Office of Inspector General

Semiannual Report to Congress

April 1 — September 30, 2011
Not since the mail crisis of the 1960s, when the Chicago Post Office ground to a halt and citizens lost 

confidence in the mail, has the fate of the nation’s postal system captured the attention of the American 

public. That crisis 40 years ago provided the impetus for Congress, the administration, and postal 

management to work toward a massive overhaul of a system steeped in neglect and patronage. It led to 

the reorganization of the old Post Office Department into today’s self-supporting U.S. Postal Service. This 

history lesson reminds us that difficult times can lay the foundation for much-needed change. 

The Postal Service’s current financial troubles are of an historic proportion. As it struggles with record 

losses and burdensome federal benefits payments, it must adapt its business model for a new era of 

communications. These struggles have landed the Postal Service and its efforts on the front pages of 

newspapers and evening newscasts. But these news reports don’t always reveal the full depth or breadth 

of the Postal Service’s challenges; nor its opportunities for success. 

In our semiannual report for the period ending September 30, 2011, submitted pursuant to the Inspector 

General Act, we consider the vast array of current and future challenges facing the Postal Service. We also 

reflect on potential solutions to these challenges, some of which rest in the Postal Service’s hands, while 

others will require assistance from Congress and the administration. We look at the Postal Service’s recent 

plans to right-size its infrastructure, and we present some of our own work around network optimization. 

In many cases, our work supports the Postal Service’s recent conclusions. In some instances, though, we 

recommend even more aggressive action.

From our ongoing work we summarize ways the Postal Service could further reduce its costs and note 

opportunities for it to gain traction in a fast-changing digital market. In the second half of the report, we 

highlight audits and reviews that address risks in the strategic, financial, and operational areas of the 

Postal Service. We also include investigations conducted during this reporting period that contributed to 

safeguarding the Postal Service’s revenues and assets and helped deter postal crimes.

We have appreciated the Postal Service’s willingness to engage in collaborative and complementary efforts 

with our office on the major questions before the organization.

Postal Service executives often work closely with their Office of Inspector General (OIG) counterparts 

to identify problems and collaborate on solutions, which this report highlights. These efforts have 

resulted in significant savings opportunities. During this period, we issued 196 audit reports and 

management advisories, and the Postal Service accepted 90 percent (117 of 130) of the OIG’s significant 

recommendations. 

Our traditional OIG role of rooting out fraud, waste, and misconduct to protect the Postal Service’s bottom 

line and maintain confidence in the mail is also highlighted in this report. Our dedication to integrity, 

accountability, and transparency means that no person in the organization is above the law or immune 

from the ethical standards set by the Postal Service. In this period, we conducted 2,129 investigations that 

A MESSAGE FROM THE INSPECTOR GENERAL
led to 333 arrests and nearly $21 million in fines, restitutions, and recoveries, of which about $11 million 

went to the Postal Service. 

This year marks our 15th year as an independent Office of Inspector General for the Postal Service. We 

have evolved from a traditional OIG to one that leverages innovation, technology, and collaborative tools. 

We have fostered a “mission-oriented” environment, which focuses on assignment-based evaluations 

and performance metrics. This approach centers more on outcomes and outputs, rather than behavioral 

management. We also rely on technology, such as data mining and game-theory modeling, to look at the 

whole agency and target the biggest problems for further probing. These tools allow us to spot potential 

problems before they occur and set up preventive measures. 

The OIG — with the support of the Governors, Congress, and Postal Service management — 

will continue to play a key role in maintaining the integrity and accountability of America’s postal service, its 

revenue and assets, and its employees through its audit and investigative body of work.

David C. Williams

Inspector General
SUMMARY OF PERFORMANCE

April 1 — September 30, 2011

AUDITS

Reports issued 196

Significant recommendations issued 130

Total reports with financial impact 38

Funds put to better use $11,468,105,234 

Questioned costs $2,008,390,107 

Revenue Impact $2,226,560,093 

TOTAL FINANCIAL IMPACT $ 15,703,055,434

INVESTIGATIONS1

Investigations completed 2,129

Arrests 333

Indictments/informations 342

Convictions/pretrial diversions2 355

Administrative actions 1,105

Cost avoidance $81,651,755

Fines, restitutions, and recoveries $20,989,706

Amount to Postal Service3 $11,014,849

OIG HOTLINE CONTACTS

Telephone calls 34,291

E-mail 16,949

Standard Mail 1,122

Voice mail messages 356

Facsimile – FAX 257

National Law Enforcement Communications Center 307

TOTAL CONTACTS 53,282

1

 Statistics include joint investigations with other law enforcement agencies.

2

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

3

 Amounts include case results of joint investigations with other OIG, federal, state, and local law enforcement entities.
TABLE OF CONTENTS

Acronym Guide ............................................................................................................................................................ 2

Mission Statement ....................................................................................................................................................... 3

THE ROAD AHEAD ............................................................................................................5

Financial Management ................................................................................................................................................. 6

Optimization of the Network.......................................................................................................................................... 7

Simplification............................................................................................................................................................. 10

Modernization through Innovation................................................................................................................................ 11

SIGNIFICANT AUDIT WORK BY RISK CATEGORY...............................................................14

Strategic Risk ............................................................................................................................................................ 14

Financial Risk ............................................................................................................................................................ 15

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

SIGNIFICANT INVESTIGATIVE WORK................................................................................22

Financial Crimes........................................................................................................................................................ 22

Workers’ Compensation Fraud.................................................................................................................................... 23

Delay, Destruction, and Theft of Mail By Employees...................................................................................................... 25

Contract Fraud........................................................................................................................................................... 26

Official Misconduct .................................................................................................................................................... 26

Executive Investigations and Internal Affairs................................................................................................................. 27

APPENDICES..................................................................................................................29

APPENDIX A — Reports with Quantifiable Potential Monetary Benefits.......................................................................... 30

Report Listing.................................................................................................................................... 33

APPENDIX B — Findings of Questioned Costs............................................................................................................. 39

APPENDIX C — Recommendations That Funds Be Put to Better Use............................................................................. 40

APPENDIX D — Other Impacts ................................................................................................................................... 41

APPENDIX E — Reports with Significant Recommendations Pending Corrective Actions................................................. 43

APPENDIX F — Significant Management Decisions in Audit Resolution ......................................................................... 62

APPENDIX G — Status of Peer Review Recommendations............................................................................................ 62

APPENDIX H — Investigative Statistics........................................................................................................................ 63

APPENDIX I — Summary of U.S. Postal Inspection Service Investigative Activities Under Title 39 USC 3005 & 3007....... 64

APPENDIX J — Closed Congressional and Board of Governors’ Inquiries....................................................................... 65

SUPPLEMENTAL INFORMATION ......................................................................................70

Freedom of Information Act......................................................................................................................................... 70

Workplace Environment.............................................................................................................................................. 70
2 | Semiannual Report to Congress

APPS: Automated Package Processing System

APWU: American Postal Workers Union

C&A: certification and accreditation

CSRS: Civil Service Retirement System

CSS: customer service supervisor

DBCS: Delivery Barcode Sorter

DOL: U.S. Department of Labor

DEA: Drug Enforcement Administration

DWC: distribution window clerk

eCBM: Electronic Conditional Based Maintenance

EDDI: Electronic Data Distribution Infrastructure

EDI: Electronic Data Interchange

EIR: Enterprise Information Repository

FEGLI: Federal Employees’ Group Life Insurance

FEHB: Federal Employees Health Benefits

FSS: Flats Sequencing System

GMU: George Mason University

HCR: highway contract route

LLV: long-life vehicles

MTE: mail transport equipment

NALC: National Association of Letter Carriers

NCSC: National Customer Support Center

NDC: network distribution center

NPV: net present value

OA: Office of Audit

OI: Office of Investigations

OWCP: Office of Workers’ Compensation Programs

P&DC: processing and distribution center 

P&DF: processing and distribution facility

PAEA: Postal Accountability and Enhancement Act of 2006 

(also known as the Postal Act of 2006)

PKI: Public Key Infrastructure

PRC: Postal Regulatory Commission

PVS: Postal Vehicle Services

RARC: Risk Analysis Research Center

SBOC: Stations and Branches Optimization Consolidation

SSA: sales and services associate

TACS: Time and Attendance Collection System

VMF: Vehicle Maintenance Facility

Acronym Guide

Here is a quick guide to acronyms used in this reporting period.

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-NShip®, Automated Postal Center®, APC®, Express Mail®, Priority Mail®, Standard Mail®, Parcel Post®, Media Mail®, Customized MarketMail®, Intelligent Mail®, Parcel Select®, Express 

Mail International®, Quick, Easy, Convenient®, United States Postal Service Office of Inspector GeneralTM, Post OfficeTM, Postal ServiceTM, Signature ConfirmationTM, Certified Mail®, Delivery 

ConfirmationTM, Registered MailTM, ZIP CodeTM, Carrier PickupTM, Priority Mail International®, First-Class Mail International®, Premium Forwarding Service®, Forever Stamp® and Postmaster 

GeneralTM. 

ACRONYM GUIDE
April 1 — September 30, 2011 | 3 

MISSION STATEMENT

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.

MISSION STATEMENT

April 1 — September 30, 2011 | 5 

The Postal Service faces the most difficult operating 

period in its 235-year history. The ways in which 

Americans communicate have changed dramatically in 

the past decade, with businesses and consumers readily 

adopting new technologies that allow for instantaneous 

communications. Today, 60 percent of Americans pay 

their bills online compared to just 5 percent a decade 

ago. Consumers are becoming increasingly comfortable 

relying on their cell phones and smart devices to 

conduct a variety of transactions, including those they 

used to do by mail. Mobile phone and smart device 

usage has skyrocketed in the past decade and reached 

near saturation levels in the United States, as we now 

have more wireless devices than citizens. 

The Postal Service’s storied past includes an impressive 

track record of success in the face of competing 

communications technologies, such as the telegraph, 

telephone, and fax machine. But the current situation 

is different. The digital revolution is not the only threat 

to the Postal Service’s long-term viability. A weakened 

economy has taken a toll on mail volumes and revenue, 

and multiple statutory requirements that direct how the 

Postal Service funds its benefits plans pose a unique 

challenge to the Postal Service. It has exhausted its 

borrowing authority and it expects mail volume to 

continue to decline. By the middle of 2012, the Postal 

Service may not be able to pay its bills. 

The Postal Service ended fiscal year (FY) 2011 with a 

net loss of $5.1 billion, bringing its 5-year net losses 

to a staggering $25 billion. While most of the losses in 

the past 5 years were due to the statutorily mandated 

schedule to prefund retiree health benefits, downward 

trends in mail volume and revenue have also contributed 

to the current position. Mail volumes in FY 2011 

declined another 3 billion pieces to 168 billion, dropping 

total mail volume to levels not seen since 1992. Since 

2007, mail volume has dropped about 44 billion pieces.

 A lack of significant volume growth and a statutorily 

imposed price cap on most products (including those 

that do not cover their costs) restrict the Postal Service’s 

ability to earn sufficient revenues to cover its current 

costs. In short, the monopoly no longer pays for 

universal service. 

Dramatic change is 

needed for the Postal 

Service to remain 

viable into the 21st 

Century.

The implications of a 

failed Postal Service 

are enormous. First, 

the Postal Service is 

the one government 

agency that touches 

every American 

on a daily basis. It 

provides affordable, 

accessible, and 

universal service 

to 150 million 

addresses, six days a 

week. When a natural 

disaster strikes a 

region of the country, 

the Postal Service is 

often the only option for communicating with displaced 

citizens. The Postal Service’s address management 

system is the government’s tool for supporting and 

informing victims, and for guarding against fraud. 

Secondly, the Postal Service is the foundation of a $1 

trillion mailing industry that employs about 8.7 million 

people and makes up 7 percent of the Gross Domestic 

Product. The Postal Service is the linchpin of a marketing 

and distribution system through which small and large 

businesses, nonprofit organizations, and consumers 

can transact business, advertise services, and distribute 

products. It is a major driver of the nation’s economic 

engine and an essential piece of its infrastructure. 

The Postal Service has endured multiple economic 

recessions and a Great Depression. It has dealt with 

numerous disasters, both natural and man made, 

which have interfered with mail delivery and strained 

the infrastructure. It has responded to these ordeals by 

adapting and thriving, often despite popular predictions 

THE ROAD AHEAD

THE ROAD AHEAD

Americans are growing increasingly comfortable 

using their mobile phones and smart devices to 

communicate and conduct transactions.
6 | Semiannual Report to Congress

of expected failure or even its demise in the face of 

competition from new technologies.

The Postal Service can survive these current challenges, 

as well, but only with considerable change to its existing 

structure. As Postmaster General Patrick Donahoe 

concluded in testimony before a Senate oversight 

committee in September, “The Postal Service requires 

radical changes to its business model if it is to remain 

viable into the future.”

Our work indicates that the Postal Service can make 

the necessary improvements to remain a valuable 

communications infrastructure, although the challenges 

are significant and the solutions not always universally 

popular or easy to implement. The solutions fall into four 

broad areas:

 Financial management

 Optimization

 Simplification

 Modernization through innovation

This semi-annual report to Congress shares some of 

the insights we have gained from our extensive work 

reviewing these challenges and the Postal Service’s key 

strategic initiatives to address them.

FINANCIAL MANAGEMENT

Despite its current liquidity crisis, the Postal Service has 

managed its cash skillfully for 40 years, setting aside an 

unprecedented pension and health benefit prefunding of 

$312 billion, which is substantially more than the federal 

government and private sector. Among the actions it has 

taken to conserve cash:

 It has reduced labor costs, including a 34 million 

workhour reduction in FY 2011. The result is an 

estimated $1.4 billion in annual savings.

 Effective June 24, 2011, it suspended employer 

contributions for the defined benefit portion of the 

Federal Employees Retirement System (FERS) funding 

requirement, which is already overfunded by nearly 

$7 billion, conserving about $114 million every pay 

period (two weeks).

 It has increased the sales of property and equipment 

in FY 2011. Facilities revenues increased 23 percent 

over FY 2010. 

The problem is that the Postal Service cannot currently 

generate sufficient funds to cover its expenses as it 

optimizes. Historically, it has paid for operations, its 

universal service obligation, the address management 

system, discounts, and unfunded mandates, such as the 

Alaska Bypass program, from revenues on the sale of 

postage and services. With volume in a steady decline 

and high fixed costs in its network and in delivery, the 

Postal Service cannot now cover its costs through the 

sale of postage. Ultimately, substantial elements of the 

finances necessary for the Postal Service’s sustainability 

are not under its own control. Devastating federal 

requirements for benefits prefunding and an aggressive 

payment schedule mandated by law have threatened 

the Postal Service’s ability to carry out its mission to the 

American public. The Postal Service cannot meet all of 

its required tasks and make huge contributions to retiree 

benefits plans while keeping price increases under the 

rate of inflation. Congress will have to act to free the 

Postal Service to secure its financial viability. 

In September, Congress provided an extension to the 

Postal Service for making its required $5.5 billion 

prefunding payment into its Retiree Health Benefits Fund 

(RHBF). The delay served to make the Postal Service’s 

FY 2011 bottom line look less dismal, but it merely 

postponed its cash depletion until later in 2012. Without 

comprehensive legislation, large losses will continue into 

the foreseeable future. 

Our office has done a series of reports on the Postal 

Service’s pension and retiree health plans, which 

highlighted the exaggerated estimates, substantial 

FINANCIAL MANAGEMENT

Civil Service Retirement System Prefunding None until 2017

Federal Employee Retirement System Prefunding, 2010 $2.9 B

Health Care Premiums for Retirees, 2010 $2.2 B

Health Care Prefunding Payment, 2010 $5.5 B

Workers’ Compensation Payment, October 2011 $1.2 B

Current Employees Health Benefits $5.1 B

Thrift Savings Plan Contributions $1.0 B

Social Security Contributions $1.9 B

TOTAL $19.8 B

Postal Service Annual Pension/Benefits/Disability Payments
April 1 — September 30, 2011 | 7 

OPTIMIZATION OF THE NETWORK

overcharges, and excessive prefunding levels. Our 

reports found:

 The Postal Service has overpaid the Civil Service 

Retirement System (CSRS) by $75 billion. 

 The Postal Service has overfunded the Federal 

Employee Retirement System (FERS) by $6.9 billion, a 

fact that the Office of Personnel Management (OPM) 

recognizes and is willing to fix. 

 If the $82 billion in overcharges were applied to the 

RHBF, prefunding levels would already exceed 100 

percent prefunding by a wide margin. Once the plans 

are fully funded, the Postal Service could stop making 

the payments and annual expenses would come out 

of the funds as intended. The funds will continue 

receiving income from current contributions and 

interest from the Treasury Department.

 Putting the overfunding aside, the Postal Service 

has set aside about $312 billion for its pension 

and healthcare liabilities, or about 80 percent of an 

unprecedented goal of 100 percent prefunding. 

We also reviewed the Postal Service’s significant 

real-estate holdings, which include buildings and land 

in every major city, resort town, and high-rent district 

in the country. One solution would be to take the Postal 

Service’s real-estate holdings into consideration for 

prefunding and declare these funds operational so the 

Postal Service could stop making payments into them. 

These assets could be turned over to the Treasury 

Department to pay the remaining unfunded liabilities in 

the unlikely event that the Postal Service went out of 

business. Prefunding was intended to address future 

obligations, so now that they are fully funded, declare 

them adequate and begin operating the funds. An 

alternative use of the overfunding would be for the 

Postal Service to explore using that money to buy credit 

years for workers willing, but unable, to retire. 

These solutions would free up significant funds for 

operations and provide much needed time for the Postal 

Service to optimize its infrastructure and address the 

major challenges it faces in a more stable environment, 

allowing proper project management and planning. 

OPTIMIZATION OF THE NETWORK 

The Postal Service has about 32,000 retail offices where 

products, postage, and services are sold, and more than 

500 processing facilities that sort mail for distribution 

to carrier units. It has about 557,000 total career 

employees, the lowest complement in more than 25 

years. While it has reduced its head count significantly 

over the past decade, the physical network has changed 

little in that time despite how Americans’ mailing habits 

have changed. First-Class Mail volumes have dropped 

by nearly 30 percent in the past decade and Americans 

make fewer trips to the Post Office, yet the retail 

network has remained largely unchanged. In fact, the 

Postal Service’s retail network is essentially the same 

one it has had since the 1970s. Similarly, its processing 

network was built to handle a different amount and type 

of mail, but it too has seen only marginal changes in 

the past few years. It relies on a patchwork of delivery 

modes without utilizing a rational plan. Optimization of 

the network is overdue.

The Postal Service recently announced major changes 

to its network and workforce, with plans to study nearly 

3,700 Postal Service-operated retail facilities in the 

near term and many others beyond, and also to study 

252 processing plants for closure. It has targeted a 

workforce reduction of about 220,000 people through 

attrition and layoffs through 2015. Our studies support 

these actions and encourage further examination of the 

network so that the infrastructure is suitably sized and 

positioned to provide the levels of service needed in 

Congress provided an extension to the Postal Service for making 

its required $5.5 billion prefunding payment into its Retiree Health 

Benefits Fund.
8 | Semiannual Report to Congress

OPTIMIZATION OF THE NETWORK

today’s environment. Many of the Postal Service’s recent 

proposals promote solutions that are similar to those 

recommended in our work on modernizing the retail, 

mail processing, transportation, and delivery networks. 

Human Capital

Despite a high-degree of automation, mail remains 

labor-intensive. Labor costs comprise nearly 80 percent 

of the Postal Service’s costs, which implies that the 

Postal Service must cut its labor costs to achieve 

substantive savings. In practice, cutting labor costs in 

concert with volume decline is challenging due to the 

Postal Service’s significant fixed cost structures. Still, 

the Postal Service has done a good job of matching its 

workforce to its workload, cutting workhours by 477 

million and reducing its number of career employees by 

more than 230,000 since 2000. 

Since 1972, the total cost of benefits rose an 

astounding 448 percent above inflation, while real 

wage expenditures declined by nearly 3 percent. This 

extraordinary increase is the result of three factors: a 

general trend toward higher benefits costs that affects 

most U.S. companies; the gradual transfer of postal 

retiree benefits costs from the federal government to 

the Postal Service; and finally, the repeated overcharges 

for these same retiree benefits costs.

Retail

The Postal Service’s 32,000 retail outlets number more 

than the domestic locations of Wal-Mart, McDonalds, 

and Starbucks combined. More than 35 percent of the 

Postal Service’s retail revenue comes from expanded 

access locations, such as grocery stores, drug stores, 

office supply stores, self-service kiosks, and 

usps.com. The current Postal Service-operated retail 

facility network substantially exceeds demand by 

customers. The Postal Service recently unveiled its plan 

to shrink the retail network by closing low-activity retail 

offices, yet providing customers greater retail access 

through its Village Post OfficeTM concept, which would 

allow local merchants to sell stamps and flat-rate 

packaging. Its proposal to close 3,652 Post Offices is a 

first step in realigning the retail network but many more 

closures must be considered in the near future. 

Our work suggests that one third of Post Offices 

should be examined to be sure they are needed. We 

collaborated on a study with a respected economist 

to develop an optimization model that aligns demand 

and supply. The study indicated that the Postal Service 

has too many retail facilities located too close together, 

especially in small towns and rural areas. The study 

found that large urban areas appear to have the optimal 

amount and location of retail units, but the number 

of open windows and staffing may be too low, which 

results in lost revenue. 

Mail Processing

The current mail processing network represents 12 

percent of the Postal Service’s operating expenses. Built 

for much larger volumes of mail and before the advent of 

automation and worksharing, the network has an excess 

of plants and capacity. The Postal Service has the legal 

authority to close plants, but political resistance has 

made it difficult to close or consolidate these facilities. 

Despite a decline of 44 billion pieces of mail since 2007 

and a reduction of almost 128,000 career employees, 

the Postal Service has closed only 14 major processing 

facilities in that time.

The network also was designed to meet specific service 

standards for First-Class Mail, notably, overnight delivery 

within certain distances. But the need for this level 

of service has declined as business transactions and 

personal correspondence move to electronic alternatives. With 32,000 retail offices, the Postal Service has more retail outlets than the U.S. 

stores of Wal-Mart, McDonalds, and Starbucks combined. Pictured are Post Offices 

near ZIP Code 20036 using the usps.com locator tool.
April 1 — September 30, 2011 | 9 

OPTIMIZATION OF THE NETWORK

As a result, relaxed service standards would also change 

the extent of the network required. 

The Postal Service is in the process of studying 

252 plants for closure, including 58 processing and 

distribution centers (P&DCs), and making First-Class 

Mail primarily a 2- to 3-day service for the contiguous 

states. Our work in this area suggests the Postal Service 

could operate with fewer than 200 major processing 

facilities. Our white paper, A Strategy for a Future Mail 

Processing and Transportation Network, took a “green 

field” approach to consider what the optimal network 

would be if the Postal Service were being established 

today. Using simulation models to design a network for 

future mail volume, we determined the Postal Service 

would need about half the number of major P&DCs 

it currently operates, with a small number of those 

being used as hubs to route mail between plants. The 

model, moderated by actual plant location, is useful in 

determining the needed capacity. 

Transportation

The Postal Service’s transportation and logistics 

network, representing about 9.3 percent of operating 

expenses, is one of the largest in the world, reaching 

every community, town, and city in the United States. 

Network transportation costs the Postal Service more 

than $6 billion annually: air transportation is almost $3 

billion; surface transportation is $3.3 billion; and other 

transportation is $50 million. The Postal Service has cut 

its transportation costs over the years and continues to 

target it for cost control while still meeting or exceeding 

service standards. 

As the Postal Service’s network changes, so will its use 

of transportation. As it closes mail processing facilities, it 

will need to reroute trucks and haul mail differently than 

it does today. Likewise, incentives the Postal Service 

gives mailers to enter mail at various locations should 

reduce the Postal Service’s transportation usage and 

costs. Implementation of its Network Distribution Center 

(NDC) plan has helped the Postal Service to capture 

savings estimated at $135 million over the past several 

years as the NDC plan reduced the number of surface 

transportation routes and encourages a shift of mail 

from higher-cost air transportation to lower-cost ground 

transportation. Similarly, the proposed elimination of the 

overnight service standard for First-Class Mail should 

allow the Postal Service to structure its transportation 

network more efficiently. Fewer facilities require less 

staffing, another opportunity for cost savings. The OIG 

has assisted the Postal Service in reducing network 

transportation costs by recommending increased 

controls over its fuel purchasing program and by 

recommending route reductions and other efficiencies 

in its postal vehicle services and highway contract route 

operations. 

With less mail to process and a gradual shrinking of its 

workforce, the Postal Service also needs to consider how 

best to structure overall management of the operation. 

It may no longer make sense to have seven area offices 

and 67 districts. A better use of resources might be to 

fold area operations into Postal Service Headquarters, 

since the primary responsibility of the areas is to collect 

data for headquarters. Reducing area operations and 

consolidating more of the 67 districts would provide 

an opportunity for the Postal Service to streamline its 

management structure as well as reduce costs. A fresh 

look at the entire organization is necessary, which 

should also consider eliminating management and 

mission support redundancies. It may be time to review 

the two parallel investigative organizations and withdraw 

substantial resources from nonpostal investigations. 

There remain many opportunities to better manage the 

network using the detailed data that the Postal Service 

collects through scanning of the Intelligent Mail Barcode 

(IMb). The IMb is expected to increase mail visibility, 

enhance revenue verification, accountability, and delivery 

predictability, as well as help drive improvements in 

service performance and customer satisfaction. This 

information should help the Postal Service in a number 

of areas, from managing service performance to 

Delivery is now the highest fixed cost in the system, making up more than 30 

percent of the Postal Service’s operating expenses.
10 | Semiannual Report to Congress

protecting revenue to 

assisting in contingency 

planning. The business 

intelligence available to 

mailers from the IMb 

will help them focus 

their future marketing 

campaigns, which 

increases mail’s value 

and helps keep it 

viable. 

Delivery

The role of the letter 

carrier remains critical 

to maintaining a 

strong infrastructure 

and a high level of 

service and customer 

satisfaction. For many 

citizens, the letter carrier is the “face” of the Postal 

Service. More importantly, delivery to the “last mile” – 

to the mailbox at a home or business – is at the heart 

of the Postal Service’s business. But the loss of mail 

volume presents the need for a paradigm shift in the 

carrier workforce as well. Mail volumes are shrinking, 

but delivery points continue to grow at about 1 million 

per year, increasing delivery costs while income per stop 

declines. Delivery is now the highest fixed cost in the 

system, making up 33 percent of the Postal Service’s 

operating expenses. 

This changing dynamic begs for a carrier compensation 

system that maximizes efficiency and minimizes the 

need for constant supervision. The current inability to 

consistently use compensation systems to efficiently 

manage letter carriers, who spend most of their time on 

the street rather than in the office, is costly. 

We estimate the Postal Service could potentially save 

more than $2.5 billion annually if it changed city letter 

carrier compensation to match the compensation for 

rural carriers. Such a change could also incentivize 

efficient performance. Additional potential savings could 

occur if optimum standards for carrier performance are 

developed and used to design a compensation system 

that is focused on maximum efficiency. As part of the 

developement of these standards, contract routes should 

be considered, where appropriate, as these are less 

costly per delivery than either city or rural carrier routes.

 The Postal Service considers its proposal to deliver mail 

only 5 days a week a key strategy in its cost-savings 

plan. Its studies indicate it would save about $3 billion a 

year by eliminating Saturday delivery, while its regulator, 

the Postal Regulatory Commission, has estimated the 

savings at closer to $1.9 billion annually. We have not 

studied the 5-day delivery issue, but we have promoted 

the concept of developing a comprehensive delivery 

strategy. The current delivery modes have been pieced 

together over many years, lacking rationalization. The 

OIG has recommended that the Postal Service develop 

a strategy that rationalizes the modes of delivery with 

an increased reliance on curbside delivery, which would 

save the Postal Service up to $4.5 billion a year. Future 

strategies should consider conversion from curbside to 

centralized delivery mode, such as cluster boxes, for as 

much as an additional $5.1 billion in savings. 

These changes in delivery modes would not require 

congressional legislation as a move from 6-day delivery 

to 5-day delivery would. While delivery mode changes 

would not be easy, they should not be dismissed simply 

because they are difficult to implement. As the Postal 

Service’s largest cost center, delivery needs a strategic 

review.

SIMPLIFICATION

The Postal Service provides competitively priced 

products with good service. Advertising mail is among 

the most targeted and personal forms of marketing 

available, and at affordable prices. The Postal Service 

offers the low-cost alternative for package shipping. And 

it handles trillions of dollars of transactions, including 

payments of more than one half of America’s household 

bills. 

However, potential new customers often find barriers to 

entry too high. With more than 7,600 domestic prices 

for three product lines – letters, flat mail, packages 

– and about 1,700 pages of regulations, mail can be 

overwhelming for the uninitiated. The Postal Service 

needs to simplify its mail entry rules and price structure, 

so that ease of use is the priority. Simplicity would 

encourage new customers to try mail and persuade 

existing customers to expand their usage. 

Our work found that simplification of the rate structure 

and rules would help lift the barriers to entry. Too much 

complexity exists:

SIMPLIFICATION

Our work determined that moving from existing door-to-door 

delivery to curbside and cluster-box delivery methods could save 

the Postal Service billions of dollars in annual delivery costs.
April 1 — September 30, 2011 | 11 

MODERNIZATION THROUGH INNOVATION

 2,361 domestic prices (31%) were not used in 

FY 2010 and another 1,237 domestic prices (16%) 

had a volume of less than 10 pieces. 

 Mailing Standards of the United States Postal Service 

Domestic Mail Manual, the compendium of mailing 

regulations, has more than 1,700 pages and grows 

with each update. This massive tome cannot be edited 

to a realistic size or scope. The Postal Service needs 

to start with a blank sheet of paper and a room full of 

customers in overhauling its mailing regulations.

 Old price-setting systems rely on statistical sampling 

for setting prices even though the Postal Service 

collects real-time data now from the IMb and by 

machine scanning of mailpieces. 

 Postal price setting has not fundamentally changed in 

40 years, despite passage five years ago of the Postal 

Accountability and Enhancement Act that set out to 

modernize the Postal Service’s system for setting 

prices. 

It is time to consider a new model for measuring costs 

and pricing products. The IMb allows for extensive data 

collection, which suggests it could one day supplement, 

or replace, today’s method of statistical sampling for 

measuring costs. The Postal Service appears focused on 

improving costing systems and working toward simplicity 

in pricing and mail preparation. Simplicity would also 

serve to improve revenue assurance, as complicated 

mail preparation rules confuse not only mail users but 

mail acceptance personnel as well. 

MODERNIZATION THROUGH INNOVATION

As an institution older than the nation itself, the Postal 

Service has adapted well to changing technologies 

and times. Throughout its history, the Postal Service 

has embraced new transportation technologies, such 

as steamboats, rail and air travel, often boosting these 

burgeoning industries in the process. The Postal Service 

also adopted automation technologies, shifting from a 

highly manual system to one that relies on equipment to 

handle and sort mail more efficiently. 

The Postal Service now finds that it can’t merely adapt 

to a changing market, it also must innovate. The digital 

revolution has changed the landscape dramatically. 

Expanding the Postal Platform

From the Internet to the digital economy, the worlds of communications, 

transportation, and commerce are fundamentally changing. This “digital revolution,” 

in combination with the Great Recession of 2008 and 2009, has had a significant 

impact on postal operators around the world, resulting in a steep decline in personal, 

business, and advertising mail volumes. We analyzed the changing digital landscape, 

the new world of communications, and the Postal Service’s new role in the white 

paper The Postal Service Role in the Digital Age – Part 1: Facts and Trends. Building 

on that first white paper, The Postal Service Role in the Digital Age – Part 2: 

Expanding the Postal Platform presents a strategic positioning framed by three guiding 

principles:

 Promoting solutions for the communications problems of the digital age.

 Using the core competencies and assets of the Postal Service.

 Considering the policy implications of the strategy based on the current legal and 

regulatory environment.

The paper suggests employing an “eMailbox” that links a physical address to an 

electronic mailbox for every citizen and business. The Postal Service could build 

a digital platform that supports communications and commerce for postal, governmental, and commercial 

applications. The paper provides six additional initial applications for consideration, including an eGovernment 

application that promotes the expansion of government services throughout the postal platform; tools for 

identity validation, privacy protection and transaction security; and hybrid and reverse hybrid mail that allow 

senders and receivers to convert digital documents to physical and physical documents to digital.
12 | Semiannual Report to Congress

IMODERNIZATION THROUGH INNOVATION

Many Americans have embraced the digital age and 

globalism, reshaping how they communicate, recreate 

and work, and how businesses market to them. We live 

and work in a global community, where communications 

have no national borders. These economic and 

communications shifts reduce our use of the traditional 

infrastructure. As these changes play out, we also 

struggle with the significant new challenges brought 

on by the digital revolution, with many of its problems 

largely unexamined and unaddressed by the nation. 

However, he traditional infrastructure remains valuable. 

Consumers and businesses still rely on hard-copy 

communications and efficient delivery systems. In the 

event of man made or natural disasters or national 

emergencies, the postal system is often the only reliable 

mode of communication. Current technological advances 

in paper and envelopes suggest emerging needs. 

Further, consumers’ concerns about privacy and 

identity security in the digital age raise the need for a 

reliable provider of secure services. The Internet was 

not constructed to ensure privacy, validate participant 

identity, or facilitate financial transactions. A trusted 

government entity might best provide services that 

ensure privacy is protected around medical records, data 

collection, and confidential transactions. 

The digital age is changing lives, but it has flaws 

and disadvantages, and the national infrastructure 

should attempt to address these to position Americans 

to prosper in the 21st Century. With this changing 

landscape, it may be the ideal time to rethink the 

definition of universal service. From our perspective, 

universal service in a digital world should mean 

providing a safety net at a minimal cost. The Postal 

Service’s role as a trusted provider of delivery services 

in the paper world should be melded with a new role in 

the digital global world. This symbiotic relationship would 

tap the strengths of the Postal Service while opening 

the door for opportunities to expand its presence in an 

evolving digital market in a variety of ways. For example 

the Postal Service could provide a platform where 

postal, government, and commercial applications can be 

developed to serve all. The Postal Service has a unique 

opportunity to provide a bridge between the physical 

and digital worlds, focusing on those offerings that 

are closest to its current mission of binding the nation 

together through delivery services. One approach, which 

many developed nations have adopted, would be to 

link a physical address in its database to an electronic 

address in an eMailbox for each registered citizen and 

business that decides to opt in. Features of the eMailbox 

might include the capabilities to:

 Send and receive messages in a secure/encrypted 

environment.

 Certify the digital identity of both sender and receiver 

for transactions and government business.

 Convert electronic messages, documents, or photos 

into physical mailpieces, such as letters or cards 

(hybrid mail), so that those who still rely on hardcopy 

delivery have options in an increasingly digital world.

 Receive personal mail in digital format (reverse hybrid) 

so our highly mobile society can view their mail at any 

location, at any time.

 Provide an eLockbox – a special section of the 

eMailbox that provides additional security for sensitive 

or personal records or data, such as medical records, 

wills, and legal documents. These would be stored 

and sent when needed or required by an emergency, 

such as a medical event while away from home.

 Provide electronic time/date stamp of digital 

communications to certify receipt. 

Cultural Shift

Entering the digital market won’t be easy for an 

organization that has struggled to fully embrace 

innovative processes. The Postal Service and its 

stakeholders also are short on risk tolerance and capital, 

two more tools necessary for successful business 

development. Innovation needs to be encouraged and 

rewarded, perhaps through creation of a separate 

strategic business unit with its own reporting chain. Risk 

should be accepted and failures expected, although both 

should be managed carefully and metrics developed to 

properly measure success and failure. Inevitably, errors 

will occur, but they should be addressed quickly and 

walled off from critical operations. 

Partnerships with businesses and customers already 

operating in these spaces should be explored. Capital to 

investigate opportunities could come from savings from 

optimization efforts, reinvestments from poor or outdated 

ventures, or partnering with the private sector or other 

government agencies. 

The Postal Service should also review its lessons from 

earlier digital efforts from the 1990s and 2000s, and 

ensure that new efforts would be embraced by the 
April 1 — September 30, 2011 | 13 

MODERNIZATION THROUGH INNOVATION

stakeholder community. Rolling out small projects 

through market tests and pilots might be a good way 

to assess risk tolerances, experiment, and learn from 

successes and failures. 

Innovation in All Areas 

Innovation, of course, should not be restricted to 

the Postal Service’s operations in the digital market. 

The Postal Service also has to revamp the way it 

does business on every front. It needs processes for 

innovation across the board – from acceptance, tracking, 

triage, design, implementation, to metric measurement. 

The Postal Service also must look at the types of 

products it currently offers the American public 

and develop new innovative products to capture an 

increasing share of the growing parcel market. It 

could provide customers with services that might not 

otherwise be readily available to them, for example, in 

rural America. 

Increased use of Global Positioning System (GPS) could 

help the Postal Service better manage its delivery fleet 

and the overall transportation network. The existing GPS 

for delivery vehicles has helped in street management 

and anecdotally curtailed negative behavior, as well as 

provided a basis for return-on-investment. An end-toend, single-sourced GPS platform for the entire fleet of 

vehicles and trucks that includes “passive scanning” 

technologies to track mail and vehicles on a real-time 

basis could increase the Postal Service’s presence as 

the preferred shipper in the growing parcel market.

The Road Ahead

This report summarizes the ongoing work of the OIG 

in its support of the Postal Service as it searches for 

an effective solution to its current financial crisis. The 

well-known problem has reached a critical level, though 

the solution is lagging behind the severe need for such 

a comprehensive response. We believe the solution 

should proceed along four avenues: 

1. The Postal Service was structured for a much larger 

volume of mail and demand for services than is now 

required. There has been an inadequate response and 

substantial interference to optimization efforts, and 

the situation has now reached the point of emergency. 

The very large size of the Postal Service is costly and 

leaves the nation with a bloated infrastructure in an 

era in which effective communication and delivery are 

essential.

2. Commingling of federal government and 

Postal Service pension and benefit funds, and 

mismanagement of these funds, have added to 

the expense and created a drag on the nation’s 

communications and delivery infrastructure. The 

government has, in effect, used the Postal Service’s 

finances as a cash cow to remedy some of the 

shortcomings of its own finances. This unintentional 

tax on Americans has contributed to artificially 

inflated prices and bled the Postal Service at a 

time when it is not strong enough to tolerate such 

additional stress on its finances. These practices are 

inappropriate and at cross-purposes with the goals of 

a self-sufficient Postal Service, as well as having an 

efficient and well-managed government. The nation 

owes its citizens a lean and strong infrastructure, 

as well as transparency regarding the true cost of 

government.

3. The Postal Service should simplify its mail induction 

rules and reform its complex pricing structure. The 

complexity is intimidating to new customers and 

strains the capacity of employees to accurately assess 

and collect revenues from customers. The revenue is 

needed, and revenue protection discourages abusive 

practices and preferential treatment. 

4. The Postal Service should update its mission to serve 

Americans’ communications and delivery needs. The 

foreign posts of the world’s leading nations now serve 

citizen and commercial interests with digital services, 

in addition to traditional mail services. They provide 

bridges, allowing citizens to traverse the digital divide. 

Risks await nations that fail to provide an adequate 

communications infrastructure during the current 

information age. 

The effort will require innovative thinking about the 

entire organization, from the “big picture” issues, such 

as a digital strategy, to the more mundane aspects of 

daily operations. We look forward to continuing to work 

closely with the Postal Service to address the challenges 

and collaborate on solutions. 
14 | Semiannual Report to Congress

SIGNIFICANT AUDIT WORK 

BY RISK CATEGORY

AUDIT SYNOPSES

For the period April 1— September 30, 2011

STRATEGIC RISK

Retirement for Postal Service Employees on Workers’ Compensation

We performed this audit to determine the monetary impact to the Postal 

Service if Congress were to reform the Federal Employees Compensation Act 

to address employees who have reached retirement age. We found that the 

agency could save about $37.8 million annually if changes were made in this 

area.

Postal Service Work Rules and Compensation Systems

Our audit determined that certain contract provisions and compensation 

arrangements hinder the Postal Service’s ability to manage its human 

resources effectively and efficiently. Further, limits on the use of part-time 

employees reduce workforce flexibility and increase the number of workhours 

expended. We determined that the three primary groups of mail carriers (city, 

rural, and contract) have different compensation systems and performance 

standards. City carriers are generally paid by the hour, while rural and contract 

carriers are generally paid by the route. Additionally, substitute carriers for 

each group are paid differently.

To address these inconsistencies, management needs to determine optimal 

standards for carrier performance and pursue the changes necessary to 

achieve a compensation system that maximizes carrier efficiency. We estimate 

that the Postal Service could save more than $2.5 billion annually if it changed 

city letter carrier compensation to match the compensation for rural carriers.

The Postal Service disagreed with the calculation of monetary impact in 

this report, and also raised concerns about the recommendations. They did, 

however, cite recent instances in which flexibilities in the work rules had been 

achieved. We agree with management that additional flexibilities have recently 

been implemented, and cited those instances in the report.

Postal Service Patent Management Continuation

We partnered with an intellectual property management firm to look at the 

Postal Service’s management of its patent portfolio. Our evaluation of the 

Postal Service’s active patents showed that strategic management of existing 

and new patents could result in significantly increased revenue.

New Approaches to Reduce Costs

We found that the Postal Service has opportunities to save $143 million 

annually by reducing costs for investigative activities and armed security 

forces, expanding the Forever StampTM program, and reducing employee 

benefits to align with other federal government agencies. 

Leveraging Assets to Address Financial Obligations

The Postal Service has the authority to transfer its real property to other 

government agencies with or without reimbursement when the transfer would 

serve the public interest. Therefore, the Postal Service could leverage its real 

property assets with the consent of both the U.S. Department of Treasury and 

Office of Personnel Management under terms and conditions to which all 

parties agree. The Postal Service would retain title to the leveraged properties 

unless or until it is no longer able to fund its retirement programs at an 

operational level. If the Postal Service becomes insolvent, the leveraged real 

property could be liquidated to return the programs to an operational level.

Postal Service’s Innovation Process for Competitive 

and Market-Dominant Products

The Postal Service faces regulatory and market constraints that make 

innovation more difficult than for private companies. Despite these external 

barriers, the Postal Service has introduced some innovations including 

Priority Mail Flat Rate Boxes, Intelligent Mail barcode, Critical Mail, Simplified 

Addressing, and the Flats Sequencing System. Management should increase 

its efforts to support a culture of innovation that would support advancements 

within current statutory authority. This includes a comprehensive innovation 

strategy and a more disciplined process for the development and 

implementation of market-based initiatives.

Market Intelligence

The Postal Service could benefit from a stronger integrated market intelligence 

strategy that incorporates best practices utilized by leading companies 

to target new and existing customers and make more informed business 

decisions. Overall, the Postal Service has not fully implemented a cohesive, 

structured market intelligence strategy, making it difficult for senior managers 

to manage the wealth of information that can be leveraged to further inform 

decision-making. 

The National Postal Museum has a purchase price of $47 million and an assessed 

tax value of $304 million. This is just one example of the Postal Service’s significant 

real estate holdings, which could be taken into consideration when evaluating benefit 

obligations. Photo courtesy of the National Postal Museum.
Additionally, management could be missing key marketing opportunities due 

to incomplete or inaccurate customer data. While the Postal Service collects 

customer transactional data and conducts opinion polls and market research, 

it lacks the ability to fully integrate and transform this data into meaningful 

information to more fully know its customers’ needs and offer suitable 

products and services.

Modes of Delivery

We found that the Postal Service should develop a comprehensive strategic 

plan to move from existing door-to-door delivery to curbside delivery, which 

could save the agency more than $4.5 billion annually. Further, we determined 

that the Postal Service could convert curbside delivery to centralized delivery 

and mandate centralized delivery for new delivery points, strategies that 

could save the Postal Service another $5.1 billion in FY 2011. Management 

disagreed with the findings in this report.

Intelligent Mail: Realizing Revenue Assurance Benefits

The Postal Service postponed implementing an Intelligent Mail program 

objective to focus on implementing other aspects of the program. The Postal 

Service removed the automated revenue assurance requirement in the 

original Decision Analysis Report. Without this automation, the Postal Service 

may not be able to reduce the $293 million it spends annually on business 

mail acceptance personnel salaries and benefits or comprehensively confirm 

the $26 billion in annual business letter mail revenue.

Transportation Initiatives

The Postal Service manages a vast transportation network that moves more 

than 170.6 billion mailpieces at an annual cost of about $7.9 billion. To 

improve operations and optimize the transportation and distribution network, 

the Postal Service procured the:

 Surface Visibility (SV) system designed to improve the visibility of mail as it 

moves through the plant-to-plant surface transportation network.

 Transportation Optimization, Planning, and Scheduling (TOPS) system to be 

used as a national transportation network optimization tool that enhances 

the surface and air transportation mail assignment processes.

 Postal Vehicle Service Management System (PVS-MS), designed to provide 

transportation managers with the technological mechanism to monitor, 

measure, and manage heavy fleet assets and associated labor.

 Yard Management System Pilot (YMS Pilot), designed to track vehicles at 

network distribution centers (NDCs) within the yard and dock areas.

We found that although the Postal Service spent more than $300 million on 

these four transportation technology initiatives, none of them achieved all of 

the intended results. Specifically: 

 The SV technology initiative was generally capable of functioning as 

planned, but it is not fully providing the intended transportation visibility.

 The TOPS technology initiative was implemented for the routing of 

air transportation, but not for surface transportation (one of its major 

components) and long-range air route planning as originally designed. 

 The PVS-MS technology initiative was implemented to monitor driver 

and fleet performance, but lacked the necessary connectivity to function 

properly and was discontinued in 2008. 

 The YMS pilot technology initiative was implemented at two locations and 

improved yard efficiency through automation, but it did not replace all 

required manual processes. 

Transportation Cost System Inputs into the Cost and Revenue 

Analysis Report

The Postal Service currently spends about $69 million annually for its manual 

data collection efforts to prepare the Cost and Revenue Analysis (CRA) report. 

This includes about $3.9 million per year to collect data for the statistical 

models within the Transportation Cost System. This audit explores alternate 

ways of preparing the transportation cost component of the CRA using 

automated data, thus reducing manual data collection efforts. The report 

determined that additional planning, systems design, and system integration 

in evolving systems could enable the Postal Service to use operational data 

for CRA cost attribution purposes.

Global Positioning System

We reviewed the Postal Service’s use of global positioning system (GPS) 

technology and found various opportunities to enhance the use of GPS. GPS 

technology has been implemented on only 3 percent of delivery vehicles 

and not on tractors or minivans that transport mail. For delivery operations, 

management uses standard GPS reports from the vendor (rather than 

customized reports) and districts do not consistently use exception data from 

the reports to manage operations. The existing GPS for delivery vehicles 

has helped in street management and appears to have curtailed negative 

behavior, as well as provided a basis for return-on-investment analyses. 

However, the audit disclosed that the Postal Service could develop an end-toend, single-sourced GPS platform and back-office accountability for the entire 

fleet of vehicles and trucks with a focus on taking costs out of the delivery 

and transportation system.

Project Phoenix

We determined that the Postal Service may prevent delays – such as those 

experienced on Project Phoenix1 – on future projects by improving technology 

solution requirements and the design process. The Postal Service planned 

to implement release 1.2 of Project Phoenix in April 2010, but it has not yet 

been released.

FINANCIAL RISK

Strategic Approaches to Revenue Protection

Postal Service officials collaborate and communicate regularly with internal 

and external stakeholders and have a wide variety of program groups 

FINANCIAL RISK

1 Project Phoenix is a management initiative to modernize the Postal Service’s ability to serve consumers and small businesses in a multichannel environment. The project includes digital 

access, both web and mobile, call center channels, and the development of re-usable technology for other retail channels. Project Phoenix focuses on enhancing the usps.com website and 

re-engineering the underlying information technology (IT) that supports three key revenue-generating channels within the Postal Service: the website (usps.com), the contact center, and retail. 

The project should enable the Postal Service to launch future revenue-generating products and services more quickly by re-using common IT components rather than building them from 

scratch.

April 1 — September 30, 2011 | 15 
16 | Semiannual Report to Congress

FINANCIAL RISK

that address revenue 

protection issues and 

strategies. The Postal 

Service continues to 

address revenue leakage 

through technological 

initiatives as well as 

checklists, quick service 

guides, and training for 

clerks. However, revenue 

leakage will continue to 

occur until automated 

verification procedures 

that use mail processing 

equipment and intelligent 

mail technologies 

replace current manual 

processes. We estimate 

that management 

could prevent an 

annual revenue loss 

of about $200 million 

with enhanced revenue 

protection strategies.

Postal Service Five-Year Financial Plan

This review was to evaluate the reasonableness of assumptions used to 

create the Postal Service’s Five-Year Financial Plan. We found that overall, the 

assumptions were reasonable; however, there are some areas to consider for 

future plan updates. For example:

 Overall revenue has fallen below expected levels projected in the plan; 

however, although noted, declining revenue trends were not incorporated 

into the numerical projections of the plan.

 The plan includes various marketing initiatives to generate future 

additional revenue. Management revised their performance measurement 

methodology for these initiatives. These revisions, together with recent 

volume and revenue trends and the recent organizational redesign, could 

affect future revenue projections from these marketing initiatives.

 At the time of our data request, personnel could not support savings from 

the closure of Post Offices and were not aware of the methodology or 

assumptions used to calculate the estimate. Therefore, the Postal Service 

had to prepare a revised estimate of the savings.

 Management included the Postal Service’s estimated savings related to 

implementation of 5-day delivery and did not consider the impact of its 

difference with the Postal Regulatory Commission’s estimate.

 The OIG has identified other cost-saving opportunities with significant 

potential monetary impact that were not considered in the plan.

FY 2010 Financial Statements Audit – San Mateo Information 

Technology and Accounting Service Center

During our audit, we noted that overall the Postal Service complied with 

laws and regulations that have a direct and material effect on the financial 

statements. Throughout the year, we reviewed internal controls over financial 

reporting and identified field operational control issues regarding vehicle 

sales requests, shuttle service payments, managing capital personal property, 

and eBuy purchases. Further, we identified operational issues regarding 

headquarters’ overview of relocation service payments, shuttle service 

payments, and management of capital personal property in that the Postal 

Service did not review supporting documentation for relocation services as 

part of the payment process.

FY 2010 Sarbanes-Oxley Testing for Selected Business Processes

We found that the Sarbanes-Oxley Program Management’s Office properly 

tested, documented, and reported its examination of key controls within the 

air transportation, highway transportation, and personal property/equipment 

processes. However, we identified opportunities for improvement in work paper 

documentation for the compensation, benefits, and motor vehicles processes. 

Also, in some cases we found that the documentation was insufficient to allow 

a subsequent auditor to reach the same conclusion.

Effects of Compliance Rules on Mailers

The Postal Service did not always fully consider how changes to mail 

compliance rules impact mailers. Specifically, the Postal Service did not 

always adequately estimate the cost to mailers of complying with proposed 

rules, collaborate with the mailing industry, and train and monitor personnel 

who accept business mailings. However, the Postal Service has increased 

emphasis on improving communication and cooperation with the mailing 

industry and has taken several steps to be more responsive to customer 

needs and improve the customer experience. 

Postal Service Refunds

The Postal Service has opportunities to improve the Value Added Refunds 

(VAR), Special Postage Payment Systems (SPPS) and meter mail refund 

processes. Specifically, the Postal Service could automate the VAR refund 

process to eliminate some costs and workload. In addition, the Postal Service 

has not documented SPPS refund processes. Finally, the Postal Service is 

not covering its costs to process meter mail refunds. We estimate that the 

Postal Service could recover about $1.62 million annually in processing costs 

by making changes to these processes. As a result of our audit, the Postal 

Service developed a standard timeframe for processing spoiled and unused 

meter mail refunds.

Management of the Highway Contract Route Voyager Card Program

We found that the Postal Service did not always ensure that highway contract 

route (HCR) suppliers purchase only authorized grades of fuels or remained 

within the contract limitations on the number of fuel gallons purchased. We 

also determined that HCR Voyager cards were not always safeguarded and 

secured because the Postal Service did not have a comprehensive control 

environment aligned with internal control best practices. 

Purchasing Compliance and Imprudent Purchases Follow-Up Audit

We found that the Postal Service has improved the effectiveness of local 

purchasing activities and reduced spending of employees using the SmartPay 

Purchase Card. For example, the Postal Service decreased SmartPay 

purchases from $266.7 million in FY 2009 to $239.4 million in FY 2010 

and recently created two purchasing shared services centers (PSSC) to 

improve oversight of local purchases and advise field managers on controlling 

The Postal Service has opportuniities to improve the 

passport application process and could find increased 

revenue by capturing a larger share of the passport 

photo market.
April 1 — September 30, 2011 | 17 

OPERATIONAL RISK

expenditures. Yet, during our recent review, we identified employee purchases 

that did not comply with Postal Service policy. We also found an opportunity to 

further improve the effectiveness of the PSSCs. 

Financial Controls Over Passport Applications

We identified three areas where the Postal Service has opportunities to 

strengthen its financial controls over passport applications and the revenue 

associated with related fees. Specifically, the Postal Service needs (1) a 

reconciliation process for the collection and financial reporting of application 

fees collected at retail units; (2) improved controls over fees collected for 

passport photos; and (3) a reevaluation of the fee charged for passport photos. 

In addition, there could be an opportunity for increased revenue by capturing a 

larger share of the market for passport photos.

Internal Controls Over the Contract Close-out Process

Postal Service personnel did not always follow contract close-out procedures 

or records management requirements. Of the 649 contracts we selected 

for review, we were able to review only 539 contract files, because postal 

employees could not locate 110 contract files at the time of our site visits. 

Of the 539 contract files we reviewed, we determined that 381 were missing 

required close-out documents, the contracts had expired and had not been 

properly closed out, or had unreliable data.

Contract Management Data

In 137 of the 139 contract actions we reviewed, we found that Postal Service 

employees did not adequately record contract data into the postal contracting 

management system. System design limitations contributed to 73 percent of 

the errors, and employee input errors accounted for the rest. These issues, 

which involved contracts valued at about $2.1 billion, affect the transparency 

of the reported data and could result in erroneous decisions based on 

incomplete and incorrect contract data.

Contract Funding Approval

Our audit found that Postal Service officials generally submitted eBuy 

requisitions to validate the funding approval process before entering into 

contractual agreements during FYs 2008 and 2009. However, officials did not 

submit requisitions for 16 of 143 (11 percent) randomly selected contracting 

actions, totaling more than $600 million, before making contractual 

commitments or incurring potential liabilities.

Conflicts of Interest: Facility Leases and Contract Delivery Services

Our audit determined that the Postal Service entered into about 1,200 leases 

with current or former postal employees with an annual rent value of $8.2 

million. Of these properties, 982 were active leases, with an annual rent value 

of $5.4 million. About 170 of the active properties were leased from current 

postal employees. Some of the leases pose risks of violations, while others 

give the appearance of a lack of impartiality.

Similarly, the Postal Service entered into 78 of the 7,797 total Contract 

Delivery Services contracts with current or former employees that, in some 

cases, resulted in apparent violations of federal regulations and Postal Service 

policies. Others also give the appearance of impropriety. 

Management disagreed with the assessment of questioned costs. 

2009 Pay for Performance Program

We determined that managers responsible for evaluating or approving 

sampled employees’ FY 2009 core requirement ratings were not always 

compliant with Pay for Performance (PFP) policies and procedures. 

Specifically, we found that managers lowered core requirement ratings in 

a manner inconsistent with PFP policies and procedures, which state that 

employees should be rated on these requirements based on agreed-upon 

objectives and targets and those end-of-year ratings should reflect employees’ 

individual achievements. In addition, managers used numeric targets to rate 

postmasters on their core requirements instead of behavioral objectives as 

specified in the policy.

OPERATIONAL RISK

Assessment of Overall Plant Efficiency 2011

We found that the Postal Service could improve operational efficiency in the 

areas of overtime hours, mail handling, automated and mechanical equipment, 

allied operations, and manual operations. This would allow the Postal Service 

to reduce more than 14 million workhours by the end of FY 2013 and achieve 

at least median productivity levels in the network. Additionally, the workhour 

reduction would allow the Postal Service to avoid costs of more than $647.5 

million based on workhour savings for 1 year.

Facility Optimization 

Nationwide

We statistically projected that the Postal Service maintains 67 million 

square feet of excess space nationwide and has a greater opportunity to 

aggressively optimize excess space through disposal or leasing than its 

FY 2011 target for reducing interior space. We estimate that if the Postal 

Service initiates disposal action for the excess space identified, it may 

realize at least $3.48 billion nationwide over typical and remaining lease 

terms. This amount represents a calculated 10-year potential savings in 

lease, custodial, building maintenance, and utility costs.

A valid business case existed for consolidating mail processing operations from the 

Beckley, WV, Post Office (pictured) into the Charleston, WV, P&DC.
18 | Semiannual Report to Congress

OPERATIONAL RISK

Facility Consolidations

University Station, Eugene, OR

In August 2010, the Postal Service approved the transfer of all operations 

and Post Office BoxesTM from the University Station Post Office into the 

Eugene Main Post Office and later closed University Station in January 

2011. We received a congressional inquiry expressing concern that public 

inputs were limited during the discontinuance process. We determined that 

the Postal Service followed applicable federal law and postal policies to 

discontinue the University Station operations. However, we identified various 

concerns with the economic analysis and believe improvements could be 

made to allow for a more objective evaluation.

Beckley, WV, Post Office

Our review determined that a valid business case existed to consolidate 

mail processing operations from the Beckley, WV, Post Office into the 

Charleston, WV, Processing and Distribution Center (P&DC) to achieve 

annual cost savings of about $1.1 million. We identified projected annual 

maintenance cost savings were overstated by $228,181 during fieldwork. 

Management corrected the proposed maintenance savings to reflect the 

correct savings of $189,555.

Oshkosh, WI, Processing and Distribution Facility

With regard to the Oshkosh Processing and Distribution Facility (P&DF) 

consolidation, we found that although the consolidation would result in 

cost savings, adequate facility and machine capacity did not exist at the 

Green Bay P&DC to process the additional mail volume and service could 

be negatively impacted. Our analysis also indicated that: (1) No career 

employees will lose their jobs at either location although there may be some 

reassignments; (2) Oshkosh P&DF is more efficient and processes its mail 

volumes at a lower cost than Green Bay P&DC; (3) Mail processing cost 

savings were overestimated, but significant savings should be achieved; 

and (4) Some Area Mail Processing (AMP) guidelines were not followed, but 

had no impact on the business case.

Bowling Green, KY, Processing and Distribution Facility

Our audit determined that a valid business case exists for consolidating 

originating mail processing operations from the Bowling Green P&DF into 

the Evansville P&DF and Nashville P&DC to achieve cost savings of about 

$3.2 million annually. No career employee will lose their job at either 

location, although there may be some reassignments at the Bowling Green 

P&DF. We also determined that AMP worksheets should be enhanced when 

consolidating operations into two or more gaining facilities.

Mail Transport Equipment — Needs, Distribution, and Use

We assessed whether the Postal Service effectively planned for the needs, 

distribution, and use of mail transport equipment (MTE) during its planning and 

implementation of the Network Distribution Center (NDC) network. We found 

that there was an imbalance of MTE rolling stock in the NDC network (some 

NDCs had an excess and others had a shortage). This occurred because 

Postal Service headquarters did not perform a comprehensive analysis of 

needed MTE rolling stock; and did not enforce or establish effective processes 

to manage, control, and redistribute existing MTE rolling stock in the NDC 

network. As a result, some NDC sites purchased cardboard containers that 

may not have been needed for about $7.5 million over a 2 year period.

Postal Vehicle Service Transportation Routes — 

Baltimore Processing and Distribution Center

Baltimore P&DC officials were not effectively managing Postal Vehicle 

Service (PVS) transportation processes and schedules as evidenced by the 

underutilized trips we identified. Ultimately, we concluded that they could 

remove 19,062 excess workhours from existing PVS schedules and reduce 

related fuel use and costs as well as damage claims, thereby saving about 

$7.3 million over a 10-year period. 

Postal Vehicle Services — Scheduling and Staffing — 

Western Pennsylvania District

During our review we determined that the Western Pennsylvania District 

can more efficiently and effectively manage PVS transportation processes 

and schedules, thereby reducing driver workhours and associated fuel use 

and damage claims. By making these changes, we estimate the Western 

Pennsylvania District could save about $1 million annually in labor and related 

costs.

Timely Processing of Mail at the Richmond, VA, 

Processing and Distribution Center

The Richmond P&DC experienced difficulties with the timely processing 

of mail during FY 2010 and Quarter 1, FY 2011. This condition led to 

significant mail delays and service declines in First-Class Mail, Periodicals, 

and Standard Mail classes. The primary causes for the excessive delayed 

mail were inadequate staffing and supervision, low mail throughput on 

Cardboard boxes on pallets are used to supplement over-the-road containers at the 

Cincinnati Network Distribution Center (NDC). A comprehensive analysis and effective 

processes are necessary to maintain the correct balance of Mail Transport Equipment 

rolling stock in the NDCs, which would ensure that the Postal Service does not spend 

needlessly on cardboard containers.

2 Mail containers did not always have color-code tags, and frequently the tags did not contain the date and time. Not properly completing color codes prevented accurate reporting and made 

adherence to processing mail on a first-in, first-out basis difficult.
April 1 — September 30, 2011 | 19 

OPERATIONAL RISK

machines, failure to consistently color-code arriving mail,2 and not accurately 

identifying and reporting delayed mail. Also, damage to mail from poorly 

packaged mail resulted in delayed processing of flat mailpieces. During the 

audit, management initiated corrective actions. Delayed mail volume at this 

facility rose while similar-sized facilities’ delays decreased during the period of 

October 1 through December 31, 2010.

City Delivery Standard Operating Procedures

We conducted an audit on city delivery issues discovered in previous reviews 

and found that the morning standard operating procedures process, designed 

to ensure that units operate efficiently, did not fully achieve intended results. 

Specifically, 1,256 delivery units either did not achieve certification, or 

achieved certification, but did not maintain performance levels afterwards. 

These conditions occurred due to weaknesses in the certification criteria 

and not adhering to procedures. As a result, the Postal Service incurred 

unnecessary workhours at a cost of about $40.2 million for FY 2009 and 

$47.9 million for FY 2010. 

National Assessment of City Delivery Performance

Results presented for our nationwide city delivery office efficiency review 

are based on results and recommendations from similar audits conducted 

during FYs 2010 and 2011. The goal of the audits was to identify actions 

that city delivery units needed to take to increase efficiency and reduce costs 

using the national average percent to standard measure as a baseline. Our 

benchmarking comparison determined that 21 districts used more minutes 

per route than the average carrier route in the nation. The Postal Service could 

save more than $88 million in 1 year if its least productive districts operated at 

the average productivity level.

Service Performance Measurement Data — Commercial Mail

Our audit determined that the process used to obtain service performance 

scores for commercial mail is not effective. The Postal Service has 

experienced significant issues with the quantity, accuracy, and reliability of its 

data, resulting in the exclusion of about 88 percent of Full-Service Intelligent 

Mail Barcode mail from service performance measurement. Specifically, the 

Postal Service did not meet its initial milestones for implementing this process 

because it underestimated the complexity of obtaining reliable data.

Postal Service Performance during the 2010 Fall Mailing Season

During the 2010 fall mailing season, the Postal Service had about 3.4 billion 

delayed mail pieces (6 percent of total mail volume). This represents an 

increase of 904 million mail pieces (37 percent) over the same period last 

year. About 95 percent of this delayed mail was Standard Mail. This adversely 

impacted service and resulted in about $10.9 million in revenue at risk. We 

identified a small amount of stand-by time during this period; thus, it appears 

that most employees were engaged in processing mail.

Compliance With Occupational Safety and Health Administration 

Recordkeeping Requirements

We reviewed a sampling of Occupational Safety and Health Administration 

(OSHA) forms from selected postal facilities for calendar years 2009 and 

2010. We found that 90 percent of the OSHA Forms 300, and 25 percent 

of the OSHA Forms 301 contained errors or were incomplete. The errors 

occurred because the Postal Service did not have adequate procedures 

for ensuring that 

OSHA recordable 

injuries or illnesses 

are appropriately 

identified, classified, 

and recorded. Officials 

responsible for OSHA 

recordkeeping did 

not receive sufficient 

training for recording 

OSHA injuries and 

illnesses. Additionally, 

existing policy does not 

provide clear guidance 

for determining 

OSHA recordable 

dates, and managers 

completed the OSHA 

Forms 300 manually, 

which increased the 

risk of inaccurate 

recordkeeping.

The Postal Service Role in the Digital Age Part 2 — Expanding the 

Postal Platform

From the Internet to the digital economy, the worlds of communications, 

transportation, and commerce are fundamentally changing. This “digital 

revolution,” in combination with the Great Recession of 2008 and 2009, has 

had a significant impact on postal operators around the world, resulting in a 

steep decline in personal, business, and marketing mail volumes. We analyzed 

the changing digital landscape, the new world of communications, and the 

Postal Service’s new role in the white paper The Postal Service Role in the 

Digital Age – Part 1: Facts and Trends. Building on the first white paper, The 

Postal Service Role in the Digital Age – Part 2: Expanding the Postal Platform

presents a strategic positioning framed by three guiding principles:

 Promoting solutions for the communications problems of the digital age.

 Using the core competencies and assets of the Postal Service.

 Considering the policy implications of the strategy based on the current 

legal and regulatory environment.

The white paper suggests employing an “eMailbox” that links a physical 

address to an electronic mailbox for every citizen and business. The Postal 

Service could build a digital platform that supports communications and 

commerce for postal, governmental, and commercial applications. The paper 

provides six additional initial applications for consideration::

 An eGovernment application that promotes the expansion of government 

services throughout the postal platform and uses the eMailbox to send and 

receive secure and official communication with federal agencies.

 Tools for identity validation, privacy protection, and transaction security that 

allow users to verify the individuals and businesses they are communicating 

An “eMailbox” solution linking a physical address to an 

electronic address for every citizen and business is one 

of the suggestions in our Digital Age series of white 

papers.
20 | Semiannual Report to Congress

with, the safety of their personal information, and the security of their 

purchases and financial transactions.

 Hybrid and reverse hybrid mail that allow senders and receivers to convert 

digital documents to physical and physical documents to digital.

 Enhanced shipping services and delivery of secure online purchases 

through flexible pick-up and delivery options, expanded payment choices, 

and a cost calculation that includes all charges and fees for purchases 

(even international) at the time of sale.

 Digital concierge services that integrate an individual’s physical and digital 

communications in a single secure “lock box” into the eMailbox and 

help manage “information overflow,” providing quick access to important 

communications and other personal documents (such as medical records 

and wills).

 A network to provide digital currency and redeem cash at Post Office 

locations and online.

Although more Americans are turning to the digital channel to communicate, 

make purchases, and store personal information, there are drawbacks 

that leave a significant portion of the population underserved. To meet the 

population’s needs and “bind the nation together” in a digital world, the Postal 

Service must modernize its role.

Simplified Address Mail — An Easier Way for Small Businesses 

to Reach Local Customers

Advertising mail is an important product for the Postal Service. It is an 

important way for businesses to reach their customers, but many local small 

businesses and others underuse or avoid advertising mail. The rules, rates, 

and regulations can be complex and confusing. For saturation mailings, or 

those going to nearly every address on a carrier’s route, simplified addressing 

allows businesses to use a simple “Postal Customer” address instead of a 

full street address. While the Postal Service has tested a number of simplified 

address products in the past, early this year it rolled out a national product 

available for all “flat-size” saturation mailings.

In the white paper Simplified Address Mail: An Easier Way for Small 

Businesses to Reach Local Customers, the Risk Analysis Research Center 

(RARC) lays out the advantages of the simplified address mail concept. The 

paper finds that, if fully implemented, a simplified address system could 

potentially increase Postal Service annual revenue by over $1 billion. This 

would benefit all users of the system by making universal service more 

affordable.

The advertising mail medium has a history of success, particularly in the area 

of geographically targeted advertising, which is precisely the purpose of the 

simplified address service. The key to realizing the wide-range of benefits 

associated with this system now depends on implementation. To reach its 

full potential, the Postal Service must ensure the system is easy to use and 

that its advantages are well-communicated to the small business community. 

The Postal Service’s successful implementation of a simplified address mail 

program can help maintain the value of mail in the face of market changes 

and electronic diversion with little financial risk.

Barriers to Changing the Retail Network

While American retail service and society have changed tremendously in the 

past 40 years, the size and distribution of the Postal Service’s retail network 

today does not greatly differ from the network that existed in 1971. It fails to 

reflect the changes in where and how Americans live today. 

The white paper, Barriers to Retail Network Optimization, identifies and 

describes some of the obstacles that have prevented the Postal Service from 

adjusting its network:

 Statutory restrictions prevent closing Post Offices for economic reasons and 

impose requirements for notice, consultation, and appeal procedures.

 Regulatory procedures and interpretations create burdens on the Postal 

Service’s ability to make adjustments.

 Political obstacles to rightsizing result from the natural inclination of 

affected groups to protest the loss of local Post Offices. 

 Institutional barriers within the Postal Service have prevented action. These 

include a lack of sustained focus over time on retail optimization, problems 

with the availability and quality of data, past dependence on a highly 

decentralized bottom-up process, and the absence of a well-articulated 

strategic retail vision.

Although the Postal Service has recently taken new steps to right size its retail 

network — removing some institutional barriers — statutory, regulatory, and 

political obstacles remain, which hinder the Postal Service’s efforts to optimize 

its retail network.

A Strategy for a Future Mail Processing and Transportation Network

For more than 230 years, the Postal Service evolved with the needs of a 

growing country. A vast and complex network of processing facilities and 

transportation links developed to meet its universal service obligation. The 

result was a legacy network built for a different level of processing capabilities, 

mail mix, and volume growth than exist today. Now the Postal Service has 

highly automated processing technology, extensive presorting and deeper drop 

shipments, and an uncertain future due to decreasing mail volumes.

For several years, the Postal Service introduced plans to consolidate its mail 

processing plants and reconfigure its transportation network, including its 

first-ever annual plan under the Postal Accountability and Enhancement 

Act of 2006. This annual plan outlined the three core rationalization efforts: 

closure of Air Mail Centers (AMC); Area Mail Processing (AMP) consolidation 

of outgoing and/or incoming mail processing operations; and transformation 

of the Bulk Mail Center (BMC) network. The Postal Service has made some 

progress — closing all but one AMC, initiating and implementing numerous 

AMP consolidations, and transforming BMCs into Network Distribution Centers.

In spite of these efforts, fundamental questions remain: What should the 

mail processing and transportation network look like to meet future demand? 

And how many plants will be needed? The OIG’s whitepaper, A Strategy for 

a Future Mail Processing & Transportation Network, answers some of these 

questions and offers an approach that can be used to create a future mail 

processing and transportation network based on modeling techniques and 

OPERATIONAL RISK
April 1 — September 30, 2011 | 21 

OPERATIONAL RISK

stakeholder input. The analysis showed that a revised network of 135 major 

mail processing facilities, inclusive of 15 consolidation hubs, could lower net 

processing and transportation costs by about $2 billion annually than the 

existing network. Equally important, the new configuration would generally 

meet or exceed existing service performance. 

Since publication of the whitepaper, the Postal Service announced plans to 

review mail processing facilities in hopes of shrinking the number of plants to 

fewer than 200 by 2013. This network modification is one important facet of a 

4-year effort to cut $20 billion and permanently reshape the Postal Service as 

a leaner organization. 

The Cost Structure of the Postal Service — 

Facts, Trends, and Policy Implications

The Postal Service is at a critical juncture in its history – in 2010, it 

experienced its largest single-year net loss of $8.5 billion. In response, RARC 

published The Cost Structure of the Postal Service: Facts, Trends, and Policy 

Implications, which discussed significant trends and drivers of the Postal 

Service’s major cost components including labor (benefits and workers 

compensation liability), non-labor (for example, fuel contract management), 

and capital expenditures. 

In addition to examining a range of topics essential to the economic viability of 

the Postal Service and the future health of the postal “ecosystem,” this paper 

provides insight into some of the more critical policy issues confronting the 

organization in the wake of new legislative requirements and record losses in 

volume and revenue. Two points were of particular importance:

 The mail business is labor intensive to the extent that labor comprises 80 

percent of Postal Service expenses. This implies that, in order to achieve 

substantive cost savings, the Postal Service must cut labor costs. However, 

in practice, cutting labor costs is challenging due to the Postal Service’s 

significant fixed cost structures.

 Since 1972, the total cost of benefits rose an astounding 448 percent 

above inflation, while real wage expenditures declined by nearly 3 percent. 

This extraordinary increase is the result of three factors: a general trend 

toward higher benefits costs that affects most U.S. companies, the gradual 

transfer of postal retiree benefits costs from the federal government to 

the Postal Service, and the repeated overcharges for these same retiree 

benefits costs.

As the Postal Service moves forward, this analysis suggests that a 

combination of continued cost reductions, legislative action to manage 

cost burdens, and investment in select projects that continue its history of 

productivity increases can help the Postal Service return to economic viability.

Cost of Service Standards

The Postal Service provides a range of expedited delivery standards to its 

customers including 1- to 3-day service for First-Class Mail, 2- to 3-day 

service for Priority Mail, and expedited handling for Periodicals. The postal 

processing and delivery system evolved over time to support these products 

and service standards; however, the diversion of much of this mail to 

electronic alternatives raises the question of whether the high speed service is 

still worth any extra cost.

With this question in mind, RARC asked Christensen Associates, an economic 

consulting firm with expert knowledge of postal service issues, to identify and 

estimate the impact and cost savings by relaxing premium service standards 

by 1 day. We selected 1 day because it should have a low impact on customer 

demand given mailers’ stated preference for consistency over high speed and 

because it maintains the differentiation in service between preferential and 

non-preferential mail.

The research indicates potential annual savings of up to $1.5 billion 

in premium pay and other mail processing costs. The study identifies 

additional transportation savings, but it is difficult to quantify the magnitude 

in conjunction with those of other mail processing activities. The research 

also analyzes overtime pay, but it is difficult to measure savings due to 

data limitations. Other indirect sources of potential, substantial savings 

such as network realignment and facility consolidations can result from 

longer processing and transportation windows, but are beyond the scope 

of this paper. As a result, this paper presents a lower bound estimate of the 

achievable cost savings by relaxing service standards by 1 day.

Retail and Delivery: Decoupling Could Improve Service 

and Lower Costs

The Postal Service has “coupled” its retail and delivery operations, both 

managerially and physically, since delivery services were first established 

almost 150 years ago. Historical business and residential patterns, and mail 

delivery efficiencies largely determined the location of postal facilities. Even 

today, postal facilities typically house both delivery and retail operations. 

Yet current and future customer access needs are quickly changing: 

geographically and demographically. Could separating retail and delivery 

functions improve customer service and save costs?

RARC strategically studied the concept of “decoupling” the Postal Service’s 

delivery and retail components’ physical and managerial functions. The 

whitepaper, Retail and Delivery: Decoupling Could Improve Service and Lower 

Costs, drew upon the insights of key stakeholders, private sector delivery 

companies within the United States, foreign postal operators, and expert 

business consultants. The study found that selective decoupling of retail and 

delivery operations, both physically and managerially, could result in new 

retail products and services that are more responsive to changing market 

conditions and diverse customer needs — across the entire country. Notably, 

the paper determined that a decoupling strategy affords the Postal Service 

more flexibility to respond to changing customer needs for retail and delivery 

services. Equally important, decoupling could help transform both retail and 

delivery into two best-practice driven strategic business units, each having 

its own distinct skills, training, and performance measures. This approach 

would likely improve the services and performance of both Postal Service 

components.

There is a compelling case for the Postal Service to decouple retail from 

delivery as a business strategy. Each contributes to the Postal Service’s longterm viability and financial performance. Developing an integrated strategy 

that maximizes the value of both functions has the potential to be extremely 

beneficial to the Postal Service and its customers in terms of reducing costs, 

increasing revenue, and improving customer service.
22 | Semiannual Report to Congress

FINANCIAL CRIMES

A large portion of the $66 billion in revenue generated by the Postal Service 

in FY 2011 is handled at the 32,000 postal retail locations. Employees who 

allegedly embezzle funds, kite or otherwise misuse money orders, or steal 

and misuse postal-issued credit cards receive investigative attention from our 

special agents. 

 A former Maryland sales and service associate pled guilty in June in federal 

court to misappropriation of Postal Service funds. The OIG investigation 

disclosed that the associate fraudulently issued 183 Postal Service no-fee 

money orders to employees, family members, and companies that provided 

benefits or services to the employee from September 2007 through May 

2009. The money orders were also used for personal use to pay bills, rent, 

and cash totaling about $78,500. The sales associate resigned during the 

investigation. Sentencing is pending. 

 A California station reported a shortage of more than $200,000 in the unit 

reserve and in the vending machine. In conjunction, investigators received 

information that a carrier was selling stamps from a “closed office” at a 

discount. The OIG investigation found the station manager stole stamps 

and sold them to two carriers who subsequently sold the stamps on the 

street. In June 2010, both carriers were removed from the Postal Service 

and the station manager retired. In July 2011, one carrier pled guilty to 

the felony theft of government property and was sentenced to 2 years of 

probation and restitution of $7,040. The second carrier has pled guilty 

in federal court and sentencing is pending. The station manager was 

sentenced in federal court in September for embezzled checks, money 

orders, and cash from stamp and vending sales.

 In July, a former California sales and services associate pled guilty in 

federal court to embezzlement and grand theft. Video footage documented 

the employee not reporting sales transactions and placing cash from the 

drawer in her pocket. To further conceal her embezzlement scheme, the 

associate replenished her cash drawer with cash prior to being counted. 

The OIG investigation disclosed the associate embezzled more than 

$24,000 in Postal Service funds during a 4-year period. Subsequently, the 

employee was removed from the Postal Service. Sentencing is pending. 

 An Illinois postmaster pled guilty in June to multiple criminal charges 

including the theft of more than $4,300 in Postal Service funds, 

bigamy, and perjury. The postmaster was sentenced to 60 days in jail 

and 2 years of probation, and ordered to pay a $1,000 fine and make 

restitution payment to the Postal Service. The investigation revealed that 

the postmaster stole Postal Service funds and also used his government 

assigned computer to create a false dissolution of marriage document, 

forged a state judge’s name and used the document in a hearing to 

cover-up multiple marriages. The postmaster was subsequently issued a 

proposed letter of removal from the Postal Service.

 A former Tennessee highway contract route (HCR) driver was sentenced 

in April for his involvement in theft of and illegal use of Voyager fuel cards 

issued to a Postal Service contractor. In November 2009, OIG special 

agents conducted investigative inquiries at several fueling centers where 

fraudulent fuel purchases were determined to have been made. At the 

time special agents received this information, nearly 6,000 gallons of 

diesel and unleaded fuel had already been purchased with the stolen 

Voyager cards. While special agents were conducting investigative inquiries 

at one location, a transaction for one of the Voyager cards in question 

was currently being processed. The special agents then responded to 

the location of the transaction, which led to the former contract driver 

attempting to flee on foot. After a brief foot chase, the OIG special agents 

arrested this individual, who had in his possession three stolen Voyager 

fleet cards that had been issued to the Postal Service contractor. This 

individual, along with a co-conspirator, were indicted in April 2010 for 

allegedly committing fraud and related activity in connection with an access 

device. The co-conspirator entered a guilty plea and was sentenced prior 

to 36 months imprisonment and ordered to pay in excess of $219,000 

in restitution. The former highway contract route driver was subsequently 

sentenced to 10 months imprisonment and ordered to pay in excess of 

$19,000 in restitution to the Postal Service.

 A Tennessee sales and service associate was sentenced in April to 6 

months incarceration with the Bureau of Prisons and ordered to pay 

restitution to the Postal Service totaling approximately $86,000 after 

admitting to manipulating entries into a computer terminal and taking 

postal funds for personal use. The OIG received information of an 

alleged postage affixed scheme resulting in embezzlement of postal 

An OIG investigation discovered that a station manager was embezzling checks, money 

orders, and cash, and stealing stamps that he sold to two carriers, who sold them on 

the street at a discount. All three were indicted on federal charges and have left Postal 

Service employment.

SIGNIFICANT INVESTIGATIVE WORK

INVESTIGATIVE SYNOPSES

For the period April 1— September 30, 2011
April 1 — September 30, 2011 | 23 

WORKERS’ COMPENSATION FRAUD

funds. In December 2010, the sales associate entered a guilty plea of 

misappropriation of postal funds. The sales associate resigned after being 

informed by the Postal Service that he would be removed.

 A former Kentucky postmaster was sentenced in April to 3 years of 

probation and ordered to pay in excess of $12,000 in restitution to the 

Postal Service for misappropriation of postal funds and money orders. In 

2009, a review of records identified Postal Service money orders were 

cashed prior to the reported date of sale. In February 2010, an accounting 

of the postmaster’s individually assigned window credit disclosed a 

shortage of $12,151. During an interview, the postmaster admitted to 

embezzling postal funds and kiting postal money orders. In February 2010, 

the postmaster resigned from his position and pled guilty to kiting money 

orders and embezzling postal funds.

 In May, a former Kentucky sales and service associate pled guilty to one 

count violation of misappropriation of Postal Service funds. The judge 

sentenced the associate to 2 years of probation and ordered restitution 

in excess of $5,800 payable to the Postal Service (which was paid in 

full by the defendant). During a review of the employee’s accountability 

with agents, the sales associate attempted to repay $4,000, which she 

produced from within folded pieces of paperwork. During the subsequent 

interview, she said she once discovered a money order voucher was 

missing from her daily postal receipts. The associate said she did not 

know what to do since she could not enter the money orders without the 

vouchers and since they have to be issued in sequence. She said she 

discontinued entering receipts in the postal accounting system and kept 

the cash in her drawer instead of depositing the funds daily. When agents 

asked about the four personal checks made out to the Postal Service found 

in her cash drawer, she stated she would place personal checks in her 

drawer to remove cash to purchase stamps at other post offices when she 

was low. She admitted that she borrowed postal funds for personal use, 

“whenever the need came up.”

 An OIG investigation disclosed that a former Colorado sales and service 

associate falsely claimed refunds to defraud the Postal Service in the 

amount of $12,732. The false refunds were created by entering fictitious 

stamp refund transactions in varying amounts into the computer terminal. 

Video footage documented that customers did not return stamps and the 

associate did not provide cash refunds. The associate admitted to the 

scheme and subsequently resigned from his position at the Postal Service. 

In June, the former associate was sentenced in federal court to 6 months 

incarceration, 3 years of supervised release, and was ordered to pay 

$7,526 in restitution to the Postal Service.

WORKERS’ COMPENSATION FRAUD

The monetary and medical benefits paid by the Postal Service to workers’ 

compensation claimants (employees who sustained job-related injuries) in 

October 2011 totaled more than $1.2 billion and its estimated total liability for 

future workers’ compensation costs is more than $15.1 billion. Administered 

by the U.S. Department of Labor (DOL), the Office of Workers’ Compensation 

Programs (OWCP) provides direct compensation to providers, claimants, and 

beneficiaries. The Postal Service later reimburses the OWCP in a process 

known as “charge-back billings.” Investigative efforts during this reporting 

period resulted in nearly $65 million in cost savings or avoidances, 19 arrests, 

and 60 administrative personnel actions, including removals and suspensions 

and termination of benefits.

Claimant Fraud

The workers’ compensation program exists for employees who are 

legitimately injured while on duty. The program provides benefits to injured 

employees and their families while the employee is unable to work. Postal 

employees who attempt to defraud OWCP with false claims are criminally 

prosecuted to permanently prevent payment of additional compensation and 

to recover funds fraudulently obtained. Cases that may require administrative 

action are referred to the Postal Service and the DOL. Special agents work 

closely with Health and Resource Management specialists from the Postal 

Service on all phases of these investigations. Following are examples of workers’ compensation fraud cases investigated during this period.

 A former Michigan letter carrier was arrested and admitted in a May federal 

court appearance to a role in a workers’ compensation fraud scheme. The 

employee was provided with pre-trial diversion and ordered to complete 

40 hours of community service and pay about $7,000 in restitution to the 

Postal Service. The employee was further ordered to never seek future 

federal employment. During the investigation, we determined that the letter 

carrier reported about 20 on-the-job injuries in her 16 years of employment 

with the Postal Service and allegedly suffered a back injury while on duty 

in 2004, which allowed her to earn workers compensation benefits. The 

investigation further determined that the former letter carrier was selling 

real estate. OIG agents witnessed the former letter carrier attempt to sell 

multiple homes for a real estate business that she was affiliated with. As a 

result of the OIG’s evidence, the DOL terminated the employee’s benefits 

and the Postal Service realized a cost avoidance of more than $930,000.

 In August, a former Indiana letter carrier pled guilty to workers’ 

compensation fraud. The investigation revealed that the employee 

submitted approximately $1,871 in false travel reimbursement vouchers 

A former Michigan letter carrier alleged total disability from a work-related back injury 

in 2005, but our investigation found that she was selling real estate. OIG agents 

witnessed the former letter carrier attempt to sell multiple homes – evidence that led 

to a termination of the employee’s benefits.
24 | Semiannual Report to Congress

WORKERS’ COMPENSATION FRAUD

to the DOL for non-existent travel to receive medical services. Starting in 

2008, the letter carrier began submitting reimbursement claims for travel 

dates on which she did not travel, or she inflated the claimed mileage. 

The investigation also revealed that the former letter carrier maintained 

an Internet business selling sex toys, sexual enhancement pills, and 

pornographic DVDs on eBay. The letter carrier’s sentencing is pending.

 After a 3-day jury trial, a North Carolina couple was found guilty on nine 

of the 13 felony counts of false statements and fraud to obtain federal 

employee’s compensation. The husband and wife were both on the periodic 

roll after they claimed injuries while in the performance of their Postal 

Service duties. Surveillance conducted by OIG agents showed the couple 

repeatedly exceeded their medical restrictions by driving on numerous 

occasions for several miles, bending, mowing the lawn, and sitting on 

stools while gambling for an extended period of time at a North Carolina 

casino. The cost avoidance to the Postal Service is more than $2.1 million 

and the couple was terminated as a result of the investigation. Sentencing 

is pending. 

 An OIG investigation determined in April that a former North Carolina 

distribution clerk misrepresented her fitness for duty and continued to 

receive OWCP benefits, thus avoiding a return to gainful employment with 

the Postal Service. Agents determined that the employee exceeded her 

physical restrictions by exercising at a local gym approximately 4 to 6 days 

per week for over a year. The employee’s compensation was terminated 

resulting in a cost avoidance of more than $1.1 million dollars. 

 A former custodian from the Network Distribution Center in Bell, California. 

was found guilty in July of one count of insurance fraud of the workers’ 

compensation program. Subsequently, he was sentenced to 3 years 

of probation, 100 hours of community service, and ordered to pay 

$4,600 in restitution to the Postal Service. A joint investigation with the 

California Department of Insurance and DOL OIG revealed the custodian 

misrepresented his condition. Surveillance video depicted the custodian 

conducting home improvement projects, loading plywood onto a truck, and 

other activities beyond his limitations. The employee was removed from the 

Postal Service and his termination of benefits resulted in a cost avoidance 

of $848,791.

 On August 1, a former Texas letter carrier was sentenced to 3 years 

of probation, including 365 days of home confinement, 160 hours of 

community service, and restitution in the amount of $172,000 to the Postal 

Service. The OIG investigation discovered that from 2005 to 2010 the letter 

carrier submitted false travel vouchers for approximately 96,000 miles 

in medical reimbursable transportation claims. The letter carrier claimed 

that she attended three appointments daily for rehabilitation treatment, 6 

days a week, filing approximately 480 travel reimbursement requests and 

ultimately receiving payment of approximately $207,706. However, the 

letter carrier actually traveled to 13 medical appointments, which should 

have only yielded a reimbursement amount of $391.

 An investigation determined that a former Michigan carrier exceeded her 

stated medical limitations while receiving federal worker’s compensation 

benefits for 2 years. The employee routinely participated in exercise 

and fitness activities at a local YMCA where she was observed bending, 

twisting, weight lifting, and performing various activities beyond her stated 

disabilities. The DOL-OWCP terminated the employee’s compensation 

resulting in a cost avoidance of $776,961 to the Postal Service. 

Subsequently, the employee was terminated from the Postal Service. The 

former carrier pled guilty on April 29 to one count of false statements or 

fraud to obtain federal employees’ compensation. Sentencing is pending.

 A former Pennsylvania letter carrier pled guilty in June to 4 counts 

of providing false statements or fraud to obtain federal employees 

compensation. He supplied false statements on four Department of Labor 

forms on which he was required to report his employment activity and 

income. The former carrier had been out of work from the Postal Service 

since 1994, due to an alleged work-related back injury. The investigation 

determined he had been working in another state at an auto repair shop 

for several years. The investigation confirmed he received payment for this 

employment. In addition, video evidence showed him bending and picking 

up heavy boxes, as well as sacks of asphalt and repairing pot holes with a 

tamper. The former carrier admitted to working at the auto repair shop for 

about 5 years. The treating physician immediately returned the claimant 

to full-duty work and the DOL terminated the claim, resulting in more than 

$936,000 in cost avoidance for the Postal Service. The DOL also found 

the claimant at fault for creating an overpayment exceeding $177,000. 

Sentencing was scheduled for late September.

Medical Provider Fraud

The workers’ compensation program is also subject to fraud and abuse by 

medical providers used by postal employees injured on the job. A few seek 

to take advantage of this program by submitting false bills, colluding with 

claimants to extend benefits, or falsifying claim documents. When evidence of 

abuse exists, OIG agents investigate these providers.

 A New York neurologist pled guilty on July 6 to one count of health care 

fraud. The neurologist billed DOL-OWCP, Medicare, the Federal Employees’ 

Health Benefit Plan, and other health care benefit programs for fraudulent 

Employees who attempt to defraud the workers’ compensation program are criminally 

prosecuted. This former custodian was charged with insurance fraud after an 

investigation found he had misrepresented his condition. Surveillance video showed him 

conducting home improvement projects, loading plywood on a truck, and other activities 

beyond his limitations.
April 1 — September 30, 2011 | 25 

DELAY, DESTRUCTION, AND THEFT OF MAIL BY EMPLOYEES

medical services. The investigation conducted jointly with Health and 

Human Services, DOL, Office of Personnel Management; and local and 

state police departments determined that from January 2006 to December 

2009, the neurologist submitted claims for services that were not 

rendered; billed two different health care benefit programs for the same 

service performed on the same patient; and billed for services performed 

when he was out of the country. As a plea agreement, he agreed to forfeit 

$905,789. Sentencing is scheduled for December.

DELAY, DESTRUCTION, AND THEFT OF MAIL BY 

EMPLOYEES

Special agents investigate allegations of postal employees delaying, destroying, or stealing mail. Suspected employees are referred to prosecutors or to 

management for administrative action. 

Theft of Mail by Employees

Following are examples of cases in which postal employees stole mail for 

personal gain.

 OIG agents developed information in July 2009 that a former Arkansas 

mail handler over-labeled packages and parcels at the Memphis Processing 

and Distribution Center causing them to be rerouted to this personal 

residence. The former mail handler was sentenced in April to 24 months 

in federal prison, and ordered to pay a $10,000 fine and restitution. The 

mail handler had previously been charged with theft of mail and possession 

of stolen mail matter. Pursuant to a federal search warrant, OIG agents 

and the local police department seized 17 stolen firearms, including four 

fully automatic military rifles, thousands of dollars worth of silver coins, 

and tens of thousands of dollars of other merchandise, all stolen from the 

mail. Agents seized hundreds of Postal Service “We Care” bags, which 

were used by the mail handler to carry merchandise stolen from the mail 

handler’s work area. The mail handler retired while under investigation.

 The OIG received numerous complaints in late 2007 through early 2009 

that gift cards were not being delivered to customers. An investigation 

determined that a Cincinnati mail handler compromised thousands of 

greeting cards, stole more than $10,000 in cash, and $1,000 in gift cards 

from letters sent through his work area. During the investigation, agents 

caught the mail handler stealing mail while at work. Agents recovered the 

stolen funds in an envelope from his pocket during a search. The mail 

handler subsequently admitted that he had stolen various articles from the 

mail for about two and a half years and admitted to the theft of the funds. 

The investigation further determined that an associate of the mail handler 

used at least one of the stolen gift cards. The mail handler resigned from 

the Postal Service and pled guilty to theft of mail in May.

 A Kentucky letter carrier pled guilty in May to obstruction of 

correspondence and was sentenced to 4 months imprisonment; 60 hours 

of community service and ordered to pay restitution in excess of $3,100. 

The OIG received complaints from individuals alleging that the Postal 

Service failed to deliver the mail on a specific route. In February 2010, 

agents observed the carrier take the non-deliverable mail “for a ride”, 

opening a letter containing currency. Agents approached the carrier in 

her vehicle at the end the business day and discovered an opened letter 

on the front passenger seat of her vehicle. Funds from the envelope were 

recovered from the top portion of the driver’s console. Also, in plain view 

inside the vehicle, agents observed undelivered Standard and Periodical 

mail along with other rifled letters, and they recovered mail from the door 

pockets, sun visor, rear seat area, and the rear cargo area of the vehicle -- 

in total, about 3,310 pieces of mail including 347 rifled First Class letters 

and a rifled prescription drug parcel. The Postal Service terminated the 

letter carrier’s employment in February 2010.

 A New York letter carrier was found guilty on one count of conspiracy to 

defraud the government, mail theft, and conspiracy to commit mail theft. 

This investigation, conducted jointly with Internal Revenue Service-Criminal 

Investigation Division, revealed the letter carrier assisted in a scheme 

to defraud the government of more than $15 million in fraudulently filed 

income tax returns. The investigation determined the letter carrier was 

stealing fraudulent U.S. Treasury checks destined for numerous bad 

addresses on his delivery route. The letter carrier was receiving a sum 

of money for each U.S. Treasury check he procured for the individuals 

involved in the scheme. The letter carrier is scheduled to be sentenced in 

September. 

Delay or Destruction of Mail by Employees

Citizens and businesses expect their deposited mail to be delivered in a timely 

manner and not be delayed or destroyed. Postal employees and contractors 

who delay, desert, or dump mail are investigated by our special agents.

 A Maryland motor vehicle operator was sentenced to 6 months 

incarceration, 6 months home detention, 2 years supervised release, 100 

hours community service, and ordered not to seek future employment 

with the Postal Service. Agents investigated a report of discarded mail at 

a secluded location in Maryland. After searching the area, a large volume 

of undelivered and burned mail was discovered spread across a wooded 

lot. The motor vehicle operator was identified as the responsible party and 

A rifled parcel containing prescription drug medication was among the non-deliverable 

mail that agents discovered in a letter carrier’s vehicle. The carrier was sentenced to 4 

months imprisonment, community service, and ordered to pay restitution.
26 | Semiannual Report to Congress

CONTRACT FRAUD/OFFICIAL MISCONDUCT

was charged with the delay and destruction of mail. Subsequently, he was 

removed from the Postal Service.

 Agents received a tip from an anonymous customer that a former West 

Virginia rural carrier left undelivered mail and Postal Service property at an 

abandoned residence. The investigation determined that the abandoned 

residence was previously rented by the rural carrier. Agents gained access 

to the residence and discovered hundreds of pieces of undelivered mail as 

well as mail processing equipment. The former rural carrier pled guilty in 

July to one count of petit larceny. The rural carrier’s sentencing is pending. 

The Postal Service terminated the rural carrier’s employment in May 2010.

CONTRACT FRAUD

The Postal Service manages contracts, ranging from multimillion dollar 

national contracts for services such as transportation networks and IT 

infrastructures to local contracts for supplies and services at individual 

postal facilities. The OIG aids the Postal Service by investigating allegations 

of contract fraud, waste, and misconduct. When contract improprieties are 

documented, special agents present the evidence for criminal and civil prosecution and administrative remedies. 

 During this reporting period, we conducted 85 contract fraud 

investigations, resulting in 15 arrests and nearly $20 million in monetary 

benefits to the Postal Service.

 A Missouri postmaster was sentenced in June to 2 years of probation 

after pleading guilty to one count of accepting a bribe/gratuity. A mailer 

devised a scheme to defraud the Postal Service by fraudulently indicating 

pre-canceled stamps were included in its mailings when they were not. 

The mailer and its employee paid the postmaster $20,000 to accept the 

fraudulent mailings. The mailer also paid a Postal Service supervisor, at 

the same office, $10,000 to accept the mailings. In June, the mailer’s 

employee was sentenced to 3 years of probation after pleading guilty to 

mail fraud. Restitution of $2,990,000 was ordered to be paid to the Postal 

Service. A few months prior, the mailer pled guilty to mail fraud, false 

statements, bribery, and offering gratuities. The mailer’s sentencing is 

pending. 

 In March, following a joint contract fraud investigation by the OIG, Federal 

Bureau of Investigation, Army Criminal Investigations Division, and General 

Services Administration, a Postal Service contractor was sentenced to 10 

years imprisonment, followed by 6 years of supervised release, and $57.3 

million in restitution, of which $4.2 million was assigned to the Postal 

Service. Two of the convicted Postal Service contractor’s employees were 

sentenced to 3 years imprisonment, followed by 3 years of supervised 

release. The Postal Service contract stated the contractor must use 75 

percent disabled persons when producing tray sleeves to process the mail, 

and that he could not use subcontractors. The investigation discovered 

that the contractor failed to comply with the contract by not employing 

the required number of severely disabled persons and improperly hired 

subcontractors to complete the work. 

 A mailer in California was sentenced in May to 366 days imprisonment, 

followed by 3 years probation, and ordered to pay $342,000 in restitution 

after pleading guilty to 2 counts of theft of government property and 

postage. The OIG investigation discovered that the mailer concocted a 

fraudulent check scheme to pay for his satellite business’ bulk mailings 

by writing checks from fictitious accounts or an account with insufficient 

funds throughout several California cities. 

OFFICIAL MISCONDUCT

Postal Service employees commit misconduct when they:

 Misuse Postal Service computers.

 Destroy or steal postal property.

 Lie or forge signatures on official documents.

 Steal funds.

 Abuse authority.

 Sabotage operations.

 Use narcotics or sell drugs while on duty.

 Abuse alcohol while on duty.

During this reporting period special agents investigated 44 cases of employees selling, possessing, or using illegal drugs on duty; made 38 arrests; and 

the Postal Service took 55 administrative personnel actions. Following are 

examples of cases the OIG investigated involving employee misconduct.

 A letter carrier pled guilty in March to knowingly conspiring with others 

to possess with the intent to distribute more than 1,000 kilograms of 

marijuana. The letter carrier and eight other non-Postal Service defendants 

were charged in a multistate marijuana trafficking and shoplifting 

conspiracy to transport large quantities of marijuana between Arizona and 

southern Ohio. The profits from the marijuana distribution were used to 

purchase automobiles, motorcycles, boats, and property in Arizona and 

Ohio. More than 100 real estate properties, numerous cars and boats are 

being sought through asset forfeiture. Sentencing is pending. The Postal 

Service placed the letter carrier on indefinite suspension in February. 

 In April, a letter carrier pled guilty to Social Security fraud and was 

sentenced to 5 years of probation and ordered to pay restitution of 

$41,635 to the Social Security Administration (SSA). In 2008, the SSA 

OIG provided information that the letter carrier received and cashed his 

mother’s social security benefit checks after her death in 2002. The letter 

carrier was interviewed and admitted to using his mother’s SSA benefits 

after her death.

 A New York maintenance mechanic pled guilty to receipt and possession 

of child pornography in February. This investigation, conducted jointly 

with a local police department, revealed the maintenance mechanic 

misused his Postal Service computer by searching for and accessing 

known child pornography websites. It also revealed he downloaded child 

pornography images while on duty at his workplace. Weblogs belonging to 

the maintenance mechanic confirmed he spent more than 170 days on the 

Internet, averaging 45 minutes per day, from April 2009 until April 2010. 

The vast majority of that time was spent searching for child pornography. 

The maintenance mechanic was sentenced to 70 months imprisonment 

and 20 years of supervised release. Following the investigation, the 

maintenance mechanic retired from the Postal Service.
April 1 — September 30, 2011 | 27 

EXECUTIVE INVESTIGATIONS AND INTERNAL AFFAIRS

OI conducts criminal and administrative investigations of Postal Service 

executives, and OIG and Postal Inspection Service personnel, as well as 

whistleblower reprisal investigations.

Whistleblower Reprisal Activity

While the Whistleblower Protection Act does not apply to the Postal Service, 

similar postal policy prohibits whistleblower retaliation. These Employee and 

Labor Relations Manual (ELM) provisions prohibit retaliation against employees who disclose information they reasonably believe to be: 1) a violation of 

any rule, law or regulation; or 2) a gross waste of funds, gross mismanagement, abuse of authority, or a substantial and specific danger to public health 

or safety. The OIG reviews postal whistleblower allegations and, when a prima 

facie finding of retaliation is reached, refers the matter to postal management 

for action.

Allegations received: .............................................................................95

OIG investigations initiated: ...................................................................14

Investigations closed with no finding of retaliation

 or deferred to other adjudicative body: ...............................................19

Allegations closed with no action: ........................................................100

Open investigations: ................................................................................5

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

EXECUTIVE INVESTIGATIONS AND INTERNAL AFFAIRS

OFFICIAL MISCONDUCT — ‘Operation Dirty Eagles’

In September 2010, a federal grand jury in the District of Puerto 

Rico indicted 20 individuals as a result of an investigation led by 

the OIG and the Drug Enforcement Administration (DEA). Seven 

of the defendants were current employees of the U.S. Postal 

Service. The defendants were charged with conspiracy to possess 

with intent to distribute heroin, cocaine, and marijuana; using 

firearms during and in relation to a drug trafficking crime; unlawful 

possession of a controlled substance; and theft of mail while 

impersonating a mail carrier. Others received pay and benefits 

from the Postal Service without performing their assigned duties. 

Our investigation disclosed that from or about 2003, the seven 

postal employees abused their positions as mail carriers in Puerto 

Rico, to facilitate drug shipments between Puerto Rico, Texas, 

California, and Arizona.

The conspiracy involved Postal Service employees informing 

clients of successful methods to send narcotics through the mail 

system to avoid detection from law enforcement. The defendants 

met with their co-conspirators at pre-determined locations 

during work hours to receive parcels while wearing their Postal 

Service uniforms, in order to make these transactions appear less 

suspicious. The defendants also took parcels to the Post Office and 

placed them into the mail system. The defendants then obtained 

confirmation numbers for their clients so they could track the 

location of the packages. At the conclusion of the transactions, the 

defendants provided receipts and parcel confirmation numbers to their clients as proof that the packages had been mailed.

The amount of the payments varied based on the weight of the parcel and the amount and type of narcotics being mailed. The defendants also discovered 

other narcotic traffickers who were using the mail system on their routes to send or receive narcotics. The defendants warned these traffickers that they 

had to pay a fee to conduct this activity on their routes. If the traffickers did not pay the mail carriers this fee, the defendants would steal the narcotics.

From January 2011 to present, 19 of the 20 defendants pled guilty. Fifteen defendants have faced sentences ranging from probation to 108 months 

incarceration, with the remaining four defendants pending sentencing. The final defendant is in federal custody in Illinois. All seven postal employees were 

removed from the Postal Service.

A major investigation in Puerto Rico, led by the OIG and the Drug Enforcement Agency, 

yielded 20 indictments and a recovery of firearms and drugs. Seven postal employees were 

among those indicted on drug, conspiracy, theft of mail, and firearm charges.

April 1 — September 30, 2011 | 29 

APPENDIX A

APPENDIX A

Reports Issued to Postal Service Management

For the period April 1 — September 30, 2011

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 (MA) reports in accordance with the identified needs of the project.

Summary

Risk Categories Number of Reports Funds Put to Better Use Questioned Costs

Unsupported 

Questioned Costs Revenue Impact

Strategic 14 $8,920,327,334 $33,375,758 — $2,207,054,263 

Financial 155 $191,685,233 $979,499,705 $801,107,522 $312,100 

Operational 30 $2,356,092,667 $995,514,644 $171,606,700 $19,193,730 

SUB-TOTAL 199 $11,468,105,234 $2,008,390,107 $972,714,222 $2,226,560,093 

PARIS Risk Model Reports 31 — — — — 

TOTAL 230 — — — — 

Fiscal Year 2011 Summary

For the period October 1, 2010 — September 30, 2011

Number of Reports Funds Put to Better Use Questioned Costs

Unsupported 

Questioned Costs Revenue Impact

Issued Reports 306 $73,097,541,486 $2,574,649,973 $1,238,894,416 $2,285,080,889 

PARIS Risk Model Reports* 60 — — — —

Total 366 — — — —

*Note – PARIS Risk model reports were not listed in the March 2011 SARC

APPENDICES

The Inspector General (IG) Act of 1978 requires semiannual reports on the immediately preceding 6-month periods ending September 30 and March 31. 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.
30 | Semiannual Report to Congress

Reports with Quantifiable Potential Monetary Benefits

Funds Put 

to Better Use Questioned Costs

Unsupported 

Questioned Costs Revenue Impact

STRATEGIC RISK

Delivery

Modes of Delivery; DR-AR-11-006; 7/7/2011 $4,513,964,171 $24,052,226 — —

Postal Service Patent Management Continuation; DA-MA-11-002; 4/8/2011 — — — $2,054,278,667 

Engineering and Facilities

Conflicts of Interest: Facility Leases and Contract Delivery Services; 

DA-AR-11-008; 6/8/2011

— $737,359 $737,359 —

FINANCIAL RISK

Cost, Revenue, and Rates

Transportation Cost System Inputs into the Cost and Revenue Analysis Report; 

CRR-AR-11-004; 9/19/2011

$9,799,206 — — —

Field Financial

Business Mail Acceptance Centralization Process; FF-AR-11-015; 9/23/2011 $118,969,551 $113,009,745 — —

Caribbean District Financial Risk; FF-AR-11-017; 9/30/2011 — $24,484 $24,484 $312,100

Global Express Guaranteed; FF-AR-11-016; 9/27/2011 — $314,351 $314,351 —

New Approaches to Reduce Costs; FF-AR-11-009; 6/14/2011 $1,426,655,830 — — —

Postal Service Refunds; FF-AR-11-013; 8/30/2011 $13,155,927 — — —

Purchasing Compliance and Imprudent Purchases Follow-Up Audit; 

FF-AR-11-010; 6/21/2011 

$314,895 $314,895 —

Stamp Distribution Procedures; FF-AR-11-012; 7/29/2011 $5,907,151 — — —

Financial Reporting

Fiscal Year 2010 Financial Statements Audit – San Mateo Information Technology 

and Accounting Service Center; FT-AR-11-008; 4/7/2011

— $ 75,838 $ 75,838 —

Officer Compensation for Calendar Year 2010; FT-AR-11-011; 9/23/2011 — $ 59,174 — —

Human Resources and Security

Retirement for U.S. Postal Service Employees on Workers’ Compensation; 

HR-MA-11-001; 4/22/2011

$377,936,529 — — —

APPENDIX A

Definitions:

Questioned Costs. A cost that is unnecessary, unreasonable, unsupported, or an alleged violation of law, regulation, contract, and so forth.

Unsupported Questioned Costs. A cost that is not supported by adequate documentation. Unsupported costs are included with the amounts shown as 

Questioned Costs.

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

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.

PARIS Risk Models. Performance and Results Information Systems (PARIS) models with data visualization techniques. These models identify operational 

and financial risks, and enable OA staff to conduct reviews of Postal Service functions on a nationwide basis, while also identifying areas of emerging risk 

— fundamentally changing the way the OIG examines and monitors risk. We present quarterly summary results and trend analyses of these risk models to 

key Postal Service executives and stakeholders. 
April 1 — September 30, 2011 | 31 

Funds Put 

to Better Use Questioned Costs

Unsupported 

Questioned Costs Revenue Impact

Supply Management

Audit of Incurred Costs of ICF Group, Incorporated for Fiscal Year 2007; 

CA-CAR-11-009; 7/26/2011

— $350 — —

Audit of SICK, Inc. Proposal for the Flats Edge Doubles Detection (FEDD) 

Modification Kits; CA-CAR-11-007; 7/11/2011

— $72,994 — —

Bell Services Group, Inc. Invoice Claim; CA-MA-11-001; 4/20/2011 — $2,652 — —

Report on Audit of Proposal Submitted by Northrop Grumman Corporation, 

Electronic Systems Company; CA-CAR-11-010; 9/2/2011

— $154,389,118 $143,509,693 —

Report on Audit of Siemens, Industry Inc., Mobility Division, Infrastructure 

Logistics Rate Proposal; CA-CAR-11-012; 9/22/2011

— $648,106 — —

Transportation

Management of the Highway Contract Route Voyager Card Program; 

NL-AR-11-003; 6/7/2011

$53,652,604 $53,719,737 — —

OPERATIONAL RISK

Cost, Revenue, and Rates

Service Performance Measurement Data - Commercial Mail; CRR-AR-11-003; 

9/6/2011

— — — $19,193,730

Delivery

Follow-Up on City Delivery Standard Operating Procedures; DR-AR-11-007; 

9/26/2011

— $88,128,993 — —

National Assessment of City Delivery Efficiency 2011 - Office Performance; 

DR-MA-11-002; 7/19/2011

— $88,192,128 — —

Engineering and Facilities

Facility Optimization: Former Southeast Area Districts; DA-AR-11-007; 5/13/2011 $151,624,144 — — —

Facility Optimization: Great Lakes Area; DA-AR-11-005; 4/22/2011 $19,977,519 — —

Facility Optimization: Pacific Area Districts; DA-AR-11-006; 5/13/2011 $172,248,822 — — —

Nationwide Facility Optimization; DA-AR-11-009; 8/26/2011 $1,992,347,498 — — —

Human Resources and Security

Postal Service Work Rules and Compensation Systems; HR-AR-11-002; 

9/19/2011

$2,591,971,598 — — —

Information Technology

Project Phoenix; IT-AR-11-009; 9/14/2011 — — — $152,775,596

Network Optimization

Assessment of Overall Plant Efficiency 2011; NO-MA-11-004; 5/20/2011 — $647,586,823 — —

Supply Management

Contract Delivery Service Cost Controls; CA-MA-11-002; 9/26/2011 — $8,918,958 $8,918,958 —

Contract Funding Approval; CA-AR-11-005; 8/25/2011 — $601,388,219 $601,388,219 —

Contract Postal Units Contract Oversight; CA-AR-11-007; 9/30/2011 — $162,687,742 $162,687,742 —

Internal Controls over the Contract Close-out Process; CA-AR-11-004; 4/27/2011 — $54,742,683 $54,742,683 —

APPENDIX A
32 | Semiannual Report to Congress

Funds Put 

to Better Use Questioned Costs

Unsupported 

Questioned Costs Revenue Impact

Transportation

Evaluation of Major Transportation Technology Initiatives; NL-AR-11-008; 

9/27/2011

— $9,323,532 — —

Highway Contract Routes – Western Pennsylvania District; NL-AR-11-007; 

9/27/2011 

$1,627,975 — — —

Postal Vehicle Service Transportation Routes – Baltimore Processing 

and Distribution Center; NL-AR-11-004; 7/25/2011

$8,240,606 — — —

Postal Vehicle Services - Scheduling and Staffing - Western Pennsylvania District; 

NL-AR-11-005; 8/12/2011

$10,026,103 — — —

TOTAL $11,468,105,234 $2,008,390,107 $972,714,222 $2,226,560,093 

 

APPENDIX A
April 1 — September 30, 2011 | 33 

APPENDIX A

Report Listing

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

For the period April 1— September 30, 2011

STRATEGIC RISK

Cost, Revenue, and Rates

Transportation Cost System Inputs into the Cost 

and Revenue Analysis Report; CRR-AR-11-004; 

9/19/2011

Delivery

Global Positioning System: End-to-End Platform 

and Actionable, Robust Reports Needed to Achieve 

Goals and Potential Return-on-Investment; 

DR-MA-11-003; 9/30/2011

Modes of Delivery; DR-AR-11-006; 7/7/2011

Engineering & Facilities

Intelligent Mail: Realizing Revenue Assurance 

Benefits; DA-AR-11-010; 8/30/2011 

Postal Service Patent Management Continuation; 

DA-MA-11-002; 4/8/2011

Field Financial 

Leveraging Assets to Address Financial 

Obligations; FF-MA-11-118; 7/12/2011

New Approaches to Reduce Costs; FF-AR-11-009; 

6/14/2011

Human Resources and Security

Postal Service Work Rules and Compensation 

Systems; HR-AR-11-002; 9/19/2011 

Retirement for U.S. Postal Service Employees 

on Workers’ Compensation; HR-MA-11-001; 

4/22/2011

Information Technology

Project Phoenix; IT-AR-11-009; 9/14/2011

Network Optimization

Web-Based Application for the Discontinuance 

of Postal Service-Operated Retail Facilities; 

EN-AR-11-006(R); 7/7/2011

Sales and Service

Market Intelligence; MS-AR-11-005; 8/10/2011

Postal Service’s Innovation Process for Competitive 

and Market-Dominant Products; MS-AR-11-004; 

6/8/2011

Transportation

Evaluation of Major Transportation Technology 

Initiatives; NL-AR-11-008; 9/27/2011

FINANCIAL RISK

Cost, Revenue, and Rates

PostalOne! Mail Data Input Validation; 

CRR-AR-11-002; 5/23/2011

Engineering & Facilities

Business Mail Acceptance Centralization Process; 

FF-AR-11-015; 9/23/2011

Caribbean District Financial Risk; FF-AR-11-017; 

9/30/2011

Conflicts of Interest: Facility Leases and Contract 

Delivery Services; DA-AR-11-008; 6/8/2011

Field Financial 

District Practices Affecting Financial Risk; 

FF-MA-11-116; 7/11/2011

Financial Controls Over Passports; FF-AR-11-011; 

7/27/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Albany Business Mail Entry Unit – Albany, NY; 

FF-MA-11-141; 8/11/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Austin Business Mail Entry Unit Austin, TX; 

FF-MA-11-129; 7/26/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Boston Business Mail Entry Unit – Boston, MA; 

FF-MA-11-052; 4/7/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Charlotte, NC; FF-MA-11-131; 8/2/2011

Fiscal Year 2011 Financial Testing Compliance 

Oversight Reviews – Mid-City Cincinnati Business 

Mail Entry Unit Cincinnati, OH; FF-MA-11-137; 

8/5/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews 

– Cleveland, OH Business Mail Entry Unit – 

Cleveland, OH; FF-MA-11-096; 5/17/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Harrisburg Business Mail Entry Unit Harrisburg, PA; 

FF-MA-11-140; 8/5/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Hartford Business Mail Entry Unit – Hartford, CT; 

FF-MA-11-051; 4/7/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Houston Business Mail Entry Unit – Houston, TX; 

FF-MA-11-077; 4/27/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews 

– Industry General Mail Facility Business Mail 

Entry Unit – City of Industry, CA; FF-MA-11-160; 

9/12/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews 

– Jacksonville Business Mail Entry Unit – 

Jacksonville, FL; FF-MA-11-157; 9/8/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Los Angeles Business Mail Entry Unit – 

Los Angeles, CA; FF-MA-11-133; 8/3/2011
34 | Semiannual Report to Congress

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Miami Business Mail Entry Unit – Miami, FL; 

FF-MA-11-071; 4/27/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Nashville Business Mail Entry Unit – Nashville, TN; 

FF-MA-11-132; 7/29/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Unit Oversight Reviews – New York 

Business Mail Entry Unit – New York, NY; 

FF-MA-11-097; 5/17/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

North Texas Business Mail Entry Unit – Coppell, TX; 

FF-MA-11-095; 5/16/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Omaha Business Mail Entry Unit – Omaha, NE; 

FF-MA-11-061; 4/14/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit, Oversight Reviews 

– Orlando Mail Processing Annex, Business 

Mail Entry Unit – Orlando, FL; FF-MA-11-138; 

8/8/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews 

– Philadelphia Business Mail Entry Unit – 

Philadelphia, PA; FF-MA-11-134; 8/5/2011

Fiscal Year 2011 Financial Testing Oversight 

Reviews – Phoenix Business Mail Entry Unit – 

Phoenix, AZ; FF-MA-11-130; 7/29/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews 

– Pittsburgh, PA Business Mail Entry Unit – 

Pittsburgh, PA; FF-MA-11-086; 5/10/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail entry Unit Oversight Reviews – 

Pittsburgh Business Mail Entry Unit – Pittsburgh, 

PA; FF-MA-11-166; 9/20/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Portland Business Mail Entry Unit – Portland, OR; 

FF-MA-11-126; 7/22/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Salt Lake City Business Mail Entry Unit – Salt Lake 

City, UT; FF-MA-11-060; 4/14/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – San 

Francisco Business Mail Entry Unit – 

San Francisco, CA; FF-MA-11-069; 4/15/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

San Francisco Business Mail Entry Unit Program – 

San Francisco, CA; FF-MA-11-165; 9/19/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

St. Louis Business Mail Entry Unit – St. Louis, MO; 

FF-MA-11-164; 9/15/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews – 

Tampa Mail Processing Annex – Tampa, FL; 

FF-MA-11-066; 4/19/2011

Fiscal Year 2011 Financial Testing Compliance 

Business Mail Entry Unit Oversight Reviews 

– Washington Business Mail Entry Unit – 

Washington, DC; FF-MA-11-163; 9/12/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – American 

Web Detached Mail Unit – Denver, CO; 

FF-MA-11-081; 5/6/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Cabelas 

Detached Mail Unit – Wheeling, WV; 

FF-MA-11-084; 5/10/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Craftsman 

Press Detached Mail Unit – Hyattsville, MD; 

FF-MA-11-055; 4/8/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Data Mail, 

Detached Mail Unit – Newington, CT; 

FF-MA-11-110; 6/14/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Direct 

Technologies Detached Mail Unit – Suwanee, GA; 

FF-MA-11-072; 4/27/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – DST 

Output Detached Mail Unit – El Dorado Hills, CA; 

FF-MA-11-120; 7/11/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – First Data 

Resources Detached Mail Unit, Omaha, NE, 

FF-MA-11-119; 7/8/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Houston 

Chronicle Detached Mail Unit – Houston, TX; 

FF-MA-11-059; 4/14/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – 

Mailworks Detached Mail Unit – Albany, NY; 

FF-MA-11-098; 5/18/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Moores 

Business Detached Mail Unit – Thurmont, MD; 

FF-MA-11-112; 6/17/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit, Oversight Reviews – New York 

Life Detached Mail Unit – Alpharetta, GA; 

FF-MA-11-108; 6/10/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – North 

American Communications Detached Mail Unit – 

Duncansville, PA; FF-MA-11-125; 7/20/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – North 

American Mailing Service Detached Mail Unit – 

El Paso, TX; FF-MA-11-049; 4/6/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – PitneyBowes Professional Services Industries Presort 

Services Industries Presort Services Detached Mail 

Unit – Grove City, OH; FF-MA-11-121; 7/11/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – 

Publication Printers Detached Mail Unit – Denver, 

CO; FF-MA-11-064; 4/14/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Redi Mail 

Detached Mail Unit – Fairfield, NJ; FF-MA-11-107; 

6/9/2011

APPENDIX A
April 1 — September 30, 2011 | 35 

APPENDIX A

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – RR 

Donnelley Detached Mail Unit – Bolingbrook, IL; 

FF-MA-11-122; 7/18/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Streamlite 

Inc., Detached Mail Unit – Moonachie, NJ; 

FF-MA-11-054; 4/8/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – Trend 

Offset Detached Mail Unit - Carrollton, TX; 

FF-MA-11-115; 7/6/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – United 

Litho Detached Mail Unit – Ashburn, VA; 

FF-MA-11-079; 4/28/2011

Fiscal Year 2011 Financial Testing Compliance 

Detached Mail Unit Oversight Reviews – World 

Marketing Detached Mail Unit – Doraville, GA; 

FF-MA-11-113; 6/17/2011

Fiscal Year 2011 Financial Testing Compliance, 

Plant-Verified Drop Shipment Oversight Reviews – 

Albany, NY; FF-MA-11-148; 8/19/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment – Oversight Reviews 

– Atlanta Plant-Verified Drop Shipment – Atlanta, 

GA; FF-MA-11-139; 8/8/2011

Fiscal Year 2011 Financial Testing Compliance, 

Plant-Verified Drop Shipment Oversight Reviews – 

Atlanta Network Distribution Center – Atlanta, GA; 

FF-MA-11-146; 8/22/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Austin Processing and Distribution Center – Austin, 

TX; FF-MA-11-063; 4/14/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Bloomington Processing and Distribution Facility – 

Bloomington, IL; FF-MA-11-159; 9/8/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Columbus Plant-Verified Drop Shipment – 

Columbus, GA; FF-MA-11-128; 7/26/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Columbus Processing and Distribution Center – 

Columbus, OH; FF-MA-11-153; 9/1/2011

Fiscal Year 2011 Financial Testing Compliance, 

Plant-Verified Drop Shipment Oversight Reviews 

– Denver Mail Processing Annex Plant-Verified 

Drop Shipment – Denver, CO; FF-MA-11-145; 

8/19/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Dominick V Daniels Processing and Distribution 

Center Plant-Verified Drop Shipment – Kearny, NJ; 

FF-MA-11-142; 8/17/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Fort Worth Processing and Distribution Center – 

Fort Worth, TX; FF-MA-11-144; 8/23/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Fort Worth Processing and Distribution Center – 

Fort Worth, TX; FF-MA-11-161; 9/9/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Grand Junction Foresight Carrier Annex PlantVerified Drop Shipment – Grand Junction, CO; 

FF-MA-11-150; 8/30/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Greensboro Network Distribution Center – 

Greensboro, OH; FF-MA-11-154; 9/2/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Linthicum Processing and Distribution Center 

– Linthicum Heights, MD; FF-MA-11-085; 

5/10/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– New Castle Processing and Distribution Facility 

Plant-Verified Drop Shipment – New Castle, PA; 

FF-MA-11-147; 8/23/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– North Texas Processing and Distribution Center – 

Coppell, TX; FF-MA-11-127; 7/22/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Pittsburgh Network Distribution Center – 

Warrendale, PA; FF-MA-11-152; 9/1/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Prescott Post Office – Prescott, AZ; 

FF-MA-11-068; 4/20/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Rapid City Post Office – Rapid City, SD; 

FF-MA-11-078; 4/27/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– San Francisco Network Distribution Center 

Plant-Verified Drop Shipment – Richmond, CA; 

FF-MA-11-155; 9/2/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– San Jose Processing and Distribution Center, 

Plant-Verified Drop Shipment – San Jose, CA; 

FF-MA-11-135; 8/3/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– San Jose Processing and Distribution Center, 

Plant-Verified Drop Shipment – San Jose, CA; 

FF-MA-11-167; 9/23/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Seattle Processing and Distribution Center – 

Seattle, WA; FF-MA-11-050; 4/6/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Shrewsbury Central MA Processing and 

Distribution Center – Shrewsbury, MA; 

FF-MA-11-073; 4/25/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Southern Connecticut Processing and Distribution 

Center – Wallingford, CT; FF-MA-11-151; 

8/29/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Southern Maine Processing and Distribution Center 

– Scarborough, ME; FF-MA-11-162; 9/9/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews 

– Springfield Logistics and Distribution Center – 

Springfield, MA; FF-MA-11-156; 9/7/2011
36 | Semiannual Report to Congress

APPENDIX A

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Springfield Mail Processing and Distribution Facility 

– Springfield, IL; FF-MA-11-136; 8/11/2011

Fiscal Year 2011 Financial Testing Compliance, 

Plant-Verified Drop Shipment, oversight Reviews – 

Terre Haute Plant-Verified Drop Shipment – Terre 

Haute, IN; FF-MA-11-158; 9/8/2011

Fiscal Year 2011 Financial Testing Compliance 

Plant-Verified Drop Shipment Oversight Reviews – 

Washington National Distribution Center – Capitol 

Heights, MD; FF-MA-11-076; 4/26/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews – Best Wishes 

Postal Retail Unit – Santa Rosa, CA; 

FF-MA-11-082; 5/10/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews – Manassas 

Park Postal Retail Unit – Manassas Park, VA; 

FF-MA-11-093; 5/16/2011

Fiscal Year 2011 Financial Testing – Compliance 

Postal Retail Unit Oversight Reviews – Merlin 

Postal Retail Unit – Merlin, OR; FF-MA-11-094; 

5/16/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews – NW St. 

Johns Finance Station (FTSA) – Jacksonville, FL; 

FF-MA-11-080; 4/28/2011

Fiscal Year 2011 Financial Testing

Compliance Postal Retail Unit Oversight Reviews 

– Junction Post Office – Junction, TX; FFMA-11-101; 5/23/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews 

– Lawrenceville Crogan Street Station – 

Lawrenceville, GA; FF-MA-11-087; 5/12/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews – North Little 

Rock Main Office – North Little Rock, AR; 

FF-MA-11-100; 5/20/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews – Orangeburg 

Postal Retail Unit – Orangeburg, NY; 

FF-MA-11-102; 5/25/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews – Perry Hall, 

MD, Postal Retail Unit – Perry Hall, MD; 

FF-MA-11-091; 5/16/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews – Silverado 

Station – Las Vegas, NV; FF-MA-11-099; 

5/18/2011

Fiscal Year 2011 Financial Testing - Compliance 

Postal Retail Unit Oversight Reviews – Taneytown, 

MD; FF-MA-11-090; 5/16/2011

Fiscal Year 2011 Financial Testing Compliance 

Postal Retail Unit Oversight Reviews – Terre Hill 

Postal Office – Terre Hill, PA; FF-MA-11-092; 

5/17/2011

Fiscal Year 2011 Financial Testing Compliance 

Voyager eFleet Card Program Oversight Reviews 

– Bakersfield Hillcrest Annex – Bakersfield, CA; 

FF-MA-11-065; 4/14/2011

Fiscal Year 2011 Financial Testing Compliance 

Voyager eFleet Card Program, Oversight Reviews – 

Duluth, MN; FF-MA-11-104; 5/27/2011

Fiscal Year 2011 Financial Testing Compliance 

Voyager eFleet Card Program Oversight Reviews 

– Gibsonville Voyager eFleet Card Program – 

Gibsonville, NC; FF-MA-11-058; 4/14/2011

Fiscal Year 2011 Financial Testing Compliance 

Voyager eFleet Card Program Oversight Reviews 

– Interbay Station Voyager eFleet Card Program – 

Tampa, FL; FF-MA-11-056; 4/15/2011

Fiscal Year 2011 Financial Testing Compliance 

Voyager eFleet Card Program Oversight Reviews 

– Kirkwood Delivery Annex Voyager eFleet Card 

Program – Kirkwood, MO; FF-MA-11-062; 

4/18/2011

Fiscal Year 2011 Financial Testing Compliance 

Voyager eFleet Card Program Oversight Reviews – 

Lincoln Post Office Voyager eFleet Card Program 

– Lincoln, CA; FF-MA-11-074; 4/25/2011

Fiscal Year 2011 Financial Testing

Compliance Voyager eFleet Card Program 

Oversight Reviews – Rochester Downtown Station 

Voyager eFleet Card Program – Rochester, NY; 

FF-MA-11-067; 4/19/2011

Fiscal Year 2011 Financial Testing Compliance 

Voyager eFleet Card Program Oversight Reviews 

– Wellesley Hills Branch – Wellesley Hills, MA; 

FF-MA-11-083; 5/10/2011

Fiscal Year 2011 Financial Testing Compliance 

Voyager eFleet Card Program Oversight Reviews 

– Westside Station Voyager eFleet Card Program – 

Greensboro, NC; FF-MA-11-053; 4/7/2011

Fiscal Year 2011 Financial Testing Compliance – 

Voyager eFleet Card Program Oversight Reviews 

– Wyoming Post Office – Wyoming, RI; 

FF-MA-11-057; 4/14/2011

Fiscal Year 2011 Review of Statistical Tests – 

Atlanta District; FF-MA-11-070; 4/25/2011

Fiscal Year 2011 Review of Statistical Tests – 

Capital District; FF-MA-11-124; 7/20/2011

Fiscal Year 2011 Review of Statistical Tests – 

Central Plains District; FF-MA-11-089; 5/12/2011

Fiscal Year 2011 Review of Statistical Tests – 

Chicago District; FF-MA-11-109; 6/13/2011

Fiscal Year 2011 Review of Statistical Tests - 

Detroit District; FF-MA-11-088; 5/11/2011

Fiscal Year 2011 Financial Testing Compliance 

Review of Statistical Tests – Fort Worth District; 

FF-MA-11-048; 4/1/2011

Fiscal Year 2011 Review of Statistical Tests – 

Hawkeye District; FF-MA-11-103; 5/26/2011

Fiscal Year 2011 Review of Statistical Tests – 

New York District; FF-MA-11-105; 6/8/2011

Fiscal Year 2011 Review of Statistical Tests 

– Philadelphia Metropolitan; FF-MA-11-117; 

7/8/2011

Fiscal Year 2011 Review of Statistical Tests – 

Sacramento District; FF-MA-11-111; 6/16/2011

Fiscal Year 2011 Review of Statistical Tests – 

Southeast New England District; FF-MA-11-075; 

4/26/2011

Fiscal Year 2011 Review of Statistical Tests – 

Western New York District; FF-MA-11-106; 

6/8/2011

Fiscal Year 2011 Review of Statistical Tests – 

San Diego District; FF-MA-11-114; 6/17/2011

Global Express Guaranteed; FF-AR-11-016; 

9/27/2011

Government Relations Operations; FF-AR-11-014; 

9/23/2011

Postal Service Refunds; FF-AR-11-013; 

8/30/2011

Purchasing Compliance and Imprudent Purchases 

Follow-Up Audit; FF-AR-11-010; 6/21/2011 

Stamp Distribution Procedures; FF-AR-11-012; 

7/29/2011
April 1 — September 30, 2011 | 37 

Statistical Tests for Fiscal Year 2011; 

FF-MA-11-168; 9/29/2011

Financial Reporting

Fiscal Year 2010 Financial Statements Audit – 

San Mateo Information Technology and Accounting 

Service Center; FT-AR-11-008; 4/7/2011

Fiscal Year 2010 Sarbanes-Oxley Testing for 

Selected Business Processes; FT-MA-11-003; 

5/19/2011 

Fiscal Year 2011 10Q Review; FT-ID-11-009 

and FT-AR-11-012-; 6/22/2011; 8/3/2011

Fiscal Year 2011 Quarter III, Draft Fonn IC-Q 

Financial; FT-ID-11-012; 8/3/2011 

Independent Report on Employee Benefits, 

Withholdings, Contributions, and Supplemental 

Semiannual Headcount Reporting Submitted to the 

Office of Personnel Management; FT-AR-11-012; 

9/30/2011

Officer Compensation for Calendar Year 2010; 

FT-AR-11-011; 9/23/2011

Postal Service Five-Year Financial Plan; 

FT-MA-11-004; 8/18/2011

Unemployment Compensation; FT-MA-11-005; 

9/30/2011

Human Resources and Security

2009 Pay for Performance Program; 

HR-AR-11-006; 8/8/2011; HR-AR-11-006; 

8/8/2011 

Mystery Shopper Program; HR-MA-11-002; 

4/28/2011

Postal Service Workers’ Compensation Program; 

HR-AR-11-007; 9/30/2011

Information Technology

Chief Information Officer’s Budget Data; 

IT-AR-11-007; 8/25/2011

Sales and Service

Effects of Compliance Rules on Mailers; 

MS-AR-11-006; 8/24/2011

Mail Verification Procedures at Long Island 

Detached Mail Units; MS-AR-11-003; 5/26/2011

Strategic Approaches to Revenue Protection; 

MS-AR-11-007; 9/30/2011

Supply Management

AECOM U.S. FY 2009 Labor Floor Check; 

CA-CAR-11-008; 7/14/2011

Audit of Incurred Costs of ICF Group, Incorporated 

for Fiscal Year 2007; CA-CAR-11-009; 7/26/2011

Audit of SICK, Inc.’s Proposal for the Flats Edge 

Doubles Detection (FEDD) Modification Kits; 

CA-CAR-11-007; 7/11/2011

Bell Services Group, Inc. Invoice Claim; 

CA-MA-11-001; 4/20/2011

Contract Funding Approval; CA-AR-11-005; 

8/24/2011

Contract Management Data; CA-AR-11-002; 

4/27/2011

Internal Controls over the Contract Close-out 

Process; CA-AR-11-004; 4/27/2011

Report on Audit of Proposal Submitted by Northrop 

Grumman Corporation, Electronic Systems 

Company; CA-CAR-11-010; 9/2/2011

Report on Audit of Siemens, Industry Inc., Mobility 

Division, Infrastructure Logistics Rate Proposal; 

CA-CAR-11-012; 9/22/2011

Transportation

Management of the Highway Contract Route 

Voyager Card Program; NL-AR-11-003; 6/7/2011

OPERATIONAL RISK

Cost, Revenue, and Rates

Service Performance Measurement Data - 

Commercial Mail; CRR-AR-11-003; 9/6/2011

Delivery

Follow-Up on City Delivery Standard Operating 

Procedures; DR-AR-11-007; 9/26/2011

Mail Volume Measurement for City Delivery 

Carriers – Greater Indiana District DR-AR-11-005 

6/29/2011

National Assessment of City Delivery Efficiency 

2011 - Office Performance; DR-MA-11-002; 

7/19/2011

Engineering and Facilities

Facility Optimization: Former Southeast Area 

Districts; DA-AR-11-007; 5/13/2011

Facility Optimization: Great Lakes Area; DAAR-11-005; 4/22/2011

Facility Optimization: Pacific Area Districts; DAAR-11-006; 5/13/2011

Internal Controls Over Facility Rental Income; DAMA-11-003; 6/17/2011

Nationwide Facility Optimization; DA-AR-11-009; 

8/26/2011

Field Financial

Bank Secrecy Compliance for Fiscal Year 2011; 

FT-AR-11-010; 6/24/2011

Human Resources and Security

Compliance with Occupational Safety and Health 

Administration Recordkeeping Requirements; 

HR-AR-11-004; 5/27/2011 

Postal Service Facility Security; HR-AR-11-005; 

8/5/2011 

Stand-by Time; HR-MA-11-003; 8/12/2011

Information Technology

Data Breach Incident Reporting; IT-AR-11-006; 

8/11/2011

Remote Access Controls; IT-AR-11-008; 

9/14/2011

Network Optimization

Beckley, WV Post Office Facility Consolidation; ENAR-11-005; 4/21/2011 

Bowling Green, KY Consolidation; EN-AR-11-008; 

8/25/2011

University Station, Eugene, OR Consolidation; ENAR-11-007; 7/20/2011

Network Processing

Assessment of Overall Plant Efficiency 2011; 

NO-MA-11-004; 5/20/2011

Oshkosh, WI Processing and Distribution Facility 

Consolidation; NO-AR-11-006; 7/29/2011

Postal Service Performance During the 2010 Fall 

Mailing Season; NO-AR-11-007; 9/7/2011

APPENDIX A
38 | Semiannual Report to Congress

Timely Processing of Mail at the Richmond, VA 

Processing and Distribution Center; 

NO-AR-11-008; 9/13/2011

Sales and Service

Overweight Inbound International Mail; 

MS-MA-11-001; 9/13/2011

Supply Management

Contract Delivery Service Cost Controls; 

CA-MA-11-002; 9/26/2011

Contract Postal Units Contract Oversight; 

CA-AR-11-007; 9/30/2011

The Sufficiency of Recent Policy Changes 

Regarding Contracting Conflicts of Interest; 

CA-AR-11-006; 8/31/2011

Transportation

Highway Contract Routes – Western Pennsylvania 

District; NL-AR-11-007; 9/27/2011 

Mail Transport Equipment – Needs, Distribution, 

and Use; NL-AR-11-006; 9/23/2011

Postal Vehicle Service Transportation Routes – 

Baltimore Processing and Distribution Center; 

NL-AR-11-004; 7/25/2011

Postal Vehicle Services - Scheduling and Staffing 

- Western Pennsylvania District; NL-AR-11-005; 

8/12/2011

PARIS Risk Models

Complete listing of all OIG PARIS Risk Models issued to Postal Service management.

For the period April 1— September 30, 2011

Field Financial

Fiscal Year 2011 BMEU Quarter 3; FF-ID-11-017; 

8/15/2011

Fiscal Year 2011 BMEU Quarter 2; FF-ID-11-011; 

5/13/2011

Fiscal Year 2011 Cost and Controls Model - 

Quarter 2; FF-ID-11-012; 5/16/2011

Fiscal Year 2011 Cost and Controls Model - 

Quarter 3; FF-ID-11-018; 8/16/2011

Financial Reporting

Fiscal Year 2011 BSA Compliance-Quarter 3; 

FT-ID-11-010; 8/10/2011

Fiscal Year 2011 Continuous Audit GL Trending – 

Quarter 2; FT-ID-11-008; 5/18/2011

Fiscal Year 2011 Continuous Audit GL Trending – 

Quarter 3; FT-ID-11-011; 8/31/2011

Fiscal Year 2011 BSA Compliance-Quarter 2; 

FT-ID-11-007; 5/13/2011

Delivery

FY 2011 City Delivery Efficiency Model Quarter 2; 

DR-ID-11-003; 6/14/2011

FY 2011 City Delivery Efficiency Model Quarter 3; 

DR-ID-11-004; 8/17/2011

Transportation

Fiscal Year 2011 Air Transportation Risk Model 

Quarter 2; NL-AR-11-006; 5/11/2011

Fiscal Year 2011 Air Transportation Risk Model 

Quarter 3; NL-ID-11-008; 8/11/2011

Fiscal Year 2011 Surface Transportation Risk 

Model Quarter 2; NL-ID-11-005; 5/11/2011

Fiscal Year 2011 Surface Transportation Risk 

Model Quarter 3; NL-ID-11-007; 8/3/2011

Cost, Revenue, and Rates

Fiscal Year 2011 Cost, Revenue and Rates Risk 

Model Quarter 2;CRR-ID-11-008; 5/18/2011

Fiscal Year 2011 Continuous Audit - Cost, Revenue 

and Rates Risk Model Quarter 3; CRR-ID-11-004; 

8/15/2011

Information Technology

Fiscal Year 2011 IT Security Risk Model Quarter 3; 

IT-ID-11-005; 8/25/2011

Sales and Service

Fiscal Year 2011 Retail Customer Service Quarter 

2; MS-ID-11-005; 5/16/2011

Fiscal Year 2011 Retail Customer Service Quarter 

3; MS-ID-11-007; 8/12/2011

Fiscal Year 2011 Revenue Risk Model Quarter 2; 

MS-ID-11-006; 5/16/2011

Fiscal Year 2011 Revenue Risk Model Quarter 3; 

MS-ID-11-008; 8/15/2011

Engineering and Facilities

Fiscal Year 2011 Green Risk Model Quarter 3; DAID-11-009; 8/4/2011

Fiscal Year 2011 Maintenance Risk Model Quarter 

2; DA-ID-11-005; 5/13/2011

Fiscal Year 2011 Maintenance Risk Model Quarter 

3; DA-ID-11-007; 7/29/2011

Fiscal Year 2011 Real Estate Risk Model Quarter 2; 

DA-ID-11-005; 5/13/2011

Fiscal Year 2011 Real Estate Risk Model Quarter 3; 

DA-ID-11-008; 8/4/2011

Human Resources and Security

Fiscal Year 2011 Human Capital Optimization Risk 

Model, Quarter 2; HR-ID-11-003; 5/17/2011

Fiscal Year 2011 Human Capital Optimization Risk 

Model, Quarter 3; HR-ID-11-004; 9/2/2011

Fiscal Year 2011 Security Risk Model Quarter 2; 

HR-ID-11-005; 9/28/2011

Supply Management

FY 2011 Supplier Solvency Model Report Quarter 

2; CA-ID-11-003; 5/13/2011

FY 2011 Supplier Solvency Model Report Quarter 

3; CA-ID-11-004; 8/4/2011

Planning and Strategic Studies

FY 2011 Workplace Environment Risk Model 

Quarter 2; CI-ID-11-022; 6-13-2011

FY 2011 Workplace Environment Risk Model 

Quarter 3; CI-ID-11-029; 9/20/2011

Network Processings

Network and Delivery Optimization Risk Model 

Quarter 2; NO-AR-11-004; 5/12/2011

APPENDIX A
April 1 — September 30, 2011 | 39 

APPENDIX B

APPENDIX B

Findings of Questioned Costs

For the period April 1— September 30, 2011

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.

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

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 5 $1,876,254 —

Reports requiring management decision that were issued during the reporting period 22 $2,008,390,107 $972,689,738

TOTAL 27 $2,010,266,361 $972,689,738 

Reports for which a management decision was made during the reporting period (i & ii) 18 $1,853,279,539 $829,180,045

(i) Dollar Value of disallowed cost $673,366,803 $665,475,043

(ii) Dollar value of cost not disallowed $1,179,912,736 $163,705,002

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

Negotiations are ongoing

9 $156,986,822 $143,509,693

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

(See Note 1 for a list of individual reports)

2 $1,064,010 —

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

(See Note 2 for a list of individual reports)

3 $812,244 —

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

Incurred Costs of Serco, Incorporated for 

Fiscal Year 2007

CA-CAR-11-004 3/14/2011 $197,124 —

Lunda Construction Company Payment Request CA-CAR-11-006 3/30/2011 $866,886 —

TOTAL $1,064,010 —

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

Tom Roberts Realty U.S. Postal Service Contract CA-CAR-10-010 7/28/2010 $73 —

Termination Settlement Proposal Submitted by C.R. 

Daniels, Incorporated

CA-CAR-09-019 7/24/2009 $336,849 —

Audit of Portions of a Termination for Convenience 

Settlement Proposal Submitted by Northrop Grumman 

Electronic Systems

CA-CAR-09-011 3/16/2009 $475,322 —

TOTAL $812,244 —

Note 3 — Contract reports with a significant audit finding:

None for this report period
40 | Semiannual Report to Congress

APPENDIX C

Description Number of Reports Dollar Value

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

Reports issued during the reporting period 16 $11,468,105,234 

TOTAL 16 $11,468,105,234 

Reports for which a management decision was made during the report period (i & ii) 16 $11,468,105,234 

(i) Value of recommendations agreed to by management — $413,242,828 

(ii) Value of recommendations that were not agreed to by management — $11,054,862,406 

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

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)

— —

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

None for this report period

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

None for this report period

APPENDIX C

Recommendations That Funds Be Put to Better Use

For the period April 1 — September 30, 2011

As required by the IG Act, the following 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.
April 1 — September 30, 2011 | 41 

APPENDIX D

APPENDIX D

Other Impacts

For the period April 1— September 30, 2011

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.

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 32

Number of customer service audits conducted Number of Audits 25

SAFEGUARDING ASSETS

Assets or Accountable Items at Risk

Inadequate internal controls put the value of assets or accountable items (such as cash and stamps) at risk of loss Dollar Value $1,981,913,472

Physical Safety and Security

Dollar value of physical assets (plant, computer equipment, vehicles, and so forth) at risk of loss due to inadequate 

physical protection

Dollar Value —

Recommendations that address the safety and security of Postal Service employees and/or the work environment Number of Recommendations —

Number of employee/facility safety and security audits conducted Number of Audits 29

Information Technology Security

Inadequate controls/protection put the value of data, IT assets (software, networks), and employee work time at risk of loss Dollar Value —

Dollar value of data at risk Dollar Value —

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

Revenue at Risk

Dollar value of revenue that the Postal Service is at risk of losing. (Mailers seeking alternative solutions for current services) Dollar Value $606,390,860

Disbursements at Risk

Dollar value of disbursements made where proper Postal Service internal controls and processes were not followed Dollar Value $27,561,031

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 27

Misallocation of Costs 

A misallocation of costs can occur when Postal Service costs are misclassified as volume variable, product specific, or 

institutional costs

Dollar Value —

Predicted Savings Shortfall

The difference between the savings predicted by the Decision Analysis Report for capital investment projects and the 

actual savings realized

Dollar Value $228,181

Potential Additional Revenue

Revenue the Postal Service could potentially generate for goods delivered or services rendered based on suggested 

improvements

Dollar Value —
42 | Semiannual Report to Congress

APPENDIX D

Type of Measure Value or Amount

RELIABILITY OF DATA

Records at Risk

Data at risk of corruption or loss due to inadequate internal controls and or protection Number of Data Records at Risk 112

Dollar value of data used to support management decisions that is not fully supported or completely accurate Dollar Value $7,549,573,700
April 1 — September 30, 2011 | 43 

APPENDIX E

APPENDIX E

Reports with Significant Recommendations Pending Corrective Actions

For the period through September 30, 2011

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.

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

HM-AR-07-002 5/16/2007 Postal Service’s Workplace Safety and Workplace-Related Injury Reduction Goals and Progress

R-1 — Closely monitor conversion to the SAP Environmental Health and Safety module and, as soon as possible, ensure the 

upgraded system captures costs by facility, district/performance cluster, and area office as well as the costs for the 

following key categories:

 Non-injury accidents.

 Injury accidents.

 Type of injury.

 Type of illness.

 Per employee.

TID: September 2011

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

R-2 — Establish policies and procedures for the protection and use of sensitive and business-controlled sensitive data in the 

test, development, and production environments. TID: January 2012

IS-AR-07-017 8/29/2007 Separation of Duties at the Eagan, MN; San Mateo, CA; and St. Louis, MO, Information Technology and Accounting 

Service Centers

R-1 — Assess the risk of the duties of all Information Technology and Accounting Service Center positions (career and noncareer) for the purpose of assigning these positions as sensitive. TID: January 2012

R-4 — Notify the Postal Inspection Service when a new Information Technology and Accounting Service Center position is 

created, a new employee is hired, or an employee is promoted to a new position, to make certain the proper clearance 

level is attributed to the employee. TID: January 2012

FF-AR-08-131 3/19/2008 Fiscal Year 2007 Financial Installation Audits – Business Mail Entry Units

R-2 — Provide proper management oversight and instructions to schedule periodic verifications when Periodicals mailings are 

received during non-business hours. TID: December 2011

FF-MA-08-001 7/21/2008 Fiscal Year 2008 – Use of No-Fee Money Orders

R-2 — Evaluate the feasibility of restricting the use of no-fee money orders for local purchases in order to reduce the Postal 

Service’s exposure to financial loss. TID: June 2012
44 | Semiannual Report to Congress

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

SA-AR-08-009 7/23/2008 Postal Service Continuity of Operations for the Great Lakes Area

R-1 — Update contact information of key continuity of operations personnel at least semiannually, or more often as changes 

occur. TID: December 2010

R-2 — Complete continuity of operations training, including Postal Alert and Notification System training. TID: December 2010

R-3 — Identify and prioritize essential functions. TID: December 2010

R-4 — Establish a formal review process to ensure continuity of operations plans are completed, updated annually, and 

maintained in the Postal Alert and Notification System, as required. TID: December 2010

R-5 — Establish an area emergency management coordinating committee to provide oversight and assistance to district and 

facility Emergency Management Teams in establishing, implementing, and reviewing emergency management plans. 

TID: December 2010

R-6 — Establish specific guidance for identifying and selecting alternate facilities, to include, at a minimum, the number 

of alternate facilities that should be identified, and criteria regarding location, mail volume, and mail capacity. TID:

December 2010

R-7 — Require personnel responsible for continuity of operations at primary and alternate facilities to conduct tests and 

exercises to ensure alternate facilities can effectively process the primary facilities’ mail. TID: December 2010

SA-AR-08-013 8/22/2008 Security Clearances for Postal Service Employees 

R-1 — Establish and implement a policy to periodically assess the risks associated with the duties of all Postal Service 

positions to determine which positions require a security clearance. TID: January 2012

R-2 — Revise the Administrative Support Manual, as appropriate, to reflect changes to the list of positions requiring a security 

clearance. TID: January 2012

IS-AR-08-016 8/29/2008 Identity Theft Potential in the Change of Address Process

R-1 — Update the Internet and Telephone Change of Address applications to eliminate acceptance of anonymous prepaid 

credit cards. TID: June 2012

IS-AR-09-001 10/8/2008 Electronic Travel Voucher System Controls

R-1 — Revise Postal Service Handbook F-15, Travel and Relocation, to require travelers to arrange for lodging at the prevailing 

government lodging rate, whenever practical. TID: October 2011

R-2 — Revise Postal Service Handbook F-15, Travel and Relocation, to require travelers to obtain prior approval and justify 

exceeding the government lodging rate within the notes on the electronic voucher. TID: October 2011

R-3 — Customize the Electronic Travel Voucher System to require the traveler to input a value in the room tax field (even if the 

room tax is zero) or provide the traveler with a check box to indicate taxes not applicable in cases where the lodging stay is 

tax exempt. TID: October 2011

R-4 — Customize the Electronic Travel Voucher System to remove the option to combine room rate and room taxes into a single 

entry. TID: October 2011

FF-AR-09-055 12/26/2008 Fiscal Year 2008 Financial Installation Audits – Post Offices, Stations, and Branches

R-5 — Issue guidance to the field to destroy all copies of Postal Service Form 1096, Customer Receipt, and determine when 

this has been completed. TID: February 2012

FT-MA-09-001 1/13/2009 Postal Service Management Instruction – Expenses for Internal and External Events

R-2 — Consult with senior level management to further update the Management Instruction, Expenses for Internal and 

External Events to require that all expenses associated with internal and external events be included in a unique 

general ledger account(s). TID: September 2011
April 1 — September 30, 2011 | 45 

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

IS-AR-09-004 2/20/2009 Access Controls in the Enterprise Data Warehouse

R-3 — Update the Business Impact Assessment for the Enterprise Data Warehouse and recertify the system as required by 

Postal Service Handbook AS-805-A, Application Information Security Assurance (ISA) Process. TID: October 2011

DR-MA-09-001 2/23/2009 Management of City Letter Carriers’ Street Performance

R-1 — Revise existing Postal Service policies and Standard Operating Procedures to reduce the number of required Delivery 

Operations Information System reports from eight to four to aid supervisors in managing carrier street performance. 

TID: October 2011

R-2 — Modify the Delivery Operations Information System Route/Carrier Daily Performance Analysis Report to show “exceptions” 

- i.e., only actual route times varying from projected route times. TID: October 2011

CA-AR-09-005 6/1/2009 Supply Management’s Oversight of Delegations of Authority

R-2 — Remind delegatees of their responsibility to ensure compliance with their delegation of authority letters and require 

delegatees to certify they have instituted a system of controls and oversight to ensure:

 Best value determinations are performed and documented.

 Annual reports are developed and provided to Supply Management detailing financial activities, including 

the number of contracts or agreements entered into and associated expenditures.

 Annual ethics training is completed and documented for staff involved in administering contracts or agreements. 

TID: December 2011

R-3 — Require the Travel, Retail, and Temporary Services Category Management Center to develop procedures for collecting 

reports required under the delegations of authority and for reviewing delegatees’ control and oversight systems to 

ensure the delegation of authority letter minimum control requirements are met. If minimum control requirements are 

not met, discontinuation should be considered, with the results and justification documented in an oversight file. 

TID: December 2011

EN-AR-09-005 9/28/2009 Performance Goals for Market-Dominant Products

R-1 — Document the methodology used to develop future performance goals for market-dominant products. 

TID: December 2012

SA-AR-09-008 9/29/2009 Postal Service Aviation Security Capping Report

R-1 — Strengthen internal controls requiring management reviews to ensure corrective actions are taken to improve the 

performance of noncompliant offices. TID: September 2011

R-2 — Develop and implement performance measures or other appropriate evaluation factors to improve operations personnel 

performance in following established policies and procedures for detecting and preventing anonymous and potentially 

dangerous mail from entering the mailstream. TID: September 2011 

NL-AR-09-010 9/30/2009 Fuel Management Consumption Strategies for Surface Network Operations

R-1 — Revise the fuel consumption strategy for surface network operations covering Postal Service and HCR transportation to 

ensure that it is comprehensive and implements the industry best practices identified in our audit. TID: June 2011

R-2 — Assess and implement all opportunities for owned, leased, and contracted vehicles to use technology to reduce wind 

resistance and identify the most viable advanced aerodynamics options consistent with industry best practices and 

adjust contracts as appropriate to account for the reduced fuel need. TID: June 2011

R-3 — Establish and implement tire inflation maintenance requirements for its owned heavy-duty vehicle fleet, as well as its 

leased, and contracted vehicles consistent with industry best practices and adjust contracts as appropriate to account 

for the reduced fuel need. TID: June 2011

R-5 — Evaluate HCR and, where feasible, implement speed limit requirements consistent with industry best practices and 

adjust contracts as appropriate to account for the reduced fuel need. TID: June 2011
46 | Semiannual Report to Congress

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

DR-AR-10-001 10/15/2009 Use of the Carrier Optimal Routing System

R-1 — Resolve performance issues with the system and application problems with Web Carrier Optimal Routing (WebCOR) 

and implement the web-based program nationwide. TID: September 2011

R-3 — Mandate districts to track and monitor vehicle mileage changes in the Carrier Optimal Routing system. 

TID: December 2012

IS-AR-10-002 12/22/2009 General Control Review of Human Resources Shared Service Center

R-1 — Designate as sensitive those positions at the Human Resources Shared Service Center that require access to personally 

identifiable information. TID: January 2012

R-2 — Initiate appropriate security clearance investigations for all employees in sensitive positions at the Human Resources 

Shared Service Center. TID: January 2012

R-5 — Revise Handbook AS-805, Information Security, to clarify the approval process for wireless access points on the Postal 

Service network. TID: March 2012

DA-MA-10-001 1/28/2010 Sustainability: Promoting Energy and Recycling Compliance Fiscal Year 2009 

R-1 — Issue written guidance to installation managers to encourage the use of more remote building management systems. 

TID: October 2011

MS-AR-10-001 2/9/2010 Plant-Verified Drop Shipment Controls

R-4 — Provide an electronic reporting solution whereby PS Form 8125, Plant-Verified Drop Shipment (PVDS) Verification 

and Clearance, information at the destination facility can be compared with the information at the origin location. 

Discrepancies or incomplete forms should be investigated. TID: December 2012

EN-AR-10-003 2/12/2010 Manasota Processing and Distribution Center Consolidation 

R-1 — Ensure the implementation activities of processing and distribution center consolidations begin immediately after area 

mail processing proposal approval and require headquarters’ approval when implementation is delayed more than 3 

months. TID: May 2011

DR-AR-10-003 3/16/2010 Rural Delivery Christmas Operations 

R-1 — Renegotiate with the National Rural Letter Carriers Association (NRLCA) to eliminate the supplemental Christmas 

Overtime Pay Provision, Article 9.2(k), set forth in the NRLCA Agreement expiring in November 2010 and any 

subsequent NRLCA agreements. TID: December 2012
April 1 — September 30, 2011 | 47 

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

IS-AR-10-008 5/4/2010 Certification and Accreditation Process

R-1 — Provide Corporate Information Security the authority necessary to enforce and execute the responsibilities for managing 

the Certification and Accreditation process. TID: January 2012

R-2 — Update Handbook AS-805, Information Security, to require mandatory annual training on the Certification and 

Accreditation process for all portfolio managers. TID: January 2012

R-3 — Ensure all portfolio managers receive mandatory training regarding their role, responsibility, and accountability for 

implementing and reinitiating the Certification and Accreditation process. This training should also be made available to 

all executive sponsors. TID: January 2012

R-4 — Hold portfolio managers accountable to complete the Certification and Accreditation process within the Technology 

Solutions Life Cycle prior to implementing critical applications into the production environment. TID: January 2012

R-5 — Complete the Certification and Accreditation process for all critical applications currently in production, as required by 

Handbook AS-805, Information Security. TID: January 2012

R-6 — Ensure the portfolio managers work with the executive sponsors to initiate the recertification process for critical 

applications assigned to their functional areas as required by Handbook AS-805, Information Security. TID: January 2012

R-7 — Develop a formal, centralized mechanism to track the status of all unmitigated residual risks identified in the applications’ 

risk mitigation plan. TID: January 2012

R-8 — Input unmitigated residual risks identified in the applications’ risk mitigation plan into the formal, centralized tracking 

mechanism and track the risks through resolution. TID: January 2012

R-9 — Work with executive sponsors to resolve unmitigated residual risks identified in the risk mitigation plans and recertification 

letters associated with the critical applications. TID: January 2012

R-10 — Establish policy to designate a central repository for storing the Certification and Accreditation documentation. 

TID: January 2012

R-11— Update Handbook AS-805, Information Security, to designate a single entity responsible for uploading the Certification 

and Accreditation information in the central repository for all critical applications. TID: January 2012

R-12 — Input the Certification and Accreditation documentation for all critical applications into the central repository. 

TID: January 2012

CA-AR-10-004 5/27/2010 Contract Payment Terms

R-1 — Revise the Postal Service’s Supplying Principles and Practices, Section 5 12.2, Payment Time Frame, and other 

sections as necessary, with language stating that when contracting officers negotiate payment terms other than net 30 

days they include the business rationale and associated documentation for the payment terms in the contract file. 

TID: September 2011

HR-AR-10-002 5/27/2010 U.S. Postal Service’s Use of Employees in Rehabilitation Status 

R-1 — Establish a plan to in-source all call center work, including a staffing and training plan. TID: None

R-2 — Expedite negotiations and finalize an agreement with the American Postal Workers Union that addresses staffing for 

in-sourced call center work. TID: None

NO-MA-10-001 6/11/2010 Assessment of Overall Plant Efficiency 2010

R-1 — Reduce 16.2 million workhours by FY 2012 with an associated economic impact of $743,961,610. 

TID: December 2012

CI-MA-10-001 6/18/2010 Civil Service Retirement System Overpayment by the Postal Service

R-1 — Pursue all necessary actions, including those suggested by the Office of Inspector General, to either secure the return 

of the $75 billion overpayment or to otherwise realize the benefit of this overpayment to the Postal Service. TID: None
48 | Semiannual Report to Congress

APPENDIX E

Report Number Report Number

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

MS-AR-10-004 7/28/2010 Efficiency of Retail Customer Service Operations

R-1 — Implement best practices for Retail Customer Service operations at all facilities. TID: October 2011

R-2 — Explore opportunities to consolidate business mail acceptance operations at post offices, stations, and branches. TID:

October 2011

R-3 — Periodically evaluate operating efficiency by assessing performance against productivity targets and adjusting resources in 

response to workload changes. TID: December 2011

R-4 — Re-deploy employees, as appropriate, to facilities where there is sufficient workload to support the workhours. TID:

October 2011

IS-AR-10-012 8/4/2010 L’Enfant Badge Access Controls

R-1 — Perform periodic reviews of all badge access to the L’Enfant Plaza Headquarters building and sensitive work areas and 

remove access for individuals who no longer require it. TID: January 2012

FF-AR-10-210 8/6/2010 Revenue for Official Mail from the House of Representatives Mailroom

R-1 — Coordinate with the U.S. House of Representatives mailroom and the Southern Maryland Business Mail Entry Unit to 

develop and implement processes to verify postage claimed for individually franked mailpieces, such as establishing 

alternate mailing system agreements. TID: March 2011

FT-MA-10-001 8/16/2010 Federal Employees Retirement System Overfunding

R-1 — Pursue legislative action to alter the Postal Service’s Civil Service Retirement and Disability Fund Contributions for 1 or 

more years until the Federal Employees Retirement System surplus is extinguished. TID: September 2011

R-2 — Coordinate with the Office of Personnel Management to identify causes of actual payout differences between the 

Postal Service and the rest of the federal government and use that information to reduce the risk of future surpluses. 

TID: September 2011

R-3 — Pursue legislative action to define future distribution of significant surpluses. TID: September 2011

R-4 — Coordinate with the Office of Personnel Management to create a sub-account within the Civil Service Retirement and 

Disability Fund exclusive to the Postal Service. TID: September 2011

EN-AR-10-005 8/17/2010 Stations and Branches Optimization and Consolidation

R-1 — Develop detailed policies and procedures for the station and branch closing process. TID: October 2011

R-2 — Improve the reliability and usefulness of retail facilities data by validating, correcting, and updating information in the 

database. TID: October 2011

R-3 — Develop measurable criteria to mitigate inconsistencies in evaluating factors used for determining feasibility to 

discontinue operations. TID: October 2011

R-4 — Process and approve or disapprove discontinuance proposals in a timely manner. TID: October 2011

DA-MA-10-004 8/31/2010 Postal Service Patent Management

R-1 — Establish a strategic plan with timelines to capitalize on the Postal Service’s patent inventory strength. 

TID: October 2011

MS-MA-10-001 9/02/2010 Electronic Postmark Program License Fees

R-1 — Develop a process to monitor and validate licensees’ Electronic Postmark usage. TID: None

R-3 — Initiate actions to collect the past due Electronic Postmark license fees. TID: None
April 1 — September 30, 2011 | 49 

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

IS-MA-10-001 9/2/2010 Securing Sensitive Data on Postal Inspection Service Laptops

R-1 — Create and maintain an inventory of all existing Inspection Service laptops. TID: October 2011

R-2 — Install full disk encryption on all new Inspection Service laptop computers before deployment. TID: September 2011

R-3 — Develop an expedited deployment schedule to reduce the risk of sensitive data loss from the unencrypted laptops. 

TID: October 2011

R-4 — Remove and destroy hard drives, or completely degauss, all sensitive data stored on the older Postal Inspection Service 

laptops before disposing of the equipment. TID: September 2011

R-5 — Enter all new laptops in the centralized inventory system upon deployment to Inspection Service users. 

TID: September 2011

EN-AR-10-006 9/17/2010 Southeast Area Processing and Distribution Center Consolidations

R-1 — Complete the full consolidation feasibility study on the Daytona Beach Processing and Distribution Facility into the MidFlorida Processing and Distribution Center and take action to eliminate excess space in the Mid-Florida Processing and 

Distribution Center TID: December 2011

R-2 — Determine alternate uses of excess space at the Birmingham Processing and Distribution Center and annex. 

TID: June 2011

FF-AR-10-224 9/20/2010 Postal Service Area and District Office Field Structure

R-1 — Develop a comprehensive strategic plan to guide future area and district field structure decisions. The plan should 

address environmental factors, mail volumes, technological advancements, operational considerations and other issues 

impacting Postal Service strategic goals. TID: September 2011

R-2 — Implement one or more of the three options, or combinations of portions of these options, for consolidating the area 

and district field structure:

 Consolidate district offices that are within 50 miles of one another.

 Consolidate area and district offices that have less than the mean mail volume and workhours.

 Relocate area offices to headquarters. 

 TID: None

R-3 — Develop a policy and process for performing a comprehensive evaluation of the area and district office structure at 

least every 5 years. TID: March 2012

R-4 — Develop a policy and procedures to maintain adequate supporting documentation for all area and district consolidations or 

expansions as part of a comprehensive strategic plan. TID: March 2012
50 | Semiannual Report to Congress

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

CA-AR-10-005 9/20/2010 U.S. Postal Service Purchasing Policies

R-1 — Establish a competition advocate within the Postal Service to independently review and approve justifications for 

noncompetitive purchases and support the use of competition in the Postal Service. The competition advocate should 

also prepare and submit an annual report to the chief financial officer and vice president, Supply Management, 

describing barriers to competition and goals and plans for increasing competition. TID: November 2011

R-3 — Review the need for and propriety of all existing contracts with former executives. TID: September 2011

R-5 — Take steps to ensure full and accurate tracking and public reporting of noncompetitive contracting actions. Data 

reported should include, but not be limited to, total dollars committed both competitively and noncompetitively; and 

the contractor, dollar value, and noncompetitive justifications for noncompetitive contracts. The tracking mechanism 

should be able to identify when a noncompetitive contract has crossed the review and approval threshold based on 

modification after initial award. TID: November 2011

R-6 — Revoke delegations of authority for contracts that acquire goods and services for the Postal Service and bring these 

contracts into compliance with all Postal Service purchasing policies. TID: December 2011

R-9 — Institute an oversight mechanism to ensure and track compliance with updated noncompetitive contracting policies. 

TID: March 2012

IS-AR-10-014 9/23/2010 Controls Over Payment Card Transaction Data

R-1 — Finalize and implement a Payment Card Industry remediation plan that includes all associated costs, resources, and 

milestones needed to achieve and maintain Payment Card Industry-Data Security Standards compliance. 

TID: September 2013

R-3 — Ensure the Payment Card Industry compliance requirements are included in all pre- and post-award contract 

documentation that includes, but is not limited to, statements of work, amendments, and modifications. 

TID: December 2011

R-4 — Validate and monitor all service providers’ Payment Card Industry compliance status throughout the lifetime of the 

contract. TID: December 2011

NL-AR-10-010 9/29/2010 Air Networks – Federal Express Transportation Agreement – National Analysis

R-5 — Standardize Postal Service oversight at Terminal Handling Services operations to ensure adequate on-site Postal 

Service representation to monitor Federal Express operations and ensure local compliance with established processes 

and procedures. TID: March 2011

NL-AR-10-009 9/29/2010 Management of Mail Transport Equipment - National Analysis 

R-1 — Further develop, update and reinforce national Mail Transport Equipment policies and procedures contained in the 

Postal Operations Manual (POM) and the Postal Handbook PO-502, Container Methods, which address Mail Transport 

Equipment inventory and accountability controls, including validating customer Mail Transport Equipment needs as well 

as tracking and reconciling Mail Transport Equipment loaned to mailers and other external customers. TID: June 2011

R-2 — Continue pursuing implementation of a planned automated Mail Transport Equipment management system and ensure 

its functionality for inventory and accountability processes and for enhancing the Postal Service’s visibility into Mail 

Transport Equipment internally and at mailers. TID: June 2011

R-3 — Reestablish an on-hand Mail Transport Equipment volume count process, both internally and externally, until an 

automated Mail Transport Equipment management system is fully developed, deployed, and operational. 

TID: June 2011

R-4 — Ensure that Area Distribution Networks’ Offices have appropriate resources assigned responsibly to monitor and 

manage Mail Transport Equipment, and maintain compliance with Postal Operations Manual requirements. 

TID: June 2011

R-5 — Document the current process for identifying annual, routine Mail Transport Equipment purchase requirements and 

ensure the process includes Mail Transport Equipment Service Center network information and facility and mailer 

inventory data, to ensure that only the necessary amount of Mail Transport Equipment is purchased. TID: June 2011
April 1 — September 30, 2011 | 51 

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

NL-AR-10-008 9/29/2010 Postal Vehicle Services - Scheduling and Staffing - Atlanta District

R-2 — Fully utilize the flexibility under the existing American Postal Workers Union Collective Bargaining Agreement and 

Memorandum of Understanding to increase the use of split days off for Postal Vehicle Service drivers and maximize the 

use of part-time regular PVS drivers where possible. TID: June 2011

R-3 — Increase the allowable percentage of all types of part-time employees to allow maximum use of part-time regular 

employees in facilities with Postal Vehicle Service operations. TID: June 2011

R-4 — Provide permanent flexibility to schedule split days off for employees in facilities with Postal Vehicle Service operations. 

TID: June 2011

CA-AR-10-006 9/30/2010 Certification Process for Electronic Payments

R-1 — Develop an oversight mechanism to monitor and ensure contracting officers’ and/or designated officials’ receipt and 

certification of invoices. TID: September 2011

R-2 — Reiterate to contracting officers and/or their designees their roles and responsibilities, and the importance of following 

Postal Service criteria, policies, and procedures for certification of invoices prior to payment to ensure that invoices are 

correct and goods and services were received. TID: August 2011

R-3 — Develop and implement written procedures for receiving invoices for annual HCR services and verifying that services 

were rendered prior to payment. TID: August 2011

R-4 — Identify and notify the contracting officers to oversee and administer all HCR payments in the Postal Service Accounts 

Payable Excellence system. TID: August 2011

R-5 — Review the $7.6 million in payments made more than 30 days after contract end dates and collect overpayments. 

TID: August 2011

R-6 — Provide detailed, consistent training for all designated officials on their roles and responsibilities and the usage of the 

Utility Management System. TID: August 2011

R-7 — Regularly reconcile payments made for utility services to identify and collect overpayments. TID: August 2011

R-8 — Ensure that Utility Management System designated official contact information is accurate and that the system requires 

positive certification by the designated official before invoice payment. TID: August 2011

FT-MA-10-002 9/30/2010 Summary of Substantial Overfunding and Postal Service Pension and Retiree Health Care Funds.

R-1 — Develop a comprehensive legislative strategy to recover overfunded amounts. TID: September 2011

R-2 — Aggressively pursue and carefully review all available data related to Civil Service Retirement System, Federal 

Employee Retirement System, and retiree health benefit calculations, including those associated with determining any 

overfunding situations, to ensure that calculations are reasonable and accurate. TID: September 2011

DR-AR-11-001 11/22/2010 City Delivery Operations Workforce Planning 

R-1 — Collaborate with area management to continue development and enhancement of an overall city delivery operations 

strategy that optimizes the most cost-effective combination of full-time, part-time, and transitional city carrier 

resources to reduce overtime workhours and costs for final publication to area officials. TID: December 2011

CA-AR-11-001 11/23/2010 Information Technology Contract Payment Oversight 

R-1 — Ensure that proper personnel have a contracting officer’s representatives (CORs) letter of designation that allows them 

to certify invoices for payment. TID: August 2011

R-2 — Require contracting officers’ representatives to reconcile invoices to receiving documents prior to certification for 

payment. TID: August 2011
52 | Semiannual Report to Congress

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

IT-AR-11-001 12/6/2010 Network Perimeter Firewall

R-5 — Establish comprehensive firewall security standards TID: September 2011

R-8 — Identify and review firewall access control rules semiannually and remove duplicate and unused firewall access control 

rules. TID: October 2011

NL-MA-11-001 12/6/2010 Surface Mail Classes on Air Transportation Networks

R-1 — Verify that actions already taken related to minimizing surface mail classes on the FedEx Day-Turn network are applied 

to other air networks to ensure transportation managers use surface transportation, instead of the FedEx Night-Turn, 

commercial air carrier, United Parcel Service, and Christmas air transportation networks to move surface mail types 

where possible. TID: None

R-2 — Routinely provide headquarters and area management with data, including Transportation Cost System/Cost and 

Revenue Analysis data, to monitor and track the volume and avoid additional costs for flying surface mail classes on 

the FedEx Night-Turn, commercial air carrier, United Parcel Service, and Christmas air transportation networks. TID:

September 2011

R-3 — Reinforce existing policies and procedures for the processing and assigning of mail to air and surface transportation. 

TID: None

CRR-AR-11-001 12/7/2010 Periodicals Mail Costs

R-2 — Issue guidance to processing facilities that emphasizes managing the expected delivery dates and eliminates using the 

“Hot 2C” program to provide expedited processing or manual processing for select publications. TID: April 2011

R-3 — Re-emphasize use of the Electronic Mail Improvement Reporting System to processing facility personnel and define the 

types of issues that should be reported. TID: May 2011

NO-AR-11-004 12/14/2010 Houston, TX Processing and Distribution Center Mail Consolidation

R-1 — Pursue expansion of the North Houston Processing and Distribution Center and consolidate the Houston Processing 

and Distribution Center’s mail processing operations into the expanded facility, by fiscal year 2013. TID: None

FF-AR-11-004 12/15/2010 Express Mail Guarantees 

R-1 — Evaluate the reasons for late deliveries for American territories and, if it’s not possible to significantly improve on-time 

delivery, determine if they should adjust or eliminate guarantees. TID: March 2011

R-2 — Review military Express Mail and logistics to evaluate reasons for the delays in delivering mail to military personnel and 

make necessary changes to improve service performance. TID: June 2011

R-3 — Implement actions to include military ZIP Codes in the Service Delivery Calculator. TID: March 2011

R-4 — Identify reasons for late Express Mail deliveries to ZIP Codes in the 50 states with the highest volumes of late deliveries 

and either implement actions to reduce late delivery or determine if they should adjust or eliminate delivery guarantee 

time. TID: March 2011

R-5 — Establish a timeframe for and develop a process to analyze Express Mail refunds by origin and destination to evaluate 

risk and identify necessary changes in service in order to make better business decisions for guarantees. 

TID: March 2011

R-6 — Reiterate to area vice presidents and appropriate district personnel their responsibility to monitor and close inactive 

Express Mail Corporate Accounts when appropriate. TID: March 2011

R-7 — Communicate current Express Mail Corporate Account inactive account information to area vice presidents for action to 

be taken by appropriate district personnel. TID: March 2011
April 1 — September 30, 2011 | 53 

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

IT-AR-11-002 1/12/2011 Fiscal Year 2010 Selected Information Technology General Controls

R-1 — Develop a procedure to notify administrators supporting Windows servers when new group policy updates are available. 

TID: August 2011

R-2 — Correct discrepancies identified by the periodic reviews of all Windows servers, as appropriate. TID: September 2011

R-3 — Develop a methodology to centrally manage all local accounts. TID: September 2011

DR-AR-11-002 1/18/2011 City Delivery Efficiency Review – New York District 

R-1 — Reduce the New York District’s workhours by 279,853 to achieve an associated economic impact of more than $9.3 

million annually, or in excess of $93 million over 10 years. TID: December 2011

NO-MA-11-002 3/1/2011 Management Advisory – Processing of Collection Box Flats in the Philadelphia Metropolitan Customer Service District 

R-1 — Process collection box flats in accordance with Postal Service Standard Operating Procedures TID: April 2011

IT-AR-11-005 3/14/2011 Securing Information on Portable Devices 

R-4 — Coordinate and update Information Technology guidance and Handbook AS-701, Materials Management, to define 

staff roles and responsibilities for updating laptop changes in the Asset Inventory Management System and 4Z-PS969 

system. TID: December 2011

DR-MA-11-001 3/14/2011 The Effects of the Flats Sequencing System on Delivery Operations – Arizona District

R-1 — Continue to collaborate with business mailers to ensure flat mailpieces meet automation requirements and reduce the 

amount of unworked flat mail sent to delivery units. TID: None

IT-AR-11-004 3/16/2011 Computer Incident Data Reliability

R-3 — Integrate the Data Loss Prevention and Security Information Manager applications with the security incident 

management system to ensure a single incident data repository. TID: October 2012

R-4 — Either modify the existing incident management system or pursue development of a new system that enforces date and 

time value sequence and data validation. TID: October 2012

NL-AR-11-002 3/18/2011 Postal Vehicle Service – Scheduling and Staffing – Connecticut Valley District

R-1 — Ensure that Southern Connecticut Processing and Distribution Center and Springfield Processing and Distribution 

Center managers follow prescribed fleet management procedures for making Postal Vehicle Service schedules 

effective, including conducting schedule and vehicle utilization reviews. TID: None

R-2 — Verify elimination from the Postal Vehicle Service trip schedules of 7,245 workhours from the Southern Connecticut 

Processing and Distribution Center and 2,856 workhours from the Springfield Processing and Distribution Center 

identified during our audit and already agreed to by management. TID: March 2011

R-3 — Reassess the remaining 4,562 workhours identified in our audit and eliminate the workhours as indicated by the 

reassessment, or document the reasons for retaining the workhours. TID: May 2011

EN-MA-11-001 3/25/2011 Benchmarking Mail Distribution to Carriers

R-1 — Pursue a delivery unit assistant initiative to have transitional employees or part-time flexible employees perform 

in-office activities including casing and preparing mail for carriers. TID: None
54 | Semiannual Report to Congress

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

HR-AR-11-001 3/31/2011 Allegations of Inaccurate Time and Attendance Records 

R-1 — Establish and implement controls in the Time and Attendance Collection Systems to document supervisors’ justification 

of changes to employees’ time. TID: January 2012

R-2 — Issue supplemental guidance emphasizing the importance of completing Postal Service Form 1017-A, Time 

Disallowance Record, and PS Form 3971, Request for or Notification of Absence. TID: July 2012

R-3— Establish a review and approval process to ensure time disallowances are appropriate and documented as required. 

TID: July 2012

R-4 — Establish periodic monitoring of clock ring deletions to ensure employee workhours are recorded accurately. 

TID: July 2012

R-5 — Provide periodic refresher training to managers, postmasters, supervisors, and acting supervisors on the Time and 

Attendance Collection System. TID: July 2012

R-6 — Issue supplemental guidance to supervisors and managers regarding the appropriate use of operation codes 

associated with recording safety talks and informational meetings in the Time and Attendance Collection System. 

TID: July 2012

HR-AR-11-003 3/31/2011 Overtime Usage

R-1 — Develop and implement a plan to attain alignment between current workload and workforce levels, by location, to 

ensure effective and efficient use of Postal Service resources. TID: None

R-2 — Ensure significant changes impacting operations and resources are accounted for in the budget plan. TID: None

DA-MA-11-002 4/8/2011 Postal Service Patent Management Continuation

R-1 — Work closely with subject matter experts to review highly rated patents to draft claims as appropriate. 

TID: October 2011

R-2 — Develop a comprehensive strategy for developing patent intellectual property that enhances Postal Service products 

and services and its competitive position in the global marketplace and is a source of income. The strategy should 

capitalize on patent evaluations performed to date and include an assessment of business options available for 

achieving the significant financial returns. TID: October 2011

R-3 — Ensure the Postal Service has an effective patent management process and comprehensive licensing program in place. 

This establishes control that protects intellectual capital and provides an appropriate return on investment 

TID: October 2011

HR-MA-11-001 4/22/2011 Retirement for U.S. Postal Service Employees on Workers’ Compensation

R-1 — Continue to pursue legislative change to reform the Federal Employees’ Compensation Act to reduce workers’ 

compensation benefits for retirement age employees. TID: None

CA-AR-11-002 4/27/2011 Contract Management Data

R-2 — Develop guidance to define data elements that should be recorded in the Contract Authoring Management System. 

TID: June 2011

R-3 — Develop mandatory training for all employees with access to the Contract Authoring Management System. 

TID: October 2011

R-4 — Develop a process along with policies and procedures to ensure validity and completeness of contract data and 

establish definitions of employees’ roles and responsibilities for data quality. TID: June 2011

CA-AR-11-004 4/27/2011 Internal Controls over the Contract Close-out Process

R-1 — Establish standardized contract close-out policies and procedures. This should include a system alert requiring 

contracting staff to complete Contract Authoring Management System close-out reports before they close-out a 

contract and ensuring that remaining funds are promptly decommitted when the contract is completed and closed. 

TID: September 2011

R-3 — Establish a periodic control to ensure category management center personnel follow records management 

requirements for contract files, including, but not limited to retaining records for the required 6 years. TID: July 2011
April 1 — September 30, 2011 | 55 

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

NO-MA-11-004 5/20/2011 Assessment of Overall Plant Efficiency 2011

R-1 — Reduce 14,017,630 workhours by FY 2012 with an associated economic impact of $647,586,823. TID: September 

2013

HR-AR-11-004 5/27/2011 Compliance with Occupational Safety and Health Administration Recordkeeping Requirements

R-1 — Enhance procedures to ensure Human Resource Management, Safety, and facility officials are appropriately identifying, 

classifying, recording, and communicating Occupational Safety and Health Administration injuries. TID: September 

2011

R-2 — Revise the Postal Service Occupational Safety and Health Administration Recordable Date policy to better clarify how 

to determine Occupational Safety and Health Administration recordable dates when they differ from the initial injury or 

illness date. TID: September 2011

R-3 — Complete the automation capability of the Occupational Safety and Health Administration Form 300, Log of WorkRelated Injuries and Illnesses, in the Employee Health and Safety system, and require all facilities to generate the 

automated form to validate them with the corresponding manual versions. TID: September 2011

R-4 — Establish mandatory training for officials responsible for determining Occupational Safety and Health Administration 

recordable cases and completing related forms. TID: December 2011

NL-AR-11-003 6/7/2011 Management of the Highway Contract Route Voyager Card Program

R-1 — Further develop, update, and reinforce requirements for the Postal Service and HCR suppliers to enhance systems 

infrastructure, including incorporating systems edits and automation tools where possible, and monitor fuel 

transactions as necessary to avoid unauthorized purchases and ensure adherence to contract gallon limits. TID:

October 2011

R-2 — Ensure that contracting officers apply pooling in accordance with established requirements and ensure pools are 

appropriately documented and approved. TID: October 2011 

R-3 — Perform and document all outstanding reconciliations for prior periods to determine excess purchased fuel gallons and 

collect resultant overpayments. TID: October 2011

R-4 — Implement controls over the contractors that include: 

 Strengthening procedures for safeguarding and securing HCR Voyager Cards; ensuring suppliers use available tools 

to effectively manage the cards; and requiring that suppliers maintain an inventory of issued cards. 

 Coordinating with the U. S. Bank to limit the number of HCR Voyager Cards issued to highway suppliers; establish 

a secure activation protocol for mailed HCR Voyager Cards and unique personal identification numbers; and 

implement a periodic review of new, cancelled, and extra HCR Voyager Cards to identify potential patterns of 

mismanagement or misuse. 

TID: June 2012

R-5 — Continue to pursue funding when feasible for enhancing the functionality of the Fuel Asset Management System and 

Enterprise Data Warehouse eFuel modules and to ensure the systems are user-friendly and enable management to 

more efficiently and effectively monitor authorized gallons, identify excess gallons, and recover any related excess 

payments. TID: None

R-6 — Periodically assess the financial and operational viability of the HCR Voyager Card program, including performing a 

formal cost-benefit analysis based on complete and recent data, considering the costs of implementing controls to 

address deficiencies identified in this report as appropriate. TID: September 2011

R-7 — Continue to identify and evaluate other fuel management program best practices used in the transportation industry, 

and perform a comparative analysis against the existing HCR Voyager Card program, where possible. TID: None
56 | Semiannual Report to Congress

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

DA-AR-11-008 6/8/2011 Conflicts of Interest: Facility Leases and Contract Delivery Services

R-1 — Revise the Postal Service’s policy for leasing property under 3,000 square feet from employees or relatives to include 

an ethics review. TID: December 2011

R-2 — Evaluate the universe of potential facility lease conflicts and develop an action plan to minimize active and future 

conflicts. TID: June 2012

R-3 — Implement a control to systemically identify, monitor, and resolve potential conflicts of interest with facility leases and, 

if necessary, request waivers for leases that represent conflicts. TID: December 2011

R-4 — Evaluate the universe of potential delivery service contract conflicts and develop an action plan to minimize active and 

future conflicts. TID: September 2011

R-5 — Implement a control to systemically identify, monitor, and resolve contract delivery service regulatory and policy 

violations in a timely manner. TID: September 2011

FF-AR-11-009 6/14/2011 New Approaches to Reduce Costs

R-3 — Conduct a review to evaluate the benefits of contracting for armed security services. TID: October 2011

R-4 — If the review supports contracting for security, implement a strategy to utilize contract staffing to supplement or replace 

Postal Service security force positions. TID: October 2011

DR-MA-11-002 7/19/2011 National Assessment of City Delivery Efficiency 2011 - Office Performance

R-1 — Reduce 2,002,690 workhours during fiscal year 2012 with an associated economic impact of $88,192,128. TID: None

EN-AR-11-007 7/20/2011 University Station, Eugene, OR, Consolidation

R-1 — Ensure that district managers review and certify that local managers have identified, reviewed, and documented 

all applicable direct and indirect costs in discontinuance proposals prior to submission to headquarters for final 

determination. TID: None

NL-AR-11-004 7/25/2011 Postal Vehicle Service Transportation Routes – Baltimore Processing and Distribution Center

R-1 — Ensure that Baltimore Processing and Distribution Center managers follow prescribed fleet management procedures for 

making Postal Vehicle Service schedules effective, including conducting schedule and vehicle utilization reviews. TID:

None

R-2 — Verify elimination of the 11,789 workhours identified in our audit - and already agreed to by management - from the 

Postal Vehicle Service trip schedules. TID: None

R-3 — Reassess the remaining 7,273 workhours and eliminate the workhours as indicated by the reassessment or document 

the reasons for retaining them. TID: August 2011

R-4 — Eliminate from highway contracts 24 trips identified in our audit and already agreed to by local and area management.

TID: None

HR-AR-11-005 8/5/2011 Postal Service Facility Security

R-1 — Establish and implement a formal plan for conducting Vulnerability Risk Assessment Tool reviews for all postal facilities 

to identify, monitor, and address facility security deficiencies. TID: October 2011

R-2 — Establish and implement policies and procedures for responsible officials to conduct on-site inspections and 

evaluations to determine the security status of postal facilities. TID: January 2012

R-3 — Issue supplemental guidance and enhance internal controls to: 

 Ensure security control officers conduct facility security surveys as required. 

 Ensure corrective actions are taken to address security deficiencies. 

 Ensure security control officers take the mandatory security training. 

TID: August 2012
April 1 — September 30, 2011 | 57 

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

HR-AR-11-006 8/8/2011 2009 Pay for Performance Program

R-1 — Clarify policies and procedures to better define the relationship between the national performance assessment and 

core requirements, and the role of higher level management in the pay for performance process. TID: November 2011

R-2 — Establish and implement mandatory training events that educate new and existing participants and managers on 

policy, roles and responsibilities, goal setting, and the program’s objectives. TID: November 2011

R-3 — Evaluate the effectiveness of the current process used to establish and use behavioral core objectives to rate 

employees’ performance. TID: November 2011

NL-AR-11-005 8/12/2011 Postal Vehicle Services - Scheduling and Staffing - Western Pennsylvania District

R-2 — Verify the elimination of 1,252 workhours from the Postal Vehicle Service trip schedules assigned to the Pittsburgh 

Processing and Distribution Center. TID: August 2011 

R-3 — Reassess the remaining 2,056 workhours and eliminate them as indicated by the reassessment, or document the 

reasons for retaining the workhours. TID: October 2011

R-4 — Negotiate the use of split days off with local union officials and continue to reduce operating costs through staff 

reductions. TID: August 2011

R-5 — Eliminate the scheduling clerk position from the Pittsburgh P&DC employee complement. TID: August 2011

R-6 — Ensure the use of chock blocks at the Pittsburgh Processing and Distribution Center by Postal Vehicle Service motor 

vehicle operators and provide oversight of chock block usage. TID: August 2011

HR-MA-11-003 8/12/2011 Stand-by Time

R-1 — Assess the inappropriate use of stand-by overtime nationwide, especially in function one, and implement internal 

controls to address usage and recording issues identified. TID: September 2011

R-2 — Enhance management controls to ensure employees and supervisors accurately report and record stand-by time. 

TID: September 2011

CA-AR-11-005 8/24/2011 Contract Funding Approval

R-1 — Direct program office officials to submit eBuy requisitions for contract funding approval for transportation contacts 

within Contract Authoring Management System prior to contractual commitments. TID: October 2011

R-2 — Establish an agreement with Network Operations and Global Business to ensure approved eBuy requisitions for surface 

transportation contracts is obtained as required. TID: October 2011

MS-AR-11-006 8/24/2011 Effects of Compliance Rules on Mailers

R-1 — Estimate and consider mailing industry costs as part of cost-benefit analyses, where practical, to determine whether 

the benefits of new initiatives and rule changes are justified in light of total industry costs. TID: None

R-2 — Further involve stakeholder groups in formal dialogue during the strategic planning phase of new initiatives. TID: None

R-3 — Enhance transparency and accountability by documenting Postal Service collaborative efforts (discussions, action 

items, resolutions, milestones). TID: None

R-4 — Continue to train and monitor Postal Service acceptance employees on changes to program requirements and related 

compliance rules. TID: None

IT-AR-11-007 8/25/2011 Chief Information Officer’s Budget Data

R-1 — Establish and implement an alternate, streamlined finance number assignment process to ensure confidentiality and 

timeliness, while maintaining validation controls when carrying out urgent reorganization and redesign activities. 

TID: December 2011
58 | Semiannual Report to Congress

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

DA-AR-11-009 8/26/2011 Nationwide Facility Optimization

R-2 — Revise the vice president, Facilities, Report Card to include measurement in square footage terms and seek to include 

facility optimization goals as part of the National Performance Assessment. TID: October 2011

DA-AR-11-010 8/30/2011 Intelligent Mail: Realizing Revenue Assurance Benefits

R-1 — Establish timeframes for implementing the enhanced/expanded automated verifications as described in the original 

Intelligent Mail infrastructure Decision Analysis Report. TID: January 2013

R-2 — Develop a tolerance level for low scan rates to use for exception reporting. TID: January 2013

R-3 —Develop a process for identifying the cause(s) of low scan rates for customer follow-up as warranted. 

TID: January 2013

FF-AR-11-013 8/30/2011 Postal Service Refunds

R-1 — Document the Special Payment Postage System refund process and policies and devise a method to communicate the 

changes effectively to customers. TID: December 2011

R-2 — Analyze and establish an administrative and minimum fee that will cover processing costs. TID: March 2012

R-3 — Establish a timeframe performance standard for processing customer meter mail refunds. TID: March 2012

R-4 — Complete the update to the PostalOne! system to enable electronic transmission of Value Added Refund data to 

accounts payable. TID: March 2012

CRR-AR-11-003 9/6/2011 Service Performance Measurement Data - Commercial Mail

R-1 — We recommend the chief information officer and executive vice president direct the vice president, Mail Entry and 

Payment Technology, to: 

 Establish milestones for implementing recovery of Full-Service Intelligent Mail Barcode discounts provided to mailers 

when Full-Service mailings do not meet the specific requirements for the discounts received.

TID: None

NO-AR-11-008 9/13/2011 Timely Processing of Mail at the Richmond, VA, Processing and Distribution Center

R-1 — Our observations revealed that floor supervisors did not ensure employees adhered to color-code and mail reporting 

requirements. Also, they routinely failed to promptly assess the mail volume and swiftly adjust workhours, assignments, 

sort plans, transportation, and any other operational requirements to ensure the Richmond P&DC met customer service 

commitments. TID: August 2011

IT-AR-11-009 9/14/2011 Project Phoenix

R-1 — Modify the Technology Solution Life Cycle process to require the identification, documentation, and analysis of 

applicable back-end business processes and information technology systems during the technology solution 

requirements, analysis, and design phases. TID: November 2011

IT-AR-11-008 9/14/2011 Remote Access Controls

R-1 — Implement two-factor authentication to comply with Handbook AS-805 requirements and to meet Payment Card 

Industry – Data Security Standards. TID: December 2012

R-2 — Configure remote access firewalls according to Handbook AS-805 and applicable firewall security standards. 

TID: March 2012

R-5 — Configure virtual private network servers and firewalls to support only authorized encryption algorithms 

TID: December 2011

R-7 — Enforce Handbook AS-805 to require administrators to periodically patch third-party applications in accordance with 

policy. TID: December 2011

R-11 — Suspend remote access for all employees or contractors until they complete required security awareness training. 

TID: September 2012
April 1 — September 30, 2011 | 59 

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

HR-AR-11-002 9/19/2011 Postal Service Work Rules and Compensation Systems

R-1 — Additional increased flexibility to temporarily assign employees across crafts. TID: November 2011

R-2 — Improved workforce flexibility through non-traditional career options, such as emphasizing part-time employment as a 

career choice or modifying full-time assignments. TID: November 2011

R-3 — A comprehensive study to determine the optimal incentive-based carrier compensation system. TID: November 2011

CRR-AR-11-004 9/19/2011 Transportation Cost System Inputs into the Cost and Revenue Analysis Report

R-1 — Coordinate with applicable vice presidents to form a coordination committee to develop system interfaces necessary to 

provide automated data from the Transportation Cost System for product costing purposes. TID: December 2011

FF-AR-11-015 9/23/2011 Business Mail Acceptance Centralization Process

R-1 — Adopt a standardized, clear process to guide each district on how to conduct a centralization feasibility study and 

update the Business Mail Entry Centralization Standard Operating Procedure accordingly. TID: March 2012

R-2 — Require each district to conduct a centralization feasibility study, document the results, and take action based on the 

results of the study, as appropriate. TID: October 2013

R-3 — Manage business mail entry workhour usage to achieve 93 percent efficiency and develop tools to monitor 

performance. TID: September 2012

R-4 — Establish annual goals for business mail entry workhour efficiency to include measuring performance against goals. 

TID: September 2012

FF-AR-11-014 9/23/2011 Government Relations Operations

R-1 — Establish procedures to gather workload statistics on all functions within the Office of Government Relations and Public 

Policy, periodically monitor those statistics, and make appropriate adjustments to the organizational structure, as 

needed. TID: March 2012

R-2 — Develop written policies and procedures to guide operations within the Office of Government Relations and Public 

Policy. TID: March 2012

R-3 — Review placement of the Stamp Services organization within the Office of Government Relations and Public Policy to 

determine whether it is properly aligned within the Postal Service based on Stamp Services’ primary mission. 

TID: None

NL-AR-11-006 9/23/2011 Mail Transport Equipment – Needs, Distribution, and Use

R-1 — Perform a comprehensive mail transport equipment needs analysis for the network distribution center network to 

determine the amount of rolling stock, by type, needed on a daily basis to meet operational requirements. 

TID: October 2011

R-2 — Monitor the purchases of cardboard containers (other than Postal Paks) for network distribution center facilities to 

ensure they make only necessary purchases and are the best mail transport equipment option for the Postal Service 

given rolling stock inventory in the network. TID: September 2011

R-3 — Reissue over-the-road container policy to reflect the present and future operational needs and use of the containers 

within and outside the network. TID: October 2011

R-4 — Ensure Network Operations takes a more active role in the management and monitoring of the need, distribution, and 

use of existing mail transport equipment rolling stock within the network distribution center network. 

TID: September 2011

FT-AR-11-001 9/23/2011 Officer Compensation for Calendar Year 2010

R-1 — Develop and implement policies and procedures to ensure adherence to compensation cap limitations. 

TID: December 2011

APPENDIX E
60 | Semiannual Report to Congress

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

CA-MA-11-002 9/26/2011 Contract Delivery Service Cost Controls

R-1 — Instruct administrative officials to complete route surveys for the 47 contract delivery service routes identified in this 

audit. TID: November 2011 

R-2 — Establish a system of accountability to ensure route surveys are completed the year prior to contract renewal. 

TID: November 2011

DR-AR-11-007 9/26/2011 Follow-up on City Delivery Standard Operating Procedures

R-1 — Re-evaluate the certification criteria and ensure the criteria require units to meet, at least the national average percent 

to standard for office operations. TID: December 2012

R-3 — Establish an annual process to de-certify units that do not maintain performance standards after certification. 

TID: December 2012

NL-AR-11-008 9/27/2011 Evaluation of Major Transportation Technology Initiatives

R-1 — Ensure that Network Operations sponsors and project managers follow the Postal Service’s technology solution life 

cycle guidelines. TID: October 2011

R-2 — Require operational deficiencies be identified for corrective action and addressed prior to project closeout. 

TID: November 2011

R-3 — Facilitate the inclusion of a robust risk assessment, risk mitigation, system data migration, and transition planning best 

practices into investment planning policies. TID: October 2011

R-4 —Ensure establishment and maintenance of the proper line of authority, funding, and oversight for key programs by 

responsible sponsors and management officials. TID: October 2011

R-5 — Ensure comprehensive training is provided for employees throughout the technology’s life cycle. TID: May 2012

NL-AR-11-007 9/27/2011 Highway Contract Routes - Western Pennsylvania District

R-1 — We recommended the vice president, Eastern Area Operations, ensure Western Pennsylvania District managers follow 

prescribed procedures for making highway contracts effective and economical, including the continual monitoring and 

adjustment of trips based on need. TID: September 2011

R-2 — We recommended the vice president, Eastern Area Operations, verify the elimination or modification of the 11 trips 

from highway contracts. TID: September 2011

R-3 —We recommended the vice president, Eastern Area Operations, eliminate or modify the additional 15 trips from highway 

contracts. TID: October 2011

CA-AR-11-007 9/30/2011 Contract Postal Units Contract Oversight

R-1 — Modify contract postal units’ contracts to include clauses identifying the submission of revenue data as an official 

invoice from the contractor. Contractors should be notified of the clause addition and informed that their revenue data 

submission constitutes an official invoice. TID: None

R-2 — Create a process to ensure the contracting officer or contracting officer’s representative validates and certifies invoices 

prior to payment, using data maintained in the Contract Postal Unit Technology system. TID: None

R-3 — Establish a mandatory training procedure to ensure all contract officer representatives receive training of appointed 

duties within 2 weeks of notification of the contracting officer’s representative appointment. TID: March 2012

R-4 — Develop an oversight mechanism to monitor whether contracting officer’s representatives conduct quarterly 

performance and annual financial reviews, obtained completed appointment letters, and retain contract postal unit 

contracts in the contract administrative files. TID: March 2012

APPENDIX E
April 1 — September 30, 2011 | 61 

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

HR-AR-11-007 9/30/2011 Postal Service Workers’ Compensation Program

R-1 — Continue to pursue legislative change to transform the Federal Employees’ Compensation Act into a modernized 

workers’ compensation program that includes best practices for increasing program effectiveness and efficiencies 

and reducing costs. TID: None

R-2 — Pursue legislative change to amend Federal Employees’ Compensation Act to allow recovery of continuation of pay 

benefits in third-party cases. TID: None

R-3 — Pursue legislative change to reform Federal Employee Compensation Act to allow employing agencies to present 

evidence at hearings when fraud is alleged. TID: None

R-4 — Clearly define organizational responsibilities for detecting workers’ compensation fraud. 

 Establish requirements for Department of Labor to respond to reports of investigations within 45 days after receiving 

them.

 Establish a provider compliance program. 

 Revise the method used to determine the administrative fee to ensure the fee is based on actual costs to administer 

Postal Service Workers’ Compensation Program.

TID: None

R-5 —Develop mandatory and refresher training for Postal Service officials responsible for workers’ compensation to ensure 

they are aware of their roles and responsibilities for workers’ compensation. TID: September 2012

MS-AR-11-007 9/30/2011 Strategic Approaches to Revenue Protection

R-1 — Work with a broadened group of internal and external stakeholders to prepare for streamlining the entry of business 

mail, accelerate the timeline for streamlined acceptance and verification, and seek to leverage technology to provide 

revenue protection for Basic Service Intelligent Mail and non-automated volumes. TID: January 2013
62 | Semiannual Report to Congress

APPENDIX F and G

APPENDIX G

Status of Peer Review Recommendations

Federal audit organizations undergo an external quality control assessment by their peers every 3 years. The Dodd-Frank Wall Street Reform and Consumer 

Protection Act of 2010 requires an appendix reporting on 1) any Office of Inspector General peer reviews conducted during the semiannual period; and 

2) any outstanding recommendations from any previous or current peer review that remain outstanding or have not been fully implemented. 

Office of Audit

Internal Peer Reviews

On March 31, 2010, the Department of Defense OIG (DOD OIG) issued a quality control review report of our audit organization. We received a peer review rating of pass. 

All outstanding recommendations have been implemented as of March 31, 2011. 

A copy of this quality control review report, in its entirety, can be viewed on the USPS OIG website at www.uspsoig.gov.

External Peer Reviews

None conducted during this period.

Office of Investigations

Internal Peer Reviews

In Spring 2011, the Office of Inspector General for the Department of Justice (DOJ OIG) conducted a peer review of our Office of Investigations. They reviewed our 

Investigative Operations at our headquarters and at two of our field offices. We received a letter from the DOJ OIG, dated June 20, 2011, containing a review of the 

results. There were no specific findings or recommendations. 

External Peer Reviews

None conducted during this period.

APPENDIX F

Significant Management Decisions in Audit Resolution

For the period April 1— September 30, 2011

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.

Report Number Issue Date

Report Title, Recommendation Summary

R = Recommendation number

TID = Target Implementation Date

CA-AR-11-007 9/30/2011 Contract Postal Units Contract Oversight

R-1 — Modify contract postal units’ contracts to include clauses identifying the submission of revenue data as an official 

invoice from the contractor. Contractors should be notified of the clause addition and informed that their revenue data 

submission constitutes an official invoice.

R-2 — Create a process to ensure the contracting officer or contracting officer’s representative validates and certifies invoices 

prior to payment, using data maintained in the Contract Postal Unit Technology system.
April 1 — September 30, 2011 | 63 

APPENDIX H

Investigative Statistics*

For the period April 1 — September 30, 2011

Investigations 

Completed Arrests

Indictments/ 

Informations

Convictions/ 

Pretrial 

Diversions**

Admin. 

Action 

Taken 

Cost 

Avoidance

Fines, Restitution, 

and Recoveries

Amt. to USPS 

(from previous 

column)***

To Mgmt. 

for Admin. 

Action

Theft, Delay, or Destruction 

of Mail by Employees or 

Contractors

782 183 186 206 370 — $548,365 $116,598 401

Injury Compensation 

Fraud 

358 19 23 16 60 $64,852,970 $8,173,156 $4,151,791 87

Official Misconduct 534 35 29 34 328 $178,588 $1,713,718 $253,843 422

Financial Fraud 370 81 85 85 202 $1,675,000 $1,774,644 $1,618,522 234

Contract Fraud 85 15 19 14 145 $14,945,197 $8,779,823 $4,874,095 77

TOTAL 2,129 333 342 355 1,105 $81,651,755 $20,989,706 $11,041,849 1,221

* Statistics include joint investigations with other law enforcement agencies.

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

*** Amounts include case results of joint investigations with other OIG, federal, state, and local law enforcement entities.

For the period October 1, 2010 — September 30, 2011

APPENDIX H

Investigations 

Completed Arrests

Indictments/ 

Informations

Convictions/ 

Pretrial 

Diversions**

Admin. 

Action 

Taken 

Cost 

Avoidance

Fines, Restitution, 

and Recoveries

Amt. to USPS 

(from previous 

column)***

To Mgmt. 

for Admin. 

Action

Theft, Delay, or Destruction 

of Mail by Employees or 

Contractors

1,399 383 392 408 763 — $1,124,017 $409,495 863

Injury Compensation 

Fraud 1 & 2 

635 36 44 34 133 $ 150,901,540 $299,332,338 $58,300,873 160

Official Misconduct 915 38 88 78 605 $178,588 $5,528,805 $349,264 735

Financial Fraud 704 141 145 187 421 $3,030,000 $3,829,188 $3,599,198 473

Contract Fraud 137 21 39 29 192 $ 16,534,195 $ 418,843,980 $16,315,800 103

TOTAL 3,790 659 708 736 2,114 $170,644,323 $728,658,328 $78,974,630 2,334

* Statistics include joint investigations with other law enforcement agencies.

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

*** Amounts include case results of joint investigations with other OIG, federal, state, and local law enforcement entities. 

1

 Amount under Fines, Restitution, and Recoveries includes nearly $264.5 million from two pharmaceutical investigations.

2

 Amount under Amt. to USPS (from previous column) includes $42.5 million from one pharmaceutical investigation.
64 | Semiannual Report to Congress

APPENDIX I

Administrative Subpoenas Requested by the Postal Inspection Service

There was one request during the reporting period.

Type of Scheme

Complaints 

Filed

Consent 

Agreements FROs

Cease & 

Desist Orders

Advance fee 1 1 — 1

Charity 2 2 — 2

Contests/sweepstakes 14 12 1 14

Coupon fraud 1 — — 1

False billings 6 7 2 7

Internet Auction — — — —

Lotteries (foreign and domestic) 9 14 — 14

Merchandise:

 Failure to furnish 3 1 2 3

 Failure to pay 3 2 — 2

Misrepresentation 14 14 — 14

Miscellaneous 9 6 — 9

Telemarketing — — — —

Work at home 2 2 — 2

TOTAL 64 61 5 69

APPENDIX I

Summary of U.S. Postal Inspection Service Actions Under 39 USC 3005 and 3007

For the period April 1— September 30, 2011

Financial Reporting on Investigative 

Activities for the Postal Inspection 

Service 

Type

Personnel $169,700,057 

Nonpersonnel $34,000,986 

TOTAL $203,701,043

Capital obligations $2,467,633 

Other Administrative Actions

Administrative Action Requests 85

Temporary Restraining Orders Requested —

Temporary Restraining Orders issued —

Cases Using Direct Purchase Authority 2

Civil Penalties (Section 3012) Imposed — 

Test Purchases —

Withholding Mail Orders Issued 22

Voluntary Discontinuances —
April 1 — September 30, 2011 | 65 

APPENDIX J

APPENDIX J

Closed Congressional and Board of Governors’ Inquiries

For the period April 1— September 30, 2011

This appendix lists the congressional and Board of Governors inquiries the OIG closed during this reporting period. OIG units reviewed or investigated these 

inquiries to resolve allegations and disputes, and to help identify systemic issues. Inquiries are listed in the chronological order of receipt.

Inspector General Investigations (32)

Requestor Allegation/Concern Major Findings/Resolution Closure Date

Senator, New York Non-receipt of an international package. Our Office of investigations (OI) confirmed the loss, but found no 

evidence of misconduct by individual postal employees. 

5/20/11

Representative, Virginia A postal manager manipulated mail volumes in order to secure a 

favorable performance rating and misused government computers.

An investigation did not substantiate allegations of manipulated mail 

volume reports, and found Internet usage was limited and within 

postal standards.

8/03/11

Senator, Ohio Management fraudulently adjusted employee time and attendance 

records; complainant also presents whistleblower retaliation issues. 

Our Office of Audit (OA) found management control of time and 

attendance recordkeeping was not adequate to ensure employee 

workhours were reported accurately. In 2010, we provided the 

Senator information on how the complainant can file a retaliation 

complaint form with our agents.

4/05/11

Representative, 

Michigan

Non-receipt of an IRS check while mail was on hold. An investigation confirmed the check was cashed by a third party, 

but found no evidence of misconduct by postal employees. 

5/10/11

Senator, New York Non-receipt of two packages mailed from the Verona Post Office. An investigation found no evidence of misconduct by postal 

employees and did not determine the cause for the loss.

5/17/11

Senator, Virginia Hostile work environment at a Post Office; contested findings of a 

previous OIG review.

OI found area management was not aware that recommendations 

from a 2010 climate assessment had not been implemented. In 

April and May, the district took action addressing recommendations. 

Employee survey results and other documentation point to an 

improving workplace environment. 

8/12/11

Senator, Maryland Non-receipt of medication and mail arriving opened or damaged. An investigation found no evidence of misconduct by individual 

postal employees and no pattern of theft of prescription medications 

in the delivery area. 

8/12/11

Representative, 

California

Non-receipt of mail. An investigation found additional losses along the carrier route 

during the timeframe investigated. However, we were unable to 

locate the missing mail or identify those responsible. 

5/10/11

Representative, 

New Jersey

Postal manager misconduct. The OIG found the allegations had been fully addressed in 2004 

investigative work. OI investigated but did not substantiate additional 

allegations arising during interview, concerning an OIG employee 

improperly releasing confidential information and the postal manager 

improperly arranging postal relocation benefits for another employee.

8/02/11

Alderman, Illinois Delay of political mail in the Chicago District. An investigation found postal workers handled mail properly and 

according to postal procedures. There were no reports of delayed or 

curtailed mail at the time the mailing in question was handled at the 

local postal facility. 

1/10/11

Representative, Ohio Non-receipt of a letter containing cash. An investigation did not identify any potential suspects, but noted 

a pattern of complaints relating to the location where the item was 

mailed. Testing and recovery attempts produced no results.

8/24/11
66 | Semiannual Report to Congress

APPENDIX J

Requestor Allegation/Concern Major Findings/Resolution Closure Date

Representative, 

California

Non-receipt of four packages. An investigation determined the losses were attributable to delivery 

issues as well as theft. The Postal Service contract driver admitted 

stealing numerous Priority Mail packages during the timeframe of this 

reported loss. We presented our findings to the U.S. Attorney’s Office 

(USAO) for prosecution, and the contract driver's employment was 

terminated.

4/22/11

Representative, Indiana Postal employees gave a community group's post office box mail to 

an unauthorized person.

An investigation found management explored the incident at the 

time. They found employees had not followed proper procedures. 

Management apologized to the group, secured the box, and provided 

refresher training to clerks. 

5/10/11

Representative, 

Alabama

Hostile work environment at an Alabama Post Office; retaliation for 

filing an Equal Employment Opportunity (EEO) complaint.

OI reviewed workplace issues and reported findings to management. 

Based on our report, the Alabama District office advised they would 

take immediate action addressing workplace conflict. As to the 

EEO retaliation allegation, we do not intervene in matters under the 

jurisdiction of other agencies.

8/12/11

Senator, Washington The Postal Service improperly reinstated an employee convicted of 

mail delay and destruction.

OI's earlier investigation of misconduct resulted in referrals for 

prosecution and administrative action. USAO declinations of 

prosecution are a matter of prosecutorial discretion. Postal officials 

advised us the subject is no longer a postal employee.

4/08/11

Senator, Missouri Non-receipt of international mail. An investigation determined the losses were attributable to delivery 

issues, and in some cases, theft. A New York-based employee 

was charged and confessed to stealing international mail, and 

prosecutors will identify the victims, possibly including the Senator's 

constituent. 

10/4/10

Representative, Florida A postal employee intentionally delayed or discarded mail. OI found no evidence of misconduct by postal employees, but 

proactively met with employees to reinforce proper delivery policy.

6/30/11

Senator, North Carolina Theft of two gift cards mailed from North Carolina. An investigation substantiated the allegations. A postal employee 

was arrested, charged with the theft in state court, and is no longer 

employed at the Postal Service.

4/28/11

Representative, Florida A postal employee in Austin, Texas, stole from a priority package 

sent to Florida.

We did not substantiate the allegation, and could not establish the 

final disposition of the package. The Austin-based shipper made 

allegations against specific employees after they refused to deviate 

from postal policy for accepting his shipments.

8/17/11

Senator, Maryland Two OIG agents denied complainant union representation during an 

interview and falsely told management they had a signed confession. 

An investigation did not substantiate the allegations. Complainant 

declined representation during the interview. We determined no 

written confession existed, and that agents reported her oral 

admissions to management.

8/18/11

Senator, Iowa A constituent requested copies of an investigative report. Our FOIA unit released documents. 5/5/11

Representative, 

Pennsylvania

A postal employee stole books. An investigation confirmed the loss, but found no evidence of 

misconduct by postal employees, and no trace of the package, after 

it left the Philadelphia Network Distribution Center. 

/12/11

Senator, Virginia Priority Mail to and from Alabama was significantly delayed at the 

Norfolk P&DC. 

An investigation found no evidence of intentional delay, but could not 

determine where the delay occurred because no enroute scan data 

was available.

5/20/11

Senator, Virginia Employee misconduct at the Postal Inspection Service. We did not substantiate allegations that supervisors did not have 

authority to record, listen to, and address issues arising from call 

center activity for quality control and training purposes.

8/12/11

Senator, Florida Hostile work environment at a Florida Vehicle Maintenance Facility 

(VMF).

We noted a management review found the climate was strained, not 

hostile. After our inquiry, management advised they and the union 

were planning a joint meeting with VMF employees.

9/19/11

Senator, Arizona Florida postal employees are destroying or stealing mail because 

resident filed previous complaints.

An investigation did not substantiate the claim. 6/27/11
April 1 — September 30, 2011 | 67 

APPENDIX J

Requestor Allegation/Concern Major Findings/Resolution Closure Date

Representative, Indiana A supervisor took no action when a casual employee reported 

an attempt to delay mail, and management retaliated against the 

employee for reporting the incident.

An investigation found management promptly addressed the 

mishandling of mail allegation. Reprisal allegations do not meet the 

required elements for a whistleblower case.

8/17/11

Representative 

Wisconsin

A postal employee tampered with an estranged spouse's mail. We did not substantiate the allegation. 8/15/11

Representative, Utah Requests the status of investigation. OIG Government Relations Director briefed requestor on the closed 

investigation.

5/24/11

Senator, New York Non-receipt of three packages mailed from a New York Post Office, 

and returned packages.

An investigation produced no indications of theft and no investigative 

leads. Two of the packages have been accounted for. 

7/14/11

Representative, New 

Hampshire

Non-receipt of mail at a university-operated postal unit. An investigation did not identify any suspect, pattern of loss, or 

explanation for the mail problems. 

9/19/11

Representative, 

California

Delay or theft of financial mail by postal employees. An investigation did not substantiate the claim. 9/07/11

General Counsel (7)

Requestor Allegation/Concern Major Findings/Resolution Closure Date

Representative, Iowa Insufficient information provided in a response to a FOIA request. The OIG General Counsel briefed the member on OI's investigative 

work.

10/7/10

Senator, Missouri Hostile work environment and retaliation for filing an EEO complaint. We declined to intervene in matters under the jurisdiction and review 

of other agencies.

6/28/11

Representative, 

Michigan

A postal worker requests a copy of video footage compiled during an 

OIG investigation.

FOIA staff denied the request, but invited the requestor to narrow her 

request to a specific time period.

6/29/11

Senator, 

Massachusetts

Complainant response to our previous reply, which did not 

substantiate whistleblower retaliation allegations.

No new information was provided to cause a review of the previous 

investigative work; complainant also states he is pursuing other 

remedies.

8/25/11

Representative, 

North Carolina

Request for copies of notes from a meeting with an OIG agent. The FOIA unit processed and released documents. 9/23/11

Representative, Texas FOIA request for results of any OIG investigation into a mail theft 

complaint.

The FOIA unit was issuing a response to a request they received 

earlier from the constituent.

8/29/11

Representative, Florida Hotline complainant wants to know what personal information the 

agency retained, and if it was associated with a personnel record.

OIG provided information on retention policy. 9/28/11

Inspector General Audits/Risk Analysis Research Center Reports (16)

Requestor Allegation/Concern Major Findings/Resolution Closure Date

Representative, Oregon Postal managers fraudulently changed time and attendance records, 

causing employees to be underpaid..

The OA found management control of time and attendance 

recordkeeping at audited locations was not adequate to ensure 

employee work hours were reported accurately..

4/5/11

Senator, Iowa Inaccurate injury and illness reports submitted to Department of 

Labor from the Des Moines Post Office.

OA concluded the Postal Service did not always record and report 

injuries and illnesses in accordance with OSHA requirements.

6/03/11

Senator, Missouri Management in Kansas City is fraudulently adjusting employee time 

and attendance records.

OA found management control of time and attendance recordkeeping 

was not adequate to ensure employee workhours were reported 

accurately.

4/05/11

Representative, 

Pennsylvania 

Management is improperly changing employee time and attendance 

records.

OA found management control of time and attendance recordkeeping 

was not adequate to ensure employee workhours were reported 

accurately.

4/05/11

Representative, 

Missouri

Management is improperly changing employee time and attendance 

records. 

OA found management control of time and attendance recordkeeping 

was not adequate to ensure employee workhours were reported 

accurately.

4/05/11
68 | Semiannual Report to Congress

APPENDIX J

Requestor Allegation/Concern Referred To Closure Date

Representative, 

West Virginia

Postal Service Area Mail Processing (AMP) proposal to move the 

Beckley and Huntington facilities into the Charleston P&DC would 

move operations from high-efficiency locations to a location with low 

efficiency rates, and where security and cost issues have not been 

addressed.

OA found a valid business case exists to consolidate Beckley mail 

processing operations. OA provided findings about consolidating 

Huntington operations in the previous SARC period.

4/21/11

Ranking Member, 

Senate Committee

Requests OIG review conflicts of interests in contracting with former 

Postal Service executives.

We issued two audits; Conflicts of Interest: Facility Leases and 

Contract Delivery Services, and later, The Sufficiency of Recent 

Policy Changes Regarding Contracting Conflicts of Interest. The first 

determined the Postal Service entered into leases that resulted in 

financial conflicts. The latter addressed issues related to contracting 

with former executives. New policy to avert direct or imputed 

conflicts of interest is in place.

9/02/11

Ranking Member, 

Senate Committee

Requests OIG review the effects Postal Service compliance rules 

have on mailers.

OA found the Postal Service has not always fully considered how 

changes to mail compliance rules impact mailers. Specifically, the 

Postal Service did not always adequately estimate the cost to mailers 

of complying with proposed rules, collaborating with the mailing 

industry, and training and monitoring personnel to accept business 

mailings.

8/29/11

Senator, Ohio Implementation of the Lima and Toledo mail processing facilities 

consolidation; based on complaints from constituents. 

OA concluded management did not ensure on-time performance 

and customer service were improved or maintained during the 

implementation of the consolidation.

4/01/11

Representative, Ohio Implementation of the Lima and Toledo mail processing facilities 

consolidation; based on complaints from constituents. 

OA concluded management did not ensure on-time performance 

and customer service were improved or maintained during the 

implementation of the consolidation.

4/01/11

Representative, 

Wisconsin

Requests the OIG review consolidation plans for the Oshkosh 

and Green Bay mail processing facilities, and questions postal 

assumptions about space available and costs of the move to Green 

Bay.

OA found although the consolidation would result in cost savings, 

adequate facility and machine capacity does not exist at the Green 

Bay P&DC to process the additional mail volume, and service could 

be negatively impacted.

7/29/11

Senator, Oregon Requests OIG review the closure of the University of Oregon branch 

post office.

OIG found the Postal Service followed applicable law and policies 

and properly considered public comments and community impact. 

However, management omitted some operational costs in the 

proposal submitted to headquarters. OIG plans a comprehensive 

review of Postal Service-Operated Retail Facility Discontinuance 

Guide.

7/25/11

Representative, 

Kentucky

Requests the OIG review a questionable AMP consolidation proposal 

for consolidating the Bowling Green, Nashville, and Evansville mail 

processing facilities.

OA found a valid business case exists to consolidate originating mail 

processing operations.

8/29/11

Chairman, House 

Committee

Requests information on open and unimplemented 

recommendations.

OA provided a list, along with an explanation of our tracking 

methods. 

4/29/11

Ranking Member, 

Senate Committee 

Requests the OIG detail an employee to a Senate committee for 6 

months.

Employee detailed to committee as requested. 5/03/11

Senator, Florida Mismanagement of the grievance award process. The constituent does not allege any specific improprieties. We 

included an audit of grievance settlements and payments in our 

response. 

8/25/11
April 1 — September 30, 2011 | 69 

APPENDIX J

Referrals (8)

Requestor Allegation/Concern Referred To Closure Date

Senator, Colorado Requests the IG remind all postal facilities of Public Law 110-41, 

concerning flag displays. 

Referred to Postal Service Government Relations Office (GRO) 4/12/11

Representative, Florida Postal employee transfer request. Referred to Postal Service GRO. 4/20/11

Representative, 

New York

Wrongful termination because of a disability. Referred to Postal Service GRO. 4/28/11

Representative, New 

Jersey

Mail fraud scheme. Referred to USPIS. 5/10/11

Council Member, 

California

Request for information about the reconstruction of a postal facility 

in Long Beach.

Referred to Postal Service GRO. 6/28/11

State Official, New York Opposing the possible of closing the New Windsor Post Office. Referred to Postal Service GRO. 8/25/11

City Council Member, 

New York 

Reaction to possible closure of five postal stations in Queens. Referred to Postal Service GRO. 8/25/11

Vice President, County 

Board of Supervisors, 

Mississippi

A petition requesting the Postal Service save the Union Church Post 

Office from closure.

Referred to Postal Service GRO. 8/25/11

Request for IG Opinion/Testimony (3)

Requestor Allegation/Concern Referred To Closure Date

Chairman, House 

Subcommittee

Request for OIG appearance at a hearing to examine Federal 

Employees' Compensation Act. 

The Assistant Inspector General for Investigations testified at the 

hearing.

4/13/11

Chairman and Ranking 

Member, Senate 

Committee

Request for advisory opinion on the most secure way for agencies to 

mail sensitive, unclassified documents to Congress.

The OIG discussed how various mailing options limit exposure to loss 

and unauthorized access.

5/04/11

Chairman, Senate 

Subcommittee

Requests Inspector General appear at a hearing on the Postal 

Service's Financial Crisis.

The IG testified on May 17. 5/17/11
70 | Semiannual Report to Congress

FREEDOM OF INFORMATION ACT/ WORKPLACE ENVIRONMENT

Requests Number of Requests

Carryover from prior period 6

Received during period 268

Total on hand during period 274

Actions Number of Requests

Processed during the period 256

 Requests denied in full 10

 Requests denied in part 81

 Requests granted in full 5

 No records 17

 Requests referred* 127

 Requests withdrawn 7

 Fee-related reasons —

 Records not reasonably described —

 Not a proper FOIA request for some other reason 4

 Not an agency record 2

 Duplicate request 3

Balance Number of Requests

Balance at the end of the period (pending) 18

Processing Days Number of Days

Median processing days to respond to a FOIA request 1

SUPPLEMENTAL INFORMATION

Freedom of Information Act

The OIG’s Freedom of Information Act (FOIA) Office operates independently 

of, but frequently coordinates with, its counterparts at the Postal Service and 

the Postal Inspection Service. The FOIA Office receives requests for records 

from the public, the media, and postal employees. The FOIA, 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.”

For the period April 1 — September 30, 2011

SUPPLEMENTAL INFORMATION

Workplace Environment

The OI Workplace Environment unit reviews workplace environment and 

operational issues that may affect workplace climate in postal facilities 

through the country. The OIG Hotline is the usual source for the complaints, 

but occasionally members of Congress, the Governors, and postal 

management will raise concerns or forward complaints appropriate for 

review by the unit. Complaint topics range from sexual harassment and 

discrimination to workplace safety. Workplace Environment reviews are 

designed to identify systemic, rather than individual, issues and foster 

postal management efforts toward providing employees a stress- and 

adversity-free work environment.

The unit accepts complaints from any postal employee, including OIG and 

Postal Inspection Service staff. Reviews may result in fact-finding reports 

to management or referral for specific suggested action, such as climate 

assessments. 

Activities

For the period April 1 — September 30, 2011

Complaints received Total

Carryover from prior period 35

Complaints received from OIG Hotline, Congress, Governors, management, 

internal, and other

255

Total on hand during this period 290

Workplace environment actions Total

Complaints reviewed and closed during the period 238

Referred to Postal Inspection Service —

Referred to Office of Audit —

Referred to Office of Investigations —

Referred to Workplace Environment 12

Referred to Hotline 7

Summary of findings to Congress/BOG/Postal Service management 42

Referred to FOIA —

Referred to AIG for Investigations —

Referred to database for statistical analysis and possible systemic review 171

Complaints pending at the end of the period 6
The U.S. Postal Service has two 

law enforcement agencies with 

distinct areas of investigative

responsibility to serve the needs

of stakeholders, postal employees,

and the American public.

Who do I call?

Postal Inspection Service

■■ Security of employees, facilities, 

and equipment

■■ Revenue and postage fraud

■■ International mail security

■■ Violent crimes: 

- Threats and assaults of employees 

- Burglaries and robberies

■■ Mail theft by nonemployees

■■ Dangerous mail and bombs

■■ Mail fraud

■■ Identity theft

■■ Narcotics in the mail

■■ Child pornography and obscenity

Contact: 877-876-2455

http://postalinspectors.uspis.gov/

Office of Inspector General

■■ Theft, delay, or destruction of mail by 

employees and contractors

■■ Workers’ compensation fraud

■■ Embezzlements and financial crimes

■■ Contract fraud

■■ Kickbacks

■■ Computer crimes

■■ Narcotics

■■ Employee misconduct

■■ Internal affairs and executive 

investigations

■■ Whistleblower reprisals

Contact: 888-USPS OIG

www.uspsoig.gov
72 | Semiannual Report to Congress

U.S. POSTAL SERVICE OFFICE OF INSPECTOR GENERAL 

1735 N. Lynn Street, Arlington, VA 22209-2020 

1-888-USPS-OIG (1-888-877-7644) Fax: 703-248-2291 www.uspsoig.gov