October 1, 1999 - March 31, 2000

Semiannual Report to Congress 

Including Significant Activities of the Inspection Service

OFFICE OF INSPECTOR GENERAL 

October 1, 1999 - March 31, 2000

Semiannual Report to Congress Semiannual Report to Congress 

Including Significant Activities of the Inspection Service

A Message from the

Inspector General

KARLA W. CORCORAN

Inspector General

Our Investment in the New Millennium

As we enter the new millennium, the Office of Inspector General is

proud to have assisted the Postal Service in meeting its “Year 2000”

(Y2K) challenge. Working with Postal Service management and

staff, we helped to ensure that any disruptions of mail delivery were minimal

and that the Postal Service tradition of universal delivery continued. The

critical date of the Y2K challenge — January 1, 2000 — came almost three

years to the day after our inception in January 1997. This was without a

doubt the most visible area where we have had an overarching and continuous impact that spanned the three years of our existence. In fact, our efforts

were recognized by Postmaster General Henderson at the January Board of

Governors meeting when he praised our work in assisting the Postal Service

in meeting its challenge so successfully. 

Simultaneously, while working on the Y2K challenge, we continued to

provide the Postal Service and its stakeholders with value-added audit, investigative, and other services in numerous ways, including:

◆ Developing and issuing our first video report, which brought to life

the unsafe and unsanitary conditions in a Postal facility that threatened the health and safety of Postal employees and customers; 

◆ Testifying before Congress on our oversight responsibilities related to

the Postal Service’s business operations; 

◆ Working with Postal Service management to develop a public disclaimer, which fully discloses that the External First-Class Measurement System is not a system-wide measurement of First-Class Mail

performance;

◆ Identifying 20 trailers holding hundreds of thousands of pieces of misreported, unprocessed mail up to three weeks old during the holiday

season, including Christmas advertising flyers, catalogs, small packages, and periodicals;

◆ Evaluating the tray management system, a $.5 billion automated mail

movement and storage system, and questioning the accuracy of the

projected return on investment;

◆ Reviewing costs and revenues on the Postal Service’s first SemiPostal Breast Cancer Research stamp and questioning whether the

Postal Service adequately accounted for and recovered all of its costs

in generating $8.6 million for breast cancer research;

◆ Recovering about $3 million as a result of an ongoing investigation

of a major telecommunications contractor for improper billing; 

◆ Establishing a contract audit program to assist the Postal Service in

negotiating fair and reasonable contract prices and paying only for

allowable and supportable costs incurred by contractors, on which

the Postal Service spends over $7 billion each year; and

◆ Launching a new program for issuing computer security advisories to

Postal management alerting them of potential weaknesses in systems

security.
In addition to these and other projects that we have conducted during the past six months, the

Office of Inspector General received an award for “Best Special Event” and the President’s Award,

the highest recognition a Federal agency can receive, for our employees’ participation in the 1999

Combined Federal Campaign. 

One of the highlights of this semiannual reporting period was our “Third Annual Recognition

Day” ceremony. Representative John M. McHugh, Chairman, Subcommittee on the Postal Service, House Committee on Government Reform; Governor Einar Dyhrkopp, Chairman of the

Postal Service Board of Governors; and Dan Blair, Senior Counsel, Senate Committee on Governmental Affairs, each spoke to our more than 400 employees, congratulating them on their successes and encouraging them to continue achieving the Office of Inspector General mission.

As a result of cooperative efforts among the Governors, Postal Service management, and others, we resolved two previously reported major challenges. Specifically, the Governors approved a

revised “Designation of Functions” between the Inspection Service and the Office of Inspector

General. The major changes to the revision included the Office of Inspector General being responsible for all audit work and expenditure investigations, and clarifying definitions between the two

groups. In addition, the Governors approved an audit resolution process to aid in resolving disagreements between management and the Office of Inspector General.

We continue to work with the Governors and others on important issues such as Inspector

General independence, the need for additional staffing to perform audits transferred from the

Inspection Service as a result of the newly approved designation of functions, and additional space

requirements resulting from our changing needs. 

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

well as those of the Inspection Service from October 1, 1999, through March 31, 2000. Submission of this report fulfills our reporting requirement under the Inspector General Act and Inspection Service requirements under the Mail Order Consumer Protection Amendments of 1983. This

report also represents a comprehensive status of the work of this office and the Inspection Service

in combating fraud, waste, abuse, and mismanagement within the Postal Service. 

In this reporting period, we issued 50 audit reports, including 18 contract audits performed for

us by the Defense Contract Audit Agency, and 77 management advisory reports and other products.

We also closed 64 investigations. These efforts resulted in over $33.6 million in questioned costs

and funds to be put to better use. The work of approximately 2,100 Postal Inspectors included 176

audits and 96 expenditure, financial, service, and revenue investigative reports which identified

over $266 million in questioned and unsupported costs and more than $9 million in funds to be put

to better use. Our combined efforts resulted in 463 written products to strengthen Postal Service

programs and operations and over $308 million in monetary benefits.

Also, in the last six months, I have filled a key management position by appointing Richard

Chambers as the Deputy Inspector General. In this role, Mr. Chambers will assist other members

of our Management Committee and me in leading the Office of Inspector General. The Board of

Governors and the Postal Service also experienced management changes. We look forward to

working with John Walsh, from Connecticut, who was appointed by President Clinton to the Board

of Governors, and John Nolan who was selected to be Deputy Postmaster General.

Four years ago no one could have predicted we would achieve so much in such a short period

of time. We are proud of our hard work and accomplishments during our brief existence. We

remain committed to working with the Inspection Service to help the Postal Service meet the challenges of a competitive marketplace and assisting the Postal Service in achieving its mission. The

new millennium will bring many changes, but we look forward to the challenges.

Sincerely,

Karla W. Corcoran

Inspector General

April 30, 2000

PAGE2 A MESSAGE FROM THE INSPECTOR GENERAL

Chairman John McHugh of the House

Subcommittee on the Postal Service

addresses all Office of Inspector General

staff at the Third Annual Recognition Day.
PAGE3

Table of Contents

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

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

POSTAL SERVICE REPORTED ACCOMPLISHMENTS ..............................................17

OVERVIEW............................................................................................................21

Office of Inspector General ........................................................................22

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

ORGANIZATION....................................................................................................35

Office of Inspector General ........................................................................37

Inspection Service........................................................................................41

GOALS AND STRATEGIES ....................................................................................43

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

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

CUSTOMER SERVICE ............................................................................................47

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

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

PERFORMANCE REVIEWS......................................................................................57

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

◆ Accepting and Processing ......................................................................58

◆ Transportation..........................................................................................59

◆ Delivery ....................................................................................................60

◆ Marketing ................................................................................................61

◆ Legislative and Regulatory Reviews ......................................................62

Inspection Service........................................................................................64

◆ Transportation..........................................................................................64

◆ Delivery ....................................................................................................64

◆ Mail Theft ................................................................................................64

◆ Service Investigations..............................................................................66

FINANCIAL MANAGEMENT REVIEWS ..................................................................67

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

◆ Financial Opinion Audits ......................................................................68

◆ Financial Related Reviews ......................................................................69

◆ Contracting and Facilities ......................................................................70

◆ Legislative and Regulatory Reviews ......................................................72

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

◆ District and Installation Financial Audits..............................................73

◆ Contracts and Facilities Audits ..............................................................74

◆ Revenue Investigations ..........................................................................74

◆ Embezzlements..........................................................................................75

TECHNOLOGY REVIEWS ......................................................................................77

Office of Inspector General ........................................................................78

◆ Year 2000 and Information Systems ......................................................78

◆ Developmental Reviews..........................................................................79

◆ Computer Security ..................................................................................80
PAGE4 TABLE OF CONTENTS

◆ Electronic Commerce..............................................................................81

◆ Computer Intrusion ................................................................................82

◆ Legislative and Regulatory Reviews ......................................................82

Inspection Service........................................................................................83

◆ Electronic Commerce..............................................................................83

LABOR MANAGEMENT REVIEWS ........................................................................85

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

◆ Violence in the Workplace ....................................................................86

◆ Workplace Climate..................................................................................87

◆ Healthcare ................................................................................................88

◆ Postal Employees Safety Enhancement Act..........................................90

◆ Legislative and Regulatory Reviews ......................................................90

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

◆ Workplace Climate..................................................................................91

◆ Postal Robberies ......................................................................................91

◆ Drugs in the Workplace ..........................................................................92

◆ Workers' Compensation..........................................................................92

OVERSIGHT REVIEWS OF INSPECTION SERVICE ..................................................95

Office of Inspector General ........................................................................96

◆ Oversight of Inspection Service..............................................................96

◆ Legislative and Regulatory Reviews ......................................................97

OTHER SIGNIFICANT REVIEWS............................................................................99

Office of Inspector General ....................................................................100

◆ Executive Investigations........................................................................100

◆ Legislative and Regulatory Reviews ....................................................100

Inspection Service ....................................................................................102

◆ Physical Security ..................................................................................102

◆ Narcotics Offenses and Trafficking ......................................................102

◆ Child Exploitation ................................................................................103

◆ Prohibited Mail ......................................................................................104

◆ Postal Burglaries ....................................................................................104

◆ Mail Fraud ..............................................................................................105

◆ Money Laundering ................................................................................107

APPENDICES ......................................................................................................108

Appendix A - Closed Congressional Inquiries........................................109

Appendix B - Reports Issued to Postal Management ............................114

Appendix C - Findings of Questioned Costs ..........................................130

Appendix D - Recommendations That Funds Be Put to Better Use....131

Appendix E - Unresolved Reports ..........................................................132

Appendix F - Summary of Inspection Service Actions 

Under 39 USC § 3005 and § 3007 ....................................................135

Appendix G - Criminal Statistics ............................................................137

Appendix H - Summary of Postal Service Investigative Activities 

Under 39 USC § 3013 (prototype)....................................................138

Hotline Poster............................................................................................139
Executive Summary

PAGE 5

What is the OIG’s primary responsibility?

The primary responsibility of the OIG is to

prevent, detect, and report fraud, waste,

abuse, and mismanagement, and to promote

efficiency in the programs and operations of 

the Postal Service. 

DID YOU 

KNOW?
EXECUTIVE SUMMARY

This Executive Summary provides a brief

synopsis of the work reported during this

six-month period. This issue of our

Semiannual Report addresses the major challenges the Postal Service faces as it enters the

21st century and the many reviews performed—

from preparing for Year 2000 (Y2K) readiness,

to exploring electronic commerce and computer intrusion issues, to investigating mail thefts

and workplace violence—that help improve

Postal operations. 

The OIG and the Inspection Service conduct reviews and investigations—independently and collaboratively—that play a vital role in

helping the Postal Service make improvements.

Work performed by both the OIG and the

Inspection Service is included in this report.

We have included examples of Inspection Service work to present Congress and the Governors with a unified report of the work being

done within the Postal Service to combat fraud,

waste, abuse, and mismangement. 

In this, the OIG’s seventh Semiannual

Report, the work has been categorized into

seven subject areas: customer service, performance, financial management, technology,

labor management, oversight of the Inspection

Service, and other significant issues. We

believe this format provides a clear understanding of where our work falls within the ten major

management and program challenges facing the

Postal Service, which include:

◆ reforming the regulatory environment;

◆ managing affordability by controlling

costs 

◆ growing and protecting revenues;

◆ improving workplace climate and labor

relations;

◆ maintaining a safe and healthy workplace;

◆ developing measures and assessing

performance;

◆ ensuring data integrity and reliability;

◆ leveraging technology;

◆ maintaining computer security; and

◆ increasing customer service and satisfaction.

The following highlights the

accomplishments of the OIG and

Inspection Service under the specific

subject areas:

(1) The area of customer service highlights

the OIG and Inspection Service commitment

to providing the best quality customer service

available. 

(2) The area of performance focuses on the

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

conducted 27 reviews in this area, which

included projects that will help save the Postal

Service over $30 million in current and future

years. A few examples of work in this area

include:

◆ working with Postal Service management

to develop a public disclaimer, which

fully discloses that the External FirstClass Measurement System is not a system-wide measurement of First-Class

Mail performance;

◆ disclosing that the Postal Service could

save $28 million over five years by reducing contract rates where Postal Service

employees perform ground-handling services expected to be performed by aircarriers;

◆ determining that the Postal Service had

not recovered some allowable costs associated with Breast Cancer Research

Stamp Program; and

◆ identifying that $6 million in stamp

stock, stored on a loading dock, was not

properly accounted for or adequately

secured at a Processing and Distribution

Center.

The Inspection Service completed 12 audits

related to area, district, and local issues, and

numerous investigations, such as:

PAGE6 EXECUTIVE SUMMARY

This Executive Summary highlights the

Office of Inspector General (OIG) and

Inspection Service accomplishments from

October 1, 1999, through March 31,

2000, that are contained in this

Semiannual Report to Congress.

The OIG Management Committee consists 

of (left to right) Deputy Inspector General

Richard Chambers and Assistant

Inspectors General Sylvia Owens and

Ronald Merryman; Inspector General

Karla Corcoran; Assistant Inspectors

General Norm Hancock and Billy Sauls;

and General Counsel Tom Coogan. (Not

pictured; Executive Representative for

Field Liaison Colleen McAntee)
PAGE7

◆ vehicle inventories and surface transportation operations;

◆ controls over carrier overtime; and 

◆ mail theft, resulting in arrests of 404

employees and 2,522 nonemployees.

(3) In the area of financial management,

which incorporates financial opinion and other

related financial reviews, contracting, and

facilities practices, the OIG completed 65

reviews and conducted investigations resulting

in one conviction, nine arrests, two indictments, and recoveries and restitution of over

$1.1 million, which included:

◆ an audit of the San Mateo accounting service center that resulted in eight financial

accounting adjustments that increased

income by $32.5 million;

◆ a review of cost containment measures

to reduce the Postal Service budgeted

expense by $400 million during Fiscal

Year (FY) 1999, which disclosed that

specific guidance on cost reductions was

needed to ensure that strategic goals

were not impacted; and 

◆ an investigation into a contract with a

large telecommunications contractor that

resulted in a recovery of $900,000 in this

reporting period, for a total recovery of

$2.9 million to date. 

In addition to other work, the Inspection Service:

◆ reported the results of 2 opinion audits,

135 financial installation audits, and 18

District Accounting Office audits, for a

total of 155 audits, which identified over

$126,000 in revenue deficiencies;

◆ reported the results of eight contract

audits and one facility audit, which identified $266 million in questioned costs;

and 

◆ reported the results of 58 revenue investigations during the reporting period,

which identified $12.6 million in revenue deficiencies.

(4) In the area of technology, which encompasses the Y2K initiative, information systems

and infrastructure, developmental systems,

telecommunications, and computer security,

the OIG performed 11 reviews. Some of our

more significant activities include:

◆ working with Postal management to successfully implement the Y2K emergency

response capability; 

◆ reviewing the Tray Management System

and identifying that the return on investment was significantly overstated and

that equipment maintenance labor and

operating costs will be at least $27.9 million more than projected; and 

◆ issuing the OIG’s first Computer Security

Advisory to assist Postal management in

improving computer security.

The Inspection Service:

◆ developed a two-day training course for

Postal Inspectors and others entitled Computer Searches and Internet Investigations.

In November, reporters from ABC’s “20/20”

visited the new computer class to highlight

the new role of Postal Inspectors as “cybercops.”

(5) The labor management area focuses on

issues related to violence in the workplace,

workplace climate, health care, and the Postal

Employees’ Safety Enhancement Act. During

this reporting period, the OIG conducted 44

reviews in this area, including:

◆ the OIG’s first video report documenting

unsafe working conditions at a Southwest station;

◆ a review that substantiated allegations of

a hostile work environment that

increased the risk of violence in a Southeast Area post office; and

◆ an investigation of a healthcare provider

that revealed a Postal employee had been

performing work on a physician’s residence while collecting disability payments.

The Inspection Service:

◆ arrested 13 individuals for selling drugs

on Postal property; 

◆ conducted numerous workers’ compensation investigations resulting in $66.4 million in long-term and continuation-ofpay cost saving for this reporting period;

and

◆ arrested 230 individuals for assaults and

threats against Postal employees.

What are the OIG “values?” 

The OIG’s values are teamwork,

leadership, creativity, communication, and conceptualization, that

are incorporated into a 360-

degree employee evaluation system called “TLC3.” 

DID YOU 

KNOW?

Deteriorating lead-based paint recorded

in the OIG’s first video report concerning

a Postal facility.
PAGE8

(6) In the area of oversight of the Inspection

Service, the OIG completed three reviews

including:

◆ a review of the Postal Service’s process

for determining the security clearance

levels for non-Inspection Service

positions.

(7) Other significant reviews included projects that do not readily fall into the other six

categories. The 41 other OIG reviews included:

◆ investigations of Postal Service Career

Executive Service employees who

allegedly misused government-issued

Citibank credit cards for personal purchases and improperly used Postal Service vehicles and drivers for personal

transportation for about 2 1/2 years.

The Inspection Service conducts numerous

audits and investigations covering significant

issues in the areas of physical security, narcotics

offenses trafficking, child exploitation, prohibited mail, Postal burglaries, and mail fraud.

EXECUTIVE SUMMARY
Major Management Issues

Facing the Postal Service

To whom does the Inspector General report? 

The Inspector General reports to the nine Postal Service

Governors and not to the Postmaster General. Also,

the Inspector General is required by statute to keep

Congress informed of OIG activities.

DID YOU 

KNOW?

PAGE 9
MAJOR MANAGEMENT

ISSUES FACING THE

POSTAL SERVICE

During the past five years, the Postal Service has made notable improvements inits financial position and delivery performance. It has recorded positive net income

and maintained or improved the overall delivery of certain specific classes of mail. However,

the Postal Service is entering a new era. It

expects declines in some of its core business

areas in the coming years. The growth of the

Internet, electronic communications, and electronic commerce all have the potential to substantially affect mail volume and traditional

revenue stream. As a result, the Postal Service

may experience difficulty maintaining its position in a dynamic communications and delivery

environment.

In the emerging electronic age, in which

some segments of the population are changing

the way they communicate and do business, the

Postal Service must continue to respond to new

customer requirements to meet its mission.

Additionally, the outcome of proposed legislative reforms could alter the fundamental regulatory framework that provides for the structure of

the Postal Service’s current operations. These

developments make it imperative for the Postal

Service to (1) reform the regulatory environment; (2) manage affordability by controlling

costs; (3) grow and protect revenues; (4)

improve workplace climate and labor relations;

(5) maintain a safe and healthy workplace; (6)

develop measures and assess performance; (7)

ensure data integrity and reliability; (8) leverage

technology; (9) maintain computer security;

and (10) increase customer service and satisfaction.

These issues, their significance, and key

OIG projects that address them are examined

below.

REFORM THE REGULATORY 

ENVIRONMENT

The Postal Service believes it is imperative

to have the statutory authority to adapt to new

conditions and demands due to rapid changes in

electronic communications, coupled with the

nation’s now mature and highly competitive

shipping and express industry. The Postmaster

General has stated that competitors of the

Postal Service can move faster, act more agilely,

and thus, better respond to the changing marketplace. To compete effectively and in concert

with the needs of its customers, the Postal Service believes it needs commercial freedoms,

including market-based pricing and the ability

to generate income for investment. Unlike

many of the foreign posts that have been privatized or deregulated, the Postal Service is limited in its ability to invest, enter into forwardlooking pacts with labor, or seek new alliances

and new markets because of legal restrictions.

While many stakeholders agree that reform

of our nation’s postal laws is needed, identifying

and implementing the right changes presents a

difficult challenge. The Postal Modernization

Act, H.R. 22, would give the Postal Service

greater freedom to compete, while establishing

new rules to ensure fair competition and protect

the public interest. Since H.R. 22 was reintroduced in Congress in January 1999, Postal management has worked with the House Subcommittee on the Postal Service to draft provisions

to move the mailing industry forward, while

providing the Postal Service with competitive

pricing in an effort to strengthen the value and

relevance of the mail and respond to customer

needs.

To address this major management challenge during the coming year, among other

reviews, the OIG will:

◆ Assess statutory and regulatory provisions

that effect the development of electronic

commerce products and services;

◆ Determine whether the Postal Service

has the commercial freedoms needed to

compete in the Internet shipping market;

and

◆ Assess the impact of current regulations

on the Postal Service’s ability to offer

incentives to attract and retain highlyqualified executives.

MANAGE AFFORDABILITY BY

CONTROLLING COSTS

The Postal Service’s ability to ensure universal mail service at affordable rates is dependent on controlling costs, strengthening internal controls, and improving productivity. Most

PAGE10 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

DID YOU 

KNOW?

Does the OIG have access to

all Postal Service documents

and information? 

The Inspector General Act

specifically provides that the

Inspector General is authorized

“to have access to all records,

reports, audits, reviews, documents, papers, recommendations,

or other material available to the

applicable establishments.”

The proposed H.R. 22 would provide regulatory relief for the Postal Service.
PAGE11

importantly, aggressive cost management will

be necessary to mitigate historic cost trends that

drive rate increases. To control costs, the Postal

Service has launched an initiative to eliminate

$4 billion in expenses by FY 2004. The majority of these reductions will come from breakthroughs in productivity in Postal operations.

Further, the Postal Service has taken steps to

strengthen internal operating controls to avoid

unwarranted costs. While these actions are

important, they will not guarantee success

unless the Postal Service ensures controls are

also adequate in future programs and initiatives.

Effective management of the Postal Service’s

capital investments is also critical if the Postal

Service is to achieve its projected return on

investments. Given the Postal Service’s plan to

spend billions of dollars on automation projects

over the next few years, it will need to ensure it

must be prepared to meet the critical challenges

of effectively implementing automation projects within budget, obtaining the planned

savings on schedule, and improving overall

productivity.

Despite efforts to control costs and increase

productivity, the Postal Service requested rate

increases in January 2000 to cover its rising

operating costs in areas such as First-Class Mail,

Express Mail, Parcel Post, and Periodicals. Such

increases would allow the Postal Service to support its operations solely through sales of its

products and services. The rate-making process

also affords the Postal Service the opportunity

to pursue rate classification changes that would

benefit mailers. However, many Americans

have the perception that the Postal Service raises rates more frequently than it actually does,

and without regard to customers’ concerns and

input. For this reason, the Postal Service continues to face challenges from its competitors as

mailing groups and members of the public argue

before the Postal Rate Commission against the

Postal Service’s proposed rate increases. 

To address this major management challenge during the coming year, among other

reviews, the OIG will:

◆ identify opportunities for optimization

and cost savings within the Postal Service’s transportation networks;

◆ review the cost effectiveness of the Postal

Service’s facilities site selection process;

◆ evaluate controls over Postal Service

contracts for consulting, personal, and

auditing services;

◆ monitor the rate case and review the

methods used to gather and analyze data

to support rate cases and associated costs;

◆ review the effectiveness of the Decision

Analysis Report process for making major

investment decisions; and

◆ determine whether the Mail Transportation Equipment Service Centers are

achieving stated performance and financial goals.

GROW AND PROTECT REVENUES

The Postal Service’s ability to adapt to

increasing competition is critical if it is to maintain a competitive position in the rapidlychanging communications and delivery environment. Increasing competition, particularly

from electronic alternatives, has slowed the

growth of Postal revenue and is expected to

have a continuing impact on the Postal Service’s financial viability in the next decade.

According to the General Accounting Office

(GAO) and Postal Service, First-Class Mail

volumes are expected to decline at an annual

rate of 2.5 percent from FY 2003 to FY 2008.

Such a decline would be unprecedented in the

Postal Service’s history and would likely create

financial and performance challenges. 

The Postal Service has also encountered

increasing competition from the private sector

and foreign posts. Increased competition places

billions of dollars of Postal revenues at risk. The

Postal Service has said that it will be challenged

to find new revenue sources. Efforts by the Postal

Service to introduce new products and services

have frequently met with opposition and have

caused controversy. Competitors and others

have questioned whether it is appropriate for a

government entity with monopoly protection to

provide nontraditional products and services in

competition with the private sector. Members of

Congress, concerned that the Postal Service was

unfairly expanding its product line to compete

in non-Postal related markets, have introduced

legislation to curtail such activity.

In addition to generating new revenue, the

Postal Service must ensure that postage and fees

for its products and services are collected. How0

50

100

150

200

250

300

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

OIG Open Criminal 

Investigations By 

Semiannual Period

NUMBER OF INVESTIGATIONS IN AN OPEN STATUS

109

189

232

255

OIG investigations help to protect Postal

Service revenues.
ever, the Postal Service has not always had

effective controls to protect its revenues. With

bulk mail business accounting for a substantial

portion of the Postal Service’s annual revenue,

the Postal Service will need to strengthen its

controls to improve the efficiency of its revenue

assurance process. Recent efforts to tighten controls have met resistance from the mailing

industry and have been subject to congressional

scrutiny.

To address this major management challenge during the coming year, among other

reviews, the OIG will:

◆ Evaluate how marketing contributes to

the successful development and promotion of Postal Service products and services;

◆ Review the effectiveness and management of the Postal Service Premier

Accounts Program;

◆ Determine whether revenues from large

mailers cover associated costs and

whether Postal Service procedures for

large mailers are effective;

◆ Assess the integrity and reliability of the

verified drop shipment process; and

◆ Assess the effectiveness of the Postal Service’s revenue assurance process.

IMPROVE WORKPLACE CLIMATE

AND LABOR RELATIONS

Labor-management relations remain one of

the Postal Service’s major challenges in meeting

its goals and maximizing performance. With

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

healthy work environment is key to maximizing

employee and organizational performance.

However, the Postal Service has been hampered

by persistent labor-management problems, such

as adversarial relationships, inadequate performance measurement systems, and management

styles that negatively affect productivity. Labormanagement problems have also been perpetuated by numerous unresolved grievances that

have impaired initiatives to automate and

improve the efficiency of Postal operations.

These problems have created barriers that have

often stood in the way of agreements between

the Postal Service and its labor unions.

As part of the Postal Service’s ongoing

commitment to elimenate violence from the

workplace, the Postmaster General asked

Joseph A. Califano, Jr., to chair The United

States Postal Service Commission on a Safe and

Secure Workplace. The five-member Commission will investigate and analyze violence in the

Postal Service, giving special attention to workrelated stress, substance abuse, and the workplace environment. The Commission’s draft

report will be issued in August 2000.

One area that historically has posed a challenge to the Postal Service and its unions

involves wage negotiations. For the first time in

a decade, the American Postal Workers Union

and the National Postal Mail Handlers Union

reached collective bargaining agreements without third-party arbitration. However, for one

union, the National Association of Letter Carriers, interest arbitration involving a third-party

arbitrator was used to settle contract disputes

regarding employee wages. The interest arbitration award created expectations of grade level

and wage increases for clerk and mailhandler

employees. These expectations will potentially

increase the tension between labor and management especially during future labor negotiations.

The Postal Service has identified a number

of goals and strategies to improve its workplace

relations and to enhance various employee programs, such as its diversity program. However,

success of these efforts is unlikely without a partnership between Postal managers and employees. Labor-management partnerships are also

critical if the Postal Service is to achieve its

overall financial goals. Employees and their

unions will have to embrace technological

advancements that will improve customer service and ensure the financial viability of the

Postal Service. However, Postal Service

announcements, that it will substitute capital

for labor and further decrease the size of its

workforce, impact employee job security and

performance. 

Additionally, management receives incentives under the Postal Service’s Economic Value

Added variable pay program. To achieve these

incentives, management sometimes engages in

behavior that employees view as adversarial.

This also adversely impacts employee productivity. In order to become a more effective organization, the Postal Service will have to evaluPAGE12 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

The Califano Commission will recommend

steps to prevent violence in the Postal

Service workplace.
PAGE13

ate the needs of its employees and resolve persistent labor-management problems. 

To address this major management challenge during the coming year, among other

reviews, the OIG will:

◆ Assess the effectiveness of Postal Service

initiatives to improve the organizational

climate;

◆ Evaluate the criteria supporting violence

prevention strategies and the violence

prevention program to determine the

impact on workplace climate and operations;

◆ Evaluate the appropriateness of the Economic Value Added program as a performance measure;

◆ Ascertain the effectiveness of workplace

climate assessments; and

◆ Review the consistency of disciplinary

actions in the Postal Service.

MAINTAIN A SAFE AND

HEALTHY WORKPLACE

Another significant challenge the Postal

Service faces is implementing the Postal

Employees Safety Enhancement Act, which

became effective on September 28, 1998. The

act requires the Postal Service to comply with

Occupational Safety and Health Act requirements for private sector employers. Accordingly, the Postal Service may now face citations

and monetary penalties for noncompliance. As

of March 2000, the Postal Service has been

assessed over $182,000 in fines. In complying

with the act, Postal officials stated they would

have to review and modify existing safety and

health policies, programs, procedures, systems,

training, and education programs, as well as

modify recordkeeping procedures for accident

and injury data. The Postal Service has begun

new training initiatives on safety leadership for

operations managers and supervisors, and instituted a self-audit program process to improve

safety performance. Challenges associated with

implementing the requirements of the act

include: (1) modifying existing automated systems at the same time the Postal Service was

forced to dedicate significant resources to meet

the Y2K computer challenge; (2) developing

and implementing training programs on judicial

and other processes that previously were not

applicable to the Postal Service for safety personnel, legal staff, and key operations staff; and

(3) revising the Postal Service’s financial systems to track expenses associated with implementing the new requirements. Additional

challenges could come this year if the current

ergonomic rule proposal, which ranges from

carpal tunnel syndrome from typing to a pulled

back muscle from heavy lifting, is implemented

because of the associated costs.

The Injury Compensation Program also

poses additional management challenges.

Workers’ compensation medical costs under the

Postal Service’s Injury Compensation Program

have risen dramatically between FY 1999 and

FY 2000, and exceeded budgeted estimates. The

Postal Service is particularly concerned about

the recent program-wide 20 percent increase

experienced in medical costs. The OIG has

efforts underway to help the Postal Service

determine why these medical costs are increasing. In addition, the Postal Service is making a

concentrated effort to return employees to work

and off of the periodic roll to aid in reducing the

long-term workers’ compensation liability.

To address this major management issue

during the coming year, among other reviews,

the OIG will:

◆ Assess the Postal Service’s implementation of the Postal Employees Safety

Enhancement Act and its impact on the

organization and operations;

◆ Review the Postal Service’s identification of substandard facilities;

◆ Assess the administration of light and

limited duty assignments; and

◆ Assess the reasons for significant

increases in medical costs in the Postal

Service’s workers’ compensation program, and identify overpayments to

recipients and providers. 

DEVELOP MEASURES AND

ASSESS PERFORMANCE

The Postal Service’s ability to maximize

performance in the face of increasing customer

demands and choices calls for establishing

processes to accurately assess performance

results. This year the Postal Service published

its first annual performance report under the
PAGE14 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

Government Performance and Results Act.

This report should help the Postal Service,

Congress, and other stakeholders assess the

Postal Service’s performance in the past fiscal

year against the goals in its performance plan. In

this regard, it will be important for the Postal

Service to continue to make tangible progress

toward implementing a complete set of performance measures and targets for its critical functions and program areas. For example, in FY

2000, the Postal Service intends to develop new

measures to assess the timeliness of the delivery

of international mail, publications, and bill payments sent through the mail. Additionally, the

Postal Service will need to establish indicators

for strengthening labor-management relations,

improving the consistency and accuracy of mail

delivery, and measuring employee proficiency.

These measures will help the Postal Service

fully assess its progress toward meeting its goals. 

To address this major management challenge during the coming year, the OIG will

monitor each program through audits or reviews

to assure that the Postal Service is developing

appropriate measures to assess program performance. In addition, the OIG will:

◆ Evaluate the sufficiency and appropriateness of the Priority End-to-End measurement system; and

◆ Monitor and report on the Postal Service’s efforts to comply with the Government Performance and Results Act.

ENSURE DATA INTEGRITY AND

RELIABILITY

Accurate measurement of mail delivery is

key to the Postal Service’s efforts to improve and

sustain service performance. However, questions have been raised concerning the integrity

of data used to measure the timeliness of

overnight First-Class Mail delivery. Last year,

the OIG identified several weaknesses that

could compromise the validity of the Postal

Service’s reporting system during reviews of rail

detention costs and the equipment preventive

maintenance program. In response, the Postal

Service has revised and updated instructions on

volume reporting and will deliver this year a

training course on data integrity, reporting, and

reliability. 

Reliable data is also a key to effective decisionmaking. In many instances, the OIG has

found that the Postal Service does not capture

the necessary data to support effective decisionmaking. Despite the importance of reliable data,

a recent study by an outside contractor on data

reliability within the Postal Service, concluded

that the increasing pace of change in the environment and technology of the Postal Service’s

operations have led participants, including

ratemakers, to criticize the quality of the Postal

Service’s data and procedures. Given the importance of data quality to setting Postal rates, the

Postal Service will need to demonstrate to Congress, the Postal Rate Commission, stakeholders, and the public that it is making progress in

improving the quality of its cost data.

To address this major management challenge during the coming year, among other

reviews, the OIG will:

◆ Assess the reliability of the financial

statements and test financial data at

Postal installations;

◆ Evaluate the controls and accuracy of

data contained in the accounting system

that controls revenue generated by

postage meters;

◆ Assess the accuracy of fuel cost

reimbursements;

◆ Assess Delivery Confirmation program

controls and the accuracy of customer

delivery status information; and

◆ Examine the accuracy and support for travel expenses incurred for international trips.

LEVERAGE TECHNOLOGY

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

technology to deliver more than 650 million

pieces of mail every day, the Postal Service must

continue to adapt to each new wave of technology

quickly to maintain its competitive position in

the market. Doing so is critical because expectations from businesses and individual customers will continue to be shaped by what they

see as they “surf the net.” Customers will expect

complete tracking capabilities and a full set of

business transactions that can be completed on

their personal computers at the office or at

home. To address changing customer needs, the

The “...Annual Performance

Plan for FY 2000 sets goals,

indicators and targets that

continue the transformation

of the Postal Service into a

proactive, mission-driven,

customer-focused organization that is responsive to the

requirements of the American public, the challenges of

a rapidly changing marketplace and the needs of

employees.”

The Postal Service FY 2000

Annual Performance Plan
PAGE15

Postal Service is developing an “information

platform” to help ensure better data management, tracking of mail piece information, communications between the Postal Service and its

customers, and activity-based costing.

The large size and diversity of the Postal

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

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

the corresponding cost savings projected

through technology investments are realized by

efficiently redeploying the resources replaced by

the new technology.

To address this major management challenge during the coming year, among other

reviews, the OIG will:

◆ Evaluate performance and costs associated with the Postal Service’s robotics program;

◆ Monitor and evaluate the research and

design for new automation initiatives

critical to the Integral Postal Facility;

◆ Assess performance and costs of new

automated equipment used for business

mail acceptance and validation;

◆ Monitor development of the information

platform to ensure it meets the needs of

the Postal Service and achieves expected

benefits; and

◆ Provide ongoing reviews of POS (Point

of Service) ONE development and

deployment.

MAINTAIN COMPUTER SECURITY

Computers and electronic data have

become indispensable to the critical operations

of the Postal Service. However, this reliance on

automated systems increases the risk of fraud,

inappropriate disclosure of sensitive data, and

disruption of critical operations and services.

The same factors that benefit operations—

speed and accessibility—also make it possible

for individuals and organizations to easily interfere with or eavesdrop on operations, possibly

for purposes of fraud, sabotage, or other malicious reasons. Recent highly-publicized attacks

on major electronic commerce web sites

revealed the loss of revenue and brand integrity

that can accompany a computer security incident. Threats of such actions are increasing, in

part, because the number of individuals with

computer skills is increasing and because intrusion or “hacking” techniques have become

readily available through magazines and computer bulletin boards. In addition, natural disasters and inadvertent errors by authorized computer users can have devastating consequences

if information resources are poorly protected.

The Postal Service’s systems face the same

vulnerability to these risks as all businesses. To

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

security programs must be developed. The

Postal Service is currently taking steps to

address these risks, however, resolving the risks

on a lasting basis, as with any organization, will

require substantial ongoing management attention. Because the Postal Service intends to

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

computer security to operate such programs

cannot be overemphasized.

To address this major management issue

during the coming year, among other reviews

and actions, the OIG will:

◆ Conduct a comprehensive Postal-wide

review of computer security;

◆ Evaluate senior management involvement in the organization, planning, budgeting, policies, and implementation of

computer security;

◆ Assess Privacy Act concerns about automated information systems;

◆ Review the Postal Service’s plans for

safeguarding against computer security

failures; and

◆ Evaluate the security architecture over

electronic commerce systems and services.

INCREASE CUSTOMER SERVICE

AND SATISFACTION

In today’s marketplace, customers have

choices about how they conduct transactions,

transmit messages, and deliver merchandise.

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

customer loyalty and growing new business.

However, recent criticism about the manner in
which the Postal Service recovers assessments

from mailers because of their underpayments for

postage and other fees threatens critical partnerships the Postal Service has worked to establish with its mailers. As the Postmaster General

indicated at a recent conference, the success of

the Postal Service depends on its partnerships

with the mailing industry. Because the Postal

Service’s efficiency and productivity are volume-driven, it needs the volume and its associated revenue to thrive in the future.

The Postal Service also views its access to

the American household as a unique asset that

it can rely on in the face of increasing competition. While this has been an asset, the Postal

Service must also continue to develop products

and services that retain their relevancy and

value for customers with changing needs. Customer needs will also have to be satisfied in an

increasingly complex manner, and the Postal

Service will need to reshape the way it views its

traditional role. It must quickly begin building

the capabilities to succeed in this environment

before the window of opportunity closes.

To address this major management challenge during the coming year, among other

reviews, the OIG will:

◆ Assess the Postal Service’s electronic

commerce environment and activities;

◆ Evaluate strategic/operational planning

and budgeting for electronic commerce;

◆ Assess the Postal Service’s strategic and

operational planning for shipments from

Internet retailers;

◆ Assess the Postal Service’s treatment of

mailers in the Revenue Assurance

Process; and

◆ Evaluate controls over the development

and implementation of specific electronic

commerce systems.

PAGE16 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
Is the OIG part of the Postal Service? 

Yes, OIG employees are Postal Service

employees; however, the OIG is not part

of the Postal Service management chain. 

DID YOU 

KNOW?

PAGE 17

Postal Service Reported

Accomplishments
PAGE18 POSTAL SERVICE REPORTED ACCOMPLISHMENTS

The OIG’s goal is to work in concert with

the Postal Service to ensure the American public receives the best mail delivery service in the world. Highlighting the Postal

Service’s accomplishments provides context to

the OIG and Inspection Service activities. During the October 1999 through March 2000

timeframe, the Postal Service made strides in

achieving its CustomerPerfect! goals. In addition, the Postal Service announced the following accomplishments, which the OIG has categorized in the areas of performance, financial

management, technology, and labor management. 

PERFORMANCE 

◆ Worked closely with the Postal Service

Subcommittee to formulate the Deceptive Mail Prevention and Enforcement

Act. The act, which became law in

December 1999, enhances the Postal Service’s ability to protect its customers from

deceptive sweepstakes mailings that lure

patrons into oversubscribing to magazines

or buying unneeded and unwanted merchandise in an attempt to win prizes.

◆ Signed an agreement with the People’s

Republic of China, one of the largest

markets for international mail, to

improve existing services and seek opportunities to jointly develop new international mail services, while expanding

Global Priority Mail service to provide 

3- to 5-day service to the Czech Republic, Hungary, Poland, Malaysia, Columbia, India, and South Africa.

◆ Created or expanded strategic alliances

with business partners to secure its position in the expedited and package market by expanding its alliance with DHL

Worldwide Express, partnering with Airborne Express in their Airborne@Home

initiative, and expanding the pilot program with MailBoxes, Etc. 

◆ Provided the drive and creativity that

resulted in unprecedented success of the

Breast Cancer Research stamp. This

effort received the Winning Spirit Innovation Award from the Women’s Information Network Against Breast Cancer. 

FINANCIAL MANAGEMENT

◆ Posted a positive net income for the fifth

straight year and reduced expenses by

$675 million to compensate for lagging

revenue.

◆ Streamlined its cash management process

and received a Silver Alexander Hamilton Award in Cash Management from

Treasury and Risk Management magazine.

◆ Implemented several initiatives to reduce

annual transportation costs, including a

fuel program to save $25 million, a trailer

leasing program to save $3.5 million, and

a highway emergency contract initiative

to reduce costs by as much as $15 million.

◆ Introduced additional credit card services

at its 33,000 post offices, including a cash

back option from debit card purchases of

Postal products and the acceptance of all

major credit cards.

TECHNOLOGY 

◆ Successfully managed the Y2K rollover,

ensuring the continuity of mission-critical

systems and electronic interfaces with

business partners. 

◆ Introduced computerized postage that

allows customers to print postage through

their personal computers, and licensed

Internet postage services to E-Stamp

Corporation, Stamps.com, and Pitney

Bowes, Inc.

◆ Deployed new Delivery Confirmation

Computers and hand-held scanners at

36,000 facilities, which will extend information technology capabilities further

into the delivery infrastructure to collect

and communicate process indicators.

◆ Launched its Electronic Merchandise

Return Service, Returns@ease, making

e-Shopping returns easy and convenient

for customers and retailers. 

◆ Began deployment of network intrusion

software at key facilities to allow for the

detection and monitoring of unauthorized network use.
PAGE19

LABOR MANAGEMENT ◆ Received the 1999 Director

’s Award from

the U. S. Office of Personnel Management for successfully implementing the

Alternative Dispute Resolution program,

and completed the first phase of its

restructuring of the Equal Employment

Opportunity program by merging

REDRESS and Equal Employment

Opportunity counseling to resolve complaints at the early stages. 

◆ Received the prestigious Hammer Award

for launching 23 broad-ranging initiatives promoting diversity at all levels of

the organization. 

◆ Developed an interim Occupational

Safety and Health Administration

program that should be implemented in

May 2000 to help manage citations and

identify program areas that require

improvement.

KEY PERSONNEL CHANGES

During this reporting period, there were

several key personnel changes for the Board of

Governors and Postal Service. In addition to

the arrival of Governor John Walsh, and

Deputy Postmaster General John Nolan, the

Board of Governors and the Postal Service have

experienced other changes in key positions.

Thomas Koerber, Secretary to the Board, will

retire in June 2000 and the Board selected

David Hunter and Bill Johnstone as Assistant

Secretaries. In addition, Mary Elcano, General

Counsel, who provided invaluable assistance for

the newly formed OIG, retired during this

reporting period. The OIG looks forward to

working with Mary’s replacement, Mary Anne

Gibbons, as well as Peter Jacobson, newlyappointed Chief Technology Officer, and

Patrick Donahoe, newly appointed Senior Vice

President for Human Resources. 

Does the OIG investigate individual labor management complaints?

Generally, the OIG does not

review individual employee complaints; however, as a new agency,

the OIG has conducted reviews

of some complaints to develop an

understanding of the Postal

culture and employee concerns. 

DID YOU 

KNOW?

Inspector General Corcoran

congratulates General Counsel Mary

Elcano on her retirement.
PAGE20 POSTAL SERVICE REPORTED ACCOMPLISHMENTS
Overview

How do the OIG responsibilities differ

from the Inspection Service? 

The OIG’s main responsibilities are

detecting fraud, waste, abuse, and mismanagement, and promoting efficiency of

operations. The Inspection Service is

mainly concerned with the security and

sanctity of the mail and the safety of

Postal Service employees. 

DID YOU 

KNOW?

PAGE 21
PAGE22 OVERVIEW

OFFICE OF INSPECTOR

GENERAL

AN INDEPENDENT VOICE 

The OIG is independent of Postal Service

management and is under the general supervision of nine Presidentially-appointed Postal

Governors who also oversee Postal Service

management. In January 1997, Karla W.

Corcoran was appointed the first independent

Inspector General of the Postal Service. From

1988 until the establishment of this office in

1997, the Chief Postal Inspector performed dual

roles as the Inspector General and Chief Postal

Inspector and reported to the Postmaster General.

In carrying out its responsibility under the

Inspector General Act, the OIG:

◆ conducts independent audits and investigations of Postal Service programs and

operations to help ensure the economy,

efficiency, effectiveness, and integrity of

the Postal Service; 

◆ exercises oversight responsibility for all

activities of the Inspection Service; 

◆ keeps Congress, the Postal Service Governors, and management fully informed

about problems, deficiencies, and the

progress of corrective actions; and

◆ shares with the Inspection Service a goal

of improving Postal Service operations.

Benefits of an Independent Office of

Inspector General

As an independent and distinct entity

within the Postal Service, the OIG: 

◆ Provides management, the Governors,

and Congress, with timely, objective, and

complete information and analysis of

Postal Service operations;

◆ Provides expanded audit and investigative coverage of all Postal Service operations and activities, including ratemaking, contract administration, labor management, computer intrusion, electronic

commerce, and marketing; 

◆ Conducts technological evaluations and

investigations in areas such as electronic

commerce, computer intrusion, and computer security with experienced, specially

trained staff;

◆ Provides oversight of the Inspection Service and performs independent reviews of

complaints against its employees; 

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

and recommendations where the OIG

and Postal management disagree; 

◆ Adds value to Postal Service operations,

contributes to a more economical and

efficient organization, and helps the

Postal Service maintain its integrity

through independent investigations,

audits, and reviews;

◆ Serves as a venue for all Postal employees

and other stakeholders to report fraud,

waste, abuse, mismanagement, and other

improprieties and concerns, with protection from management retaliation; and 

◆ Achieves cost savings, enhances contract

and program administration, and increases employee and program efficiency and

integrity.

To improve Postal Service programs and

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

OIG is continuing to work with Postal Service

management to inform them of the duties and

responsibilities of an independent OIG and

demonstrate how the OIG adds value to Postal

Service processes.

OIG Vision and Values

The vision of the OIG is “A Constellation of

Talented People Making a Difference.” This vision

reflects the OIG’s mission to shed light on problems and opportunities. The OIG emphasizes

five fundamental values:

◆ Teamwork–synergy derived from people

with diverse backgrounds and ideas working together to achieve better results;

This section provides an overview of the

OIG and Inspection Service internal operations. To differentiate between the work

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

Service work have been color screened.

The Strategic Plan reinforces the

OIG vision and values.
PAGE23

◆ Leadership–applying interpersonal influence to inspire others to move in a

meaningful direction with competence

and commitment;

◆ Creativity–taking an innovative

approach to business problems or

questioning and challenging the quality

of conventional work, with the goal of

improving Postal Service operations;

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

and ideas while showing respect for the

contributions and opinions of others; and

◆ Conceptualization–visualizing “the big

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

ultimate goal of the organization;

“keeping one’s eye on the ball.”

OIG Culture

The OIG culture demands that all people

be treated fairly and be given the opportunity to

develop their unique and diverse skills and abilities to their fullest potential. The OIG is committed to attracting a diverse and highly qualified workforce from government, the private

sector, the Postal Service, and colleges and universities.

The OIG is proud of its professional and

cultural diversity and is committed to developing and utilizing the talents of all its employees.

In order to ensure that the OIG employees are

the best they can be, the OIG encourages

employees to attain and maintain professional

accreditation. Many OIG staff have advanced

degrees and are Certified Public Accountants,

Certified Internal Auditors, Certified Fraud

Examiners, Certified Information Systems

Auditors, and Certified Acquisition Auditors.

In addition, a number of investigators hold law

enforcement specialty certifications in areas

such as polygraph examinations and seized

computer evidence recovery, and all OIG criminal investigators have undergone rigorous

training. By demonstrating professional skills

and technical knowledge, the OIG will provide

value-added services to Postal Service management to help maintain a competitive edge in

today’s marketplace. 

OIG Diversity

During the past six months, the OIG continued to hire highly skilled staff from the

widest sources available. As of March 31, 2000,

470 individuals were on board, of which 209

(44 percent) were women and 206 (44 percent)

were minorities. Based on the latest U.S.

Bureau of the Census estimates, the OIG has

met or exceeded the U.S. percentage of total

population for each minority group, except for

Hispanics and Native Americans. The OIG

senior staff is 34 percent female and 28 percent

minority. 

In August 1999, the Governors approved a

FY 2000 budget of $72 million that allows the

OIG to hire a total of 648 employees and to

open offices in five additional locations. The

OIG will complete hiring by May 31, 2000,

with all staff on board by July 31, 2000. To

identify a diverse pool of highly-qualified candidates for the additional positions that need to

be filled, the OIG staff has attended numerous

conferences, colleges, and career fairs. With the

unemployment rate at historic lows, hiring

competent and talented individuals continues

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

addition, the OIG may need to increase its

staffing levels and hiring efforts because beginning this year, the Inspection Service will no

longer perform field financial audits and other

local, district, and area performance audits. 

Striving to Be a Model Organization

The OIG strives to be a model organization by using the latest available technology,

the most innovative ideas of its employees, and

the best business practices of both the public

and private sectors. One of its internal goals is

to become the most efficient, effective, and economical organization possible. The OIG staff

works to establish best practices by benchmarking with other organizations and exemplary performers. The OIG is also working to develop

streamlined policies to facilitate innovation. By

making its policies broad and flexible, OIG

encourages creative thought and the development of improved processes and procedures.

These include:

◆ Forming interdisciplinary project teams

of criminal investigators, evaluators, statisticians, and attorneys for greater diversity and objectivity;

0

10

20

30

40

50

OIG CENSUS

BLACK HISPANIC ASIAN NATIVE AMERICAN

Diversity Statistics

4

COMPARISON OF OIG TO CENSUS INFORMATION

Percentage
PAGE24 OVERVIEW

◆ Using technology-based teams for computer intrusion, information systems, and

electronic commerce audits;

◆ Analyzing more data in a shorter time

through specialized teams that use computer retrieval and system command languages; 

◆ Using electronic workpapers and developing automated investigative programs

that aid in the documentation and analysis of data; and

◆ Designing a Pay-for-Performance system

that rewards employees who demonstrate

superior performance and share the

vision and values of the organization.

NOTABLE OIG ACHIEVEMENTS

OIG Testimony at Oversight Hearing

On October 21, 1999, the Inspector General, General Counsel, and Assistant Inspector

General for Audits testified before the House

Subcommittee on the Postal Service Committee on Government Reform. The Inspector

General highlighted the OIG’s significant contributions during the third year of the OIG’s

existence and provided a synopsis of the OIG’s

work in the critical areas of performance, technology, financial management, labor-management relations, and Inspection Service oversight. In addition, the OIG discussed the major

challenges it faces and progress made in building

a new organization.

Designation of Functions Between the

OIG and Inspection Service

Over the last six months, the OIG and

Inspection Service met to review the original

Designation of Functions approved by the Governors in March 1997. These meetings culminated in a revised Designation of Functions

approved by the Governors at their April 2000

board meeting. The original Designation of

Functions served as a preliminary charter when

the OIG was newly created in order to distinguish the OIG’s new role from the Inspection

Service.

Since 1997, the OIG and the Inspection

Service realized that changes to the original

Designation of Functions were needed to more

clearly delineate respective investigative and

audit responsibilities. This process included

establishing common definitions, reviewing

legal requirements, and determining roles and

responsibilities that were in the best interest of

the Postal Service. The revised Designation of

Functions will more clearly delineate the

respective responsibilities and enhance coordination between the OIG and the Inspection

Service.

The major changes in the revised designation are:

◆ The OIG will perform all audits within

the Postal Service, the Inspection Service will discontinue performing audits;

◆ The OIG will investigate all procurement fraud within the Postal Service, the

Inspection Service will discontinue procurement/expenditure investigations

except cash and money orders; and

◆ The OIG will investigate thefts of Postal

funds resulting from improper expenditures, including compromise of program

integrity, and the Inspection Service will

conduct all revenue investigations and

embezzlements where there is no formal

contract and payments are made in cash

or money orders.

In general, the revised Designation of

Functions also reflects a more defined line of

investigative authority associated with revenue

investigations, e-Business/e-Commerce, civil

false claims, computer intrusion, executive

investigations, and service investigations. Currently, the OIG is working with the Inspection

Service to develop operating guidelines

between the agencies to implement the revised

Designation of Functions.

To obtain detailed information on the new

Designation of Functions, please visit the

respective web sites at www.uspsoig.gov or

www.usps.gov/postalinspectors. 

Resolution Process for Audit Disagreements

By statute, the OIG conducts, supervises,

and coordinates all audits and audit-related services within the Postal Service. Reports resulting from these efforts frequently include findings or observations with recommendations or

suggestions for corrective action on the part of

Postal management. Management is responsible

for providing timely responses to draft reports

and implementing agreed upon recommenda-

“I want to thank [the OIG]

who I think is doing an

amazing job in establishing

an office and yet at the same

time not spending a lot of

time getting acclimated but

rather going out and making

a real difference to the

quality of service that the

Postal Service provides.”

The Honorable John M. McHugh

Chairman

Subcommittee on the Postal Service
OVERVIEW PAGE25

OFFICE OF

INSPECTOR GENERAL INSPECTION SERVICE

JOINT FUNCTIONS

Designation of Functions

as of May 2000

• AUDIT

– All audits

• DISBURSEMENT INVESTIGATIONS

– Contract/procurement fraud

– Improper expenditures except cash 

and money orders

– IMPAC Card

• HEALTH CARE FRAUD - USPS NEXUS

– Provider and contractor fraud

– Health benefit program fraud

• EMPLOYEE CORRUPTION

– Bribery

– Gratuities

– Conflict of Interest

• COMPUTER INTRUSION

• FRAUD AWARENESS BRIEFINGS 

RELATED TO OIG RESPONSIBILITIES

• SECURITY PROGRAMS

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

• EXECUTIVE INVESTIGATIONS

– Excludes crimes of violence

• QUI TAM

• TORT CLAIM FRAUD

• INSPECTION SERVICE OVERSIGHT

• RESPONSIBILITY FOR 

– e-business/e-commerce will be

determined in accordance with the

principles set forth in this document.

• FUTURE E-COMMERCE ACTIVITIES WILL BE

REVIEWED JOINTLY BY THE OIG AND

INSPECTION SERVICE ON AN ONGOING

BASIS.

• REVENUE/FINANCIAL INVESTIGATIONS

– Theft or embezzlement of postal cash and

money orders by employees and others 

where there is no formal contract

– Fraudulent activity relating to mailings,

postage, and meters

• FRAUDULENT WORKERS’ COMPENSATION

• FRAUD AGAINST CONSUMERS, BUSINESS,

AND GOVERNMENT (NON-POSTAL)

• HEALTH CARE FRAUD - OTHER

• SECURITY CONSULTATION ON ELECTRONIC

PRODUCTS AND SERVICES

• CRIME PREVENTION AND SECURITY

• CRIMES OF VIOLENCE

• DRUGS IN THE WORKPLACE

• MAIL THEFT

• PROHIBITED MAILINGS

– Child Exploitation

– Bombs

– Drugs

• ROBBERIES

• BURGLARIES

• MONEY ORDERS, FINANCIAL

INSTRUMENTS, AND POSTAL PROPERTY

CRIMES

• SECURITY PROGRAMS

– Facilities, Mail, and Products 

– Employee Background Investigations

– Emergency Preparedness

– International Security

– Service Investigations

• ASSET FORFEITURE PROGRAM
PAGE26

tions/suggestions. Both the OIG and management personnel should make every effort to

resolve differences of opinion concerning findings/observations and recommendations/suggestions prior to issuance of draft reports, as appropriate. However, despite the best efforts of all

involved, sometimes disagreements occur.

As indicated in the previous Semiannual

Report, the OIG and Postal management have

been working together to frame a process for

resolving disagreements on OIG audit and

audit-related reports. During this period, the

audit resolution process was completed. The

process will serve as a vital mechanism for

ensuring that disagreements are resolved on a

timely basis at the appropriate level of management. The process involves three phases in

which unresolved disagreements are elevated to

progressively higher levels of management

within the Postal Service. The overall process is

outlined below.

Final OIG reports are issued with a summary of management’s comments in the body of

the report and the corresponding OIG evaluation of those comments. When management

disagrees, or the OIG determines that management’s comments are “not responsive,” the resolution process proceeds as follows:

Step 1. The OIG will initiate a meeting with

the cognizant management committee member

within 15 calendar days of the date of final

report to discuss the disagreement(s) and reach

resolution if possible. If the disagreement is

resolved, the OIG will issue a letter describing

how the disagreement was resolved.

Step 2. If the OIG and cognizant management

committee member cannot resolve the disagreement(s) at Step 1, the Inspector General

or designated representative will present the

issue and the reason for disagreement within 45

calendar days after date of final report to the

postmaster general or designated representative

for attempted resolution at Step 2. The postmaster general or the designated representative

will work with the parties to reach agreement.

If an agreement is reached, the OIG will issue a

letter describing how the disagreement was

resolved. If an agreement is not reached, the

Inspector General will determine whether it is

appropriate to elevate the issue to the Board of

Governors, through the Audit Committee, as

outlined in Step 3.

Step 3. If agreement is not reached within 90

days of the date of the final report, the Inspector General may elect to take the disagreement(s) to the Governors for final resolution.

Generally, disagreements that the Inspector

General determines meet one or more of the

following criteria will be brought to the

Governors:

◆ material to the financial position of the

Postal Service;

◆ have a potential significant impact on

Postal-wide programs or operations; and

◆ involve highly visible or potentially

embarrassing issues for the Postal Service.

The Governors may elect to hear the disagreement directly, or they may ask the Audit

Committee or some other designee to review

and resolve the disagreement on their behalf.

The decision of the Governors will represent

the final Postal Service position concerning the

disputed issue. However, pursuant to statutory

responsibilities, the Inspector General will

report the status of unresolved recommendations and suggestions as well as the disposition

of these disagreements in the Semiannual

Report to Congress. The approved process now

governs the resolution of all disagreements

between management and the OIG on recommendations/suggestions in audit and auditrelated products.

Y2K: “The Postal Service Was Ready!” 

In March 2000, the Postal Service gathered

over 100 senior Postal Service managers for a

special celebration of the Postal Service’s Y2K

Initiative, which successfully ushered in the

new year. In addition to complimenting the

extraordinary efforts of Postal Service staff,

Postmaster General Henderson singled out the

Inspector General and seven members of the

OIG’s Y2K audit team who were instrumental

in surfacing Y2K problems and recommending

solutions for senior management attention. He

thanked the OIG for the independent assessments of Postal Service contract administration, testing, and contingency planning efforts.

This celebration was in addition to the recognition the OIG Y2K audit team received from the

“I think that the cooperation

between postal management

and OIG is a model case for

how things ought to operate

. . . the OIG played a major

role in our being successful in

Y2K . . .”

William J. Henderson

Postmaster General
PAGE27

Two officials with the Japanese Ministry

of Posts and Telecommunications,

General Affairs Department, met with

Inspector General Corcoran concerning

OIG operations.

Executive Council on Integrity and Efficiency,

which last September, awarded the audit team

the Council’s highest award, the Award for

Excellence.

International and Domestic Presence

The OIG is sharing its knowledge within

the domestic and international law enforcement community and representing the Postal

Service and the Inspector General community

in several different professional organizations.

For example, members of the OIG staff:

◆ Provided a presentation on computer

security at the First International High

Tech Crime and Forensics conference in

London, England, in October 1999. The

conference brought together computer

security and law enforcement professionals from the United States, Europe, and

Asia.

◆ Briefed member countries on fraud indicators concerning Bulk Mail corruption

at the International Revenue Protection

Seminar in Bristol, England.

◆ Met with the Japanese Postal delegation

during a visit to Washington, DC, in

January 2000, to provide an overview of

the OIG organizational structure, recruitment, training, designation of functions,

investigations, and audits. The Japanese

government is considering legislation to

create a Postal Service oversight agency

and wanted to learn more about how the

OIG was created.

◆ Continued to provide access to state-ofthe-art computer crimes training to

employees within the Postal Service, the

Inspector General community, and the

law enforcement community. Currently,

the OIG has contracted to provide 260

training slots for the basic course and a

new, advanced course. Last year, 250

people were trained to conduct computer

security and intrusion investigations.

◆ Served as a member of the International

Internal Audit Standards Board of the

Institute of Internal Auditors. The board,

comprised of audit directors from Fortune

500 companies, major government audit

organizations, major accounting firms,

and academia, sets standards for internal

auditors worldwide. 

◆ Served on the American Institute of

Certified Public Accountants “Task

Force on Government Auditors.” The

task force identifies and resolve conflicts

between Government Auditing Standards and the Institute’s Code of Professional Conduct, relating to the audit

independence issue.

◆ Chaired and hosted monthly meetings of

the Council of Counsels to the Inspector

General, a group made up of lawyers representing all federal Inspectors General.

OIG Works with Postal Management to

Address Computer Security Concerns

The OIG continues to work with Postal

management to highlight potential security

risks within the Postal network infrastructure.

As a result of efforts in working with Postal

management regarding computer security concerns, the Postal Service installed its first intrusion detection devices on the Postal Service

computer network. This intrusion detection

system provides Postal systems administrators

with real-time alerting capabilities in the event

of an “attack” on the Postal network.

OIG Helps Raise Awareness of Computer Security Risks 

As the nationwide incidence of computer

crime continues to increase, the OIG staff at

various agencies must respond to computer

crimes, particularly computer intrusions. Many

of these agencies have expressed frustration at

the difficulty of finding the qualified investigative personnel and funding required to establish

a successful intrusion investigation capability.

Computer crimes rarely affect only one organization; rather, cases often cut across agency, and

even national boundaries, making informationsharing vital. To that end, the OIG:

◆ Established the Inspector General Intrusion Working Group to bring together

representatives from across the Inspector

General community to improve information-sharing efforts and promote the

leveraging of resources to combat computer crime; 

◆ Hosted the first meeting of the Intrusion

Working Group in February 2000, which

was attended by 29 representatives from

21 organizations. Topics discussed
PAGE28 OVERVIEW

included program funding, strategic planning, legal issues, recruitment, and leveraging of resources across the Inspector

General community to promote high

standards in the investigation of computer crime. The response to the first meeting was overwhelmingly positive, and

many organizations have expressed a

commitment to continue, and in some

cases expand their participation; and

◆ Provided a presentation regarding computer security and fraud issues in electronic commerce to over 120 participants

in a joint conference of the Mid-Atlantic

and New York/New Jersey chapters of

the Intergovernmental Audit Forum.

The presentation included not only an

overview of security risks in electronic

commerce, but also information regarding emerging technologies currently

being developed and implemented to

help mitigate those risks.

Video Report of Postal Facility Unsafe

Working Conditions Debuts

During this six-month period, the OIG

unveiled a new product line - video reports.

This medium leverages technology to accurately depict audit observations at a Postal facility.

During this period, the OIG issued a video

report on unsafe working conditions at a Southwest station. The video report helped Postal

management visualize the unsafe physical working conditions found at the station, including

potential violations of safety, health, and security requirements. These unsafe conditions

increased the risk of injury to Postal Service

employees and customers, and compromised

Postal Service property and the safety and security of the mail at this facility.

OIG Hotline Awareness

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

persons contacting the Hotline to report alleged

violations of laws, rules, or regulations; mismanagement; waste of funds; abuse of authority; or

danger to public health and safety. Since October 1997, it has received more than 40,000 contacts from employees, customers, and the general public. 

During the fall of 1999, the OIG initiated

a Hotline awareness campaign with an eyecatching poster. The poster was initially reproduced in the September 30, 1999, Semiannual

Report to Congress. It was also distributed to all

Postal Service facilities, advertised in the January/February Postal Life magazine, which is distributed to all Postal employees, and can be

ordered from the Postal Service Material Distribution Centers. Following publication of the

poster, Hotline contacts increased dramatically—from a total of 1,116 during October 1999,

to 1,888 in March 2000—an increase of nearly

70 percent.

OIG Holds Third Annual Training and

Recognition Event

The OIG celebrated its third anniversary

with an employee training and recognition

event held January 11-13, 2000, in Washington, DC. The event emphasized the OIG’s core

vision and values and featured technical training sessions, job-related seminars, and a ceremony recognizing the accomplishments of the

OIG staff. The OIG senior executives provided

a presentation of the history of the OIG and the

duties and responsibilities of functional teams.

For the first time, senior executives gave awards

to eleven individuals who best exemplified the

OIG core values and performed in a truly outstanding manner: Darrell Benjamin, Jeanne

Black, William Hencken, Stephanie Hengelmann, Rick Hightower, Aaron Jordan, Tracy

LaPoint, Kelly Oliver, Rona Shorr, Steve

Suarez, and Joy Thornton.

The three-day event was highlighted by

presentations from: U.S. Representative John

McHugh, Chairman of the Subcommittee on

the Postal Service; Governor Einar B.

Dyhrkopp, Chairman of the Postal Service

Board of Governors; Dan Blair, Senior Counsel,

Governmental Affairs Committee, U.S. Senate; Jerry B. Harvey, Professor of Management

Science, George Washington University and

author of the Trip to Abilene; and Eileen

McDargh, motivational speaker on business

excellence. The conference was not only a

training vehicle, but also a celebration of the

tremendous contributions made by the OIG

staff throughout the year. 

OIG Receives Special Awards

The OIG received four 1999 Combined

Federal Campaign awards, including a unique

0

250

500

750

1000

1250

1500

1750

2000

OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH

Hotline Awareness

Hotline Poster 

Advertised 

in Postal Life

January - February 2000

Hotline Poster 

Distributed 

to Postal Facilities 

December 1999

Hotline Poster 

Announced 

in Postal Bulletin

October 1999

SEMIANNUAL REPORTING PERIOD OCTOBER 1999-MARCH 2000

Governor Dyhrkopp, Chairman of the 

Board of Governors, shares his

perspective on Postal Service operations

at the Third Annual Recognition Day.
PAGE29

award for the National Capitol Area’s Communication Contest for “Best Special Event.” This

award was presented by Donna Shalala, Secretary of the Department of Health and Human

Services, to the OIG in recognition of excellence in efforts to sponsor various special events

that raise money and heighten Combined Federal Campaign awareness among employees.

The OIG also received “The Combined Federal Campaign President’s Award,”“The Pacesetter Award,” and the “100 Percent Goal Certificate Award.”

PROGRESS IN BUILDING THE

OIG’S INFRASTRUCTURE

In order to build an effective infrastructure, the

OIG established: 

Human resource processes and systems,

including:

◆ a 360-degree feedback evaluation system;

◆ a Pay-For-Performance system;

◆ an extensive screening process for potential employees;

◆ a thorough pre-employment background

investigation process;

◆ a one-week orientation class for new

employees;

◆ a monthly employee newsletter; and

◆ a three-week Postal-specific investigative

training program.

Administrative resources services, 

including:

◆ management controls over internal

processes;

◆ development of its own contracting function;

◆ establishment of the OIG offices by identifying, leasing, and developing space to

accommodate the OIG staff in various

locations throughout the country;

◆ performance of numerous quality assurance and internal reviews; and

◆ implementation of an automated tracking system for time and projects.

Critical audit, investigative and administrative processes, including: 

◆ developing internal policies for describing

the OIG authorities and responsibilities;

◆ continuing to notify Postal employees at

all levels of their right to report wrongdoing to the OIG without fear of retaliation;

◆ deploying an electronic subpoena system

to improve processing of Inspector General administrative subpoenas;

◆ establishing a report processing review

staff to expedite and standardize issuance

of reports;

◆ working with the Postal Service to

ensure a valid tracking system for recommendations from the external auditor,

GAO, Inspection Service, and the OIG;

◆ entering into an agreement with the

Financial Crimes Enforcement Network

to access numerous commercial, financial, and law enforcement databases to

help with criminal financial investigations and audits;

◆ processing over 56 Freedom of Information Act requests and closing 51 Congressional and Governor responses;

◆ issuing 209 Inspector General subpoenas

(164 for the Inspection Service and 45

for the OIG); and

◆ providing quarterly firearms qualifications and defensive tactics training to

the OIG criminal investigators.

Strategic processes, including:

◆ revising the Five-Year Strategic Plan;

◆ developing a universe of over 1,000

projects; 

◆ preparing the FY 2000 Annual Performance Plan;

◆ achieving over 80 percent of the performance measurements for FY 1999 resulting in a Team Award for the OIG

employees;

◆ detailing a member of the OIG staff to

the Office of Management and Budget to

serve as a technical expert on Inspectors

General matters; and

◆ establishing computer intrusion and electronic commerce units.

Secretary Shalala, Department of Health

and Human Services, (second from left)

presents OIG staff with a special award

for OIG’s support of the Combined

Federal Campaign.

The OIG Administrative Resources Team

provides a variety of important supporting services by utilizing the talents of a

diverse and highly qualified staff.
CHALLENGES FACING THE OIG 

Proposed Changes Conflict with OIG

Independence

A recent change by the American Institute

of Certified Public Accountants to revise its

independence requirements for internal, state,

local, and federal auditors could have a major

impact on the OIG. In response to this change,

the GAO has proposed incorporating the

American Institute of Certified Public Accountants changes into the Government Auditing

Standards. Under this revision, Inspectors General appointed by the agency head or board they

serve are not considered independent. As a

result, these Inspectors General would have to

issue qualified reports noting a lack of organizational independence, which could threaten the

credibility and usefulness of all reports issued. 

These proposed revisions are inconsistent

with the Inspector General Act and, according

to an independent legal opinion, may be unconstitutional. The Comptroller General has issued

a discussion draft and has responded that he

does not believe the proposal is unconstitutional. The Inspector General Act created independent Inspectors General charged with conducting audits, investigations, and other reviews of

programs and operations. The act also provides

the Inspector General with greater independence than most certified public accounting

firms because top management is prohibited

from interfering with the Inspector General’s

decision to audit or investigate any matter. The

OIG is playing an active role in discussing the

issue with the American Institute of Certified

Public Accountants, GAO, and the Inspectors

General community, to resolve this conflict

before the proposed changes go into effect.

Hiring Additional Qualified Staff

Hiring highly-qualified people during this

period of record-low unemployment is a major

challenge. With a goal of 648 employees by September 30, 2000, the OIG assembled a crossfunctional team to assure that well-qualified

staff is promptly hired by further streamlining its

hiring and clearance processes. These actions

have resulted in a reduction in processing time,

a quicker interview process, and more rapid

background investigations. The OIG anticipates having all 648 employees hired by

May 31, 2000.

Transitioning Inspection Service Audit

Work

Following an OIG audit in the fall of 1999

of the Inspection Service’s use of criminal investigators to perform audits, the Inspection Service elected to cease performing audits. As a

result, the OIG faces the challenge of assuming

this work. This challenge includes acquiring the

staff and infrastructure necessary to perform the

financial and performance audit work critical to

the Postal Service’s system of internal controls.

The OIG recently submitted a proposal to the

Governors to increase resources for the field

financial audit function. Additional requirements will be identified in connection with the

FY 2000 budget submission.

Office Space and Field Offices

The OIG has established new offices in

Chicago, New York, Raleigh, and Los Angeles,

and is hiring personnel to staff these offices.

These new offices will expand the OIG’s ability to meet the needs of and better serve the

Postal community. 

However, even more office space will be

needed as the OIG staff grows. Open meeting

areas at headquarters will be converted to office

space temporarily while the OIG looks for a

more permanent solution by obtaining additional space. 

OTHER MAJOR CHALLENGES

The OIG continues to work on other

major challenges. These are in three major

areas: Internal OIG Infrastructure, Internal to

the Postal Service, and External to the Postal

Service, and are as follows.

Internal OIG Infrastructure: 

◆ building the OIG processes, policies, and

procedures;

◆ promoting the OIG values and culture; 

◆ continuing to forge ahead with the OIG

mission while being sensitive to the variety of extensive demands that are being

placed on the OIG employees in its

evolving environment; and 

◆ preparing the OIG for the triennial peer

reviews scheduled for FY 2001 that will

assess how well the OIG has meet professional standards in performing its work. 

Internal to the Postal Service: 

◆ continuing to add value by providing

PAGE30 OVERVIEW
PAGE31

meaningful results on a timely basis;

◆ educating the Postal Service on the OIG

roles and responsibilities;

◆ resolving differences, including those of

authority, roles, and responsibilities with

the Inspection Service;

◆ educating Postal Service management on

the independence of the OIG and its

duty to report any significant issues to

the Postal Service Governors and the

Congress;

◆ informing Postal Service officials of the

OIG authority to make independent

decisions on areas to review; and

◆ performing work and continuing to gain

expertise in Postal Service programs,

operations, and emerging issues.

External to the Postal Service:

◆ making the results of the OIG work publicly available without affecting the

Postal Service’s competitive position;

◆ educating Postal stakeholders on the

OIG’s role;

◆ remaining a significant influence in the

Inspectors General and federal law

enforcement communities;

◆ coordinating reviews of Postal Service

programs and operations with the GAO

to reduce the possibility of duplication;

and

◆ effectively responding to Hotline and

Congressional inquiries.

The Internal Quality Team helps to reinforce the core values of the OIG through

team-building and process improvement.
PAGE32

INSPECTION SERVICE

For more than two centuries, the role of

the Inspection Service has been to preserve the

public trust in the Postal Service. The Inspection Service enforces over 200 statutes related

to crime against the U.S. Mail, the Postal Service, Postal employees, and customers. The

Inspection Service’s mission has been refined

over the years by statutes related to the U.S.

Mail, creation of a separate OIG, and the needs

and requirements of the Postal Service and its

customers. The Inspection Service provides an

essential service to the American public and

the Postal Service by ensuring the security and

sanctity of the mails and the safety of Postal

employees. The Inspection Service has almost

4,500 employees, which includes approximately 2,100 Postal Inspectors, about 1,500 uniformed Postal Police Officers, and about 900

professional support associates.

The national headquarters of the Inspection Service is organized into functional groups

that report to the Deputy Chief Inspectors for:

◆ Business Investigations;

◆ Criminal Investigations; 

◆ Professional Standards and Resource

Development; and 

◆ Administration. 

The Inspection Service includes 18 field

divisions, which report directly to two Deputy

Chief Inspectors for Field Operations. Five

Operations Support Groups also support the

field offices. The Inspection Service Forensic

Laboratories, located at five sites, support field

office investigations and provide state-of-theart technology. Inspection Service offices are

linked nationally through electronic systems

with online connections to the National Crime

Information Center and the National Law

Enforcement Telecommunications System. 

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

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

respond to emergencies involving Postal Service crimes, natural disasters, and other problems that affect the Postal Service. The Inspection Service will continue to conduct financial

installation audits through the end of FY 2000. 

Along with the coverage of the Postal

Inspectors, uniformed Postal Police Officers

provide security around the clock at Postal facilities. Postal Police Officers, at facility control

centers, monitor robbery and burglar alarms to

provide protection for Postal employees, property, and assets. The Postal Police Officers also

provide escorts for the Postal Service for highvalued shipments, such as certain registered

mail and Postal remittances.

Postal Inspectors work cooperatively

nationwide with the OIG, Department of Justice, and other federal, state, and local law

enforcement agencies on joint efforts. The

expertise of the Inspection Service is recognized

internationally, with Inspectors assigned to the

U.S. National Central Bureau of Interpol in

Washington, DC, and to Interpol Headquarters

in Lyon, France. The Inspection Service has a

leading role in the Postal Security Action

Group, a committee within the Universal

Postal Union, which has established the following priorities:

◆ prevent injuries to customers resulting

from dangerous goods in the mail;

◆ prevent the loss or theft of mail entrusted by customers to world Postal administrations;

◆ prevent revenue and asset losses of world

Postal administrations; and

◆ preserve customers’ confidence in the

U.S. mail.

Postal Inspectors are active members in councils and groups, such as the:

◆ Financial Crimes Enforcement Network;

◆ Organized Crime Council;

◆ International Policy Committee of the

International Association of Chiefs of

Police;

◆ International Association of Financial

Crimes Investigations;

◆ Securities and Commodities Fraud

Working Group;

◆ Economic Crimes Council;

◆ National Health Care Anti-Fraud Association;

◆ National Law Enforcement Explorers’

Committee; and

Postal Police Officers provide security

and protection for Postal employees,

property, and assets.
◆ Asset Forfeiture Policy Advisory Group.

Postal Inspectors also work with the following organizations regarding child pornography

cases: the Child Exploitation and Obscenity

Section of the Department of Justice; the

National Center for Missing and Exploited Children; and the Standing Working Party on

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

The Inspection Service’s forensic specialists

and technical financial analysts play a vital role

in supporting investigative, audit, and security

functions of the Inspection Service. These professional technical employees perform a variety

of tasks, which include:

◆ providing forensic examinations;

◆ developing, procuring, and deploying

electronic security and surveillance equipment;

◆ providing photography, video, and graphics support;

◆ publishing policies, reports, manuals,

handbooks, and consumer publications;

◆ developing and maintaining management

systems;

◆ providing direct contact with Congress

and the public; and

◆ supplying administrative support.

NOTABLE INSPECTION SERVICE

ACHIEVEMENTS

Inspection Service Has New Seal

The Inspection Service unveiled a new seal

during this reporting period. The seal represents

all Inspection Service employees and incorporates the two basic elements of its service, the

Postal Service eagle, and a five-pointed star.

New badges for Postal Inspectors and Postal

Police Officers were also issued to incorporate

updated elements of the seal.

New Movie About Postal Inspectors

On February 25, 2000, The Inspectors 2, a

ShowTime original movie premiered starring

Louis Gossett, Jr., and Jonathan Silverman. The

Inspectors 2 is the second ShowTime original

film about the country’s oldest federal law

enforcement agency, the Inspection Service.

This film is based on actual Inspection Service

cases involving one of America’s fastest growing

white-collar crimes: identity theft. 

Annual Report of Investigations

The 1999 Annual Report of Investigations

of the Inspection Service was released in March

2000. The accomplishments described in the

report are intended to inform the Postmaster

General, the Postal Service Board of Governors,

Postal managers, and employees about Inspection Service activities, and give greater insight

into the value and benefits provided by the

Inspection Service. 

Consumer Protection

On December 12, 1999, the President

signed the Deceptive Mail Prevention and

Enforcement Act, which became Public Law

106-168. This new law will protect consumers

against deceptive mailings and sweepstakes practices by establishing standards for sweepstakes

mailings, skill contests, and facsimile checks;

restricting government look-alike documents;

and creating a uniform notification system

allowing individuals to remove their names and

addresses from all major sweepstakes mailing lists

at one time. Disclosure will make clear that no

purchase is necessary to enter a sweepstakes and

that a purchase will not improve a consumer’s

chances of winning a prize. The law also creates

financial penalties for companies that do not disclose all terms and conditions of a contest. Individuals will be able to request that certain mailings are discontinued to their homes, and companies will face liability if they do not honor

these requests. Most importantly, the law allows

the Postal Service to issue administrative subpoenas in these matters. Inspection Service personnel were instrumental in providing Congress

with important information relating to deceptive mailings, and in drafting the legislation.

Appendix F provides statistics on this area.

National Symposium on Child Sexual

Abuse

The Inspection Service co-sponsored the

Sixteenth National Symposium on Child Sexual Abuse the week of March 6, 2000, in

Huntsville, Alabama. This symposium was

attended by more than 1,800 people from across

the country to include local, state, and Federal

law enforcement personnel; prosecutors; judges; 

PAGE33

The Inspection Service’s new seal incorporates

the Postal Service eagle in a five-pointed star.
PAGE34

The second movie based on actual

Inspection Service cases recently aired

on cable television.

OVERVIEW

child protection service workers; and mental

health and medical professionals. This symposium, the largest of its kind, provided state-ofthe-art training in the intervention and investigation of child sexual abuse and exploitation. 

Career Development

The Inspection Service Career Development Division provides basic training for candidate Postal Inspectors as well as in-service training for all Inspection Service employees. Certification of threat management instructors is also

provided. 

All Postal Inspector candidates undergo 14

weeks of scenario-based basic training consisting of investigative techniques, defensive tactics, firearms, legal matters, search and seizure,

arrest techniques, court procedures, Postal operations, and a detailed study of the Federal

statutes over which the Inspection Service has

jurisdiction. The training program has been

revised to focus on building problem-solving

abilities, critical thinking, and cognitive skills.

During this reporting period, the Career Development Division graduated one basic Postal

Inspector training class. The 24 graduates are

currently completing various phases of postbasic training. 

Security

To assist in carrying out its responsibilities,

the Inspection Service maintains a security

force staffed by uniformed Postal Police Officers

who are assigned to major Postal facilities

throughout the country. The officers provide

perimeter security, escort high-value mail shipments, and perform important protective functions. Postal Police Officers undergo a 10-week

basic training course at the Federal Law

Enforcement Training Center in Glynco, Georgia, which includes firearms training, constitutional law, ethical behavior, conflict management, communications/interviewing, criminal

law, search/seizure, civil liability, detention and

arrest, physical security, patrol procedures, victimology, and radio communications. One Postal

Police Officers class, comprised of 45 candidates, graduated from the Federal Law Enforcement Training Center Postal Police basic training program during this period.

Y2K

The Information Technology Division

completed preparations for the Y2K rollover

within the Inspection Service, finalized procedures to invoke the Inspection Service’s Component Contingency Plans and Business Continuity Plans, and maintained readiness to ensure

systems, information technology infrastructure,

external data interfaces, and other Inspection

Service components were Y2K compliant. An

Inspection Service Information Technology

Y2K Command Center was also set up to monitor the status of its systems and respond to

Inspection Service Y2K-related information

technology problems. All Inspection Service

applications that were remediated on the computer system or migrated to the new infrastructure were certified and tested to be Y2K compliant. Telecommunications hardware and software supporting approximately 190 sites was

also thoroughly tested. Around-the-clock

staffing occurred during the rollover period,

beginning December 31, 1999. 

Information Technology

The Inspection Service’s Correspondence

Management System, Fraud Complaint System,

Polygraph Examiner System, Complement

Reporting System, and Prohibited Mailings and

Narcotics System were completed, tested, and

deployed on the new infrastructure. Enhancements to the Inspection Service Database Information System were also completed. Based on

the Inspection Service’s increased use of the

Internet, the Information Technology Division

doubled the connection speed to the Internet. 
Organization

DID YOU 

KNOW?

PAGE 35

What are the locations of the OIG Headquarters and field offices? 

The OIG Headquarters is in Rosslyn, Virginia. Additional offices are

located in Los Angeles, California; Denver, Colorado; Atlanta, Georgia;

Chicago, Illinois; New York, New York; Raleigh, North Carolina; and

Dallas, Texas; and at the three Postal Data Centers in Minneapolis,

Minnesota; St. Louis, Missouri; and San Mateo, California. 
PAGE36 ORGANIZATION

INSPECTOR GENERAL

Karla Corcoran

Executive Representative for Field Liaison

Colleen McAntee

Special Assstant

Rona Shorr

GENERAL 

COUNSEL TO THE

INSPECTOR 

GENERAL 

Thomas Coogan

Deputy General Counsel Kirt West

Congressional & Public Relations

Laura A. Whitaker

Legal Services

Gladis Griffith

INVESTIGATIONS

Sylvia L. Owens

Deputy Ronald K. Stith

Deputy Richard S. Trinidad

Contracts

Kim Stroud

Facilities

Anthony T. Cannarella

Healthcare Fraud

Katherine K. Johnson

Revenue Generation

Larry Chisley

Revenue Protection

Dan O'Rourke

Mike Shiohama

EMPLOYEE 

Billy Sauls

Deputy Ronnie Wainwright

Administrative Resources

Steve Spratt

Human Resources

Connie Ambush

Information Systems

David I. Berran

Labor Management

Joyce Hansen

Chris Nicoloff

CUSTOMER

Norm Hancock

Deputy Debra Pettitt 

Computer Intrusion

Howard Cox

Executive Investigations

Tommy Hampton

Hotline

Joe Oliva

Oversight

Bob Pemberton

ASSISTANT INSPECTOR

GENERAL

ASS SI

TANT

NI SPECTOR GENERAL

ASSISTA

NT

INSPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

ASSISTANT INSPECTOR

GENERAL

AUDITS

Robert Emmons (Acting)

Deputy Debra Ritt

Accepting & Processing 

Stew Dorris

Delivery

Bennie Cruz

Developmental

Tracy LaPoint

Financial Audit

John M. Seeba

Support

Gwen Johnson

Transportation

Debra Ritt (Acting)

DEPUTY 

INSPECTOR GENERAL

Richard Chambers

Special Assstant

David Shelley

STRATEGIC 

PLANNING 

& QUALITY

MANAGEMENT

Ronald Merryman

Deputy Wayne Goleski

Electronic Commerce

Robert Batta

Forensic & Technical Services

John DeMaggio

Information Technology

David Sidransky

Internal Quality

Jim Nugent

Quality Assurance/Internal Affairs

George Davis

Strategic Planning 

Russ Barbee

Office of Inspector General

Organizational Structure
PAGE37

OFFICE OF INSPECTOR

GENERAL

The OIG is designed to support Postal Service business and public policy objectives. It is a

unique, non-traditional, and diverse organization that conducts audits, evaluations, investigations, and other core Inspector General functions identified by the Inspector General Act of

1978, as amended. 

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

on improving Postal Service business processes

and overall organizational achievement. The

following section describes the OIG organizational structure during the semiannual reporting

period ending March 31, 2000. 

DEPUTY INSPECTOR GENERAL, 

Richard Chambers - assists the Inspector General and the OIG Management Committee and leading the organization.

ASSISTANT INSPECTOR GENERAL

FOR STRATEGIC PLANNING &

QUALITY MANAGEMENT, 

Ronald Merryman

Deputy Assistant Inspector General,

Wayne Goleski

ELECTRONIC COMMERCE TEAM

Director, Robert Batta - conducts reviews of

Postal Service initiatives in the emerging field

of electronic commerce, including areas such as

information-based indicia and electronic bill

payment.

FORENSIC & TECHNICAL SERVICES

TEAM

Director, John Demaggio - provides technical support in such areas as surveillance, evidence recovery, firearms, computer forensics,

and polygraph examinations; and maintains

close liaison with technical experts in the law

enforcement community.

INFORMATION TECHNOLOGY TEAM

Director, David Sidransky - manages computer operations and telecommunications

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

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

INTERNAL QUALITY TEAM

Director, Jim Nugent - instills continuous

internal process improvement and facilitates

internal communications through orientation,

teambuilding, and mentoring.

QUALITY ASSURANCE/INTERNAL

AFFAIRS TEAM

Director, George Davis - conducts internal

reviews of OIG operations and procedures to

ensure that they are effective and appropriate,

provides advice on improving operations, and

conducts reviews of allegations made against

OIG employees.

STRATEGIC PLANNING TEAM

Director, Russ Barbee - anticipates and

plans for current and future changes in the

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

research and statistical analysis, informing

Postal Service employees and customers about

the OIG mission, and promoting the vision of

the OIG.

ASSISTANT INSPECTOR GENERAL

FOR AUDIT (PERFORMANCE),

Robert L. Emmons (Acting)

Deputy Assistant Inspector General,

Debra Ritt

ACCEPTING & PROCESSING TEAM

Director, Stew Dorris - conducts audits and

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

This section describes the organization of

the OIG and the Inspection Service. The

OIG is organized consistent with the three

Voices of the Postal Service CustomerPerfect! Program: Voice of the Customer,

Voice of the Employee, and Voice of the

Business. The Inspector General, Deputy

Inspector General, General Counsel, five

Assistant Inspectors General, and the

Executive Representative for Field Liaison,

form the OIG management committee. In

order to differentiate between the OIG and

the Inspection Service, the pages concerning

the Inspection Service have been color

screened.
PAGE38

The Assistant Inspector General for 

Investigations oversees all investigations

performed by the OIG.

ORGANIZATION

DELIVERY OPERATIONS TEAM

Director, Bennie Cruz- conducts audits and

reviews to enhance delivery processes and

operations and improve customer satisfaction.

DEVELOPMENTAL TEAM

Director, Tracy LaPoint - conducts audits

and reviews of new or redesigned Postal Service

systems, programs, and operations that are

under development.

FINANCIAL TEAM

Directors, John Seeba and Sheila Bruck

- conducts audit work in support of the independent public accounting firm’s annual financial audit opinion and conducts other financial-related audits to identify areas for improvement.

SUPPORT TEAM

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

conducts audits and reviews of Postal Service

enabling operations, including quality, government relations, and customer service.

TRANSPORTATION TEAM

Director, Debra Ritt (Acting) - conducts

audits and reviews focusing on domestic and

international transportation and logistics operations, specifically addressing Postal Service

fleet operations and contracts for airline, highway, and rail services.

ASSISTANT INSPECTOR GENERAL

FOR INVESTIGATIONS (REVENUE

& COST CONTAINMENT), Sylvia

Lindquist Owens

Deputy Assistant Inspectors General,

Ronald K. Stith and Richard S. Trinidad 

CONTRACT AUDIT TEAM

Director, Kim Stroud - improves Postal Service contracting by conducting audits and

investigations of purchasing activities and

operations.

HEALTH CARE TEAM

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

have falsely billed the Postal Service for workrelated injury claims, and conducts audits of

systemic issues involving the Workers’ Compensation Program.

FACILITIES TEAM 

Director, Tony Cannarella - conducts

audits, management reviews, and investigations of all aspects of Postal facilities, including

repair, renovation, and new construction.

REVENUE GENERATION TEAM

Director, Larry Chisley - examines and

evaluates the major sources of revenue from

marketing, advertising, stamp services, retail,

and international mail business operations, and

also monitors Postal rate cases.

REVENUE PROTECTION TEAM

Directors, Dan O’Rourke and Michael

Shiohama - investigates bribery, kickbacks,

embezzlements, and other cases involving revenue losses and contract fraud, such as defective pricing, product substitution, and cost mischarging.

ASSISTANT INSPECTOR GENERAL

FOR EMPLOYEE, Billy Sauls

Deputy Assistant Inspector General,

Ronnie Wainwright

ADMINISTRATIVE RESOURCES TEAM

Director, Steve Spratt - provides the OIG

staff with facility, procurement, financial, budget, and other services necessary to accomplish

the OIG mission.

HUMAN RESOURCES TEAM

Director, Connie Ambush - delivers fullservice human resources programs for the OIG

in the areas of employee relations, ethics, pay

and benefits, retirement, awards, performance

management, counseling, diversity, and training.

INFORMATION SYSTEMS TEAM

Director, Dave Berran - audits major automated Postal management and information

systems to determine Y2K readiness, and

whether applications are properly established

and systems are properly designed to provide

accurate data to management; and provides

computer-assisted audit techniques to support

the OIG staff.

LABOR MANAGEMENT TEAM

Directors, Joyce Hansen and Chris

Nicoloff - conducts audits and evaluations of

labor management and employee relations

Number of Investigations Completed 

During Semiannual Period

0

5

10

15

20

25

10/1/99-3/31/00

4/1/99-9/30/99

REVENUE EXECUTIVE

PROTECTION

COMPUTER CONTRACT AUDIT FACILITIES HEALTH CARE

INTRUSION
PAGE39

issues within the Postal Service to assist in fostering and maintaining a healthy organizational climate for employees and improving operational efficiency; also audits and evaluates

Postal Service systems and operations involving violence prevention.

ASSISTANT INSPECTOR GENERAL

FOR CUSTOMER, Norm Hancock

Deputy Assistant Inspector General,

Debbie Pettitt

COMPUTER INTRUSION TEAM

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

assists in identifying computer systems vulnerabilities so that appropriate countermeasures

may be implemented. 

EXECUTIVE INVESTIGATIONS TEAM

Director, Tommy Hampton - investigates

allegations of criminal activities and misconduct involving Postal Service executives.

HOTLINE TEAM

Director, Joe Oliva - operates the OIG Hotline to provide a vital and confidential communication link between the Postal Service

and the public.

OVERSIGHT TEAM

Director, Bob Pemberton - conducts audits

and evaluations of Inspection Service programs

and operations.

GENERAL COUNSEL TO THE

INSPECTOR GENERAL, 

Tom Coogan

Deputy General Counsel, Kirt West

CONGRESSIONAL & PUBLIC

RELATIONS TEAM

Director, Laura Whitaker- serves as liaison

to Congress, the Board of Governors, and the

media; coordinates congressional testimony

and presentations; reviews legislation and regulations; coordinates internal policies and procedures; and reviews and comments on Postal

Service policies and procedures. 

LEGAL SERVICES TEAM

Director, Gladis Griffith - provides legal

advice to the Inspector General and OIG staff

on criminal, civil, and administrative issues;

processes subpoenas; responds to Freedom of

Information and Privacy Act requests; and

serves as liaison with the Postal Service Law

Department and Department of Justice legal

staffs.

EXECUTIVE REPRESENTATIVE FOR

FIELD LIASON, Colleen McAntee -

provides a senior level communications link

between the OIG Headquarters and its ten

field offices, and all Postal Service field operations.

REVISED ORGANIZATIONAL

STRUCTURE

Near the end of the semiannual reporting

period, the OIG decided to revise its structure

to better reflect Postal Service business processes, the new Designation of Functions between

the OIG and Inspection Service, and to be

more effective and responsive in dealing with

its customers. These changes include:

◆ Renaming and realigning all teams under

the following areas: e-Business, Business

Operations, Business Protection, Oversight and Business Evaluations, and

Internal Business;

◆ Dividing the field liaison function into

East and West areas of operation; and

◆ Moving the Strategic Planning, Congressional & Public Relations, and Quality

Assurance/Internal Affairs Teams to

more prominent positions in the organization.

A copy of the revised organization chart

follows.

What is the background of the 

OIG staff? 

OIG personnel include auditors,

evaluators, criminal investigators,

lawyers, technicians, and administrative personnel from Federal

and state government agencies,

private industry, non-profit organizations, and the Postal Service. 

DID YOU 

KNOW?
PAGE40 ORGANIZATION

ASSISTANT INSPECTOR

GENERAL

ASS SI

TANT

NI SPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

ASSISTANT INSPECTOR

GENERAL

(Business Operations)

Accepting & Processing

Business Support

Delivery

Financial Statement

Marketing

Transportation

FIELD LIAISON

(Business Protection)

Business Integrity

Contracts

Facilities

Health Care Fraud

Inspector General

Strategic Planning

Deputy IG

Congressional & Public Relations

Quality Assurance & 

 Internal Affairs

General Counsel

Legal Services

Business

Computer Intrusion

Developmental 

Electronic Commerce

Information Systems

Information Technology

Oversight & 

Business Evaluation

Executive Investigations

Hotline

Labor Management

Oversight

Field Offices

Atlanta

Chicago

Dallas

Denver

Los Angeles

New York

Minneapolis

Raleigh

San Mateo

St. Louis

Internal Business

Administrative Resources

Diversity

Hiring

Human Resources

Internal Quality

Policies

Audits Investigations

Office of Inspector General

Revised Organizational Structure

as of May 8, 2000
PAGE41

INSPECTION SERVICE

At the end of FY 1999, the Inspection Service completed a realignment of reporting relationships among field divisions. Over the last

few years, 30 Inspection Service Field Divisions

have been consolidated to 18. This has resulted

in increased efficiency and effectiveness. The

consolidation of specific support functions, the

availability of additional staff resources for emergency response, and a more uniform span of control among division Inspectors-in-Charge will

enhance the Inspection Service’s ability to

address Inspection Service goals. The Inspection

Service remains committed to the ongoing evaluation of organizational performance, employee

development, and customer service with the

goal of continuous improvement.

AIC

Deputy Counsel

Z. HILL

AIC

Deputy Counsel

L. KATZ

INC

Congressional 

& Public Affairs

D. MIHALKO

INC

Corporate Information

Management

R. LUERS

INC

Finance and Admin.

Services

M. MUNLEY

INC

Information 

Technology

R. COCCIA

Managers

ISOSGs

Bala Cynwyd

L. KLAUS

Newark

V. BELLINGER

So. San Francisco

K. PARAMORE

INC

International Security

D. HILL

INC

Performance

T. DENNEY

INC

Revenue & Asset

Protection Prog.

S. SCHMERBECK

INC

Security

F. MARION

Manager

ISOSG

Memphis

L. BROOKS

INC

Computer Crimes &

Commerce

J. EASLEY

INC

Fraud, Child Expl.,

Asset Forfeture &

Money Laundering

L. MAXWELL

INC

Forensic & Tech. Services Division

R. GEFFEN

INC

Mail Theft & 

Violent Crimes

A.CLEMMONS

Manager

IS0SG

Chicago

D. HARRIS

Inspectors in Charge

Florida - 

M. GREY

Mid Atl. - 

A. CRAWFORD

NY Metro - 

L. HEATH

North Jersey/Caribbean - 

J. SKIDMORE

Northeast - 

M. AHERN

Philadelphia Metro - 

B. CHAMBERS

Southeast - 

I. CARIFE

Washington Metro - 

J. ROWAN

W. Allegheny - 

J. BIRCH

Inspectors in Charge

Gulf Coast -

R. DODD

Michiana - 

W. MITCHELL

Midwest - 

R. TERLEP

No. Ca - 

D. DAVIS

No. Illinois - 

I. GILLIS

Northwest - 

R. MORGAN

Rocky Mountain - 

M. COBOS

So. Ca - 

J. FREEMAN

Southwest - 

A. HOLMES

INC

Career Develop.

Division

K. BOND

INC

Strategic Plng. & Management Process

J. STINCHFIELD

Manager Employee

Development

N. JOHNSON

Manager

Exec. Resources

and Ldrship. Dev.

E. LUCERO

Manager Training

Assessment

S. CLARK

Manager Workforce

Strategic Plng.

N. ARROYO

AIC

E. CRESPO

Inspection Service Organizational Structure

Chief Postal Inspector

K. C. WEAVER

Inspector in Charge

Office of Counsel

H. J. BAUMAN

Deputy Chief Inspector

Administration

J. K. BELZ

Deputy Chief Inspector

Business Investigations

A. B. KIEL

Deputy Chief Inspector

Criminal Investigations

K. W. NEWMAN

Deputy Chief Inspector

Field Operations East

L. S. CRAWFORD

Deputy Chief Inspector

Field Operations West

J. J. DUPILKA

Deputy Chief Inspector Prof. Standards &

Resource Dev.

D. P. WRIGHT

Inspector in Charge

Office of Inspections

J. M. SOMERSET

AIC - Assistant Inspector in Charge

INC - Inspector in Charge

ISOSG - Inspection Service Operations Support Group

Chief Postal Inspector 

Kenneth C. Weaver
PAGE42 ORGANIZATION
Goals and Strategies

Why does the Postal Service need an OIG

in addition to the Inspection Service? 

In a word - Independence. The Inspection

Service is part of and reports through 

Postal management. The OIG is independent

from Postal management, and by law, must

report findings without interference from 

management.

DID YOU 

KNOW?

PAGE 43
PAGE44

OFFICE OF INSPECTOR

GENERAL

STRATEGIC GOALS

To assure long-term success, the OIG recognizes that it must address Postal Service operations and activities, broadly define realistic

goals, set priorities in line with business vision,

and conceive effective strategies and action

plans. Therefore, in January 1998, the OIG

issued its first Five-Year Strategic Plan

In the published Strategic Plan for 

FY’s 1998-2002, three external and three internal goals were identified that were aligned with

each of the Postal Service’s CustomerPerfect!

goals. The revised plan will reflect one external

and one internal goal, aligned with the

CustomerPerfect! goals. These five-year goals

are:

External Goal

Enhancing the Postal Service’s:

◆ customer service and value;

◆ employee and workplace environment;

and

◆ financial integrity and business viability.

Internal Goal

◆ effective use of OIG resources.

OIG PLANNING PROCESS

These goals play a crucial role in the OIG’s

planning process. The planning process has

three interrelated components: the project universe, the annual performance plan, and the

annual audit workload plan. The project universe, which includes all projects that could be

considered, is the umbrella of the plan. This

year, the OIG identified nearly 1,000 projects

for consideration. To hire staff to complete the

entire universe of projects in one year would be

unrealistic. Therefore, OIG management selects

projects from the universe on the basis of risk.

These risk factors include the:

◆ level of Postal Service labor and capital

resources;

◆ impact on Postal-wide operations and

goals; and

◆ degree of sensitivity and level of

visibility.

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

plan, the second component of the planning

process. For FY 2000, this plan consists of over

200 projects, many of which are identified in

the Major Management Challenges section of

this report. The third component is the OIG

annual audit workload plan, which is extracted

from the annual performance plan. This audit

workload plan, which includes Inspection Service audits, is presented to the Postal Governors

each year.

PERFORMANCE RESULTS

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

During FY 1999, the OIG accomplished over 80

percent of its plan. For FY 2000, OIG has established eight annual performance goals—one for

each major operating area—and two for internal operations. To date, OIG is on target to substantially meet its plan. 

THE ROAD AHEAD

As the OIG expands its infrastructure, it

will transition its focus to more intensive prevention and detection of fraud, waste, abuse,

and mismanagement, as well as the promotion

of effectiveness, efficiency, and economy

throughout the Postal Service. The OIG will

continue to work with the Inspection Service to

transition additional responsibilities to support

CustomerPerfect! goals and help the Postal Service meet its major management challenges. 

OIG GOALS AND STRATEGIES

This section describes the OIG and

Inspection Service vision and goals for

assisting the Postal Service in achieving

its operational, performance, and financial goals in the 21st century. In addition, this section describes the process by

which the OIG translates its vision into

an annual performance plan. In order to

differentiate between the OIG and the

Inspection Service, the pages concerning

the Inspection Service have been color

screened.

Planning System

Interrelationships

AUDITS & AUDIT RELATED PROJECT

INVESTIGATIONS

OTHER PROJECTS

INTERNAL ENABLING FUNCTIONS

POSTAL 

PROJECT

UNIVERSE

ANNUAL

PERFORMANCE

PLAN

AUDIT 

WORKLOAD

PLAN

CONSULTING

QUICK RESPONSE

FACT-FINDINGS

AUDITS & AUDIT RELATED PROJECT

INVESTIGATIONS

OTHER PROJECTS

INTERNAL ENABLING FUNCTIONS

POSTAL 

PROJECT

UNIVERSE

ANNUAL

PERFORMANCE

PLAN

AUDIT 

WORKLOAD

PLAN
PAGE45

INSPECTION SERVICE

GOALS INDICATORS

Inspection Service 

FY2000 Goals and Indicators

CUSTOMER

Increase Customer Confidence 

in the Security & Integrity of the Mail

Customer Satisfaction MeasurementsResidential (Security)

Volume Thefts

EMPLOYEE

Ensure Employee Safety

Enhance the Workplace Environment 

to Improve Organizational Performance

Number of Robberies

Robbery Solution Rate

Number of Assaults

Number of Credible Threats

Performance Management Profiles

Recruitment

BUSINESS

Prevent Loss of Revenue

and Assets

Fraudulent Schemes Involving 

Underpayment of Postage

Fraudulent Compensation 

Costs Avoided

Reduce Costs

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

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

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

tangible method for establishing Inspection Service goals. This process resulted in the identification of the five goals and ten indicators for FY 2000 as follows:

PAGE45
PAGE46 OIG GOALS AND STRATEGIES
Customer Service

Why must the OIG report all of its findings and

issues to the Governors and Congress?

The OIG is required by law to keep the Governors

and Congress fully and currently informed. The

OIG also reports its findings and issues to Postal

management so that they can take appropriate

action to improve the efficiency and effectiveness 

of Postal programs and operations.

DID YOU 

KNOW?

PAGE 47
PAGE48 CUSTOMER SERVICE

OFFICE OF INSPECTOR

GENERAL

The OIG’s customers include Members of

Congress, the Postal Service Governors, Postal

managers and employees, other government

agencies, and the American public. In addition

to conducting audits, investigations, and other

reviews, the OIG demonstrates its commitment

to service by responding to customer concerns

in a variety of ways as described below.

COMMUNICATING WITH 

CONGRESS AND THE POSTAL

SERVICE GOVERNORS

The OIG is legally responsible for keeping

Members of Congress and the Postal Service

Governors fully and currently informed. The

OIG keeps Congress informed by issuing the

Semiannual Report to Congress, testifying at

oversight and other hearings, and briefing

Members and their staffs on issues related to the

Postal Service. The OIG keeps the Governors

informed through regular briefings at monthly

Board meetings, a monthly activity report from

the Inspector General, and responses to requests

for information. The OIG also regularly provides Congress and the Governors with copies

of audit and management advisory reports.

One of the highest priorities of the OIG is

to provide accurate and timely responses to

Congress and the Postal Governors. The OIG

Congressional and Public Relations team serves

as the liaison between OIG staff and Congress

and the Governors and provides a myriad of services, such as:

◆ serving as the point of contact and conduit

of information for all of OIG communications with Congress and the Governors;

◆ facilitating and monitoring OIG internal

processing of all Congressional and Governors’ requests to help ensure accurate

and timely responses;

◆ monitoring legislation and attending

Congressional hearings that affect the

Postal Service and the Inspector General

community; 

◆ coordinating preparation of written and

oral testimony for Congressional hearings

and questions arising from such hearings;

and 

◆ working with Congressional staff members to address important issues as appropriate.

In addition, the OIG keeps the Governors’ and

Congressional staff members informed about

matters that are referred to the OIG from Postal

Service stakeholders and constituents.

The OIG conducts independent audits and

investigations of Postal Service programs and

operations to help ensure their efficiency and

integrity. The OIG does not, however, normally perform audits and investigations when the

case involves an individual employee issue that

can be resolved through contractual grievancearbitration procedures or the Equal Employment Opportunity process.

Instead, the OIG focuses its efforts on identifying systemic issues and performing Postalwide reviews designed to assist in promoting a

healthy and productive work environment for

all Postal Service employees. By performing systemic rather than individual reviews, the results

of OIG work will affect a large number of people and have a wide-ranging beneficial impact

on Postal Service operations. Information about

individual concerns, however, is incorporated

into a database to identify systemic issues and

potential areas for Postal-wide review by the

OIG.

During this six-month reporting period,

the OIG closed 51 Congressional and Governor

inquiries. Appendix A of this report lists the

OIG responses to these inquiries by subject area.

In addition to the following summaries, narratives describing significant OIG work in

response to Congressional and Governor

requests appear in subsequent sections, as appropriate.

The following are a few examples that illusThis section describes the OIG and Inspection Service’s efforts to provide Customer

Service including initiatives by support funtions to enhance service to internal customers. Customer satisfaction and service is

the underlying creed of most successful

organizations and businesses. In order to

differentiate work reported by the OIG and

the Inspection Service, pages concerning the

Inspection Service have been color screened. 

Congressional Inquiries 

Closed During this Semiannual Period by Category

FINANCIAL

 MANAGEMENT

OTHER

OVERSIGHT

LABOR MANAGEMENT

PERFORMANCE

34

7

1

6 3
PAGE49

trate the variety of inquiries the OIG closed

during this reporting period:

◆ An investigation into allegations of contract fraud and conflict of interest

revealed that the Postal Service was paying a contractor for services performed

for another company (owned by the contractor’s spouse) while on the job for the

Postal Service. Although the United

States Attorney’s office declined to prosecute, the matter is being pursued under

the Program Fraud Civil Remedies Act. 

◆ An allegation of a delayed payment of a

$25,000 indemnity claim to an individual, when coupled with other similar

inquiries, led to the OIG initiating a

systemic review of the indemnity claim

process. The individual was eventually

issued a check for the full amount

claimed, plus postage. 

◆ After an individual was ordered by a

Postal Service manager to vacate Postal

Service premises where he was collecting

signatures for a political election, he contacted the OIG through his Congressional representative. The OIG found that

Postal Service regulations expressly prohibit political activity on Postal property.

Therefore, the Postal Service manager

acted lawfully and in accordance with

applicable Postal Service regulations. 

In its continuing efforts to improve overall

responsiveness to Congressional requests, the

OIG has improved its tracking system that provides information on the status of each request.

The tracking system also provides historical

data on all Congressional and Governor

inquiries since the OIG’s inception.

RESPONDING TO HOTLINE

INQUIRIES

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

and persons who contact the Hotline. The Hotline receives complaints from employees, customers, and the general public. Complaints

include alleged violations of laws, rules, or regulations; mismanagement; waste of funds; abuse

of authority; or danger to public health and safety. Complaints and allegations received by the

Hotline are analyzed to identify systemic issues

affecting the Postal Service.

The OIG considers all Hotline contacts

when planning OIG audits and projects. However, the Hotline does not replace formal

avenues of problem resolution like grievance

arbitration procedures established under agreement between the Postal Service and its

Unions, or Equal Employment Opportunity

complaint procedures established under Federal

guidelines.

As mentioned in the Overview section,

during the fall of 1999, the OIG initiated a Hotline awareness campaign by distributing a

“Fraud, Waste, Abuse, and Mismanagement”

poster throughout the Postal Service. As a

result, Hotline contacts increased dramatically,

by almost 70 percent, and total contacts during

the reporting period exceeded 9,000—the second largest total for a semiannual reporting

period since the Hotline was established in

1997.

Of the more than 9,000 contacts received:

◆ Twelve percent were referred internally

to the OIG staff for resolution or information, and pertained to allegations of

fraud, waste, abuse, and mismanagement,

or violations of health and safety rules;

◆ Thirty-five percent were referred to the

Inspection Service and involved allegations of criminal activity, including

threats of violence, mail theft, vandalism, or mail tampering;

◆ Seven percent were customer service

matters that were referred directly to the

Postal Service Consumer Advocate; and 

◆ Forty-six percent related to miscellaneous requests for information such as

job opportunities, ZIP Codes, postal

meters, and other Postal Service-related

matters.

The OIG’s national toll-free Hotline number, 1-888-USPS-OIG (1-888-877-7644), is

staffed from 7:00 a.m.-7:00 p.m., Eastern Time,

Monday through Friday (except federal holidays). Threats and any other potentially violent

work situations are routed immediately to the

Postal Police Control Center for action 24-

hours a day either by an OIG Hotline analyst or

through a caller-directed menu system. If the

emergency call is answered by an OIG Hotline

analyst, it is evaluated and immediately forwarded to Postal Inspectors for appropriate

CONSUMER 

ADVOCATE

CLOSED DIRECTLY BY HOTLINE

FURTHER OIG REVIEW

INSPECTION SERVICE

35%

12%

46%

7%

Referral of Contacts 

Received by the Hotline

During this Semiannual Period

The OIG Hotline poster should be posted in all

Postal facilities. 
PAGE50 CUSTOMER SERVICE

attention. Contacts can also be received at any

time by fax, e-mail, and voicemail. To increase

efficiency and Postal customer service satisfaction, the OIG uses a caller-direct menu that

allows callers to route inquiries to the appropriate office for response. 

People interested in contacting the Hotline may also write to the United States Postal

Service, OIG, Attn: Hotline, 1735 North Lynn

Street, Arlington, VA 22209-2020; e-mail the

OIG at hotline@uspsoig.gov; or fax information

to (703) 248-2259.

ISSUING INSPECTOR GENERAL

SUBPOENAS 

The Inspector General is authorized under

section 6(a)(4) of the Inspector General Act to

issue subpoenas in support of audits and investigations. The Inspector General issues subpoenas

in support of activities it performs and in support of selected investigations undertaken by

the Inspection Service.

The OIG is fully utilizing technology to

process subpoenas and has deployed its electronic subpoena system. The OIG “e-subpoena”

system enables OIG special agents and Postal

Inspectors to process subpoena requests online

by completing standard forms and transmitting

the requests electronically. This greatly reduces

the time and resources involved in processing

requests that previously were received by mail or

fax and had to be re-entered in the subpoena

system. The e-subpoena system was recognized

last year with an Award of Excellence from the

Executive Council on Integrity and Efficiency.

In this reporting period, the OIG issued

209 subpoenas: 164 subpoenas supporting the

Inspection Service and 45 subpoenas supporting

the OIG. Eighteen of these subpoenas were

issued in accordance with the Right to Financial

Privacy Act, which requires notifying the customer before obtaining financial information.

The OIG issued its first subpoena under the

Electronic Right to Privacy Act in response to

an investigation into cyber-attacks on Postal

Service computer systems.

The OIG legal staff provides assistance in

enforcing subpoenas when the subpoenaed

party refuses to provide the records. Subpoenas

issued under the Inspector General Act are

enforced with the assistance of the Department

of Justice. Two enforcement cases are pending

judicial determination. In a third case, a federal

court in Philadelphia gave the OIG 24 hours to

respond to a challenge to a Right to Financial

Privacy Act subpoena. The legal staff filed its

response within 24 hours, and the following day

the court dismissed the challenge, directing the

financial institution to turn over the records. 

ANSWERING FREEDOM OF

INFORMATION AND PRIVACY

ACT INQUIRIES

The OIG responds to many requests for

reports and other information made to the OIG

under the Freedom of Information Act and the

Privacy Act. The Freedom of Information Act

requires that the OIG respond to the requestor

within 20 working days. Upon receiving a

request, OIG staff conduct a search of OIG

records to determine whether the OIG has any

responsive documents. The OIG disclosed

many audit and management advisory reports.

Open criminal investigations, however, are not

released, and generally, only portions of closed

criminal investigations are released.

Because some audit and management advisory reports contain sensitive Postal Service

business information, the OIG asks Postal Service management and Law Department officials

to identify any business or proprietary information that may be exempted from disclosure

under the Freedom of Information Act. After

reviewing management’s comments, the OIG

makes the final determination as to whether an

exemption is applicable to an OIG document. 

Often, the OIG receives requests for Postal

Service documents and documents from other

agencies. In those cases, requestors are notified

that their request is being forwarded to the

appropriate agency for determination. 

Requestors have the right to appeal an

OIG determination to withhold all or part of a

document. The appeal is sent to the OIG, who

forwards it to the Law Department, which is

responsible for handling all Freedom of Information appeals in the Postal Service. 

During this six-month period, the OIG

received 56 requests for information pursuant to

the Freedom of Information and Privacy Acts.

Two of these requests were answered in full,

seven were withheld totally, twenty-seven were

partially withheld, and six were referred outside

the OIG. The OIG did not have any documen-
PAGE51

How does the OIG handle 

Freedom of Information Act

requests?

Public requests for OIG information are processed pursuant to the

Freedom of Information Act

(FOIA) by OIG staff. FOIA

requests may be made in writing,

or the public can review information posted on the world wide

web at www.uspsoig.gov 

tation for the remaining 14 requests. During

this reporting period, two appeals were transmitted to the Postal Service’s Law Department,

Civil Practice Section, for final decisions. One

appeal was decided in the OIG’s favor and the

other appeal is pending. In addition, the Law

Department rendered a final decision on two

appeals that were transmitted in the last reporting period, upholding the OIG’s initial decision

to withhold information. 

A majority of Freedom of Information Act

requests were from individuals interested in

obtaining their applicant files and for specific

audit reports.

MONITORING COMPUTER

MATCHING REQUESTS FOR

POSTAL INFORMATION

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

involving the automated Federal system of

records of two or more agencies. Information

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

agreement between the source and recipient

agencies, and after publication in the Federal

Register. The Postal Service receives requests

from other government agencies for Postal Service data that are used in computer matching

programs for a variety of purposes, including statistical studies and law enforcement activities.

Pursuant to the Privacy Act, the Postal Service

Data Integrity Board reviews requests seeking

information to perform computer matches. The

Inspector General is a member of the Data

Integrity Board along with the Vice President,

Employee Resources Management; Vice President, General Counsel; Chief Financial Officer

and Executive Vice President, Finance; and the

Chief Postal Inspector. 

During this six-month period, the Inspector General, as a member of the Data Integrity

Board, reviewed and approved the following

four requests for computer matching data from

the Postal Service

◆ Separate requests from the South Dakota

Department of Labor and the Florida

Department of Education asking for

information from the Postal Service to

identify Postal employees who were

former students of South Dakota’s and

Florida’s, respective, education systems.

Each State’s Department of Education

will determine whether Postal job duties

of former students relate to their education.

◆ The Department of Education requested

a computer matching agreement to

obtain information from the Postal Service to identify Postal employees who are

in default on student loan obligations

held by the Department. The purpose of

the match is to collect those debts under

the salary offset provisions of the Debt

Collection Act of 1982 when voluntary

payment is not forthcoming.

◆ The Department of Veterans Affairs

requested an extension of a computer

matching agreement to obtain information from the Postal Service to identify

Postal employees who owe delinquent

debts under programs administered by

the Department. The purpose of the

match is to collect those debts under the

salary offset provisions of the Debt Collection Act of 1982 when voluntary payment is not forthcoming.

In addition, the OIG itself follows the

computer matching requirements of the Privacy

Act. The OIG and the Department of Labor,

Office of Workers’ Compensation Programs,

recently agreed to a process by which the OIG

would construct a computer matching program.

In this computer match, the OIG would compare Postal Service payroll records with the

Department of Labor, Office of Workers’ Compensation Programs records as part of an audit of

workers’ compensation payments to Postal Service employees. The OIG is awaiting final

approval from the Postal Service Data Integrity

Board. Upon approval, the OIG will initiate a

review of the Postal Service Injury Compensation Program to determine the extent of overpayment of Federal Employee Compensation

Act benefits to Postal Service employees who

have returned to work.

RESPONDING TO MANAGEMENT

REQUESTS FOR OIG REVIEWS 

The OIG provides timely and accurate

information and recommendations to Postal

Service management. The OIG asked Postal

DID YOU 

KNOW?
PAGE52 CUSTOMER SERVICE

Service managers to identify operations and

emerging issues that would benefit from the

OIG’s review. Their suggestions are considered

during the OIG annual planning process and, to

the extent practical, are given priority consideration for inclusion in the plan. This process creates a unique opportunity to assist management

by providing independent analysis and additional information that will assist management

officials in fulfilling their responsibilities.

Some examples of suggestions from Postal

Service management for operations and issues

that the OIG plans to review in FY 2000

include:

◆ workers’ compensation;

◆ marketing systems;

◆ alternative dispute resolution; and

◆ computer security.

The OIG plans to continue to solicit suggestions from Postal managers and will consider

all suggestions as it plans projects.

REVIEWING LEGISLATION AND

REGULATIONS

As required by the Inspector General Act,

the OIG monitors legislative and regulatory

developments to advise Congress and the Governors of the impact of such legislation and regulations on Postal Service programs and operations. The relevant legislative and regulatory

reviews are included at the end of the appropriate sections that describe the OIG and Inspection Service reviews performed during the last

six months. During the six-month period, the

OIG evaluated 47 legislative proposals and 49

regulatory initiatives.

ASSISTING INSPECTORS

GENERAL COUNCILS

The OIG is a member of the Executive

Council on Integrity and Efficiency, whose

member Inspectors General are appointed by

their agency heads. The OIG also interacts with

the President’s Council on Integrity and Efficiency, whose members are appointed by the

President. 

The President’s Council on Integrity and

Efficiency and Executive Council on Integrity

and Efficiency conduct interagency audits,

inspections, and investigative projects to

address government-wide fraud, waste, and

abuse. They achieve these goals through established committees, which include Audit,

Inspection and Evaluation, Integrity, Investigations, Legislation, and Professional Development. The Postal Service Inspector General

serves on the President’s Council on Integrity

and Efficiency’s Investigations Committee and

the Assistant Inspector General for Audits

serves on the Federal Audit Executive Council. 

Both Councils frequently request assistance

and information from the Inspector General

community about specific projects, and solicit

ideas, comments, and suggestions regarding

other Inspector General-related issues. Maintaining an ongoing relationship with these

groups allows the OIG to respond to requests

and participate in discussions and decisionmaking

on important issues of mutual interest within

the Inspector General community. 

The OIG received over 50 inquires from

these Councils during this reporting period. A

sampling of some of the various requests

include:

◆ providing information for the President’s

Council on Integrity and Efficiency FY

1999 Progress Report to the President,

which outlined the Postal Service OIG’s

audit and investigative accomplishments

for the year; 

◆ joining with the Inspector General community and commenting to Congress on

the Webster Report, which addressed the

need for criminal investigators to remain

within the Inspector General community;

and 

◆ participating in significant discussion and

debate of a possible GAO auditing standard

that would question the organizational

independence of Inspectors General and

have a significant negative impact on the

Inspector General community.

USING COMPUTER FORENSICS

The OIG Computer Forensics Team is

staffed by specialists trained and certified in the

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

individuals who use computers for criminal purposes generally in one of three ways. First, a

computer may be the target of the offense. In

these cases, the criminal’s goal is to steal information from or cause damage to a computer.
PAGE53

Second, the computer may be a tool of the

offense. This occurs when an individual uses a

computer to facilitate some traditional offense

such as fraud. Lastly, computers are sometimes

incidental to the offense but significant to law

enforcement because they contain evidence of

a crime. ◆ During the reporting period, Computer

Forensics team members participated in

five search warrants and seized thousands

of megabytes of data. The data will be

analyzed in the OIG computer forensics

laboratory located in headquarters. 

◆ Members of the team are active in the

High Technology Crime Investigation

Association, the Regional Computer

Forensics Group, and the International

Association of Computer Investigative

Specialists.

PROVIDING POLYGRAPH 

SERVICES

The OIG Polygraph program aids criminal

investigators and is an effective tool to assist in

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

polygraph community and on the Federal Polygraph Executive Committee.

DEPLOYING A COMMUNICATIONS

SYSTEM

Law enforcement agencies use two-way

radio communications during field operations.

The OIG utilizes state-of-the-art handheld

radios to ensure operational readiness and practicality for field agents. In addition, the OIG

utilizes the Customs Service radio network,

called SECTOR, to enhance the effectiveness

of its communications abilities and assure that

communications are secure. 

SECTOR increases the range of the handheld radios through a nationwide system of over

368 repeaters. The SECTOR system also gives

field agents a communication link to a dispatcher who can send emergency assistance

immediately 24 hours a day, seven days a week.

The Customs Service is compensated by the

OIG on a per handheld or subscriber basis. This

arrangement benefits the OIG by reducing

manpower, repair, and site costs. 

OIG staff sharing skills and knowledge to

achieve effective results.
PAGE54 CUSTOMER SERVICE

INSPECTION SERVICE 

The Inspection Service has adopted

numerous initiatives to improve customer service. The Inspection Service endeavors to alert

consumers and businesses to current crimes by

attracting media attention to Postal crime

trends, publicizing positive law enforcement

accomplishments, circulating media releases,

and hosting crime prevention presentations.

CONGRESSIONAL LIAISON

On December 13, 1999, Senate and House

staff members and a representative from the

Postal Service’s Government Relations office

toured the Forensic and Technical Service Division facility in Virginia, during which the capabilities and technical expertise of each department were explained. A positive response from

congressional staffers resulted in additional

tours being scheduled.

The Inspection Service recently participated in the spring session of the Brookings Institution’s LEGIS Fellows Program. The program

offers a one-month orientation to the structure

and organization of Congress, followed by an

assignment on Capitol Hill working for a member of Congress, a Congressional committee, or

a support agency in Washington, DC. A sixmonth detail assignment was completed in

December by a Postal Inspector serving as a

Legislative Assistant on the personal staff of a

member of the House Committee on Government Reform, the oversight committee of the

Postal Service. 

The Inspection Service coordinated meetings for the Chief Postal Inspector with the

Chairman of the Subcommittee on the Postal

Service and the Ranking Minority member,

Subcommittee on the Postal Service, to discuss

Inspection Service matters. 

CONSUMER PROTECTION

Mail fraud is a crime that can be prevented

through education and awareness because every

victim or potential victim must decide whether

or not to participate in a given promotion.

Accordingly, this year Postal Inspectors frequently joined forces with consumer protection

agencies and organizations in fraud prevention

initiatives. The Postal Service has partnered

with the Securities and Exchange Commission,

the National Association of Attorneys General,

the Better Business Bureau, the American

Association of Retired Persons, and the Federal

Trade Commission. One such teaming involved

“surfing the net” for get rich quick scams for

project “Get Rich Quick.con.” Another initiative involved Internet auction frauds. The

Inspection Service contributed to this effort by

highlighting at least 26 Internet auction investigations that involved use of the mail.

Additionally, a survey commissioned by

the Inspection Service revealed that 48 percent

of respondents who were victims of fraud did

not report the crimes. The reason most often

cited was that did not know where to go for

assistance. In an effort to educate and help consumers, the Inspection Service joined forces

with several federal, state, and private agencies,

including the Department of Justice, Federal

Bureau of Investigation (FBI), Federal Trade

Commission, Securities and Exchange Commission, National Association of Attorneys

General, American Association of Retired Persons, and Better Business Bureau to launch

KNOW FRAUD, the largest consumer protection effort ever undertaken. The purpose of the

nationwide campaign was to connect the public

with agencies that can help and provide consumers with new resources to “slam the phone”

on telemarketing scams. 

A toll-free number, 1-877-987-3728, and a

KNOW FRAUD web site were established to

provide consumers with additional fraud prevention information and to link consumers

with law enforcement officials who would share

information. To date, over 80,000 visits to the

web site have been received as well as nearly

42,000 calls to the toll-free number. 

CRIME LABORATORIES

Solving investigations and convicting

criminals often requires the unique scientific

and technical support of the Forensic and Technical Services Division. The Forensic and Technical Services Division oversees polygraph,

technical, and laboratory services for the

Inspection Service. Five forensic laboratories

provide scientific support by analyzing and

examining document and physical evidence

gathered from Postal crime scenes.

The Inspection Service KNOW FRAUD

campaign was designed to help protect

consumers.
PAGE55

TECHNICAL SERVICES

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

of various sophisticated equipment and services

to make their job easier and safer. The unit utilizes Inspectors, security technicians, and communications specialists to meet program objectives. Programs include radio, electronic surveillance, and mail screening. Information relating

to each program follows. 

◆ The division provides and manages a $40

million national two-way radio communications system for Postal Inspectors and

Postal Police Officers. The system

includes the hardware infrastructure

(mobiles, portables, base stations and

repeaters) and ancillary equipment

including satellite telephone services. The

systems provide the Inspection Service

with reliable and efficient law enforcement communications and emergency

national or local disaster communications

for the Postal Service (e.g., floods, hurricanes, etc.). During this reporting period,

the Rocky Mountain, Western Allegheny,

and Philadelphia Metro Divisions were

being upgraded with digital narrow band

systems. Special projects this period

included upgrading the radio system for

the San Juan office and setting up a communications system for the Y2K Command Center.

◆ The National Electronic Surveillance

Program includes the administration and

asset management of the Inspection Service’s approved or court-ordered interception of electronic transmissions, which

requires strict adherence to legal and

operational guidelines, and continued

maintenance of state-of-the-art technology and expertise. 

◆ Forensic and Technical Service Division

staff supplied the equipment and installation for a Title III wiretap on land-line

and cellular telephone circuits used by

Postal Inspectors and Arizona police

detectives after they uncovered a multimillion dollar marijuana trafficking organization. Large quantities of marijuana

were being sent via a private carrier to

several states, and proceeds returned via

Express Mail to commercial mail receiving agencies. The case resulted in the

arrest of seven subjects, including an

employee of a private carrier, and the

seizure of $60,000 in cash, jewelry, and six

vehicles. 

◆ The Mail Screening Program involves

acquiring and maintaining portable and

fixed mail screening equipment utilized by

Inspection Service personnel and Postal

employees assigned to Mail Recovery

Centers and the national headquarters

mailroom. Currently, the Inspection Service maintains 107 portable units used by

Postal Inspectors nationwide and 16 fixed

units in Postal facilities. In addition,

seven mobile trailers are maintained and

ready for immediate deployment for

urgent mail screening initiatives authorized by the Chief Postal Inspector. Eighty

portable units were recently upgraded for

Y2K compatibility. The Inspection Service provided mail screening during the

World Trade Organization Conference

held in Seattle, Washington, on November 30 through December 3, 1999. 

POLYGRAPH SERVICES

Polygraph examinations have proven to be

effective in resolving cases involving employee

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

funds or property.

◆ A casual clerk/rural carrier associate of

the Appalachian District Accounting

Office was polygraphed in conjunction

with an investigation of lost registered

mail. The clerk took a polygraph test and

was found deceptive; however, the clerk

denied any knowledge of the theft and

agreed to an automobile and residence

consent search. During the search, Postal

Inspectors recovered a substantial amount

of cash and other documents that were

contained in the registered mail. The

employee then confessed to stealing. 

◆ A New York distribution clerk accepted

$7,500 in counterfeit U.S. currency. In

all, the clerk had 150 counterfeit $50

bills. When Postal Inspectors responded,

the employee claimed he could not

remember any one person coming to his

window with these counterfeit bills and

did not realize they were counterfeit when

he accepted them. The clerk was then

The Inspection Service’s forensic specialists provide technical expertise to

support investigations of criminal

activities.
PAGE56

polygraphed and found deceptive. In the

subsequent interrogation, he acknowledged he knew the money was counterfeit when he accepted it and admitted

that he exchanged the money for Postal

money orders.

FORENSIC SERVICES

Inspection Service forensic analysts provide expert examinations and testimony on

evidence submitted by Postal Inspectors for

document, fingerprint, chemical, and physical

evidence analyses. Lab personnel are available

to respond to the most critical, violent criminal

investigations to assist in processing and evaluating evidence. During this reporting period,

over 108 sets of fingerprints were matched on

Automated Fingerprint Identification System

searches. This significantly reduced investigative hours by identifying suspects from latent

prints developed. Ten identifications were

made just on volume mail theft cases in two

western cities. In Virginia, a suspect was identified through an Automated Fingerprint Identification System search after 43 fingerprints

were obtained and then matched in the system.

The suspect was responsible for stealing mail

from 200 residents and possessed 12 counterfeit

driver’s licenses when arrested. Forensic analysts also made 45 court appearances to provide

testimony.

DIGITAL EVIDENCE

Inspection Service personnel assigned to

this unit preserve, access, retrieve, and recover

evidence stored on computers and related

media. The unit also conducts forensic examinations of audio and video media. They provided assistance with search warrant and affidavit preparation, pre-search planning, on-site

search assistance, and marking, packing, transporting, and processing seized computer equipment.

Significant activities of the Digital Evidence Program include testimony in a child

molestation case that resulted in a successful

prosecution. On-site support of search warrant

activities was also provided in Maryland, Virginia, Illinois, and Texas. Program managers

assisted in a child exploitation case in Montana, which involved finding over 3,500 child

pornography images on the suspect’s seized

computers.

CUSTOMER SERVICE

Are mailboxes considered

Federal property?

Yes, Federal law (18 USC § 1705)

makes it a crime to vandalize

mailboxes (and to injure, deface,

or destroy any mail deposited in

them). Violators can be fined up

to $250,000 or imprisoned for

up to three years for each act of

vandalism. 

DID YOU 

KNOW?
Performance Reviews

OFFICE OF INSPECTOR GENERAL

Accepting and Processing

Transportation

Delivery

Marketing

Legislative and Regulatory Reviews

INSPECTION SERVICE

Transportation

Delivery

Mail Theft

Service Investigations

PAGE 57
PAGE58

What is a “performance”

audit? 

Performance auditing is a specific

type of audit that assesses

whether Postal Service programs

and operations are managed

economically and efficiently,

achieve desired results, or are

conducted in compliance with

applicable laws and regulations.

The OIG plans and executes a

wide range of performance audits

of Postal Service efforts to

respond to their businesses,

customers, and employees.

PERFORMANCE REVIEWS

OFFICE OF INSPECTOR

GENERAL

To deliver world-class service, businesses

and government agencies must excel in performing their core business processes. For the

Postal Service, these core business processes and

systems encompass accepting, processing, transporting, and delivering the mail as well as marketing Postal products and services. In the past

six months, the OIG has completed 27 reviews

of key and emerging issues relating to the Postal

Service’s performance of core business processes.

The reviews identified opportunities to save

over $31 million during current and future

years. The reports with the major savings or significant findings are:

◆ External First-Class Measurement

System, page 58;

◆ Commercial Air Carrier Performance,

page 59;

◆ Breast Cancer Research Stamp Program,

page 61; and

◆ Security of Stamp Stock, page 61.

ACCEPTING AND PROCESSING 

Each day, over 650 million pieces of mail

are accepted by the Postal Service in a variety of

ways, including collections from more than

300,000 blue collection boxes and residential

and business collection mailboxes. Express

Mail, First-Class Mail, and some Priority Mail

and periodicals are sorted at the more than 300

processing and distribution plants, while Standard Mail is generally handled at the 21 bulk

mail centers. In order to ensure timely and

accurate delivery of mail, accepting and processing procedures must be state-of-the-art. Situations that result in delayed mail processing

must be vigorously evaluated and the underlying causes promptly resolved. During the past

six months, the OIG issued six reports in the

Accepting and Processing Area, including the

External First-Class Measurement System and

delayed mail volume, which are discussed

below.

EXTERNAL FIRST-CLASS 

MEASUREMENT SYSTEM

The OIG evaluated the Postal Service’s

controls for detecting and preventing compromise of the External First-Class Measurement

System and its capabilities for measuring FirstClass Mail service. The audit confirmed the

current contractor has adequate internal controls for detecting and preventing compromise

of the system. However, the current system does

not include all ZIP Code areas in the selection

process, relies on a sample size that is larger than

necessary to obtain projectable results, and does

not measure the mail volume flow of many

modes of First-Class Mail. 

The audit identified that the External FirstClass Measurement System may not accurately

measure overall performance of First-Class Mail

service ZIP Codes that are not represented in the

testing universe. The OIG offered a recommendation designed to enhance the system and

ensure that External First-Class Measurement

Systems results would not be misinterpreted by

users outside of the Postal Service. Management agreed with a recommendation to fully disclose that the External First-Class Measurement

System is not a system-wide measurement of all

First-Class Mail performance. Specifically, management agreed to include the following disclaimer in connection with External First-Class

Measurement System results: “External FirstClass Measurement is an external measurement system of collection box to mailbox delivery performance. External First-Class Mail Measurement

continuously tests a panel of 465 ZIP Code areas

selected on the basis of geographic and volume density from which 90 percent of First-Class volume originates and 80 percent destinates. External FirstClass Mail Measurement is not a system-wide measurement of all First-Class Mail performance.”

Management also agreed to establish milestones

This section highlights audits, reviews,

and investigations conducted by the OIG

and the Inspection Service in the Performance area. Also, included at the end of

the OIG section are the OIG legislative

and regulatory reviews. In order to differentiate the work products by the OIG

and Inspection Service, the pages containing the Inspection Service work have

been color screened. Report numbers are

shown in parentheses after the narratives, as appropriate.

DID YOU 

KNOW?
PAGE59

for using planned information technology to

measure all streams of First-Class Mail. 

(OIG DS-AR-00-001)

DELAYED MAIL IDENTIFIED

During this period, the OIG conducted

two reviews of mail processing activities that

identified delayed mail at Postal facilities.

Because mail processing delays are potentially

damaging to the Postal Service’s reputation

with its customers, the OIG reported results to

Postal management expeditiously and management took immediate action to correct the

problems identified. 

◆ In the first review, the OIG discovered

approximately 20 trailers of delayed mail

at a Kentucky processing and distribution

center. The mail was found inside sealed

and unsealed trailers and was several

weeks old. Delayed mail was also found

in various staging areas on the plant floor

and in unsecured storage areas. Facility

personnel also inaccurately reported

delayed mail volumes and processing

deadlines to Postal Service Headquarters.

Postal management took immediate steps

to correct the underlying causes of the

mail delays and indicated that the OIG’s

review led to decisions that will improve

controls and integrity in the processing

and reporting of mail volumes. 

(OIG TR-MA-00-001)

◆ In the second review, the OIG evaluated

the Standard Mail processing operation at

a Virginia location to determine if mail

delays similar to those in Kentucky also

occurred at other locations. While the

review did not disclose the same type of

mail delays and processing issues identified in Kentucky, the OIG determined

that mail could be more efficiently staged

for mail processing and identified problems with the procedure for reporting mail

status. Management took immediate

action to correct the problems identified.

(OIG AC-LA-00-001)

TRANSPORTATION

Transportation of mail is a vital part of the

Postal Service’s mission of binding the nation

together by providing prompt, reliable, efficient, and universal mail delivery. To fulfill this

mission, the Postal Service spends in excess of

$4.4 billion annually on transportation services.

For most of these services, the Postal Service

relies on private transportation contractors. In

addition to its contracts with commercial carriers, the Postal Service operates its own truck

fleet for some routes and manages three dedicated transportation networks for expedited services. During the past six months, the OIG performed eight transportation-related reviews, the

most significant of which are highlighted below. 

COMMERCIAL AIR CARRIER

PERFORMANCE 

In response to a request from the Postal

Service’s Chief Operating Officer, the OIG

conducted an audit of commercial air carrier

performance. The Chief Operating Officer

expressed concern that air carriers were not

meeting expected on-time delivery targets

established by the Postal Service’s Air Systems

Contract, despite pay-for-performance incentives offering incremental pay for higher levels

of service. To address these concerns before

renewal of the Air Systems Contract in

September 2000, the OIG issued three reports. 

◆ The first report disclosed the Postal Service could save $28 million over a fiveyear period by reducing contract rates

where Postal Service employees perform

ground-handling services expected of carriers. Although the contract requires air

carriers to unload the mail at Postal Service facilities, local agreements were made

at 17 locations to have Postal Service personnel unload mail without any decrease

in the payments to the carriers. In negotiating the terms of the new Air Systems

Contract, the OIG recommended management assess the value of delivery services, reduce the contract rate where

Postal employees are unloading the mail,

and eliminate provisions prohibiting contract rate adjustments. 

Management concurred with the OIG

findings and recommendations, but did

not fully agree with estimated savings.

However, management indicated they

would give special consideration to price

adjustments in the upcoming contract

renewal. (OIG TR-AR-00-006)

◆ In the second report, the OIG determined

the measurement system for evaluating air

Containers of delayed mail indicate

management problems with mail

processing operations.
PAGE60 PERFORMANCE REVIEWS

carrier performance did not provide the

Postal Service and commercial air carriers

with the type of information needed to

make performance improvements. Also,

the method for measuring volumes did not

represent overall air carrier performance

and data supporting performance measurement was inaccurate. Postal Service management agreed with the OIG’s recommendations, and suspended use of the current system, effective February 26, 2000.

Postal management also agreed to either

redesign performance measurement or

explore other alternatives for improving

performance. (OIG TR-AR-00-003)

◆ The third report disclosed the pay-for-performance clause introduced in September

1998 was not effective in improving air carrier performance and that data underlying

incentive payments was unreliable. The

audit concluded that continued use of the

current pay-for-performance system would

not produce the service improvements originally envisioned. The OIG recommended

Postal Service management immediately

discontinue incentive payments and eliminate the current pay-for-performance clause

in future renewals of the Air Systems Contract. Management agreed with the findings and recommendations and suspended

use of the Performance Measurement System on February 26, 2000. 

(OIG TR-AR-00-004)

EXCESSIVE EXPENDITURES 

FOR HIGHWAY TRIPS IN THE

SOUTHWEST AREA 

In an audit of extra highway trips in the

Southwest Area, the OIG reported that contractors were overpaid approximately $848,000

for extra trips operated under a service improvement initiative. Although required by Postal

policy, contract rates for the extra trip service

were not adjusted and contracts were not

amended to authorize the use of leased equipment. As a result, the Postal Service continued

to make excessive payments to contractors for

33 months after the service improvement program was initiated. Management agreed with

the OIG’s findings and recommendations, but

disagreed with the amount of the overpayments.

However, despite this disagreement, management indicated they would review and determine contractors’ actual costs and recover any

overpayments. (OIG TR-AR-00-005)

DELIVERY

Universal service—delivering mail to

everyone, everyday, everywhere in America, at

uniform rates—is the cornerstone of the Postal

Service’s mission. To fulfill this mission, the

Postal Service developed a delivery network of

about 233,000 mail routes that are serviced by

nearly 300,000 letter carriers and 200,000 delivery vehicles. During FY 1999, the Postal Service delivered over 200 billion pieces of mail to

130 million homes and businesses—an average

of 1,500 pieces of mail for every household and

business in America. In the last six months, the

OIG performed five delivery-related reviews,

two of which are highlighted below. 

ACCEPTANCE OF ALTERNATIVE

FUEL DELIVERY VEHICLES NOT

MEETING SPECIFICATION 

Management requested that OIG review

plans to accept 21,775 delivery vehicles under a

$441 million contract with an automobile manufacturer. Postal Service management had

already determined that fuel pumps on the vehicles failed within 100 hours of engine run time

when used with ethanol fuel. The OIG agreed

with management that the Postal Service

should accept the vehicles after the manufacturer agreed to correct the problem by retrofitting the vehicles after delivery.

The OIG recommended the Postal Service

identify and recover all expenses, including

salaries, fringe benefits, and other costs incurred

by Postal Service personnel to retrofit the vehicles, and that the manufacturer be required to

provide details on its retrofitting plans to ensure

only minimal disruption to Postal operations.

Management agreed with the OIG recommendations and indicated that if the manufacturer is

unable to comply with the contract, they will

enter negotiations to return the vehicles or

obtain a price reduction, identify and recover all

costs to retrofit vehicles, and obtain a written

retrofit plan from the manufacturer.

(OIG DS-MA-00-001)

The OIG Transportation Team focuses on

improving the Postal Service’s airline,

highway, and rail operations.
PAGE61

IMPROVEMENTS IN VEHICLE

MAINTENANCE ASSIGNMENTS

AND REDUCTION IN RELATED

TRANSPORTATION COSTS

The OIG conducted a review of delivery

operations and determined that 3 of 10 area

offices did not always send vehicles to the nearest facility for maintenance. In addition, the

Postal Service used mechanics to transport the

vehicles to the maintenance facility. The OIG

reported the Postal Service could achieve cost

savings by transporting vehicles to the nearest

maintenance facility, obtaining contractors to

transport vehicles when cost effective, and

using personnel other than mechanics to transport vehicles. Management generally agreed

with the suggestions and initiated action to

address the issues in the report. 

(OIG DS-MA-00-002)

MARKETING

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

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

rates. During the past six months, the OIG performed eight reviews of marketing, including

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

BREAST CANCER RESEARCH

STAMP PROGRAM

The OIG conducted an audit of the Breast

Cancer Research Stamp Program to determine

whether revenues, costs, and payments were

accounted for adequately, and whether Postal

Service management acted on suggestions in a

prior OIG audit report. The audit disclosed

that the Postal Service had raised about $8.6

million for breast cancer research. 

The OIG found, however, that the Postal

Service had not collected $841,000 in recoverable program costs incurred for the Breast Cancer Research stamp. The OIG also reported the

Postal Service spent more than $940,000 to

print an additional 131.7 million Breast Cancer

Research stamps that, based on past sales data,

may not be needed. 

The OIG recommended the Postal Service

recover the incremental costs, issue guidance

on tracking and reporting program costs, and

develop an improved system for estimating the

number of semi-postal stamps required in the

future. Management agreed to issue regulations

on recoverable semi-postal stamp costs by July

2000. However, management only intended to

recover $482,000 of $841,000 in incremental

costs, and disagreed that improvements are

needed to improve estimates of semi-postal

stamp printing requirements. The OIG plans to

perform additional work in the area of estimating stamp printing volumes. The GAO recently issued a separate report on the appropriateness of the Postal Service as a fundraising

agency and the overall effectiveness of semipostal stamps. (OIG RG-AR-00-002) 

SECURITY OF STAMP STOCK

The Postal Service prints over 38 billion

stamps each year, which generates over $12 billion in annual revenue. Sales include approximately 30 billion First-Class Mail stamps. Security of stamp inventory is important because

stamps can easily be converted to cash. The

OIG performed two reviews as discussed below.

◆ During one review, the OIG observed

unsecured stamp stock, valued in excess of

$6 million, on the outbound dock of a

North Carolina processing and distribution center. The stamp stock, which was

transported as registered mail, was not

properly accounted for and secured. The

audit disclosed that the registered mail

clerk had not taken custody of and

secured the stamp stock as required

because storage space was not available at

the plant.

The OIG offered three suggestions to provide adequate security. Postal Service

management agreed to take steps to

ensure employee compliance with Postal

security regulations, investigate options

for securing the stamp stock at the present

facility, and ensure that adequate space is

provided for stamp stock storage in the

new facility. (OIG TR-MA-00-002)

◆ Another OIG audit identified 27 management control weaknesses in the areas of

physical security, interior facility design,

stamp accountability, stamp destruction,

separation of duties, and stamp inventory

management at six Postal Service sites.

At one of the sites, weaknesses contributed to a $79,680 loss in stamp stock.

The Breast Cancer Research Stamp program has raised over $8.6 million for

breast cancer research.
PAGE62 PERFORMANCE REVIEWS

Management generally agreed with the

OIG findings and recommendations, and

offered additional information or proposed

solutions to mitigate concerns raised in

the report. (OIG RG-AR-00-001)

COST/BENEFIT OF THE 

INTERNATIONAL STAMP 

COLLECTION PROGRAM 

QUESTIONED

As a result of a Congressional inquiry, an

OIG review of the Postal Service’s International Stamp Collection Program disclosed that,

since its inception in FY 1997, the program had

lost about $3.9 million. In addition, about $4.5

million in costs had not been accurately charged

to the program. Postal Service management

agreed with the OIG’s suggestions to consider

past financial performance in addition to revenue and cost projections in determining

whether to continue the program, and to ensure

accurate identification of future program costs.

The Postmaster General notified Congress that

the International Stamp Collection Program

would be discontinued which will save the

Postal Service about $1.5 million annually in

catalogue printing costs. (OIG RG-MA-00-001)

INADEQUATE INTERNAL 

CONTROLS OVER GRAND

CANYON STAMP

The OIG issued its second report on errors

in the issuance of the Grand Canyon stamp.

The first report determined that a printing error

occurred because management did not adhere

to established control processes to prevent text

errors, specifically the use of the name Colorado

rather then Arizona. The second report

disclosed that additional controls were needed

to prevent the second error, the reversal of

photo images used in the stamp designing

process. Stamp Services’ management implemented additional controls that should prevent

the errors noted in these reports from occurring

in future stamp designs. (OIG RG-LA-00-002)

LEGISLATIVE AND REGULATORY

REVIEWS

PROPOSED LEGISLATION

S. 1359 – The Postal Hazardous Materials

Safety Enhancement Act

This legislation would remove the exemption the Postal Service currently enjoys from

Federal regulation of hazardous material shipped

in the mails. The Postal Service self-governs

hazardous materials transportation through

internal regulations and inspections.

The sponsor of the legislation has stated

the National Transportation Safety Board has

made numerous recommendations over the

years to subject the Postal Service to Department of Transportation inspections and

increased enforcement efforts. In addition, the

sponsor maintains that the National Transportation Safety Board has also recommended

the Postal Service be subject to enforcement

obligations similar to those observed by other

package and express mail companies.

The Postal Service is concerned that

adding another layer of regulation could create

more problems than it would solve, and would

be an impediment to efficient Postal operations.

Mail might not be able to move when scheduled

due to Department of Transportation inspections and a diminished level of service could

result. This legislation has been referred to the

Senate Commerce Committee for their consideration. The OIG has not performed specific

work to evaluate the impact of this proposal.

However, the OIG will consider including

appropriate steps in future reviews to develop

independent and objective information to assist

Congress in its decisionmaking. 

H.R. 3202 – Door Delivery of Mail to

Persons Residing in Senior Communities

This legislation would require the Postal

Service to deliver mail to the doors of persons

who reside in senior communities. Senior

communities are defined in the bill as housing

facilities or communities designed for persons

age 55 or older. Eighty percent of the units in

the facility or community would have to have at

least one resident age 55 or older residing in

them to qualify the facility or community for

The Postal Service decided not to recall

the Grand Canyon Stamp which was

printed with a reversed photo image.
PAGE63

What is the OIG Hotline

number? 

The number to call for reporting

possible fraud, waste, abuse, and

mismanagement in the Postal Service is 1-888-USPS-OIG or

1-888-877-7644. 

door delivery. The bill has been referred to the

House Postal Service Subcommittee for legislative consideration.

This legislation could have an impact on

the economy and efficiency of the Postal Service. The Postal Service believes that requiring

it to employ dismounted delivery in areas

encompassed by the bill would increase labor

costs and diminish delivery efficiency. The

OIG has not performed specific work to evaluate the impact of this proposal. However, the

OIG will consider including appropriate steps

in future reviews to develop independent and

objective information to assist Congress in its

decisionmaking. 

H. R. 3768 – Dedicated ZIP Codes for

Communities Surrounded by a City 

This bill would require the Postal Service

to issue a ZIP Code to any city, town, or municipality of 5,000 or more persons that is completely surrounded by any other city. The

Postal Service has established an extensive and

thorough process for assigning ZIP Codes.

Before any ZIP Code can be authorized or

assigned, Postal Service management prepares a

long-range study that includes input from local

delivery office managers. The bill has been

referred to the House Government Reform

Committee for legislative consideration.

This legislation could impact the economy

and efficiency of the Postal Service. Postal Service officials have expressed the need to be able

to develop and assign ZIP Codes based on criteria

that will facilitate the efficient and timely

delivery of the mail. The adoption of additional criteria in assigning ZIP Codes is unrelated to

processing and delivery of mail and could

impact mail service. This could result in added

costs and delays in mail delivery. The OIG has

not performed specific work to evaluate the

impact of this proposal. However, the OIG will

consider including appropriate steps in future

reviews to develop independent and objective

information to assist Congress in its decisionmaking.

S. 2044 / S. 2062 – Stamp Out Domestic Violence Act of 2000

These two legislative proposals authorize

the sale of semi-postal stamps, providing a

fundraising mechanism for various causes by the

sale of stamps at prices above the normal FirstClass rate. Under the semi-postal legislation,

the difference between the stamp sales price,

less the First-Class rate and an amount sufficient to cover reasonable costs incurred by the

Postal Service in printing, selling, and distributing the stamp, would be paid to the benefiting

organization. Both bills have been referred to

the Senate Governmental Affairs Committee

for legislative consideration.

The OIG has reviewed the only semipostal stamp bill to have become law to date –

the Breast Cancer Research Stamp. The review

disclosed that management controls for revenues, costs, and payments were ineffective.

Additional information concerning this review

is contained in the Performance section of this

report. The GAO has also reviewed the appropriateness of the Postal Service as a fundraising

agency and the overall effectiveness of semipostal stamps.

DID YOU 

KNOW?
PAGE64

Does the Postal Service’s

External First-Class Measurement System measure the

delivery performance of all

First-Class Mail?

No. According to Postal management, “External First-Class Measurement is an external measurement system of collection box to

mailbox delivery performance.

External First-Class Mail Measurement continuously tests a

panel of 465 ZIP Code areas

selected on the basis of geographic

and volume density from which

90 percent of First-Class volume

originates and 80 percent destinates. External First-Class Mail

Measurement is not a systemwide measurement of all FirstClass Mail performance.”

PERFORMANCE REVIEWS

INSPECTION SERVICE

The Inspection Service is responsible for

investigations that ensure the sanctity of the

mail. The Inspection Service completed 12 performance audits related to area, district, and

local issues. This section describes some of their

more significant work in the areas of transportation and delivery. Included are selected Inspection Service mail theft reviews at the end of this

section.

TRANSPORTATION

The following reviews are highlights of

Inspection Service work on transportation-related issues at the area, district, and local levels.

HUB AND SPOKE OPERATIONS

REVIEWED AT A MIDWEST SITE

An audit was conducted to review surface

transportation operations supported by the Hub

and Spoke in order to identify redundant transportation routings. The review found numerous

trips within routes that were underutilized at

five plants, and weaknesses in the areas of

untimely clearance for surface mail, improper

operations, placards in use, surface transportation mail being routed to air carriers, and

untimely dispatch of mail to meet scheduled

transportation. These findings can result in significant savings by reducing work hours and

transportation costs. Management has taken

action to address many of the findings reported.

(IS 039-1295484-PA(2))

DELIVERY

Delivery-related reviews conducted by the

Inspection Service at the area, district, and local

level are highlighted in the following sections.

CITY CARRIER

OPERATIONS/OVERTIME

An audit of City Carrier Operations/Overtime in a district in Pennsylvania was conducted to determine whether delivery unit managers

and supervisors were effectively reviewing, evaluating, and approving city carrier’s overtime to

ensure overtime usage was judicious and justified. Reviews at 5 post offices representing 10

delivery zones disclosed untimely and inaccurate mail counts, lack of utilization of idle time,

and insufficient overall supervisory action. The

audit revealed that of the total city carrier overtime usage, approximately 39 percent of the

overtime hours was not justified by carrier workload. Management concurred with recommendations to improve controls over the counting,

recording, input, utilization of data, delivery of

service, supervision to clarify carrier expectations, procedures for assistance/overtime authorization, and management of attendance control. (IS 052-1289574-PA(3))

IMPROVEMENTS NEEDED 

IN CITY CARRIER OPERATIONS

AT A SOUTHWEST DISTRICT

An audit of the City Carrier and Flat Sorting Machine Operations at a Southwest district

was performed to assist management in identifying operational efficiencies and cost-savings.

The review found that carrier overtime was

excessive and not justified, sorting machines

operations were not fully utilized, and that a

staffing study was not initiated to determine the

quantity and level of employees needed on the

sorting machine operations. Postal management agreed with the recommended corrective

actions and projected annual savings of over

$3.8 million. (IS 052-1290664-PA(3))

MAIL THEFT

Postal Inspectors are committed to

reducing mail theft to maintain the public’s

confidence in the Postal Service and preserve

the sanctity of the mail. Postal Inspectors are

currently working with major mailers to prevent

mail theft and related problems. Mail losses

attributed to the Postal Service are often

consequences of actions taken by one of its

business “partners.” These actions may occur at

some point in the process of mail acceptance,

processing, transportation, or delivery. During

this reporting period, Postal Inspectors have

arrested 404 employees, and 2,522 non-employees or contractors for mail theft resulting in 368

and 1,997 convictions, respectively. Mail theft

targets include not only items of obvious value

in the mail, such as jewelry, computers, cash,

credit cards and checks, but mail containing

personal and financial information. The following are examples of significant reviews reported

during this semiannual reporting period.

NON-EMPLOYEE MAIL THEFT

Thieves frequently concentrate on targets

that offer a large volume of mail. Inspection

Service efforts are continuing to lessen the vulDID YOU 

KNOW?
PAGE65

nerability of such targets to attack. Examples of

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

◆ A joint task force consisting of Postal

Inspectors and over 40 other law enforcement officers arrested 16 individuals for

their involvement in a debit card scheme

centered in Florida. The task force

learned that individuals were recruited to

open checking accounts at area banks and

to obtain debit cards that would allow

them to retrieve money from the

accounts. Stolen and counterfeit checks

were then deposited into checking

accounts. Losses exceeded $700,000. 

◆ Postal Inspectors on a New York task

force arrested an individual for conspiring

to open a bank account with almost

$286,000 in stolen checks. Over

$113,000 was actually withdrawn from

the account. The task force investigation

further revealed that the individual had

previously opened an account in which

five stolen checks totaling over $400,000

were deposited. The account was frozen

before the funds could be withdrawn. 

◆ An individual was arrested in New York

for his involvement in the fraudulent

negotiation of over 500 convenience

checks, which resulted in bank losses that

exceeded $2 million dollars. The individual stated he received the checks from

another individual and was paid for his

services when the checks cleared his

account.

◆ A mailroom employee in New York was

arrested by Postal Inspectors and charged

with possession of stolen mail. Postal

Inspectors determined the employee stole

checks sent from various suppliers and

vendors. Approximately $250,000 was

used by an organized crime group, with

which the employee was associated, to

open investment accounts in Illinois and

California.

◆ Postal Inspectors were notified by bank

employees of a missing daily remittance

that was sealed for dispatch in a pouch in

a Mississippi post office. Postal Inspectors

were on hand when the armored car

transporting the remittance returned to

the company’s secured loading area and

conducted interviews and searches. During the removal of empty mailbags and

trays from the armored car, a one-gallon

plastic water bottle was found behind a

seat. A search of the bottle, which

belonged to a company employee, disclosed a large bundle of money. Federal

prosecution is pending. 

EMPLOYEE MAIL THEFT AND 

THE DELAY OR DESTRUCTION 

OF MAIL

The overwhelming majority of Postal

employees work conscientiously to move the

nation’s mail to its proper destination, and it is

a responsibility they take very seriously. Unfortunately, there are a few who abuse the public

trust placed in them. It is the job of the Inspection Service to identify these individuals and

take steps to have them removed from the

Postal Service. Examples of employee mail

theft cases are highlighted below:

◆ Postal Inspectors arrested a New York letter carrier and another individual and

charged them with conspiracy to steal

mail. The letter carrier admitted providing approximately 100 credit cards to the

individual over the past two years. The

letter carrier was placed on emergency

suspension pending removal from the

Postal Service. 

◆ A casual employee of a California airport

mail center was terminated from the

Postal Service after being confronted by

Postal Inspectors with about 24 parcels

due for delivery with altered and/or overlabeled parcel addresses. The employee

admitted to Postal Inspectors that he

altered and over-labeled the 24 parcels. 

◆ Postal Inspectors and local police uncovered a stolen credit card and counterfeit

credit card scheme that resulted in the

recovery of over 520 stolen credit cards.

To date, there has been one arrest and

over 40 additional suspects identified.

Losses are estimated at over $750,000.

◆ The Inspection Service and the FBI

worked together to investigate a scheme

where fraudulent bank accounts were

opened and deposits made with stolen and

counterfeit checks. The investigation

revealed that a debit card was obtained for

the fraudulent account and withdrawals

were made through cash advances and

Postal Inspectors help ensure the

integrity and safety of the mail system,

identify lost revenue, and maintain

effective customer service.
PAGE66

purchases. The individuals also used the

debit cards to purchase large volumes of

Postal money orders, which were kept

under the $3,000 reporting requirement.

Losses exceeded $26 million. To date, one

suspect has been sentenced to 4 years and

9 months in prison, 5 years of probation,

and restitution of over $360,000.

SERVICE INVESTIGATIONS

Service investigations are conducted to

address localized service-related concerns or to

verify the accuracy and timeliness of reports of

mail processing conditions or delivery services.

Some of the more significant reviews are noted

below.

FLAT SORTING MACHINE

OPERATIONS

A review of the Flat Sorting Machine

Operations was conducted at a processing and

distribution center in Michigan. The objective

of the review was to determine if processes were

in place to ensure flat sorting machines were

fully and effectively utilized. The flat sorting

machine unit was not properly staffed and overlapping employee schedules caused unproductive time. Postal Inspectors recommended that

management reschedule the clerk staff and the

resulting increase of machine utilization would

save the Postal Service over $466,000 in each

month. Management implemented two of the

five recommendations and agreed to implement 

the remaining recommendations during

FY 2000. (IS 071-1294372-SI(2))

REVIEW OF THE ACCURACY 

OF EXTERNAL FIRST-CLASS

REPORTING AT A NORTHEAST

DISTRICT

A review was conducted at a Northeast

district to verify the accuracy of external FirstClass reporting for a sample of post office boxes.

The review found several problems, including

reporters who did not pick up their mail for a

number of days, mail that was not picked up on

a daily basis, and mail pieces that were not

reported upon pickup or picked up late. 

The results of the review were provided to management. (IS 071-1296235-SI(2))

PERFORMANCE REVIEWS
Financial Management

Reviews

OFFICE OF INSPECTOR GENERAL

Financial Opinion Audits

Financial-Related Reviews

Contracting and Facilities

Marketing

Legislative and Regulatory Reviews

INSPECTION SERVICE

District and Installation Financial Audits

Contracts and Facilities Audits

Revenue Investigations

Embezzlements

PAGE 67
PAGE68 FINANCIAL MANAGEMENT REVIEWS

OFFICE OF INSPECTOR

GENERAL

The Postal Service is a $62 billion business

that relies on strong financial management controls to maximize revenue and minimize costs.

In the past six months, the OIG has completed

65 financial-related reviews. In addition, the

OIG has conducted investigations that have

resulted in one conviction, nine arrests, two

indictments, and investigative recoveries and

restitution of over $1.1 million. These reviews

add value by identifying opportunities for cost

savings and by improving financial management, contracting, and facilities practices. 

FINANCIAL OPINION AUDITS

The Postal Reorganization Act of 1970

requires annual audits of the Postal Service’s

financial statements. In FY 1999, the OIG

assumed full responsibility from the Inspection

Service for the financial audit work conducted

at Postal Service Headquarters, and at the three

Accounting Service Centers. This audit work

supports the independent public accounting

firm’s overall opinion of the Postal Service’s

financial statements. The most significant six

reports are highlighted below:

◆ An audit at the San Mateo Accounting

Service Center resulted in four findings

and eight financial accounting adjustments. Postal management agreed to

three findings and accepted all proposed

adjustments. The adjustments increased

income by $32.5 million. The audit also

noted that five of the seven prior years’

findings had been completely implemented while substantial progress had been

made on the other two. 

During the course of this audit, the OIG

found interest penalty payments had

steadily increased from $1.7 million in

FY 1995 to over $3.5 million in FY 1999.

The OIG provided management with a

list of 128 finance numbers that accounted for a majority of the total interest

penalty payments in order to target

improvements in this area. Management

agreed to implement the OIG’s recommendations to improve compliance with

the Prompt Payment Act. 

(OIG FR-AR-00-007)

◆ An audit at the Minneapolis Accounting

Service Center identified two internal

control weaknesses. First, the Center did

not have adequate procedures and controls to prevent or recover overpayments

to employees who separated prior to the

end of a pay period. Second, controls

over back pay awards were weak, leading

to frequent disbursement errors. In a random sample of back pay awards, the OIG

found 17 of 24 awards contained errors

totaling $44,000. In addition, the OIG

recommended a $433 million adjusting

journal entry, which impacted the FY

1999 general ledger account balances.

Postal management agreed with the findings and recommendations, and accepted

the $433 million balance sheet adjustment. The Postal Service also took action

to correct two of the prior years’ findings

but a third finding was reported again in

this year’s review. (OIG FR-AR-00-006)

◆ An audit at the St. Louis Accounting

Service Center resulted in five findings

and three financial accounting adjustments. With the exception of two areas,

Postal management generally agreed with

the findings and recommendations contained in the five reports and accepted

the proposed adjustments. The adjustments decreased income by $340,000.

The audit also noted that four of the

nine findings from prior years had been

completely implemented while substantial progress has been made on three; two

are still outstanding. 

(OIG FR-AR-00-005)

◆ An audit at Postal Service Headquarters

examined cash, investments, retirement,

workers’ compensation, postage in the

hands of the public estimation model, and

This section highlights audits, reviews,

and investigations performed by the OIG

and Inspection Service in the Financial

Management area. Also included at the

end of this section are OIG legislative

and regulatory reviews. In order to differentiate the work reported by the OIG

and Inspection Service, the pages containing the Inspection Service work have

been color screened. Report numbers are

shown in parentheses after the narrative,

as appropriate.

The OIG San Mateo Financial Team 

performs reviews at the data center.

Also pictured are Inspector General

Corcoran, Deputy Inspector General

Chambers, and possibly, a future OIG

employee.
the Postal Service’s year-end accrual

model. The audit disclosed that management’s policies, accounting procedures,

and internal controls conformed with

generally accepted accounting principles. 

(OIG FR-AR-00-004)

◆ The OIG also reviewed travel and miscellaneous expenses for the Postal Service

officers and the Board of Governors and

determined that the expenses were valid,

adequately supported, and properly

recorded in Postal Service accounts. 

(OIG FR-AR-00-001 and 

OIG FR-AR-00-002)

FINANCIAL-RELATED REVIEWS

Financial-related audits are reviews that

examine areas that have significant financial

implications and offer the potential to save

Postal resources. The OIG has taken a proactive approach to identify areas that offer potential cost savings and improve Postal operations.

During this semiannual period, the OIG completed 25 reviews in areas such as the Headquarters Management Challenge and Dinero

Seguro.

HEADQUARTERS SURPASSES

MANAGEMENT CHALLENGE

The OIG reviewed cost containment measures to reduce budgeted expenses by $400 million during FY 1999 as part of the Postmaster

General’s Management Challenge initiative.

The initiative was implemented to ensure the

Postal Service would achieve its targeted $200

million net income for the year despite delays in

rate increases and decreased revenue projections. The OIG review disclosed the Postal Service surpassed its Management Challenge

goals—cutting $675 million in expenses with

little impact on customer service. However, key

personnel were told to make reductions without

specific guidance on how to reduce costs. As a

result, personnel often did not focus on strategic

goals and long-term implications when making

budget reductions. Because the focus was on

short-term goals, value-added programs were

sometimes eliminated or deferred. The OIG

recommended several process improvements

and that a method be developed to assess the

impact of future budget reductions. Management concurred with the OIG suggestions and

advised that written guidelines and criteria

would be incorporated in subsequent budget

activities. (OIG FR-MA-00-001)

REVIEW SUGGESTS LOWER

DINERO SEGURO ELECTRONIC

FUND TRANSFER THRESHOLDS 

The OIG has continued to take a proactive

role in Postal Service operations by reviewing a

draft solicitation to expand the Dinero Seguro

electronic funds transfer service to the Dominican Republic. The review disclosed the solicitation specified a daily transaction threshold of

$2,999 for an individual. The OIG suggested

that the threshold be lowered to $2,000 for this

solicitation and future expansions, which would

reduce the risk of money laundering but have

little impact on the revenues of the program.

Management concurred with the recommendation. (OIG FR-LA-00-001)

CONTINUED INVESTIGATION 

OF DINERO SEGURO PROGRAM

LEADS TO MORE ARRESTS

Following the audit of the Dinero Seguro

Program, which was reported in the previous

Semiannual Report to Congress, OIG personnel continued using sophisticated computer

analysis techniques to review more than

500,000 transactions to identify suspicious

activity. The review identified a series of suspicious transactions by various senders. This led

to a joint investigation by the OIG and other

federal law enforcement agencies that uncovered a scheme involving drug traffickers using

the Dinero Seguro money transfer program to

wire drug proceeds from the United States to

Mexico. As of March 31, 2000, four additional

arrests had been made for distribution of controlled substances, conspiracy, and money laundering. In addition, $854,000 of marijuana,

$60,000 of cocaine, and currency totaling over

$568,000 were seized. 

INTERNATIONAL TRAVEL

LODGING EXPENSES 

WERE REASONABLE 

The OIG reviewed 39 international travel

vouchers totaling $445,000 and determined that

reported lodging expenses were reasonable based

on a comparison to State Department rates.

However, while Postal Service travel policies

PAGE69

Does the Postal Service follow

Federal Government Statutes

and Regulations?

Except for certain statutes and

regulations expressly made applicable to the Postal Service, most

federal laws of government-wide

applicability do not apply to

Postal Service. This permits the

Postal Service, an independent

establishment of the executive

branch, to operate in a businesslike manner. 

DID YOU 

KNOW?
PAGE70 FINANCIAL MANAGEMENT REVIEWS

and procedures encouraged prudent planning of

travel, they did not set expense limits for international lodging. (OIG RG-LA-00-001)

EMPLOYEE CHARGED WITH

EMBEZZLEMENT

During an OIG audit of cancelled checks

originally disbursed by the San Mateo Accounting Service Center, the OIG discovered irregularities associated with payments of tort claims

handled by a Postal Service employee. Investigation by the OIG and Inspection Service disclosed that an employee fraudulently prepared,

approved, and submitted vehicle accident

claims to the Accounting Service Center for

payment. The scheme resulted in the issuance

of 14 checks totaling nearly $68,000 to accomplices that the employee recruited to be

claimants and payees. The employee was subsequently arraigned in Federal court and charged

with embezzlement. Prosecution is pending.

CALLING CARD SAVINGS

IDENTIFIED

Review of contract rates and billing practices of a major telecommunications provider

disclosed opportunities to save on monthly

expenses. Specifically, the review indicated that

the Postal Service paid an average of 38 cents

per minute for calling card calls, which was 22

cents higher per minute than its toll free, “dial

1,” and local phone services. Contractor personnel responsible for billing and invoicing

explained that the calling card charges were

higher because Postal Service personnel used

operator assistance instead of direct dial when

making calls. Using direct dial would save

$13,000 per month over the remaining life of

the contract. The OIG suggested that district

personnel be instructed to use direct dial when

using calling cards. Management agreed with

the OIG’s suggestion and took corrective

action. (OIG FA-MA-00-003)

COMPENSATION POLICIES WERE

VAGUE AND CONFUSING

As a result of an employee complaint, an

investigation was initiated by the OIG to determine whether employees at a Postal Service facility were fraudulently or illegally receiving night

differential, overtime, and Sunday premium pay.

The complainant alleged this situation existed

with the knowledge and concurrence of upper

management. An investigation revealed there

was no criminal activity or intent on the part of

Postal Service employees. However, the investigation did reveal pay and compensation policies

for employees on detail, temporary assignment, or

in training status were vague and confusing—an

opinion shared by officials at the district and area

level. The issue was brought to the attention of

Headquarters Offices of Corporate Accounting,

Human Resources, and Compensation. As a

result, Postal Service Management issued a compensation clarification directive to the field to clarify pay policy and alleviate confusion resulting in

potential cost savings and enhanced employee

morale.

TORT CLAIM RECEIVABLES

The OIG found that tort claim receivables

were neither aggressively managed nor written

off after the statute of limitations for collection

had expired. Fourteen of twenty accounts

receivable reviewed were uncollectible and

needed to be written off. Three receivables

transferred to a collection agency were not

followed up on, and two others needed to be

referred to a collection agency. One account

needed a review by the legal department for

improper denial of a claim by a municipality.

Management did not agree with the findings

but took corrective action to write-off the

outstanding tort receivables.

(OIG FR-FA-00-006)

CONTRACTING AND FACILITIES

In FY 1999, the Postal Service had contract

actions of $9.1 billion for supplies and services,

equipment, transportation, and facilities. These

contracts included $581.8 million in non-competitive purchases and $374.5 million in credit

card purchases. The Postal Service is also one of

America’s largest owners, developers, and managers of real estate, committing over $1.6 billion

in FY 1999 for repair, renovation, and new construction of facilities, and paying $727.5 million

in rent.

Effective October 1, 1999, the OIG

assumed responsibility from the Inspection Service for contract audits designed to assist Postal

Service contracting officers in determining fair

and reasonable contract prices, as well as providing them with reviews of contractor accounting

systems. The OIG contracted with the Defense

Contract Audit Agency to assist with this effort.

Documents siezed from a major

procurement fraud investigation.
PAGE71

During the semiannual period, the OIG

conducted 34 reviews of contracting and facilities-related issues. Of these, the Defense Contract Audit Agency completed 18 reviews of

Postal Service contracts at the request of the

OIG. Also, the OIG has 255 open criminal

investigations, many of which target fraud and

corruption in these areas. The most significant

contracting and facilities reviews are highlighted below.

TELECOMMUNICATIONS

CONTRACTOR AGREES TO

ADDITIONAL SETTLEMENT

An investigation into charges submitted by

a large telecommunication contractor responsible for installing telecommunications wiring for

8,000 Postal facilities resulted in an additional

settlement agreement. The investigation

revealed that the contractor had subcontractors

completing most of the work and had been

billed for services not rendered, incomplete, or

defective. After being notified of this, the contractor recouped an additional $900,000 from

its subcontractors, which is being credited to

the Postal Service contract. Including the

amount above, the total recovery to date is $2.9

million.

IMPROVEMENTS NEEDED IN

CONTRACTOR SUSPENSION

AND DEBARMENT POLICY

A review of the Postal Service’s suspension

and debarment actions disclosed the Postal

Service had only suspended or debarred 29

individuals/firms during the past four years.

The OIG found this was in sharp contrast to

other Federal agencies with similar or smaller

contracting programs. The review noted that

Postal Service’s policy was vague and subject to

misinterpretation. Further, the OIG noted the

policy did not facilitate timely processing of

suspension and debarment actions, and Postal

management did not maintain a list of problem

contractors. Postal Service management generally agreed with the findings and established a

team to review current practices. 

(OIG FA-AR-00-001)

CONTRACTOR CHARGES

DISPUTED/FOUND IMPROPER

The OIG conducted several investigations

and reviews that questioned contractor charges.

Three are highlighted below.

◆ During an OIG investigation into the

production and deployment of a flat sorting machine, the OIG identified six issues

related to potential overcharges and questioned costs associated with a $935,000

claim for an equitable adjustment submitted by the contractor. Three of these

issues have been resolved, resulting in the

contractor reducing its claim by $35,000.

The remaining issues are pending final

contract negotiations.

◆ In another investigation, the OIG

reviewed allegations that an indefinite

quantity contractor was overcharging the

Postal Service. The OIG discovered that

the contractor improperly billed the

Postal Service $12,500. As a result of the

investigation, the contractor made full

restitution.

◆ In a separate investigation, the OIG discovered a contractor had paid gratuities to

Postal Service representatives and improperly charged the costs of these gratuities to

the Postal Service through an existing

contract. The contractor refunded the

Postal Service $2,145. As a result of the

investigation, Postal Service agreed to a

contract modification to account for unallowable costs revealed in the audit report. 

CONTRACTOR INDICTED ON

KICKBACK SCHEME

A joint investigation conducted by the

OIG, the Defense Criminal Investigative Service, the National Aeronautics and Space

Administration OIG, and the Environmental

Protection Agency OIG resulted in a sevencount indictment against the president of a

printing services company for allegedly paying

kickbacks to obtain subcontracts related to the

Postal Service and other government agencies.

If convicted, the contractor faces a maximum

sentence of five years in prison for the conspiracy count affecting the Postal Service and ten

years for each of the violations of the anti-kickback act affecting the non-Postal agencies, as

well as a $250,000 fine for each count. 

Investigators secure documents

supporting an ongoing review.
PAGE72 FINANCIAL MANAGEMENT REVIEWS

DEFECTIVE ROOFING PRODUCT

AT A POSTAL FACILITY 

An OIG investigation determined that

there was no merit to a Hotline complaint that

the new roof at a Texas Processing and Distribution Center was defective and had to be replaced

at an additional cost of $1 million. Specifically,

a general contractor had installed a new roof at

the center using a defective roofing product;

however, the roof was replaced under warranty

at no additional cost to the Postal Service. Management agreed to implement two OIG suggestions designed to ensure that the Postal Service

does not incur costs for repairing roofs, which

were initially installed using a defective roofing

product. (OIG FA-MA-00-002)

CONTRACT PRICING REVIEWS

During the reporting period, the Defense

Contract Audit Agency initiated 50 contract

audits on the OIG’s behalf. Eighteen audits

were requested because of concerns by the OIG

and 32 were requested by Postal contracting

officials. The audits consisted of various types,

such as incurred costs, proposals, defective pricing, and systems reviews. Incurred cost audits

evaluate the reasonableness of costs incurred by

contractors, while audits of proposals evaluate

the reasonableness of contractor cost estimates.

Defective pricing audits are performed to determine whether contact prices significantly

increased because of defective contractor pricing data. Lastly, contractor systems such as

accounting, estimating, and billing systems are

reviewed to determine their adequacy to

account for contract costs. The chart shows the

number of audits by type initiated in this reporting period. 

Of the 50 audits, 18 were completed during

the semiannual period and auditors took exception to $2.3 million that consisted of questioned, unsupported, or unresolved costs. The

chart shows the types of audits that resulted in

the $2.3 million in audit exceptions.

The most significant of the 18 contract

audits completed during the semiannual period

are highlighted below:

◆ An audit of the 1994 operating expenses

associated with a lease between the

Postal Service’s Los Angeles West Coast

Training Center and the lessor concluded

that the lessor’s claimed operating

expenses were almost $640,000 more

than the costs included in its records.

The lessor could not provide supporting

documentation for the disallowed

amounts and stated that most of the

records were lost as a result of a change

in ownership of the building. The lessor

was also unable to provide a reconciliation of the company’s books and records.

The results of this audit are still pending

resolution between the contracting officer and the contractor. 

(OIG CA-CAR-00-009)

◆ Another audit of a recyclable release

liner contractor questioned over

$498,000 in overhead costs and identified unsupported costs of $382,500 due to

the contractor’s lack of support for proposed travel costs. The excessive overhead resulted from the contractor’s use of

outdated financial data. The findings of

this audit are still pending resolution

between the contracting officer and the

contractor. (OIG CA-CAR-00-010)

◆ In a third audit, approximately $465,000

of a contractor’s proposed cost for sorter

equipment was questioned. The questioned costs related to a sorter previously

built by the contractor, which was not

part of the current contract effort. The

findings are still pending resolution

between the contracting officer and the

contractor. (OIG CA-CAR-00-015) 

◆ Finally, an audit determined wheather

over $538,000 in claimed costs submitted

by a contractor was acceptable as a basis

for an agreement of a settlement. However, the audit questioned over $121,000

of the contractor’s costs resulting from

overstated overhead costs and the contractor’s inability to provide supporting

documentation for electrical costs. The

findings are pending resolution between

the contracting officer and the contractor. (OIG CA-CAR-00-006)

LEGISLATIVE AND REGULATORY

REVIEWS

During this reporting period, the OIG did

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

DEFECTIVE 

PRICINGS

CLAIMS

PROPOSALS

INCURRED COSTS

SYSTEMS

OTHER

Types and Number of 

Contract Audits Initiated

14

11

8

9

5 3
PAGE73

INSPECTION SERVICE

Within the financial management area,

the Inspection Service performed District

Accounting Office, financial installation, contracting, and facilities audits. In addition, the

Inspection Service conducted financial and

contract audits, revenue investigations, and

embezzlements. 

DISTRICT AND INSTALLATION

FINANCIAL AUDITS

The Inspection Service conducts District

Accounting Office audits to evaluate accounting controls over district accounts as a supplement to financial installation audits and the

security provided district computer systems.

Inspectors also conduct financial installation

audits to review the adequacy of internal controls at the installation level. During this

reporting period, the Inspection Service reported the results of 2 opinion audits, 135 financial

installation audits and 18 District Accounting

Office audits, for a total of 155 audits. These

audits resulted in 87 findings being presented to

Postal management and identified $126,680 in

revenue deficiencies. Some of the more significant audits are noted below. 

◆ A financial audit of a Mississippi business

mail entry unit identified over $27,000

in revenue deficiencies. Clerks were not

properly monitoring bulk mailings.

Amounts were not entered into a permit

account because of an insufficient balance in the account; however, mailings

were accepted and processed. Automation rate mailers were not providing support documentation for postage rates

claimed. Management agreed with the

finding and initiated collection procedures. (IS 011-1299014-AF(1))

◆ A financial installation audit at a 

Michigan post office disclosed a breakdown in internal controls. The review

disclosed 34 permit accounts were cancelled from 1995 through 1997, with

over $19,000 in customer deposits that

had not been refunded. The review also

disclosed that permit imprints disclosed

105 inactive permit accounts with balances totaling over $25,000 had not

been refunded. The lack of internal controls could lead to the misappropriation

of customer funds or loss of Postal revenue. Management agreed with the

finding and initiated corrective action.

(IS 011-1299819-AF(1))

◆ A financial audit at a California business

mail entry unit identified over $14,000

in revenue deficiencies. Established procedures were not sufficient to ensure that

mailing statements were controlled,

required reviews were conducted, bypass

mailings were identified, and revenues

were collected. Improving procedures

and ensuring timely performance of Periodicals, First-Class and Standard Mail

reviews would help prevent loss of revenue due to clerical errors, inappropriately applied discounts and rates, missing

mailing statements and bypass mailings.

Management agreed with the recommendations and began an action plan to

improve internal controls and collect the

revenue deficiencies. 

(IS 011-1298831-AF(1))

◆ A financial audit at an Illinois business

mail entry unit identified a $5,300 periodicals revenue deficiency. Management

did not have a procedure in place to

review mailing histories to verify publishers were maintaining periodicals’ stated

mailing frequencies and to check for

missing mailing statements. The proper

completion of mail acceptance verification procedures, timely entry of mailing

statements and managerial oversight of

operations would improve internal controls within the unit. Management

agreed with the recommendations, collected the revenue deficiency and initiated an action plan to improve internal

controls. (IS 011-1302193-AF(1))

◆ Two financial installation audits at Ohio

post offices identified problems with Post

Office Box/Caller Service. Post office box

fees were not properly charged or collected. The weakness in the Post Office

Box/Caller Service internal control procedures resulted in revenue deficiencies of

$4,400 and $3,750, respectively. Management agreed with the findings and recommendations and provided plans to take

corrective action. 

(IS 011-1300965-AF(1) and 

IS 011-1300969-AF(1))
PAGE74

CONTRACTING AND FACILITY

AUDITS

The Inspection Service conducts preaward and post-award audits to ensure

efficiency, effectiveness, and economy in the

procurement process. Questioned costs relate to

post-award audits and recommendations to put

funds to better use relate to contract proposal

audits. In addition, the Inspection Service has

responsibility for new construction or leasing

activity estimated with a cost of $5 million or

less. 

During this reporting period, Postal

Inspectors reported the results of two contract

proposal audits, six post-award audits, and one

facility audit. These reviews identified $266

million in questioned costs. Details of significant audits reported during the period appear

below. 

◆ Postal Inspectors completed a contract

audit of a $13.5 million contract claim

submitted by a contractor for the delay

associated with the Tray Management

System, Phase III-A. The audit identified over $7 million in questioned costs

of which $1.7 million was unsupported

costs. (IS 181-1294644-AC(1)) 

◆ Postal Inspectors audited approximately

$421 million in costs that a contractor

represented as costs incurred for the performance of a contract during 1998. The

Inspection Service questioned a total of

$95.9 million in incurred costs. Of this

amount, $13.2 million represented questioned administrative costs and $4.1 million represented unsupported costs. The

contracting officer utilized the results of

the audit in making a decision not to

increase the per piece rate as requested

by the contractor.

(IS 184-1281717-AC(1))

◆ Inspectors completed an audit of the $163

million claim submitted by a contractor,

which related to the operation of a dedicated network. The purpose of the audit

was to verify the accuracy of the claimed

amount. The audit identified the entire

$163 million claim as questioned costs.

(IS 182-1300114-AC(1))

◆ Postal Inspectors completed an audit of

SiteMETA (Method to Evaluate Technological Alternatives) model usage.

SiteMETA is a set of interrelated programs that are used to model complex

mail flows in mail processing facilities.

The model is used to determine automation equipment and facility space requirements for Postal facilities. The audit

identified systemic deficiencies related to

the utilization, review, and approval of

the SiteMETA process. Management

agreed with the report’s findings and

developed policies and procedures to

include usage guidelines, standardized

reporting, validation procedures, and formal review and approval processes. 

(IS 267-1293180-FPA(1)) 

REVENUE INVESTIGATIONS

The Inspection Service conducts revenue

investigations to help ensure that Postal Service

revenue is properly assessed and collected.

Priority is given to investigating alleged

schemes to avoid payment of postage and to

identify, pursue, and seek prosecutive actions

against violators, through civil, administrative,

and criminal remedies.

Postal Inspectors focus attention on revenue investigations where there is intent on the

part of the customer to defraud the Postal Service. In this reporting period, there were 59

arrests and 45 successful criminal prosecutions

resulting from revenue investigations. Inspectors reported the results of 58 revenue investigations during the reporting period, which identified $12.6 million in revenue deficiencies.

Examples of case activity related to revenue

investigations follow.

◆ Inspectors identified the mailer of a

national publication as the perpetrator of

a scheme to misrepresent its eligibility to

mail at the periodical rates of postage.

The case has been referred to the U.S.

Attorney’s Office for prosecution. The

loss to the Postal Service to date is over

$1 million.

FINANCIAL MANAGEMENT REVIEWS
PAGE75

◆ A mailer took advantage of a $30,000

over-setting on its postage meter. The

mailer normally brought the meter in

several times a month for resetting.

After several months passed and the

“free” postage ran out, the mailer

brought the meter in to purchase

postage and waited to see if the Postal

clerk would notice the error. The meter

was reset three times before the Postal

Service discovered the problem. Only

after the matter was brought to the

mailer’s attention did he offer to pay for

the additional postage used. 

◆ A Federal grand jury in Missouri

returned a seven-count indictment

against a Texas man for his involvement

in purchasing postage stamps with counterfeit corporate checks. The suspect

used a scheme that had been previously

identified in a rash of fraudulent stamp

purchases in Tennessee, Alabama, Missouri, and Ohio. Postal Inspectors

obtained information relating to the

involvement of others, which resulted in

a search of a Georgia residence. Seized

in the search was nearly $14,000 in

postage stock, a computer, numerous

color printers, credit card embossing and

scanning equipment, check paper stock,

blank credit card stock, and other related

items. 

◆ Postal Inspectors arrested a Kansas man

for passing forged checks to purchase

coils of postage stamps. The forgeries

started in August 1996, ceased for

approximately two years, then began

again in December 1998. Latent fingerprints taken from the forged checks were

analyzed and a successful match identified the suspect.

◆ The owner of a New York commercial

mail receiving agency pled guilty to possessing and using counterfeit meter

stamps. In addition to receiving four

months in prison, he was ordered to pay

$5,000 in restitution to the Postal Service.

◆ Postal Inspectors arrested a California

man for his participation in a scheme to

fraudulently purchase postage stamps

from various places in northern California. The suspect and his accomplices

stole bank account holder information,

made fraudulent California driver’s

licenses matching bank victim identities,

and generated counterfeit checks to

fraudulently purchase approximately

$166,000 worth of postage stamps.

Inspectors notified bank authorities of

weaknesses in their internal controls

compromising bank account holder

information. Additional charges are

expected as the investigation continues.

EMBEZZLEMENTS

Embezzlement is appropriating property

fraudulently for individual gain. Within the

Postal Service, embezzlements include stealing

from cash drawers by Postal Service or contractor employees; kiting schemes involving Postal

money orders or falsified financial records; and

the theft of merchandise from retail stores.

Postal Inspectors investigated 200

employee embezzlements this reporting period,

with documented losses of $2.7 million. Examples of significant Inspection Service case

activity during the period follow.

◆ A Federal grand jury in Virginia returned

a 12-count indictment against a former

Virginia postmaster for mail fraud,

embezzlement, and making false entries

in the issuance of postal money orders.

The former postmaster was charged with

the embezzlement of $60,179 in money

order funds.

◆ A Florida window clerk was charged with

misappropriating $26,500 in Postal funds.

An investigation was initiated at the

Postal retail store based on reported

shortages and disclosed the clerk

consistently under-reported postage sales

and failed to remit Postage revenues.

During the investigation, Postal Inspectors observed the clerk placing Postal

funds in his pocket. Inspectors recovered

$2,276 pocketed by the clerk. 

◆ The former postmaster of a Maryland

post office pled guilty to the embezzlement of 150 postal money orders, valued

at over $58,000. The former postmaster

made full restitution and was sentenced

to 18 months supervised probation, 250

hours of community service, a $1,000

fine, and ordered to continue mental

health counseling.
PAGE76 FINANCIAL MANAGEMENT REVIEWS
Technology Reviews

OFFICE OF INSPECTOR GENERAL

Y2K and Information Systems

Developmental Reviews

Computer Security

Electronic Commerce

Computer Intrusion

Legislative and Regulatory Reviews

INSPECTION SERVICE

Electronic Commerce

PAGE 77
PAGE78 TECHNOLOGY REVIEWS

OFFICE OF INSPECTOR

GENERAL

Through technology, the Postal Service is

able to deliver more than 650 million pieces of

mail every day, and maintain its network of over

38,000 post offices and facilities. The Postal

Service recognizes that technology is key to productivity and affordability. Its technology strategy is to provide convenient access to all concerned on a daily basis through increasingly

sophisticated retail systems, expansion into new

electronic access channels, and electronic linkages that integrate customer and postal processes. The OIG technology reviews encompass the

Y2K initiative, information systems, information technology infrastructure, developmental

systems, telecommunications, computer security, and computer intrusion. During this period,

the OIG performed 11 reviews in the technology area. Significant reviews are highlighted

below.

YEAR 2000 (Y2K) AND 

INFORMATION SYSTEMS

The Postal Service recognized the criticality of technology in its future and invested heavily in Y2K preparedness - an investment that

paid off! During Y2K preparations, the OIG

continued to provide timely audit support by

evaluating ongoing Y2K efforts to identify issues

and recommend corrective actions. During this

period, the OIG performed independent observations of system tests of critical mail processing

equipment and other mission-critical applications, issued three Y2K reports, and monitored

the Y2K rollover at Postal Service Headquarters

and at its two major data processing centers in

California and Minnesota.

The Postmaster General lauded the OIG’s

contributions to the Postal Service’s Y2K

initiative in a public session with the Board of

Governors. Also, the President’s Council on

Integrity and Efficiency and the Executive

Council on Integrity and Efficiency recognized

the Postal Service OIG’s Y2K oversight role

with the Award for Excellence. This award recognized the team’s efforts that led to “increased

level of senior management involvement, reexamination of the initiative’s scope, and

expansion testing.”

Key OIG efforts on the Y2K initiative are

highlighted below:

◆ The OIG addressed the Postal Service’s

Y2K progress in the critical areas of automated mail processing equipment, critical

suppliers, embedded chips, and technology-dependent facilities. Aside from

remediation of severe and critical computer applications, no other area was as

important to the Postal Service’s Y2K

initiative. The OIG concluded the

Postal Service had made substantial

progress and adequate processes were

developed to make facilities, including

mail-processing equipment, Y2K-ready

before the new millennium. The OIG

recommended the Postal Service place

more emphasis on supplier contingency

planning, establish deadlines to activate

these plans for high risk critical suppliers,

and monitor processing equipment software deployment to ensure installation of

the proper Y2K compliant software.

Management implemented all the OIG

recommendations. (OIG IS-AR-00-001)

◆ In December 1999, the OIG reported the

Postal Service had demonstrated significant progress in making its severe and

critical information systems Y2K compliant, implementing Y2K solutions for its

information technology infrastructure

and mail-processing equipment, completing information system readiness testing,

and determining whether its data

exchange partners would be Y2K ready.

The Postal Service also demonstrated

considerable progress in assessing the

Y2K readiness of its facilities and exterThis section highlights audits, reviews,

and investigations performed by the OIG

and the Inspection Service in the technology area. Also, included at the end of

this section are the OIG legislative and

regulatory reviews. In order to differentiate the work reported by the OIG and

Inspection Service, the pages containing

the Inspection Service work have been

color screened. Report numbers are

shown in parentheses after the narrative,

as appropriate.

Postal Service Management thanked

the OIG for its timely and outstanding efforts in assisting the Postal

Service with its Y2K challenge. 
PAGE79

What is computer “hacking?” 

Computer hacking is an event

in which someone within or

outside the Postal Service

illegally attempts to gain entry

into the Postal Service computer

systems. The OIG is developing

a computer intrusion network

that will enable OIG to detect

and investigate hacking attempts.

nal suppliers. While strides had been

made in these areas, the OIG advised

management that more work was needed

in developing component contingency

and business continuity plans. Management agreed with the findings.

(OIG IS-AR-00-002)

◆ The OIG also addressed the development and testing of continuity and contingency plans designed to mitigate operational failures and the ability of the

Postal Service to recover expeditiously

from such events. The OIG noted the

Postal Service made significant progress

in developing business continuity and

contingency plans. However, a plan had

not been developed for one critical system and other plans were not completed,

well integrated, or adequately tested.

The OIG recommended the Postal Service develop a plan for the omitted critical system, expand testing to those areas

where plans were not fully developed,

and integrate all continuity and contingency plans with other supporting plans.

The OIG also recommended the Postal

Service pursue comprehensive plans for

all severe or critical systems and for highimpact failure scenarios in the long-term.

Management generally agreed with the

findings and recommendations and took

action to mitigate potential problems.

However, management disagreed with

OIG’s recommendation to expand the

testing but planned to require business

owners to provide additional testing justification. (OIG TR-AR-00-001)

◆ Finally, the OIG reviewed the “Day

One” strategy that comprised a comprehensive set of actions to be executed during the last days of 1999 and the first

days of 2000. The OIG noted the Postal

Service established an effective infrastructure and process to communicate,

react to, and track resolution of potential

Y2K failures. The Postal Service also

had developed a complete “Day One”

strategy to identify Y2K problems and

take corrective actions. However, the

OIG determined that, although dedicated resources were available, the Postal

Service needed to further define the critical staff needed for the rollover period

and rehearse its “Day One” strategy.

Management agreed with the findings

and recommendations and took immediate action to mitigate potential problems.

(OIG TR-AR-00-002)

OIG AND POSTAL

MANAGEMENT WORK TO

IMPLEMENT POSTAL-WIDE 

Y2K EMERGENCY RESPONSE

CAPABILITY

In the months prior to the Y2K rollover,

the OIG and Postal management discussed

concerns regarding the potential for computer

intrusion into the Postal Service systems by

unauthorized individuals or groups, particularly

those that could be masked as Y2K disruptions.

The OIG worked with Postal management to

underscore the potential harm to Postal Service

operations from a successful intrusion into the

Postal Service network by unauthorized individuals. The OIG stressed that such a disruption could place critical Postal Service computer systems at risk, degrade the performance of

the Postal Service network, and hamper the

overall function of the Postal Service. 

Postal management requested the assistance of the OIG in establishing a 24-hour

emergency response capability that would

address potential disruptions during the days

preceding and following the Y2K rollover. By

evaluating the programs implemented by other

law enforcement agencies and computer emergency response organizations, the OIG was able

to assist the Postal Service in establishing an

emergency response capability. After coordinating emergency preparedness efforts, several

members of the OIG joined Postal personnel in

staffing the Y2K emergency response teams.

Although there were isolated reports of general

computer problems, which the OIG helped to

assess, no intrusions into the Postal Service network were detected. 

DEVELOPMENTAL REVIEWS

The Postal Service is developing numerous

business systems that will improve performance,

enhance service, and reduce operating costs.

The OIG understands the importance of

reviewing these systems as they are developed

and has completed three audits of major projects currently under development during the

reporting period.

DID YOU 

KNOW?
PAGE80 TECHNOLOGY REVIEWS

TRAY MANAGEMENT SYSTEM 

The Tray Management System automates

the movement and staging of mail between

most mail sorting operations in a processing

plant. The OIG audited this system to determine if cost estimates and projected savings

were reasonable and achievable, and whether

system capacity was adequate to move candidate mail. Despite progress made to date in

designing and deploying the Tray Management

System, the OIG determined the projected

return on investment for the system was overstated and that the Postal Service will incur at

least $27.9 million more in equipment maintenance, labor, and operations disruption costs

than projected. 

The audit also disclosed that system capacity was less than projected, a plan for attrition

maintenance training did not exist, and Phases

II and III of contract administration contained

weaknesses. Management’s comments were

responsive to the majority of issues identified in

the report. However, management did not

agree to revalidate the savings associated with

the Tray Management System or to reassess

whether the continued deployment was in the

Postal Service’s best interest. The OIG and

Postal Service management subsequently

resolved their disagreements.

(OIG DA-AR-00-002)

POS (POINT OF SERVICE) ONE –

VENDOR SOLUTION

At the request of the Postal Service’s Chief

Marketing Officer, the OIG reviewed the benefits of transitioning from two vendors to one for

the POS ONE system. The audit revealed the

cost model reasonably projected the financial

impact of transitioning to one POS ONE vendor. However, the OIG was unable to validate

the overall benefits from such a transition and

determined that relying on one vendor posed

some risks. The OIG did not solicit formal comments but encouraged Postal Service management to carefully weigh the potential risks

against projected benefits prior to relying on

one vendor. Management subsequently decided

to continue with two vendors. 

(OIG DA-LA-00-001)

PHASE I REMOTE ENCODING

CENTER CONSOLIDATION

Last year, the Postal Service announced

that remote encoding center operations would

be consolidated to control overhead costs as

technological improvements reduced the workload at the centers. The OIG assessed Phase I

of the planned consolidation and determined

that it was properly approved and economically

justified, and that policies, procedures, and controls over the process were sufficient. However,

the net cash flow estimated in the initial economic analysis of Phase I was overstated. Postal

Service personnel agreed with the OIG and

revised the estimated cash flows.

(OIG DA-AR-00-001)

COMPUTER SECURITY

Computers and electronic data have

become indispensable to the critical operations

of the Postal Service. The Postal Service relies

upon a massive computer infrastructure to

accomplish and streamline operations, from

managing one of the largest civilian workforces

in the world, to moving billions of pieces of mail

per year. In addition to using information technology to promote efficiency, Postal management has initiated projects intended to bolster

the Postal Service’s position as a major participant in electronic commerce, a strategy that

necessarily requires further reliance upon information technology. Although information

technology has enhanced efficiency and revenue, security issues related to computers place

Postal operations at risk for fraud, inappropriate

disclosure of sensitive data, and disruption of

critical operations and services. 

As the Postal Service continues to transform itself into a technology and service leader

in the digital marketplace, computer security

will translate into competitive advantage by

protecting the Postal Service brand image, providing a secure accessible environment for consumers and business partners, reducing legal and

financial liability, and ensuring service continuity. To that end, the OIG continues to work

with Postal management to improve the overall

computer security posture of the Postal Service.

The OIG is looking at the Postal Service’s

ability to protect its investment in technology

by evaluating computer security. During this

The OIG has been reviewing the new Point

of Service terminals installed at retail

stores nationwide.
PAGE81

What is the OIG’s web

address? 

http://www.uspsoig.gov 

reporting period, the OIG completed two

computer security reviews. The results of these

and other OIG computer security initiatives

during the period are highlighted below.

PRIVACY ACT ALLEGATIONS

Allegations involving Privacy Act violations concerning four Postal Service systems

prompted the OIG to conduct a review. The

complainant alleged that Postal Service security policies for systems of records were not followed and recommendations provided by the

Postal Service’s National Computer Security

Group were not implemented. The OIG substantiated the systems security allegations but

could not substantiate specific “willful” Privacy

Act violations. The OIG recommended Postal

Service management reemphasize existing

restrictions on the use of production data in test

facilities, and that the necessary systems security approvals be obtained before moving production data to test facilities. Postal management

concurred with three of OIG’s recommendations and provided acceptable alternatives as

solutions for two other recommendations.

(OIG IS-AR-00-003)

OIG EFFORTS TO MITIGATE

COMPUTER SECURITY RISKS 

The OIG issued its first Computer Security Advisory this reporting period to assist Postal

management in improving computer security.

This advisory was prepared from information

received from Federal law enforcement and

intelligence sources as well as major computer

security organizations. The advisory addressed

“denial of service” attacks, the subject of intense

press coverage and multiple criminal investigations. While the main advisory was prepared to

address information technology management

concerns, supporting technical supplements

were written to communicate vital technical

information to network administration personnel. Together, the Computer Security Advisory and technical supplements outlined the

“denial of service” security problems relevant to

Postal computer systems and provided information regarding risk and damage mitigation.

Such advisories are intended to provide officials

with technical information to identify, prevent,

and respond to attacks on Postal web sites and

other vital computer systems, and to assist in

reporting criminal attacks to the OIG.

(OIG CI-CSA-00-001)

COMPUTER SECURITY

CONCERNS IDENTIFIED TO NEW

CHIEF TECHNOLOGY OFFICER 

Since computer security issues affect financial, operational, strategic, and legal concerns

within an organization, implementing effective

security policy is largely dependent upon the

support of high-level decisionmakers. In order

to promote organization-wide computer security within the Postal Service, the OIG reported

to the Postal Service’s Chief Technology Officer

on the need to take immediate action to address

Postal-wide computer security issues identified

at Federal agencies by Congress and the GAO.

These issues included use of warning banners,

outdated security policy, and computer security

organizational structure. (OIG CI-LA-00-001)

ELECTRONIC COMMERCE

Businesses world-wide are facing the

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

Postal Service is expecting little or no growth in

its traditional markets (e.g., First-Class Mail)

and needs to develop new sources of revenue.

The Postal Service views electronic commerce

as a strategy for obtaining new sources of revenue. Several of these strategies in electronic

commerce are beginning to emerge. For

instance, the Postal Service is building a strong

Internet presence and working on becoming

the “carrier of choice” for merchandise purchased on the Internet. However, the Postal

Service faces a formidable challenge in implementing electronic commerce strategies for the

new century. 

Clearly, electronic commerce will forever

change the way the Postal Service conducts

business. The OIG has established a separate

electronic commerce team directly involved in

day-to-day consultations and reviews of the

electronic commerce initiative, and a number

of other teams are available to perform related

reviews and investigations. In addition to the

work being done in other related areas, ongoing

OIG electronic commerce-related activities

include: (1) a Postal-wide survey of electronic

DID YOU 

KNOW?
PAGE82

The Computer Intrusion Team uses the

latest technology to investigate

computer hacking attacks on Postal

Service systems.

commerce; (2) an examination of the electronic commerce organizational structure, planning

and budgeting process; and (3) a review of competition and management of mail from Internet

retailers. The OIG will continue to help the

Postal Service move successfully and securely

into the electronic marketplace of the 21st century. 

COMPUTER INTRUSION

The Computer Intrusion Team investigates

violations of federal law pertaining to computer

activity such as the Computer Fraud and Abuse

Act. Law enforcement activities include developing and implementing intrusion detection

systems for law enforcement purposes, working

with Postal management in responding to computer-based attacks, and conducting criminal

investigations of attacks. During this period,

the OIG completed one review and closed two

investigations in this area.

OIG REVIEWS ALLEGATION

MADE BY “WATCH-DOG”

GROUP

At the request of Postal Service management, the OIG conducted a review of allegations made by an outside agency that proclaims

itself as the “Watchdog over the Postal Service.”

The outside agency alleged that repeated visits

by Postal Service employees to the organization’s web site were causing service disruptions.

The OIG indicated that, in at least two locations, the Postal Service Government Relations’ web site had a direct link to the outside

organization’s web site. As a result of these

links, over 1,000 visits per day were made by

Postal Service employees to this web site. The

OIG determined that this high number of visits

could be construed as excessive. The OIG further suggested that steps be taken to remove the

links to the outside web site. Postal management disagreed saying that there was no evidence of abuse or excessive usage by Postal

employees. The OIG intends to reexamine this

issue as part of a future review of the Postal

Internet. (OIG CI-MA-00-001)

LEGISLATIVE AND REGULATORY 

REVIEWS

During this reporting period, the OIG did

not identify any significant legislation or regulations affecting Postal Service technology. 

TECHNOLOGY REVIEWS
INSPECTION SERVICE

The Inspection Service plays an important

role in the support of Postal Service e-Commerce initiatives and technical applications.

The Inspection Service’s Computer Crimes and

Commerce Units and their Information Technology Division utilize the latest technology to

facilitate their work.

ELECTRONIC COMMERCE

The Inspection Service monitors the

development of new Postal electronic products

and services as well as provides advice to Postal

managers on the security, loss prevention, revenue protection, and evidence retention capabilities of the electronic products and services.

Members of the Inspection Service units have

developed and conducted training on computer

crimes, particularly those involving the Internet. The units also provide program management and guidance to field divisions conducting

online investigations.

To increase the technical knowledge and

skills of Postal Inspectors, the Inspection Service developed a two-day training course for

Postal Inspectors and others entitled Computer

Searches and Internet Investigations. The course

provides Postal Inspectors with a basic introduction to new investigative and evidentiary

issues relating to high-technology crime, and

introduces them to the Internet as a valuable

source of information and as a potential crime

scene. In November, reporters from ABC’s

broadcast news program “20/20” visited the new

computer class to highlight the new role of

Postal Inspectors as “cybercops.”

The Inspection Service maintains a security infrastructure for national computing and

telecommunications needs, including developing and maintaining business applications to

support core business functions.

While the Postal Service worked to mitigate the potentially debilitating effects of the

Y2K calendar rollover, the Inspection Service

provided continuous security, emergency planning advice, and a Recovery Management Plan.

The Postal Service provided reports on Postal

conditions related to Y2K and helped prepare

personnel to react to potential problems, based

upon Inspection Service crisis management

plans.

PAGE83
PAGE84
Labor Management

Reviews

OFFICE OF INSPECTOR GENERAL

Violence in the Workplace

Workplace Climate

Healthcare

Postal Employees Safety Enhancement Act

Legislative and Regulatory Reviews

INSPECTION SERVICE

Workplace Climate

Postal Robberies

Drugs in the Workplace

Workers’ Compensation

PAGE 85
PAGE86 LABOR MANAGEMENT REVIEWS

OFFICE OF INSPECTOR

GENERAL

The OIG has identified the Postal Service’s

labor management area as one of the major performance and management challenges that

must be addressed if the Postal Service is to be

competitive in the 21st century. The OIG supports the Postal Service in its overall goal of fostering an inclusive and welcoming workplace

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

management area deals with issues involving

workplace violence, workplace climate, health

care, and the Postal Employees Safety Enhancement Act. During the period, the OIG conducted 44 reviews in this area.

VIOLENCE IN THE WORKPLACE 

The Postal Service widely acknowledges

concerns about violence in the workplace.

Both the OIG and the Postal Service are dedicated to the prevention of violence and consider early intervention and cooperation with

management and employee groups essential.

The OIG recently conducted 12 reviews of violence in the workplace, several of which are presented below.

INCREASED RISK FOR VIOLENCE

AT A SOUTHEAST AREA POST

OFFICE 

The OIG reviewed and substantiated allegations of a hostile working environment that

increased the risk for violence at a Southeast

Area post office. The audit disclosed evidence

that some managers verbally abused, harassed,

and intimidated employees. There was also evidence that managers singled out employees for

unwarranted discipline, resulting in monetary

awards and settlements totaling about $70,000

in back pay to 13 employees. The audit further

disclosed district officials knew of employees’

concerns for about three years, but did not

address employee issues or respond to Congressional inquiries in a timely manner. Management generally agreed with the recommendations, with the exception of implementing disciplinary action against the managers identified.

Management indicated that corrective action

was appropriate and identified specific actions

initiated for these managers. The Southeast

Area also issued guidance to district managers in

an effort to prevent similar incidents at other

facilities. (OIG LM-AR-00-001)

HOSTILE WORK ENVIRONMENT

IN PUERTO RICO POST OFFICE

The OIG identified evidence of a hostile

work environment at a Puerto Rico Metro Area

post office but found that Postal management

had improved the environment during the last

two years. The audit was initiated in response

to requests from the Chairman of the Subcommittee on the Postal Service to review allegations that threats and assaults had taken place in

the post office. The OIG confirmed that physical altercations had occurred between managers and craft employees. However, the OIG

concluded that district management took

appropriate action to resolve the issues and, as

evidenced in a December 1999 climate survey,

was successful in improving the workplace climate. Postal management elected not to provide written comments on the report. 

(OIG LM-LA-00-002 and OIG LR-CR-00-032)

MANAGEMENT TOOK ACTION

TO HANDLE POTENTIAL HOSTILE

WORKING ENVIRONMENTS

The OIG reviewed several allegations

involving potential hostile working environments. 

◆ The OIG reviewed allegations of unethical conduct and abusive behavior by a

Postal supervisor in a Great Lakes Area

post office. The OIG review revealed

that an employee and workplace intervention analyst was assigned to review

the situation at the post office. AddiThis section highlights audits, reviews,

and investigations performed by the OIG

and the Inspection Service in the Labor

Management area. Also included at the

end of the section are the OIG legislative

and regulatory reviews. In order to differentiate the work reported by the OIG

and Inspection Service, the pages containing the Inspection Service work have

been color screened. Report numbers are

shown in parentheses after the narrative,

as appropriate.

The OIG Labor Management Team

evaluates Postal Service organizational

climate and employee relations issues.
PAGE87

Are all Hotline complaints

confidential? 

The identity of individuals who

make complaints or provide

information regarding alleged

wrongdoing is held confidential

unless the individual gives

permission for the disclosure of

his/her name, or if disclosure is

required by law. 

tionally, the OIG confirmed that Postal

officials conducted conflict management

training at the facility, and that a climate

task force is now in place at the post

office to provide continuous monitoring

and guidance in addressing the workplace climate situations. Further, the

complainants relayed that the overall situation had greatly improved and that in

their opinion, the climate task force

made a dramatic difference. 

(OIG LM-CR-99-012)

◆ The OIG reviewed allegations that a

manager caused a hostile working environment in a Southeast Area processing

and distribution center. The OIG determined that management implemented

procedures to deal with the employees’

concerns and that the manager who was

the focus of the allegations was reassigned. This manager also received

training regarding interpersonal skills

and behavior. (OIG LM-CR-00-020)

◆ The OIG reviewed a Louisiana Postal

Service employee’s allegation of sexual

harassment and a hostile working environment. The review was initiated in

response to a request from the Chairman

of the Subcommittee on the Postal Service to investigate these allegations. As

a result of the OIG review, the area manager for human resources took action and

initiated an investigation into the

employee’s issues. In addition, the area

manager conducted a workplace climate

assessment at the post office. 

(OIG LM-CR-00-027)

◆ During this reporting period, the OIG

initiated a large scale review of 26 district offices located in the Mid-Atlantic,

Pacific, Southeast, and Western Areas,

in an ongoing effort to determine the

impact of Postal Service compliance with

violence prevention and response program criteria. Area and district officials

have been briefed on the findings for

their respective programs. Reports on all

26 districts have been drafted and will be

reported in the next semiannual report.

WORKPLACE CLIMATE 

The Postal Service believes that signs of

workplace stress are present, and that it needs to

take comprehensive steps to improve the workplace environment. This must be accompanied

by aligning human resources with business

requirements. To assist the Postal Service in

addressing workplace environment issues, the

OIG conducted 24 reviews of workplace climate and conditions, three of which are highlighted below.

MANAGEMENT FOLLOWED

APPROPRIATE POLICIES AND

PROCEDURES

The OIG reviewed several instances

involving application of Postal policies and procedures. 

◆ The OIG evaluated allegations made by

a Kansas Postal Service employee regarding unjust suspension and removals from

the Postal Service. The Chairman of the

Subcommittee on the Postal Service

requested a review of reprisal allegations

by Postal Service management as a result

of the employee’s contact with the Subcommittee. The OIG determined that

there was no evidence of misconduct on

the part of Postal Service management

and that the employee’s removals were

not related to communications with

Congress. Further, the OIG found that

the employee was terminated on both

occasions for unacceptable conduct. In

addition, the employee has returned to

duty as a letter carrier and, as a result of

arbitration, has recovered some back pay. 

(OIG LM-CR-99-009)

◆ The OIG reviewed allegations made by a

Postal Service employee regarding denial

of a request to reinstate 160 hours of sick

leave because the employee was not

given full-time status until the three year

temporary limit expired and the benefits

were lost. The OIG found that the

Postal Service determination was in

accordance with established procedures

and policies, which had been properly

applied. (OIG LM-CR-00-004)

EMPLOYEE AWARDED BACK PAY

The OIG reviewed an allegation made by

an employee that the Postal Service owed her

back pay as a result of an on-the-job injury. As

a result of the OIG inquiry, the Postal Service

DID YOU 

KNOW?
PAGE88

Will the OIG investigate allegations of retaliation when

wrongdoing is reported to

them? 

The OIG investigates all complaints of management retaliation

received from Postal Service

employees who had previously

reported wrongdoing to the OIG.

LABOR MANAGEMENT REVIEWS

submitted the claim for processing and the

employee subsequently was awarded over

$8,000 in back pay. (OIG LM-CR-OO-030)

HEALTH CARE

For FY 1999, the Postal Service paid over

$580 million for employee injury claims, an $18

million increase over FY 1998. Because the

Postal Service is self-insured for workers’ compensation costs, they make such payments out

of operating funds. Thus, the Postal Service’s

net income is affected every time an employee is

injured and unable to return to work. Containing these costs continues to be a key to the

Postal Service’s financial well being.

The OIG conducts audits and investigations designed to prevent and detect fraud,

waste, abuse, and mismanagement related to

Postal Service health care program costs, and

assists in the protection of the health and welfare of the Postal Service’s workforce. The OIG

has initiated proactive investigative projects to

identify issues affecting health care providers.

Other ongoing OIG investigations include

improper billing practices, such as false claims

and false statements. In addition, the OIG is

evaluating the increase in medical costs within

the injury compensation program and has other

related reviews ongoing.

In the past six months, the OIG completed

six projects—four investigative reviews and two

management reviews—resulting in a $155,000

recovery and one conviction. In addition, five

ongoing investigations have resulted in three

arrests. Some of the OIG’s more significant initiatives in this area are highlighted below.

INAPPROPRIATE USE AND 

UNTIMELY SUBMISSION OF

INJURY CLAIM FORMS

◆ The OIG received a Hotline complaint

concerning the Postal Service’s inappropriate use of an injury claim form. The

OIG conducted a review of the use of the

form to obtain employee medical information from health care providers. The

review disclosed that since mid-1994, the

office staff had inappropriately used the

injury claim form as an authorization to

request employees’ medical information

from health care providers. As a result,

Postal Service management issued a policy letter instructing appropriate personnel not to use the injury claim form for

the release of medical information. This

would eliminate the practice of misrepresenting the claimants’ authorization and

violating the employees’ privacy. The

OIG also recommended that management avoid misinterpretation of the language on the forms and ensure timely dissemination of Health and Resource Management instructions. Postal management agreed and has taken corrective

actions. (OIG HC-MA-00-001)

◆ The OIG received a Hotline complaint

concerning the untimely submission of

injury claims in a New Mexico district.

The OIG conducted a review of injury

claims submissions in the district and

found that Postal Service managers were

submitting injury claims an average of 21

days late for 246 injury claims that were

reviewed. The review showed that late

claim submissions occurred because the

district senior management did not

enforce internal policies and procedures.

To correct these deficiencies, the OIG

suggested that Postal Service managers

develop a policy detailing supervisory

responsibilities for processing injury

claims and establish sanctions for supervisors who fail to submit injury claims

timely. In addition, injury compensation

training should be required and conducted for all Postal Service supervisors.

Management agreed with most of the

recommendations but did not agree with

mandatory injury compensation training.

Management has either taken or is planning to take corrective action. 

(OIG HC-MA-00-002)

HEALTH CARE PROVIDERS

INVESTIGATED

◆ In an investigation of a health care

provider, jointly conducted by the OIG

and other Federal law enforcement agencies, a settlement agreement was reached

by an Oklahoma-based physician billing

company and its founder to pay the Government and 28 states $15 million. This

payment was made to resolve allegations

of false billings to Medicare, Medicaid,

the Defense Department’s TRICARE

DID YOU 

KNOW?
PAGE89

programs, the Federal Employee Health

Benefits Program, and the Office of

Workers’ Compensation Programs. The

settlement agreement resolved allegations that the firm and its founder typically submitted claims for more extensive

procedures than rendered, and billed for

services more extensive than those actually provided by physicians. The Postal

Service recovered $155,500 from the settlement agreement.

◆ The OIG conducted an investigation of

a health care provider based upon information received from the Inspection Service that an employee and physician

were in collusion regarding the employee’s disability claim. The investigation

revealed that the employee who had

been on disability for the last 18 years

performed work on the physician’s residence while collecting disability payments. Subsequently, the employee was

indicted for filing false claims. Federal

prosecution was declined on the physician.

◆ An OIG-led task force initiated a joint

investigation into fraudulent billing of

medical claims by a medical provider.

The provider was fraudulently billing

medical clinics for services not rendered

to the Postal Service and state employees

under the Workers’ Compensation Program. Since December 1998, the

provider billed the Postal Service for

over $400,000 in medical services. Four

search warrants were executed and

numerous records were seized. The

investigation is continuing. 

◆ As a result of a multi-agency task force

that included the OIG, a California

physician was convicted in federal court

of 41 counts of mail fraud, wire fraud,

bankruptcy fraud, false statements, and

conspiracy to accept and pay kickbacks.

The physician was accepting kickbacks

for patient referrals, signing medical certificates for durable medical equipment

that was not needed, and fraudulently

using medical provider numbers to bill

Medicare and Medi-Cal. Sentencing is

pending.

OIG RECOUPS DISABILITY

OVERPAYMENT

During the investigation of a health care

provider for alleged double billing, the OIG

found that an overpayment was made to a former Postal Service employee who was receiving

disability compensation. The OIG requested

that the Department of Labor, Office of Workers’ Compensation Programs, credit the Postal

Service for the overpayment. The Postal Service was reimbursed over $18,000. The investigation is continuing.

HEALTH CARE SWINDLERS AND

DRUG DIVERTER ARRESTED

◆ As a result of a joint task force investigation that included the OIG, two individuals were arrested and charged in state

court for their alleged participation in a

health care fraud scheme. The individuals involved fabricated or stole health

care provider names, then submitted

fraudulent claims for payment to insurance programs. Prosecution is pending.

◆ As a result of another joint task force

investigation, a search warrant was executed and an individual was arrested for

defrauding the Federal Employees Health

Benefit Program. The scheme involved

the diversion of expired and substandard

drugs to health care providers, thus

endangering the health and well-being of

Postal Service employees. Prosecution is

pending.

MEDICAL PROVIDERS INVESTIGATED

◆ The OIG received information that disclosed billing irregularities by a physician

providing services to a Postal Service

employee for a work-related injury. The

physician used multiple employment

identification numbers on claim forms

that resulted in the issuance of duplicate

payments. Federal prosecution was

declined against the physician; however,

state charges are pending against the

employee.

◆ The OIG initiated another investigation

based upon an allegation that a physician

double-billed the Postal Service for
PAGE90 LABOR MANAGEMENT REVIEWS

providing services. The Department of

Labor denied payment after being

notified by the Postal Service Injury

Compensation Office. Federal prosecution was declined.

THE POSTAL EMPLOYEES’ 

SAFETY ENHANCEMENT ACT

The Postal Employees Safety Enhancement Act, enacted on September 28, 1998,

changed the status of the Postal Service as an

employer under the Occupational Safety and

Health Act of 1970. As a result, the Postal Service can be cited, fined, and referred for prosecution by the Occupational Safety and Health

Administration for safety violations. This Act

was meant to assure safe and healthy working

conditions for Postal workers.

The Postal Service is continuing to implement the Postal Employees Safety Enhancement Act to improve workplace safety. In complying with the act, Postal Service officials will

have to review and modify existing safety and

health policies, programs, procedures, systems,

training, and education programs. The OIG

completed reviews of unsafe working conditions

during this period.

FIRST VIDEO REPORT DOCUMENTS

UNSAFE WORKING CONDITIONS

The OIG substantiated employee allegations that working conditions at an aging

Southwest Area Postal facility were unsafe.

Using video equipment, the OIG documented

water leaks that created electrical and fire hazards and lead-based paint that had deteriorated.

Further, the video demonstrated that employees

had limited protection from falling debris. The

OIG concluded that these conditions increased

the risk of employee and customer injuries,

compromised Postal Service property and the

security of the mail, and constituted potential

violations of Occupational Safety and Health

Administration requirements. Postal management agreed to implement all corrective actions

addressing all reported issues, including relocating operations until conditions were corrected. 

(OIG LM-AR-00-002 and OIG LM-VR-00-001)

LEGISLATIVE AND REGULATORY 

REVIEWS

SUBPOENA AUTHORITY 

JEOPARDIZED BY NEW PRIVACY

STANDARDS

The OIG commented on a proposed

Department of Health and Human Services rule

defining standards of privacy for individually

identifiable health information and restricting

the OIG’s ability to obtain individual health

care information through the use of administrative subpoenas. The proposed rule would establish a three-part test requiring that:

◆ the information be relevant and material

to a legitimate law enforcement inquiry;

◆ the request be as specific and narrowly

drawn as is reasonably practicable; and

◆ the information be purged of unique,

individual identifiers.

The OIG expressed concern that the

three-part test would restrict its ability to obtain

individual health care information through its

administrative subpoena process. The OIG also

expressed concern that the second part of the

three-part test would require Inspector General

subpoenas to be so narrowly drawn that it would

impede the OIG’s ability to obtain information

during the course of a lawful audit or investigation. In addition, the rule does not indicate

how the three-part test will be met or who will

make that determination.

The OIG recommended the drafters insert

language exempting Inspector General subpoenas from the new three-part test. In response to

comments provided by the OIG and others, the

Department of Health and Human Services

agreed to amend the proposed rule.

Examples of safety and health hazards

documented in an OIG video report.
PAGE91

INSPECTION SERVICE

The Inspection Service reviews a number

of labor management areas including: workplace climate, Postal robberies, drugs in the

workplace, and workers’ compensation investigations. 

WORKPLACE CLIMATE

The Inspection Service is committed to

employee safety in the workplace, and partners

with Postal management and employee groups

in early interventions and other efforts to prevent violence in the workplace. There were

230 arrests for assaults and threats, up from 127

from the last reporting period.

◆ An individual was sentenced to 29 years

in prison for attempted murder, aggravated battery with a firearm, armed violence, and aggravated discharge of a

firearm for the shooting of an Illinois letter carrier. The letter carrier was shot

five times while delivering the mail. An

investigation of the incident determined

the shooting was over a dispute involving child support. The carrier recovered

fully.

◆ Postal Inspectors and local police detectives arrested an individual for the physical assault of a letter carrier delivering

mail in New York. The assault arose

from an earlier confrontation between

the carrier and a Postal Service customer

concerning delivery of a Social Security

check. During the confrontation, one of

the customer’s companions pistolwhipped the carrier. The carrier was not

seriously hurt. The individual was

charged with assault.

◆ An individual pled guilty to one count of

shooting a mail handler in North Carolina as the employee was attempting to

assist a coworker. The employee’s former

friend was arrested for the shooting.

Sentencing is pending.

POSTAL ROBBERIES

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

to facility, carrier, and other Postal robberies to

deter these attacks on employees. Carrier robberies are generally committed for the purpose

of stealing mail and Postal keys to mail receptacles, while robberies of facilities are committed

for cash and money orders. The Inspection Service investigated 53 robberies in this reporting

period. Robbery-related arrests and convictions

for this semiannual period totaled 34 and 56,

respectively. Aggressive prosecution and stiff

sentences are sought for Postal robbers. Examples of significant investigations follow. 

◆ An individual was sentenced to 39 years

and 7 months in prison for armed robberies of post offices in West Virginia

and New Jersey. The individual was

ordered to pay over $22,000 in restitution jointly with a co-conspirator, who

was previously sentenced to 11 years and

6 months in prison. 

◆ Three individuals were sentenced for a

series of armed robberies that included

post offices in Virginia. The suspects,

respectively, were sentenced to 124 years

and 4 months in prison and a total of

over $216,000 in restitution; 26 years

and 10 months in prison and over

$103,000 in restitution; and five years in

prison, three years’ probation, and restitution of $3,790. 

◆ An individual was convicted for an

armed robbery of a Postmaster at a post

office in North Carolina. The individual

was sentenced in Federal court to serve

13 years and 4 months in prison, make

restitution of over $2,000, assessed a fine

of $4,000, and required to pay a special

assessment of $200. 

◆ An individual was convicted in Federal

court for the armed robbery of a New Jersey post office. The individual was sentenced to 32 years and 4 months in

prison. 
PAGE92

What should you do if you

receive a mailing promising

you a free prize, or if you

have been victimized in a free

prize promotion through the

mail?

You should contact your local

postmaster or the nearest 

Inspection Service office.

◆ A Postal contract driver reported to

Postal Inspectors of being robbed at gunpoint while transporting the registry

pouch from a post office to a general mail

facility in Maryland. The driver stated

the suspect approached the truck, opened

the passenger side door, displayed a semiautomatic handgun and entered the

truck and ordered him to drive the truck

to a remote location where he later took

possession of the registered pouch. The

registered pouch contained $18,000 in

U.S. currency, $2,294 in checks, and several registered mail pieces. Two individuals were arrested by Postal Inspectors and

pled guilty in Federal court to theft of

government property. They were sentenced to a combined 12 months in

prison, 8 years supervised probation, 6

months home detention, and ordered to

pay $37,320 in restitution to the Postal

Service.

DRUGS IN THE WORKPLACE

Postal Inspectors also investigate the dealing and selling of narcotics by Postal employees

or others while on Postal property or on duty.

Information regarding the possession or personal use of illegal drugs by Postal employees is

referred through Postal management to the

Employee Assistance Program for attention.

During this reporting period, Postal Inspectors

arrested 13 individuals for the sale of drugs on

Postal property.

◆ A letter carrier in Illinois was arrested for

selling crack cocaine and marijuana

while on duty. During the interview, the

individual admitted to selling drugs and

using marijuana on a daily basis.

◆ A letter carrier in California was arrested

for distribution of marijuana while delivering mail. Subsequent to the arrest, the

carrier confessed to selling drugs.

◆ After Postal Inspectors received an

anonymous call regarding the narcotic

usage and trafficking by a California letter carrier, an undercover operation corroborated the allegation. The carrier sold

marijuana to an undercover Inspector on

three occasions while delivering mail.

Following the arrest, the carrier admitted

to narcotics trafficking. The carrier was

charged in state court with distribution of

drugs. The carrier pled guilty and was

sentenced to 180 days in jail (suspended)

and 3 years probation.

WORKERS’ COMPENSATION

The Inspection Service investigates fraudulent claims and receipt of benefits by individual

employees. Unlike other Federal agencies,

these claims are paid from Postal revenues, not

appropriations, thereby affecting the Postal Service’s net income.

Prosecution of workers’ compensation

fraud serves as a deterrent and prevents future

benefit payments from being made to violators.

Normally, prosecution is based on showing that

the allegedly disabled claimant is receiving outside earnings and failing to report them to the

Department of Labor. Inspection Service investigations resulted in $66.4 million in long-term

and continuation-of-pay cost savings for this fiscal year to date, compared to $60.6 million for

the same period last year. During this reporting

period, 29 individuals were arrested for workers’

compensation fraud. The following are a few

examples of court action for this type of infraction. 

◆ A former Maryland letter carrier was sentenced in the District of Columbia to

four months’ home detention, five years’

probation, and ordered to pay restitution

of $20,000 at a rate of $125 per month.

The letter carrier received workers’ compensation benefits while operating a septic tank business and failed to report her

activity and earnings to the Department

of Labor as required. As a result of the

investigation, future cost savings of over

$446,000 were realized by the Postal Service.

◆ A former California clerk was sentenced

in Washington to 40 days’ home confinement, 3 years’ probation, and $1,000 in

restitution. The former clerk received

workers’ compensation benefits while

claiming disability. As a result of an

Inspection Service investigation, successful prosecution was based solely on the

employee exceeding physical activity limitations. Future cost savings of over

$739,000 to the Postal Service will be

realized. 

LABOR MANAGEMENT REVIEWS

DID YOU 

KNOW?
PAGE93

◆ A former Florida letter carrier was sentenced to five months’ imprisonment,

three years’ probation, and ordered to

pay over $27,000 in restitution. The former employee received workers’ compensation benefits while working a construction job and failed to report her activity

and her income to the Department of

Labor. An Inspection Service investigation determined that the claimant’s physical activities exceeded her medical

restrictions and also revealed her outside

employment. As a result of the Inspection Service investigation, future cost

savings of over $943,000 were realized by

the Postal Service.

◆ A former Texas letter carrier was sentenced in the Northern District of Texas

to five years’ probation, six months’

home confinement with electronic monitoring, and court ordered restitution of

over $18,000. His retirement of $2,275

was immediately payable toward the

restitution. The letter carrier was convicted for claiming total disability due to

an injury of his right foot while concealing his employment as a carpet installer.

Future cost savings to the Postal Service

of over $896,000 will be realized.
PAGE94
Oversight Reviews of

Inspection Service 

OFFICE OF INSPECTOR GENERAL

Oversight of Inspection Service

Legislative and Regulatory Reviews

PAGE 95
PAGE96 OVERSIGHT REVIEWS OF INSPECTION SERVICE

OFFICE OF INSPECTOR

GENERAL

One of the primary reasons the OIG was

established in the Postal Service was to provide

oversight of Inspection Service activities. The

OIG’s work in this area provides an independent voice with objective information and

analysis of Inspection Service operations and

issues. 

OVERSIGHT OF THE 

INSPECTION SERVICE

The OIG seeks to review and resolve all

complaints received against the Inspection Service. During this reporting period, the OIG

completed three oversight reviews, two of

which are highlighted below.

SENSITIVE SECURITY CLEARANCE

PROCESS FOR NON-INSPECTION

SERVICE POSITIONS 

The OIG reviewed the Postal Service’s

process for determining the security clearance

levels for non-Inspection Service positions and

concluded that the process could be improved.

Specifically, existing guidance did not clearly

establish who should determine sensitive clearance requirements or explain how to determine

the appropriate clearance levels. As a result,

managers and human resources personnel each

assumed the other had responsibility to determine whether a sensitive clearance was needed

and the appropriate clearance level.

The OIG suggested that the Chief Postal

Inspector issue guidance that clearly assigns

responsibility for determining appropriate clearance levels and identifies how the determinations should be made. Management stated that

the Administrative Support Manual would be

revised to clarify any misunderstandings. 

(OIG OV-MA-00-001)

ALLEGATIONS CONCERNING

1998 LEADERSHIP CONFERENCE

– REVISED REPORT

The OIG reported in its October 1999

Semiannual Report to Congress that it had

reviewed a Hotline allegation that the Inspection Service abused and wasted Postal funds at

its FY 1998 leadership conference. To ensure

timely dissemination of the information contained in the report, the OIG elected to publish

the report without management comments.

Subsequently, the OIG received management

comments and published a revised report during

this reporting period.

The revised report disclosed certain expenditures and agenda items for the FY 1998 Leadership Conference appeared unnecessary or

extravagant, and some workshop topics were

not directly related to the Inspection Service

mission. The OIG suggested that future workshops be mission-related, expenditures be centrally controlled, the cost of mementos be modest to avoid the appearance of extravagance,

and that conference publications be limited to

material that relates to the mission of the

Inspection Service.

Management agreed that future workshops

be mission-related and conference expenditures

be centrally controlled. Management further

stated that the mementos were presented as

informal awards consistent with the Postal Service’s employee award program and the conference publication was related to the mission of

the conference and of the Inspection Service.

Management further stated that they will more

closely monitor the written content of future

publications to avoid detracting from the publication message. The OIG responded that the

mementos were not given in accordance with

the Inspection Service and Postal Service

awards programs, the conference bulletin was

not limited to mission-related material, and the

expenditures associated with the bulletin were

not consistent with those of similar Postal Service conferences. These issues remain unresolved. (OIG OV-MA-99-003(R))

This section highlights audits, reviews,

and investigations performed by the OIG

in conducting its oversight of the Inspection Service. Also included at the end of

this section are the OIG legislative and

regulatory reviews. Report numbers are

shown in parentheses after the narrative,

as appropriate.

The OIG reviewed the Inspection 

Service’s 1998 Leadership Conference

expenses, including this conference

publication.
PAGE97

REVIEW OF COMPLAINTS

REGARDING THE INSPECTION

SERVICE

The OIG’s oversight of the Inspection Service provides customers, employees, and other

interested persons with an independent avenue

to address their complaints. At the same time,

the OIG provides the Inspection Service with

an unbiased review of accusations that, if left

unresolved, could harm its reputation as a professional law enforcement agency. During this

reporting period, the OIG received 21 new

complaints, and closed 27 Inspection Servicerelated Hotline complaints as shown on the

chart on this page.

MONITORING INSPECTION 

SERVICE INTERNAL 

INVESTIGATIONS 

The OIG’s Oversight team is responsible

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

employees. These investigations, which are

assigned to the Inspection Service Office of

Inspections at National Headquarters, are conducted when there are allegations of employee

misconduct that affect the performance of their

duties, or when managers have information of

employee misconduct. As of the beginning of

FY 2000, the Office of Inspections had 28 open

internal investigations. Sixteen cases were

closed during the first two quarters of the fiscal

year, while 41 cases remained open as of

March 31, 2000.

LEGISLATIVE AND REGULATORY

REVIEW

OIG’S OVERSIGHT ROLE HAS

BEEN EXPANDED

The Deceptive Mail Prevention and

Enforcement Act, PL 106-168, was enacted on

December 12, 1999, to curtail the activities of

disreputable operators of mailed sweepstakes

and games of chance. Appendix H describes in

greater detail how the Act expands the OIG’s

oversight and reporting responsibilities and the

investigative authority of the Postal Service.

Inspection Service-Related

Hotline Cases Closed During

This Semiannual Period

REFERRED TO 

UNDER REVIEW INSPECTION SERVICE

POSSIBLE SYSTEMIC ISSUES

16

5

6
PAGE98 OVERSIGHT REVIEWS OF INSPECTION SERVICE
Other Significant

Reviews

OFFICE OF INSPECTOR GENERAL

Executive Investigations

Legislative and Regulatory Reviews

INSPECTION SERVICE

PAGE 99

Physical Security 

Narcotics Offenses and Trafficking

Child Exploitation

Prohibited Mail

Postal Burglaries

Mail Fraud

Fraud Against Consumers 

Fraud Against Businesses 

Fraud Against the Government

Money Laundering
PAGE100

OIG Investigations Closed

During This Semiannual Period 

SUBSTANTIATED COMPLAINTS

SPECIAL INVESTIGATIONS

UNSUBSTANTIATED COMPLAINTS

16

7

2

How is the OIG funded? 

The OIG budget is approved 

by the Governors. Postal 

revenues fund the OIG. 

OTHER SIGNIFICANT ISSUES

OFFICE OF INSPECTOR

GENERAL

In addition to reviews summarized earlier

in this Semiannual Report, the OIG has completed 41 reviews of other significant issues

related to Postal Service operations. 

EXECUTIVE INVESTIGATIONS

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

and has over 25 ongoing investigations of allegations involving criminal violations and misconduct, including retaliation against individuals who have previously provided the OIG with

information. During this period, the OIG

closed 25 cases as shown in the chart. Examples

of two recent investigations are as follows: 

◆ In an investigation of a Postal Service

Career Executive Service employee, the

OIG determined that the employee misused his government-issued Citibank

Credit Card for personal purchases. The

determination was based on interviews of

Postal Service personnel and examination of records of the Citibank charges.

The employee admitted to using the

Citibank Credit Card for approximately

$7,000 in personal purchases. 

◆ In another investigation of a Postal Service Career Executive Service employee,

the OIG determined that the employee

improperly used a Postal Service vehicle

and employee driver for personal transportation for a period of approximately

21

⁄2 years. Although the United States

Attorney’s Office declined prosecution,

administrative action was initiated

against the executive involved. The

executive was reduced in grade, reassigned, and agreed to reimburse the

Postal Service for the costs associated

with this abuse. 

LEGISLATIVE AND REGULATORY

REVIEWS

WEBSTER COMMISSION 

RECOMMENDS CONSOLIDATING

INSPECTORS GENERAL

The Commission on the Advancement of

Federal Law Enforcement, established to advise

Congress and the public on Federal law enforcement matters and headed by former FBI Director William Webster, issued its report to Congress. The Commission’s basic conclusion was

that Federal law enforcement agencies, while

essential and doing good work, have become

too numerous. It stated that the Federal law

enforcement apparatus has become too

unwieldy and needs to be pruned back. The

Commission suggested that Federal law enforcement make improvements in order to deal more

effectively with the future of criminal activity,

particularly terrorism and cyberwarfare. 

The report frequently mentions the Offices

of Inspectors General. The Commission cited

the proliferation of the Offices of Inspectors

General as one of the primary reasons the law

enforcement community has grown so large and

become unwieldy and jurisdictionally illdefined. The Commission recommended stripping Inspectors General of their law enforcement functions and consolidating their audit

functions under one Auditor General. 

The Inspectors General community,

through the President’s Council on Integrity

and Efficiency and the Executive Council on

Integrity and Efficiency, criticized the Commission’s report. The Councils’ response notes that

the Commission cited no empirical or objective

evidence to support consolidating Inspectors

General offices. The Councils also charged the

Commission with a lack of understanding

regarding Congressional intent in enacting the

Inspector General Act. The response highlighted that the Commission failed to credit the

Offices of Inspectors General with recovering

This section highlights audits, reviews,

and investigations performed by the OIG

and the Inspection Service in other significant areas. Also, included at the end of

this section are the OIG legislative and

regulatory reviews. In order to differentiate the work product by the OIG and

Inspection Service, the pages containing

the Inspection Service have been color

screened. Report numbers are shown in

parentheses after the narrative, as appropriate.

DID YOU 

KNOW?
PAGE101

more than $13 billion for taxpayers, completing

over 122,000 successful criminal prosecutions,

and prompting agency action on more than

19,000 personnel matters. Finally, the Councils

opined that the Commission did not obtain sufficient testimony from the Inspector General

community to make a fair and objective assessment of the role of the Inspectors General in

the law enforcement community. 

PROPOSED LEGISLATION

S. 1707 – Establishment of Certain

Designated Federal Entities under the

Inspector General Act of 1978

This bill is primarily designed to make the

Inspector General of the Tennessee Valley

Authority a presidentially-appointed position.

The bill also provides for the establishment of

the Criminal Investigator Academy within the

Department of the Treasury. The academy will

train investigators working in the Offices of

Inspectors General. In addition, the bill establishes the Inspectors General Forensic Laboratory, also within the Department of the Treasury. This laboratory will perform forensic services for the Offices of Inspectors General. The

bill also authorizes annual appropriations for

these establishments.

While making the Tennessee Valley

Authority Inspector General presidentiallyappointed does not affect the Postal Service or

the OIG, creating the academy and the laboratory does. Training for existing and newly-hired

agents is essential for maintaining a high level

of investigative expertise and professionalism.

The Offices of Inspectors General will benefit

by having their own training academy and

forensics lab. This legislation has passed the

Senate and has been referred to the House Government Reform Committee, pending further

legislative consideration.
PAGE102

Postal Inspectors make arrests related

to a variety of offenses involving the

mail.

INSPECTION SERVICE

The Inspection Service conducted numerous audits and investigations covering significant issues in the following areas: physical security; narcotics offenses and trafficking; child

exploitation; prohibited mail; postal burglaries;

mail fraud including fraud against consumers,

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

PHYSICAL SECURITY

The Inspection Service devotes significant

resources to preventing crimes through employee and customer awareness programs and security measures. Potential problems and deficiencies are identified and priorities are set based on

trend analyses of specific criminal activity.

Once trends are identified, prevention and

security measures are developed to reduce or

eliminate the risk of criminal activity against

the mail, the Postal Service, and its employees.

To protect both the public and Postal

employees, the Inspection Service developed

plans and provided resources to ensure the

screening of mail by Postal Inspectors in

response to recent security threats. Examples

include the crash of Egypt Air 900, the Seattle

meetings of the World Trade Organization,

and the threat of someone mailing an explosive device disguised as a Christmas gift.

In October 1999, the Inspection Service

held its first international revenue protectiontraining course in Panama City, Panama. Fortyone participants from 18 member countries of

the Postal Union of the Americas, Spain, and

Portugal attended this pilot course hosted by the

Postal Administration of Panama. 

The Inspection Service issued over 17,000

security clearances, and met with Area Security

Officers to develop the Security Control Officer

Program. To date, approximately 5,000 individuals have been trained as Security Control

Officers.

The Inspection Service International

Security Group established world-wide Postal

security networks in partnership with 81 international authorities. This group works with

member countries to improve the quality of service, safety, and security of the mail for Universal Postal Union countries. Representatives of

the group are located at Interpol in Washington, DC; Lyon, France; and Bern, Switzerland.

The Inspection Service was involved in the following projects:

◆ The Chief Inspector chaired the Postal

Security Action Group meeting held in

Bern, Switzerland. The group, now comprised of postal security experts from 46

member and 27 observer countries, identified, interdicted, and disrupted Nigerian

advance fee fraud letters, which had a

significant impact on Postal customers

and administrations world-wide. The

group discussed current activities, the use

of postage meters, use of legitimate

postage, and the creation of a universal

memorandum of understanding. 

◆ A Postal Inspector assigned to the U.S.

National Central Bureau - Interpol

attended the annual Interpol General

Assembly meeting in Seoul, Korea, as a

delegate of the United States. The South

Korean National Police Agency hosted

the conference.

NARCOTICS OFFENSES AND

TRAFFICKING 

The Inspection Service interdicts mailings

of illegal drugs and drug proceeds to protect

Postal employees from violence related to drug

trafficking, and to preserve the integrity of the

mail. Postal Inspectors, working with other law

enforcement agencies, arrested 804 individuals

during this semiannual period for drug trafficking and money laundering via the U.S. Mail.

Seizures from the mail for this period included

5764 pounds of illegal narcotics and 68,491

units of steroids. Investigations also resulted in

the seizure of $1.1 million in cash and monetary

instruments, 19 vehicles, and 37 firearms. 

◆ An individual pled guilty to six counts of

illegal possession and distribution of controlled substances. Between July 1997

and May 1998, this individual fraudulently caused two pharmaceutical distributors to send controlled substances based

on an altered Drug Enforcement Agency

registration certificate from a closed

pharmacy where the offender was previously employed. The individual received

approximately 161,000 doses of controlled substances with a street value estimated at between $483,000 and

OTHER SIGNIFICANT ISSUES
PAGE103

$805,000. The proceeds of these illegal

activities were laundered by using Postal

money orders to pay the distributors for

the drugs.

◆ Nine individuals were indicted by an

Arizona grand jury on drug-related

offenses. The individuals were arrested

in Arizona, Massachusetts, and Hawaii

by Postal Inspectors and other Federal

and state law enforcement agents for

transporting marijuana, money laundering, and conspiracy. The arrests were a

result of a multi-million dollar marijuana

trafficking organization operating out of

Arizona. The traffickers transported

large quantities of marijuana to Massachusetts, New York, New Jersey, Florida,

and Pennsylvania. The traffickers set up

at least four fictitious businesses at four

different commercial mail receiving

agencies1 in Arizona. Drug proceeds

were returned via Express Mail to individuals at other commercial mail receiving agencies in Arizona. 

◆ A Federal grand jury in Massachusetts

indicted seven individuals for conspiracy

to distribute marijuana and various

money laundering violations. The case is

an ongoing Organized Crime and Drug

Enforcement Task Force investigation

involving a drug trafficking operation

between Arizona and Massachusetts.

Express Mail was used extensively to

launder the drug proceeds and traffic the

marijuana. Postal Inspectors in Massachusetts and Arizona coordinated the

investigation, which resulted in the

arrests of six individuals, and several

seizures of Express Mail parcels in

Arizona.

◆ A task force of Postal Inspectors, Customs Service agents, Drug Enforcement

Administration agents, and local law

enforcement officers arrested seven individuals involved in an international drug

smuggling operation. The individuals

purchased the drugs in the Netherlands

and mailed them from the Netherlands

and Belgium to California, and also

recruited couriers to transport the drugs

on commercial airline flights. To date,

more than 15,000 pills have been seized,

with a street value of $450,000. 

◆ Several individuals pled guilty to interstate transportation in aid of racketeering

enterprises. Sentencing was the result of

a two-year conspiracy, drug and money

laundering investigation, which involved

approximately 90 kilograms of cocaine

being mailed from California to Michigan, and conversely, drug proceeds being

mailed from Michigan to California. 

CHILD EXPLOITATION

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

knowingly receive child pornography. During

this reporting period, 53 child molesters were

identified and stopped as a result of the Inspection Service’s investigative efforts to rid the

mail of child pornography. This represented an

increase of 45 percent over the same period last

year. Fifty-eight children were rescued from

ongoing sexual abuse, and 13 additional victims

of prior sexual abuse by child pornography suspects were identified. Postal Inspectors nationwide are investigating 473 cases involving child

pornography. To date, Inspection Service

efforts have resulted in 112 arrests and 108 convictions. Some of the more significant child

exploitation case activity that occurred during

this period is highlighted below.

◆ Four individuals involved in a child

pornography ring in Oklahoma were

charged with violations relating to the

production, distribution, and possession

of child pornography. The initial suspect

was identified through an undercover

operation conducted by a Postal Inspector in Tennessee. Search warrants were

subsequently obtained and executed at

locations in three different Oklahoma

counties. Videotapes and photographs

depicting the sexual abuse of two children were seized. The suspects include

the parents of these children. State

charges have also been filed against the

four individuals. 

◆ A prison sentence of 24 years and 5

months was handed down to a convicted

child molester and pornographer in an

Indiana federal court. Postal Inspectors

initiated an investigation after the individual mailed film depicting the sexual

1These agencies are businesses designated by their customers to receive, hold, and forward their mail.
PAGE104

abuse of minors to a commercial film

processor. Working with local law enforcement, Postal Inspectors determined that

the offender sexually abused, photographed,

and videotaped a number of children,

including the individual’s own child and

stepchild.

◆ An individual pled guilty in Federal district court in Hawaii to receiving child

pornography through the mail and via the

Internet. Postal Inspectors executed a

search warrant at the individual’s home,

and discovered a number of homemade

videotapes depicting exploitation activity

with six different children. Sentencing is

pending.

◆ Postal Inspectors and Customs agents in

Michigan arrested a Canadian national on

a Federal warrant for the distribution of

child pornography videotapes. This individual was identified during the course of

another Inspection Service child exploitation investigation. Canadian law enforcement officials searched the offender’s residence and seized approximately 1,000

videotapes, along with a computer and

computer-generated child pornography

images. 

◆ An individual was sentenced in Federal

court to 30 months in prison for using the

computer and the mail to entice and

engage children in sexual conduct. This

individual’s license to practice medicine

was revoked by the Illinois State Board of

Licensing and the Drug Enforcement

Administration revoked the offender’s ability to dispense controlled substances. 

◆ An individual in Nevada was sentenced to

46 months in a Federal prison for using the

Internet and the mail to distribute child

pornography. State charges are pending

against this offender for molesting four

minors.

◆ Complaints from a victim and the National Center for Missing and Exploited Children’s Cyber Tipline resulted in the arrest

of an individual for possession, production,

and distribution of child pornography. The

individual used the Internet to auction

pornographic photographs of the victim,

who was a minor at the time the photos

were taken.

PROHIBITED MAIL

The Inspection Service considers the investigation of mail bombs among its highest priorities. This reporting period, Postal Inspectors

arrested 39 and convicted 34 individuals for their

involvement in incidents related to mail bombs

and bomb threats. These include threats against

Postal facilities, placement of hoax devices and

other suspicious items in the mail, and

bombs/devices placed in private mail receptacles. 

◆ An individual pled guilty in Federal court

in New York to two counts of mailing

threatening communications. This individual was previously arrested and charged

with mailing hoax bomb devices to a state

lottery office. 

◆ The FBI issued an advisory regarding the

possibility of parcels containing bombs

being placed in the mail showing a Frankfurt, Germany, postmark. Members of the

Inspection Service participated as experts

in numerous interviews conducted by

CNN’s Morning News, Burden of Proof,

Talk Back Live and CBS Evening News, as

well as with Tribune Broadcasting, Cox

Broadcasting, Hearst Broadcasting,

Reuters, CBS Radio and United Press

International.

POSTAL BURGLARIES

The Inspection Service employs sophisticated burglary prevention techniques and detection

devices to make Postal facilities less vulnerable to

attack. Burglaries may result in property losses,

mail thefts, and repair expenses for damage to

Postal facilities as a result of forced entries. During this period, there were 91 arrests and 85 convictions related to burglaries compared to 75

arrests and 62 convictions for the last reporting

period. 

◆ An Illinois post office and several other

businesses located in a strip mall were burglarized. Postal Inspectors arrested a professional burglar who had 16 prior arrests.

The offender confessed to burglarizing the

post office and two Illinois contract stations, and was subsequently sentenced to

25 years in prison.

OTHER SIGNIFICANT ISSUES
PAGE105

MAIL FRAUD

Postal Inspectors protect Postal patrons,

business mailers and local, state and Federal

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

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

individuals who are more dependent on mail

delivery for purchases, are particularly susceptible to fraudulent schemes. These citizens trust

the Postal Service will maintain the integrity of

the mail, while fraudulent opportunists attempt

to enjoy the reliability and relative anonymity

the mail offers. The Inspection Service investigated approximately 36,000 consumer fraud

complaints this reporting period. As a result,

827 individuals were arrested and 715 individuals were convicted on charges of mail fraud.

Listed below are some of the investigations

that were conducted during this period.

FRAUD AGAINST CONSUMERS 

To preserve the public’s confidence and

trust in the U.S. Mail, the Inspection Service

investigates a variety of mail fraud schemes,

including fraud against consumers. Some of the

most significant investigations follow.

◆ Four individuals who operated a sweepstakes telemarketing scheme in California, were convicted and sentenced to pay

over $1 million in victim restitution to

the over 1,000 elderly victims who

mailed a check to claim a prize they were

told they had won. None of the victims

received prizes. 

◆ A telemarketing investigation in Southern California resulted in a court ordered

payment of over $6 million in restitution

to victims of a riverboat gambling venture. This individual was also sentenced

to three years and five months in prison. 

◆ An individual in Texas was arrested for

involvement in a work-at-home scheme

in which approximately 9,500 victims

were identified. The individual used 32

commercial mail receiving agency

addresses from coast-to-coast to operate

the secretarial work-at-home schemes

and a direct marketing television distributorship scheme.

◆ An investment fraud investigation from

the Midwest resulted in an individual

being sentenced for defrauding investors,

who were elderly and invested more than

$3.5 million of their life savings. Victims

were offered a minimum of 12 percent on

money invested, which was allegedly to

be used to purchase deeds of trust on

commercial and residential properties.

In addition to being sentenced to 12

months and 1 day in prison and 3 years’

supervised release, the man was ordered

by the court to pay $1.4 million in restitution. 

◆ A married couple was sentenced in Federal court for conducting a mail fraud

scheme that victimized at least 15

African-American churches across the

United States. This scheme resulted in

losses of approximately $2.6 million.

One spouse assisted churches in obtaining financing for building projects

through the sale of church bonds, while

the other spouse represented himself as a

contractor with 20 years of experience

building churches. The couple advised

victims that when they were finished,

they would turn over the keys to the

church, which would be ready for immediate use by the congregation. No

churches identified were ever completed

even though the couple obtained building funds. They were sentenced collectively to five years and five months’

imprisonment, six years’ supervised

release, and ordered to pay over

$700,000 restitution to victim churches.

◆ Two of three individuals pled guilty in

Federal court for defrauding numerous

individuals by falsely advertising the sale

of stuffed animals on the Internet. The

defendants alleged they were in possession of rare or retired stuffed animals that

were for sale at substantial discounts.

After receiving victims’ money, the

defendants sent victims damaged stuffed

animals or no stuffed animals at all. This

scheme resulted in the loss of over

$20,000 to victims. 

◆ The U.S. Attorney’s Office in New York

presented the Inspection Service with

three equitable sharing checks totaling

almost $1,215,000 as the result of asset

forfeiture cases involving insider trader

stock manipulations and sweepstakes

fraud. The checks have been deposited
PAGE106

into the Postal Inspector’s Forfeiture Revenue Account.

FRAUD AGAINST BUSINESSES

The mail is often used to submit false or

inflated invoices to businesses and institutions.

Some of the more significant investigations

follow.

◆ An individual was found guilty in Pennsylvania on charges of submitting more

than 2 million unredeemed manufacturers’ cents-off coupons. The coupons were

valued in excess of $1 million. 

◆ A New Jersey flea market salesman pled

guilty in a $350,000 failure to pay case.

The investigation determined the individual fraudulently established 1,630 customer accounts utilizing at least 12 different boxes at several post offices and commercial mail receiving agencies in New

Jersey to order compact discs that he

then sold at area flea markets. 

◆ A scam involving mailing fraudulent

invoices resulted in an individual pleading

guilty in Federal court in Pennsylvania.

Postal Inspectors determined this individual mailed over 4,000 fraudulent bills to

victim companies, many being private

and public schools. The individual

attempted to defraud the companies in

excess of $7 million. The victim companies unknowingly paid exorbitant prices

for merchandise they had not ordered. 

◆ An individual in Illinois was sentenced

to one year and six months in prison,

three years of probation, and ordered by

the court to make over $176,000 in restitution for involvement in a scheme

which inflated rental rates for condominiums and then split the inflated proceeds. An investigation by Postal

Inspectors revealed that the individual

also sold customers tickets to sporting

events and concerts at prices that

allowed her to increase the amount of

sales commissions she received from her

employer. She also advised her employer

she sold vacation packages at inflated

prices to customers when she had not. 

◆ Three individuals were sentenced in Federal court for their involvement in a $22

million bank and investment fraud

scheme. The individuals created companies that conducted very little business,

but were used as fronts to apply for bank

loans and obtain investor funds. 

FRAUD AGAINST THE

GOVERNMENT

Postal Inspectors also work to protect the

government from being victimized by mail

fraud. Some of the most significant investigations follow.

◆ An Inspection Service investigation

resulted in a guilty plea to mail fraud by

company employees. The company operated in Oregon and California, and sold

stolen recreational vehicles. The investigation revealed representatives of the

company assisted out-of-state customers

who purchased recreational vehicles to

evade sales tax and registration fees owed

their states as well as assisted out-of-state

customers register their new vehicles in

Oregon. The company paid over $1.4

million in forfeited proceeds to the FBI

and the Inspection Service and $1.6 million to the State of Oregon. 

◆ A Missouri chiropractor was sentenced in

Federal court to four months of home

confinement, five years of supervised

release, and ordered to pay over $15,000

in restitution to Medicare. The chiropractor defrauded Medicare by submitting false insurance claims for treatment

allegedly rendered to patients. 

◆ An individual in New Jersey was sentenced in Federal court to two years and

nine months in prison, three years of

supervised release, and ordered to pay

$846,000 in restitution to the U.S.

Department of Education. The individual and her brother operated a beauty

school and directed their employees to

submit false forms to various educational

loan assistant centers. The submission of

the false documents caused the school’s

default rate to remain within the Department of Education guidelines for participating in the Federally-funded financial

aid programs. Postal Inspectors, along

with agents from the Department of EduOTHER SIGNIFICANT ISSUES
PAGE107

cation’s OIG, determined the false submissions made by the school enabled it

to receive over $1 million in Federallyguaranteed loans over a five-year period,

which it would not have otherwise been

entitled to receive. Four others involved

in the scheme, including the brother,

were previously sentenced. 

MONEY LAUNDERING

The Inspection Service plays a key role in

fulfilling the Postal Service’s anti-money laundering program requirements under the Bank

Secrecy Act. Postal Inspectors work closely

with Postal management to ensure that new

financial services possess anti-money laundering security measures. In addition, Postal

Inspectors participate in Bank Secrecy Act

training programs, sharing their money laundering expertise with Postal employees involved in

the sale of Postal financial products.

◆ The Inspection Service seized more than

$345,000 from two California bank

accounts for structuring financial transactions to avoid Federal reporting

requirements. Reports showed that 29

separate post offices were visited on 118

different occasions between April 13,

1998, and May 17, 1999, for the purchase of 889 Postal Service money orders

with an aggregate value of approximately

$444,500. All of the Postal Service

money orders were found to have been

purchased through structured transactions in avoidance of both Federal and

Postal reporting requirements. The

investigation is continuing. 

◆ Postal Inspectors arrested two fugitives

for their involvement in a money laundering and narcotic smuggling scheme.

One individual was arraigned in Federal

court on two counts of murder, money

laundering, and narcotics smuggling, and

held without bond. The other individual

was arraigned for currency and monetary

instrument reports violations and

released on a $25,000 personal bond.

The investigation is continuing. 

◆ An individual in Michigan was arrested

by local police and charged with bank

fraud. Having established a commercial

mail receiving agency post office box

under an assumed name, the individual

attempted to access funds from an

account opened under an alias. The

account had been flagged due to the

deposit of numerous high-value Postal

money orders identified as structured

purchases by debit cards drawn from

fraudulent bank accounts. The arrest is

the third in an investigation that began

after the Inspection Service was contacted regarding losses approaching $1 million. Postal Inspectors are investigating

this case jointly with FBI agents. 

◆ Postal Inspectors in New York arrested

two individuals on conspiracy to commit

money laundering. At the time of their

arrest, approximately $200,000 was

seized. One individual was held without

bond and the other was released on a

$100,000 personal bond. The investigation is continuing.
PAGE108 OTHER SIGNIFICANT ISSUES
PAGE 109

Appendices

DID YOU 

KNOW?

PAGE 109

Is OIG responsible for all audits within the Postal Service?

Yes. In January 1999, the Postmaster General reemphasized to all

Postal Service officers the audit role of the OIG. Specifically, the

OIG is responsible for performing or contracting for all Postal

Service audits, as well as establishing procedures for

management-requested audits. In addition, the OIG serves as the

focal point with other agencies, to coordinate work efforts and

avoid any duplication. 
APPENDIX A

Closed Congressional and Board of

Governors Inquiries

For the period October 1, 1999, through March 31, 2000

This appendix lists the 51 Congressional and Governor inquiries the OIG closed during this

reporting period. The OIG reviewed these inquiries to help identify systemic issues and to determine the need for future Postal-wide audits.

CONGRESSIONAL

PERFORMANCE

Response

Requestor Allegation/Concern Location Date

Senator, Review of the Postal-wide 12/3/99

Wyoming International Collection Program

Representative, Mail processing delays Louisville, 2/18/00

Kentucky due to improper staffing Kentucky

Representative, Dissatisfaction with Postal-wide 2/24/00

California Priority Mail service

from contractor

Representative, Untimely delivery of Oakland, 2/24/00

California newsletters California

Senator, Mail was not forwarded Poughkeepsie, 3/3/00

New York to new address New York

Representative, Improper handling of Pompano 3/13/00

Ohio indemnity claim Beach,

Florida

Senator, Mail collection problems Chicago, 3/17/00

Illinois Illinois

FINANCIAL MANAGEMENT

Response

Requestor Allegation/Concern Location Date

Chairman, House Purchase and maintenance of Roundup, 11/9/99

Postal Subcommittee Postal facility Montana

Representative, Contract fraud and Allendale, 2/29/00

New Jersey conflict of interest New Jersey

Chairman, House Violations of Federal New Haven, 3/17/00

Postal Subcommittee laws and regulations in Connecticut

facility relocation

PAGE 110 APPENDICES
LABOR MANAGEMENT

Response

Requestor Allegation/Concern Location Date

Senator, Unethical conduct and Benton Harbor, 11/15/99

Michigan abusive behavior by management Michigan

Representative, Mismanagement of Postal Service facility San Francisco, 11/26/99

California and discrimination against employees California

Senator, Review of suspension from employment South Bend, 11/26/99

Indiana and concerns with Equal Employment Indiana

Opportunity process

Representative, Managerial harassment and concerns about Sparta, 11/30/99

New Jersey Equal Employment Opportunity claim New Jersey

Chairman, House Human resource concerns with Postal-wide 12/15/99

Postal Subcommittee the Postal Service

Representative, Age discrimination and Morristown, 12/27/99

New Jersey managerial harassment New Jersey

Representative, Managerial harassment Rockaway, 12/27/99

New Jersey New Jersey

Representative, Discrimination, failure to comply with New Kensington, 12/27/99

Pennsylvania employment guidelines, and abuse of Pennsylvania

workers’ compensation laws

Senator, Request for additional information Greenville, 12/29/99

North Carolina North Carolina

Representative, Boycott of vending machines and misuse Buffalo, 1/4/00

New York of funds New York

Representative, Postal Service providing false information Marlboro, 1/5/00

New York regarding workers’ compensation claim New York

Representative, Intimidation and restricted use of sick time Miami, 1/31/00

Florida Florida

Chairman, House Managerial abuses, discrimination, and Santa Ana, 2/24/00

Postal Subcommittee hostile work environment California

Representative, Wrongful termination Mobile, 3/1/00

Alabama Alabama

Chairman, House Unjust suspension and Baxter Springs, 3/8/00

Postal Subcommittee removal from employment Kansas

Chairman, House Disparate treatment by supervisors Annapolis, 3/8/00

Postal Subcommittee Maryland

Senator, Managerial harassment Winfield, 3/8/00

Alabama Alabama

Senator, Request for reinstatement of sick leave Charleston, 3/8/00

South Carolina South Carolina

PAGE 111
Representative, Nepotism and false accusations Cape Girardeau, 3/15/00

Missouri of sexual harassment Missouri

Representative, Managerial harassment and status on South Plainfield, 3/15/00

New Jersey workers’ compensation claim New Jersey

Representative, Employment discrimination complaint South Dennis, 3/29/00

Massachusetts not handled properly Massachusetts

Representative, Hostile work environment Brook Park, 3/29/00

Ohio Ohio

Senator, Managerial harassment Chicago, 3/29/00

Illinois Illinois

Senator, Managerial harassment and South Holland, 3/29/00

Illinois hostile work environment Illinois

Senator, Abuse of union time by stewards Alden, 3/29/00

New York New York

Chairman, House Hostile work environment2 Arecibo, 3/31/00

Postal Subcommittee Puerto Rico

Chairman, House Hostile work environment2 Arecibo, 3/31/00

Postal Subcommittee Puerto Rico

Chairman, House Hostile work environment2 Arecibo, 3/31/00

Postal Subcommittee Puerto Rico

Chairman, House Hostile work environment Ft. Lauderdale, 3/31/00

Postal Subcommittee Florida

Chairman, House Sexual harassment and Plaquemine, 3/31/00

Postal Subcommittee hostile work environment Louisiana

Representative, On-the-job injury resulting in back pay Manteca, 3/31/00

California California

Representative, Managerial harassment Broken Arrow, 3/31/00

Oklahoma Oklahoma

Representative, Failure to pay overtime hours Allentown, 3/31/00

Pennsylvania Pennsylvania

OVERSIGHT OF THE INSPECTION SERVICE

Response

Requestor Allegation/Concern Location Date

Senator, Status of mail fraud complaint Detroit, 2/15/00

Michigan Michigan

PAGE 112 APPENDICES

Response

Requestor Allegation/Concern Location Date

2All three individual Congressional inquiries concerned related issues and were addressed jointly by the OIG.
OTHER SIGNIFICANT REVIEWS

Response

Requestor Allegation/Concern Location Date

Representative, Release of information regarding investigation Postal-wide 10/8/99

Texas closed within the last 3-5 years

Senator, Mail fraud related to debt collection scams New York, 1/4/00

New York New York

State Senator, Participating in peaceful political activity Oak Hill, 3/3/00

Virginia on Postal Service property Virginia

Chairman, House Misuse of National Change of Address data Postal-wide 3/10/00

Postal Subcommittee

Representative, Misuse of National Change of Address data Postal-wide 3/10/00

Pennsylvania

BOARD OF GOVERNORS

FINANCIAL MANAGEMENT

Response

Requestor Allegation/Concern Location Date

Chairman Fraud, program abuse, and Glendale Heights, 3/20/00

postal policy violations Illinois

LABOR MANAGEMENT

Response

Requestor Allegation/Concern Location Date

Governor Request for minority statistics Postal-wide 1/19/00

PAGE 113
APPENDIX B

Reports Issued to Postal Management

For the period October 1, 1999, through March 31, 2000

OVERVIEW

Office of Inspector General

The OIG audit teams are aligned to conduct performance and financial audits, evaluations, and

other reviews to address the business processes of the Postal Service. Each team issues audit

reports (AR), letter advisory reports (LA), or management advisory reports (MA) in accordance

with the identified needs of the project.

Inspection Service

The Inspection Service audit groups are aligned by the type of audits performed which are primarily performance, financial, contract, and facility audits. The Inspection Service continued to provide Postal-wide attention in selected areas until these functions are fully transitioned to the OIG.

SUMMARY

The following is a summary by principal area of reports issued to Postal management for both the OIG

and Inspection Service. The following pages list each organization’s reports separately.

Recommend 

Number of Questioned Unsupported Funds Put to

Principal Area Reports Issued Costs Costs3 Better Use

Performance 42 $ 848,000 $ 0 $39,258,326

Financial Management 289 268,561,854 6,911,275 114,906

Technology 9000

Labor Management 6000

Oversight 2000

Other Significant Reviews 25 0 0 0

GRAND TOTALS 373 $269,409,854 $6,911,275 $39,373,23

PAGE 114 APPENDICES

Definitions

Questioned Cost – A cost that is unnecessary, unreasonable, unsupported, or an

alleged violation of law, regulation, contract,

etc. 

Unsupported Costs – A cost that is not supported by adequate documentation.

Funds Put to Better Use – Funds that

could be used more efficiently by implementing

recommended actions.

3

Unsupported Costs are included with the amounts shown as Questioned Costs.
REPORT LISTING

The following is a list of each report grouped by core business processes and enabling functions.

OIG REPORTS

PERFORMANCE

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

ACCEPTING AND PROCESSING

AC-LA-00-001 Richmond Processing and Richmond, VA $0 $0 $0 1/31/00

Distribution Center

Standard Mail Processing

AC-MA-00-001 St. Louis Processing and St. Louis, MO 0 0 0 3/17/00

Distribution Center – 

Business Mail Entry Unit

Use of the Convenience

Deposit Point Process

DS-AR-00-001 External First-Class Mail Postal-wide 0 0 0 3/27/00

Measurement System

TRANSPORTATION

TR-AR-00-001 Year 2000 Business Postal-wide $0 $0 $0 12/3/99

Contingency and

Continuity Planning: Plan

Development and Testing

TR-MA-00-001 Mail Processing Delays at Louisville, KY 0 0 0 12/6/00

the Louisville Processing and

Distribution Center

TR-AR-00-002 Year 2000 Business Postal-wide 0 0 0 12/7/00

Continuity and

Contingency Planning:

Day One Strategy

TR-MA-00-002 Handling of Stamp Stock at Greensboro, NC 0 0 0 1/31/00

the Greensboro Processing

and Distribution Center

TR-AR-00-003 Commercial Air Carrier: Postal-wide 0 0 0 1/31/00

Performance Measurement

System

TR-AR-00-004 Commercial Air Carrier Postal-wide 0 0 0 1/31/00

Performance: Effectiveness

of Pay-for-Performance

TR-AR-00-005 Southwest Area Southwest Area 848,000 0 0 2/29/00

Expenditures for Extra

Highway Trips Using

Leased Equipment

TR-AR-00-006 Commercial Air Carrier Postal-wide 0 0 28,000,000 3/27/00

Performance: Payment for

Ground Handling Services

DELIVERY

DS-MA-00-001 Acceptance of Postal-wide $0 $0 $0 12/15/99

Delivery Vehicles

DS-MA-00-002 Assignment of Postal Postal-wide 0 0 0 2/25/00

Service Vehicles for

Maintenance Service

PAGE 115
MARKETING

RG-MA-00-001 Cost and Benefit of Postal-wide $0 $0 $1,500,000 12/3/99

the International 

Collection Program

RG-AR-00-001 Controls Over the Storage Postal-wide 0 0 0 1/31/00

and Distribution of Stamp

Inventory at Selected Sites

RG-LA-00-001 International Travel Process- Postal-wide 0 0 0 2/29/00

Phase II Lodging Expenses

RG-LA-00-002 Grand Canyon Stamp- Postal-wide 0 0 0 3/27/00

Production Internal Controls

RG-AR-00-002 Breast Cancer Research Postal-wide 0 0 841,000 3/31/00

Stamp Program ReviewPhase II

RP-MA-00-001 Indefinite Quantity Postal-wide 0 0 0 11/8/99

Contracts

PERFORMANCE TOTALS $848,000 $30,341,000

$0

FINANCIAL MANAGEMENT

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

FINANCIAL-RELATED

FR-LA-00-001 Sure Money Electronic Postal-wide $0 $0 $0 11/23/99

Funds Transfer Service

Expansion to

Dominican Republic

FR-FA-00-001 Employee Separation Postal-wide 8,913 0 0 11/23/99

FR-FA-00-002 Back Pay Award Postal-wide 0 0 0 11/23/99

FR-FA-00-007 Facilities Management Postal-wide 0 0 0 11/23/99

System-Windows

Internal Controls

FR-FA-00-003 Capital Personal Property Postal-wide 0 0 0 12/1/99

FR-FA-00-008 Internal Controls at the Dulles, VA 0 0 0 12/1/99

Dulles, Virginia,

International

Records Unit

FR-FA-00-005 Travel Advances Postal-wide 0 0 0 12/1/99

FR-FA-00-006 Tort Claim Receivables Postal-wide 0 0 0 12/10/99

FR-AR-00-003 Withholdings and Postal-wide 0 0 0 12/16/00

Contributions for Health

Benefits, Life Insurance,

Retirement, and Employee

Headcount Data

FR-MA-00-001 Budget Cost Containment Postal-wide 0 0 0 12/22/00

Measures

FR-FA-00-009 Computer Associates- Postal-wide 0 0 0 1/4/00

Access Control Facility 2

Password Options

FR-AR-00-001 Postal Service Officers’ Postal-wide 0 0 0 1/4/00

Travel and Miscellaneous

Expense for FY 1999

PAGE 116 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date
FR-AR-00-002 Postal Service Board of Postal-wide 0 0 0 1/6/00

Governors Travel and

Miscellaneous Expense

for FY 1999

FR-AR-00-004 FY 1999 Postal Service Postal-wide 0 0 0 1/31/00

Financial Statement AuditWashington, DC, 

Headquarters

FR-AR-00-005 FY 1999 Postal Service St. Louis, MO 0 0 0 2/11/00

Financial Statement AuditSt. Louis Information

Service Center

FR-AR-00-006 Transmittal of FY 1999 Minneapolis, MN 0 0 0 2/25/00

Postal Service Financial

Statement AuditEagan Information

Service Center

FR-AR-00-007 Transmittal of FY 1999 San Mateo, CA 0 0 0 2/25/00

Postal Service Financial 

Statement AuditSan Mateo Information

Service Center

CONTRACT AUDITS 

CA-CAR-00-001 Evaluation of Costs $0 $0 $0 12/16/99

Associated with a 

Postal Service Sublease of

Facilities

CA-CAR-00-002 Evaluation of Accounting 0 0 0 1/4/00

System

CA-CAR-00-003 Evaluation of 0 0 0 1/4/00

Direct Labor Rates and

Indirect Expenses Rates

CA-CAR-00-004 Evaluation of 0 0 0 1/27/00

Forward Pricing Rates and

Factors

CA-CAR-00-005 Evaluation of 0 0 0 1/28/00

Accounting System

CA-CAR-00-006 Evaluation of Claim 121,452 54,185 0 2/21/00

Submitted

CA-CAR-00-009 Evaluation of 639,621 639,621 0 2/23/00

1994 Operating Expenses

CA-CAR-00-007 Evaluation of 0 0 0 2/23/00

Final Indirect Rates

CA-CAR-00-008 Evaluation of 0 0 0 2/23/00

Costs Incurred

CA-CAR-00-011 Evaluation of 36,490 0 0 3/6/00

Proposal

PAGE 117

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date
CA-CAR-00-010 Evaluation of 881,215 382,500 0 3/6/00

Proposal

CA-CAR-00-012 Evaluation of 0 0 0 3/9/00

Accounting System

CA-CAR-00-014 Proposal for 38,607 0 0 3/14/00

Tray Management 

System Work

CA-CAR-00-013 Delivery Confirmation 59,229 0 0 3/14/00

Code Recognition for 

Flat Sorting Machine 881

CA-CAR-00-015 Proposal for a 464,644 0 0 3/14/00

Small Parcel and 

Bundle Sorter

CA-CAR-00-016 Research and 0 0 0 3/16/00

Development Costs 

CA-CAR-00-017 Evaluation of 0 0 0 3/24/00

Proposal for Express 

Mail Collection Boxes

CA-CAR-00-018 Evaluation of 90,366 0 0 3/29/00

Subcontract Proposal 

CA-MA-00-001 Contract Audit Practices Postal-wide 92,214 0 0 3/31/00

FACILITY PROGRAM AUDITS 

FA-AR-00-001 Postal Service Postal-wide $0 $0 $0 10/22/99

Suspension and 

Debarment Process

FA-MA-00-001 Asbestos Abatement at Postal-wide 0 0 0 1/24/00

Postal Service Facilities 

FA-MA-00-002 Roofing Product at Postal-wide 0 0 0 2/29/00

Postal Service Facilities

FA-MA-00-003 Cost Savings Identified in Postal-wide 0 0 26,000 3/21/00

the Use of Calling Cards by 

Postal Service Employees

FINANCIAL MANAGEMENT TOTALS $2,432,751 $26,000

$1,076,306

PAGE 118 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date
TECHNOLOGY

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

Y2K AND INFORMATION SYSTEMS

IS-AR-00-001 Year 2000 Initiative: Postal-wide $0 $0 $0 11/30/99

Mail Processing Equipment,

Critical Suppliers, 

Embedded Chips, 

and Facilities

IS-AR-00-002 Status of Postal Service Postal-wide 0 0 0 12/3/99

Year 2000 Readiness

IS-AR-00-003 Allegation Involving Postal-wide 0 0 0 3/31/00

Privacy Act Violations

DEVELOPMENTAL

DA-LA-00-001 Point of Service ONE- Postal-wide $0 $0 $0 11/4/99

Vendor Solution

DA-AR-00-001 Phase 1 Remote Encoding Postal-wide 0 0 0 2/10/00

Center Consolidation

DA-AR-00-002 Tray Management System Postal-wide 0 0 0 3/31/00

COMPUTER INTRUSION

CI-CSA-00-001 Computer Security Advisory Postal-wide $0 $0 $0 2/29/00

COMPUTER SECURITY

CI-MA-00-001 Allegations of Abuse of Postal-wide $0 $0 $0 2/24/00

Postalwatch.org Web Link

CI-LA-00-001 Postal Service Postal-wide 0 0 0 3/1/00

Computer Security

TECHNOLOGY TOTALS $0 $0 $0

LABOR MANAGEMENT

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

HOSTILE WORK ENVIRONMENT

LM-LA-00-002 Allegation of a Hostile Puerto Rico $0 $0 $0 2/29/00

Work Environment in a 

Puerto Rico Post Office

LM-AR-00-001 Allegations of a Hostile Southeast Area 0 0 0 3/20/00

Working Environment at a 

Post Office in the 

Southeast Area

UNSAFE WORKING CONDITIONS

LM-AR-00-002 Allegations of Unsafe Dallas, TX $0 $0 $0 3/20/00

Working Conditions at 

the Dallas 

Downtown Station

LM-VR-00-001 Allegations of Unsafe Dallas, TX 0 0 0 3/20/00

Working Conditions at 

the Dallas 

Downtown StationVideo Report

PAGE 119
Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

HEALTH CARE

HC-MA-00-001 Allegation Concerning the Middlesex Central District $0 $0 $0 2/29/00

Middlesex Central District’s 

Use of Injury Claim Forms 

CA-1

HC-MA-00-002 Allegation of Untimely Albuquerque District 0 0 0 3/21/00

Submission of 

Injury Claims

LABOR MANAGEMENT TOTALS $0 $0 $0

OVERSIGHT REVIEWS OF THE INSPECTION SERVICE

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

OV-MA-99-001 Postal Personnel Security Postal-wide $0 $0 $0 3/23/00

Program-Sensitive Clearance 

for Non-Inspection 

Service Position

OV-MA-99-003 (R) FY 1998 National Norman, OK 0 0 0 3/23/00

Leadership Conference

OVERSIGHT TOTALS $0 $0 $0

OTHER SIGNIFICANT REVIEWS

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

99CX017EX000 Executive Investigation $0 $0 $0 1/24/00

98CX012EX000 Executive Investigation 0 0 0 2/16/00

99CX019EX000 Executive Investigation 0 0 0 1/23/00

99CX024EX000 Executive Investigation 0 0 0 1/31/00

99CX031EX000 Executive Investigation 0 0 0 1/31/00

98CX032EX000 Executive Investigation 0 0 0 1/4/00

98CX035EX000 Executive Investigation 0 0 0 12/15/99

99CX002EX000 Executive Investigation 0 0 0 11/30/99

00CX005EX000 Executive Investigation 0 0 0 2/1/00

98CX015EX000 Executive Investigation 0 0 0 10/1/99

99CX011EX000 Executive Investigation 0 0 0 10/1/99

00CX008EX000 Executive Investigation 0 0 0 2/2/00

99CX026EX000 Executive Investigation 0 0 0 10/1/99

99CX010EX000 Executive Investigation 0 0 0 10/1/99

99CX012EX000 Executive Investigation 0 0 0 10/1/99

99CX023EX000 Executive Investigation 0 0 0 10/13/99

00CX011EX000 Executive Investigation 0 0 0 1/17/00

97CX007EX000 Executive Investigation 0 0 0 2/2/00

PAGE 120 APPENDICES
Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

99CX032EX000 Executive Investigation 0 0 0 3/1/00

99CX034EX000 Executive Investigation 0 0 0 10/28/99

97CX002EX000 Executive Investigation 0 0 0 12/16/99

98CX016EX000 Executive Investigation 0 0 0 1/6/00

98CX005EX000 Executive Investigation 0 0 0 11/15/99

99CX006EX000 Executive Investigation 0 0 0 12/5/99

00CX001EX000 Executive Investigation 0 0 0 3/9/00

SIGNIFICANT REVIEWS $0 $0 $0

OIG TOTALS $3,280,751

$1,076,3063

$30,367,000

PAGE 121
INSPECTION SERVICE REPORTS

FINANCIAL MANAGEMENT

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

CONTRACT AUDITS

181-1282969-AC(1) Contract Audit Kansas City, KS $ 0 $ 0 $88,906 11/4/99

66112

181-1294644-AC(1) Contract Audit Hatfield, PA 7,063,747 1,675,877 0 11/17/99

19440

184-1199426-AC(1) Contract Audit Chicago, IL 60601 0 0 0 11/01/99

182-1300114-AC(1) Contract Audit Fairborne, OH 163,115,691 0 0 1/10/00

45324

184-1281717-AC(1) Contract Audit Fairborne, OH 95,904,442 4,147,617 0 11/24/99

45324

184-1289120-AC(1) Contract Audit Danbury, CT 06810 14,798 11,475 0 3/22/00

184-1293100-AC(1) Contract Audit Chicago, IL 60611 0 0 0 11/10/99

185-1268720-AC(1) Contract Audit Irvine, CA 92715 0 0 0 12/23/99

FINANCIAL OPINION

010-1259185-AD(1) Canadian Surface Jersey City, NJ 07096 $0 $0 $0 1/4/00

Mail Accounting

010-1296618-AD(1) Vehicle Management Baltimore, MD 21201 0 0 0 10/7/99

Accounting System

FINANCIAL INSTALLATION AUDITS

011-1298638-AF(1) Financial Installation Audit Jamaica, NY 11431 $0 $0 $0 3/30/00

011-1298640-AF(1) Financial Installation Audit Ronkonkoma, NY 11779 0 0 0 11/23/99

011-1298652-AF(1) Financial Installation Audit Floral Park, NY 11001 0 0 0 1/31/00

011-1298653-AF(1) Financial Installation Audit Staten Island, NY 10314 0 0 0 12/30/99

011-1298655-AF(1) Financial Installation Audit Columbus, GA 31908 0 0 0 2/25/00

011-1298698-AF(1) Financial Installation Audit New York, NY 10001 0 0 0 3/20/00

011-1298700-AF(1) Financial Installation Audit New York, NY 10001 0 0 0 3/20/00

011-1298723-AF(1) Financial Installation Audit Wells, ME 04090 0 0 0 12/15/99

011-1298776-AF(1) Financial Installation Audit Sacramento, CA 95813 0 0 0 3/20/00

011-1298818-AF(1) Financial Installation Audit Denver, CO 80266 0 0 0 11/4/99

011-1298825-AF(1) Financial Installation Audit Alpharetta, GA 30004 0 0 0 2/3/00

011-1298829-AF(1) Financial Installation Audit Honolulu, HI 96820 0 0 0 2/25/00

011-1298831-AF(1) Financial Installation Audit San Francisco, CA 94188 0 0 0 2/8/00

011-1298880-AF(1) Financial Installation Audit Orlando, FL 32862 0 0 0 1/31/00

011-1298923-AF(1) Financial Installation Audit Tampa, FL 33630 0 0 0 12/27/99

011-1298929-AF(1) Financial Installation Audit Tampa, FL 33630 0 0 0 12/27/99

011-1298935-AF(1) Financial Installation Audit Miami, FL 33152 0 0 0 11/23/99

011-1298941-AF(1) Financial Installation Audit Mt. Morris, IL 61054 0 0 0 11/18/99

011-1298944-AF(1) Financial Installation Audit Woodstock, IL 60098 0 0 0 11/18/99

011-1299012-AF(1) Financial Installation Audit Memphis, TN 38101 0 0 0 12/6/99

011-1299013-AF(1) Financial Installation Audit Jackson, MS 39205 0 0 0 1/19/00

011-1299014-AF(1) Financial Installation Audit Olive Branch, MS 38654 0 0 0 11/1/99

011-1299041-AF(1) Financial Installation Audit Antioch, TN 37013 0 0 0 12/30/99

011-1299042-AF(1) Financial Installation Audit Hampton, VA 23670 0 0 0 10/25/99

011-1299046-AF(1) Financial Installation Audit Trenton, TN 38382 0 0 0 1/5/00

PAGE 122 APPENDICES
011-1299047-AF(1) Financial Installation Audit Jackson, MS 39205 0 0 0 3/17/00

011-1299055-AF(1) Financial Installation Audit Memphis, TN 38101 0 0 0 12/16/99

011-1299193-AF(1) Financial Installation Audit Boston, MA 02205 0 0 0 3/28/00

011-1299194-AF(1) Financial Installation Audit Rochester, NY 14600 0 0 0 1/7/00

011-1299200-AF(1) Financial Installation Audit Newington, CT 06111 0 0 0 2/23/00

011-1299203-AF(1) Financial Installation Audit Manchester, NH 03100 0 0 0 3/14/00

011-1299218-AF(1) Financial Installation Audit Columbia, SC 29201 0 0 0 3/3/00

011-1299219-AF(1) Financial Installation Audit Columbia, SC 29201 0 0 0 3/24/00

011-1299231-AF(1) Financial Installation Audit Jersey City, NJ 07303 0 0 0 3/17/00

011-1299240-AF(1) Financial Installation Audit San Juan, PR 00936 0 0 0 10/28/99

011-1299245-AF(1) Financial Installation Audit San Juan, PR 00936 0 0 0 12/10/99

011-1299329-AF(1) Financial Installation Audit Florence, KY 41042 0 0 0 11/10/99

011-1299330-AF(1) Financial Installation Audit Chicago, IL 61938 0 0 0 11/3/99

011-1299723-AF(1) Financial Installation Audit Martinsburg, WV 25401 0 0 0 11/30/99

011-1299724-AF(1) Financial Installation Audit Merrifield, VA 22116 0 0 0 12/3/99

011-1299727-AF(1) Financial Installation Audit Capitol Heights, MD 20791 0 0 0 12/22/99

011-1299728-AF(1) Financial Installation Audit Washington, DC 20066 0 0 0 2/14/00

011-1299729-AF(1) Financial Installation Audit Luthervill/Timonium, 0 0 0 1/13/00

MD 21093

011-1299730-AF(1) Financial Installation Audit Rockville, MD 20850 0 0 0 2/28/00

011-1299732-AF(1) Financial Installation Audit Merrifield, VA 22081 0 0 0 2/3/00

011-1299744-AF(1) Financial Installation Audit Perris, CA 92570 0 0 0 11/15/99

011-1299746-AF(1) Financial Installation Audit Fullerton, CA 92831 0 0 0 11/24/99

011-1299748-AF(1) Financial Installation Audit Van Nuys, CA 91409 0 0 0 3/30/00

011-1299784-AF(1) Financial Installation Audit Thurmont, MD 21788 0 0 0 3/17/00

011-1299816-AF(1) Financial Installation Audit Elm City, NC 27822 0 0 0 3/8/00

011-1299819-AF(1) Financial Installation Audit Royal Oak, MI 48083 0 0 0 1/25/00

011-1299938-AF(1) Financial Installation Audit San Diego, CA 92199 0 0 0 2/29/00

011-1299942-AF(1) Financial Installation Audit Los Angeles, CA 90001 0 0 0 3/22/00

011-1299944-AF(1) Financial Installation Audit Orange, CA 92667 0 0 0 11/4/99

011-1300035-AF(1) Financial Installation Audit Denver, CO 80202 0 0 0 3/3/00

011-1300037-AF(1) Financial Installation Audit Colorado Springs, 0 0 0 1/28/00

CO 80903

011-1300039-AF(1) Financial Installation Audit Logan, UT 84321 0 0 0 2/10/00

011-1300139-AF(1) Financial Installation Audit San Antonio, TX 78284 0 0 0 11/15/99

011-1300140-AF(1) Financial Installation Audit Stillwater, OK 74074 0 0 0 11/9/99

011-1300152-AF(1) Financial Installation Audit Oklahoma City, OK 73198 0 0 0 2/24/00

011-1300153-AF(1) Financial Installation Audit Oklahoma City, OK 73198 0 0 0 1/31/00

011-1300200-AF(1) Financial Installation Audit Waterloo, IA 50701 0 0 0 12/14/99

011-1300207-AF(1) Financial Installation Audit Jefferson City, MO 65101 0 0 0 11/24/99

011-1300214-AF(1) Financial Installation Audit Hazelwood, MO 63042 0 0 0 2/15/00

011-1300219-AF(1) Financial Installation Audit Dubuque, IA 52001 0 0 0 11/2/99

011-1300220-AF(1) Financial Installation Audit St.Louis, MO 63155 0 0 0 2/1/00

011-1300248-AF(1) Financial Installation Audit Salt Lake City, UT 84199 0 0 0 2/4/00

011-1300250-AF(1) Financial Installation Audit Mesa, AZ 85201 0 0 0 12/10/99

011-1300251-AF(1) Financial Installation Audit Boulder, CO 80301 0 0 0 1/3/00

011-1300383-AF(1) Financial Installation Audit Wilkes-Barre, PA 18701 0 0 0 12/10/99

011-1300384-AF(1) Financial Installation Audit Scranton, PA 18505 0 0 0 12/10/99

011-1300497-AF(1) Financial Installation Audit Bloomsburg, PA 17815 0 0 0 3/15/00

PAGE 123

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date
011-1300500-AF(1) Financial Installation Audit Easton, PA 18044 0 0 0 2/3/00

011-1300502-AF(1) Financial Installation Audit Lancaster, PA 17604 0 0 0 2/23/00

011-1300508-AF(1) Financial Installation Audit Easton, PA 18043 0 0 0 2/3/00

011-1300516-AF(1) Financial Installation Audit Valley Forge, PA 19481 0 0 0 1/14/00

011-1300927-AF(1) Financial Installation Audit Melrose Park, IL 60160 0 0 0 11/26/99

011-1300961-AF(1) Financial Installation Audit Cincinnati, OH 45202 0 0 0 11/29/99

011-1300965-AF(1) Financial Installation Audit Dayton, OH 45401 0 0 0 1/18/00

011-1300967-AF(1) Financial Installation Audit Cincinnati, OH 45214 0 0 0 2/7/00

011-1300969-AF(1) Financial Installation Audit Sidney, OH 45365 0 0 0 1/28/00

011-1300970-AF(1) Financial Installation Audit Columbus, OH 43216 0 0 0 2/4/00

011-1300980-AF(1) Financial Installation Audit Hebron, OH 43025 0 0 0 3/15/00

011-1301231-AF(1) Financial Installation Audit Southfield, MI 48037 0 0 0 2/7/00

011-1301233-AF(1) Financial Installation Audit Troy, MI 48009 0 0 0 3/27/00

011-1301266-AF(1) Financial Installation Audit Jackson, MI 49201 0 0 0 2/22/00

011-1301268-AF(1) Financial Installation Audit Lansing, MI 48924 0 0 0 3/17/00

011-1301271-AF(1) Financial Installation Audit Lansing, MI 48037 0 0 0 2/28/00

011-1301509-AF(1) Financial Installation Audit Bloomsburg, PA 17815 0 0 0 3/15/00

011-1302193-AF(1) Financial Installation Audit Berwyn, IL 60402 0 0 0 12/28/99

011-1302198-AF(1) Financial Installation Audit Worth, IL 60482 0 0 0 1/11/00

011-1302199-AF(1) Financial Installation Audit Downers Grove, IL 60515 0 0 0 2/4/00

011-1302381-AF(1) Financial Installation Audit Worth IL 60482 0 0 0 1/14/00

011-1302405-AF(1) Financial Installation Audit Chicago, IL 60601 0 0 0 3/16/00

012-1298736-AF(1) Financial Installation Audit San Mateo, CA 94402 0 0 0 11/15/99

012-1299090-AF(1) Financial Installation Audit Royal Oak, MI 48068 0 0 0 12/17/99

012-1299920-AF(1) Financial Installation Audit Chatsworth, CA 91311 0 0 0 11/5/99

012-1300206-AF(1) Financial Installation Audit Clarion, IA 50526 0 0 0 11/1/99

012-1300962-AF(1) Financial Installation Audit Cincinnati, OH 45240 0 0 0 12/17/99

013-1298728-AF(1) Financial Installation Audit Freeport, ME 04033 0 0 0 11/15/99

013-1298984-AF(1) Financial Installation Audit Ft. Myers, FL 33902 0 0 0 10/26/99

013-1298991-AF(1) Financial Installation Audit Melbourne, FL 32901 0 0 0 12/7/99

013-1299201-AF(1) Financial Installation Audit Norwich, CT 06360 0 0 0 2/8/00

013-1299247-AF(1) Financial Installation Audit San Juan, PR 00919 0 0 0 1/24/00

013-1300524-AF(1) Financial Installation Audit Pittsburgh, PA 15213 0 0 0 12/30/99

014-1298649-AF(1) Financial Installation Audit Flushing, NY 11351 0 0 0 3/30/00

014-1298774-AF(1) Financial Installation Audit Ridgefield, WA 98642 0 0 0 2/17/00

014-1298986-AF(1) Financial Installation Audit Miami, FL 33149 0 0 0 1/21/00

014-1298988-AF(1) Financial Installation Audit Miami, FL 33145 0 0 0 1/21/00

014-1299034-AF(1) Financial Installation Audit Evans, GA 30809 0 0 0 11/18/99

014-1299036-AF(1) Financial Installation Audit Forest, MS 39074 0 0 0 11/18/99

014-1299043-AF(1) Financial Installation Audit Indian Head, MD 20640 0 0 0 10/29/99

014-1299202-AF(1) Financial Installation Audit Niantic, CT 06357 0 0 0 11/29/99

014-1299205-AF(1) Financial Installation Audit Walpole, NH 03608 0 0 0 12/29/99

014-1299222-AF(1) Financial Installation Audit Hackettstown, NJ 07840 0 0 0 2/24/00

014-1299234-AF(1) Financial Installation Audit Elizabeth, NJ 07202 0 0 0 1/31/00

014-1299785-AF(1) Financial Installation Audit Locust Grove, VA 22508 0 0 0 3/17/00

014-1299787-AF(1) Financial Installation Audit Lanham-Seabrook, 0 0 0 2/25/00

MD 20706

014-1299937-AF(1) Financial Installation Audit Santa Ana, CA 92799 0 0 0 1/14/00

PAGE 124 APPENDICES

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date
014-1300156-AF(1) Financial Installation Audit Irving, TX 75063 0 0 0 12/15/99

014-1300157-AF(1) Financial Installation Audit Baton Rouge, LA 70862 0 0 0 11/24/99

014-1300208-AF(1) Financial Installation Audit Wentzville, MO 63385 0 0 0 1/13/00

014-1300209-AF(1) Financial Installation Audit Beulah, ND 58523 0 0 0 3/15/00

014-1300224-AF(1) Financial Installation Audit Milan, IL 61264 0 0 0 12/6/99

014-1300225-AF(1) Financial Installation Audit Marshfield, MO 65706 0 0 0 1/13/00

014-1300228-AF(1) Financial Installation Audit North Platte, NE 69101 0 0 0 2/14/00

014-1300506-AF(1) Financial Installation Audit Thorofare, NJ 08086 0 0 0 12/30/99

014-1300982-AF(1) Financial Installation Audit Zanesville, OH 43701 0 0 0 3/28/00

014-1301289-AF(1) Financial Installation Audit Ft. Wayne, IN 46805 0 0 0 3/9/00

015-1299038-AF(1) Financial Installation Audit Linden, AL 36748 0 0 0 11/18/99

015-1299102-AF(1) Financial Installation Audit Rio, IL 61472 0 0 0 10/28/99

015-1299237-AF(1) Financial Installation Audit Fairlawn, NJ 07410 0 0 0 1/31/00

015-1299726-AF(1) Financial Installation Audit Davy, WV 24828 0 0 0 12/16/99

015-1300217-AF(1) Financial Installation Audit Clemons, IA 50051 0 0 0 1/24/00

015-1300247-AF(1) Financial Installation Audit Dexter, NM 88230 0 0 0 3/8/00

DISTRICT ACCOUNTING OFFICE AUDITS

016-1298651-AF(2) Financial Installation Audit White Plains, NY 10602 $0 $0 $0 11/23/99

016-1298675-AF(2) Financial Installation Audit Sacramento, CA 95799 0 0 0 10/22/99

016-1298677-AF(1) Financial Installation Audit Oakland, CA 94615 0 0 0 1/24/00

016-1299028-AF(2) Financial Installation Audit Jackson, MS 39201 0 0 0 12/23/99

016-1299181-AF(1) Financial Installation Audit Hartford, CT 06100 0 0 0 3/13/00

016-1299457-AF(2) Financial Installation Audit Philadelphia, PA 19101 0 0 0 11/16/99

016-1300040-AF(1) Financial Installation Audit Albuquerque, NM 87102 0 0 0 3/3/00

016-1300971-AF(1) Financial Installation Audit Columbus, OH 43216 0 0 0 2/24/00

188-1298641-AF(2) Financial Installation Audit White Plains, NY 10602 0 0 0 12/20/99

188-1298819-AF(2) Financial Installation Audit Oakland, CA 94615 0 0 0 11/1/99

188-1298821-AF(2) Financial Installation Audit San Francisco, CA 94188 0 0 0 12/21/99

188-1298822-AF(2) Financial Installation Audit Sacramento, CA 95799 0 0 0 11/4/99

188-1299455-AF(2) Financial Installation Audit Philadelphia, PA 19101 0 0 0 12/7/99

188-1300041-AF(1) Financial Installation Audit Albuquerque, NM 87101 0 0 0 3/10/00

188-1300428-AF(1) Financial Installation Audit Oklahoma City, OK 73125 0 0 0 3/10/00

188-1300429-AF(1) Financial Installation Audit Grand Prairie, TX 75051 0 0 0 2/21/00

188-1300974-AF(1) Financial Installation Audit Columbus, OH 43216 0 0 0 2/24/00

800-1300800-ICR(1) Financial Installation Audit Detroit, MI 48236 0 0 0 1/13/00

EXPENDITURE INVESTIGATIONS

195-1299456-EI(1) Procurement Activities St. Louis, MO 63155 $30,425 $0 $0 11/8/99

566-1265991-EI(1) IMPAC Credit Card Review San Diego, CA 92199 0 0 0 12/14/99

PAGE 125

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Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date
Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

FACILITY PROGRAM AUDITS

267-1293180-FPA(1) SiteMeta Model Usage Washington, DC 20066 $0 $0 $0 3/16/00

FINANCIAL INVESTIGATIONS

017-1253585-FI(2) Financial Investigation Detroit, MI 48232 $0 $0 $0 11/18/99

017-1288456-FI(2) Financial Investigation Seahurst, WA 98062 0 0 0 10/27/99

017-1294538-FI(2) Financial Investigation Exmore, VA 23350 0 0 0 10/1/99

017-1294539-FI(2) Financial Investigation Melfa, VA 23410 0 0 0 10/1/99

017-1292697-FI(2)4 Financial Investigation Diamondale, MI 48821 0 0 0 7/16/99

017-1295925-FI(2) Financial Investigation New York, NY 10001 0 0 0 11/17/99

017-1296647-FI(2) Financial Investigation Osburn, ID 83849 0 0 0 10/1/99

017-1296651-FI(2)4 Financial Investigation Lansing, MI 48917 0 0 0 9/8/99

017-1298857-FI(2) Financial Investigation Royal Oak, MI 48083 0 0 0 1/10/00

017-1301046-FI(2) Financial Investigation Haddock, GA 31033 0 0 0 11/1/99

017-1306153-FI(2) Financial Investigation Yacolt, WA 98675 0 0 0 1/24/00

017-1308019-FI(2) Financial Investigation Dayton, Ny 14041 0 0 0 3/8/00

820-1212361-FI(1) Financial Investigation Portland, OR 97205 0 0 0 11/2/99

827-1234991-FI(1) Financial Investigation Gateway, CO 81522 0 0 0 1/25/00

830-1302496-FI(1) Financial Investigation Bosie, ID 83708 0 0 0 11/18/99

833-1295888-FI(1) Financial Investigation San Jose, CA 95101 0 0 0 11/18/00

839-1298725-FI(2) Financial Investigation Golconda, IL 62938 0 0 0 10/18/99

840-1302577-FI(2) Financial Investigation Phoenix, AZ 85034 0 0 0 12/2/99

830-1307109-FI(2) Financial Investigation Bethalto, IL 62010 0 0 0 2/7/00

840-1306609-FI(2) Financial Investigation Billings, MT 59101 0 0 0 2/15/00

841-1290810-FI(2) Financial Investigation Miami, FL 33138 0 0 0 12/7/99

842-1301419-FI(1) Financial Investigation Grand Rapids, MI 49504 0 0 0 1/18/00

843-1307671-FI(1) Financial Investigation Yakima, WA 98902 0 0 0 3/23/00

146-1183701-PVS(2) Financial Investigation Detroit, MI 48233 0 0 0 3/10/00

165-1305549-PVS(2) Financial Investigation Independence, OR 97351 0 0 0 1/13/00

REVENUE INVESTIGATIONS

061-1259463-RI(1) Postage Meter Stamford, CT 06920 $0 $0 $0 12/22/99

061-1297813-RI(1) Postage Meter Cicero, IL 60650 0 0 0 10/13/99

061-1299270-RI(1) Postage Meter Asheville, NC 28813 0 0 0 12/17/99

061-1299271-RI(1) Postage Meter Richmond, VA 23228 0 0 0 1/18/00

061-1299272-RI(1) Postage Meter Louisville, KY 40213 0 0 0 1/7/00

061-1299339-RI(1) Postage Meter Cleveland, OH 44113 0 0 0 12/17/99

061-1299566-RI(1) Postage Meter Albuquerque, NM 87110 0 0 0 12/21/99

061-1299582-RI(1) Postage Meter Tampa FL 33603 0 0 0 3/10/00

061-1299589-RI(1) Postage Meter Garland, TX 75044 0 0 0 11/24/00

061-1299593-RI(1) Postage Meter Birmingham, AL 35206 0 0 0 1/19/00

061-1299594-RI(1) Postage Meter Spokane, WA 99212 0 0 0 2/15/00

061-1299595-RI(1) Postage Meter Stone Mountain, 0 0 0 12/8/99

GA 30087

061-1299601-RI(1) Postage Meter Renton, WA 98055 0 0 0 12/7/99

061-1299605-RI(1) Postage Meter Hauppauge, NY 11788 0 0 0 1/3/00

061-1299608-RI(1) Postage Meter Tarrytown, NY 10591 0 0 0 2/24/00

061-1299620-RI(1) Postage Meter Boise, ID 83705 0 0 0 3/22/00

061-1300036-RI(1) Postage Meter Lakewood, CO 80214 0 0 0 11/30/99

PAGE 126 APPENDICES
061-1300252-RI(1) Postage Meter Santa Fe, NM 87505 0 0 0 3/2/00

061-1300331-RI(1) Postage Meter Sacramento, CA 95814 0 0 0 1/18/00

061-1300332-RI(1) Postage Meter San Jose, CA 95126 0 0 0 1/21/00

061-1300385-RI(1) Postage Meter Bensalem, PA 19021 0 0 0 1/25/00

061-1300485-RI(1) Postage Meter Lacrosse, WI 54603 0 0 0 1/21/00

061-1301540-RI(1) Postage Meter Lansing, MI 48910 0 0 0 2/18/00

061-1303288-RI(1) Postage Meter Los Angeles, CA 90023 0 0 0 2/2/00

061-1305144-RI(1) Postage Meter Houston, TX 77251 0 0 0 3/16/00

061-1305918-RI(1) Postage Meter Houston, TX 77087 0 0 0 2/8/00

062-1206077-RI(1) Nonprofit Mail Tallahassee, FL 32301 0 0 0 2/17/00

062-1233050-RI(1) Nonprofit Mail Long Beach, CA 90809 0 0 0 2/15/00

062-1301372-RI(1) Nonprofit Mail Livonia, MI 48150 0 0 0 11/16/99

062-1302374-RI(1) Nonprofit Mail Flint, MI 48532 0 0 0 12/8/99

062-1303709-RI(1) Standard Mail Albany, GA 31707 0 0 0 12/8/99

062-1303973-RI(1) Nonprofit Mail Pontiac, MI 48343 0 0 0 12/15/99

064-1282422-RI(1) Business Reply Mail Tampa, FL 33623 0 0 0 12/17/99

064-1302881-RI(1) First-Class Mail Bedford, VA 24523 0 0 0 11/17/99

064-1306639-RI(1) First-Class Mail Richmond, VA 23294 0 0 0 1/28/00

064-1308714-RI(1) Postage Meter Norwalk, CT 06856 0 0 0 2/25/00

065-1294384-RI(1) Periodical Mail W. Palm Beach, FL 33406 0 0 0 10/12/99

065-1294847-RI(1) Periodical Mail Cadillac, MI 49601 0 0 0 11/12/99

064-1305694-RI(1) Periodical Mail New York, NY 10036 0 0 0 1/21/00

066-1298980-RI(1) Periodical Mail Glasgow, KY 42141 0 0 0 10/4/99

066-1298981-RI(1) Nonprofit Mail Spartanburg, SC 29307 0 0 0 10/4/99

066-1298983-RI(1) Nonprofit Mail Danville, KY 40422 0 0 0 10/4/99

066-1304422-RI(1) Standard Mail Rockford, IL 61110 0 0 0 12/16/99

068-1300519-RI(1) First-Class Mail Richmond, VA 23227 0 0 0 11/29/99

069-1220769-RI(2)4 Caller Service Fees Seattle, WA 98124 0 0 0 5/3/99

069-1303033-RI(2)4 Caller Service Fees Des Moines, IA 50318 0 0 0 3/3/99

069-1304383-RI(2) Caller Service Fees Clarion, IA 50526 0 0 0 12/17/99

069-1308683-RI(2) Caller Service Fees Lanoka Harbor, NJ 08734 0 0 0 3/8/00

069-1308684-RI(2) Caller Service Fees Pine Beach, NJ 08741 0 0 0 3/8/00

069-1308685-RI(2) Caller Service Fees Stanhope, NJ 07874 0 0 0 11/29/99

069-1308687-RI(2) Caller Service Fees Yardville, NJ 08620 0 0 0 3/8/00

069-1310014-RI(2) Caller Service Fees Belford, NJ 07718 0 0 0 3/13/00

920-1203070-RI(1) First-Class Mail Hazelwood, MO 63042 0 0 0 2/16/00

921-1297254-RI(1) Plant Verified Drop Tarzana, CA 91356 0 0 0 2/10/00

Shipment Mail

921-1299389-RI(1) Plant Verified Drop Belle Mead, NJ 08502 0 0 0 11/3/99

Shipment Mail

923-1297408-RI(1) First-Class Mail Edison, NJ 08899 0 0 0 11/19/99

924-1254090-RI(1) Presort Bureaus Lynnfield, MA 01940 0 0 0 9/16/99

924-1285196-RI(1) Presort Bureaus Eugene, OR 97402 0 0 0 11/17/99

FINANCIAL MANAGEMENT TOTALS $266,129,103 $88,906

$5,834,9693

PAGE 127

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date
PERFORMANCE

Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

ACCEPTING AND PROCESSING, TRANSPORTATION, DELIVERY AND ENABLING FUNCTIONS

038-1288323-PA(2) Mail Flow Analysis Albany, NY 12212 $0 $0 $0 3/16/00

038-1292495-PA(2) Delivery Automation Denver, CO 80299 0 0 0 2/8/00

039-1291158-PA(2) Mail Transport Equipment Pasadena, CA 91102 0 0 0 12/8/99

039-1295484-PA(2) Transportation Review 0 0 5,073,926 3/29/00

052-1254545-PA(3)4 Indefinite Quantity Santa Clarita, CA 91380 0 0 0 9/21/99

Contract Work Orders

052-1289574-PA(3) City Carrier Harrisburg, PA 17107 0 0 0 11/17/99

Operations/Overtime 

052-1290664-PA(3) Carrier Operations San Antonio, TX 78265 0 0 1,857,900 10/5/99

052-1293000-PA(3) Window Operation Gaithersburg, MD 20898 0 0 0 10/18/99

Retail Hours

052-1293335-PA(3) Carrier Overtime Ft. Worth, TX 76161 0 0 0 12/22/99

052-1296292-PA(3) City Carrier 0 0 0 2/14/00

Operations/Overtime

312-1294163-PA(3) Service Improvement Houston, TX 77202 0 0 0 11/30/99

314-1288321-PA(3) Vehicle Maintenance Facility 0 0 0 10/19/99

SERVICE INVESTIGATIONS

070-1264180-SI(1)4 Observation of Chicago, IL 60657 $0 $0 $0 8/13/99

Mail Conditions

070-1268886-SI(1) Observation of Chicago, IL 60610 0 0 0 10/20/99

Mail Conditions

070-1291731-SI(1) Classification Reform Tampa, FL 33609 0 0 0 10/12/99

Follow-Up Review

070-1309573-SI(1) Mail Service Beverly Hills, CA 90210 0 0 0 3/14/00

071-1294372-SI(2) Operational Review Allen Park, MI 48101 0 0 0 1/28/00

071-1296235-SI(2) Overnight Delivery San Juan, PR 00960 0 0 0 11/1/99

071-1296405-SI(2) Observation of Washington, DC 20260 0 0 0 2/23/00

Mail Conditions

072-1267684-SI(2) Observation of Richmond, VA 23232 0 0 0 11/3/99

Mail Conditions

PAGE 128 APPENDICES
Un- Recommend

Report/Case Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs3 Better Use Date

072-1267691-SI(2) Observation of Louisville, KY 40231 0 0 0 11/29/99

Mail Conditions

072-1295069-SI(2)4 Change of San Jose, CA 95101 0 0 0 9/21/99

Address Complaints

072-1297502-SI(2) Observation of Chicago, IL 60669 0 0 1,985,500 12/20/99

Mail Conditions

PERFORMANCE TOTALS $ 0 $8,917,326

$ 0

INSPECTION SERVICE TOTALS $266,129,103

$5,834,9693

$9,006,232

GRAND TOTALS $269,409,854

$6,911,2753

$39,373,232

PAGE 129

3

Unsupported Costs are included with the amounts shown as Questioned Costs.

4

These reports were issued in a prior Semiannual Reporting period; however, they were not

entered into the Inspection Service database information system until the current reporting period.

To ensure all reports issued to management are reported to Congress, these reports are being

included during this reporting period.
APPENDIX C

Findings of Questioned Costs

For the period ending March 31, 2000

OFFICE OF INSPECTOR GENERAL AND INSPECTION SERVICE

Unsupported

Costs

Total Included In

Number of Questioned Questioned

Description Reports Costs Costs

Reports for which no management 

decision was made at the beginning

of the reporting period 20 $24,446,815 $6,250,621

Reports requiring a management 

decision that were issued 

during the reporting period 16 269,409,854 6,911,275

TOTALS 36 $293,856,669 $13,161,896

Reports for which a management 

decision was made during the 

reporting period (i + ii) 16 $1,126,565 $10,383

(i) Dollar value of disallowed costs $571,670

(ii) Dollar value of costs not disallowed $554,895

Reports for which no management 

decision was made by the end of 

the reporting period. Negotiations are ongoing. 20 $292,730,104 $13,151,513

Reports for which no management decision was 

made within six months of issuance 

(See Note 1 for list of individual reports) 3 $15,742,109

Reports for which no management decision was 

made within one year of issuance 

(See Note 2 for list of individual reports) 3 $7,617,479 $6,240,238

Note 1 – Reports for which no management decision was made within six months of issuance:

Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Project Type Costs Costs

7/28/99 184-1259633-AC(1) Contract Audit $29,758 $0

9/24/99 190-1290163-AC(2) Contract Audit 15,662,099 0

7/9/99 192-1262874-AC(2) Contract Audit 50,252 0

TOTALS $15,742,109 $0

Note 2 – Reports for which no management decision was made within one year of issuance:

Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Project Type Costs Costs

6/16/98 184-1218249-AC(1) Contract Audit $515,521 $398,675

12/7/98 184-1243166-AC(1) Contract Audit 7,087,038 5,841,563

3/12/98 182-1224877-AC(1) Contract Audit 14,920 0

TOTALS $7,617,479 $6,240,238

PAGE 130 APPENDICES
APPENDIX D

Recommendations That Funds

Be Put to Better Use

For the period ending March 31, 2000

OFFICE OF INSPECTOR GENERAL AND INSPECTION SERVICE

Number of

Description Reports Dollar Value

Reports for which no management decision was made at 

the beginning of the reporting period 49 $104,768,853

Reports requiring a management decision that were issued 

during the reporting period 8 39,373,232

TOTALS 57 $144,142,085

Reports for which a management decision was made during the report period 37 $99,406,468

(i) Value of recommendation implemented by management $43,433,198

(ii) Value of recommendation that management did not recover $55,973,270

(iii) Value of recommendations that management did not agree to implement $0

Reports for which no management decision was made by the end of the reporting period 20 $44,735,617

Reports for which no management decision was made 

within six months of issuance (See Note 1 for list of individual reports) 5 $4,704,159

Reports for which no management decision was made 

within one year of issuance (See Note 2 for list of individual reports) 13 $34,868,626

Note 1 – Reports for which no management decision was made within six months of issuance:

Recommend

Report Case Funds Put to

Date Number Project Type Better Use

4/30/99 181-1283911-AC(1) Contract Audit 46,162

6/15/99 181-1288561-AC(1) Contract Audit 94,303

7/21/99 181-1289630-AC(1) Contract Audit 4,403,092

8/27/99 181-1294162-AC(1) Contract Audit 122,861

9/20/99 181-1296773-AC(1) Contract Audit 37,741

TOTAL $4,704,159

Note 2 – Reports for which no management decision was made within one year of issuance:

Recommend

Report Case Funds Put to

Date Number Project Type Better Use

10/13/98 181-1252323-AC (1) Contract Audit $6,166,150

10/30/98 181-1252372-AC(1) Contract Audit 1,710,680

12/18/98 181-1253441-AC(1) Contract Audit 145,532

11/24/98 181-1254410-AC(1) Contract Audit 137,480

3/9/99 181-1265241-AC(1) Contract Audit 103,476

4/14/98 181-1237199-AC(1) Contract Audit 14,156,740

5/30/96 181-1165940-AC(1) Contract Audit 8,370,460

5/23/96 181-1187389-AC(1) Contract Audit 2,799,714

7/3/97 181-1204343-AC(1) Contract Audit 134,283

7/22/97 181-1212417-AC(1) Contract Audit 10,595

1/23/98 181-1214298-AC(1) Contract Audit 135,198

12/3/97 181-1215690-AC(1) Contract Audit 481,301

11/26/97 181-1216446-AC(1) Contract Audit 517,017

TOTAL $34,868,626

PAGE 131
APPENDIX E

Unresolved Reports

For the period ending March 31, 2000

OFFICE OF INSPECTOR GENERAL AND INSPECTION SERVICE

Number of Total 

Number of Inspection Service Number of

Description OIG Reports Reports Reports

Reports Unresolved at Beginning of Period:

Reports Issued Before 4/1/99 7 45 53

Reports issued Prior Period, 9/30/99 3 51 53

Total Reports 10 96 106

Reports Issued This Period, 3/31/00 3 120 123

Total Reports5 13 216 229

Reports Resolved:

Issued Before 4/1/99 0 33 33

Issued Prior Period 9/30/99 0 41 41

Issued This Period 3/31/00 0 78 78

Total Resolved 0 152 152

Reports Unresolved as of 3/31/00:

One year or more, 4/1/99 

(See Note 1 for list of individual reports) 7 12 19

Six months or more but less than one year, 10/1/99 

(See Note 2 for list of individual reports) 3 10 13

Less than Six Months 3 42 45

TOTAL UNRESOLVED 13 64 77

Reports Resolved Where Management Did Not Agree 

to Implement All Recommendations 0 3 3

5

Excludes audits previously reported, in Appendix C, Findings of Questioned Costs; and Appendix

D, Recommendations That Funds Be Put To Better Use.

PAGE 132 APPENDICES
Note 1 – List of reports pending one year or more:

OFFICE OF INSPECTOR GENERAL 

Issue Report/Case

Date Number Condition6

3/30/99 LR-MA-99-006 Employee Allegations at the Ponca City Post Office 

3/30/99 LR-AR-99-006 Allegations of Retaliation at the Garden Grove Post Office 

3/31/99 LR-AR-99-001 Labor and Management Workplace Disputes

3/31/99 FA-AR-99-001 Review of the Atlanta Olympic Facility Improvement Plan

3/31/99 LR-AR-99-008 Follow-up on Postal Service Recommendations to Investigate Sexual Harassment

Allegations and to Reassign a Supervisor 

3/31/99 LR-AR-99-009 Administration of the Advance Sick Leave Program and Health and Safety

Issues at the Garden Grove Post Office

3/31/99 DS-MA-99-002 Accident Reporting Process 

INSPECTION SERVICE

Issue Report/Case

Date Number Condition

8/12/97 1199652-AD(1) Electronic Data Processing Controls, San Mateo, CA – Management is progressing in testing critical applications and providing off-site storage for critical files.

9/30/98 1225935-AD(1) Electronic Data Processing Controls, St. Paul, MN – Management is concluding

administrative security issues.

5/11/98 1204380-PA(1) National Audit on Effectiveness of Employee Reassignments -–Management is

developing integrated policies and procedures on reassignment processes and providing attention in complement planning initiatives.

5/12/98 1209811-PA(1) National Audit on Air Transportation Networks – Management is preparing

operating plans and corrective actions are being taken. 

6/05/98 1214098-PA(1) National Audit on City Route Inspections and Adjustment Process –

Management is developing instructions to review, train, and increase supervision

for the route inspections/adjustment process and the associated monitoring of

savings.

9/15/98 12202833-PA(1) National Audit on Postal Retail Stores – Management is developing procedures

in retail operations and a handbook and instructions are being updated.

12/30/98 1223496-PA(1) National Audit on Logistics and Transportation – Management is in the process

of implementing recommendations regarding air-to-surface mail routing.

3/17/99 1244541-PA(1) National Audit on Priority Mail – Management is developing procedures to

ensure efficient and effective processing of priority mail.

5/7/98 1223382-AX(1) Mail Transport Equipment Service – Management is implementing recommendations regarding program planning management.

1/27/99 1260310-RI(1) Postage Meter, Anchorage, AK – Management is in the process of reconciling instock inventory records.

12/30/98 1262023-RI(1) Postage Meter, Southington, CT – Management is in the process of implementing recommendations regarding meter inventories, meter control, and miss-set

meters.

12/31/97 1188871-RI(1) Inbound Verification Procedures, Jersey City, NJ – Management is continuing to

develop action plans to verify inbound foreign and Canadian mail.

6

Postal Service and OIG management just recently implemented a process to address the disagreements shown in this appendix (See Overview section)

PAGE 133
Note 2 – List of reports pending six months or more but less than one year:

OFFICE OF INSPECTOR GENERAL

Issue Report/Case

Date Number Condition6

3/23/00 OV-MA-99-003 (R) FY 1998 National Leadership Conference

9/30/99 LR-AR-99-012 Actions Against Postmasters Atlanta District

9/30/99 RG-MA-99-010 Reproductions of Stamp Images

INSPECTION SERVICE

Issue Report/Case

Date Number Condition

8/13/99 1256263-AF(1) Financial Installation Audit, Chicago, IL – Management is in the process of

implementing recommendations relating to employee accountabilities, post office

box/caller service and stamp inventories.

8/6/99 1256274-AF(1) Financial Installation Audit, Seattle, WA – Management is reviewing procedures

relating to business reply mail and post office box/caller service fees.

8/12/99 1256722-AF(1) Financial Installation Audit, San Luis Obisqo, CA – Management is implementing procedures relating to office accountability.

9/2/99 1257164-AF(1) Financial Installation Audit, Baltimore, MD – Management is implementing procedures relating to post office box/caller service and business reply mail.

4/19/99 1261674-FI(2) Self-Initiated Financial Review, Washington, DC – Management is implementing procedures relating to office accountability and security.

7/6/99 1253949-RI(1) Postage Meter, Hayward, CA – Management is in the process of implementing

recommendations relating to meter and inventory inspections.

5/22/99 1263973-RI(1) Postage Meter, Washington, DC – Management is in the process of implementing internal control recommendations.

9/14/99 1294489-RI(1) Business Reply Mail Review, Chicago, IL – Management is in the process of

implementing recommendations relating to postage due/business reply mail.

4/19/99 1254408-SI(2) Mail Service Review, Chicago, IL – Management is currently re-evaluating maintenance staffing issues.

8/10/99 1294973-PA(3) Processing and Distribution Audit, Oakland, CA – Management is in the process

of implementing recommendations relating to the utilization of the optical character reader.

PAGE 134 APPENDICES
APPENDIX F

Summary of Actions Under 

39 USC § 3005 and § 3007

For the period October 1, 1999, through March 31, 2000

INSPECTION SERVICE

False Cease &

Complaints Consent Representation Desist

Type of Scheme Filed Agreements Orders Orders

Advance fee

Boiler rooms/Telemarketing 1 1

Contest/Sweepstakes 1223

Rebate fraud

Directory solicitations

Distributorships

Employment

False billings 6628

Fraud against government agencies

Fraud against Postal Service

Insurance

Investments 1 1 1

Loans

Lotteries (Foreign and Domestic)

Medical

Memberships

Merchandise:

Failure to furnish 2 2 2

Failure to pay 3 3 3

Misrepresentation 2213

Miscellaneous 4222

Solicitations

Travel

Work at home 2213

TOTALS 21 21 8 26

Other Administrative Actions

Administrative Actions Requests 17

Temporary Restraining Orders Requested 1

Temporary Restraining Orders Issued 1

Civil Injunctions (1345) Requested 0

Civil Injunctions (1345) Issued 0

Cases Using Direct Purchase Authority 0

Refusals of Direct Purchase Authority 0

Civil Penalties (Section 3012) Imposed $0

Expenditures Incurred for:

Test Purchases $0

Expert Testimony $0

Witness Travel $0

Withholding Mail Orders Issued 83

Voluntary Discontinuances 263

PAGE 135
DEFINITIONS OF SCHEMES

Advance fee. Obtaining fees purporting to secure buyers or obtain loans.

Boiler rooms/Telemarketing. An office or suite of offices with banks of telephones and telephone

solicitors who use high-pressure techniques to persuade consumers to respond to bogus offers.

Contest/Sweepstakes. Schemes in which the respondent is required to pay a fee to obtain prizes

of money, gifts, or other items of value. "Prizes" are never shipped or are inferior to what was

promised.

Rebate fraud. Redeeming cents-off coupons or manufacturers’ rebates when no merchandise was

actually purchased; establishing fictitious stores, clearing houses, or addresses; or submitting

counterfeit coupons or rebates by consumers.

Directory solicitations. Fraudulent solicitation in the guise of invoices for advertisement or

renewal in business directories.

Distributorships. Pyramid schemes in which it is mathematically impossible for all participants

to recoup their investments. The emphasis is not on the sale of the product, but on getting others to participate.

Employment. Soliciting money for information or assistance in obtaining nonexistent or misrepresented jobs.

False billings. Mailing solicitation in the guise of billings.

Fraud against government agencies. Any scheme that attempts to defraud a government agency

except the Postal Service.

Fraud against Postal Service. Any scheme that attempts to defraud the Postal Service.

Insurance. Investigations of insurance-related fraud involving false claims, false advertising on

the availability of insurance, or the collection of premiums for nonexistent policies.

Investments. Misrepresented opportunities to invest in commodities gems, metals, stocks,

bonds, certificates of deposit, mutual funds, IRAs, coins, stamps, art, etc.

Loans. Mailings soliciting money for information on nonexistent or misrepresented loans.

Lottery. Advertisements seeking money or property by mail for participation in schemes to win

prizes through chance.

Medical. Sales by mail of misrepresented health products or services, including fraudulent medical degrees.

Memberships. Failure to provide services advertised in connection with organization membership.

Merchandise failure to furnish. A mail order operator that does not provide ordered merchandise.

Merchandise failure to pay. Mail order merchandise that is acquired without providing payment.

Merchandise misrepresentation. Mail order merchandise or services that are materially misrepresented in advertising.

Miscellaneous. Any other scheme not described in a specific category.

Solicitations. Fraudulent solicitation of funds through the mail for alleged charitable, religious,

minority-oriented groups, and similar cases or organizations.

Travel. Fraudulent vacation or travel opportunities.

Work at home. Schemes, such as envelope stuffing, that do not provide home employment.

PAGE 136 APPENDICES
APPENDIX G

Criminal Statistics

For the period October 1, 1999, through March 31, 2000

OFFICE OF INSPECTOR GENERAL

Type of Investigation Arrests Convictions7

Revenue & Cost Containment

Revenue Protection 9 1

OIG TOTALS8 9 1

INSPECTION SERVICE

Type of Investigation Arrests Convictions7

Revenue & Asset Protection Program

Expenditure Investigations 1 8

Financial Investigations 169 159

Workers' Compensation Fraud 29 33

Revenue Investigations 59 45

Robbery 34 56

Burglary 91 85

Miscellaneous External Crimes

Includes counterfeit and contraband postage, money order 

offenses, vandalism and arson 356 264

Assaults Against Employees

Includes threats and assaults against on-duty postal employees 230 181

Employee Narcotics Cases

Includes employees and non-employees selling narcotics on 

postal property 13 20

Mail Theft by Employees

Includes theft and possession of stolen mail 404 368

Mail Theft by Non-Employees or Contractors

Includes theft and possession of stolen mail 2,522 1,997

Miscellaneous Employee Crimes

Includes theft of postal property and sabotage of equipment 42 46

Bombs/Explosive Devices 39 34

Mailing of Controlled Substances

Includes hazardous material, firearms and weapons, intoxicants,

explosives other than bombs, extortion and false documents 804 569

Child Exploitation, Mailing of Obscene Matter and

Sexually Oriented Advertisements 112 108

Mailing of Miscellaneous Nonmailables

Includes hazardous material, firearms and weapons, intoxicants,

explosives other than bombs, extortion and false documents 34 20

Mail Fraud 827 715

INSPECTION SERVICE TOTALS8 5,766 4,708

GRAND TOTALS 5,775 4,709

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

8

Arrests and convictions include joint investigations with other federal law enforcement agencies.

PAGE 137
APPENDIX H (PROTOTYPE)

Summary of Postal Service Investigative

Activities Under 39 USC § 3013

The Postal Reorganization Act requires the Postmaster General to furnish information on the

investigative activities of the Postal Service on a semiannual basis. With passage of the Deceptive

Mail Prevention and Enforcement Act in December 1999, the Postal Service’s reporting obligations

were changed. These changes will have a significant impact on the OIG’s oversight of the

Inspection Service and the manner in which the OIG will fulfill its semiannual reporting obligations.

The act requires the Postal Service to submit its semiannual report to the OIG rather than to the

Board of Governors, expands the subject matter that must be reported, and revises the reporting

schedule to coordinate with the OIG Semiannual Report to Congress. The information in the

report includes actions directed at combating crimes involving the mail; costs and expenditures

devoted to Postal Service investigative activities; use of the newly-conferred subpoena power;

and any additional information the OIG may require. This change in reporting requirements is

effective for the reporting period beginning April 1, 2000, and will be reported in future

Semiannual Reports to Congress as shown in this prototype appendix. 

The following outline describes the significant reporting obligations required under 39 USC §

3013.

ABUSE OF MAILS

(39 USC § 3013(1), (2), and (3))

This section presents:

• Proceedings instituted or resolved under 39 USC § 3005 during the reporting period;

• Cases involving exercise of authority granted under 39 USC § 3005(e); and

• Activities of the Postal Service seeking injunctions to temporarily detain mail.

SWEEPSTAKES SUBPOENAS

(39 USC § 3013(5))

Detailed discussions of each case in which the Postal Service exercised its subpoena authority in

investigating cases of alleged illegal and deceptive sweepstakes offerings.

FINANCIAL REPORTING ON INVESTIGATIVE ACTIVITIES

(39 USC § 3013(4))

Financial information related to conducting Postal Service investigative activities. 

MISCELLANEOUS ACTIVITIES

(39 USC § 3013(6))

All other additional information which the OIG may require. 

PAGE 138 APPENDICES
,

THIS PAGE TEARS OUT FOR YOUR CONVENIENCE

NOTES
NOTES
NOTES
NOTES
US Postage Stamps

ISSUED FROM APRIL 1, 1999 THROUGH SEPTEMBER 30, 1999

3 UNCLE SAM – colorfully depicts “Uncle Sam” on a stamp used for secondounce postage.

16 HOLIDAY CELEBRATION: HANUKKAH- celebrates the Jewish Festival

of Lights, the first stamp jointly issued between two countries.

18 YEAR 2000 – serves as a historical record of a unique period of time in our

country with a traditional image of a baby ringing in the New Year.

20 INSECTS AND SPIDERS – celebrates National Stamp Collecting Month

with life-like depictions of 16 crawling insects and four spiders.

42 VIVARINI’S MADONNA AND CHILD – captures the warmth of the holiday season through the use of Bartolomeo Vivarini’s masterpiece, Madonna

and Child, painted during the 15th century.

46 HOLIDAY CONTEMPORARY: DEER – features a fleet-footed deer prancing across a colorful background as a token of holiday friendship, cheer, and

goodwill.

62 GRAND CANYON – recognizes one of the Nation’s beautiful landmarks,

part of a series of four scenes that depicts “Americana.”

76 LUNAR NEW YEAR: DRAGON – celebrates the Year of the Dragon, the

eighth in the Lunar New Year Commemorative series.

83 NORTH ATLANTIC TREATY ORGANIZATION – honors the 50th

anniversary of the founding of this organization which formed an alliance of

12 independent nations committed to one nation’s defense.

84 PACIFIC COAST RAIN FOREST – recognizes 26 animal and plant species

common to the Pacific Northwest Rain Forest, the second in the “Nature of

America” series.

94 PATRICIA ROBERTS HARRIS – honors this woman for her steadfast

determination and forthrightness, the 23rd American and seventh woman

commemorated in the Black Heritage series.

98 U.S. NAVY SUBMARINES – depicts five Navy submarines from different

periods in submarine technology in appreciation of the dedication and valor of

our nation’s submarine force.

101 OFFICIAL MAIL –

108 HOLIDAY CELEBRATION: KWANZAA – commemorates the African

American seven-day celebration of family, community, and culture.

PAGE

ACKNOWLEDGEMENTS

This report represents the

outstanding efforts and

accomplishments of OIG and

Inspection Service staff. The

production of this report would

not have been possible without

the contributions and dedication

of the many OIG and Inspection

Service who contributed to this

effort, particularly Wayne

Goleski, Jim Crumpacker, Dan

Kenney, Allan Reid and Paula

Staub of OIG and Tom Denneny

of the Inspection Service.
OFFICE OF INSPECTOR GENERAL

1735 N. Lynn Street 

Arlington, VA 22209-2020

(703) 248-2300

Fax: (703)248-2291

Internet: www.uspsoig.gov