIMATE

The Inspection Service is committed to

employee safety in the workplace, and partners

with Postal Service management and employee

groups in early interventions and other efforts

to prevent violence in the workplace. There

were 24 arrests for assaults and threats in this

reporting period. Examples of significant investigations follow:

◆ In a three-day trial, an individual was

convicted of assaulting a federal employee and using and discharging a weapon

during a crime of violence. The shooter

who was found to be mentally ill, but not

legally insane, was incarcerated without

bail and faces a mandatory ten-year

sentence on weapons charges and an

additional ten years on assault charges.

◆ A Postal police officer was severely

assaulted while performing a routine

perimeter patrol at a General Mail Facility. The officer was struck in the back of

the head with a steel pipe, which caused

multiple fractures to the skull. Postal

police officers subdued the attacker, who

was arrested and charged with attempted

murder, assault, and two counts of

attempted robbery.

POSTAL ROBBERIES

The Inspection Service regards the prevention of robberies as one of its highest organizational priorities and affords task force attention

to facility, letter carrier, and other Postal robberies to deter these attacks on employees.

Letter carrier robberies are generally committed

for the purpose of stealing mail and Postal keys

to mail receptacles, while robberies of facilities

are committed for cash and money orders. The

Inspection Service investigated 31 robberies in

this reporting period. Robbery-related arrests

and convictions for the last six-month period

totaled 50 and 30, respectively. Examples of

investigations follow:

◆ An individual was arrested and charged

with the theft of Postal funds from a contract station. During the investigation,

this individual initially reported being

robbed while counting the cash drawers

at the contract station but subsequently

admitted to the theft of the Postal funds

after several inconsistencies were found

in statements provided to the Postal

Inspectors.

◆ An individual was arrested by Postal

Inspectors and charged with three armed

Postal robberies and 18 armed bank robberies that occurred in the Gulf Coast

area.

◆ An individual was sentenced to eight

years in custody, five years probation, a

fine, and ordered to make restitution to

the Postal Service for a post office robbery. 

DRUGS IN THE WORKPLACE

Postal Inspectors investigate the possession, personal use, and sales of narcotics by

Postal Service employees or others while on

Postal property or on duty. Information regarding the possession or personal use of illegal drugs

by Postal employees is referred through Postal

Service management to the Employee

Assistance Program for attention. In the last six

months, Postal Inspectors arrested seven individuals for the sale of drugs on Postal property.

Examples of investigations follow:

◆ A casual mail handler who was employed

at an airmail service center was arrested

for possession and distribution of marijuana. After the investigation was completed, the employee was terminated

from employment with the Postal

Service.

◆ After selling crack cocaine to undercover

Postal Inspectors, a maintenance custodian at a Postal facility was arrested and

charged in federal court with felony

distribution of crack cocaine. 

WORKERS’ COMPENSATION

The Inspection Service assists the OIG by

investigating fraudulent claims and receipt of

workers’ compensation benefits by individual

employees. Unlike other federal agencies, these

claims are paid from Postal revenues versus

PAGE79
PAGE80

appropriations, thereby affecting the Postal

Service’s net income.

Prosecution of workers’ compensation

fraud serves as a deterrent and prevents future

benefit payments from being made to violators.

Normally, prosecution is based on showing that

the allegedly disabled claimant is receiving

outside earnings and failing to report them to

the Department of Labor. Inspection Service

investigations resulted in $95.5 million in longterm and continuation-of-pay cost savings for

this fiscal year, compared to $86.6 million for

the same period last year. In the last six months,

nine individuals were arrested for workers’ compensation fraud. Examples of investigations

follow: 

◆ A former letter carrier was sentenced for

making false statements to obtain federal

employee compensation benefits, mail

fraud, and theft of government property.

Postal Inspectors revealed that the

alleged wheelchair-bound claimant had

falsified almost every aspect of the claim

that actually occurred while the employee served on active duty with the military. Additionally, the claimant’s spouse,

who is a nurse’s aid, was approved as the

primary care attendant thereby increasing

monthly benefits to about $3,300. As a

result of this investigation, the claimant

was sentenced to one year and one day in

prison and three years supervised probation, and was ordered to pay about

$52,000 in restitution and a $500 assessment. Civil actions are pending to

recover other costs. This investigation

resulted in $1.2 million in future cost

savings for the Postal Service.

◆ A former Postal maintenance supervisor

was sentenced to seven months imprisonment, seven months confinement at a

halfway house, three years probation, and

mental health counseling, and was

ordered to pay over $24,000 in restitution. Postal Inspectors found the former

employee had been working as a registered nurse since 1984 while claiming to

be totally disabled. As a result, the

Postal Service realized a future cost savings of over $1 million.

◆ A former distribution clerk had not

worked for the Postal Service since 1988

after allegedly sustaining an injury to the

head, neck, and back. However, Postal

Inspectors revealed that the claimant was

working as a waitress and owned and

operated a beauty salon. The claimant

was sentenced to six months imprisonment and three years probation and

ordered to pay $6,000 in restitution. The

Postal Service realized future cost savings

of over $726,000. 

◆ A former letter carrier was sentenced in

U.S. District Court to three years probation, six months home confinement with

electronic monitoring, 400 hours of community service and a $10,000 fine, with

restitution of over $47,000 to the Social

Security Administration and $72,000 to

the Postal Service. Postal Inspectors

found the carrier collected dual benefits

from the Department of Labor and the

Social Security Administration, and

failed to report employment activities to

either agency as required. As a result of

the investigation, the Postal Service realized future cost savings of over $651,000

in workers’ compensation benefits.

LABOR MANAGEMENT REVIEWS
Oversight of the

Inspection Service

PAGE 81

OFFICE OF INSPECTOR GENERAL

Oversight of the Inspection Service

Legislative and Regulatory Reviews
PAGE82 OVERSIGHT OF THE INSPECTION SERVICE

OFFICE OF INSPECTOR

GENERAL

One of the primary reasons the OIG was

established within the Postal Service

was to provide oversight of Inspection

Service activities. The OIG’s work in this area

provides an independent voice with objective

information and analyses of Inspection Service

operations and issues. 

OVERSIGHT OF THE 

INSPECTION SERVICE

As a law enforcement agency, it is essential

that the Inspection Service be held to the highest standards of conduct to maintain the public’s

trust and the Postal Service’s reputation of reliability. In the last six months, the OIG focused

on administrative and budgeting challenges facing the Inspection Service. These challenges

included pay parity for forensic scientists, consistency in the implementation of the disciplinary and awards programs, and the alignment of

budgetary resources to performance-related

goals and functions. During this reporting

period, the OIG completed 17 oversight reviews

as well as numerous monitoring actions, some of

which are highlighted below:

PAY PARITY RECOMMENDED FOR

INSPECTION SERVICE FORENSIC

SCIENTISTS

The OIG reviewed concerns that forensic

scientists were underpaid when compared to

their federal counterparts, resulting in personnel

recruiting and retention problems. The review

disclosed that while junior forensic scientists

had pay parity with their federal counterparts,

senior forensic scientists did not. The review

also identified that other federal agencies had

recently established special pay programs for

forensic scientists, which could worsen the

Inspection Service’s ability to attract and retain

senior forensic scientists. Specifically, the

Federal Bureau of Investigation and the

Department of Treasury received congressional

approval to establish special pay and benefit

programs to attract scientists and technicians

for positions that have historically had recruiting and retention problems. Both agencies have

included forensic scientist positions in these

special programs. The OIG found that

although the Inspection Service had been working with the Postal Service to resolve the pay

parity issue, it did not have a similar special program to attract and retain senior forensic scientists. After receiving the OIG report, the Chief

Postal Inspector was able to establish a compensation program that provided pay parity for

forensic scientists. (OIG OV-MA-00-002)

BUDGET PLANNING AND FORMULATION PROCESS REVIEWED 

An OIG review of the Inspection Service

budget planning and formulation process found

that the Inspection Service did not establish a

process for annually determining personnel

requirements and for allocating these resources

by location. In addition, the OIG found that

the process could be improved by linking budgetary resources to performance-related goals

and functions. Further, the OIG found that the

Inspection Service did not issue a written

request for estimated expenses from field divisions when developing its operating budget.

The Chief Postal Inspector agreed with OIG

recommendations to improve the budget planning and formulation process.

(OIG OV-AR-00-005)

IMPROVEMENTS NEEDED IN DISCIPLINARY PROCESS FOR NONBARGAINING EMPLOYEES 

An OIG review of the Inspection Service’s

disciplinary process for nonbargaining employees found that field inspectors conducted internal investigations of individuals located in the

same division. Further, headquarters oversight

of internal investigations assigned to field

inspectors was not fully documented. In addition, potential violations of the Inspection

Service Code of Conduct were not always

reported to headquarters as required. 

This section highlights audits, reviews,

and investigations performed by the OIG

in conducting its oversight of the Inspection Service. Report numbers are shown

in parentheses after the narrative, as

appropriate. Also, the OIG legislative

and regulatory reviews are included at

the end of this section.

DID YOU 

KNOW?

How does the OIG handle

requests for information? 

Public requests for OIG 

information are processed 

pursuant to the Freedom Of

Information Act(FOIA) by OIG

staff. FOIA requests may be

made in writing, or the public can

review reports and other 

information posted on the OIG

website at www.uspsoig.gov
PAGE83

The Chief Postal Inspector agreed with

OIG recommendations to assign significant

internal investigations to the headquarters

office responsible for internal investigations and

less serious offenses, to field inspectors assigned

to a division other than the division where the

individual under investigation is assigned. The

Chief Postal Inspector also agreed to establish

controls to ensure that potential violations of

the Code of Conduct are reported to headquarters as required. (OIG OV-AR-00-004)

INSPECTION SERVICE AWARDS

PROGRAM FOR LAW

ENFORCEMENT EMPLOYEES

FAIRLY ADMINISTERED

An OIG review of the Inspection Service

awards program for law enforcement employees

found that the program was fairly administered.

However, the OIG found that the awards program could be improved by requiring consistent

justifications and statements of purpose, and

ensuring that awards are appropriately reported

to the Internal Revenue Service. The Chief

Postal Inspector agreed with OIG recommendations to improve the awards program and to

ensure that cash equivalent and noncash tangible awards are also reported as income to the

Internal Revenue Service. 

(OIG OV-AR-00-003)

REVIEW OF COMPLAINTS

REGARDING THE INSPECTION

SERVICE

The OIG’s oversight of the Inspection

Service provides customers, employees, and

other interested persons with an independent

avenue to address their complaints. At the

same time, the OIG provides the Inspection

Service with an unbiased review of accusations

that, if left unresolved, could harm its reputation as a professional law enforcement agency.

During this reporting period, the OIG received

8 new complaints, and closed 26 hotline complaints as shown on the chart on this page.

MONITORING INSPECTION

SERVICE INTERNAL

INVESTIGATIONS

The OIG’s oversight team is responsible for

monitoring the conduct of internal investigations of Inspection Service non-executive

employees. These investigations are conducted

when there are allegations of employees’ misconduct that affect the performance of duties or

when managers have information of employee

misconduct. The OIG’s oversight team reviews

the results of internal investigations, including

conclusions reached and recommended actions.

At the beginning of the reporting period, the

Inspection Service had 35 open internal investigations. During the reporting period 38 cases

were closed, and 34 new cases were opened. As

of September 30, 2000, 31 cases remained open.

LEGISLATIVE AND REGULATORY

REVIEWS

ENACTED LEGISLATION

Public Law 106-168 - Deceptive Mail

Prevention and Enforcement Act 

The Deceptive Mail Prevention and

Enforcement Act, passed in December 1999,

granted administrative subpoena authority to

the Postmaster General. Prior to enactment,

only the Postal Service Inspector General had

authority to issue administrative subpoenas. As

a result of the Act, the Postal Service issued

proposed regulations implementing the subpoena authority. The OIG commented on the

proposed regulations, recommending that:

◆ Subpoenas be issued only in investigations where specific cases have been

opened by the Inspection Service concerning a particular person or entity.

◆ Ambiguous language concerning the

subpoena issuing authority of the Postal

Services’ General Counsel be clarified.

◆ Material produced by the subpoena not

be subject to a broad exemption from the

Freedom of Information Act.

◆ The underlying statute’s new reporting

requirements should be listed in the bill.

In response to OIG’s concerns, the Postal

Service modified the rule to satisfy the OIG’s

primary concern that subpoenas be issued only

to investigate cases opened by the Inspection

Service pertaining to a particular person or

entity. The Postal Service also modified the

rule to satisfy the OIG’s concern that the proposed rule seemed to require that the Postal

Service General Counsel must sign any subpoena presented. A new section has been

added, clarifying that the General Counsel has

discretion to issue or deny a subpoena.

Inspection Service-Related

Hotline Cases Closed

17

4

5

POSSIBLE SYSTEMIC

REVIEW

OIG

REVIEWED

REFERRED TO

INSPECTION SERVICE
PAGE84 OVERSIGHT OF THE INSPECTION SERVICE
Other Significant

Reviews

PAGE 85

OFFICE OF INSPECTOR GENERAL

Executive Investigations

Subcommittee Request

Legislative and Regulatory Reviews

INSPECTION SERVICE

Physical Security

Narcotics Offenses and Trafficking

Child Exploitation

Prohibited Mail

Postal Burglaries

Mail Fraud

Money Laundering
PAGE86 OTHER SIGNIFICANT REVIEWS

OFFICE OF INSPECTOR

GENERAL

I

n addition to reviews summarized earlier in

this Semiannual Report, the OIG has completed 35 reviews of other significant issues

related to Postal Service operations. 

EXECUTIVE INVESTIGATIONS

The OIG is responsible for reviewing allegations involving senior-level Postal executives for criminal violations and misconduct,

including retaliation against individuals who

have previously provided the OIG with information about possible fraud, waste, abuse, and

mismanagement. Examples of two investigations follow:

◆ In an investigation of a Postal Service

Career Executive Service employee, the

OIG determined that the employee used

a Postal desktop computer to view pornographic websites. The executive admitted to misuse of the computer and

subsequently was disciplined.

◆ In another investigation of a Postal

Service Career Executive Service

employee, the OIG determined that the

employee improperly used the government-sponsored credit card to withdraw

cash for gambling purposes. The

employee admitted using the card for personal use on 16 occasions. The executive was disciplined. 

SUBCOMMITTEE REQUEST

Judicial Officer’s Subpoena Authority

The OIG addressed an inquiry from the

Chairman of the Subcommittee on the Postal

Service, House Committee on Government

Reform, who inquired whether the OIG had

comments on proposed rules implementing the

Postal Service judicial officer’s subpoena authority. Specifically, concerns existed about a provision of the proposed rule permitting a subpoena

to be issued with the space for the name of the

person to be served left blank. The presiding

officer, who is authorized to issue a subpoena in

blank to a party, is either an administrative law

judge or the judicial officer.

The OIG found that the practice of issuing

subpoenas in blank is not unusual. The Federal

Rules of Civil Procedure permit subpoenas to be

issued in blank to a party requesting it. This is

similar to the latitude given to administrative

law judges. Therefore, it did not appear to be

inappropriate for the Postal Service to issue subpoenas in blank. The OIG provided a letter

indicating no objections to the proposed rule.

LEGISLATIVE AND REGULATORY

REVIEWS

PROPOSED LEGISLATION

Legislation Amending the Inspector

General Act

Various bills were proposed in this session

of Congress that would impact Offices of

Inspectors General. 

◆ H.R. 2013 would amend the Inspector

General Act to provide for the appointment of the Inspector General of certain

federal agencies by the President of the

United States. 

◆ H.R. 305 would amend the Inspector

General Act to establish an Office of

Inspector General Oversight Council. 

◆ S. 870 would amend the Inspector

General Act to increase the efficiency

and accountability of Offices of Inspectors

General within federal departments. 

◆ S. 1707, which we discussed in the previous Semiannual Report to Congress,

would make the Inspector General of the

Tennessee Valley Authority a presidentially-appointed position and would

establish a forensic laboratory for the

Inspector General community.

Of the four bills, S. 870 and S. 1707 seem

to have the broadest impact and the greatest

chance for enactment. S. 870 prohibits the

This section highlights reviews and

investigations performed by the OIG and

the Inspection Service in other significant

areas. Also, the OIG legislative and regulatory reviews are included at the end of

this section. In order to differentiate the

work reported by the OIG and Inspection

Service, the pages containing the work

reported by the Inspection Service have

been color screened. 
receipt of any cash award or cash bonus by an

Inspector General. However, the legislation

compensates for this by increasing the rate of

pay of specified Inspectors General, including

the Postal Service Inspector General, from

Level IV to Level III of the Executive Schedule.

It also provides for an external review of the

Office of Inspector General at least every three

years by the General Accounting Office or a

private entity, and a reporting of the results to

appropriate congressional committees. 

S. 870 also changes the OIG’s congressional reporting requirement to an annual

report. However, a semiannual activities report

may still be requested by a congressional oversight committee or the Comptroller General. 

PAGE87
PAGE88 OTHER SIGNIFICANT REVIEWS

INSPECTION SERVICE

The Inspection Service conducted numerous investigations and reviews relating to significant issues in the following areas: physical

security; narcotics offenses and trafficking; child

exploitation; prohibited mail; postal burglaries;

mail fraud including fraud against consumers,

fraud against businesses, and fraud against government; and money laundering.

PHYSICAL SECURITY

The Inspection Service devotes significant

resources to prevent crimes by conducting

employee and customer awareness training programs and implementing security measures.

Potential problems and deficiencies are identified and priorities set based on trend analyses of

criminal activity. When trends are identified,

prevention and security measures are developed

to reduce or eliminate the risk of criminal activity against the mail, the Postal Service, and its

employees. Some of the more significant physical security activity4 that occurred during this

period is highlighted below:

◆ The Inspection Service continued its

efforts to increase the security of collection boxes. Modified locks and other

security countermeasures were installed

in California. Several other districts are

scheduled to have the security countermeasures installed in the near future.

◆ The Inspection Service kicked off the

National Security Messaging Program in

June 2000. This campaign is a cooperative effort designed to encourage all

Postal Service employees to help improve

security at their workplace. Employees

are asked to wear identification badges,

politely challenge strangers in postal

facilities and on loading docks, ensure

doors are locked, and identify and report

security deficiencies. 

NARCOTICS OFFENSES AND

TRAFFICKING

The Inspection Service interdicts mailings

of illegal drugs and drug proceeds to protect

postal employees from violence related to drug

trafficking, and to preserve the integrity of the

mail. Postal Inspectors, working with other law

enforcement agencies, arrested 787 individuals

during this semiannual period for drug trafficking and money laundering via the mail.

Seizures from the mail for this period included

over 7,300 pounds of illegal narcotics and about

243,000 units of steroids. Investigations also

resulted in the seizure of over $2.6 million in

cash and monetary instruments, 21 vehicles, 67

firearms, and 2 residences. Examples of significant investigations follow:

◆ Postal Inspectors, Drug Enforcement

Agency agents, and local Sheriff deputies

investigated four businesses in the Iowa

area known for receiving drug paraphernalia through the mail. The investigation resulted in seizing individual items

valued at about $3 million. 

◆ A task force of Postal Inspectors, Internal

Revenue Service agents, and local police

officers was formed to investigate marijuana trafficking between the New York

and Los Angeles areas. The investigation involved large-scale activities over

at least a four-year period that included

more than one ton of marijuana and $2.1

million.

◆ Two individuals were convicted of federal

conspiracy, and cocaine and methamphetamine distribution in a District court

in California. The convictions culminated a long and highly successful narcotics investigation by multiple law

enforcement agencies involving the distribution of crystal methamphetamine by

a trafficking organization operating out of

California. The traffickers transported

large quantities of crystal methamphetamine to Hawaii for distribution. The

investigation resulted in the arrests of 35

individuals and several seizures of personal property.

CHILD EXPLOITATION

Postal Inspectors employ proactive investigative techniques to identify and bring to justice individuals who use the mail to distribute or

knowingly receive child pornography. During

this reporting period, 26 child molesters were

identified and stopped as a result of the

Inspection Service’s efforts to rid the mail of

child pornography. In addition, 43 children

were rescued from further incidents of ongoing

child sexual abuse, and two other previously vic4 Some investigative statistics in this section do not include 4th quarter results because the statistics were not availible prior to publication of this report.
PAGE89

timized children were identified. Postal

Inspectors nationwide are investigating 516

cases involving child exploitation. During this

reporting period, Inspection Service efforts

have resulted in 145 arrests and 105 convictions. Some of the more significant child

exploitation cases are highlighted below:

◆ An individual was sentenced to four consecutive life terms, and another was sentenced to two life terms, for their

involvement in a child pornography ring

in Oklahoma. Charges are pending

against four other codefendants. Search

warrants resulted in the seizure of videotapes and photographs depicting the sexual abuse of two children. Defendants

include the parents of these children.

◆ Multiple felony charges for child sexual

abuse were brought against an individual

following a joint investigation in

California. The investigation revealed

that this offender sought out and procured young minor females between the

ages of 9 and 16 for “modeling” through

newspaper advertisements. Thousands of

photographs were seized, and in at least

seven cases, young girls were sexually

abused during the photo sessions.

◆ Postal Inspectors and Federal Bureau of

Investigation agents arrested a California

youth choir leader for receiving child

pornography by mail. This suspect was

identified through an international

investigation of a child pornography ring

operating out of Chile.

PROHIBITED MAIL

The Inspection Service considers the

investigation of mail bombs among its highest

priorities. In the last six months, Postal

Inspectors arrested 43 individuals and convicted 47 defendants for their involvement in

incidents related to mail bombs and bomb

threats. These include threats against postal

facilities, placement of hoax devices and other

suspicious items in the mail, and bombs and

devices placed in private mail receptacles.

Examples of significant investigations follow:

◆ In Tennessee, a letter carrier on a mail

collection run found a pipe bomb

attached to an envelope addressed to the

chief of police. Postal Inspectors, Bureau

of Alcohol, Tobacco and Firearms special

agents, and local police rendered the

bomb safe. The investigation is continuing in an effort to identify the person or

persons responsible.

◆ An individual in Maryland pled guilty

and was sentenced in circuit court for

mailing a “hoax mail bomb.” The individual was sentenced to a 10-year suspended sentence and two years

probation.

POSTAL BURGLARIES

The Inspection Service employs sophisticated burglary prevention techniques and

detection devices to make postal facilities less

vulnerable to attack. Burglaries may result in

property losses, mail thefts, and repair expenses

for damage to postal facilities as a result of

forced entries. In the last six months, there

were 93 arrests and 83 convictions related to

burglaries compared to 91 arrests and 85 convictions for the previous reporting period. For

example:

◆ Postal Inspectors and state police

responded to a burglary at a Connecticut

contract station. The investigation disclosed that a 300-pound safe containing

approximately $5,600 of postage stock

was missing. The unopened safe and its

contents were recovered.

MAIL FRAUD

Postal Inspectors protect Postal customers,

business mailers, and local, state, and Federal

governments from schemes involving investments, insurance, Medicare/Medicaid fraud,

telemarketing, loans, and merchandise misrepresentations. The elderly and disadvantaged

individuals who depend on mail delivery for

purchases are particularly susceptible to fraudulent schemes. These citizens trust the Postal

Service to maintain the integrity of the mail,

while opportunists take advantage of the

anonymity the mail offers. The Inspection

Service investigated approximately 54,000 consumer fraud complaints during this reporting

period. As a result, 806 individuals were

arrested and 662 individuals were convicted on

charges of mail fraud. 
PAGE90 OTHER SIGNIFICANT REVIEWS

FRAUD AGAINST CONSUMERS

To preserve the public’s confidence and

trust in the mail, the Inspection Service investigates a variety of mail fraud schemes, including

fraud against consumers. Some of the most significant investigations follow:

◆ Ten individuals were charged with mail

fraud, money laundering, and tax evasion

following an investigation by Postal

Inspectors and Internal Revenue Service

special agents. The investigation

revealed an invention promotion scam

that defrauded over 34,000 victims of

$60 million. To date, three of the ten

individuals charged in the indictments

have pled guilty.

◆ Two Canadian nationals were sentenced

in a Pennsylvania federal district court to

one year in prison and two years probation for their roles as manager and salesman for a gemstone portfolio liquidation

scheme. During the firm’s final five

years, over 1,000 victims from the United

States, Canada, and Europe were

defrauded of more than $15 million using

the mail. At the time of sentencing, the

defendants presented a check for $1 million restitution to the court under a

negotiated plea agreement.

◆ The founder of a bogus investment company was sentenced to three years imprisonment for investment fraud and ordered

to pay over $12.9 million in restitution.

Two other codefendants were also sentenced for their involvement in the

investment scheme.

◆ An individual was sentenced for an 

$8 million investment and mail fraud

scheme. This individual was sentenced

to four years and three months in prison

on four counts (to be served concurrently), to be followed by five years probation, and was ordered to pay over $8

million in restitution to victims. 

◆ Three individuals pled guilty to schemes

involving senior citizens who were

defrauded of $2.9 million. They were

sentenced to various prison terms and

probation and ordered to make full restitution. 

FRAUD AGAINST BUSINESSES

The mail is often used to submit false or

inflated invoices to businesses and institutions. Some of the most significant investigations follow:

◆ In an investigation into illegal telemarketing conducted by postal inspectors, an

individual pled guilty in federal court to

one count of structuring transactions.

The investigation revealed that the individual was responsible for cashing checks

for principals of a telemarketing firm and

resulted in losses of over $3.3 million to

its various investors.

◆ In an investigation conducted jointly by

Postal Inspectors, agents of the Federal

Bureau of Investigation and members of

local law enforcement officers, the former

vice president of a managed health care

company was arrested and sentenced to

seven years and three months in prison

and was ordered to pay over $729,000 in

restitution.

◆ In a federal district court in New York,

an attorney and a registered nurse pled

guilty to conspiracy to commit mail

fraud. Postal Inspectors proved that the

attorney authorized the payment of

$215,000 in insurance company funds to

a phony medical services company that

was controlled by the registered nurse.

FRAUD AGAINST GOVERNMENT

Postal Inspectors also work to protect the

government from being victimized by mail

fraud. Some of the most significant investigations follow:

◆ Three doctors were convicted in a New

York federal district court for their

involvement in a multimillion-dollar

scheme to defraud Medicare. The doctors defrauded Medicare by signing fictitious claims, which certified they

examined patients for treatment. The

doctors received kickbacks on payments

from Medicare for treatments not rendered.

◆ An individual stole blank Treasury

checks from the St. Louis Information

Service Center and fled to Mexico,

where one of the stolen checks was 
PAGE91

cashed for over $1 million. The individual was arrested and served three years in

a Mexican prison before being extradited

back to the United States. The individual was subsequently sentenced to three

years probation and allowed to leave the

United States.

◆ An individual was sentenced to one year

and three months in prison and ordered

to pay $350,000 in restitution. The individual defrauded the U.S. Department of

Education of more than $900,000 by submitting fraudulent student loan applications. The individual seeking assistance

claimed to be a student and diverted the

funds received for personal use.

MONEY LAUNDERING

The Inspection Service plays a key role in

fulfilling the Postal Service’s anti-money laundering program requirements under the Bank

Secrecy Act. Postal Inspectors work closely

with Postal Service management to ensure that

new financial services possess anti-money laundering security measures. In addition, Postal

Inspectors participate in Bank Secrecy Act

training programs, sharing their anti-money

laundering expertise with Postal Service

employees involved in the sale of Postal financial products. Examples of significant investigations follow: ◆ A U.S. Attorney’s Office forwarded two

equity share checks totaling about

$109,000 to the Inspection Service. One

equity share check was the result of the

division’s investigation of postal money

orders that were purchased in structured

transactions in order to evade the reporting requirements. 

◆ An individual was arrested by U.S.

Customs agents and Postal Inspectors for

money laundering in the San Juan area.

The investigation focused on a

Colombian drug distribution organization, which laundered money by purchasing postal money orders in

denominations that allowed them to

avoid the requirements of transaction

reporting.
PAGE92 OTHER SIGNIFICANT REVIEWS
PAGE 93

Appendices

DID YOU 

KNOW?

PAGE 93

Is the OIG responsible for all audits within the Postal Service?

Yes. The OIG is responsible for performing or contracting for all

Postal Service audits, as well as establishing procedures for management-requested audits. In addition, the OIG serves as the focal

point with other agencies, to coordinate work efforts and avoid any

duplication. 
APPENDIX A

Reports Issued to Postal Management

For the period April 1, 2000, through September 30, 2000

OVERVIEW

Office of Inspector General

The OIG audit teams are aligned to conduct performance and financial audits, evaluations and

other reviews to address the business processes of the Postal Service. Each team issues audit

reports (AR), letter advisory reports (LA), or management advisory reports (MA) in accordance

with the identified needs of the project.

Inspection Service

The Inspection Service audit groups were aligned by the type of audits performed which are primarily performance, financial, contract, and facility audits. The Inspection Service provided

Postal-wide attention in the field financial area until September 30, 2000, when this audit function was fully transitioned to the OIG.

SUMMARY

The following is a summary by principal area of reports issued to Postal Service management for

both the OIG and Inspection Service. The following pages list each organization's reports separately.

Recommend 

Number of Questioned Unsupported Funds Put to

Principal Area Reports Issued Costs Costs1 Better Use

Performance 25 $5,200,000 $5,200,000 $78,634,395

Financial Management 319 56,105,289 5,304,442 61,039,690

Technology 10 0 0 0

Labor Management 18 0 0 0

Oversight 7000

Other Significant Reviews 23 0 0 0

GRAND TOTAL 402 $61,305,289 $10,504,442 $139,674,085

PAGE 94 APPENDICES

1 Unsupported Costs are included with the amounts shown as Questioned Costs.

Definitions

Questioned Costs – A cost that is unnecessary, unreasonable, unsupported, or an

alleged violation of law, regulation, contract,

etc. 

Unsupported Costs – A cost that is not supported by adequate documentation.

Funds Put to Better Use – Funds that

could be used more efficiently by implementing

recommended actions.
REPORT LISTING

The following is a list of each report grouped by core business processes and enabling functions.

OIG REPORTS

PERFORMANCE

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

ACCEPTING AND PROCESSING

AC-AR-00-001 Preventative Maintenance- Postal-wide $0 $0 $0 4/28/00

Equipment

AC-MA-00-002 Mail Processing Delays at Los Angeles, CA 0 0 0 5/5/00

the Worldway Airport

Mail Center, Los Angeles,

California

AC-AR-00-002 Integrity of Plant Verified Postal-wide 0 0 0 5/11/00

Drop Shipment

AC-AR-00-003 Revenue Assurance Process Postal-wide 0 0 0 7/14/00

AC-AR-00-004 Use of Robotic Tray Postal-wide 0 0 0 9/29/00

Handling System

AC-AR-00-005 International Postal-wide 0 0 0 9/29/00

Mail Processing

DELIVERY

DE-MA-00-001 Unprocessed Mail in Dallas, TX $0 $0 $0 5/30/00

Dallas, Texas

MARKETING 

MK-LA-00-001 Postal Service Dallas Dallas District $0 $0 $0 5/30/00

District Plan for Retail

Operations Performance

MK-MA-00-001 Citizen's Stamp Postal-wide 0 0 0 6/19/00

Advisory Committee

MK-LA-00-002 Postal Rate-Making Process Postal-wide 0 0 0 6/30/00

MK-AR-00-001 Review of Postal-wide 0 0 28,457,395 9/29/00

Stamp Fulfillment Services

Performance Measures

MK-AR-00-002 Audit of the Postal-wide 5,200,000 5,200,000 0 9/29/00

Management Controls Over

the Sales Force 

Augmentation Program

TRANSPORTATION

TR-AR-00-007 Mail and Other Items Postal-wide $0 $0 $0 4/5/00

Missent to Mail Transport

Equipment Service Centers

TR-AR-00-008 Extra Trip Expenditures Dallas, TX 0 0 0 6/30/00

at the Dallas Bulk Mail

Center

TR-AR-00-009 Extra Trips Expenditures Mid-Atlantic Area 0 0 2,477,000 7/27/00

within the Mid-Atlantic

Area

TR-AR-00-010 Use of Chauffeur-Driven Postal-wide 0 0 0 8/29/00

Vehicles by Postal Service

Executives

PAGE 95
TRANSPORTATION

TR-AR-00-011 Dedicated Christmas Postal-wide $0 $0 $47,700,000 9/29/00

Air Network - Phase 1

PERFORMANCE TOTALS $5,200,000

$5,200,000

$78,634,395

FINANCIAL MANAGEMENT

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

FINANCIAL-RELATED

FR-AR-00-008 Fiduciary Audit of Postal-wide $0 $0 $0 4/3/00

United States Postal Service's

Oversight of the

Thrift Savings Plan

FR-FA-00-010(R) Relocation Benefits for Postal-wide 0 0 0 5/2/00

Postal Service Officers -

Revised

BI-MA-00-001 Highway Transportation Postal-wide 0 0 0 5/11/00

Contracts

FT-LA-00-001 Destroyed Money Order Postal-wide 0 0 0 6/28/00

Blank Stock

FT-FA-00-001 Money Order Blank Postal-wide 0 0 0 8/25/00

Stock and Imprinters

FF-FA-00-00(1-33)2 Fiscal Year 2000 Cost and Postal-wide 0 0 0 8/29/00

Revenue Analysis Audit

FT-AR-00-002 International List Service Postal-wide 0 0 0 8/29/00

Transmittal of Funds Bank

Secrecy Act Compliance

FT-LA-00-002 Terminated Cleaning and Postal-wide 216,861 0 0 9/20/00

Station Contracts

FT-AR-00-003 Audit of Chase Insight Postal-wide 0 0 0 9/27/00

Treasury Workstations

FT-AR-00-001 Miscellaneous Relocation Postal-wide 0 0 0 9/28/00

Expense Payments

FT-AR-00-004 Equity Loss Payments Postal-wide 0 0 0 9/29/00

FT-AR-00-005 Deviations from Postal Postal-wide 0 0 0 9/29/00

Relocation Policy

CONTRACT AUDITS 

CA-AR-00-001 United States Postal Service Postal-wide $977,598 $0 $400,000 5/17/00

Warranty Repair of Tractors

CA-CAR-00-019 Evaluation of Accounting 0 0 0 4/5/00

System

CA-CAR-00-020 Evaluation of Incurred Costs 28,890 28,890 0 4/27/00

CA-CAR-00-021 Evaluation of 0 0 0 4/27/00

Accounting System

CA-CAR-00-022 Evaluation of Incurred Costs 4,794 4,794 0 4/27/00

CA-CAR-00-023 Evaluation of Incurred Costs 0 0 0 4/27/00

CA-CAR-00-024 Evaluation of 131,750 0 0 4/27/00

Proposal Submitted

CA-CAR-00-025 Evaluation of Incurred Costs 471,432 471,432 0 4/27/00

PAGE 96 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

2 This report represents 33 district reports issued during this period.
CA-CAR-00-026 Evaluation of Subcontract Proposal 3,531,433 0 0 4/27/00

CA-CAR-00-027 Evaluation of 316,325 188,633 0 4/27/00

Claim Submitted

CA-CAR-00-028 Evaluation of Incurred Costs 0 0 0 5/2/00

CA-CAR-00-029 Evaluation of Incurred Costs 13,107 0 0 6/6/00

CA-CAR-00-030 Evaluation of 0 0 0 6/6/00

Accounting System

CA-CAR-00-031 Evaluation of Incurred Costs 5,065,428 0 0 6/26/00

CA-CAR-00-032 Evaluation of Incurred Costs 0 0 0 6/28/00

CA-CAR-00-033 Evaluation of 0 0 0 7/10/00

Proposal Submitted

CA-CAR-00-034 Evaluation of Incurred Costs 0 0 0 7/12/00

CA-CAR-00-035 Evaluation of 0 0 0 7/12/00

Accounting System

CA-CAR-00-036 Evaluation of 0 0 0 7/12/00

Proposal Submitted

CA-CAR-00-037 Evaluation of Incurred Costs 0 0 0 7/12/00

CA-CAR-00-038 Evaluation of Incurred Costs 0 0 0 7/12/00

CA-CAR-00-039 Evaluation of 0 0 0 7/14/00

Billing System

CA-CAR-00-040 Evaluation of Forward Pricing 0 0 0 7/27/00

Direct Labor Rates

CA-CAR-00-041 Evaluation of 0 0 0 7/27/00

Estimating Systems

CA-CAR-00-042 Evaluation of Time 580,338 0 0 7/28/00

and Material Proposal

CA-CAR-00-043 Evaluation of 0 0 0 7/28/00

Indefinite-Delivery,

Indefinite-Quantity Proposal

CA-CAR-00-044 Evaluation of 57,774 0 0 8/25/00

Indefinite-Delivery,

Indefinite-Quantity Proposal

CA-CAR-00-045 Evaluation of 160,053 0 0 8/25/00

Claim Submitted

CA-CAR-00-046 Evaluation of 82,314 61,065 0 8/25/00

Change Proposal Submitted

CA-CAR-00-047 Evaluation of Final 917,345 0 0 8/25/00

Close Out of Contract

CA-CAR-00-048 Evaluation of 0 0 0 8/28/00

Firm Fixed Price Proposal 

CA-CAR-00-049 Post Award Audit 0 0 0 8/29/00

CA-CAR-00-050 Evaluation of Closeout 0 0 0 8/29/00

of Contract

CA-CAR-00-051 Evaluation of 3,583,880 3,264,062 0 8/29/00

Firm Fixed Price Proposal

CA-CAR-00-052 Evaluation of Incurred Costs 0 0 0 8/31/00

CA-CAR-00-053 Evaluation of Proposed Rates 0 0 0 9/13/00

CA-CAR-00-054 Evaluation of 6,172,504 0 0 9/13/00

Firm Fixed Price Proposal

CA-CAR-00-055 Evaluation of 10,565,117 0 0 9/20/00

Firm Fixed Price Proposal

CA-CAR-00-056 Evaluation of Lease Costs $0 $0 $0 9/20/00

PAGE 97

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

CONTRACT AUDITS 
CA-CAR-00-057 Evaluation of $0 0 0 9/20/00

Indirect Expense Forward 

Pricing Rates

CA-CAR-00-058 Evaluation of 159,388 0 0 9/20/00

Firm Fixed Price Proposal

CA-CAR-00-059 Evaluation of Incurred Costs 49,120 0 0 9/20/00

CA-CAR-00-060 Evaluation of 235,534 235,534 0 9/26/00

Revised Claim Submitted 

CA-CAR-00-061 Evaluation of Amended 66,910 66,910 0 9/26/00

Claim B Submitted

CA-CAR-00-062 Evaluation of Incurred Costs 21,665 0 0 9/26/00

CA-CAR-00-063 Evaluation of Billing System 0 0 0 9/29/00

CA-CAR-00-064 Evaluation of 17,726,329 0 0 9/29/00

Firm Fixed Price Proposal

CA-CAR-00-065 Evaluation of 3,879,191 983,122 0 9/29/00

Firm Fixed Price Proposal

CA-LA-00-001 Review of Minority Postal-wide 0 0 0 7/14/00

Contracting Opportunities 

Under Advertising Contract

CA-LA-00-002 Review of Influence of Postal-wide 0 0 0 7/28/00

Postal Service Officials on

Contractors' Employment

of Consultants

FACILITY PROGRAM AUDITS

FA-AR-00-002 Salt Lake City District Salt Lake $0 $0 $0 6/30/00

2002 Winter Olympic Plans City District

FA-AR-00-003 Audit of New Postal-wide 0 0 0 9/28/00

Construction Owned

FA-AR-00-004 Review of Postal Service Postal-wide 0 0 0 9/29/00

Major Construction

Contracting Process

FA-AR-00-005 Seattle Processing and Seattle, WA 0 0 0 9/29/00

Distribution Center

FA-LA-00-002 Disposal of Chicago, IL 0 0 0 6/15/00

Chicago Post Office

FA-MA-00-004 Charlottesville Charlottesville, VA 0 0 2,439,690 4/3/00

Carrier Annex

FA-MA-00-005 Review of Selected Billing Postal-wide 0 0 0 6/8/00

Practices of a Postal Service

Telecommunications

Contractor

FA-MA-00-006 Quality of Drinking Water Anne Arundel 0 0 0 6/28/00

at Anne Arundel County, County, MD

Maryland Postal Facilities

FA-MA-00-007 Review of the Managed Postal-wide 0 0 58,200,000 7/28/00

Network Services Contract

& Billing Process of the

Contractor

FINANCIAL MANAGEMENT TOTALS $55,015,080

$5,304,442

$61,039,690

PAGE 98 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

CONTRACT AUDITS 
TECHNOLOGY

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

COMPUTER SECURITY

IS-LA-00-001(R) Adequacy of Security Postal-wide $0 $0 $0 5/31/00

Controls for the

Audit Tracking System

IS-AR-00-004 State of Computer Security Postal-wide 0 0 0 9/29/00

in the Postal Service

DEVELOPMENTAL

DA-MA-00-001 Corporate Call Postal-wide $0 $0 $0 4/10/00

Management Program

DA-MA-00-002 Priority Mail Processing Postal-wide 0 0 0 6/30/00

Center Network 

1999 Christmas Operations

DA-AR-00-003 Mailing Evaluation, Postal-wide 0 0 0 7/31/00

Readability, and Lookup

Instrument Program

(MERLIN)

DA-AR-00-004 Information Platform Postal-wide 0 0 0 9/28/00

Planning

DA-AR-00-005 Unresolved Accounting Postal-wide 0 0 0 9/28/00

Adjustments

DA-AR-00-006 Point of Service ONE Postal-wide 0 0 0 9/29/00

Phase II

ELECTRONIC COMMERCE

EC-AR-00-001 USPS eBillPay Security Postal-wide $0 $0 $0 9/5/00

and Privacy Issues

EC-TR-00-001 September 2000 Electronic Postal-wide 0 0 0 9/26/00

Commerce Testimony

TECHNOLOGY TOTALS $0 $0 $0

LABOR MANAGEMENT

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

HEALTH CARE

HC-AR-00-003 Lancaster Performance Allegheny Area $0 $0 $0 9/28/00

Cluster's Process for

Administering Continuation

of Pay Leave Benefits

HC-AR-00-001 South Jersey Performance Allegheny Area 0 0 0 9/28/00

Cluster's Process for

Administering Continuation

of Pay Leave Benefits

HC-AR-00-002 Erie Performance Cluster's Allegheny Area 0 0 0 9/29/00

Process for Administering

Continuation of Pay

Leave Benefits

LB-AR-00-002 Administration of Long Island District 0 0 0 9/29/00

Aspects of the Injury

Compensation Process -

Long Island District

PAGE 99
VIOLENCE IN THE WORKPLACE

LR-LA-00-001 Allegation of a Threat by a Mid-Atlantic Area $0 $0 $0 5/5/00

Supervisor at a Mid-Atlantic

Area Processing and

Distribution Center

LR-LA-00-003 Responsiveness to Spokane District 0 0 0 6/22/00

Congressional Inquiries

in Spokane District

LB-FR-00-001 Flash Report - New Jersey 0 0 0 9/8/00

Potential for Violence

LB-AR-00-010 Review of Violence Arkansas District 0 0 0 9/29/00

Prevention and Response

Programs in the

Arkansas District

LB-AR-00-008 Violence Prevention and Central Florida 0 0 0 9/29/00

Response Programs in the District

Central Florida District

LB-AR-00-003 Evaluation of Postal Service Postal-wide 0 0 0 9/29/00

Criteria for Workplace 

Violence Prevention and

Response Program

LB-AR-00-007 Review of the Violence North Florida District 0 0 0 9/29/00

Prevention and Response

Programs in the

North Florida District

LB-AR-00-006 Review of the Violence South Florida District 0 0 0 9/29/00

Prevention and Response

Programs in the

South Florida District

LB-AR-00-004 Review of the Violence Mississippi District 0 0 0 9/29/00

Prevention and Response

Programs in the 

Mississippi District

LB-AR-00-005 Review of the Violence South Georgia District 0 0 0 9/29/00

Prevention and Response

Programs in the 

South Georgia District

LB-AR-00-009 Review of the Violence Atlanta District 0 0 0 9/29/00

Prevention and Response

Programs in the 

Atlanta District

WORKPLACE CLIMATE

LR-LA-00-002 Allegations of Harassment Mid-Atlantic Area $0 $0 $0 5/5/00

by a Supervisor at a 

Mid-Atlantic Area

Post Office

LB-AR-00-001 Economic Value Added Postal-wide 0 0 0 7/31/00

Variable Pay Program

LB-MA-00-001 Management Postal-wide 0 0 0 8/29/00

Reassignment Actions

LABOR MANAGEMENT TOTALS $0 $0 $0

PAGE 100 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date
OVERSIGHT REVIEWS OF THE INSPECTION SERVICE

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

OV-MA-00-002 Review of Postal-wide $0 $0 $0 7/17/00

Postal Inspection Service

Forensic Scientist Salaries

OV-MA-00-003 Review of Postal-wide 0 0 0 8/25/00

Area Case Investigations

OV-AR-00-001 Inspection Service Self- Postal-wide 0 0 0 8/29/00

Referral Counseling Program

OV-AR-00-005 Review of the Postal-wide 0 0 0 9/29/00

United States Postal

Inspection Service

Budget Process

OV-AR-00-002 Audit of the Inspection Postal-wide 0 0 0 9/29/00

Service Reporting of

Cost-Avoidance Savings

Under the Fraudulent

Workers' Compensation

Program

OV-AR-00-004 Postal Inspection Service Postal-wide 0 0 0 9/29/00

Disciplinary Process for

Nonbargaining Employees

OV-AR-00-003 Inspection Service Postal-wide 0 0 0 9/29/00

Awards Program for Law

Enforcement Employees

OVERSIGHT TOTALS $0 $0 $0

OTHER SIGNIFICANT REVIEWS

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

99CX004EX000 Executive Investigations $0 $0 $0 5/4/00

98CX029EX000 Executive Investigations 0 0 0 6/16/00

00CX018EX000 Executive Investigations 0 0 0 6/14/00

98CX042EX000 Executive Investigations 0 0 0 5/12/00

00CX014EX000 Executive Investigations 0 0 0 5/9/00

00CX006EX000 Executive Investigations 0 0 0 9/13/00

00CX066EX000 Executive Investigations 0 0 0 9/14/00

00CX024EX000 Executive Investigations 0 0 0 9/12/00

00CX027EX000 Executive Investigations 0 0 0 9/5/00

00CX025EX000 Executive Investigations 0 0 0 6/7/00

99CX027EX0PI Executive Investigations 0 0 0 4/26/00

99CX007EX000 Executive Investigations 0 0 0 8/11/00

98CX043EX000 Executive Investigations 0 0 0 5/22/00

98CX003EX000 Executive Investigations 0 0 0 8/4/00

00CX031EX000 Executive Investigations 0 0 0 6/24/00

00CX046EX00C Executive Investigations 0 0 0 9/27/00

00CX020EX000 Executive Investigations 0 0 0 8/29/00

99CX035EX000 Executive Investigations 0 0 0 9/11/00

00CX010EX000 Executive Investigations 0 0 0 5/18/00

99CX020EX000 Executive Investigations 0 0 0 5/1/00

00CX015EX000 Executive Investigations 0 0 0 4/4/00

PAGE 101
00CX026EX000 Executive Investigations $0 $0 $0 5/16/00

99CX009EX000 Executive Investigations 0 0 0 6/8/00

OIG TOTALS $60,215,080

$10,504,442

$139,674,085

PAGE 102 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date
INSPECTION SERVICE REPORTS

PERFORMANCE

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

ACCEPTING AND PROCESSING, TRANSPORTATION, DELIVERY AND ENABLING FUNCTIONS

044-1248530-PA(2) Location of Small Post OfficesBoston, MA 02210 $0 $0 $0 08/01/00

043-1274900-PA(2) Facilities Service Office Buffalo, NY 14202 0 0 0 09/28/00

042-1290280-PA(2)3 FLSA Reviews New York, NY 10116 0 0 0 01/03/00

SERVICE INVESTIGATIONS

072-1277924-SI(2)3 International Air Jersey City, NJ 07096 $0 $0 $0 2/18/00

Carrier Service

071-1307159-SI(2) Aviation Security New York, NY 10116 0 0 0 05/08/00

Screening Program

070-1289991-SI(1)3 Savings Opportunities Washington, DC 20260 0 0 0 10/12/99

091-1308234-SI(2)3 Observation of Honolulu, HI 96820 0 0 0 3/13/00

Mail Conditions

071-1307844-SI(2) Census 2000 Audit Washington, DC 20260 0 0 0 05/01/00

PERFORMANCE TOTALS $ 0 $ 0 $ 0

FINANCIAL MANAGEMENT

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

CONTRACT AUDITS

184-1126310-AC(1) Contract Audit New York, $514,696 $0 $0 4/3/00

NY 10017

184-1254390-AC(1) Contract Audit New York, 644 0 0 8/30/00

NY 10017

184-1225141-AC(1) Contract Audit New York, 0 0 0 8/30/00

NY 10153

184-1210121-AC(1) Contract Audit New York, 574,869 0 0 8/30/00

NY 10017

FINANCIAL INSTALLATION AUDITS

013-1299606-AF(1) Financial Installation Audit Paramount, CA 90723 $0 $0 $0 04/17/00

011-1298934-AF(1) Financial Installation Audit Tampa, FL 33630 0 0 0 04/01/00

011-1298836-AF(1) Financial Installation Audit Merced, CA 95340 0 0 0 04/04/00

013-1300155-AF(1) Financial Installation Audit Conway, AR 72032 0 0 0 04/04/00

011-1300514-AF(1) Financial Installation Audit Reading, PA 19612 0 0 0 04/04/00

011-1300215-AF(1) Financial Installation Audit Topeka, KS 66603 0 0 0 04/05/00

011-1302404-AF(1) Financial Installation Audit Downers Grove, IL 60515 0 0 0 04/05/00

011-1298888-AF(1) Financial Installation Audit Jacksonville, FL 32203 0 0 0 04/06/00

011-1299223-AF(1) Financial Installation Audit Franklin, KY 42134 0 0 0 04/07/00

011-1302194-AF(1) Financial Installation Audit Clinton, IL 61727 0 0 0 04/11/00

011-1302195-AF(1) Financial Installation Audit Peoria, IL 61601 0 0 0 04/11/00

011-1300983-AF(1) Financial Installation Audit Toledo, OH 43601 0 0 0 04/12/00

011-1302221-AF(1) Financial Installation Audit Chicago, IL 60607 0 0 0 04/13/00

011-1300151-AF(1) Financial Installation Audit New Orleans, LA 70113 0 0 0 04/17/00

PAGE 103

3 These reports were issued in a prior Semiannual Reporting period; however, they were not entered

into the Inspection Service database information system until the current reporting period. To

ensure all reports issued to management are reported to Congress, these reports are being included

during this reporting period.
011-1298835-AF(1) Financial Installation Audit Sacramento, CA 95815 0 0 0 04/18/00

014-1300241-AF(1) Financial Installation Audit Renton, WA 98058 0 0 0 04/07/00

014-1300249-AF(1) Financial Installation Audit Seattle, WA 98109 0 0 0 04/13/00

014-1301274-AF(1) Financial Installation Audit New Buffalo, MI 49117 0 0 0 04/14/00

015-1301287-AF(1) Financial Installation Audit Dunreith, IN 47337 0 0 0 04/14/00

011-1301270-AF(1) Financial Installation Audit Midland, MI 48640 0 0 0 04/28/00

013-1299925-AF(1)3 Financial Installation Audit San Diego, CA 92123 0 0 0 02/23/00

011-1298893-AF(1) Financial Installation Audit Greenville, SC 29612 0 0 0 04/17/00

011-1298894-AF(1) Financial Installation Audit Greenville, SC 29602 0 0 0 04/17/00

011-1300505-AF(1) Financial Installation Audit Mechanicsburg, PA 17055 0 0 0 04/12/00

011-1299048-AF(1) Financial Installation Audit Clarksville, TN 37043 0 0 0 04/11/00

011-1300499-AF(1) Financial Installation Audit Harrisburg, PA 17105 0 0 0 04/06/00

011-1298889-AF(1) Financial Installation Audit Tallahassee, FL 32301 0 0 0 04/03/00

011-1300038-AF(1) Financial Installation Audit Seattle, WA 98101 0 0 0 04/20/00

011-1299790-AF(1) Financial Installation Audit Richmond, VA 23230 0 0 0 04/25/00

011-1298648-AF(1) Financial Installation Audit Farmingdale, NY 11735 0 0 0 04/14/00

011-1298657-AF(1) Financial Installation Audit Central Islip, NY 11722 0 0 0 04/26/00

013-1299033-AF(1) Financial Installation Audit McDonough, GA 30253 0 0 0 04/21/00

012-1299206-AF(1) Financial Installation Audit Worcester, MA 01613 0 0 0 04/25/00

014-1301255-AF(1) Financial Installation Audit Carleton, MI 48117 0 0 0 04/20/00

011-1299059-AF(1) Financial Installation Audit Birmingham, AL 35217 0 0 0 04/21/00

011-1299792-AF(1) Financial Installation Audit Washington, DC 20066 0 0 0 03/30/00

011-1300202-AF(1) Financial Installation Audit Madison, WI 53714 0 0 0 05/08/00

014-1299031-AF(1) Financial Installation Audit Jackson, GA 30233 0 0 0 05/04/00

011-1298654-AF(1) Financial Installation Audit Mendota, IL 61342 0 0 0 05/12/00

011-1299239-AF(1) Financial Installation Audit Omaha, NE 68108 0 0 0 05/12/00

011-1301286-AF(1) Financial Installation Audit Terre Haute, IN 47802 0 0 0 05/10/00

011-1301866-AF(1) Financial Installation Audit Boston, MA 02205 0 0 0 05/11/00

011-1299743-AF(1) Financial Installation Audit Chanhassen, MN 55317 0 0 0 05/11/00

014-1298699-AF(1) Financial Installation Audit Monticello, NY 12701 0 0 0 05/09/00

015-1300530-AF(1) Financial Installation Audit Jean, NV 89019 0 0 0 05/09/00

011-1298645-AF(1) Financial Installation Audit Jericho, NY 11753 0 0 0 05/15/00

011-1298833-AF(1) Financial Installation Audit Folsom, CA 95630 0 0 0 05/17/00

015-1300520-AF(1) Financial Installation Audit Salford, PA 18957 0 0 0 04/27/00

011-1298834-AF(1) Financial Installation Audit Rancho Cordova, 0 0 0 05/11/00

CA 95670

011-1300245-AF(1) Financial Installation Audit Lincoln, NE 68501 0 0 0 05/17/00

011-1298882-AF(1) Financial Installation Audit Frankfort, KY 40601 0 0 0 05/17/00

011-1299057-AF(1) Financial Installation Audit Birmingham, AL 35203 0 0 0 05/17/00

013-1299932-AF(1) Financial Installation Audit Los Angeles, CA 90015 0 0 0 05/18/00

013-1299950-AF(1) Financial Installation Audit Los Angeles, CA 90025 0 0 0 05/18/00

014-1300986-AF(1) Financial Installation Audit Uniontown, OH 44685 0 0 0 05/19/00

012-1299195-AF(1) Financial Installation Audit Buffalo, NY 14240 0 0 0 05/26/00

011-1298884-AF(1) Financial Installation Audit Shepherdsville, KY 40165 0 0 0 05/25/00

012-1300526-AF(1) Financial Installation Audit Rapid City, SD 57701 0 0 0 05/16/00

015-1300525-AF(1) Financial Installation Audit Oliver, PA 15472 0 0 0 05/01/00

011-1301284-AF(1) Financial Installation Audit Terre Haute, IN 47803 0 0 0 05/18/00

011-1300147-AF(1) Financial Installation Audit Grand Prairie, TX 75051 0 0 0 05/22/00

011-1302200-AF(1) Financial Installation Audit Bridgeview, IL 60455 0 0 0 05/24/00

PAGE 104 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date
014-1298802-AF(1) Financial Installation Audit Gilroy, CA 95020 0 0 0 05/17/00

014-1300521-AF(1) Financial Installation Audit Holmes, PA 19043 0 0 0 05/25/00

011-1299815-AF(1) Financial Installation Audit Gaithersburg, MD 20898 0 0 0 05/31/00

014-1301277-AF(1) Financial Installation Audit Fenton, MI 48430 0 0 0 05/18/00

013-1298752-AF(1) Financial Installation Audit Sacramento, CA 95825 0 0 0 05/22/00

011-1300210-AF(1) Financial Installation Audit Waseca, MN 56093 0 0 0 06/06/00

012-1301278-AF(1) Financial Installation Audit Grand Rapids, MI 49599 0 0 0 05/16/00

011-1299697-AF(1) Financial Installation Audit Waite Park, MN 56387 0 0 0 05/18/00

014-1298646-AF(1) Financial Installation Audit Aquebogue, NY 11931 0 0 0 06/05/00

014-1299196-AF(1) Financial Installation Audit Lancaster, NY 14086 0 0 0 06/06/00

011-1301267-AF(1) Financial Installation Audit Grand Rapids, MI 49599 0 0 0 06/12/00

014-1300987-AF(1) Financial Installation Audit Wadsworth, OH 44281 0 0 0 06/09/00

011-1299216-AF(1) Financial Installation Audit Dundee, IL 601180 0 0 0 06/09/00

011-1302224-AF(1) Financial Installation Audit Carol Stream, IL 60188 0 0 0 06/09/00

011-1302222-AF(1) Financial Installation Audit Bensenville, IL 60106 0 0 0 06/09/00

014-1298989-AF(1) Financial Installation Audit Wildwood, FL 34785 0 0 0 06/12/00

011-1301290-AF(1) Financial Installation Audit Louisville, KY 40231 0 0 0 06/12/00

011-1299045-AF(1) Financial Installation Audit Knoxville, TN 37950 0 0 0 06/15/00

011-1300513-AF(1) Financial Installation Audit Southampton, PA 18966 0 0 0 06/13/00

011-1301508-AF(1) Financial Installation Audit Altoona, PA 16601 0 0 0 06/14/00

014-1300510-AF(1) Financial Installation Audit Milford, PA 18337 0 0 0 06/14/00

011-1299227-AF(1) Financial Installation Audit Newark, NJ 07102 0 0 0 06/15/00

011-1298985-AF(1) Financial Installation Audit South Holland, IL 60473 0 0 0 06/16/00

014-1299924-AF(1)3 Financial Installation Audit Claremont, CA 91711 0 0 0 12/14/99

011-1298830-AF(1) Financial Installation Audit Medford, OR 97501 0 0 0 06/14/00

014-1300240-AF(1) Financial Installation Audit Salida, CO 82101 0 0 0 06/07/00

011-1300494-AF(1) Financial Installation Audit Wilmington, DE 19808 0 0 0 06/27/00

011-1299603-AF(1) Financial Installation Audit Long Beach, CA 90809 0 0 0 06/16/00

011-1300060-AF(1) Financial Installation Audit Sioux Falls, SD 57104 0 0 0 06/19/00

011-1299214-AF(1) Financial Installation Audit Mundelein, IL 60060 0 0 0 06/23/00

011-1299197-AF(1) Financial Installation Audit Hartford, CT 06101 0 0 0 06/28/00

011-1300154-AF(1) Financial Installation Audit Tulsa, OK 74103 0 0 0 06/22/00

011-1300991-AF(1) Financial Installation Audit Cleveland, OH 44101 0 0 0 06/23/00

011-1301282-AF(1) Financial Installation Audit Seymour, IN 47274 0 0 0 06/09/00

011-1300216-AF(1) Financial Installation Audit Green Bay, WI 54303 0 0 0 06/26/00

014-1298810-AF(1) Financial Installation Audit Payette, ID 83661 0 0 0 06/12/00

011-1298639-AF(1) Financial Installation Audit Hicksville, NY 11801 0 0 0 07/13/00

012-1298993-AF(1) Financial Installation Audit Pembroke Pines, FL 33082 0 0 0 07/12/00

011-1299199-AF(1) Financial Installation Audit Torrington, CT 06790 0 0 0 07/19/00

014-1300994-AF(1) Financial Installation Audit Greenville, KY 42345 0 0 0 07/19/00

011-1300213-AF(1) Financial Installation Audit Mt. Pleasant, IA 52641 0 0 0 07/20/00

014-1299189-AF(1) Financial Installation Audit Boonville, NY 13309 0 0 0 07/26/00

015-1299226-AF(1) Financial Installation Audit St. Paul, MN 55101 0 0 0 07/14/00

011-1299224-AF(1) Financial Installation Audit St. Paul, MN 55164 0 0 0 07/14/00

014-1302407-AF(1) Financial Installation Audit Bartonville, IL 61607 0 0 0 07/10/00

011-1300244-AF(1) Financial Installation Audit Milwaukee, WI 53202 0 0 0 07/07/00

011-1300992-AF(1) Financial Installation Audit Berea, OH 44017 0 0 0 07/12/00

011-1300243-AF(1) Financial Installation Audit Milwaukee, WI 53203 0 0 0 07/07/00

PAGE 105

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date
011-1299822-AF(1) Financial Installation Audit Winston-Salem, 0 0 0 07/07/00

NC 27120

011-1299747-AF(1) Financial Installation Audit Pomona, CA 91766 0 0 0 07/06/00

014-1300221-AF(1) Financial Installation Audit Yankton, SD 57078 0 0 0 07/06/00

011-1299820-AF(1) Financial Installation Audit Washington, NC 27889 0 0 0 07/05/00

011-1302378-AF(1) Financial Installation Audit Carol Stream, IL 60188 0 0 0 06/26/00

011-1299225-AF(1) Financial Installation Audit St. Paul, MN 55113 0 0 0 07/21/00

012-1300222-AF(1) Financial Installation Audit Aberdeen, SD 57401 0 0 0 07/26/00

011-1300229-AF(1) Financial Installation Audit Kenosha, WI 53140 0 0 0 07/27/00

011-1299939-AF(1) Financial Installation Audit Kansas City, MO 64108 0 0 0 07/05/00

011-1299917-AF(1) Financial Installation Audit Butler, MN 55403 0 0 0 07/05/00

012-1299745-AF(1) Financial Installation Audit Vista, CA 92083 0 0 0 07/11/00

014-1299317-AF(1) Financial Installation Audit Port Townsend, 0 0 0 07/26/00

WA 98368

014-1299191-AF(1) Financial Installation Audit Dolgeville, NY 13329 0 0 0 07/31/00

011-1299056-AF(1) Financial Installation Audit Montgomery, AL 36119 0 0 0 07/31/00

011-1299619-AF(1) Financial Installation Audit Los Angeles, CA 90052 0 0 0 08/02/00

011-1300996-AF(1) Financial Installation Audit Versailles, KY 40383 0 0 0 08/02/00

014-1300995-AF(1) Financial Installation Audit Winchester, KY 40391 0 0 0 08/02/00

011-1298650-AF(1) Financial Installation Audit Flushing, NY 11351 0 0 0 08/03/00

011-1299232-AF(1) Financial Installation Audit Union City, NJ 07087 0 0 0 08/04/00

013-1299611-AF(1) Financial Installation Audit Inglewood, CA 90311 0 0 0 08/04/00

011-1301229-AF(1) Financial Installation Audit Allen Park, MI 48233 0 0 0 08/07/00

011-1300150-AF(1) Financial Installation Audit Missouri City, TX 77489 0 0 0 08/14/00

011-1299184-AF(1) Financial Installation Audit Saratoga, NY 12866 0 0 0 08/15/00

015-1301273-AF(1) Financial Installation Audit Reed City, MI 49677 0 0 0 07/19/00

011-1299929-AF(1) Financial Installation Audit Los Angeles, CA 90052 0 0 0 05/08/00

011-1299198-AF(1) Financial Installation Audit Old Saybrook, CT 06475 0 0 0 08/18/00

011-1299789-AF(1) Financial Installation Audit Richmond, VA 23232 0 0 0 05/01/00

011-1299818-AF(1) Financial Installation Audit Raleigh, NC 27676 0 0 0 05/15/00

011-1304153-AF(1) Financial Installation Audit Princeton, NJ 08540 0 0 0 08/18/00

015-1299935-AF(1) Financial Installation Audit Ontario, CA 91764 0 0 0 08/21/00

014-1299186-AF(1) Financial Installation Audit Coxsackie, NY 12051 0 0 0 08/25/00

011-1300205-AF(1) Financial Installation Audit Beaver Dam, WI 53916 0 0 0 08/28/00

011-1300984-AF(1) Financial Installation Audit Toledo, OH 43601 0 0 0 05/12/00

014-1299030-AF(1) Financial Installation Audit Atlanta, GA 30316 0 0 0 08/28/00

011-1299602-AF(1) Financial Installation Audit Kansas City, MO 64101 0 0 0 06/22/00

011-1300201-AF(1) Financial Installation Audit Effingham, IL 62401 0 0 0 08/31/00

011-1298832-AF(1) Financial Installation Audit San Jose, CA 95101 0 0 0 08/25/00

015-1301865-AF(1) Financial Installation Audit Pompey, NY 13138 0 0 0 09/07/00

011-1302223-AF(1) Financial Installation Audit Franklin Park, IL 60131 0 0 0 08/31/00

011-1300148-AF(1) Financial Installation Audit Ft. Worth, TX 76161 0 0 0 09/06/00

015-1299192-AF(1) Financial Installation Audit Calcium, NY 13616 0 0 0 09/05/00

011-1302197-AF(1) Financial Installation Audit Pontiac, IL 61764 0 0 0 09/07/00

011-1300146-AF(1) Financial Installation Audit Dallas, TX 75260 0 0 0 09/07/00

011-1299207-AF(1) Financial Installation Audit Randolph, MA 02368 0 0 0 09/08/00

011-1300149-AF(1) Financial Installation Audit Houston, TX 77201 0 0 0 09/08/00

011-1299773-AF(1) Financial Installation Audit Thousand Oaks, 0 0 0 07/02/00

CA 91360

PAGE 106 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date
DISTRICT ACCOUNTING OFFICE AUDITS

188-1300427-AF(2) Financial Installation Audit Little Rock, AR 72205 $0 $0 $0 04/18/00

188-1300042-AF(2) Financial Installation Audit Seattle, WA 98168 0 0 0 04/19/00

016-1299248-AF(2) Financial Installation Audit Newark, NJ 07102 0 0 0 04/21/00

016-1300033-AF(2) Financial Installation Audit Seattle, WA 98109 0 0 0 04/18/00

188-1299249-AF(2) Financial Installation Audit Newark, NJ 07102 0 0 0 04/28/00

016-1302205-AF(2) Financial Installation Audit St. Louis, MO 63155 0 0 0 04/27/00

016-1300400-AF(2) Financial Installation Audit Coppell, TX 75099 0 0 0 05/10/00

188-1301279-AF(2) Financial Installation Audit Grand Rapids, MI 49599 0 0 0 05/22/00

016-1300401-AF(2) Financial Installation Audit Oklahoma City, OK 73125 0 0 0 06/20/00

016-1301280-AF(2) Financial Installation Audit Grand Rapids, MI 49599 0 0 0 06/09/00

016-1300988-AF(2) Financial Installation Audit Cleveland, OH 44101 0 0 0 06/22/00

188-1300989-AF(2) Financial Installation Audit Cleveland, OH 44101 0 0 0 06/22/00

016-1302233-AF(2) Financial Installation Audit Richmond, VA 23232 0 0 0 04/27/00

016-1300399-AF(2) Financial Installation Audit Little Rock, AR 72205 0 0 0 06/28/00

016-1299922-AF(2) Financial Installation Audit Minneapolis, MN 55402 0 0 0 08/04/00

188-1299947-AF(2) Financial Installation Audit Minneapolis, MN 55402 0 0 0 08/02/00

016-1302543-AF(2) Financial Installation Audit Bedford Park, IL 60499 0 0 0 08/14/00

188-1302403-AF(2) Financial Installation Audit Bedford Park, IL 60499 0 0 0 08/18/00

016-1298678-AF(2) Financial Installation Audit San Francisco, CA 94188 0 0 0 08/29/00

188-1299176-AF(2) Financial Installation Audit New Haven, CT 06500 0 0 0 08/30/00

188-1299017-AF(2) Financial Installation Audit Jackson, MS 39205 0 0 0 08/30/00

FINANCIAL INVESTIGATIONS

173-1308487-PVS(1)3 Delivery Point Sequence South, FL 33082 $0 $0 $0 03/02/00

017-1312706-FI(2) Financial Audit Halsey, OR 97348 0 0 0 05/01/00

017-1311604-FI(2) Financial Audit Clark Fork, ID 83811 0 0 0 05/05/00

017-1312705-FI(2) Financial Audit Murphy, ID 83650 0 0 0 05/11/00

017-1312709-FI(2) Financial Audit Melba, ID 83641 0 0 0 05/01/00

017-1315949-FI(2) Financial Audit Wishram, WA 98673 0 0 0 06/22/00

017-1311413-FI(2) Financial Audit East Otto, NY 14729 0 0 0 05/16/00

824-1314103-FI(3) Financial Investigation Monroe, OH 45056 0 0 0 05/31/00

830-1312659-FI(1) Financial Investigation Milwaukee, WI 53237 0 0 0 06/15/00

017-1315820-FI(2) Financial Audit Orondo, WA 98843 0 0 0 07/17/00

798-1291938-ICR(1) Registered Mail Royal Oak, MI 48068 0 0 0 07/28/00

822-1305289-FI(1) Financial Investigation Mooresville, IN 46158 0 0 0 04/13/00

833-1317409-FI(1) Financial Investigation Chicago, IL 60646 0 0 0 07/28/00

017-1317904-FI(2) Financial Audit Raymond, WA 98577 0 0 0 08/21/00

830-1230138-FI(1) Embezzlement San Bernardino, 0 0 0 04/07/00

CA 92401

017-1320223-FI(2) Financial Audit Atlanta, NY 14808 0 0 0 09/01/00

017-1318989-FI(2) Financial Audit Stockton, NY 14784 0 0 0 09/01/00

447-1307663-ECM(3)3 Arrow Key Inventory Anchorage, AK 99508 0 0 0 02/15/00

REVENUE INVESTIGATIONS

061-1299273-RI(1) Postage Meter Framingham, MA 01702 $0 $0 $0 04/07/00

061-1302035-RI(1) Postage Meter Fairfield, NJ 07004 0 0 0 04/05/00

061-1301199-RI(1) Postage Meter McLean, VA 22102 0 0 0 04/07/00

384-1311120-RI(1)3 Postage Meter Washington, IA 52353 0 0 0 03/27/00

061-1305920-RI(1) Postage Meter City of Industry, 0 0 0 04/28/00

CA 91748

PAGE 107

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date
061-1312692-RI(1) Postage Meter Miamisburg, OH 45342 0 0 0 05/12/00

065-1305006-RI(1) Periodical Mail Chicago, IL 60659 0 0 0 05/16/00

061-1305652-RI(1) Postage Meter Wallingford, CT 06492 0 0 0 06/02/00

064-1314004-RI(1) First-Class Mail Norfolk, VA 23501 0 0 0 05/26/00

064-1314745-RI(1) First-Class Mail Arlington Heights, 0 0 0 06/01/00

IL 60004

065-1249966-RI(1) Periodical Mail King of Prussia, PA 19406 0 0 0 05/02/00

068-1314597-RI(1) First-Class Mail Bradenton, FL 34208 0 0 0 06/21/00

069-1312663-RI(2) Express Mail Review Tampa, FL 33622 0 0 0 05/25/00

409-1315507-ECM(2)Bait Money Order Program Miami, FL 33128 0 0 0 06/20/00

061-1296645-RI(1) Postage Meter Lisle, IL 60532 0 0 0 07/05/00

062-1290923-RI(1) Nonprofit Mail Wilkes-Barre, PA 18701 0 0 0 06/19/00

920-1242149-RI(1) Plant Loads Bala Cynwyd, PA 14202 0 0 0 04/03/00

FINANCIAL MANAGEMENT TOTALS $1,090,209 $ 0 $ 0

INSPECTION SERVICE TOTALS $1,090,209 $ 0 $ 0

GRAND TOTALS $61,305,289 

$10,504,442

$139,674,085

PAGE 108 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date
APPENDIX B

Findings of Questioned Costs

For the period April 1, 2000, through September 30, 2000

OFFICE OF INSPECTOR GENERAL AND INSPECTION SERVICE

Unsupported

Costs

Total Included In

Number of Questioned Questioned

Description Reports Costs Costs

Reports for which no management decision was made at the 

beginning of the reporting period 20 $292,730,104 $13,151,513

Reports requiring management decision that were issued 

during the reporting period 29 61,305,289 10,504,442

TOTALS 49 $354,035,393 $23,655,955

Reports for which a management decision was made 

during the reporting period (i+ii) 9 $277,144,395 $5,757,046

(i) Dollar Value of disallowed cost $272,041,133

(ii) Dollar value of cost not disallowed $5,103,262

Reports for which no management decision was 

made by the end of the reporting period. 

Negotiations are ongoing. 40 $76,890,998 $17,898,909

Reports for which no management decision was 

made within six months of issuance 

(See Note 1 for a list of individual reports) 9 $8,770,318 $1,741,537

Reports for which no management decision was 

made within one year of issuance 

(See Note 2 for a list of individual reports) 3 $7,131,716 $5,841,563

Note 1 – Reports for which no management decision was made within six months of issuance:

OFFICE OF INSPECTOR GENERAL

Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Project Type Costs Costs

2/21/00 CA-CAR-00-006 Contract Audit $121,452 $54,185

3/6/00 CA-CAR-00-011 Contract Audit 36,490 0

3/14/00 CA-CAR-00-014 Contract Audit 38,607 0

3/14/00 CA-CAR-00-015 Contract Audit 464,644 0

3/29/00 CA-CAR-00-018 Contract Audit 90,366 0

3/31/00 CA-MA-00-001 Contract Audit Practices 92,214 0

2/29/00 TR-AR-00-005 Southwest Area Expenditures for 848,000 0

Extra Highway Trips Using

Leased Equipment

OIG TOTAL $1,691,773 $54,185

PAGE 109
INSPECTION SERVICE

Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Project Type Costs Costs

11/17/99 181-1294644-AC(1) Contract Audit $7,063,747 $1,675,877

3/22/00 184-1289120-AC(1) Contract Audit 14,798 11,475

INSPECTION SERVICE TOTAL $7,078,545 $1,687,352

TOTAL $8,770,318 $1,741,537

Note 2 – Reports for which no management decision was made within one year of issuance:

INSPECTION SERVICE

Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Project Type Costs Costs

07/28/99 184-1259633-AC(1) Contract Audit $29,758 $ 0

12/07/98 184-1243166-AC(1) Contract Audit 7,087,038 5,841,563

03/12/98 182-1224877-AC(1) Contract Audit 14,920 0

INSPECTION SERVICE TOTAL $7,131,716 $5,841,563

PAGE 110 APPENDICES
APPENDIX C

Recommendations That Funds

Be Put to Better Use

For the period April 1, 2000, through September 30, 2000

OFFICE OF INSPECTOR GENERAL AND INSPECTION SERVICE

Number of

Description Reports Dollar Value

Reports for which no management decision was made at 

the beginning of the reporting period 20 $44,735,617

Reports requiring a management decision that were issued 

during the reporting period 6 $139,674,085

TOTALS 26 $184,409,702

Reports for which a management decision was made during the report period (i+ii+iii) 15 $76,277,584

(i) Value of recommendations implemented by management $71,166,922

(ii) Value of recommendations that management did not recover $5,110,662

(iii) Value of recommendations that management did not agree to implement $ 0

Reports for which no management decision was made by the end of the 

reporting period. 11 $108,132,118

Reports for which no management decision was made within six months of issuance 

(See Note 1 for a list of individual reports) 1 $5,073,926

Reports for which no management decision was made within one year of issuance 

(See Note 2 for a list of individual reports) 8 $24,775,797

Note 1 – Reports for which no management decision was made within six months of issuance:

Recommend

Report Case Funds Put to

Date Number Project Type Better Use

3/29/00 039-1295484-PA(2) Transportation Operations $5,073,926

TOTAL $5,073,926

Note 2 – Reports for which no management decision was made within one year of issuance:

Recommend

Report Case Funds Put to

Date Number Project Type Better Use

10/30/98 181-1252372-AC(1) Contract Audit $1,710,680

12/18/98 181-1253441-AC(1) Contract Audit 145,532

11/24/98 181-1254410-AC(1) Contract Audit 137,480

04/14/98 181-1237199-AC(1) Contract Audit 14,156,740

05/20/95 181-1165940-AC(1) Contract Audit 8,370,460

06/15/99 181-1288561-AC(1) Contract Audit 94,303

08/27/99 181-1294162-AC(1) Contract Audit 122,861

09/20/99 181-1296773-AC(1) Contract Audit 37,741

TOTALS $24,775,797

PAGE 111
APPENDIX D

Unresolved Reports

For the period April 1, 2000, through September 30, 2000

OFFICE OF INSPECTOR GENERAL AND INSPECTION SERVICE

Number of Total 

Number of Inspection Service Number of

Description OIG Reports Reports Reports

Reports Unresolved At The Beginning

Of Period

Reports Issued Before 10/01/99 10 23 33

Reports Issued Prior Period, 3/31/00 3 42 45

Total Reports 13 65 78

Reports Issued This Period, 9/30/00 3 220 223

Total Reports1 16 285 301

Reports Resolved:

Issued Before 10/01/99 10 9 19

Issued Prior Period 3/31/00 2 30 32

Issued This Period 9/30/00 0 190 190

Tota1 Resolved 12 229 241

Reports Unresolved as of 9/30/00

One year or more (10/01/99) 

(See Note 1 For A List Of Individual Reports) 0 14 14

Six months or more but less than one year, 4/1/00 

(See Note 2 For A List Of Individual Reports) 1 12 13

Less Than Six Month 3 30 33

TOTAL UNRESOLVED 4 56 60

Reports Resolved Where Management Did Not Agree to 

Implement All Recommendation 12 4 16

PAGE 112 APPENDICES

1 Excludes audits previously reported, in Appendix B - Findings of Questioned Costs; and 

Appendix C - Recommendations That Funds Be Put To Better Use.
Note 1 – List of reports pending one year or more:

INSPECTION SERVICE

Issue Report/Case

Date Number Condition

08/12/97 007-1199652-AD(1) EDP Controls, San Mateo, CA -- Management is progressing in testing critical applications and providing off-site storage for critical files. 

12/31/97 069-1188871-RI(2) Inbound Verification Procedures, Jersey City, NJ -- Management is continuing to develop action plans to verify inbound foreign mail.

05/11/98 027-1204380-PA(1) National Audit on Effectiveness of Employee Reassignments --

Management is developing integrated policies and procedures on reassignment processes and providing attention in complement planning initiatives.

05/12/98 023-1209811-PA(1) National Audit on Air Transportation Networks -- Management is preparing operating plans and corrective actions are being taken.

06/05/98 024-1214098-PA(1) National Audit on City Route Inspections and Adjustment Process --

Management is developing instructions to review, train, and increase supervision for the route inspection/adjustment process and the associated monitoring of savings.

09/15/98 020-1220283-PA(1) National Audit on Postal Retail Stores -- Management is developing procedures in retail operations and a handbook and instruction are being updated.

09/28/98 061-1234452-RI(1) Postage Meter, Chicago, IL -- Management is in the process of reconciling

the movement of meters from customers to the direct distribution center.

09/30/98 007-1225935-AD(1) EDP Controls, St. Paul, MN -- Management is concluding administrative

security review.

12/30/98 023-1223496-PA(1) National Audit on Logistics and Transportation -- Management is in the

process of implementing recommendations regarding air-to-surface mail

routing.

12/30/98 061-1262023-RI(1) Postage Meter, Southington, CT -- Management is in the process of implementing recommendations regarding meter inventories and meter control.

03/17/99 022-1244541-PA(1) National Audit on Priority Mail -- Management is developing procedures to

ensure efficient and effective processing of priority mail.

04/19/99 072-1254408-SI(2) Mail Service Review, Chicago, IL -- Management is currently re-evaluating

maintenance staffing issues.

05/22/99 061-1263973-RI(1) Postage Meter, Washington, DC -- Management is in the process of implementing internal control recommendations.

08/13/99 011-1256263-AF(1) Financial Installation Audit, Chicago, IL -- Management is in the process of

implementing recommendations relating to employee accountabilities, stamp

stock destruction, post office box/caller service and stamp inventories.

PAGE 113
Note 2 - List of reports pending six months but less than one year:

OFFICE OF INSPECTOR GENERAL

Issue Report/Case

Date Number Report Name

3/31/00 RG-AR-00-002 Review of the Breast Cancer Research Stamp Program 

INSPECTION SERVICE

Issue Report/Case

Date Number Condition

10/05/99 052-1290664-PA(3) Flat Operations, San Antonio, TX -- Management is in the process of

implementing recommendations regarding flat sorter staffing and compensation levels.

11/23/99 016-1298651-AF(2) District Accounting Office, White Plains, NY -- Management is in the

process of reconciling money order differences.

12/22/99 011-1299727-AF(1) Financial Installation Audit, Capital Heights, MD -- Management is implementing internal controls over postage due and business reply mail trust

funds.

01/28/00 071-1294372-SI(2) Operation Review, Allen Park, MI -- Management is in the process of

implementing recommendations over flat operations, flat sorter staffing and

scheduling and compensation levels.

01/31/00 011-1298652-AF(1) Financial Installation Audit, Floral Park, NY -- Management is implementing internal controls over capital property and local disbursements.

02/07/00 011-1301231-AF(1) Financial Installation Audit, Southfield, MI -- Management is implementing internal controls over retail store stamp accountability.

02/08/00 038-1292495-PA(2) Delivery Automation, Western Area -- Management is in the process of

implementing recommendation regarding flat sorting operations.

02/28/00 011-1299730-AF(1) Financial Installation Audit, Rockville, MD -- Management is implementing internal controls over post office box operations.

02/29/00 011-1299938-AF(1) Financial Installation Audit, San Diego, CA -- Management is implementing internal controls over retail store stamp accountability.

03/16/00 011-1302405-AF(1) Financial Installation Audit, Chicago, IL -- Management is in the process

of implementing recommendations relating to financial reporting, employee

accountability, unit reserve accountability, vending accountability, post

office box, postage due / business reply mail, collect on delivery mail and

window operations.

03/16/00 061-1305144-RI(1) Postage Meter, Houston, TX -- Management is in the process of implementing recommendations over meter inspections and control of meters.

03/29/00 039-1295484-PA(2) Transportation Operations, Indianapolis, IN -- Management is evaluating

HCR operations.

PAGE 114 APPENDICES
APPENDIX E

Criminal Statistics

For the period April 1, 2000, through September 30, 2000

OFFICE OF INSPECTOR GENERAL

Type of Investigation Arrests1 Convictions2

Business Protection

Business Protection 31 3

OIG TOTALS 31 3

INSPECTION SERVICE

Type of Investigation Arrests1 Convictions2

Revenue & Asset Protection Program

Expenditure Investigations 3 1

Financial Investigations 153 141

Workers' Compensation Fraud 18 22

Revenue Investigations 49 43

Robbery 50 30

Burglary 93 83

Miscellaneous External Crimes

Includes counterfeit and contraband postage, 

money order offenses, vandalism and arson 317 285

Assaults Against Employees

Includes threats and assaults against on-duty postal employees 211 161

Employee Narcotics Cases

Includes employees and non-employees selling 

narcotics on postal property 16 11

Mail Theft by Employees, Non-Employees, or Contractors

Includes theft and possession of stolen mail 2,798 2,464

Miscellaneous Employee Crimes

Includes theft of postal property and sabotage of equipment 40 46

Bombs/Explosive Devices 37 41

Mailing of Controlled Substances

Includes hazardous material, firearms and weapons, 

intoxicants, explosives other than bombs, extortion 

and false documents 771 539

Child Exploitation, Mailing of Obscene Matter and 

Sexually Oriented Advisement 145 105

Mailing of Miscellaneous Nonmailables

Includes hazardous material, firearms and weapons, 

intoxicants, explosives other than bombs, extortion 

and false documents 43 47

Mail Fraud 806 662

INSPECTION SERVICE TOTALS3 5,550 4,681

GRAND TOTALS 5,581 4,684

PAGE 115

1 Some of these arrests occurred in a prior semiannual reporting period; however, they were not

reported until the current reporting period. 

2 Convictions reported in this time frame may be related to arrests made in prior reporting periods.

3 Arrests and convictions include joint investigations with other federal law enforcement agencies.
APPENDIX F

Summary of Postal Service Investigative

Activities Under 39 USC § 3013

For the period April 1, 2000, through September 30, 2000

The Postal Reorganization Act requires the Postmaster General to furnish information on the

investigative activities of the Postal Service on a semiannual basis. With passage of the

Deceptive Mail Prevention and Enforcement Act in December 1999, the Postal Service's reporting obligations were changed. 

The Act requires the Postal Service to submit its semiannual report to the OIG rather than to

the Board of Governors; expands the subject matter that must be reported; and revises the

reporting schedule to coordinate with the OIG Semiannual Report to Congress. The information in the report includes actions directed at combating crimes involving the mail; costs and

expenditures devoted to Postal Service investigative activities; use of subpoena power; and any

additional information the OIG may require. This change in reporting requirements was effective the beginning of this reporting period.

ABUSE OF MAILS

The Postal Service reports to the OIG information related to investigative activities designed to

protect the public against unscrupulous mailers perpetrating fraudulent schemes. The following

information summarizes the administrative and judicial actions initiated and resolved during the

reporting period. These actions include the issuance of cease and desist orders directed to mailers, actions to intercept payments fraudulently induced, and orders seeking to intercept fraudulent mailings. This information is reported as required under 39 USC § 3005 and § 3007.

INSPECTION SERVICE

False Cease &

Complaints Consent Representation Desist

Type of Scheme1 Filed Agreements Orders Orders

Advance fee 

Boiler rooms/Telemarketing 1

Contest/Sweepstakes 1 1 1

Rebate fraud 1 1 1

Directory solicitations

Distributorships 1 1 1

Employment

False billings

Fraud against government agencies

Fraud against the Postal Service

Insurance

Investments 2 2 2

Loans 

Lotteries (foreign and domestic) 10 10

Medical 4344

Memberships

Merchandise:

Failure to furnish 1 1 1

Failure to pay 2 2 2

Misrepresentation 1 1 1

Miscellaneous

PAGE 116 APPENDICES

1 Definitions of these schemes are listed at the end of this appendix.
False Cease &

Complaints Consent Representation Desist

Type of Scheme Filed Agreements Orders Orders

Solicitations

Travel

Work at home 4 4 5

TOTAL 28 15 15 18

ADMINISTRATIVE ACTIONS

Administrative Action requests 27

Temporary Restraining Order requests

Temporary Restraining Orders issued

Civil Injunction requests 4

Civil Injunctions issued 4

Cases using Direct Purchase Authority 0

Refusals of Direct Purchase Authority 0

Civil penalties imposed $0

Withholding Mail Orders issued 68

Voluntary Discontinuances 239

Expenditures incurred for:

Test Purchases $0

Expert Testimony $1,650

Witness Travel $0

POSTAL SERVICE ADMINISTRATIVE SUBPOENA AUTHORITY

The Postal Service reports to the OIG information on the number of cases in which the Postal

Service issued administrative subpoenas in connection with deceptive mailings. The following

section identifies the number and nature of cases in which the Postal Service exercised this

authority to request relevant business and associated records.

Case Number Date Requested Scheme

USPS-00-001 5/25/00 Identity Takeover

USPS-00-002 6/30/00 Merchandise - Failure to pay

USPS-00-003 7/11/00 Medical Fraud

USPS-00-005 8/9/00 Work at home schemes

USPS-00-006 8/9/00 Work at home schemes

USPS-00-007 8/28/00 Merchandise Misrepresentation

USPS-00-008 8/28/00 Merchandise Misrepresentation

USPS-00-009 8/28/00 Merchandise Misrepresentation

USPS-00-010 8/28/00 Merchandise Misrepresentation

USPS-00-011 8/28/00 Merchandise Misrepresentation

USPS-00-012 8/28/00 Merchandise Misrepresentation

FINANCIAL REPORTING ON INVESTIGATIVE ACTIVITIES

The Postal Service reports to the OIG information related to the amount of financial expenditures and obligations incurred pursuing the investigative activities of the Postal Service.

Information related to these activities is summarized below.

Type Year End Report

Personnel $138,045,117

Nonpersonnel 38,662,985

Total Expenditures $176,668,102

Capital Obligations $6,910,973

PAGE 117
OTHER INVESTIGATIVE ACTIVITIES

The Postal Service also reports to the OIG additional information related to significant investigative activities and other investigative matters. This section outlines a number of significant

investigative activities the Postal Service has initiated and is pursuing, to include the Mail Task

Forces and the KNOW FRAUD initiative. Inspection Service and OIG criminal statistical

information is summarized in Appendix E.

MAIL TASK FORCES

The Inspection Service has partnered with the financial services, manufacturing, and direct marketing industries on behalf of the Postal Service to ensure confidence in the mail by forming

three task forces to combat fraud: Credit Card Mail Security, Rebate Fraud and Mail Order

Security. Each task force helps to reduce mail fraud, theft, and processing problems by identifying and exchanging information on best practices, fraud trends and loss-prevention techniques,

and to develop improved processes and procedures.

The Credit Card Mail Security Task Force was created in 1992 and has dramatically reduced

nonreceived issued credit card fraud losses by 68 percent, while credit card purchases have

increased more than 86 percent. In 1995, the Inspection Service teamed with the coupon rebate

industry to combat mail-in rebate fraud. In 1996, the Inspection Service and the direct marketing industry created the Mail Order Task Force to facilitate this continued success by joining

together to prevent and detect fraud and theft. In a pilot program, the Mail Order Task Force

has reduced nonreceipt losses by 10 percent to 15 percent for direct marketing companies experiencing mail processing problems.

KNOW FRAUD

In an effort to educate and help consumers, Inspection Service launched KNOW FRAUD, a

consumer protection effort, in November 1999, which served as an excellent example of "coordination among the federal government’s consumer protection agencies." To launch the KNOW

FRAUD program, the Inspection Service joined forces with several federal, state, and private

agencies, including the Department of Justice, Federal Bureau of Investigations, Federal Trade

Commission, Securities and Exchange Commission, National Association of Attorneys General,

American Association of Retired Persons, and Better Business Bureau. The KNOW FRAUD

initiative has included a postcard mailing to 120 million American households alerting consumers to the dangers of telemarketing and mail fraud. 

The KNOW FRAUD partnership is now focusing on identity theft. Work is underway by the

partners to get an identity theft prevention message to consumers. A toll-free ID theft hotline,

1-877-438-4338, and a KNOW FRAUD website were established to provide consumers with

additional information and to link consumers with law enforcement officials who would share

information.

PAGE 118 APPENDICES
DEFINITIONS OF SCHEMES

Advance fee. Obtaining fees purporting to secure buyers or obtain loans.

Boiler rooms/Telemarketing. An office or suite of offices with banks of telephones and telephone solicitors who use high-pressure techniques to persuade consumers to respond to bogus

offers.

Contest/Sweepstakes. Schemes in which the respondent is required to pay a fee to obtain prizes

of money, gifts, or other items of value. "Prizes" are either never shipped or are inferior to what

was promised.

Rebate fraud. Redeeming cents-off coupons or manufacturers' rebates when no merchandise was

actually purchased; establishing fictitious stores, clearing houses or addresses; submitting counterfeit coupons or rebates by consumers.

Directory solicitations. Fraudulent solicitations in the guise of invoices for advertisement or

renewal in business directories.

Distributorships. Pyramid schemes in which it is mathematically impossible for all participants

to recoup their investments. The emphasis is not on the sale of the product, but on getting others to participate.

Employment. Soliciting money for information or assistance in obtaining nonexistent or misrepresented jobs.

False billings. Mailing solicitations in the guise of billings.

Fraud against government agencies. Any scheme that attempts to defraud a U.S. government

agency except the Postal Service. 

Fraud against Postal Service. Any scheme that attempts to defraud the Postal Service.

Insurance. Investigation of insurance-related fraud involving false claims, false advertising on

the availability of insurance, or the collection of premiums for nonexistent policies. 

Investments. Misrepresented opportunities to invest in commodities, gems, metals, stocks,

bonds, certificates of deposit, mutual funds, IRAs, coins, stamps, art, etc.

Loans. Mailings soliciting money for information on nonexistent or misrepresented loans.

Lottery. Advertisements seeking money or property by mail for participation in schemes to win

prizes through chance.

Medical. Sales by mail of misrepresented health products or services, including fraudulent medical degrees.

Memberships. Failure to provide services advertised in connection with organization membership.

Merchandise failure to furnish. A mail order operator that does not provide ordered merchandise.

Merchandise failure to pay. Mail order merchandise that is acquired without providing payment.

Merchandise misrepresentation. Mail order merchandise or services are materially misrepresented in advertising.

Miscellaneous. Any other scheme not described in a specific category. 

Solicitations. Fraudulent solicitation of funds through the mail for alleged charitable, religious

minority-oriented groups, and similar causes or organizations.

Travel. Fraudulent vacation or travel opportunities.

Work at home. Schemes, such as envelope stuffing, that do not provide home employment.

PAGE 119
PAGE 120 APPENDICES

APPENDIX G

Closed Congressional Inquiries

For the period April 1, 2000, through September 30, 2000

This appendix lists the 50 Congressional inquiries the OIG closed during this reporting period.

The OIG reviewed these inquiries to help identify systemic issues and to determine the need for

future Postal-wide audits.

PERFORMANCE

Response

Requestor Allegation/Concern Date

Senators, Ohio Inquiry into the Citizens’ Stamp Advisory Committee 7/21/00

Representative, Alabama Mail delivery problems at a federal prison 7/21/00

Chairman, House Mail delivery problems 8/11/00

Postal Subcommittee

Chairman, House Request to evaluate the Postal Service’s Revenue Assurance Program 8/14/00

Postal Subcommittee

Representative, Alabama Survey of proposed ZIP Code change 9/6/00

FINANCIAL MANAGEMENT

Response

Requestor Allegation/Concern Date

Member, House Review of advertising and promotional contract needs 8/15/00

Postal Subcommittee

TECHNOLOGY

Response

Requestor Allegation/Concern Date

Representative, Texas Review of Postal Service website 5/22/00

LABOR MANAGEMENT

Response

Requestor Allegation/Concern Date

Chairman, House Allegations of unsafe working conditions 4/4/00

Postal Subcommittee

Representative, Allegations of managerial harassment 4/26/00

North Carolina

*Representative, Allegations of managerial harassment and hostile work environment 5/2/00

Alabama

*Representative, Allegations of managerial harassment and hostile work environment 5/2/00

Alabama

*Representative, Allegations of managerial harassment and hostile work environment 5/2/00

Alabama

* All six individual Congressional inquiries concerned related issues and were addressed jointly by the OIG.
PAGE 121

*Representative, Allegations of managerial harassment and hostile work environment 5/2/00

Alabama

*Representative, Allegations of managerial harassment and hostile work environment 5/2/00

Alabama

*Representative, Allegations of managerial harassment and hostile work environment 5/2/00

Alabama

Senator, Illinois Allegations of discrimination and deceit by Postal Service manager 5/3/00

Senator, Alabama Allegations of managerial harassment and hostile work environment 5/3/00

Chairman, House Allegations of managerial harassment and intimidation 5/4/00

Postal Subcommittee 

Representative, Maryland Allegations of managerial harassment and hostile work environment 5/4/00

Chairman, House Allegations of managerial harassment and poor workplace conditions 5/9/00

Postal Subcommittee

Representative, Allegations of managerial harassment and mistreatment 5/9/00

New Jersey

Senator, Massachusetts Allegations of managerial harassment and poor workplace conditions 5/9/00

Representative, Texas Allegations the Postal Service owes compensation for voluntary work 5/9/00

completed by employees

Chairman, Senate Allegations of wrongful termination and harassment 5/9/00

Governmental Affairs

Committee

Senator, Idaho Allegations of harassment because of limited duty status 5/17/00

Representative, Allegations of managerial harassment 5/17/00

California

Chairman, House Employee transferred from a full-time position to a part-time position 5/22/00

Postal Subcommittee

Chairman, House Allegations of employee and labor management problems 5/22/00

Postal Subcommittee

Chairman, House Request for investigation into a suicide of a Postal Service employee 5/22/00

Postal Subcommittee

Chairman, House Allegations of harassment and intimidation 5/31/00

Postal Subcommittee

Representative, Allegations of managerial abuse 5/31/00

New Jersey

Representative, Tennessee Allegations of managerial harassment 6/21/00

Chairman, Senate Allegations of managerial harassment 6/12/00

Governmental Affairs

Committee

Response

Requestor Allegation/Concern Date
PAGE 122 APPENDICES

Representative, Allegations of an abusive and hostile work environment 6/21/00

Tennessee

Chairman, House Allegations of managerial harassment and intimidation 7/21/00

Postal Subcommittee

Representative, Alabama Assistance with Workers’ Compensation claim 7/24/00

Senator, New York Allegations of violations of mail solicitation laws and regulations 8/31/00

Representative, New York Allegations of managerial harassment, sexual discrimination, 9/6/00

and retaliation

Representative, Alabama Receipt of removal notice because of alleged employee actions 9/6/00

OVERSIGHT OF INSPECTION SERVICE

Response

Requestor Allegation/Concern Date

Representative, Allegations of mail delivery delays 4/5/00

New Jersey

Chairman, House Designation of Postal Inspectors as auditors or investigators 5/3/00

Postal Subcommittee

Senator, New York Allegation of a stolen money order 8/8/00

Chairman, House Monitoring investigations of Postal Inspection investigations 8/21/00

Postal Subcommittee

Senator, New York Allegations of mail tampering 8/21/00

Representative, Allegations of false accusation by a Postal Inspector 9/6/00

California

Senator, New York Allegations of stolen mail 9/15/00

Representative, Texas Allegations of management misconduct 9/15/00

Senator, Pennsylvania Allegations about improper removal of a 9/15/00

Postal Inspection Service employee 

Chairman, House Review of initial investigation of managerial harassment allegations 9/25/00

Postal Subcommittee

OTHER SIGNIFICANT ISSUES

Response

Requestor Allegation/Concern Date

Chairman, House Allegations of management issues with a Postal Service employee 8/2/00

Postal Subcommittee

Response

Requestor Allegation/Concern Date
,

THIS PAGE TEARS OUT FOR YOUR CONVENIENCE
NOTES
US Postage Stamps

ISSUED FROM APRIL 1, 2000 THROUGH SEPTEMBER 30, 2000

3 ADOPTION AWARENESS – celebrates the joys of and awareness about

adoption, which makes a difference in the lives of thousands of children and

families across America.

12 LIBRARY OF CONGRESS – commemorates the 200th anniversary of the

nation’s oldest federal cultural institution, using a color photograph of the

interior dome of the Thomas Jefferson Building

24 STAMPIN’ THE FUTURE – immortalizes the winning designs of four talented American children that were turned into postage stamps that illustrate

their dreams, hopes, and visions of the future.

31 SUMMER SPORTS – celebrates the thrill of watching and participating in

athletics with the artistic portrayal of the graceful stride of runners’ legs during a race.

34 WILE E. COYOTE AND ROAD RUNNER – honors these classic animated

characters and represents the first stamp issued through an on-line Internet

event.

48 SPACE ACHIEVEMENT & EXPLORATION – represents the nation’s first

hologram, circular, and pentagonal postage stamps in a set of 15 related stamps

that celebrate space exploration.

56 THE STARS AND STRIPES – pays tribute to our cherished flag through a

sampling of 20 visually interesting and historically significant flags in U.S.

history.

66 LOUISE NEVELSON – commemorates the works of one of the most gifted

sculptors of the 20th century with five stamps of wooden boxes painted black,

white, or gold.

73 AMERICAN SAMOA – recognizes the 100th anniversary of the historical

union between the United States and its territory of American Samoa, a series

of islands located in the South Pacific.

74 LEGENDS OF BASEBALL – honors 20 famous individuals known to baseball fans around the world and an American tradition that has universal reach

and appeal. 

84 CELEBRATE THE CENTURY: 1990s – represents the final installment of

the series and consists of 15 stamp subjects selected by the public during

nationwide balloting.

87 YOUTH TEAM SPORTS – encourages everyone to lead a healthy lifestyle,

promote positive social interaction, and provide children with the opportunity

to learn about teamwork and cooperation.

91 DISTINGUISHED SOLDIERS – honors four American war heroes:

Lieutenant Audie L. Murphy, General Omar N. Bradley, General John L.

Hines, and Sergeant Alvin C. York.

92 EDWIN POWELL HUBBLE – honors the efforts of this eminent American

astronomer with five stamp images captured by the Hubble Space Telescope.

PAGE

ACKNOWLEDGEMENTS

This report represents the

outstanding efforts and

accomplishments of OIG and

Inspection Service staff. The 

production of this report would

not have been possible without

the contributions and dedication

of the many OIG and Inspection

Service staff who contributed to

this effort, particularly Wayne

Goleski, Sandra Bruce, Joy

Thorton, Alonzo Webb, and

Susan Le of the OIG, and Tom

Denneny of the Inspection

Service.
OFFICE OF INSPECTOR GENERAL

1735 N. Lynn Street 

Arlington, VA 22209-2020

(703) 248-2300

Fax: (703)248-2291

Internet: www.uspsoig.gov