A Message from the

Inspector General

KARLA W. CORCORAN

Inspector General

Corporate scandals such as we have witnessed lately dot America’s

landscape and remind us of the dire need for the work performed

by inspectors general and others in oversight roles. Whether it is

the federal government or the private sector, organizations need independent oversight to help them prosper through sound business practices and

basic integrity. 

Perhaps some of us in oversight positions may have been disheartened

over the years by an apparent lack of respect or appreciation for our jobs

often demonstrated by others. Well, it is obviously time for us to be proud

of our role in helping keep America on its feet. In fact, never have we been

more needed than we are right now!

We at the U.S. Postal Service Office of Inspector General are playing

a significant role in auditing and investigative issues that have an effect on

the integrity and financial viability of Postal Service operations. To meet

this responsibility, we are investigating procurement fraud against major

Postal Service suppliers, transitioning Office of Workers’ Compensation

cases from the Inspection Service, and expanding our audit focus to include

public policy as well as operational issues.

We also dramatically increased our outreach efforts recently to educate

diverse audiences — internally and externally — not only about our office,

but also about the role, function, and value of all inspectors general. Using

our core organizational values of teamwork, leadership, communication,

conceptualization, and creativity, we explain how our independence

ensures they are receiving impartial results, showcase how we perform

audits and investigations, and illustrate how our work makes a positive difference in their lives and Postal Service operations. We feel so strongly

about this effort that we actually incorporated outreach into our annual

performance measures and far exceeded our goal in the past year. One of

many noteworthy benefits we have reaped is hearing first-hand from postal

management associations, employee unions, and business mailers. Their

perspectives on postal issues give us invaluable insight we could not get

anywhere else and help us in planning and carrying out our work. We have

found that developing these relationships with our stakeholders truly benefits us all. 

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

April 1, 2002, through September 30, 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. In this reporting period, the Office of Inspector General issued

285 audit reports, 70 management advisory reports and other products, and

closed 58 investigations.

A Crucial Time to Recommit to Our Role
We also want to bid a fond farewell to Governor Einar Dyhrkopp, who will retire

from the Board of Governors in November after many years of distinguished service. His

unwavering support and his determination to improve Postal Service operations have

been invaluable to the Postal Service and to us. We would also like to welcome the new

Chief Postal Inspector, Lee Heath, and look forward to working with him on a regular

basis. 

Finally, I would like to congratulate my wonderful staff for receiving 11 of 100

Awards of Excellence given by the President’s Council on Integrity and Efficiency and

the Executive Council on Integrity and Efficiency for audit and investigative work performed in fiscal year 2002. In addition, we share with others in the inspector general

community a strong sense of pride for a special award thanking us for our unprecedented

efforts to respond to the September 11, 2001, terrorist attacks on the United States. This

type of outstanding work and dedication continues to prove our value to Congress, the

Governors, the Postal Service, and the American public.

It also inspires me to recommit myself every day to my job.

Karla W. Corcoran 

October 31, 2002

PAGE2 A MESSAGE FROM THE INSPECTOR GENERAL

Governor Einar Dyhrkopp retires from

the Postal Service Board of Governors.
PAGE3

Table of Contents

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

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

PERFORMANCE REVIEWS......................................................................................17

Office of Inspector General ........................................................................18

◆ Accepting and Processing Reviews ........................................................18

◆ Transportation and Delivery Reviews ....................................................19

◆ Marketing Reviews ..................................................................................21

◆ Quick Response Reviews ........................................................................22

◆ Legislative, Regulatory & Policy Reviews..............................................22

Inspection Service........................................................................................24

FINANCIAL MANAGEMENT REVIEWS ..................................................................25

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

◆ Financial Opinion Audits ......................................................................26

◆ Financial-Related Reviews......................................................................27

◆ Contracting and Facilities Reviews........................................................30

◆ Legislative, Regulatory & Policy Reviews..............................................33

Inspection Service........................................................................................35

TECHNOLOGY REVIEWS ......................................................................................37

Office of Inspector General ........................................................................38

◆ Developmental Reviews..........................................................................38

◆ Information Systems Reviews ................................................................40

◆ Systems Development Reviews ..............................................................42

◆ eCommerce Reviews ..............................................................................42

◆ Computer Intrusion Investigation Activities ........................................43

◆ Legislative, Regulatory & Policy Reviews..............................................44

Inspection Service........................................................................................45

LABOR MANAGEMENT REVIEWS ........................................................................47

Office of Inspector General ........................................................................48

◆ Workplace Environment Reviews..........................................................48

◆ Human Resource Process Reviews ........................................................48

◆ Health Care Reviews ..............................................................................50

◆ Legislative, Regulatory & Policy Reviews..............................................52

Inspection Service........................................................................................54

OVERSIGHT OF THE INSPECTION SERVICE AND

OTHER SIGNIFICANT ACTIVITIES........................................................................55

Office of Inspector General ........................................................................56

◆ Oversight of the Inspection Service Reviews........................................56

◆ Other Significant Activities....................................................................57

◆ Legislative, Regulatory & Policy Reviews..............................................58

Inspection Service........................................................................................59
PAGE4 TABLE OF CONTENTS

CUSTOMER SERVICE ............................................................................................61

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

◆ External Communications ......................................................................62

◆ Specialized Services ................................................................................66

◆ Computer Assisted Assessment Techniques..........................................67

Inspection Service........................................................................................68

GOALS AND STRATEGIES ....................................................................................69

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

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

ORGANIZATIONAL DYNAMICS ............................................................................75

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

◆ Notable OIG Achievements ..................................................................79

◆ Challenges Facing the OIG ....................................................................81

Inspection Service........................................................................................84

ORGANIZATIONAL STRUCTURE ..........................................................................85

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

◆ OIG Field Locations................................................................................90

Inspection Service........................................................................................91

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

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

Appendix B - Findings of Questioned Costs ..........................................104

Appendix C - Recommendations That Funds Be Put to Better Use....106

Appendix D - Reports with Significant Recommendations Pending

Corrective Actions ..........................................................107

Appendix E - Investigative Statistics......................................................110

Appendix F - Summary of Postal Service Investigative Activities

Under 39 USC § 3013 ....................................................111

Appendix G - Closed Congressional and 

Board of Governors’ Inquiries..........................................115
Executive Summary

PAGE 5

What is the OIG mission? 

To conduct and supervise objective and independent

audits, reviews, and investigations relating to Postal

Service programs and operations to promote economy,

efficiency, and effectiveness. To prevent and detect

fraud, waste, abuse, and mismanagement. To provide

oversight of the Postal Inspection Service and keep

the Governors and Congress informed of problems

and deficiencies, and corresponding corrective actions.

DID YOU 

KNOW?
EXECUTIVE SUMMARY

This Executive Summary provides a synopsis of the work reported during this 6-month period. This Semiannual Report

addresses the major issues facing the Postal Service and the work performed by the OIG that

helps 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 in order to present Congress and the Governors a unified

report of the Postal Service’s efforts to combat

fraud, waste, abuse, and mismanagement.

In this, the OIG’s twelfth Semiannual

Report, the work has been categorized into

eight subject areas: performance, financial

management, technology, labor management,

oversight of the Inspection Service and other

significant reviews, customer service, organizational dynamics, and organizational structure.

These eight areas include OIG work addressing

the following 10 major management issues facing the Postal Service:

◆ physical security and safeguarding the

mail;

◆ maintaining customer confidence;

◆ improving financial performance and

accountability; 

◆ resolving workforce and workplace issues;

◆ controlling workers’ compensation costs;

◆ managing acquisitions and contracts;

◆ leveraging technology;

◆ improving the quality of information for

making decisions;

◆ safeguarding the integrity, confidentiality,

and availability of information; and

◆ balancing public service and commercial

enterprise.

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

under the specific subject areas:

(1) Performance focuses on the critical core

business processes needed to succeed in a competitive environment. The OIG conducted 10

reviews in this area, including projects that will

help save the Postal Service over $21 million in

current and future years. A few examples of

OIG work in this area included:

◆ Disclosing three organizations identified

by law enforcement as having alleged ties

to terrorist activities used nonprofit mailing accounts.

◆ Concluding that the Postal Service

lacked data to properly analyze the acquisition of trailers that could have cost as

much as $30 million if they made the

purchase. 

◆ Observing commercial airline employees

negligently handling mail and leaving it

unprotected and subject to theft and

other problems such as exposure to

inclement weather.

◆ Uncovering several schemes, through a

joint investigation with the Postal

Inspection Service, used to defraud the

Postal Service which resulted in one of

the largest presort mailers being ordered

to pay over $17 million in restitution.

◆ Disclosing an employee knowingly

approved fraudulent invoices from a

vehicle repair contractor in exchange for

free automobile services for vehicles

owned by the Postal Service employee

and family members. The former employee was ordered to pay $20,000 in restitution to the Postal Service.

◆ Disclosing several highway contract route

drivers conspired to fix prices during the

contract renewal process. OIG investigaPAGE6 EXECUTIVE SUMMARY

This Executive Summary highlights the

Office of Inspector General (OIG) and

Inspection Service accomplishments 

from April 1, 2002, through 

September 30, 2002, that are contained 

in this Semiannual Report to Congress.

The OIG’s Management Committee

members and Deputies.

John Seeba, Donna Edsall and 

Daniel O’Rourke

Thomas Coogan and Colleen McAntee

Ronald Merryman, Mary Demory and

Ronald Stith
PAGE7

tors followed-up a complaint from a

Postal Service contract manager who

received identical bids from several

contractors. 

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

resulting in the arrests of over 300 employees

and 2,500 non-employees or contractors.

(2) Financial Management incorporates financial-related reviews, financial opinion work,

and contracting and facilities reviews. The

OIG completed 282 reviews and investigations

that identified over $159 million in questioned

costs. In addition, OIG investigations resulted

in 7 convictions, 16 indictments, and recoveries and restitution of over $18 million, which

included:

◆ Determining the Postal Service overpaid

approximately $7.2 million for tabbing

equipment and lost the opportunity to

take $130,000 in quantity discounts.

◆ Determining the Postal Service’s

advanced annual leave policy resulted in

advance payments of approximately $9.4

million with low probability of collection

from employees who separated for reasons other than death or disability. 

◆ Identifying the Postal Service did not

receive credit for $1.9 million in payments made to a utility company and

about $669,000 paid in state taxes from

which it was exempt. 

◆ Investigating a $1.5 million tort claim

filed against the Postal Service for pain,

suffering, and property damage resulting

from a car accident with a Postal Service

vehicle that was settled for $200,000.

◆ Investigating a $1 million claim against

the Postal Service for serious injuries

allegedly caused by a Postal Service truck

rear-ending a parked vehicle that was

settled for $500.

◆ Investigating a structural engineer for

defrauding the Postal Service by accepting $12,500 from a subcontractor for

construction and design work for which

the prime contractor had already compensated the engineer. 

In addition to other work, the Inspection Service reported:

◆ Revenue investigations that resulted in

34 arrests and 14 successful criminal convictions.

◆ Initiation of 208 employee embezzlement

investigations, which documented losses

of over $2.6 million. 

(3) Technology encompasses reviews of developmental systems, computer security, electronic commerce, and computer intrusion detection activities. The OIG performed 24 reviews

and 8 investigations in this area. Some of the

more significant OIG activities included:

◆ Determining the first phase test of the

Segway Human Transporter program was

not properly planned or conducted

independently.

◆ Revealing weaknesses related to contracting practices for CONFIRM including inadequate documentation for contract negotiations, inappropriate increases in costs, and improper disclosure of

information to the contractor.

◆ Identifying inadequacies in the testing

program for Biohazard Filtration and Biohazard Detection Systems.

◆ Identifying program mismanagement and

contracting irregularities associated with

the Automated Seamless Dispatch Program.

◆ Analyzing approximately 1,000 incidents

reported as potential attacks or suspicious

activity against the Postal Service’s information network.

◆ Determining an individual at a Canadian

college was involved in hacking the OIG

website and providing information to the

Royal Canadian Mounted Police leading

to the hacker’s arrest.

In addition to other work, the Inspection Service reported:

◆ 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

Postal Service. 

◆ As a result of the growing trend among

fraudsters to use the Internet, the Inspection Service participates in a multi-federThe OIG’s Management Committee

members and Deputies.

Robert Emmons, Gladis Griffith and

Sam Maxey

Kirt West, Karla Corcoran and 

Wayne Goleski
PAGE8

al project known as the Internet Fraud

Complaint Center. The project is aimed

at stemming Internet fraud by gathering,

analyzing, and referring Internet complaints. 

(4) Labor Management focuses on issues related to workplace environment, human resource,

and health care. During this reporting period,

the OIG completed 39 inquiries, 5 reviews and

10 investigations in this area, which included:

◆ Finding the Postal Service did not

receive credit adjustments of $286,000

for wage compensation and refundable

overpayments in their Workers’

Compensation program.

◆ Concluding that after the pay for performance program was established, mail

delivery and employee safety improved,

but workplace relations and financial

performance did not.

◆ Determining the Postal Service did not

fully assess their Associate Supervisor

Program to determine its impact on

labor management relations and postal

operations.

◆ Completing a joint investigation with

other federal agencies resulting in a dentist being sentenced to 27 months in

prison and payment of $264,000 in restitution for involvement in a scheme to

submit false insurance claims for dental

services never rendered. 

◆ Disclosing a Missouri doctor recommended or performed unnecessary surgeries

and billed for unperformed surgeries,

which resulted in the doctor being sentenced to 72 months in prison.

The Inspection Service work resulted in the: 

◆ Sentencing of a former officer in charge

to 15 months imprisonment and 3 years

probation, for the embezzlement of postal

money order funds and stamp stock sales.

The former officer in charge was also

ordered to pay over $43,000 restitution. 

◆ Sentencing of a former clerk to 27

months imprisonment and 3 years

supervised probation for mail fraud for 

claiming total disability, while running a

private business.

◆ A former letter carrier pled guilty to theft

of postal money orders. The plea agreement ordered the former carrier to make

full restitution of over $500,000 to the

Postal Service. 

(5) Oversight of the Inspection Service and

Other Significant Activities. In this area, the

OIG completed several reviews of the Inspection Service, and 13 investigative efforts and

reviews of other significant issues related to

Postal Service operations, which included:

◆ Finding that Inspection Service management appropriately focused their efforts

on ensuring the safety of postal service

employees and the public, but postal

management could not ensure that all

mail located at decontaminated postal

facilities or processed at irradiation facilities was secure.

◆ Revealing that management did not

ensure postal inspectors possessed the

physical abilities necessary to effectively

perform their duties. 

◆ Finding that a Postal Service executive

developed a consultant relationship and

participated in discussions concerning

future full-time employment with a former Postal Service contractor who had

been awarded a $1.4 million contract.

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.

(6) 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.

(7) Organizational Dynamics focuses on the

OIG and the Inspection Service vision, values,

culture, and diversity.

(8) Organizational Structure focuses on the

OIG and the Inspection Service headquarters

and field structure.

EXECUTIVE SUMMARY

DID YOU 

KNOW?

Does the Postal Service follow

federal government statutes

and regulations? 

Except for certain statutes and

regulations expressly made applicable to the Postal Service, most

federal laws of government-wide

applicability do not apply to the

Postal Service. This permits the

Postal Service, an independent

establishment of the executive

branch, to operate in a businesslike manner.
Major Management Issues

Facing the Postal Service

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 our joint efforts to

prevent and detect fraud, waste, abuse, and

mismanagement in Postal Service programs

and operations.

DID YOU 

KNOW?

PAGE 9
MAJOR MANAGEMENT

ISSUES FACING THE

POSTAL SERVICE

The Postal Service needs to identify specific long-term strategies to better balance its statutory mandate of providing

universal service with its need to remain a

viable commercial enterprise. At stake, according to the Postal Service, is every American’s

right to send and receive mail. The Postal

Service’s April 2002 Transformation Plan

begins this process. As it proceeds with transformation, the Postal Service continues to face significant challenges, including financial

instability, bioterrorism threats, and labor problems. Recently, the Postmaster General testified

before Congress that the Postal Service’s current

financial situation is improving. To assist

Congress, the Governors, and postal management as they address these challenges, the

OIG has independently identified the following major management issues:

◆ physical security and safeguarding the

mail;

◆ maintaining customer confidence;

◆ improving financial performance and

accountability;

◆ resolving workforce and workplace issues;

◆ controlling workers’ compensation costs;

◆ managing acquisitions and contracts;

◆ leveraging technology;

◆ improving the quality of information for

making decisions;

◆ safeguarding the integrity, confidentiality,

and availability of information; and

◆ balancing public service and commercial

enterprise.

These issues generally reflect the issues the

OIG has identified in past years. Controlling

costs and growing revenues have been combined to form improving financial performance

and accountability. In addition, because of the

significant impact workers’ compensation costs

are having on the Postal Service, the OIG has

made workers’ compensation costs a separate

issue. 

These major 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 200 billion

pieces of mail delivered each year, the Postal

Service faces the enormous challenge of moving

the mail efficiently and economically while

effectively safeguarding postal employees, customers, and the mail. Historically, the Postal

Service has dealt with numerous disasters, both

natural and man-made, which have interfered

with mail delivery. However, the October 2001

anthrax attacks using the mail exposed a new

danger, and as a result, led to a renewed emphasis on the security of the nation’s postal system.

The OIG reviewed the Postal Service’s response

to bioterrorist attacks on the mail and commended the Postmaster General for his leadership. The OIG found the Postal Service’s

communication efforts, safety efforts, and other

efforts initiated after terrorists used the mail to

carry out anthrax attacks were adequate to

ensure the safety and health of its employees.

In the past year, the Postal Service has

acted to ensure the physical security and safety

of the mail and sought new methods to detect

biohazardous materials and sanitize the mail.

The technological solutions may necessitate

procuring new equipment and changing

processes to accommodate use of new equipment, which could impact floor plans and

staffing requirements. Regardless of technology

or any other improvement or expenditure, the

threat of terrorists using the mail to carry out an

attack can be reduced, but not eliminated. To

better protect its employees and customers, the

OIG believes the Postal Service must also

reassess its facility designs, especially the ventilation systems, maintenance practices, and

emergency response and evacuation procedures.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Reviewed whether the Postal Service

properly safeguarded mail while facilities

were decontaminated and mail was irradiated.

◆ Reviewed Inspection Service contingency plans related to the physical security of the mail when biohazard threats

were suspected or detected.

◆ Is participating in Postal Service Mail

Security Task Force meetings.

PAGE10 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

What standards are used as

the OIG conducts audits and

investigations?

By law, the OIG follows General

Accounting Office standards in

conducting audits. In conducting

investigations and inspections, the

OIG follows the standards set

forth by the President’s Council

on Integrity and Efficiency.

DID YOU 

KNOW?
PAGE11

MAINTAINING CUSTOMER

CONFIDENCE

To remain competitive, the Postal Service

must be customer-focused and deliver the mail

in a timely manner and at affordable rates.

Moreover, the Postal Service needs to adapt its

services to address changing customer needs and

a changing mailing public. In today’s marketplace, customers have more choices about how

they conduct postal 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 it can leverage as it faces increasing competition. The Postal Service must continue to

develop and provide products and services that

retain relevance and value for customers with

changing needs by:

◆ identifying better ways to deliver the

mail;

◆ optimizing the current infrastructure;

◆ increasing customer satisfaction; and

◆ adjusting to a changing mailing public,

including any changes in the customer

base and customers with increased technological options.

To effectively transition to a changing customer base, the Postal Service must address such

factors as declining mail volumes due partly to

new technological options such as electronic

bill paying, different mail mixes including

increased package delivery, and rapid growth in

delivery points. These factors can impact the

efficiency of mail collection, processing, and

delivery to customers, as well as consistently

pose challenges in efficiently scheduling and

procuring transportation, identifying efficient

processing and delivery modes, effectively

scheduling staff, and maximizing technological

options.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Assessed the efficiency and effectiveness

of Postal Service procurement of fuel and

delivery vehicle maintenance.

◆ Assessed the methods used to procure

mail transportation vehicles and equipment in selected areas.

◆ Assessed certified mail processing operations at a processing and distribution

center.

◆ Investigated allegations of corruption and

bribery.

◆ Is assessing the effectiveness of scheduled

highway contract routes. 

◆ Is assessing the transportation agreement

with Federal Express.

IMPROVING FINANCIAL

PERFORMANCE AND

ACCOUNTABILITY

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 meet the challenge of increasing its revenue

each year to cover increasing costs.

The Postal Service’s financial position has

deteriorated, despite recent rate increases,

employee reductions, and a freeze on capital

expenditures. The Postal Service has reported

over $2 billion in losses since FY 2000.

Financial performance needs to improve to

assure the public that the Postal Service is providing the best possible service at the lowest

cost. The Postal Service must address this challenge by improving its financial systems and

continuing its efforts to grow revenues, manage

debt, reduce costs, and increase productivity.

Recent financial data indicate that the

Postal Service’s current financial situation is

better than originally projected for FY 2002.

While the Postal Service originally projected a

$1.35 billion net loss for FY 2002, it now reports

a loss of less than $1 billion and projects a net

income of $600 million for FY 2003. The projected positive net income can most likely be

attributed to the Postal Service’s cost reduction

efforts; sustained productivity increases, particularly labor productivity; and postal rate

increases effective in June 2002. The Postal

Service’s outstanding debt as of August 2002

was approximately $11.1 billion, slightly down

from $11.3 billion in FY 2001. The Postal

Service projects it will continue to reduce its

debt in FY 2003. These are encouraging trends.
In the past, increasing productivity and

controlling costs has helped the Postal Service’s

financial position. It is crucial, however, that

these efforts continue, and, more importantly,

prove sustainable in the long term. It is also critical that the Postal Service continues to

improve its financial operations to ensure it is

accountable to the public.

The Postal Service recognizes its responsibility to improve financial performance and

accountability. Therefore, it has initiated projects to replace the current general ledger,

implement a monthly reporting cycle, realign its

fiscal year with the government fiscal year, and

consolidate common accounting services.

Additionally, the Postal Service has acted to

reduce the need for additional borrowing as it

approaches the debt ceiling. These initiatives

should help improve financial management.

However, these efforts must go hand-in-hand

with other efforts, such as cost reduction, revenue generation, and productivity gains.

In addition to improving financial performance and accountability and reducing costs,

growing revenues is important to assure longterm financial viability.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Evaluated the Executive Relocation Program’s effect on cost.

◆ Identified opportunities for the Postal

Service to recover funds from overpayments.

◆ Evaluated the availability of data to

ensure Postal Retail Stores are profitable

and generating revenue.

◆ Assessed the role of marketing in increasing revenue.

◆ Is monitoring the Postal Service’s initiatives related to financial system and

process redesign.

◆ Is assessing the profitability of eCommerce initiatives and sponsorship programs and their contribution to increase

revenues.

RESOLVING WORKFORCE AND

WORKPLACE ISSUES

Resolving long-standing disagreements

between Postal Service management and its

unions and associations continues to be a main

priority for the Postal Service, and is an essential element of effective transformation. The

Postal Service has more than 850,000 full and

part-time employees with personnel compensation and benefits costs totaling over $51 billion

for FY 2001. This accounts for more than threequarters of the Postal Service’s total operating

expenses. Consequently, improving the work

environment and labor relations is key to maximizing Postal Service operational and financial

performance. In an increasingly competitive

environment, improving labor relations is

essential if the Postal Service is to provide universal service at reasonable rates. Past attempts

to improve labor relations have not been as successful as planned.

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 any confrontational environment on the workroom floor and giving

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

link employees’ pay to their performance.

To assist the Postal Service in addressing

this issue, the OIG

◆ Reviewed workplace environment issues.

◆ Reviewed succession planning programs.

◆ Investigated alleged reprisals against

employees for reporting fraud, waste,

abuse, or mismanagement.

◆ Is reviewing efforts to reduce the number

of grievances and the applicability of best

practices to the grievance-arbitration

process.

◆ Is auditing sexual harassment prevention

programs.

PAGE12 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

DID YOU 

KNOW?

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.
PAGE13

CONTROLLING WORKERS’

COMPENSATION COSTS

The Postal Service is the largest participant

in the Federal Workers’ Compensation Program

and accounts for approximately $760 million, or

over one-third, of the $2.2 billion in total federal workers’ compensation cash outlays from

claims for reporting year 2002. The Postal

Service’s workers’ compensation cash outlays

from claims have risen dramatically, increasing

by approximately 35 percent over the last 

3 years. This is a considerable cost for an agency

that recorded a $1.7 billion net loss in FY 2001

and projects a loss of less than $1 billion in

FY 2002. Many factors have contributed to

these increased costs, including the rising age of

the Postal Service workforce; higher costs for

medical equipment, medications, and medical

treatments; overpayments, including duplicate

payments made by the program administrator;

and increased incidents of fraud by doctors and

hospitals. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Identified factors that have contributed

to an increase in workers’ compensation

costs.

◆ Provided congressional testimony on

OIG efforts to assist the Postal Service in

identifying ways to better administer its

workers’ compensation program.

◆ Is partnering with postal management

and the Department of Labor to find

ways to reduce injury compensation

costs.

MANAGING ACQUISITIONS AND

CONTRACTS

The Postal Service administers over 

$18 billion a year (over one-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 by consolidating procurements. While

this practice allows for certain efficiencies and

cost savings, adequate controls must be established and enforced to decrease the risk of loss

in the procurement area. The Postal Service

must ensure that its supply chain management

contracting practices are consistent with applicable laws and regulations and increase its efforts

to ensure that postal contracts contain sufficient language to pursue action against contractors as necessary or conduct independent

reviews.

Over the last year, the OIG has proposed

numerous revisions to the Postal Service purchasing manual, including strengthening the

examination of records clause, requiring contractors to have approved accounting systems,

incorporating standard computer security provisions, and increasing the use of suspension and

debarment authority. As recently as September

16, 2002, the Postmaster General indicated that

the Postal Service should continue to make

improvements to its purchasing system and will

consider the OIG’s findings and recommendations, but stressed that the Postal Service

needed to maintain its flexibility and business

discretion in this area. 

To continue to promote better procurement practices, and to assist the Postal Service

in addressing this issue, the OIG:

◆ Conducted audits of contractor proposals, incurred cost submissions, systems,

and contract closeouts.

◆ Increased the number of debarments and

suspensions of unscrupulous postal

contractors.

◆ Is continuing to conduct fraud awareness

briefings throughout the Postal Service

to raise awareness of potential fraud

indicators.

LEVERAGING TECHNOLOGY

The Postal Service depends greatly on

technology to help process the mail in the most

productive manner. Further, as the Postal

Service addresses the anthrax threats, it is identifying and deploying technology that best fits

its operational requirements, is compatible with

existing systems, and improves the security and

safety of its processing operations.

OIG investigators along with various

federal law inforcement agencies

identified fraudulent practices used by 

a contractor which charged the Postal

Service for work that was never

performed.
PAGE14 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

The Postal Service is working to leverage

technology to improve its service, productivity,

and profitability. While it depends on technology to deliver more than 660 million pieces of

mail daily to 138 million addresses, the Postal

Service must continue to adapt to each new

wave of technology quickly to maintain its competitive position in the market. To address

changing customer needs, the Postal Service has

committed resources to help ensure better data

management, track mail piece information, and

improve communication between the Postal

Service and its customers.

The large size and diversity of the Postal

Service’s customer base presents technological

challenges and demands that solutions be simple, easy to use, and competitive. To be successful, the Postal Service should also ensure that

the corresponding cost savings projected from

technology investments are realized by efficiently redeploying the resources replaced by

the new technology. Decisions on technology

investments should 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:

◆ Assessed system life cycle development

and performance of major projects associated with the information platform.

◆ Reviewed the performance and costs of

the Postal Automated Redirection System for processing undelivered as

addressed mail.

◆ Is reviewing the Postal Service’s automation and streamlining of its accounting

process.

IMPROVING THE QUALITY OF

INFORMATION FOR MAKING

DECISIONS

Accurate measurement of mail delivery is

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

decision making. Data justifying the need for

major capital expenditures must be reliable so

that postal management can decide whether to

invest in the project. Furthermore, reliable data

is needed to assess whether the project’s estimated and actual return on investment is reasonable and has been realized. However, in

many instances, the OIG has found that the

Postal Service does not adequately capture or

track the data necessary to support effective

decision making. For example, postal managers

do not always track data to determine whether

they are achieving expected return on investment. The OIG has also noted the Postal

Service’s inability to track costs that have been

incurred but not paid, making 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 data reliability issues related to

mailing operations.

◆ Reviewed the Postal Service’s short-term

transformation pricing initiatives.

◆ Is reviewing the rate case development

process and discount methodology.

◆ Is evaluating the Retail Data System to

ensure sales data captured is accurate and

used for management decision making.

SAFEGUARDING THE INTEGRITY,

CONFIDENTIALITY, AND

AVAILABILITY OF INFORMATION

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 interfere with or eavesdrop on operations, possibly for purposes of fraud

or sabotage. For example, terrorist organizations

could use computer networks to attack the federal infrastructure. Attacks that have already

occurred on both government and private

industry websites reveal the damage a computer

security breach can inflict on brand integrity

and an organization’s revenue stream.

The OIG’s work on telecommunications

security continues to identify vulnerabilities in
PAGE15

the security of computer equipment that are

being addressed by postal management. There

remains a continuing need to emphasize computer security throughout the Postal Service.

Furthermore, the Postal Service’s Internet initiatives reinforced the need for increased security awareness and compliance. Success in this

area will depend on the level of protection

afforded sites such as the Postal Service’s website and the programs operating on it. In addition, the Postal Service needs to continually

protect consumer information and guarantee

customer privacy.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Identified eBusiness agreements that

lacked sufficient security, privacy, and

access language to protect the Postal Service and its commercial partners and customers.

◆ Ensured the Postal Service was identified

as a critical infrastructure for national

security.

◆ Is continuing to represent the Postal Service’s information infrastructure concerns

by working on the Cyber Interagency

Working Group, chartered by the

President’s Critical Infrastructure

Protection Board.

◆ Plans to continue to work with Postal

Service Computer Incident Response

Team to detect, report, and respond to

attacks on the Postal Service’s information infrastructure.

BALANCING PUBLIC SERVICE

AND COMMERCIAL ENTERPRISE

The 1970 Postal Reorganization Act

required the Postal Service to function as a government entity tasked to operate in a businesslike manner supported by its own revenues. As

a public agency, it is charged with binding the

nation together with universal mail service at

affordable rates. Its government status carries

certain advantages, such as a monopoly on letter mail, exclusive access to customers’ mailboxes, and a tax-free status. The universal

service obligation requires a significant, costly

infrastructure to deliver postal services, but

unlike private corporations, the Postal Service

is bound by statutory constraints that limit its

ability to quickly adjust rates to respond to

changing costs, negotiate with customers and

employees, develop and price new products,

close unprofitable outlets, and generate and

invest profits. The Postal Service performs a

wide range of significant law enforcement

duties for the protection of the public, even in

cases that have no direct impact on the Postal

Service. To survive, it needs to articulate how it

will balance providing public service with its

goal of operating like a commercial/private

enterprise in implementing strategies to meet

future service and delivery challenges.

The Postal Service is a public service that

must operate like a commercial enterprise. This

dual role has become more challenging in the

face of increased competition in the delivery

and communication industries, especially with

electronic communication steadily eroding

First-Class Mail revenues. The postal community has been aware of and debated these challenges for years, but no consensus has emerged

on how the challenges should be addressed. To

date, efforts at comprehensive legislative reform

have been unsuccessful.

In its Transformation Plan published

earlier this year, the Postal Service presented its

strategy to address concerns raised by Congress,

the General Accounting Office, and others.

The plan is a good starting point and provides

information about challenges the Postal Service

faces, identifies short-term actions to take under

its existing authority, and outlines long-term

strategies that require congressional action.

However, the plan does not define key terms

such as universal service, lacks an overall implementation plan, and relies heavily on congressional action.

The Postal Service must act decisively to

balance its public service obligation with its

need to remain commercially viable. Until its

statutory framework is changed, it must work

within existing law to increase its accountability in contracting and other major expenditures

to achieve profitability in the near future. It

must identify its core businesses and ensure that

new products and services are self-sustaining. In

short, the Postal Service must continue to

refine its operations under the existing statutory

model, while developing and re-defining its role

under the Transformation Plan. The Postal

Delivering mail to the bottom of the

Grand Canyon by mule is one of the

many ways the Postal Service serves

its customers
Service cannot successfully transform itself

without congressional oversight and attention,

as well as a public debate about the continued

relevance of the Postal Service.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Identified previously completed OIG

work that provided insight on the issues

discussed in the Transformation Plan.

◆ Is examining the ratemaking process.

◆ Is examining mailer discounts.

PAGE16 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
OFFICE OF INSPECTOR GENERAL

Accepting and Processing Reviews

Transportation and Delivery Reviews

Marketing Reviews

Quick Response Reviews

Legislative, Regulatory & Policy Reviews

INSPECTION SERVICE

PAGE 17

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. The OIG has audit teams specializing

in these areas and also has a quick response team

to conduct expedited reviews of Postal Service

business practices. During the past 6 months,

the OIG completed 10 reviews of the Postal

Service’s performance of core business processes.

The reviews identified opportunities to save

over $21 million during current and future

years.

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 mail collected 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 centers,

while Standard Mail is generally handled at

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 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 last year, mail processing was

greatly affected 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, they required the Postal Service

to divert mail, causing increased costs and 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 work in the areas of accepting

and processing, which is highlighted below:

THREE ORGANIZATIONS WITH 

ALLEGED TERRORIST TIES 

USED NONPROFIT MAILING

ACCOUNTS

An OIG audit of Southeast Area Nonprofit

Standard Mail operations disclosed three organizations with alleged ties to terrorist activity

were authorized to mail at nonprofit rates.

These organizations were included in a

Presidential Executive Order to freeze the assets

of organizations and individuals suspected of

supporting or associating with foreign terrorists.

The audit revealed one of these organizations

continued to mail at nonprofit rates five months

after the Executive Order was issued. Also, two

of the organizations had mailing accounts with

the Postal Service of more than $10,000 that

had not been frozen or reported to the Treasury

Department as required by the Executive Order.

The OIG reported its findings to appropriate

law enforcement agencies and Postal Service

officials, who then took control of the mailing

account funds, reported the funds to the

Treasury Department, and requested a legal

opinion regarding their authority to hold these

organizations’ accounts and revoke their nonprofit mailing status. Subsequently, the Justice

Department indicted one of the mailers for

using contributions to support terrorist activities.

In addition, the OIG audit found other

organizations with nonprofit mail permits were

either not listed or incorrectly listed in Postal

PAGE18 PERFORMANCE REVIEWS

This section highlights audits, reviews, and

investigations performed by the OIG and

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 page containing the activities reported by the Inspection Service has

been color-screened.

The OIG’s review of certified mail

operations found that a Pacific Area

processing and distribution center

reduced mail-processing delays 

during the 2002 tax season

What is a performance audit? 

Performance auditing is a specific

type of audit that assesses

whether Postal Service programs

and operations are managed

economically and efficiently,

achieve desired results, or are

conducted in compliance with

applicable laws and regulations.

The OIG plans and executes a

wide range of performance audits

of Postal Service programs and

operations.

DID YOU 

KNOW?
Service records. Several organizations were

using the same nonprofit authorization number

without the Postal Service verifying that each

organization was eligible to mail at nonprofit

rates. The Postal Service agreed with the OIG’s

recommendation to increase controls over the

nonprofit mailing authorization process by

establishing a standardized process for entering

and updating information into the nonprofit

authorization database, and establishing policies

clarifying the use of authorization numbers by

for-profit organizations affiliated with nonprofit

organizations. (OIG AC-MA-02-002)

PRESORT MAILER ORDERED TO

PAY OVER $17 MILLION

As a result of a joint investigation by the

OIG and the Postal Inspection Service, several

owners and managers of one of the largest presort mailers in New York were convicted of several counts of mail fraud and racketeering. The

company was responsible for sorting and metering mail for a variety of corporate clients and

then submitting the mail to the Postal Service.

The investigation uncovered several schemes

used to defraud the Postal Service, including

bribery, postage meter fraud, alteration of presort

qualification reports to reflect less postage owed,

and hiding unqualified mail in large quantity

mailings. A cooperative effort between an OIG

investigator and postal inspectors obtained confessions from the manager of the company and

the postal manager regarding the payment of

bribes to the postal employee. The confessions

were subsequently used at trial against the

owners of the company. The manager of the

company was sentenced to 37 months imprisonment, 3 years supervised release, and joint restitution of over $17 million. 

DELAYS IN CERTIFIED MAIL

PROCESSING SIGNIFICANTLY

REDUCED DURING 2002 TAX

SEASON

An OIG review of certified mail operations

revealed that a Pacific Area processing and

distribution center significantly reduced mail

processing delays from up to four-day delays

during the 2001 tax season to just one or twoday delays during the 2002 tax season.

Improvements occurred because of better planning and increased communications with a

State Franchise Tax Board. Specifically, postal

management assigned a dedicated certified mail

coordinator to oversee mail operations, temporarily relocated certified mail processing to a

larger facility, and hired 60 temporary employees to process certified mail during the 2002 tax

season. Postal management agreed to continue

improving operations by refining the action

plan for seasonal certified mail increases and

adjusting the cut-off date for certified mail processing to ensure operations are not ended prematurely. (OIG AC-MA-02-001)

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 over $5 billion annually for air, highway, rail, and water transportation. As a result of the September 11, 2001,

terrorist attacks, the Postal Service has been

forced to rely 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 serviced by 300,000 city and rural letter

carriers and more than 180,000 delivery vehicles. A Postal Service agreement with FedEx to

transport Express, Priority, and First-Class Mail

was entered into to provide more reliable

service and reduce costs. During FY 2001, the

Postal Service delivered over 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

several investigations and six transportation

and delivery related reviews, some of which are

highlighted below:

TRAILER REPLACEMENT NOT

ADEQUATELY JUSTIFIED

An OIG audit, conducted in response to a

congressional request, determined Postal

Service management did not properly analyze

and justify a plan to purchase 45-foot trailers to

replace 40-foot trailers. The acquisition was

PAGE19

An OIG audit found that a planned

trailer replacement was not

adequately justified.
proposed at a cost of $30 million. The OIG recommended and postal management agreed to

delay its purchase plans until operating conditions and trailer requirements were analyzed

and justified in accordance with Postal Service

investment policies and procedures. 

(OIG TD-MA-02-003)

MAIL LEFT UNPROTECTED BY

AIRLINE EMPLOYEES AT

LAGUARDIA AIRPORT

The OIG observed commercial airline

employees negligently unloading mail from a

flight and roughly throwing mail containers

into a pile on a truck. Airline employees then

left the area, leaving mail on the tarmac unprotected and subject to theft and other problems

such as inclement weather. Postal management

agreed to inquire into the conditions observed

and take corrective action. After being notified

by Postal Service managers, the airline took

action to prevent future occurrences of mishandled mail. Specifically, the entire airline ground

handling staff was briefed on proper mail handling procedures, written notices were placed in

the personnel files of the crew members

involved in mishandling mail, and the airline

agreed to hire two additional ground handlers to

load and unload mail. (OIG TD-MA-02-004)

HIGHWAY CONTRACTORS

CONSPIRE TO FIX PRICES

An OIG investigation disclosed several

highway contract route drivers conspired to fix

prices during their contract renewal process.

The OIG initiated the investigation after

receiving a complaint from a Postal Service area

contract manager who received identical bids

from several contractors. The investigation

revealed the contractors met at a North

Carolina restaurant and schemed to obtain

higher reimbursement in their contract

renewals. The investigation saved the Postal

Service more than $200,000 over the 4-year

contract period. 

LETTER CARRIERS DELAYED AND

TRANSPORTATION COSTS

INCREASED BY HANDLING OF

MISSENT MAIL

At the request of the Postmaster General,

the OIG conducted an audit that revealed letter carriers in the Capital Metro Area were

delayed up to two hours waiting for “missent”

mail being redistributed to the correct post

office. Mail sent to the wrong post office should

normally be returned to a processing and distribution center where it would be sent to the

proper office. However, in this case missent mail

was rerouted, using local transportation, to a

centrally located post office or “hub operation”

where it was then sent directly to the correct

post office for delivery. This process sometimes

caused increased transportation costs and

unnecessary overtime costs for letter carriers

waiting for missent mail. Postal management

agreed with the OIG’s recommendation to discontinue hub operations that were not cost

effective. (OIG TD-MA-02-005)

CANCELING UNNECESSARY

TRIPS BETWEEN PROCESSING

FACILITIES COULD SAVE

$4.5 MILLION

An OIG audit revealed the Postal Service

could save about $4.5 million over the term of

existing Pacific Area highway contracts by canceling unnecessary highway contract trips

between postal mail processing facilities. The

OIG found that due to low mail volume, 

158 unnecessary trips could be terminated and

mail could be consolidated on other trips without negatively affecting service. Postal Service

managers agreed to eliminate 124 trips; however, management disagreed with eliminating

the remaining 34, stating this would reduce

operational flexibility. Subsequently, postal

management informed the OIG they eliminated 110 trips, 14 trips were pending final

action, and they were reassessing the remaining

34 trips. (OIG TD-AR-02-003)

ST. LOUIS HIGHWAY

CONTRACTOR CONVICTED 

OF MAIL FRAUD

As a result of an OIG investigation, a St.

Louis highway contractor pled guilty to mail

fraud and was sentenced to 3 years supervised

probation and ordered to pay approximately

$29,000 in fines and restitution to the Postal

Service. The OIG investigation found that

from 1996 through 2000 the contractor submitted false receipts and fuel certifications related

to approximately $28,000 in fuel expenses. 

PAGE20 PERFORMANCE REVIEWS

An OIG review found that sending missent mail to a “hub” (diagram above)

rather than to a processing and distribution center (diagram below) to be

redistributed delayed letter carriers by

up to two hours and caused increased

transportation costs.
PAGE21

VOYAGER CARDS NOT

ADEQUATELY PROTECTED

An OIG review of the Postal Service

Voyager card program in the Great Lakes Area

revealed these cards, used for fuel purchases and

vehicle maintenance, were not adequately protected. Specifically, personal identification

numbers were not canceled when necessary and

Voyager account activities were not reconciled

monthly as required. As a result, the Postal

Service incurred costs for unauthorized purchases and there was an increased risk the cards

could be used fraudulently. Postal Service management agreed with the OIG’s recommendations to improve oversight of the Voyager

program and better protect it from fraudulent or

questionable purchases by ensuring that officials

follow controls included in nationwide guidelines and by providing additional training to

staff. (OIG TD-AR-02-004)

IMPROVEMENTS TO DELIVERY

VEHICLE GASOLINE PROGRAM

COULD SAVE MILLIONS

An OIG audit revealed the Postal Service

could recover approximately $4 million in

unclaimed discounts and overpaid state taxes.

Specifically, the OIG found the fuel credit card

company did not process state tax exemptions

electronically, which required them to be

processed manually by the Postal Service.

Further, the Postal Service paid too much in

taxes because the process to recoup taxes was

not fully developed. The OIG also found the

Southeast Area could reduce the letter carrier

workhour budget annually by $6 million by

capturing cost reductions projected from outsourcing fuel delivery. The Postal Service

could further reduce fuel costs by implementing a prior OIG recommendation to establish a

centralized fuel management unit and pursue

volume discounts from vendors. Postal management agreed to establish a centralized fuel

management team, pursue discounts, and

recover erroneously paid taxes. 

(OIG TD-AR-02-005)

MECHANIC ORDERED TO PAY

RESTITUTION TO THE POSTAL

SERVICE

A former Postal Service vehicle maintenance mechanic was sentenced to 5 years probation and ordered to pay over $13,000 in

restitution to the Postal Service. The individual pled guilty to misappropriation of Postal

Service property and conflict of interest when

the mechanic advised the Postal Service to

purchase vehicle parts from a company in

which the mechanic and spouse had a financial interest. The mechanic took vehicle parts

belonging to the Postal Service, cleaned them,

and sold them back to the Postal Service as

new. A debarment proceeding against the

company is pending. 

FORMER VEHICLE MAINTENANCE

FACILITY MANAGER SENTENCED

FOR EMBEZZLEMENT

As a result of an OIG investigation, a former Postal Service vehicle maintenance facility

manager in New York was sentenced to 3 years

probation, 6 months home detention, and 300

hours of community service for embezzlement

and conspiracy to defraud the Postal Service.

The former employee was also ordered to pay

restitution of $20,000 to the Postal Service. The

OIG’s investigation revealed between 1996 and

1999, the employee knowingly approved

$87,000 in fraudulent invoices from an automobile repair contractor in exchange for free services for vehicles owned by the employee and

family members. The manager included the

costs of repairs to personal vehicles in the

invoices charged to the Postal Service. 

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 marketing programs and services to build customer

awareness and loyalty. The Postal Service also

wants to ensure its services are available at

places where customers choose to do business.

During this reporting period, the OIG conducted work in the area of marketing, which is

highlighted below:

NATIONAL POSTAL FORUM

STRENGTHENED CUSTOMER

RELATIONS

An OIG audit found that the National

Postal Forum generated sufficient revenues to

The OIG’s review of the Voyager card

program revealed that the cards were

not adequately protected against unauthorized purchases or fraud. Shown

here is a personal identification number

written on the back of the card and

cards left unattended.

An OIG review found that airline employees at LaGuardia Airport left mail

unprotected and subject to theft and

inclement weather.
PAGE22

cover its costs and strengthened Postal Service’s

customer relations. Approximately 11,000 mailers attended the spring 2001 Postal Forum,

including representatives from over 100 of the

largest Postal Service accounts, which

accounted for over $7 billion in Postal Service

revenue for FY 2000. The OIG also noted several Postal Service employees performed operational support duties during the postal forums,

which may give the impression the forum is not

independent of the Postal Service. Postal management agreed to continue emphasizing prudent spending at postal forums and discontinue

having Postal Service employees perform support duties at forums. (OIG EM-AR-02-011)

QUICK RESPONSE REVIEWS

The OIG quick response team coordinates

and conducts expedited reviews of Postal

Service business practices and operations to

improve and advise postal management and the

Governors on information needed to address

time sensitive issues raised by internal and

external stakeholders. In addition to the work

highlighted in this section, the OIG’s quick

response team has conducted work that is highlighted in the Customer Service section of this

Semiannual Report. During the past 6 months,

the OIG conducted quick response work in the

area of workhour savings, which is highlighted

below:

OVER $1 MILLION PER YEAR

COULD BE SAVED BY REDUCTION

OF EMPLOYEES AT TWO

WESTERN AREA FACILITIES

An OIG review disclosed that a reduction

of 16 to 22 employees at two facilities in the

Western Area could save over $1 million a year.

Specifically, the audit revealed excessive workhours were assigned because when workload was

minimal, business mail entry technicians performed duties that should have been accomplished by dock personnel. In addition, postal

managers did not consider consolidating business mail entry units less than a mile apart; and

did not periodically reevaluate staffing levels to

improve productivity. The OIG recommended,

and Postal Service management agreed, to consolidate business mail entry operations, reduce

staff as appropriate, and reevaluate staffing

periodically to determine whether further

reductions are necessary based on changes in

workload and revenue. Postal Service managers

initiated an aggressive plan to implement these

recommendations prior to the completion of

the review. (OIG CQ -AR-02-001)

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:

ENACTED LEGISLATION

Public Law 107-210 — 

The Trade Act of 2002

This law permits the Customs Service to

stop and search outbound and inbound mail

processed by the Postal Service. By law, FirstClass Mail is sealed against inspection.

However, customs officers may now search

First-Class Mail weighing more than 16 ounces

without a warrant, if there is reasonable cause to

suspect the item contains contraband. The OIG

plans to examine the Postal Service’s international products and services in the near future,

including the effect of this legislation on the

processing and marketability of international

mail. 

PROPOSED LEGISLATION

H. R. 4970 — The Postal Accountability

and Enhancement Act

This bill would give postal management

and employees the tools to adapt and maintain

viability in the face of challenges due to changing technology and a dynamic communications

marketplace. The bill encourages innovation

and efficiency by permitting the Postal Service

to distribute earnings as bonuses to all employees. However, losses could not be recovered by

increasing rates beyond specified parameters.

The bill also allows the Postal Service to react

more quickly and efficiently to economic conditions by streamlining the rate setting process

and permitting rates better tailored to consumers’ needs. The Postal Service’s

Transformation Plan highlights the need for

several proposed legislative reforms contained

in this bill. The OIG discussed issues related to

reform with staff from the offices of

An OIG review found that the National

Postal Forum strengthened the Postal

Service’s customer relations.

PERFORMANCE REVIEWS

An OIG audit found that the Postal

Service could save $1 million by

consolidating business mail entry unit

work from two facilities.
PAGE23

Representative John McHugh, the bill’s sponsor, and Representative Henry Waxman,

Ranking Minority Member of the House

Committee on Government Reform. 

A vote taken in the Committee on

Government Reform to send the bill to the

House failed. The OIG urges the next Congress

to reconsider some of the proposals contained

in this bill. The OIG is encouraged by statements from certain members that a new reform

bill will be proposed in the Senate in the next

Congress.

S. 2445 — The Book Stamp Act

This bill promotes child literacy by making

books available through early learning, childcare, literacy, and nutrition programs. Language

in the bill would require the Postal Service to

issue a semipostal stamp to support the child literacy promotion program. Semipostal stamps are

issued at special rates higher than the current

First-Class rate in order to generate revenue to

promote causes the Postal Service deems to be in

the national public interest. The Postal Service

will establish a special postage rate, no higher

than 25 percent over the current First-Class rate,

and contribute this premium, less any reasonably

incurred printing, selling, and distribution costs,

to the child literacy program.

The OIG conducted an audit that raised

concerns about the Postal Service’s ability to

accurately account for its costs in producing and

marketing semipostal stamps. As a result, the

Postal Service issued new regulations to correct

this situation. With the new regulations in

place, the Postal Service is better prepared to

administer the semipostal program, track costs,

and effectively raise funds.

S. 2754 — The United States Postal

Service Commission Act of 2002

This bill would establish a Presidential

Commission on the Postal Service to examine

challenges the Postal Service faces. The commission would develop specific recommendations and legislative proposals that Congress

and the Postal Service can implement. A commission could generate debate on ways to transform the Postal Service and ensure its

continued viability and relevance into the 21st

century.
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.

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.

PAGE24

TYPE OF INVESTIGATION

Non-Employee Mail Theft

Employee Mail Theft

ARRESTS

2,592

347

CONVICTIONS

2,396

329

The Postal Inspection Service investigates mail tampering to ensure the sanctity of the mail.

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 25
PAGE26

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. After September 11,

2001, and the anthrax attacks, the initial outlook for FY 2002 was not much better. In

response to the declining financial situation,

the Postal Service took aggressive actions to cut

costs. In addition, the Postal Service implemented a rate increase effective June 30, 2002.

As a result, the Postal Service expects FY 2002

net losses to be less than $1 billion.

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

and minimize costs. In the past 6 months, the

OIG has completed 255 financial management

reviews and 27 investigations. These efforts

identified almost $159.8 million in questioned

costs and opportunities to save $3.2 million during current and future years. 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 a similar amount each year. Since

inception, the OIG served as co-contracting

officer’s representative with Postal Service

Finance for the work performed by the independent public accounting firm. However,

beginning in FY 2003, the OIG will be the sole

contracting officer’s representative.

FY 2002 FINANCIAL

INSTALLATION AUDITS

The OIG conducted audits at 187 postal

facilities and found financial information was

reasonably and fairly represented in the

accounting records, and internal controls were

generally in place and effective. However, at

three facilities, the OIG identified accounting

records were not reasonably and fairly represented and internal controls were not in place

and effective. In addition, at 151 facilities, the

OIG identified non-compliance with Postal

Service instructions and minor internal control

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,

pages 95-99)

CONTRACTOR PAID AFTER

CONTRACT TERMINATED

During the FY 2002 financial statement

audits, the OIG identified over $58,000 in payments made to a contractor for a station contract that had been terminated. A station

contractor operates in a store or place of business and accepts mail from the public, sells

postage and postal service supplies, and provides

other selected special services. The OIG found

the appropriate accounting service center did

not receive a notification of termination for the

contract. As a result, the contract was not canceled and the contractor received 45 monthly

payments for services not performed. Based on

the results of the OIG review, the contract was

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.

PAGE26 FINANCIAL MANAGEMENT REVIEWS

DID YOU 

KNOW?

How does the OIG handle

requests for information? 

Public requests for OIG

information are processed

pursuant to the Freedom of

Information Act (FOIA) by OIG

staff. FOIA requests may be

made in writing, or the public

can review reports and other

information posted on the OIG

website at www.uspsoig.gov

The OIG conducted audits at 187 postal

facilities and found that financial information was reasonably and accurately

represented in the accounting records.
PAGE27

terminated and action was taken to recover the

overpayments and ensure no additional payments were made to the contractor. Because

this discrepancy appeared to be an isolated

instance and corrective actions were initiated,

the OIG made no recommendations; however,

this area will be continually monitored. 

(OIG FT-MA-02-004)

FINAL WRAP-UP OF FY 2001

FINANCIAL INSTALLATION

AUDITS

The OIG wrapped-up its FY 2001 financial

installation audits. These audits were conducted at postal facilities and revealed financial

information was reasonably and fairly represented in the accounting records, and internal

controls were generally in place and effective.

However, the OIG identified the following

areas for improvement including controls over

accountable paper and cash; controls over collect on delivery items and post office box inventory; Express Mail corporate account collection

activities; clearing suspense items; and business

mail reviews and computer system access. Postal

Service management generally agreed with OIG

recommendations to improve all of the areas.

(OIG FF-AR-02-208, OIG FF-AR-02-309,

OIG FF-AR-02-324, and OIG FF-AR-02-326)

FINANCIAL-RELATED REVIEWS 

Financial-related reviews 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

37 financial-related audits and 27 investigations. These investigations have resulted in 16

indictments and 7 convictions. Some significant reviews and investigations are highlighted

below:

EXCESSIVE EXECUTIVE

RELOCATION BENEFITS

SUMMARIZED IN OIG 

CAPPING REPORT

At the request of the Board of Governors,

the OIG examined all aspects of the Postal

Service’s executive relocation program. During

this reporting period, the OIG issued a capping

report to summarize the relocation audit work

performed. The OIG concluded the Postal

Service paid excessive relocation benefits to

Postal Service executives in three areas: miscellaneous relocation expense benefits, the Shared

Real Estate Appreciation Loan Program, and

equity loss payments. The audit found the

$25,000 miscellaneous relocation expense benefits paid to executives were excessive when

compared to the public and private sectors. The

Shared Real Estate Appreciation Loan Program

was not cost effective and was only offered to a

limited number of executives. In addition, the

controls of payments for reimbursing employees

for losses incurred on real estate transactions

needed improvement.

Postal Service management agreed with

OIG’s recommendation to fully document policies and procedures for equity loss calculation

and reimbursement and publish a list of appropriate capital improvements. However, postal

management disagreed with recommendations

to reduce the amount of officers’ and other

executives’ miscellaneous relocation expense

benefits and require officers who relocate more

than once during a 3-year period to document

costs before receiving miscellaneous relocation

expenses. In addition, postal management disagreed with OIG’s recommendation to replace

the Shared Real Estate Appreciation Loan

Program with a more cost effective alternative

program that enables the Postal Service to still

recruit and retain executives. The OIG considers these recommendations unresolved and is

pursuing them through the audit resolution

process. (OIG FT-AR-02-012)

$1.9 MILLION IN UTILITY

PAYMENT CREDITS DUE TO

POSTAL SERVICE

At the request of postal management, the

OIG conducted an audit of postal utility payments. The audit disclosed the Postal Service

did not receive credit for $1.9 million in payments made to a utility company and paid

about $669,000 in state taxes from which it was

exempt. The OIG found the Postal Service did

not obtain the state tax exemptions at two of

three accounting offices and was unsuccessful in

obtaining a refund from the utility company.

Postal Service management agreed with recommendations to seek reimbursement or credit for

An OIG audit found that the Postal

Service did not receive credit for

$1.9 million in payments made to a

utility company.
PAGE28

the funds cited, discontinue paying state taxes

on utility bills, and determine whether the

Postal Service is exempt from paying local taxes

and franchise costs. The Postal Service is in

active discussions with the utility company and

the OIG requested written confirmation when

corrective actions are completed. 

(OIG FT-AR-02-015)

MILLIONS MAY BE LOST

THROUGH ADVANCE ANNUAL

LEAVE POLICY

Postal Service policy is to advance annual

leave to full-time and part-time career employees at the beginning of the leave year allowing

them to take annual leave before it is earned.

An OIG audit disclosed over 12,000 former

Postal Service employees used advance leave

worth over $15.4 million. These former

employees neither earned the leave nor reimbursed the Postal Service prior to their separation. The Postal Service has little probability of

immediate collection of approximately $9.4

million from employees who separated for reasons other than death or disability. The OIG

recommended discontinuing the advanced

annual leave policy; however, Postal Service

management contends this would have a negative operational impact during peak periods and

would be subject to union negotiations. The

OIG is working with management to resolve

these issues. (OIG-FT-AR-02-016)

POSTAL EMPLOYEE SCHEMED 

TO DEFRAUD BY FICTITIOUS

INVOICES AND FORGERY OF

SIGNATURES

A former Postal Service employee pled

guilty to one count of embezzlement of public

funds. The OIG investigation disclosed from

July 1997 to May 2000, the employee schemed

to defraud the Postal Service by creating fictitious invoices and forging signatures of Postal

Service employees certifying goods and services

were delivered. The employee invoiced the

Postal Service almost $260,000 for goods and

services not delivered. The actual loss to the

Postal Service was over $220,000 and these

funds were deposited into personal bank

accounts. 

UNCLAIMED ASSET

IDENTIFICATION & COLLECTION

PROCEDURES CAN BE IMPROVED

An OIG audit disclosed the Postal

Service’s unclaimed asset identification and collection procedures can be improved. Unclaimed

assets are financial assets held by states until the

rightful owners or heirs claim the property.

Specifically, approximately $877,000 of

unclaimed assets, dating as far back as 1968,

were not recovered. Additionally, at least three

Postal Service district office personnel and one

postmaster collected unclaimed assets in violation of current postal policy. Postal Service

management agreed to: pursue potential collection of unclaimed assets where cost effective,

include web-based searches as part of their collection procedures, and reissue the unclaimed

asset collection policy. During the audit, the

OIG learned the Postal Service was in the

process of recovering approximately $200,000

of these assets. (OIG-FT-AR-02-017)

OIG INVESTIGATIVE EFFORTS

REDUCED CIVIL CLAIMS AGAINST

THE POSTAL SERVICE BY OVER

$19.5 MILLION

The OIG assists the Postal Service in

reducing civil claims by working with the Postal

Service Law Department and the United States

Attorney’s Offices to conduct investigations

into tort claims filed against the Postal Service.

These investigations have proven to be a valuable source of information in determining the

severity of the claimant’s injury and the truthfulness of the complaint. Furthermore, in some

instances, these investigations often result in

significant reductions in the initial claim

amount. During the past 6 months, the OIG

has closed 3 tort claim investigations and

reported significant activity on the following

cases: 

◆ As a result of an OIG investigation, a

$1.5 million tort claim filed against the

Postal Service was settled for $200,000,

plus the cost of a Medicare lien. The

claim sought damages for pain, suffering,

and property damage resulting from a car

accident with a Postal Service vehicle.

The individual had undergone double

bypass heart surgery prior to the accident

and alleged the impact of the accident

FINANCIAL MANAGEMENT REVIEWS
PAGE29

caused the surgical repairs to come loose,

thus requiring additional surgery. The

OIG’s investigation uncovered evidence

suggesting the individual was re-injured

prior to the accident and the investigation also raised questions about the

severity of the pain and suffering claimed

by the individual. 

◆ A Florida individual filed a $1 million

claim against the Postal Service alleging

injuries due to an accident with a Postal

Service vehicle. The OIG investigation

revealed the accident was a result of the

individual making an illegal passing

maneuver. In addition, the state trooper’s

documentation disclosed the individual

stated they were not injured and minimal

damage was caused to the vehicle. Surveillance and investigative support by

OIG resulted in a settlement of $5,000,

amounting to a $995,000 cost avoidance

to the Postal Service. 

◆ As a result of an OIG investigation, a 

$1 million claim against the Postal Service was settled for $500. The individual

claimed to be sitting in a parked vehicle

when it was rear-ended by a Postal Service truck, which allegedly caused serious

injuries. As a result of the alleged

injuries, the individual claimed bodily

pain and mental anguish, which substantially impaired financial earnings and

caused significant medical expenses. The

OIG investigation did not substantiate

the severity of the individual’s injuries

and resulted in a cost avoidance of

$999,500.

◆ An individual filed a $250,000 lawsuit

against the Postal Service after allegedly

slipping and falling on a wet lobby floor

at a Florida postal facility. A leaking roof

and postal patrons tracking rainwater

into the facility caused the wet floor. The

area was marked with yellow caution

signs and the Postal Service custodian

was performing periodic mopping of the

floor. The individual was wearing fourinch, high-heeled shoes at the time of

alleged fall. Surveillance and investigative support failed to support the allegations in this complainant. The claim of

personal injury was found to be excessive

and without foundation of sufficient

diagnosis/prognosis documentation and

medical payment records; thereby, resulting in a civil settlement of $40,000. 

◆ An individual settled a $100,000 claim

for $25,000 for injuries allegedly sustained when struck from behind by a

postal vehicle while riding a bicycle. The

OIG’s investigation revealed the individual worked full-time, although claiming

an inability to work since sustaining the

injuries. The individual also sustained a

significant shoulder injury just five

months prior to the accident. The OIG’s

investigation resulted in a cost avoidance

of over $75,000. 

FY 2002 OBSERVATIONS OF

STATISTICAL TESTS FOR THE COST

AND REVENUE ANALYSIS

The OIG performed cost and revenue

analysis audits in 30 districts and found that,

generally, the tests were conducted in accordance with policy and procedures by the Postal

Service. However, employees did not always

adhere to instructions for sampling, equipment

use, and telephone readings in 18 districts. 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, pages 99-101)

HUSBAND AND WIFE, POSTAL

MANAGERS, TERMINATED 

FOR PROVIDING FALSE

INFORMATION

As a result of an OIG investigation, two

Florida postal managers were terminated from

the Postal Service for providing false information during an official investigation. Both individuals were interviewed on three separate

occasions and failed to disclose pertinent information to investigators. It was determined the

pair concealed their involvement and knowledge about two former Postal Service managers,

who embezzled over $3.2 million from the

Postal Service. This investigation was a part of

an ongoing investigation reported in a previous

Semiannual Report to Congress. 

OIG investigators have reduced civil

claims against the Postal Service by

millions of dollars.
OHIO INDIVIDUAL SENTENCED

FOR POSTAL SERVICE CREDIT

CARD FRAUD

As a result of an OIG investigation, an

Ohio individual was sentenced to a confinement house for 6 months and 3 years probation

for unauthorized use of a postal credit card. The

OIG investigation revealed the individual used

the credit card of a postal employee and made

purchases totaling approximately $2,800. The

individual obtained the credit card information

after the postal employee made a legitimate purchase at a company where the individual

worked. 

CONTRACTING AND FACILITIES

REVIEWS

The Postal Service manages approximately

$18 billion annually in contracts for essential

goods and services, including facilities, mail

processing equipment, and supplies.

Consequently, this makes the Postal Service

one of the largest civilian contracting agencies

in government. During FY 2002, postal purchases included over $627 million in noncompetitive contracts and over $295 million in

credit card purchases. The Postal Service is also

one of America’s largest owners, developers,

and managers of real estate, committing over

$700 million in FY 2002 for repair, renovation,

and construction of new facilities, and over

$800 million in rent.

The OIG is responsible for contract audits

designed to assist Postal Service contracting

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

reviews of contractor financial systems. In the

past 6 months, the OIG conducted 20 reviews

of contracting and facilities-related issues with

the assistance of a contract audit agency. Also,

the OIG has many open criminal investigations

targeting fraud and corruption in these areas.

Highlights of some contracting and facilities

reviews follow below:

POSTAL SERVICE DISCONTINUED

CONTRACT WITH A FORMER

MAJOR ACCOUNTING FIRM

On or about April 15, 2002, the Postal

Service suspended or discontinued service with

16 companies and/or individuals related to the

Arthur Andersen, LLP and Enron Corporation

investigation. The Postal Service initiated the

debarment based on OIG recommendations.

Future contracts with Arthur Andersen, LLP

were discontinued indefinitely because of its

March 2002, indictment for obstruction of justice. Debarment for 2 years was proposed for a

former partner of the accounting firm, based on

a guilty plea to obstruction of justice. The 14

other entities were suspended from doing business with the Postal Service for 6 months. 

OVER $159 MILLION IN

QUESTIONED COSTS IDENTIFIED

BY CONTRACT AUDITS

In the past 6 months, the OIG worked

with the Defense Contract Audit Agency and

completed 20 audits of contracts valued at

almost $790 million. These audits resulted in

approximately $159 million in questioned and

unsupported costs. The contract audits include:

incurred cost audits that evaluated the reasonableness of costs incurred by contractors; proposal audits that evaluated the reasonableness

of contractor cost estimates; defective pricing

audits performed to determine whether contract prices significantly increased because of

contractor pricing data that was not accurate or

complete; 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’:

◆ Proposed and incurred costs were allowable and reasonable;

◆ Pricing data was accurate, complete, and

current; and 

◆ Accounting systems for allocating costs

to the Postal Service were adequate. 

In addition to raising questions about cost,

the audits disclosed a major contractor’s

proposal was not prepared in accordance with

Postal Service policy. The following is a summary of seven significant contract audits completed in the last 6 months: 

◆ An audit of a contractor’s $120 million

termination for convenience settlement

proposal for operation of an air transportation network disclosed questioned

costs of over $38 million. All of the

PAGE30 FINANCIAL MANAGEMENT REVIEWS

6

6

4 3

1 INCURRED 

COSTS

OTHERS

PROPOSALS

SYSTEM

REVIEWS

CLAIMS

Types and Number of Contract 

Audits Completed

The OIG completed 20 audits of contracts

valued at almost $790 million.

An OIG investigation led to the

sentencing of an individual for

fraudulently using a postal

employee’s credit card.
PAGE31

Who determines what the OIG

audits or investigates? 

The OIG receives requests to

conduct audits and investigations

from many sources. However, the

OIG independently determines

what it audits or investigates.

questioned costs are generally classified

as unallowable or unreasonable under

Postal Service policies and procedures or

in noncompliance with generally accepted accounting principles. 

(OIG CA-CAR-02-043) 

◆ A review of a contractor’s $3.8 million

termination for convenience settlement

proposal for the Tray Management System at a Postal Service facility disclosed

questioned costs of over $1.6 million for

proposed wind up costs, contract impact

costs, and settlement costs. The questioned contract impact costs represented

unallowable overhead and general and

administrative costs for other contracts

affected by the termination. Questioned

settlement costs were unallowable costs

associated with severance pay and

employee transfer and reassignment

costs. (OIG CA-CAR-02-042)

◆ An analysis of a contractor’s equitable

adjustment claim related to the construction of a new post office questioned the

entire claim amount of over $1 million.

Approximately 76 percent of the claimed

amount represented unallowable anticipated profit and the contractor did not

provide sufficient documentation to support the remaining costs. Therefore, the

OIG did not consider the claim acceptable as a basis for negotiation of settlement. (OIG CA-CAR-02-045) 

◆ An evaluation of a contractor’s firm fixed

price proposal for various configurations

of automated package processing system

machines and related spares and support

items disclosed unsupported costs of over

$117 million and questioned costs of

over $577,000. Due to the significant

cost and pricing inadequacies, the OIG

did not consider the proposal to be

acceptable as a basis for negotiation of a

fair and reasonable price. 

(OIG-CA-CAR-02-050) 

◆ A review of three equitable price adjustment claims concerning renovation of

toilets at a Postal Service processing and

distribution center questioned the entire

claim of over $620,000, and disclosed

alleged delays and additional supervision

costs were not adequately supported with

sufficient auditable documentation. The

OIG did not consider the claims to be

acceptable as a basis for settlement of a

fair and reasonable price increase and

recommended the contracting officer

contact the OIG or Defense Contract

Audit Agency prior to negotiating a final

settlement. (OIG-CA-CAR-02-051) 

◆ An audit of a contractor’s accounting

system controls revealed the overall

accounting system and related internal

control policies and procedures were

inadequate. Significant deficiencies were

found in the design and operation of the

internal control structure including:

inadequate accounting system policies

and procedures; irreconcilable proposal

and cost work breakdown structures;

insufficient material and production

labor cost detail; excessive volume of

material transfers; and inadequate management risk assessment and monitoring.

The OIG recommended disapproval of

the contractor’s accounting system and

proposed several corrective actions. The

contractor concurred and is in the

process of implementing the corrective

actions. (OIG CA-CAR-02-052) 

◆ An analysis of a contractor’s billing system and related controls revealed the

billing system and related internal control policies and procedures were inadequate. Significant deficiencies were

found in the design or operation of the

internal control structure including:

inadequate monitoring of timely payment of vendors; inadequate contracts

department policies and procedures; use

of indirect billing rates on legacy contracts; inaccurate estimates to complete;

and failure to exclude advance payments

to subcontractors from requests for

progress payment. The contractor concurred with identified deficiencies and is

in the process of implementing corrective actions. The Postal Service contracting officer agreed to ensure the contractor implemented all corrective actions.

(OIG CA-CAR-02-053) 

DID YOU 

KNOW?

An OIG review of a contractor’s

termination for convenience settlement

proposal for a Tray Management System

disclosed questioned costs of over $1.6

million. The Tray Management System is

designed to automate the moving and

staging of mail.
POSTAL TRAINING CENTER

CONSTRUCTION PROJECT COSTS

DEEMED REASONABLE

An OIG audit of capital construction

projects at a Postal Service center for leadership

development found that, over the past 5 years,

17 projects totaling approximately $8.3 million

were necessary and reasonably completed.

However, a review of the site’s $6.3 million master plan found at least $300,000 of the project’s

costs were nonessential enhancements.

Additionally, the OIG found the current center

marketing strategies to attract external customers might not be appropriate when compared with the primary Postal Service mission of

delivering the mail. 

The OIG recommended future capital

construction projects at the center include only

essential repairs. Postal Service management

disagreed but planned actions met the intent of

the recommendation. The OIG also recommended postal management evaluate the center’s marketing strategies to ensure investment

in areas appropriate to the overall mission.

Postal management did not explicitly agree or

disagree with these recommendations. Instead,

postal management stated the center functions

and marketing strategies add revenue and train

Postal Service managers who support the overall Postal Service mission. The OIG is actively

working with postal management to resolve this

issue. (OIG CA-AR-02-006) 

WEAKNESSES IDENTIFIED IN

UNDEFINITIZED CONTRACT

ACTIONS

An OIG review identified weaknesses in

the Postal Service’s controls over undefinitized

contract actions. Undefinitized contract actions

are letter contracts or contract modifications

that direct a contractor to provide products or

services without agreed to price or terms. The

OIG reviewed 51 contracts and found 20 contracts containing 81 undefinitized actions totaling over $728 million. The audit found that

postal management did not effectively track and

monitor undefinitized contract actions and use

proper price-to-be-determined-later notifications. Also, independent postal cost/price estimates, negotiations, and best value

determinations were not always documented,

and were not always timely. Postal management

agreed to require tracking and monitoring, clarify policies over use and justification, enforce

policies for preparing cost or price estimates,

and document rationale for best value determinations. (OIG CA-AR-02-004) 

NONCOMPETITIVE PURCHASING

PROCESS LED TO OVERPAYMENT

FOR TABBING SYSTEMS

An OIG audit revealed the Postal Service

did not effectively use the competitive purchasing process to purchase tabbing systems.

Consequently, the OIG concluded the Postal

Service overpaid approximately $7.2 million for

tabbing equipment and lost the opportunity to

take $130,000 in quantity discounts. The tabbing system places a translucent tab on openended mail such as fliers and booklets, allowing

the mail to be handled by high-speed automation equipment without being torn or jammed.

The OIG also found 30 of the 83 tabbing systems were underutilized because the Postal

Service did not perform an adequate needs

analysis. While postal management disagreed

with the estimated $7.2 million overpayment,

the OIG considers this amount to be accurate

and fully supported. Postal management agreed

with the recommendation to ensure justifications provided in support of noncompetitive

purchases are valid and purchases are consolidated in order to take advantage of available

quantity discounts. Postal management also

agreed with the recommendation to remove the

tabbing system from the catalog of approved

products, to perform needs analysis, and to redeploy tabbing systems. (OIG CA-AR-02-005) 

OIG CONTRACTOR

INVESTIGATIONS TARGET 

FRAUD & CORRUPTION

The OIG conducts investigations relating

to the Postal Service’s contracting and facilities

areas. These investigations target contractors

who have attempted to defraud the Postal

Service by submitting false invoices, performing

poor work, or using substandard construction

material. These investigations ensure the financial interests of the Postal Service are protected

in these areas. In some instances, these investigations often result in significant recoveries and

improve the safety of employees and customers. 

PAGE32

An OIG audit found that at least

$300,000 of the Postal Service’s

costs for renovating a training

center were for nonessential

enhancements. Shown here is a

the training center courtyard

before and after renovation.

FINANCIAL MANAGEMENT REVIEWS

Before

After
PAGE33

During the past 6 months, the OIG has

reported significant activity in this area, some of

which are highlighted below:

◆ The OIG partnered with various federal

law enforcement agencies, including the

Environmental Protection Agency,

Defense Criminal Investigative Service,

and the Federal Bureau of Investigation,

to identify fraudulent practices used by a

contractor when testing underground

storage tanks. The efforts of this team

resulted in the filing of 10 criminal complaints in nine states. The company

charged the Postal Service, and other

government agencies, for underground

storage tank testing that was never performed or inadequately conducted. 

◆ The OIG initiated an investigation after

receiving information from the St. Louis

Service Center, concerning a $679,700

erroneous payment to a contractor. The

investigation disclosed the contractor

was mistakenly paid for service actually

performed by another contractor. The

contractor was contacted for repayment

but fled to New Zealand. The OIG coordinated with the Department of Justice

and the New Zealand authorities to

apprehend and extradite the contractor.

The Department of Justice seized approximately $27,000 of the contractor’s assets

and is in the process of seizing approximately $470,000 held in other foreign

bank accounts. Additionally, the contractor repaid the Postal Service $59,000

of the $679,700 and is currently awaiting

trial for theft of government property

and money laundering. 

◆ As a result of an OIG investigation, a

major technology company, hired by the

Postal Service to ensure that systems

would function properly for the Y2K

deadline, paid the Postal Service

$882,000 to settle a complaint regarding

labor rates. The complaint alleged the

company placed employees in labor categories with higher labor rates than those

for which the employees were qualified.

An OIG analysis determined the company hired employees for administrative

positions; then billed the Postal Service

for documentation specialists. In addition, the company hired several people as

managers, but billed the Postal Service

for higher rated technical positions. The

OIG analysis revealed a potential loss of

over $1.4 million to the Postal Service.

The company claimed these were not

false claims, but contractual issues. The

OIG worked closely with the Postal Service Law Department during the litigation to achieve the settlement.

◆ As a result of a joint investigation by the

OIG and the Inspection Service, a contractor pled guilty to one count of wire

fraud for attempting to defraud the Postal

Service of almost $10,000 by submitting

false invoices. The Postal Service paid a

contractor over $2,300 based on false

invoices that stated a truck lift gate was

purchased recently. The investigation

disclosed the contractor already owned

the lift gate and submitted false invoices

to two different offices. 

◆ As the result of an OIG investigation, a

structural engineer was indicted for

fraudulent construction practices at two

Maryland postal facilities. Investigation

revealed the engineer defrauded the

Postal Service by accepting $12,500 from

a subcontractor for construction and

design work for which the prime contractor had already compensated the engineer. Problems with construction at the

facilities disrupted postal operations,

which were relocated while repairs were

made. 

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. 107-206 — 

The Supplemental Appropriations Act

This law provides an additional $87 million funding to the Postal Service for emergency expenses to enable the Postal Service to

protect its employees and customers from exposure to biohazardous material and to sanitize

and screen the mail. 

The law contains a provision of the Rural

The OIG found the Postal Service underutilized 30 of 83 tabbing systems. The

tabbing system allows open-ended mail

such as fliers and brochures to be handled by high-speed automation equipment.

OIG investigators worked with

Department of Justice and New Zealand

authorities to apprehend and extradite

a contractor who had received a

$679,700 payment in error and fled to

New Zealand.
Service Improvement Act of 2002, amending

the Alaska Bypass Mail Service law, governing

the selection of carriers for non-priority bypass

mail to remote areas of Alaska, referred to as

“the bush.” It prescribes requirements for the

selection of bypass mail to: (1) bush passenger

carriers and non-mail freight carriers for the

delivery of non-priority bypass mail at mainline

service rates, bush rates, or composite rates; (2)

mainline and non-mainline air carriers to hub

points; and (3) all air carriers providing scheduled passenger service to bush points. The OIG

conducted a fact-finding review of the bypass

mail system and plans to address some of the

public policy issues pertaining to bypass mail in

future reviews. Our future work will include

operational and financial aspects of bypass mail

service. 

PROPOSED LEGISLATION

H.R. 5120/S. 2740 — Treasury and

General Government Appropriations Act 

of 2003

These companion bills include the Postal

Service Appropriations Act for FY 2003, providing for a $60 million payment to the Postal

Service Fund for revenue forgone on free mail

for overseas voting, mail for the blind, and

reduced rate mail. None of the funds provided

in this Act can be used to consolidate or close

small rural and other small post offices in

FY 2003. 

S. 2740 would appropriate $60 million for

the Postal Service. H.R. 5120 requests $76.6

million for the Postal Service. The apparent difference between the recommended amounts of

the two bills relates to timing of the payments

by the advanced funding provisions of the

authorizing legislation.

H.J. Resolution 98 — Postage Rate

Moratorium

This joint resolution would provide for a 

3-year moratorium on postage rate increases for

nonprofit organizations and certain other mailers. During the proposed moratorium, rates of

postage would not be increased for: periodicals

with a paid circulation of less than 50,000; any

issue of a periodical with an advertising portion

of less than 20 percent; and any publication of a

nonprofit organization. Although the resolution

does not have the force of law, the OIG has concerns about whether revenue-depressing measures are appropriate at a time when the Postal

Service faces serious financial challenges. 

PAGE34 FINANCIAL MANAGEMENT REVIEWS

DID YOU 

KNOW?

What are the OIG’s values? 

The OIG’s core values are

teamwork, leadership, creativity,

communication, and

conceptualization (TLC3).
PAGE35

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 intent by a customer to

defraud the Postal Service. In the last 6 months,

there were 34 arrests and 14 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

208 investigations of employee embezzlements

this reporting period, which documented losses

of over $2.6 million. Examples of investigations

in this area are summarized below: 

◆ A former Oklahoma officer-in-charge

was sentenced to 15 months imprisonment, 3 years probation, 104 hours of

community service, and ordered to pay

restitution of over $43,700 for embezzling

postal money orders and stamp stock

sales. The officer-in-charge issued over

$23,000 in postal money orders without

making payment and deposited the funds

into checking accounts controlled by the

officer-in-charge. The investigation also

found that approximately $5,800 was not

deposited into postal bank accounts from

stamp stock sales. The scheme was discovered during the investigation of a fire

at the office, which occurred the day

before the office was to be transferred to

a new officer-in-charge. 

◆ A former New York letter carrier pled

guilty to theft of postal money orders.

The Inspection Service investigation disclosed serious deficiencies in internal

controls relating to the receipt and distribution of money orders at the post office.

The plea agreement ordered the carrier

to make full restitution of approximately

$503,000 to the Postal Service. 

◆ A former remote encoding center manager was sentenced to 10 months in

prison and two years supervised release

for submitting false information on travel

vouchers. The former manager reported

personal travel expenses, expenses for

relatives, vacation expenses, false travel

and relocation expenses, and duplicate

claims for miscellaneous expenses as official travel expenses. The investigation

revealed the manager used a ficticious

name as the approving official. The former manager was ordered to pay over

$94,700 in restitution to the Postal Service.

◆ As the result of an investigation, a former Louisiana postmaster was sentenced

to 1 year in prison and 3 years probation

for stealing postal funds. The postmaster

failed to remit money order, postage, and

vending sales and also posted fraudulent

or inflated disbursements to accounts.

The postmaster first claimed the office

had been robbed at gunpoint several

times and that it was never reported and

losses were covered up because the robbers threatened harm if the authorities

were notified. The former postmaster

was also ordered to pay over $77,400 in

restitution.

◆ A former Virginia sales and service associate was sentenced to 1 year in prison

and 3 years probation for conspiring to

negotiate stolen postal money orders.

Postal Inspectors discovered that money

orders missing from the station had been

imprinted for $700 with an inkjet printer

and were cashed in Virginia and Alabama. The former employee was also

ordered to pay $30,800 in restitution to

the Postal Service.

Postal Inspectors work diligently to protect

the elderly from being victims of fraud.
PAGE36 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 37

Technology Reviews
PAGE38

OFFICE OF INSPECTOR

GENERAL

The Postal Service recognizes that technology 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 and

secure 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. 

Last year’s terrorist attacks have demonstrated how the nation’s infrastructure, including information systems, may be vulnerable to

attacks. Computer systems are also 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 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, electronic commerce, and computer intrusion detection activities. In the past 6 months, the OIG performed

24 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, and first article tests and

final deployment. The OIG understands the

importance of reviewing these systems as they

are developed and has completed 8 audits of

major projects currently under development

during the reporting period. These reviews are

highlighted below: 

TESTING OF HUMAN 

TRANSPORTER INADEQUATE

An OIG audit determined that the first

testing phase of the Human Transporter program did not have a written test plan. As a

result, there was no assurance that test procedures and data collection methodologies were

uniform or consistent. Furthermore, the administration of the testing by the Postal Service did

not ensure an independent assessment of the

program. Postal management agreed to delay

the first testing phase until a written test plan is

developed in collaboration with the Postal

Service’s Test, Evaluation, and Quality group. In

addition, postal management agreed to provide

the OIG with a written test plan and to perform

future tests of the Human Transporters with the

Postal Service’s Test Evaluation and Quality

group. (OIG DA-AR-02-009) 

CONFIRM MAIL TRACKING

SYSTEM NOT USED

CONSISTENTLY IN POSTAL

OPERATIONS FOR 

DIAGNOSTIC PURPOSES

An OIG audit revealed that Confirm

should be a valuable tool in managing the mail

and improving customer satisfaction; however,

at this time the service is not consistently used

as a diagnostic tool to improve Postal Service

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 found that the first testing

phase of the Human Transporter program lacked a written test plan. As a

result, there was no assurance that

test procedures or data collection were

uniform or consistent.
PAGE39

operations. Confirm is a new Postal Service

mail-tracking system intended to improve customer satisfaction by allowing business customers to track individual letter-size and flat

mail pieces using a special barcode. The audit

also disclosed several weaknesses in the contract process, including lack of documentation

for contract negotiations, inappropriate

increases in costs, and improper disclosure of

contract information to the contractor. 

Postal Service management agreed with

seven OIG recommended improvements.

However, postal management disagreed with

recommendations to explore the feasibility of

using Confirm to supplement the External FirstClass Measurement System and refrain from

disclosing budget information to the contractor

prior to contract award. The OIG does not plan

to pursue these recommendations through formal audit resolution. (OIG DA-AR-02-007) 

WEAKNESSES FOUND IN

SURFACE-AIR MANAGEMENT

SYSTEM

An OIG audit disclosed the Surface-Air

Management System was an improvement over

the Air Contract Data Collection System being

replaced. However, the OIG found the system

does not comply with some Postal Service software requirements. In addition, the system has

insufficient security controls and unreliable

information due to weaknesses in operational

and functional areas. The Surface-Air

Management System assigns mail to air carriers

and supports air contract payments. Postal

Service management agreed to ensure the system complies with Postal Service standards and

policy for computer access and system classification, and to update the system’s risk assessment.

Further, postal management agreed to train

field maintenance staff and take advantage of

future opportunities to obtain the best contractual value. (OIG DA-AR-02-005) 

PRE-PRODUCTION TEST 

SHOWS LOWER THAN 

ANTICIPATED PERFORMANCE

FOR THE POSTAL AUTOMATED

REDIRECTION SYSTEM

The OIG conducted a survey to validate

the justification to purchase the Postal

Automated Redirection System, Phase I, and

examined the official results of the pre-production test. The system is designed to reduce the

expenses related to handling undeliverable as

addressed mail. The OIG identified issues with

testing that was used to justify the purchase. 

The OIG recommended that postal management not approve the request for $307.6

million for production until the system meets

higher performance requirements. Postal

Service management stated that OIG concerns

were already addressed because the contractor

receives payment incentives when performance

objectives are met. In addition, postal management is committed to improving performance

and the contractor has designed a system that

will allow the existing system to work with the

new system. The OIG plans to perform followup work on these performance issues as the

project progresses. (OIG DA-AR-02-006) 

POSTAL SERVICE PAID 

$39 MILLION TO AUTOMATED

SEAMLESS DISPATCH PROGRAM

CONTRACTOR WITHOUT A

SPECIFIED CONTRACT

At the request of postal management, the

OIG reviewed the Automated Seamless

Dispatch program. That review revealed shortcomings in the management of the program,

and contract administration negatively affected

the program’s cost and integrity. In addition,

mismanagement of the Automated Seamless

Dispatch program and related contracts contributed to improper contracting practices. For

example, the Postal Service paid the contractor

approximately $39 million without validating

whether reported costs were allowable and

properly charged. 

In addition, a statement of work was not

completed until 11 months after the funds were

initially authorized. Specifically, the contractor

claimed it had been performing and delivering

to the requirements of the program without a

specified contract. As a result, the contractor

claimed its costs to complete the program grew

to an estimated $78 million, far exceeding the

original $25 million proposal. After Postal

Service management stopped work on the program, it limited the contractor’s liability, redirected the remaining integration work, and

completed deployment of the dispatch equipment within budget. 

An OIG audit revealed that the Confirm

mail tracking system is not used

consistently as a diagnostic tool to

improve operations and measure performance.
The OIG found that the Postal Service did

not effectively manage the Automated

Seamless Dispatch Program.

PAGE40

Additionally, postal management identified but took no action regarding $2.9 million in

costs incorrectly included in the program. The

OIG considers the $2.9 million as questioned

costs requiring action by postal management.

The OIG made eight recommendations to

improve contracting and program management.

Postal management generally agreed with the

recommendations; however, postal management’s response to four of the recommendations

was not responsive. Two of those recommendations are being pursued through the audit resolution process. The OIG will follow-up on the

other two recommendations in a future audit

report. (OIG DA-AR-02-010)

BIOHAZARD PREVENTION AND

DETECTION TECHNOLOGY NEEDS

SIMULTANEOUS TESTING

In response to last year’s anthrax attacks,

the Postal Service has assessed various technologies to address the threat of biohazards in

the mailstream and is currently focusing on filtration and detection systems. The goal of filtration technology is to reduce the risk of

biohazards being introduced into the mailstream, reduce the risk of exposure to employees

and the public, and prevent cross contamination of mail. The Postal Service will rely on

detection technology to identify potential biohazardous materials as early as possible in the

mailstream. 

Testing of prototype filtration systems and

biohazard detection systems is currently underway at various postal facilities. However, OIG

reviews found that the Postal Service had not

tested the systems concurrently to determine

how either system will affect the performance of

the other. Postal Service management agreed to

test the filtration and detection systems simultaneously on a single piece of mail processing

equipment to ensure there are no adverse effects

on either system prior to acquisition. Of the

$587 million appropriated by Congress to

address the biohazard threat, the Postal Service

has designated a portion for filtration systems

and biohazard detection equipment.

(OIG DA-AR-02-008) 

BIOHAZARD DETECTION SYSTEM

IMPROVEMENTS NEEDED

The Biohazard Detection System was

tested on various mail processing equipment.

The OIG had concerns with the air collection

efficiency and testing of the alarm notification

system. The Postal Service generally agreed to

continue to search for complementing technologies, such as trigger capabilities. Additionally,

postal management agreed to address air collection efficiency differences during tests and identify requirements needed for the alarm

notification system. The Postal Service stated it

has an ongoing effort to conduct further testing

and evaluation of promising technologies to be

integrated with the existing Biohazard

Detection System. (OIG DA-MA-02-001) 

EFFECTIVENESS OF BIOHAZARD

FILTRATION SYSTEM

QUESTIONED

An OIG review questioned the effectiveness and level of protection of the Postal

Service’s Ventilation and Filtration System.

The audit revealed the Postal Service needs to

test the filtration portion of the system to determine its effectiveness and base its testing strategy on a detailed risk assessment. Additionally,

the total cost of site upgrades could outweigh

the benefits of installing the system. Postal

Service management agreed with OIG recommendations to continue to assess the system to

determine whether it is beneficial to install.

Further, the Postal Service agreed to have the

National Institute for Occupational Safety and

Health test the filtration unit to determine its

actual efficiency. (OIG DA-MA-02-002) 

INFORMATION SYSTEMS

REVIEWS

The Postal Service relies on a complex

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. The Postal Service must continue to ensure computer security is maintained

and improved 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 a major telecommunications review and reviews of Postal Service 

TECHNOLOGY REVIEWS

OIG reviews recommended

improvements to the Postal Service’s

biohazard prevention and detection

efforts, including the ventilation and

filtration system.
PAGE41

general controls at an engineering research and

development center. In addition, the OIG conducts annual assessments of general controls at

major processing centers. The most significant

reviews are highlighted below: 

SENSITIVE TEST DATA

VULNERABLE TO DISCLOSURE

AND UNAUTHORIZED

MODIFICATIONS

While conducting a survey review of general controls and the network layout at an engineering research and development center site,

the OIG identified vulnerabilities in the protection of sensitive test data used in developing

new mail processing systems and supporting

new equipment acquisitions. Disclosure or

unauthorized modification of this data could

result in a loss of public trust, fraud, or manipulation for financial gain by vendors competing

for Postal Service automation equipment contracts. The Postal Service agreed with the OIG’s

recommendations and has initiatives completed or in progress to install firewalls or filters

and encrypt sensitive data traveling over the

network. (OIG IS-AR-02-007) 

SECURITY WEAKNESSES

IDENTIFIED BY NETWORK

VULNERABILITY TESTS

The OIG issued six technical reports on

security weaknesses in network switches and

selected servers at Postal Service Headquarters

and other localities nationwide. These vulnerabilities, if left uncorrected, could result in the

loss of confidentiality, integrity, and availability

of vital financial and operational systems; or

allow an unauthorized user to gain access to

additional information and systems. Postal

Service management agreed with the OIG’s

recommendations and indicated corrective

actions were planned or taken. 

(OIG IS-AR-02-008, OIG IS-AR-02-009,

OIG IS-AR-02-010, OIG IS-AR-02-011,

OIG IS-AR-02-012, and OIG IS-AR-02-013)

MULTIPLE VULNERABILITIES

DISCOVERED IN DATABASES

OIG vulnerability tests on selected databases at a Postal Service data center revealed

multiple vulnerabilities that, if uncorrected,

could result in the loss of confidentiality and

integrity of vital application data. Further, the

audit revealed that these databases resided on

servers that were not secure. The vulnerabilities

occurred because, at the time of our review, the

Postal Service did not have complete and current guidance for securing databases, and semiannual reviews of user permissions had not been

documented. Postal Service management

agreed with four OIG recommendations regarding improving server and database security and

corrective actions are planned or taken.

(OIG IS-AR-02-014) 

FY 2002 INFORMATION

SYSTEMS CONTROLS AUDIT

CONDUCTED

The OIG conducts an audit of information

systems controls each year in support of the

annual financial statement audit. The FY 2002

audit revealed that controls over software and

data security at the Information Technology

and Accounting Service Centers were adequate

and postal management had taken action to

resolve recommendations made in previous

reports. However, additional improvements

were necessary in the area of computer equipment accountability and access badge permissions for employees, contractors, and visitors

who no longer needed to access the facilities

where the badges were assigned. Postal Service

management has taken or planned appropriate

corrective actions. (OIG IS-AR-02-015)

NETWORK SECURITY COULD 

BE IMPACTED BY GENERAL

CONTROL WEAKNESSES

The OIG’s reports on general controls at

two locations collectively identified weaknesses in implementing the information security assurance process and/or physical and

network security. The OIG identified a need

to follow the formal security assurance

process to ensure that minimum system security requirements are defined and properly

implemented. Vulnerability tests conducted

on selected network equipment identified a

variety of weaknesses that require immediate

management attention. The network deficiencies occurred because at the time of the OIG’s

review, the Postal Service did not have definitive guidance for managing and securing these

devices. Postal Service management indicated

that corrective actions were planned or taken to

The OIG conducted vulnerability tests

on selected servers at Postal Service

headquarters and other localities

nationwide.

Did You Know? 

In 1777, the Continental

Congress created a system for

handling “dead letters”, pieces of

mail rendered undeliverable by

incomplete, improper, or even

missing addresses. Employees of

the Dead Letter Office were and

still are, allowed to break the

sanctity of the mail by opening

and reading mail only as far as

needed to ascertain the proper

recipient. If they are unable to

determine either who the letter

came from, or to whom it was

intended, the letter is destroyed.

DID YOU 

KNOW?
PAGE42

What is computer hacking? 

Computer hacking is an event in

which someone within or outside

the Postal Service illegally

attempts to gain entry into the

Postal Service computer systems.

The OIG’s computer intrusion

team investigates hacking

attempts.

TECHNOLOGY REVIEWS

address all OIG recommendations. 

(OIG IS-AR-02-016 and OIG IS-AR-02-017) 

SYSTEMS DEVELOPMENT

REVIEWS

Reviewing systems during the development

process provides an opportunity to identify

potential cost and time savings, and a greater

assurance that appropriate internal controls will

be included in the completed system. Industry

practices show that it is 50 to 100 times more

costly to make changes after a system is placed

into production. During system development,

the OIG reviewed two initiatives. The first,

which is designed to improve mail tracking to

support service measurement, is an umbrella

covering multiple programs. The OIG recommended that Postal Service management further define the project and address information

security requirements. Postal Service management disagreed with two recommendations and

provided existing documentation that further

defined the program and appointed an executive sponsor. Management agreed with the

remaining recommendations and has implemented corrective actions to address them. 

The second initiative provides data to a

program that enables the Postal Service to share

mail tracking and status information with

mailers. The OIG identified concerns with the

communications approach, software change

management, information security requirements, and hardware resources. Postal Service

management disagreed with two recommendations; however, corrective actions planned satisfy

the intent of one recommendation and the OIG

does not plan to pursue the second item through

the formal audit resolution process. Postal

Service management has taken or has planned

corrective actions to address the remaining recommendations. 

(OIG EM-AR-02-013 & OIG EM-AR-02-014)

DIRECTOR OF AN 

INFORMATION TECHNOLOGY

COMPANY EMBEZZLED 

$1.1 MILLION FROM PAYROLL,

PLED GUILTY TO FRAUD

As a result of a joint investigation by the

OIG, Federal Bureau of Investigation, Defense

Criminal Investigative Service, and the Air

Force Office of Special Investigations, the former financial systems director for an information technology company pled guilty to one

count of wire fraud. The director defrauded the

company by manipulating the payroll system to

embezzle over $1.1 million. The company provided outsourcing and information technology

solutions to various federal, state, and local government agencies including the Postal Service.

As a result of this theft, the overhead rates for

government contracts with the company were

inflated. 

eCOMMERCE REVIEWS

The Postal Service continues to provide

customers with new online products and services to enhance their personal and professional

lives. In addition, the Postal Service continues

to improve the performance and usability of its

web presence to ensure secure access and protect customer privacy. The Postal Service has

also eliminated or consolidated initiatives that

do not fully support the core products and contribute to revenue. OIG efforts during this

period focused on security, privacy, access, contract, and cost containment issues. Three of

these efforts are highlighted below:

eBUSINESS AGREEMENTS NEED

IMPROVED CONTRACT

LANGUAGE

Based on a review of selected eBusiness

agreements, the OIG found that the Postal

Service did not always include in its contracts

clauses relating to computer security, Privacy

Act issues, and access to contractor records. As

a result, the Postal Service’s systems, trusted

third-party status, and access rights were placed

at risk. For example, one contract for a greeting

card service the Postal Service offers on its website did not have a security clause in the agreement with its service provider. The Postal

Service identified that the service was transmitting customer data in a way that exposed personal and financial data to other Internet users.

After the problem was identified, the Postal

Service took immediate corrective action.

However, if adequate contract language and

controls had been in place, this situation may

have been mitigated. Postal management initially disagreed with seven recommendations;

however, all disagreements have been resolved.

(OIG EM-AR-02-012) 

An OIG audit made recommendations

to improve Postal Service policy and

procedures for a pilot program to 

auction off the contents of undeliverable

mail online.

DID YOU 

KNOW?
PAGE43

INTERNET AUCTION PROCESS

CAN BE STRENGTHENED 

In response to three Hotline allegations,

the OIG conducted an audit of mail recovery

center auctions. The Postal Service auctioned

the contents of undeliverable mail and parcels

under a pilot program using an online auction

company. The audit revealed that by using an

online auction company, the Postal Service

increased revenue, the frequency of auctions,

and its customer base. For example, online auctions of undeliverable mail from one of the

three mail recovery centers brought in additional revenue totaling $1.7 million over 10

accounting periods. The audit substantiated one

of the allegations that Postal Service employees,

their families, and friends were not always

restricted from purchasing Postal Service items

on the auction website. Because policies and

controls were not adequate, the Postal Service

may not be able to detect improper auction purchases. The OIG did not substantiate the other

two allegations related to non-compliance with

the Americans with Disabilities Act and contract awards. 

The audit also revealed that privacy and

security issues were not adequately addressed

and concluded that the Postal Service may not

be adequately maintaining and protecting information collected through online auctions.

Furthermore, the Postal Service did not perform

the required security review of the online auction system, thereby increasing security risks

and exposure to potential problems. The OIG

recommended Postal Service management

update its guidance for online auctions, determine whether the Privacy Act applies to online

auctions, implement the appropriate protections, and complete the required security

review. Postal management agreed with the

majority of recommendations; however, because

the online auction pilot project was discontinued, postal management responded that no further action was necessary. 

(OIG EM-AR-02-010) 

USERS SURVEYED SATISFIED

WITH THE RETAIL DATA MART

SYSTEM

The OIG conducted two agency-wide

surveys of Postal Service employees using the

Retail Data Mart System to determine the level

of system usage, satisfaction, and decision-making capabilities. The Retail Data Mart System is

designed to warehouse and provide retail information captured through the POS One terminals on products sold. Survey results revealed

that employees using the system gave it an overall positive rating. Of the 71 authorized users

and 50 district managers who responded to the

survey, the majority were generally pleased with

the system, indicating that it provided useful

and timely data; and was accurate, reliable,

complete, and cost justified. However, users

indicated that few respondents use the system in

the decision-making process, specifically in

areas such as inventory, finance, and marketing.

The report made no recommendations to postal

management. (OIG EM-MA-02-002) 

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. 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 on 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 completed a number of

investigations and provided technical assistance

to the Postal Service. Some efforts are highlighted below: 

CANADIAN ARRESTED FOR

INVOLVEMENT IN HACKING 

OIG WEB SITE

In June 2002, based upon information

provided by OIG investigators, the Royal

The OIG surveyed postal employees who

used the Retail Data Mart System to

determine their satisfaction with the

system. The system provides retail

information captured through the POS

One terminal shown here.
PAGE44

What law enforcement

authority do OIG investigators

have? 

OIG criminal investigators have

full law enforcement authority.

These special agents are authorized to carry firearms, serve

subpoenas, execute search

warrants, and make arrests.

Canadian Mounted Police arrested a 20-yearold Canadian citizen for involvement in hacking a postal web page. OIG investigators determined that an individual participated in the

hack by using computers at a Canadian college.

Based upon information provided by the OIG,

the Royal Canadian Mounted Police determined that the Canadian college’s computers

had also been hacked. The Royal Canadian

Mounted Police identified and arrested the

hacker, who now faces charges in Montreal. 

OIG PROTECTS THE POSTAL

SERVICE’S INFRASTRUCTURE

The OIG computer intrusion team, working jointly with the Postal Service’s Computer

Incident Response Team, analyzed approximately 1,000 events reported as potential

attacks or suspicious activity against the Postal

Service’s information network.

The computer intrusion team continues to

work with the Postal Service to enhance its

ability to detect, report, and respond to attacks

on the Postal Service’s information network. 

LEGISLATIVE, REGULATORY &

POLICY REVIEWS

During this reporting period, the OIG did

not identify legislation, regulations, and policies

affecting Postal Service technology.

TECHNOLOGY REVIEWS

DID YOU 

KNOW?
PAGE45

INSPECTION SERVICE

The Inspection Service plays an important role in the support of Postal ServiceInternet products and services. The

Inspection Service evaluates the need for and

processes security clearances of employees and

contractors accessing postal systems or sensitive

information. In addition, the Inspection Service

monitors the development of new postal products and services and provides consultation to

postal managers on security, loss prevention,

revenue protection, and evidence retention

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

Postal Inspectors were presented with an

award by the National Center for Missing

and Exploited Children at the 2002

Congressional Breakfast.
PAGE46 TECHNOLOGY REVIEWS
OFFICE OF INSPECTOR GENERAL

Workplace Environment Reviews

Human Resources Process Reviews

Health Care Reviews

Legislative, Regulatory & Policy Reviews

INSPECTION SERVICE

PAGE 47

Labor Management

Reviews
PAGE48 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 850,000 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 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 every precaution 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 areas of concern,

reviewing labor management areas continues to

be one of the OIG’s greatest challenges. In this

regard, the OIG has received over 3,896 individual labor management complaints since

1997. During this reporting period, the OIG

completed 5 reviews and 10 investigations 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, the OIG

completed 39 inquiries into complaints of a hostile work environment or other health and

safety issues, some of which are highlighted

below:

◆ Postal Service district management proposed a reduction in pay for a postmaster

after an OIG review determined the

postmaster caused a hostile work environment. An employee alleged the postmaster created a hostile work environment through sexual harassment.

◆ As a result of an OIG review, a supervisor at a California processing and

distribution center was detailed to

another position after it was determined

the supervisor may have caused a hostile

work environment. An employee complained of deteriorating working conditions when the supervisor returned to the

center. Postal Service management took

corrective action to resolve this issue

including remedial training for the

supervisor. 

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 resources 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 investigations to assess controls over these processes:

This section highlights audits, reviews, and

investigations performed by the OIG and

the Inspection Service in the labor management area. Report numbers are shown in

parentheses after the narrative, as appropriate. Also, the OIG legislative, 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.

The Postal Service deals with four

labor unions and two management

associations.
PAGE49

An OIG audit revealed that the Postal

Service needs to improve its monitoring

to obtain credits for wage compensation

overpayments.

$700,000 CREDIT ADJUSTMENT

POSSIBLE IN WORKERS’

COMPENSATION PROGRAM

An OIG audit of the Southwest Area

revealed the Postal Service did not receive

credit adjustments for approximately $286,000

in wage compensation overpayments and

refundable disbursements from the Department

of Labor. Based on sample results, the OIG projected approximately $700,000 in overpayments were not monitored to ensure the Postal

Service received appropriate credits. Although

the Postal Service had policies to ensure appropriate credit adjustments for wage compensation overpayments, and third-party liability

refundable disbursements were received, some

locations did not implement the procedures. 

Postal Service management agreed with

OIG recommendations to renew its emphasis

on monitoring overpayments and disbursements; issue follow-up procedures that adhere

to existing policies; develop a system to track

previously identified wage compensation overpayments; and review the cases the OIG did not

audit to determine whether credit adjustments

were received. In addition, Postal Service management agreed to implement these recommendations nationwide. (OIG LH-AR-02-003)

CORPORATE SUCCESSION

PLANNING CAN BE BETTER

DEFINED AND DOCUMENTED

At the Board of Governors’ request, the

OIG conducted an audit, which revealed the

Postal Service’s corporate succession planning

process for filling vacant Postal Career

Executive Service positions included many features the OIG identified as best practices for

successful organizations. However, the Postal

Service had not fully documented its corporate

succession planning process or clearly defined

how the plan would help meet corporate strategic goals, and address significant changes in the

Postal Service business environment.

Additionally, the Postal Service needed to

improve its oversight of potential successors’

executive development and the associated

training costs. 

The OIG also found the Postal Service

implemented diversity programs into the corporate succession planning process, resulting in a

slight increase of some diversity statistics, and

little or no change in others. The Postal Service

agreed it could improve its representation of

women and minorities at the Postal Career

Executive Service level. Postal Service management agreed to improve the corporate succession planning process by fully documenting the

process, and to identify and address obstacles to

increase diversity of postal executives.

(OIG LH-AR-02-004)

ECONOMIC VALUE ADDED PAY

FOR PERFORMANCE PROGRAM

TERMINATED

The OIG performed a comprehensive

review of the Postal Service’s executive pay for

performance program. In August 2001, the

Board of Governors asked the Postmaster

General to find alternatives to its pay for performance program after an OIG report raised

questions about whether the program, as structured, was appropriate for the Postal Service’s

breakeven operating environment.

Some highlights of the two reports issued

include advising management that there

appeared to be little connection between the

amount of incentive awards paid and financial

performance. While incentive awards remained

fairly level at about $300 million per year, at the

same time profits steeply declined from $1.8

billion in 1995 to a loss of $1.7 billion in

FY 2001. After the pay for performance program was established in 1996, on-time mail

delivery service improved, but results were only

measured for one-half of the year. The Postal

Service spent an extra $130 million per year for

fall and winter mail delivery; however, they

stated service during this period was not measured because the impact of weather and airline

traffic did not equally affect transportation

networks at all locations.

In addition, participants received almost

$223 million in incentive awards based on measures and targets that did not challenge participants to improve workplace relations or overall

safety. For instance, while employee safety

improved significantly overall, program participants received approximately $117 million in

incentive awards for achieving targets even

though the number of lost workdays increased

in FYs 1999 and 2000 when compared to FY

1998. Additionally, the program resulted in 

DID YOU 

KNOW?

Why are workers’

compensation costs

increasing? 

Many factors contribute to this.

Some are beyond the control of

the Postal Service such as higher

medical costs, claim overpayments

by the program administrator,

increased incidents of fraud by

doctors and hospitals, and an

aging work force. The OIG and

Postal Service are focusing their

efforts on improving the program

and reducing costs.
PAGE50 LABOR MANAGEMENT REVIEWS

managers receiving over $500 million in incentive awards for allegedly improving financial

performance, when all indicators showed financial performance declined.

While the Postal Service announced the

end of its pay for performance program, it generally agreed with OIG recommendations to

add performance measures to the new program

and hold managers accountable for improving

labor management relations and financial performance. Improvements included reducing

debt, and establishing controls to assure a

return on its investments.

(OIG AC-AR-02-005 & OIG AC-AR-02-006)

ASSOCIATE SUPERVISOR

PROGRAM BENEFITS NOT 

FULLY REALIZED

An OIG audit revealed while the Great

Lakes Area was successful in training over 900

employees through the Associate Supervisor

Program, the Postal Service had not fully

assessed the program to determine its impact on

labor management relations and operations.

Specifically, the OIG found procedures for

screening applications and selecting program

candidates were adequate; however, these procedures were not always followed. The OIG also

found the Postal Service deviated from the

selection procedures when processing applications and selecting candidates for the program.

In addition, benefits of the program were not

maximized because postal management did not

determine the appropriate number of entrylevel supervisor positions, nor place graduates

when and where needed. Furthermore, Postal

Service management did not have a budget or

track expenditures for the program. Finally,

oversight was not provided to ensure the program was implemented efficiently and effectively. 

Postal management agreed to the majority

of the findings and recommendations. However,

they did not agree with recommendations to

assess the impact of the program to improve

labor management relations and Postal Service

operations, or to establish a budget and cost

center to capture program expenditures Postalwide. OIG meetings with postal management

resulted in planned actions by the Postal

Service, which satisfy the intent of the recommendations. Based on these meetings, the OIG

considers these issues resolved. 

(OIG LH-AR-02-005)

HEALTH CARE REVIEWS

Controlling injury claim costs continues to

be key to the Postal Service’s financial wellbeing because it is self-insured for workers’ compensation costs and makes payments out of

operating funds, which directly affect the net

income. In FY 2002, the Postal Service paid

over $760 million for employee injury claims, a

$66 million increase over the $694 million paid

in FY 2001.

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 health care program costs. In

addition, involvement in health care fraud

investigations is vital to controlling costs related

to health care premiums. To enhance these

efforts, the OIG entered into a partnership with

the Department of Labor Office of Inspector

General to conduct joint reviews of workers’

compensation claims.

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. Under the program, the Postal

Service pays 80 percent of approximately

850,000 employees’ health care premiums, which is a direct expenditure for the

Postal Service.

In the past 6 months, the OIG completed

10 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 9 arrests,

An OIG audit revealed that the Postal

Service had not fully assessed the

Associate Supervisor Program to

determine its impact on labor

management relations and operations.
PAGE51

10 indictments, and 5 convictions. Some investigations are highlighted below:

◆ A joint OIG investigation with the

Defense Criminal Investigative Service,

Federal Bureau of Investigation and

Internal Revenue Service, Criminal

Investigation Division, resulted in a dentist pleading guilty and being sentenced

to 27 months in prison and 3 years probation. The investigation disclosed the

dentist was involved in a scheme to submit insurance claims for dental services

never rendered to government employees, including Postal Service employees.

The dentist was ordered to pay restitution of more than $264,000 to several

health insurance companies, surrender a

license to practice dentistry, and pay the

Internal Revenue Service approximately

$1 million. 

◆ Two Texas siblings were indicted and

pled guilty in a Texas court for involvement in a health care fraud scheme

involving durable medical equipment.

The siblings, who owned and operated a

telemarketing company, allegedly contacted disabled people and offered free

medical equipment such as hospital beds,

motorized vehicles, and wheelchairs. The

disabled were told, if the equipment was

covered under their insurance policy and

their doctor submitted a prescription, the

equipment would be provided free. Customers’ information was used to file

claims with insurance companies, including claims on behalf of Postal Service

employees, for equipment not delivered

or inferior to that claimed. 

◆ As a result of a joint OIG investigation

with the Department of Labor, Office of

Inspector General, Texas Workers’ Compensation Commission, and the Texas

Mutual Insurance Company, a Texas

health care provider pled guilty to stealing fees in excess of $100,000 in a health

care fraud scheme. The provider was

ordered to pay over $168,000 in restitution to numerous federal and state workers’ compensation system participants.

The Postal Service received over $8,000

in restitution and $10,000 for investigative costs. The investigation was conducted after an audit of the provider

identified deceptive billing practices. A

former employee revealed the provider

fraudulently billed the Department of

Labor, Postal Service, and other private

insurance carriers. 

◆ As a result of an OIG investigation, a

Postal Service employee was removed

from a temporary position with the

Postal Service for working as a part-time

chiropractor with an expired license.

The investigation disclosed the former

employee wrote a light duty status note

on Postal Service letterhead for a fellow

employee. 

◆ As part of a joint investigation by the

OIG, the Postal Inspection Service, the

Defense Criminal Investigative Service,

and the Florida Department of Insurance

Fraud, four subjects were arrested in

Miami for involvement in a fraudulent

health care billing scheme. The investigation was initiated based on fraudulent

medical claims submitted by fictitious

medical providers to the Federal Employees Health Benefits Program, TRICARE,

and private medical insurance companies

for services never rendered. A total of

over $660,000 in fraudulent health care

insurance checks were cashed in this

scheme. 

◆ An OIG investigation revealed a Kansas

City doctor recommended or performed

unnecessary surgeries and billed for surgeries not performed. Convicted of 33

counts of health care fraud, 7 counts of

mail fraud, and 3 counts of perjury, the

doctor was sentenced to 72 months in

prison, 3 years of supervised release, and

ordered to pay a $4,300 special assessment fee. The doctor also agreed to be

excluded from Medicare, TRICARE,

Medicaid, and all Federal Employee

Health Benefit Programs, for 15 years

after being released from jail. 

◆ As a result of an OIG analysis, the

Department of Labor, Office of Workers’

Compensation reimbursed the Postal

Service nearly $70,000. The investigation disclosed that although a series of

payments made to a provider were never

negotiated, the charges were passed to

the Postal Service. The charges were

cancelled and the credits were issued to

the Postal Service. 

The OIG issues subpoenas in support

of its activities and of selected

investigations undertaken by the

Inspection Service.
PAGE52 LABOR MANAGEMENT REVIEWS

LEGISLATIVE, REGULATORY, &

POLICY REVIEWS

During this reporting period, the OIG

identified and reviewed legislation, regulations,

and policies affecting Postal Service labor management. Some of the legislation and regulations reviewed are highlighted below: 

ENACTED LEGISLATION

Public Law 107-174 — The Notification and Federal Employee Anti-discrimination and Retaliation Act of 2002

(No FEAR Act)

This law requires federal agencies, including the Postal Service, to be accountable for

violations of anti-discrimination and whistleblower protection laws. Accordingly, the

amount of any claim, final judgment, award, or

compromise settlement paid to any current or

former federal employee or applicant in connection with specified anti-discrimination and

whistleblower protection complaints will be

paid out of the operating expenses of the agency

to which the discriminatory conduct is attributable. The legislation sets forth requirements for:

the written notification of federal employees

and applicants of their rights and remedies

under these laws, including posting that information on the Internet; and providing

employee training regarding such rights and

remedies.

It requires each federal agency to submit an

annual report to the Speaker of the House of

Representatives, the President pro tempore of

the Senate, the Committee on Governmental

Affairs of the Senate, the Committee on

Government Reform of the House of

Representatives, each congressional committee

with jurisdiction relating to the agency, the

Equal Employment Opportunity Commission,

and the Attorney General. The report includes

the number and status of cases arising under

such laws and the amount of money involved;

the number of employees disciplined; data

relating to complaints filed; agency policy relating to disciplinary actions against employees

who discriminated or committed another prohibited personnel practice; an analysis of all

such information in conjunction with certain

data provided to the Equal Employment

Opportunity Commission; and any adjustment

to comply with the reimbursement requirement

under this Act.

Additionally, the law directs each federal

agency to post on its public website specified

summary statistical data relating to equal

employment opportunity complaints filed with

such agency by employees or applicants; the

Equal Employment Opportunity Commission

to post on its public website summary statistical

data relating to hearings requested on such complaints and appeals filed with it from final

agency actions; and the Equal Employment

Opportunity Commission to issue rules governing the posting of such data. 

The OIG strongly supports statutes to protect employees from discrimination and retaliation resulting from reporting misconduct, fraud,

waste, and abuse. The OIG is assisting the

Postal Service in extending reprisal protection

afforded to other federal employees under the

Whistleblower Protection Act, to its employees.

Although the Postal Service agreed to extend

protection in May 2001, the regulations have

not been finalized. The OIG has raised its concerns in this matter with senior postal management as well as certain members of Congress

including Representative John McHugh,

Representative Henry Waxman, and Senator

Daniel Akaka, Chairman of the Senate

Subcommittee on International Relations,

Proliferation and Federal Services. In response,

the Postal Service has stated it plans to issue regulations soon. If that is not the case, legislation

may be necessary to secure this protection for

Postal Service employees. 

PROPOSED LEGISLATION

H.R. 4763 — Federal Law Enforcement

Officers Pay Equity and Reform Act 

Similar: S. 2770 — The Federal Law

Enforcement Pay Reform Amendments

Act

H.R. 4763 would amend chapter 55 of Title

5, United States Code, to exclude availability

pay for criminal investigators from the limitation on premium pay. S. 2770 is similar to the

House version of the bill as one of its provisions

increases the federal special pay differential for

The OIG uses search warrants as an

investigative tool to obtain critical

information.
PAGE53

federal law enforcement officers employed in

specified metropolitan statistical areas. 

In addition, H.R. 4763 would also require a

study by the Office of Personnel Management

regarding the need for, and potential benefits of,

the establishment of a separate pay, evaluation,

and promotion system for federal law enforcement officers. The bill authorizes Office of

Personnel Management to implement a

demonstration project for such a system. 

Generally, federal laws dealing with compensation do not apply to the Postal Service.

However, under 39 U.S.C. § 1003(b), compensation for OIG employees must be comparable

to that of other offices of inspector general.

Therefore, the OIG has historically followed

federal law enforcement pay statutes. Should

this legislation become law, OIG management

will assess whether the compensation it pays its

law enforcement personnel is comparable with

what is provided for in this legislation and take

appropriate action.
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 179 arrests and 117 convictions for

assaults and threats, and 43 arrests and 43 convictions related to robberies. In addition, 22

individuals were arrested and 15 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, 26 individuals were arrested and 15

were convicted for workers’ compensation

fraud. Examples of workers’ compensation fraud

cases worked by the Inspection Service are

highlighted below:

◆ In the Northern District of Ohio, a letter

carrier was sentenced following a guilty

plea of making false statements to obtain

federal employees’ workers’ compensation

benefits and mail fraud. The carrier was

sentenced to 3 years probation, 150 hours

of community service, and ordered to pay

over $39,000 in restitution to the Postal

Service. In addition, the carrier agreed

to return over $14,000 in wage loss benefits received up to the time the plea

agreement was signed. The former

employee suffered a back injury in 1983

for which total disability was claimed. A

joint investigation with the Inspection

Service and the Department of Labor,

Office of Inspector General revealed the

claimant had been employed in Germany

as early as 1993. A subsequent investigation disclosed the former employee operated a second-hand store in 2001. A

future cost savings of over $250,000 was

attained for the Postal Service. 

◆ A former Florida clerk was sentenced to

27 months imprisonment and 3 years

supervised probation for mail fraud. The

former employee claimed total disability

due to carpal tunnel syndrome. The

symptoms consisted of pain in both

wrists, which prevented writing in a normal manner. The investigation disclosed

the claimant ran a travel business and

arranged tours throughout the world. A

review of business records revealed

$100,000 in the business account. In

addition, the former employee failed to

report income from a travel business to

the Department of Labor and the Postal

Service as required. As a result of the

investigation, the court ordered restitution of $321,000 and a future cost savings

of over $330,000 were attained for the

Postal Service.

◆ A former New Jersey clerk was sentenced

to 3 months probation and ordered to

pay $25,000 in restitution for making

false statements to obtain federal employees’ compensation benefits. The employee claimed total disability as the result of

a 1985 work-related anxiety disorder.

The investigation disclosed that although

claiming to be unable to work, the former employee operated a kennel and falsified statements to the Department of

Labor about job and income. As a result,

the Postal Service received a future costs

savings of over $654,300.

PAGE54

Surveillance is just one of the many

investigative tools used by Postal

Inspectors.
Oversight of the

Inspection Service and

Other Significant

Activities

PAGE 55

OFFICE OF INSPECTOR GENERAL

Oversight Reviews

Other Significant Activities

Legislative, Regulatory & Policy Reviews

INSPECTION SERVICE
PAGE56 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 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. 

The OIG provides independent and objective information and analyzes 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 oversight reviews, as well as numerous

monitoring activities, which are highlighted

below:

HEALTH EXAMINATION

PROGRAM MAY NOT ENSURE

APPROPRIATE PHYSICAL

ABILITIES

The OIG initiated an audit of the Postal

Inspection Service’s health examination program based in part on several complaints alleging Inspection Service management used the

program to inappropriately remove a targeted

group of postal inspectors. The audit revealed

Inspection Service management did not use the

program inappropriately to remove a targeted

group of postal inspectors from service.

Although the allegations were not substantiated, the audit disclosed management did not

ensure postal inspectors possessed the physical

abilities necessary to effectively perform their

duties. Specifically, Inspection Service management did not finalize physical requirements or

medical standards governing periodic health

examinations; ensure postal inspectors completed health examinations as required; use a

rating system which clearly defined conditions

that would result in postal inspectors not meeting the physical requirements of their positions;

and did not appropriately update, maintain and

store employees’ medical files. 

Inspection Service management agreed to

ensure health examinations are taken as

required, medical standards for postal inspector

positions are finalized, and inspectors’ medical

files are appropriately retained and stored.

Although Inspection Service management disagreed with OIG recommendations to develop

physical position requirements and a revised

health examination rating system, they initiated

actions that should correct the deficiencies

identified. (OIG OV-AR-02-003)

MAIL SECURITY COULD BE

STRENGTHENED DURING

DECONTAMINATION AND

IRRADIATION EFFORTS 

An OIG review found Inspection Service

management responded reasonably in ensuring

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 color-screened. The OIG legislative, regulatory, and policy reviews are

included at the end of this section. 

DID YOU 

KNOW?

Are OIG employees Postal

Service employees? 

Yes. OIG employees are Postal

Service employees; however, the

OIG is not a part of the Postal

Service management chain and

does not report to the Postmaster

General, as do other Postal

Service employees.

OIG criminal investigators undergo

rigorous annual physical examinations

to ensure they possess the physical

abilities necessary to effectively

perform their duties.
INTERNAL INVESTIGATIONS 

CONDUCTED

SUMMARY OF CLOSED INTERNAL 

INVESTIGATION ALLEGATIONS

ACTIONS TAKEN ON CLOSED

INTERNAL INVESTIGATIONS

NUMBER OF

INVESTIGATIONS

Active Investigations at Beginning of Period 59

Investigations Opened 32

Investigations Closed 36

Active Investigations at End of Period 55

TYPES OF ALLEGATIONS NUMBER OF 

CASES CLOSED

Code of Conduct (violations involving 

evidence, funds, firearms)

Inspectors 0

Postal Police 1

Support Personnel 0

Code of Conduct (violations involving 

integrity, property, conduct, behavior)

Inspectors 12

Postal Police 15

Support Personnel 2

Other 6

DISCIPLINARY ACTIONS FREQUENCY

Non-bargaining – adverse

Removal/Resignation 1

Suspensions >14 days 0

Non-bargaining – non-adverse

Letter of Warning 5

Letter of Warning 

in lieu of time-off suspensions 0

Official Counseling 4

Bargaining (per collective bargaining 

agreements) – adverse

Removal/Resignation 3

Suspensions>14 days 0

Bargaining (per collective bargaining 

agreements – non-adverse

Letter of Warning 5

Letter of Warning 

in lieu of time-off suspensions 0

Official Counseling 1

PAGE57

mail security during anthrax decontamination

and irradiation efforts. The review found

Inspection Service management appropriately

focused their efforts on the safety of Postal

Service employees and the public. However,

postal management could not ensure all mail

located at decontaminated facilities or

processed at irradiation facilities was secure.

Specifically, postal inspectors who initially

maintained a presence inside 2 contractor irradiation facilities after anthrax was detected

stopped maintaining their presence in

December 2001. Later, rifling of the mail was

detected by Postal Inspectors at a capital metro

processing and distribution plant. Furthermore,

the OIG found postal management did not

ensure contract employees decontaminating

Postal Service facilities and irradiating the mail

obtained security clearances as required. 

The OIG also found Postal Service’s facility manager’s checklist, included in the Postal

Service’s interim guidelines addressing their

response to the anthrax threat, did not require

the Inspection Service be notified when a biohazard threat is detected. Postal management

agreed to develop, and update as appropriate,

contingency plans addressing physical security

of the mail in response to biohazard threats;

include a requirement for background security

checks in future contracts addressing biohazard

threats; and update the Postal Service’s anthrax

guidelines to require the Inspection Service be

notified immediately when a biohazard threat is

detected. (OIG OV-MA-02-001)

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 several 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. 

INSPECTION SERVICE INTERNAL

INVESTIGATIONS

The OIG conducts investigations of

alleged 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

charts to the right summarize the internal investigations conducted by the Inspection Service,

the types of allegations reviewed, and the types

of actions taken 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 13 investigative

efforts and reviews of other significant issues

related to Postal Service operations, some of

which are highlighted below:

BACKGROUND INVESTIGATIONS

OF THREE CANDIDATES FOR

CHIEF POSTAL INSPECTOR

COMPLETED EXPEDITIOUSLY

At the request of the Postmaster General,

OIG investigators conducted background investigations of three candidates for the Chief Postal

Inspector position. Although these types of

investigations often take Office of Personal

Management investigators several months to

perform, OIG agents expedited the investigations and accomplished them in a matter of

days.
PAGE58 OVERSIGHT OF THE INSPECTION SERVICE AND OTHER SIGNIFICANT ACTIVITIES

POSTAL SERVICE PROGRAM

MANAGER DEVELOPED

IMPROPER CONSULTANT 

RELATIONSHIP 

WITH CONTRACTOR

An OIG investigation of a Postal Service

executive revealed the executive, who was a

program manager, developed a consultant relationship with a former Postal Service contractor

who had been awarded a $1.4 million procurement contract. The investigation also revealed

the executive was participating in a discussion

with the same contractor concerning future fulltime employment in violation of the Postal

Service Code of Ethical Conduct. The executive elected to retire in lieu of confronting possible disciplinary action.

LEGISLATIVE, REGULATORY &

POLICY REVIEWS

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:

PROPOSED LEGISLATION

H.R. 5005 — 

Homeland Security Act of 2002

Similar: S. 2794 — 

Homeland Security Act of 2002

These similar, though not identical, bills

would establish a Department of Homeland

Security, as an executive department of the

United States, headed by a Secretary of

Homeland Security, appointed by the President,

by and with the advice and consent of the

Senate, to deal with the threat of terrorist

attacks in the United States. The legislation

gives primary responsibility for investigating

and prosecuting acts of terrorism in federal,

state, and local law enforcement agencies with

proper jurisdiction except as specifically provided by law with respect to entities transferred

to Department of Homeland Security under this

Act. 

Unlike the Senate bill, the House bill provides for a limitation on liability for providers of

biohazard detection equipment to all customers.

An OIG review of contracts for anthrax detection and decontamination found the Postal

Service deviated from standard indemnification

provisions that would have otherwise shielded it

from financial risk in the event of contamination. The risk management provisions of the

House bill would address this problem.

OIG special agents conduct interviews of potential suspects during

investigations.
PAGE59

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, fraud against

businesses, and fraud against 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 the reporting period.

ARRESTS CONVICTIONS*

*Convictions reported in this time frame may be related to arrests made in prior reporting periods.

TYPE OF INVESTIGATION

Mailing of Controlled Substances

 Includes narcotics, steroids, drug-related 

 proceeds, and drug paraphernalia 770 580

Bombs, Threats, Hoaxes, and Explosive Devices 47 20

Child Exploitation, Mailing of Obscene Matter, 

and Sexually Oriented Advisement 139 122

Prohibited Mailings

 Includes hazardous material, firearms, and weapons,

 intoxicants, explosives other than bombs, extortion, 

 and false documents 79 63

Postal Burglaries 64 73

Mail Fraud 

 Includes fraud against consumers, businesses, 

 and government 935 738

Miscellaneous External Crimes

 Includes counterfeit and contraband postage, 

 money order offenses, vandalism, and arson 173 195

Miscellaneous Employee Crimes

 Includes theft of postal property and sabotage 

 of equipment 34 30

Postal Inspectors often join forces with

FBI agents to investigate bombs placed in

mailboxes.
PAGE60 OVERSIGHT OF THE INSPECTION SERVICE AND OTHER SIGNIFICANT ACTIVITIES
Customer Service 

OFFICE OF INSPECTOR GENERAL

External Communications

Specialized Services

INSPECTION SERVICE

PAGE 61
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.

Additionally, 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. 

CONGRESSIONAL TESTIMONY

Each year, the OIG has testified before

Congress on matters affecting the Postal

Service. The OIG provided written statements

to Congress on May 9 and September 27, 2002.

These statements can be found in their entirety

on the OIG’s website at http://www.uspsoig.gov.

In these statements, the OIG highlighted

opportunities to improve the Postal Service’s

workers’ compensation program, and recognized

the need to improve its financial reporting systems. The testimony also highlighted the benefits of OIG work.

The first testimony, presented before the

House Committee on Government Reform’s

Subcommittee on Government Efficiency,

Financial Management and Intergovernmental

Relations, discussed the subject of “Oversight of

the Management of the Office of Workers’

Compensation Program: Are the Complaints

Justified?” Because the Postal Service accounts

for approximately one-third of the total federal

workers’ compensation cost, controlling these

costs is a high priority. The OIG identified ways

the Postal Service could better administer its

workers’ compensation program to ensure its

viability, including better program administration, controlling costs, combating fraud, and

ensuring the health and safety of employees.

The testimony also addressed ways in which the

OIG is partnering with the Department of

Labor to review options to address crucial issues

facing the workers’ compensation program.

The second hearing was presented before

the Senate Committee on Governmental

Affairs, Subcommittee on International

Security, Proliferation and Federal Services,

which had received the Annual Report of the

Postmaster General to the Senate. The OIG

submitted written testimony for the record,

which discussed the benefits of the OIG’s work,

including the identification of $2 billion in

potential monetary benefits for the Postal

Service. 

The OIG stated the Postal Service must be

accountable to the public, and needs a clearly

defined, long-term strategy to achieve an appropriate balance between public service and commercial enterprise that transcends short-term

changes in senior management. The OIG credited the Postal Service for recognizing the need

to improve its financial reporting systems; however, the testimony pointed out the Postal

Service needs to effectively protect revenues,

manage costs, and increase productivity in order

to improve its financial condition. Further, the

Postal Service must provide users of its financial

reports with the necessary information to make

informed decisions. Finally, the Postal Service

needs to change certain procurement policies

and procedures while continuing to be accountable for its primary objective of delivering the

mail.

RESPONDING TO REQUESTS

FROM CONGRESS AND THE

POSTAL SERVICE GOVERNORS

The OIG provides accurate and timely

responses to requests from Congress and the

PAGE62 CUSTOMER SERVICE

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.

In two written statements to Congress

this reporting period, the OIG highlighted opportunities to improve the

Postal Service’s workers’ compensation

program, and noted the Postal Service’s

need to improve its financial reporting

systems.
PAGE63

Postal Service Governors. The OIG responds to

many of these requests by conducting audits or

investigations. However, the OIG does not generally perform audits or investigations when an

inquiry involves a non-systemic issue that may

be resolved through Postal Service’s administrative processes, such as the equal employment

opportunity complaint process, contractual

grievance-arbitration procedures, or the Merit

System Protection Board. Instead, the OIG

incorporates individual concerns into a database to identify systemic issues for review. When

systemic issues have been identified, the OIG

may conduct independent audits or investigations of Postal Service programs and operations

to help ensure their economy, efficiency, and

integrity.

During this 6-month reporting period, the

OIG completed 57 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 review substantiated allegations

the Postal Service was not achieving

anticipated returns on investments in

automated mail processing. Specifically, a

complainant alleged management

reprocessed mail already processed for

delivery by bulk mail customers, thereby

not taking full advantage of the work

sharing discount. 

Work sharing discounts occur when mailers presort the mail for the Postal Service

and receive a discount for their services.

The OIG found Postal Service facility

managers reprocessed the mail stating

merging it with other mail was easier for

delivery. This resulted in decreased cost

savings the Postal Service would have

realized by not reprocessing already presorted mail. The OIG notified Postal

Service management of the findings and

plans to conduct a systemic review to

determine if savings realized justified

work sharing discounts.

◆ A review was conducted in response to a

congressional inquiry regarding a postal

police officer’s allegation of being moved

to another facility as part of a reprisal for

raising law enforcement retirement and

periodic physical examination issues. The

OIG review revealed allegations were

unsubstantiated and the individual was

moved for obstructing operational

changes implemented by Inspection

Service management. Since notification

of a move to another facility, the individual is currently on sick leave. The OIG

plans to conduct a review of the issues

affecting postal police officers, including

their exclusion from the Inspection

Service’s health examination program. 

◆ At the request of the Board of

Governors, the OIG conducted a survey

into whether Postal Service payments 

to the Smithsonian for the National

Postal Museum were in accordance with

the agreement. The OIG noted the

Postal Service did not follow the established formula for calculating the

museum annual operating budget and as

a result during a 4-year period over

funded the museum budget by as much 

as $1.7 million. Instead of submitting 

the annual budget through the coordinating committee, which has not met in

over 2 years, a Postal Service budget

officer determined the Postal Service

contribution to the National Postal

Museum’s budget. 

◆ An OIG review of allegations of false termination and a hostile work environment at a California facility determined a

hostile work environment might have

existed; however, at the time of our

review the allegation appeared to have

been resolved. An arbitrator ruled the

Postal Service had just cause to terminate the complainant for falsifying payroll records. Regarding the hostile work

environment, the OIG found an action

plan was implemented based on a climate

assessment conducted in previous years

and ongoing focus groups are still active. 

In addition to the above requests, the OIG

implemented a process to rapidly respond to

requests made by the Governors and senior

postal management. This is driven by the need

to quickly communicate information to assist

with decision-making or to clarify issues, policies, and procedures. During this reporting
PAGE64

period, the OIG provided information on the

following matters: 

◆ OIG work conducted to assist with the

Transformation Plan commitments;

◆ Differences between offices of inspector

generals and internal audit organizations;

◆ Communicating and resolving audit

issues with Postal Service management;

◆ Factors that contribute to increased

workers’ compensation costs; and

◆ Goals of the Postal Service’s

Breakthrough Productivity Initiative

Awards Program.

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 12,800 contacts on issues related

to deficient postal operations, personnel matters, waste, fraud, abuse, mismanagement, and

other concerns. In addition:

◆ Twenty-three percent were addressed by

the Inspection Service and involved

criminal issues such as mail theft, assaults

and threats, and workers’ compensation

fraud;

◆ Eleven percent were addressed by the

Postal Service’s Office of Consumer

Advocate involving complaints related

to customer service issues, particularly

mail delivery;

◆ Fifty-three percent were related to miscellaneous requests for information such

as ZIP Codes, postage meters, and other

Postal Service-related matters;

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

were referred to Postal Service management; and 

◆ One percent was assigned to OIG staff

for further review for fraud, waste, abuse,

and mismanagement.

Some examples of OIG Hotline work are

highlighted below:

◆ Designed, developed, and implemented a

new “user friendly” voice mail menu for

its customers, enhancing the customer’s

ability to receive prompt assistance; 

◆ Developed a method for conducting data

and trend analysis, providing auditors

and investigators with information to

support their audits, reviews and

investigations;

◆ Made a Hotline promotional video in

support of the OIG’s outreach and educational efforts;

◆ Established a Hotline Information

Request mailbox giving OIG employees

the opportunity to request and receive

information electronically on any complaint received by the Hotline since

inception; and

◆ Installed a telephone service to be used

by the hearing impaired to open up an

avenue of communication to those individuals with hearing impairments.

Hotline Achieves Major Milestone

As one of the most recent offices to join the

inspector general community, the OIG received

its first Hotline contact in August 1997.

Within the first few months of operation, the

OIG had already received over 12,000 contacts,

averaging over 1,690 contacts per month from

employees, customers and members of the general public reporting fraud, waste, abuse and

mismanagement. On September 10, 2002, a little more than five years after its first contact, the

Hotline reached a major milestone, receiving its

100,000th contact. This is an exciting accomplishment for an organization that has only

been in existence a little more than five years.

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

The OIG Hotline posters are prominently

displayed in postal facilities nationwide.
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

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

page 64.

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 15 legislative proposals and 43 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 web

page. 

Before posting a report on the web page,

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. As of July 15, 2002, the OIG transitioned

into the role of deciding and responding to all

OIG related Freedom of Information Act

appeals to more efficiently safeguard individual

privacy and sensitive OIG information while

ensuring maximum access. Specifically,

Freedom of Information Act appeals are handled in OIG legal services and the authority is

outlined under Title 39 United States Code of

Federal Regulations §230.5(e). 

Prior to July 15, 2002, the OIG handled

initial Freedom of Information Act requests for

OIG information, but the Postal Service Law

Department received and decided OIG appeals.

The Postal Service Law Department worked

closely with the OIG to ensure the smooth transition of this important function. In this reporting period, the OIG processed 63 Freedom of

Information Act requests, which were handled

as indicated in the tables in the margin to the

right.

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

the 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 investigators, and Postal

Inspectors first attempt to negotiate with the

subpoena recipient to obtain the requested documents. If this is not successful, the OIG seeks

enforcement in United States district court.

The courts generally enforce the subpoena so

long as the inquiry is within the authority of the

agency, the information sought is reasonably relevant to the agency’s inquiry, and the demand is

not unduly burdensome. 

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

PAGE65

FREEDOM OF INFORMATION ACT REQUESTS

For the period April 1, 2002, through 

September 30, 2002

FREEDOM OF INFORMATION ACT APPEALS

For the period April 1, 2002, through 

September 30, 2002

OIG Number of

Activity Requests

Carryover from prior period 5

Received during the period 63

Total on hand during the period 68 

Processed during the period

Released 29

Withheld 6

Referred to Postal Service 

or other agency 15 

Otherwise closed* 13 

Total processed during the period 63

Balance at end of the period (Pending) 5

*Otherwise closed includes no responsive documents,

improper requests, requests withdrawn, etc.

OIG Number of 

Activity Appeals

Total appealed 6 

Total upheld 5 

Appeals pending 1
PAGE66

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 undergo thorough, progressive investigative and legal reviews. The

subpoena process requires OIG investigators

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

The OIG Computer Forensics Team is

staffed with specialists trained and certified in

the seizure of computers and the recovery of

electronic evidence. 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. 

The OIG Computer Forensics Team also

conducts forensic examinations of computer

media seized during OIG investigations. The

team also deploys during OIG search warrants

to seize or image computer media for later

examination, and during the reporting period

the team imaged over 90 hard disk drives in support of 10 OIG investigations. 

OIG COMPUTER FORENSICS

TEAM WORKS WITH CYBER

INTERAGENCY WORKING

GROUP

The Computer Forensics Team represented

the Postal Service’s information infrastructure

concerns by working on the Cyber Interagency

Working Group, chartered by the President’s

Critical Infrastructure Protection Board. As a

result of the OIG’s representation on this working group, the White House designated a new

Postal/Shipping sector within the nation’s critical infrastructure in the President’s new

National Strategy to Secure Cyberspace. The

OIG computer intrusion team was designated as

the representative for the Executive Council on

Integrity and Efficiency to the newly designated

Interagency Cyber Team, which will be the

vehicle for initially communicating future

national cyber emergencies. The OIG’s contributions to the Cyber Interagency Working

Group has become the blueprint for development of a long-term Cyber Information

Assurance Implementation Plan, which will be

a principal function of the new Department of

Homeland Security. 

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. Two examples of the effective use of polygraph examinations follow: 

◆ An employee in the Treasury Inspector

General for Tax Administration alleged a

co-worker made unwanted sexual

advances, which culminated in the coworker kissing the individual. The OIG

was requested to conduct a voluntary

polygraph examination of the complainant. Subsequent to the polygraph

examination, it was determined the individual demonstrated deception while

responding to the test questions. During

an interview, the individual admitted initiating the kiss with the co-worker and

the previous statements to investigators

were erroneous. The investigation was

dropped and charges regarding false statements were referred to the local Assistant

United States Attorney.

◆ The OIG administered a polygraph

examination to an individual who

allegedly witnessed a “slip and fall” tort

CUSTOMER SERVICE

For the period April 1, 2002, through

September 30, 2002

Types of Number

Subpoenas Issued

OIG 

Related to 

Investigation 60 

Right to 

Financial 

Privacy Act 7 

Inspection Service 

Related to

Investigations 113 

Right to 

Financial 

Privacy Act 15 

Total 195

SUBPOENAS ISSUED

The OIG polygraph program is an

effective investigative tool that

assists in proving guilt or innocence.
PAGE67

claim at a post office in the Midwest

Area. The alleged claimant sought civil

legal representation and $100,000 from

the Postal Service to cover the injury.

The examination indicated deception.

An interview of the witness subsequent

to the examination revealed the injury

actually occurred at the victim’s residence and the victim and witness fabricated the story in an effort to defraud the

government. The victim agreed to take

the witness on a shopping spree and pay

several thousand dollars as compensation

for lying to investigators. Following the

examination, the local Assistant United

States Attorney pursued false statement

charges against both the victim and the

witness and the $100,000 civil tort claim

was dropped.

COMPUTER-ASSISTED

ASSESSMENT TECHNIQUES

The OIG 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

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 supported several significant OIG efforts during this reporting period,

including:

◆ Identified and extracted data during the

review of the Voyager Fleet card system

to identify areas where the Postal Service

could save money when purchasing gasoline for delivery vehicles. See write-up on

page 21.

◆ In accordance with the computer-matching program agreement, conducted an

analysis of the Postal Service payroll system, with the Department of Labor’s

Automated Compensation Payment

System and National Case Management

Systems. The OIG provided postal management with additional information

regarding potential overpayments on a

series of 12 CDs. The Postal Service can

use this information to follow-up and

identify additional overpayments. 

See write-up on page 49.

◆ In concert with an audit team, an 

in-depth analysis of the Postal Service

Accounts Payable and Reporting System

was conducted to determine if the Postal

Service owed money to a utility company

for electric services billed. See write-up

on page 27.

◆ Identified and extracted data from the

Postal Service Payroll System to determine whether the Postal Service was

effectively managing the Associate

Supervisor Program in the Great Lakes

Area. See write-up on page 50.

◆ Worked with an audit team to analyze

the Postal Service Transportation

Information Management Evaluation

System to evaluate the effectiveness of

scheduled highway contract routes, and

to identify opportunities for cost savings.

See write-up on page 20.

What is bypass mail? 

Bypass mail refers to air

shipments primarily of commodities, such as food, to remote areas

of Alaska where air is the only

means available for deliveries.

The mail bypasses post offices

and goes directly to eligible air

carriers on a rotating basis. The

Postal Service then reimburses air

carriers for delivery of the mail to

consumers. 

The OIG analyzed the Postal Service

payroll system and provided detailed

information to the Postal Service on

12 CDs.

DID YOU 

KNOW?
PAGE68

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

Inspection Service crime laboratories analyze evidence,

which assist with solving crimes.
Goals and Strategies

Is employee diversity important to OIG? 

Yes. The OIG is proud of the diverse talents,

skills, and professional experience of our staff.

The OIG believes diversity has enhanced our

work environment.

DID YOU 

KNOW?

PAGE 69
PAGE70

The OIG is committed to

excellence through a vision of “A

constellation of Talented People

Making a Difference Through

Teamwork, Leadership,

Communication, Creativity, 

and Conceptualization (TLC3).”

OFFICE OF INSPECTOR

GENERAL

STRATEGIC GOALS

I

n March 2001, the OIG published a revised

Five Year Strategic Plan for FYs 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 Postal Service 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

the Postal Service’s 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 FY 2003.

The OIG’s strategic planning process has

four distinct steps. First, the OIG determines

the major management issues 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 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. 

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 issues 

 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.
PAGE71

The OIG’s strategic plan identified two

overarching goals. Under each goal, 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 to

determine how well the OIG is achieving its

goals. These measures provide a baseline and

give the OIG 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 to

identify appropriate performance measures that

lead to the OIG’s achievement of its strategic

goals. To that end, the OIG continually

reviews stakeholder input, data from tracking

systems, and cumulative management experience to ensure the OIG’s stated objectives are

on target. As the OIG obtains new information, it continually evaluates and updates OIG

goals, strategies, and performance measures. 

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

OIG’s strategic 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

toward strengthening the OIG’s capability to

fulfill its 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 and value-added services

that contribute to the success of the Postal

Service. 

The FY 2002 performance results were validated by an independent federal agency, which

found the OIG accomplished over 84 percent of

its performance measures. Based upon information gained from FY 2002, the OIG updated its

performance measures for FY 2003 and

increased its challenges. 

OIG PLANNING PROCESS

To ensure long-term success, it is necessary

for the Postal Service and the OIG to plan

reviews, audits, and investigations appropriately. As part of its planning process, the OIG

asks key stakeholders, including Congress, the

Governors, Postal Service managers, the Postal

Rate Commission, 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 in the right margin. 

OIG AUDIT WORKLOAD PLAN 

In a previous section of this Semiannual

Report, the ten major management issues facing

the Postal Service were discussed. In preparing

its audit workload plan, the OIG consolidated

the major management issues facing the Postal

Service into four major areas along with the

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
PAGE72

oversight of the Inspection Service. The OIG

will continue to focus its audit attention on

these major areas to help address critical issues

facing the Postal Service: 

◆ improving safety and security of the mail

for employees and customers; 

◆ reducing workers’ compensation costs; 

◆ improving financial performance and

accountability; 

◆ enhancing productivity through technology and improving the quality of electronic information; and

◆ overseeing the Inspection Service. 

The following presents each of the five

areas and the focus of our audit efforts.

Improving Safety and Security of the Mail

for Employees and Customers

The anthrax contamination of the mail last

year has threatened customer confidence in the

Postal Service’s ability to continue to provide

safe and secure mail services. A decline in customer confidence may cause customers to seek

services other than traditional mail, which will

reduce volume and revenue. The Postal Service

must restore and maintain customer confidence

in its ability to keep secure and safely deliver the

nations mail. The OIG will focus on the following: 

◆ Biohazard detection and filtration

◆ Anthrax irradiation

◆ Collection boxes

◆ Mail processes

◆ Air mail

◆ International mail

◆ Crime prevention

◆ Security Cameras

Reducing Workers’ Compensation Costs

Workers’ compensation costs have

increased 35 percent in the last three years. As

the largest participant in the Federal Workers’

Compensation Program, the Postal Service

accounted for $760 million of the total $2.2 billion in federal workers’ compensation outlays

for claims for 2002. Controlling workers’ compensation costs is a priority issue for the Postal

Service critical to improving its financial condition. The OIG will focus on the following: 

◆ Costs 

◆ Injury compensation costs 

◆ Medical costs

◆ Return to work

◆ Outplacement efforts

◆ Programs

◆ Administration

◆ Rehabilitation program

◆ Pre-injury safety programs

Improving Financial Performance and

Accountability

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.

Recent financial trends are encouraging; however, the Postal Service needs to sustain the

progress made and continue to improve financial performance and accountability. 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

◆ Identification of potential corruption 

with the Postal Service’s contracting 

and procurement process

GOALS AND STRATEGIES

During the planning process the OIG

creates a unique opportunity to obtain

input from all OIG resources. 
PAGE73

◆ Facilities and real estate 

◆ Justification, approval, and budgeting

◆ Construction management

◆ Logistics

◆ Transportation systems and operations

◆ Material management

Enhancing Productivity Through

Technology and Improving The Quality of

Electronic Information

Enhancing productivity through the use of

technology is key to the Postal Service’s ability

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 also depends on

high quality information in order to improve

and sustain service performance. In addition,

changes in technology make timely and accurate data critical for effective decision-making.

OIG efforts will focus on the following: 

◆ Information systems 

◆ Information infrastructure and 

architecture

◆ System performance and integrity

◆ Systems development and 

implementation

◆ Disaster recovery and business 

continuity plans

◆ Computer security 

◆ Access

◆ Data protection

◆ Data integrity

◆ Accepting and Processing

◆ Mail tracking (scanning)

◆ Breakthrough productivity initiatives

◆ Network integration and alignment

◆ Transportation/Delivery

◆ City carrier productivity

◆ Vehicle maintenance facilities

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 over the next five

years. 
PAGE74

GOALS OBJECTIVES

Safety

Security

Integrity

• Reduce and deter the use of the nation’s mail system by 

 organized groups to transport illegal narcotics

• Reduce and deter the use of U.S. Postal Money Orders 

 to launder money by disrupting money laundering operations

• Reduce and deter the use of the U.S. mails for the procurement or 

 delivery of materials that promote the sexual exploitation of children

• Reduce and deter employee on employee assaults and 

 credible threats 

• Deter robberies of postal employees and facilities

• Reduce and deter illegal drugs in the postal environment

• Reduce and deter attacks on postal vehicles, apartment panels, 

 collection boxes, NDCBU's and CBU's in Arizona and California

• Identify and resolve domestic and international in-transit mail theft

• Reduce and deter mail theft related identity theft and identity 

 takeover crimes

• Reduce and deter embezzlements

• Reduce and deter criminal misuse of the Postal Service’s workers’ 

 compensation program and reduce long-term compensation costs

• Reduce and deter postage fraud schemes

• Assure sanctity and security of U.S. Mail

• Reduce and deter multi-state domestic and international 

 fraudulent telemarketing operations and direct mail operations

• Reduce and deter deceptive mailing operations

Reduce the Use of the Mail to Defraud Consumers, 

Businesses, and Government Agencies

Ensure a Safe and Secure Drug-Free Work Environment

Reduce Theft of the Mail

Reduce and Deter Criminal Attacks of Postal Products, 

Services, and Assets

Reduce and Prevent the Use of the Postal System for 

Prohibited, Illegal, and Dangerous Mailings

GOALS AND STRATEGIES

Inspection Service

FY2002 Goals and Objectives

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.
Organizational Dynamics

How do 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 agreements is not reached, the Inspector General may

elect to submit the disagreement to the Governors for

final resolution.

DID YOU 

KNOW?

PAGE 75
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 on

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, developmental,

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 inforPAGE76 ORGANIZATIONAL DYNAMICS

This section describes the OIG and the

Inspection Service organizational vision,

values, culture, and diversity that assist

with providing value-added service to the

Postal Service. In order to differentiate the

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

reported by the Inspection Service has been

color-screened.

The OIG’s values make up the core

of its culture and define how it

performs its work.

DID YOU 

KNOW?

Did You Know? 

The Citizen’s Stamp Advisory

Committee, established in 1957,

is tasked with evaluating the

merits of all postage stamp proposals. Each year, Americans

submit proposals to the Postal

Service on literally thousands of

different topics. The Committee

considers every stamp suggestion,

regardless of who makes it or how

it is presented. Committee members are appointed by the Postmaster General and are comprised

of 15 members whose backgrounds reflect a wide range of

educational, artistic, historical,

and professional expertise. 
PAGE77

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 Systems

Security Professionals, Certified Government

Audit Professionals, Certified Government

Financial Managers, and Certified Acquisition

Auditors. OIG employees also hold law

enforcement specialty certifications in areas

such as polygraph examinations. In addition,

many OIG employees have undergraduate or

advanced degrees, while other employees are

continuing to work towards professional and

academic achievements. OIG employees work

in teams of auditors, evaluators, criminal investigators, lawyers, technicians, and administrative personnel. These employees have diverse

backgrounds and experiences from federal and

state government agencies, private industry,

non-profit 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 September

30, 2002, the OIG had 712 employees, of whom

51 percent were women and 49 percent minorities. The senior management staff is composed

of approximately 38 percent women and 23 percent minorities. Based on the September 2000

U.S. Office of Personnel Management Federal

Civilian Workforce estimates, the OIG workforce has exceeded the representation in the

federal civilian workforce of Asians, Blacks,

Hispanics, and women. The federal civilian

workforce is comprised of the executive branch

and non-Postal Service employees. Because

Bureau of Labor Statistics census data is now

over 10 years old, and new census civilian labor

force data will not be released until 2003, the

OIG is using the more up-to-date Federal

Civilian Workforce data as a comparison.

The OIG also continued to take proactive

actions to ensure a productive, inclusive, and

quality work culture and environment for

employees. Employees are the OIG’s most valuable resource. Therefore, it is essential that the

OIG maintain the best workplace for employees

to do their best work. The OIG established an

organizational performance measure for FY

2002 designed to engage all employees in sharing responsibility for enhancing their work

environment and work relationships. This measure required all employees to complete at least

20 credits of activities intended to enhance

their skills in areas such as effective communication, resolving differences, teamwork, and

managing stress. Ninety-seven percent of all

OIG employees achieved, and most exceeded,

this goal. 

The OIG also launched a sexual harassment prevention online training program for all

employees to ensure a harassment-free workplace environment. The training included the

OIG’s Sexual Harassment Prevention Policy,

information on what constitutes sexual harassment, and responsibilities and strategies for

addressing and preventing it. As of

September 30, 2002, over 92 percent of all

employees had completed the training. 

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

Comparison of OIG 

Diversity Statistics to

Federal Civilian Workforce

0

10%

20%

30%

40%

50%

60%

70%

WHITE BLACK HISPANIC ASIAN NATIVE AMERICAN

OIG 

Federal Workforce 

OIG exceeds minority representation in

nearly every category.
PAGE78

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.

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 evaluated 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

This past year, the OIG made a concerted

effort to reach out and educate diverse audiences, large and small, not only about the results

of the OIG’s work, but also about the role, function, and value of an inspector general’s office.

Outreach performance is one of the OIG’s

annual performance measures, and the results

are tracked. This past year, the OIG outreach

performance exceeded last year’s result by 224

percent. 

The OIG placed particular emphasis on

presenting speeches to outside audiences and

arranged speaking opportunities for senior staff.

In this last reporting period, the Inspector

General delivered major speeches to 2,500 postmasters attending the National Association of

Postmasters of the United States annual 2002

convention; 560 members of Women In Federal

Law Enforcement; 160 members of the Institute

of Internal Auditors; and 500 members of

MAILCOM. The Deputy Inspector General

addressed 2,000 rural letter carriers attending

the National Rural Letter Carriers Association

annual 2002 convention. Members of the OIG’s

Leadership Team addressed over 2,500 attendees of Postal Service state and area management association conventions, and OIG special

agents gave 270 fraud awareness and 27 computer intrusion briefings to postal audiences.

In addition, the OIG increased its news

releases by over 400 percent, using targeted

media mailing lists and Internet postings. This

resulted in getting messages regarding OIG

work to the media, employee unions, other

“watchdog” groups, and the American public.

The public can access audit reports, press

releases, and other OIG information on its website at http://www.uspsoig.gov. Groups desiring

an OIG speaker are invited to contact the OIG’s

Public Relations Director at (703) 248-2100.

ORGANIZATIONAL DYNAMICS

As part of its public relations and

outreach efforts, the OIG staffed an

informational booth at the Women

in Federal Law Enforcement

conference.
PAGE79

NOTABLE OIG ACHIEVEMENTS

OIG EMPLOYEE REQUESTED BY

CONSUL GENERAL FOR JERICHO

DETAIL

In May 2002, OIG evaluator Dave Zielinski

was requested by the Consul General and Chief

of Mission in Jerusalem, Department of State, to

assist with an international peacekeeping effort

in the Middle East. The Department of State

selected Mr. Zielinski based on his success as a

Department of Justice employee working with

Palestinian authorities. Mr. Zielinski was asked

to serve in Jericho, Israel, on an international

team of monitors overseeing the confinement of

Palestinian prisoners involved in the Church of

Nativity standoff. He worked closely with

American, British, and Israeli officials to ensure

the prisoners were held in accordance with

international agreements. As the only U.S. government employee on the monitoring team, Mr.

Zielinski has given the Postal Service international recognition. The OIG is proud to have

such a distinguished, internationally recognized

individual as one of its own.

OIG PEER REVIEW EXEMPLARY

In February 2002, the National Railroad

Passenger Corporation (AMTRAK) Office of

Inspector General conducted a peer review of

the OIG’s audit program. Government

Auditing Standards require that each audit

organization conducting audits in accordance

with these standards have an external quality

control review at least once every 3 years. The

peer review team concluded the OIG’s internal

quality control system was exemplary. This is a

tremendous accomplishment, particularly in

light of recent high-profile events related to the

work quality of the auditing profession and the

fact that this was the OIG’s first peer review. 

The peer review assures the OIG has an

effective audit program. The objective of the

review is to determine whether an internal

quality control system is in place and operating

effectively to provide reasonable assurance that

established policies, procedures, and applicable

auditing standards are being followed. The

results are presented in an external report and,

when applicable, a letter of comments containing recommendations for improvements to the

quality control system.

TRANSFORMATION PLAN

STEERING COMMITTEE

In order to address its short and long-term

challenges, the Postal Service published a

Transformation Plan in April 2002. The OIG

established a Transformation Plan Steering

Committee to coordinate and oversee OIG

efforts related to postal transformation. OIG

Steering Committee members represent each of

the OIG’s major teams in order to ensure adequate coverage of issues in the plan.

In August 2002, the committee issued two

internal reports that provided information and

analyses for OIG managers to consider when

planning their work. The first report compared

Transformation Plan areas to completed and

ongoing OIG work. By conducting this comparison, the OIG was able to identify areas that did

not have audit coverage and use this data in

developing its FY 2003 Audit Workload Plan.

The second report presented the results of the

OIG’s review of the Transformation Plan as it

relates to the Postal Service’s voice of the business, voice of the customer, and voice of the

employee. This report highlighted areas where

the OIG could consider placing greater audit

coverage. The reports will be updated periodically.

The Steering Committee coordinated several OIG projects related to transformation in

order to maximize efficiency and avoid overlap

of efforts. These projects included reviews of the

Transformation Plan, the Postal Service’s compliance with Government Performance and

Results, and ratemaking. In addition, the

Steering Committee plans to periodically issue

capping reports on OIG reviews that correspond to transformation issues. The Steering

Committee will continue to play an active part

in planning, oversight, and coordination as

transformation unfolds. 

OIG EXPERTISE SOUGHT 

IN INTERNATIONAL 

ANTI-CORRUPTION EFFORTS

The U.S. Department of Treasury’s Office

of Technical Assistance asked the OIG to share

its expertise in fighting fraud, waste, and abuse

to help with anti-corruption programs for developing countries. The OIG will be providing its

expertise in the areas of auditing and anti-corruption in order to help countries such as

OIG Evaluator Dave Zielinski assisted the

Department of State in an international

peacekeeping effort in the Middle East.
PAGE80

Armenia, South Africa, and others create anticorruption policies, develop enabling legislation, implement regulations, and train

anti-corruption personnel. 

OIG IMPLEMENTS 

ENTERPRISE-WIDE RESOURCE

PLANNING SYSTEM

The OIG effectively implemented an

enterprise-wide resource planning system that

provides state-of-the-art technical capabilities

to conduct business processes and support

employees. Specifically, the OIG enhanced its

strategic planning capabilities, program management, and employee productivity. The system also supports the OIG’s core values of

teamwork, leadership, creativity, communication, and conceptualization by providing realtime communication and data access to its

management committee, leadership team, and

employees. In addition to implementing the system on time and within budget, the OIG realized over $900,000 in savings by documenting

business processes, developing training materials, and using in-house resources to provide the

training.

OIG HOSTS ANNUAL FEDERAL

AUDIT EXECUTIVE COUNCIL

CONFERENCE

In May, the OIG hosted the annual Federal

Audit Executive Council Conference in

Norfolk, Virginia. The theme was “The Future

of Auditing.” The conference provided

attendees with thought-provoking insight into

the direction of the audit profession and how

audit executives can meet future challenges.

Inspector Generals and other audit executives

from federal agencies attended. The OIG’s

Assistant Inspector General of Financial

Management, is Chairman of the council. The

council consists of Assistant Inspector Generals

for Auditing or individuals in similar positions

from federal agencies, and discusses and coordinates matters affecting audit policy and operations of common interest in the federal audit

community.

OIG DEVELOPS CRIMINAL

INVESTIGATIVE SOFTWARE

APPLICATION

The OIG Information Technology and

Investigative Teams worked together to design,

develop, and implement an internal software

application for criminal investigators to plan,

execute, document, track, and report investigative casework. This innovative software application gives the OIG real-time access to sensitive

investigative data, the ability to share information with other federal law enforcement entities, and the tools necessary to account for

resources used in investigative processes, all

within an encrypted, secure operational environment. 

The development and implementation of

this software application demonstrates the

OIG’s core values and significantly increases

productivity. The system also enhances the

OIG’s position as a leader in the federal law

enforcement community, as witnessed by the

interest and enthusiasm it has generated within

the community. The OIG has provided demonstrations of the software to 11 agencies, and

more are scheduled to receive demonstrations.

OIG IMPLEMENTS PROTECTIVE

REVIEW PROGRAM

The OIG is implementing a Protective

Review Program. These reviews are designed to

provide critical coverage of the almost 38,000

facilities of the Postal Service. This program

will provide valuable and timely feedback

about office and program management to local

and headquarters-level management and identify systemic issues for quick resolution. 

OIG DIRECTOR SELECTED FOR

GENERAL ACCOUNTING OFFICE

EXECUTIVE DEVELOPMENT

PROGRAM 

The OIG’s former director of Oversight was

one of 10 individuals selected to participate in

the General Accounting Office’s Executive

Candidate Assessment and Development

Program. This individual was the only candidate selected from outside the General

Accounting Office. The program, which began

in 1981, identifies individuals who have the

potential to undertake executive-level responsibility and provides them with training to

enhance their leadership skills. The OIG is

extremely proud that one of its former leaders

was selected for this program. 

ORGANIZATIONAL DYNAMICS

OIG teams received Awards of

Excellence from the President’s

Council on Integrity and Efficiency

and Executive Council on Integrity

and Efficiency.
PAGE81

OIG RECEIVES AWARDS OF

EXCELLENCE

The OIG received 11 Awards of

Excellence from the President’s Council on

Integrity and Efficiency and the Executive

Council on Integrity and Efficiency for

FY 2002. The OIG was recognized for excellence in the areas of audits, investigations,

administrative support, and assistance after the

September 11, 2001, attacks. The OIG won

awards for:

◆ innovation and dedication during a

national biohazard attack by assisting the

Postal Service in responding to anthrax

contamination by evaluating the steps

taken and providing concurrent suggestions to improve their ongoing process of

action;

◆ successful prosecution of four postal contractors and a postal employee for conspiring to defraud the Postal Service by

making and receiving payments in return

for awarding contracts valued at nearly

$16 million;

◆ using state-of-the-art technology to

transform its Hotline into a paperless

environment;

◆ designing and applying critical safeguards

that ensure the security of network applications, and implementing an enterprisewide resource planning system to support

all OIG employees; and

◆ achievement in a multi-agency investigation that identified improper and fraudulent testing practices for underground

storage tanks in Postal Service facilities,

military bases, and a National Aeronautics and Space Administration facility.

This year a special category was included to

recognize the unprecedented efforts of the

inspector general community in responding to

the September 11, 2001, terrorist attacks on the

United States and efforts to protect the people

of the United States. The OIG was recognized

for contributing to this effort.

OIG EMPLOYEES ASSIST IN THE

FIGHT AGAINST TERRORISM

Eight 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 SPECIAL AGENTS CONDUCT

NATIONWIDE OUTREACH

EFFORTS

This reporting period, OIG special agents

continued their outreach and education efforts

nationwide. Special agents worked to develop

new cases by providing information to various

Postal Service and law enforcement entities on

the mission and structure of the OIG, the current designation of functions between the OIG

and the Inspection Service, and the ways in

which OIG investigative and audit teams work

together. The OIG also conducted numerous

fraud awareness briefings to postal employees

nationwide and continued to make its presence

known in the health care fraud arena. Special

agents attended a Health Care Task Force

meeting at the U.S. Attorney’s Office in

Atlanta, Georgia, and attended the Health

Care Fraud Working Group meeting at the U.S.

Attorney’s Office, Western District of

Tennessee. Representatives attended these

meetings from various federal, state, and local

law enforcement and health care agencies. 

CHALLENGES FACING THE OIG 

As the OIG moves forward in its efforts to

help the United States 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

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

OIG teams received Awards of Excellence

from the President’s Council on Integrity

and Efficiency and Executive Council on

Integrity and Efficiency.
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 issues, 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 Inspection Service and senior postal management to

resolve these challenges, and looks forward to establishing an environment of

cooperation with the new Chief Postal

Inspector.

◆ 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

the 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 initiatives 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.

PAGE82 ORGANIZATIONAL DYNAMICS

Inspector General Karla Corcoran

was interviewed for a MAIL

magazine cover story.
PAGE83

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 utilize 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 an informational CD for stakeholders and prospective employees.

◆ 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 just over 1 year. 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, video teleconferencing,

and the employee newsletter.
INSPECTION 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 court. 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 800 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 Internal Affairs Division operates with

a staff of 11 Postal Inspectors, an Inspector in

Charge, 4 support employees and 36 Postal

Police Officers, and has a two-fold mission.

First, it ensures integrity and excellence within

the Inspection Service by conducting independent internal investigations of its employees.

Second, 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 Postal

Inspection Service investigations, programs,

and goals, processes requests for access to

Inspection Service records and provides legal

training to Inspection Service personnel. The

Counsel’s office comprises 20 InspectorAttorneys, supported by an administrative staff

including paralegals, information disclosure specialists, a labor relations analyist, 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.

PAGE84

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 85
PAGE86 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/ Quick Response

AIG for Financial Management

Contracting & Facilities

Financial Field 

Financial Statements

AIG for Core Operations

Accepting & Processing

Labor Management

Transportation & Delivery

Health Care

AIG for eBusiness

Developmental

eCommerce/Marketing

Information Systems

Inspection Service

Assistant Inspector General

Investigative Operations

Deputy AIG for Investigations

Financial Crimes

Health Care Fraud

Executive Investigations & Retaliation

Computer Intrusion/Forensic 

 & Tech Services

Hotline & Security

General Counsel & 

AIG for Oversight 

& Legal Services

Deputy AIG for

Oversight & Legal Services

Legal Services

Oversight 

OVERSIGHT & LEGAL SERVICES

◆ FIELD OFFICES : WASHINGTON ◆ ATLANTA ◆ BOSTON ◆ CHICAGO ◆ DALLAS ◆ DENVER ◆

LOS ANGELES ◆

TAMPA

◆

ST. LOUIS

◆

SAN FRANCISCO ◆ RALEIGH ◆ PORTLAND ◆ PITTSBURGH ◆ NEW YORK

◆

MINNEAPOLIS

Executive Representative 

for Field Liaison

Field Offices

Inspector General

Deputy 

Inspector General

Quality Assurance & Internal Affairs

Strategic Planning

Public Relations

Congressional & FOIA

Office of Inspector General

Organizational Structure
PAGE87

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. It is a matrix

organization with a non-hierarchical structure

organized into five core business functions.

The OIG works in teams to maximize the

abilities of its employees and uses cutting-edge

technology and the most advanced management principles available to add value to postal

programs and operations. 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 following section

describes the OIG organizational structure as

of September 30, 2002.

DEPUTY INSPECTOR GENERAL

Thomas Coogan

CONGRESSIONAL & FOIA TEAM 

Director, Carrie Fox - serves as liaison and

responds to requests from Congress and the

Board of Governors; coordinates congressional

testimony and presentations; and responds to

all Freedom of Information Act requests.

PUBLIC RELATIONS TEAM

Director, Laura Whitaker - plans and

directs public relations activities; serves as liaison and responds to requests from media; plans

and directs all OIG outreach activities; and

keeps OIG staff informed of news articles of

interest.

QUALITY ASSURANCE & INTERNAL

AFFAIRS TEAM

Director, George Davis - conducts internal

reviews of OIG operations and procedures to

ensure they are effective and appropriate, and

reviews allegations against OIG employees.

STRATEGIC PLANNING

Director, Linda Libician (Acting) - incorporates current and future Postal Service

changes into OIG operations, prepares and

updates the OIG strategic plan, develops and

monitors the OIG 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: Washington, New York,

Atlanta, Pittsburgh, Boston, Raleigh, and

Tampa

◆ West Offices: Chicago, Los Angeles,

Dallas, Minneapolis, St. Louis, Denver,

Portland, and San Francisco

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

(Central) and Carl Puricelli (West) and

Rosa Howard (East)- plan and direct investigations in coordination with Headquarters

staff and are responsible for overall investigative field staff development.

GENERAL COUNSEL & ASSISTANT

INSPECTOR GENERAL FOR

OVERSIGHT AND LEGAL

SERVICES

Kirt West

DEPUTY ASSISTANT INSPECTOR

GENERAL FOR OVERSIGHT AND

LEGAL SERVICES

Gladis Griffith

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.

The OIG has 15 field offices nationwide.

Pictured here are employees at the

Minneapolis Field Office.
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.

OVERSIGHT TEAM

Director, Howard Cox (Acting) - provides

oversight of Inspection Service functions and

operations through 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/QUICK RESPONSE TEAM

Director, Kim Stroud - 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. In addition, assists

Postal Service management by identifying best

practices for improving Postal Service operations and advises on critical, time sensitive

issues.

ASSISTANT INSPECTOR GENERAL

FOR FINANCIAL MANAGEMENT

John Seeba

FINANCIAL TEAMS

Director, Financial Statements, John

Cihota (Acting) 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.

CONTRACTING & 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

Wayne Goleski

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 TEAM 

Director, Chris Nicoloff - plans and directs

audits and reviews focusing on labor relations

and labor management issues within the Postal

Service to assist in maintaining a healthy and

safe organizational climate for employees and

improving operational economy, efficiency, and

effectiveness.

HEALTH CARE TEAM

Director, Erica Blackman (Acting)- plans

and directs audits and reviews focusing on

health care issues within the Postal Service to

assist in 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,

PAGE88 ORGANIZATIONAL STRUCTURE

DID YOU 

KNOW?

Did You Know? 

The Postal Service did not require

city dwellers to have mailboxes at

their homes until 1916. Before

that, carriers would deliver the

mail to the door, ring the bell

twice (the postman always rings

twice) to signal the mail was

there, or knock. To save wear

and tear on their knuckles, carriers also used wooden doorknockers to announce their presence.
PAGE89

marketing programs, stamp services, retail operations, international business, and support

operations. 

INFORMATION SYSTEMS TEAM

Director, Frances Cain (Acting) - 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. 

INSPECTION SERVICE TEAM

Director, Michael Thompson (Acting) -

plans and directs audits and reviews of Inspection Service functions and operations.

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 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.

This team also 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.

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.

COMPUTER INTRUSION AND

FORENSIC & TECHNICAL SERVICES

TEAM

Director, Ovie Carroll (Acting) - 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, John DeMaggio - 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

Ron Stith

DEPUTY ASSISTANT INSPECTOR

GENERAL FOR RESOURCES

Mary Demory

HUMAN RESOURCES TEAM

Director, Marta Erceg (Acting) - provides

full-service 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

The Human Resources Team provides

full-service human resources support to the OIG.

The OIG Legal Services team provides

legal advise to OIG staff, processes

subpoenas, manages the ethics

program, and reviews existing and

proposed legislations, regulations,

and policies affecting the Postal

Service.
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;

architecture; engineering; 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 Washington, DC. In addition, the OIG has 15 field

offices located in San Francisco 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

Washington, DC. OIG locations are depicted

in the chart below.

PAGE90

RALEIGH, NC

NEW YORK, NY MINNEAPOLIS, MN

ST. LOUIS, MO

ATLANTA, GA LOS ANGELES, CA

DALLAS, TX

WASHINGTON, DC CHICAGO, IL

DENVER, CO

SAN FRANCISCO, 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

WASHINGTON, DC CHICAGO, IL

DENVER, CO

SAN FRANCISCO, CA

TAMPA, FL

BOSTON, MA

PITTSBURGH, PA

PORTLAND, OR

OIG Locations Nationwide 

ORGANIZATIONAL STRUCTURE
PAGE91

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.

Chief Postal Inspector 

Lee R. Heath

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

Lab Director

F+TSD

L. MUEHLBERGER

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 - 

W. KEZER

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. SOMERSET

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

(VACANT)

Inspector in Charge

Congressional & 

Public Affairs

D. MIHALKO

Inspection Service Organizational Structure

Chief Postal Inspector

LEE R. HEATH

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

(VACANT)

Deputy Chief Inspector

Field Operations West

M. AHERN

Deputy Chief Inspector

Field Operations South

W. MITCHELL
PAGE92 ORGANIZATIONAL STRUCTURE
Appendices

DID YOU 

KNOW?

PAGE 93

Did You Know? 

The Postal Service’s technology infrastructure

is one of five largest in the world with a

network of more than 540,000 devices, 

1,800 employees, and operating at a cost of

nearly $878 million annually. 
APPENDIX A

Reports Issued to Postal Management

For the period April 1, 2002, through September 30, 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 

Number of Questioned Unsupported Funds Put to Unrecoverable

Principal Area Reports Issued Costs Costs1 Better Use Costs

Performance 10 $0 $0 $21,459,787 $0

Financial Management 255 $159,752,997 $117,650,903 $3,244,892 $8,301,831

Technology 24 $2,970,477 $0 $0 $0

Labor Management 5 $0 $0 $835,000 $0

Oversight 2 $0 $0 $0 $0

Other Significant Reviews 2 $0 $0 $0 $0

GRAND TOTAL 298 $162,723,474 $117,650,903 $25,539,679 $8,301,831

PAGE 94 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 unrecoverable costs. 
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 Other2 Date

ACCEPTING AND PROCESSING

AC-MA-02-001 Certified Mail Processing $0 $0 $0 $0 8/30/02

Operations at the Sacramento 

Processing and Distribution Center

AC-MA-02-002 Review of Nonprofit Standard Mail $0 $0 $0 $0 8/14/02

QUICK RESPONSE 

CQ-AR-02-001 Work Performed by Business Mail $0 $0 $1,079,832 $0 9/26/02

Entry Employees in the Colorado

Wyoming Performance Cluster

MARKETING

EM-AR-02-011 National Postal Forum $0 $0 $0 $0 4/24/02

TRANSPORTATION AND DELIVERY

TD-AR-02-003 Highway Network Scheduling - $0 $0 $4,500,417 $0 9/24/02

Pacific Area

TD-AR-02-004 Voyager Card Control Weaknesses - $0 $0 $0 $0 9/26/02

Chicago

TD-AR-02-005 Delivery Vehicle Gasoline $0 $0 $15,879,538 $0 9/30/02

TD-MA-02-003 New York Metro Area Trailer $0 $0 $0 $0 7/10/02

Acquisition Requirements

TD-MA-02-004 Mishandled Mail at $0 $0 $0 $0 7/25/02

New York LaGuardia Airport

TD-MA-02-005 Delayed Letter Carrier Operations $0 $0 $0 $0 8/29/02

in the Capital Metro Area

PERFORMANCE TOTALS $0 $0 $21,459,787 $0

FINANCIAL MANAGEMENT

FINANCIAL OPINION

FT-MA-02-004 Terminated Station Contract $58,248 $58,248 $0 $0 8/2/02

FISCAL YEAR 2001 FINANCIAL INSTALLATION AUDITS

FF-AR-02-208 Stamp Distribution Offices $0 $0 $0 $0 4/26/02

FF-AR-02-214 Boulder Business Mail Entry Unit $0 $0 $0 $0 5/10/02

FF-AR-02-309 District Accounting Offices $0 $0 $0 $0 7/11/02

FF-AR-02-324 Post Offices, Branches, and Stations $0 $0 $0 $0 7/26/02

FF-AR-02-326 Business Mail Entry Units $0 $0 $0 $0 7/26/02

FISCAL YEAR 2002 FINANCIAL INSTALLATION AUDITS

FF-AR-02-212 Denver Business Mail Entry Unit $0 $0 $0 $0 4/15/02

FF-AR-02-211 Peoria Business Mail Entry Unit $0 $0 $0 $0 4/17/02

FF-AR-02-213 Milwaukee Business Mail Entry Unit $0 $0 $0 $0 4/17/02

FF-AR-02-209 Churchs Ferry Post Office $0 $0 $0 $0 4/23/02

FF-AR-02-210 Brocket Post Office $0 $0 $0 $0 4/23/02

FF-AR-02-215 McLean Business Mail Entry Unit $0 $0 $0 $0 5/2/02

FF-AR-02-218 Marion Business Mail Entry Unit $0 $0 $0 $0 5/2/02

FF-AR-02-216 Rye Main Post Office $0 $0 $0 $0 5/3/02

FF-AR-02-217 Hilltop Post Office $0 $0 $0 $0 5/21/02

FF-AR-02-219 Cupertino Business Mail Entry Unit $0 $0 $0 $0 5/21/02

FF-AR-02-226 Carol Stream Business Mail Entry Unit $0 $0 $0 $0 5/24/02

FF-AR-02-227 South Temple Contract Postal Unit $0 $0 $0 $0 5/31/02

FF-AR-02-233 Santa Ana Business Mail Entry Unit $0 $0 $0 $0 6/3/02

PAGE 95
FF-AR-02-236 Tacoma Business Mail Entry Unit $0 $0 $0 $0 6/3/02

FF-AR-02-240 Bensenville Business Mail Entry Unit $0 $0 $0 $0 6/3/02

FF-AR-02-229 Belvedere Tiburon Post Office $0 $0 $0 $0 6/13/02

FF-AR-02-223 Wausau Business Mail Entry Unit $0 $0 $0 $0 6/19/02

FF-AR-02-230 Hollywood Station $0 $0 $0 $0 6/19/02

FF-AR-02-247 Darlington Post Office $0 $0 $0 $0 6/19/02

FF-AR-02-250 Cathedral City Post Office $0 $0 $0 $0 6/19/02

FF-AR-02-239 Frankfort Business Mail Entry Unit $0 $0 $0 $0 6/20/02

FF-AR-02-235 Fort Scott Business Mail Entry Unit $0 $0 $0 $0 6/21/02

FF-AR-02-237 Canon City Post Office $0 $0 $0 $0 6/21/02

FF-AR-02-238 Garden Grove Business Mail $0 $0 $0 $0 6/21/02

Entry Unit

FF-AR-02-241 Gaithersburg Post Office $0 $0 $0 $0 6/21/02

FF-AR-02-263 Tampa Business Mail Entry Unit $0 $0 $0 $0 6/21/02

FF-AR-02-264 Omaha Business Mail Entry Unit $0 $0 $0 $0 6/21/02

FF-AR-02-266 Farmingdale Business Mail Entry Unit $0 $0 $0 $0 6/21/02

FF-AR-02-268 Somerville Business Mail Entry Unit $0 $0 $0 $0 6/21/02

FF-AR-02-269 Augusta Business Mail Entry Unit $0 $0 $0 $0 6/21/02

FF-AR-02-242 Pacific Palisades Postal Store $0 $0 $0 $0 6/24/02

FF-AR-02-248 Donovan Post Office $0 $0 $0 $0 6/24/02

FF-AR-02-251 Watson Community Station $0 $0 $0 $0 6/24/02

FF-AR-02-252 Tarzana Business Mail Entry Unit $0 $0 $0 $0 6/24/02

FF-AR-02-255 Huntington Business Mail Entry Unit $0 $0 $0 $0 6/24/02

FF-AR-02-257 Edgerton Business Mail Entry Unit $0 $0 $0 $0 6/24/02

FF-AR-02-234 Aubrey Post Office $0 $0 $0 $0 7/1/02

FF-AR-02-246 Syracuse Business Mail Entry Unit $0 $0 $0 $0 7/1/02

FF-AR-02-249 Gateway Contract Postal Unit $0 $0 $0 $0 7/1/02

FF-AR-02-253 Everett Main Office $0 $0 $0 $0 7/1/02

FF-AR-02-254 Greenfield Business Mail Entry Unit $0 $0 $0 $0 7/1/02

FF-AR-02-256 Maitland Post Office $0 $0 $0 $0 7/1/02

FF-AR-02-258 Wood Dale Post Office $0 $0 $0 $0 7/1/02

FF-AR-02-259 Hazel Dell Contract Postal Unit $0 $0 $0 $0 7/1/02

FF-AR-02-260 Niland Post Office $0 $0 $0 $0 7/1/02

FF-AR-02-262 Holiday Station $0 $0 $0 $0 7/2/02

FF-AR-02-271 Minneapolis Business Mail Entry Unit $0 $0 $0 $0 7/3/02

FF-AR-02-278 Olive Branch Business Mail $0 $0 $0 $0 7/3/02

Entry Unit

FF-AR-02-270 North Houston Business Mail $0 $0 $0 $0 7/5/02

Entry Unit

FF-AR-02-291 Santa Ana Window Section $0 $0 $0 $0 7/5/02

FF-AR-02-261 Mason City Post Office $0 $0 $0 $0 7/8/02

FF-AR-02-265 Thief River Falls Business Mail $0 $0 $0 $0 7/9/02

Entry Unit

FF-AR-02-272 Marysville Post Office $0 $0 $0 $0 7/9/02

FF-AR-02-294 Sunny Isles Station $0 $0 $0 $0 7/12/02

FF-AR-02-285 Republican City Post Office $0 $0 $0 $0 7/16/02

FF-AR-02-289 Babcock Post Office $0 $0 $0 $0 7/16/02

FF-AR-02-290 Tempe Self-Service Postal Center $0 $0 $0 $0 7/16/02

FF-AR-02-301 Countryside Contract Postal Unit $0 $0 $0 $0 7/16/02

FF-AR-02-304 Hattiesburg Business Mail Entry Unit $0 $0 $0 $0 7/16/02

FF-AR-02-311 James C. Brown Window Section $0 $0 $0 $0 7/16/02

PAGE 96 APPENDICES

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-288 Jetson Main Office $0 $0 $0 $0 7/17/02

FF-AR-02-296 Birmingham Stamp District Office and $0 $0 $0 $0 7/17/02

Alabama District Accounting Office

FF-AR-02-297 St. Bernard Post Office $0 $0 $0 $0 7/17/02

FF-AR-02-303 Ashtabula Business Mail Entry Unit $0 $0 $0 $0 7/17/02

FF-AR-02-308 Sprague Post Office $0 $0 $0 $0 7/18/02

FF-AR-02-244 Wolsey Post Office $0 $0 $0 $0 7/23/02

FF-AR-02-273 Cedar Creek Post Office $0 $0 $0 $0 7/23/02

FF-AR-02-275 Freeman Spur Post Office $0 $0 $0 $0 7/24/02

FF-AR-02-245 Kendall Park Business Mail Entry Unit $0 $0 $0 $0 7/24/02

FF-AR-02-286 Adrian Post Office $0 $0 $0 $0 7/24/02

FF-AR-02-328 Smithtown Business Mail Entry Unit $0 $0 $0 $0 7/26/02

FF-AR-02-307 Deland Business Mail Entry Unit $0 $0 $0 $0 7/30/02

FF-AR-02-318 Port Orford Post Office $0 $0 $0 $0 7/31/02

FF-AR-02-320 Newark Stamp District Office and $0 $0 $0 $0 7//31/02

Northern New Jersey District

Accounting Office

FF-AR-02-325 Osborn Self-Service Postal Center $0 $0 $0 $0 8/6/02

FF-AR-02-332 Mahwah Business Mail Entry Unit $0 $0 $0 $0 8/6/02

FF-AR-02-331 Valley Forge Business Mail Entry Unit $0 $0 $0 $0 8/8/02

FF-AR-02-306 Port Bolivar Post Office $0 $0 $0 $0 8/9/02

FF-AR-02-315 Enosburg Falls Post Office $0 $0 $0 $0 8/9/02

FF-AR-02-316 Maysville Post Office $0 $0 $0 $0 8/9/02

FF-AR-02-317 Scotchtown Station $0 $0 $0 $0 8/9/02

FF-AR-02-335 St. Patrick Post Office $0 $0 $0 $0 8/9/02

FF-AR-02-336 Goodrich Post Office $0 $0 $0 $0 8/13/02

FF-AR-02-276 Bel Air Contract Postal Unit $0 $0 $0 $0 8/13/02

FF-AR-02-277 Kim Post Office $0 $0 $0 $0 8/13/02

FF-AR-02-295 East Los Angeles Station $0 $0 $0 $0 8/13/02

FF-AR-02-299 Carmichael Business Mail Entry Unit $0 $0 $0 $0 8/13/02

FF-AR-02-300 Horton Plaza Postal Store $0 $0 $0 $0 8/13/02

FF-AR-02-321 Santa Margarita Post Office $0 $0 $0 $0 8/13/02

FF-AR-02-322 Yuba City Business Mail Entry Unit $0 $0 $0 $0 8/13/02

FF-AR-02-357 Bakersfield Self-Service Postal Center $0 $0 $0 $0 8/15/02

FF-AR-02-319 Graniteville Post Office $0 $0 $0 $0 8/20/02

FF-AR-02-327 Baton Rouge Downtown Post Office $0 $0 $0 $0 8/20/02

FF-AR-02-339 Inlet Main Office $0 $0 $0 $0 8/20/02

FF-AR-02-341 Lake Post Office $0 $0 $0 $0 8/22/02

FF-AR-02-302 Windsor Business Mail Entry Unit $0 $0 $0 $0 8/26/02

FF-AR-02-329 Paramus Main Post Office $0 $0 $0 $0 8/26/02

FF-AR-02-346 Margaret L. Sellers Business Mail $0 $0 $0 $0 8/26/02

Entry Unit

FF-AR-02-305 Lebanon Business Mail Entry Unit $0 $0 $0 $0 8/27/02

FF-AR-02-340 Coffeyville Business Mail Entry Unit $0 $0 $0 $0 8/28/02

FF-AR-02-342 Framingham Business Mail Entry Unit $0 $0 $0 $0 8/29/02

FF-AR-02-354 Maple Grove Business Mail $0 $0 $0 $0 8/29/02

Entry Unit

FF-AR-02-343 Crawfordsville Business Mail $0 $0 $0 $0 8/30/02

Entry Unit

FF-AR-02-350 St. Leo Post Office $0 $0 $0 $0 8/30/02

FF-AR-02-349 Chandler Business Mail Entry Unit $0 $0 $0 $0 9/4/02

PAGE 97

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-358 Marble Falls Post Office $0 $0 $0 $0 9/4/02

FF-AR-02-359 Old National Station $0 $0 $0 $0 9/4/02

FF-AR-02-360 West Chester Business Mail $0 $0 $0 $0 9/4/02

Entry Unit

FF-AR-02-344 Newtown Business Mail Entry Unit $0 $0 $0 $0 9/5/02

FF-AR-02-347 Notre Dame Business Mail Entry Unit $0 $0 $0 $0 9/5/02

FF-AR-02-348 Montrose Business Mail Entry Unit $0 $0 $0 $0 9/5/02

FF-AR-02-365 Houston Business Mail Entry Unit $0 $0 $0 $0 9/5/02

FF-AR-02-338 Knightstown Business Mail Entry Unit $0 $0 $0 $0 9/6/02

FF-AR-02-345 Camden New Jersey Business Mail $0 $0 $0 $0 9/6/02

Entry Unit

FF-AR-02-287 Hyannis Port Post Office $0 $0 $0 $0 9/12/02

FF-AR-02-356 Joshua Self-Service Postal Center $0 $0 $0 $0 9/12/02

FF-AR-02-363 Manitowoc Business Mail Entry Unit $0 $0 $0 $0 9/12/02

FF-AR-02-372 New Brunswick Business Mail $0 $0 $0 $0 9/12/02

Entry Unit

FF-AR-02-361 Jonestown Contract Postal Unit $0 $0 $0 $0 9/13/02

FF-AR-02-377 Manassas Business Mail Entry Unit $0 $0 $0 $0 9/13/02

FF-AR-02-362 East Shore Drugs Contract Postal Unit $0 $0 $0 $0 9/17/02

FF-AR-02-380 Columbus Business Mail Entry Unit $0 $0 $0 $0 9/17/02

FF-AR-02-381 Hartford Business Mail Entry Unit $0 $0 $0 $0 9/17/02

FF-AR-02-383 Wheeling Business Mail Entry Unit $0 $0 $0 $0 9/17/02

FF-AR-02-371 Indianapolis Self-Service Postal $0 $0 $0 $0 9/18/02

Center #4

FF-AR-02-392 Las Vegas Business Mail Entry Unit $0 $0 $0 $0 9/18/02

FF-AR-02-314 Bigfork Self-Service Postal Center $0 $0 $0 $0 9/19/02

FF-AR-02-352 Plano Business Mail Entry Unit $0 $0 $0 $0 9/19/02

FF-AR-02-379 Lincoln Business Mail Entry Unit $0 $0 $0 $0 9/19/02

FF-AR-02-391 Lancaster Business Mail Entry Unit $0 $0 $0 $0 9/19/02

FF-AR-02-395 Waite Park Business Mail Entry Unit $0 $0 $0 $0 9/19/02

FF-AR-02-407 Saratoga Business Mail Entry Unit $0 $0 $0 $0 9/19/02

FF-AR-02-337 Volcano Post Office $0 $0 $0 $0 9/20/02

FF-AR-02-351 Ontario Business Mail Entry Unit $0 $0 $0 $0 9/20/02

FF-AR-02-373 Red Springs Post Office $0 $0 $0 $0 9/20/02

FF-AR-02-402 Reedley Main Post Office $0 $0 $0 $0 9/20/02

FF-AR-02-415 Franklin Park Business Mail $0 $0 $0 $0 9/23/02

Entry Unit

FF-AR-02-374 Portland Stamp Distribution and $0 $0 $0 $0 9/24/02

District Accounting Office

FF-AR-02-375 Visalia Business Mail Entry Unit $0 $0 $0 $0 9/24/02

FF-AR-02-378 Durham Business Mail Entry Unit $0 $0 $0 $0 9/24/02

FF-AR-02-384 Horace Harding Station $0 $0 $0 $0 9/24/02

FF-AR-02-385 Talbott Main Office $0 $0 $0 $0 9/24/02

FF-AR-02-386 Akron Stamp Distribution Office $0 $0 $0 $0 9/24/02

and District Accounting Office

FF-AR-02-393 Lenoir City Post Office $0 $0 $0 $0 9/24/02

FF-AR-02-396 Central Station $0 $0 $0 $0 9/24/02

FF-AR-02-398 Wilcox Station $0 $0 $0 $0 9/24/02

FF-AR-02-401 Carlinville Business Mail Entry Unit $0 $0 $0 $0 9/24/02

FF-AR-02-422 Rocklin Post Office $0 $0 $0 $0 9/24/02

FF-AR-02-423 Akron Main Office $0 $0 $0 $0 9/24/02

PAGE 98 APPENDICES

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-389 Fort Payne Post Office $0 $0 $0 $0 9/25/02

FF-AR-02-403 Rensselaer Polytechnic Institute $0 $0 $0 $0 9/25/02

Contract Postal Unit

FF-AR-02-404 Group 1 Self-Service Postal Center $0 $0 $0 $0 9/25/02

FF-AR-02-405 Shade Gap Post Office $0 $0 $0 $0 9/25/02

FF-AR-02-406 Godley Post Office $0 $0 $0 $0 9/25/02

FF-AR-02-413 Miles City Business Mail Entry Unit $0 $0 $0 $0 9/25/02

FF-AR-02-414 Peachtree City Branch $0 $0 $0 $0 9/25/02

FF-AR-02-408 Jamestown Post Office $0 $0 $0 $0 9/26/02

FF-AR-02-418 Painesville Self-Service Postal Center $0 $0 $0 $0 9/26/02

FF-AR-02-425 Hershey Business Mail Entry Unit $0 $0 $0 $0 9/26/02

FF-AR-02-419 Watertown Furniture Barn $0 $0 $0 $0 9/27/02

Contract Postal Unit

FF-AR-02-416 Maryville Main Office $0 $0 $0 $0 9/27/02

FF-AR-02-231 Lake Dallas Self-Service Postal Center $0 $0 $0 $0 9/30/02

FF-AR-02-293 Wilton Post Office $0 $0 $0 $0 9/30/02

FF-AR-02-313 Helena Self-Service Postal Center $0 $0 $0 $0 9/30/02

FF-AR-02-370 Eustis Post Office $0 $0 $0 $0 9/30/02

FF-AR-02-376 Camden South Carolina Business $0 $0 $0 $0 9/30/02

Mail Entry Unit

FF-AR-02-382 Sioux Falls Stamp Distribution Office $0 $0 $0 $0 9/30/02

and Dakotas District Accounting Office

FF-AR-02-387 Columbia Stamp Distribution Office $0 $0 $0 $0 9/30/02

and Greater South Carolina

District Accounting Office

FF-AR-02-390 Jacksonville Main Post Office $0 $0 $0 $0 9/30/02

FF-AR-02-394 Virginia Post Office $0 $0 $0 $0 9/30/02

FF-AR-02-397 Easton Post Office $0 $0 $0 $0 9/30/02

FF-AR-02-399 Lakeview Post Office $0 $0 $0 $0 9/30/02

FF-AR-02-410 Grand Rapids Business Mail Entry Unit $0 $0 $0 $0 9/30/02

FF-AR-02-411 Caledonia Post Office $0 $0 $0 $0 9/30/02

FF-AR-02-412 Pulaski Business Mail Entry Unit $0 $0 $0 $0 9/30/02

FF-AR-02-417 Troy Business Mail Entry Unit $0 $0 $0 $0 9/30/02

FF-AR-02-420 Lancaster Avenue Station $0 $0 $0 $0 9/30/02

FF-AR-02-421 Lutz Business Mail Entry Unit $0 $0 $0 $0 9/30/02

FF-AR-02-424 Coudersport Business Mail Entry Unit $0 $0 $0 $0 9/30/02

FF-AR-02-426 West Sacramento Stamp Distribution $0 $0 $0 $0 9/30/02

Office and Sacramento District

Accounting Office

FF-AR-02-427 Boyd's Pharmacy Station 4 $0 $0 $0 $0 9/30/02

Contract Postal Unit

FF-AR-02-428 Fig Garden Contract Postal Unit $0 $0 $0 $0 9/30/02

FF-AR-02-429 Silver Dollar City Contract $0 $0 $0 $0 9/30/02

Postal Unit

FF-AR-02-430 Pease Contract Postal Unit $0 $0 $0 $0 9/30/02

FF-AR-02-431 Union Post Office $0 $0 $0 $0 9/30/02

FF-AR-02-432 St. Paul Self-Service Postal Center $0 $0 $0 $0 9/30/02

FF-AR-02-434 Albuquerque Stamp Distribution and $0 $0 $0 $0 9/30/02

Albuquerque District Accounting Office

FINANCIAL-RELATED

FF-AR-02-220 Audit of Statistical Tests for $0 $0 $0 $0 5/9/02

Fiscal Year 2002 Cost and Revenue

Analysis - South Florida District

PAGE 99

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-224 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 5/21/02

Year 2002 Cost and Revenue Analysis

- Southeast New England District

FF-AR-02-221 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 5/24/02

Year 2002 Cost and Revenue Analysis

- Mid-Carolinas District

FF-AR-02-222 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 5/24/02

Year 2002 Cost and Revenue Analysis 

- Greater Michigan District

FF-AR-02-225 Audit of Statistical Tests for the Fiscal $0 $0 $0 $0 5/24/02

Year 2002 Cost and Revenue Analysis

- Central Plains District

FF-AR-02-228 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 5/30/02

Year 2002 Cost and Revenue Analysis

- Kentuckiana District

FF-AR-02-232 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/3/02

Year 2002 Cost and Revenue Analysis

- Oklahoma District

FF-AR-02-243 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/14/02

Year 2002 Cost and Revenue Analysis

- San Jose District

FF-AR-02-267 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/21/02

Year 2002 Cost and Revenue Analysis

- Los Angeles District

FF-AR-02-274 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/3/02

Year 2002 Cost and Revenue Analysis

- Springfield District

FF-AR-02-279 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/5/02

Year 2002 Cost and Revenue Analysis

- Rio Grande District

FF-AR-02-280 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/5/02

Year 2002 Cost and Revenue Analysis

- Chicago District

FF-AR-02-281 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/5/02

Year 2002 Cost and Revenue Analysis

- Suncoast District

FF-AR-02-282 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/5/02

Year 2002 Cost and Revenue Analysis

- Mid-America District

FF-AR-02-283 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/5/02

Year 2002 Cost and Revenue Analysis

- Harrisburg District

FF-AR-02-284 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/5/02

Year 2002 Cost and Revenue Analysis

- Northern Illinois District

FF-AR-02-292 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/5/02

Year 2002 Cost and Revenue Analysis

- Long Beach District

FF-AR-02-298 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/10/02

Year 2002 Cost and Revenue Analysis

- Akron District

FF-AR-02-310 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/16/02

Year 2002 Cost and Revenue Analysis

- Salt Lake City District

FF-AR-02-312 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/17/02

Year 2002 Cost and Revenue Analysis

- Albuquerque District

PAGE 100 APPENDICES

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-02-323 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/25/02

Year 2002 Cost and Revenue Analysis

- Oakland District

FF-AR-02-330 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/30/02

Year 2002 Cost and Revenue Analysis

- Tennessee District

FF-AR-02-334 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/31/02

Year 2002 Cost and Revenue Analysis

- Maine District

FF-AR-02-353 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 8/8/02

Year 2002 Cost and Revenue Analysis

- Alaska District

FF-AR-02-355 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 8/8/02

Year 2002 Cost and Revenue Analysis

- Cleveland District

FF-AR-02-364 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 9/4/02

Year 2002 Cost and Revenue Analysis

- Capital District

FF-AR-02-366 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 9/12/02

Year 2002 Cost and Revenue Analysis

- Central Florida District

FF-AR-02-367 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 9/12/02

Year 2002 Cost and Revenue Analysis

- Northland District

FF-AR-02-368 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 9/12/02

Year 2002 Cost and Revenue Analysis

- Western New York District

FF-AR-02-369 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 9/12/02

Year 2002 Cost and Revenue Analysis

- Las Vegas District

FF-AR-02-435 Periodicals Publication Reviews at $0 $0 $0 $0 9/26/02

Business Mail Entry Units

FT-AR-02-012 Relocation Compilation Report $0 $0 $0 $0 5/31/02

FT-AR-02-013 Segregation of Duties Over $0 $0 $0 $0 9/12/02

Contract Lease Payment Schedules

FT-AR-02-014 System Security Issues at $0 $0 $0 $0 9/24/02

Two Airmail Centers

FT-AR-02-015 Payments to a Utility Company $0 $0 $2,567,497 $0 9/26/02

FT-AR-02-016 Advanced Annual Leave $0 $0 $0 $0 9/26/02

FT-AR-02-017 Effectiveness of the Postal Service's $0 $0 $677,395 $0 9/27/02

Asset Locator Program

CONTRACTING AND FACILITIES

CA-AR-02-003 Costs Associated with Two $0 $0 $0 $645,257 9/23/02

Decontamination Sites

CA-AR-02-004 Undefinitized Contract Actions $0 $0 $0 $0 9/30/02

CA-AR-02-005 Use of Noncompetitive Contracting $0 $0 $0 $7,350,464 9/30/02

Process for Tabbing Systems Purchases

CA-AR-02-006 Costs of Capital Construction $0 $0 $0 $306,110 9/30/02

Projects at a Training Center

CA-CAR-02-036 Evaluation of Accounting System $0 $0 $0 $0 4/18/02

CA-CAR-02-037 Evaluation of Final Vouchers $0 $0 $0 $0 4/26/02

CA-CAR-02-038 Evaluation of Proposal $0 $0 $0 $0 5/9/02

CA-CAR-02-039 Evaluation of Proposal $0 $0 $0 $0 5/9/02

CA-CAR-02-040 Accounting System Survey $0 $0 $0 $0 5/9/02

CA-CAR-02-041 Evaluation of Incurred Costs $96,324 $20,202 $0 $0 5/9/02

CA-CAR-02-042 Evaluation of Proposal $1,689,663 $0 $0 $0 5/9/02

PAGE 101

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
CA-CAR-02-043 Evaluation of Termination for $38,406,029 $0 $0 $0 5/20/02

Convenience Proposal

CA-CAR-02-044 Evaluation of Termination for $0 $0 $0 $0 6/28/02

Convenience Proposal

CA-CAR-02-045 Evaluation of Equitable $1,053,263 $134,340 $0 $0 6/28/02

Adjustment Claim

CA-CAR-02-046 Evaluation of Proposal $0 $0 $0 $0 7/3/02

CA-CAR-02-047 Evaluation of Incurred Costs $0 $0 $0 $0 7/10/02

CA-CAR-02-048 Evaluation of Information $0 $0 $0 $0 7/10/02

Technology System Controls

CA-CAR-02-049 Evaluation of Equitable $0 $0 $0 $0 7/24/02

Adjustment Claim

CA-CAR-02-050 Evaluation of Proposal $117,828,789 $117,250,842 $0 $0 9/6/02

CA-CAR-02-051 Evaluation of Equitable $620,681 $187,271 $0 $0 9/13/02

Price Adjustment Claims

CA-CAR-02-052 Evaluation of Accounting $0 $0 $0 $0 9/13/02

System Controls

CA-CAR-02-053 Evaluation of Billing System $0 $0 $0 $0 9/13/02

CA-CAR-02-054 Evaluation of Proposal $0 $0 $0 $0 9/13/02

CA-CAR-02-055 Evaluation of Research and $0 $0 $0 $0 9/18/02

Development Allocation Rate

CA-VR-02-001 Noncompetitive Purchases of $0 $0 $0 $0 9/30/02

Tabbing Systems Video Report

FINANCIAL MANAGEMENT TOTALS $159,752,997 $3,244,892

$117,650,903 $8,301,831

TECHNOLOGY

INFORMATION SYSTEMS

IS-AR-02-007 Network General Controls $0 $0 $0 $0 4/3/02

IS-AR-02-008 Server Security Testing $0 $0 $0 $0 5/1/02

IS-AR-02-009 Server Security Testing $0 $0 $0 $0 7/29/02

IS-AR-02-010 Server Security Testing $0 $0 $0 $0 8/27/02

IS-AR-02-011 Security Testing of Switches $0 $0 $0 $0 8/27/02

IS-AR-02-012 Server Security Testing $0 $0 $0 $0 9/3/02

IS-AR-02-014 Database Controls $0 $0 $0 $0 9/4/02

IS-AR-02-013 Server Security Testing $0 $0 $0 $0 9/5/02

IS-AR-02-015 Fiscal Year 2002 Information $0 $0 $0 $0 9/27/02

System Controls

IS-AR-02-016 General and Electronic Controls $0 $0 $0 $0 9/30/02

IS-AR-02-017 General Controls $0 $0 $0 $0 9/30/02

DEVELOPMENTAL

DA-AR-02-005 Surface Air Management System $0 $0 $0 $0 4/19/02

DA-AR-02-006 Postal Automated Redirection $0 $0 $0 $0 5/9/02

System, Phase 1

DA-AR-02-007 Confirm $0 $0 $0 $0 9/10/02

DA-AR-02-008 Postal Service Efforts to Implement $0 $0 $0 $0 9/4/02

Prevention and Detection Technology

DA-AR-02-009 Human Transporter $0 $0 $0 $0 9/12/02

DA-AR-02-010 Automated Seamless $2,970,477 $0 $0 $0 9/18/02

Dispatch Program

DA-MA-02-001 Biohazard Detection System $0 $0 $0 $0 9/24/02

DA-MA-02-002 Biohazard Filtration System $0 $0 $0 $0 9/24/02

PAGE 102 APPENDICES

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
ELECTRONIC COMMERCE

EM-AR-02-010 Mail Recovery Center Auctions $0 $0 $0 $0 4/8/02

EM-AR-02-012 Review of eBusiness Agreements $0 $0 $0 $0 7/9/02

EM-MA-02-002 Retail Data Mart System Surveys $0 $0 $0 $0 9/3/02

EM-AR-02-013 Integrated Data System Update $0 $0 $0 $0 9/27/02

EM-AR-02-014 Team Enterprise Initiative $0 $0 $0 $0 9/30/02

TECHNOLOGY TOTALS $ 2,970,477 $ 0 $ 0 $ 0

LABOR MANAGEMENT

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date

HUMAN RESOURCE PROCESSES 

LH-AR-02-003 Southwest Area's Efforts in $0 $0 $835,000 $0 5/8/02

Obtaining Appropriate Chargeback

Credits for Identified Wage

Compensation Overpayments and

Refundable Disbursements

AC-AR-02-005 Reasonableness and Distribution $0 $0 $0 $0 8/14/02

of Pay for Performance Program

Incentive Awards

AC-AR-02-006 Performance Measures Used in the $0 $0 $0 $0 8/14/02

Pay for Performance Program

LH-AR-02-004 Postal Service's Corporate Succession $0 $0 $0 $0 9/3/02

Planning Process

LH-AR-02-005 Associate Supervisor Program in $0 $0 $0 $0 9/30/02

the Great Lakes Area

LABOR MANAGEMENT TOTALS $ 0 $ 0 $ 835,000 $ 0

OVERSIGHT

OV-AR-02-003(R) Postal Inspection Service Health $0 $0 $0 $0 7/30/02

Examination Program

OV-MA-02-001 Postal Service Security of the Mail $0 $0 $0 $0 8/13/02

During Anthrax Decontamination

and Irradiation Efforts

OTHER SIGNIFICANT REVIEWS

IG-TR-02-001 Subcommittee on Government $0 $0 $0 $0 5/9/02

Efficiency, Financial Management

and Intergovernmental Relations

Testimony

IG-TR-02-002 Subcommittee on International $0 $0 $0 $0 9/27/02

Security, Proliferation and

Federal Services Testimony

OIG TOTALS $162,723,474 $25,539,679

$117,650,903 $8,301,831

PAGE 103

Un- Recommend

Report Subject Title/ Questioned supported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
APPENDIX B

Findings of Questioned Costs

For the period April 1, 2002, through September 30, 2002

OFFICE OF INSPECTOR GENERAL AND INSPECTION SERVICE

Unsupported

Costs

Total Included In

Number of Questioned Questioned

Description Reports Costs Costs

Reports for which no management decision was made at 29 $105,269,833 $8,434,315

the beginning of the reporting period

Reports requiring management decision that were issued 8 $162,723,474 $117,650,903

during the reporting period

TOTALS 37 $267,993,307 $126,085,218

Reports for which a management decision was made 7 $48,375,313 $6,203,560

during the reporting period (i+ii)

(i) Dollar Value of disallowed cost $29,686,117 $1,238,231

(ii) Dollar value of cost not disallowed $18,689,196 $4,965,329

Reports for which no management decision was made by the 30 $219,617,994 $119,881,658

end of the reporting period. Negotiations are ongoing.

Reports for which no management decision was made within 7 $32,866,643 $304,407

six months of issuance (See Note 1 for a list of individual reports)

Reports for which no management decision was made within 15 $24,027,877 $1,926,348

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

10/12/01 CA-CAR-02-004 Contract Audit $17,359,760

10/3/01 CA-CAR-02-006 Contract Audit 405,052

10/10/01 CA-CAR-02-005 Contract Audit 11,314,673

12/26/01 CA-CAR-02-031 Contract Audit 305,480 $304,407

2/28/22 CA-CAR-02-026 Contract Audit 491,590

3/3/02 CA-CAR-02-027 Contract Audit 2,217,874

3/4/02 CA-CAR-02-032 Contract Audit 772,214

OIG TOTAL $32,866,643 $304,407

PAGE 104 APPENDICES
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

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

2/27/01 CA-AR-01-001 Contracting Practices for the 12,500,000 0

Procurement of 

Mail Transport Equipment Services

4/19/01 CA-CAR-01-038 Contract Audit 17,554 17,554

6/7/01 CA-CAR-01-046 Contract Audit 2,505 0

7/17/01 CA-AR-01-003 Price Adjustment 5,891 0

7/18/01 CA-CAR-01-057 Contract Audit 136,651 0

7/19/01 CA-CAR-01-059 Contract Audit 198,450 198,450 

7/27/01 CA-CAR-01-060 Contract Audit 46,931 0

9/14/01 CA-CAR-01-066 Contract Audit 1,131 0

9/14/01 CA-CAR-01-068 Contract Audit 222,509 34,467

OIG TOTALS $15,874,565 $250,471

Unsupported

Costs

Total Included In

Report/ Questioned Questioned

Report Date Case Number Project Type Costs Costs

11/17/99 181-1294644-AC(1) Contract Audit $7,063,747 $1,675,877

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 $8,153,312 $1,675,877

TOTAL $ 24,027,877 $1,926,348

PAGE 105
APPENDIX C

Recommendations That Funds

Be Put to Better Use

For the period April 1, 2002, through September 30, 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 8 $130,891,029

Reports requiring management decision that were 

issued during the reporting period 6 $25,539,679

TOTALS 14 $156,430,708

Reports for which a management decision was made during the report period* 11 $28,309,708

(i) Value of recommendations agreed to by management $10,211,539

(ii) Value of recommendations that were not agreed to by management $18,098,169

Reports for which no management decision was made by the end of the reporting period 3 $128,121,000

Reports for which no management decision was made within six months of issuance 

(See Note 1 for a list of individual reports) 1 $82,349,739

Reports for which no management decision was made within one year of issuance 

(See Note 2 for a list of individual reports) 2 $44,375,430

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

3/29/02 TD-AR-02-002 Trailer Lease Justification $82,349,739

TOTAL $82,349,739

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

9/29/00 MK-AR-00-001 Review of Stamp Fulfillment Services Performance $ 28,457,395

7/27/01 TR-AR-01-004 Bulk Fuel Purchase Plan 15,918,035

TOTAL $44,375,430 

*The reported amounts include $1,947,229 in “value of recommendations agreed to by management” and $169,324 in “value of recommendations not agreed to by management” that were based

on allocation percentages. Since documentation for four audits were not available, the Office of

Inspector General and the Postal Service agreed to allocate results based on historical experience

from October 1, 1998 to March 30, 2002. 

PAGE 106 APPENDICES
APPENDIX D

Reports with Significant

Recommendations Pending Corrective

Actions

For the period April 1, 2002, through September 30, 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

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-99-003 Emergency and Extra Trip Expenditures on Highway Routes 6 9/29/99

CA-AR-99-002 Removal of Underground Storage Tanks 1 9/30/99

CA-AR-99-003 Responsibilities of Contracting Officers’ Representatives 2 9/30/99

RP-MA-00-001 Indefinite Quantity Contracts 1 11/8/99

FR-MA-00-001 Budget Cost Containment Measures 1 12/22/99

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 1 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 6 3/31/00

DA-AR-00-002 Tray Management System 5 3/31/00

TR-AR-00-008 Extra Trip Expenditures at the Dallas Bulk Mail Center 1 6/30/00

TR-AR-00-009 Extra Trips Expenditures within the Mid-Atlantic Area 2 7/27/00

AC-AR-00-004 Use of Robotic Tray Handling System 2 9/29/00

DA-AR-00-006 Point of Service ONE Phase II 2 9/29/00

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

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 

LC-AR-01-007 Alleged Nepotism in the Arkansas District 4 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

PAGE 107
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 

IS-AR-01-003 Review of Security Access Controls 7 8/29/01

CA-AR-01-005 Supplier Diversity Program for Supplies, Services, and 8 9/6/01

Equipment Purchases 

DA-AR-01-005 Decision Analysis Report Process 1 9/27/01

DA-AR-01-006 Singulate, Scan, Induction Unit 5 9/27/01

TR-MA-01-003 Security Risks Associated with a Transportation Agreement 1 9/27/01

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 1 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 - 3 10/18/01

PostmarkAmerica.com Technical Issues

IS-AR-02-001 Fiscal Year 2001 Information System Controls 3 11/8/01

IS-AR-02-002 Network Security Vulnerabilities 3 12/19/01

CQ-MA-02-001 Review of Letter Contract 1 12/28/01

IS-CS-02-002 Security Testing of Switches 2 1/11/02

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

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 1 3/22/02

DA-AR-02-004 Postal Service Test, Evaluation, and Quality 3 3/27/02

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 4 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 1 3/29/02

IS-AR-02-007 Network General Controls 2 4/3/02

EM-AR-02-010 Mail Recovery Center Auction through an 3 4/8/02

Online Auction Company

DA-AR-02-005 Surface-Air Management System 1 4/19/02

LH-AR-02-003 Southwest Area's Efforts in Obtaining Appropriate 5 5/8/02

Chargeback Credits for Identified Wage Compensation 

Overpayment and Refundable Disbursements

FT-AR-02-012 Relocation Compilation Report 3 5/31/02

OV-AR-02-003(R) Postal Inspection Service Health Examination Program 3 7/30/02

EM-AR-02-012 Review of eBusiness Agreements 7 7/9/02

TD-MA-02-003 New York Metro Area Trailer Acquisition Requirements 2 7/10/02

TD-MA-02-005 Delayed Letter Carrier Operations in the Capital Metro Area 2 8/29/02

LH-AR-02-004 Postal Service's Corporate Succession Planning Process 7 9/3/02

DA-AR-02-008 Postal Service's Efforts to Implement Prevention and 1 9/4/02

Detection Technology

DA-AR-02-007 Confirm 2 9/10/02

DA-AR-02-010 Automated Seamless Dispatch Program 5 9/18/02

DA-MA-02-001 Biohazard Detection System 6 9/24/02

DA-MA-02-002 Biohazard Filtration System 3 9/24/02

TD-AR-02-003 Highway Network Scheduling - Pacific Area 3 9/24/02

CQ-AR-02-001 Work Performed by Business Mail Entry Employees in the 2 9/26/02

Colorado Wyoming Performance Cluster

FT-AR-02-015 Payments to a Utility Company 1 9/26/02

FT-AR-02-016 Advanced Annual Leave 1 9/26/02

TD-AR-02-004 Voyager Card Control Weaknesses - Chicago 2 9/26/02

CA-AR-02-004 Undefinitized Contract Actions 2 9/30/02

FT-AR-02-017 Effectiveness of the Postal Service's Asset Locator Program 3 9/27/02

PAGE 108 APPENDICES

Report Report Number of Issue 

Number Title Recommendations Date
IS-AR-02-015 Fiscal Year 2002 Information System Controls 2 9/27/02

AC-MA-02-002 Review of Nonprofit Standard Mail 2 9/30/02

CA-AR-02-005 Use of Noncompetitive Contracting Process for 5 9/30/02

Tabbing Systems Purchases

CA-AR-02-006 Costs of Capital Construction Projects at a Training Center 1 9/30/02

LH-AR-02-005 Associate Supervisor Program in the Great Lakes Area 6 9/30/02

TD-AR-02-005 Delivery Vehicle Gasoline 4 9/30/02

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

CONTRACT AUDITS

Report Number Contractor Report Date

0184-1126310-AC(1) Contract Audit 4/3/00

0184-1210121-AC(1) Contract Audit 8/30/00

PAGE 109

Report Report Number of Issue 

Number Title Recommendations Date
APPENDIX E

Investigative Statistics1

For the period April 1, 2002, through September 30, 2002

OFFICE OF INSPECTOR GENERAL

Statistics

Arrests 14

Information2/Indictments 27

Convictions3/Pretrial Diversions 12

Suspension/Debarments

Individuals 10 

Firms 10

Administrative Actions

Postal Service Employee 6

Contractor 0

Fines, Restitution, and Recoveries $18,939,1584

Cost Avoidance, Savings and Funds Put To Better Use $21,175,813

INSPECTION SERVICE5

Statistics

Arrests 200

Convictions3 161

Administrative Actions

Postal Service Employee 345

Contractor 33

Fines, Restitution, and Recoveries $108,188,973

Collections $47,100

Civil Actions 7

PAGE 110 APPENDICES

1 Statistics include joint investigations with other federal law enforcement agencies.

2 Some of these occurred in the prior semiannual reporting period, however, they were not reported

until the current reporting period.

3 Convictions reported in this time frame may be related to arrests made in prior reporting periods.

4 The total amount includes $17,826,541 in restitution from a joint OIG and Inspection Service

investigation

5 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 April 1, 2002, through September 30, 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 1111

Boiler rooms/Telemarketing 2 5 5

Contest/Sweepstakes 2 1 1

Employment 1 1 1

False billings 6415

Fraud - Internet Schemes 3 3 3

Lotteries (foreign and domestic) 39 39

Merchandise:

Failure to pay 2 2 2

Misrepresentation 1 1

Miscellaneous 2212

Work at home 3 4 4

TOTAL 61 24 42 25

PAGE 111
ADMINISTRATIVE ACTIONS

Administrative Action requests 62

Temporary Restraining Order requests 1

Temporary Restraining Orders issued 1

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 1

Expenditures incurred for:

Test Purchases 0

Expert Testimony 0

Witness Travel 0

Withholding Mail Orders issued 109

Voluntary Discontinuances 82

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-02-006 05/01/02 Misrepresentation

USPS-02-008 05/01/02 Misrepresentation

USPS-02-009 05/03/02 Charity

USPS-02-010 05/03/02 Charity

USPS-02-011 07/02/02 Work at Home

USPS-02-012 08/18/02 Identity Takeover

USPS-02-013 08/19/02 Identity Takeover

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 $141,163,133

Nonpersonnel $36,508,180

Total Expenditures $177,671,313

Capital Obligations $6,234,883

PAGE 112 APPENDICES
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 Task Forces and the Deceptive Mail Enforcement Team.

Inspection Service and Office of Inspector General criminal statistical information is 

summarized in Appendix E

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 Mail Center 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 if issuing an interim status report.

INTERNATIONAL SECURTIY 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 on international communications products. This group is chaired by the Chief Postal Inspector. 

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 team, as well as those received as consumer complaints, are

examined for compliance. During the reporting period 371 promotions were reviewed for possible

violations, and 69 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 113
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.

False billings. Mailing solicitations in the guise of billings.

Fraud - Internet Schemes. Fraudulent schemes using the Internet with a nexus to the mail.

Lotteries. Advertisements seeking money or property by mail for participation in schemes to win

prizes through chance.

Merchandise failure to pay. Mail order merchandise that is acquired without providing payment.

Merchandise misrepresentation. Mail order merchandise or services are materially misrepresented in advertising.

Miscellaneous. Any other scheme not described in a specific category. 

Work at home. Schemes, such as envelope stuffing, that do not provide home employment.

PAGE 114 APPENDICES
APPENDIX G

Closed Congressional and Board of

Governors Inquiries

For the period April 1, 2002, through September 30, 2002

This appendix lists the 57 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

Representative, Maryland Allegation of mail tampering 15-Apr-02

Representatives, Texas Allegation of mismanagement and waste 29-Apr-02

Representative, Indiana Allegation of waste and facility mismanagement 24-May-02

Representative, Alabama Allegation of delayed delivery 17-Jun-02

Representative, New York Allegation of mail delivery problems 16-Jul-02 

Senator, California Allegation of mail tampering by landlord 19-Jul-02

Representative, New York Allegation of improper revenue deficiency assessment 13-May-02

Senator, New York Allegation of mail delivery problems 26-July-02

Senator, Texas Allegation that pre-sorted discount bulk mail is being 26-Jul-02

improperly reprocessed

Representative, Allegation of difficulties with mail delivery 01-Aug-02

New Jersey

Senator, Connecticut Allegation of mismanagement which has resulted in mail delays 03-Sep-02

Senator, Florida Allegation of mail tampering 08-Aug-02

FINANCIAL MANAGEMENT

Requestor Allegations/Concern Response Date

Representatives, Oregon, Concerns regarding overnight and priority mail agreement 04-Apr-02

Ohio, Michigan, Kansas,

and New Jersey

Senator, California Improper claim processing and investigation 15-Apr-02

Representative, New Jersey Request for review of proposed rate increase 05-Jun-02

Representative, New York Allegation of mismanagement and contracting improprieties 27-Jun-02

Representative, Indiana Request for review of procurement 19-Jul-02

LABOR MANAGEMENT

Requestor Allegations/Concern Response Date

Representative, Allegation of supervisory assault 15-Apr-02

Massachusetts

Senator, Maine Allegation of harassment 19-Apr-02

Representative, Allegation that supervisor manufactured documents to support dismal 19-Apr-02

Pennsylvania

Senator, California Allegation of unsafe working conditions 01-May-02

Representative, New York Allegation of retaliation 02-May-02

Representative, California Request for information 09-May-02

Senator, California Request for information regarding an arbitration 24-May-02

Senator, Maine Allegation of breach of contract and related abuse and retaliation 24-May-02

Representative and Allegation of harassment, hostile work environment and mismanagement 05-Jun-02

Senators, Maryland

PAGE 115
Senator, Montana Allegation of sexual harassment 12-Jun-02

Representative, Louisiana Allegation of hostile work environment 17-Jun-02

Representative, Louisiana Allegation of hostile work environment and poor customer service 17-Jun-02

Senator, Tennessee Allegation of hostile work environment 17-Jun-02

Senator, Maine Allegation of hostile work environment and sex discrimination 12-Jul-02

Representative, Indiana Allegation of health and safety issues 21-Jul-02

Representative, Texas Allegation of disregard for medical restriction 26-Jul-02

Representative, New York Allegation of hostile work environment 26-Jul-02

Senator, Tennessee Allegation of discrimination and harassment 26-Jul-02

Representative, Florida Allegation of retaliation and other employment concerns 29-Jul-02

Representative, California Allegation of improper conduct by an employee 16-Aug-02

Representative, Allegation of discrimination 19-Aug-02

Pennsylvania

Senator, Colorado Allegation of improper personnel practices 03-Sep-02

Senator, North Carolina Allegation of improper computation of retirement benefits 10-Sep-02

OVERSIGHT OF INSPECTION SERVICE 

Requestor Allegations/Concern Response Date

Senator, Alabama Allegation of improper investigation 29-Apr-02

Senator, Minnesota Allegation of misconduct by Postal Inspectors 17-Jun-02

Representative, Indiana Allegation of improper removal 02-Aug-02

Senator, Tennessee Allegation of hostile work environment within an 16-Aug-02

Inspection Service group

OTHER SIGNIFICANT ISSUES

Requestor Allegations/Concern Response Date

Representative, Louisiana Allegation of unfair treatment in the Department of 15-Apr-02

Labor claims process

Representative, Georgia Request for information concerning OIG employment 24-Apr-02

Representative, New York Request for status of complaint 26-Apr-02

Representative, Indiana Suggestions for review of program improvement 05-Jun-02

Senator, Tennessee Request for information 19-Jul-02

Representative, Texas Request for information 02-Aug-02

GOVERNORS

PERFORMANCE

Requestor Allegations/Concern Response Date

Governor Request for review of mail recovery center sales of damaged or lost items 23-Apr-02

FINANCIAL MANAGEMENT

Requestor Allegations/Concern Response Date

Governor Request for review of an operating agreement 04-Jun-02

Governor Request for review of excess property disposal 29-Jul-02

APPENDICES

Requestor Allegations/Concern Response Date

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