October 1, 1999 - March 31, 2000

Semiannual Report to Congress 

Including Significant Activities of the Inspection Service

OFFICE OF INSPECTOR GENERAL 

October 1, 2001 – March 31, 2002

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

S

ometimes rocky, sometimes rewarding, always gratifying—that’s how I

would describe the journey of establishing this office. Over the past

five years, we traveled many miles and forged significant new paths.

As I reflect on all we have accomplished, I realize that I could not have

done it without the commitment and passion of those who walked the journey with me. In 1997, Congress presented us with a challenge to create a

totally new organization that would independently investigate and evaluate

Postal Service programs and operations. We did it! Together, we built an

organization over 700 strong that adds value to Congress, the Postal Service

Governors, the Postal Service, and the American public.

We turned our passion for the challenge into performance by building an

organization that assists the Postal Service through reviews of its processes,

operations, and management controls. To date, we have identified over

$1.9 billion in potential savings, cost avoidances, unrecoverable costs, fines,

penalties, and recoveries related to postal operations. In addition, we have

performed hundreds of reviews, audits, and investigations which contribute

to a more efficient, effective Postal Service. Our success in identifying areas

where the Postal Service can control costs, increase revenues, strengthen

labor-management relations, and improve management processes and controls is due in large part to our position as an independent, objective organization not subject to influence by Postal Service management. 

One of my proudest accomplishments during these first five years is our

fierce fight to maintain that independence. We fought the battle in the

inspector general community, taking the lead and helping to overturn an initiative to take it away. We pursue it every day as we strive to perform our work

in an environment of objectivity and impartiality, when we seek to obtain

documents that are denied to us, and when we are on the streets conducting

investigations and our authority is questioned. Although the Inspector General Act has been in existence for almost 25 years, the Postal Service has only

had an independent inspector general for five years. The lack of experience

with and knowledge of how an independent inspector general works has led

to misunderstanding and confusion that we hope will be resolved in the

future through our education and outreach efforts.

During our 5-year tenure, the Postal Service has faced predictable as well

as unforeseen challenges—severe financial losses resulting from controllable

and uncontrollable factors, strained labor relations, the devastating events of

September 11, 2001, the terror of anthrax in the mail, and now a proliferation of mailbox bombs. We have been with the Postal Service through it all

and our commitment to and passion for our mission has not wavered.

This, our eleventh Semiannual Report, sets forth the significant activities and accomplishments of this office and the Inspection Service from

October 1, 2001, through March 31, 2002. It details our efforts to combat

fraud, waste, abuse, and mismanagement within the Postal Service; and fulfills our reporting requirement under the Inspector General Act and Inspection Service requirements under the Mail Order Consumer Protection Act.

A Time for Reflection and Continued Passion
In this reporting period, the Office of Inspector General issued 283 audit reports, 102 management

advisory reports and other products, and closed 56 investigations. Our efforts resulted in more than

441 written products to strengthen Postal Service programs and operations.

During these six months, the Inspection Service experienced a change in leadership when

Chief Postal Inspector Kenneth Weaver retired. The Board of Governors also had some changes.

We said goodbye to Governor Tirso del Junco, whose term ended in December.

We had a few changes in our own leadership team. We bid farewell to Billy Sauls, Assistant

Inspector General for Investigations, who left in January to establish a new office for the Federal

Reserve Board of Governors, and welcomed Sam Maxey as the new Assistant Inspector General

for Investigations. In addition, Gladis Griffith was named Deputy Assistant Inspector General for

Congressional, Oversight, and Legal Services; and Mary Demory was named Deputy Assistant

Inspector General for Internal Business. We are delighted to add each of them to our team as we

move into the future. 

As we reflect on our past, we can’t help but wonder, “Where will the next five years take us?”

While we obviously cannot predict the future, we can say with certainty that we will continue to

bring passion and integrity to our work and tackle any future challenges. 

We know that we have a big job ahead of us in the coming years. Not the least of these challenges before us is examining the Postal Service’s proposed Transformation Plan. In April, the Postal

Service presented to Congress their proposal, which includes changes to their existing structure and

operating procedures. While these proposed changes are purported to help turn around the Postal

Service’s precarious position, reaction to the Plan has been mixed. While we realize drastic measures may be required to bring the Postal Service back to a position of solvency and viability, we

believe there are many questions to be asked and issues to be addressed for this plan to succeed. We

are currently reviewing it to determine its efficacy and will present our findings to Congress, the

Governors, and the Postal Service.

In closing, I want to say that I am extremely proud of this agency’s accomplishments and look

forward to it adding value to the Postal Service in the coming years. I would like to end with a quote

from Aristotle which I believe captures the essence of an inspector general’s often difficult role:

“Courage is the most important of the virtues, because without it you can’t practice any of the other

virtues consistently.”

Sincerely, 

Karla W. Corcoran

April 30, 2002

PAGE2 A MESSAGE FROM THE INSPECTOR GENERAL

Inspector General Karla Corcoran and

Deputy Inspector General Tom Coogan

said goodbye to Assistant Inspector

General for Investigations Billy Sauls 

in January.

Inspector General Karla Corcoran and

Sam Maxey, new Assistant Inspector

General for Investigations, said goodbye

to retiring Chief Postal Inspector

Kenneth Weaver (left).
PAGE3

Table of Contents

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

MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE ............................9

RESPONDING TO TERRORISM ..............................................................................17

PERFORMANCE REVIEWS......................................................................................23

Office of Inspector General ........................................................................24

◆ Accepting and Processing Reviews ........................................................24

◆ Transportation and Delivery Reviews ....................................................25

◆ Marketing Reviews ..................................................................................26

◆ Consulting & Quick Response Reviews ................................................26

◆ Legislative, Regulatory & Policy Reviews..............................................26

Inspection Service........................................................................................28

FINANCIAL MANAGEMENT REVIEWS ..................................................................29

Office of Inspector General ........................................................................30

◆ Financial Opinion Audits ......................................................................30

◆ Financial-Related Reviews......................................................................31

◆ Contracting and Facilities Reviews........................................................33

◆ Legislative, Regulatory & Policy Reviews..............................................37

Inspection Service........................................................................................42

TECHNOLOGY REVIEWS ......................................................................................43

Office of Inspector General ........................................................................44

◆ Developmental Reviews..........................................................................44

◆ Information Systems Reviews ................................................................45

◆ Systems Development Reviews ..............................................................46

◆ eCommerce Reviews ..............................................................................47

◆ Computer Intrusion Investigation Activities ........................................48

◆ Legislative, Regulatory & Policy Reviews..............................................49

Inspection Service........................................................................................51

LABOR MANAGEMENT REVIEWS ........................................................................53

Office of Inspector General ........................................................................54

◆ Workplace Environment Reviews..........................................................54

◆ Human Resource Process Reviews ........................................................54

◆ Health Care Reviews ..............................................................................55

◆ Legislative, Regulatory & Policy Reviews..............................................57

Inspection Service........................................................................................59

OVERSIGHT OF THE INSPECTION SERVICE AND

OTHER SIGNIFICANT ACTIVITIES........................................................................61

Office of Inspector General ........................................................................62

◆ Oversight of the Inspection Service Reviews........................................62

◆ Other Significant Activities....................................................................64

◆ Legislative, Regulatory & Policy Reviews..............................................65

Inspection Service........................................................................................68
PAGE4 TABLE OF CONTENTS

CUSTOMER SERVICE ............................................................................................69

Office of Inspector General ........................................................................70

◆ External Communications ......................................................................70

◆ Specialized Services ................................................................................73

Inspection Service........................................................................................74

GOALS AND STRATEGIES ....................................................................................75

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

Inspection Service........................................................................................80

ORGANIZATIONAL DYNAMICS ............................................................................81

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

◆ Notable OIG Achievements ..................................................................84

◆ Challenges Facing the OIG ....................................................................86

Inspection Service........................................................................................90

ORGANIZATIONAL STRUCTURE ..........................................................................91

Office of Inspector General ........................................................................92

◆ OIG Field Locations................................................................................96

Inspection Service........................................................................................97

APPENDICES ........................................................................................................99

Appendix A - Reports Issued to Postal Management ............................100

Appendix B - Findings of Questioned Costs ..........................................110

Appendix C - Recommendations That Funds Be Put to Better Use....112

Appendix D - Reports with Significant Recommendations Pending

Corrective Actions ..........................................................113

Appendix E - Investigative Statistics......................................................117

Appendix F - Summary of Postal Service Investigative Activities

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

Appendix G - Closed Congressional and 

Board of Governors’ Inquiries..........................................123
Executive Summary

PAGE 5

When was Postal Service OIG established? 

Congress created the Postal Service Office of

Inspector General in 1996. Karla W. Corcoran

was hired by the Postal Service Governors and was

sworn in as the Postal Service’s first independent

Inspector General on January 6, 1997, and has a

7-year appointment in this position.

DID YOU 

KNOW?
EXECUTIVE SUMMARY

This Executive Summary provides a synopsis of the work reported during this6-month period. This issue of the Semiannual Report addresses the major issues facing

the Postal Service and the work performed by

the OIG that helped improve postal operations.

It also provides a general overview of Inspection

Service operations and specific examples of

work related to the detection and prevention of

fraud, waste, abuse, and mismanagement.

The OIG is responsible for conducting all

audits of Postal Service programs and operations. In addition, the OIG, along with the

Inspection Service, conducts investigations to

prevent and detect fraud, waste, abuse, and mismanagement affecting the Postal Service. Both

conduct investigations that play a vital role in

helping the Postal Service make improvements.

Work performed by the OIG and the Inspection

Service is included in this report 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 eleventh Semiannual

Report, the work has been categorized into nine

subject areas: responding to terrorism, performance, financial management, technology,

labor management, oversight of the Inspection

Service and other significant reviews, customer

service, organizational dynamics, and organizational structure. These nine areas include OIG

work addressing the following 10 major management issues facing the Postal Service: 

◆ physical security and safeguarding the

mail; 

◆ maintaining customer confidence;

◆ resolving workforce and workplace issues;

◆ controlling costs;

◆ protecting revenues;

◆ managing acquisitions and contracts;

◆ leveraging technology;

◆ ensuring data integrity and reliability;

◆ maintaining information security and

customer privacy; and

◆ balancing public service and commercial

enterprise.

The following highlights the accomplishments of the OIG and Inspection Service under

the specific subject areas:

(1) Responding to terrorism focuses on the

challenges of protecting postal employees and

customers from exposure to biohazardous material, and safeguarding the mail system from future

bioterrorism attacks while maintaining current

service levels to the American public. Some of

the work performed in this area included:

◆ Evaluating the Postal Service’s response

to the anthrax threat in several areas,

including safeguarding employees, communication of safety and health information, purchasing of safety material and

sterilization equipment, decontamination

of facilities and mail, and transportation

of mail;

◆ Concluding that the Postal Service failed

to get advance approval from local government officials to process sanitized mail

and deploy irradiation equipment at two

facilities resulting in up to $1 million

needlessly spent preparing facilities for

sanitizing mail;

◆ Finding that expedited contracts awarded

in response to the biohazard threat

deviated from standard contracting

procedures and provisions. One review,

involving a $34 million contract, and

another review of 10 contracts totaling

$70.3 million revealed that the Postal

Service omitted or deviated from some

standard contract provisions designed to

safeguard it from financial and environmental risk; and

◆ Assisted the Federal Bureau of Investigation on various counter-terrorism task

forces and tip line centers, and continued

to assist the National Infrastructure Protection Center in the use of computerassisted investigative techniques to identify potential suspects in the attacks.

PAGE6 EXECUTIVE SUMMARY

This Executive Summary highlights the

Office of Inspector General (OIG) and

Inspection Service accomplishments from

October 1, 2001, through

March 31, 2002, that are contained in

this Semiannual Report to Congress.

Management Committee and Deputies
PAGE7

(2) Performance focuses on the critical core

business processes needed to succeed in a competitive environment. The OIG conducted 8

reviews in this area, which include projects

that will help save the Postal Service about

$87 million in current and future years. A few

examples of OIG work in this area included:

◆ Disclosing that the Postal Service could

save over $80 million over 12 years by

purchasing instead of leasing trailers;

◆ Revealing that the Postal Service could

save up to $5 million over 5 years by

reducing trailer door damage;

◆ Determining that the Postal Service

lacked data to accurately evaluate the

financial performance of retail stores; 

◆ Concluding that Postal Service could

improve mail delivery by sharing its best

practices;

◆ Recovering over $87,000 from a contractor who submitted false claims; and

◆ Identifying that a contractor, who was

awarded five highway contracts, did not

provide workers’ compensation coverage

for its employees, as required by the

contracts. 

The Inspection Service conducted numerous investigations in the area of mail theft,

resulting in the arrests of over 300 employees

and over 2,500 non-employees or contractors.

(3) Financial management incorporates financial-related reviews, financial opinion work,

and contracting and facilities reviews. The

OIG completed 258 reviews and investigations

that identified over $52.4 million in questioned costs and opportunities to save $5.4 million during current and future years. Some of

the more significant OIG activities include:

◆ Identifying non-compliance with Postal

Service regulations and minor weaknesses in internal control at 180 facilities;

◆ Identifying that the Postal Service paid

$45 million for 30 properties which were

never developed, utilized, or referred for

disposal;

◆ Disclosing that the Postal Service’s relocation loan program was more generous

than other federal agencies and large

companies;

◆ Investigating a $750,000 tort claim filed

against the Postal Service which resulted

in dismissal of the lawsuit; and

◆ Investigating a $7 million lawsuit resulting from an accident which was settled

for $185,000.

In addition to other work, the Inspection Service reported:

◆ Revenue investigations that resulted in

23 arrests and 29 successful criminal convictions. 

◆ Initiation of 210 employee embezzlement

investigations, which documented losses

of over $2.2 million.

(4) Technology encompasses reviews of developmental systems, computer security, electronic commerce, and computer intrusion detection activities. The OIG performed 25 reviews

and investigations in this area. Some of the

more significant OIG activities included:

◆ Concluding that the Processing Operations Information System was not an

effective decisionmaking tool for managing processing operations;

◆ Revealing weaknesses in a facilities management system that could affect the

data integrity of the system;

◆ Disclosing that the Postal Service spent

$22 million on five independent public

key infrastructure initiatives that either

overlapped in some areas or could overlap as they proceed; and

◆ Reviewing postal computer network firewall logs that led to an employee’s resignation for having pornographic images in

a postal computer. 

In addition to other work, the Inspection Service reported: 

◆ Continuing the development of the 

Business Mailers Industry Task Force

Website for use as a communication tool

by the task force members; and 

◆ Creating the Anthrax Information and

Mail Security Websites as well as the

Anthrax Reporting Incident System. The

Anthrax Information Website contains

Federal Bureau of Investigation and

Postal Service press releases, known mailing lists, Federal Bureau of Investigation

evidence photos, and an Inspection

DID YOU 

KNOW?

Did You Know? 

The OIG is the 4th largest

federal Office of Inspector

General employing over 700

employees with 15 field

locations throughout the

United States.
PAGE8

Service Biological and Chemical

Weapons presentation.

(5) Labor management focuses on issues related to the workplace environment, human

resources, and health care. During this reporting period, the OIG conducted 46 reviews and

7 investigations in this area, which included:

◆ Concluding that although sexual harassment prevention policies and procedures

were adequate, discipline, training, and

investigative efforts could be improved;

◆ Assisting the Postal Service with reducing administrative leave cost by over 

$3 million in calendar year 2001;

◆ Revealing that the use of the economic

value-added concept was not an appropriate methodology to fund the Postal

Service’s Pay for Performance Program;

and

◆ Conducting an investigation resulting in

an individual receiving 8 years probation

and paying $24,000 in restitution to the

Federal Employees Health Benefits

Program.

The Inspection Service work resulted in the:

◆ Sentencing of a former California mail

handler to 5 years probation, after pleading guilty to mail fraud. The former mail

handler also was ordered to pay over

$15,000 restitution. 

◆ Sentencing of a former Florida letter carrier to 2 years imprisonment and 3 years

supervised release for misrepresenting a

medical condition. In addition to the

incarceration, the former employee was

ordered to pay over $92,500 in

restitution.

◆ Sentencing of a former Ohio letter carrier to 8 months incarceration for making

false statements to obtain federal employees’ compensation benefits. In addition,

the former letter carrier was ordered to

pay over $72,500 in restitution.

(6) Oversight of the Inspection Service and

Other Significant Activities. In this area, the

OIG completed several reviews of the Inspection Service, and 19 investigative efforts and

reviews of other significant issues related to

Postal Service operations, which included:

◆ Disclosing that the Inspection Service’s

executive awards ranged up to $20,000,

to 100 percent of its eligible executives

during FYs 1999 and 2000, and the program was not implemented as approved

by the Board of Governors;

◆ Concluding that although the Inspection

Service effectively safeguarded collected

evidence, it could improve its practices

for maintaining, controlling, and disposing of evidence; 

◆ Revealing that a postal executive

received consulting fees and conducted

personal business with a Postal Service

contractor and as a result was placed on

administrative leave pending possible

removal; and

◆ Finding that the Inspection Service

issued a sensitive security clearance to a

postal contractor who had a prior federal

felony conviction for unlawful receipt of

pornographic images of children.

The Inspection Service conducts numerous investigations covering significant issues in

the areas of physical security; narcotics offenses

and trafficking; child exploitation; prohibited

mailings; postal burglaries; mail fraud including

fraud against consumers, fraud against businesses, and fraud against government; and money

laundering.

(7) Customer service focuses on the OIG and

the Inspection Service efforts to provide customer service, including support functions to

enhance service to internal customers and Hotline operations.

(8) Organizational dynamics focuses on the

OIG and the Inspection Service vision, values,

culture, and diversity.

(9) Organizational structure focuses on the

OIG and the Inspection Service headquarters

and field structure.

EXECUTIVE SUMMARY

DID YOU 

KNOW?

How does the OIG and Postal

Service resolve report

disagreements?

The OIG and the Postal Service

have developed a Report Response

and Resolution process to resolve

differences of opinion on audit

findings and recommendations.

Disagreements are elevated

through successively higher levels

of management in an attempt to

reach resolution. If agreement is

not reached, the Inspector

General may elect to submit the

disagreement to the Governors 

for final resolution. 
Major Management Issues

Facing the Postal Service

How long is a Postal Service Governor’s Term? 

The Postal Service has an 11-member Board of

Governors which is comprised of nine presidentiallyappointed Governors, the Postmaster General, and

the Deputy Postmaster General. The Governors

serve a staggered nine-year term and no more than

five Governors can belong to the same political party.

DID YOU 

KNOW?

PAGE 9
MAJOR MANAGEMENT

ISSUES FACING THE

POSTAL SERVICE

The Postal Service is facing challenging

times. Long-term technological and

commercial trends are reshaping the

collection, transportation, and delivery of

postal products. These trends, as well as challenges resulting from current financial losses,

bioterrorist threats, and employee issues, were

incorporated into the Postal Service’s recentlydeveloped plan to transform its business, operations, and delivery services. To assist Congress,

the Governors, and postal management as they

address these challenges, the OIG has independently identified the following major management issues facing postal management: 

◆ physical security and safeguarding the

mail;

◆ maintaining customer confidence;

◆ resolving workforce and workplace issues;

◆ controlling costs;

◆ protecting revenues;

◆ managing acquisitions; 

◆ leveraging technology;

◆ ensuring data integrity and reliability;

◆ maintaining information security and customer privacy; and

◆ balancing public service and commercial

enterprise.

These issues, their significance, and the key

OIG projects addressing them are included in

this section.

PHYSICAL SECURITY AND

SAFEGUARDING THE MAIL

With 38,000 facilities and over 207 billion

pieces of mail delivered each year, the Postal

Service has, for over 200 years, faced the challenge of moving the mail efficiently and economically while effectively safeguarding postal

employees and customers. Terrorist attacks and

biohazardous material transported through the

mail last fall resulted in a renewed emphasis on

securing the nation’s postal system. The Postal

Service needs to continue its efforts to complete

an organization-wide business continuity plan

that not only addresses natural disasters but also

protects its entire critical infrastructure. In light

of the September 11, 2001 terrorist attacks, the

Postal Service must comply with national

efforts, such as Presidential Decision Directive

63, which are designed to protect the infrastructure of the United States from terrorist attacks. 

To assure the physical security and safeguarding of the mail, the Postal Service has been

actively seeking solutions to detect biohazardous

materials and/or sanitize the mail. These technological solutions may require procuring new

equipment and changing processes, which

could impact facility floor plans and staffing

requirements. To better protect its employees,

the Postal Service must also reassess its facility

designs, especially ventilation systems, maintenance practices, and emergency response and

evacuation procedures.

To assist the Postal Service in addressing

these issues, the OIG:

◆ Reviewed the Postal Service’s communication of the anthrax threat to Postal

Service employees and the actions taken

to ensure their safety and health

◆ Evaluated mail security and sanitization

procedures and transportation of biohazardous materials to ensure effectiveness 

◆ Worked with the Federal Bureau of Investigation to identify terrorist activities

involving computers 

◆ Is assessing the Postal Service’s efforts and

plans to protect its critical infrastructure 

◆ Is evaluating the Inspection Service’s

efforts to ensure security of the mail

MAINTAINING CUSTOMER

CONFIDENCE

To remain competitive, the Postal Service

must deliver the mail in a timely manner and at

affordable rates, and be customer-focused. In

today’s marketplace, customers have choices

about how they conduct transactions, transmit

messages, and deliver merchandise. Increasing

customer confidence will be the key to growing

new business. The Postal Service views its access

to the American household as a unique asset

that it can leverage as it faces increasing competition. The Postal Service must continue to

develop products and services that retain relePAGE10 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

Why does the OIG review

proposed legislation,

regulations, and policy?

The Inspector General Act

requires the Office of Inspector

General to review all proposed

legislation, regulations, and policies and make recommendations

to the Postal Service. 

DID YOU 

KNOW?
PAGE11

vance and value for customers with changing

needs. This has become even more challenging

in light of the disruption caused by the recent

anthrax contamination.

To assist the Postal Service in addressing

these issues, the OIG:

◆ Identified best practices to assist the

Postal Service in improving External

First-Class Mail delivery

◆ Evaluated certified mail handling and

scanning procedures to ensure timely

mail delivery

◆ Is evaluating ground transportation

scheduling to ensure timely mail delivery

RESOLVING WORKFORCE AND

WORKPLACE ISSUES

With more than 860,000 full and parttime employees, improving the work environment and labor relations is key to maximizing

Postal Service operational and financial performance. Also, personnel compensation and

benefits costs totaled over $51 billion for

FY 2001, and account for more than threequarters of the Postal Service’s total operating

expenses. In an increasingly competitive environment, improving labor relations and controlling labor costs is essential if the Postal

Service is to provide universal service at reasonable rates. Past attempts to improve labor

relations and reduce labor costs through automation have not been as successful as planned, due

to restrictions in union agreements.

Future efforts to improve in these areas will

only succeed if the Postal Service can effectively

partner with its employees and engage them in

a shared vision of success. This vision must

include eliminating the confrontational environment on the workroom floor and providing

employees the freedom to raise concerns without fear of retaliation. As the Postal Service pursues efforts to partner with employees, it must

also develop programs for recruiting, training,

communicating, compensating, and rewarding

employees consistent with the Postal Service’s

vision for the future. In this regard, the Postal

Service needs to establish an effective way to tie

employees’ pay to their performance.

The Postal Service faces a significant challenge of reducing labor-related costs under the

Postal Service Injury Compensation Program.

Costs under this program have risen dramatically over the past three years to over $700 million annually, primarily due to increased

medical costs. Not only do these costs directly

impact the Postal Service’s financial performance, but they also indirectly impact productivity. Furthermore, the full impact of the Postal

Service’s potential financial liability under the

Occupational Safety and Health Act has yet to

be determined because it has only been subject

to citations and monetary penalties for noncompliance since 1998. 

To assist the Postal Service in addressing

this issue, the OIG: 

◆ Investigated health care provider fraud

against postal employee health care

insurance providers

◆ Investigated alleged reprisals against

employees

◆ Evaluated aspects of the pay for performance program

◆ Is continuing to identify best practices

that reduce grievances

◆ Is reviewing succession planning

◆ Is partnering with the Department of

Labor to find ways to reduce injury compensation costs 

CONTROLLING COSTS

Increasing productivity while controlling

costs is the primary method the Postal Service

uses to reduce expected losses. At the end of

February 2002, the Postal Service took

actions to reduce anticipated costs by over $850

million for the current fiscal year. However, the

cost of servicing a growing universal delivery

network has escalated. In addition, the

September 11, 2001 terrorist attacks and

anthrax contamination, created new challenges

for the financial viability of the Postal Service. 

Even with the approval of a rate increase

for June 2002, the Postal Service projects a loss

of about $1.5 billion for FY 2002. In February

2001, one of the steps the Postal Service took to

address this shortfall was to freeze all non-essential capital investments, particularly in new

facilities and facility improvements. Deferring

other capital expenditures cannot be sustained

over the long term. Therefore, further cost

reductions and productivity gains must con-
tinue to be pursued.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Evaluated the executive relocation program’s effect on cost

◆ Identified and investigated fraud relative

to purchasing, contracting, and programs

responsible for the acquisition of transportation, facilities, consulting services,

and supplies and materials

◆ Investigated tort and indemnity claims

against the Postal Service

◆ Investigated false claims filed against the

Postal Service by contractors

◆ Is evaluating carrier productivity and

highway network operations effect on

costs

PROTECTING REVENUES

Unlike most federal agencies, the Postal

Service relies primarily on its revenues, not

appropriations, to fund its operations. Without

adequate revenues, the Postal Service would

have to reduce services, raise rates, or seek taxpayer subsidies. Thus, the Postal Service needs

to address the challenge of increasing its revenue each year to cover increasing costs. 

Over the past several years, the Postal

Service has had difficulty addressing this challenge and has reported less than expected revenue because of competition from electronic

commerce and the general downturn in the

economy. In addition, after the September 11,

2001 terrorist attacks, the Postal Service experienced an unexpected decline in revenues, at a

time when the Postal Service was dependent on

the fall mailing season to generate a substantial

portion of its annual revenue for FY 2002.

These declines in revenue have contributed to a

$1.7 billion loss in FY 2001 and anticipated

losses of about $1.5 billion for FY 2002. 

The Postal Service has introduced new

products and services to increase revenues, but

these efforts have not always met expectations.

Recently, the Postal Service has reviewed its

eCommerce initiatives and is deciding which

ones to continue. In addition, competitors have

questioned whether it is appropriate for the

Postal Service, as a government entity with

monopoly protection, to provide nontraditional

commercial products and services. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Assessed the role of marketing in increasing revenue

◆ Evaluated the availability of data to

ensure Postal Retail Stores are profitable

and generating revenue

◆ Is assessing the profitability of eCommerce initiatives and sponsorship programs and their contributions to increasing revenues

◆ Is continuing to review new scanning

technology designed to ensure appropriate revenue is received from bulk mailing

customers

MANAGING ACQUISITIONS AND

CONTRACTS

The Postal Service administers over

$15 billion a year (almost a quarter of its

revenues) in contracts for essential goods and

services, including facilities, transportation,

mail processing equipment, and supplies. The

Postal Service’s challenge in this area is to balance efficient contracting practices with effective controls to prevent fraud, waste, and abuse.

Over the past several years, the Postal Service

has progressed towards adopting purchasing

practices consistent with best commercial practices. Recently, it has identified the supply chain

management philosophy to further its business

and competitive objectives in the purchasing

process. While this practice allows for certain

efficiencies and cost savings, it has fewer controls and increases the risk of abuse in the procurement area. 

The Postal Service must continue to protect its interests. It must take aggressive steps to

ensure appropriate monitoring and oversight,

including systems and data to validate contractor charges for services rendered. It must also

increase its efforts to ensure that postal contracts contain sufficient language to pursue

action against contractors as necessary or conduct independent reviews. Quality assurance,

staffing, and training of contracting officials

impacts the Postal Service’s ability to properly

monitor contractor work.

PAGE12 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
PAGE13

To assist the Postal Service in addressing

this issue, the OIG:

◆ Reviewed expedited contracts for equipment and services needed to deal with

bioterrorism 

◆ Conducted 35 audits of contractor

proposals, incurred cost submissions,

systems, and contract closeouts 

◆ Recommended improved controls over

contracting policies and better practices

to protect the Postal Service from contract fraud

◆ Recommended significant changes to the

Postal Service’s system to suspend and

debar fraudulent contractors 

◆ Investigated fraudulent contracting practices and embezzlements by employees

and improper billings by contractors

◆ Is reviewing sole source contracting practices, undefinitized contractual actions,

and unauthorized commitments

LEVERAGING TECHNOLOGY

The Postal Service is leveraging technology to improve its service, productivity, and

profitability. While it depends on technology to

deliver more than 660 million pieces of mail

daily, the Postal Service must continue to adapt

to each new wave of technology quickly to

maintain its competitive position in the

market. 

The large size and diversity of the Postal

Service’s customer base presents technological

challenges and demands 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. Decisions on technology

investments must continue to be scrutinized

more closely and be based on information that

is current, accurate, and reliable. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Reviewed the viability of eBusiness initiatives against performance goals

◆ Assessed system life cycle development

for major technology projects 

◆ Is reviewing enterprise-wide system and

data integration initiatives 

◆ Is reviewing information platform

initiatives

ENSURING DATA INTEGRITY

AND RELIABILITY

Accurate measurement of mail delivery is

key to improving and sustaining service performance. Reliable data is also a key to effective

decisionmaking. However, in many instances,

the OIG has found that the Postal Service does

not adequately capture or track the data necessary to support effective decisionmaking. The

OIG has also noted the Postal Service’s

inability to track costs that have been incurred

but not paid makes it difficult for managers to

monitor expenses. 

Changes in technology and the business

environment emphasize the need for providing

timely, accessible, relevant, and accurate data to

Postal Service decision makers. Also, given the

importance of data quality in setting postal rates

and, recently, requesting emergency appropriations, 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 revenue, cost, and service measurements. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Evaluated the accuracy of the emergency

appropriation request

◆ Validated data used to justify and support

major capital expenditures such as the

Automated Flat Sorting Machine 100

and Postal Operations Information System 

◆ Evaluated the investment decisionmaking process 

◆ Is continuing evaluations of rate making

processes, including those proposed in

the Transformation Plan

◆ Is determining whether retail sales data

are accurate and used for management

decisionmaking

What is the OIG Hotline

number? 

The number to call for reporting

possible fraud, waste, abuse, and

mismanagement in the Postal

Service is 1-888-USPS-OIG or 

1-888-877-7644

DID YOU 

KNOW?
PAGE14 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

MAINTAINING INFORMATION

SECURITY AND CUSTOMER

PRIVACY

Computers and electronic data are vital to

the critical operations of the Postal Service. The

same factors that benefit operations – speed and

accessibility – also make it possible for individuals and organizations to easily interfere with or

eavesdrop on operations, possibly for purposes of

fraud, sabotage, or other malicious reasons.

Attacks on both government and private

industry websites serve to emphasize the damage

a computer security breach can do to brand

integrity and an organization’s revenue stream. 

Terrorist organizations use computer networks to attack the federal infrastructure. The

OIG’s work on two major national security

efforts demonstrated the potential vulnerability

of postal computer systems, and the need to

continue to emphasize computer security

throughout the Postal Service.

Furthermore, the OIG’s work with the

Webster Commission, which examined the

impact of poor computer security on Federal

Bureau of Investigations operations, identified

lessons learned that could be used to evaluate

the Postal Service’s computer security posture

and its susceptibility to insider attacks. Many

postal and contractor employees have access to

postal computer systems and the sensitive information located on those systems. Access to sensitive data, without appropriate monitoring and

controls over such access, could lead to the

compromise of information and operations.

This lesson applies with equal vigor to postal

operations and demonstrates the need for postal

management to carefully monitor and control

postal computer use by employees and contractors.

Congress reemphasized the importance of

addressing these risks by passing the USA

Patriot Act, which enhanced the government’s

authority to address hacker attacks on government computer systems. Furthermore, Postal

Service electronic commerce initiatives on the

Internet have raised security issues. Success in

this arena will depend on the level of protection

afforded sites, such as the Postal Service’s website and the programs operating in it, including

eBillPayTM, NetPost CertifiedTM, and The

Postal StoreTM. In addition, the Postal Service

needs to protect consumer information and

guarantee customer privacy. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Assessed the security and privacy of

major eCommerce initiatives

◆ Assisted postal management in responding to virus and “worm” attacks on critical systems

◆ Continued to conduct vulnerability tests

of computer systems and networks

throughout the Postal Service

◆ Is working with the Postal Service to

identify potential threats to critical infrastructures through the Postal Service’s

Computer Incident Response Team

BALANCING PUBLIC SERVICE

AND COMMERCIAL ENTERPRISE

Since 1970, the Postal Service has been

required to operate in a businesslike manner.

However, unlike a private corporation, it is

bound by statutory constraints that limit its ability to negotiate with customers and employees,

develop and price new products, and generate

and invest profits. Although the Postal Service

is granted a monopoly on letter mail, it must

deliver to all areas in a timely fashion, and at

uniform, affordable rates. The Postal Service’s

obligation to serve as both a public service and

a commercial enterprise has become more challenging in the face of increased competition in

the delivery and communication industries. 

In April 2001, the General Accounting

Office stated that the Postal Service faced major

challenges that called for a structural transformation if the Postal Service were to remain

viable in the 21st century. In response to the

General Accounting Office and a

Congressional mandate, the Postal Service

issued its Transformation Plan in April 2002 to

serve as a long-term blueprint for the Postal

Service’s future. The Transformation Plan made

it clear that the Postal Service’s primary mission

has not and will not change; and that the Postal

Service will continue to provide universal services to customers in all areas at reasonable

rates. In its Transformation Plan, the Postal

Service recommends converting the Postal

Service to a commercial government enterprise,

The Postal Service’s Transformation Plan

outlines a blueprint for the long-term

future.
PAGE15

operating like a private business in many

respects, while still remaining a government

entity. 

The Postal Service needs to articulate how

it will balance providing public service with

being a commercial enterprise and how it will

implement strategies to meet future service and

delivery challenges. Since the OIG’s inception

in 1997, the Postal Service has had three postmasters general, each with their own distinct

vision of the Postal Service’s future. Each implemented operational changes consistent with

their vision, which impacted the costs and revenues of the Postal Service. Postmaster generals

must have long-term strategies with consistent

objectives that transcend short-term changes in

senior management. 

The Postal Service must act decisively to

maintain its public service role in a commercial

environment. It must work within the established statutory framework to improve its

accountability in contracting and other major

expenditures. It must identify its core businesses

and ensure that new products and services are

self-sustaining. In short, the Postal Service must

refine its operation under the existing statutory

model while developing and redefining its role

under the Transformation Plan.

To assist the Postal Service in addressing

this issue, the OIG: ◆ Identified OIG work that has focused 

on the issues discussed in the

Transformation Plan

◆ Reviewed reform and other legislation

impacting the Postal Service

◆ Evaluated revised rules governing commercial mail receiving agencies ◆ Is evaluating and identifying trends from

OIG work that will address issues in the

Transformation Plan
PAGE16
Did You Know? 

If you receive mail that contains fraudulent

material, do not throw the envelope away.

This document is important in finding out

from where the item was mailed.

DID YOU 

KNOW?

PAGE 17

Responding to Terrorism
PAGE18

The OIG evaluated the effectiveness of

decontamination efforts at Postal

Service facilities.

RESPONDING 

TO TERRORISM

The tragic terrorist attacks dramatically

changed the environment in which the

Postal Service operates. For the first

time, the Postal Service was on the front lines of

the war against terrorism. The bioterrorist

attacks on the nation had a major impact on the

American public and postal operations. 

As a result, the Postal Service is facing the

enormous challenges of protecting postal

employees and customers from exposure to biohazardous material, and safeguarding the mail

system from future bioterrorism attacks while

maintaining current service levels to the

American public. The OIG is committed to

ensuring that postal employees and customers

are safeguarded from future biohazard threats as

well as making sure that monies allocated to

purchase new equipment and implement safety

measures are well spent. In addition, the OIG is

committed to supporting other government agencies in the fight against the threat of terrorism.

OIG employees have participated in various roles in responding to terrorism.

Additionally, the OIG has assisted the Postal

Service with its efforts and during this reporting

period conducted 11 reviews. These reviews

evaluated communication efforts to protect

employees and the public, decontamination

efforts, and expedited contracting processes.

Some of the OIG’s efforts are highlighted below.

RESPONSE TO ANTHRAX THREAT

EFFECTIVE

The OIG commended the efforts of Postal

Service management and employees in

responding to the anthrax threat in the wake of

the September 11, 2001, attacks on the United

States. The OIG completed a series of reviews

that evaluated the Postal Service’s response to

the anthrax threat in several areas, including

safeguarding employees, communicating safety

and health information, purchasing safety material and sterilization equipment, decontaminating facilities and mail, and transporting mail.

OIG reports provided 24 recommendations to

improve processes and protect Postal Service

interests. These recommendations included

improving contracting, security, transportation,

and decontamination procedures. The Postal

Service has taken or planned appropriate corrective actions that are responsive to the OIG’s

recommendations. (OIG AC-AR-02-004)

POSTAL SERVICE COMMENDED

FOR EMPLOYEE SAFETY &

HEALTH COMMUNICATION

EFFORTS

An OIG review found the Postal Service

effectively communicated information to protect the safety and health of the public and

postal employees. The OIG commended the

communication efforts, safety, and self-initiated

actions taken by the Postal Service, and concluded that the Postal Service communicated

an extensive amount of information on mail

handling received from health experts to ensure

the safety and health of its employees. Under

the guidance of the Centers for Disease Control

and Prevention, Postal Service management

agreed to initiate worksite evaluations, which

should help the Postal Service address any

future biohazard threats more efficiently and

economically. (OIG LH-MA-02-002)

PLAN ADEQUATE FOR

SANITIZING AND PROCESSING

MAIL, BUT SOME FUNDS

NEEDLESSLY SPENT 

An OIG review found that the Postal

Service’s plan for sanitizing and processing the

mail during the anthrax biohazard threat was

sufficient to protect employees, customers, and

the mail. However, the Postal Service failed to

get advance approval from local government

officials to process sanitized mail and deploy

irradiation equipment at two facilities. As a

result, it may have needlessly spent up to

$1 million preparing the facilities for sanitizing

mail. The review also found that three federal

government agencies refused to accept both

sanitized and non-sanitized mail that the Postal

Service considered safe for delivery, creating a

backlog of mail at some postal facilities.

Postal Service management agreed to

develop procedures to ensure that approvals are

obtained from the appropriate local government

officials prior to acquiring and/or modifying

facilities for sanitizing and processing mail.

Also, management agreed to return the backlog

of mail to senders if agencies failed to accept

mail within a specified period of time. 

(OIG AC-AR-02-003)

RESPONDING TO TERRORISM

The Postal Service began using special

equipment to sanitize the mail. This

equipment is sectioned off into protective areas to ensure the health and

safety of postal employees and

customers.
PAGE19

ANTHRAX TESTING AND

DECONTAMINATION EFFORTS

EFFECTIVE, BUT CONTRACTOR

OVERSIGHT NEEDS

IMPROVEMENT 

An OIG review found that the Postal

Service’s testing for anthrax contamination and

decontamination of facilities was effective and

that contingency planning for biohazard emergencies was appropriate. However, the review

noted the Postal Service did not provide adequate contractor oversight to avoid possible

conflicts of interest; identify a permanent coordinator to implement contingency plans for

biohazard emergencies; or identify clear milestones for completion of contingency plans.

The Postal Service agreed to establish a policy

that would prohibit contract project managers

from competing for the same work for which

they provided technical direction or advice;

designate a permanent Postal Service coordinator or entity to implement biohazard contingency plans; and develop and monitor

contingency planning milestones. 

(OIG EM-MA-02-001)

POTENTIALLY CONTAMINATED

MAIL IMPROPERLY

TRANSPORTED

An OIG review revealed that the Postal

Service improperly transported mail potentially

contaminated with anthrax in vehicles that

were not designed or intended for the transportation of hazardous material. In addition,

contract drivers did not receive appropriate

training in the movement of hazardous material, and did not undergo criminal background

screenings. Furthermore, the Postal Service

incurred unnecessary costs of $181,000 on trailers waiting to be loaded at two facilities. Postal

Service management agreed to issue guidance

to ensure potentially contaminated mail is

properly transported, and to establish controls

to avoid unnecessary transportation costs. In

addition, Postal Service management referred

the recommendation regarding criminal background screenings for contract drivers to the

Inspection Service for guidance. 

(OIG TD-MA-02-001)

POSTAL SERVICE FACES

CHALLENGES IN STERILIZING 

THE MAIL

An OIG audit revealed that the Postal

Service took appropriate action to explore and

develop a sterilization process for anthrax-contaminated mail. The chosen method of electron

beam irradiation was successful for the sterilization of anthrax-contaminated mail. However,

there were factors that impact its long-term use

including high cost, slow processing throughput, and mail damage. The Postal Service paid

$40 million for eight electron beam irradiation

systems; experienced differences in the irradiation throughputs; and, identified items such as

vitamins, electronics, and heat sensitive materials that were damaged and should not have

been electron beam irradiated. The Postal

Service is planning to implement a three-prong

approach of prevention, detection, and sanitization for national deployment. The OIG did not

make recommendations and plans to continue

monitoring technology applications related to

the anthrax threat. (OIG DA-AR-02-003)

MISCOMMUNICATION CAUSED

FACILITY TO CLOSE TWICE

DURING ANTHRAX CRISIS

A South Jersey processing and distribution

center was closed twice due to the miscommunication of anthrax test results. Despite this the

Postal Service was able to quickly decontaminate the facility without any confirmed incidents of anthrax infection by the public or

postal employees.

The miscommunication occurred during a

time of crisis and when policy and procedures

addressing the anthrax threat were still being

developed. The miscommunication contributed

to the wrong mail processing machine being

initially decontaminated. However, the correct

machine was decontaminated within days and

the Postal Service has established written policies and procedures, which should ensure this

type of miscommunication does not occur in

the event of another anthrax or biohazard

attack. (OIG LH-MA-02-004)

OIG special agents assisted in

investigating contaminated mail at

postal facilities.

An OIG review found the Postal

Service improperly transported

potentially contaminated mail.
PAGE20

REVIEW OF EARLY

DECONTAMINATION CONTROLS 

An OIG review of a specific decontamination effort at a postal facility discovered some

discrepancies and issues the OIG believed

postal management should address. These

included communication of test results and procedures requiring independence of duties

between entities that test, decontaminate, and

retest facilities. Postal management, while

pointing out the chaotic circumstances at the

time and the fact that the facility was successfully decontaminated, agreed to establish procedures requiring independent verification and

timely notification. (OIG LH-MA-02-003)

ANTHRAX INVESTIGATION

CONDUCTED PROPERLY

The OIG conducted an inquiry into allegations that Inspection Service management mishandled personnel and safety issues during an

anthrax investigation at a Capital Metro Area

postal facility. Inspection Service management

allegedly directed inspectors to collect anthraxrelated evidence against their will and without

the required protective gear. The OIG found

that one inspector did become ill, however, the

illness was not due to any negligence on behalf

of Inspection Service management. Also, in

light of the Centers for Disease Control and

Prevention’s guidance, the OIG determined

that Inspection Service management took

proper precautions and handled this situation

appropriately. 

EXPEDITED CONTRACTING

PROCEDURES CAN BE IMPROVED

Two OIG reviews of expedited contracts

issued by the Postal Service in response to the

biohazard threat revealed the Postal Service

deviated from standard contracting procedures

and provisions. One review, involving a

$34 million contract, revealed that the Postal

Service omitted or deviated from some standard

contract provisions designed to safeguard it

from financial and environmental risk. Another

review of 10 contracts totaling $70.3 million

identified similar deviations that increased the

Postal Service’s financial risk. For example,

there was a lack of documentation supporting

the price reasonableness of $53.7 million in

contract increases, and almost $600,000 paid to

a supplier for work that the OIG could not verify. Postal Service management agreed to

improve expedited purchasing procedures and

agreed to request contract audits necessary to

protect its financial interests.

(OIG CQ-MA-02-001 and 

OIG CQ-MA-02-002)

OIG RESPONDS TO TERRORISM

The OIG and postal employees responded

quickly to the challenges stemming from the

September 11, 2001, attacks against the nation.

Approximately 70 OIG special agents and computer specialists participated in various investigative activities related to terrorism in

locations throughout the United States. For

example, agents:

◆ Participated in witness interviews, the

collection of evidence, and the processing of other investigative leads, as well as

related investigative security work at the

World Trade Center and the Pentagon.

◆ Participated on Federal Bureau of Investigation task forces to help identify

potential suspects, and assisted the

Inspection Service in screening and

investigating suspect mail.

◆ Assisted the Federal Bureau of Investigation on various counter-terrorism task

forces and tip line centers, and continued

to assist the National Infrastructure Protection Center in the use of computerassisted investigative techniques to identify potential suspects in the attacks. 

OIG ASSISTS THE POSTAL

SERVICE WITH COORDINATING

ANTHRAX TESTING

In the days following the anthrax attack,

the OIG took a proactive role to assist the

Postal Service in testing and decontaminating

postal facilities. In an unusual role, the OIG

served as the contracting officer representative

to a contract with the Army Corps of Engineers,

who coordinated testing and contamination of

several postal facilities. The OIG provided liaison to the Corps so that responses were timely,

processes were developed, and that adequate

resources were available. In one situation, the

OIG made contact with the Centers for Disease

Control and Prevention to secure additional

laboratory assistance to assess anthrax samples.

RESPONDING TO TERRORISM

Approximately 100 OIG employees

received awards recognizing their

dedication and commitment in

responding to the terrorist attacks of

September 11, 2001, and subsequent

bioterrorist attacks through the mail. 

Pictured below are some of the OIG

special agents who were recognized.
PAGE21

This discussion lead to a nationwide conference

call with Public Health Laboratories in several

states and resolved a serious issue of testing

capacity. This was a situation where OIG

involvement helped the Postal Service ensure

that its employees, customers, and the mail

were safe.

OIG EMPLOYEES ASSIST IN THE

FIGHT AGAINST TERRORISM

Seven OIG employees were called back to

active military duty after the attacks. The OIG

is proud of these employees’ dedicated service

and commitment to their country, and looks

forward to their safe return. 

OIG EMPLOYEES HONORED FOR

ASSISTANCE IN WAKE OF

TERRORIST ATTACKS

Approximately 100 employees were honored at a special ceremony during the OIG’s

Fifth Annual Employee Recognition

Conference. The following speakers joined the

Inspector General in recognizing the

contributions of OIG employees in the aftermath of September 11, 2001: Joel Hudson,

Administrative Assistant to the Secretary of the

Army; Patrick McFarland, Inspector General of

the Office of Personnel Management and

Chairman of the President’s Council on

Integrity and Efficiency Investigations

Committee; and James Rowan, Deputy Chief

Inspector Security/Technology.

The Postal Service and the Federal

Bureau of Investigation offers a reward

for information leading to the arrest and

conviction of parties responsible for

mailing anthrax contaminated letters.
PAGE22
OFFICE OF INSPECTOR GENERAL

Accepting and Processing Reviews

Transportation and Delivery Reviews

Marketing Reviews

Consulting and Quick Response Reviews

Legislative, Regulatory & Policy Reviews

INSPECTION SERVICE

PAGE 23

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. During the

past 6 months, the OIG completed 8 reviews of

the Postal Service’s performance of core business

processes. The reviews identified opportunities

to save over $87 million during current and

future years. In addition, the OIG created a consulting and quick response team to conduct

expedited reviews of Postal Service business

practices. 

ACCEPTING AND PROCESSING

REVIEWS

On average, over 660 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, as well as

residential and business collection mailboxes.

Express Mail, First-Class Mail, and some Priority

Mail and periodicals are sorted at more than

470 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 equipment 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. In this regard,

the Postal Service continues to explore ways to

enhance the accepting and processing of mail

through innovative automation.

During the past 6 months, mail processing

has been greatly impacted by terrorist activities,

including anthrax contamination, which caused

the closing of a number of major mail processing

centers. Although the closures protected

employees and customers, it has required the

Postal Service to divert mail, incur increased

costs, and deal with processing challenges. To

address the anthrax contamination of the mail,

the Postal Service purchased and plans to purchase additional specialized equipment designed

to sterilize the mail and protect employees and

the public from the threat of anthrax and other

possible biohazard contamination. During the

past 6 months, the OIG conducted four audits

in the accepting and processing area. Two

anthrax related reviews are highlighted in the

Responding to Terrorism section and the other

two reviews are highlighted below:

FAILURE TO FILL VACANT

POSITIONS RESULTS IN DELAYED

STANDARD MAIL AND

INCREASED COSTS

An OIG review found that 2-day to 8-day

delays in mail delivery and a 22 percent increase

in overtime costs at several Northeast Area post

offices occurred because management allowed

12 clerk positions to remain vacant. The review

also found that the post offices did not accurately record or report the delayed mail in

reports to Postal Service headquarters. Postal

Service management agreed to adequately staff

mail-processing operations at postal facilities

and ensure that daily mail condition reports are

prepared accurately and retained in accordance

with Postal Service policy. 

(OIG AC-AR-02-001)

2001 TAX SEASON CERTIFIED

MAIL PROCESSING DELAYED 

An OIG audit found that certified mail was

delayed at four locations during the 2001 tax

season because postal managers did not fully utilize mail detector technology and instead relied

on manual processing of some certified mail.

Postal Service management agreed to update

operating plans to handle the increased volume

of certified mail during the tax season, improve

certified mail detector software functionality,

and develop new procedures to decrease the

PAGE24 PERFORMANCE REVIEWS

This section highlights audits, reviews, and

investigations performed by the OIG and

the Inspection Service activities in the

Performance area. Report numbers are

shown in parentheses after the narrative,

as appropriate. Also, the OIG legislative,

regulatory, and policy 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 activities reported by the Inspection

Service have been color-screened.

On average, the Postal Service accepts

over 660 million pieces of mail each

day in a variety of ways, including

collections from more than

300,000 blue collection boxes.
reliance on manual operations. 

(OIG AC-AR-02-002)

TRANSPORTATION AND 

DELIVERY REVIEWS

Transportation of mail is a vital part of the

Postal Service’s mission of binding the nation

together by providing prompt, reliable, efficient,

and universal mail delivery at affordable rates.

The Postal Service spends in excess of 

$5 billion annually for air, highway, rail, and

water transportation. As a result of the

September 11, 2001, terrorist attacks, the Postal

Service has relied more heavily on highway and

rail transportation because of restrictions on

commercial airlines carrying certain types of

mail. 

Contractors provide most transportation;

however, the Postal Service operates its own

fleet of trucks for some highway routes,

including a delivery network of approximately

230,000 mail routes that are serviced by nearly

300,000 letter carriers and almost 180,000 delivery vehicles. Under a January 2001 agreement

with FedEx to transport Express, Priority, and

First-Class Mail, the Postal Service is expected

to provide more reliable service, reduce costs,

and manage future cost growth. 

During FY 2001, the Postal Service delivered almost 207 billion pieces of mail to

138 million homes and businesses—a yearly

average of 1,500 pieces of mail for every household and business in America. During the past

6 months, the OIG completed four transportation and delivery related audits, one of which

was a video report, and conducted several investigations. One anthrax related review is highlighted in the Responding to Terrorism section

and the other significant audits and investigations are highlighted below:

OVER $80 MILLION COULD BE

SAVED BY PURCHASING

TRAILERS

An OIG audit revealed the Postal Service

could save over $80 million over the next

12 years by purchasing rather than leasing 4,475

trailers, and that the lease justification had not

been prepared according to Postal Service

investment policy. Specifically, postal investment policy requires that both leases and major

operating expense investments be supported by

a Decision Analysis Report. Furthermore, the

investment policy specifies the threshold for

Board of Governors’ review or approval is

$10 million. Postal Service management disagreed with the OIG’s findings, recommendations, and estimated savings, stating that this

was not a lease, but a service contract, and

therefore did not require a Decision Analysis

Report or Board of Governors’ approval. The

OIG is pursuing resolution of this disagreement

through the audit resolution process. 

(OIG TD-AR-02-002)

REDUCED TRAILER DOOR

DAMAGE CAN SAVE THE 

POSTAL SERVICE $5 MILLION 

An OIG audit revealed the Postal Service

could save up to $5 million over the next 5 years

by reducing trailer door damage. The audit

found that cargo not properly loaded or secured

shifted during transport, causing trailer door

damage. Postal Service management agreed to

issue training videos on proper load-securing

procedures, and emphasize the importance of

using safety posters, checklists, inspection

sheets, and deficiency reports. This report was

issued in written, CD-ROM, and video formats. 

(OIG TD-MA-02-002, OIG TD-VR-02-001)

OVER $87,000 RECOVERED

FROM A TRANSPORTATION

CONTRACTOR

An OIG investigation resulted in recovery of over $87,000 from an Alaska air transportation contractor who submitted false

claims and received overpayments from the

Postal Service. Specifically, the investigation

determined that the contractor overstated

mail weight and charged the Postal Service a

more expensive wilderness rate instead of the

cheaper mainline rate. 

SHARING OF BEST PRACTICES

COULD IMPROVE MAIL DELIVERY 

In response to a Board of Governors’

request, the OIG conducted an audit, which

found Postal Service facilities had been using

various practices to improve on time mail delivery performance but did not have a process in

place to share the practices nationwide. More

specifically, the Postal Service had no formal

mechanism for identifying, assessing, and sharing best practices agency-wide to improve delivery performance. Postal management agreed to

establish a formal process to identify and share

best practices. (OIG TD-AR-02-001)

PAGE25

An OIG audit found the Postal Service

could save $5 million over the next 5

years by reducing trailer damage.
HIGHWAY TRANSPORTATION

CONTRACTS TERMINATED FOR

DEFAULT

As a result of an OIG investigation, the

Postal Service terminated five highway transportation contracts awarded to a Kansas contractor. The investigation found that the

contractor did not provide workers’ compensation coverage for its employees, as required by

the contracts. 

DELIVERY STUDY RESULTS WERE

NOT RELIABLE

An OIG review determined that postal

management could not use a contractor’s study

of Express Mail on-time delivery performance

because the accuracy and completeness of data

used in the study could not be verified. The contractor acknowledged the constraints and, as a

result, the OIG will review the accuracy and

completeness of on-time delivery performance

data in its audit of the Express Mail scanning

processes.

MARKETING REVIEWS

The Postal Service operates in a globally

competitive environment and its ability to

maintain or increase its market share of the

$900 billion mailing industry is essential to providing universal service at affordable rates.

Therefore, the Postal Service designs its products and services to build customer awareness

and loyalty. The Postal Service also wants to

ensure that its services are available at places

where customers choose to do business. During

this reporting period, the OIG completed

two reviews of marketing operations, which are

highlighted below:

THE ROLE OF MARKETING IN THE

POSTAL SERVICE

An OIG audit found that the Postal

Service had not developed a consolidated marketing plan since FY 2000 and that the system

for measuring the effectiveness of advertising

campaigns needed improvement. The Postal

Service agreed to develop an integrated marketing plan linked to its strategic plan; include performance measures to assess the effectiveness of

the marketing plan; establish measurable advertising objectives prior to the start of their advertising campaigns; establish benchmarks for each

objective prior to beginning advertising campaigns; and reevaluate the use of targeted advertising campaigns that do not generate enough

revenue to cover advertising expenses.

(OIG EM-AR-02-007)

DATA NEEDED TO ACCURATELY

EVALUATE POSTAL RETAIL

STORES

At the request of the Board of Governors,

the OIG conducted a review that revealed the

Postal Service lacked data to accurately evaluate the financial performance of retail stores. As

a result, postal management will be unable to

reasonably compute the economic impact of

building postal retail stores until it develops

methods to isolate financial data for individual

postal retail stores. Postal management agreed

to establish systems, when economically feasible, to provide necessary data to evaluate the

financial performance and impact of retail store

operations. (OIG EM-AR-02-002)

CONSULTING AND QUICK

RESPONSE

The OIG created a consulting and quick

response team to conduct expedited reviews to

improve Postal Service business practices and

operations and to advise postal management

and the Governors on information needed to

address critical time sensitive issues. These

reviews address major challenges and the needs

of internal and external stakeholders. During

this reporting period, the work in this new area

covered the Postal Service’s handling of expedited contracts related to obtaining equipment

to sanitize the mail. These reviews are highlighted in the Responding to Terrorism section

of this report.

LEGISLATIVE, REGULATORY &

POLICY REVIEWS 

During this reporting period, the OIG

identified legislation, regulations, and policies

affecting Postal Service performance. Some of

the legislation and regulations reviewed are

highlighted below:

Transformation Plan

In a June 14, 2001, letter Senator Joseph

Lieberman requested that the Postal Service

develop and submit a comprehensive plan to

address its problems and methods to correct

them after the General Accounting Office

placed the Postal Service on its high-risk list.

PAGE26 PERFORMANCE REVIEWS

The OIG determined that the Postal

Service lacked data to evaluate

performance of Retail Stores.

As a result of the September 11, 2001,

terrorist attacks, the Postal Service

has relied more heavily on highway and

rail transportation because of restrictions on commercial airlines carrying

certain types of mail.
PAGE27

On October 9, 2001, the Federal Register published the Postal Service’s notice inviting the

public to comment on the Outline for

Discussion: Concepts for Postal Transformation.

On April 4, 2002, the Postal Service delivered

to Congress the Transformation Plan, which

provides a comprehensive plan for the future of

the Postal Service. The OIG will examine the

plan during the next reporting period and will

conduct reviews to assist the Postal Service in

assuring the plan is efficiently and effectively

implemented. 

PROPOSED LEGISLATION

S. 1669 -- Hazardous Material

Transportation Safety Reauthorization

Act of 2001 (Similar: H.R. 3276)

This bill contains a provision that would

classify hazardous materials as nonmailable

unless exempted by law or Postal Service regulation. In addition, the bill would strengthen

existing law by authorizing the Postal Service to

impose civil penalties ranging from $250 to

$100,000 for each violation of the law regarding

the shipment of hazardous materials and to collect clean-up costs and damages resulting from

the shipment.

This legislation would be very helpful to

the Postal Service in its efforts to protect its

employees and the public from harmful substances transported through the mail. It should

act as a deterrent for those who may be inclined

to ship hazardous materials through the mail.

The funds collected from the penalties imposed

and for clean-up costs and damages will help the

Postal Service defray the expense associated

with contamination resulting from hazardous

materials entering the mail stream. 

OIG Special Agent Paul Herbert received

the Award for Public Service from the

United States Attorney’s Office, Eastern

District of New York, for his work on an

investigation involving a Postal Service

manager who pled guilty to felony

charges of embezzlement and conspiracy

to defraud.
PAGE28

INSPECTION SERVICE

Mail thieves frequently concentrate on

targets that offer a large volume of

mail including not only items of obvious value in the mail, such as jewelry, computers,

cash, credit cards, and checks, but also mail containing personal and financial information.

Postal Inspectors investigate mail theft to maintain the public’s confidence in the Postal Service

and preserve the sanctity of the mail. Postal

Inspectors are working with major mailers to

prevent mail theft and related problems. Also,

while the overwhelming majority of Postal

Service employees work conscientiously to

move the nation’s mail to its proper destination,

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. The following chart provides the activity during this reporting period.

Founded by Benjamin Franklin in 1737,

the Postal Inspection Service is one of

the oldest federal law enforcement

organizations in America.

TYPE OF INVESTIGATION

Non-Employee Mail Theft

Employee Mail Theft

ARRESTS

2,583

336

CONVICTIONS

2,183

307

PERFORMANCE REVIEWS
Financial Management

Reviews

OFFICE OF INSPECTOR GENERAL

Financial Opinion Audits

Financial-Related Reviews

Contracting and Facilities Reviews

Legislative, Regulatory & Policy Reviews

INSPECTION SERVICE

PAGE 29
PAGE30

OFFICE OF INSPECTOR

GENERAL

The Postal Service currently faces one of

the most challenging financial periods

in its history. In FY 2001, the Postal

Service incurred a net loss of $1.68 billion on

$66 billion in revenue. The events of

September 11, 2001, and the anthrax attacks,

further depressed an already bleak outlook for

FY 2002. In response to the declining financial

situation, the Postal Service has taken aggressive actions to cut costs. In addition, a rate

increase was requested and subsequently recommended by the Postal Rate Commission after

the Postal Service held discussions and reached

agreements with major mailers and other participants. The Postal Service Governors

approved the Postal Rate Commission’s recommendations. 

The Postal Service relies on strong financial management controls to maximize revenue

and minimize costs. In the past 6 months, the

OIG has completed 258 financial management

reviews and 7 investigations. These efforts identified almost $52.4 million in questioned costs

and opportunities to save $5.4 million during

current and future years. In addition, OIG

investigations resulted in a conviction and several indictments. These projects add value to

the Postal Service by identifying opportunities

for cost savings and improving financial management, contracting, and facilities practices,

and detecting and deterring fraud, waste, abuse,

and mismanagement.

FINANCIAL OPINION AUDITS

The Postal Reorganization Act of 1970

requires an annual audit of the Postal Service’s

financial statements. The OIG conducts audits

in support of the independent public accounting firm’s overall opinion on those statements.

These audits assess the integrity and reliability

of the financial information contained in the

Postal Service financial statements. The

Information Technology and Accounting

Service Centers in Eagan, Minnesota; St. Louis,

Missouri; San Mateo, California; and at Postal

Service Headquarters in Washington, DC,

oversee the collection of approximately $66 billion in revenue and the recording and disbursement of about a similar amount each year.

Examples of reviews in this area are highlighted

below:

◆ The OIG conducted audits at these centers and headquarters and found that

management’s policies, accounting procedures, and internal controls conformed

with generally accepted accounting principles. However, the OIG identified the

following areas for improvement:

◆ accountability for capital personal 

property;

◆ money order inquiry system;

◆ controls over accounting for parts 

inventory and the recording of 

vehicle disposals; and

◆ controls to ensure contracting 

officers award contracts within their 

authority. 

The OIG recommended and the Postal

Service management generally agreed to

improve all of the areas.

(OIG FT-AR-02-007 through 

OIG FT-AR-02-010)

◆ The OIG reviewed travel and miscellaneous expenses for the Office of the

Board of Governors and travel and representation expenses for Postal Service officers for the year ending September 30,

2001. The reviews determined expenses

were properly supported and complied

with postal policies and procedures and

Board of Governors’ guidelines. 

(OIG FT-AR-02-005 and 

OIG FT-AR-02-006)

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,

regulatory, and policy 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.

PAGE30 FINANCIAL MANAGEMENT REVIEWS

DID YOU 

KNOW?

Is the OIG responsible for

audits within the Postal

Service? 

Yes. In January 1999, the

Postmaster General re-emphasized

to all Postal Service officers the

audit roles of the OIG.

Specifically, 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 will serve as

the focal point with other agencies, to coordinate work efforts

and avoid any duplication. 
PAGE31

ALMOST $1.4 MILLION

OVERPAYED TO VENDORS

An OIG audit found that in FY 2001 the

Postal Service paid almost $1.4 million to vendors for services already paid for or not rendered. The Postal Service did not always verify

either the standard invoice number format or

the vendor location, or made data entry errors

resulting in over 1,000 duplicate payments

totaling over $1.13 million. Vendors returned

$880,000, and based on the OIG’s review,

postal management initiated actions to recover

almost $217,000. The OIG recommended and

postal management agreed to collect remaining

overpayments of about $250,000 identified in

the report and to direct field office personnel to

verify invoice numbers and vendor locations

before paying the invoices. 

(OIG FT-AR-02-011)

FY 2001 FINANCIAL

INSTALLATION AUDITS

The OIG conducted audits at 205 postal

facilities and found that financial information

was reasonably and fairly represented in the

accounting records, and internal controls were

generally in place and effective. However, at

180 facilities, the OIG identified certain noncompliance with Postal Service instructions

and minor internal controls weaknesses. The

OIG issued individual reports to address these

issues and will issue a summary report providing

Postal Service management with recommendations to address systemic issues. (For specific

reports see Appendix A, page 102-106.)

THE POSTAL SERVICE CHANGES

TO MONTHLY REPORTING OF

FINANCIAL DATA

With the support of the OIG and the

recent approval by the Governors, the Postal

Service is undertaking one of the most significant changes to its financial accounting systems

in recent history. By September 2003, the

Postal Service plans to change the periodic

reporting of financial data from 13 accounting

periods to a monthly reporting cycle. There are

numerous advantages for monthly reporting

including alignment with the government fiscal

year, the ability to meet Office of Management

and Budget requirements for calendar quarter

reporting in FY 2004, and the elimination of 

the need for the accounting period 14 reconciliation. Other benefits include reduced

accounting cost and a monthly cycle that will

be compatible with private sector. This change

will also require the OIG to adjust the nature,

timing, and extent to which financial transactions are tested. 

FINANCIAL-RELATED REVIEWS

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 6 months, the OIG has completed

6 financial-related audits and 7 investigations.

Some significant reviews and investigations are

highlighted below:

POSTAL SERVICE RELOCATION

LOAN PROGRAM MORE

GENEROUS THAN OTHER

FEDERAL AGENCIES & FORTUNE

500 COMPANIES

At the request of the Board of Governors,

the OIG reviewed a Postal Service program

that allows postal employees to relocate to

high-cost areas without an increase in their

monthly mortgage payment. This program was

more generous than relocation programs offered

by Fortune 500 companies and other federal

agencies. Under the program, executives apply

the equity from their previous home to the

purchase of a new home and the Postal Service

pays for any increases in the executives’ mortgages.

Between January 1997 and October 2000

the program was selectively offered to 48 executives, 10 of whom did not meet program eligibility requirements. In addition, the program

was offered in three cities not covered by the

program; offered to five individuals multiple

times, regardless of their eligibility; and based

on informal policies that did not address

program exceptions or establish adequate documentation. Postal Service management agreed

to provide the shared real estate appreciation

loan program policy to all executives, improve

program documentation, restrict program

participation to defined high-cost areas, update

approved high-cost areas annually, and ensure 

During an audit, OIG employees review

controls over cash as part of a financial

installation review.
PAGE32

that program exceptions are in the best interest

of the Postal Service. This report is one of a

series examining relocation benefits for postal

executives. (OIG FT-AR-02-001)

CONTROLS OVER CREDIT 

CARD PURCHASES NEED

STRENGTHENING

The OIG found that overall the Postal

Service had proper and sufficient controls over

purchases made with the International

Merchant Purchase Authorization Card.

However, the audit did identify instances where

controls needed improvement. The Postal

Service continued to address the issues involving improving controls, and the OIG will continue to monitor International Merchant

Purchase Authorization Card purchases and

make further recommendations if warranted.

(OIG FT-AR-02-002)

OBSERVATIONS OF STATISTICAL

TESTS FOR THE COST AND

REVENUE ANALYSIS

An OIG audit of statistical tests for the

FY 2001 Cost and Revenue Analysis revealed that,

generally, tests conducted to collect cost, revenue, and volume data were performed in accordance with policies and procedures. However,

employees did not always adhere to instructions

for sampling and data collection. Postal Service

management agreed to reinforce procedures and

train data collectors. In addition, the Postal

Service plans to implement new In-Office Cost

System Software and policies in FY 2003. 

(OIG FF-AR-02-206) 

OIG ASSISTS IN VERIFYING

POSTAL EMPLOYEE

WITHHOLDINGS AND 

EMPLOYER CONTRIBUTIONS

At the request of the Inspector General for

the Office of Personnel Management, an OIG

review verified Postal Service employee withholdings and employer contributions reported

in the “Report of Withholdings and

Contributions for Health Benefits, Life

Insurance, and Retirement.” The OIG verified

the information in the report and identified

three minor errors, which were corrected. The

report was for informational purposes only, and

did not require action by postal management.

(OIG FT-AR-02-003)

IMPLEMENTATION OF

RECOMMENDATIONS MADE IN

THE DATA QUALITY STUDY

NEEDS IMPROVEMENT

The OIG assessed the Postal Service’s

efforts to implement 11 recommendations from

the April 1999 Data Quality Study, which was

jointly sponsored by the Postal Service, Postal

Rate Commission, and General Accounting

Office. The OIG initiated this audit because of

the potential impact of the Data Quality Study

recommendations on the ratemaking process.

The audit revealed that the Postal Service

made reasonable progress in implementing six

recommendations for the Transportation Cost

System and the Revenue, Pieces and Weight

System. However, efforts to implement the five

recommendations involving the replacement of

the mid-1980s Carrier Cost System delivery

study data were not effective or timely. The

report concluded that until the Postal Service

updates the delivery special studies, a portion of

approximately $9 billion in city carrier street

time costs may not be accurately distributed to

the various subclasses of mail. Postal management agreed to require finance personnel to

establish a formal, time-phased action plan that

identifies key milestone dates and provides the

chief financial officer and executive vice president with periodic briefings on the progress of

the new costing strategy. (OIG FT-AR-02-004)

OIG INVESTIGATIVE EFFORTS

REDUCE CIVIL CLAIMS AGAINST

THE POSTAL SERVICE BY OVER

$7.8 MILLION

◆ Tort claims totaling $7 million were settled for $185,000 as a result of an OIG

investigation. The claims were based on

an accident that involved a postal letter

carrier who fell out of a mail delivery

truck and onto the plaintiff, allegedly

resulting in serious injuries. The plaintiff’s relatives also filed a joint tort claim

lawsuit stating that the plaintiff’s alleged

injuries caused them pain and suffering.

By revealing that the plaintiff was without obvious physical limitations in contrast to the claims made for damages, the

OIG investigation assisted the Department of Justice in settling the claims for

a reduced amount.

FINANCIAL MANAGEMENT REVIEWS

An OIG audit of statistical tests for the

FY 2001 Cost and Revenue Analysis

revealed that, generally, tests

conducted to collect cost, revenue, and

volume data were performed in accordance with policies and procedures.
PAGE33

◆ As a result of an OIG investigation, a

settlement agreement was reached

between a private citizen and the Postal

Service concerning a $45,000 tort claim.

The claim was based on an auto accident

involving the plaintiff and a Postal Service vehicle. Information obtained during the course of the investigation

revealed that the plaintiff had been in

eight previous motor vehicle accidents.

In all previous accidents, the plaintiff

had claimed injuries identical to the

injury allegedly suffered in the accident

with the postal vehicle. The case was settled for over $13,600 resulting in a cost

avoidance of more than $31,000 to the

Postal Service.

◆ A $750,000 claim was dismissed as a

result of an OIG investigation. A private

citizen filed a tort claim lawsuit against

the Postal Service in connection with an

injury allegedly sustained as a result of an

accident with a Postal Service vehicle.

The investigation did not substantiate

the individual’s claimed injury and assisted with the dismissal of the claim.

◆ As a result of an OIG investigation, a

$250,000 claim was settled for approximately $10,000. A highway contract

route driver filed a tort claim lawsuit

against the Postal Service in connection

with injuries allegedly suffered when an

overhead garage door at a processing and

distribution facility fell, striking the driver on the head and lower back. The

investigation revealed several discrepancies in the plaintiff’s claim related to the

timing, plausibility, and severity of the

alleged accident, and as a result the

claim was settled.

CONTRACTING AND FACILITIES

REVIEWS

The Postal Service manages approximately

$15 billion annually in contracts for essential

goods and services, including facilities, transportation, mail processing equipment, and supplies. This makes the Postal Service one of the

largest civilian contracting agencies in government. During FY 2001, postal purchases

included over $570 million in noncompetitive

contracts and over $310 million in credit card

purchases. The Postal Service is also one of

America’s largest owners, developers, and managers of real estate, committing over $370 million in FY 2001 for repair, renovation, and

construction of new facilities, and paying over

$920 million in rent. The commitment amount

of $370 million was reduced from the prior fiscal year because the Board of Governors and

Postal Service management decided to take

action to immediately suspend new construction, new leasing, and facility expansion contract activity, except for those items that were

in process or met the exception criteria.

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 financial systems. In the

past 6 months, the OIG conducted 38 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 conducts investigations targeting fraud and corruption in these

areas. Highlights of some contracting and facilities reviews follow:

CONTRACT AUDITS IDENTIFIED

OVER $51.1 MILLION IN

QUESTIONED COSTS

In the past 6 months, the OIG worked

with the Defense Contract Audit Agency and

completed 35 audits of contracts valued at

almost $580 million. These audits resulted in

approximately $51.1 million in questioned and

unsupported costs and opportunities to save

$1.3 million during current and future years.

The contract audits include: incurred cost

audits that evaluated the reasonableness of costs

incurred by contractors; proposal audits that

evaluate the reasonableness of contractor cost

estimates; defective pricing audits that are performed to determine whether contract prices

significantly increased because of defective contractor pricing data; and contractor financial

system audits, such as accounting, estimating,

and billing systems that are reviewed to determine their adequacy to account for contract

costs. These audits, which are summarized in

the graph in the margin focus on whether contractors’:

Types and Number of Contract 

Audits Completed

OTHERS

SYSTEM REVIEWS

INCURED COSTS

CLAIMS

PROPOSALS

11

10

7

5 2

The OIG completed 35 audits of contracts valued

at over $580 million.

OIG investigations often result in settlements of reduced claims for damage, at

great cost savings to the Postal Service.

For example, the owner of a vehicle

originally claimed over $45,000 worth of

damage as a result of a collision with a

postal vehicle; however, the claim was

settled for over $13,000.
◆ Proposed and incurred costs were allowable and reasonable;

◆ Pricing data were accurate, complete,

and current; and 

◆ Accounting systems for allocating costs

to the Postal Service were adequate.

In addition to raising questions about costs,

the audits disclosed that a major contractor’s

proposal was not prepared in accordance with

Postal Service policy. Following is a summary of

6 significant contract audits completed in the

last 6 months:

◆ An audit of a contractor’s $109.7 million

firm-fixed-price proposal for the Mailing

Evaluation, Readability, Lookup Instrument Program disclosed questioned costs

of $13.5 million, with unsupported costs

of over $3 million. Significant questioned costs include purchased parts, subcontracts, direct labor, travel, and associated indirect costs. Questioned costs

were the result of the contractor failing

to provide supporting documentation for

proposed purchased parts, subcontracts,

and other direct costs. (OIG CA-CAR02-012)

◆ An audit of a contractor’s approximately

$39.7 million firm-fixed-price subcontract proposal for Automated Flat Sorting Machine-100 phase II replenished

and emergency spare parts support disclosed questioned costs of over $11 million. Additionally, the audit disclosed

contractor restructuring and acquisition

activities that could result in additional

savings. The audit did not consider the

proposal acceptable as a basis to negotiate a fair and reasonable contract price

because the contractor did not submit

adequate cost or pricing data. 

(OIG CA-CAR-02-005)

◆ An audit of a $5.4 million Partial Termination of Convenience settlement proposal disclosed questioned costs of

$2.2 million. Significant questioned costs

included purchased parts, direct labor,

overhead, and profit.

(OIG CA-CAR-02-027)

◆ A review of a contractor’s purchasing

system disclosed several deficiencies,

including incomplete purchase order file

documentation; supplier quotes and procurement support information that were

not in a usable format; and procedures

that did not clearly require buyers to perform and document sole source justification, price and cost analyzes, and negotiations. The audit provided seven recommendations to address these issues. 

(OIG-CA-CAR-02-018)

◆ An audit disclosed that a contractor’s

efficient and effective use of video teleconferencing as an alternative to travel

could result in approximately $1.3 million in potential savings in travel costs

allocable to the Postal Service. The OIG

recommended that the Postal Service

contracting officer require the contractor

to implement procedures to ensure that

its employees use video teleconferencing

and incorporate the associated savings

into future, forward-pricing rates and

contract price proposals. 

(OIG CA-CAR-02-019)

◆ An audit disclosed that a contractor’s

billing system and new accounting system were partially inadequate. Regarding

the billing system, written policies and

procedures did not exist, contract or task

order briefs were not routinely prepared

and updated, and no evidence of management review of invoices existed.

Regarding the new accounting system,

certain time and expense reporting controls were weak or nonexistent, and the

contractor did not have a job cost

accounting system. In addition, the contractor occasionally billed overtime

hours, but did not pay its salaried

employees for overtime worked. The

OIG recommended that the Postal Service contracting officer ensure the contractor implement the corrective actions

outlined in the audit report and consider

the suggestion to negotiate overtime

rates to be used for pricing overtime

hours. (OIG CA CAR-02-021)

$45 MILLION WORTH OF 

PROPERTY NOT DEVELOPED 

OR USED

An OIG audit revealed that 30 properties

purchased for $45 million were never developed, utilized, or referred for disposal. One of

the properties was purchased over 18 years ago.

The Postal Service did not use these properties

PAGE34 FINANCIAL MANAGEMENT REVIEWS

The OIG audited a contractor’s firmfixed-price proposal for the Mailing

Evaluation, Readability, Lookup

Instrument Program, commonly known

as MERLIN.
PAGE35

Will the OIG investigate

allegations of retaliation when

wrongdoing is reported? 

The OIG investigates all

complaints of management

retaliation received from Postal

Service employees who had

previously reported wrongdoing 

to the OIG.

because operational requirements changed and

budget constraints prevented their development. During the audit, one property that had

been donated to the Postal Service was subsequently returned to the original owner, and 12

properties were referred for disposal. Disposal of

these properties could provide up to $4.1 million. Postal management agreed to require a

review of all undeveloped and unused real property and refer those properties that are no longer

needed to Realty Asset Management to begin

the disposal process. (OIG CA-AR-02-002)

SUPPLIER DIVERSITY PROGRAM

NEEDS IMPROVEMENT

An OIG review requested by the Board of

Governors showed the Postal Service was generally consistent with national business demographics regarding the total percentage of

dollars awarded to minority-owned and

women-owned suppliers. However, the Postal

Service was not consistent with national business demographics regarding the percentage of

minority-owned and woman-owned suppliers

awarded contracts. The Postal Service agreed to

require contracting officers to input ethnic

codes for minority-owned suppliers in procurement databases and use national business

demographics data as a tool when assessing

diversity of its suppliers and identifying market

opportunities. (OIG CA-MA-02-001)

REVIEW OF WINTER OLYMPICS

PLAN DISCLOSED PROJECTS

WERE COMPLETED ON TIME

An OIG follow-up review of its June 2000

audit of the Salt Lake City District Winter

Olympics Plan determined that a prior report’s

recommendations had been implemented, and

the Salt Lake City District was on track to complete the 23 Olympic projects before the

Olympics began on February 8, 2002.

Documentation provided subsequent to the

issuance of the report disclosed that all Olympic

lobby projects were completed prior to the start

of the games. (OIG CA-AR-02-001)

OVER $8.4 MILLION ORDERED

IN RESTITUTION 

As a result of a joint investigation by the

OIG and the Inspection Service, a former

Postal Service supervisor at a Bulk Mail Entry

Unit was sentenced to 1 year probation and

ordered to make joint restitution, along with 11

other previously convicted defendants, to the

Postal Service of over $8.4 million. The former

supervisor previously pled guilty to bribery

charges relating to a 4-year scheme in which

the owners and managers of a bulk mail company under-reported 250 million pieces of

First-Class mail, resulting in a loss of more

than $25 million to the Postal Service. The

former supervisor accepted bribes from an

employee of the company to allow the scheme

to continue. 

OIG INVESTIGATION LEADS TO

MULTIPLE CONVICTIONS 

An OIG investigation led to spin-off investigations resulting in multiple convictions of

individuals involved in paying bribes in

exchange for being awarded postal contracts.

Specifically, the initial investigation involved

two former postal managers, a married couple,

who were sentenced for embezzling over $3.2

million from the Postal Service by conspiring to

submit fraudulent invoices for computers and

supplies not received. As a result of that investigation, it was alleged that four postal contractors made payments in exchange for receiving

contracts. In addition, it was later revealed that

a third postal employee accepted gratuities in

exchange for ensuring that work was not

delayed on projects under his supervision and

for approving work in advance on contracts

having pending modifications. 

All five subjects have pled guilty to charges

relating to the scheme. Three of the four contractors have been sentenced and ordered to

pay restitution and fines totaling over $200,000.

Sentencing of the fourth contractor is pending.

Additionally, two of the four contractors have

agreed to reimburse the OIG a total of $100,000

for the cost of the investigation. Furthermore,

the postal employee who accepted gratuities

was ordered to make restitution of $20,000 and

retired prior to any administrative action being

taken. Debarment actions are being pursued

against the contractors.

DID YOU 

KNOW?

As a result of an OIG investigation, a

Postal Service vendor pled guilty to

fraud and related activity in connection

with Postal Service credit card

numbers.
CONTRACTOR INDICTED ON

TWO COUNTS OF WIRE FRAUD

As a result of a joint investigation by the

OIG and the Inspection Service, a transportation contractor was indicted on two counts of

wire fraud. The indictment alleged that the

contractor submitted, via facsimile, false

invoices to two Western Area Distribution

Network Offices. The indictment further

alleged that the contractor altered a price quote

to make it appear as if a lift gate was purchased. 

DUPLICATE CLAIMS AND

ERRONEOUS BILLING RESULTS 

IN CLAIM REDUCTION OF

ALMOST $150,000

An OIG investigation revealed that a

Louisiana construction contractor submitted

duplicate claims and billed the Postal Service

for services not rendered. The Postal Service

settled all claims with the contractor for approximately $19,000, resulting in a total claim

reduction of almost $150,000.

SUBCONTRACTORS PLEAD

GUILTY TO CONSPIRACY

As a result of two related OIG investigations, six employees of various Postal Service

subcontractors pled guilty to conspiracy and

various other charges pertaining to their roles in

a kickback scheme. In addition, an associate of

one of the subcontractors pled guilty to the

same violation. The scheme involved seven

individuals paying kickbacks to three employees

of a Postal Service contractor. Kickbacks of

almost $1.2 million were paid to the three contractor employees in return for over $6.7 million

worth of subcontract work.

POSTAL SERVICE VENDOR

EMPLOYEE SENTENCED FOR

CREDIT CARD FRAUD

As a result of an OIG investigation, a

Postal Service vendor employee was sentenced

in Central California for fraud and related activity in connection with Postal Service credit card

numbers. The employee stole the credit card

numbers and used them to buy items over the

telephone and Internet. The credit card numbers were obtained from the individual’s

employer, an auto parts dealer who supplied

repair parts to the Postal Service. The employee

was sentenced to 6 months home confinement

and 5 years probation, and required to pay

almost $4,000 in restitution to the Postal

Service.

STOLEN POSTAL SERVICE CREDIT

CARD USED TO PURCHASE

COMPUTER EQUIPMENT

As a result of an OIG investigation, a

Florida individual was convicted of felony theft.

The crime involved the illegal use of a Postal

Service credit card number to purchase almost

$900 in computer equipment from a computer

company. The defendant was sentenced to serve

2 days in jail, placed on 3 years supervised probation, and ordered to serve 50 hours of community service. In addition, the defendant was

ordered to pay restitution commensurate to the

amount stolen, pay the cost of conducting the

investigation, and pay fines and court costs.

POSTAL MECHANIC INDICTED ON

CONFLICT OF INTEREST CHARGES

As a result of an OIG investigation, a

postal mechanic assigned to a Vehicle

Maintenance Facility was indicted on conflict

of interest charges. Specifically, the mechanic

allegedly recommended and approved the

Postal Service purchase of vehicle parts from an

electronics company in which the mechanic

and spouse had a financial interest. The

mechanic also allegedly presented claims to the

Postal Service for payment, knowing they were

fraudulent. As a result, the mechanic was

removed from the position without pay pending

the outcome of the criminal trial.

CONSTRUCTION CONTRACTOR

DEBARRED

As a result of an OIG investigation, a construction company and two of its officers were

debarred from contracting with the Postal

Service for 31 months. The OIG found the contractor falsely inflated the quantity of work performed on contracts involving construction

projects in Oregon.

CONTRACTOR LOSES RETAINER

FOR SUBSTANDARD WORK

An OIG investigation of a contractor

resulted in an administrative recovery of almost

$158,000. The investigation determined that

the Postal Service paid for incomplete, defective, or substandard work relating to electrical,

PAGE36

Surveillance is one technique OIG

special agents use when conducting

investigations.

FINANCIAL MANAGEMENT REVIEWS
PAGE37

heating and air conditioning, security, drainage,

and fire alarm systems. As a result of the administrative settlement with the Postal Service

Legal Department, the contractor agreed to

allow the Postal Service to keep a retainer fee of

almost $156,000 and to pay an additional

$2,000 to settle this matter. 

CONTRACT TERMINATED FOR

FRAUDULENT CLAIMS

Based on an OIG investigation, Postal

Service management terminated a contractor’s

services to wash tractors, trailers, and trucks.

The investigation revealed the contractor submitted multiple fraudulent claims requesting

payment for services not rendered. The Postal

Service paid no more than $7,000 of the original contract amount of $94,000 before the contract was terminated. 

LEGISLATIVE, REGULATORY &

POLICY REVIEWS

During this reporting period, the OIG

identified legislation, regulations, and policies

affecting Postal Service financial management.

Some of the legislation, regulations, and policies reviewed are below.

ENACTED LEGISLATION

Public Law No. 107-67 — Treasury,

Postal Service Appropriations Act, FY

2002 

This bill authorizes over $76.6 million for

revenue foregone provided that mail for overseas voting and mail for the blind shall continue

to be free; that 6-day delivery and rural delivery

of mail shall continue at not less than the 1983

level; that none of the funds made available to

the Postal Service by this Act shall be used to

implement any rule, regulation, or policy of

charging any officer or employee of any state or

local child support enforcement agency, or any

individual participating in a state or local program of child support enforcement, a fee for

information requested or provided concerning

an address of a postal customer; and that none

of the funds provided in this Act shall be used

to consolidate or close small rural and other

small post offices in FY 2002. 

The measure also contains three semipostal stamp measures raising money for the following causes: an extension for Breast Cancer

Research; 9/11 Heroes; and Domestic Violence.

There are also provisions providing for guards at

postal facilities, Federal Law Enforcement

Training Center, and training of Postal Police.

An additional provision enables the Postal

Service to require that private carriers transport

day-old poultry and other live animals as mail. 

In previous reports, the OIG expressed

concern with the semipostal stamp program,

recommending that better cost accounting be

employed and enforced. Another concern is

with the language prohibiting the use of the

appropriate funds to consolidate or close post

offices during FY 2002. The OIG understands

the importance of small post offices, particularly

in rural communities. However, limiting the

Postal Service’s latitude to close or consolidate

retail facilities can hinder its ability to effectively manage its financial situation. 

Public Law No. 107-117 — Emergency

Supplemental Acts, Department of

Defense Appropriations Act, 2002

On November 8, 2001, the Postal Service

requested $1.1 billion in emergency appropriations to protect postal employees and customers

from exposure to biohazardous material; to sanitize and screen the mail; and to replace or

repair Postal Service facilities destroyed or damaged in New York City as a result of the

September 11, 2001, terrorist attacks. To help

meet this need, Congress provided a $500 million appropriation to the Postal Service in the

Defense Appropriations Act. The law also

enables the Sergeant at Arms of the House of

Representatives to destroy or otherwise dispose

of any anthrax-contaminated mail delivered by

the Postal Service to the House of

Representatives and that no action taken under

this section may serve as a basis for civil or criminal liability of any individual or entity.

The law specifies that no funds shall be

obligated for the purpose of sanitizing and

screening the mail until the Postal Service submits to the Committees on Appropriations, the

House Committee on Government Reform,

and the Senate Committee on Governmental

Affairs an emergency preparedness plan to combat the threat of biological and chemical substances in the mail. The plan must also include

a proposal for expenditure of funds in support of

the emergency preparedness plan. The Postal

What is the Mail Fraud

Statute? 

The Mail Fraud Statute contained

in Title 18 of the United States

Code, Section 1341, makes it a

criminal violation to use the US

mail or the services of any private

or commercial carrier to carry out

a fraudulent scheme.

DID YOU 

KNOW?
Service presented its Emergency Preparedness

Plan to Congress on March 6, 2002. 

As detailed in the Responding to Terrorism

section of this report, the OIG has reviewed and

reported on many aspects of the Postal Service’s

anthrax response and emergency plans. In 

the Review of the Accuracy of the Terrorist

Attack Damages and the Anthrax Threat, the

OIG found that cost estimates used to base the

Postal Service’s request were reasonable, particularly in light of the great pressure, short timeframes, and concerns for public safety, employee

welfare, and business impact. In addition,

because the events were unprecedented, the

Postal Service had no baseline financial information to assist in developing their estimates. 

PROPOSED LEGISLATION

H.R. 3832 — Services Acquisition

Reform Act of 2002

This bill is designed to make improvements

with respect to the procurement of services for

the federal government. It specifically includes

the Postal Service. The legislation establishes a

funding mechanism to pay for training of acquisition personnel who are engaged in Postal

Service contracting.

Because the Postal Service is exempt from

standard federal contracting rules, it is afforded

the opportunity to realize greater efficiencies

and operate in a more business-like manner

than other federal agencies. However, past

results of the OIG’s audits and reviews suggest

that while the Postal Service has realized some

efficiencies, there is a clear need to utilize best

practices. Indeed, the OIG recently made several recommendations for revisions to the Postal

Service’s Purchasing Manual. However, the

Postal Service has not adopted many of these

recommendations. The acquisition training

encouraged by this legislation could assist the

Postal Service with employing best practices.

S. 565 — Voting Procedures Commission and Modernization Bill

This bill would establish the Commission

on Voting Rights and Procedures to study and

make recommendations regarding election

technology, voting, and election administration. It would also establish a grant program

under which the Office of Justice Programs and

the Civil Rights Division of the Department of

Justice shall provide assistance to states and

localities in improving election technology and

the administration of federal elections. Finally,

it would require states to meet uniform and

nondiscriminatory election technology and

administration requirements for the 2004 federal elections.

The legislation has been subject to negotiations over, among other things, a provision

that would provide for postage free, electionrelated mail. The Postal Service has expressed

its reservations about this provision. The OIG

has concerns about whether revenue-depressing

measures are appropriate at this time in light of

the financial challenges facing the Postal

Service.

S. 1801 — Educational Matter Postal

Rate Act of 2001

This bill would amend Chapter 36 of Title

39, United States Code, to enable the Postal

Rate Commission to provide for a separate

postal rate for certain educational bound

printed matter. The bill defines “educational

matter” as bound printed matter as defined

under regulations promulgated by the Postal

Service that is principally intended to educate,

inform, develop, or support the education of students. This includes books and related materials; catalogues of books; software and related

materials; and materials that enable schools,

colleges, universities, public libraries, teachers,

or students to obtain books, software, or related

materials; and is mailed to or from a school, college, university, or public library.

While the OIG recognizes the value of

such educational material, we would recommend that Congress consider the financial

impact this legislation may have on the Postal

Service, particularly in a time of declining revenue.

S. 1811 — Presidential Appointment

Improvements Act of 2001

This bill would amend the Ethics in

Government Act of 1978 (5 U.S.C. App.) to

streamline the financial disclosure process for

executive branch employees, including the

Postmaster General, the Deputy Postmaster

General, and each Governor of the Board of

Governors of the Postal Service and other officers of the Postal Service and the Postal Rate

Commission. 

PAGE38 FINANCIAL MANAGEMENT REVIEWS
PAGE39

The bill would raise the minimum threshold for reporting assets from $1,000 to $5,000

and for liabilities from $10,000 to $20,000,

reduce the number of valuation categories,

shorten certain reporting time periods, limit the

scope of reporting by raising certain dollar

thresholds, and eliminate many descriptive

details. These changes will make it easier for

persons who annually file ethics reports subject

to public disclosure. 

H.R. 3175 — Late Fee Emergency

Relief Act of 2001 

(Similar: H.R. 3251 – Payment as

Postmarked)

This legislation would amend the Truth in

Lending Act to limit the late fee and annual

percentage rate increase imposed upon a consumer credit obligation in the case of a consumer whose principal residence is located in a

postal ZIP Code designated by the Postmaster

General as a biological, chemical, or radiological attack-related mail disruption area. 

The bill would prohibit creditors from

imposing late fees, increasing interest rates, or

submitting adverse credit information with

regard to the account of a consumer whose mail

service has been disrupted due to a biological,

chemical, or radiological attack.

This bill would likely have little impact on

Postal Service operations; however, the OIG

believes it is a powerful reminder of the confidence that Congress and the public have in the

integrity of the postmark.

H.R. 3778 — Federal Government

Water and Sanitary Sewer Billing and

Collection Improvement Act of 2002

This bill would provide for direct billing for

water and sanitary sewer furnished to federal

agencies by the District of Columbia, and direct

payment by those agencies to the District of

Columbia. When Congress addressed this issue

last session, the OIG determined that the Postal

Service did not use the special water and sewer

account that other agencies used to pay the

District for water and sewer services. The Postal

Service is billed directly and in turn promptly

pays for its water and sewer services from its

own account. The OIG reported the Postal

Service’s situation to the Congressional appropriations committees as required by similar legislation last year.

This year’s legislation attempts to give the

District the authority to bill federal agencies

directly. The bill phases out use by the agencies

of the special Treasury water and sewer account

to pay for these charges. Agencies would have

to budget for water and sewer bills in their

annual budget proposals based on estimates supplied by the District. The bill emphasizes

prompt payment of these bills when directly

billed and OIG’s reporting on compliance. 

If this legislation passes, it will impose a

continuous reporting burden on the OIG. A

provision of the bill (Section 2(b)(5)) requires

Inspector General offices to report to the

Congressional appropriations committees by

the 15th of the month following the close of

each quarter, how promptly its agencies paid

their District water bills. The OIG would have

to commit resources to comply with this quarterly requirement. In accordance with the

Prompt Payment Act, the OIG routinely

reviews the timeliness of the Postal Service’s

payment on accounts. The OIG believes that

an annual reporting requirement for the Postal

Service would be sufficient.

GOVERNMENT AUDIT 

STANDARDS, AMENDMENT 

NO. 3

In January, the General Accounting Office

published the third amendment to its

Government Auditing Standards (1994 revision), commonly known as the “Yellow Book.”

Amendment No. 3, Independence, addresses

many issues of independence in audit, nonaudit, and consulting services. 

The OIG has always strived to maintain

the highest level of professional standards,

including those set forth by the General

Accounting Office. As described in previous

semiannual reports, the OIG expressed concern

over provisions in the “Independence

Preliminary Views” document circulated for

comment by the General Accounting Office in

February 2000. The changes proposed at that

time stated that Inspectors General who were

appointed by an agency head would not be considered to be organizationally independent. The

OIG believed that this would have created a

misperception that management influenced

work performed by such Inspectors General. 

DID YOU 

KNOW?

Does the Inspector General

report to the Postmaster

General?

No. The Inspector General is

independent of Postal Management and reports directly to the

Governors and Congress. 
The OIG is pleased to report that the final

amendments recognize the independence of

Inspectors General who are not presidentially

appointed. In particular, section 3.30.2 of

Amendment No. 3 sets forth the criteria by

which Inspectors General such as the Postal

Service OIG may be presumed to be free of

organizational impairments. These changes

address the concerns raised by the Postal

Service OIG and many other Inspectors

General and will promote an understanding of

both our independence and the objectivity of

our work. 

POLICY REVIEW

PURCHASING MANUAL

The OIG prepared a series of proposed revisions to the Postal Service Purchasing Manual

requesting that they be addressed as part of its

re-issuance. The OIG’s major concerns are summarized as follows:

◆ After comparing the Postal Service suspension and debarment system with

those of other federal agencies, it was

apparent that the Postal Service’s suspension and debarment system must be tightened to protect its business operations,

and provide the Postal Service with the

level of protection and flexibility enjoyed

by other federal agencies. The OIG recommended that the Postal Service follow

the practice used in most federal agencies

and lower the burden of proof standard in

debarment actions from “clear and convincing” to “preponderance of the evidence.” The OIG also suggested that

business decision makers and not the

postal judicial officer make the debarment decisions. In addition, the OIG

suggested that once a supplier was proposed for debarment, the supplier should

be ineligible for a contract award. Finally,

the OIG suggested that Postal Service

contracts contain a certification clause

requiring that the contractor not have

been debarred within the previous three

years. The Postal Service has not yet

adopted these recommendations. 

◆ While the examinations of records

clause is a required clause in Postal Service contracts, it is not as encompassing

as the OIG suggested. The examination

of records clause should include specific

language that permits the Postal Service

to have access to the contractor’s facilities, as well as language that extends

access obligations to subcontractors. The

Postal Service has not yet adopted this

recommendation.

◆ The Purchasing Manual should require

all contractors who receive over

$500,000 in cost-type postal contracts

annually to have an approved accounting

system, including an estimating and

billing system that can properly allocate

costs to postal contracts. The Postal Service has not yet adopted this suggestion.

◆ A computer security standard provision

should be in contracts requiring the computer security architecture to maintain

incident handling procedures. The contractor would also be required to notify

the Postal Service of incidents that may

impact upon postal computer security,

and provide access to contractor computer systems by postal information technology and OIG officials. While the Postal

Service did take steps to enhance their

own computer security and policies, it

did not require contractor’s computer systems, whose computers might interface

with the OIG, be subject to OIG review

and inspection.

◆ Because the OIG assumed many of the

functions, such as contract audits, which

were previously performed by the Inspection Service, the Purchasing Manual

should be updated to properly reflect the

current role of the OIG. References to

the “Inspection Service” must be

changed to “Office of Inspector General.”

These changes were made. 

◆ The OIG will continue to work with the

Postal Service in the months ahead to

secure the recommended reforms. 

SUSPENSION AND DEBARMENT

OF CONTRACTORS

Under its current purchasing rules, the

Postal Service is not bound to General

Services Administration suspensions and

debarments. The OIG has recommended for

three years to postal management that this policy be changed. If the Postal Service used

PAGE40 FINANCIAL MANAGEMENT REVIEWS

DID YOU 

KNOW?

Who can request that the 

OIG conduct an audit or

investigation?

Anyone can request the OIG

conduct an audit or investigation.

However, the Inspector General

ultimately determines what work

will be performed.
PAGE41

General Services Administration’s suspension

and debarment list, Arthur Andersen would

have been suspended sooner. Before suspending or debarring a company, the Postal Service

uses its own standards for debarment, which is

a concern.

For example, almost immediately after its

indictment, the General Services Administration suspended Arthur Andersen from federal

government contracting, which prevented

almost every agency in the executive branch

of the federal government from making new

contract awards to the firm. The Postal

Service did not suspend Arthur Andersen

until nearly one month after the General

Services Administration’s suspension became

effective. In order to fully protect itself from

unscrupulous contractors, the OIG believes

the Postal Service should reconsider its

position on suspension and debarment.
INSPECTION SERVICE

Within the financial management

area, the Inspection Service performs 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 6 months,

there were 23 arrests and 29 successful criminal

convictions resulting from revenue investigations. 

Further, the Inspection Service investigates

embezzlements involving employee theft from

cash drawers and schemes involving postal

money orders. Postal Inspectors initiated

210 investigations of employee embezzlements

this reporting period, which documented losses

of over $2.2 million. Examples of investigations

in this area are summarized below.

◆ A supervisor in charge of a large New

York area presort bureau was found guilty

of defrauding the Postal Service and its

customers of over $20 million through a

combination of postage fraud schemes.

Testimony at trial disclosed that the

supervisor was responsible for operating

and directing others to use two postage

meters, which the company knew were

either defective or had been altered. The

conviction of the supervisor brings the

total number of defendants convicted to

14, while another suspect is still at large.

Sentencing for the supervisor is scheduled for May 2002.

◆ The supervisor of a Washington, DC,

area letter shop was arrested for defrauding a mailing customer, the Democratic

National Committee. The letter shop

contracted with the Committee to mail

approximately 550,000 solicitations during the 2000 presidential campaign. An

Inspection Service investigation revealed

that the letter shop only prepared and

mailed about 4 percent of the contracted

amount. 

◆ A former Tennessee postal manager was

sentenced to 10 months federal imprisonment followed by 2 years supervised

release, and ordered to pay restitution of

over $94,700 for submitting falsified travel vouchers. The vouchers were for the

manager and the manager’s relatives and

included non-existent travel and relocation expenses, and duplicate claims of

various expenses. In addition, the individual forged the signature of a non-existent manager as the approving official.

◆ A former Missouri postmaster was sentenced to 6 months community confinement, 5 years probation, and ordered to

pay over $88,600 in restitution for mail

fraud and embezzling money order funds.

While serving as postmaster or officer-incharge at five Missouri post offices, the

employee issued money orders for personal expenses and for their child’s tuition at

a local beauty college. The money orders

were claimed in postal financial records

as official disbursements. The restitution

amount includes more than $34,000 to

the Missouri Chapter of the National

Association of Postmasters of the United

States. As the elected secretary treasurer,

the individual also wrote and mailed

Association checks to pay personal

expenses.

◆ A former Illinois postal supervisor was

sentenced to 5 years probation and

ordered to pay restitution of over $34,700

for embezzling postal funds. The investigation revealed that one hundred postal

money orders were reported stolen by the

supervisor; 54 of which had been negotiated without payment made to the Postal

Service.

◆ A former Ohio post office branch manager was sentenced to 3 years probation, 6

months of which will be on home detention for embezzling postal funds. The

manager removed stamps from the unit

reserve and sold them to local merchants

to acquire cash to pay a gambling debt.

The former employee was ordered to pay

restitution of over $13,000, which was

paid at the time of sentencing.

PAGE42

Inspection Service assists with protecting the Postal Service’s revenues.

FINANCIAL MANAGEMENT REVIEWS
OFFICE OF INSPECTOR GENERAL

Developmental Reviews

Information Systems Reviews

Systems Development Reviews

eCommerce Reviews

Computer Intrusion Investigation Activities

Legislative, Regulatory & Policy Reviews

INSPECTION SERVICE

PAGE 43

Technology Reviews
PAGE44

OFFICE OF INSPECTOR

GENERAL

The Postal Service recognizes that technology, including electronic commerce,is key to productivity and affordability.

Through technology, the Postal Service handles

more than 660 million pieces of mail every day

and maintains 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, such as NetPostTM Mailing Online,

NetPostTM Cardstore, and eBillPayTM. These

initiatives will improve and build on its existing

services and relationships with customers and

continue meeting traditional customer

demands. 

The recent terrorist attacks have demonstrated how the postal infrastructure, including

information systems, is vulnerable to attacks.

Computer systems are a critical component of

every aspect of postal operations that must be

protected from potential cyber-terrorism to prevent disruption in service. Technology investments not only need to be scrutinized to

minimize the risk of disclosure or compromise,

but also to ensure that sound business decisions

are made. This is particularly important as the

Postal Service reviews several technologies to

identify an efficient, effective, and safe method

to sanitize mail. 

OIG reviews have covered developmental

systems, information systems, eCommerce, and

computer intrusion detection activities. In the

past 6 months, the OIG performed 25 reviews in

the technology area, some of which are highlighted below:

DEVELOPMENTAL REVIEWS

The Postal Service is developing business

systems and mail processing equipment to

improve performance, enhance service, and

reduce operating costs. The typical development process begins with the identification of a

business need. After the business need has been

identified, a solution is developed, followed by

the proof of concept or first article test and final

deployment. The OIG understands the importance of reviewing these systems as they are

developed and has completed four audits of

major projects currently under development

during the reporting period. One anthrax

related review is highlighted in the Responding

to Terrorism section and the other reviews are

highlighted below:

TEST, EVALUATION, AND

QUALITY GROUP PRACTICES

CAN BE IMPROVED

An OIG initiated audit of the Test,

Evaluation, and Quality group revealed that its

practices could be improved. For example, the

group did not provide an independent assessment of programs. Additionally, the group

lacked formal written policies and procedures

for performing and documenting tests and

inspections of capital equipment. The OIG recommended and Postal Service management

agreed to provide routine testing and quality

information directly to the vice president of

engineering. Additionally, postal management

agreed to establish formal policies and procedures, as well as, define roles and responsibilities. However, postal management disagreed

with the recommendation to provide the

Quality Group with an independent budget.

The OIG does not consider this recommendation significant and does not plan to pursue it

through the audit resolution process. 

(OIG DA-AR-02-004)

TECHNOLOGY REVIEWS

This section highlights audits, reviews,

and investigations performed by the OIG

and summarizes Inspection Service activities in the technology area. Report numbers are shown in parentheses after the

narrative, as appropriate. Also, the OIG

legislative, regulatory, and policy reviews

are included at the end of this section. In

order to differentiate the work reported by

the OIG and Inspection Service, the page

containing the activities reported by the

Inspection Service has been colorscreened.

The OIG reviewed the deployment of the

Automated Flat Sorting Machine 100,

which automates processing of mail

larger than a letter by incorporating onsite barcode technology. 

Why does the OIG report all of

its findings and issues to the

Governors and Congress?

The OIG is required by law to

keep the Governors and Congress fully and currently

informed. The OIG also reports

its findings and issues to Postal

Service management so that they

can take appropriate action to

further improve the efficiency

and effectiveness of Postal Service programs and operations.

DID YOU 

KNOW?
PAGE45

UTILIZATION OF AUTOMATED

FLAT SORTING MACHINE 100

SHOULD BE ASSESSED PRIOR TO

ADDITIONAL PURCHASES

An audit of the Automated Flat Sorting

Machine 100 revealed that although key

deployment activities for the flat sorting

machines were reasonable, the machines would

be underutilized at the end of the second phase

of deployment due to changes in initial assumptions. Postal Service management disagreed

with the OIG’s recommendation to recalculate

the impact of lower processing rates on

expected return on investment, stating that it

was too early in the program to effectively evaluate it because deployment has yet to be completed. However, management did agree to

perform a utilization analysis after all of the

machines are deployed and have been operational for at least four months. Additionally,

management agreed to address flat sorting

machine underutilization before considering

additional machine purchases. 

(OIG DA-AR-02-001) 

PROCESSING OPERATIONS

INFORMATION SYSTEM MAY

NOT HAVE BEEN AN EFFECTIVE

DECISION-MAKING TOOL

An OIG audit disclosed that certain conditions existed where the Processing Operations

Information System was not an effective decision-making tool for managing processing operations. The system was designed to allow plant

managers to monitor and assess work hour distribution and mail processing operations to easily identify and diagnose problems or

inefficiencies. The system, which was initiated

prior to the Information Platform, did not fully

address emerging corporate-wide business goals,

such as the Information Platform. In addition,

OIG found weaknesses in measuring and tracking costs, benefits, risks, and contract administration. While there were limited productivity

benefits that resulted from the Processing

Operations Information System pilot, management suspended the program and did not fund

national deployment. Because of this sequence

of events, management believed there was no

value in addressing the recommendations contained in the report. In the event the project is

restarted, the OIG will follow up on the

recommendations to validate that they are

being addressed. Management agreed to address

the recommendations if the project is restarted.

(OIG DA-AR-02-002)

INFORMATION SYSTEMS

REVIEWS

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. The

Postal Service has initiated several information

technology projects to enhance efficiency and

increase revenue. To ensure the success of these

projects, the Postal Service needs to improve

computer security to reduce the risk of fraud,

inappropriate disclosure of sensitive data, unauthorized disclosure of customer information,

and disruption of critical operations and services. The OIG has initiated reviews of Postal

Service information systems under development, a major telecommunications review, and

an annual assessment of general controls at

major processing centers. The most significant

reviews are highlighted below:

SERVER WEAKNESSES IDENTIFIED

IN NETWORK VULNERABILITY

TESTS 

The OIG issued technical reports on the

results of vulnerability tests of selected servers in

Postal Service Headquarters, and at three other

localities nationwide. The OIG noted various

security weaknesses in the server systems that

required remedial action to reduce risks to the

Postal Service’s telecommunications infrastructure and information systems. If left uncorrected, the vulnerabilities could result in loss of

confidentiality, integrity, and availability of

vital financial and operational systems.

Additionally, uncorrected vulnerabilities could

result in unauthorized access to Postal Service

information and/or allow an unauthorized user

to leverage the compromised system to gain

access to additional information and systems.

Postal Service management agreed with the

OIG’s recommendations and indicated corrective actions would be taken.

(OIG IS-CS-02-001, OIG IS-CS-02-003,

OIG IS-AR-02-002, and OIG IS-AR-02-004)

The OIG conducted vulnerability tests of

servers at Postal Service Headquarters

and three other locations nationwide.
PAGE46

VULNERABILITY TESTING

REVEALED POTENTIAL 

NETWORK EXPOSURES

OIG vulnerability tests revealed a variety

of weaknesses related to critical communication

devices that control the flow of data that if left

uncorrected could impact the confidentiality,

integrity, availability, and efficient performance

of the Postal Service’s wide-area network. The

deficiencies occurred because the Postal Service

did not have complete and definitive guidance

for managing and securing these devices. Postal

Service management agreed with the OIG’s

recommendations and indicated that guidelines, to strengthen security, configuration

checklists, corrective action plans for identified

vulnerabilities, management plans for updating

technology, and periodic verifications of

security configurations would be developed or

completed. (OIG IS-CS-02-002, 

OIG IS-AR-02-005, and OIG IS-AR-02-006)

FY 2001 INFORMATION

SYSTEMS CONTROLS AT THE

INFORMATION TECHNOLOGY

AND ACCOUNTING SERVICE

CENTERS ARE GENERALLY

ADEQUATE

The OIG conducts an audit of information

systems controls each year in support of the

annual financial statement audit. The objective

of the FY 2001 audit was to determine whether

general controls over information systems at

three service centers provided reasonable assurance that data was accurate, complete, and

secure. Each of these sites provide computer

processing and accounting services for the

Postal Service and house multiple service centers. The review included an evaluation of controls over software, data, personnel, and

physical security that affect computer systems. 

Generally, the audit revealed that controls

over software and data security at the

Information Technology and Accounting

Service Centers were adequate and that management had taken aggressive actions to resolve

recommendations made in previous reports.

However, additional enhancements were

needed to improve user access controls for

Oracle databases and controls over security

clearance processing. In the area of business

continuity planning, action was necessary to

create and test disaster recovery plans for

certain critical systems. Additionally, improved

controls were needed to strengthen the configuration, control, and security of UNIX operating systems. Postal Service management agreed

with the findings and recommendations and

corrective actions have been taken or planned.

(OIG IS-AR-02-001) 

INTERNAL CONTROL

WEAKNESSES FOUND IN A

FACILITIES MANAGEMENT 

SYSTEM

An OIG audit of a facilities management

system revealed weaknesses that could affect the

data integrity of the system. Specifically, the

OIG identified weaknesses in the systems development life cycle practices, access controls, segregation of duties over financial transactions,

systems security, and contingency planning.

This system is used to manage Postal Service

leased and owned facilities. Many of the systems

deficiencies were a result of not consistently

applying good systems development life cycle

practices or a structured approach to properly

developing a system, including not integrating

basic security controls in the original design.

Postal Service management agreed with OIG’s

recommendations with the exception of segregating duties at small postal facilities where they

do not have enough experienced personnel

familiar with the system to allow the segregation and still handle the workload. 

(OIG IS-AR-02-003)

SYSTEMS DEVELOPMENT 

REVIEWS

Reviewing systems during the development process provides an opportunity to identify potential development cost and time

savings, and a greater assurance that appropriate

internal controls will be included in the completed system. Best practices show that it is 50

to 100 times more costly to make changes after

a system is placed into production. During system development, OIG reviewed the eServices

Registration, Delivery Unit Notification

System, Facilities Database, and Vehicle

Operation Information System. The OIG determined that there was insufficient planning and

documentation; inadequate requirements definition; lack of end-user involvement throughout

the process; incomplete test plans; inherent

risks in the systems being overlooked or compromised; and a lack of validation testing. 

TECHNOLOGY REVIEWS

The OIG conducts audits of information

systems controls at Information

Technology Accounting and Service

Centers each year in support of the

annual financial statement audit. 
PAGE47

The OIG provided preliminary results on

these systems to Postal Service management.

As a result, postal management immediately

suspended implementation of the eServices

Registration and Delivery Unit Notification

System until corrective actions could be made.

Subsequently, Postal Service management terminated eServices Registration. Due to budget

constraints, the Postal Service cancelled the

Vehicle Operations Information System.

Should the project be restarted, corrective

actions will be taken to address the recommendations in the report. Management agreed with

all recommendations in the Facilities Database

and Delivery Unit Notification System reports

and either has already or soon will take corrective actions to address those recommendations. 

(OIG-EM-AR-02-003, EM-AR-02-006, 

EM-AR-02-005, EM-AR-02-004)

OIG AUDITS RESULT IN POSTAL

MANAGEMENT ISSUING

MEMORANDUM TO ENSURE

COMPLIANCE WITH

INFORMATION TECHNOLOGY

POLICIES 

The OIG’s systems development life cycle

audits have identified instances of noncompliance with information technology policies and

procedures. In particular, these audits focused

on the lack of use of a standard systems development methodology. As a result of the OIG’s

work in this area, the Postal Service’s Chief

Operating Officer and Chief Financial Officer

addressed a memorandum to all Postal Service

officers encouraging compliance with postal

information technology policy and procedures.

The memorandum noted that in order to

address the OIG’s concerns, the Postal Service

created an integrated solutions methodology

and portal that provide a standard methodology

and access to extensive information technology

resources and services that support the systems

development process. The memorandum also

noted that each postal program manager is

responsible for adhering to, monitoring, and

enforcing all information technology policies.

eCOMMERCE REVIEWS

The Postal Service continues to provide

customers with new online products and services to enhance customers’ personal and business lives. Some of the newer services available

through the website USPS.comTM include

MoversGuideTM, new features under USPS

eBillPayTM, and NetPostTM Cardstore. In addition, the Postal Service continues to improve

the performance and usability of its web presence to ensure secure access and the protection

of customer privacy. eCommerce initiatives

have been consolidated under the Products

Development group, reporting to the Chief

Marketing Officer. The reorganization will

help the Postal Service focus on those initiatives supporting the core products and contribute to revenue.

The OIG is committed to helping the

Postal Service meet the eCommerce challenge. OIG efforts during this period focused

on overlap of initiatives, return on investment, and privacy issues. Three of these efforts

are highlighted below:

OVERLAP OF INITIATIVES

RESULTS IN INEFFICIENT USE 

OF FUNDS

At the request of the Postmaster General,

the OIG conducted a review to determine

whether overlap existed between the Postal

Service’s five public key infrastructure initiatives. Public-key infrastructure is a system of

hardware, software, policies, and people that

protects electronic communications and transactions. The audit revealed that the Postal

Service spent $22 million on five independent

public-key infrastructure initiatives that either

overlapped in some areas or could significantly

overlap as they proceeded. As a result, initiatives competed for scarce resources, funds were

used inefficiently, and customers would potentially be confused. In addition, these initiatives

did not have a single executive sponsor and

were not well coordinated throughout the

Postal Service. The OIG also reviewed legal

matters such as fair play, control, ownership

rights, and subcontracting, since several

alliance agreements with private firms were

pending at the time. The Postal Service agreed

with five of the six recommendations and has

initiatives in progress, completed, or planned

addressing the issues. Postal management initially disagreed with the recommendation to

develop a policy on investing in a private enterprise because they concluded it would be better

The OIG’s systems development life cycle

audits resulted in the Postal Service’s

Chief Operating Officer and Chief

Financial Officer issuing a memorandum

to all Postal Service officers encouraging compliance with postal information

technology policy and procedures. 
PAGE48

What is the Postal Service’s

Transformation Plan? 

The Transformation Plan was

created to explore ways that the

Postal Service can change its

business model to be successful 

in the 21st century and promote

an efficient, reliable, and innovative delivery services sector that

meets the diverse economic and

social needs of the nation and all

its citizens. 

TECHNOLOGY REVIEWS

to handle this on a case-by-case basis. However,

further communication between the OIG and

postal management resolved the issue.

(OIG EM-AR-02-009)

SYSTEM NOT ECONOMICALLY

JUSTIFIED OR EFFECTIVELY

MANAGED

PostmarkAmerica.com was a website capable of accepting and processing Postal Service

merchandise sales orders online. The OIG

found that the system: was not economically

justified; developed and maintained without

adequate contract provisions; developed and

operated without requiring the contractor to

adhere to Postal Service policies; and did not

have a migration plan to USPS.com. As a

result, a positive investment may not be

achieved, additional costs were incurred, work

was performed outside the contract scope and

with unauthorized contract commitments, and

the risk of database compromise was increased.

Management agreed with six of the eight recommendations in the report. However,

management disagreed that the creation of

PostmarkAmerica.com was outside the contract

scope and developed with unauthorized contract commitments. The OIG met with Postal

Service management, which agreed to issue a

contract modification, and has updated policy

and improved its contracting officer representative training program. Based on these actions,

the OIG considers these issues resolved. 

(OIG EM-AR-02-008)

QUESTIONABLE METHODS USED

TO GATHER USER INFORMATION

An OIG report, the second such report,

disclosed that the Postal Service used questionable methods to gather website visitor information and that online data collected by third

parties was not clearly identified as Postal

Service property. As a result, the public could

perceive that the Postal Service is trying to profile its website visitors even though this is not

the intent and third parties may try to claim

that the online data gathered through these

methods belongs to them and not the Postal

Service. Also, the Postal Service lacked assurance that a third party is not profiling Postal

Service online data with other user data or

selling Postal Service visitor information for

marketing purposes. 

Postal Service management generally

agreed with the OIG’s recommendations. As a

result of these recommendations, and the OIG’s

prior audit, postal management undertook

efforts to review all websites in addition to

PostmarkAmerica.com. These efforts include

removing the tracking device from

PostmarkAmerica.com, updating policy and

procurement clauses on privacy, agreeing to perform periodic reviews to identify improper

tracking devices, and requesting the return of

data gathered via the web from the third party.

The Postal Service disagreed that the thenexisting contracts put customers data at risk.

Postal management did, however, implement

OIG recommendations by adding additional

security clauses to contracts to further protect

the Postal Service interest. 

(OIG EM-AR-02-001)

COMPUTER INTRUSION

INVESTIGATION ACTIVITIES

The OIG Computer Intrusion Team investigates criminal violations of state and federal

laws enacted to protect the authenticity, privacy, integrity, and availability of electronically

stored and transmitted information. Rapidly

expanding eCommerce ventures make the protection of postal information systems critical to

the financial viability of the Postal Service.

Because such ventures involve connectivity

between postal systems and eCommerce partners, the Computer Intrusion Team conducts

investigations of attacks upon the security of

those systems in order to maintain the integrity

of eCommerce information. The team informs

Postal Service management and eCommerce

partners regarding emerging threats to information systems, and assists them in identifying and

eliminating potential vulnerabilities. These

efforts include assisting the Postal Service in

developing security policies, information systems, and eCommerce procedures that conform

to the best practices in industry and government. During this reporting period, the OIG has

completed a number of investigations and provided technical assistance to the Postal Service.

Some of these efforts are highlighted below.

POSTAL CONTRACTOR ENGAGED

IN COMPUTER HACKING

After receiving information from Postal

The Postal Service uses technology to

handle more than 660 million pieces of

mail every day. Pictured here is the

Tray Management System, which is

designed to automate the moving and

staging of mail in processing and

distribution centers.

DID YOU 

KNOW?
PAGE49

Service management, an OIG investigation

established that a postal contractor engaged in

computer hacking from postal computers. The

misuse was directed at sensitive postal computer

systems and at commercial computer systems

outside the Postal Service. The exploits had the

potential to compromise the authenticity, privacy, integrity, and availability of electronically

stored and transmitted information within sensitive postal systems and targeted non-postal

systems. These actions could have undermined

public confidence in the security of postal information systems and could have subjected the

Postal Service to civil liability for damage to the

targeted non-postal systems. As soon as the

OIG notified Postal Service management, the

contractor resigned in lieu of termination. 

OIG COMPUTER SECURITY

AWARENESS BRIEFINGS

During this reporting period, the Computer

Intrusion Unit conducted 23 briefings attended

by 568 individuals at postal and law enforcement facilities throughout the United States.

These briefings provide an overview of the

Computer Intrusion Unit’s investigative program, capabilities, and services. They also provide a platform to exchange common security

information facing the Postal Service network.

4,000 PORNOGRAPHIC IMAGES

DISCOVERED ON A POSTAL

SERVICE COMPUTER

As a result of an OIG investigation of computer misuse, identified by postal management,

a Postal Service employee resigned in lieu of termination after 4,000 pornographic images were

found on the employee’s postal computer. The

employee, who was assigned to an Information

Technology Service Center, was identified as a

result of the OIG’s periodic review of postal

computer network firewall logs. 

OIG PARTICIPATES IN CYBER

INTERAGENCY WORKING

GROUP

An employee of the OIG Computer

Intrusion Unit is working on the Cyber

Interagency Working Group chartered by the

President’s Critical Infrastructure Protection

Board. The working group was formed to coordinate government and industry efforts to prevent potential cyber threats to America’s

critical infrastructure. OIG participation provides access to the best available information

regarding cyber threats that could potentially

degrade postal operations. Further, OIG

involvement fosters a close working relationship among other organizations with similar

missions.

LEGISLATIVE, REGULATORY &

POLICY REVIEWS

During this reporting period, the OIG

identified legislation, regulations, and policies

affecting Postal Service technology. Some of the

legislation and regulations reviewed are below.

PROPOSED LEGISLATION

H.R. 3482 — Cyber Security Enhancement Act of 2001 

This bill would require the United States

Sentencing Commission to amend federal sentencing guidelines and to reflect the serious

impact computer–related fraud has on individuals and the general public. The legislation aims

to toughen the sentencing guidelines to provide

greater deterrence for those who commit computer-related fraud. The legislation also provides

electronic communication providers with

authorization to divulge the content of electronic information and records associated with

it to a governmental entity if the provider in

good faith believes an emergency involving possible death or serious physical injury exists.

The OIG is continually involved with

efforts to detect and prevent computer intrusion

and computer–related fraud involving Postal

Service computer systems. The law needs to

reflect the serious consequences that can result

from the activities of unauthorized and criminal

computer system users. 

The OIG’s Computer Intrusion Unit detects

and investigates computer hacking and

other high-technology crimes involving

Postal Service computers and telecommunications systems.
PAGE50

This legislation will help focus the U.S.

Sentencing Commission on the need to

strengthen the government’s authority in prosecuting computer fraud and seriously punishing

those who engage in it.

TECHNOLOGY REVIEWS
PAGE51

INSPECTION SERVICE

The Inspection Service plays an important role in the support of PostalService eCommerce initiatives and

technical applications. The Inspection Service

evaluates the need for and processes security

clearances of employees and contractors accessing postal systems or sensitive information. The

Inspection Service also evaluates all Postal

Service new electronic products, including:

eBillPayTM, NetPostTM Mailing Online, and

NetPostTM Certified, and enterprise public key

infrastructure. The Inspection Service also monitors and reviews the physical security of individual systems before and after implementation. 

Postal Inspectors collect evidence during

an investigation.
PAGE52
OFFICE OF INSPECTOR GENERAL

Workplace Environment Reviews

Human Resource Process Reviews

Health Care Reviews

Legislative, Regulatory & Policy Reviews

INSPECTION SERVICE

PAGE 53

Labor Management

Reviews
PAGE54 LABOR MANAGEMENT REVIEWS

OFFICE OF INSPECTOR

GENERAL

The Postal Service has characterized

labor management as one of the most

important challenges in achieving its

mission in the 21st century. A key Postal

Service goal in the labor management area is to

foster an inclusive, welcoming, and productive

workplace consistent with its values of fairness,

opportunity, safety, and security. With more

than 860,000 full and part-time employees

working at more than 38,000 facilities nationwide, the Postal Service realizes that to operate

effectively in a rapidly changing environment,

it needs to give employee issues a higher priority

and to enhance each employee’s contribution to

organizational performance. Additionally, in

light of terrorist attacks, including attacks

involving the transport of anthrax through the

mail, the Postal Service must take precautions

to ensure the safety and well being of its

employees. 

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 workplace environment, human

resources, and health care. While the OIG has

worked diligently with the Postal Service and

Congress to address these concerns, reviewing

labor management areas continues to be one of

the OIG’s greatest challenges. In this regard, the

OIG has received over 3,680 individual labor

management complaints since 1997. During

this reporting period, the OIG completed 46

reviews and seven investigations identifying

opportunities to save $3 million during current

and future years in the labor management area. 

WORKPLACE ENVIRONMENT

REVIEWS

The Postal Service has identified signs of

workplace stress in many of its facilities and is

developing comprehensive steps to improve the

workplace environment, including improving

relations between managers and employees, and

aligning human resources with business requirements. During this reporting period, Postal

Service efforts focused primarily on safeguarding

the public, postal employees, facilities, and the

mail from the anthrax biohazard threat. The

OIG completed reviews to assist the Postal

Service with these efforts, which are highlighted in the Responding To Terrorism section

of this report. While reviews indicate problems

at individual locations, they are not necessarily

indicative of the nationwide Postal Service

work environment. 

HUMAN RESOURCE PROCESS

REVIEWS

Postal Service managers are responsible for

preserving and protecting official records and

privacy information. In addition, managers

must avoid conflicts of interest, which could

affect both the public’s trust and confidence in

Postal Service human resource processes. Postal

Service managers are also responsible for complying with existing policies and procedures

regarding sexual harassment, overtime, leave,

compensation and benefits, and training. The

OIG conducted the following audits and investigation to assess controls over these processes: 

ALTERNATE FUNDING METHOD

NEEDED FOR PAY FOR

PERFORMANCE PROGRAM 

An OIG review revealed that the use of the

economic value-added concept was not an

appropriate methodology to fund the Postal

Service’s Pay for Performance program.

Specifically, the concept was created for profitmaking entities and did not fit the Postal

Service’s break-even operating environment.

An inflation adjustment increased revenue by

over $4 billion, which caused program participants to earn $805 million in incentive awards

for FYs 1998 through 2000. Without this adjustThis 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, regulatory, and policy reviews are included at the

end of this section. In order to differentiate

the work reported by the OIG and Inspection Service, the page containing the work

reported by the Inspection Service has been

color-screened.

DID YOU 

KNOW?

Will the OIG investigate

allegations of retaliation when

wrongdoing is reported? 

The OIG investigates all

complaints of management

retaliation received from Postal

Service employees who had

previously reported wrongdoing

to the OIG.
PAGE55

In response to an OIG audit, the Postal

Service took prompt action to improve its

injury compensation program.

ment, the profits were not sufficient to generate

funding for incentive awards. The audit

received national attention and was covered on

the ABC World News television program.

Postal management disagreed with the OIG’s

analysis, but agreed to establish an alternative

method for funding the Pay for Performance

Program. (OIG LH-AR-02-001)

SEXUAL HARASSMENT

PREVENTION EFFORTS IN THE

DISTRICT OF MAINE NEEDED

IMPROVEMENT 

An OIG audit of the District of Maine

found that its managers did not always comply

with sexual harassment prevention policies and

procedures, even though they were adequate.

Specifically, sexual harassment training and

investigations were not always properly documented and preventive measures were not

enforced when findings were inconclusive

regarding responsible officials in sexual harassment cases. Also, some managers involved in

sexual harassment cases received incentive pay

under the Postal Service’s Pay for Performance

program. The OIG audit concluded that full

compliance with policies and procedures might

have allowed resolution of more sexual harassment complaints before they became formal.

Postal Service management agreed to ensure

that sexual harassment awareness training is

provided and documented for all employees;

conduct prompt investigations that are documented; and consider excluding employees disciplined for sexual harassment from the Pay for

Performance Program. (OIG LH-AR-02-002)

ADMINISTRATIVE LEAVE COSTS

REDUCED BY ABOUT $3 MILLION 

An OIG follow-up report commended the

Postal Service for taking quick and responsive

actions to advise all postal area vice presidents

of findings in a prior report that presented

results of one area’s management of administrative leave. The vice presidents were directed to

implement recommendations as appropriate in

their own areas. These actions led to an estimated $3 million reduction in administrative

leave costs for calendar year 2001. 

(OIG LH-MA-02-001)

HEALTH CARE REVIEWS

In FY 2001, the Postal Service paid over

$730 million for employee injury claims, a

$60 million increase over the $670 million paid

in FY 2000. Controlling injury claim costs continues to be key to the Postal Service’s financial

well being because the Postal Service pays for

workers’ compensation costs out of operating

funds, which directly affect the Postal Service’s

net income.

The OIG assists in protecting 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. In addition, involvement in health

care fraud investigations is vital to controlling

costs related to Postal Service health care premiums. Furthermore, to enhance investigative

efforts, the OIG will be partnering with the

Department of Labor Office of Inspector

General to conduct joint reviews of the workers’ compensation program. 

The OIG investigates allegations of fraud

involving health care providers who are paid by,

or on behalf of, the Postal Service for medical

services rendered to Postal Service employees

related to: 

◆ Federal Employees’ Compensation Act.

This act is administered by the Department of Labor with costs charged back to

the Postal Service. 

◆ Postal Service-Contracted Doctors and

Facilities. Approximately 1,500 physicians and facilities are contracted and

paid directly by the Postal Service to

provide medical services to its employees. 

◆ Federal Employees Health Benefits

Program. The Postal Service pays a portion of approximately 860,000 employees’ insurance premiums, which is a

direct expenditure for the Postal Service.

Under the program, the Postal Service

pays 80 percent of all employee health

care premiums. 

In the past 6 months the OIG completed

seven investigations in this area. These investigations identified improper billing practices,

such as false claims and false statements by

health care providers. The OIG’s health care

fraud investigations have resulted in 14 arrests,

13 indictments, and 12 convictions. These

activities are highlighted below:
PAGE56 LABOR MANAGEMENT REVIEWS

◆ The OIG assisted in identifying almost

$60,000 in Postal Service duplicate

billings and payments for approximately

18 Postal Service employees who were

treated at medical clinics operated by

physicians. Specifically, a multi-agency

undercover operation, headed by the

Federal Bureau of Investigation, led to

the Department of Labor debarring six

physicians from providing services under

the Office of Workers’ Compensation

Program. The physicians were previously

convicted in U.S. District Court on

charges relating to health care fraud. The

health care fraud scheme also involved

billings for non-existent, or “ghost” workers.

◆ An OIG investigation led to the Department of Labor removing two doctors

from the list of physicians available to

provide second opinions for injured

Postal Service employees. These physicians were suspected of possible fraudulent billing practices under the Office of

Workers’ Compensation Program. The

investigation disclosed the physicians

were almost exclusively used when second opinions were required in workers’

compensation cases, and the cases they

handled generally resulted in permanent

restrictions for the injured workers. The

physicians tended to give evaluations

that were contrary to the evaluations

provided by the doctors who originally

evaluated the injured employees.

◆ Five physicians and one office manager

were charged with various crimes relating

to a conspiracy to bill over $5 million in

fraudulent medical claims to various

health insurance companies and patients.

Three of the physicians pled guilty; one

was sentenced to 60 months imprisonment, 3 years supervised release, and was

ordered to pay restitution of more than

$2.7 million and an assessment fee to the

U.S. District Court. Another physician

was sentenced to 18 months imprisonment and ordered to pay a fine of

$250,000.

◆ A joint investigation resulted in an

administrative recovery of more than

$800,000 from a medical clinic in Utah.

The recovery resulted from an investigation conducted by the OIG, Health and

Human Services, Defense Criminal

Investigative Service, and the State of

Utah Bureau of Insurance. This joint

investigation was initiated based on a

self-initiated effort to identify medical

providers suspected of defrauding Postal

Service employees and the insurance programs offered under the Federal Employee Health Benefits Program. 

◆ As a result of a joint OIG investigation

with the Defense Criminal Investigative

Service and the Florida Department of

Insurance Fraud, an individual was found

guilty of 39 counts of grand theft, 39

counts of insurance fraud, one count of

organized scheme to defraud, and one

count of violation of probation. This

individual was sentenced to 13 years in a

Florida state prison for using a network of

shell corporations to fraudulently bill

more than $400,000 to a health insurance company participating in the Federal Employees Health Benefits Program. 

◆ A joint OIG investigation with the Federal Bureau of Investigation and the

Defense Criminal Investigative Service

led to a federal criminal jury finding a

Kansas physician guilty of 33 counts of

health care fraud, 7 counts of mail fraud,

and 3 counts of perjury. The physician

submitted false medical claims to government-funded insurance programs, which

included billing a Postal Service employee’s insurance provider for two unnecessary surgeries. 

◆ A joint investigation conducted by the

OIG, the Defense Criminal Investigative

Service, and the Florida Department of

Insurance Fraud led to six individuals

being indicted for involvement in a

fraudulent health care billing scheme.

The scheme involved submitting fraudulent health insurance claims by fictitious

medical providers to health insurance

companies nationwide. All of the individuals entered into pre-trial diversion

agreements and were given probation.

Three of the six were also ordered to pay

restitution to the Federal Employees

Health Benefits Program and other insurance companies. 

◆ An OIG investigation led to an individual receiving 8 years probation and payAgents from the OIG and other law

enforcement agencies conduct an arrest

during a health care fraud investigation. 

An OIG press release highlights a successful health care fraud investigation.
PAGE57

ing $24,000 in restitution to Federal

Employees Health Benefits Program and

other insurance companies for involvement in a health care fraud scheme. The

individual was found to have cashed

checks made out to a shell company used

to bill insurance companies for services

not rendered. The investigation was initiated based on fraudulent postal medical

claims submitted by fictitious medical

providers.

LEGISLATIVE, REGULATORY 

& POLICY REVIEWS

During this reporting period, the OIG

identified and reviewed legislation, regulations,

and policies affecting Postal Service labor management. Two legislative proposals reviewed

during this period are highlighted below.

PROPOSED LEGISLATION

Whistleblower Legislation

H.R. 169 — Notification and Federal

Employee Anti-discrimination and

Retaliation Act of 2001; and 

H.R. 3806 — Paul Revere Freedom to

Warn Act

H.R. 169 would require federal agencies to

be held accountable for violations of anti-discrimination and whistleblower protection laws

and post quarterly, on their public websites, certain statistical data relating to federal sector

Equal Employment Opportunity complaints

filed with their agencies. The legislation specifically mentions the Postal Service in its definition of applicable federal agencies. 

Federal agencies would have to pay for any

discrimination or whistleblower judgments,

awards, and settlements out of funds otherwise

appropriated to them. Federal agencies would

be required to provide notification of and training in employee rights under the Whistleblower

Protection Act and the anti-discrimination

statutes. The agency’s semiannual reports to

Congress, the Equal Employment Opportunity

Commission, and the Attorney General will be

required to cite the number of anti-discrimination and whistleblower cases filed, their status,

the amount of money spent on the case, the

number of employees disciplined for discrimination, harassment, or retaliation. The report

must also state the policies implemented to discipline employees who run afoul of anti-discrimination and whistleblower policies and the

number of employees who are disciplined in

accordance with these policies. Agencies would

have to post on their websites certain summary

data about the anti-discrimination and whistleblower cases filed against them, including the

number of complaints filed, processing time,

and those resulting in findings of violations. 

H.R. 3806 provides for a cause of action

against the United States government for federal employees who are retaliated against for

whistleblowing activities. It states that any person who is aggrieved by a violation of the

Whistleblower Act could bring a civil action,

and would be entitled to a jury trial, in federal

district court within three years from the date of

such violation, against any person, organization,

or employer responsible for the violation. The

person would also be entitled to lost wages and

benefits, reinstatement, costs and attorney fees,

compensatory or punitive damages, and equitable, injunctive, or any other relief that the

court considers appropriate. 

While the OIG strongly supports statutes

to protect employees from discrimination and

retaliation for reporting misconduct, fraud,

waste, and abuse, the OIG does have some concerns with these bills. 

The OIG believes the extensive reporting

requirements of H.R. 169 could result in a costly

regulatory burden. Requiring federal agencies to

incur the costs imposed by the outcome of discrimination and whistleblower lawsuits would

seem incentive enough for agencies to take

steps to comply with the applicable statutes. 

In addition, the Postal Service is currently

exempted from the Whistleblower Protection

Act. After discussions with the Inspector

General, the former Postmaster General

directed the Postal Service in May 2001 to

immediately strengthen existing whistleblower

protection to ensure postal employees have protection similar to other federal employees under

the Whistleblower Protection Act. The OIG is

concerned that a Postal Service working group

has not yet implemented the May 2001 directions but have been assured by the Postal

Service that it will develop draft procedures by

early May 2002. To this end, the working

The OIG seized this vehicle during a

health care fraud investigation.
PAGE58 LABOR MANAGEMENT REVIEWS

group is developing procedures that will provide for the investigation of reprisal complaints and use of an independent hearing

officer if the parties cannot resolve the complaint. In the absence of statutory applicability,

the OIG will continue to push the Postal

Service to extend to its employees similar protections afforded other federal employees

under the Whistleblower Protection Act. 
PAGE59

INSPECTION SERVICE

P

ostal Inspectors investigate a number of

labor management areas, including workplace safety, workers’ compensation,

postal robberies, and drugs in the workplace. 

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.

Postal Inspectors investigate the possession,

personal use, and sale of narcotics by Postal

Service employees or others while on postal

property. Postal Inspectors also partner with

Postal Service management and employee

groups in early interventions and other efforts

to prevent violence in the workplace. During

this period, there were 146 arrests and 121 convictions for assaults and threats, and 44 arrests

and 37 convictions related to robberies. In addition, 12 individuals were arrested and 8 convicted for the sale of drugs on postal property. 

The Inspection Service investigates fraudulent claims and receipt of workers’ compensation benefits by individual employees.

Prosecution of workers’ compensation fraud

serves as a deterrent and prevents future benefit

payments from being made to violators. During

this period, 19 individuals were arrested and 20

were convicted for workers’ compensation

fraud. Examples of workers’ compensation fraud

cases worked by the Inspection Service are

highlighted below:

◆ A former California mail handler was

sentenced after pleading guilty to mail

fraud for claiming a disability was caused

by hernias suffered during a 90-day casual appointment with the Postal Service.

The investigation revealed that the

employee actively had a real estate business, worked construction, and was a

piano teacher, while claiming to be

totally disabled. The employee failed to

report these employment activities or

the ability to work to the Department of

Labor, as required. As a result, the

employee was sentenced to 5 years

probation, ordered to pay over $15,000

in restitution. Additionally, an overpayment of over $24,000 was declared by

the Department of Labor.

◆ A former Ohio letter carrier was sentenced to 8 months incarceration,

ordered to pay over $72,500 in restitution for making false statements to

obtain federal employees workers’ compensation benefits. In 1995, the former

carrier claimed a traumatic injury to the

right elbow, shoulder, and hip. The carrier supposedly had been totally disabled

since 1996 suffering from frozen shoulder

syndrome. The Inspection Service investigation revealed that the claimant was

employed at various department stores,

graduated from modeling school, and

was extremely active in modeling competitions. The carrier also performed vigorous gardening and lawn care activities

and was observed pulling a lawn mower

starter cord 76 times in an attempt to

get it to work. Additional observations

following a doctor’s visit, during which

the carrier claimed constant pain,

revealed that the claimant immediately

left and spent the day at an amusement

park. The claimant’s physician subsequently advised that the claimant’s true

physical abilities were fraudulently misrepresented. 

◆ A former Illinois clerk was sentenced to

1 year imprisonment and 3 years supervised release for making false statements

to obtain federal employees workers’

compensation benefits. In 1978, the former clerk claimed a neck and shoulder

injury, and was subsequently placed on

the long-term rolls by the Department of

Labor. The clerk claimed total disability

for the past 23 years. The Inspection

Service investigation, which was conducted over a period of several years,

revealed that the claimant was able to

easily perform many of the activities that

were reported as physically impossible

under the claim. In addition to incarceration, the former clerk was ordered to

pay over $82,700 in restitution. The

investigation resulted in future cost

savings to the Postal Service of more

than $682,000. 

The Inspection Service regards workplace safety as one of its highest

priorities.
PAGE60
Oversight of the

Inspection Service and

Other Significant

Activities

PAGE 61

OFFICE OF INSPECTOR GENERAL

Oversight Reviews

Other Significant Activities

Legislative, Regulatory & Policy Reviews

INSPECTION SERVICE
PAGE62 OVERSIGHT OF THE INSPECTION SERVICE AND OTHER SIGNIFICANT ACTIVITIES

OFFICE OF INSPECTOR

GENERAL

OVERSIGHT REVIEWS

One of the primary reasons the OIG was

established within the Postal Service

was to provide oversight of all

Inspection Service activities. The Inspector

General Act, as amended, provides for the OIG

to conduct, supervise, coordinate, and provide

policy direction for audits and investigations

relating to the programs and operations of the

Postal Service, including the Inspection

Service. In addition, the 1996 amendment to

the Inspector General Act provided specific

“oversight responsibility for all activities of the

Inspection Service, including any internal

investigations performed by the Inspection

Service.” This additional authority means that

any and all activities of the Inspection Service

are subject to the OIG’s scrutiny and review,

except as it may be limited by the Governors,

for specific reasons and with notification to

Congress.

The OIG provides independent and objective information and analyses to the Governors,

Congress, and postal management regarding

Inspection Service operations. 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 addition, the OIG keeps the Governors, Congress,

and postal stakeholders fully informed of Postal

Service law enforcement efforts to detect and

prevent fraud, waste, abuse, and mismanagement by reporting the activities of the OIG and

the Inspection Service in these areas.

During the last 6 months, the OIG completed several oversight reviews, as well as

numerous monitoring activities, some of which

are highlighted below.

INSPECTION SERVICE EXECUTIVE

AWARDS NOT IMPLEMENTED AS

APPROVED 

In 1998, the Board of Governors approved

an executive awards program for the Inspection

Service based on a 1996 law that required

Inspection Service pay and benefits to be comparable with other federal law enforcement

agencies. The Governors approved a program in

which the awards pool was capped at 3 percent

of total executive salaries and awards were to be

based on individual achievements.

An audit of the Inspection Service’s executive awards program found that the Inspection

Service gave awards, ranging up to $20,000, to

100 percent of its eligible executives during

FYs 1999 and 2000, compared to only 38 percent of executives given awards at other federal

law enforcement agencies. Awards were also

given to individuals who had retired before the

end of the evaluation period. The Inspection

Service supported each award with identical justifications that did not identify individual

accomplishments, as required by the Board of

Governors. In addition, the Inspection Service

did not establish a performance review board to

ensure that awards were based on superior

achievements. 

The OIG recommended that management

modify its executive awards program to make it

comparable with the programs of other federal

law enforcement agencies. Management disagreed with the recommendation, stating that

Title 39 of the United States Code grants the

Inspection Service latitude in the design and

implementation of its program. Management

also stated that implementing the recommendation would reduce the program’s effectiveness by

limiting their ability to drive organizational performance. The OIG believes that the current

program could subject the Postal Service and

This section highlights audits, reviews,

and investigations performed by the OIG

in conducting its oversight of the Inspection Service. This section also highlights

reviews and investigations performed by

the OIG and summarizes Inspection Service activities in other significant areas.

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

In order to differentiate the work reported

by the OIG and Inspection Service, the

page containing the activities reported by

the Inspection Service has been colorscreened. The OIG legislative, regulatory, and policy reviews are included at the

end of this section. 

DID YOU 

KNOW?

Did You Know? 

One of the primary reasons the

OIG was established was to

provide oversight of all Inspection

Service activities. The 1996

amendment to the Inspector

General Act provided specific

“oversight responsibility for all

activities, including any internal

investigations, performed by the

Inspection Service.” This means

that any and all activities of the

Inspection Service are subject to

the OIG’s scrutiny and review.
PAGE63

Inspection Service to potential criticism and

the appearance of fiscal irresponsibility. The

OIG is pursuing this disagreement through the

audit resolution process. (OIG OV-AR-02-001)

INSPECTION SERVICE EVIDENCE

HANDLING GENERALLY

EFFECTIVE

An OIG audit revealed that the Inspection

Service effectively safeguarded collected evidence, but could improve its practices for maintaining, controlling, and disposing of evidence.

Although areas for improvements were noted,

the OIG did not find any instances in which

the integrity of evidence reviewed was jeopardized. The review found weaknesses in the

transfer of evidence; tagging and sealing of evidence; documentation of evidence in inventory

logs and reports, and on attached tags and

labels; and lack of documentation regarding

currency verification forms. Additionally, the

OIG could not determine whether all highvalue evidence was properly disposed of because

supporting documentation in case files was

sometimes missing, inaccurate, or incomplete.

Inspection Service management agreed to provide periodic refresher training on evidence

procedures, and to strengthen management

oversight related to evidence handling and disposal. (OIG OV-AR-02-002)

INSPECTION SERVICE ISSUES

CRITICAL NETWORK SECURITY

CLEARANCE TO CONTRACTOR

PREVIOUSLY CONVICTED OF A

FELONY

After receiving information from Postal

Service management, an OIG investigation

revealed that the Inspection Service granted a

sensitive security clearance to a contractor,

despite having learned from the Office of

Personnel Management that the contractor

had a prior federal felony conviction for unlawful receipt of pornographic images of children.

Further, the Inspection Service granted an

interim clearance that allowed the contractor

to begin working for the Postal Service even

though the contractor admitted to having been

fired from two previous jobs.

Postal policy generally prohibits the

issuance of sensitive security clearances to individuals convicted of felonies. Therefore, the

contractor should not have been hired for a sensitive network security position. The Inspection

Service did not provide a sufficient explanation

of how this incident occurred. As a result, the

OIG will be conducting a review of Inspection

Service security clearances. 

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 complaints regarding the

Inspection Service. 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 and

reduce the public’s confidence in the Postal

Service. Over the past 6 months, the OIG

closed 16 Congressional and 19 Hotline

inquiries related to the Inspection Service. The

inquiries resulted from complaints made by

Postal Service and Inspection Service employees, and the general public concerning a variety

of issues, including adequacy and selection of

investigations. Examples of Congressional and

Hotline inquiries are highlighted below. 

◆ The OIG reviewed an allegation that an

Inspection Service investigation into

mail and paycheck tampering, forgery,

and obstruction of justice was inadequate. The OIG reviewed the previous

investigation conducted by the

Inspection Service, as well as additional

information provided by the complainant. The investigation found no

evidence to substantiate the allegation,

and the Inspection Service’s previous

investigation was deemed appropriate. 

◆ An OIG review found no basis for a

Hotline allegation that a postal manager

conducted inappropriate private business

ventures during duty hours at a Postal

Service facility. The complainant alleged

that a postal manager was operating a

personal business venture within a federal agency and employees were being

solicited to participate in this private

business while on the clock.

Documentation provided by the com-
PAGE64 OVERSIGHT OF THE INSPECTION SERVICE AND OTHER SIGNIFICANT ACTIVITIES

plainant was reviewed, and Inspection

Service officials were interviewed regarding the allegations. The OIG investigation revealed that the Inspection Service

actively investigated this matter on three

separate occasions, but was unable to

substantiate the claims. 

◆ An OIG review did not substantiate a

Hotline allegation that the Inspection

Service did not properly investigate a

mail fraud complaint. The complainant

reportedly provided a postal money order

in the amount of $225, via U.S. mail, to

a company for a product seen on the

Internet. The complainant allegedly

never received the product or money

order back. The OIG investigation determined that the Inspection Service’s

action to refer the matter to the

Consumer Protection Office was appropriate.

INSPECTION SERVICE INTERNAL

INVESTIGATIONS

The OIG conducts investigations of misconduct by senior Inspection Service personnel,

and monitors the conduct of internal investigations of other Inspection Service employees.

These investigations are conducted when allegations of employee misconduct affect the performance of duties or when managers have

information of employee misconduct.

The OIG receives information regarding

Inspection Service internal investigations,

including conclusions reached and recommended actions. Inspection Service internal

investigations for this period included allegations of sexual misconduct, physical assault, and

obstructing an internal investigation. The chart

on the left summarizes the internal investigations conducted by the Inspection Service, the

types of allegations reviewed, and the types of

actions taken on closed investigations during

this reporting period. 

OTHER SIGNIFICANT ACTIVITIES

The OIG is responsible for reviewing allegations involving senior-level Postal Service

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. During this reporting

period, the OIG completed 19 investigative

efforts and reviews of other significant issues

related to Postal Service operations, some of

which are highlighted in the margin to the left. 

POSTAL EXECUTIVE ACCEPTS

CONSULTING FEE FROM A

POSTAL SERVICE CONTRACTOR

An OIG investigation revealed that, prior

to contract bidding, a postal executive received

consulting fees of $1,200 per day from a Postal

Service contractor. The investigation determined that some of the information provided by

the executive pertained to a contract yet to be

awarded. Further, during the same time frame,

the executive conducted discussions with the

contractor concerning potential full-time

employment after the issuance of the contract.

The executive was placed on administrative

leave pending possible removal from the Postal

Service.

POSTAL EXECUTIVE RECEIVED

OVER $15,000 IN RELOCATION

BENEFITS FOR A MOVE HE DID

NOT MAKE

An OIG investigation determined that the

Postal Service authorized relocation benefits to

a postal executive concerning his official

change in duty station to another city. The

executive subsequently did not relocate, despite

executing a Postal Service relocation agreement

and receiving reimbursement for relocation

expenses of over $15,000. The postal executive

admitted to OIG investigators that there were

irregularities in the failure to relocate, but that

several personal and professional events caused

the executive to remain in the area. The Postal

Service reduced the executive’s pay grade and

salary.

EXECUTIVE REASSIGNED FOR

SEXUAL HARASSMENT

As previously reported in the 

September 30, 2001, Semiannual Report to

Congress, the OIG completed an investigation

into allegations of misconduct by a senior Postal

Service executive. It was alleged that the executive made comments containing sexual

overtones and innuendoes towards several subordinate employees. As last reported, the OIG

was awaiting Postal Service management’s

INTERNAL INVESTIGATIONS 

CONDUCTED

SUMMARY OF CLOSED INTERNAL 

INVESTIGATION ALLEGATIONS

ACTIONS TAKEN ON CLOSED

INTERNAL INVESTIGATIONS

NUMBER OF

INVESTIGATIONS

Active Investigations at Beginning of Period 51

Investigations Opened 22

Investigations Closed 14

Active Investigations at End of Period 59

TYPES OF ALLEGATIONS NUMBER OF 

CASES CLOSED

Code of Conduct (violations involving 

evidence, funds, firearms)

Inspectors 3

Postal Police 1

Support Personnel 0

Code of Conduct (violations involving 

integrity, property, conduct, behavior)

Inspectors 5

Postal Police 1

Support Personnel 2

Other 2

DISCIPLINARY ACTIONS FREQUENCY

Non-bargaining – adverse

Removal/Resignation 3

Suspensions >14 days 1

Non-bargaining – non-adverse

Letter of Warning 0

Letter of Warning in lieu of time-off suspensions 0

Official Counseling 2

Bargaining (per collective bargaining 

agreements) – adverse

Removal/Resignation 1

Suspensions>14 days 0

Bargaining (per collective bargaining 

agreements – non-adverse

Letter of Warning, 1

Letter of Warning in lieu of time-off suspensions 0

Official Counseling 0
PAGE65

Who controls the Office of

Inspector General’s

documents and information? 

The Office of Inspector General

is independent of postal management and maintains its own

records. Requests for information under the Freedom of Information Act (FOIA) or the Privacy Act are directed to the OIG

FOIA Officer, who independently

assesses whether any documents

will be released. 

response. During the current reporting period,

postal management took corrective actions.

Specifically, the Postal Service executive was

reassigned to a district office and received a significant reduction in pay grade level.

LEGISLATIVE, REGULATORY &

POLICY REVIEWS

In order to fulfill the OIG’s obligations

under Section 4 of the Inspector General Act,

in addition to statutory oversight responsibility,

the OIG is required to review existing and proposed legislation, regulations, and policies, and

make associated recommendations to improve

the economy and efficiency of both the Postal

Service and the Inspection Service.

Accordingly, the OIG has requested that

the Inspection Service immediately begin referring all legislative initiatives, regulatory proposals, new policies, and policy changes to the OIG

for review and comment prior to their publication or transmittal to Congress or other external

organizations. The OIG has pledged to work

with the Inspection Service to ensure the referral and review process operates in a timely and

efficient manner, without impeding the OIG’s

statutory mandate.

The OIG has addressed this issue with the

Inspection Service on several occasions, but to

date, no progress has been made in establishing

a referral and review process. The OIG believes

that the authority granted under the Inspector

General Act provides an unequivocal mandate

from Congress to oversee all activities of the

Inspection Service. This specific oversight

authority is in addition to the general oversight

authority provided to all Inspectors General

under other provisions of the Inspector General

Act. The OIG will continue to work with the

Inspection Service during the next reporting

period to resolve this issue.

During this reporting period, the OIG

identified legislation, regulations, and policies

affecting Postal Service law enforcement.

Legislative, regulatory and policy reviewed during this period are highlighted below.

ENACTED LEGISLATION

Public Law No: 107-56 — Uniting and

Strengthening America by Providing

Appropriate Tools Required to Intercept

and Obstruct Terrorism Act of 2001

(USA Patriot Act)

Among other matters, this law amends the

federal criminal code to expand search and

seizure authority for federal law enforcement

officers, particularly with regard to the interception of many forms of electronic communication. Among other changes, the law will:

◆ Authorize the interception of wire, oral,

and electronic communications for the

production of evidence of specified

chemical weapons or terrorism offenses

and computer fraud and abuse; 

◆ Permit the seizure of voice-mail messages

with a warrant; 

◆ Expand the scope of subpoenas for

records of electronic communications to

include the length and types of service

utilized, temporarily assigned network

addresses, and the means and source of

payment (including any credit card or

bank account numbers);

◆ Permit electronic communication and

remote computing service providers to

make emergency disclosures to a governmental entity of customer electronic

communications to protect life and limb;

◆ Require legal and procedural safeguards

for the use of certain electronic monitoring devices to protect public privacy;

◆ Make it lawful to intercept the wire or

electronic communication of a computer

trespasser in certain circumstances;

◆ Permit federal magistrate judges in any

district in which terrorism-related activities may have occurred to issue search

warrants for searches within or outside

the district; and,

◆ Provide for nationwide service of search

warrants for electronic evidence.

The law also provides for administrative

discipline of federal officers or employees who

violate prohibitions against unauthorized disclosures of protected information in addition to

civil actions against the United States for damages by any person aggrieved by such violations.

This provision requires the agency to make

prompt inquiry as to whether a disciplinary

action is warranted in circumstances that raise

serious questions about whether an officer or

employee willfully or intentionally violated the

DID YOU 

KNOW?
Act. If the agency determines that discipline is

not warranted, it must notify the Attorney

General and provide justification for its decision. 

The OIG believes that the USA Patriot

Act will greatly assist law enforcement efforts of

the OIG and Inspection Service. However, the

OIG will also ensure that both it and the

Inspection Service exercise this expanded

authority appropriately and with due consideration to the rights of suspects and third parties.

Code of Federal Regulations Revision

Working in close cooperation with the

Postal Service Law Department, the OIG

amended the Code of Federal Regulations to

reflect the role the Inspector General plays in

the audit, investigative, and oversight activity

of the Postal Service. This is the first comprehensive revision of the Postal Service Inspector

General regulations since the independent

postal Inspector General came into existence in

1997. 

Outdated references in Title 39 of the

Code of Federal Regulations citing the

Inspection Service as the party responsible for a

variety of audit and oversight duties were

updated to show the OIG as the responsible

party. Incorrect references to the Inspection

Service and the Chief Postal Inspector, which

should cite the Inspector General, have been

revised. A new part has been added regarding

the creation of OIG and the ensuing roles and

responsibilities of the OIG and the Postal

Service.

The changes reflect the results of meetings

held over the past few years with the Inspection

Service that led to a mutually agreed-upon

Designation of Functions. It was the intent of

these revisions to reflect the current working

relationship the OIG has with the Inspection

Service and that both organizations have with

the Postal Service.

PROPOSED LEGISLATION

S. 1666 — Antiterrorist Hoax and

False Report Act of 2001 

This bill would make it a crime to knowingly and maliciously impart, convey, or communicate false or fraudulent information

concerning the use of biological or chemical

weapons, nuclear materials, or weapons of mass

destruction that would likely cause a response

by a federal, state, or local government agency.

This legislation would deal with circumstances

such as individuals who mail otherwise benign

powder for the purpose of perpetrating an

anthrax scare. 

The legislation also directs the court to

order restitution to all victims of such an

offense, including for any losses suffered as a

proximate result; and the defendant to reimburse all federal, state, and local government

entities for any expenses incurred in response to

protect public health or safety. 

The Postal Service has spent a considerable amount of resources investigating and

arresting perpetrators of hoaxes who use the

mail. The OIG believes this legislation could be

a strong deterrent to those who would perpetrate such hoaxes and believes that it will assist

the Inspection Service in dealing with such

offenders.

H.R. 3129 — Customs Border Security

Act of 2001 

This bill contains similar measures as in

H.R. 3004, the Financial Anti-Terrorism Act of

2001, and S. 1209, the Trade Adjustment

Assistance for Workers, Farmers, Communities,

and Firms Act of 2001. It contains provisions

that would authorize the U.S. Customs Service

and other appropriate agencies to apply the customs laws of the United States to the importation and exportation of mail shipments by the

Postal Service and private companies. This legislation would allow U.S. Customs Service officers to search and seize U.S. international mail

at the border. 

The OIG is concerned about the impact

legislation may have on the privacy rights of

U.S. citizens, and on the operation and marketability of Postal Service’s international delivery services.

H.R. 365 — Enhanced Border Security

and Visa Entry Reform Act of 2002 

This legislation calls upon federal law

enforcement agencies (the Postal Inspection

Service is listed as one) to share information

with the Immigration and Naturalization

Service and the State Department that would

be of assistance in determining whether to issue

PAGE66 OVERSIGHT OF THE INSPECTION SERVICE AND OTHER SIGNIFICANT ACTIVITIES
PAGE67

visas to aliens. Federal law enforcement agencies and the intelligence community will be

required, to the maximum extent practicable, to

share any information with the Department of

State and the Immigration and Naturalization

Service relevant to the admissibility and

deportability of aliens. 

This provision of the bill will be useful in

dealing with people who may seek to enter the

United States for illicit purposes. The OIG and

the Inspection Service have cooperated with

other federal law enforcement authorities in

rooting out those engaged in antiterrorist activities. This legislation, if passed, will help law

enforcement authorities identify and deny visa

status to those who do not have a legitimate

purpose for coming to the United States. 
INSPECTION SERVICE

The Inspection Service conducts investigations and reviews of significant issuesrelated to: physical security; narcotics

offenses and trafficking; child exploitation; prohibited mailings; postal burglaries; mail fraud

including fraud against consumers, businesses,

and government; and money laundering. The

Inspection Service considers investigations of

biohazardous material sent through the U.S.

mail among its highest priorities. The

Inspection Service also devotes significant

resources to prevent crimes by conducting

employee and customer awareness training programs and implementing security measures.

The following chart provides the activity during

this reporting period.

PAGE68 OVERSIGHT OF THE INSPECTION SERVICE AND OTHER SIGNIFICANT ACTIVITIES
Customer Service 

OFFICE OF INSPECTOR GENERAL

External Communications

Specialized Services

INSPECTION SERVICE

PAGE 69
PAGE70 CUSTOMER SERVICE

OFFICE OF INSPECTOR

GENERAL 

EXTERNAL COMMUNICATIONS

The OIG is responsible for keeping members of Congress and the Governorsfully and currently informed. The OIG

keeps Congress informed by issuing Semiannual

Reports to Congress, testifying at oversight and

other hearings, and briefing members and their

staff on issues related to the Postal Service. The

OIG also regularly provides synopses of its audit

and management advisory reports to

Congressional committees and subcommittees

with oversight interest in the Postal Service.

The OIG keeps the Governors informed

through regular briefings at monthly Board

meetings, activity reports from the Inspector

General, and responses to requests for information. The OIG also provides the Governors

with copies of audit and management advisory

reports.

CONGRESSIONAL TESTIMONY

Each year, since its inception, the Inspector

General has testified before Congress on various

matters. While the OIG did not provide written

statements to Congress during this reporting

period, in the past the OIG has provided testimony and statements highlighting significant

work and identifying opportunities for the

Postal Service to improve accountability and

public trust. These testimonies and statements

can be found in their entirety on the OIG’s website at http://www.uspsoig.gov. 

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 audits and investigations. However,

the OIG does not normally perform an audit or

investigation when an inquiry involves an individual employee issue that can be resolved

through contractual grievance-arbitration procedures or the Equal Employment Opportunity

process. Instead, the OIG incorporates individual concerns into a database to identify systemic

issues for review. When systemic issues have

been identified, the OIG conducts independent

audits or investigations of Postal Service programs and operations to help ensure their economy, efficiency, effectiveness, and integrity.

During this 6-month reporting period, the

OIG completed 85 Congressional and

Governors’ inquiries. Appendix G of this report

lists the OIG responses to these inquiries by subject area. Some examples of OIG work in

response to Congressional and Governors’

requests are highlighted below:

◆ An OIG investigation disclosed evidence

that Postal Service officials received gratuities from contractors during the contract award process. As a result of the

investigation, the contractor signed an

“Agreement in Lieu of Debarment” and

repaid approximately $126,000 to the

Postal Service for the cost of the OIG’s

investigation. In addition, a Postal

Service manager resigned in lieu of

removal; another Postal Service manager

was removed; and two other employees

received Letters of Warning. 

◆ Reviews of allegations from Florida letter

carriers regarding unsafe working conditions and delayed standard mail were partially substantiated. The review revealed

that the mail arrived late to the delivery

unit, resulting in letter carriers delivering

mail in 100-degree temperatures. District

management stated that they were concerned about employees working outside

in the summer heat and humidity and

therefore furnished cold bottled water.

Postal management also stated they were

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 Inspection Service, pages

concerning the Inspection Service have

been color-screened.

The OIG’s Congressional and Public

Relations Team serves as liaison and

responds to requests from Congress,

the Board of Governors, and the media;

coordinates congressional testimony

and presentations; and responds to all

Freedom of Information Act requests. 
PAGE71

committed to providing safe working

conditions for employees and had no

reported incidents of heat exhaustion at

these facilities. The OIG plans to conduct a review regarding the delay of standard mail delivery.

◆ At the request of the Senate Committee

on Governmental Affairs, the OIG provided information on whether the OIG

was in compliance with the National

Energy Conservation Policy Act, Section

8262f (c). This Act encourages

Inspectors General to conduct periodic

reviews of agency compliance. This section of the Act does not apply to the

Postal Service, however, its goals are

consistent with current postal energy

conservation efforts. Therefore, the OIG

plans to review measures taken by the

Postal Service to reduce energy use and

improve energy efficiencies.

◆ A postal customer alleged that personal

property mailed through the Postal

Service was damaged and sought full

replacement value. The OIG contacted

the Postal Service Claims and Inquiry

Section and was informed that the individual’s insurance claim would be paid. 

OIG HOTLINE PROVIDES A 

VITAL AND CONFIDENTIAL

COMMUNICATIONS LINK

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

OIG and individuals who contact the Hotline

to report allegations of fraud, waste, abuse, and

mismanagement.

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; and danger to public health

and safety. Complaints and allegations received

by the Hotline are analyzed to identify systemic

issues affecting the Postal Service, and referred

for appropriate action. The OIG also considers

Hotline contacts when planning audits and

projects.

During this reporting period the Hotline

received over 9,900 contacts, some of which

were addressed by the OIG on issues such as

waste, fraud, abuse, mismanagement, deficient

postal operations, personnel matters, and other

concerns. In addition:

◆ Twenty-seven percent were addressed by

the Inspection Service and involved

criminal issues such as mail theft, assaults

and threats, and workers’ compensation

fraud;

◆ Thirteen percent were addressed by the

Postal Service’s Office of Consumer

Advocate involving complaints related

to customer service issues, particularly

mail delivery;

◆ Forty-nine percent were related to miscellaneous requests for information such

as ZIP Codes, postage meters, and other

Postal Service-related matters; and 

◆ Eleven percent were related to operational and human resource issues that

were referred to Postal Service management.

Some examples of OIG Hotline work are

highlighted below:

◆ This reporting period, the OIG transformed its Hotline into a “paperless environment,” by scanning 685,000 paper

documents for storage on 18 compact

discs. In addition, the OIG scanned all

Hotline data collected since its inception

and stored the data on a shared network,

allowing employees to access the information instantly. 

◆ An OIG Hotline analyst took a complaint from an anonymous source that

resulted in an indictment of a California

postal employee. The analyst was instrumental in assisting an OIG investigator

by obtaining information from the source

that resulted in an indictment against

the employee for stealing nearly $60,000

in vehicle parts from the Postal Service

and then reselling them back to the

Postal Service. 

The OIG Hotline is staffed from 7 a.m. to

7 p.m., Eastern Standard Time, Monday

through Friday (except federal holidays). Calls

can be made 24 hours a day, 7 days a week.

Threats 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

The OIG’s Hotline Team processes

complaints of fraud, waste, abuse,

and mismanagement. 
PAGE72

caller-directed menu system. OIG Hotline contact information is provided in the margin to

the left.

PROPOSED LEGISLATION,

REGULATIONS AND POLICY

As required by the Inspector General Act,

the OIG monitors existing and proposed legislation and regulations to advise Congress and the

Governors of the impact of such legislation and

regulations on Postal Service programs and

operations. During the 6-month reporting

period, the OIG evaluated 25 legislative proposals and 19 regulatory initiatives. Highlights of

the legislative and regulatory proposals are

included at the end of the appropriate section

that describes the OIG and Inspection Service

reviews performed in the last 6 months.

FREEDOM OF INFORMATION ACT

REQUESTS

The OIG is committed to making all final

audit and management advisory reports

available to the public, unless the law prohibits

disclosure. The OIG website, http://www.uspsoig.gov, contains all releasable final audit and

management reports. A list of all reports,

including those that are not releasable, is also

included on the website. 

Before posting a report on the website, the

OIG reviews each report in accordance with the

Freedom of Information Act, the Privacy Act,

and the Postal Reorganization Act. The OIG

may coordinate its review with Postal Service

management and attorneys. In deciding what

information to release, the OIG balances the

public right to access federal agency records

with individual privacy rights, as well as the

Postal Service’s need to safeguard certain protected information, such as those affecting business needs and employee privacy. As a result,

OIG reports may be withheld in whole or in

part to protect privacy as well as proprietary or

confidential information. The OIG responds to

many written requests for reports and other

information under the Freedom of Information

Act. In this reporting period, the OIG received

78 Freedom of Information Act requests, as

depicted in the chart that follows.

INSPECTOR GENERAL

SUBPOENAS 

Pursuant to the Inspector General Act, the

Inspector General is authorized to issue subpoenas for audits and investigations for which the

OIG has investigative jurisdiction. This

includes authority to issue subpoenas in support

of selected investigations of the Inspection

Service. An Inspector General subpoena is a

valuable audit and investigative tool. It enables

OIG to secure documentary information and

evidence that, unlike grand jury subpoenas, can

be readily used in civil and administrative proceedings, as well as criminal cases.

Inspector General subpoenas are not selfenforcing. If a subpoena is not complied with,

OIG legal staff, OIG agents, and Postal

Inspectors first attempt to negotiate with the

subpoena recipient to obtain the requested documents. If this is not successful, we seek enforcement in United States district court. The courts

generally enforce the subpoena as long as the

inquiry is within the authority of the agency, the

information sought is reasonably relevant to the

CUSTOMER SERVICE

OIG HOTLINE 

◆Toll-Free, 1-888-USPS-OIG

(1-888-877-7644) 

◆TTY (Hearing Impaired) 

1-866-OIG-TEXT

(1-866-644-8398) 

◆To write to the United States

Postal Service, OIG:

ATTN: Hotline

1735 North Lynn Street

Arlington, VA 22209-2020

◆To e-mail the OIG:

hotline@uspsoig.gov 

◆To fax information toll-free:

1-866-756-6741

FREEDOM OF INFORMATION ACT REQUESTS

FREEDOM OF INFORMATION ACT APPEALS

Number of

OIG Actions Requests

Carryover from prior period 11

Received during the period 67

Total on hand during the period 78 

Processed during the period

Released 35

Withheld 10

Referred to Postal Service 

or other agency 10 

Otherwise closed* 18 

Total processed during the period 73

Balance at end of the period (Pending) 5

*Otherwise closed includes no responsive documents,

improper requests, requests withdrawn, etc.

Number of 

OIG Actions Appeals

Total appealed 4 

Upheld by Postal Service 3 

Appeal pending 1
PAGE73

agency’s inquiry, and the demand is not unduly

burdensome. 

Since its inception, the OIG has been successful in enforcing every subpoena that has

been challenged in court because the subpoena

review process is thorough in terms of scope of

review, level of supervisory review, and signature

authority. All subpoenas are processed at OIG

headquarters and they undergo thorough, progressive investigative and legal reviews. The

subpoena process requires OIG special agents

and Postal Inspectors to submit a justification

with their subpoena request. After supervisory

review, the OIG legal staff evaluates each subpoena to ensure the subpoena can withstand a

legal challenge. The Inspector General, the

Deputy Inspector General, the Assistant

Inspector General for Investigations, and the

Deputy Assistant Inspector General for

Investigations are the only individuals authorized to sign Inspector General subpoenas. 

SPECIALIZED SERVICES

COMPUTER FORENSICS

Specialists trained and certified in the

seizure of computers and the recovery of electronic evidence staff the OIG Computer

Forensics Team. The team’s 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 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. 

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. 

COMPUTER-ASSISTED

ASSESSMENT TECHNIQUES

The OIG’s Computer-Assisted Assessment

Techniques Team uses automated methods and

tools to extract and analyze electronic data

located in over 900 postal systems in support of

OIG audit and investigative efforts. The team

has achieved success by developing programming techniques to independently access the

large database systems in both San Mateo and

Minneapolis, as well as numerous remote

Oracle database systems throughout the postal

network. This team has supported several significant OIG efforts during this reporting period,

including:

◆ Working in concert with an audit team,

conducted an analysis of the Inspection

Service’s executive awards program. This

review was conducted to determine

whether the program was comparable

with other federal law enforcement agencies and was implemented in an effective

manner. The audit revealed that the

Inspection Service’s executive awards

program was neither comparable with the

programs of other federal law enforcement agencies in many respects nor

implemented as approved by the Board of

Governors.

◆ Using creative methods, identified and

extracted data from the Facilities

Management System during the review

of excess Postal Service real estate (land).

This effort revealed 30 properties purchased for $45 million that were not

developed and utilized by the Postal

Service and had not been referred for disposal. As a result of this work, the Postal

Service referred 12 properties for disposal

and returned one property to the original

owner. 

◆ Working with an audit team, analyzed

two Postal Service databases to identify

sexual harassment complaints and grievances filed and their disposition within

the Northeast Area. This effort found

that postal management could improve

its administration of the sexual harassment prevention program. Further, some

managers involved in sexual harassment

cases received incentive pay under the

Postal Service’s Pay for Performance

Program.

For the period October 1, 2001,

through March 31, 2002

Types of Number

Subpoenas Issued

OIG 

Related to: 

Investigations 38 

Right to 

Financial 

Privacy Act 0 

Inspection Service 

Related to:

Investigations 90 

Right to 

Financial 

Privacy Act 4 

Total 132

SUBPOENAS ISSUED

The OIG’s Computer Forensics Team is

staffed by specialists trained and

certified in the seizure of computers

and the recovery of electronic

evidence. 
PAGE74

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. 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.

In an effort to maintain the integrity of the

mail and ensure the confidence and trust that

government agencies, businesses, and customers

place in the Postal Service, the Inspection

Service conducts mail fraud investigations that

focus on a variety of complex schemes. To promote consumer protection, the Inspection

Service utilizes specialized investigative tools

and techniques such as criminal forensic laboratories, technical surveillance and communications, polygraph examiners, and digital

evidence recovery units to solve crimes committed against the public.

CUSTOMER SERVICE

The Inspection Service produces an

annual report which highlights their

numerous accomplishments.
Goals and Strategies

What is the value of jointly reporting OIG

and Inspection Service results in a unified

Semiannual Report to Congress?

A unified Semiannual Report to Congress

provides a complete accounting to the Postal

Service stakeholders on joint efforts to prevent

and detect fraud, waste, abuse, and

mismanagement in Postal Service programs 

and operations.

DID YOU 

KNOW?

PAGE 75
PAGE76

Did You Know? 

The Postal Service has over

776,000 career employees, which

include 270,000 clerks, 240,000

city delivery carriers, 60,000 mail

handlers, and 60,000 rural

delivery carriers.

OFFICE OF INSPECTOR

GENERAL

STRATEGIC GOALS

I

n March 2001, the OIG published a revised

Five Year Strategic Plan for FY 2001-2005.

Each aspect of this plan is in accordance

with President Bush’s management agenda and

the principles of the Government Performance

and Results Act. The OIG’s strategic plan is

outcome-oriented and focuses on the fundamental mission to increase the efficiency and

effectiveness of the Postal Service’s programs

and operations, while eliminating and preventing fraud, waste, abuse, and mismanagement.

This plan was designed to address the Postal

Service’s strategic direction and objectives outlined in its Strategic Plan for FYs 2001-2005,

which reflected a growing uncertainty about the

future implications of emerging technologies,

changing customer requirements, and competitors’ actions on mail volume and postal revenues. The OIG is currently working on

updating its strategic plan that will be released

in September 2003. 

The OIG’s strategic planning process has

four distinct steps. First, the OIG determines

the major management challenges facing the

Postal Service. Second, the OIG assesses Postal

Service operations and activities, broadly

defines realistic goals, sets priorities in line with

the Postal Service’s business vision, and develops effective strategies and action plans that

align the OIG’s activities to best help the Postal

Service improve its effectiveness and efficiency.

Third, the OIG measures progress in meeting

those goals. And fourth, the OIG updates and

revises goals, strategies, and performance measures to continually align its efforts with the

changing business needs of the Postal Service. 

The OIG’s strategic plan identified two

overarching goals for the organization. Under

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 Inspection Service,

the page concerning the Inspection Service

has been color-screened.

Office of Inspector General

FY2002 Goals and Strategies

DID YOU 

KNOW?

GOALS STRATEGIES GOALS STRATEGIES

The OIG will be the 

independent voice that 

provides its stakeholders 

with timely, accurate, and 

relevant information 

that contributes to the 

success of the Postal Service.

 Annually identify major 

 management challenges 

 and independently develop 

 work priorities that assist 

 the Postal Service in 

 addressing major 

 management challenges.

 Independently provide 

 the right information to 

 the right people at the 

 right time.

 Independently manage 

 and optimize OIG 

 resources, including 

 leveraging cutting-edge 

 technology.

 Maintain a TLC3 values-

 based organization that 

 attracts, develops, and 

 retains a talented and 

 diverse workforce.

The OIG is an independent 

entity that maximizes 

resources, leverages cuttingedge technology, and 

provides a healthy 

organizational culture and 

environment.
PAGE77

each goal, the OIG identified two strategies

designed to achieve each goal. 

PERFORMANCE MEASURES AND

RESULTS

As a part of the planning process, it is necessary to establish performance measures in

order to determine how well the OIG is achieving its goals. These measures provide a baseline

measure of achievement towards goals, and also

allow the organization the ability to monitor

and track trends over time. It is imperative to

ascertain a benchmark of current performance,

resources used, products produced, and results

achieved in order to identify appropriate performance measures that lead to the achievement

of OIG strategic goals. To that end, the OIG

continually reviews stakeholder input, data

from tracking systems, and cumulative management experience to ensure that the OIG’s stated

objectives are on target. OIG goals, strategies,

and performance measures will continue to be

evaluated and updated as information is gained. 

Each of the performance measures identified for FY 2002 are not intended to measure

the work of the OIG in its totality. Rather, they

are a means of focusing on select areas so efforts

can be concentrated and substantive improvement made. The strategies contained in the

plan provide guidance and an overarching

structure, while allowing for flexibility in

achieving the goals. OIG managers use this

plan to identify and communicate general work

product milestones, and to monitor efforts

towards strengthening the OIG’s capability to

fulfill our mission. 

The OIG continuously monitors its performance and seeks ways to improve. By maintaining objective data on key performance

areas, the OIG is able to periodically measure

and assess its progress in achieving goals.

Annually, the OIG establishes performance

measures to emphasize program objectives, promote teamwork, and encourage innovation

throughout the OIG. These measures are linked

to a team award that is structured to reward

commitment to the strategic priorities of the

OIG and to reinforce the importance of providing high-quality, value-added services that contribute to the success of the Postal Service. 

The FY 2001 performance results were validated by an independent federal agency, which

found that the OIG accomplished over 86 percent of its performance measures. Based upon

information gained from FY 2001, the OIG

updated its performance measures for FY 2002

and increased its challenges. The OIG is also

beginning to test some new performance measures in FY 2002 for FY 2003. The OIG will

report FY 2002 results in the next Semiannual

Report to Congress.

OIG PLANNING PROCESS

To ensure long-term success, it is necessary

for the Postal Service and the OIG to plan

appropriately. As part of its planning process,

the OIG asks key stakeholders, including Postal

Service managers, the Postal Rate Commission,

Congress, Board of Governors, employee

unions, management associations, and major

mailers to identify risk areas and emerging challenges that would benefit from the OIG’s

review. Suggestions received are considered during the annual OIG planning process, and

become part of the universe of projects for consideration. This creates a unique opportunity for

the OIG to provide independent analyses and

information to assist Postal Service management officials in fulfilling their responsibilities. 

Projects from the universe are selected on

the basis of risk and OIG resources available for

the year. The OIG selects the highest priority

projects for inclusion in the annual performance plan and the annual audit workload

plan. 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

This audit workload plan is presented to

the Postal Service Governors each year. The

plan is adjusted throughout the year as the

OIG’s work reveals new issues or the Postal

Service encounters new challenges. The OIG

workload planning process is depicted in the

chart to the right. 

OIG

POSTAL 

PROJECT

UNIVERSE

OIG

ANNUAL

PERFORMANCE

PLAN

AUDIT 

WORKLOAD

PLAN

AUDITS & AUDIT RELATED PROJECTS

INVESTIGATIONS

OTHER PROJECTS

INTERNAL ENABLING FUNCTIONS

CONSULTING

QUICK RESPONSE

FACT-FINDINGS

AUDITS & AUDIT RELATED PROJECTS

INVESTIGATIONS

OTHER PROJECTS

INTERNAL ENABLING FUNCTIONS

OIG

POSTAL 

PROJECT

UNIVERSE

OIG

ANNUAL

PERFORMANCE

PLAN

AUDIT 

WORKLOAD

PLAN

Planning System

Interrelationship
PAGE78

OIG FY 2002 AUDIT WORKLOAD

PLAN

In a previous section of this Semiannual

Report, the ten major management issues facing

the Postal Service were discussed. In preparing

the FY 2002 Audit Workload Plan, the OIG

consolidated these issues into four major areas

along with the oversight of the Inspection

Service. In FY 2002, the OIG will continue to

focus its audit attention on these major areas to

help address critical issues facing the Postal

Service: 

◆ maintaining customer confidence and

ensuring the viability of the postal

system; 

◆ improving the workplace climate and

labor relations; 

◆ maintaining affordability by controlling

costs; 

◆ 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.

Maintaining Customer Confidence and

Ensuring the Viability of the Postal

System

The anthrax contamination of the mail last

fall has threatened customer confidence in the

Postal Service’s ability to continue to provide

safe and secure mail services. A decline in customer confidence has made it difficult for the

Postal Service to provide universal service at

reasonable rates. Customers may seek services

other than traditional mail, which would reduce

volume and revenue. The Postal Service must

maintain customer confidence, develop new

products and services, and improve customer

service. The OIG will focus on the following: 

◆ Safety and security of the mail

◆ Service performance and customer satisfaction

◆ Timeliness and reliability of service

◆ Measurement systems

◆ Postal rates

◆ Re-engineering

◆ Core business processes

◆ Strategic alliances

◆ Marketing

◆ Financial initiatives

◆ International mail

◆ New products and services 

◆ Justification and approval

◆ Marketing and sales

◆ Return on investment

◆ Public trust 

◆ Brand integrity

◆ Employee integrity

Improving the Workplace Climate and

Labor Relations

Improving the work environment and

labor relations is key to maximizing Postal

Service operational and financial performance.

The effectiveness of the Postal Service’s efforts

to communicate with and safeguard employees

against the threats of bioterrorism could have a

major impact on worker morale, productivity,

and the Postal Service’s ability to deliver the

mail effectively. Further, the Postal Service has

historically had significant labor relations issues

that impeded its ability to manage its operations

efficiently. It is important that the OIG’s

involvement in this area be meaningful and

positive. 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. The

OIG will focus on the following: 

◆ Workplace climate 

◆ Occupational safety and health 

◆ Conflict prevention and resolution

◆ Threat assessment programs

◆ Employee management 

◆ Training and development

◆ Succession planning

◆ Workforce planning

◆ Performance and compensation

◆ Diversity

GOALS AND STRATEGIES

The OIG conducts internal planning

meetings. Featured above is a strategic

planning team meeting.
PAGE79

Maintaining Affordability by

Controlling Costs

Increasing productivity while controlling

costs is crucial for the Postal Service to reduce

anticipated losses. The cost of maintaining and

servicing a growing universal delivery network

has escalated while mail volumes have

decreased. The Postal Service needs strong controls and aggressive efforts to ensure that contracts and programs are managed effectively.

Furthermore, the terrorist attacks have also

resulted in cost and business impacts that the

Postal Service had not anticipated. The OIG

will focus on the following:

◆ Financial system integrity 

◆ Financial statements

◆ Field installations

◆ Cost and revenue analysis

◆ 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

◆ Material management

◆ Health care 

◆ Workers’ compensation program 

administration

◆ Provider billing

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 handle more than 660 million

pieces of mail every day, the Postal Service must

continue to maintain its competitive position

in the market. OIG efforts will 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

Legislation requires the OIG to conduct

oversight reviews of the Inspection Service in

addition to OIG’s audit and investigative

responsibilities over postal operations. OIG

efforts in this area will focus on the following:

◆ Public trust 

◆ Function and role

◆ Operational effectiveness

◆ Management controls

◆ Internal Affairs

The OIG’s mission statement, goals, and

strategies set forth in the Five-Year

Strategic Plan are the foundation for

measuring, reporting, and improving the

OIG’s performance. 
PAGE80

INSPECTION SERVICE

The Inspection Service must supplement its reactive capability with proactive strategies to

deter and prevent criminal activity. To accomplish this, the Inspection Service has developed five long-term strategic goals and related objectives. The new strategic plan begins

with three critical imperatives: safety, security, and integrity.

GOALS AND STRATEGIES

Inspection Service

FY2002 Goals and Objectives

1 NDCBU is Neighborhood Delivery and Collection Box Unit; and CBU is Cluster Box Unit
Organizational Dynamics

What are the OIG’s values? 

The OIG’s core values are teamwork,

leadership, creativity, communication,

and conceptualization (TLC3).

DID YOU 

KNOW?

PAGE 81
OFFICE OF INSPECTOR

GENERAL

AN INDEPENDENT VOICE

The OIG is an independent agency

within the Postal Service and is under

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

From 1988 until the establishment of the OIG

in 1996, 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 sworn in as the first independent Inspector

General of the Postal Service. In carrying out its

responsibilities under the Inspector General

Act, the OIG:

◆ 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, accepting

and processing, transportation, delivery,

financial management, development,

information systems, computer intrusion,

electronic commerce, and marketing.

◆ Maintains oversight of Inspection Service

operations and performs independent

reviews of complaints against its employees.

◆ Adds value to Postal Service operations,

contributes to a more efficient, economical, and effective organization, and helps

the Postal Service maintain its integrity

through independent investigations,

audits, and reviews.

◆ Reviews computer security and conducts

computer intrusion activities to identify

vulnerabilities in postal systems.

◆ 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 and recommends

improvements for contract and program

administration, employee integrity, and

program efficiency.

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

and recommendations when the OIG

and Postal Service management disagree.

To improve Postal Service programs and

operations, the OIG provides independent and

objective information, analysis, and recommendations. The OIG is continuing to work with

Postal Service management to inform them of

the duties and responsibilities of the OIG and to

demonstrate how the OIG adds value to Postal

Service processes.

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 Postal Service challenges and identify opportunities for improvement by emphasizing five

fundamental values:

◆ Teamwork—Diverse talents and levels

working cooperatively and collaboratively toward producing timely, relevant, and

quality work products and services that

add value to the Postal Service and the

OIG.

◆ Leadership—Encouraging each employee to be the best they can be regardless of

position or grade, understanding that all

levels of employees are expected to play a

role in developing and directing every

effort performed.

◆ Creativity—Cultivating fresh perspectives in the development of new processes and techniques that will improve

Postal Service and OIG operations.

◆ Communication—Ensuring cross level

and cross functional sharing of all inforPAGE82

The values make up the core of the

OIG’s culture and define how it does

its work.

ORGANIZATIONAL DYNAMICS

This section describes the OIG and the

Inspection Service organizational vision,

values, culture, and diversity that assist

with providing value-added services to the

Postal Service. In order to differentiate the

work reported by the OIG and the Inspection Service, the pages containing the work

reported by the Inspection Service have

been color-screened.
PAGE83

mation as well as facilitating honesty,

openness, respect, and consideration of

the contributions and opinions of others.

◆ Conceptualization—Keeping one’s “eye

on the ball” and recognizing interrelationships to accomplish desired results.

OIG CULTURE AND EMPLOYEES

Enhancing the Work Environment

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 and reflects 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, Certified Information Security

Systems Professionals, Certified Government

Audit Professionals, Certified Government

Financial Managers, and Certified Acquisition

Auditors. Some 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 toward professional and

academic achievements. OIG employees work

in teams of auditors, evaluators, criminal investigators, lawyers, technicians, and administrative personnel formerly from federal and state

government agencies, private industry, nonprofit organizations, and the Postal Service. 

The OIG continues to carry out an aggressive hiring initiative to staff the organization

with highly-skilled employees. As of March 31,

2002, the OIG had 702 employees, of whom

51 percent were women and 48 percent were

minorities. The senior management staff is

composed of approximately 35 percent women

and 27 percent minorities. Based on September

1999 U.S. Office of Personnel Management

Federal Civilian Workforce estimates, the OIG

workforce has exceeded the percentage of

minority representation in the federal civilian

workforce for all groups, except Native

Americans. The federal civilian workforce is

comprised of the executive branch and nonPostal Service employees. 

In the past 6 months, the OIG increased its

hiring outreach and recruitment efforts, which

contributed toward the OIG reaching and

exceeding the Federal Civilian Workforce estimates for Hispanics. The OIG is committed to

achieving the same success with Native

Americans, and as a result their representation

in the OIG’s workforce has increased. Because

Bureau of Labor Statistics census data is now

over 10 years old, and new census civilian labor

force data is not expected to be released until

2003, the OIG is using the more up-to-date

Federal Civilian Workforce data as a comparison.

ADHERING TO THE HIGHEST

PROFESSIONAL STANDARDS

The OIG reports to Congress and the nine

presidentially-appointed Governors. The

Inspector General is under the “general supervision” of these Governors and is not supervised

by the Postmaster General. This independence

from postal management is crucial to the OIG’s

credibility and allows the OIG to objectively

conduct audits and investigations of program

operations and to report its findings to the

Governors, Postmaster General, and Congress.

To help respond to the challenges the Postal

Service faces, the OIG annually identifies major

management issues and independently develops

work priorities that assist the Postal Service in

addressing these issues.

OIG work is performed in accordance with

a variety of professional standards, such as:

◆ The General Accounting Office’s Government Auditing Standards; and

◆ The President’s Council on Integrity and

Efficiency’s Quality Standards for Inspections and Quality Standards for Investigations.

Comparison of

OIG/Federal Civilian 

Workforce

0

10%

20%

30%

40%

50%

60%

70%

WHITE BLACK HISPANIC ASIAN NATIVE AMERICAN

OIG 2002

Federal Workforce 1999

OIG exceeds minority representation in

every category, except Native Americans.
PAGE84

Each audit is subject to supervisory review

at each stage of the audit process and must meet

established standards for due professional care,

quality, and independence. Each report is subject to review by the OIG’s statisticians, attorneys, editors, and other experts, and is

independently referenced by individuals not

associated with the project. Draft reports are

submitted to Postal Service management, who

has the opportunity to provide written comments in response to the report’s findings and

recommendations. These comments are analyzed and incorporated in the final report. 

In addition, the OIG ensures the highest

ethical standards by performing full security

background investigations of its employees.

Nearly all OIG employees are required to provide annual financial disclosure statements for

review to determine potential conflicts of interest. All employees are required to complete

ethics training each year and meet the OIG’s

established standards for continuing professional education. 

Further, the OIG ensures its own compliance with professional, legal, and ethical standards through established processes. Every three

years, the OIG is selected for a peer review of its

audit processes by another Inspector General

organization. The OIG also has an effective

quality assurance function that evaluates internal processes, programs, and work performed.

Complaints against senior OIG management

officials are handled pursuant to Executive

Order and are investigated by the Integrity

Committee of the President’s Council on

Integrity and Efficiency, headed by a high-ranking official of the Federal Bureau of

Investigation. 

PUBLIC RELATIONS AND

OUTREACH

OIG work to independently investigate

and evaluate programs and operations helps

maintain America’s confidence in the Postal

Service while improving its bottom line. Public

reporting of the OIG’s work informs the

American public and Congress that its findings

are truly independent; puts on notice those who

would defraud the Postal Service that they will

face consequences for their actions; reminds the

public of the OIG’s existence; and encourages

stakeholders to use the OIG Hotline to report

potential problems, so that the OIG may assist

the Postal Service in devising effective solutions. The public can access audit reports, press

releases, and other information regarding the

OIG on its website at http://www.uspsoig.gov.

NOTABLE OIG ACHIEVEMENTS

OIG JOINS COUNTERTERRORISM

TASK FORCE

As a result of the September 11, 2001, terrorist attacks on the World Trade Center and

the Pentagon, evaluators and special agents of

the OIG Computer Intrusion and Technical

Services Team joined the Federal Bureau of

Investigation National Infrastructure

Protection Center to assist in the investigation

of terrorist activities and attempt to identify any

future terrorist activity. The National

Infrastructure Protection Center provides

timely warnings of international threats, comprehensive analyses, and law enforcement

investigation and response. The unit assisted

the multi-agency task force in the migration of

information to a mass medium necessary for

conducting cross-relational analysis. The data

analysis resulted in the identification of Internet

research conducted by the terrorists pertaining

to potential targets and various means to carry

out terrorist attacks.

OIG EMPLOYEE PARTICIPATES IN

INQUIRY INTO ACTIONS OF

MAJOR ACCOUNTING FIRM AND

ENERGY CONTRACTOR

At the request of a White House agency,

the OIG’s Director, Computer Intrusion and

Technical Services Team, was detailed to the

General Services Administration to participate

in the inquiry into the suspension and possible

debarment of a major accounting firm and an

energy contractor. The Office of Management

and Budget directed the General Services

Administration to review federal contracts

awarded to these companies to determine

whether acts of misconduct were conducted

that would make them ineligible for future federal contracts. As a result, on April 15, 2002, six

businesses and seven individuals were debarred

and suspended from conducting business with

the Postal Service. 

ORGANIZATIONAL DYNAMICS

The OIG’s audit report on trailer damage

was released in written, video, and 

CD-ROM formats. 
PAGE85

OIG INSPECTOR GENERAL

ELECTED AS AT-LARGE MEMBER

OF PCIE

Inspector General Karla Corcoran was

recently elected by the Executive Council on

Integrity and Efficiency to be its at-large member to the President’s Council on Integrity and

Efficiency. Members from both councils form an

Executive Council that provides leadership to

the entire federal inspector general community.

The Executive Council consists of chairpersons

from six standing President’s Council on

Integrity and Efficiency committees and the

Executive Council on Integrity and Efficiency

Vice Chair. Along with the Vice Chair, the

Inspector General will provide representation

for Executive Council on Integrity and

Efficiency issues.

ASSISTANT INSPECTOR GENERAL

SELECTED AS CHAIRMAN OF

FEDERAL AUDIT EXECUTIVE

COUNCIL

John M. Seeba, Assistant Inspector

General for Financial Management, was

appointed Chairman of the Federal Audit

Executive Council in February 2002. The

Council, which consists of Assistant Inspectors

General for audit or similar positions in federal

agencies, discusses and coordinates matters

affecting audit policy and operations of common interest in the federal audit community.

Council activities include bimonthly meetings,

training sessions, working groups, and an annual

conference. 

INVESTIGATOR DETAILED TO

WEBSTER COMMISSION 

An OIG investigator was detailed to the

Webster Commission for the review of Federal

Bureau of Investigation security programs and

its relation to counter-espionage. The goal was

to recommend changes that would limit the

time from “defection to detection.” The

Commission reviewed the security structures at

the Central Intelligence Agency, National

Security Agency, Department of State,

National Reconnaissance Office, Air Force

Office of Special Investigations, Drug

Enforcement Administration, Customs Service,

and Defense Security Service to develop recommendations based on “best practices.”

Based on the review of Federal Bureau of

Investigation security programs and similar programs at other agencies, the Commission was

able to make recommendations that will hopefully lead to the consolidation of security functions within a single office at the Federal Bureau

of Investigation, and safeguard sensitive information contained on the Federal Bureau of

Investigation computer systems. Additionally,

recommendations were made to strengthen

computer and document security within the

Bureau.

OIG PROVIDES TRAINING AND

SUPPORT TO LAW

ENFORCEMENT, INSPECTOR

GENERAL COMMUNITIES

This reporting period, the OIG continued

to play a leadership role in the Inspector

General and federal law enforcement communities by providing training and assistance. OIG

staff provided the following training:

◆ In November, the OIG’s acting Deputy

General Counsel and Assistant Inspector

General for Congressional, Oversight,

and Legal Services made a presentation

on “Fraud in Electronic Commerce” to

the Annual Conference on Control and

Audit of Information Technology, sponsored by the Institute of Internal Auditors and the MIS Training Institute. The

conference, which was held in Boston, is

one of the largest annual audit conferences relating to information technology.

◆ In January, the OIG’s General Counsel

and Assistant Inspector General for Congressional, Oversight, and Legal Services,

spoke at a conference of Postal Service

Managing Legal Counsels as part of a

continuing dialogue on how OIG and

Postal Service Legal Counsels can better

coordinate legal issues of mutual interest.

SPECIAL AGENTS RECEIVE

AWARD FROM U.S. ATTORNEY’S

OFFICE

Two OIG special agents received the

Award for Public Service from the United

States Attorney’s Office, Eastern District of

New York, for their work on an investigation

that resulted in the firing of the former manager

of a New York Vehicle Maintenance Facility.

The manager, a 26-year postal employee, pled

guilty on June 4, 2001, to felony charges of

Vice Chairman S. David Fineman (above

right) and Governor John Walsh (above

left) of the Board of Governors spoke to

employees at the OIG’s Fifth Annual

Employee Recognition Conference. 

The National Capital Area Combined

Federal Campaign presented the OIG

with two awards: the President’s Award

for having over 75 percent employee

participation and the Pacesetter Award,

which is given to campaigns that exceed

the previous year’s results by at least

3.4 percent.
PAGE86

embezzlement and conspiracy to defraud the

Postal Service and was sentenced to serve

3 years probation, 6 months home detention,

and 300 hours of community service, along with

paying restitution of $20,000. 

The OIG investigation found that the

manager knowingly approved $87,000 in fraudulent and inflated invoices from an automobile

repair contractor between 1996 and 1999. In

exchange for approving the fraudulent invoices,

the manager received free automobile services

from the contractor for the manager’s personal

vehicles. The costs for the repair to the personal

vehicles were fraudulently included in the cost

of repairing Postal Service vehicles.

OIG EXCEEDS GOAL – RAISES

OVER $120,000 FOR COMBINED

FEDERAL CAMPAIGN

The OIG’s Combined Federal Campaign

for 2001 was a tremendous demonstration of the

agency’s core values and employees’ generosity.

Headquarters staff exceeded its goal and raised

over $90,000. Field office contributions were

equally impressive, totaling over $30,000 and

increasing the OIG’s total amount raised to over

$120,000. The Headquarters campaign garnered two awards from the National Capital

Area Combined Federal Campaign: the

President’s Award, for the third straight year, for

having over 75 percent employee participation

and for the fourth straight year, the Pacesetter

Award. The Pacesetter Award is given to campaigns that exceed the previous year’s results by

at least 3.4 percent. Both awards were presented at the OIG Fifth Annual Employee

Recognition Conference by a loaned executive from the Combined Federal Campaign.

LEGAL SERVICES SPONSORS

FREEDOM OF INFORMATION ACT

AND PRIVACY ACT TRAINING

The Legal Services team sponsored

Freedom of Information Act and Privacy Act

training in January 2002 at OIG Headquarters.

Attorneys from the Department of Justice

Freedom of Information Act office provided the

training to members of the Legal Services and

Congressional and Public Relations teams and

other OIG personnel. The goal of the training

was to provide an overview of the acts and

strengthen the OIG’s responsiveness to requests

for OIG documents under the Freedom of

Information Act.

OIG HOLDS FIFTH ANNUAL

EMPLOYEE RECOGNITION

CONFERENCE

The OIG held a three-day employee training and recognition conference in Washington,

DC, during the week of January 8, 2002. The

event emphasized the OIG’s core values

through training and featured presentations

from Vice Chairman S. David Fineman and

Governor John Walsh from the Board of

Governors; Representative Danny K. Davis, a

member of the House Government Reform

Committee and Chairman of the Postal Caucus;

and Postmaster General John E. Potter. 

Three Postal Service employees, George

Butler, Chief Counsel, Employment Law;

Azeezaly Jaffer, Vice President, Public Affairs

and Communications; and Robert Otto, Vice

President, Information Technology, were presented with awards for their tremendous support

to the OIG throughout the year. In addition,

numerous OIG teams and individuals were recognized for their exceptional support and dedication. A special ceremony honored OIG

employees who assisted in the aftermath of the

September 11, 2001, terrorist attacks and OIG

employees who were called to active military

duty in the wake of the attacks.

CHALLENGES FACING THE OIG 

As the OIG moves forward in its efforts to

help the Postal Service enhance its position as

the world’s leading postal service, it must

address the following challenges, some of which

have an impact on OIG internal operations,

and others on OIG oversight of the Postal

Service. These include:

◆ Balancing the OIG’s Responsibility to

Report Information with the Postal Service’s Concern About Withholding Proprietary Data. The OIG carefully weighs

the public’s right of access to information

under the Freedom of Information Act

against the Postal Service’s commercial

and security needs when considering

whether to release audit reports and

other information. To accurately assess

the sensitivity of information, the OIG

works closely with postal management

ORGANIZATIONAL DYNAMICS

Vice Chairman S. David Fineman (left)

and Governor John Walsh (right) joined

Inspector General Karla Corcoran at 

the Fifth Annual Employee Recognition

Conference. 

At its annual employee recognition conference, the OIG recognized postal

employees for their tremendous support they provided to the OIG. Pictured

are Deborah Willhite, Senior Vice

President for Government Relations and

Public Policy; Azeezaly Jaffer, Vice

President of Public Affairs and

Communication; Vice Chairman S. David

Fineman and Governor John Walsh of

the Board of Governors, and Inspector

General Karla Corcoran.
PAGE87

and its Law Department. The challenge

of balancing the OIG’s responsibility to

keep the public informed against the

Postal Service’s interest in non-disclosure

becomes particularly critical as the Postal

Service enters into new business ventures

that might involve commercially sensitive information and prepares to respond

to the increased threat of terrorism.

◆ Educating Stakeholders About the OIG’s

Role. A continuous challenge for the

OIG is to inform stakeholders about the

OIG’s mission, responsibilities, and audit

and investigative efforts. The OIG has

proactively reached out to stakeholders

regarding how it prevents and detects

fraud, waste, abuse, and mismanagement

and otherwise adds value to the Postal

Service. The OIG will continue its outreach efforts until all stakeholders

become familiar with the OIG’s roles and

responsibilities. As part of those efforts,

the OIG is conducting outreach by delivering presentations at postal management association and postal union state

and national conventions.

◆ Managing OIG Resources to Accommodate Changing Postal Service Priorities.

The current environment of the Postal

Service challenges the OIG to manage

its resources to accommodate and rapidly

respond to changing priorities. In addition, the urgency of the anthrax threat,

escalating workers’ compensation costs,

labor management, and other challenges

facing the Postal Service require the

OIG to use innovative methods to assist

in addressing these challenges in a timely

manner. These methods include using

the latest technology, reallocating staff

and financial resources, and maintaining

a workforce with diverse talents, backgrounds, and experiences. 

◆ Overseeing Postal Inspection Service

Activities. One of the primary reasons an

independent OIG was established within

the Postal Service was to provide oversight of Inspection Service activities.

The OIG’s statutory mandate for providing oversight is comprehensive, and

requires that it oversee all Inspection

Service activities, including the conduct

of internal investigations. 

Despite this clear mandate, the OIG

continues to face challenges in exercising

its oversight responsibility. Among the

most pressing challenges the OIG has

faced in fulfilling this responsibility has

been the Inspection Service questioning

the OIG’s oversight authority and not

providing unrestricted access to Inspection Service personnel and information.

The OIG continues to work with the

Inspection Service and senior postal

management to resolve these challenges,

and looks forward to establishing an

environment of cooperation when a new

Chief Postal Inspector is designated. 

◆ Protecting OIG Organizational Independence and Authority. The Inspector

General Act clearly establishes the OIG’s

independence from postal management

and its unrestricted right of access to personnel and records. However, postal

management has at times had difficulty

understanding this independence and

authority. Postal management has sometimes attempted to direct the efforts of

OIG and control OIG access to individuals and records. The OIG will continue

its outreach and education efforts to

assist management in understanding its

independence and authority.

◆ Recruiting and Retaining Talented Staff.

The OIG is committed to attracting and

retaining the best and brightest staff, and

continues to promote a diverse workforce. After the attacks of September 11,

2001, other agencies, such as the Transportation Security Administration, have

recruited many OIG employees because

of their experience and expertise. The

OIG is challenged to continue to attract

and retain talented staff at a time when

these agencies and others are offering

thousands of job opportunities to people

with the same qualifications the OIG is

seeking.

To respond to the loss of experienced

staff, the OIG has continued to carry out

an aggressive hiring initiative to maintain staffing levels needed to provide

quality audit and investigative services to

stakeholders. This has required innovative approaches to recruitment and workforce management. Some of the initiaOIG employees received awards for their

outstanding contributions and dedication

at the Fifth Annual Employee Recognition

Conference.
tives undertaken by the OIG include specialized training and development, access

to the latest investigative and audit management technology, as well as greater

deployment of staff to field locations. 

Part of the OIG’s recruiting and retention efforts include maintaining a healthy

organizational culture and environment

through methods such as employee advisory councils, workplace enhancement

training, teambuilding, and career change

opportunities.

◆ Providing User-Friendly Results to

Stakeholders. Keeping stakeholders fully

and currently informed is the foundation

of providing value-added audit and investigative services. One of the biggest

challenges the OIG faces is providing

timely, understandable, and useful information to its stakeholders. To meet this

challenge, the OIG will continue to

explore and use new avenues of communicating user-friendly information. One

such avenue is technology. The OIG’s

innovative use of video reports provides a

visual illustration of audit results that

transcends the limitations of text reports.

In addition, the OIG website provides

comprehensive information about the

OIG’s mission, culture, and work. The

OIG also created a CD-Rom to inform

stakeholders and prospective employees

about the OIG. 

◆ Preparing for a New Inspector General.

The Postal Service is the only federal

agency where the Inspector General

serves a statutory term. In January 1997,

the Inspector General was appointed by

the Postal Service Governors to a 7-year

term that expires in less than 2 years.

The Governors will need to identify a

successor, and the OIG will need to prepare for a change in leadership to ensure

a seamless transition. 

In addition, because the Inspector General’s position is for a 7-year term, some

highly-qualified candidates, particularly

senior executives from other agencies,

may be deterred from seeking the position if they are not eligible to retire at

the end of the term. This may also

increase the possibility of postal management being appointed to the position,

which could have an adverse impact on

the actual or perceived independence of

the OIG. Because the Inspector General is not appointed by the President and

confirmed by the Senate, Congressional

oversight of the hiring of the next

Inspector General may be limited. 

The OIG will embark on a communication program designed to prepare its

employees for the organization’s first

change in leadership using a wide variety

of communications tools, including allhands meetings, videoteleconferencing,

and the employee newsletter.

PAGE88 ORGANIZATIONAL DYNAMICS
PAGE89

In March, OIG’s managers received

unique leadership training in Gettysburg,

Pennsylvania, where they studied how

different leadership styles determined

the outcome of the Battle of Gettysburg,

and ultimately, the outcome of the Civil

War.
INSPECTION SERVICE

The primary law enforcement arm of the

United States Postal Service, The

Inspection Service, the traditional law

enforcement arm of the Postal Service, is a

highly specialized, professional organization

that performs investigative and security functions essential to a stable and sound postal system. Through its security and enforcement

functions, the Inspection Service provides

assurance to businesses for the safe exchange of

funds and securities through the U.S. mail; to

postal customers of the “sanctity of the seal” in

transmitting correspondence and messages; and

to postal employees of a safe work environment.

Postal Inspectors are federal law enforcement officers who carry firearms, make arrests,

execute federal search warrants, and serve subpoenas. Postal Inspectors work closely with U.S.

Attorneys, other law enforcement agencies, and

local prosecutors to investigate postal cases and

prepare them for citst. There are approximately

1,900 Postal Inspectors stationed throughout

the United States who enforce over 200 federal

laws covering investigations of crimes that

adversely affect or fraudulently use the U.S.

mail and postal system.

To assist in carrying out its responsibilities,

the Inspection Service maintains a security

force staffed by over 1,400 uniformed Postal

Police Officers, who are assigned to critical

postal facilities throughout the country. The

officers provide perimeter security, escort highvalue mail shipments, and perform other essential protective functions.

The Inspection Service operates five forensic crime laboratories, strategically located in

cities across the country. The laboratories are

staffed with forensic scientists and technical

specialists who assist Postal Inspectors in analyzing evidentiary material needed for identifying

and tracking criminal suspects and in providing

expert testimony for cases brought to trial.

The Inspection Service’s 900 professional

and technical employees also include program

analysts, financial analysts, information technology experts, and others who play a vital role

in supporting the criminal investigation and

security functions of the Inspection Service.

They perform a wide variety of tasks, including

developing, maintaining and continually

upgrading management systems; developing,

procuring and deploying electronic security and

surveillance equipment; publishing policy

handbooks and consumer awareness guides and

brochures; supplying photography and video

services; and facilitating direct communications

with Congress and the public.

The Office of Inspections operates with a

staff of 12 Postal Inspectors, an Inspector in

Charge, 4 support employees and 33 Postal

Police Officers, and has a three-fold mission.

First, it ensures integrity and excellence within

the Inspection Service by conducting independent internal investigations of its employees.

Second, the office also oversees the quality and

thoroughness of Inspection Service operations

by conducting reviews at field divisions and

headquarters units. Finally, it protects the safety

of postal employees and customers by providing

security and preventive services at national

Headquarters.

The Office of Counsel provides legal

advice and services in support of Inspection

Service investigations, programs and goals, and

processes requests for access to Inspection

Service records. The Counsel’s office is composed of 20 inspector-attorneys and a support

staff of paralegal specialists, information disclosure specialists, a labor relations specialist, a program specialist, and an administrative support

specialist.

The Inspection Service’s national information technology infrastructure supports over

4,300 users at more than 220 sites nationwide.

Inspection Service offices are linked nationally

via a dedicated frame-relay network, with online

connections to the Postal Service, the National

Crime Information Center, the National Law

Enforcement Telecommunications System, and

the Internet.

The Inspection Service extends full cooperation to all federal, state, and local investigative and prosecutorial authorities in law

enforcement matters to ensure greater protection to the public. Working with other agencies,

Postal Inspectors regularly participate in joint

task force cases aimed at curtailing widespread

criminal acts of an organized nature.

More information on the Inspection

Service can be found at http://www.usps.com/

postalinspectors.

PAGE90

Inspection Service seal and badges

ORGANIZATIONAL DYNAMICS
Organizational Structure

What is the background of the OIG’s staff? 

The OIG staff consists of auditors, criminal

investigators, evaluators, lawyers, experts,

technicians, and administrative personnel from

federal and state government agencies, private

industry, nonprofit organizations, and the 

Postal Service.

DID YOU 

KNOW?

PAGE 91
PAGE92 ORGANIZATIONAL STRUCTURE

INVESTIGATIONS

AUDITS

INTERNAL BUSINESS

Assistant 

Inspector General

Deputy AIG for 

Resources

Administrative Services

Human Resources

Internal Quality

Workplace Enhancement

Deputy AIG for Technology

Communications & Policy 

Experts & CAATS

Information Technology

Assistant Inspector General

Audit Operations & Follow-up

AIG for Financial Management

Contracting & Facilities

Financial Field 

Financial Statements

AIG for Core Operations

Accepting & Processing

Labor Management

Transportation & Delivery

AIG for eBusiness

Consulting & Quick Response

Developmental

eCommerce/Marketing

Information Systems

Assistant Inspector General

Investigative Operations

Deputy AIG for Investigations

Financial Crimes

Health Care Fraud

Executive Investigations & Retaliation

Computer Intrusion/Forensic 

 & Tech Services

Hotline & Security

Non-Financial Crimes 

 & Corruption

General Counsel & 

AIG for Congressional, 

Oversight & Legal 

Services

Deputy AIG for

Congressional, 

Oversight & Legal 

Services

Congressional & 

 Public Relations 

Legal Services

Oversight 

CONGRESSIONAL,

OVERSIGHT

&

L

EGAL

◆ FIELD

OFFICES : ARLINGTON ◆ ATLANTA ◆ BOSTON ◆ CHICAGO ◆ DALLAS ◆ DENVER

◆

LOS

ANGELES ◆

TAMPA

◆

ST. LOUIS

◆

SAN MATEO ◆ RALEIGH ◆ PORTLAND ◆ PITTSBURGH ◆ NEW YORK

◆

MINNEAPOLIS

Executive Representative 

for Field Liaison

Field Offices

Inspector General

Deputy 

Inspector General

Quality Assurance & Internal Affairs

Strategic Planning

Office of Inspector General

Organizational Structure
PAGE93

OFFICE OF INSPECTOR

GENERAL

The OIG 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.

Teams that focus on improving Postal

Service business processes and overall organizational achievement demonstrate the OIG’s values of teamwork, leadership, communication,

creativity, and conceptualization. The OIG

implemented a reorganization of its headquarters structure in September 2001 to better

reflect the Postal Service’s recent reorganization, more clearly define audit and investigative

functional areas and responsibilities, and clarify

lines of communication, resulting in a more efficient and effective organization. The following

section describes the OIG organizational structure as of March 31, 2002.

DEPUTY INSPECTOR GENERAL

Thomas Coogan

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

Director, Steve Spratt - incorporates current

and future Postal Service changes into OIG

operations, prepares and updates the OIG

strategic plan, develops and monitors the OIG’s

annual performance measures, and completes

strategic studies as needed.

EXECUTIVE REPRESENTATIVE FOR FIELD

LIAISON

Colleen McAntee - provides senior-level

communication links between the OIG Headquarters and its 15 field offices, and all Postal

Service field operations.

◆ East Offices: Arlington, New York,

Atlanta, Pittsburgh, Boston, Raleigh,

Tampa

◆ West Offices: Chicago, Los Angeles,

Dallas, Minneapolis, St. Louis, Denver,

Portland, San Mateo

Audit Directors, Darrell Benjamin

(West) and Debbie Pettitt (East) - plan

and coordinate staffing for audits and reviews as

initiated by Headquarters and responsible for

overall audit field staff development.

Investigative Directors, William Hencken

and Carl Puricelli (West) and Gwen

Johnson and Dennis Riley (East) - plan

and direct investigations in coordination with

Headquarters staff and responsible for overall

investigative field staff development.

GENERAL COUNSEL & ASSISTANT

INSPECTOR GENERAL FOR

CONGRESSIONAL, OVERSIGHT 

AND LEGAL SERVICES

Kirt West

DEPUTY ASSISTANT INSPECTOR

GENERAL FOR CONGRESSIONAL,

OVERSIGHT AND LEGAL

SERVICES

Gladis Griffith

LEGAL SERVICES TEAM

Director, Andrea Bernardo (Acting)- provides legal advice to the Inspector General and

OIG staff in all areas of criminal, civil, and

administrative law; processes subpoenas; manages ethics program; and reviews existing and

proposed legislation, regulations, and policies

affecting the economy and efficiency of the

Postal Service.

CONGRESSIONAL & PUBLIC

RELATIONS TEAM

Director, Laura Whitaker- serves as liaison

and responds to requests from Congress, the

Board of Governors, and the media; coordinates Congressional testimony and presentations; and responds to all Freedom of Information Act requests.

This section describes the organization of

the OIG and the Inspection Service. In

order to differentiate between the OIG and

the Inspection Service, the page concerning

the Inspection Service has been colorscreened.

Did You Know? 

In FY 2001, the Postal Service

was the 11th largest domestic

enterprise and the 33rd largest

worldwide. The Postal Service is

also the second largest employer in

America.

DID YOU 

KNOW?
OVERSIGHT TEAM

Director, Cathleen Berrick - provides oversight of Inspection Service functions and operations through audits, inspections, reviews,

monitoring, and coordination, including assessing criminal investigative programs and operations.

ASSISTANT INSPECTOR GENERAL

FOR AUDIT

Robert Emmons, Acting 

AUDIT OPERATIONS AND FOLLOW-UP

TEAM

Director, Joyce Hansen - provides support,

services, and coordination of audit activities;

facilitates the development of audit reporting

policy and procedures; develops and oversees

implementation of the audit workload plan;

manages the closure of significant audit recommendations and the audit resolution process;

and analyzes statistical audit data to accomplish

the OIG’s audit mission.

ASSISTANT INSPECTOR GENERAL

FOR FINANCIAL MANAGEMENT

John Seeba

FINANCIAL TEAMS

Director, Financial Statements, Bennie

Cruz and Director, Financial Field,

Sheila Bruck - plan and direct work in support of the independent public accounting

firm’s annual financial audit opinion and conduct other financial-related audits to identify

areas for improvement.

CONTRACTS & FACILITIES TEAM

Director, Lorie Siewert - plans and directs

audits and reviews of purchasing and contracting activities, as well as all aspects of postal

facility repair, renovation, and new construction.

ASSISTANT INSPECTOR GENERAL

FOR CORE OPERATIONS

Ronald Stith

ACCEPTING & PROCESSING TEAM

Director, Larry Chisley - plans and directs

audits and reviews focusing on the economy,

efficiency, and effectiveness of mail acceptance,

collection, and processing operations, as well as

logistics activities supporting these operations.

TRANSPORTATION & DELIVERY TEAM

Director, Joe Oliva - plans and directs audits

and reviews focusing on delivery, and domestic

and international transportation operations,

specifically addressing economy, efficiency, and

effectiveness of Postal Service fleet operations

and contracts for air, highway, and rail services.

LABOR MANAGEMENT & HEALTH

CARE TEAM

Director, Chris Nicoloff - plans and directs

audits and reviews focusing on labor relations,

management, and health care issues within the

Postal Service to assist in maintaining a healthy

and safe organizational climate for employees

and improving operational economy, efficiency,

and effectiveness.

ASSISTANT INSPECTOR GENERAL

FOR eBUSINESS

Ronald Merryman, Acting

DEVELOPMENTAL TEAM

Director, Tracy LaPoint - plans and directs

audits and reviews of new or redesigned Postal

Service systems, programs, and operations that

are under development.

eCOMMERCE & MARKETING TEAM

Director, Robert Batta - plans and directs

audits and reviews of electronic commerce,

marketing programs, stamp services, retail operations, international business, and support

operations. 

INFORMATION SYSTEMS TEAM

Director, Dave Berran - plans and directs

audits and reviews of major Postal Service

information systems to determine whether general and application controls are properly established and systems are designed to be secure and

provide accurate data to management. 

CONSULTING AND QUICK RESPONSE

TEAM

Director, Kim Stroud - assists Postal Service

management by identifying best practices for

improving Postal Service operations and advises on critical, time sensitive issues.

PAGE94 ORGANIZATIONAL STRUCTURE

Inspector General Karla Corcoran (center) visits the OIG’s Eagan, Minnesota

field office.

OIG’s Raleigh, North Carolina field office. 
PAGE95

ASSISTANT INSPECTOR GENERAL

FOR INVESTIGATIONS

Sam Maxey

INVESTIGATIVE OPERATIONS TEAM

Director, Russ Barbee - provides support

and coordination to field and headquarters

investigative programs, facilitates the development of investigative policy and procedures,

compiles and analyzes statistical investigative

data and results to accomplish the OIG’s investigative mission.

DEPUTY ASSISTANT INSPECTOR

GENERAL FOR INVESTIGATIONS 

Daniel O’Rourke

FINANCIAL CRIMES, CONTRACTING &

FACILITIES TEAM

Director, Anthony Cannarella - identifies

and coordinates investigations related to the

expenditure of Postal Service funds, supports

investigations of purchasing activities and

operations as well as all aspects of postal facility repair, renovation, and new construction.

HEALTH CARE FRAUD TEAM

Director, Mimi Band - identifies and coordinates investigations of wrongdoing by medical providers under contract with the Postal

Service and medical providers that have falsely

billed the Postal Service for work-related injury

claims.

NON-FINANCIAL CRIMES &

CORRUPTION TEAM

Director, Michael Shiohama - identifies

and coordinates investigations of bribery, kickbacks, conflict of interest, fraudulent tort claims,

impact card fraud, indemnity claims fraud, and

cases involving expenditures and contract fraud

dealing with product substitution.

COMPUTER INTRUSION AND

FORENSIC & TECHNICAL SERVICES

TEAM

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

provides technical support in such areas as surveillance, evidence recovery and computer

forensics.

HOTLINE AND SECURITY TEAM

Director, Tommy Hampton - operates the

OIG Hotline, providing a vital link for reporting fraud, waste, abuse and mismanagement;

and provides physical and personnel security

services within the OIG. 

ASSISTANT INSPECTOR GENERAL

FOR INTERNAL BUSINESS

Wayne Goleski

DEPUTY ASSISTANT INSPECTOR

GENERAL FOR RESOURCES

Mary Demory

HUMAN RESOURCES TEAM

Director, Eufemia Lucero - provides fullservice human resource support to the OIG in

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

ADMINISTRATIVE SERVICES TEAM

Director, Stew Dorris- provides facility, procurement, financial, budget, and other internal

services necessary to accomplish the OIG’s mission.

WORKPLACE ENHANCEMENT TEAM

Director, Sharon Solomon - provides work

life, organizational climate, diversity, Equal

Employment Opportunity, and other workplace-related services.

INTERNAL QUALITY TEAM

Director, Bob Pemberton - develops programs and activities that promote the vision

and core values of the OIG—teamwork, leadership, communication, creativity, and conceptualization. 

DEPUTY ASSISTANT INSPECTOR

GENERAL FOR TECHNOLOGY

Donna Edsall

INFORMATION TECHNOLOGY TEAM

Director, David Sidransky - provides computer operations, telecommunications, agencywide information systems, computer security,

and technical support.
EXPERTS AND COMPUTER-ASSISTED

ASSESSMENT TECHNIQUES TEAM

This self-directed team provides support to

OIG in the areas of statistical sampling; quantitative and statistical methods; computer-assisted assessment techniques for data retrieval and

analysis; economic forecasting; cost/benefit

analysis; estimation of monetary benefits; and

activity-based costing.

COMMUNICATIONS & POLICY TEAM

Director, Jim Nugent - provides writing, editorial, video, and graphic services; coordinates

and publishes OIG reports as well as other documents for Congress, the Governors, and Postal

Service management; and manages development of internal policies and procedures.

OIG FIELD LOCATIONS

The OIG Headquarters is located in

Rosslyn, Virginia. In addition, the OIG has

15 field offices located in San Mateo and Los

Angeles, California; Denver, Colorado;

Tampa, Florida; Atlanta, Georgia; Chicago,

Illinois; Boston, Massachusetts; Minneapolis,

Minnesota; St. Louis, Missouri; New York,

New York; Portland, Oregon; Pittsburgh,

Pennsylvania; Raleigh, North Carolina;

Dallas, Texas; and Arlington, Virginia. OIG

locations are depicted in the chart below.

PAGE96 ORGANIZATIONAL STRUCTURE

RALEIGH, NC

NEW YORK, NY MINNEAPOLIS, MN

ST. LOUIS, MO

ATLANTA, GA LOS ANGELES, CA

DALLAS, TX

ROSSLYN & ARLINGTON, VA CHICAGO, IL

DENVER, CO

SAN MATEO, CA

TAMPA, FL

BOSTON, MA

PITTSBURGH, PA

PORTLAND, OR

RALEIGH, NC

NEW YORK, NY MINNEAPOLIS, MN

ST. LOUIS, MO

ATLANTA, GA LOS ANGELES, CA

DALLAS, TX

ROSSLYN, VA CHICAGO, IL

DENVER, CO

OIG Locations Nationwide 

SAN MATEO, CA

TAMPA, FL

BOSTON, MA

PITTSBURGH, PA

PORTLAND, OR

BOSTON, MA

NEW OFFICE
PAGE97

INSPECTION SERVICE

The national headquarters offices of the

Inspection Service are organized into

functional groups that report to Deputy

Chief Inspectors for Investigations, Security &

Technology, and Professional Standards &

Resource Development. The Inspection Service

has 18 field divisions, which report directly to

three Deputy Chief Inspectors for field operations. Five Inspection Service Operations

Support Groups support field offices. The

Inspection Service’s Executive Committee,

which consists of the six Deputy Chief

Inspectors and the three Inspectors in Charge

who report directly to the Chief Postal

Inspector, establishes the direction of the organization. The National Leadership Team consists of the Deputy Chief Inspectors and all

Inspectors in Charge.

Inspector in Charge

Information Technology

R. COCCIA

Inspector in Charge

Computer Crimes &

Commerce

J. EASLEY

Inspector in Charge

International Security

D. HILL

Inspector in Charge

Security

T. DENNENY

Inspector in Charge

Fraud, Child Expl., 

Asset Forfeiture & 

Money Laundering

L. MAXWELL

Inspector in Charge

Mail Theft & 

Violent Crimes

K. ROBERTS

Inspector in Charge

Revenue & Asset 

Protection Prog.

K. BOND

Inspector in Charge

Forensic & Tech. 

Services

R. GEFFEN

Inspector in Charge

Strategic Plng. & 

Management Process

L. SPALLANZANI

Inspector in Charge

Career Development 

Division

J. STINCHFIELD

Inspector in Charge

Finance & 

Adm. Services

L. VISOS

Manager

Human Resource

Performance

N. JOHNSON

Inspectors in Charge

Mid Atl. - 

A. CRAWFORD

NY Metro - 

J. SKIDMORE

No. Jersey/Caribbean - 

K. BURKE

Northeast - 

K. JONES

Philadelphia Metro - 

I. CARLE

Washington Metro - 

A. CLEMMONS

W. Allegheny - 

J. BIRCH

Inspectors in Charge

Michiana - 

A. DAVIDSON

Midwest - 

R. BOWDREN

No. Ca - 

A. KIEL

No. Illinois - 

I. GILLIS

Northwest - 

R. MORGAN

So. Ca - 

J. FREEMAN

Inspectors in Charge

Florida - 

J. BELZ

Gulf Coast -

R. DODD

Rocky Mountain - 

M. COBOS

Southeast - 

D. COLLINS

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

Inspection Service Organizational Structure

Chief Postal Inspector

(VACANT)

Deputy Chief Inspector

Security/Technology

J. ROWAN

Deputy Chief Inspector

Investigations

K. NEWMAN

Deputy Chief Inspector

Professional Standards & Resource Development

(VACANT)

Deputy Chief Inspector

Field Operations - East

L. HEATH

Deputy Chief Inspector

Field Operations West

M. AHERN

Deputy Chief Inspector

Field Operations South

W. MITCHELL
PAGE98 ORGANIZATIONAL STRUCTURE
Appendices

DID YOU 

KNOW?

PAGE 99

Did You Know? 

Every year the Postal Service adds about

1.7 million new addresses, the equivalent

of over 3,000 new carrier routes. 
APPENDIX A

Reports Issued to Postal Management

For the period October 1, 2001, through March 31, 2002

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) or management advisory reports (MA) in accordance with the identified needs of

the project.

Inspection Service

The Inspection Service provided Postal-wide attention in selected areas until September 30, 2000,

when all audit functions were transitioned to the OIG.

SUMMARY

The following is a summary by principal area of reports issued to Postal Service management

by the OIG. The following pages list the reports.

Recommend Potential

Number of Questioned Unsupported Funds Put to Unrecoverable Additional

Principal Area Reports Issued Costs Costs1 Better Use Costs Revenue

Performance 13 $0 $0 $87,349,739 $0 $0

Financial Management 258 $52,471,979 $3,345,405 $5,414,128 $0 $65,517

Technology 21 $0 $0 $0 $0

Labor Management 6 $0 $3,000,000 $0 $0

Oversight 2 $0 $0 $0 $0

Other Significant Review 0 $0 $0 $0 $65,517

GRAND TOTAL 300 $52,471,979 $3,345,405 $95,763,867 $0 $65,517

PAGE 100 APPENDICES

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.

Unrecoverable Costs - A cost that

perhaps should not have been

incurred and is not recoverable.

Potential Additional Revenue -

Amounts from revenue generating

functions such as retail sales, rent,

leases, or fees that were underpaid

or not realized. 

1 Unsupported Costs are included with the amounts shown as Questioned Costs.

2 Represents potential additional revenue. 
REPORT LISTING

The following is a list of each report grouped by core business processes and enabling functions.

PERFORMANCE

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date

ACCEPTING AND PROCESSING

AC-AR-02-001 Mail Processing Operations at $0 $0 $0 $0 10/17/01

New Haven Metropolitan 

Area Post Offices

AC-AR-02-002 Certified Mail Processing $0 $0 $0 $0 3/21/02

Operations

AC-AR-02-003 Postal Service Strategy for $0 $0 $0 $0 3/29/02

Processing At-Risk Mail

and Deployment of

Irradiation Equipment

AC-AR-02-004 Anthrax Capping Report $0 $0 $0 $0 3/29/02

CONSULTING AND QUICK RESPONSE 

CQ-MA-02-001 Review of Letter Contract $0 $0 $0 $0 12/28/01

CQ-MA-02-002 Review of Contracts Associated $0 $0 $0 $0 3/29/02

With Biohazard Threat

MARKETING

EM-AR-02-002 Postal Retail Store Operations $0 $0 $0 $0 2/28/02

EM-AR-02-007 The Role of Marketing in the $0 $0 $0 $0 3/29/02

Postal Service

TRANSPORTATION

TD-AR-02-001 Critical Factors and Best Practices $0 $0 $0 $0 2/28/02

for Managing External First-Class

Mail Measurement System Scores

TD-AR-02-002 Trailer Lease Justification $0 $0 $82,349,739 $0 3/29/02

TD-MA-02-001 Transportation of Anthrax $0 $0 $0 $0 2/14/02

Contaminated Mail

TD-MA-02-002 Trailer Damage $0 $0 $5,000,000 $0 3/22/02

TD-VR-02-001 Trailer Damage Video Report $0 $0 $0 $0 3/29/02

PERFORMANCE TOTALS $0 $0 $ 87,349,739 $0

FINANCIAL MANAGEMENT

FINANCIAL OPINION

FT-AR-02-005 Postal Service Board of Governors' $0 $0 $0 $0 1/24/02

Travel and Miscellaneous Expenses 

for Fiscal Year 2001 

FT-AR-02-006 Postal Service Officers' Travel and $0 $0 $0 $0 1/24/02

Representation Expenses for 

Fiscal Year 2001

FT-AR-02-007 Fiscal Year 2001 Postal Service $0 $0 $0 $0 1/29/02

Financial Statement Audit - 

Washington, D.C., Headquarters

FT-AR-02-008 Fiscal Year 2001 Postal Service $0 $0 $0 $0 2/12/02

Financial Statement Audit - 

Eagan Information Technology and

Accounting Service Center 

FT-AR-02-009 Fiscal Year 2001 Postal Service $0 $0 $0 $0 2/12/02

Financial Statement Audit - 

San Mateo Information Technology

and Accounting Service Center

PAGE 101
FT-AR-02-010 Fiscal Year 2001 Postal Service $0 $0 $0 $0 2/12/02

Financial Statement Audit - 

St. Louis Information Technology and

Accounting Service Center

FT-AR-02-011 Payments to Contract $1,350,236 $0 $0 $0 3/6/02

Stations and Vendors 

Providing Goods and Services

FT-MA-02-001 Fiscal Year 2001 $0 $0 $0 $0 10/9/01

Financial Statement Audit -

San Francisco International

Records Unit

FT-MA-02-002 Mississippi State Tax Computation $0 $0 $0 $0 12/10/01

FISCAL YEAR 2001 FINANCIAL INSTALLATION AUDITS

FF-AR-02-001 Lynchburg Business Mail Entry Unit $0 $0 $0 $0 10/24/01

FF-AR-02-002 Augusta Business Mail Entry Unit $0 $0 $0 $0 10/24/01

FF-AR-02-003 Auburn Business Mail Entry Unit $0 $0 $0 $0 10/24/01

FF-AR-02-004 Glen Rock Post Office $0 $0 $0 $0 11/15/01

FF-AR-02-005 Lakehurst Post Office $0 $0 $0 $0 11/15/01

FF-AR-02-006 Amelia Post Office $0 $0 $0 $0 11/13/01

FF-AR-02-007 Altoona Business Mail Entry Unit $0 $0 $0 $0 10/24/01

FF-AR-02-008 Hartford Business Mail Entry Unit $0 $0 $0 $0 10/24/01

FF-AR-02-009 Mount Prospect Business Mail $0 $0 $0 $0 11/23/01

Entry Unit

FF-AR-02-010 City of Industry Business Mail $0 $0 $0 $0 10/24/01

Entry Unit

FF-AR-02-011 Refugio Post Office $0 $0 $0 $0 11/28/01

FF-AR-02-012 Mattoon Main Post Office $0 $0 $0 $0 10/24/01

FF-AR-02-013 Santa Rosa Main Post Office $0 $0 $0 $0 10/24/01

FF-AR-02-014 Long Beach District $0 $0 $0 $0 10/5/01

Accounting Office

FF-AR-02-015 Montebello Post Office $0 $0 $0 $0 10/5/01

FF-AR-02-016 South Hackensack Business $0 $0 $0 $0 11/23/01

Mail Entry Unit

FF-AR-02-017 Houston Stamp Distribution Office $0 $0 $0 $0 10/17/01

FF-AR-02-018 Newark Stamp Distribution Office $0 $0 $0 $0 11/15/01

FF-AR-02-019 South Florida Business Mail Entry Unit $0 $0 $0 $0 10/17/01

FF-AR-02-020 Columbus Business Mail Entry Unit $0 $0 $0 $0 10/26/01

FF-AR-02-021 Baton Rouge Stamp Distribution Office $0 $0 $0 $0 10/31/01

FF-AR-02-022 Phelps Post Office $0 $0 $0 $0 11/15/01

FF-AR-02-023 Highland Post Office $0 $0 $0 $0 11/15/01

FF-AR-02-024 Rutland Post Office $0 $0 $0 $0 10/17/01

FF-AR-02-025 Woodstock Business Mail Entry Unit $0 $0 $0 $0 11/15/01

FF-AR-02-026 Lilburn Post Office $0 $0 $0 $0 10/23/01

FF-AR-02-027 Torrington Post Office $0 $0 $0 $0 11/15/01

FF-AR-02-028 Worthington Post Office $0 $0 $0 $0 11/13/01

FF-AR-02-029 Torrance Business Mail Entry Unit $0 $0 $0 $0 10/26/01

FF-AR-02-030 El Paso Stamp Distribution Office $0 $0 $0 $0 10/31/01

FF-AR-02-031 Corona Main Post Office $0 $0 $0 $0 11/21/01

FF-AR-02-032 Mendocino Post Office $0 $0 $0 $0 10/26/01

FF-AR-02-033 Mercersburg Post Office $0 $0 $0 $0 11/13/01

FF-AR-02-034 Montgomery Business Mail Entry Unit $0 $0 $0 $0 11/8/01

FF-AR-02-035 Portland Business Mail Entry Unit $0 $0 $0 $0 10/26/01

FF-AR-02-036 Lawrenceville Post Office $0 $0 $0 $0 10/31/01

PAGE 102 APPENDICES

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-037 Seattle Stamp Distribution Office $0 $0 $0 $0 10/26/01

FF-AR-02-038 Cedartown Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-039 Clearfield Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-040 Columbus, Georgia Business $0 $0 $0 $0 11/20/01

Mail Entry Unit

FF-AR-02-041 Fairburn Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-042 Hot Springs Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-043 Flintstone Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-044 Alabama District Accounting Office $0 $0 $0 $0 10/26/01

FF-AR-02-045 Honolulu Business Mail Entry Unit $0 $0 $0 $0 10/26/01

FF-AR-02-046 Portland District Accounting Office $0 $0 $0 $0 10/26/01

FF-AR-02-047 Las Vegas District Accounting Office $0 $0 $0 $0 10/26/01

FF-AR-02-048 Hegins Post Office $0 $0 $0 $0 11/9/01

FF-AR-02-049 Forest Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-050 Garden City Post Office $0 $0 $0 $0 11/9/01

FF-AR-02-051 Shamrock Post Office $0 $0 $0 $0 11/29/01

FF-AR-02-052 Main Street Station $0 $0 $0 $0 11/2/01

FF-AR-02-053 Bay St. Louis Downtown $0 $0 $0 $0 11/8/01

Contract Postal Unit

FF-AR-02-054 Jamaica Business Mail Entry Unit $0 $0 $0 $0 11/21/01

FF-AR-02-055 Long Pond Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-056 Mohawk Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-057 Saginaw Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-058 Frederick Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-059 Hayward Main Office $0 $0 $0 $0 11/20/01

FF-AR-02-060 Helen Post Office $0 $0 $0 $0 11/20/01

FF-AR-02-061 Lancaster Business Mail Entry Unit $0 $0 $0 $0 11/8/01

FF-AR-02-062 Toledo Business Mail Entry Unit $0 $0 $0 $0 11/20/01

FF-AR-02-063 Versailles Business Mail Entry Unit $0 $0 $0 $0 11/20/01

FF-AR-02-064 Baltimore Business Mail Entry Unit $0 $0 $0 $0 11/16/01

FF-AR-02-065 Pewaukee Business Mail Entry Unit $0 $0 $0 $0 11/29/01

FF-AR-02-067 Rockford Post Office $0 $0 $0 $0 12/4/01

FF-AR-02-068 Bloomfield Post Office $0 $0 $0 $0 11/29/01

FF-AR-02-069 Portland Stamp Distribution Office $0 $0 $0 $0 12/4/01

FF-AR-02-070 Temple Post Office $0 $0 $0 $0 11/29/01

FF-AR-02-071 Land Park Post Office $0 $0 $0 $0 12/28/01

FF-AR-02-072 Plymouth Post Office $0 $0 $0 $0 11/30/01

FF-AR-02-073 Central New Jersey District $0 $0 $0 $0 11/28/01

Accounting Office

FF-AR-02-074 Sioux City Post Office $0 $0 $0 $0 11/30/01

FF-AR-02-075 Dakotas District Accounting Office $0 $0 $0 $0 11/28/01

FF-AR-02-076 Alexandria Post Office $0 $0 $0 $0 11/28/01

FF-AR-02-077 Witch Duck Station $0 $0 $0 $0 11/28/01

FF-AR-02-078 Phoenix District Accounting Office $0 $0 $0 $0 11/28/01

FF-AR-02-079 Flushing Stamp Distribution Office $0 $0 $0 $0 12/13/01

FF-AR-02-080 Boston Business Mail Entry Unit $0 $0 $0 $0 12/20/01

FF-AR-02-081 Northside Station $0 $0 $0 $0 12/19/01

FF-AR-02-082 Lutherville Business Mail Entry Unit $0 $0 $0 $0 12/13/01

FF-AR-02-083 Buffalo Business Mail Entry Unit $0 $0 $0 $0 12/13/01

FF-AR-02-084 Atlanta Business Mail Entry Unit $0 $0 $0 $0 12/4/01

FF-AR-02-085 Bartlett Station $0 $0 $0 $0 12/18/01

PAGE 103

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-086 Hamburg Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-087 Des Plaines Business Mail Entry Unit $0 $0 $0 $0 12/7/01

FF-AR-02-088 Richmond Business Mail Entry Unit $0 $0 $0 $0 12/6/01

FF-AR-02-089 Baltimore District Accounting Office $0 $0 $0 $0 12/7/01

FF-AR-02-090 New York District Accounting Office $0 $0 $0 $0 12/11/01

FF-AR-02-091 Bend Post Office $0 $0 $0 $0 12/19/01

FF-AR-02-092 Jacksonville Business Mail Entry Unit $0 $0 $0 $0 12/18/01

FF-AR-02-093 Jonesboro Post Office $0 $0 $0 $0 12/18/01

FF-AR-02-094 St. Paul Main Window Unit $0 $0 $0 $0 12/18/01

FF-AR-02-095 Onalaska Post Office $0 $0 $0 $0 12/26/01

FF-AR-02-096 Austin Downtown Station $0 $0 $0 $0 12/18/01

FF-AR-02-097 Loveland Post Office $0 $0 $0 $0 12/19/01

FF-AR-02-098 Detroit Business Mail Entry Unit $0 $0 $0 $0 12/26/01

FF-AR-02-099 Salem Post Office $0 $0 $0 $0 12/18/01

FF-AR-02-100 Las Vegas Business Mail Entry Unit $0 $0 $0 $0 12/14/01

FF-AR-02-101 Compton Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-102 Alameda Station $0 $0 $0 $0 12/19/01

FF-AR-02-103 Waldorf Post Office $0 $0 $0 $0 12/14/01

FF-AR-02-104 Keene Post Office $0 $0 $0 $0 12/20/01

FF-AR-02-105 Farmingdale Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-106 Cleveland Business Mail Entry Unit $0 $0 $0 $0 12/21/01

FF-AR-02-107 Camden Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-108 Gateway District Accounting Office $0 $0 $0 $0 12/17/01

FF-AR-02-109 Rhinehart Post Office $0 $0 $0 $0 12/19/01

FF-AR-02-110 Brooklyn Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-111 Mt. Pleasant Business Mail Entry Unit $0 $0 $0 $0 12/20/01

FF-AR-02-112 Farley Station $0 $0 $0 $0 12/26/01

FF-AR-02-113 Santa Monica Main Post Office $0 $0 $0 $0 12/21/01

FF-AR-02-114 Bellmawr Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-115 Franklin Park Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-116 Hazelwood Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-117 Clinton Post Office $0 $0 $0 $0 12/19/01

FF-AR-02-118 Kent Business Mail Entry Unit $0 $0 $0 $0 12/26/01

FF-AR-02-119 Wilkes Barre Business Mail Entry Unit $0 $0 $0 $0 12/21/01

FF-AR-02-120 Philadelphia Business Mail Entry Unit $0 $0 $0 $0 12/19/01

FF-AR-02-121 Shawnee Mission Business $0 $0 $0 $0 12/26/01

Mail Entry Unit

FF-AR-02-122 Van Nuys Post Office $0 $0 $0 $0 12/21/01

FF-AR-02-123 University Station $0 $0 $0 $0 12/21/01

FF-AR-02-124 Indianapolis Business Mail Entry Unit $0 $0 $0 $0 12/21/01

FF-AR-02-125 Millbury Post Office $0 $0 $0 $0 12/21/01

FF-AR-02-126 Harrisburg Business Mail Entry Unit $0 $0 $0 $0 1/7/02

FF-AR-02-127 Newark Business Mail Entry Unit $0 $0 $0 $0 12/21/01

FF-AR-02-128 Merrifield Business Mail Entry Unit $0 $0 $0 $0 12/26/01

FF-AR-02-129 Vacaville-Cernon Station $0 $0 $0 $0 12/21/01

FF-AR-02-130 Detroit Stamp Distribution Office $0 $0 $0 $0 12/26/01

FF-AR-02-131 Austin Capitol Station $0 $0 $0 $0 12/26/01

FF-AR-02-132 Eaton Rapids Post Office $0 $0 $0 $0 12/26/01

FF-AR-02-133 Fayetteville Main Post Office $0 $0 $0 $0 12/26/01

FF-AR-02-134 Dallas Main Post Office $0 $0 $0 $0 12/26/01

PAGE 104 APPENDICES

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-135 New London Business Mail $0 $0 $0 $0 12/31/01

Entry Unit

FF-AR-02-136 Terre Haute Business Mail $0 $0 $0 $0 12/26/01

Entry Unit

FF-AR-02-137 Victory Center Post Office $0 $0 $0 $0 12/21/01

FF-AR-02-138 Brookfield Business Mail Entry Unit $0 $0 $0 $0 12/26/01

FF-AR-02-139 Grand Prairie Business Mail $0 $0 $0 $0 12/26/01

Entry Unit

FF-AR-02-140 Telluride Post Office $0 $0 $0 $0 1/3/02

FF-AR-02-141 Salt Lake City Business Mail $0 $0 $0 $0 12/26/01

Entry Unit

FF-AR-02-142 Dubuque Post Office $0 $0 $0 $0 12/28/01

FF-AR-02-143 Norwich Business Mail Entry Unit $0 $0 $0 $0 12/28/01

FF-AR-02-144 Phoenix Business Mail Entry Unit $0 $0 $0 $0 12/26/01

FF-AR-02-145 Reading Business Mail Entry Unit $0 $0 $0 $0 12/26/01

FF-AR-02-146 Worth Post Office $0 $0 $0 $0 12/26/01

FF-AR-02-147 Rancho Cordova Business Mail $0 $0 $0 $0 12/26/01

Entry Unit 

FF-AR-02-148 Baraboo Business Mail Entry Unit $0 $0 $0 $0 12/31/01

FF-AR-02-149 Market Square Station $0 $0 $0 $0 12/31/01

FF-AR-02-150 Maryland Heights Branch Post Office $0 $0 $0 $0 1/4/02

FF-AR-02-151 Milwaukee Business Mail Entry Unit $0 $0 $0 $0 1/3/02

FF-AR-02-152 Stevensville Business Mail Entry Unit $0 $0 $0 $0 12/28/01

FF-AR-02-153 Woburn Main Post Office $0 $0 $0 $0 12/31/01

FF-AR-02-154 Cincinnati Business Mail Entry Unit $0 $0 $0 $0 12/28/01

FF-AR-02-155 Kenosha Business Mail Entry Unit $0 $0 $0 $0 12/28/01

FF-AR-02-156 Kalamazoo Post Office $0 $0 $0 $0 12/28/01

FF-AR-02-157 Warsaw Business Mail Entry Unit $0 $0 $0 $0 12/28/01

FF-AR-02-158 Pioneer Post Office $0 $0 $0 $0 12/28/01

FF-AR-02-159 San Juan Stamp Distribution Office $0 $0 $0 $0 12/31/01

FF-AR-02-160 Katy Post Office $0 $0 $0 $0 12/31/01

FF-AR-02-161 Austin General Mail Facility $0 $0 $0 $0 12/31/01

Window Service

FF-AR-02-162 Springfield Post Office $0 $0 $0 $0 12/31/01

FF-AR-02-163 Tucson Downtown Station $0 $0 $0 $0 12/31/01

FF-AR-02-164 Northland District Accounting Office $0 $0 $0 $0 12/31/01

FF-AR-02-165 Little Ferry Post Office $0 $0 $0 $0 12/31/01

FF-AR-02-166 Los Angeles Main Office Station $0 $0 $0 $0 12/31/01

FF-AR-02-167 Maple Grove Business Mail $0 $0 $0 $0 1/3/02

Entry Unit

FF-AR-02-168 Liberty Post Office $0 $0 $0 $0 1/3/02

FF-AR-02-169 Springfield District Accounting Office $0 $0 $0 $0 12/31/01

FF-AR-02-170 Charleston Business Mail Entry Unit $0 $0 $0 $0 12/31/01

FF-AR-02-171 Western New York District $0 $0 $0 $0 1/4/02

Accounting Office

FF-AR-02-172 Minneapolis Main Post Office $0 $0 $0 $0 1/7/02

FF-AR-02-173 Eastern Heights Station $0 $0 $0 $0 1/7/02

FF-AR-02-174 Scottsdale Air Park Station $0 $0 $0 $0 1/4/02

FF-AR-02-175 Effingham Business Mail Entry Unit $0 $0 $0 $0 1/7/02

FF-AR-02-176 Van Nuys Business Mail Entry Unit $0 $0 $0 $0 1/7/02

FF-AR-02-177 Spartanburg Business Mail Entry Unit $0 $0 $0 $0 1/7/02

FF-AR-02-178 Indianapolis Airport Mail Center $0 $0 $0 $0 1/7/02

PAGE 105

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-179 Folsom Business Mail Entry Unit $0 $0 $0 $0 1/7/02

FF-AR-02-180 Kansas City Business Mail Entry Unit $0 $0 $0 $0 1/22/02

FF-AR-02-181 Union City Business Mail Entry Unit $0 $0 $0 $0 1/7/02

FF-AR-02-182 Cleveland District Accounting Office $0 $0 $0 $0 1/4/02

FF-AR-02-183 San Antonio Air Mail Facility $0 $0 $0 $0 1/4/02

FF-AR-02-184 Seeley Lake Post Office $0 $0 $0 $0 1/11/02

FF-AR-02-185 Collingswood Post Office $0 $0 $0 $0 1/11/02

FF-AR-02-186 Mora Business Mail Entry Unit $0 $0 $0 $0 1/23/02

FF-AR-02-187 Saddle Creek Station $0 $0 $0 $0 1/23/02

FF-AR-02-188 Southport Branch $0 $0 $0 $0 1/22/02

FF-AR-02-189 Lincoln Post Office $0 $0 $0 $0 1/25/02

FF-AR-02-190 South Hackensack Post Office $0 $0 $0 $0 1/28/02

FF-AR-02-191 Ellisburg Station $0 $0 $0 $0 1/28/02

FF-AR-02-192 Julius Melcher Station $0 $0 $0 $0 1/24/02

FF-AR-02-193 Miami Business Mail Entry Unit $0 $0 $0 $0 1/25/02

FF-AR-02-194 Allen Post Office $0 $0 $0 $0 1/25/02

FF-AR-02-195 Dallas Business Mail Entry Unit $0 $0 $0 $0 1/28/02

FF-AR-02-196 Wilmington Post Office $0 $0 $0 $0 1/31/02

FF-AR-02-197 Chicago Stockyard Station $0 $0 $0 $0 1/28/02

FF-AR-02-198 JA Farley Business Mail Entry Unit $0 $0 $0 $0 1/29/02

FF-AR-02-199 Houston Business Mail Entry Unit $0 $0 $0 $0 1/29/02

FF-AR-02-200 Houston District Accounting Office $0 $0 $0 $0 1/29/02

FF-AR-02-201 Skokie Post Office $0 $0 $0 $0 1/30/02

FF-AR-02-202 Dallas District Accounting Office $0 $0 $0 $65,5172 1/30/02

FF-AR-02-203 Suburban Business Mail Entry Unit $0 $0 $0 $0 1/31/02

FF-AR-02-204 Durham Business Mail Entry Unit $0 $0 $0 $0 1/31/02

FISCAL YEAR 2002 FINANCIAL INSTALLATION AUDITS

FF-AR-02-205 Bellmawr Business Mail Entry Unit $0 $0 $0 $0 3/8/02

FF-AR-02-207 Lynchburg Business Mail Entry Unit $0 $0 $0 $0 3/28/02

FINANCIAL RELATED

FF-AR-02-206 Audit of Statistical Tests for the $0 $0 $0 $0 3/27/02

Fiscal Year 2001 Cost and 

Revenue Analysis

FT-AR-02-001 Shared Real Estate Appreciation $0 $0 $0 $0 10/17/01

Loan Program

FT-AR-02-002 Internal Controls Over International $0 $0 $0 $0 11/6/01

Merchant Purchase Authorization 

Card Purchases

FT-AR-02-003 Withholdings and Contributions for $0 $0 $0 $0 11/6/01

Health Benefits, Life Insurance, 

Retirement, and Employee 

Headcount Data

FT-AR-02-004 Postal Service Efforts to Address $0 $0 $0 $0 12/19/01

Data Quality Study Recommendations

FT-MA-02-003 Review of the Accuracy of the $0 $0 $0 $0 3/29/02

Estimated Costs to Address

Terrorist Attack Damages and

the Anthrax Threat

CONTRACTING

CA-AR-02-001 Follow-up Audit of $0 $0 $0 $0 1/11/02

Salt Lake City District

2002 Winter Olympic Plan

CA-AR-02-002 Disposal of Excess Real Property $0 $0 $4,100,000 $0 1/28/02

CA-CAR-02-001 Pre-Award Accounting System Survey $0 $0 $0 $0 10/5/01

PAGE 106 APPENDICES

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
CA-CAR-02-002 Evaluation of Proposal $0 $0 $0 $0 10/5/01

CA-CAR-02-003 Audit of Common Area $0 $0 $0 $0 10/5/01

Maintenance Costs

CA-CAR-02-004 Evaluation of Termination $17,359,760 $0 $0 $0 10/12/01

for Convenience Proposal

CA-CAR-02-005 Evaluation of Firm Fixed $11,314,673 $0 $0 $0 10/23/01

Price Proposal

CA-CAR-02-006 Evaluation of Firm Fixed $405,052 $0 $0 $0 10/23/01

Price Proposal

CA-CAR-02-007 Evaluation of Proposal $0 $0 $0 $0 11/15/01

CA-CAR-02-008 Evaluation of Proposal $0 $0 $0 $0 11/21/01

CA-CAR-02-009 Evaluation of Proposal $4,681,606 $0 $0 $0 12/14/01

CA-CAR-02-010 Evaluation of Proposal $0 $0 $0 $0 12/14/01

CA-CAR-02-011 Pre-award Accounting $0 $0 $0 $0 12/17/01

System Survey

CA-CAR-02-012 Evaluation of Proposal $13,573,494 $3,040,998 $0 $0 1/7/02

CA-CAR-02-013 Evaluation of Incurred Costs $0 $0 $0 $0 1/11/02

CA-CAR-02-014 Evaluation of Purchases $0 $0 $0 $0 1/23/02

Existence and Consumption

of Materials

CA-CAR-02-015 Pre-award Accounting $0 $0 $0 $0 1/30/02

System Survey

CA-CAR-02-016 Evaluation of Final $0 $0 $0 $0 2/5/02

Voucher and Cumulative

Claimed Costs

CA-CAR-02-017 Evaluation of Final $0 $0 $0 $0 2/5/02

Voucher and Cumulative

Claimed Costs

CA-CAR-02-018 Review of Purchasing System $0 $0 $0 $0 2/6/02

CA-CAR-02-019 Evaluation of Video $0 $0 $1,314,128 $0 2/6/02

Teleconferencing Utilization

CA-CAR-02-020 Evaluation of Final $0 $0 $0 $0 2/8/02

Voucher and Cumulative

Claimed Costs

CA-CAR-02-021 Evaluation of Accounting $0 $0 $0 $0 2/8/02

and Billing Systems

CA-CAR-02-022 Evaluation of Final Voucher $0 $0 $0 $0 2/13/02

and Cumulative Claimed Costs

CA-CAR-02-023 Evaluation of Incurred Costs $0 $0 $0 $0 2/14/02

CA-CAR-02-024 Evaluation of Final Voucher $0 $0 $0 $0 2/14/02

and Cumulative Claimed Costs

CA-CAR-02-025 Evaluation of Final Voucher $0 $0 $0 $0 2/14/02

and Claimed Costs

CA-CAR-02-026 Evaluation of Incurred Costs $491,590 $0 $0 $0 2/28/02

CA-CAR-02-027 Evaluation of Partial $2,217,874 $0 $0 $0 3/6/02

Termination for

Convenience Proposal

CA-CAR-02-028 Evaluation of Incurred Costs $0 $0 $0 $0 3/8/02

CA-CAR-02-029 Evaluation of Equitable $0 $0 $0 $0 3/8/02

Price Adjustment Claim

CA-CAR-02-030 Post Award Audit of Cost $0 $0 $0 $0 3/8/02

or Pricing Data

CA-CAR-02-031 Evaluation of Proposals $305,480 $304,407 $0 $0 3/19/02

CA-CAR-02-032 Evaluation of Equitable $772,214 $0 $0 $0 3/25/02

Price Adjustment Claim

PAGE 107

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
CA-CAR-02-033 Evaluation of Incurred Costs $0 $0 $0 $0 3/25/02

CA-CAR-02-034 Evaluation of Incurred Costs $0 $0 $0 $0 3/26/02

CA-CAR-02-035 Evaluation of Firm $0 $0 $0 $0 3/26/02

Fixed Price Proposal

CA-MA-02-001 Postal Service Supplier $0 $0 $0 $0 3/28/02

Demographics

FINANCIAL MANAGEMENT TOTALS $52,471,979 $3,345,405 $5,414,128 $ 65,517

TECHNOLOGY

INFORMATION SYSTEMS

IS-AR-02-001 System Controls $0 $0 $0 $0 11/8/01

IS-AR-02-002 Network Security $0 $0 $0 $0 12/19/01

IS-AR-02-003 Review of the Facilities $0 $0 $0 $0 2/22/02

Management System for Windows

IS-AR-02-004 Server Security Testing $0 $0 $0 $0 3/22/02

IS-AR-02-005 Security Testing of Routers $0 $0 $0 $0 3/22/02

and Switches

IS-AR-02-006 Security Testing of Load Balancers $0 $0 $0 $0 3/28/02

IS-CS-02-001 Server Security Testing $0 $0 $0 $0 11/15/01

IS-CS-02-002 Security Testing of Switches $0 $0 $0 $0 1/11/02

IS-CS-02-003 Network Security $0 $0 $0 $0 2/4/02

DEVELOPMENTAL

DA-AR-02-001 Performance of Automated $0 $0 $0 $0 2/22/02

Flat Sorting Machine 100

DA-AR-02-002 Processing Operations $0 $0 $0 $0 3/22/02

Information System

DA-AR-02-003 Assessment of Anthrax $0 $0 $0 $0 3/22/02

Sterilization Solution

DA-AR-02-004 Postal Service Test, Evaluation, $0 $0 $0 $0 3/27/02

and Quality

ELECTRONIC COMMERCE

EM-AR-02-001 Protection of Internet $0 $0 $0 $0 10/18/01

Users' Information - 

PostmarkAmerica.com

Technical Issues

EM-AR-02-003 Facilities Database Application $0 $0 $0 $0 3/26/02

Development Review

EM-AR-02-004 eServices Registration Application $0 $0 $0 $0 3/26/02

Development Review

EM-AR-02-005 Vehicle Operations $0 $0 $0 $0 3/26/02

Information System

EM-AR-02-006 Delivery Unit Notification System $0 $0 $0 $0 3/27/02

Application Development Review

EM-AR-02-008 PostmarkAmerica.Com Financial $0 $0 $0 $0 3/29/02

and Management Issues

EM-AR-02-009 Public-Key Infrastructure $0 $0 $0 $0 3/29/02

Initiatives by the Postal Service

EM-MA-02-001 Postal Service's Biohazard $0 $0 $0 $0 3/29/02

Command Center Efforts and

Contingency Planning

TECHNOLOGY TOTALS $ 0 $ 0 $ 0 $ 0

PAGE 108 APPENDICES

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
LABOR MANAGEMENT

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date

WORKPLACE ENVIRONMENT REVIEWS 

LH-MA-02-002 Review of the Postal Service's $0 $0 $0 $0 2/28/02

Communication of Employee 

Safety and Health Issues at

Selected Locations

LH-MA-02-003 Review of Decontamination $0 $0 $0 $0 3/12/02

Activities at the Pentagon Station

LH-MA-02-004 Fact-Finding Review of Actions $0 $0 $0 $0 3/22/02

and Decisions by Postal Service

Management at the South Jersey

Processing and Distribution Center

HUMAN RESOURCE PROCESSES

LH-AR-02-001 Use of the Economic Value Added $0 $0 $0 $0 12/5/01

Concept in the Pay for

Performance Program (second report)

LH-AR-02-002 Sexual Harassment Prevention $0 $0 $0 $0 3/22/02

Measures in the Maine District

LH-MA-02-001 Follow-up Report on Postal Service's $0 $0 $3,000,000 $0 11/29/01

Oversight of Other Paid

Administrative Leave Use

LABOR MANAGEMENT TOTALS $ 0 $ 0 $ 3,000,000 $ 0

OVERSIGHT

OV-AR-02-001 Postal Inspection Service $0 $0 $0 $0 12/20/01

Executive Awards Program

OV-AR-02-002 Postal Inspection Service $0 $0 $0 $0 3/25/02

Evidence Handling Program

OVERSIGHT TOTALS $ 0 $ 0 $ 0 $ 0

OIG TOTALS $52,471,979 $3,345,405 $95,763,867 $65,517

PAGE 109
APPENDIX B

Findings of Questioned Costs

For the period October 1, 2001, through March 31, 2002

OFFICE OF INSPECTOR GENERAL

Unsupported

Costs

Total Included In

Number of Questioned Questioned

Description Reports Costs Costs

Reports for which no management decision was made at 43 $267,297,217 $13,753,137

the beginning of the reporting period

Reports requiring management decision that were issued 10 $52,471,979 $3,345,405

during the reporting period

TOTALS 53 $319,769,196 $17,098,542 

Reports for which a management decision was made 24 $214,499,363 $8,664,227

during the reporting period (i+ii)*

(i) Dollar Value of disallowed cost $195,029,709 $379,646 

(ii) Dollar value of cost not disallowed $19,469,654 $8,284,581

Reports for which no management decision was made by the 29 $105,269,833 $8,434,315

end of the reporting period. Negotiations are ongoing.

Reports for which no management decision was made within 9 $1,339,917 $250,471

six months of issuance (See Note 1 for a list of individual reports)

Reports for which no management decision was made within 12 $66,131,228 $7,879,437

one year of issuance (See Note 2 for a list of individual reports)

Note 1 – Reports for which no management decision was made within six months of issuance:

Unsupported

Costs

Total Included In

Report/ Questioned Questioned

Report Date Case Number Project Type Costs Costs

4/19/01 CA-CAR-01-038 Contract Audit $17,554 $17,554

6/7/01 CA-CAR-01-046 Contract Audit 2,505

7/17/01 CA-AR-01-003 Price Adjustment for Year-A-Round Corp. 5,891

7/18/01 CA-CAR-01-057 Contract Audit 136,651

7/19/01 CA-CAR-01-059 Contract Audit 198,450 198,450 

7/27/01 CA-CAR-01-060 Contract Audit 46,931

9/14/01 CA-CAR-01-066 Contract Audit 1,131

9/14/01 CA-CAR-01-068 Contract Audit 222,509 34,467

9/14/01 CA-CAR-01-069 Contract Audit 708,295

TOTAL $1,339,917 $250,471

PAGE 110 APPENDICES

* The reported amounts disallowed reflect the results of a negotiated settlement, signed on September 26,

2001, between the Postal Service and a contractor. The settlement resolved $543.2 million of amounts in

dispute and all other potential claims. Included herein is $163.1 million disallowed related to this action.
Note 2 – Reports for which no management decision was made within one year of issuance:

Unsupported

Costs

Total Included In

Report/ Questioned Questioned

Report Date Case Number Project Type Costs Costs

2/29/00 TR-AR-00-005 Southwest Area Expenditures for Extra $848,000 $0

Highway Trips Using Leased Equipment

3/31/00 CA-MA-00-001 Contract Audit Practices 92,214 0

5/17/00 CA-AR-00-001 United States Postal Service Warranty 977,598 0

Repair of Tractors

8/25/00 CA-CAR-00-047 Contract Audit 917,345 0

9/20/00 CA-CAR-00-055 Contract Audit 10,565,117 0

9/29/00 CA-CAR-00-064 Contract Audit 17,726,329 0

12/14/00 CA-CAR-01-013 Contract Audit 7,264,275 361,997

2/27/01 CA-AR-01-001 Contracting Practices for the Services 12,500,000 0

Procurement of Mail Transport Equipment

OIG TOTALS $50,890,878 $361,997

Unsupported

Costs

Total Included In

Report/ Questioned Questioned

Report Date Case Number Project Type Costs Costs

12/7/98 184-1243166-AC(1) Contract Audit $7,087,038 $5,841,563 

11/17/99 181-1294644-AC(1) Contract Audit 7,063,747 1,675,877

4/3/00 184-1126310-AC(1) Contract Audit 514,696 0

8/30/00 184-1210121-AC(1) Contract Audit 574,869 0

INSPECTION SERVICE TOTALS $15,240,350 $7,517,440 

TOTAL $66,131,228 $7,879,437 

PAGE 111
APPENDIX C

Recommendations That Funds

Be Put to Better Use

For the period October 1, 2001, through March 31, 2002

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 7 $48,541,290

Reports requiring management decision that were 

issued during the reporting period 5 $95,763,867

TOTALS 12 $144,305,157

Reports for which a management decision was made during the report period 4 $13,414,128

(i) Value of recommendations agreed to by management $12,477,640

(ii) Value of recommendations that were not agreed to by management $936,488

Reports for which no management decision was made by the end of the reporting period 8 $130,891,029

Reports for which no management decision was made within six months of issuance 

(See Note 1 for a list of individual reports) 2 $17,967,342

Reports for which no management decision was made within one year of issuance 

(See Note 2 for a list of individual reports) 5 $30,573,948

Note 1 – Reports for which no management decision was made within six months of issuance:

Recommend

Report Report/ Funds Put to

Date Case Number Project Type Better Use

07/27/01 TR-AR-01-004 Bulk Fuel Purchase Plan $15,918,035

08/22/01 OV-AR-01-003 Service Investigations Conducted by the Inspection Service 2,049,307

TOTAL $17,967,342

Note 2 – Reports for which no management decision was made within one year of issuance:

Recommend

Report Report/ Funds Put to

Date Case Number Project Type Better Use

10/30/98 181-1252372-AC(1) Contract Audit $1,710,680 

11/24/98 181-1254410-AC(1) Contract Audit 137,480

12/18/98 181-1253441-AC(1) Contract Audit 145,532

8/27/99 181-1294162-AC(1) Contract Audit 122,861

9/29/00 MK-AR-00-001 Review of Stamp Fulfillment Services Performance 28,457,395

TOTAL $30,573,948

PAGE 112 APPENDICES
APPENDIX D

Reports with Significant

Recommendations Pending Corrective

Actions

For the period October 1, 2001, through March 31, 2002

This appendix lists reports containing significant recommendations pending final action by management. On October 1, 2000, the OIG assumed complete responsibility for tracking corrective

actions for all significant recommendations. As a result, the OIG performed an extensive analysis

to identify reports with significant recommendations requiring confirmation that appropriate corrective actions have been taken. This appendix identifies those reports. The OIG is working

with Postal Service management to validate whether appropriate corrective actions have been

taken, and if so, remove them from this appendix.

OFFICE OF INSPECTOR GENERAL

Report Report Number of Issue 

Number Title Recommendations Date

LM-MA-99-002 Effectiveness of USPS Grievance Arbitration Procedures 2 3/26/99

LR-MA-99-001 Grievance Arbitration Management Information 2 3/26/99

QR-MA-99-001 USPS Management of Personal Services Contract 1 3/29/99

FA-AR-99-001 Review of Atlanta Olympics Facility Improvement Plan 2 3/31/99

OV-MA-99-001 Review of USPS Personnel Security Program - 

Process for Updating Sensitive Clearances 1 3/31/99

DA-AR-99-002 Point of Service ONE 1 9/20/99

TR-AR-99-001 Compliance Opportunities for Savings in Rail Detention Costs 3 9/23/99

FR-AR-99-010 Fiscal Year 1999 Information Systems Controls, St. Louis 2 9/28/99

Information Service Center

FR-AR-99-008 Fiscal Year 1999 Information Systems Controls, San Mateo 1 9/29/99

Information Service Center

TR-AR-99-003 Emergency and Extra Trip Expenditures on Highway Routes 6 9/29/99

CA-AR-99-001 Opportunities to Increase Savings Through the 2 9/30/99

Use of Natural Gas Vehicles

CA-AR-99-002 Removal of Underground Storage Tanks 1 9/30/99

CA-AR-99-003 Responsibilities of Contracting Officers’ Representatives 9 9/30/99

FR-LA-00-001 Sure Money Electronic Funds Transfer Service Expansion 2 11/23/99

to Dominican Republic

RG-MA-00-001 Cost and Benefit of the International Collection Program 1 12/3/99

FR-MA-00-001 Budget Cost Containment Measures 1 12/22/99

TR-AR-00-003 Commercial Air Carrier: Performance Measurement System 2 1/31/00

TR-AR-00-004 Commercial Air Carrier Performance: 2 1/31/00

Effectiveness of Pay for Performance

TR-AR-00-005 Southwest Area Expenditures for Extra Highway Trips 3 2/29/00

Using Leased Equipment

DS-AR-00-001 External First-Class Mail Measurement System 2 3/27/00

TR-AR-00-006 Commercial Air Carrier Performance: 2 3/27/00

Payment for Ground Handling Services

CA-MA-00-001 Contract Audit Practices 7 3/31/00

DA-AR-00-002 Tray Management System 5 3/31/00

RG-AR-00-002 Breast Cancer Research Stamp Program Review-Phase II 1 3/31/00

FR-FA-00-010(R) Relocation Benefits for Postal Service Officers - Revised 1 5/2/00

FA-AR-00-002 Salt Lake City District 2002 Winter Olympic Plans 2 6/30/00

TR-AR-00-008 Extra Trip Expenditures at the Dallas Bulk Mail Center 1 6/30/00

OV-MA-00-002 Review of Postal Inspection Service Forensic Scientist Salaries 1 7/17/00

TR-AR-00-009 Extra Trips Expenditures within the Mid-Atlantic Area 4 7/27/00

PAGE 113
FA-MA-00-007 Review of the Managed Network Services Contract & 1 7/28/00

Billing Process of the Contractor

FT-FA-00-001 Money Order Blank Stock and Imprinters 6 8/25/00

FT-AR-00-002 International List Service Transmittal of 1 8/29/00

Funds Bank Secrecy Act Compliance

EC-AR-00-001 USPS eBillPay Security and Privacy Issues 1 9/5/00

DA-AR-00-004 Information Platform Planning 1 9/28/00

AC-AR-00-004 Use of Robotic Tray Handling System 2 9/29/00

AC-AR-00-005 International Mail Processing 2 9/29/00

DA-AR-00-006 Point of Service ONE Phase II 2 9/29/00

IS-AR-00-004 State of Computer Security in the Postal Service 4 9/29/00

LB-AR-00-003 Evaluation of Postal Service Criteria for Workplace Violence 3 9/29/00 

Prevention and Response Program

MK-AR-00-001 Review of Stamp Fulfillment Services Performance Measures 1 9/29/00

OV-AR-00-005 Review of the United States Postal Inspection Service 2 9/29/00

Budget Process

TR-AR-00-011 Dedicated Christmas Air Network - Phase 1 3 9/29/00

MK-AR-00-002(R) Management Controls over the 3 10/31/00

Sales Force Augmentation Program - Revised

TR-AR-01-001 Adequacy of Mail Transport Equipment Service Center 4 10/31/00

Network Internal Controls

CA-MA-01-001 Privacy Data Contained in Contract Files 2 12/24/00

DE-AR-01-002 Review of the Revised Rules Governing Commercial Mail 3 4/9/01

Receiving Agencies 

DA-AR-01-004 Postal One! Business Customer Support Systems Phase One 5 4/9/01

IS-AR-01-001 Network Security 5 4/18/01 

CA-AR-01-002 Responsibilities of Contracting Officers’ Representatives 9 4/30/01

OV-AR-01-002 Inspection Service Support to Postal Service Threat 2 4/30/01

Assessment Teams 

TR-AR-01-003 Mail Transport Equipment Service Center-Decision Analysis 1 5/4/01 

Report Performance and Financial Benefits 

LC-AR-01-007 Alleged Nepotism in the Arkansas District 5 6/4/01

LB-AR-01-019 Management Practices in the Alaska District 2 6/7/01

TR-LA-01-001 Review of a Transportation Agreement 2 6/26/01

TR-AR-01-004 Bulk Fuel Purchase Plan 5 7/27/01

TR-MA-01-002 Excise Taxes and Third Party Ground Handling Costs under a 1 8/8/01

Transportation Agreement 

CA-AR-01-004 Consulting and Audit Services Contracts 1 8/14/01

OV-AR-01-003 Service Investigations Conducted by the Inspection Service 2 8/22/01

IS-AR-01-002 Fiscal Year 2001 Information System Controls 5 8/23/01 

IS-AR-01-003 Review of Security Access Controls 8 8/29/01

CA-AR-01-005 Supplier Diversity Program for Supplies, Services, and 9 9/6/01

Equipment Purchases 

DA-AR-01-005 Decision Analysis Report Process 10 9/27/01

DA-AR-01-006 Singulate, Scan, Induction Unit 5 9/27/01

FA-AR-01-002 National Refrigerant Management Plan 3 9/27/01

TR-MA-01-003 Security Risks Associated with a Transportation Agreement 1 9/27/01

EC-AR-01-003 USPS.com Management and Security Issues 3 9/28/01

MK-AR-01-002 Stamp Printing Quantities 4 9/28/01

OV-AR-01-004 Postal Inspection Service Fraud Against Government Program 1 9/28/01

TR-AR-01-006 Manual Payments on Rail Transportation Contracts 3 9/28/01 

FT-AR-02-001 Shared Real Estate Appreciation Loan Program 5 10/17/01

EM-AR-02-001 Protection of Internet Users' Information - 4 10/18/01

PostmarkAmerica.com Technical Issues

IS-AR-02-001 Fiscal Year 2001 Information System Controls 8 11/8/01

LH-AR-02-001 Use of the Economic Value Added Concept in the 1 12/5/01

Pay for Performance Program

IS-AR-02-002 Network Security Vulnerabilities 3 12/19/01

PAGE 114 APPENDICES

Report Report Number of Issue 

Number Title Recommendations Date
OV-AR-02-001 Postal Inspection Service Executive Awards Program 1 12/20/01

CQ-MA-02-001 Review of Letter Contract 1 12/28/01

IS-CS-02-002 Security Testing of Switches 2 1/11/02

FT-AR-02-008 Fiscal Year 2001 Postal Service Financial Statement Audit - 2 2/12/02

Eagan Information Technology and Accounting Service Center

FT-AR-02-009 Fiscal Year 2001 Postal Service Financial Statement Audit - 4 2/12/02

San Mateo Information Technology and 

Accounting Service Center

FT-AR-02-010 Fiscal Year 2001 Postal Service Financial Statement Audit - 3 2/12/02

St. Louis Information Technology and

Accounting Service Center

IS-AR-02-003 Review of the Facilities Management System for Windows 4 2/22/02

EM-AR-02-002 Postal Retail Store Operations 2 2/28/02

FT-AR-02-011 Payments to Contract Stations and 6 3/6/02

Vendors Providing Goods and Services

LH-MA-02-003 Review of Decontamination Activities at the Pentagon Station 2 3/12/02

AC-AR-02-002 Certified Mail Processing Operations 3 3/21/02

IS-AR-02-005 Security Testing of Routers and Switches 2 3/22/02

LH-AR-02-002 Sexual Harassment Prevention Measures in the Maine District 4 3/22/02

DA-AR-02-004 Postal Service Test, Evaluation, and Quality 3 3/27/02

CA-MA-02-001 Postal Service Supplier Demographics 1 3/28/02

TD-AR-02-002 Trailer Lease Justification 2 3/29/02

EM-AR-02-007 The Role of Marketing in the Postal Service 3 3/29/02

EM-AR-02-008 PostmarkAmerica.com Financial and Management Issues 6 3/29/02

EM-AR-02-009 Public-Key Infrastructure Initiatives by the Postal Service 2 3/29/02

CQ-MA-02-002 Review of Contracts Associated with Biohazard Threat 5 3/29/02

AC-AR-02-003 Postal Service Strategy for Processing At-Risk Mail and 2 3/29/02

Deployment of Irradiation Equipment

INSPECTION SERVICE

Report Report Number of Issue 

Number Title Recommendations Date

0061-1263973-RI(1) Meter Security Review, Pitney Bowes, Inc., 1 5/21/99

Lanham, Maryland

0188-1300042-AF(2) Financial Audit, Stamp Distribution Office, 1 8/24/00

Seattle District, Seattle, Washington

0061-1305144-RI(1) Meter Security Review, Ascom Hasler Mailing 2 3/16/00

Systems, Inc., Houston, Texas

0038-1292495-PA(2) Delivery Automation 1 2/8/00

0044-1248530-PA(2) Small Post Office Cost Study 2 8/1/00

0022-1244541-PA(1) Priority Mail 1 3/17/99

0052-1290664-PA(3) City Carrier and Flat Sorting Machine (FSM) 2 10/5/99

Operations Cost Savings, San Antonio, Texas

0061-1296645-RI(1) Meter Security Review, Postage Technology 6 7/5/00

Management, Lisle, Illinois

0016-1298651-AF(2) Financial Audit, Westchester District Accounting Unit, 1 11/23/99

White Plains, New York

0016-1298678-AF(2) Financial Audit, San Francisco District Accounting Office, 2 8/29/00

San Francisco, California

PAGE 115

Report Report Number of Issue 

Number Title Recommendations Date
CONTRACT AUDITS

Report Number Contractor Report Date

0181-1165940-AC(1) Contract Audit 5/20/95

0181-1237199-AC(1) Contract Audit 4/14/98

0181-1252372-AC(1) Contract Audit 10/30/98

0181-1253441-AC(1) Contract Audit 12/18/98

0181-1254410-AC(1) Contract Audit 11/24/98

0181-1294162-AC(1) Contract Audit 8/27/99

0181-1294644-AC(1) Contract Audit 11/17/99

0184-1126310-AC(1) Contract Audit 4/3/00

0184-1210121-AC(1) Contract Audit 8/30/00

0184-1243166-AC(1) Contract Audit 12/7/98

PAGE 116 APPENDICES
APPENDIX E

Investigative Statistics1

For the period October 1, 2001, through March 31, 2002

OFFICE OF INSPECTOR GENERAL

Statistics

Arrests 28

Information/Indictments 27

Convictions2/Pretrial Diversions 22

Suspension/Debarments

Individuals 6

Firms 3

Administrative Actions

Postal Service Employee 4

Contractor 9

Fines, Restitution, and Recoveries $9,049,8123

Cost Avoidance, Savings and Fund Put To Better Use $12,683,478

INSPECTION SERVICE4

Statistics

Arrests 223

Convictions2/Pretrial Diversions 217

Administrative Actions

Postal Service Employee 460

Contractor 18

Fines, Restitution, and Recoveries $566,540

Collections $25,749

Civil Actions 5

PAGE 117

1 Statistics include joint investigations with other federal law enforcement agencies.

2 Convictions reported in this time frame may be related to arrests made in prior reporting periods.

3 Total amount includes $8,461,044 in restitution from a joint OIG and Inspection Service investigation.

This amount is not reported by the Inspection Service. 

4 Statistics for investigations related to fraud, waste, abuse, and mismanagement of Postal Service

operations.
APPENDIX F

Summary of Postal Service Investigative

Activities Under 39 USC § 3013

For the period October 1, 2001, through March 31, 2002

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. 

ABUSE OF MAILS

The Postal Service reports to the Office of Inspector General 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. 

INSPECTION SERVICE

False Cease &

Type of Complaints Consent Representation Desist

Scheme Filed Agreements Orders Orders

Advance fee 1 1 1

Boiler rooms/Telemarketing 5 1 1

Contest/Sweepstakes 1

Employment 4 2 4

Fraud - Internet Schemes 2 2 2

Medical 1111

Merchandise:

Failure to pay 1 1 1

Misrepresentation 1

Solicitations 1 1 1

Work at home 2

TOTAL 15 11 4 10

PAGE 118 APPENDICES
ADMINISTRATIVE ACTIONS

Administrative Action requests 21

Temporary Restraining Order requests 0

Temporary Restraining Orders issued 0

Civil Injunction (1345) requests 1

Civil Injunctions (1345) issued 1

Cases using Direct Purchase Authority 0

Refusals of Direct Purchase Authority 0

Civil penalties (Section 3012) imposed 0

Expenditures incurred for:

Test Purchases 0

Expert Testimony 0

Witness Travel 0

Withholding Mail Orders issued 42

Voluntary Discontinuances 239

POSTAL SERVICE ADMINISTRATIVE SUBPOENA AUTHORITY

The Postal Service reports to the Office of Inspector General information on the number of cases

in which the Postal Service issued administrative subpoenas in connection with deceptive mailing. 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-02-001 01/08/02 False Representations

USPS-02-002 01/29/02 False Representations

USPS-02-004 02/21/02 False Representations – Merchandise

USPS-02-005 03/04/02 Sweepstakes

FINANCIAL REPORTING ON INVESTIGATIVE ACTIVITIES

The Postal Service reports to the Office of Inspector General 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 Semi Annual Report

Personnel $205,494,560

Nonpersonnel $34,668,272

Total Expenditures $240,162,832

Capital Obligations $7,533,617

PAGE 119
OTHER INVESTIGATIVE ACTIVITIES

The Postal Service also reports to the Office of Inspector General 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 Security Task Force and the Deceptive Mail Enforcement Team.

Inspection Service and Office of Inspector General criminal statistical information is summarized in Appendix E. 

BIOTERRORISM THREATS 

During the reporting period, Postal Inspectors arrested 71 suspects for possible anthrax hoax or

threat activity. The Postal Inspection Service received over 17,000 reports of anthrax threats,

hoaxes, or suspicious letters or packages in the mail.

MAIL SECURITY TASK FORCE

The Postmaster General established the Mail Security Task Force in October 2001, and appointed the Chief Postal Inspector to lead the team. The task force is committed to reducing the risks

to the safety and security of postal employees and customers. The Steering Committee, comprising Postal Inspectors, senior level postal executives, and presidents of the labor unions and management associations, meets on a regular basis. Seven working groups are contained within the

task force including Mailroom Security, Contingency Planning System-Wide, Mail Preparation,

Mail Screening, Communicating/Messaging, Safety and Security in the Workplace Environment,

and Mail Transportation Security. All of the working groups have presented findings to the

Steering Committee, which is in the process of issuing an interim status report. 

TRUSTED MAIL PROVIDER INITIATIVE

The Trusted Mail Provider (TRUMP) concept was introduced during this reporting period. This

initiative proposes the independent review of the mail security practices of private mailers by

Postal Inspectors. It is designed to decrease the risk of a biohazard attack against the American

public via the U.S. Mail. Private mailers account for approximately 85% of total mail. Several

visits were made to mailers to gauge their acceptance of these reviews, and a risk assessment

worksheet was created based on best mail security practices specifically adopted by the mailing

industry and employee, cargo, and transportation security practices as identified by members of

the American Society for Industrial Security. The goal is to encourage all private mailers to take

adequate measures to protect the mail, deter or detect possible attacks, and fully support investigations. No special treatment is accorded Trusted Mail Provider mail, and no certification is

given by the Postal Service or the Postal Inspection Service.

INTERNATIONAL SECURITY GROUPS

The Inspection Service is an active participant in two international groups focused on security. The

International Security Group targets initiatives to improve the safety, security, and reliability of international mail products for the U.S. Postal Service. The group also develops strategies and initiatives

to improve quality of service and security of mail for the 189 member countries of the Universal

Postal Union. The Postal Security Action Group of the Universal Postal Union focuses on problems

and issues affecting the safety, security, and integrity of international communications products. This

group is chaired by the Chief Postal Inspector.

PAGE 120 APPENDICES
2002 WINTER OLYMPICS SECURITY

The Postal Inspection Service was responsible for the safety and security of postal employees,

Postal Service assets, and Olympic mail during the 2002 Winter Olympic Games in Salt Lake City,

Utah, which ended February 24, 2002. Postal Inspectors screened mail before delivery to Olympic

venues and disseminated daily risk assessment reports. By the end of February, Inspectors had

screened, cleared, and delivered 51,091 pieces of mail. Postal Inspectors also worked with Utah

Olympic Public Safety Command, comprising 60 law enforcement agencies and representing the

largest domestic security operation in U.S. history. Inspectors were key members of the Joint

Terrorism Task Force and were instrumental in maintaining the security of Olympic visitors, participants, and officials, as well as security for 4,000 postal employees and 200 post offices in Utah. 

DECEPTIVE MAIL PREVENTION 

The Deceptive Mail Prevention and Enforcement Act, which became effective April 12, 2000,

subjects violators to civil penalties in addition to Cease and Desist Orders and False

Representation Orders. To support this new law, the Postal Inspection Service created the

Deceptive Mail Enforcement Team to identify violators and ensure swift, appropriate, investigative attention. Questionable promotions identified by the team, as well as those received as consumer complaints, are examined for compliance. During the reporting period, 90 promotions

were reviewed for possible violations, and 16 have been referred for preliminary investigative

attention.

INTERNET FRAUD PREVENTION

The Internet is teeming with schemes, and swindlers have learned how easy it is to exploit innocent victims. Fraud on the Internet often results in mail fraud, as cyber scammers use the mail to

receive payments or ship items. As a result of the growing trend among fraudsters to use the

Internet, the Postal Inspection Service participates in a multi-federal project known as the

Internet Fraud Complaint Center, which was established by the Federal Bureau of Investigation

and National White Collar Crime Center. The project is aimed at stemming Internet fraud by

gathering, analyzing, and referring Internet complaints. The Internet Fraud Complaint Center

offers a central repository for complaints related to Internet fraud.

PAGE 121
DEFINITIONS OF SCHEME 

Advance fee. Obtaining fees purporting to secure buyers or obtain loans.

Boiler room/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.

Employment. Soliciting money for information or assistance in obtaining nonexistent or misrepresented jobs.

Fraud - Internet Schemes. Fraudulent schemes using the Internet with a nexus to the mail.

Medical. Sales by mail of misrepresented health products or services, including fraudulent medical degrees.

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.

Solicitations. Fraudulent solicitation of funds through the mail for alleged charitable, religious

minority-oriented groups and similar causes or organizations.

Work at home. Schemes, such as envelope stuffing, that do not provide home employment.

PAGE 122 APPENDICES
APPENDIX G

Closed Congressional and Board of

Governors Inquiries

For the period October 1, 2001, through March 31, 2002

This appendix lists the 85 Congressional and Governors 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.

CONGRESSIONAL

PERFORMANCE

Requestor Allegations/Concern Response Date

Senator, Mississippi Allegations of improper delivery of political post cards 03-Oct-01

Representative, California Allegation of mail fraud 18-Oct-01

Senator, California Allegation of failure to deliver mail 18-Oct-01

Representative, Request for investigation of a facility relocation 08-Nov-01

Connecticut

Senator, Tennessee Allegation that fuel policy is negatively impacting mail contractors 28-Nov-01

Senator, Nevada Request for status of complaint on mail delivery problems 11-Feb-02

Representative, Allegations of mismanagement and intentional mail delays 01-Mar-02

North Carolina

FINANCIAL MANAGEMENT

Requestor Allegations/Concern Response Date

Senator, Florida Allegations of misappropriations of funds, theft, and fraud 23-Oct-01

Senator, Iowa Concerns over government charge card programs 02-Nov-01

Senator, Louisiana Request for investigation of misconduct by a contractor 13-Nov-01

Representative, Illinois Request for investigation of a contract selection process 19-Nov-01

Representative, Illinois Request for investigation of a procurement 03-Jan-02

Representative, New York Request for investigation of contract award 03-Jan-02

Senator, Virginia Allegation of improper contracting 14-Mar-02

Representative, Maryland Allegation of fuel embezzlement and fraud 28-Mar-02

Senator, Texas Allegations of bribery 28-Mar-02

Senator, Indiana Allegation of improper contract award 29-Mar-02

LABOR MANAGEMENT

Requestor Allegations/Concern Response Date

Representative, Missouri Allegations of continuing discrimination and retaliation 03-Oct-01

Senator, Tennessee Allegation of a hostile workplace environment 03-Oct-01

Representative, Alabama Allegations of harassment and retaliation for filing EEO complaints 04-Oct-01

Senator, Tennessee Allegations of employment favoritism 10-Oct-01

Representative, Indiana Allegation of improper termination 10-Oct-01

Senator, North Carolina Allegation of improper termination 10-Oct-01

Representative, Texas Request for information 12-Oct-01

Senator, Tennessee Allegations of management delaying mail delivery and 17-Oct-01

unsafe working conditions

Representative, Allegation of employee assault 19-Oct-01

Massachusetts

Representative, Ohio Allegation of retaliation 30-Oct-01

PAGE 123
Senator, California Allegation of racial discrimination 30-Oct-01

Senator, California Allegation of discrimination 30-Oct-01

Senator, Florida; and Allegations of retaliation 02-Nov-01

Representatives,

Florida and New York

Representative, Georgia Allegation of improper wage rate paid to employee 08-Nov-01

Representative, Indiana Allegations of unsafe work environment and waste 13-Nov-01

Representative, Indiana Allegation of harassment by a supervisor 23-Nov-01

Representative, Ohio Allegations of harassment by supervisors and failure to honor 26-Nov-01

Equal Employment Opportunity agreement

White House Allegations of harassment by supervisors 10-Dec-01

Senator, California Allegation of improper personnel demotions 19-Dec-01

Representative, Illinois Request for investigation of pay for performance program 27-Dec-01

Representative, Indiana Allegation of management falsification of safety records 31-Dec-01

Senator, California Allegations of discriminatory and arbitrary abolishment of 16-Jan-02

positions and delays in mail delivery

Senators, Mississippi and Allegations of wrongful termination 17-Jan-02

North Carolina

Representative, Indiana Allegation of abuse to disabled, injured, and female workers 05-Feb-02

Representative, Allegations of improper conduct by a supervisor 11-Feb-02

Pennsylvania

Representative, New York Allegations of harassment and reprisal 25-Feb-02

Senator, Tennessee Improper use of temporary and rural carriers and denial of overtime 01-Mar-02

Representative, California Allegation of denial of veteran’s preference 06-Mar-02

Representative, Louisiana Allegation of improper use of light duty workers 06-Mar-02

Representative, Indiana Request for assistance in seeking relocation 14-Mar-02

Representative, Texas Allegations of managerial harassment 14-Mar-02

Senator, Tennessee Allegation that the Disabled Veterans Affirmative Action Program 21-Mar-02

has not been implemented

Senator, Tennessee Allegation of reprisal 21-Mar-02

Senator, Maine Request for review of sexual harassment 22-Mar-02

Representative, Request for report on actions taken at a Postal Service facility 26-Mar-02

New Jersey

Representative, California Allegations of employee violence by contractors 28-Mar-02

Representative, Allegations of harassment by managers 28-Mar-02

New Jersey

Senator, California Allegations of retaliation and worker’s compensation fraud 28-Mar-02

Representative and Allegations of racial discrimination and a hostile work environment 29-Mar-02

Senator, Illinois

Representative, New York Allegations of improper behavior, intimidation, violence and 29-Mar-02

financial mismanagement

OVERSIGHT OF INSPECTION SERVICE 

Requestor Allegations/Concern Response Date

Senator, Tennessee Allegation of improper investigation of mail and 16-Oct-01

paycheck tampering, and forgery

Representative, New York Allegation of inspector receiving preferential treatment 23-Oct-01

Senator, Michigan Allegation of improper investigation 06-Dec-01

Senator, Pennsylvania Allegations of abuse and misconduct by a Postal Inspector 19-Dec-01

Representative, Florida Two allegations that Postal Inspectors revealed the identity of 31-Dec-01

whistleblowers and reprisals were taken against the whistleblowers

Senator, Indiana Allegation of harassment by a Postal Inspector 29-Jan-02

PAGE 124 APPENDICES

Requestor Allegations/Concern Response Date
OTHER SIGNIFICANT ISSUES

Requestor Allegations/Concern Response Date

Representative, California Request for a review of a damage claim 03-Oct-01

Representatives, Requests for copy of OIG investigative report 04-Oct-01

Pennsylvania and 

New York;

Senator, Alabama

Senator, Indiana Concerns about an OIG closeout letter 12-Oct-01

Representative, Alaska Allegation of OIG neglecting Freedom of Information Act requests 15-Oct-01

Senator, Massachusetts Request for status of an OIG investigation 13-Nov-01

Representative, Maryland Concerns over OIG personnel decision 28-Nov-01

Senator, Connecticut Request for information on whether the OIG is in compliance with 14-Dec-01

the National Energy Conservation Policy Act

Senator, California Allegation of identity theft through stolen mail 27-Dec-01

Representative, Request for assistance on status of damage claims 07-Feb-02

Connecticut

Senator, Michigan Request for assistance in obtaining documentation 22-Feb-02

Senator, Tennessee Request for status of an OIG investigation 01-Mar-02

Representative, New York Allegation of retaliation for assisting OIG 01-Mar-02

Representative, New York Inquiry regarding the status of a reward application 21-Mar-02

Representative, Request for review of a software package 29-Mar-02

North Carolina

GOVERNORS

OTHER SIGNIFICANT ISSUES

Requestor Allegations/Concern Response Date

Governor Request for copy of OIG investigative report 04-Oct-01

PAGE 125
Notes
,

THIS PAGE TEARS OUT FOR YOUR CONVENIENCE
Notes
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, Felicia

Hawthorne and Jim Nugent of

the OIG; and Kenneth Newman

of the Inspection Service.

U.S. Postage Stamps

ISSUED FROM OCTOBER 1, 2001 THROUGH MARCH 31, 2002

11 U.S. MILITARY ACADEMY - commemorates the academy’s inception

at West Point 200 years ago and its alumni’s accomplishments.

15 WINTER SPORTS - features athletes depicting four popular sports of

the 2002 Winter Olympic games. 

22 HONORING HEROES OF SEPTEMBER 11 - new fundraising stamp

features a detail photograph of three firefighters as they raised the U.S.

flag at “ground zero”.

27 SANTAS - features four colorful chromolithographs of Santa Claus.

38 MOUNT MCKINLEY - features a photograph of Mount McKinley,

located in Alaska’s Denali National Park and Preserve.

41 MENTORING A CHILD - conveys the benefits of mentoring.

50 LUNAR NEW YEAR - honors the Chinese New Year celebrated on

February 12th.

52 JAMES MADISON - commemorative stamp marks the 250th

anniversary of President James Madison’s birth.

60 HOLIDAY VIRGIN AND CHILD - features Madonna and child.

63 LEONARD BERNSTEIN - honors Leonard Bernstein for his

contributions to the American music tradition.

66 WE GIVE THANKS - celebrates Thanksgiving.

67 NEUTER OR SPAY - features a neutered puppy (“Kirby”) and a spayed

kitten (“Samantha”).

95 LANGSTON HUGHES - features writer/poet Langston Hughes, the

stamp commemorates the 25th anniversary of the Postal Service’s Black

Heritage series.

97 ENRICO FERMI - commemorates the centenary of Enrico Fermi’s birth

on September 29, 1901.

98 THAT’S ALL FOLKS - Porky Pig poses as a diligent U.S. mail carrier

—mailbag and all—delivering a letter.

ACKNOWLEDGEMENTS
OFFICE OF INSPECTOR GENERAL

1735 N. Lynn Street 

Arlington, VA 22209-2020

(703) 248-2300

Fax: (703) 248-2291

Internet: www.uspsoig.gov