semiannual report to congress

OFFICE OF INSPECTOR GENERAL

April 1 — SEPTEMBER 30, 2007

Promoting Integrity and Accountability
MISSION

The mission of the U.S. Postal Service Office of Inspector General is to 

conduct and supervise objective and independent audits, reviews, and 

investigations relating to Postal Service programs and operations to:

■ Prevent and detect fraud, theft, and misconduct.

■ Promote economy, efficiency, and effectiveness.

■ Promote program integrity.

■ Keep the Governors, Congress, and Postal Service management informed of problems, deficiencies, and corresponding 

corrective actions.
This semiannual report focuses on audit and investigative work in three areas of risk (strategic, financial, and operational) identified by the Office of Inspector General (OIG) as facing the 

U.S. Postal Service today. We used risk assessment to determine the critical areas requiring 

attention based on the potential for adverse effects on the Postal Service. This ensures we 

have the right resources in the right places.

Our work and activities for the 6-month period ending September 30, 2007, are outlined here 

pursuant to the Inspector General Act.

During this period, we issued 206 audit reports and management advisories. These efforts 

resulted in $1.6 billion in savings opportunities 

and more than $1.7 million in revenue opportunities. We had 46 significant audit recommendations, most of which were accepted by the Postal Service. 

In addition, we closed 4,436 cases and referred 2,408 to management for administrative 

action. Our investigators made 282 arrests, obtained 123 indictments, and we returned more 

than $13.2 million in fines, restitutions, and recoveries to the Postal Service.

I look forward to working with the Governors, Congress, and Postal Service executives as we 

continue to address the risks facing the Postal Service today.

A MESSAGE FROM THE INSPECTOR GENERAL
SUMMARY OF PERFORMANCE

For the period April 1 — September 30, 2007

AUDIT

Reports issued................................................................................................................ 206

Significant recommendations issued............................................................................... 102

Total reports with financial impact ..................................................................................... 86

 Funds put to better use ...........................................................................$1,351,943,885

 Questioned costs1 ..................................................................................... $248,014,993

 Revenue Impact .............................................................................................$1,780,382

Total2 ...................................................................................................$1,601,739,260

INVESTIGATIONS3

Investigations completed.............................................................................................. 4,436

Arrests............................................................................................................................. 282

Indictments/informations................................................................................................. 123

Convictions/pretrial diversions4

........................................................................................ 370

Administrative actions taken......................................................................................... 2,275

Cost avoidance ................................................................................................. $87,862,882

Fines, restitutions, and recoveries ...................................................................... $17,740,468

 Amount to Postal Service5............................................................................ $13,213,100

HOTLINE CONTACTS

Telephone calls........................................................................................................... 28,334

e-Mail ..........................................................................................................................11,702 

Virtual Front Office calls.................................................................................................2,215

Standard Mail...................................................................................................................818

Voice mail messages....................................................................................................... 610

Facsimile—FAX................................................................................................................ 384

Total Contacts..................................................................................................44,063

1

 Includes unsupported costs of $8,920,918.

2

 The Postal Service could save $1.6 billion by implementing OIG recommended corrective actions.

3

 Statistics include joint investigations with other law enforcement agencies.

4

 Convictions reported in period may be related to arrests made in prior reporting periods. 

5

 Amount included in Fines, restitution, and recoveries.

*

 The October 1, 2006 — March 31, 2007 Semiannual Report to Congress contained a typographical error. 

Actual cost avoidance (Office of Workers’ Compensation Programs and tort) for this period should have read 

$120,318,529. Fines, restitution, and recoveries for this period should have read $22,386,061. 

** The Virtual Front Office calls were included in Telephone calls in the October 1, 2006 — March 31, 2007 

Semiannual Report to Congress. The correct number for telephone calls in that period were 27,012.

**

*
TABLE OF CONTENTS

Risk Assessment ......................................................................................................2

Strategic Risk Factors.......................................................................................................... 4

Financial Risk Factors.......................................................................................................... 9

Operational Risk Factors ....................................................................................................17

Feature Stories........................................................................................................34

Postal Accountability and Enhancement Act..................................................................... 34

Computer Assisted Assessment Techniques Continuous Monitoring System .................. 35

Suspicious Expenditures Task Force................................................................................. 36

Office of Investigations Reorganization.............................................................................. 38

Keeping Congress Informed.............................................................................................. 39

Map of Area Field Office Locations.......................................................................41

Appendices .............................................................................................................42

Appendix A – Reports with Quantifiable Potential Monetary Benefits................................ 42

Report Listing.................................................................................................................... 46

Appendix B – Findings of Questioned Costs..................................................................... 51

Appendix C – Recommendations That Funds Be Put to Better Use................................. 52

Appendix D – Reported Non-monetary Benefits............................................................... 53

Appendix E – Reports with Significant Recommendations Pending Corrective Actions ... 54

Appendix F – Significant Management Decisions in Audit Resolution............................... 57

Appendix G – Investigative Statistics ................................................................................. 58

Appendix H – Summary of Postal Service Investigative Activities Under 

 Title 39 USC § 3013 ........................................................................................................ 58

Appendix I – Closed Congressional and Board of Governors Inquiries ............................. 60

Supplemental Information......................................................................................65

Freedom of Information Act............................................................................................... 65

Workplace Environment .................................................................................................... 66

Glossary ............................................................................................................................ 67
2 | Semiannual Report to Congress

Top Postal Service leaders and the Board of Governors (BOG) are increasingly focused on 

risks to the Postal Service. 

We define “risks” as events or things that could keep the Postal Service from accomplishing 

its goals and objectives. Risks can be expressed in terms of money (for example — excessive 

costs). They can also be expressed in terms of loss of data (either to outside hackers or the 

crash of a system that obliterates much needed management information), damage to public 

goodwill or reputation, or damage to the ethical climate of the organization. On the other 

hand, risks can be foregone opportunities such as the harm to future growth and revenue by 

not introducing a great new product. 

It is up to the Postal Service to address their risks, but the OIG can add value by being aware 

of all key risks and understanding their ramifications. As a result, we need to be in the best 

possible position to know what the risks are, understand how they might impact the Postal 

Service, and help find ways to address them more effectively. To that end, beginning with 

the fiscal year (FY) 2008 audit plan, we developed a planning approach based on a formal 

top-down risk assessment of the Postal Service. Further, we are committed to addressing 

the highest risks even if it requires temporarily redeploying our resources or reassigning work. 

This risk deployment approach helps us direct audit and investigative resources toward top 

priorities and critical areas for attention, based on the potential for adverse effects on the 

Postal Service.

We first identified three overarching risk categories: Strategic, Financial, and Operational; then 

we articulated specific risk factors that confront the Postal Service associated with each of 

these risk categories.

The Strategic Risk category includes big picture long-range issues, such as: 

■ Network streamlining.

■ Strategic vision for automation.

■ Strategic workforce planning.

■ Viability of the Postal Service business model.

The Financial Risk category includes issues with a clear financial impact, such as: 

■ Employees on leave without pay, limited duty, workers’ compensation.

■ Financial systems.

■ Financial fraud.

■ Pricing.

RISK ASSESSMENT
April 1 — September 30, 2007 | 3

ris

k assessment

The Operational Risk category includes 

issues related to the day-to-day operation of 

the Postal Service, such as:

■ Planning and monitoring work.

■ Revenue operations.

■ Contracting process.

■ Security of the mail.

■ Service.

Our Office of Audit executives conducted the 

top-down strategic aspect of the process, 

after gathering important risk information 

from Postal Service officials and other key 

OIG officials. Once the risk categories and 

risk factors were identified, audit executives 

assessed each risk factor by identifying the 

likelihood it will occur and the impact on the 

Postal Service, if it does occur. Each risk 

factor was rated Low, Medium, or High, and 

then the ratings were captured in risk matrices for each category. We shared the results 

of this risk assessment with the Postmaster 

General (PMG), other top Postal Service 

officials, and the BOG’s Audit & Finance 

Committee, and then factored their input into 

the final assessment.

In the bottom-up tactical aspect of the 

process, the results were used to identify 

and prioritize audit work for FY 2008 based 

on the highest risk factors impacting each 

audit director’s area. The directors also 

coordinated their planning efforts to address 

cross-functional issues, where applicable. 

Finally, where necessary, we are redeploying resources or reassigning work from one 

directorate to another to ensure we address 

the highest risks.

Over the last few months, top Postal Service 

officials and the Audit & Finance Committee 

have embraced their own need to focus on 

risks. The Chief Financial Officer has formed 

an Enterprise Risk Management Steering 

Committee made up of 

the Deputy Postmaster 

General, General Counsel, himself, and others, 

to further address risks 

and institutionalize risk 

management in the 

Postal Service.

Using both our risk 

assessment and risk 

deployment approaches 

allows us to identify the 

most important bodies 

of work that need to be 

done, and then position 

ourselves to do that work. 

This more agile approach 

will enhance our value to 

the Postal Service. 

For this reporting period 

we highlight audits, 

reviews, and investigations that address 

selected risk factors in 

strategic, financial, and 

operational areas.

Management Response to OIG Work

We adhere to professional audit standards and present our audit work to management for comments prior to issuing a 

final report. Unless otherwise noted in the selected audit work discussed in this report, management has agreed or partially 

agreed with our recommendations and is taking or has already taken corrective action to address the issues we raised. 

Further, we adhere to the President’s Council on Integrity and Efficiency and the Executive Council on Integrity and 

Efficiency (PCIE ECIE) Quality Standards for Investigations in issuing to management the results of our administrative 

investigations. We report the facts in our Reports of Investigation, but make no recommendations. Management decides if 

disciplinary action is warranted and reports to us any action taken.

The Postal Service continually looks for opportunities to streamline 

operations, reduce costs, increase operational effectiveness, and 

improve service.
4 | Semiannual Report to Congress

STRATEGIC RISK FACTORS

The Strategic Risk category includes big 

picture long-range issues that impact the 

Postal Service’s overarching strategic direction. Strategic risk factors are those which 

may impede the Postal Service’s ability to 

be effective and efficient, and ensure that 

its products and services are self-sustaining 

and balance legal considerations and 

stakeholder views. The Postal Service has 

many important initiatives in progress including optimizing its processing and delivery 

networks and increasing investments in 

technology to streamline operations. These 

initiatives are critical if the Postal Service is to 

continue providing mail services to customers at a reasonable price. Historically, mail 

volume (revenue) growth has covered the 

growth of the delivery network (cost). Today, 

with declining First-Class Mail volumes, this is 

increasingly difficult to achieve. 

The Postal Service’s processing, distribution, retail, and delivery network is one 

of the world’s largest, comprising almost 

34,000 sites and more than 450 mail processing facilities. The existing network was 

developed over time to support the Postal 

Service’s historic business model. However, 

changing conditions are raising questions 

about this business model, and have made 

network streamlining imperative. These 

changing conditions include mail volume 

fluctuations and declines, shifting population 

demographics, and increasing automation 

and mail processing by mailers.

The President’s Commission on the Postal 

Service lauded the Postal Service for its 

goal of streamlining its distribution network. 

In addition, Congress has encouraged 

the Postal Service to continue its network 

streamlining efforts.

In FY 2007, the Postal Service made some 

significant strategic moves in streamlining 

its network. Additionally, other important 

changes are occurring in the environment 

regarding the Postal Accountability and 

Enhancement Act of 2006 (Postal Act of 

2006) and the mail mix. Each of these strategic moves presents risks that must be 

carefully managed. At the same time, some 

opportunities need to be seized expeditiously, such as furthering Intelligent Mail 

(see discussion on page 8).

This section discusses audit work addressing the strategic risk factors of:

■ Network streamlining.

■ Strategic vision for automation.

■ Access to products/services.

■ Intelligent Mail.

■ Human capital. 

Network Streamlining. The Postal Service’s 

business environment is challenging due to 

declining First-Class Mail volume, increasing 

competition with traditional mail products 

from the private sector, increasing automation and mail processing by mailers, 

and shifting population demographics. In 

addressing these challenges, the Postal 

Service continually looks for opportunities 

to streamline operations, reduce costs, 

increase operational effectiveness, and 

improve service.

In recent years, the Postal Service’s most 

significant strategic effort to optimize its mail 

processing network is to identify potential 

operations and network changes to create 

a more flexible postal distribution and transportation network. Additionally, the Postal 

Service uses Area Mail Processing (AMP) 

studies to consolidate mail processing functions to eliminate excess capacity, increase 

efficiency, and better use resources.

Our recent reviews focused on the process 

for identifying consolidation opportunities, 

whether consolidation proposals have been 

supported, and whether consolidations realized projected cost savings. In general, we 

found the consolidations were supported, 

but we identified various concerns. 
April 1 — September 30, 2007 | 5

STRATEGIC RISK FACTORS

■ We reported that both the strategic 

approach (top-down) and tactical 

approach (bottom-up) add value to the 

process of identifying consolidation 

opportunities and help ensure consistency. However, the Postal Service could 

improve this process by integrating the 

benefits of both approaches. There were 

inconsistencies in the identification of 

bottom-up AMP consolidation opportunities where area management had 

developed additional criteria for service 

degradation, minimum savings thresholds, and distance between facilities. We 

recommended that management validate 

consolidation opportunities with the network realignment strategy and revise 

AMP guidance. 

■ We assessed the post-implementation 

reviews (PIR) of the Marina Processing 

and Distribution Center (P&DC) consolidation into the Los Angeles and Long Beach 

P&DCs, all located in California. We found 

the economy and efficiencies associated 

with the consolidation resulted in considerable savings. However, support for and 

accuracy of the Marina PIR could have 

been improved. There were misstatements in workhours, transportation, and 

associated costs resulting in a net savings 

overstatement of $1.5 million. Further, we 

identified issues with data retrieval timeframes, service impacts during the first 

year after consolidation, and compliance 

with AMP guidance. We recommended 

management correct the Marina annual 

PIR, establish a rigorous review process 

for identifying AMP and PIR errors, and 

clarify AMP guidelines.

■ Management requested we review the 

proposal to consolidate the Bronx, New 

York, P&DC incoming mail operations into 

the Morgan Station, New York, P&DC. 

We concluded the proposal was generally accurate and supported, showed 

evidence of management review, and 

provided confirming evidence for the 

consolidation. However, some calculation issues resulted in an overstatement 

of $1.4 million in savings. In response to 

congressional inquiries, we also reviewed 

concerns regarding the impact of the 

consolidation on trailer volume during 

peak hours, worker reassignments, 

and potential mail delivery delays. We 

determined that management’s planning 

appeared adequate to minimize any negative impacts. In addition, there were some 

potential consolidation risk factors and a 

slight downgrade in Standard Mail service. 

Management corrected the savings issues 

during the audit and resubmitted the AMP 

to headquarters for review and approval. 

We recommended that management 

develop a more objective and supportable 

method for determining required workhours for consolidations. 

The Postal Service’s processing, distribution, retail, and delivery network is one of the world’s largest, comprising 

almost 34,000 sites and more than 450 mail processing facilities. 
6 | Semiannual Report to Congress

Streamlining the network presents the Postal 

Service with many challenges. These challenges include developing a flexible network 

that can adjust to changing market conditions and mail volumes; balancing service 

with cost; keeping stakeholders informed to 

prevent surprises; and maintaining resilience 

in the event of major disruptions, natural 

disasters, or acts of terrorism.

We will continue to review initiatives to 

streamline the network to ensure these initiatives achieve desired results and comply with 

the Postal Act of 2006 without sacrificing 

service to stakeholders.

Enterprise Architecture. The Postal Service 

balances increasing demands to enhance its 

technology investment capabilities with the 

need to control costs. One technique that 

can help with this is an Enterprise Architecture (EA), which is a conceptual framework 

for designing, developing, and operating 

business solutions to ensure that Postal Service business goals are aligned. Managed 

properly, an EA can clarify and help optimize 

the interdependencies and relationships 

among an organization’s business operations 

and the infrastructure and applications that 

support them.

Our evaluation found the Postal Service had 

executive support for EA, but plans did not 

demonstrate an awareness of EA within 

Postal Service Engineering. Engineering did 

not utilize standard processes and controls 

that promote accountability and effective 

project execution under EA, and they did 

not identify clear measurement of progress 

towards goals within corporate timelines.

To mature under the EA framework, we 

recommended that Postal Service Engineering establish and fund a program office 

to support the Postal Service EA, and 

delegate responsibilities supporting the 

Postal Service chief architect. Additionally, 

we recommended that they make information security more visible in technology 

plans, and standardize tools to measure 

risks, progress, quality, compliance, and the 

impact of adjustments. Management 

agreed that moving in this direction had 

merit and communicated our findings to the 

Senior Vice President of Strategic Planning 

for consideration.

Commodity Sourcing Activities. In response 

to BOG questions about the Automation 

Category Management Center’s (CMC) 

practice of awarding contracts to a limited 

number of suppliers, often noncompetitively, 

we reviewed the commodity sourcing activities within the Automation CMC. In general, 

the Postal Service effectively identified 

and maintained a mail automation supplier 

base consistent with its policies and business objectives. Specifically, Postal Service An updated OIG Hotline poster was distributed to all post offices and postal facilities during 

this reporting period.
April 1 — September 30, 2007 | 7

STRATEGIC RISK FACTORS

officials adopted an acquisition strategy 

and established strategic partnerships with 

key suppliers to acquire automated mail 

processing equipment and enhancements. 

In addition, they took action to mitigate risks 

associated with contracting with a few 

key suppliers. 

However, in light of the limited automation 

equipment supplier market, we recommended the Postal Service explore options 

for developing alternative mail automation 

supply sources and include appropriate technology protection clauses in these contracts 

to better protect its investments. Additionally, we recommended the Postal Service 

obtain contractor cost or pricing data when 

noncompetitively awarding share-in-savings, 

incentive-type mail automation contracts. 

Management agreed with the recommendations except they did not agree to 

obtain contractor cost or pricing data when 

noncompetitively awarding share-in-savings, 

incentive-type mail automation contracts. 

Alternatively, they said they would conduct 

market research activities with other world 

posts to obtain information about the prices 

paid on recognition system address interpretation improvements, and would include 

this information, together with the Postal 

Service’s historical pricing, in future negotiation memorandums to improve the price 

analysis coverage for contract file documentation. This is expected to help ensure that 

contracts are fair and reasonably priced and 

suppliers are not unduly enriched. We may 

review the price analysis documentation during future audits of noncompetitively awarded 

share-in-savings contracts. In addition, the 

Postal Service said it will routinely include 

appropriate technology protection clauses in 

all new automation contracts.

Automated Postal Centers. We assessed the 

deployment strategy of Automated Postal 

Center (APC) kiosks and determined that 

the Postal Service deployment strategy was 

adequate. Postal Service officials initially 

deployed APC kiosks to facilities based on 

operation criteria. As of December 2006, 

officials had identified and appropriately 

redeployed 170 underperforming APC 

kiosks. Additionally, we performed an analysis of FY 2006 actual transaction data for 

the best 3,000 candidate facilities for 

APC deployment. 

We recommended the Postal Service revise, 

finalize, and distribute the APC instructional 

documents to area officials and include information on procedures similar to those found 

in Handbook PO-102, Self Service Vending 

We recommended management reevaluate the draft Decision Analysis Report to include strategies for achieving their 

goal of doubling to 40 the percentage of retail transactions conducted via alternate access channels by 2010.
8 | Semiannual Report to Congress

Operational and Marketing Program. We 

also recommended management reevaluate 

the draft Decision Analysis Report (DAR) 

to include strategies for achieving their goal 

of doubling to 40 the percentage of retail 

transactions conducted via alternate access 

channels by 2010. 

Intelligent Mail. Intelligent Mail is a major 

Postal Service initiative to capture and share 

information about each mailpiece throughout 

its processing, allowing end-to-end visibility. 

We assessed the deployment status of data 

collection devices and determined whether 

the Postal Service sought the appropriate 

compensation for additional costs due to 

program delays.

The data acquisition system was more than 

18 months behind schedule due to hardware 

and software deficiencies. While negotiations 

for program losses due to schedule delays 

were timely, the Postal Service excluded 

certain relevant losses from the negotiations. 

In particular, we identified losses related to 

extending the service life, maintaining the 

legacy system, extending the period for 

program management services supplied by 

a separate vendor, operating optical scanner workstations longer than expected, and 

storing postal-furnished equipment. The 

Postal Service could have negotiated these 

losses for additional vendor compensation 

based on a percentage share of the responsibility for schedule delays. Since we had 

highlighted similar issues in prior audits, we 

recommended that the Postal Service finalize a formal process for negotiating delay of 

delivery of goods and services.

Management disagreed with the audit finding 

that there were unrecoverable questioned 

costs and believed the report findings would 

not have resulted in a higher recovery.

Comprehensive Strategic Workforce Plan. 

Although the Postal Service has taken some 

steps to address workforce planning for 

bargaining and non-bargaining employees 

at both the field and headquarters levels, it 

has not developed and implemented a comprehensive strategic workforce plan that fully 

addresses the five key elements essential to 

successful workforce planning. These key 

elements include such things as determining 

the critical skills and competencies needed 

to achieve current and future programmatic 

results, and developing workforce strategies 

tailored to address the number, deployment, 

and alignment of human capital. 

We recommended the Postal Service 

develop and implement such a plan to help 

guide its human capital efforts and perform 

its mission economically, efficiently, and 

effectively. In addition, implementing the 

recommendations 

will assist the Postal 

Service in responding to Congress in 

compliance with the 

Postal Act of 2006, 

which requires a 

plan describing the 

long-term vision of 

the Postal Service 

for rationalizing its 

infrastructure and 

workforce to support 

new service standards. 

Intelligent Mail is a major Postal Service initiative to capture and share information about each mailpiece throughout its processing, allowing 

end-to-end visibility. 
April 1 — September 30, 2007 | 9

FINANCIAL RISK FACTORS

FINANCIAL RISK FACTORS

The Financial Risk category includes issues 

that have a clear financial impact, particularly 

those related to cost control and revenue 

generation. The greatest opportunities to 

reduce financial risks are in the areas of 

improving internal controls in financial systems, processes, and benefit programs, 

and maximizing the cost-effectiveness 

of contracts. 

The major financial trends in FY 2007 were 

that financial statement audits continued to 

produce unqualified opinions and that efforts 

related to Sarbanes-Oxley Act provisions are 

off to a good start. Additionally, labor costs 

continue to receive attention, and there 

are some opportunities to be seized in controlling Postal Service contributions to life 

and health insurance.

Financial risk factors for the Postal Service 

discussed in this section include: 

■ Workers’ compensation program claimant 

and provider fraud. 

■ Postal Service benefits programs. 

■ Maximizing the cost-effectiveness of 

contracts, and contract fraud.

■ Financial fraud. 

■ Financial systems and processes. 

Our Office of Investigations has five investigative programs, three of which address 

financial risk: healthcare fraud, contract 

fraud, and financial fraud. Workers’ compensation risk is addressed under the healthcare 

fraud program. We investigated two types of 

cases under this program: Office of Workers’ 

Compensation Program (OWCP) claimant 

fraud and OWCP medical provider fraud.

OWCP Claimant Fraud. A critical cost control 

area within the Postal Service is the funding of workers’ compensation benefits for 

employees who sustain job related injuries. 

It is a violation of federal criminal law to 

knowingly make a false representation on 

an OWCP claim. (A false representation 

typically involves unreported income or misrepresentation of one’s physical limitation.) 

We work closely with injury compensation 

units and management to identify instances 

of suspected workers’ compensation fraud. 

When we find instances of fraud, we gather 

facts and report findings to management 

and prosecutors. Criminal prosecutions of 

these offenders are an effective deterrent to 

combating workers’ compensation fraud. 

A conviction prevents those claimants from 

obtaining any future OWCP benefits. 

Based on successful 

investigative activity, 

claimants who fraudulently obtain workers’ 

compensation benefits 

are removed from the 

U.S. Department of Labor 

(DOL) periodic and daily 

rolls. As a result, the 

Postal Service avoids 

future compensation 

liability payments to DOL. 

The savings experienced 

by the Postal Service is 

called a cost avoidance. During this reporting 

period, our investigations resulted in 

$87.9 million in cost avoidance.

During this reporting period, we completed 

971 investigations and obtained 16 criminal 

convictions. The Postal Service took personnel action against 307, including removals, 

letters of warnings, and claim terminations.

Our investigative goal in this area is to prevent 

and deter workers’ compensation fraud, not 

simply detect and investigate it. For example, 

to examine additional ways to control the 

escalating workers’ compensation costs, 

the Postal Service and the OIG, along with 

officials from DOL, convened in Arlington, 

Virginia, at a National Injury Compensation Symposium and Training Conference 

in April 2007. During the first 2 days, more 

than 200 attendees shared executive-level 

knowledge of the workers’ compensation 

program, discussed the program’s design 

Results of significant OWCP fraud investigations are shared with the 

Postal Service’s injury compensation specialists, who work closely 

with our special agents on these investigations. This newsletter is 

distributed quarterly to injury compensation specialists, postmasters, 

and other postal officials.
10 | Semiannual Report to Congress

and intended function, and talked about 

the challenges facing the program. The final 

day was devoted to investigative training for 

special agents. We also publicize criminal 

workers’ compensation fraud to the Postal 

Service through a “Healthcare Fraud Highlights Newsletter.” The newsletter is designed 

to raise awareness and deter other attempts 

to defraud the government.

Following are examples of investigations during this reporting period.

■ Former Illinois Rural Letter Carrier 

Sentenced to Prison for OWCP Fraud. 

A former Rural Letter Carrier had received 

workers’ compensation payments since 

December 2002, claiming she was unable 

to perform any work because of extreme 

pain and limited movement in her hands 

and arms. Special agents challenged her 

claim when they learned the claimant 

operated a lawn and garden business and 

failed to report earnings to the DOL. She 

was convicted in federal court of fraudulently obtaining workers’ compensation 

benefits. In May 2007, she was sentenced 

to 5 months in prison, 5 months of home 

confinement, and ordered to pay $62,226 

in restitution. Her workers’ compensation 

benefits were terminated; thereby saving 

the Postal Service $1,067,040 in future 

workers’ compensation costs. 

■ Selling Cattle Results in OWCP Fraud 

Conviction. We received an allegation that a Virginia Rural Letter Carrier 

was working on a farm while receiving 

workers’ compensation benefits. Our 

investigation revealed that the employee 

earned between $6,000 and $7,000 on 

the sale of cattle from his ranch while 

receiving workers’ compensation payments and failed to report these earnings 

as required on DOL forms. The employee 

was indicted on a federal charge of 

false statements. He pled guilty and in 

May 2007, was sentenced to 2 years of 

probation and ordered to pay $8,038 in 

restitution. Following the sentencing, the 

DOL ordered him to repay an additional 

$33,513 and then terminated his workers’ compensation benefits, allowing the 

Postal Service to save $542,598 in future 

workers’ compensation costs.

■ OWCP Fraud Investigation in New 

Jersey Results in $1,225,000 Cost 

Avoidance. We were advised that a Rural 

Letter Carrier was performing physical 

activities inconsistent with her “total disability” status. The employee had earlier 

filed a workers’ compensation claim alleging she had a shoulder injury caused by 

repetitive movement. As a result, she said 

she could not perform limited work duties 

at the post office. She said she could not 

use either arm, was on pain medication, 

and was unable to drive an automobile 

or lift objects weighing between 2 and 

15 pounds. Special agents’ surveillance 

showed her on rides at a Six Flags Great 

Adventure amusement park and displaying no apparent signs of discomfort or 

disability. The next day, we videotaped her 

carrying grocery bags. One month later, 

she completed a questionnaire representing that she was basically placed on bed 

rest, and this is what she did most of the 

time. We presented this evidence to the 

treating physician, who approved the 

employee for limited duty. The Rural 

Letter Carrier resigned in May 2007 after 

receiving a letter of removal from management. As a result of our investigative 

efforts, the Postal Service avoided costs 

of $1.2 million.

■ Convicted Former Mail Handler to 

Repay $393,000 for OWCP Fraud. A 

proactive review of records determined 

that a former New York Mail Handler 

concealed his business enterprises from 

the OWCP while receiving compensation 

payments on the periodic roll. The Mail 

Handler injured his back in 1988, and 

began receiving workers’ compensation 

payments in 1989. Our review revealed 

that while receiving workers’ compensation payments, the former Mail Handler 
April 1 — September 30, 2007 | 11

FINANCIAL RISK FACTORS

bought and sold cars for his wife’s 

automobile sales business. During the 

execution of a federal search warrant, 

special agents obtained evidence confirming that the former Mail Handler also 

operated a sign-making business and a 

driveway-sealing business. In June 2007, 

the Mail Handler retired from the Postal 

Service, and in August he pled guilty in 

federal court to committing fraud to obtain 

federal employee compensation. The former Mail Handler agreed to pay $392,864 

in restitution. Sentencing is scheduled for 

December 2007. The Postal Service realized a cost avoidance of $595,140.

OWCP Medical Provider Fraud. We also investigate allegations of fraud against medical 

providers who treat multiple Postal Service 

OWCP claimants. Following are examples of 

our medical provider fraud investigations during the reporting period.

■ Medical Contractor Convicted of Mail 

Fraud to Repay $63,700 to Postal 

Service. Our investigation determined 

that a Contract Nurse at a California 

postal facility created 38 false invoices 

in the name of a fictitious doctor and 

directed payments to a post office box 

she controlled. A total of $63,700 was 

paid to the Contract Nurse before the 

scheme was detected. The Contract 

Nurse was indicted in federal court on a 

charge of Mail Fraud. She pled guilty and, 

in May 2007, was sentenced to 3 years of 

probation and ordered to make restitution.

■ California Chiropractor Ordered to Pay 

Restitution in Illegal Kickback Scheme.

Our investigation determined that a California chiropractor made illegal payments 

to a Postal Service Injury Compensation 

Specialist in return for referrals of injured 

postal employees to his medical practice. 

The chiropractor pled guilty and, in 

May 2007, was sentenced to 3 years of 

probation and ordered to pay $25,664 

in restitution. 

Postal Service Benefit Programs. We assessed 

the Postal Service’s Federal Employees’ 

Group Life Insurance (FEGLI) and Federal 

Employee Health Benefits 

(FEHB) programs for bargaining and non-bargaining 

employees and found they 

are comparable to the 

six federal and five quasifederal agencies with which 

we benchmarked. However, the Postal Service’s 

contribution rates for both 

programs were significantly 

higher than most agencies. 

For example, the Postal 

Service pays the full cost of 

the premiums for almost all 

employees’ FEGLI basic life 

insurance and for executives’ Option-A life insurance 

and FEHB benefits. Most 

other agencies pay 33 and 

72 percent of the FEGLI and 

FEHB premiums, respectively, for their employees. 

We also found that the 

Postal Service made great 

progress in reducing future 

FEHB costs when it successfully negotiated with two of its major unions — the 

American Postal Workers Union (APWU) 

and the National Postal Mail Handlers Union 

(NPMHU) — for a reduction in the agency’s 

FEHB contribution rate of one percent for 

each year of the new collective bargaining 

agreements. Based on our analysis, this will 

result in a $713 million savings to the Postal 

Service over a 10-year period. 

Changes can be made to existing FEGLI and 

FEHB contribution rates through negotiations with the Postal Service’s other unions 

(for bargaining employees) and consultations with management associations (for 

non-bargaining employees). These changes 

could result in significant savings to the 

Postal Service. Specifically, we estimated the 

present value of the Postal Service’s potential 

This news story that ran in The Post-Standard, in Syracuse, New 

York, depicts a former Mail Handler convicted of fraudulently 

collecting OWCP payments while buying and selling cars for his 

wife’s automobile sales business. 
12 | Semiannual Report to Congress

savings resulting from further reductions in 

benefit program contributions to be $1.073 

billion over 10 years.

Maximizing the Cost-Effectiveness of Contracts. 

We issued 11 contract-related audit reports 

during the reporting period, evaluating five 

cost proposals, two accounting systems, two 

leases, one claim, and one key performance 

indicator. These audits identified questioned 

costs of more than $500 million. This information was provided to contracting officers 

for their consideration in negotiating the best 

terms for the Postal Service. An example of 

significant work in this area follows.

An audit of a $518 million firm-fixed-price 

proposal for the Biohazard Detection System 

Operations and Maintenance/Consumables 

disclosed more than $235 million in questioned costs. The contractor did not provide 

pertinent cost and pricing data requested 

during the audit. The audit also determined 

numerous related party transaction concerns 

and unallowable costs that resulted from 

a pyramiding of profits. In addition, certain 

subcontract cost proposals were inadequate 

and the subcontractors were unable to support their proposed costs.

Since the non-compliances and inadequacies were significant, we did not believe the 

proposal was an acceptable basis for negotiating a fair and reasonable contract price. 

Therefore, we recommended that the Postal 

Service not negotiate a contract based on 

this proposal. Additional information was 

provided by the contractor and further audit 

work was performed. We expect to issue a 

report on the most recent proposal submissions in October 2007. 

Contract Fraud. We address the Postal Service’s external risk to financial fraud through 

our investigative contract fraud program. 

This program is a cross-functional effort 

involving special agents, contract fraud 

attorneys, forensic examiners, and investigative analysts. 

Together, OIG components are identifying 

ways to more aggressively investigate contract fraud schemes that range from failure of 

contractors to meet contract specifications to 

payment of bribes to postal employees; from 

cost irregularities of chargebacks to double 

and false billing. Other common schemes 

include kickbacks, conflict of interest, and 

misuse of contract modifications. 

A national approach ensures that when a 

scheme is identified in one region of the 

country, other offices are on the lookout 

for similar schemes. For example, after the 

discovery of a contract fraud scheme in 

Houston involving recycling contracts, all 

similar contracts around the country were 

quickly identified and leads sent to other 

field offices.

The Postal Service presently manages many 

contracts, involving tens of billions of dollars 

and ranging from multimillion-dollar national 

contracts for services such as transportation 

networks and information technology (IT) 

An audit of a $518 million firm-fixed-price proposal for the Biohazard Detection System Operations and 

Maintenance/Consumables disclosed more than $235 million in questioned costs. 
April 1 — September 30, 2007 | 13

FINANCIAL RISK FACTORS

infrastructures to local contracts for supplies 

and services at individual postal facilities. 

The sheer volume of contracts and their 

huge dollar value provide opportunities for 

contractors and employees to defraud the 

Postal Service. We aid the Postal Service by 

assessing its management of acquisitions 

and contracts and investigating allegations of 

contract improprieties. 

During this period, we completed 96 

Contract Fraud investigations, resulting in 

$1.3 million returned to the Postal Service. 

Following are examples of investigative 

accomplishments in this area.

■ Postal Service Receives $424,614 

from Two Contractors for Improper 

Fee Payments. In August 2007, the 

U.S. Department of Justice announced 

that two federal contractors paid 

approximately $5.2 million to the U.S. 

Government to settle allegations that they 

solicited and provided improper payments 

and other things of value on technology 

contracts with government agencies, 

including the Postal Service. The Postal 

Service received $424,614 from this 

settlement. This settlement stemmed from 

a False Claims Act lawsuit filed in September 2004 in federal court in Arkansas 

alleging that numerous companies inappropriately received kickbacks and other 

referral fees from alliance agreements they 

formed with other companies. Under the 

alliance agreements, the government contractor would allegedly receive improper 

payments for recommending hardware, 

software, and computer services provided 

by another company. Special agents 

reviewed and analyzed thousands of 

subpoenaed records to identify evidence 

of the scheme. This case is being investigated jointly with several other federal 

law enforcement organizations, and the 

investigation is ongoing.

■ New Jersey Postmaster Pleads Guilty 

to Embezzling $16,500. In May 2007, a 

former New Jersey Postmaster pled guilty 

in federal court to embezzling $16,500 

from the Postal Service. Our investigation 

determined that the former Postmaster 

had a postal employee perform 5 weeks 

of carpentry work at the home of his exwife, while the employee was on duty. The 

Postmaster also allowed five employees 

to donate annual leave to his ex-wife, who 

is also a postal employee, and then falsified the employees’ attendance records 

to reflect that they were working during 

times when they were actually on leave. 

The carpentry work and leave time totaled 

$16,500. The Postmaster also steered 

plumbing, heating, and air conditioning 

work to a contractor at inflated rates in 

return for kickbacks. He resigned from the 

Postal Service in October 2006 and will 

be sentenced later this year.

■ Colorado Postmaster Paid Wife 

$35,000 for Landscaping Services 

Not Performed. We received information that a Colorado Postmaster was 

performing landscaping work at the 

post office while on duty, even though 

a company was being paid to perform 

the work. Our investigation determined 

that the Postmaster improperly steered 

landscaping and snow removal contracts 

to his wife’s company, which had contracts only with the Postmaster’s post 

office. Special agents found that the 

Postmaster’s wife used her maiden name 

to conceal her marital relationship and that 

the Postmaster assisted her in preparing 

the bids. The wife acknowledged she was 

paid for doing nothing more than submitting monthly invoices. The Postmaster and 

his wife were arrested on state criminal 

charges. In September 2007, they both 

pled guilty to charges of theft and failure to 

disclose conflict of interest. The Postmaster retired under investigation.

■ New Jersey Manager Pleads Guilty 

to Receiving Years of Kickbacks. We 

investigated questionable contracting 

practices by a New Jersey Operations 

Manager. Our investigation determined the 
14 | Semiannual Report to Congress

Operations Manager steered $600,000 in 

contracts for plumbing, heating, ventilation, and air conditioning work at various 

postal facilities over a period of 8 years. 

In return, he received payoffs of between 

$100 and $400 for each job. Additionally, 

he received free auto repairs for himself 

and his family, a free car for his son, and 

$2,500 for his daughter’s wedding. We 

further determined he used the carpentry 

services of a postal employee at his residences while the employee was on duty. 

The Operations Manager was suspended 

from the Postal Service without pay. In 

July 2007, he resigned and pled guilty to 

one count of conspiracy to defraud the 

government. He faces up to 5 years in 

prison and a maximum $250,000 fine.

Financial Fraud. The Postal Service has 

annual operating revenue of nearly $73 billion. Each day it serves more than nine million 

customers and issues more than 900,000 

money orders. We address risks in this 

area through our investigative Financial 

Fraud program. 

The Financial Fraud program objectives are 

to protect postal revenue and assets from 

theft or misuse; to review internal controls 

and identify problems and solutions to prevent the loss of postal revenue and assets; to 

investigate and initiate administrative, civil, or 

criminal actions against individuals and firms 

responsible for the theft or misuse of postal 

revenue and assets; and to provide guidance 

to postal management to reduce risk.

Financial Fraud investigations include: 

■ Employee theft of postal funds associated 

with retail unit revenue from the sale of 

stamps, money orders, retail products, 

and packaging products.

■ Personal use of postal funds associated 

with retail sales (for example, kiting money 

orders or postage sales).

■ Theft of postal products (stamps or padded bags) and services (the rent for a Post 

Office Box).

■ SmartPay card purchases converted to 

personal use.

■ Gasoline purchased with the Voyager card 

for personal use.

■ Merchant-submitted fictitious Voyager 

card transactions.

During this reporting period, our investigations have resulted in 112 arrests, 365 

personnel actions, and $735,000 in 

recoveries to the Postal Service. Following 

are examples of our investigative work in 

this area.

■ Puerto Rico Contract Station Operator 

Arrested and Contract Terminated for 

$130,000 Embezzlement. Special agents 

investigated the discovery of several bank 

deposit discrepancies that were associated with a Contract Postal Unit (CPU) in 

Puerto Rico. Our investigation revealed 

that the Contract Station operator embezIn the spring of 2007, more than 600,000 postal 

employees received this insert with their paycheck 

statements, providing avenues for reporting postal 

crimes to the OIG.
April 1 — September 30, 2007 | 15

FINANCIAL RISK FACTORS

zled more than $130,000 and used 

the funds at various Puerto Rico hotels 

and casinos. In May 2007, the contract 

holder was arrested, and the contract 

was terminated.

■ Ohio Sales and Service Associate Guilty of Stealing $72,000. We 

investigated an Ohio post office after 

regular audits identified a pattern of stamp 

shortages. Undercover special agents 

observed a Sales and Service Associate 

failing to properly record and account 

for stamp sales. He recorded some 

retail transactions at less than face value 

and did not record others at all. Further 

investigation determined that the Sales 

and Service Associate had taken approximately $200 a day in retail sales for more 

than 18 months, totaling around $72,000. 

The Sales and Service Associate retired 

from the Postal Service. In August 2007, 

he entered a guilty plea in federal court to 

one count of Misappropriation of Postal 

Funds and agreed to pay full restitution to 

the Postal Service. He faces a possible 

maximum sentence of 10 years in jail and 

a fine of $250,000 at his sentencing later 

this year.

■ North Carolina Postmaster Convicted 

of Embezzling $40,000. We determined 

that a North Carolina Postmaster issued 

money orders and cashed them before 

reporting the sales. Our review of financial 

reports indicated a possible embezzlement and check kiting scheme. Our 

investigation determined the Postmaster 

had embezzled approximately $40,000 

in Postal Service funds. The Postmaster resigned in January 2007 and was 

indicted in state court on five counts of 

embezzlement. She pled guilty, received 

a suspended jail sentence and 90 days 

house arrest, and was ordered to pay 

restitution to the Postal Service.

■ California Sales and Service Associate 

Removed and Arrested for Embezzling 

$25,800 in Money Orders. A money 

order exception report identified 17 money 

orders assigned to a station of a California post office that were cashed but not 

reported as sold. Our investigation determined that an additional 13 money orders 

were also not reported as sold. Our investigation showed that the money orders 

were assigned to one employee who 

printed money orders totaling $25,800, 

issued them to herself, and cashed them. 

She also wrote personal checks to pay 

for the money orders and put the checks 

in her cash drawer, but never deposited 

the checks at the close of business. The 

employee resigned from the Postal Service and was indicted in federal court in 

July 2007.

■ Missouri Postmaster Pleads Guilty to 

$21,000 in Postal Money Order Fraud.

A review of money order reports determined that two money orders, issued 

from a Missouri post office, had cleared 

the Federal Reserve Bank before the 

reported dates of sale. We investigated 

this and determined the Postmaster 

perpetrated a personal short-term loan 

scheme. She issued 288 money orders 

that were reported as sold on dates later 

than the dates on which the money orders 

were imprinted. Over a 3-year period, 

the Postmaster fraudulently issued more 

than $21,000 in postal money orders. In 

February 2007, the Postmaster resigned 

pending termination. In August 2007, the 

Postmaster pled guilty in federal court to 

charges involving fraud regarding issuance of postal money orders. Sentencing 

is scheduled for later this year.

■ Colorado Contract Postal Unit Owner 

Pleads Guilty to Embezzlement of 

$11,500 in Postal Funds. We received 

information that a Contract Postal Unit 

(CPU) lessee was behind in rent by 

approximately $15,000. (A CPU is a “post 

office” located within a retail establishment that operates under contract with 

the Postal Service by individuals who are 

not postal employees. CPUs generally 
16 | Semiannual Report to Congress

maintain a surety bond to cover the value 

of stamps and cash on hand.) Our investigation found the CPU owner embezzled 

approximately $11,500 in postal funds 

between November 2004 and March 2006 

and manipulated records to conceal the 

crime. In January 2007, she pled guilty to 

one count of theft, and was sentenced to 4 

years of supervised probation and ordered 

to pay restitution.

Financial Systems and Processes. We perform 

reviews to assess the adequacy of controls in 

financial systems and processes. Following 

are two audits conducted in this area.

■ OracleTM Accounts Payable — Feeder 

Systems. Oracle Accounts Payable 

(Oracle AP) processes all non-payroll 

related payments, which totaled approximately $14 billion annually. Business 

processes include supplier maintenance, 

purchase orders (PO), and invoice 

management. Oracle AP receives and 

processes invoices, receipts, and POs 

from 30 electronic feeder systems. Each 

feeder system represents an individual 

application with its own inherent risks and 

unique controls. 

Our audit showed that, generally, the 

controls in place for the Contract Authoring Management System (CAMS), the 

Logistics Control Management System 

(LCMS), and the Transportation Contract 

Support System (TCSS) were adequate 

to ensure data and transactions are valid, 

authorized, and accurately processed. 

However, the Postal Service can improve 

controls by updating contract award numbers, reinforcing separation of duties, and 

implementing batch reconciliation control 

totals in CAMS. Additionally, management 

can improve processes of the Pay Alone 

feature in TCSS. 

During our review, management 

strengthened security by implementing 

encryption of TCSS. In response to our 

audit, management provided instructions for CAMS users covering update of 

older contracts with new contract award 

numbers when a contract is renewed, 

modified, or changed. Management also 

took action and performed a review of 

processes and controls relating to batch 

controls within CAMS, concluding that 

the system processes and controls are 

adequate. Management will also establish operational procedures to move the 

credit memoranda to a site that does not 

process third-party payments, when a 

Pay Alone request for third-party payment 

results in a negative invoice balance. 

■ Refund Process — Capital Metro Area.

We audited the Capital Metro Area’s 

Refund Process and found that retail 

associates and customer service supervisors were not always properly processing 

and recording refunds of stamps, fees, 

retail services, and Express Mail services. 

Specifically, retail associates did not 

always complete refund documentation, 

enter the proper refund account identifier codes in the Point-of-Service system, 

and provide signatures on Postal Service 

Daily Financial Reports. These conditions occurred because customer service 

supervisors did not always adequately 

oversee the refund process. As a result, 

we projected the four sites visited in the 

Capital Metro Area have incurred more 

than $180,000 in unsupported questioned 

costs and more than half a million dollars 

in assets are at risk for these refunds. 

We recommended that customer service 

supervisors ensure retail associates follow 

established procedures for processing 

and recording refunds and reissue the 

area refund policy memorandum. Also, 

customer service supervisors should 

review daily financial reports and supporting documentation and verify that retail 

associates are properly signing daily financial reports.
April 1 — September 30, 2007 | 17

OPERATIONAL RISK FACTORS

OPERATIONAL RISK FACTORS

The Operational Risk category focuses on 

issues related to the day-to-day operation 

of the Postal Service. These risk factors 

potentially affect the Postal Service’s ability to provide timely, reliable delivery and 

customer service across all access points. 

Operational risk factors involve the quality of 

postal services and the end-to-end service 

performance of all mail, as well as the assurance that postal products and services meet 

customer expectations by being responsive, 

consistent, and easy to use. 

Being attentive to operational risks is especially important as the Postal Service works 

to control costs with the significant infrastructure investment required to meet its universal 

service obligation. For example, delivery 

extends to more than 144 million delivery 

points with about 290,000 city and rural letter carriers, and more than 6,000 highway 

route contractors. The sheer magnitude of 

Postal Service operations and the costs 

involved make addressing operational risk 

factors a significant challenge for the Postal 

Service. Significant opportunities to reduce 

costs are in the areas of optimizing the network to control delivery costs and increasing 

efficiencies of technology investments. 

The major operational trends in FY 2007 

include continuing opportunities for cost savings in work systems and processes. Service 

risks, coupled with congressional attention, 

have commanded extensive consideration. 

We believe that better planning and project 

management in contracting and automation 

development activities could save costs and 

improve delivery of the programs. Finally, 

there continue to be compliance issues in the 

revenue assurance area.

This section will discuss the following operational risk factors facing the Postal Service:

■ Operational efficiency. 

■ Expedient mail delivery – 

customer service.

■ Process and mail processing 

equipment enhancements.

■ Information systems.

■ Workforce and workplace issues. 

■ Security of the mail.

■ Official misconduct.

Operational Efficiency. Streamlining operations is a significant business concern for 

the Postal Service. Our work in this area is 

aimed at helping the Postal Service improve 

operational efficiencies, ultimately improving 

customer service. 

■ Efficiency Reviews. The Postal Service 

spends more than $20 billion annually 

on its mail processing infrastructure and 

works to create a 

flexible logistics network that reduces 

costs, increases 

operational effectiveness, and improves 

operational efficiency.

•	 We found the Dallas 

Bulk Mail Center 

(BMC) failed to 

adjust workhours 

in response to 

changes in workload; attain the 

efficiency achieved 

by most other 

BMCs; achieve 

target productivities; 

take full advantage 

of existing mechanization options; 

and reduce excess 

handling of mail. Consequently, the 

Dallas BMC used more workhours than 

necessary to process the mail. We 

recommended the Dallas BMC improve 

operational efficiency by reducing mail 

processing workhours by 418,000, producing a labor cost avoidance of about 

$135 million over 10 years. 

The Postal Service delivers 212 billion pieces of mail to over 144 

million homes, businesses and Post Office boxes every year.
18 | Semiannual Report to Congress

•	 We found that the Connecticut District 

used more resources than necessary to process its mail volume. We 

concluded a favorable business case 

existed to transfer incoming mail processing operations from the Bridgeport 

Processing and Distribution Facility 

(P&DF) to the Stamford P&DC. This 

consolidation would save an additional 

21,800 workhours at the Bridgeport 

P&DF, improve network efficiencies, 

and potentially upgrade delivery service. This workhour reduction could 

produce a labor cost avoidance of 

more than $6.8 million based on labor 

savings over 10 years.

•	 The Postal Service and the OIG worked 

together to improve mail processing 

efficiency, by recommending that management close the Priority Mail Hub in 

Plano, Texas. Closing the Hub could 

help avoid labor and transportation 

costs totaling more than $1.4 million.

■ Optimization of Surface Transportation. During this period, we issued 

three audit reports addressing surface 

transportation network optimization. This 

network includes Postal Service vehicles 

and employees, and contracted transportation. Network transportation using 

Postal Service vehicles and employees is 

called Postal Vehicle Service (PVS); and 

contracted suppliers are called Highway 

Contract Routes (HCR). 

We reviewed PVS operations at the Los 

Angeles BMC and Milwaukee P&DC, 

and HCR transportation servicing at 

P&DCs throughout the Southwest Area 

to evaluate their effectiveness and identify 

opportunities to save money. 

We found the Postal Service could save 

about $8.9 million in PVS personnel 

costs by not adding more than 25,000 

driver hours to the Los Angeles BMC’s 

PVS workforce and at the Milwaukee 

P&DC; and $2.1 million over the term of 

existing Southwest Area P&DC highway 

contracts by canceling, not renewing, or 

modifying 32 trips. The PVS cost can be 

avoided without negatively affecting service because the current PVS workforce 

at the Los Angeles BMC is sufficient to 

Leased 28-foot and 53-foot trailers parked next to each other at the San Francisco Bulk Mail Center on May 16, 2007.
April 1 — September 30, 2007 | 19

OPERATIONAL RISK FACTORS

accomplish all required work and, at the 

same time, meet established productivity standards. Further, schedules at the 

Milwaukee P&DC contained unassigned 

time when drivers were not needed for a 

specific trip or related activity, duplicate 

trips, and trips that were not as full as 

possible. The HCR costs can be avoided 

by eliminating or modifying the identified 32 trips without negatively affecting 

service because trip volume was low and 

mail could be consolidated on other trips. 

■ Management of the National Trailer 

Lease Fleet. We evaluated the National 

Trailer Lease requirements and renewal 

in the Southwest and Pacific Areas and 

identified opportunities to reduce costs. 

Due to fleet management control weaknesses, the National Trailer Lease renewal 

could have been more effective by more 

accurately identifying its trailer requirements. Instead, the Postal Service may 

have missed an opportunity to save 

$2.5 million when it allocated more trailers 

to the Southwest and Pacific Areas than 

were needed. However, the Postal Service 

still has an opportunity to save $9.7 million 

by returning unneeded trailers.

■ Standard Mail Color Coding. We 

worked with the Postal Service to identify 

opportunities to enhance the color-code 

process on a nationwide basis. For Standard Mail, the color code process involves 

using a series of color-coded tags to 

ensure the efficient processing of mail in 

a first-in first-out sequence to meet processing, dispatch and delivery targets. A 

color-coded tag represents the day of the 

week the mail arrived on Postal Service 

premises and denotes the targeted clearance date from the facility in 1 or 2 days. 

We concluded the Postal Service processed 94 percent of its Standard Mail 

using the correct color-code processes. 

However, color-code tags were often not 

in a standard format, and the contents of 

the tags were sometimes inconsistent. 

We made several recommendations to 

improve the processes and create a standardized tag nationwide. 

Expedient Mail Delivery – Customer Service. 

Improving service is a significant concern 

for the Postal Service while it simultaneously 

works to cut costs. Following are examples 

of our work in this area.

■ Philadelphia District Delayed Mail. In 

response to a congressional inquiry, we 

reviewed allegations of delayed mail at the 

Southeastern P&DC, located in the Philadelphia District. From December 2005 to 

December 2006, the Southeastern P&DC 

had difficulty with the timely processing of standard flat mail. Specifically, we 

found that they adjusted mail processing 

procedures; processed standard flat mail 

without using a first-in first-out method; 

and handled standard flat mail excessively 

due to poor trailer loading procedures. 

They also conducted inefficient opening operations for BMC sack mail and 

executed only a partial contingency 

plan when flat volume exceeded sorting 

capacity. As a result, there were significant increases in delayed standard flat 

mail at this facility. Management acted on 

many of the audit suggestions prior to the 

completion of the audit. 

■ Tennessee Rural Carrier Convicted of 

Delaying more than 10,000 Mail Pieces.

A Tennessee Police Department contacted us regarding a rented storage unit 

that appeared to contain a large volume of 

undelivered mail. The storage facility manager alerted police after finding mail in a 

partially open storage unit. Special agents 

determined that the unit was rented by 

a Rural Letter Carrier, who stored mail in 

two privately owned storage units rented 

or controlled by her. For 2 years, the Rural 

Letter Carrier intentionally delayed approximately 10,700 pieces of mail. The Rural 

Letter Carrier resigned from the Postal 

Service, and in June 2007 she pled guilty 

in federal court to delay of mail.
20 | Semiannual Report to Congress

DELAYED MAIL IN CHICAGO

In December 2006, the Chicago District began receiving negative media coverage about the significant mail delays and 

inconsistent deliveries in and around Chicago; this media coverage accompanied numerous complaints from customers. 

In response to a request from the Postmaster General and a congressional inquiry, we examined the timeliness of mail 

processing in the Chicago District. (See feature story on hearings on page 39.) The Chicago District is part of the Great 

Lakes Area, covers 255 square miles, and services a population of more than 3 million. The Chicago District processes 

more than 1.5 billion pieces a mail annually, and has 48 delivery units 

and 2,462 city delivery routes.

We assembled a team to examine the major components of postal 

operations — processing, transportation, and delivery. Our reviews 

confirmed that the Chicago District continued to have difficulty 

with the timely processing of mail resulting in mail delays and 

service declines. 

Our reports made 16 recommendations to improve the timely 

processing of mail. During the reviews, we discussed our 

recommendations with Postal Service management, and they began 

taking immediate corrective action. In addition, under the leadership 

of the Postmaster General, the Postal Service took aggressive actions 

to improve mail timeliness. These efforts have begun to reap benefits 

as the Chicago District mail delays are decreasing greatly and service 

scores have started to show improvement. In FY 2008, we plan to 

monitor management actions and conduct follow-up reviews. 

Operational/Service Concerns. The Cardiss Collins P&DC is located 

in the Chicago District, and is the 30th largest mail processing plant 

in the postal network of 273 plants. Compared to other large plants, 

the P&DC remains one of the lowest performers in processing mail in 

a timely manner. In addition, the P&DC had difficulty meeting outgoing 

mail clearance times and ensuring that transportation dispatches 

met scheduled departure times. Further, the P&DC consistently 

ranked below the national average for letters sorted in Delivery Point 

Sequence (DPS) order. 

The P&DC inefficiencies also impacted Chicago District delivery units’ performance. Delivery performance indicators 

showed office performance was well below the national average for some time, and reached its lowest level during 

February 2007; street performance was at an all time low with delivery units using increasingly more office time to case 

mail; and delayed mailed volume had increased dramatically. During our observations at units visited, the DPS mail truck 

from the P&DC consistently arrived later than anticipated and contained not only DPS mail but also caseable mail. The 

additional processing necessary before the carriers could case it for delivery impacted office and street delivery time. 

We had previously identified and reported several of the issues noted in audits to the Chicago District and the Great Lakes 

Area. Management had agreed with the recommendations in these reports but had not always taken timely action to 

address or correct all of these issues. 

Once the significance of the Chicago District service issues surfaced, management took aggressive action to:

■ Conduct a top-to-bottom review of every aspect of mail processing from repairing equipment, to improving mail flows, to 

evaluating staffing and scheduling. 

■ Provide a delivery refresher course for all delivery management.

■ Hire approximately 200 part-time flexible carriers.

■ Deploy a team to conduct route reviews for every route in the Chicago District.

We reviewed mail flow transported to Chicago from other U.S. cities at Chicago P&DCs, including 

the Irving Park Road P&DC, located next to the Chicago Airport Mail Center at O’Hare International 

Airport. Photograph taken June 5, 2007.
April 1 — September 30, 2007 | 21

OPERATIONAL RISK FACTORS

Financial Concerns. Since FY 2002, we issued 13 financial audit reports regarding units in the Chicago District. In 

these audits, we identified significant, systemic financial weaknesses over stamp and cash accountability. Generally, 

management agreed with the findings and recommendations. However, the Postal Service did not fully implement 

corrective actions or maintain compliance at the units we had previously audited.

In April 2007, the Chicago District Manager asked us to conduct more financial audits of Chicago’s stations and branches. 

Our audits again disclosed significant weaknesses in the internal controls over financial operations. Specifically, we noted 

internal controls over stamps, cash, and money orders were not in place and effective; accountability balances were not 

fairly presented; revenue was not always accurately collected and recorded; and expenses were not always allowable, 

reasonable, necessary, or fully supported. 

We attributed these issues to a long-standing 

history of insufficient knowledge of financial 

policies and procedures, inadequate managerial 

accountability, and insufficient oversight. 

Although various training classes had been 

provided, no formal, detailed financial 

training program was required for managers. 

Additionally, unit managers generally showed 

an unwillingness to accept accountability for 

unit operations and comply with prescribed 

procedures. During individual site exit briefings 

for this audit, most station managers refused to 

sign documents certifying financial accountability 

for their units when presented to them by the 

District Finance Manager. In addition, corrective 

actions from previous audits were not sustained 

and the same issues often recurred. 

Finally, we believe there was insufficient 

managerial oversight of financial operations 

resulting from frequent turnover. For example, 

employees at one station had not used the 

unit reserve because it was never properly 

transferred to a new custodian after the previous 

custodian left the unit in 2006. 

As a result of our financial audits, we identified nearly $122,000 related to shortages in stamps and cash, post office box/

caller service fees, retail floor stock, and unsupported disbursements. Further, the internal control weaknesses placed 

$11.1 million of assets and accountable items at risk. 

We recommended that management implement a mandatory financial training program for all unit managers and 

supervisors; establish a system to monitor compliance with financial procedures; develop a plan to correct the noted 

deficiencies; and provide updates to the Great Lakes Area on the remediation of the noted deficiencies. 

Investigative Activity in the Chicago District. In May 2007, we initiated the Chicago Carrier Observation Program (OpCOP) to investigate problems in the Chicago Performance Cluster. Special agents conducted the initiative in phases, and 

for part of the time partnered with postal inspectors to maximize the impact. Each day, special agents conducted covert 

surveillance operations and records checks of carriers who were believed to be engaged in unauthorized or inappropriate 

conduct while delivering mail. More than 235 investigations were conducted, resulting in more than 60 carriers from 

several stations observed engaging in misconduct. Reports were forwarded to postal management outlining the results of 

these investigations. Following is one such investigative activity. 

Uniformed Letter Carrier and Union Steward Seen Drinking Alcohol on the Job. We received information from 

management that two City Letter Carriers were engaging in unauthorized deviations from their delivery route assignment. 

We observed the employees sitting together in a postal vehicle for over an hour drinking beer and whiskey while on the 

job and in uniform. Special agents followed one employee to a liquor store, where he walked inside and made a purchase. 

Ironically, one of the employees was a Union Steward who gave a stand up talk to carriers the day before warning them 

that the OIG had caught other employees drinking on their route. The Letter Carrier and Union Steward were removed from 

the Postal Service in July 2007.

Pictured is flat mail in queue for processing at the Cardiss Collins Processing and Distribution Center. Many of these flats, 

more than 1.5 million, were delayed mainly due to the retrofit of the Automated Flat Sorting Machine 100 (AFSM 100) on 

May 8, 2007. Note: The retrofit of the AFSM 100 machines has since been completed. 
22 | Semiannual Report to Congress

Process and Mail Processing Equipment 

Enhancements. Our work in this area is aimed 

at assisting the Postal Service in identifying 

opportunities to reduce costs by improving 

significant aspects of the mail process. Some 

examples follow.

■ Flats Sequencing System. In December 

2006, the Postal Service issued a 

$1.4 billion Phase I DAR to develop, 

purchase, and deploy 100 Flat Sequencing System machines at 31 sites. The 

mail processed on these machines would 

arrive at the delivery unit in walk sequence 

order, ready for delivery by the carrier with 

no additional mail movement or manual 

sorting required. As a result, the primary 

savings expected are those resulting from 

delivery units eliminating the requirement 

that mail carriers manually case flat mail, 

thereby reducing workhours. 

Risks are inherent in any project and, 

therefore, risk management needs to be 

an integral part of every project. Hence, 

the Postal Service recently developed 

risk management guidance as part of its 

investment guidelines. This was one of 

the first projects to which management 

applied the new risk management policies. As it applies these new policies, we 

reviewed the Flat Sequencing System 

project and concluded that the Postal 

Service needs to focus greater attention on risk management standards to 

ensure that the significant risks associated 

with deployment of these machines are 

adequately identified and managed to 

optimize benefits. 

■ Automated Flat Sorting Machine 

Enhancements. The Automated Induction (AI) and Automated Tray Handling 

Systems (ATHS) are major equipment 

investments that management deployed 

in support of the Postal Service’s cost 

reduction goals. Both systems are 

enhancements to the Automated Flat 

Sorting Machine 100 (AFSM 100) and 

are expected to eliminate workhours by 

reducing the staff needed to operate the 

AFSM 100. 

We assessed whether the Postal Service realized the expected savings, and 

found that while overall workhours were 

reduced as planned, workhours for the 

mail preparation operation were increased 

beyond projections. In addition, we noted 

a decline in AFSM 100 throughput. The 

increase in mail preparation workhours 

and reduction in throughput negatively 

impacted the realization of projected savings. As a result, we considered more 

than $80 million as funds put to better 

use since overstaffing the mail preparation operation is avoidable by adhering to 

established standards and methods. 

We recommended that the Postal Service 

emphasize use of established methods for 

effective machine operation and staffing 

to plant managers, and establish plans to 

reduce mail preparation workhours. We 

also recommended that Postal Service 

Engineering establish formal procedures 

for validating baseline throughput figures. 

■ Address Management System. Address 

management forms the basis of how the 

Postal Service moves mail. In 1994, the 

Postal Service established the Address 

Management System (AMS) to capture, 

Mail processed on 100 Flat Sequencing System machines will arrive at the delivery unit in walk 

sequence order, ready for delivery by the carrier with no additional mail movement or manual 

sorting required. 
April 1 — September 30, 2007 | 23

OPERATIONAL RISK FACTORS

correct, and complete address information 

to enhance the efficiency of mail processing and delivery via automation. The AMS 

captures address information in sort 

programs used to process mail in delivery 

point sequence (DPS). 

We audited the Postal Service’s management of AMS quality review results to 

ensure that address information is correct 

and complete, which allows for effective processing and delivery of the mail. 

District officials in the five areas reviewed 

(Capital Metro, Eastern, Pacific, Southwest, and Western) effectively managed 

delivery AMS quality review results for 

about five percent of their routes (2,742 

of 58,926) according to Postal Service 

guidelines. District AMS officials did not 

conduct additional street reviews for the 

remaining routes due to limited staff and 

a priority on timely mail delivery. However, 

we pointed out that if officials in these 

five areas implemented a program similar 

to the New York District’s program, they 

could reduce errors by about 32 percent, 

saving the Postal Service more than 

$18 million over the next 10 years.

Management agreed in principle with 

our findings and recommendations, and 

agreed to take actions that should reduce 

AMS errors. In addition, based on our 

audit, the Vice President, Delivery and 

Retail, and the Senior Vice President, Intelligent Mail and Address Quality, issued a 

joint memorandum to area vice presidents 

implementing a National Delivery-AMS 

Street Review process for FY 2008. This 

process is expected to address the issues 

raised in our audit. 

■ Vehicle Maintenance and Repair Payments. We found the Postal Service’s use 

of PS Form 8230 to pay commercial vendors for maintenance and repair services 

was not cost-effective. 

In FY 2006, the Postal Service processed 

more than 75,000 of these forms, disbursing about $19.2 million to commercial 

vendors for maintenance and repair services, even though the Voyager Card was 

the most cost-effective payment method 

for these services. This occurred because 

management officials did not: 

•	 Always realize the cost and time 

impacts of using this form and, 

therefore, did not monitor its use.

•	 Always pursue alternate methods of 

paying vendors who did not accept 

the Voyager Card. 

•	 Ensure all unit personnel received 

training on Voyager Card use and 

approval limits. 

In addition, the PS Form 8230 payment 

process did not provide the controls 

necessary to reconcile and validate the 

reasonableness of maintenance payments 

for each vehicle serviced.

As a result, we estimated the Postal 

Service incurred more than 12,000 labor 

hours annually to prepare and process 

these forms. Further, with continued 

use of this form for maintenance and 

repair services, the Postal Service will 

spend more than $1.2 million in unnecessary expenses over the next 10 years; 

will not have sufficient assurance that 

vehicle maintenance expenses are appropriate; and will not receive revenues 

from Voyager Card rebates of more 

than $300,000.

We recommended that the Postal Service require district management to 

discontinue using this form (with some 

exceptions) and to provide information 

and training on the Voyager Card and 

PS Form 8230 process. 

■ Management of Administrative 

Vehicles. The Postal Service requested a 

nationwide review of administrative (nonmail hauling) vehicles used to support 

Postal Service operations. Specifically, 

we determined whether the number of 

administrative vehicles used to support 

operations was necessary and whether 

controls were adequate to support effi-
24 | Semiannual Report to Congress

cient utilization. We found that the Postal 

Service had 587 underutilized/excess 

administrative vehicles in support of a variety of operations, for several reasons. 

•	 Management did not have guidelines to 

use when determining the effective use 

of administrative vehicles.

•	 Personnel primarily focused on the 

management of delivery vehicles 

because of the size and cost of the 

delivery fleet.

•	 Personnel did not consistently monitor, review, and report administrative 

vehicle use. 

•	 Personnel did not always take advantage of the vehicle motor pool concept. 

Eliminating these 

underutilized vehicles 

could save the Postal 

Service more than $2.7 

million over the next 2 

years. Consequently, 

we recommended that 

management reduce 

the current number of 

administrative vehicles 

and implement a policy to 

review use of all administrative vehicles based 

on miles driven and days 

used. We also recommended promoting the 

use of motor vehicle 

pools and reinforcing 

the policy to use and 

maintain PS Form 4570 

to track miles and days 

used for owned and 

General Services Administration-leased vehicles.

■ Passport Program. In 1975, the Postal 

Service began accepting passport 

applications for the Department of State. 

Today, if they choose to participate in the 

program and are approved to accept 

applications, post offices, public libraries, and courthouses can all accept 

passport applications and mail them to 

the Department of State for processing. Approximately 5,500 Postal Service 

facilities nationwide accept passport 

applications. During our audit, the Department of State estimated that 16 million 

passports would be requested in 2007, 

of which the Postal Service estimated it 

would receive approximately 10.9 million 

applications (68 percent). Subsequent 

to our audit, the Postal Service provided 

FY 2007 actuals for passport applications, noting that the Department of State 

received 18.2 million passport application 

requests with 12.0 million of those applications coming through the Postal Service.

During this reporting period, we reviewed 

the Postal Service’s ability to accurately 

convey passport application locations and 

appointment information to the public. Our 

review determined that customers may 

receive inaccurate location information 

for passport application acceptance 

because the Postal Service database 

that maintains facility information is sometimes inaccurate. Also, its website,

www.usps.com, does not tell customers 

which post offices require appointments 

to apply for passports, and some of the 

post office locator links were inaccurate.

Passport applications contain sensitive 

personal information. Given the level of 

personal information required for passport 

application and processing, we work to 

ensure that this application acceptance 

process does not become an opportunity 

for identity theft by employees. Unfortunately, this recently became a reality, as 

illustrated next.

■ Pennsylvania Passport Acceptance 

Clerk Arrested for Theft. A Passport 

Acceptance Clerk at a Pennsylvania post 

office inappropriately accessed and used 

customer passport-related information. 

Special agents identified customers 

whose information was accessed and/

or used inappropriately, provided those 

names to the Postal Service, and coordinated efforts with the Postal Service to 

Approximately 5,000 Postal Service facilities nationwide accept 

passport applications, processing an estimated 10 million 

applications in 2007.
April 1 — September 30, 2007 | 25

OPERATIONAL RISK FACTORS

prevent financial loss to these customers. 

In July 2007, the Postal Service sent letters to identifiable customers notifying 

them of the incident and providing contact 

points to answer any questions or provide 

further assistance. The Postal Service provided important information on preventing 

identity theft and agreed to pay for 1-year 

credit monitoring service for affected 

customers. The employee resigned under 

investigation in April 2007. She 

was arrested and the case is pending.

Information Systems. The OIG works to 

preserve the integrity of the data in Postal 

Service information systems. Examples of 

our work in this area follow. 

■ State of Information Technology within 

the Postal Service. As part of our oversight of the Postal Service’s information 

resources, we assessed the progress 

the Chief Technology Office (CTO) has 

made with the IT program. Overall, CTO 

management has made notable progress 

toward enhancing the Postal Service’s 

information security program, upgrading 

its computing infrastructure, and achieving universal computing connectivity. 

The 75 audits and assessments of the 

IT program we conducted from October 

2003 through June 2007 showed that the 

IT program is well managed and supports 

overarching Postal Service needs. When 

opportunities for improvements were identified, management undertook initiatives to 

address them. Consequently, we believe 

the Postal Service’s information resources 

provide an adequate level of security, reliability, and value. 

■ Controls over Network Switches. Network switches help direct and control data 

flowing across computer networks. These 

devices inspect data packets as they are 

received, determine the sources and destinations of those packets, and forward 

them appropriately. The Postal Service 

had adequate physical controls over 

the network switches at the U.S. Postal 

Inspection Service facilities we visited; 

however, applying additional technical and 

management controls could strengthen 

security over switches serving Inspection 

Service users, provide for reliable inventory information, and ensure continuation 

of vendor maintenance support. We made 

two recommendations for strengthening 

technical controls, including updating 

and applying hardening guidance to 

network switches. We also made five 

recommendations for strengthening 

management controls related to an Infrastructure Information Security Assurance 

evaluation, technology refreshment, and 

switch accountability.

Implementing corrective actions would 

help ensure that the Postal Service 

maintains the confidentiality, availability, 

and integrity of sensitive law enforcement 

communications and data, thereby 

safeguarding customer goodwill and 

the Postal Service brand. We regard the 

entire switch inventory, valued at about 

$1.2 million, to be at risk due to accountability issues. 

■ Information Systems Reviews. We 

review information systems general 

controls to support the annual financial statement audit and to assess the 

adequacy of controls over information 

systems security and software. 

■ Separation of Duties. Sensitive positions include those in which personnel 

could, during the performance of their 

duties, cause material adverse affect to 

Postal Service information resources. This 

includes making changes to operating 

system configuration parameters, system 

controls, and security authorizations. All 

personnel whose duties require access to 

sensitive or business-controlled sensitive 

Postal Service information resources must 

have an appropriate clearance before they 

obtain access.

We assessed whether the principles of 

least privilege and separation of duties 

were specified in the Postal Service’s policies and procedures and implemented 

at the Eagan, Minnesota; San Mateo, 
26 | Semiannual Report to Congress

California; and St. Louis, Missouri Information Technology and Accounting Service 

Centers (IT/ASC). Generally, we found the 

policies, procedures, and internal controls 

adequate to separate duties for personnel accessing critical information system 

resources at the IT/ASCs. However, controls to determine which career employees 

required sensitive security clearances 

needed strengthening. Specifically, 

management did not always review and 

update the classification of sensitive positions for employees at the three IT/ASCs in 

a timely manner. 

As a result, management needs to review 

555 ASC positions that may need to be 

classified as sensitive positions because 

they have access to sensitive information resources or the capability to update 

information systems critical to financial 

operations. Also, some ASC career 

employees had sensitive security clearances, while other ASC employees in 

similar positions did not.

■ Security Vulnerability Assessment — 

Postal Automated Redirection System.

More than 40 million Americans change 

addresses every year, resulting in 4.3 billion mail pieces identified as Undeliverable 

as Addressed (UAA). The mobility of the 

American population creates formidable 

obstacles for the Postal Service in maintaining an efficient process for forwarding 

mail and for large mailing businesses that 

try to maintain high quality mailing lists. 

The national Change of Address (COA) 

program makes change of address information available to mailers to help reduce 

undeliverable or duplicate mail pieces.

The Postal Automated Redirection System 

(PARS) plays an integral role in the COA 

process. PARS devices identify and redirect UAA mailpieces at their point of origin 

rather than their destination. As a result, 

PARS provides significant savings in 

both mail processing and transportation. 

Implementation of PARS also substantially 

improves the processing time associated 

with handling redirected mail. 

We assessed the security of the servers 

and databases supporting PARS and 

determined whether they complied with 

current Postal Service hardening standards. We identified numerous high-risk 

vulnerabilities, primarily related to missing 

patches, across the servers tested. In 

addition, the servers and databases do 

not comply with Postal Service hardening 

standards. Our technical report did not 

contain any formal recommendations; 

however, management took corrective 

actions as the issues were brought to 

light. By reviewing and addressing these 

vulnerabilities, management has the 

opportunity to strengthen security, and to 

preserve existing service levels and the 

integrity of the PARS data and the Postal 

Service brand. 

■ Database Administration Practices 

Audit. The Postal Service is committed 

to creating and maintaining an environment that protects information resources 

from unauthorized use, modification, 

disclosure, or destruction. It is further 

challenged with managing and monitoring 

186 business applications and 550 associated databases hosted on its Oracle 

database management system platform 

More than 40 million Americans change addresses every year, resulting in 4.3 billion mail pieces identified as 

Undeliverable as Addressed (UAA).
April 1 — September 30, 2007 | 27

OPERATIONAL RISK FACTORS

and providing services to Postal Service 

business units. All requests for access to 

these databases are subject to a security 

clearance, management approval, and 

validation prior to management granting 

developers access to production data.

Our limited review of four applications 

showed the Postal Service needs to 

strengthen controls and processes surrounding access, segregation of duties 

and database administration. Implementing our recommendations would result 

in stronger controls surrounding production data, which would help preserve 

the integrity of the sensitive data at risk 

in these applications. As a result of our 

audit, management is implementing a 

new process for approvals and rejections 

that tracks written requests for use of 

production data in a test environment, and 

the expiration date of approved requests. 

In addition, the Corporate Information 

Security Office (CISO) has updated policy 

and procedures that address the use of 

sensitive but unclassified data in the test, 

development, and production environments. Further, the CISO and Database 

Support Services have implemented additional requirements and steps that ensure 

everyone follows existing policy. Finally, 

management is formulating a semiannual user access account review process 

within eAccess that lists pertinent data for 

all users of a registered application.

■ Contractor Terminated After Unintentionally Modifying Global Security 

Policy. As part of our efforts to mitigate 

risk concerning IT security, we maintain a 

Computer Crimes Unit (CCU), staffed with 

investigators trained in network security. 

The CCU recently completed an investigation regarding access to sensitive 

information resources. In March 2007, 

Postal Service IT management told us 

thousands of Postal Service workstations 

were becoming inoperable due to unauthorized changes replicated across the 

Postal Service computer infrastructure. 

The unauthorized modification was made 

to the global security policy within the 

Postal Service’s Active Directory computer 

security application, known as Global 

Policy Objects (GPO). The GPO provides 

uniform security policies for networked 

computers, computer applications, and 

computer users. 

Because of the unauthorized modifications, internal computer users were 

denied access to some applications, 

significantly disrupting business. Our 

CCU investigators worked together with 

the Postal Service Computer Incident 

Response Team and determined that a 

postal contractor in Greenbelt, Maryland, 

unintentionally initiated the unauthorized 

GPO modification. The contractor knowingly provided a false statement to special 

agents during his interview. 

In June 2007, the contractor was terminated, and his Postal Service computer 

network access was disabled. The U.S. 

Attorney’s Office declined prosecution. 

The documented cost damages to the 

Postal Service were $392,737.

■ Data Integrity Reviews. The Postal 

Service processes more than 213 billion 

mail pieces a year. To help manage its 

mission, the Postal Service has a number 

The OIG’s Computer Crimes Unit provides specialized support services to investigations, including forensic imaging, 

analyzing seized images of electronic media and consensual monitoring of computer systems.
28 | Semiannual Report to Congress

of systems supporting its operations. 

Critical among these systems is the Web 

Mail Condition Reporting System — this 

system is vital to managing the day-to-day 

domestic and international operational 

mail activities. In cooperation with the 

Postal Service, we completed three data 

integrity reviews and found the mail condition reports for the:

•	 San Francisco International Service 

Center (ISC) were submitted on a 

timely basis, but the data was incomplete and inaccurate. 

•	 Miami ISC were submitted on a 

timely basis and generally reported 

complete and accurate data, with 

some minor exceptions.

•	 Los Angeles ISC were accurate, 

complete, and timely. However, 

improvements could be made in the 

reporting of inbound parcels and plan 

failures for each processing operation. 

We found that management could 

not always rely on data to make 

distribution decisions, identify 

problems in achieving operational 

targets, or analyze operational 

trends. We recommended improving controls over reporting and 

training employees. 

We also reviewed internal controls 

over the clock rings and time card 

operations at the P&DC in San 

Diego, California. (A clock ring 

occurs when employees swipe 

time cards on an electronic badge 

reader to record their work hours 

in the Time and Attendance Control System.) Generally, internal 

controls to ensure the accuracy 

of clock rings were in place and 

effective. Based on our statistical 

sample of 220 employees, we 

projected that 93 percent of mail 

processing employees were clocked into 

the correct operation, while seven percent 

were clocked into incorrect operations. 

Errors in employees’ operational moves 

could result in management making 

incorrect decisions about resource allocations and the productivity of individual 

operations. Furthermore, the Postal 

Service did not secure all time card racks 

containing employees’ electronic time 

cards and allowed some employees to 

retain their time cards during their tours. 

This increased the P&DC’s vulnerability to 

timekeeping errors and fraud. We made 

four recommendations in the report to 

correct these issues.

Workforce and Workplace Issues. The Postal 

Service faces the challenge of managing a 

large and dynamic workforce. Added to that 

challenge is the need to improve workplace 

safety and to reduce workplace-related injuries. Our work in this area follows.

■ Workplace Safety and WorkplaceRelated Injury Reduction Goals and 

Progress. During this reporting period, 

we assessed the Postal Service’s ability to 

resolve workforce and workplace issues, 

particularly those related to injury and 

illness reduction goals. We also worked 

with the Department of Labor (DOL) OIG 

to address scheduled awards program 

recommendations with the DOL OWCP. In 

addition, under the auspices of the President’s Council on Integrity and Efficiency 

(PCIE), we led an OIG community effort to 

develop a pro forma Federal Employees’ 

Compensation Act (FECA) Audit Guide. 

■ Workplace Safety. In compliance with 

the Postal Act of 2006, we reviewed the 

Postal Service workplace safety and 

workplace-related injuries and found the 

Postal Service had exceeded its DOL 

Occupational Safety and Health Administration (OSHA) injuries and illnesses (I&I) 

reduction goals for FYs 2005 and 2006. 

In fact, over the past 5 years, the Postal 

Service’s OSHA I&I rate and numbers 

decreased 27 and 34 percent, respectively. The Postal Service’s success in 

achieving its OSHA I&I goals was due 

to numerous actions taken to improve 

workplace safety and reduce workplacerelated OSHA I&I nationwide. 

PCIE FECA Audit Guide

The Postal Service OIG and OIGs 

at the Departments of Labor and 

Treasury developed a pro forma 

audit guide for auditing the FECA 

program for the Federal Audit 

Executive Council. The purpose 

of this guide is to provide a 

more coordinated approach to 

conducting FECA-related audit, 

inspection, and evaluation work 

and to promote collaboration 

across the OIG community. In 

addition, the audit guide will help 

ensure FECA audits, inspections, 

and evaluations contribute to 

improving internal controls, 

reducing costs, returning workers’ 

compensation claimants to work, 

and identifying and preventing 

fraud, waste, and abuse in 

the program.
April 1 — September 30, 2007 | 29

OPERATIONAL RISK FACTORS

In addition, although OSHA does not 

establish individual injury reduction goals 

for federal agencies or the Postal Service, 

it does establish a national average injury 

reduction goal to reduce OSHA I&I for 

all entities within its jurisdiction. Using 

OSHA’s national average reduction goal 

as a benchmark, we determined the 

Postal Service exceeded OSHA’s national 

average 5-year goal by seven percent. 

Further, we determined there may be a 

corresponding reduction in the Postal 

Service’s total accident and OSHA I&I 

costs. (OSHA defines an accident as any 

unplanned event that results in personal 

injury or property damage and defines an 

injury or illness as an abnormal condition 

or disorder.) However, the Postal Service 

does not capture individual accident 

costs so we could not determine the cost 

savings in key categories from 1 year to 

the next. We recommended the Postal 

Service monitor costs associated with 

accidents and OSHA I&I, to help target 

high cost areas for reductions in accidents 

and OSHA I&I and ensure the safety 

of employees.

■ Scheduled Awards Program. Last 

reporting period, we issued a report to the 

DOL OIG requesting that it address two 

issues identified during our review of the 

Schedule Awards Program in the Postal 

Service’s New York Metro Area. These 

issues were: (1) OWCP handbooks and 

course materials do not contain information on how OWCP participating agencies 

should calculate and verify schedule 

award payments; and (2) the OWCP 

does not notify participating agencies of 

new weekly or monthly schedule award 

payments resulting from annual costof-living adjustments (COLA). Since the 

DOL OWCP has program responsibility 

for schedule awards, we recommended 

that it provide participating agencies with 

instructions on how to calculate and verify 

schedule award payments and advise 

agencies of COLA changes to employees’ schedule award payments. This 

would help agencies monitor increases in 

schedule award payments to ensure they 

are correct and would enable agencies 

to identify and correct errors before the 

OWCP bills them.

Through meetings with DOL OIG auditors 

and review of our report and supporting work papers, they concurred that 

our two recommendations to the OWCP 

were valid and would enable all federal 

agencies (not just the Postal Service) to 

accurately validate schedule award payments. The OWCP also agreed to 

implement the recommendations 

for workers’ compensation training for federal agencies.

Security of the Mail. The American 

public expects to receive their letters 

and parcels on time and intact. Most 

postal employees work diligently to 

move the mail to its proper destination. Unfortunately, a small number 

of individuals betray the public’s 

trust. Investigating and identifying 

those employees who steal mail and 

seeking their prosecution is 

our responsibility.

Since assuming responsibility from 

the Inspection Service for these 

types of investigations, we hired 

a number of postal inspectors 

specializing in internal crime investigations. 

These investigators, along with the existing 

complement of special agents, have made 

an immediate impact. 

We address the security of the mail risk 

through our Mail Theft program, which is 

designed to protect mail from theft, rifling, 

destruction, mistreatment, or obstruction. 

This desired outcome is achieved through 

the identification, arrest, and prosecution 

of those responsible for these crimes, 

as well as the removal of employees by 

postal management.

Office of Investigations management has initiated investigative and prevention efforts by 

partnering with the mailing industry. 

In compliance with the Postal Act of 2006, we 

reviewed the Postal Service workplace safety and 

workplace-related injuries
30 | Semiannual Report to Congress

Examples include attending strategic 

meetings with key mailers (such as Netflix, 

Blockbuster, QVC, and the U.S. Department of Veterans Affairs) and major financial 

industry associations, and leading a General Assembly presentation at a recent 

International Association of Financial Crime 

Investigators conference in Toronto. As a 

result of these partnerships, mailers provide 

loss information to the OIG that we match 

with Postal Service delivery databases to 

determine possible points of theft, improve 

efficiency, and reduce losses associated with 

employee theft. 

During this period, our mail theft investigations resulted in 196 arrests and 513 

administrative actions. The following cases 

are examples of our investigative accomplishments in this area during the reporting period.

■ Pennsylvania Casual Carrier Pleads 

Guilty to Stealing Gold Bars from the 

Mail. When a jewelry store owner in Pennsylvania reported that an 

Express Mail package 

of gold bars was not 

received, special agents 

determined that the 

package was scanned 

as delivered and signed 

for, but the jewelry store 

owner did not receive the 

package. The package 

contained 15 gold bars, 

valued at $790 each, 

totaling $11,850. Our 

investigation concluded 

that a Casual Carrier stole 

the gold bars. He surrendered the gold bars 

to us and resigned from 

the Postal Service in April 

2007. In May 2007, the 

Casual Carrier pled guilty in federal court 

to one count of Obstruction of mails and 

was sentenced to 1 year of probation. 

■ California Postal Employee Pleads 

Guilty to Mail Theft. A major DVD movie 

rental company alerted us about the possible theft of inbound DVD movies at the 

San Bernardino P&DC. The company’s 

records indicated that between January 

and October 2006, customers reported 

not receiving 9,303 DVD movies. Our 

investigation determined that a Mail Handler was responsible for the rifling and 

theft of the DVD mailings. In addition, the 

Mail Handler was responsible for the theft 

of mailings from other mailers of DVD 

movies, video game discs, and other mail 

matter. We executed a federal search 

warrant at the employee’s residence and 

seized more than 5,000 discs valued at 

approximately $75,765. The employee 

was removed from the Postal Service, and 

in March 2007, pled guilty to one count 

of Theft of Mail. The employee was sentenced to 3 years of probation, 12 months 

of home detention, and 100 hours of community service.

■ North Carolina Casual Letter Carrier 

Arrested for Theft of U.S. Treasury 

Checks. In June 2007, we arrested a 

Casual Letter Carrier after observing 

her steal mail and place it in her pocket. 

Special agents recovered six pieces of 

mail containing Treasury checks from the 

employee’s pockets, and found an additional three Treasury checks in the glove 

box of her vehicle. The Postal Service 

terminated the Casual Letter Carrier’s 

employment. The criminal case is pending.

■ West Virginia HCR Driver Convicted of 

Stealing Veterans Affairs Medications. 

We investigated numerous customer complaints regarding missing U.S. Department 

of Veterans Affairs (VA) packages. These 

packages contained medications from 

the VA’s mail order pharmacy. Special 

agents arrested the HCR Driver after he 

videotaped stealing VA parcels from a 

post office shelf. The HCR Driver pled 

guilty to Theft of Mail in July 2007, and he 

is awaiting sentencing. The Postal Service 

terminated his contract and he no longer 

has access to the mail. 

■ Pacific Area Security Controls. The 

Inspection Service conducts Facility Security Surveys (FSS) to assess facility status 

We address the security of the mail risk through our Mail 

Theft program, which is designed to protect mail from theft, 

rifling, destruction, mistreatment, or obstruction. Above is an 

example of rifled mail, or mail that has been broken into and the 

contents removed.
April 1 — September 30, 2007 | 31

OPERATIONAL RISK FACTORS

and to recommend actions to improve 

security. The FSS, which must be completed annually, is an in-depth checklist 

covering physical security areas.

During our review of the Pacific Area’s 

FSS program, we found opportunities 

for the Postal Service and Inspection 

Service to improve security controls and 

processes to effectively and efficiently protect employees, customers, the mail, and 

critical assets. For example, responsible 

security personnel did not always conduct 

FSS’s accurately or annually as required. 

We recommended that management 

require area- and district-level personnel 

to establish and implement appropriate internal controls, such as an internal 

review and approval process, to ensure 

that security personnel complete FSS’s 

accurately and in a timely manner. We also 

recommended that management develop 

appropriate performance measures for 

physical security to assess the achievement of security goals and incorporate 

them into performance plans for area-, 

district-, and field-level security personnel.

Area Security Assessment Program. We 

reviewed the Area Security Assessment 

Program (ASAP) and determined that ASAP 

reviews were similar to security reviews the 

Inspection Service performs. Postal Service 

management used its own personnel to conduct ASAP reviews, the results of which the 

Inspection Service did not take into account 

when assessing security operations. Additionally, Postal Service management spent 

about $144,000 on the ASAP database; 

however, the information in the database was 

not reliable. Consequently, management discontinued use of the ASAP based on 

our recommendation.

Suspicious Powder Incident. We reviewed 

the handling of a February 2007, suspicious 

powder incident at the Wichita Falls Mail 

Processing Center (MPC) in Texas and found 

that employees did not follow policies and 

procedures for handling suspicious powders 

and unknown substances found in the mail. 

Additionally, Wichita 

Falls MPC management 

had not established an 

Integrated Emergency 

Management Plan (IEMP) 

to ensure employees 

were familiar with policies and procedures for 

effectively responding to 

suspicious mail incidents. 

As a result, Postal Service 

employees and critical 

assets were not appropriately safeguarded, 

and personnel were 

exposed to increased 

risks that could have 

resulted in serious health 

problems or death. We 

recommended that management provide training and practice drills 

to ensure that employees understand the 

procedures for handling suspicious powders 

and unknown substances, and complete an 

IEMP with a focus on suspicious powders 

and unknown substances.

Official Misconduct. The Official Misconduct 

program oversees investigations of misconduct by postal employees that deteriorates 

the public’s trust and reflects negatively 

on the Postal Service. Official Misconduct 

investigations include: misuse of postal 

computers; destruction or theft of postal 

property; falsifying official documents/

forgery; theft of funds; abuse of authority; sabotage of operations; narcotics and 

alcohol abuse; and general miscellaneous 

employee misconduct. 

During the reporting period, we completed 

1,871 Official Misconduct investigations, 

resulting in 115 arrests and 1,071 administrative actions. The following are examples of 

our investigative accomplishments in this 

area during the reporting period.

■ Missouri Postmaster Indicted for 

Alleged Sale of Narcotics at Work.

We received anonymous information 

alleging that a Missouri Postmaster was 

selling drugs on postal property. An OIG 

We investigated allegations that a South Carolina Rural Letter 

Carrier discarded and destroyed a significant amount of deliverable 

mail. The delayed mail impacted 574 customers. A search of the 

employee’s property resulted in the recovery of more than 2,000 

pieces of First-Class Mail), 527 newspapers, two full hampers of 

Standard Mail, and 34 packages that were all later delivered to the 

affected customers. In June 2007, the Rural Letter Carrier resigned 

from the Postal Service. Prosecution is pending.
32 | Semiannual Report to Congress

and Drug Enforcement Administration 

(DEA) investigation led to the arrest of the 

Postmaster. The investigation revealed 

the Postmaster was using money from 

the office safe to fund some of the drug 

transactions, and she sold methadone 

for cash, traded the pain killer Vicodin for 

another prescription drug, and purchased 

other drugs including methamphetamine. Our investigation determined that 

the Postmaster falsified records in the 

accounting system to conceal the missing 

money. The Postmaster, who had worked 

for the Postal Service for nearly 27 years, 

resigned and was indicted in June 2007, 

on drug-related charges. She pled guilty 

to one count of misbranding prescription 

drugs in federal court and could now face 

up to 3 years in prison. Sentencing 

is pending.

■ Temporary Employee Gets Prison for 

Intent to Distribute 48 Pounds of Marijuana. The Inspection Service told us that 

an Express Mail parcel mailed to a Houston-area address had been interdicted 

after being identified by a drug-sniffing 

dog. The parcel contained marijuana. 

A temporary Rural Letter Carrier at the 

delivery office made it 

known at the post office 

that the addressee was 

a friend of the family and 

was expecting another 

Express Mail parcel. 

Surveillance by special 

agents, postal inspectors, and officers of the 

Houston Police Department determined that the 

temporary Rural Letter 

Carrier failed to deliver the 

parcel or leave a notice at 

either address. The Postal 

Service subsequently 

removed the temporary 

Rural Letter Carrier. She 

was indicted in federal court and arrested. 

In May 2007, the former employee pled 

guilty and was sentenced to 4 months 

in federal prison for intent to distribute 

48 pounds of marijuana and 2 years of 

supervised release.

■ Oregon Letter Carrier Arrested for 

Selling Narcotics. We received an 

anonymous complaint reporting that drug 

sales by a Letter Carrier were common 

knowledge among the employees and 

customers of a local Oregon bar. Surveillance by special agents on approximately 

25 occasions documented transactions 

of cash and apparent narcotics transactions from within and around his postal 

vehicle. The Letter Carrier was arrested 

at his home by OIG and DEA agents and 

local police. Among items seized at the 

employee’s residence were approximately 

14 pounds of marijuana and $3,000 in 

cash. The employee was arraigned in 

federal court in March 2007. Trial is scheduled for November 2007.

■ Postmaster Charged for Viewing Child 

Pornography on Office Computer. The 

Office of Investigations CCU conducts 

administrative and criminal investigations 

of misuse of postal systems. A CCU 

investigation involving a New Jersey 

Postmaster uncovered 127 pornographic 

images on a postal computer. Individuals 

in many of these pornographic images 

were certified as children by the National 

Center for Missing and Exploited Children. 

Disciplinary action against the Postmaster 

is pending. In August 2007, the Postmaster was charged in federal court with 

possession of child pornography. 

■ Carrier Observation Program. Misconduct committed by postal employees who 

are on duty, in uniform, and in public view 

casts the Postal Service in a negative light. 

This improper conduct includes, but is 

not limited to, purchasing or consuming 

alcohol, selling illegal narcotics, driving 

with suspended state drivers’ licenses, 

and deviating from their routes to conduct 

non-postal business. In particular, City 

Letter Carriers who drive postal trucks 

while intoxicated or under the influence 

of drugs also present a threat to themselves, the public, and Postal Service 

A federal grand jury indicted a former North Carolina Rural Letter 

Carrier on charges of destruction and theft of mail after we 

presented evidence that the employee delayed and burned mail. We 

recovered approximately 1,000 First-Class Mail pieces and about 

1,600 Standard Mail pieces. The former Rural Letter Carrier was 

arrested on August 29, 2007. Her trial is pending.
April 1 — September 30, 2007 | 33

OPERATIONAL RISK FACTORS

property while placing the security of the 

mail at risk.

On September 1, 2005, we initiated the 

Carrier Observation Program (COP) based 

on allegations of Letter Carrier misconduct. We receive information from various 

sources nationwide, including:

•	 Hotline allegations.

•	 Surveillance of postal vehicles parked 

outside bars or similar establishments 

for prolonged periods.

•	 Contact with Postal Service supervisors, managers, postmasters, and 

district managers.

In addition, special agents review Overtime Usage Reports and Managed 

Service Points Exception Reports to 

identify excessive early, late, or missing scans that recur for the same letter 

carriers and to compare workload and 

resource utilization. 

As a result of our investigative activity, 

during this period management took corrective action against 209 employees. 

Actions ranged from reprimands and 

suspensions to removal. Following is an 

example of a COP investigation during the 

reporting period.

■ Uniformed Denver Letter Carriers Seen 

Drinking Alcohol in Bar while on Duty. 

We received information from management that two Denver Letter Carriers were 

frequenting a bar and drinking alcohol 

while on duty and in uniform. The Carriers were observed driving postal vehicles 

after consuming the alcohol. Additionally, 

the two Carriers falsified Managed Service 

Point scans while in the bar to make it 

appear they were on their delivery routes. 

In July 2007, both employees were issued 

Letters of Removal by the Postal Service.

Special Investigations/Internal Affairs Investigations. The Special Investigations/Internal 

Affairs Division conducts criminal and administrative investigations of Postal Service and 

OIG executives, Inspection Service, and OIG 

staff, as well as allegations of whistleblower 

reprisal. 

In the Postal Service, a whistleblower is 

an employee or an applicant for employment who reports misconduct to people 

or entities that have the power to take corrective action. Generally, the misconduct is 

a violation of law, rule, or regulation, and/

or a direct threat to public interest — fraud, 

health, safety violations, and corruption are 

just a few examples. In order to be eligible 

for whistleblower protection, the employee 

must reasonably believe his or her employer 

has committed a violation of some law, rule, 

or regulation.

OIG whistleblower activity during this period:

Allegations received: .............................44

OIG investigations initiated: ................... 32

Investigations closed with no finding 

of retaliation or deferred to other 

adjudicative body: ................................. 23

Open investigations:................................ 9

OIG found reprisal: .................................. 0

Our Hotline staff received 44,000 contacts during this period, many of which led to misconduct investigations.
34 | Semiannual Report to Congress

FEATURE STORIES

Postal Accountability and Enhancement Act 

Update. The Postal Service’s mandate is to 

provide reliable universal service at affordable 

prices. At the same time, the Postal Service 

needs to operate in a businesslike manner 

while reducing costs and fostering growth 

and innovation in the mailing industry. 

As noted in our prior Semiannual Report to 

Congress, the Postal Act of 2006 is the first 

major legislative change to the Postal Service since 1971. A number of its important 

requirements impact the OIG. For example, it: 

■ Requires the OIG to submit to Congress 

and the Postal Service, by June 2007, a 

report that details and assesses Postal 

Service progress toward improving safety, 

reducing workplace injuries, and identifying opportunities for improvement. 

•	 In May 2007, we issued a report entitled “Postal Service’s Workplace Safety 

and Workplace-Related Injury Reduction Goals and Progress.” 

■ Requires the OIG, by December 2007, 

to study and submit to the President, 

the Congress, and the Postal Service a 

report concerning how the Postal Service 

administers the assessment of revenue 

deficiencies for Nonprofit Standard Mail. 

•	 We have reviewed the adequacy 

and fairness of the process by which 

assessments are determined and 

appealable, including whether the 

Postal Regulatory Commission (PRC) 

or any other body outside the Postal 

Service should be assigned a role and 

whether a statute of limitations should 

be established for the commencement 

of proceedings by the Postal Service. 

We are currently summarizing our 

results and plan to issue our report 

prior to the required reporting date. 

■ Applies certain provisions of the Sarbanes-Oxley Act to the Postal Service, 

and requires the Postal Service to conform to certain aspects of Securities 

and Exchange Commission (SEC) reporting requirements, both of which will 

require the OIG to conduct audit work. 

Also, the Postal Service must submit to 

the PRC financial results segmented 

by market-dominant and competitive 

product lines along with additional supplementary information.

•	 We coordinated with the Postal Service 

and Ernst & Young (E&Y), its independent public accounting firm, to monitor 

its process to become Sarbanes-Oxley 

Act compliant by FY 2010. We also 

started realigning our financial reporting structure and processes to better 

assist in supporting the overall opinion 

on internal controls over financial 

reporting issued by E&Y. Also, for the 

third quarter, FY 2007, we assisted E&Y 

in reviewing the quarterly financial information to prepare for full compliance 

with SEC requirements beginning in FY 

2008. We will continue to coordinate 

with the Postal Service as they identify 

key controls over financial reporting 

and move towards compliance; and will 

further refine and coordinate our work 

and incorporate process efficiencies in 

the overall opinion process. 

■ Requires the OIG to audit regularly the 

data collection systems and procedures 

the Postal Service uses to collect information used for its report analyzing costs, 

revenues, rates and quality of service to 

the PRC. 

•	 In August 2007, we issued a report 

entitled Management Operating Data 

System (MODS), which assessed the 

effectiveness of MODS internal controls 

and the validity and reliability of MODS 

volume and workhour data. We found 

that MODS internal controls were 

generally effective at the seven mail 

processing facilities we audited and 

that MODS data was valid and reliable 

at these facilities when used to assess 

overall plant efficiency. However, MODS 

internal controls were not effective in 

ensuring that volume and workhour 

data recorded against MODS opera-
April 1 — September 30, 2007 | 35

FEATURE STORIES

tion numbers was valid. We provided 

three recommendations for updating 

outdated policies, procedures, and 

on-line training materials, developing 

guidelines for correcting MODS volume 

and workhour errors, and performing 

MODS reviews annually. 

Computer Assisted Assessment Techniques 

Continuous Monitoring System. In the traditional 

audit approach, a period of time passes 

(sometimes months after business activities 

occurred) before transactions or events are 

reviewed and an audit report is issued. In 

many instances, this delay makes information contained in the report less beneficial to 

management. Further, the audit results were 

likely derived from a testing methodology that 

employed only a statistical sampling of the 

total population being reviewed. 

By implementing continuous auditing 

techniques within the Computer Assisted 

Assessment Techniques (CAATs) Continuous 

Monitoring System (CCMS), we can now 

analyze, in a near real-time environment, 

100 percent of a transaction universe within 

key Postal Service systems for anomalies 

and indicators of control deficiencies, fraud, 

and emerging risk. 

This initiative mirrors a recent PricewaterhouseCoopers nationwide survey of Fortune 

250 firms; many respondents said their 

audit executives are now pursuing continuous auditing solutions to shorten audit cycle 

times and provide more timely audit testing 

of control effectiveness or fraud detection.

Our CCMS analyzes transactions at the end 

of each month for selected Postal Service 

systems. It identifies trends for risk assessment and “flags” transactions that meet 

defined fraudulent patterns or control anomalies. In addition to producing special reports, 

CCMS allows special agents to search all 

transactions relating to a subject cardholder.

Our Computer Assisted Assessment Techniques (CAATs) Continuous Monitoring System (CCMS) produces analytical reports that identify risk assessment 

trends, fraudulent patterns and control anomalies. 
36 | Semiannual Report to Congress

Suspicious Expenditures Task Force. As 

discussed in our last Semiannual Report 

to Congress, we established a cross-component task force to coordinate purchase 

card audit and investigative work. The group 

analyzes purchase card transactions using 

pre-defined queries from the CCMS. Some 

of the systems under continuous review 

include the following.

■ SmartPay Purchase Card. The SmartPay Purchase Card program processed 

purchases of about $187 million during 

this reporting period. The CCMS assesses 

about 103,000 SmartPay Purchase Card 

transactions each month for anomalies 

and common fraud indicators. 

We judgmentally and statistically select 

purchase card transactions for testing 

on a routine basis. When a transaction is 

selected, we request documentation from 

cardholders to confirm the validity of these 

transactions. We also evaluate relevant 

internal controls and data reliability. We will 

be issuing an interim report on the initial 

results of our national transaction review in 

the first quarter of FY 2008.

In addition, the Suspicious Expenditures 

Task Force has a number of other ongoing 

audits, including audits of purchase card 

transactions at Postal Service districts and 

statistically selected field units, an audit of 

officers’ use of purchase cards, and audits 

In addition to managing the OIG’s nationwide radio system, the Tech Ops Group of the Technical Investigations Division also does research and development of advanced surveillance technologies and 

manages the nationwide Criminal Investigative Systems program.
April 1 — September 30, 2007 | 37

FEATURE STORIES

on the effectiveness of internal controls on 

Voyager transaction cards.

■ SmartPay Purchase Card Audits – 

District Reviews. As part of our work in 

support of the annual financial statement 

audit, we completed audits of SmartPay 

Purchase cards in four districts. Our 

audits disclosed systemic issues related 

to approvals, supporting documentation, purchases made from unauthorized 

vendors, and prohibited purchases. In 

addition, we noted that cardholders in 

each district did not always reconcile, or 

timely reconcile, purchase card statements. In total, our audits identified 

monetary impact of more than $300,000 

in unapproved, unauthorized, and unsupported purchases, and almost $700,000 

in non-monetary impact for purchases 

that were not reviewed or reconciled.

■ SmartPay Purchase Card Audits — 

Officers Use. We audited purchase card 

use by Postal Service officers. At the 

request of management, this included a 

review of purchase card policies at the 

headquarters level. Our audit concluded 

that internal controls over SmartPay Purchase Card use by officers were generally 

adequate. However, the Postal Service 

did not always maintain adequate purchase documentation. 

We also identified areas where controls over the purchase card could be 

enhanced by strengthening existing 

SmartPay Purchase Card policies. These 

included allowing officers to serve as 

cardholders or credit card approving 

officials (CCAO) on an exception basis 

only; requiring that itemized sales slips be 

included as part of required documentation; and requiring that documentation of 

meals acquired with the purchase card 

include identifying the participating staff. 

We identified questioned costs of more 

than $127,000 (such as unsupported purchases), and an additional $182,000 for 

disbursements at risk (such as purchases 

not reconciled or split purchases). 

■ Voyager Fleet Cards (eFleet). The 

eFleet program pays for fuel, oil, repair, 

maintenance, and washing of more than 

200,000 Postal Service vehicles. The 

eFleet program processed purchases 

of about $235 million during this reporting period. The CCMS assesses about 

863,000 such transactions each month.

As part of our national review of the eFleet 

program, we select post offices for a more 

detailed audit. During this reporting period 

we found managers at certain branches of 

a Pennsylvania post office did not always 

follow pertinent eFleet program policies 

and procedures because they had other 

duties that took priority or they were 

unaware of the requirements. Although 

we did not identify any fraudulent transactions, control weaknesses increased the 

risk of eFleet program fraud or abuse at 

these branches. Management agreed 

with our two recommendations to improve 

the eFleet program at the branches. The 

results of this audit will be included in 

a nationwide capping report assessing 

eFleet program controls and transactions.

In addition, Voyager Cards are issued to 

HCR suppliers to purchase commercial 

fuel for supplier vehicles transporting mail 

for the Postal Service. We have several 

ongoing and planned audits addressing 

the effectiveness of internal controls over 

Voyager Cards issued to HCR suppliers. 

We plan to issue several reports discussing opportunities for the Postal Service to 

improve internal controls over retail purchases of fuel by HCR trucking suppliers.

Augmenting the audit work discussed above, 

we investigate allegations of suspicious 

transactions. This complements ongoing 

work by the Postal Service to strengthen 

controls. For example, the Postal Service’s 

Financial Control and Support Office recently 

conducted approximately 800 Purchase 

Card reviews in the field, concentrating on 

root causes for issues regarding training and 

cardholder and CCAO activity.
38 | Semiannual Report to Congress

Office Of Investigations Aligns With Postal 

Service Areas. The Office of Investigations 

assists the Postal Service in its efforts to 

achieve the highest level of employee and 

program integrity through the prevention, 

detection, and investigation of embezzlement, theft, fraud, and misconduct. It is 

organized geographically with about 650 

investigators and support staff assigned to 

our nine area offices that are aligned with the 

Postal Service field management structure, 

along with a headquarters support component in Arlington, Virginia.

In July, the Office of Investigations restructured its field operations and reduced its 

13 Field Offices to nine. Its field operations 

now coincide with the nine Postal Service 

Area Offices. The realignment will enhance 

Office of Investigations’ ability to establish 

stronger lines of cooperation and communication with area stakeholders, as area 

vice presidents and the area special agents 

in charge will communicate directly. The 

restructuring will also promote integrity, economy, efficiency, and better customer service, 

particularly to senior postal management. 

Our investigative work is now organized by 

function, with five major field investigative 

programs (Contract Fraud, Financial Fraud, 

Official Misconduct, Healthcare Fraud, and 

Mail Theft). At the headquarters level is a 

separate Special Investigations Division and 

a Countermeasures group. 

Office of Inspector General 

Areas of Responsibility

■ Theft, delay, or destruction of mail by employees 

and contractors

■ Injury compensation fraud

■ Embezzlements and financial crimes

■ Contract fraud

■ Kickbacks

■ Computer crimes

■ Narcotics

■ Official misconduct

■ Internal affairs and 

executive investigations

■ Whistleblower reprisals

Hotline: 1-888-USPS OIG

(1-888-877-7644)

www.uspsoig.gov

Postal Inspection Service 

Areas of Responsibility

■ Mail fraud

■ Violent crimes

•	 assaults and homicides of employees

•	 burglaries and robberies

■ Security of employees, facilities, and equipment

■ Mail theft by non-employees

■ Dangerous mail and bombs

■ Revenue and 

postage fraud

■ Narcotics in the mail

■ Child pornography/

obscenity

■ International mail security

Contact: 1-877-876-2455

www.postalinspectors/uspis.gov

The OIG attended the National Organization of Black Law Enforcement Executives (NOBLE), 31st Annual Training 

Conference in Fort Lauderdale. The theme was “NOBLE: Addressing an Ocean of Challenges with Waves of 

Solutions & Building Bridges Back to Basics,” and provided law enforcement-related education, training, networking, 

and camaraderie. 
April 1 — September 30, 2007 | 39

Keeping Congress Informed. The Inspector 

General Act requires the individual inspectors general to formally report their activities 

to Congress twice each year. We fulfill this 

requirement with the submission of two 

semiannual reports to Congress. However, 

communicating with Congress is an on-going 

activity. From responses to congressional 

inquiries to briefings of congressional staffers, we are actively involved in keeping key 

stakeholders in Congress apprised of our 

oversight activities of the Postal Service. 

Congressional hearings also afford the OIG 

opportunities to testify on Postal Service 

programs and policies, as well as issues of 

concern in the inspector general community. 

During this reporting period, Congressman 

Danny Davis, Chairman of the House of 

Representatives’ Subcommittee on Federal 

Workforce, Postal Service and the District of 

Columbia, invited the Inspector General to 

testify four times. Copies of the OIG testimonies are available on our website: 

www.uspsoig.gov.

On April 17, 2007, the Subcommittee held 

their first oversight hearing. “The U.S. Postal 

Service: 101” hearing provided an overview 

of the Postal Service’s operation and business processes; mail growth and delivery 

services; and infrastructure and realignment. 

Four panels, comprised of the Postal Service, Governors, and the Postal Regulatory 

Commission (PRC); Inspector General and 

Government Accountability Office (GAO); 

postal unions; and postal management 

associations provided testimony. Inspector 

General David Williams testified on the activities of the OIG; the impact of the Postal Act 

of 2006; and major challenges facing the 

Postal Service, including network optimization, cost controls, revenue, and technology. 

The complete text of all hearing testimony 

for all four hearings can be found at :

www.federalworkforce.oversight.house.gov/

hearings.asp.

FEATURE STORIES

Agents from the Saint Paul Office participated in the Missing Children’s Day event in Stillwater, Minnesota, joining other federal law enforcement agents in the 

event. Through the collective efforts of the agents, 40 children were fingerprinted and photographed. Another 50 take-home ID kits were distributed.
40 | Semiannual Report to Congress

The Subcommittee visited Chicago, on 

May 31, 2007, for their first field hearing. 

This hearing examined the mail delivery 

issues in Chicago and the reforms and new 

systems implemented by the Postal Service 

to improve service. The Subcommittee heard 

from the Postmaster General, local postal 

officials, politicians, businesses, citizens, and 

unions. Assistant Inspector General for Audit 

Gordon Milbourn testified on behalf of the 

OIG. In his testimony, Milbourn briefed the 

subcommittee on the audit and investigative 

activities being undertaken to assist in remedying the Postal Service’s challenges 

in Chicago. 

A July 19, 2007, hearing focused on the issue 

of contracting out services within the Postal 

Service. Of particular interest was outsourcing new mail delivery routes to contractors 

rather than having the mail delivered by 

career postal employees. The subcommittee 

heard testimony from Congressman Albio 

Sires; the Postmaster General; Chairman, 

Board of Governors; and presidents of 

postal unions and management associations. Inspector General Williams testified 

on the OIG’s responsibilities for reviewing 

and investigating contractual activities of the 

Postal Service.

The fourth Subcommittee hearing focused 

on the infrastructure and realignment programs and policies of the Postal Service. 

Of specific interest to the subcommittee 

was how the Postal Service updated its 

delivery standards to reflect changes in mail 

preparation and delivery. Testimony was 

also provided on the Postal Service’s plans 

to consolidate operations and facilities. The 

subcommittee heard from the GAO, PRC, 

Postal Service, and mailer’s associations. 

Assistant Inspector General for Audit Milbourn testified for the OIG. His testimony 

focused on the Postal Service’s END initiative 

and the AMP process.

Copies of the OIG testimonies are available on our website: www.uspsoig.gov.
April 1 — September 30, 2007 | 41

Office Of Inspector General Area field Office Locations

Area 

field Office 

Locations

PACIFIC

SOUTHWEST

SOUTHEAST

NORTHEAST GREAT LAKES

CAPITAL METRO

NEW YORK METRO

EASTERN

The OIG currently has more than 1,100 employees located in more than 100 offices nationwide in each of 

the Postal Service’s nine areas.

WESTERN

Headquarters

Area Offices

Financial Audit Field Offices
42 | Semiannual Report to Congress

Appendices

REPORTS ISSUED TO POSTAL SERVICE MANAGEMENT

For the period April 1 — September 30, 2007

OIG audit teams conduct performance and financial audits, evaluations, and other reviews to address the business of 

the Postal Service. Each team issues audit reports (AR) or management advisory reports (MA) in accordance with the 

identified needs of the project.

Summary

Following is a summary, by principal area, of reports issued to Postal Service management. The following pages list each 

issued report.

The Inspector General Act of 1978 requires semiannual reports on the immediately 

preceding 6-month periods ending March 31 and September 30. These reports are 

sent to Congress and made available to the public.

This report summarizes OIG activities and illustrates significant problems, abuses, and 

deficiencies, along with recommendations and corrective actions related to the administration of U.S. Postal Service programs and operations during the reporting period. 

The appendices on the following pages fulfill the requirements of the Act.

Definitions

Funds Put to

Better Use

Funds that could be used more 

efficiently by implementing 

recommended actions.

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. 

Unsupported costs are 

included with the amounts 

shown as Questioned Costs.

Revenue Impact

Amounts from revenue 

generating functions such as 

retail sales, rent, leases, or 

fees that were underpaid or 

not realized. In addition, this 

category includes increased 

revenue from existing functions 

and generating revenue from 

new sources.

Appendix A

Risk Assessment Categories

Number of 

Reports

Funds Put to 

Better Use

Questioned 

Costs

Unsupported 

Questioned 

Costs

Revenue 

Impact

Strategic 7 — — — —

Financial 141 $1,072,843,275 $236,130,426 $686,367 $1,478,583 

Operational 58 $279,100,610 $11,884,567 $8,234,551 $301,799 

TOTAL 206 $1,351,943,885 $248,014,993 $8,920,918 $1,780,382 
April 1 — September 30, 2007 | 43

Reports With Quantifiable Potential Monetary Benefits

Report Title

Funds Put to

Better Use

Questioned

Costs

Unsupported

Questioned

Costs

Revenue 

Impact

FINANCIAL RISK

Delivery

Postal Service’s Refund Process – Capital Metro Area; DR–AR–07–011; 

7/13/2007 — $180,619 $180,619 —

Financial Reporting

SmartPay Purchase Card Use by Postal Service Officers; FT–AR–07–014; 

9/29/2007 — $127,393 $127,393 —

Fiscal Year 2007 Financial Installation Audit

Ada Main Post Office – Ada, Oklahoma; FF–AR–07–154; 5/3/2007 — $409 $409 $1,214 

Benson Post Office – Benson, Arizona; FF–AR–07–213; 8/2/2007 — — — $1,293 

Boulder Valmont Station – Boulder, Colorado; FF–AR–07–162; 5/21/2007 — $1,182 — $129 

Charlotte Business Mail Entry Unit – Charlotte, North Carolina; FF–AR–07–228; 

8/30/2007 — — — $37,928 

Chester Post Office – Chester, Pennsylvania; FF–AR–07–165; 5/23/2007 — — — $943 

Chicago District Financial Accountability; FF–AR–07–254; 9/28/2007 — $6,782 $6,782 $114,894 

Cincinnati Business Mail Entry Unit – Cincinnati, Ohio; FF–AR–07–207; 

7/27/2007 — — — $330,094 

Danville Post Office – Danville, Indiana; FF–AR–07–216; 8/13/2007 — $2,594 $2,594 —

Easley Business Mail Entry Unit – Easley, South Carolina; FF–AR–07–214; 

8/6/2007 — $7,892 — $1,040 

Effingham Business Mail Entry Unit – Effingham, Illinois; FF–AR–07–182; 

6/6/2007 — — — $5,384 

Frederick Business Mail Entry Unit – Frederick, Maryland; FF–AR–07–189; 

6/19/2007 — $6,700 — $5,211 

Fredericksburg Business Mail Entry Unit – Fredericksburg, Virginia; 

FF–AR–07–212; 8/1/2007 — $135 — $34,089 

Grand Central Station – New York, New York; FF–AR–07–178; 6/19/2007 — $2,668 $1,574 $50,353 

Gulfway Station – Corpus Christi, Texas; FF–AR–07–151; 5/1/2007 — $6,076 $2,026 —

Houston General Post Office Window Main Office – Houston, Texas; 

FF–AR–07–147; 4/20/2007 — $8,175 $491 $67,488 

IMPAC–Gateway District – St. Louis, Missouri; FF–AR–07–179; 6/5/2007 — $8,363 $8,363 —

IMPAC–San Francisco District – San Francisco, California; FF–AR–07–202; 

7/20/2007 — $144,759 $144,759 —

Keith D Oglesby Station – Greenville, South Carolina; FF–AR–07–171; 

5/30/2007 — $1,494 — $3,400 

Kirkwood–Voorhees Business Mail Entry Unit – Voorhees, New Jersey; 

FF–AR–07–253; 9/28/2007 — — — $29,806 

Lagrangeville Post Office – Lagrangeville, New York FF–AR–07–232; 9/12/2007 — — — $7,663 

Le Mars Business Mail Entry Unit – Le Mars, Iowa; FF–AR–07–166; 5/24/2007 — — — $5,076 

Liberty Business Mail Entry Unit – Liberty, Missouri; FF–AR–07–169; 

5/25/2007 — — — $50,980 

Macon Business Mail Entry Unit – Macon, Georgia; FF–AR–07–185; 6/13/2007 — — — $2,300 

Main Office Window Service Post Office – Trenton, New Jersey; 

FF–AR–07–246; 9/19/2007 — $6,099 $6,099 $57,990 

Midtown Station – New York, New York; FF–AR–07–161; 5/18/2007 — $1,904 — $34,751 

Midway Main Office Window – San Diego, California; FF–AR–07–188; 

6/20/2007 — — — $6,399 

Morganton Post Office – Morganton, North Carolina; FF–AR–07–208; 

7/30/2007 — $1,393 $878 $3,325 

appendix 

A
44 | Semiannual Report to Congress

Reports With Quantifiable Potential Monetary Benefits

Report Title

Funds Put to

Better Use

Questioned

Costs

Unsupported

Costs

Revenue 

Impact

Fiscal Year 2007 Financial Installation Audit

Morristown Business Mail Entry Unit – Morristown, New Jersey; 

FF–AR–07–233; 9/12/2007 — $4,190 $4,190 —

Nampa Post Office – Nampa, Idaho; FF–AR–07–156; 5/9/2007 — — — $809 

Natchitoches Main Post Office – Natchitoches, Louisiana; FF–AR–07–172; 

5/31/2007 — — — $2,825 

Oaks Corners Post Office – Oaks Corners, New York; FF–AR–07–197; 7/6/2007 — — — $2,538 

Oklahoma City Business Mail Entry Unit – Oklahoma City, Oklahoma; 

FF–AR–07–167; 5/25/2007 — — — $61,804 

Phi-Olney Station – Philadelphia, Pennsylvania; FF–AR–07–199; 7/31/2007 — $5,930 — $16,150 

Renton Main Post Office – Renton, Washington; FF–AR–07–160; 5/16/2007 — — — $1,684 

Rye Post Office – Rye, New Hampshire; FF–AR–07–206; 7/25/2007 — — — $1,018 

San Angelo Business Mail Entry Unit – San Angelo, Texas; FF–AR–07–193; 

6/22/2007 — — — $1,041 

San Francisco Business Mail Entry Unit – San Francisco, California; 

FF–AR–07–217; 8/14/2007 — $2,098 $2,098 $30,269 

Santa Rosa Main Post Office – Santa Rosa, California; FF–AR–07–140; 

4/17/2007 — $361 $361 $12,627 

Shawnee – Lenexa Branch – Lenexa, Kansas; FF–AR–07–137; 4/10/2007 — $1,226 $1,226 —

SmartPay Purchase Card Program – Colorado/Wyoming District, Denver, 

Colorado; FF–AR–07–247; 9/19/2007 — $59,629 $28,719 —

SmartPay Purchase Card Program for Local Buying – Capital District – 

Washington, District of Columbia; FF–AR–07–251; 9/27/2007 — $93,938 $14,186 —

Springfield Business Mail Entry Unit – Springfield, New Jersey; FF–AR–07–235; 

9/14/2007 — — — $36,709 

St. Paul Main Post Office – St. Paul, Minnesota; FF–AR–07–186; 6/13/2007 — $14,585 — —

STC–Mission Station – Santa Clara, California; FF–AR–07–138; 4/13/2007 — $1,065 $159 —

Summerlin Station – Las Vegas, Nevada; FF–AR–07–192; 6/29/2007 — $6,858 $101 —

Swedesboro Business Mail Entry Unit – Swedesboro, New Jersey; 

FF–AR–07–153; 5/4/2007 — — — $59,389 

Tallahassee Business Mail Entry Unit – Tallahassee, Florida; FF–AR–07–157; 

5/9/2007 — — — $42,294 

Thiensville Business Mail Entry Unit – Thiensville, Wisconsin; FF–AR–07–211; 

8/1/2007 — — — $2,955 

Van Nuys Business Mail Entry Unit – Van Nuys, California; FF–AR–07–174; 

5/31/2007 — $127,884 — $640 

Victoria Business Mail Entry Unit – Victoria, Texas; FF–AR–07–218; 8/15/2007 — — — $1,488 

Westgate Post Office – Raleigh, North Carolina; FF–AR–07–243; 9/18/2007 — $13,247 — $13,988 

White Plains Main Post Office – White Plains, New York; FF–AR–07–230; 

9/6/2007 — $11,439 $10,750 $16,867 

Wilmington–Myrtle Grove Station – Wilmington, North Carolina; FF–AR–07–245; 

9/18/2007 — $70,634 $70,634 $3,801 

Windsor Mills Branch – Windsor Mills, Maryland; FF–AR–07–148; 4/20/2007 — $38,945 — —

Woodbridge Business Mail Entry Unit – Woodbridge, Virginia; FF–AR–07–190; 

6/18/2007 — — — $3,332 

Woodstock Business Mail Entry Unit – Woodstock, Illinois; FF–AR–07–195; 

6/28/2007 — — — $314,605 

Human Capital

Postal Service’s Employee Benefit Programs; HM–AR–07–003; 

9/24/2007 $1,072,843,275 — — —
April 1 — September 30, 2007 | 45

Reports With Quantifiable Potential Monetary Benefits

Report Title

Funds Put to

Better Use

Questioned

Costs

Unsupported

Costs

Revenue 

Impact

Supply Management

Billboard Lease Agreement Revenue Received from Van Wagner, 

Communications, LLC; CA–CAR–07–012; 4/30/2007 — $3,162 — —

Price Adjustment Claim Submitted by Bertsch Properties, Limited Liability 

Corporation; CA–CAR–07–015; 7/18/2007 — $71,956 $71,956 —

Proposal Submitted by Northrop Grumman Corporation, Electronic Systems 

Company; CA–CAR–07–018; 8/1/2007 — $235,088,642 — —

OPERATIONAL RISK

Delivery

Address Management System Information – Capital Metro Area; 

DR–AR–07–004; 5/1/2007 $455,197 — — —

Address Management System Information – Eastern Area; DR–AR–07–009; 

5/7/2007 $779,013 — — —

Address Management System Information – Pacific Area; DR–AR–07–005; 

5/1/2007 $7,881,288 — — —

Address Management System Information – Southwest Area; DR–AR–07–006 

( R ); 8/20/2007 $5,201,116 — — —

Address Management System Information – Western Area; DR–AR–07–008; 

5/1/2007 $4,454,816 — — —

City Delivery Vehicle Mileage–Base vs. Actual – Eastern Area; DR–AR–07–014; 

9/26/2007 — $832,800 $832,800 —

City Delivery Vehicle Mileage–Base vs. Actual – Southeast Area; 

DR–AR–07–015; 9/29/2007 — $2,098,347 $2,098,347 —

City Delivery Vehicle Mileage–Base vs. Actual – Southwest Area; 

DR–AR–07–013; 9/26/2007 — $753,322 $753,322 —

Maintenance and Repair Payments to Commercial Vendors Using Postal Service 

Form 8230, Authorization for Payment; DR–MA–07–005 ( R ); 9/21/2007 $1,269,718 — — $301,799 

Management of Administrative Vehicles; DR–AR–07–007; 5/1/2007 $2,715,468 — — —

Engineering

Automated Flat Sorting Machine 100 Enhancements; DA–AR–07–005; 

9/10/2007 $80,307,204 — — —

Intelligent Mail Data Acquisition System Deployment Status and Vendor 

Negotiations; DA–AR–07–006; 9/21/2007 — $4,550,082 $4,550,082 —

Information Systems

Headquarters Cellular Services; IS–AR–07–011; 4/30/2007 $122,772 — — —

Inspection Service & Facilities

Postal Inspection Service Security Controls and Processes – Area Security 

Assessment Program; SA–AR–07–004; 7/10/2007 — $144,000 — —

Network Processing

Efficiency Review of the Bridgeport Processing and Distribution Facility – 

Bridgeport, Connecticut; NO–AR–07–004; 4/25/2007 $17,740,107 — — —

Efficiency Review of the Dallas Bulk Mail Center; NO–AR–07–005; 5/31/2007 $134,971,638 — — —

Priority Mail Hub Operations in Plano, Texas; NO–AR–07–011; 9/27/2007 $687,536 $736,543 — —

Supply Management

Compliance with the Use of MSC Industrial Supply Co., Inc. and W. W. Grainger, 

Inc. National Contracts; CA–AR–07–004; 5/23/2007 $1,751,112 $217,113 — —

Transportation

Postal Vehicle Service Transportation – Los Angeles Bulk Mail Center; 

NL–AR–07–006; 9/21/2007 $4,914,726 — — —

appendix 

A
46 | Semiannual Report to Congress

Report Listing

For the period April 1 — September 30, 2007

Complete listing of all OIG Reports issued to Postal Service management.

Reports With Quantifiable Potential Monetary Benefits

Report Title

Funds Put to

Better Use

Questioned

Costs

Unsupported

Costs

Revenue 

Impact

Transportation

Postal Vehicle Service Transportation Routes – Milwaukee Processing and 

Distribution Center; NL–AR–07–007; 9/27/2007 $4,015,221 — — —

Surface Transportation–Processing and Distribution Center Transportation 

Routes – Southwest Area; NL–AR–07–004; 4/20/2007 $2,116,153 — — —

Vehicle Management–National Trailer Lease Renewal – Pacific Area; 

NL–AR–07–009; 9/28/2007 $5,960,140 $1,555,344 — —

Vehicle Management–National Trailer Lease Renewal – Southwest Area; 

NL–AR–07–005; 6/15/2007 $3,757,385 $997,016 — —

TOTAL $1,351,943,885 $248,014,993 $8,920,918 $1,780,382 

STRATEGIC RISK

Delivery

Engineering

Enterprise Architecture In Postal Service 

Engineering; DA–MA–07–001; 7/17/2007

Network Optimization

Area Mail Processing Initiation Process; 

EN–MA–07–001; 6/26/2007

Bronx, New York Processing and Distribution Center 

Consolidation; EN–AR–07–003; 7/18/2007

Bulk Mail Center Outsourcing; EN–WP–07–001; 

4/25/2007

Post–Implementation Review of the Marina 

Processing and Distribution Center Area Mail 

Processing Consolidation; EN–AR–07–004; 

8/14/2007

Supply Management

Commodity Sourcing Activities Within the Automation 

Category Management Center; CA–MA–07–005; 

8/2/2007

FINANCIAL RISK

Delivery

Postal Service’s Refund Process – Capital Metro 

Area; DR–AR–07–011; 7/13/2007

Financial Reporting

Compliance with Bank Secrecy Act (Suspicious 

Activity Reporting); FT–AR–07–015; 9/29/2007

Independent Report on Withholdings and 

Contributions for Health Benefits, Life Insurance, 

Retirement, and Employee Headcount Data; 

FT–AR–07–013; 9/20/2007

SmartPay Purchase Card Use by Postal Service 

Officers; FT–AR–07–014; 9/29/2007

Automated Deployment Strategy of Automated 

Postal Center; DR–AR–07–010; 6/7/2007
April 1 — September 30, 2007 | 47

appendix 

A

Fiscal Year 2007 Cost and Revenue Analysis

Albuquerque District; FF–AR–07–215; 8/9/2007

Boston District; FF–AR–07–240; 9/17/2007

Massachusetts District; FF–AR–07–239; 

9/18/2007

Southeast Michigan District; FF–AR–07–248; 

9/24/2007

Fiscal Year 2007 Financial Installation Audit

Ada Main Post Office – Ada, Oklahoma; 

FF–AR–07–154; 5/3/2007

Alderwood Manor Station – Lynnwood, Washington; 

FF–AR–07–219; 8/15/2007

Amarillo Business Mail Entry Unit – Amarillo, Texas; 

FF–AR–07–159; 5/10/2007

Anniston–Oxford Branch – Oxford, Alabama; 

FF–AR–07–225; 8/27/2007

Bath Post Office – Bath, New York; FF–AR–07–244; 

9/18/2007

Bemidji Business Mail Entry Unit – Bemidji, 

Minnesota; FF–AR–07–249; 9/24/2007

Benson Post Office – Benson, Arizona; 

FF–AR–07–213; 8/2/2007

Bolingbrook Business Mail Entry Unit – Bolingbrook, 

Illinois; FF–AR–07–201; 7/13/2007

Boulder Valmont Station – Boulder, Colorado; 

FF–AR–07–162; 5/21/2007

Buffalo Main Post Office – Buffalo, North Dakota; 

FF–AR–07–221; 8/21/2007

Cambridge Post Office – Cambridge, Iowa; 

FF–AR–07–139; 4/12/2007

Cameron Post Office – Cameron, West Virginia; 

FF–AR–07–144; 4/18/2007

Carrollton Business Mail Entry Unit – Carrollton, Ohio; 

FF–AR–07–143; 4/18/2007

Center Station Post Office – Westminster, California; 

FF–AR–07–229; 9/4/2007

Charlotte Business Mail Entry Unit – Charlotte, North 

Carolina; FF–AR–07–228; 8/30/2007

Chester Post Office – Chester, Pennsylvania; 

FF–AR–07–165; 5/23/2007

Chicago Accountable Paper Depository and 

Stamp Distribution Office – Chicago, Illinois; 

FF–AR–07–164; 5/23/2007

Chicago District Financial Accountability; 

FF–AR–07–254; 9/28/2007

Chickamauga Station – Chattanooga, Tennessee; 

FF–AR–07–200; 7/11/2007

Cincinnati Business Mail Entry Unit – Cincinnati, 

Ohio; FF–AR–07–207; 7/27/2007

Cincinnati–Lockland Branch – Cincinnati, Ohio; 

FF–AR–07–184; 6/12/2007

Citronelle Post Office – Citronelle, Alabama; 

FF–AR–07–180; 6/6/2007

Crossroads Station – St. Petersburg, Florida; 

FF–AR–07–141; 4/16/2007

Danville Post Office – Danville, Indiana; 

FF–AR–07–216; 8/13/2007

Denver Accountable Paper Depository – Denver, 

Colorado; FF–AR–07–136; 4/9/2007

Downers Grove Business Mail Entry Unit – Downers 

Grove, Illinois; FF–AR–07–205; 7/16/2007

Easley Business Mail Entry Unit – Easley, South 

Carolina; FF–AR–07–214; 8/6/2007

Effingham Business Mail Entry Unit – Effingham, 

Illinois; FF–AR–07–182; 6/6/2007

Elkhart Business Mail Entry Unit – Elkhart, Indiana; 

FF–AR–07–142; 4/16/2007

Fairfax Post Office – Fairfax, Oklahoma; 

FF–AR–07–203; 7/16/2007

Farmersburg Post Office – Farmersburg, Indiana; 

FF–AR–07–226; 8/27/2007

Fayetteville Post Office – Fayetteville, Pennsylvania; 

FF–AR–07–170; 5/31/2007

Fort Worth Stamp Distribution Office – Fort Worth, 

Texas; FF–AR–07–250; 9/25/2007

Fraziers Bottom Post Office – Fraziers Bottom, West 

Virginia; FF–AR–07–145; 4/17/2007

Frederick Business Mail Entry Unit – Frederick, 

Maryland; FF–AR–07–189; 6/19/2007

Fredericksburg Business Mail Entry Unit – 

Fredericksburg, Virginia; FF–AR–07–212; 8/1/2007

Glendora Business Mail Entry Unit – Glendora, 

California; FF–AR–07–204; 7/16/2007

Grand Central Station – New York, New York; 

FF–AR–07–178; 6/19/2007

Gulfway Station – Corpus Christi, Texas; 

FF–AR–07–151; 5/1/2007

Harold Business Mail Entry Unit – Harold, Kentucky; 

FF–AR–07–176; 5/31/2007

Houston General Post Office Window Main Office – 

Houston, Texas; FF–AR–07–147; 4/20/2007

Hoven Main Post Office – Hoven, South Dakota; 

FF–AR–07–231; 9/11/2007

Huntington Business Mail Entry Unit – Huntington, 

New York; FF–AR–07–242; 9/17/2007

IMPAC – Gateway District – St. Louis, Missouri; 

FF–AR–07–179; 6/5/2007

IMPAC – San Francisco District, San Francisco, 

California; FF–AR–07–202; 7/20/2007

Jamestown Business Mail Entry Unit – Jamestown, 

New York; FF–AR–07–163; 5/22/2007

Junction City Business Mail Entry Unit – Junction 

City, Kansas; FF–AR–07–191; 6/18/2007

Keith D Oglesby Station, Greenville, South Carolina; 

FF–AR–07–171; 5/30/2007

Kirkwood – Voorhees Business Mail Entry Unit – 

Voorhees, New Jersey; FF–AR–07–253; 9/28/2007

La Valle Post Office – La Valle, Wisconsin; 

FF–AR–07–220; 8/17/2007

Lagrangeville Post Office, Lagrangeville, New York; 

FF–AR–07–232; 9/12/2007

Le Mars Business Mail Entry Unit – Le Mars, Iowa; 

FF–AR–07–166; 5/24/2007

Libby Main Post Office – Libby, Montana; 

FF–AR–07–224; 8/23/2007

Liberty Business Mail Entry Unit – Liberty, Missouri; 

FF–AR–07–169; 5/25/2007

Lynchburg Business Mail Entry Unit – Lynchburg, 

Virginia; FF–AR–07–155; 5/4/2007

Macon Business Mail Entry Unit – Macon, Georgia; 

FF–AR–07–185; 6/13/2007

Main Office Window Service Post Office – Trenton, 

New Jersey; FF–AR–07–246; 9/19/2007

Manteo Post Office – Manteo, North Carolina; 

FF–AR–07–152; 5/4/2007

Marion Post Office – Marion, Montana; 

FF–AR–07–222; 8/21/2007

Meadow Vista Post Office – Meadow Vista, 

California; FF–AR–07–175; 6/6/2007

Midtown Station – New York, New York; 

FF–AR–07–161; 5/18/2007

Midway Main Office Window – San Diego, California; 

FF–AR–07–188; 6/20/2007

Morganton Post Office – Morganton, North Carolina; 

FF–AR–07–208; 7/30/2007

Morristown Business Mail Entry Unit – Morristown, 

New Jersey; FF–AR–07–233; 9/12/2007

Muskegon Business Mail Entry Unit – Muskegon, 

Michigan; FF–AR–07–234; 9/12/2007

Nampa Post Office – Nampa, Idaho; 

FF–AR–07–156; 5/9/2007

Nashville Business Mail Entry Unit – Nashville, 

Tennessee; FF–AR–07–198; 7/9/2007

Natchitoches Main Post Office – Natchitoches, 

Louisiana; FF–AR–07–172; 5/31/2007

New Lenox Post Office – New Lenox, Illinois; 

FF–AR–07–236; 9/17/2007

Oaks Corners Post Office – Oaks Corners, New York; 

FF–AR–07–197; 7/6/2007

Oklahoma City Business Mail Entry Unit – Oklahoma 

City, Oklahoma; FF–AR–07–167; 5/25/2007

Parkwood Station – Wilson, North Carolina; 

FF–AR–07–209; 7/31/2007

Peoria Stamp Distribution Office – Peoria, Illinois; 

FF–AR–07–158; 5/4/2007

Perkins Branch Post Office – Sacramento, California; 

FF–AR–07–237; 9/17/2007
48 | Semiannual Report to Congress

Inspection Service & Facilities

Postal Inspection Service Transition and Resources; 

SA–MA–07–002; 9/21/2007

Sales & Service

Management Operating Data System; 

MS–AR–07–003; 8/21/2007

Human Capital

Postal Service’s Employee Benefit Programs; 

HM–AR–07–003; 9/24/2007

Information Systems

Application Control Review of Oracle Accounts 

Payable – Feeder Systems; IS–AR–07–014; 

8/7/2007

Phi–Olney Station – Philadelphia, Pennsylvania; 

FF–AR–07–199; 7/31/2007

Pittsburgh Stamp Distribution Office – Pittsburgh, 

Pennsylvania; FF–AR–07–241; 9/17/2007

Pleasant Garden Post Office – Pleasant Garden, 

North Carolina; FF–AR–07–223; 8/23/2007

Prentice Post Office – Prentice, Wisconsin; 

FF–AR–07–194; 6/22/2007

Renton Main Post Office – Renton, Washington; 

FF–AR–07–160; 5/16/2007

Roanoke Business Mail Entry Unit – Roanoke, 

Virginia; FF–AR–07–187; 6/13/2007

Rye Post Office – Rye, New Hampshire; 

FF–AR–07–206; 7/25/2007

San Angelo Business Mail Entry Unit – San Angelo, 

Texas; FF–AR–07–193; 6/22/2007

San Francisco Business Mail Entry Unit – San 

Francisco, California; FF–AR–07–217; 8/14/2007

Santa Rosa Main Post Office – Santa Rosa, 

California; FF–AR–07–140; 4/17/2007

Sharpsburg Branch – Sharpsburg, Pennsylvania; 

FF–AR–07–227; 8/28/2007

Shawnee–Lenexa Branch – Lenexa, Kansas; 

FF–AR–07–137; 4/10/2007

SmartPay Purchase Card Program–Colorado/

Wyoming District – Denver, Colorado; 

FF–AR–07–247; 9/19/2007

SmartPay Purchase Card Program for Local 

Buying–Capital District – Washington, District of 

Columbia; FF–AR–07–251; 9/27/2007

Smiths Creek Post Office – Smiths Creek, Michigan; 

FF–AR–07–238; 9/17/2007

Springfield Business Mail Entry Unit – Springfield, 

New Jersey; FF–AR–07–235; 9/14/2007

St. Paul Main Post Office – St. Paul, Minnesota; 

FF–AR–07–186; 6/13/2007

Stamping Ground Post Office – Stamping Ground, 

Kentucky; FF–AR–07–183; 6/12/2007

STC–Mission Station – Santa Clara, California; 

FF–AR–07–138; 4/13/2007

Stevensville Business Mail Entry Unit – Stevensville, 

Montana; FF–AR–07–181; 6/12/2007

Storrs Business Mail Entry Unit – Storrs, 

Connecticut; FF–AR–07–150; 4/30/2007

STP–Pioneer Station – St. Paul, Minnesota; 

FF–AR–07–177; 6/6/2007

Summerlin Station – Las Vegas, Nevada; 

FF–AR–07–192; 6/29/2007

Summit Business Mail Entry Unit – Summit, New 

Jersey; FF–AR–07–252; 9/28/2007

Swedesboro Business Mail Entry Unit – Swedesboro, 

New Jersey; FF–AR–07–153; 5/4/2007

Tallahassee Business Mail Entry Unit – Tallahassee, 

Florida; FF–AR–07–157; 5/9/2007

Thiensville Business Mail Entry Unit – Thiensville, 

Wisconsin; FF–AR–07–211; 8/1/2007

Thurmont Business Mail Entry Unit – Thurmont, 

Maryland; FF–AR–07–168; 5/24/2007

Ulysses Post Office – Ulysses, Kansas; 

FF–AR–07–173; 5/30/2007

Valley Mills Post Office – Valley Mills, Texas; 

FF–AR–07–149; 4/23/2007

Van Nuys Business Mail Entry Unit – Van Nuys, 

California; FF–AR–07–174; 5/31/2007

Victoria Business Mail Entry Unit – Victoria, Texas; 

FF–AR–07–218; 8/15/2007

Westgate Post Office – Raleigh, North Carolina; 

FF–AR–07–243; 9/18/2007

White Plains Main Post Office – White Plains, New 

York; FF–AR–07–230; 9/6/2007

Wichita Business Mail Entry Unit – Wichita, Kansas; 

FF–AR–07–210; 8/1/2007

Wichita General Mail Facility Station – Wichita, 

Kansas; FF–AR–07–196; 7/2/2007

Wilmington–Myrtle Grove Station – Wilmington, 

North Carolina; FF–AR–07–245; 9/18/2007

Windsor Mills Branch – Windsor Mills, Maryland; 

FF–AR–07–148; 4/20/2007

Woburn Stamp Distribution Office – Woburn, 

Massachusetts; FF–AR–07–146; 4/17/2007

Woodbridge Business Mail Entry Unit – Woodbridge, 

Virginia; FF–AR–07–190; 6/18/2007

Woodstock Business Mail Entry Unit – Woodstock, 

Illinois; FF–AR–07–195; 6/28/2007
April 1 — September 30, 2007 | 49

appendix 

A

Supply Management

Billboard Lease Agreement Revenue Received 

from Van Wagner Communications, LLC; 

CA–CAR–07–012; 4/30/2007

Controls Over eBuy Billings and Payments; 

CA–MA–07–007; 9/25/2007

Direct Labor and Indirect Expense Rates of Indefinite 

Delivery, Indefinite Quantity Proposal Submitted by 

Highland Associates; CA–CAR–07–019; 8/14/2007

Direct Labor Rates and Indirect Rate of Indefinite 

Delivery, Indefinite Quantity (IDIQ) Proposal 

Submitted by Program Management, LLC; 

CA–CAR–07–021; 9/7/2007

Key Performance Indicators Including Procurement 

Savings of Contract Number 5BMSTR–05–B–3002, 

and Accounting System of Ryder Integrated Logistics, 

Incorporated; CA–CAR–07–017; 7/30/2007

Lease Expenses at TMC Enterprises, Limited Liability 

Corporation; CA–CAR–07–016; 7/30/2007 

Preaward Survey of Accounting System at I G 

Associates, Incorporated; CA–CAR–07–020; 

8/31/2007

Price Adjustment Claim Submitted by Bertsch 

Properties, Limited Liability Corporation; 

CA–CAR–07–015; 7/18/2007

Proposal Submitted by Jacobs Facilities, 

Incorporated; CA–CAR–07–014; 5/23/2007

Proposal Submitted by Northrop Grumman 

Corporation, Electronic Systems Company; 

CA–CAR–07–018; 8/1/2007

Proposal Submitted by Oudens and Knoop Architects, 

PC; CA–CAR–07–013; 5/10/2007

Siemens Energy and Automation, Incorporated; 

CA–CAR–07–011; 5/1/2007

Southeast Facilities Service Office Use of 

the Parsons’ Indefinite Quantity Contract; 

CA–MA–07–006; 9/10/2007

Voyager Card Program – Swatara and Lower Paxton 

Branches of the Harrisburg, Pennsylvania Post Office; 

CA–AR–07–006; 7/9/2007

OPERATIONAL RISK

Delivery

Address Management System Information – Capital 

Metro Area; DR–AR–07–004; 5/1/2007

Address Management System Information – Eastern 

Area; DR–AR–07–009; 5/7/2007

Address Management System Information – National 

Capping; DR–AR–07–012; 8/29/2007

Address Management System Information – Pacific 

Area; DR–AR–07–005; 5/1/2007

Address Management System Information – 

Southwest Area; DR–AR–07–006 ( R ); 8/20/2007

Address Management System Information – Western 

Area; DR–AR–07–008; 5/1/2007

City Delivery Vehicle Mileage–Base vs. Actual – 

Eastern Area; DR–AR–07–014; 9/26/2007

City Delivery Vehicle Mileage–Base vs. Actual – 

Southeast Area; DR–AR–07–015; 9/29/2007

City Delivery Vehicle Mileage–Base vs. Actual – 

Southwest Area; DR–AR–07–013; 9/26/2007

Implementation and Utilization of the Growth 

Management Tool; DR–AR–07–016; 9/29/2007

Maintenance and Repair Payments to Commercial 

Vendors Using Postal Service Form 8230, 

Authorization for Payment; DR–MA–07–005 ( R ); 

9/21/2007

Management of Administrative Vehicles; 

DR–AR–07–007; 5/1/2007

Management of Retail Workhours in Relation to 

the Workload for Mobile Units – Triboro District; 

DR–MA–07–004; 6/14/2007

Engineering

Automated Flat Sorting Machine 100 Enhancements; 

DA–AR–07–005; 9/10/2007

Flat Sequencing System Risk Management; 

DA–AR–07–003; 7/31/2007

Intelligent Mail Data Acquisition System Deployment 

Status and Vendor Negotiations; DA–AR–07–006; 

9/21/2007

Optical Character Reader Enhancements, Delivery 

Input Output Sub–System; DA–AR–07–004; 

8/27/2007

St. Louis Equipment Maintenance and Waste 

Disposal; DA–MA–07–002; 9/13/2007

Human Capital

Postal Service’s Workplace Safety and Workplace–

Related Injury Reduction Goals and Progress; 

HM–AR–07–002; 5/16/2007

The Postal Service’s Comprehensive Strategic 

Workforce Plan; HM–AR–07–004; 9/26/2007
50 | Semiannual Report to Congress

Information Systems

Change Controls at the Eagan, Minnesota; 

San Mateo, California; and St. Louis, Missouri, 

Information Technology and Accounting Service 

Centers for Fiscal Year 2007; IS–AR–07–015; 

8/14/2007

Controls Over Postal Inspection Service Network 

Switches; IS–AR–07–012; 7/25/2007

Database Administration Practices; IS–AR–07–016; 

8/20/2007

Disaster Recovery Testing for Critical Postal Service 

Applications at the Eagan, Minnesota, and San 

Mateo, California, Information Technology and 

Accounting Service Centers for Fiscal Year 2007; 

IS–AR–07–018; 9/14/2007

Headquarters Cellular Services; IS–AR–07–011; 

4/30/2007

Security Vulnerability Assessment of the National 

Accounting Oracle Financials Application; 

IS–CS–07–004; 9/11/2007

Security Vulnerability Assessment of the Servers 

and Databases Supporting the Postal Automated 

Redirection System; IS–CS–07–003; 5/14/2007

Separation of Duties at the Eagan, Minnesota; 

San Mateo, California; and St. Louis, Missouri, 

Information Technology and Accounting Service 

Centers; IS–AR–07–017; 8/28/2007

State of Information Technology Within the Postal 

Service; IS–MA–07–001; 8/6/2007

System Software Controls at the Eagan, Minnesota, 

and San Mateo, California, Information Technology 

and Accounting Service Centers for Fiscal Year 2007; 

IS–AR–07–013; 8/3/2007

Inspection Service & Facilities

Handling of a Suspicious Powder Incident 

at the Wichita Falls Mail Processing Center; 

SA–AR–07–005; 7/11/2007

Postal Inspection Service Security Controls and 

Processes–Area Security Assessment Program; 

SA–AR–07–004; 7/10/2007

Postal Service Facilities Maintenance and Repair 

Costs; CA–AR–07–003; 5/14/2007

Postal Service Security Controls and Processes for 

the Pacific Area; SA–AR–07–003; 5/9/2007

Use of Existing Postal Service–Owned Space in the 

Pacific Area; CA–AR–07–005; 6/14/2007

Use of Existing Postal–Owned Space in the Great 

Lakes Area; CA–AR–07–002; 5/18/2007

Use of Existing Postal–Owned Space in the 

Southeast Area; SA–AR–07–006; 9/27/2007

Network Processing

Color–Code Capping Report; NO–MA–07–003; 

9/28/2007

Color–Coding of Standard Mail at the 

Mobile Processing and Distribution Center; 

NO–MA–07–002; 6/26/2007

Efficiency Review of the Bridgeport Processing 

and Distribution Facility – Bridgeport, Connecticut; 

NO–AR–07–004; 4/25/2007

Efficiency Review of the Dallas Bulk Mail Center; 

NO–AR–07–005; 5/31/2007

Internal Controls Over Clock Rings at the Margaret 

L. Sellers Processing and Distribution Center; 

NO–AR–07–008; 8/24/2007

Mail Condition Reporting at the Los Angeles 

International Service Center; NO–AR–07–010; 

9/24/2007

Mail Condition Reporting at the Miami International 

Service Center; NO–AR–07–009; 9/20/2007

Mail Condition Reporting at the San Francisco 

International Service Center; NO–AR–07–006 ( R ); 

8/20/2007

Mail Processing at the Southeastern 

Pennsylvania Processing and Distribution Center; 

NO–AR–07–007; 8/6/2007

Priority Mail Hub Operations in Plano, Texas; 

NO–AR–07–011; 9/27/2007

Timeliness of Mail Processing at the Chicago, Illinois, 

Cardiss Collins Processing and Distribution Center; 

NO–AR–07–012; 9/28/2007

Sales & Services

Postal Service Passport Program; MS–AR–07–004; 

9/28/2007

Supply Management

Compliance with the Use of MSC Industrial Supply 

Co., Inc. and W. W. Grainger, Inc. National Contracts; 

CA–AR–07–004; 5/23/2007

Facilities Service Office Use of the Parsons’ Indefinite 

Quantity Contract; CA–MA–07–003; 6/4/2007

Great Lakes Facilities Service Office Use of 

the Parsons’ Indefinite Quantity Contract; 

CA–MA–07–004; 7/31/2007

Transportation

Impact of Transportation on Chicago District 

Performance; NL–AR–07–008; 9/28/2007

Postal Vehicle Service Transportation – Los Angeles 

Bulk Mail Center; NL–AR–07–006; 9/21/2007

Postal Vehicle Service Transportation Routes – 

Milwaukee Processing and Distribution Center; 

NL–AR–07–007; 9/27/2007

Surface Transportation–Processing and Distribution 

Center Transportation Routes – Southwest Area; 

NL–AR–07–004; 4/20/2007

Vehicle Management–National Trailer Lease Renewal 

– Pacific Area; NL–AR–07–009; 9/28/2007

Vehicle Management–National Trailer Lease Renewal 

– Southwest Area; NL–AR–07–005; 6/15/2007
April 1 — September 30, 2007 | 51

Appendix B

FINDINGS OF QUESTIONED COSTS

For the period April 1 — September 30, 2007

Questioned Cost: A cost that is unnecessary, unreasonable, unsupported, or an alleged violation of law, regulation, or contract.

As required by the IG Act, the following pages show the total number of audit reports and the total dollar value of questioned costs in audit reports.

Description Number of Reports Questioned Costs

Unsupported Costs Included 

in Questioned Costs

Reports for which no management decision was made at the beginning of the 

reporting period 26 $161,347,047 $2,853,836

Reports requiring management decision that were issued during the 

reporting period 45 $248,014,993 $8,920,918

TOTAL 71 $409,362,040 $11,774,754 

Reports for which a management decision was made during the reporting 

period (i+ii) 43 $118,689,006 $9,459,835

(i) Dollar Value of disallowed cost $43,121,897 $2,207,288

(ii) Dollar value of cost not disallowed $75,567,109 $7,252,547

Reports for which no management decision was made by the end of the 

reporting period. Negotiations are ongoing. 28 $290,673,034 $2,314,347

Reports for which no management decision was made within 6 months of 

issuance (See Note 1 for a list of individual reports) — — —

Reports for which no management decision was made within 1 year of 

issuance (See Note 2 for a list of individual reports) 7 $50,443,108 —

Note 1 - Reports for which no management decision was made within 6 months of issuance:

Subject Report/Case Number Report Date

Questioned 

Costs

Unsupported Costs Included 

in Questioned Costs

None

Note 2 - Reports for which no management decision was made within 1 year of issuance:

Subject Report/Case Number Report Date

Questioned 

Costs

Unsupported Costs Included 

in Questioned Costs

Contract Audit–Bell and Howell Mail and Messaging Technologies CA-CAR-03-002 10/16/2002 $343,759 —

Contract Audit - D. L. Kaufman, Incorporated CA-CAR-03-011 2/11/2003 $4,028,935 —

Vehicle Management–Delivery Vehicles – Buy vs. Lease NL-AR-04-005 9/30/2004 $42,751,032 —

Report on Audit of Settlement Proposal Under Contract Number 

102591-03-Q-0454 Submitted by Hasler Incorporated CA-CAR-06-027 7/5/2006 $2,470,818 —

Audit of Fiscal Year 2002 Incurred Cost of

New Breed Corporations CA-CAR-06-007 12/9/2005 $89,576 —

Postal Service’s Grievance-Arbitration Service Centers HM-AR-06-006 8/29/2006 $356,510 —

Vehicle Management–National Trailer Lease Requirements – 

Capital Metro Area NL-AR-06-013 9/29/2006 $402,478 —

TOTAL $50,443,108 —

Appendix B
52 | Semiannual Report to Congress

RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

For the period April 1 — September 30, 2007

As required by the IG Act, this pages show the total number of audit reports and the total dollar value of recommendations for funds that can be put to better 

use by management.

Funds Put to Better Use — Funds that could be used more efficiently by implementing recommended actions.

Note 1 - Reports for which no management decision was made within 6 months of issuance:

Subject Report Number Report Date

Recommend Funds Put to 

Better Use

None

Note 2 - Reports for which no management decision was made within 1 year of issuance:

Subject Report Number Report Date

Recommend Funds Put to 

Better Use

Vehicle Management–Delivery Vehicles – Buy versus Lease NL-AR-04-005 09/30/2004 $40,296,954

Surface Transportation–Bulk Mail Center Highway Transportation Routes – 

Western Area NL-AR-06-001 02/14/2006 $2,235,812

Postal Service’s Grievance–Arbitration Service Centers HM-AR-06-006 08/29/2006 $5,521,081

Vehicle Management–National Trailer Lease Requirements – 

Capital Metro Area NL-AR-06-013 09/29/2006 $1,514,170

TOTAL $49,568,017 

Description Number of Reports Dollar Value

Reports for which no management decision was made at the beginning of the reporting period 7 $58,927,790 

Reports issued during the reporting period 19 $1,351,943,885 

TOTAL 26 $1,410,871,675 

Reports for which a management decision was made during the report period 20 $1,351,586,133 

(i) Value of recommendations agreed to by management $271,880,491 

(ii) Value of recommendations that were not agreed to by management $1,079,705,642 

Reports for which no management decision was made by the end of the reporting period. 6 $59,285,542 

Reports for which no management decision was made within 6 months of issuance

(See Note 1 for a list of individual reports) — —

Reports for which no management decision was made within 1 year of issuance

(See Note 2 for a list of individual reports) 4 $49,568,017 

Appendix C
April 1 — September 30, 2007 | 53

Appendix 

C — 

D

Type of Measure Value or Amount

IMPROVED SERVICE

Recommendations that address the Postal Service’s efforts to improve the quality and 

accessibility of its products and services Number of Recommendations 37

Number of customer service audits conducted Number of Audits 19

SAFEGUARDING ASSETS

Assets or Accountable Items at Risk:

Inadequate internal controls put the value of assets or accountable items (for example cash 

and stamps) at risk of loss Dollar Value $110,611,612

Physical Safety and Security:

Recommendations that address the safety and security of Postal Service employees and/or 

the work environment. Number of Recommendations 16

Number of employee/facility safety and security audits conducted Number of Audits 7

Information Technology Security:

Inadequate controls/protection put the value of data, IT assets (software, networks), and 

employee work time at Dollar Value $1,211,119

Number of data security/IT security audits conducted Number of Audits 16

GOODWILL / BRANDING

An “adverse impact” on goodwill is an actual event/problem that harms the Postal 

Service’s reputation or a potential problem that could negatively impact the Postal Service 

“brand name” Number of Issues Identified 10

Reported Non-Monetary Benefits

For the period April 1 — September 30, 2007

Appendix D

Overview

Many of our audit reports identify areas for improvement that result in non-monetary benefits to the Postal Service. These benefits include improvements to 

service, protection of assets, and improvements in the reliability of data. FY 2007 is the first year we are reporting these benefits to the Postal Service.
54 | Semiannual Report to Congress

Issue Date

Number of 

Recommendations Report Title Report Number

7/9/2002 3 Review of eBusiness Agreements EM-AR-02-012

8/21/2003 1 Propriety of Postal Service Utility Payments FT-AR-03-011

9/30/2003 2 General Controls at the Engineering Research and Development Center – 

Merrifield, Virginia IS-AR-03-008

4/21/2004 1 Postal Inspection Service’s Postal Police Officers SA-AR-04-001

9/30/2004 1 Postal Service’s Business Partner Connectivity IS-AR-04-014

9/30/2004 5 Vehicle Management–Delivery Vehicles - Buy vs. Lease NL-AR-04-005

10/25/2004 1 Reports Distribution IS-AR-05-001

1/25/2005 2 Mail Transport Equipment Service Center Network - Network Realignment – Pittsburgh, 

Detroit, Cleveland. NL-AR-05-001

3/29/2005 1 Efficiency Review of the Akron, Ohio, Processing and Distribution Center NO-AR-05-009

4/21/2005 2 Vehicle Management–National Trailer Lease – Unresolved Audit Recommendations NL-MA-05-001

6/17/2005 1 Efficiency of the Los Angeles International Service Center NO-AR-05-011

7/22/2005 5 Complaints Regarding Personnel Issues in the Caribbean District HM-AR-05-009

8/11/2005 1 Action Taken By Pacific Area Regarding Complaints of a Hostile Work Environment in 

the Sacramento District HM-AR-05-010

9/28/2005 3 Commercial Air Network Operations NL-AR-05-015

12/23/2005 2 Security Over Sensitive Customer Data on Automated Postal Center Kiosks IS-MA-06-001

2/10/2006 1 Flat Remote Encoding System for Automated Flat Sorting Machine 100 DA-AR-06-003

2/10/2006 4 Security Vulnerability Assessment and Audit of Automated Postal Center Systems IS-AR-06-003

2/22/2006 1 Efficiency Review of the Washington Bulk Mail Center NO-AR-06-003

3/22/2006 1 J.T. Weeker (Chicago) International Service Center – Inbound International Mail FT-AR-06-013

3/31/2006 1 Postal Service’s Share of Health Insurance Premiums for Retired Employees FT-AR-06-016

5/5/2006 1 Follow up at the Engineering Research and Development Center – Merrifield, Virginia IS-AR-06-010

REPORTS WITH SIGNIFICANT RECOMMENDATIONS PENDING CORRECTIVE ACTIONS

For the period through September 30, 2007

As required by the IG Act, the following pages include a list of each audit report for which no management decision has been made by the end of the 

reporting period.

Appendix E
April 1 — September 30, 2007 | 55

Issue Date

Number of 

Recommendations Report Title Report Number

5/19/2006 2 Postal Service’s Injury Compensation Programs’ Controversion and Challenge Process 

in Selected Areas HM-AR-06-004

6/29/2006 2 Hurricane Katrina – The Effectiveness of the Postal Service Transportation and 

Logistics Network NL-AR-06-006

7/20/2006 2 Mail Transport Equipment Service Center Network – Proposed Change to Quality 

Inspection and Payment Authorization Controls NL-AR-06-007

7/25/2006 3 Surface Transportation–Processing and Distribution Center Transportation Routes – 

Great Lakes Area NL-AR-06-008

8/9/2006 1 Overdrawn Express Mail Corporate Accounts DR-AR-06-007

8/29/2006 9 Postal Service’s Grievance-Arbitration Service Centers HM-AR-06-006

9/12/2006 1 Efficiency Review of the Los Angeles, California, Worldway Airport Mail Center NO-AR-06-006

9/18/2006 3 Mail Transport Equipment Service Center Network–Highway Transportation 

Routes – Greensboro NL-AR-06-010

9/26/2006 3 Pasadena, California, Processing and Distribution Center Consolidation EN-AR-06-001

9/27/2006 2 Enterprise Payment Switch Solution Phase 1: Requirements and Design IS-AR-06-017

9/27/2006 1 Information System Access Controls at the Eagan, Minnesota, and San Mateo, 

California, Information Technology and Accounting Service Centers IS-AR-06-018

9/28/2006 2 Mail Transport Equipment Service Center Network–Highway Transportation 

Routes – Dallas NL-AR-06-012

9/29/2006 3 Delivery and Retail Standard Operating Procedures – Great Lakes Area DR-MA-06-008

9/29/2006 3 Postal Service’s Schedule Awards Program in the New York Metro Area – Report I HM-AR-06-007

9/29/2006 4 Vehicle Management–National Trailer Lease Requirements – Capital Metro Area NL-AR-06-013

9/29/2006 1 Mail Transport Equipment – Transportation of Over the Road Containers NL-AR-06-014

9/30/2006 1 Biohazard Detection System Consumables DA-AR-06-006

10/16/2006 4 Delivery and Retail Standard Operating Procedures – Capital Metro Area DR-MA-07-001

11/9/2006 4 Sioux City, Iowa, Processing and Distribution Facility Consolidation EN-AR-07-001

12/5/2006 4 Service Implications of Area Mail Processing Consolidations EN-AR-07-002

12/7/2006 1 Security Vulnerability Assessment of Legacy Applications at the Eagan Host Computing 

Services, Eagan, Minnesota IS-AR-07-003

12/11/2006 1 Postal Service Contact Center Phase 1: Customer Service MS-AR-07-001

12/26/2006 2 National Customer Management System Encryption IS-AR-07-006

2/9/2007 2 Timeliness of Mail Processing at the Los Angeles, California, Processing and 

Distribution Center NO-AR-07-001

2/23/2007 1 Enterprise Payment Switch Solution Phase II: Preparations for Security Testing IS-AR-07-007

3/15/2007 3 Address Management System Information – Northeast Area DR-AR-07-001

3/23/2007 2 Surface Transportation–Processing and Distribution Center Transportation Routes – 

Eastern Area NL-AR-07-002

3/29/2007 2 Audit of Cellular Services IS-AR-07-010

3/30/2007 4 Address Management System Information – Southeast Area DR-AR-07-002

3/30/2007 1 Steubenville–Youngstown, Ohio, Outgoing Mail Consolidation NO-AR-07-003

3/30/2007 2 Postal Vehicle Service Transportation Routes – Memphis Processing and 

Distribution Center NL-AR-07-003

3/30/2007 5 Postal Service Security Controls and Processes for the Capital Metro Area SA-AR-07-002

3/31/2007 1 Stamps on Consignment Program DR-AR-07-003

Appendix 

E
56 | Semiannual Report to Congress

Issue Date

Number of 

Recommendations Report Title Report Number

4/20/2007 1 Efficiency Review of the Bridgeport Processing and Distribution Facility – 

Bridgeport, Connecticut NL-AR-07-004

4/25/2007 1 Efficiency Review of the Bridgeport Processing and Distribution Facility – 

Bridgeport, Connecticut NO-AR-07-004

4/30/2007 1 Headquarters Cellular Services IS-AR-07-011

5/1/2007 4 Address Management System Information – Capital Metro Area DR-AR-07-004

5/1/2007 4 Address Management System Information – Pacific Area DR-AR-07-005

5/1/2007 4 Address Management System Information – Western Area DR-AR-07-008

5/1/2007 4 Address Management System Information – Eastern Area DR-AR-07-009

5/9/2007 2 Postal Service’s Security Controls and Processes for the Pacific Area SA-AR-07-003

5/16/2007 1 Postal Service’s Workplace Safety and Workplace-Related Injury Reduction Goals 

and Progress HM-AR-07-002

5/31/2007 1 Efficiency Review of the Dallas Bulk Mail Center NO-AR-07-005

6/14/2007 2 Management of Retail Work Hours in Relation to the Workload for Mobile Units – 

Triboro District DR-MA-07-004

6/15/2007 3 Vehicle Management–National Trailer Lease Renewal – Southwest Area NL-AR-07-005

6/26/2007 2 Area Mail Processing Initiation Process EN-MA-07-001

7/11/2007 2 Handling of a Suspicious Powder Incident at the Wichita Falls Mail Processing Center SA-AR-07-005

7/18/2007 2 Bronx, New York Processing and Distribution Center Consolidation EN-AR-07-003

7/25/2007 3 Review of Controls Over Postal Inspection Service Network Switches IS-AR-07-012

7/31/2007 2 Flat Sequencing System Risk Management DA-AR-07-003

8/1/2007 1 Report on Audit of Proposal Submitted by Northop Grumman Corporation, Electronic 

Systems Company CA-CAR-07-018

8/2/2007 3 Commodity Sourcing Activities Within the Automation Category Management Center CA-MA-07-005

8/14/2007 4 Post-Implementation Reviews of the Marina Processing and Distribution Center Area 

Mail Processing Consolidation EN-AR-07-004

8/20/2007 4 Address Management System Information – Southwest Area DR-AR-07-006

8/20/2007 1 Audit of Database Administration Practices IS-AR-07-016

8/27/2007 2 Optical Character Reader Enhancements, Delivery Input Output Sub-System DA-AR-07-004

8/29/2007 2 Separation of Duties at the Eagan, Minnesota; San Mateo, California; and St. Louis, 

Missouri, Information Technology and Accounting Service Centers IS-AR-07-017

9/10/2007 3 Automated Flat Sorting Machine 100 Enhancements DA-AR-07-005

9/13/2007 1 St. Louis Equipment Maintenance and Waste Disposal DA-MA-07-002

9/14/2007 1

Disaster Recovery Testing for Critical Postal Service Applications at the Eagan, 

Minnesota; and San Mateo, California, Information Technology and Accounting Service 

Centers for Fiscal Year 2007

IS-AR-07-018

9/21/2007 1 Management Advisory – Maintenance and Repair Payments to Commercial Vendors 

Using Postal Service Form 8230, Authorization of Payment DR-MA-07-005

9/21/2007 1 Intelligent Mail Data Acquisition System Deployment DA-AR-07-006

9/24/2007 4 Postal Service’s Employee Benefit Programs HM-AR-07-003

9/26/2007 1 City Delivery Vehicle Mileage Base vs. Actual – Southwest Area DR-AR-07-013

9/26/2007 1 City Delivery Vehicle Mileage Base vs. Actual – Eastern Area DR-AR-07-014

9/26/2007 2 The Postal Service’s Comprehensive Strategic Workforce Plan HM-AR-07-004
April 1 — September 30, 2007 | 57

Issue Date

Number of 

Recommendations Report Title Report Number

9/27/2007 1 Postal Vehicle Service Transportation Routes – Milwaukee Processing and 

Distribution Center NL-AR-07-007

9/28/2007 6 Audit Report – Chicago District Financial Accountability FF-AR-07-254

9/28/2007 2 Postal Service Passport Program MS-AR-07-004

9/28/2007 8 Timeliness of Mail Processing at the Chicago, Illinois Cardiss Collins Processing and 

Distribution Center NO-AR-07-012

9/28/2007 4 The Impact of Transportation on Chicago District Performance NL-AR-07-008

9/28/2007 4 National Trailer Lease Renewal – Pacific Area NL-AR-07-009

9/29/2007 1 City Delivery Vehicle Mileage Base vs. Actual – Southeast DR-AR-07-015

9/29/2007 1 Implementation and Utilization of the Growth Management Tool DR-AR-07-016

Appendix F

SIGNIFICANT MANAGEMENT DECISIONS IN AUDIT RESOLUTION

For the period April 1 — September 30, 2007

As required by the IG Act, the following page discusses information concerning any significant management decision with which the Inspector General disagrees and is 

currently in audit resolution.

The OIG has no significant management decisions in audit resolution as of September 30, 2007.

Appendix F
58 | Semiannual Report to Congress

Note: 

1) There is a significant increase in the number of subpoenas issued this past summer due to a growing increase in inbound foreign lottery solicitations mailed 

from Canada. 

2) There is a significant increase in the number of administrative actions and civil penalties due largely to renewed emphasis on that program by the Postal Service’s 

Office of Counsel..

SUMMARY OF U.S. POSTAL INSPECTION SERVICE ACTIONS UNDER 39 USC 3005 and 3007

For the period April 1 — September 30, 2007

The Postal Reorganization Act requires the Postmaster General to furnish information, on a semiannual basis, on the investigative activities of the Postal Service by 

the U.S. Postal Inspection Service. 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 on investigative activities to the OIG rather than to the 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 Inspection Service investigative activities; use of subpoena 

power; and any additional information the OIG may require.

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.

Appendix H

INVESTIGATIVE STATISTICS1

For the period April 1 — September 30, 2007

INVESTIGATIonS1

Investigations Completed 4,436

Arrests 282

Indictments/Information 123

Convictions/Pretrial Diversions2 370

Administrative Actions Taken 2,275

Cost Avoidance 87,862,882*

Fines, Restitutions, and Recoveries $17,740,4683

Amount to Postal Service $13,213,100

1

 Statistics include joint investigations with other law enforcement agencies.

2

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

3

 Amount included in Fines, restitutions, and recoveries.

* The October 1, 2006 — March 31, 2007 Semiannual Report to Congress contained a typographical error. Fines, 

 restitution, and recoveries for this period should have read $22,386,061.

Appendix G
April 1 — September 30, 2007 | 59

Type of Scheme Complaints Filed

Consent 

Agreements FROs

Cease & Desist 

Orders

Advance Fee 3 — 1 1

Contests/Sweepstakes 4 1 — 1

Coupon Fraud 4 4 — 4

False billings 9 6 3 8

Internet Auction 8 3 4 7

Lotteries 

(Foreign and Domestic)

2 1

—

2

Medical 5 — — —

Merchandise:

 Failure to furnish 4 1 — 1

 Failure to pay 17 7 1 7

Misrepresentation 10 — — —

Miscellaneous 11 3 — 4

Telemarketing 2 1 2 2

Work at home 15 5 4 9

TOTAL 94 32 15 46

Appendix 

G — H

Other Administrative Actions

Administrative Action Requests 96

Temporary Restraining Orders Requested —

Temporary Restraining Orders issued —

Cases Using Direct Purchase Authority 2

Civil Penalties (Section 3012) Imposed $329,800

Test Purchases $204

Withholding Mail Orders Issued 79

Voluntary Discontinuances 8

Financial Reporting On Investigative 

Activities FY 2007 (April 2007 —

September 2007)

TYPE

Semiannual 

Report

Personnel $145,754,785 

Nonpersonnel $48,482,221 

Total $194,237,006 

Capital Obligations $22,628,078 

IG Subpoenas for Semiannual Report to Congress

(April 1 — September 30, 2007)

U.S. Postal

Subpoena No. Violation: Date Issued:

07-003

39 USC 3016

Sweepstakes promotion 5/9/2007

07-004 36 USC 3016 Sweepstakes promotion 8/20/2007

07-005

39 USC 3016 

Deceptive mailing; sweepstakes 8/20/2007

07-006

39 USC 3016 Deceptive mailing; 

sweepstakes 8/20/20077

07-007

39 USC 3016

Deceptive mailing; sweepstakes 8/20/2007

07-008

39 USC 3016 Deceptive mailing; 

sweepstakes 8/20/2007

07-009

39 USC 3016

Deceptive mailing; sweepstakes 8/20/2007

07-010

39 USC 3016

Deceptive mailing; sweepstakes 8/20/2007

07-011

39 USC 3016

Deceptive mailing; sweepstakes 8/20/2007

07-012

39 USC 3016

False representation; 

sweepstakes mailing 9/14/2007

07-013

39 USC 3016 False representation; 

sweepstakes mailing 9/14/2007

07-014

39 USC 3016 False representation; 

sweepstakes mailing 9/14/2007

07-015

39 USC 3016 False representation; 

sweepstakes mailing 9/14/2007

07-016

39 USC 3016 False representation; 

sweepstakes mailing 9/18/2007
60 | Semiannual Report to Congress

Investigations

Requestor Allegation/Concern Our Major Findings Closure Date

Senator, Pennsylvania Alleged a Postal Service manager brought a 

firearm into the garage of a General Mail Facility; 

dissatisfied with management’s response.

We investigated, found employee had a pending 

Equal Employment Opportunity (EEO) complaint. No 

additional work necessary. 4/4/2007

Representative, Texas Employee alleges falsification of injury claim by the 

Postal Service Injury Compensation Office in San 

Antonio, Texas.

We reviewed, found no evidence of a systemic 

problem in processing workers’ compensation 

claims and did not substantiate allegation 

of mishandled claim. As a result of other 

congressional inquiries pertaining to the San 

Antonio P&DC, we began a review within our 

Workplace Environment Unit. 5/8/2007

Representative, Florida Postal employee allegedly has been 

impersonating complainant.

Our criminal investigation was on-going at the time 

of closure. 5/15/2007

Representative, West Virginia Mail tampering. We investigated, found no evidence of intentional 

delay or discarding of mail. 5/22/2007

Senator, Texas Alleged a postal manager disrupted public meetings 

and misused postal facilities in support of personal 

and/or political agendas.

We investigated; reported our findings to 

management for any appropriate action.

4/4/2007

Representative, Alabama Alleged mail destruction or delay by carriers. We investigated but did substantiate allegations. 5/8/2007

Representative, California Whistleblower reprisal after reporting safety 

hazards to supervisors.

We reviewed, found concerns communicated to 

us were not covered by the postal whistleblower 

protection rules. Employee has pending EEO 

complaints, no additional work necessary. 5/11/2007

Representative, Virginia Misconduct by Postal Service and Inspection 

Service employees, including mail theft and 

tampering, and retaliation for filing a complaint.

We investigated, did not discover any 

misconduct on the part of the Postal Service 

or Inspection Service. 5/8/2007

Representative, Texas Alleged mail tampering by an employee at the post 

office. An Officer in Charge removed a letter from 

the mail, wrote on the envelope, and had another 

employee return it.

We investigated, found no evidence that postal 

laws or regulations were violated. We reported our 

findings to district management.

4/19/2007

Representative, Texas Agent allegedly acted unprofessionally. We reviewed, did not substantiate allegation. 6/20/2007

Representative, New York Mail theft concerning package sent via Express Mail 

through Parcel Force of Great Britain.

Our investigation revealed the driver intentionally 

destroyed the package. Provided our findings to 

Department of Justice and referred to management. 6/5/2007

Senator, Arizona Postal Service has fraudulently removed injured 

employees from their rolls.

We investigated, did not substantiate allegations.

5/11/2007

Representative, California Employee contesting proposed removal; alleged 

basis for removal a biased OIG report.

We investigated, found no evidence to support 

the allegations. 7/31/2007

Representative, New York Mail theft concerning package sent via Express Mail 

through Parcel Force of Great Britain.

Our investigation revealed the driver intentionally 

destroyed the package. Provided our findings to 

Department of Justice and referred to management. 6/5/2007

Senator, Arizona Postal Service has fraudulently removed injured 

employees from their rolls.

We investigated, did not substantiate allegations.

5/11/2007

Representative, California Employee contesting proposed removal; alleged 

basis for removal a biased OIG report.

We investigated, found no evidence to support 

the allegations. 7/31/2007

CLOSED CONGRESSIONAL AND BOARD OF GOVERNORS INQUIRIES

For the period April 1 — September 30, 2007

This appendix lists the Congressional and Board of Governors inquiries the OIG closed during this reporting period. We reviewed these inquiries to help 

identify systemic issues and to determine the need for future Postal Service-wide audits.

Appendix I
April 1 — September 30, 2007 | 61

Appendix I

Representative, Texas Union alleges Postal Service Office of Injury 

Compensation abused authority and retaliated 

against claimants by delaying or controverting 

injury compensation claims.

We reviewed, found no evidence of a systemic 

problem in processing workers’ compensation 

claims and did not substantiate allegation 

of mishandled claim. As a result of other 

congressional inquiries pertaining to the San 

Antonio P&DC, we began a review within our 

Workplace Environment Unit. 6/20/2007

Representative, Georgia Alleged mail theft, which could lead to identity theft. We reviewed, did not substantiate allegation. 5/25/2007

Representative, Kentucky Postal inspectors conducting interview about 

discarded mail allegedly mistreated employee, 

failed to provide proper warning, and forced a 

resignation. 

We investigated, did not substantiate allegations.

8/21/2007

Representative, Maryland Mishandling of mail by postal employees and 

possible machinery problems.

Our investigation did not substantiate allegations 

and found no similar complaints or instances of 

tampering or losses for this ZIP Code. 7/23/2007

Senator, Minnesota Concerns with sufficiency of Inspection Service 

investigation into the return of mail marked as 

“deceased” which had been addressed to soldier 

in Iraq.

Our investigation supported the Inspection Service’s 

work. We referred our findings to the U.S. military 

authority servicing the “APO” delivery address for 

any appropriate action. 5/22/2007

Representative, Utah Inquiry about investigative techniques used during 

an OIG investigation.

We investigated, did not substantiate allegations 

relating to misuse or abuse of postal resources 

and OWCP benefits. However, we did find potential 

safety issues, which we forwarded to management. 

These findings resulted in the employee’s removal 

from duty. 5/24/2007

Representative, California Mail theft, possibly by a postal employee. We determined appropriate jurisdiction resided with 

the Inspection Service. 5/24/2007

Senator, Missouri Mail tampering, theft, or delay. We investigated, did not substantiate allegations. 5/24/2007

Representative, California Mail theft, possibly from a collection box. We investigated, did not substantiate allegations. 

However, we did determine the collection box was 

defective. We reported the problem to management. 7/31/2007

Senator, New York Mail tampering and stolen postage. We reviewed, found no link to any postal employee. 

We referred complaint and our findings to the 

Inspection Service for additional review. 5/25/2007

Representative, Florida Executive Service employee allegedly fraudulently 

used a federally funded relocation program to sell a 

home with undisclosed known defects.

We reviewed, did not substantiate allegation.

8/8/2007

Representative, Texas Fraud and falsification of records at a Texas 

post office.

We shared our findings regarding fraud and 

falsification of records with management. Did not 

substantiate allegation of unfair disciplinary action. 8/2/2007

Senator, New York Mail theft by an employee at a New York post office. We investigated, did not substantiate allegations. 7/23/2007

Senator, New Hampshire Whistleblower retaliation for reporting misconduct 

to the OIG. 

Our investigation revealed the matters raised 

were not a proper basis for a whistleblower 

reprisal complaint. Found employee had a 

pending EEO complaint. 8/20/2007

Representative, Minnesota Concerns with sufficiency of Inspection Service 

investigation into the return of mail marked as 

“deceased” which had been addressed to soldier 

in Iraq

Our investigation supported the Inspection Service’s 

work. We referred our findings to the U.S. military 

authority servicing the “APO” delivery address for 

any appropriate action. 5/25/2007

Senator, California Violation of the Privacy Act of 1974 resulting from 

loss of a thumb drive.

We investigated, did not find missing thumb drive. 

However, we determined employee’s privacy was 

not violated. 7/31/2007

Representative, Missouri Allegedly two postal inspectors falsified a 

photocopy of a check that was drawn on the 

account of a family inheritance; received money 

from the trustee; part of a bribery/extortion ring; 

and were cocaine addicts.

We investigated, did not substantiate allegations of 

employee misconduct.

9/19/2007

Senator, Texas Retaliation for contacting Congress about 

employment-related issues

We reviewed, found no evidence that a case of 

whistleblower reprisal existed. 8/14/2007
62 | Semiannual Report to Congress

Representative, Texas Consolidation of postal facilities at Waco into Fort 

Worth/Austin allegedly supported by intentional 

delay of mail and falsification of records. 

We investigated, found problems of delayed mail 

existed due to personnel shortage, restrictions on 

overtime, and inexperienced management staff. 

When hiring restrictions were lifted, management 

resolved the delays. We did not substantiate 

allegations of intentional delay. 8/22/2007

Representative, Texas Delayed mail at a Texas post office. We investigated, found problems of delayed mail 

existed due to personnel shortage, restrictions on 

overtime, and inexperienced management staff. 

When hiring restrictions were lifted, management 

resolved the delays. We did not substantiate 

allegations of intentional delay. 8/22/2007

Representative, California Mail theft and concern about OIG role in 

resolving complaint.

We investigated, did not substantiate the allegation. 

We noted the delay was unusual, but alone was not 

conclusive of misconduct. 8/3/2007

Representative, Nebraska Alleged employee theft of mail a business has 

placed in mail stream. 

We reviewed, did not substantiate allegation against 

the employee. 7/9/2007

Senator, Pennsylvania Insufficient OIG support in investigating a 

retaliation complaint.

We investigated, found employee made a protected 

communication but did not find management 

retaliated. As the employee also had a pending EEO 

complaint, no further OIG action was indicated. 8/7/2007

Representative, New York Concerns about OIG investigation into mail 

theft complaint.

We worked on this case with the Office of the U.S. 

Attorney for the Northern District of New York and 

addressed all issues within our jurisdiction. 8/2/2007

Representative, Ohio Alleged mail tampering. We investigated, did not substantiate allegation. 9/14/2007

Audits

Requestor Allegation/Concern Our Findings Closure Date

Representative, Illinois The Subcommittee on Federal Workforce, Postal 

Service, and the District of Columbia requested to 

testify at a hearing on Thursday, May 31 at 10 a.m., 

in Room 2525 of the Dirksen Federal Courthouse, 

219 South Dearborn Street, Chicago, Illinois. 

Assistant Inspector General for Audit testified before 

the Subcommittee on Federal Workforce, Postal 

Service, and the District of Columbia on May 31.

5/31/2007

General Counsel

Requestor Allegation/Concern Our Findings Closure Date

Senator, Virginia Alleged hostile environment (stress, harassment, 

sexual harassment), retaliation, and misconduct at 

a P&DC. 

We did not substantiate allegations of a hostile 

environment, but noted management efforts to 

address the issues. Our investigation found no 

evidence of employee misconduct. 7/27/2007

Representative, Florida Employee requests documentation on medical 

clearances reviewed by the OIG.

We reviewed prior documents and determined they 

were correct. 5/4/2007

Representative, Texas Complaint with the handling of an injury claim by 

officials of the Injury Compensation Office at the 

Postal Service.

We conducted a review, but noted that the 

employee was actively pursuing the complaint 

through the equal employment opportunity process. 8/2/2007

Representative, Pennsylvania Employee alleges management created a hostile 

work environment at a post office.

We did not find sufficient evidence to support 

the allegations. However, we found employees 

perceived their work environment as hostile. At our 

request, management conducted an investigation 

and has made efforts to correct the issues. 6/14/2007

Representative, New Jersey Complaints about safety, harassment, and 

retaliation at a New Jersey postal facility, including 

making workers use outdoor portable toilets in 

freezing weather following a water main break.

We reviewed, found no indication that the 

workplace climate declined as a result of the 

portable toilets. Management is continuing to 

monitor the climate. 7/25/2007
April 1 — September 30, 2007 | 63

Representative, New Jersey Alleged safety issues, harassment, and retaliation at 

a New Jersey post office.

We reviewed, found no indication that the 

workplace climate declined as a result of the 

water main break. We made numerous 

unsuccessful attempts to reach complainant to 

identify specific incidents relating to the alleged 

hostile work environment. 7/25/2007

Representative, North Carolina Complainant disputes OIG finding not substantiating 

whistleblower complaint and seeks further review.

Our January report concluded there were not 

sufficient grounds to find that whistleblower 

retaliation occurred. Our Office of Investigations 

complied with statutory and regulatory 

requirements. 5/22/2007

Senator, Texas An employee expressed concern about allegations 

against carriers and about the stress on carriers to 

deliver more mail with fewer personnel.

We investigated, found substantial amounts of 

addressed but undelivered (delayed) mail. We 

shared our findings with management and verified 

the employee filed a grievance with the National 

Association of Letter Carriers union. Since the 

union is pursuing, we deferred to the union. 4/27/2007

Senator, Georgia Threatening behavior by manager in a 

Georgia P&DC.

Management conducted an inquiry and provided a 

copy of the final report. Found no threat of violence 

was made against either party. 8/7/2007

Representative, Iowa Employees allege postmaster is directing them to 

violate postal regulations in performance of duties.

We reviewed, did not substantiate allegations of 

violations. Our investigative findings regarding 

discarded mail was provided to management 

for disposition. 7/25/2007

Representative, Illinois On April 17, 2007, the Subcommittee on Federal 

Workforce, Postal Service, and the District of 

Columbia held an oversight hearing on the Postal 

Service. As part of the scope of this hearing, the 

subcommittee requested a copy of the full report 

drafted by the OIG on the investigation of Cintas.

Our FOIA office provided copies for hearing.

4/12/2007

Representative, Pennsylvania Alleged mail tampering. We reviewed, did not substantiate allegation. 4/30/2007

Representative, New York Alleged mail theft by postal employee. Our earlier investigation substantiated the allegation 

and we forwarded our findings to the U.S. Attorney 

for the Western Judicial District of New York. The 

U.S. Attorney declined prosecution; we made 

information available to another agency, which 

might want to pursue the matter. 5/22/07

Senator, California Request for OIG and GAO investigation of 

complainant’s removal from the Postal Service. 

Our Workplace Environment unit was unable to 

locate documentation addressing root causes of 

removal due to the age of the personnel action 

and unavailability of personnel records. We will 

review if contacts with postal sources yield 

responsive records. 5/31/2007

Representative, Georgia Alleged perjury by postal managers in a federal 

court case.

We reviewed, due to passage of time and 

unavailability of records, we declined to refer the 

matter for investigation. 6/19/2007

Representative, Connecticut Staffing decision at a post office allegedly violated 

the Civil Rights and Age Discrimination Acts.

We reviewed, found to be individual issues subject 

either to union grievance or EEO processes. No 

further work necessary. 6/21/2007

Representative, Connecticut Post office management allegedly discarded 

large amounts of political mail during fall 2006 

election season. 

We reviewed, did not substantiate allegations.

6/26/2007

Representative, Illinois Whistleblower retaliation. Matter was previously referred to the Office of 

Special Counsel for appropriate investigation. 7/3/2007

Representative, Arizona Alleged management created hostile environment 

and committed wide-ranging misconduct aimed at 

eliminating the mail handler craft in Mesa.

We reviewed, did not substantiate allegations.

9/25/2007

Appendix I
64 | Semiannual Report to Congress

Representative, California Alleged OIG investigators refused to recognize 

the right of union stewards to participate in 

the interrogations of employees, as provided in 

collective bargaining agreements.

Provided general information on OIG policy and how 

we ensure compliance.

9/6/07

Representative, Oklahoma Alleged retaliation. We reviewed, found employee had a pending EEO 

complaint. No additional work necessary. 9/13/2007

Representative, Georgia Alleged perjury by postal managers in a federal 

court case.

We reviewed, due to passage of time and 

unavailability of records, we declined to refer the 

matter for investigation. 9/19/2007

Representative, Florida Alleged an Inspector-in-Charge should be removed 

for instances of misconduct, including violation of 

the Health Insurance Portability and Accountability 

Act (HIPAA).

Outside of our jurisdiction, referred to the 

Inspection Service.

9/25/2007

Referrals

Requestor Allegation/Concern Referred To Closure Date

Representative, Iowa Postal Service non-compliance with Americans with 

Disabilities Act at local post office.

Government Relations Office

5/24/2007

Representative, Illinois Allegations neighbors used the mail to 

harass complainant.

Inspection Service

6/26/2007

Representative, Pennsylvania Postal Service improper refusal to honor insurance 

for an item sent through the mail.

Government Relations Office

7/24/2007

Representative, Virginia Correspondent has ideas that would benefit the 

Postal Service.

Government Relations Office

8/9/2007

Representative, Florida Legal questions concerning private-sector 

competition with the Postal Service on mail delivery.

Government Relations Office

8/29/2007

Representative, Virginia Alleged mail fraud. Inspection Service 9/13/2007
April 1 — September 30, 2007 | 65

supplemental in

formation

Freedom of Information Act

The Freedom of Information Act (FOIA) Office for the Postal Service Office of Inspector General operates independently of, but frequently coordinates with, 

its counterparts at the Postal Service and the Inspection Service. The FOIA Office receives requests for records from the public, the media, and Postal 

Service employees. The Freedom of Information Act, according to the Department of Justice, “generally provides that any person has a right, enforceable in 

court, to obtain access to federal agency records, except to the extent that such records (or portions of them) are protected from public disclosure by one of 

nine exemptions.”

Activities

For the period April 1 — September 30, 2007

Requests Number of Requests

Carryover from prior period 16

Received during period 173

Total on hand during period 189

OIG Actions Number of Requests

Processed during the period 155

Requests released in full 9

Requests partially granted 44

Requests not granted 26

Requests referred to another agency 51

No records 13

Not proper FOIA requests 10

Withdrawn 1

Other 1

Balance Number of Requests

Balance at the end of the period (pending) 34

Processing Days Number of Days

Median processing days to respond to a FOIA request 11

SUPPLEMENTAL INFORMATION
66 | Semiannual Report to Congress

Workplace Environment

For the period April 1 — September 30, 2007

The OIG’s Workplace Environment team receives referrals involving workplace environment and operational issues from multiple sources, which include the 

Hotline, Congress, the Board of Governors (BOG), and Postal Service and OIG management. Complaints reviewed by the team include sexual harassment; 

discrimination; harassment and intimidation; nepotism; mail delivery and processing; and workplace safety issues. Workplace Environment closely 

coordinates efforts with management to ensure employees a stress and adversity-free work environment. The team also reviews complaints received 

from OIG staff providing them with another avenue to report their concerns, in addition to the equal employment opportunity process. Once the review is 

completed, the team may issue a fact-finding report to OIG management.

Referrals Total

Carryover from prior period 28

Complaints received from OIG Hotline 287

Congressional/BOG/Postal Service management 5

Internal 15

Other 2

Total on hand during this period 337

Workplace Environment Actions Total

Complaints closed during the period 293

Referred to Postal Service management 64

Referred to OIG Office of Investigations 20

Referred to OIG Office of Audit 1

Summary of findings reported to Congress/BOG/Postal Service management 9

Conducted limited inquiry into allegations/issues 146

Referred to database for statistical analysis and possible systemic reviews 47

Fact-finding reports issued to OIG management 6

Referrals pending at the end of the period 44
April 1 — September 30, 2007 | 67

supplemental In

formation

Advance fee scheme – Obtaining fees purporting to 

secure buyers or obtain loans.

APC – Automated Postal Center, a kiosk that dispenses 

postage and provides several mailing services. APCs 

allow customers to weigh, calculate, apply exact postage, 

and ship Express Mail and Priority Mail items, packages, 

and First-Class letters right at the kiosks. They also 

provide easy access to postal products and services.

BMC – Bulk Mail Center where packages and standard 

mail are processed.

Bulk mail – Mail that is rated for postage partly by weight 

and partly by the number of pieces in the mailing. The 

term is generally used to refer to Standard Mail (A).

CPU – Contract Postal Units (CPU) are contractor-owned 

and operated facilities under contract to the Postal Service 

to provide selected postal services such as accepting mail 

and selling postage, supplies, and Postal Service money 

orders to the public. CPUs are usually located in a store or 

other place of business.

DPS – Delivery Point Sequence (DPS) provides mail in 

letter carrier route order with automation.

END initiative – The Evolutionary Network Development 

(END) initiative is the next step in the Postal Service’s efforts to create a flexible logistics network to reduce costs, 

increase overall effectiveness, and improve consistency of 

service. It is now known as Network Streamlining.

Express Mail service – A mail class that provides 

expedited delivery service for mailable matter subject to 

certain standards. 

False billings scheme – Mailing solicitations in the guise 

of billings.

FECA – Postal Service employees injured while performing 

their duties may be eligible for compensation under the 

Federal Employee’s Compensation Act (FECA).

FEHB – The Federal Employees Health Benefits (FEHB) 

program helps federal employees, retirees, and their 

survivors meet health care needs through a wide selection 

of health plans across the country.

First-Class Mail – A class of mail that includes all matter 

wholly or partly in writing or typewriting, all actual and 

personal correspondence, all bills and statements of 

account, and all matter sealed or otherwise closed against 

inspection. First-Class Mail comprises three subclasses: 

postcards, letters and sealed parcels, and Priority Mail.

Any mailable matter may be sent as First-Class Mail. 

First-Class Mail is a Postal Service trademark.

Flat–size mail – A mailpiece that exceeds one of the 

dimensions for letter-size mail (11-1/2 inches long, 6-1/8 

inches high, 1/4 inch thick) but that does not exceed the 

maximum dimension for the mail processing. Flat-size 

mail may be unwrapped, sleeved, wrapped, or enveloped.

Fraud Internet schemes – Fraudulent schemes using the 

Internet with a connection to the mail.

FY – Fiscal Year.

Highway contract routes – A route served by a postal 

contractor to carry mail by highway between 

designated points.

IEMP – The Postal Service’s Integrated Emergency 

Management Plan that improves coordination or planning 

and response activities among functional areas in the 

event of an emergency.

Lottery scheme – Advertisements seeking money or 

property by mail for participation in schemes to win prizes 

through chance.

Merchandise failure to pay scheme – Mail order 

merchandise acquired without providing payment.

Merchandise misrepresentation scheme – Mail order 

merchandise or services that are materially misrepresented in advertising.

OWCP – Administered by the U.S. Department of Labor, 

the Office of Workers’ Compensation Programs (OWCP) 

provides direct compensation to providers, claimants, 

and beneficiaries.

PCIE ECIE – The President’s Council on Integrity and Efficiency and Executive Council on Integrity and Efficiency 

(PCIE ECIE) address integrity, economy, and effectiveness 

issues that transcend individual government agencies.

This organization also seeks to increase the professionalism and effectiveness of IG personnel throughout 

the government.

Postal Act of 2006 – Abbreviation for the Postal 

Accountability and Enhancement Act passed by Congress 

in December 2006.

Postal Regulatory Commission (PRC) – An independent 

federal agency that makes recommendations on Postal 

Service requests for changes in postal rates and mail 

classifications. The five commissioners are nominated 

by the President and approved by the U.S. Senate. The 

name was changed from Postal Rate Commission on Dec. 

20, 2006.

Postal Reorganization Act – The statute that requires 

postal rates and fees to “provide sufficient revenues so 

that the total estimated income and appropriations...

will equal as nearly as practicable total estimated costs.” 

(Public Law 91-375, signed August 12, 1970.)

Priority Mail – First-Class Mail that weighs more than 

13 ounces and, at the mailer’s option, any other mail 

matter weighing 13 ounces or less. Priority Mail provides 

expedited delivery.

Processing and Distribution Center/Facility (P&DC

/F) – A central mail facility that processes and dispatches 

part or all of both incoming mail and outgoing mail for a 

designated service area. It also provides instructions on 

the preparation of collection mail, dispatch schedules, and 

sorting plan requirements to mailers.

Glossary
68 | Semiannual Report to Congress

The following are among the many trademarks owned by the United States Postal Service: United States Postal Service®, U.S. Postal Service®, USPS®, First 

Class Mail®, USPS.com®, Click-N-Ship®, Automated Postal Center®, APC®, Express Mail®, Priority Mail®, Standard Mail®, Parcel Post®, The Postal 

Store®, Media Mail®, Customized Market Mail®, United States Postal Service Office of Inspector General®, Post OfficeTM, Postal ServiceTM, Signature 

ConfirmationTM, Certified MailTM, Delivery ConfirmationTM, Registered MailTM, Post Office BoxTM, ZIP CodeTM, Carrier PickupTM, and Postmaster GeneralTM.

The Sonic Eagle Logo, and the Mail Truck Design are also registered trademarks belonging to the U.S. Postal Service.

Retail facility – A postal unit of a Post Office and its 

subordinate units as well as military Post Offices that sell 

postage stamps and provide other postal retail services 

to customers. The subordinate units are within the 

service area of a main post office and include post office 

stations, post office branches, contract postal units, and 

nonpersonnel units.

SmartPay Purchase Card – SmartPay Purchase Cards 

are how the Postal Service acquires goods and services 

through contracts.

Standard Mail – A class of mail that includes advertisements, circulars, newsletters, magazines, small parcels, 

and merchandise.

Unsupported costs – Costs that are questioned because 

of inadequate supporting documentation for the proposed/ 

claimed costs.

Verification – Process to check a mailing presented 

by a mailer to determine proper preparation and 

postage payment.

Value proposition – Develops audit work that maximizes 

benefits to the Postal Service and assists top management 

in reaching their goals.

Voyager Fleet Cards – These are credit cards are used 

by postal employees to acquire automotive goods and 

services, such as gasoline or repairs.

Work at home scheme – Schemes, such as envelope 

stuffing, that falsely purport to provide home employment.
April 1 — September 30, 2007 | 69

NOTES
70 | Semiannual Report to Congress

NOTES
office of inspector general

Report 

Fraud, Theft, and Misconduct 

in the Postal Service

Contact the Hotline at:

1.888.USPS.OIG

1.888.877.7644 

Fax: 1.866.756.6741

or www.uspsoig.gov

TTY (HEARING IMPAIRED)

1.866.OIG.TEXT

1.866.644.8398
U.S. Postal Service OFFICE OF INSPECTOR GENERAL

1735 N. Lynn Street, Arlington, VA 22209-2020 

703.248.2100 Fax: 703.248.2291 Internet: www.uspsoig.gov

Promoting Integrity and Accountability