October 1, 1999 - March 31, 2000

Semiannual Report to Congress 

Including Significant Activities of the Inspection Service

OFFICE OF INSPECTOR GENERAL 

October 1, 2000 – March 31, 2001 October 1, 2000 – March 31, 2001

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

I

am pleased to report that midway through our fifth year as an independent Office of Inspector General (OIG), we continue to serve as an independent and objective voice that illuminates areas where the Postal Service can prevent fraud, waste, abuse, and mismanagement and improve its

critical management practices. After establishing our presence and forming a

highly-talented, experienced, and dedicated team of OIG employees, the

results of our efforts are clear. Our work is making a difference – not just to

the Postal Service but also to the inspector general and federal law enforcement communities and to the American public. 

By investing in our own future, we have invested in the future of the

Postal Service. We are using the latest and best technology to improve our

productivity to better assist the Postal Service. We have made great progress

in clarifying our roles and responsibilities with those of the Inspection Service, and successfully transitioned field financial audit work previously handled by the Inspection Service. To better serve our customers, we broadened

our presence nationwide – this reporting period, we opened four new offices

across the country, bringing our total number of field offices to 15. We implemented a reorganization designed to focus our resources on the Postal Service’s needs and priorities. And, after months of aggressive recruiting efforts,

we are close to meeting our staffing goal of 725 employees.

We are now focusing on more complex issues within the Postal Service.

In our first four years of performing audits and investigations, clear trends

have emerged. We have used these trends to identify areas in postal operations that need to be strengthened. As I noted in my April 4, 2001, statement

to the House Committee on Government Reform, these areas include contracting, budget, return on investment, labor management, systems development, computer security and privacy, and strategic planning. Based on the

work we have completed since our inception and the knowledge we have

gained of the Postal Service, we have identified what we believe are the most

challenging issues the Postal Service faces. These issues are discussed in detail

on pages 14 through 19.

It is crucial that we continue to serve as an independent and objective

voice that adheres to the highest quality standards possible. The past six

months have been a turbulent time for the Postal Service. While it ended 

FY 2000 with high levels of customer satisfaction, record service delivery, and

increased productivity, the Postal Service has projected a loss of $2 billion to

$3 billion for this fiscal year. Because of this projected loss, the Postal

Service’s operations, practices, policies, and services are being scrutinized

intensely by competitors, the media, and stakeholders. We recognize that the

Postal Service faces tremendous challenges in the emerging electronic

marketplace and commend its efforts to address these issues. We believe that

by strengthening its basic operations and ensuring its core business processes

are sound, the Postal Service will be taking significant steps in overcoming

these challenges. 

A Foundation for the Future
This Semiannual Report to Congress details the significant activities and accomplishments of

the OIG and the Inspection Service from October 1, 2000, through March 31, 2001. This report

details the efforts of both the OIG and the Inspection Service toward combating fraud, waste, abuse,

and mismanagement within the Postal Service and fulfills our reporting requirement under the

Inspector General Act and Inspection Service requirements under the Mail Order Consumer Protection Act.

In this reporting period, we issued 88 audit reports and 117 management advisory reports and

other products. These efforts resulted in over $109 million in questioned costs, unrecoverable costs,

and funds to be put to better use. In addition, we closed 86 investigations resulting in 30 arrests; 34

indictments; 16 convictions; over $3 million in fines, penalties and restitution; as well as over $25

million in cost avoidances, savings, and funds to be put to better use. Our efforts resulted in

291 written products to strengthen Postal Service programs and operations.

In May we will bid farewell to one of our senior management members who will be retiring.

We will miss Sylvia L. Owens, our Deputy Inspector General, who has been with the OIG since its

inception. Ms. Owens has been a tremendous asset and was instrumental in establishing the investigative arm of this office. Based on her outstanding reputation in the law enforcement community, we have been able to attract highly-qualified investigators from many federal agencies. As

Deputy Inspector General, she provided invaluable support and strategic vision in overseeing the

day-to-day operations of the OIG. 

The Postal Service will also undergo a significant change in leadership when William J.

Henderson, Postmaster General and Chief Executive Officer, leaves in May 2001, after 30 years of

federal service. Mr. Henderson used his vision and leadership to guide the Postal Service to record

delivery service performance for First-Class Mail. During his tenure, the Postal Service also

achieved a record productivity increase. In addition, the Postmaster General has directed the Postal

Service to immediately begin enhancing whistleblower protection for its employees. This would

ensure that Postal Service employees have protection similar to that of other federal employees

under the Whistleblower Protection Act. These protections provide for the investigation of reprisal

complaints and resolution by an independent decision maker if the parties cannot resolve the complaint. This action fulfills the former chairman of the House Subcommittee on the Postal Service’s

longstanding commitment to ensure such protection. Mr. Henderson’s leadership and vision will be

missed.

With our foundation secure and our independent status intact, this office will continue to provide postal management, Congress, and stakeholders with the timely, objective information necessary to help ensure a secure future for the Postal Service.

Sincerely,

Karla W. Corcoran

April 30, 2001

PAGE2 A MESSAGE FROM THE INSPECTOR GENERAL

We will miss Sylvia L. Owens, our Deputy

Inspector General, who retires in May.

Postmaster General Henderson receives

recognition for his support of the OIG.
PAGE3

Table of Contents

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

POSTAL SERVICE REPORTED ACCOMPLISHMENTS ................................................9

MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE ..........................13

GOALS AND STRATEGIES ....................................................................................21

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

Inspection Service........................................................................................26

ORGANIZATIONAL DYNAMICS ............................................................................27

Office of Inspector General ........................................................................28

◆ Notable OIG Achievements ..................................................................30

◆ Challenges Facing the OIG ....................................................................33

Inspection Service........................................................................................34

ORGANIZATIONAL STRUCTURE ..........................................................................35

Office of Inspector General ........................................................................36

◆ OIG Field Locations................................................................................39

Inspection Service........................................................................................40

CUSTOMER SERVICE ............................................................................................41

Office of Inspector General ........................................................................42

◆ External Communications ......................................................................42

◆ Internal Communications ......................................................................44

◆ Specialized Services ................................................................................44

Inspection Service........................................................................................46

◆ External Communications ......................................................................46

◆ Specialized Services ................................................................................46

PERFORMANCE REVIEWS......................................................................................49

Office of Inspector General ........................................................................50

◆ Accepting and Processing Reviews ........................................................50

◆ Transportation Reviews ..........................................................................50

◆ Delivery Reviews......................................................................................52

◆ Marketing Reviews ................................................................................52

◆ Legislative and Regulatory Reviews ......................................................53

Inspection Service........................................................................................55

◆ Mail Theft Investigations........................................................................55

◆ Service Investigations..............................................................................55

FINANCIAL MANAGEMENT REVIEWS ..................................................................57

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

◆ Financial Opinion Audits ......................................................................58

◆ Financial-Related Reviews......................................................................59

◆ Contracting and Facilities Reviews........................................................60

◆ Legislative and Regulatory Reviews ......................................................63

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

◆ Revenue Investigations............................................................................64
PAGE4 TABLE OF CONTENTS

TECHNOLOGY REVIEWS ......................................................................................65

Office of Inspector General ........................................................................66

◆ Developmental Reviews..........................................................................66

◆ Information Systems Reviews ................................................................67

◆ eCommerce Reviews ..............................................................................68

◆ Computer Intrusion Detection Activities..............................................69

◆ Legislative and Regulatory Reviews ......................................................70

Inspection Service........................................................................................71

◆ eCommerce Activities ............................................................................71

LABOR MANAGEMENT REVIEWS ........................................................................73

Office of Inspector General ........................................................................74

◆ Violence in the Workplace Reviews ......................................................74

◆ Workplace Environment Reviews..........................................................74

◆ Human Resource Process Reviews ........................................................75

◆ Health Care Reviews ..............................................................................75

◆ Legislative and Regulatory Reviews ......................................................76

Inspection Service........................................................................................79

◆ Workplace Safety Investigations ............................................................79

◆ Postal Robbery Investigations ................................................................79

◆ Drugs in the Workplace Investigations..................................................79

◆ Workers’ Compensation Investigations ................................................79

OVERSIGHT OF THE INSPECTION SERVICE ..........................................................81

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

◆ Oversight Reviews ..................................................................................82

◆ Legislative and Regulatory Reviews ......................................................84

OTHER SIGNIFICANT REVIEWS............................................................................85

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

◆ Executive Investigations..........................................................................86

◆ Support Operations Reviews ..................................................................86

◆ Legislative and Regulatory Reviews ......................................................86

Inspection Service........................................................................................88

◆ Prohibited Mail Investigations................................................................88

◆ Physical Security Activities ....................................................................88

◆ Narcotics Offenses and Trafficking Investigations ................................88

◆ Child Exploitation Investigations ..........................................................89

◆ Postal Burglary Investigations ................................................................89

◆ Mail Fraud Investigations........................................................................89

◆ Money Laundering Investigations ..........................................................91

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

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

Appendix B - Findings of Questioned Costs ..........................................102

Appendix C - Recommendations That Funds Be Put to Better Use....104

Appendix D - Reports with Significant Recommendations Pending

Corrective Actions............................................................105

Appendix E - Investigative Statistics ......................................................108

Appendix F - Summary of Postal Service Investigative Activities 

Under 39 USC § 3013 ......................................................109

Appendix G - Closed Congressional and 

Board of Governors’ Inquiries ............................................113
Executive Summary

PAGE 5

What is the OIG’s primary responsibility?

The primary responsibility of the OIG is to

conduct audits and investigations to prevent,

detect, and report fraud, waste, abuse, and

mismanagement; to promote efficiency in the

programs and operations of the Postal Service;

and to provide oversight of the Inspection

Service.

DID YOU 

KNOW?
EXECUTIVE SUMMARY

This Executive Summary provides a synopsis of the work reported during this 6-month period. This issue of our Semiannual Report addresses Postal Service reported

accomplishments, the major issues facing the

Postal Service, and the many projects performed

by the OIG and the Inspection Service that

help improve postal operations.

The OIG is responsible for conducting all

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

Postal Inspection Service conducts investigations to prevent and detect fraud, waste, abuse,

and mismanagement affecting the Postal Service. Both conduct investigations that play a

vital role in helping the Postal Service make

improvements. Work performed by the OIG

and the Inspection Service is included in this

report to present Congress and the Governors

with a unified report of the Postal Service’s

efforts to combat fraud, waste, abuse, and mismanagement.

In this, the OIG’s ninth 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 reviews. We

believe presenting the work in this format provides

a clear understanding of where our work falls

within the following ten major management

and program issues facing the Postal Service: 

◆ increasing customer value; 

◆ growing and protecting revenues; 

◆ controlling costs by improving efficiency

and productivity; 

◆ leveraging technology; 

◆ managing acquisitions; 

◆ resolving workforce and workplace issues; 

◆ ensuring data integrity and reliability; 

◆ maintaining information security and

customer privacy; 

◆ restructuring for the future; and 

◆ balancing public service and commercial

enterprise.

The following highlights the

accomplishments of the OIG and

Inspection Service under the specific

subject areas: 

(1) Organizational dynamics focuses on the

OIG and the Inspection Service vision, values,

culture, and diversity.

(2) Organizational structure focuses on the

OIG and the Inspection Service headquarters

and field structure.

(3) Customer service focuses on the OIG and

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

enhance service to internal customers and Hotline operations.

(4) Performance focuses on the critical core

business processes needed to succeed in a 

competitive environment. The OIG conducted

27 reviews and investigations in this area,

including projects that will help save the Postal

Service about $40.5 million in current and

future years. A few examples of OIG work in

this area included:

◆ Determining that the Postal Service

could reduce costs by more than

$17.5 million over a 5-year period by

properly administering damage claims on

leased trailers and improving controls

over trailer use. The Postal Service also

needed to account for $5 million in

leased trailer inventory and properly

secure and protect trailers.

◆ Identifying major weaknesses in the controls

over a $ 3.7 billion contractor-operated

network. The audit disclosed that contractors were billing the Postal Service

for work not performed, overstating the

volume of equipment processed and

repaired by 20-30 percent and improperly

disposing of serviceable equipment.

◆ Investigating a Postal Service manager

who had developed a questionable relationship with a contractor and provided

favorable treatment during the Postal

PAGE6 EXECUTIVE SUMMARY

This Executive Summary highlights the

Office of Inspector General (OIG) and

Inspection Service accomplishments from

October 1, 2000, through March 31,

2001, that are contained in this

Semiannual Report to Congress.

The OIG Management Committee is 

comprised of the Inspector General,

Deputy Inspector General, General

Counsel, Assistant Inspectors General,

and Executive Representatives for Field

Liaison.
PAGE7

Service’s testing and assessment of a

transportation contract. The Postal

Service decided not to proceed with the

$23.5 million expenditure for the system

as initially proposed to the Board of

Governors. The current proposal is to

purchase significantly fewer units from 

a different contractor at a cost of only

$500,000, resulting in a cost avoidance

of $23 million.

The Inspection Service conducted numerous

investigations in the area of mail theft, 

resulting in arrests of over 390 employees and

almost 3,100 non-employees, which included:

◆ Arresting an individual for the theft and

possession of credit cards, guns, drugs,

counterfeit identification cards, and

forged birth certificates worth approximately $1 million.

◆ Conducting a joint undercover operation

that resulted in the arrest of a mail 

handler at a local airmail center for the

theft of 31 credit cards stolen from the

U.S. mail. 

◆ Arresting a processing and distribution

clerk for conspiracy and possession of

stolen mail, including 124 First-Class 

letters containing personal checks for

credit card payments and 120 U.S. 

Treasury checks totaling almost $85,000. 

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

and contracting and facilities reviews. The

OIG completed 108 reviews that identified

over $39 million in questioned costs and

almost $11 million in potential savings. In

addition, OIG investigations resulted in 

6 convictions, 7 arrests, 14 indictments, and

recoveries, restitution, and cost savings of over

$6 million. Reviews in this area included:

◆ Identifying over $26 million in contract

costs that were questioned or considered

unsupported.

◆ Determining that the Postal Service

improperly authorized over $12 million

in contract commitments and could save

almost $11 million by renegotiating a

noncompetitive contract.

◆ Uncovering a corruption scheme, with

international connections involving

approximately $3 million in fraudulent

invoices submitted by the owner of 

a computer company that was under

contract to supply equipment to the

Postal Service.

◆ Determining that the Fiscal Year 2000

headquarters budget formulation process

was not based on current and complete

analysis.

◆ Continuing to review relocation payments to postal executives to ensure such

payments are reasonable and necessary.

◆ Successfully transitioning financial 

installation audit work from Inspection

Service as scheduled.

In addition to other work, the Inspection 

Service reported:

◆ Revenue investigations that resulted in

45 arrests and 33 successful criminal

convictions. 

◆ Initiating 187 employee embezzlement

investigations, which documented losses

of over $2.2 million. 

(6) Technology encompasses reviews of developmental systems, computer security, electronic commerce, and computer intrusion detection activities. The OIG performed 18 reviews

and investigations in this area. Some of the

more significant OIG activities included:

◆ Determining that postal managers failed

to include $4.1 million needed for

repairs, replacement parts and training in

the request for approval of the Robotics

Containerization System.

◆ Conducting audits that focused on security and privacy and working with the

Postal Service’s Chief Privacy Officer to

expand and clarify the Postal Service’s

web privacy policy for disclosure, collection, and retention of information.

◆ Assigning a special agent to the Federal

Bureau of Investigation’s National Infrastructure Protection Center who will

keep the OIG abreast of trends in 

cyber-crime and emergent cyber-threats. 

◆ Assisting Postal Service information

technology management by developing 

a Computer Incident Response Team to

respond to suspected computer

DID YOU 

KNOW?

Who investigates procurement

fraud within the Postal 

Service? 

The OIG investigates all 

procurement fraud within the

Postal Service.
PAGE8

intrusions, and assisting in revising the

Postal Service computer security policy

to protect eCommerce against cybercrime.

In addition to other work, the Inspection

Service reported:

◆ Working with Federal Express to discuss

security issues relating to its business

alliance with the Postal Service.

◆ Kicking off a security-messaging service

on USPS TV. The campaign is designed

to encourage postal employees at every

level to get personally involved in helping improve security at their workplace. 

(7) Labor management focuses on issues related to violence in the workplace, workplace climate, health care, and workplace safety. During

this reporting period, the OIG conducted 

79 reviews and investigations in this area. OIG

investigations resulted in 9 convictions, 22

arrests, and 19 indictments. Reviews in this

area included:

◆ Performing an audit resulting in the

Postal Service addressing contentious

labor management relations at a post

office in the Mid-Atlantic Area.

◆ Conducting audits resulting in plans to

enhance the violence prevention programs in 19 postal districts. 

◆ Evaluating whether the Postal Service

took appropriate disciplinary actions

against managers responsible for safety

violations.

◆ Reviewing the implementation and

tracking of facility and health inspections.

The Inspection Service work included:

◆ Conducting numerous workers’ 

compensation investigations, resulting 

in over $53 million in long-term and

continuation-of-pay cost savings.

◆ Arresting 32 individuals for selling drugs

on postal property, 15 individuals for

workers’ compensation fraud, and 

190 individuals for assaults and threats

against Postal Service employees.

(8) Oversight of the Inspection Service. In

this area, the OIG completed 19 reviews of the

Inspection Service, which included:

◆ Determining that building access 

controls at Postal Service Headquarters

could be improved.

◆ Finding that international travel practices could be improved and additional

controls could be established to ensure

that international travel requests were

properly justified and approved.

◆ Determining the need to improve the

billing process for postal police services

and including indirect expenses in

billings for these services.

(9) Other significant reviews include projects

that are not readily covered by the other six

categories. The OIG completed 40 reviews of

other significant issues including reviews of

Postal Service Career Executive Service

employees. Reviews in this area included:

◆ Identifying the misuse of a postal 

vehicle over 4 years by a Postal Service

executive, which led to the employee’s

retirement.

◆ Finding that controls over signature

devices were not adequate to prevent

unauthorized use.

The Inspection Service conducts numerous

investigations covering significant issues in the

areas of physical security; narcotics offenses and

trafficking; child exploitation; prohibited mail;

postal burglaries; and mail fraud including fraud

against consumers, fraud against businesses,

and fraud against government; and money

laundering.

EXECUTIVE SUMMARY

OIG’s Arlington, Virginia, Field Office East
Are OIG employees Postal Service

employees?

Yes, OIG employees are Postal Service

employees; however, the OIG is not part of

the Postal Service management chain and

does not report to the Postmaster General,

as do other Postal Service employees.

DID YOU 

KNOW?

PAGE 9

Postal Service Reported

Accomplishments
POSTAL SERVICE

REPORTED 

ACCOMPLISHMENTS

The OIG works with the Postal Service

to help ensure the American public

receives the best mail delivery service in

the world. Highlighting the Postal Service’s

accomplishments provides context to OIG and

Inspection Service activities. In the past six

months, the Postal Service announced the following accomplishments, which the OIG has

categorized in the areas of performance, financial management, technology, and labor management.

PERFORMANCE

◆ Achieved high customer satisfaction

ratings. Ninety-two percent of households surveyed had a positive perception

of the Postal Service, with almost two

out of three rating their satisfaction as

“very good” or “excellent.”

◆ Increased total factor productivity by 

2.5 percent from last year’s levels, which

is equivalent to reducing expenses by

$1.6 billion. 

◆ Delivered 6.2 billion more pieces of mail,

added 1.7 million delivery points, and

used 6,200 fewer work years than in

1999.

◆ Continued working toward nationwide

deployment of the Delivery Operation

Information System. This system will

assist delivery unit supervisors in managing daily delivery activities, planning

street activities, and managing the route

inspection and adjustment process. The

Postal Service expects to fully deploy the

Delivery Operation Information System

by March 2003.

◆ Received, in partnership with the U.S.

State Department, a Hammer Award for

allowing U.S. citizens to apply for passports at post offices.

FINANCIAL MANAGEMENT

◆ Entered into a strategic partnership with

FedEx for the transportation of Express,

Priority, and First-Class Mail. FedEx will

locate overnight service collection boxes

at post offices nationwide. The Postal

Service believes this partnership will

enable it to provide more reliable service,

reduce costs, and better manage future

cost growth. 

◆ Trimmed spending by approximately 

$1 billion, despite huge and unanticipated rises in the cost of fuel and some

employee benefits. 

◆ Entered into a strategic partnership with

a major digital copier company to purchase digital copiers, maintenance, and

supplies. The Postal Service expects that

the agreement will save $7.4 million

annually in reduced costs, including an

almost 70 percent reduction in equipment costs and a 46 percent reduction in

maintenance costs.

◆ Launched, with America Online, a new

co-branded advertising campaign. This

campaign, which featured ad banners

promoting both America Online and the

Postal Service on 10,000 postal delivery

trucks in 11 major markets, ran for six

weeks beginning in mid-December and is

expected to increase revenues.

TECHNOLOGY

◆ Received a number one rating – among

all shipping websites – from a leading

Internet web page evaluation firm for its

easy-to-use package delivery site. Also

received a five-star rating for the time

and effort required to find various shipping rates.

◆ Began deploying state-of-the-art flat-sorting equipment – the AFSM 100 – that

should improve the efficiency, speed, and

accuracy of processing catalogs, newspapers, magazines, and larger envelopes. 

◆ Received from a leading computer products and service evaluation company its

“best choice” selection for Postal Service

eBillPay,TM its online bill-paying system

that offers a quick, easy, and inexpensive

way to receive and pay bills with the

click of a mouse. 

◆ Launched Signature Confirmation,TM 

an enhanced proof-of-delivery service,

which provides hard copy delivery confirmation documenting delivery date, time,

destination, and an image of the recipient’s delivery acceptance signature.

PAGE10

United States Postal Service 2000

Annual Report summerizes financial and

performance accomplishments.

POSTAL SERVICE REPORTED ACCOMPLISHMENTS
PAGE11

◆ Introduced NetPostTM Mailing Online,

which allows mailers to electronically

transmit documents, correspondence,

newsletters, First-Class Mail, and Standard Mail (A), along with their mailing

lists, to www.usps.com. Printing and

mailing fees paid by users generate revenue.

LABOR MANAGEMENT

◆ Established teams to address recommendations made by the Report of the United States Postal Service Commission on

a Safe and Secure Workplace.

◆ Completed, together with the National

Association of Letter Carriers, the final

stages of the nationwide rollout of the

Dispute Resolution Process. This jointly

developed grievance process streamlines

the appeal procedures, increases contract

compliance and resolution at the local

level, and expedites the resolution of disputes. The Dispute Resolution Process

has significantly increased the resolution

of disputes at the local level and has

reduced the number of appeals to

arbitration.

DID YOU 

KNOW?

Does the OIG have a Workplace Enhancement Team?

Yes. The Workplace Enhancement Team provides support and

services to the OIG in internal

work life, organizational climate,

diversity, equal employment

opportunity, and other workplacerelated issues.
PAGE12 POSTAL SERVICE REPORTED ACCOMPLISHMENTS
Major Management Issues

Facing the Postal Service

Does the Inspector General report to

the Postmaster General?

No. The Inspector General is

independent of postal management and

reports directly to the Governors and

Congress.

DID YOU 

KNOW?

PAGE 13
MAJOR MANAGEMENT

ISSUES FACING THE

POSTAL SERVICE

L

ast year, after five years of positive net

income, the Postal Service incurred a

deficit of nearly $200 million, even

though it reported the highest labor productivity ever. This year, the Postal Service is projecting a $2–$3 billion loss, in spite of a rate

increase that went into effect in January 2001. It

is apparent that the Postal Service is facing significant issues as evidenced by the deterioration

in its current financial condition.

The Postal Service has indicated that the

main reasons for this projected loss include

reduced revenues, increased labor and overhead

costs, and a continued soft economy. It has been

suggested that another rate increase will be

needed to address this shortfall. Postal management has also renewed its call for legislative

reform to provide greater flexibility in the areas

of labor and operations, pricing, products,

investments, and oversight. While reform may

be part of the solution, the Postal Service must

continue to address critical management and

financial practices in order to remain financially sound and relevant to its customers. Specifically, the OIG believes the ten major issues facing

Postal Service management are: 

◆ increasing customer value 

◆ growing and protecting revenues 

◆ controlling costs by improving efficiency

and productivity 

◆ leveraging technology 

◆ managing acquisitions 

◆ resolving workforce and workplace issues 

◆ ensuring data integrity and reliability 

◆ maintaining information security and

customer privacy 

◆ restructuring for the future 

◆ balancing public service and commercial

enterprise

In recent years, the Postal Service has

made progress in addressing these issues. However, continued efforts must be given to improving performance and accountability throughout

the Postal Service. These issues, their significance, and the key OIG projects that address

them are included in this section.

INCREASING CUSTOMER VALUE

In today’s marketplace, customers have

choices about how they conduct transactions,

transmit messages, and deliver merchandise.

Increasing customer value will be key to growing new business. The Postal Service views its

access to the American household as a unique

asset that it can leverage as it faces increasing

competition. In addition, the postal delivery

network continues to grow by about 2 million

new household and business deliveries each

year. The Postal Service must continue to

develop products and services that retain relevance and value for customers with changing

needs. For example, the Postmaster General

highlighted the Postal Service’s effort to add

value-added services like delivery and signature

confirmation. 

The Postal Service faces increasing competition, decreasing First-Class Mail volume, and a

changing economy. As a result, the Postal Service may find it difficult to maintain its position

as a self-supporting provider of universal postal

services at reasonable rates. Customers are now

seeking services other than traditional mail,

such as electronic delivery services, and the

Postal Service will need to balance its customer

service with limited resources. For example, the

Postal Service’s recent announcement that it

was studying five-day delivery was met with

substantial media, Congressional, and customer

reaction—particularly in light of recent rate

increases and potential future rate increases. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Assessed mail delays in a North Carolina

Post Office

◆ Reviewed allegations of delayed certified

tax mailings

◆ Audited the Postal Service’s Delivery

Confirmation Program at five locations

◆ Is assessing Express Mail service in

Tampa, Florida 

GROWING AND PROTECTING

REVENUES

During the past four months, projected

financial losses have increased significantly.

PAGE14 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

The OIG audits automation processes

such as the Delivery Point Barcode

sorter, which sorts mail in sequence of

the letter carrier’s route.
PAGE15

These projected losses threaten affordable, high

quality, universal postal service on a selffinanced basis. Consequently, the Postal Service

will be required to grow substantial new revenues to compensate for projected loss of revenue. Past efforts by the Postal Service to introduce new products and services have frequently

been met with opposition. Competitors have

questioned whether it is appropriate for a government entity with monopoly protection to

provide nontraditional commercial products

and services. Nonetheless, the Postal Service

believes that substantial revenues must be generated from new services and products. 

The Postmaster General recently stated

that the Postal Service was working hard to

expand into the global market. In addition, he

cited a number of improved or simplified products, such as PC Postage,TM and a suite of new

electronic services that make it more convenient for consumers and mailers to do business. 

The Postal Service must also ensure that it

has appropriate controls over acceptance, payment, and mail-preparation processes to protect

existing revenues. Historically, the Postal Service has had difficulty establishing controls to

protect its revenues without adversely affecting

customer service.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Audited statistical tests for the fiscal year

2000 cost and revenue analysis

◆ Is assessing the role of the marketing

group

◆ Is evaluating the profitability of postal

retail stores

CONTROLLING COSTS BY

IMPROVING EFFICIENCY AND

PRODUCTIVITY

The Comptroller General of the United

States recently cited the Postal Service’s deteriorating financial condition as one of the reasons

for placing the Postal Service on the General

Accounting Office’s High Risk List. He emphasized the Postal Service’s need to cut costs and

improve productivity. The Postal Service is projecting significant losses for FY 2001, which, in

part, were attributed to total expenses that were

$111 million higher than initially expected for

the first half of this fiscal year. These expenses

include greater fuel costs and costs passed on by

its transportation contractors. In addition,

employee-related costs, including wage increases, workers’ compensation benefits, and retirement expenses, continue to rise.

The Postal Service plans to reduce costs by

$2.5 billion by 2003, through eliminating

75,000 work years and reducing administrative

expenses by 25 percent and transportation costs

by 10 percent. However, the OIG has noted

that the Postal Service often has difficulties in

realizing actual cost savings due to a number of

factors. These include a requirement to service

all communities, wages determined by binding

arbitration, and extensive work rules and regulations that impede flexibility and innovation.

Furthermore, federal law prohibits closing small

post offices merely for operating at a deficit.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Audited the leased trailer fleet

◆ Is auditing stamp printing volumes

◆ Is evaluating the cost and productivity of

flats processing operations

LEVERAGING TECHNOLOGY

The Postal Service continues to seek ways

of leveraging technology to improve its service,

productivity, and profitability. The Postal Service depends on technology to deliver more

than 660 million pieces of mail every day. It

must position itself to quickly adapt to each new

wave of technology to maintain its competitive

position. In particular, the Postal Service must

adapt to the evolution of an Internet-familiar

customer base and the impact this new force

will have on its business. Some customers

expect the Postal Service to transition its services to the point where most, if not all, services

can be carried out on personal computers at the

office or at home. To address changing customer

needs, the Postal Service has committed

resources to ongoing development of an “information platform” to help ensure better data

management, track mail piece information,

improve communications between the Postal

Service and its customers, and provide activitybased costing.

The large size and diverse nature of the

Postal Service’s customer base demands that

The General Accounting Office’s April 4,

2001, testimony to Congress places the

Postal Service on its high risk list.
technology-based solutions are accessible, easy

to use, and competitive. Given the projected

revenue downturn in the coming year, the

Postal Service must vigorously pursue cost savings by efficiently redeploying resources

replaced by new technology. Finally, all decisions on technology investments must be scrutinized more closely and be based on information

that is current, accurate, and reliable.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Audited the Robotics Containerization

System

◆ Evaluated the deployment of the

Delivery Operations Information System

◆ Is conducting a review of the process

used to approve capital projects

◆ Is reviewing the development of the

Postal Operations Information System

MANAGING ACQUISITIONS

The Postal Service awards approximately

$9 billion in contracts per year for essential

goods and services, including facilities, transportation, mail processing equipment, and supplies. Over the last four years, the OIG conducted over 150 audits and investigations relating to contracting operations. These reviews

have disclosed that such contracting practices

have resulted in $434 million in monetary findings including fraud, waste, abuse, mismanagement, and other recoveries on postal contracting programs.

The Postal Service needs to take aggressive

steps to ensure that appropriate monitoring and

oversight exist and that systems and data are

available to validate contractor charges for services rendered or work performed. Quality

assurance, staffing, and training of contracting

officials impact the Postal Service’s ability to

properly monitor work performed by contractors. 

The Postal Service must increase its efforts

to prevent, detect, and deter fraud related to its

contracting activities. Many postal contracts

lack sufficient language, making it difficult to

pursue criminal and/or civil action against contractors and, in some cases, may impede independent review. Because the Postal Service is

exempt from standard federal contracting rules,

it is afforded the opportunity to realize greater

efficiencies and operate in a more businesslike

manner than other federal agencies. However,

the OIG’s reviews suggest that while the Postal

Service has realized some efficiencies, there is a

clear need to utilize best practices. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Conducted 38 contract audits

◆ Is reviewing responsibilities of contracting officers

◆ Is evaluating contracting for consulting

and auditing services

◆ Is reviewing sole source contracting

practices

RESOLVING WORKFORCE AND

WORKPLACE ISSUES

Labor-related costs continue to account for

more than three-quarters of the Postal Service’s

total operating expenses. In competitive markets where customers face a myriad of choices,

controlling these costs while expanding service

is crucial to providing value and maintaining a

competitive edge. The Postal Service will succeed only if it can effectively partner with its

employees, their unions, and management association leadership. With more than 900,000 full

and part-time employees, work environment

and labor relations improvements are key to

maximizing employee and organizational performance. The Postal Service faces the challenge of developing recruitment, training, communication, incentive, and other support systems that help employees realize the connection

between their efforts and the results desired by

customers. 

Past attempts to replace labor through

automation have not been as successful as

planned. Future endeavors will succeed only if

the Postal Service can engage the workforce in

a shared vision of success, encouraging discretionary effort and eliminating the confrontational environment on the workroom floor.

With responsibility for more than 38,000

facilities, major transportation networks, and

universal delivery, the Postal Service faces a significant challenge in the areas of health and

safety. In addition to the direct costs and loss of

productivity resulting from accidents, medical

PAGE16 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
PAGE17

costs under the Postal Service’s Injury Compensation Program have risen dramatically. Furthermore, the Postal Service is now subject to

citations and monetary penalties for noncompliance with the Occupational Safety and

Health Act. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Investigated allegations of health care

fraud

◆ Audited the implementation of safety

and health inspections at postal facilities

in the Pacific Area

◆ Reviewed the Violence Prevention and

Response Program

◆ Is reviewing the Associate Supervisor

Program

◆ Is reviewing succession planning

◆ Is auditing the Postal Service’s management of staffing complements

ENSURING DATA INTEGRITY

AND RELIABILITY

Changes in technology and the business

environment emphasize the need for timely,

accessible, and accurate data relevant to the

needs of Postal Service decisionmakers. However, in many instances, the OIG has found that

the Postal Service does not adequately capture

or track the data necessary to support effective

decisionmaking. For example, in one review the

OIG noted some budget components were not

based on current or complete analyses, consequently bringing some funding requirements

into question and hampering management’s

ability to effectively develop, justify, and defend

budgets. The OIG has also noted an inability to

track costs that have been incurred but not

paid, making it difficult for managers to monitor expenses.

Given the importance of data quality to

setting postal rates, the Postal Service must

continue demonstrating to Congress, the Postal

Rate Commission, stakeholders, and the public

that it is making progress in improving the quality of its revenue, cost, and service measurements. Accurate measurement of mail volume

and operations remains a key ingredient in the

Postal Service’s efforts to improve and sustain

service performance.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Audited the FY 2000 headquarters

budget formulation process

◆ Reviewed FY 2000 Information System

Controls in the Accounting Service

Centers

◆ Is evaluating the quality of data

supporting the ratemaking process

◆ Is assessing the reliability of the

information in Retail Data Mart

MAINTAINING INFORMATION

SECURITY AND CUSTOMER

PRIVACY

Although computers have become indispensable to the Postal Service, reliance on automated systems increases the risk of fraud, inappropriate disclosure of sensitive data, and disruption of critical operations and services. The

same attributes of computer networks that

enhance operations also make it possible for

individuals and organizations to compromise

these systems. Attacks on websites, in both the

government and private industry, serve to

emphasize the damage a computer security

breach can do to a brand’s integrity and an organization’s revenue stream.

Many organizations have built networks

that are secure against outside threats. However,

this practice sometimes fails to recognize the

threat from within. Network intrusions are often

carried out by insiders but most organizations

are not publicly willing to admit this. Also,

many organizations often neglect to address

internal threats in their security designs. An

ongoing audit of the Postal Service’s telecommunications security and infrastructure revealed

weaknesses that could be exploited, resulting in

the loss of confidentiality, integrity, and availability of vital financial and operational systems,

and harm the Postal Service’s reputation as a

trusted third party. Also, a recent initiative to

allow employee access to Postal Service networks through home computers increases its vulnerability. Comprehensive computer security

programs must be implemented at all levels. The

Postal Service is currently taking steps to address

security risks, but resolving them on a lasting

basis will require substantial management commitment and attention.

Does the OIG provide support

to other agencies in computer

forensics?

Yes. The OIG has provided

forensic support to several Offices

of Inspector General that led to

successful prosecution. The OIG

has also assisted other Offices of

Inspector General in developing

their own computer forensics

capabilities.

DID YOU 

KNOW?
The OIG audits technology-based systems

such as the Auto Buffer System, which

retains unreadable mail until it can be

barcoded by remote computer or

remote barcode system.

PAGE18 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

Furthermore, postal electronic commerce

initiatives on the Internet raise concerns about

the adequacy of security. Success in this arena

will depend on the level of protection afforded

sites such as www.usps.com and programs that

operate in this environment, such as eBillPay,TM

NetPost Certified,TM The Postal Store,TM and

PosteCS.TM Most importantly, the Postal Service needs to protect consumer information

that is collected and the guarantee of privacy

implicit in such undertakings.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Conducted tests of server vulnerabilities

◆ Evaluated security and privacy requirements for the Postal Service’s online bill

presentment and payment system

◆ Is reviewing Internet privacy

◆ Is assessing third party agreements and

security of business partners

RESTRUCTURING FOR THE

FUTURE

Currently, the Postal Service has over

900,000 employees; a retail and delivery infrastructure with over 136 million delivery points;

over 38,000 post offices; over 470 processing

and distribution plants; and numerous administrative and support operations. In this time of

increased budgetary pressure, the Postal Service

has frozen capital improvements and is reviewing all current programs and projects in an effort

to contain costs. Restructuring may be necessary

to downsize, eliminate, or consolidate operations or organizational models that no longer

add value.

In numerous reviews of postal programs,

the OIG has identified organizational issues

such as fragmentation, decentralization, and

need for better focus; all of which affect the

Postal Service’s ability to control its costs and

improve performance. For example, individual

Postal Service managers have direct authority

over large sums of money and resources. Without effective accountability, oversight, and

other controls within the organization, this

autonomy may result in fraud, waste, abuse, and

mismanagement. 

By law, the Postal Service must maintain

an infrastructure sufficient to ensure timely and

affordable service to every delivery point in the

United States. The number of households and

businesses served continues to grow every year,

while increased costs and declining mail volumes make each delivery less profitable. Organizational structure and strategic planning must

address the statutory mission of the Postal Service and ensure a high level of efficiency

throughout postal operations.

To assist the Postal Service in addressing

this issue, the OIG:

◆ Evaluated the consolidation of Postal

Service data centers

◆ Assessed the effectiveness of internal

controls over contracting functions and

mail processing operations

◆ Is conducting a comprehensive review of

postal logistics 

BALANCING PUBLIC SERVICE

AND COMMERCIAL ENTERPRISE

Since 1970, the Postal Service has been

tasked to operate in a businesslike manner.

However, unlike private corporations, it is

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

develop and price new products, and generate

and invest profits. Although the Postal Service

is granted a monopoly on letter mail, it must

deliver to all areas, in a timely fashion, and at

uniform, affordable rates. The Postal Service’s

obligation to serve as both a public service and

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

the delivery and communication industries. 

The Postal Service believes that legislative

action is necessary to enable it to adapt to new

market conditions and compete with the private delivery and expedited mail industry.

While many foreign posts have been deregulated or privatized, the Postal Service remains a

notable exception. The Postmaster General has

stated that the Postal Service has only “blunt

instruments” with which to improve its financial situation and compete with private industry.

He and the Governors support statutory change

to permit earnings growth and investment,

streamline the ratemaking process, enable pricing flexibility, and eliminate the requirement of

binding arbitration. While many stakeholders

agree that reform of postal laws is needed, identifying and implementing the right changes pre-
PAGE19

sents a difficult challenge. This year, some

members of Congress have renewed the call for

bipartisan support of comprehensive postal

reform but the contents of such a measure have

yet to be determined.

While the reform debate continues, the

Postal Service must maintain its public service

role in a commercial environment. It must consider the scope of its universal service obligation

and its ability to maintain it. It must identify its

core businesses and ensure that new products

and services are not cross-subsidized by the letter monopoly. Most importantly, the Postal Service must continue to refine its operations

under the existing statutory model while developing and defining the role it will play in the

future. 

To assist the Postal Service in addressing

this issue, the OIG:

◆ Reviewed the Postal Service’s ability to

meet requirements of an electronic

commerce mailer

◆ Reviewed and provided comments on

various pieces of proposed legislation

impacting the Postal Service

◆ Is reviewing the Economic Variable Pay

Program

◆ Is assessing supplier diversity

◆ Is evaluating revised rules governing

commercial mail receiving agencies
PAGE20 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
Goals and Strategies

Who determines what the OIG audits

or investigates?

The OIG receives requests to conduct

audits and investigations from many

sources. However, the OIG independently

determines what is audited or investigated.

DID YOU 

KNOW?

PAGE 21
OFFICE OF INSPECTOR

GENERAL

STRATEGIC GOALS

The OIG is committed to the principles

of the Government Performance and

Results Act, which helps ensure that

government agencies operate efficiently and

effectively. To ensure long-term success, it is

necessary for the Postal Service and the OIG to

plan appropriately. Planning includes defining

strategic goals and developing strategies to

achieve those goals. In addition, performance

measures are established to evaluate how well

the agency is doing in achieving its goals. These

measures provide a “report card” on agency performance and results. 

The OIG’s planning process analyzes relevant information; establishes goals, strategies,

and measures based on its analysis; then measures how effectively and efficiently it is performing to meet these goals. There are four steps

in this strategic planning process. First, the OIG

determines major management issues facing the

Postal Service. Second, the OIG broadly defines

realistic goals, sets priorities in line with the

Postal Service’s business vision, and conceives

effective strategies and action plans. The goal of

this step is to align the OIG’s activities to help

the Postal Service improve its effectiveness and

efficiency. Third, the OIG measures progress in

meeting its goals. And fourth, the OIG periodically updates and revises goals, strategies, and

measures to align OIG organizational efforts

with Postal Service needs. 

In March 2001, the OIG issued a revised

Five-Year Strategic Plan, which is designed to

address the Postal Service’s strategic direction

and objectives outlined in its Strategic Plan for

Fiscal Years 2001-2005. The Postal Service’s

strategic direction and objectives reflect a growing uncertainty about the future impact of

emerging technologies, changing customer

requirements, and the impact of composition on

mail volume and postal revenues. The OIG’s

Five-Year Strategic Plan consists of two

overarching goals and four strategies to meet

these goals.

PERFORMANCE RESULTS

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

OIG can periodically measure and assess its

progress in achieving goals. The OIG established annual performance measures to emphasize program objectives, promote teamwork, and

encourage innovation throughout the OIG.

PAGE22 GOALS AND STRATEGIES

This section describes the OIG and

Inspection Service goals and strategies 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.

Office of Inspector General

FY2001 Goals and Strategies

GOALS STRATEGIES

 Independently manage 

 and optimize OIG 

 resources, including 

 leveraging cutting-edge 

 technology.

 Maintain a TLC3 values-

 based organization that 

 attracts, develops, and 

 retains a talented and 

 diverse workforce.

The OIG is an independent 

entity that maximizes 

resources, leverages cuttingedge technology, and 

provides a healthy 

organizational culture and 

environment.

GOALS STRATEGIES

The OIG will be the 

independent voice that 

provides our stakeholders 

with timely, accurate, and 

relevant information 

that contributes to the 

success of the Postal Service.

 Annually identify major 

 management challenges 

 and independently develop 

 work priorities that assist 

 the Postal Service in 

 addressing major 

 management challenges.

 Independently provide 

 the right information to 

 the right people at the 

 right time.
PAGE23

These measures are linked to a team award that

is structured to reward commitment to the

strategic priorities of the OIG and to reinforce

the importance of providing high-quality and

value-added services that contribute to the success of the Postal Service. Each year, the OIG

establishes annual performance goals to support

its strategic goals. During FY 2000, the OIG

accomplished over 85 percent of its projects.

For FY 2001, the OIG has established ten annual performance goals, seven of which focus on

Postal operations, and three of which focus on

OIG operations. 

OIG PLANNING PROCESS

The OIG is committed to providing timely and accurate information to Postal Service

management. As part of its planning process,

the OIG asks Postal Service managers to identify operations and emerging issues that would

benefit from the OIG’s review. Their suggestions are considered during the annual planning

process, and to the extent practical, are given

priority consideration for inclusion in the OIG’s

Annual Work Plan, which is summarized in this

section of the semiannual report. This process

creates a unique opportunity for the OIG to

provide independent analysis and information

that will assist Postal Service management officials in fulfilling their responsibilities.

The OIG planning process has three

interrelated components: the project universe;

the annual performance plan; and the annual

audit workload plan. Since its inception, the

OIG has identified a universe of over 1,800 projects for consideration. Projects from the universe, which is the first component of the planning process, are selected on the basis of risk.

The OIG considers the project’s potential

impact on:

◆ Postal Service labor and capital resources

◆ Postalwide operations and goals

◆ Public trust

In the second component of the planning

process, the OIG selects the highest priority

projects for inclusion in the annual performance plan. The third component is the OIG

annual audit workload plan, which is extracted

from the annual performance plan. This audit

workload plan is presented to the Postal Service

Governors each year. The plan is adjusted as the

OIG’s work reveals new issues or the Postal

Service encounters new issues.

OIG FY 2001 AUDIT WORKLOAD

PLAN

In the previous section of this semiannual

report, the OIG discussed ten major management issues facing the Postal Service. These ten

issues were consolidated into four major areas

along with the oversight of the Inspection Service for the purposes of audit planning. 

In FY 2001, the OIG will focus its audit

attention on the following areas to help address

major challenges facing the Postal Service: 

◆ growing revenues and competing in a

rapidly changing market; 

◆ maintaining affordability by controlling

costs; 

◆ improving the workplace climate and

labor relations; 

◆ leveraging technology to enhance productivity; and

◆ overseeing the Inspection Service. 

The following presents each of the five areas

and the focus of our audit efforts.

Growing Revenues and Competing in a

Rapidly Changing Market

Increasing competition from electronic

commerce and other competitors has slowed

the growth of postal revenue and is expected to

have a continuing impact on the Postal Service’s financial viability. Electronic commerce

threatens to reduce First-Class Mail volume,

putting at risk as much as $33 billion in revenue

over the next nine years. In addition, foreign

postal services have recently set up offices in the

United States, siphoning away millions of dollars in outbound international mail. Consequently, the Postal Service is being challenged

to find new revenue sources at the same time

the Postal Service is being challenged to fulfill

its core mission of delivering mail in a timely

manner and improving customer service. 

To assist with this challenge, the OIG is

assessing how the Postal Service develops new

products and services to grow revenue,

enhances core business processes to improve

customer service, and maintains the public’s

trust. OIG work will focus on the following: 

The OIG’s mission statement, goals, and

strategies set forth in the Five-Year

Strategic Plan are the foundation for

measuring, reporting, and improving the

OIG’s performance over the next five

years. 
◆New products and services:

◆ Justification and approval

◆ Marketing and sales

◆ Return on investment

◆Enhancing core business: 

◆ Strategic alliances

◆ Marketing

◆ Financial initiatives

◆ International mail

◆Service performance and customer

satisfaction: 

◆ Timeliness and reliability of service

◆ Measurement systems

◆ Postal rates

◆ Re-engineering

◆Public trust: 

◆ Brand integrity

◆ Employee integrity

Maintaining Affordability by

Controlling Costs

With over $60 billion in operating expenses each year, the Postal Service needs strong

management controls to reduce rate increases

while ensuring universal mail service at affordable rates. Controlling costs requires strong contract administration, effective program oversight, and sound budget processes to make

informed decisions. OIG efforts will focus on

the following:

◆Financial system integrity: 

◆Financial statements

◆Field installations

◆Cost and revenue analysis

◆Treasury-related issues

◆Budget: 

◆Planning

◆Execution

◆Systems

◆Contracting activities: 

◆Fair and reasonable contract pricing

◆Reasonableness and allowability of

incurred costs

◆Adequacy of contractor systems

◆Contract administration

◆Facilities and real estate: 

◆Justification, approval, and budgeting

◆Construction management

◆Logistics:

◆Transportation systems and operations

◆Material management

◆Health care: 

◆Workers’ compensation program

administration

◆Provider billing

Improving the Workplace Climate and

Labor Relations

The Postal Service, with approximately

900,000 employees, has characterized labor

management relations as one of its most formidable challenges in achieving its goals in the

21st century. To operate effectively in this rapidly changing environment, the Postal Service

has recognized that it will need to give employee issues a higher priority and enhance each

employee’s contribution to organizational performance. Labor and management cooperation

is also critical if the Postal Service is to achieve

its overall financial goals. However, employees sometimes view management attempts to

achieve incentives under the Postal Service’s

Economic Value Added Variable Pay Program

as adversarial. The Postal Service will need to

address this and other negative perceptions in

order to resolve persistent labor management

problems. 

Since its inception, the OIG has been

working with the Postal Service to address these

issues. However, labor management relations

continue to be one of the most difficult areas to

adequately address. To date, the OIG has

received over 3,100 individual employee complaints. Because of the emotional involvement,

potential financial impact, and length of time to

resolve these issues for the employee, manager,

and Postal Service, it is important that OIG’s

involvement in this area be meaningful and

positive. Therefore, to deal with the sheer magnitude of complaints, the OIG focuses primarily

on systemic issues and conducts postalwide

reviews. These reviews are designed to identify

PAGE24 GOALS AND STRATEGIES

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 Inpection Service is mainly

concerned with the security and

sanctity of the mail and the safety

of Postal Service employees 

DID YOU 

KNOW?
PAGE25

and prevent potential problems that can detract

from a healthy and productive work environment. OIG efforts will focus on the following: 

◆Workplace climate: 

◆Conflict prevention and resolution

◆Threat assessment programs

◆Occupational safety and health

◆Employee management: 

◆Training and development

◆Succession planning

◆Workforce planning

◆Performance and compensation

◆Diversity

Leveraging Technology to Enhance

Productivity

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

technology to handle more than 660 million

pieces of mail every day, the Postal Service must

continue to maintain its competitive position

in the market. The unprecedented growth in

computer activity and Internet usage is revolutionizing the way the nation communicates and

conducts business and is reshaping customer

expectations. To address these technology challenges, the Postal Service had planned to invest

approximately $17 billion through Fiscal Year

2005 on capital investments, some of which are

technology-related investments. However, with

the Postal Service’s current financial condition,

the funding of these projects is uncertain. These

projects were intended to automate and

modernize mail processing and acceptance,

enhance communications and access to information, and extend the postal infrastructure to

better support core business processes and electronic products and services. In addition, the

Postal Service continues to focus on commerce

and computer security to protect these investments. OIG efforts will focus on the following: 

◆Information systems: 

◆Information infrastructure and 

architecture

◆System performance and integrity

◆Systems development and

implementation

◆Computer security: 

◆Access

◆Data protection

◆Data integrity

◆Developmental: 

◆Automation of core functions

◆Process re-engineering

◆eCommerce: 

◆Business partnerships and joint ventures

◆Brand integrity

◆Justification, cost, budgeting, and risk

Overseeing the Inspection Service

Enabling legislation requires the OIG to

conduct oversight of the Inspection Service in

addition to OIG’s audit and investigative

responsibilities over postal operations. As a law

enforcement agency, it is essential that the

Inspection Service be held to the highest

standards of conduct to maintain the public’s

trust and the Postal Service’s reputation of

reliability. OIG efforts in this area will focus on

the following:

◆Public trust: 

◆Function and role

◆Operational effectiveness

◆Management controls
PAGE26

GOALS OBJECTIVES

Inspection Service 

FY2001 Goals and Objectives

Safety

Security

Integrity

• Eliminate the use of the nation’s mail system’s by 

 major organizations to transport illegal narcotics

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

 to launder money by disrupting money-laundering operations

• Reduce and deter the use of the postal system to procure or 

 deliver materials that promote the sexual exploitation of children

• Reduce and deter employee on employee assaults and 

 credible threats 

• Reduce and deter robberies of postal employees and facilities

• Reduce and deter illegal drugs in the postal environment

• Reduce and deter volume mail theft in high theft areas

• Identify and resolve domestic and international in-transit 

 mail theft

• Reduce and deter embezzlements

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

 compensation program

• Reduce and deter postage fraud schemes

• Reduce and deter multi-state domestic and international 

 telemarketing and deceptive mail operations Reduce Use of the Mail to Defraud Customers, Businesses, 

and Government Agencies

Ensure a Safe and Secure Drug-Free Work Environment

Reduce Theft of the Mail

Reduce and Deter Criminal Attacks of Postal Products, 

Services, and Assets

Reduce and Prevent the Use of the Postal System for 

Prohibited, Illegal, and Dangerous Mailings

INSPECTION SERVICE

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

deter and prevent criminal activity. To accomplish this, the Inspection Service has developed five

long-term strategic goals and related objectives. The new strategic plan begins with three critical

imperatives: safety, security, and integrity.

GOALS AND STRATEGIES
Organizational Dynamics

Does the OIG have access to all

Postal Service documents and

information?

Yes. 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.”

DID YOU 

KNOW?

PAGE 27
The values make up the core of

the OIG’s culture and define how

it does its work.

OFFICE OF INSPECTOR

GENERAL

AN INDEPENDENT VOICE

The OIG is an independent agency

within the Postal Service and is under

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

From 1988 until the establishment of the OIG

in 1996, the Chief Postal Inspector performed

dual roles as the Inspector General and Chief

Postal Inspector and reported to the Postmaster

General. In January 1997, Karla W. Corcoran

was sworn in as the first independent Inspector

General of the Postal Service. In carrying out its

responsibilities under the Inspector General

Act, the OIG:

◆ Provides Congress, the Governors, and

Postal Service management with timely,

objective, and complete information and

analysis of Postal Service operations.

◆ Conducts audits and investigations of all

Postal Service operations and activities,

including ratemaking, contract administration, labor management, computer

intrusion, electronic commerce, computer security, and marketing.

◆ Maintains oversight of Inspection Service

operations and performs independent

reviews of complaints against its

employees.

◆ Adds value to Postal Service operations,

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

the Postal Service maintain its integrity

through independent investigations,

audits, and reviews.

◆ Serves as an objective venue for all

Postal Service employees and other

stakeholders to report fraud, waste, abuse,

mismanagement, and other improprieties

and concerns, with protection from management retaliation.

◆ Identifies cost savings, enhances contract

and program administration, and promotes employee integrity and program

efficiency.

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

and recommendations when the OIG

and Postal Service management disagree.

To improve Postal Service programs and

operations, the OIG provides 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 to

demonstrate how the OIG adds value to Postal

Service processes.

OIG VISION AND VALUES

The vision of the OIG is “A Constellation

of Talented People Making a Difference.” This

vision reflects the OIG’s mission to shed light

on problems and opportunities by emphasizing

five fundamental values:

◆ Teamwork—Diverse talents and levels

working cooperatively and collaboratively toward producing timely, relevant, and

quality work products and services that

add value to the Postal Service and our

organization.

◆ Leadership—Encouraging each employee

to be the best they can be regardless of

position or grade, understanding that all

levels of employees are expected to play a

role in developing and directing every

effort performed.

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

Postal Service and OIG operations.

◆ Communication—Ensuring cross level

and cross functional sharing of all information as well as facilitating honesty,

openness, respect, and consideration of

the contributions and opinions of others.

◆ Conceptualization—Keeping one’s “eye

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

PAGE28 ORGANIZATIONAL DYNAMICS

This section describes organizational vision,

values, cultures, and diversity that assist

with providing value added service to the

Postal Service. In order to differentiate the

OIG from the Inspection Service, the page

concerning Inspection Service has been

color-screened.

What are the OIG’s values?

The OIG’s core values are

teamwork, leadership, creativity,

communication, and

conceptualization (TLC3).

DID YOU 

KNOW?
PAGE29

OIG CULTURE AND EMPLOYEES

Value and Benefit of a Diverse Culture

The OIG’s culture is defined by the diversity of its employees, who share the organization’s core values of teamwork, leadership,

creativity, communication, and conceptualization. The OIG is committed to creating and

maintaining a workplace that is enriched by the

talents, contributions, and full participation of

all of its employees and that reflects the tremendous diversity of the Postal community.

Diversity is a tool for achieving the OIG’s mission and enhancing its organizational effectiveness by using the creative energies of employees

who contribute different approaches, solutions,

and innovations.

The OIG workforce is diverse in age, race,

ethnicity, gender, and background, as well as

education, professional accomplishments, work

experience, and work style. The OIG workforce

includes Certified Public Accountants,

Certified Internal Auditors, Certified Fraud

Examiners, Certified Information Systems

Auditors, Certified Government Audit

Professionals, and Certified Acquisition

Auditors. OIG employees also hold law

enforcement specialty certifications in areas

such as polygraph examinations. In addition,

many OIG employees have undergraduate or

advanced degrees, while other employees are

continuing to work towards professional and

academic achievements. OIG teams include

auditors, evaluators, criminal investigators,

lawyers, technicians, and administrative personnel formerly from federal and state government agencies, private industry, non-profit

organizations, and the Postal Service.

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

with highly skilled employees. As of March 31,

2001, OIG had 655 employees, of whom, 50

percent were women and 47 percent were

minorities. The senior staff is composed of

approximately 40 percent women and 27 percent minorities. Based on 1990 U.S. Bureau of

Census, Civilian Labor Force estimates, the

OIG has met or exceeded the U.S. percentage

of total population for women and for each

minority group, except for Hispanics and

Native Americans. 

ADHERING TO THE HIGHEST

PROFESSIONAL STANDARDS

The OIG reports to Congress and the nine

presidentially-appointed Governors. The

Inspector General is not supervised by the

Postmaster General and cannot be removed by

the Postmaster General. This independence

allows the OIG to report all findings of fraud,

waste, abuse, and mismanagement, which it is

required to do by law. The OIG annually identifies major management issues and develops

work priorities that assist the Postal Service in

addressing these issues. This enables the OIG to

provide critical information to stakeholders in a

timely manner.

To ensure its work is of the highest quality

and has a positive impact, the OIG adheres to

the highest professional standards. The OIG

complies with the following professional standards:

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

◆ The President’s Council on Integrity and

Efficiency’s Quality Standards for

Inspections and Quality Standards for

Investigations 

Each audit is subjected to supervisory

review at every stage of the audit process, and

must meet established standards for due professional care, quality, and independence. Each

report is subject to review by the OIG’s statisticians, lawyers, editors, and other experts, and is

independently referenced by an individual not

associated with the project. Draft reports are

submitted to Postal Service management who

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

recommendations. These comments are considered in preparing the final report and the actual

comments are included in their entirety.

The OIG also ensures the highest ethical

standards by performing full security background investigations on all of its employees.

Most employees are required to provide annual

financial disclosure statements to the legal staff,

who review these statements to determine

potential conflicts of interest. All employees are

also required to complete ethics training each

year, and OIG evaluators must meet standards

for continuing professional education.

OIG Diversity

NATIVE AMERICANS

ASIANS

HISPANICS

BLACKS

WHITES

53.1% 33.1%

6.1%

7.2%

.5%

The OIG is committed to creating and

maintaining a diverse workforce.
The OIG also has an aggressive internal

quality assurance program that evaluates

processes, programs, and work performance.

Also, every three years, the OIG undergoes a

peer review of its audit processes by another

Office of Inspector General. 

The OIG Quality Assurance and Internal

Affairs team also ensures ethical standards by

investigating complaints regarding OIG activities. In addition, complaints against senior OIG

management officials are investigated by the

Integrity Committee of the President’s Council

on Integrity and Efficiency headed by a senior

executive with the Federal Bureau of

Investigation. 

NOTABLE OIG ACHIEVEMENTS

CD-ROM PROVIDES VIRTUAL

TOUR OF OIG

The OIG has prepared a credit card sized

compact disc that provides information about

what it is, what it does, and where its offices are

located. This computer disk contains links to

the OIG’s main website and useful websites such

as the Postal Service, Congress, and other

agency Offices of Inspector General. It also

includes videos highlighting the OIG’s diverse

staff, Hotline operations, and OIG teams in

action. The CD-Rom was distributed at the

National Postal Forum in March and will be

used as an informational tool for stakeholders

and the public, and as a recruiting tool.

FEDERAL COURT AFFIRMS THE

IMPORTANCE OF OIG VALUES

On January 4, 2001, the U.S. District

Court in Alexandria, Virginia, granted the

OIG’s summary judgment motion in an

employee termination lawsuit. This judgment

affirmed the OIG’s right to use its core organizational values as a basis for measuring an

employee’s performance. The OIG terminated a

former evaluator during the probationary period

for poor job performance based on a failure to

adhere to the OIG’s core values of teamwork,

conceptualization, and communication. In

holding for the OIG, the court rejected the former employee’s claim that the firing was for discriminatory reasons. 

COMMENTARY HIGHLIGHTS

SUPERVISORS’ RIGHTS

The OIG was pleased with an article written by Vincent Palladino, President of the

National Association of Postal Supervisors, in

the February 20, 2001, edition of their magazine, The Postal Supervisor, that explains supervisors’ rights and responsibilities in OIG

investigations and audits. The article discusses a

legal opinion provided by the Association’s

attorney that stated: the OIG has very broad

audit and investigative authority; failure to

cooperate with an OIG investigation or audit

could subject the employee to disciplinary or

criminal action; the OIG may not disclose the

identity of complainants, unless the OIG determines the disclosure is unavoidable; employees

who complain to the OIG may not suffer

reprisal; and employees have limited rights with

respect to OIG interviews, which are conducted

within constitutional parameters. The article is

consistent with OIG’s position regarding its

authority.

EXECUTIVE AWARDS

Kirt West, Assistant Inspector General for

Internal Business, and Ronald Stith, Assistant

Inspector General for Oversight and Business

Evaluation, received a 2000 National Executive

Conference Executive Recognition Award for

exceeding performance expectations and delivering outstanding results while representing the

Postal Service OIG in challenging proposed

audit standards that would have impaired its

organizational independence. Together, they

prepared position papers and made oral presentations to professional associations and government agencies, which resulted in the

Comptroller General agreeing that the OIG is

organizationally independent. This decision

allows the OIG to continue to function effectively and add value to the Postal Service by

rendering independent audit and investigative

services. 

OIG SPECIAL AGENT RECEIVES

AWARD FROM U.S. ATTORNEY’S

OFFICE

At its Second Annual Awards Ceremony,

the U.S. Attorney’s Office, Central District of

California, presented Special Agent Dave

Sermos an award for his outstanding contribuPAGE30

The OIG issued a CD-Rom that provides

information about its mission, culture,

and accomplishments.

ORGANIZATIONAL DYNAMICS

OIG Special Agent David Sermos receives

the U.S. Attorney’s Award from the

Honorable Alejandro N. Mayorkas, U.S.

Attorney, Central District of California.
PAGE31

tions relating to a significant product substitution investigation involving Postal Service

equipment. This product substitution case

affects post offices throughout the country. The

U.S. Attorney commented that this complex

investigation and its pending prosecution is the

direct result of Special Agent Sermos’ technical

and professional skills. 

OIG SPECIAL AGENT AWARDED

TOP HONORS AT TRAINING

PROGRAM

The Inspector General Criminal

Investigator Academy presents two awards to

students who attend the four-week Inspector

General Investigator Training Program. The

William Barton Award is based on performance

in the training program and qualitative standards such as demeanor, attitude, responsibility,

professionalism, and integrity. The Honor

Graduate Award is based on quantitative academic standards. OIG Special Agent Gregory

Tremaglio received both awards for the March

2001 program. Special Agent Tremaglio

received the Honor Graduate award for scoring

100 percent on the program’s two required

examinations. 

OIG HOSTS ASSOCIATION OF

DIRECTORS OF INVESTIGATIONS

CONFERENCE

The OIG was honored to host the

Association of Directors of Investigations

Conference in Williamsburg, Virginia, from

March 12–16, 2001. The conference is an

annual event attended by the heads of investigations of the President’s Council on Integrity

and Efficiency and the Executive Council on

Integrity and Efficiency Office of Inspectors

General. Forty-seven federal agencies were

represented at the conference. The theme of

this year’s conference was “Addressing the

Challenges of the 21st Century.”

In addition to presentations from experts

in the Inspector General community, the week

was highlighted by presentations on ethics and

stress management; futuristic law enforcement;

working with Congress; interactive interviewing; managing “Generation X” employees; communications and customer service; and

Inspector General investigations from a criminal defense perspective. The conference provided an opportunity to address the emerging

issues facing the Inspector General investigative community, as well as to promote the ability and reputation of the OIG and the Postal

Service as leaders in the use of technology and

modern management techniques to improve

federal law enforcement.

OIG HOLDS FOURTH ANNUAL

TRAINING AND RECOGNITION

EVENT

The OIG celebrated its fourth anniversary

with an employee training and recognition conference in Washington, DC, from January 8 -

11, 2001. The event emphasized the OIG’s core

values and featured technical training sessions,

job-related seminars, and a ceremony recognizing the accomplishments of OIG staff. Awards

were presented to four Postal Service employees

–Jayne Schwarz, Wendy Hocking, Stephen

Leavey, and Michael Wolfe– in recognition of

the tremendous support they have provided to

the OIG. Awards were also given to 20 staff

members who best exemplified the OIG’s core

values and performed in a truly outstanding

manner: James Campbell, John Cihota, George

Davis, Sean Dawson, Annette Demory, Carrie

Fox, Gladis Griffith, Felicia HawthorneRichardson, Roger Holland, Nancy Lynham,

Rose Madden, Sam Montalvo, Beverly Partney,

Concha Perry, Hugh Reynolds, Charles

Stephens, Michael Striglers, Nora Tijerina,

Mike Vogel, and Barbara Will. 

The four-day event was highlighted by presentations from: Governor John Walsh of the

Postal Service Board of Governors; Debbie

Willhite, Postal Service Senior Vice President

of Government Relations and Public Policy; as

well as professional authorities on customer service and relationship building. 

MAIL ACCEPTANCE TRAINING

COURSE TAILORED TO OIG

NEEDS

OIG employees developed and taught a

mail acceptance training course as an

alternative to a two week course taught at the

Postal Service Training Academy in Norman,

Oklahoma. Approximately 50 evaluators and

investigators attended the course which was

held at OIG headquarters and the Dallas, Texas,

field office. This in-house training saved the

OIG approximately $62,000 in travel expenses.

OIG employees received special awards

for their outstanding work at the OIG.

Forty-seven agencies were represented

at the Association of Directors of

Investigations Conference hosted by 

the OIG.
OIG CONDUCTS COMPUTER

FRAUD AND SECURITY

AWARENESS BRIEFINGS

The OIG conducted Computer Fraud and

Security Awareness briefings for the following

Postal Service stakeholders during this reporting

period: 

◆ Computer Operations Service Center

staff, San Mateo, California; Information

Systems managers’ meetings for the Pacific,

Allegheny, and Western districts; 

◆ Postal Service staff including Hawaii district postmasters and Information Systems

staff; Van Nuys, California, district staff

and plant managers; Portland, Oregon,

district manager and staff; Santa Ana,

California, Operations and Customer

Service staff; Philadelphia district manager,

postmasters and station managers; 

◆ Western Area Managers’ meeting in Las

Vegas, Nevada; and 

◆ Information Technology managers meeting at the National Center for Employee

Development Conference in Norman,

Oklahoma.

OIG PARTNERS WITH DISTRICT

OF COLUMBIA REHABILITATION

SERVICES ADMINISTRATION 

As part of its continuing efforts to reach out

to persons with disabilities, the OIG has entered

into an employer partnership with the D.C.

Rehabilitation Services Administration. The

Administration’s mission is to help people 

with disabilities prepare for the workforce. An

OIG representative serves on the Rehabilitation Services Administration’s Employer

Advisory Council. The Council serves as an

advisory body to the Rehabilitation Services

Administration on providing employment

opportunities for persons with disabilities. The

OIG participated in a career fair co-sponsored by

the Rehabilitation Services Administration and

its Council on October 24, 2000.

OIG RECEIVES COMBINED

FEDERAL CAMPAIGN AWARDS

The OIG’s Combined Federal Campaign

for 2000 was a tremendous demonstration of the

OIG’s core values and our employees’ generosity. Headquarters staff raised over $80,000,

exceeding last year’s efforts by 50 percent. Field

office contributions were equally impressive,

totaling over $20,000 and increasing the OIG’s

fundraising efforts to over $100,000. The headquarters campaign garnered two awards from

the National Capital Area Combined Federal

Campaign: the President’s Award ($275 per person or 75 percent participation) and the

Pacesetter Award (3.4 percent or better over last

year’s fundraising effort). Both awards were presented at the OIG Fourth Annual Training and

Recognition Conference by Ed Kiess, Senior

Campaign Manager for National Capital Area

Combined Federal Campaign. The OIG Dallas

Field Office also received the Pacesetter Award

from the Dallas, Texas, Regional Combined

Federal Campaign for the 1999 Campaign. The

Award was presented during the field office’s

Combined Federal Campaign 2000 kick-off celebration. 

OIG PROVIDES TRAINING 

AND SUPPORT TO INSPECTOR 

GENERAL COMMUNITY

The OIG has provided computer forensics

services to several Offices of Inspector General

at their request, including the Securities and

Exchange Commission, Department of the Interior,

Department of Treasury, National Credit Union

Administration, and National Archives and

Records Administration. Most of this assistance

has involved providing forensic analysis of

seized media for evidence. The OIG examinations have led to successful prosecution and or

administrative action against the subjects

involved in the cases. The OIG has also assisted

other Offices of Inspector General in developing their own computer forensics capabilities. 

OIG team members gave numerous presentations this reporting period, including presentations on computer forensics to: 

◆ International Organization on Computer

Evidence;

◆ Department of the Interior;

◆ Diplomatic Security Service; and

◆ Association of Directors of

Investigations.

OIG’S TECHNOLOGICAL

ADVANCES FEATURED IN

LEADING TECHNICAL JOURNAL

The OIG successfully installed and

deployed its Voice Over Internet Protocol netPAGE32

The OIG received Pacesetter and

President’s Awards for its outstanding

support of the Combined Federal

Campaign.

ORGANIZATIONAL DYNAMICS
PAGE33

work to four field locations. This technology

allows the OIG to transmit voice communications over its data network, thus reducing

telecommunications costs. The OIG is one of

the first federal government organizations to use

this technology. Packet Magazine, a leading

technical journal, highlighted the OIG’s implementation of Voice Over Internet Protocol in

its second quarter 2001 edition.

CHALLENGES FACING THE OIG

During the past five months, the OIG has

opened four new field offices in Boston,

Massachusetts; Pittsburgh, Pennsylvania;

Portland, Oregon; and Tampa, Florida; for a

total of 15 field offices. These offices will

increase the OIG’s nationwide presence and

reduce travel costs. Adding new offices has been

a challenge, requiring the OIG to rely on stateof-the-art technology to ensure effective communication among its field offices and

headquarters. Communication, one of the

OIG’s core values, is crucial to maintaining the

flow of information and coordination required

to effectively start up and staff new field offices.

Further, as the OIG moves forward in its

efforts to help the Postal Service maintain and

enhance its position as best in the world, the

OIG faces several external and internal challenges. These include:

◆ Continuing to hire and retain talented

and diverse staff;

◆ Building processes, policies, and procedures;

◆ Promoting values and culture;

◆ Demonstrating sensitivity to employee

needs;

◆ Providing meaningful and timely results;

◆ Educating the Postal Service on the

OIG’s role;

◆ Resolving differences regarding authority

and responsibility of the OIG and

Inspection Service;

◆ Balancing our responsibility to report our

findings with the Postal Service’s competitive needs;

◆ Strengthening liaison with postal stakeholders;

◆ Establishing a significant presence with

the Inspector General and law enforcement communities;

◆ Responding effectively to Hotline and

Congressional inquiries; and

◆ Resolving disagreements with Postal Service management in a timely manner.
PAGE34

INSPECTION SERVICE

The Inspection Service, the traditional

law enforcement arm of the Postal

Service, is a highly specialized, professional organization with over 4,300 employees

that performs investigative and security functions essential to a stable and sound postal system. Through its security and enforcement

functions, the Inspection Service provides

assurance to: businesses for the safe exchange of

funds and securities through the U.S. mail;

postal customers of the “sanctity of the seal” in

transmitting correspondence and messages; and

postal employees of a safe work environment.

Postal Inspectors are federal law enforcement officers who carry firearms, make arrests,

execute federal search warrants, and serve subpoenas. Postal Inspectors work closely with U.S.

Attorneys, other law enforcement agencies, and

local prosecutors to investigate postal cases and

prepare them for court. There are approximately

2,000 Postal Inspectors stationed throughout

the United States who enforce over 200 federal

laws covering investigations of crimes that

adversely affect or fraudulently use the U.S.

Mail and postal system.

To assist in carrying out its responsibilities,

the Inspection Service maintains a security

force staffed by 1,400 uniformed Postal Police

Officers, who are assigned to critical postal facilities throughout the country. The officers provide perimeter security, escort high-value mail

shipments, and perform other essential protective functions.

The Inspection Service operates five forensic crime laboratories, strategically located in

cities across the country. The laboratories are

staffed with forensic scientists and technical

specialists who assist Postal Inspectors in analyzing evidentiary material needed for identifying

and tracking criminal suspects and in providing

expert testimony for cases brought to trial.

The Inspection Service’s 900 professional

and technical employees also include forensic

specialists, program analysts, financial analysts,

information technology experts, and others,

who play a vital role in supporting the criminal

investigation and security functions of the

Inspection Service. They perform a wide variety

of tasks, including developing, maintaining and

continually upgrading management systems;

providing forensic examinations of evidence;

developing, procuring and deploying electronic

security and surveillance equipment; publishing

policy handbooks and consumer awareness

guides and brochures; supplying photography

and video services; and facilitating direct communications with Congress and the public.

Operating with a staff of 10 Postal

Inspectors, an Assistant Inspector in Charge,

four support employees and 39 Postal Police

Officers, the Office of Inspections has a threefold mission. It ensures integrity and excellence

within the Inspection Service by conducting

independent internal investigations of its

employees. The office oversees the quality and

thoroughness of Inspection Service operations

by conducting reviews at field divisions and

headquarters units. Finally, it protects the safety

of postal employees and customers by providing

security and preventive services at national

Headquarters. 

The Office of Counsel provides legal

advice and services in support of Inspection

Service investigations, programs and goals, and

processes requests for access to Inspection

Service records. The Counsel’s office is composed of 20 inspector-attorneys and a support

staff of paralegal specialists, information disclosure specialists, a labor relations specialist, a program specialist, and an administrative support

specialist.

The Inspection Service’s national information technology infrastructure supports over

4,300 users at more than 220 sites nationwide.

Inspection Service offices are linked nationally

via a dedicated frame-relay network, with online connections to the Postal Service, the

National Crime Information Center, the

National Law Enforcement Telecommunications

System, and the Internet.

The Inspection Service extends full cooperation to all federal, state, and local investigative and prosecutorial authorities in law

enforcement matters to ensure greater protection to the public. Working with other agencies,

Postal Inspectors regularly participate in joint

task force cases aimed at curtailing widespread

criminal acts of an organized nature.

More information on the Inspection Service

canbe found at http://www.usps.com/postalinspectors.

Inspection Service seal and badges

ORGANIZATIONAL DYNAMICS
Organizational Structure

Who does the OIG employ?

The OIG staff consists of auditors, criminal investigators, evaluators, lawyers, technicians, and

administrative personnel from federal and state

government agencies, private industry, nonprofit

organizations, and the Postal Service.

DID YOU 

KNOW?

PAGE 35
PAGE36 ORGANIZATIONAL STRUCTURE

Inspector General

ASSISTANT INSPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

ASSISTANT INSPECTOR GENERAL

Business Operations

Accepting & Processing 

Delivery 

Financial Statement/Financial Field 

Marketing & Enabling 

Transportation

Deputy 

Inspector General

Congressional & Public Relations

Quality Assurance & Internal Affairs

Strategic Planning

Business Protection

Contracts/Facilities

Corruption & Nonfinancial Crimes

Financial Crimes

Health Care Fraud

Oversight and 

Business Evaluations

Hotline

Labor Management

Oversight

General Counsel

Legal Services

eBusiness

Computer Intrusion

Developmental

Electronic Commerce

Forensic & Technical Services

Information Systems

Information Technology

East & West

Field Liaison

Arlington

Atlanta

Boston

Chicago

Dallas

Denver

Los Angeles EXECUTIVE REPRESENTATIVES

Internal Business

Administrative Resources

Communications & Policy

Experts

Human Resources

Internal Quality

Workplace Enhancement

ASSISTANT INSPECTOR GENERAL

Minneapolis

New York

Pittsburgh

Portland

Raleigh

San Mateo

St. Louis

Tampa

Office of Inspector General

Organizational Structure

(as of March 31, 2001)
PAGE37

OFFICE OF INSPECTOR

GENERAL

The OIG supports the Postal Service’s business and public policy objectives. It is a unique,

nontraditional, diverse organization that conducts audits, reviews, investigations, and other

core functions identified by the Inspector

General Act of 1978, as amended.

The OIG’s 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 as of March 31, 2001.

DEPUTY INSPECTOR GENERAL

Sylvia L. Owens - assists the Inspector

General and the OIG Management Committee in leading the organization.

CONGRESSIONAL & PUBLIC

RELATIONS TEAM

Director, Laura Whitaker - serves as liaison

and responds to requests from Congress, the

Board of Governors, and the media; and coordinates Congressional testimony and 

presentations.

QUALITY ASSURANCE & INTERNAL

AFFAIRS TEAM

Director, George Davis - conducts internal

reviews of OIG operations and procedures to

ensure that they are effective and appropriate,

and reviews allegations against OIG employees.

STRATEGIC PLANNING TEAM

Director, vacant - anticipates and plans for

current and future changes in the Postal Service, OIG operations, and technology by identifying workload and providing research and

statistical analysis.

GENERAL COUNSEL TO THE

INSPECTOR GENERAL

Thomas Coogan

Deputy General Counsel,

Ronnie Wainwright

LEGAL SERVICES TEAM

Director, Gladis Griffith - provides legal

advice to the Inspector General and OIG staff

in all areas of law, including criminal, civil, and

administrative issues; processes subpoenas;

responds to Freedom of Information Act and

Privacy Act requests; serves as liaison with

Postal Service and Department of Justice legal

staffs; manages compliance with Office of Government Ethics regulations; and reviews existing and proposed legislation, regulations and

policies affecting the economy and efficiency of

the Postal Service.

ASSISTANT INSPECTOR GENERAL 

FOR AUDIT (BUSINESS OPERATIONS)

Debra Ritt

Deputy Assistant Inspectors General, 

John M. Seeba and Tracy LaPoint 

(Acting)

ACCEPTING & PROCESSING TEAM

Director, Stew Dorris - plans and directs

audits and reviews focusing on mail acceptance

and collection operations, and mail processing

and distribution processes.

DELIVERY TEAM

Director, Chris Nicoloff - plans and directs

audits and reviews to enhance delivery processes and operations and improve customer satisfaction.

FINANCIAL TEAMS

Director - Financial Field, Sheila Bruck

and Director - Financial Statements,

vacant - plan and direct work in support of

independent public accounting firm’s annual

financial audit opinion and conduct other

financial-related audits to identify areas for

improvement.

MARKETING & ENABLING TEAM

Director, Larry Chisley - plans and directs

audits and reviews examining the major sources

of revenue from marketing, advertising, stamp

services, retail and international business, and

Postal Service support operations such as government relations and customer service as well

as performs rate case monitoring.

This section describes the organization of

the OIG and the Inspection Service. In

order to differentiate between the OIG and

the Inspection Service, the pages concerning

the Inspection Service have been color

screened.

How many field offices does

the OIG have?

The OIG has 15 field offices in

addition to its headquarters

offices. Field offices supporting

headquarters in Rosslyn, Virginia,

are located in San Mateo and Los

Angeles, California; Denver, Colorado; Atlanta, Georgia; Chicago,

Illinois; Minneapolis, Minnesota;

St. Louis, Missouri; New York,

New York; Raleigh, North Carolina; Dallas, Texas; Boston, Massachusetts; Tampa, Florida; Pittsburgh, Pennsylvania; Portland,

Oregon; and Arlington, Virginia.

DID YOU 

KNOW?
TRANSPORTATION TEAM

Director, Joe Oliva - plans and directs audits

and reviews of domestic and international

transportation and logistics operations, specifically addressing Postal Service fleet operations

and contracts for air, highway, and rail services.

ASSISTANT INSPECTOR GENERAL

FOR INVESTIGATIONS

(BUSINESS PROTECTION)

Billy Sauls

Deputy Assistant Inspectors General,

Daniel O’Rourke and Kim Stroud 

(Acting)

CONTRACTS TEAM

Director, Kim Stroud - plans and directs

audits and investigations of purchasing activities and operations to improve Postal Service

contracting.

CORRUPTION & NON-FINANCIAL

CRIMES TEAM

Director, Michael Shiohama - investigates

bribery, kickbacks, conflict of interest, embezzlements, fraudulent tort claims, executive misconduct, employee retaliation/reprisal, and

cases involving expenditures and contract fraud

dealing with product substitution.

FACILITIES TEAM

Director, Russ Barbee - plans and directs

audits, reviews, and investigations of all aspects

of postal facilities, including repair, renovation,

and new construction.

FINANCIAL CRIMES TEAM

Director, Anthony T. Cannarella - initiates proactive approaches to prevent and detect

fraud, waste, abuse, and mismanagement in the

expenditure of Postal Service funds. 

HEALTH CARE FRAUD TEAM

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

have falsely billed the Postal Service for workrelated injury claims; investigates allegations of

wrongdoing by medical providers under

contract with the Postal Service; and plans and

directs audits and reviews of systemic issues

involving the Workers’ Compensation

Program.

ASSISTANT INSPECTOR GENERAL

FOR INTERNAL BUSINESS

Kirt West

Deputy Assistant Inspector General, 

Wayne Goleski

SELF DIRECTED TEAMS

EXPERTS- provide support to OIG staff in the

areas of statistical sampling; statistical and

other quantitative methods used by the Postal

Service; the selection, development, and use of

analytical methods; economic forecasting;

cost/benefit analysis; estimation of monetary

benefits; and activity-based costing. 

INTERNAL QUALITY - facilitates the success

of OIG operations by providing consulting services to strengthen internal processes and promote the vision and core values of the OIG —

teamwork, leadership, communication, creativity, and conceptualization.

ADMINISTRATIVE RESOURCES TEAM

Director, Steve Spratt - provides the OIG

staff with facilities, procurement, financial,

budget, and other services necessary to accomplish the OIG mission.

COMMUNICATIONS & POLICY TEAM

Director, Jim Nugent - provides video,

graphics, writing, and editorial services; coordinates and publishes OIG reports as well as other

documents for Congress, Governors and Postal

Service management; and manages development of internal policies and procedures.

HUMAN RESOURCES TEAM

Director, Eufemia Lucero - provides fullservice human resources programs to the OIG

in the areas of employee relations, pay and benefits, retirement, awards, performance management, counseling, and training.

WORKPLACE ENHANCEMENT TEAM

Director, Sharon Solomon - provides support and services to the OIG on internal work

life, organizational climate, diversity, equal

employment opportunity, and other workplacerelated issues.

ASSISTANT INSPECTOR GENERAL

FOR OVERSIGHT & BUSINESS

EVALUATIONS

Ronald K. Stith

Deputy Assistant Inspector General, 

Debbie Pettitt 

PAGE38 ORGANIZATIONAL STRUCTURE

The OIG Creative Services staff provides

in-house video and photography services

to enhance OIG products. 
HOTLINE TEAM

Director, Bob Pemberton - operates the

OIG Hotline to provide a vital and confidential communications link for postal employees,

other stakeholders, and the public to report

fraud, waste, abuse, and mismanagement in the

Postal Service.

LABOR MANAGEMENT TEAMS

Directors, Bennie Cruz and 

Joyce Hansen - plan and direct audits and

reviews of labor management and employee

relations issues within the Postal Service to

assist in maintaining a healthy and safe organizational climate for employees and improving

operational efficiency.

OVERSIGHT TEAM

Director, Cathleen Berrick - plans and

directs audits and reviews to provide oversight

of Inspection Service programs and operations.

ASSISTANT INSPECTOR GENERAL

FOR eBUSINESS

Bob Emmons

Deputy Assistant Inspector General,

Donna Edsall

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 vulnerable computer systems so that appropriate countermeasures may

be implemented.

DEVELOPMENTAL TEAM

Director, Tracy LaPoint - plans and directs

audits and reviews of new or redesigned Postal

Service systems, programs, and operations that

are under development.

ELECTRONIC COMMERCE TEAM

Director, Robert Batta - plans and directs

audits and reviews in the emerging field of electronic commerce, focusing on new electronic

business initiatives and revenues.

FORENSIC & TECHNICAL SERVICES

TEAM

Director, Tommy Hampton - 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 SYSTEMS TEAM

Director, Dave Berran - plans and directs

audits and reviews of major automated Postal

management information systems to determine

whether general and application controls are

properly established and systems are designed

to provide accurate data to management; and

provides computer-assisted audit techniques for

data retrieval and analysis in support of the

OIG administrative, audit, and investigative

staff.

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.

EXECUTIVE REPRESENTATIVES

FOR FIELD LIAISON

Colleen McAntee (West) and

Ronald Merryman (East)

Provides senior-level communication links

between the OIG Headquarters and its 15 field

offices, and all Postal Service field operations.

OIG FIELD LOCATIONS

During this reporting period, the OIG

opened four new field offices in Tampa, Florida;

Boston, Massachusetts; Portland, Oregon; and

Pittsburgh, Pennsylvania, for a total of 15 field

offices. In addition, the OIG expanded its

headquarters facility in Rosslyn, Virginia.

Other field offices supporting headquarters are

located in San Mateo and Los Angeles,

California; Denver, Colorado; Atlanta,

Georgia; Chicago, Illinois; Minneapolis,

Minnesota; St. Louis, Missouri; New York, New

York; Raleigh, North Carolina; Dallas, Texas;

and Arlington, Virginia. OIG locations are

depicted in the following map.

RALEIGH, NC

NEW YORK, NY MINNEAPOLIS, MN

ST. LOUIS, MO

ATLANTA, GA LOS ANGELES, CA

DALLAS, TX

ROSSLYN & 

ARLINGTON, VA CHICAGO, IL

DENVER, CO

SAN MATEO, CA

TAMPA, FL

BOSTON, MA

PITTSBURGH, PA

PORTLAND, OR

TAMPA, FL

PITTSBURGH, PA

BOSTON, MA

NEW OFFICE

The OIG Forensic & Technical Services

Team provides technical support to OIG

evaluators and investigators. 

RALEIGH, NC

NEW YORK, NY MINNEAPOLIS, MN

ST. LOUIS, MO

ATLANTA, GA LOS ANGELES, CA

DALLAS, TX

ROSSLYN & 

ARLINGTON, VA CHICAGO, IL

DENVER, CO

OIG Locations Nationwide 

SAN MATEO, CA

TAMPA, FL

BOSTON, MA

PITTSBURGH, PA

PORTLAND, OR

BOSTON, MA

NEW OFFICE
PAGE40

INC

Information Technology

R. COCCIA

INC

Corporate Information

Management

R. LUERS

INC

Computer Crimes &

Commerce

J. EASLEY

INC

International Security

D. HILL

INC

Security

T. DENNENY

INC

Fraud, Child Expl., 

Asset Forfeiture & 

Money Laundering

L. MAXWELL

INC

Mail Theft & 

Violent Crimes

A. CLEMMONS

INC

Revenue & Asset 

Protection Prog.

S. SCHMERBECK

INC

Forensic & Tech. 

Services

R. GEFFEN

INC

Strategic Plng. & 

Management Process

J. STINCHFIELD

INC

Career Development 

Division

K. BOND

INC

Finance & 

Adm. Services

M. MUNLEY

Manager

Human Resource

Performance

N. JOHNSON

Manager

Exec. Resources &

Leadership Dev.

S. CLARK

Inspectors in Charge

Florida - 

M. GREY

Mid Atl. - 

A. CRAWFORD

NY Metro - 

J. SKIDMORE

No. Jersey/Caribbean - 

K. BURKE

Northeast - 

K. JONES

Philadelphia Metro - 

B. CHAMBERS

Southeast - 

I. CARLE

Washington Metro - 

J. ROWAN

W. Allegheny - 

J. BIRCH

Inspectors in Charge

Gulf Coast -

R. DODD

Michiana - 

W. MITCHELL

Midwest - 

R. BOWDREN

No. Ca - 

A. KIEL

No. Illinois - 

I. GILLIS

Northwest - 

R. MORGAN

Rocky Mountain - 

M. COBOS

So. Ca - 

J. FREEMAN

Southwest - 

A. HOLMES

Inspector in Charge

Office of Counsel

L. KATZ

Inspector in Charge

Office of Inspections

J. SOMERSET

Inspector in Charge

Congressional & 

Public Affairs

D. MIHALKO

ORGANIZATIONAL STRUCTURE

INSPECTION SERVICE

At the end of FY 2000, 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 its goals.

The Inspection Service remains committed to

the ongoing evaluation of organizational performance, employee development, and customer

service, with the goal of continuous improvement.

The national headquarters offices of the

Inspection Service are organized into functional

groups that report to Deputy Chief Inspectors

for Investigations, Security & Technology, and

Professional Standards & Resource

Development. The Inspection Service has 18

field divisions, which report directly to two

Deputy Chief Inspectors for field operations.

Five Inspection Service Operations Support

Groups support field offices. The Inspection

Service’s Executive Committee, which consists

of the five Deputy Chief Inspectors and the

three Inspectors in Charge who report directly

to the Chief Postal Inspector, establishes the

direction of the organization. The National

Leadership Team consists of the Deputy Chief

Inspectors and all Inspectors in Charge. 

Inspection Service Organizational Structure

Chief Postal Inspector

KEN C. WEAVER

AIC - Assistant Inspector in Charge

INC - Inspector in Charge

ISOSG - Inspection Service Operations Support Group

Chief Postal Inspector 

Kenneth C. Weaver

Deputy Chief Inspector

Security/Technology

J. BELZ

Deputy Chief Inspector

Investigations

K. NEWMAN

Deputy Chief Inspector

Professional Standards & Resource Development

D. WRIGHT

Deputy Chief Inspector

Field Operations East

L. HEATH

Deputy Chief Inspector

Field Operations West

M. AHERN
Customer Service 

OFFICE OF INSPECTOR GENERAL

External Communications

Internal Communications

Specialized Services

INSPECTION SERVICE

External Communications

Specialized Services

PAGE 41
PAGE42 CUSTOMER SERVICE

OFFICE OF INSPECTOR

GENERAL

EXTERNAL COMMUNICATIONS

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

keeps Congress informed by issuing Semiannual

Reports to Congress, testifying at oversight and

other hearings, and briefing members and their

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. 

CONGRESSIONAL TESTIMONY

Each year, the OIG has testified before

Congress on various matters. During this period,

the OIG provided one written statement for the

record. 

OIG Submits Written Testimony to

House Committee on Government

Reform 

On April 4, 2001, the Inspector General

provided a written statement to the House

Committee on Government Reform. The

Inspector General highlighted opportunities to

improve critical management and financial

practices of the Postal Service, including contracting, budget, return on investment, labor

management, systems development, computer

security and privacy, and strategic planning.

The Inspector General stated that the Postal

Service needs better controls to strengthen its

performance and improve efficiency, whether or

not postal reform occurs. The testimony also

applauded efforts the Postal Service has made to

continue its role as a world leader in the delivery of communications and logistics services. 

RESPONDING TO REQUESTS

FROM CONGRESS AND THE

POSTAL SERVICE GOVERNORS

One of the OIG’s highest priorities is to

provide accurate and timely responses to

Congress and the Postal Service Governors.

The OIG responds to many of these requests by

conducting audits and investigations. However,

the OIG does not normally perform an audit or

investigation when the allegation involves an

individual employee issue that can be resolved

through contractual grievance-arbitration procedures or the Equal Employment Opportunity

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

issues for review. When systemic issues have

been identified, the OIG conducts independent

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

During this 6 month reporting period, the

OIG completed 103 Congressional inquiries.

Appendix G of this report lists the OIG

responses to these inquiries by subject area. A

few examples of OIG work in response to

Congressional requests are highlighted below:

◆ A review of allegations that a hostile

work environment existed at a Virginia

post office confirmed that it was potentially volatile because of harassment and

intimidation by the postmaster. As a

result of the review, the postmaster was

reassigned to another facility and performance and conduct were monitored at

the new assignment. We verified with

Postal Service management, district management, and union officials that the

work environment improved as a result

of the actions taken.

◆ An allegation that the Postal Service was

not properly conducting the site selection

process for a new Postal Service facility

prompted us to perform a review which

found that the process was fundamentally

sound and followed Postal Service guideThis section describes the OIG and

Inspection Service’s efforts to provide

Customer Service, including initiatives by

support functions to enhance service to

internal customers. Customer satisfaction

and service is the underlying creed of

most successful organizations and businesses. In order to differentiate work

reported by the OIG and the Inspection

Service, pages concerning the Inspection

Service have been color screened.

The Inspector General submitted written

testimony to Congress on April 4, 2001.
PAGE43

lines. Although we identified minor

errors in some of the solicitation notices,

the errors were not material and did not

adversely affect the site selection process.

In addition, we found no indication that

these errors occurred as a result of inappropriate or unethical behavior by Postal

Service personnel. 

OIG HOTLINE PROVIDES A VITAL

AND CONFIDENTIAL

COMMUNICATIONS LINK

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

OIG and individuals who contact the Hotline

to report allegations of fraud, waste, abuse, and

mismanagement.

Responding to Hotline Inquiries

The Hotline receives complaints from

Postal Service employees, customers, and the

general public concerning 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, and referred for appropriate action.

The OIG considers all Hotline contacts when

planning audits and reviews.

During this reporting period, the Hotline

received nearly 11,000 contacts, some of which

were addressed by the OIG on such issues as

waste, fraud, abuse, mismanagement, deficient

postal operations, personnel matters, and other

concerns. In addition:

◆ Twenty-six percent were addressed by the

Inspection Service and involved criminal

issues such as mail theft, assaults and

threats, and workers compensation fraud; 

◆ Seventeen percent were addressed by the

Office of Consumer Advocate involving

complaints related to customer service

issues, particularly mail delivery; 

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

ZIP Codes, postage meters, and other

Postal Service related matters; and

◆ Eight percent were related to operational

and human resource issues that were

referred to Postal Service management.

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

7 p.m., Eastern Standard Time, Monday

through Friday (except federal holidays). Calls

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

Threats and any other potentially violent work

situations are routed immediately to the Postal

Police Control Center for action 24 hours a day,

either by an OIG Hotline analyst or through a

caller-directed menu system. Anyone interested

in contacting the Hotline can call toll-free, 

1-888-USPS-OIG (1-888-877-7644); 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 tollfree to (866) 756-6741.

PROPOSED LEGISLATION AND

REGULATIONS

As required by the Inspector General Act,

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

the Governors of their impact on Postal Service

programs and operations. During the 6 month

reporting period, the OIG evaluated 43 legislative proposals and 36 regulatory initiatives.

Highlights of the legislative and regulatory proposals are included at the end of the appropriate

section that describes the OIG and Inspection

Service reviews performed in the last six

months.

FREEDOM OF INFORMATION

AND SUBPOENA REQUESTS

The OIG releases all final audit and management advisory reports when requested pursuant to the Freedom of Information Act, 5

U.S.C. 552, unless the law prohibits disclosure.

In addition, the Electronic Freedom of

Information Act amendments, Public Law No.

104-231, require federal agencies to make certain records accessible electronically. The OIG

established its Internet reading room in order to

make certain information available to the public without requiring a Freedom of Information

Act request. 

Each request is reviewed on a case-by-case

basis in accordance with the Freedom of

Information Act, the Privacy Act, and the

Postal Reorganization Act. The OIG may coordinate its review and response with Postal

Service management and the Law Department

OIG Reports with white covers (above)

contain restricted information.

OIG Reports with blue covers (above) are

available to the public.
when it deems appropriate. In deciding what

information to release, the OIG balances the

public’s right to access federal agency records

with the government’s need to safeguard certain

protected information, such as those affecting

business needs and employee privacy. As a

result, requested information may be deleted to

protect proprietary or confidential information,

or withheld in its entirety.

The OIG received sixty-eight Freedom of

Information Act requests which were handled

as follows:

◆ 11 were answered in full, 12 were

answered stating no OIG documents

existed, 12 were withheld totally, 

23 were partially withheld, 1 was

withdrawn, and 9 were referred outside

the OIG. Nine of the 68 requests were

appealed. Of the nine appeals, seven

were upheld by the Postal Service, one

was partially upheld, and one appeal was

withdrawn. To date the OIG has no

appeals pending.

In addition, the Inspector General is

authorized under the Inspector General Act to

issue subpoenas for audits and investigations,

and in support of selected investigations for the

Inspection Service. In the last 6 months: 

◆ The OIG issued 184 subpoenas; 141 supporting Inspection Service investigations

and 43 supporting OIG investigations.

INTERNAL COMMUNICATIONS

In addition to responding to official

requests by Congress and the Governors for

information, the OIG responds to Postal

Service management and other agency requests.

MONITORING COMPUTER

MATCHING REQUESTS FOR

POSTAL INFORMATION

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

comparison between the automated federal system of records of a federal agency with the automated records of another federal, state, or local

agency. 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 for information needed to perform computer matches. The Inspector General

is a member of the Data Integrity Board, along

with the Postal Service Vice President,

Employee Resources Management; Vice

President, General Counsel; Chief Financial

Officer and Executive Vice President, Finance;

and the Chief Postal Inspector.

During this 6 month period, the Inspector

General, as a member of the Data Integrity

Board, reviewed and approved one request for

computer matching data from the Postal

Service. The Alaska Department of Labor and

Workforce Development requested information

from the Postal Service in order to identify

postal employees who are former students of the

state of Alaska’s education system and to determine whether their postal job duties related to

the funded education they received. The match

will be used to generate statistics, determine

program effectiveness, and identify potential

improvements.

SPECIALIZED SERVICES

COMPUTER FORENSICS

The OIG’s Computer Forensics Team is

staffed by specialists trained and certified in

computer seizures and the recovery of electronic

evidence. The team’s mission is to provide technical support to extract data to help identify

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

computer may be the target of the offense where

the criminal’s goal is to steal information or

cause damage to a computer. Second, the computer may be a tool of the offense. This occurs

when an individual uses a computer to facilitate

some traditional offense, such as fraud. Third,

computers are sometimes incidental to the

offense but significant to law enforcement

because they contain evidence of a crime.

PAGE44 CUSTOMER SERVICE

DID YOU 

KNOW?

How does the OIG promote

open communication throughout the organization?

In addition to e-mail and voice

mail, the OIG uses videoteleconferencing, all-hands meetings,

teambuilding, and field office

visits to foster communication

throughout the organization.
PAGE45

During this reporting period, the

Computer Forensics Team: ◆ Examined data seized in a variety of cases

involving postal employee misconduct,

intrusion into postal computer systems,

and contract frauds.

◆ Seized and examined a subject’s computer, uncovering evidence that led to

the individual’s conviction for vandalizing the OIG website of numerous other

federal and state government agencies.

◆ Assisted the Treasury Department and

State Department Inspectors General

with the seizure and examination of

computer evidence.

POLYGRAPH SERVICES

The OIG polygraph program aids criminal

investigators and is an effective tool to assist in

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

polygraph community and on the Federal

Polygraph Executive Committee.

COMPUTER ASSISTED

ASSESSMENT TECHNIQUES

The OIG’s Computer Assisted Assessment

Techniques team uses automated methods and

tools to extract and analyze electronic data

located in over 900 postal systems in support of

OIG audit and investigative efforts. This team

has supported several significant OIG efforts

during this reporting period, including: ◆ Conducting data retrieval analyses of

Postal Service databases to identify contract irregularities that may indicate corruption. As a result, two companies

admitted to paying bribes in exchange

for postal contracts and scheming to

delay the issuance of the solicitation to

ensure they received the contract award. 

◆ Gathering data from three purchasing

systems and the Highway Payment

System in support of a benchmarking

study of supplier diversity. 
INSPECTION SERVICE

The Inspection Service has adopted

numerous initiatives to improve customer service. The Inspection Service alerts consumers

and businesses to current crimes by attracting

media attention to postal crime trends, publicizing positive law enforcement accomplishments,

circulating media releases, and hosting crime

prevention presentations.

EXTERNAL COMMUNICATIONS

The Inspection Service is responsible for

communicating its law enforcement and crime

prevention achievements to the American public, Congress, the Postal Service, and the law

enforcement community.

PROVIDING CONGRESSIONAL

LIASION

The Inspection Service provided members

of Congress with the following information

relating to Postal Service and Inspection

Service issues:

◆ An introductory package, including a

new brochure entitled Congressional

Guide to Postal Crimes, was completed

and delivered to all members of the

107th Congress.

◆ To further educate Congress and the

American public on current mail related

crime, an updated brochure, Sweepstakes

Advertising: A Consumer’s Guide, was

distributed to Congressional offices.

Published in cooperation with the Direct

Marketing Association, the brochure

helps consumers distinguish between

legitimate sweepstakes offers and fraudulent promotions.

◆ In February, members of the Senate

Subcommittee on International Security,

Proliferation and Federal Services were

briefed about the Inspection Service’s

enforcement of the Deceptive Mail

Prevention and Enforcement Act. Also

in February, a briefing was held with

staffers of the Senate Permanent

Subcommittee on Investigations regarding cross border lotteries and gold card

merchandising schemes.

CONSUMER PROTECTION

In an effort to maintain the integrity of the

mail and to ensure the confidence and trust that

government agencies, businesses, and customers

place in the Postal Service, the Inspection

Service conducts mail fraud investigations that

focus on a variety of schemes. Because of their

complexity and far-reaching implications, mail

fraud investigations are often conducted jointly

with other federal and local law enforcement

agencies to take advantage of the expertise of

each agency and to maximize resources. Postal

Inspectors also work with other law enforcement agencies and consumer groups in prevention efforts to raise awareness of fraud.

ANNUAL REPORT OF

INVESTIGATIONS

The 2000 Annual Report of Investigations

of the Inspection Service was released in

November 2000. The accomplishments

described in the report are intended to inform

the Governors, the Postmaster General, Postal

Service managers, and employees about

Inspection Service activities and give greater

insight into the value and benefits provided by

the Inspection Service.

SPECIALIZED SERVICES

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. Laboratory personnel are

available to respond to the most critical criminal investigations of violent crimes to assist in

processing and evaluating evidence. During this

reporting period, over 780 sets of fingerprints

were searched on Automated Fingerprint

Identification System searches yielding 34 identifications. 

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 Postal Inspectors, security technicians,

and communications specialists to meet program objectives. Programs include radio and

PAGE46 CUSTOMER SERVICE

Congressional Guide to Postal Crimes

Sweepstakes Advertising: A Consumer’s

Guide
PAGE47

electronic surveillance and mail screening. Two

examples of technical services support follow:

◆ The technical services unit has been

instrumental in assisting the revenue

asset protection program division in identifying, evaluating, procuring, deploying,

installing, and providing training in the

use of special equipment needed by field

inspectors to conduct difficult embezzlement investigations. In three unrelated

cases in two field divisions, the new

equipment was used to assist in the identification of three postal employees for

embezzlement of Postal Service assets

totaling over $123,000.

◆ Portable X-ray equipment training was

provided to 33 Postal Inspectors and 18

new portable X-ray units were deployed

to the field in support of our mail screening and prohibited mail investigations.

The technical service unit also conducted a survey of the 2002 Olympic

games venue to identify security, mail

screening, and communication issues.

POLYGRAPH SERVICES

Polygraph examinations continue to be

excellent aids in criminal investigations and

have proven to be very effective in resolving

cases involving employee assaults, registered

and other mail thefts, allegations of assault, and

misappropriation of postal funds or property.

◆ In December 2000, a Texas bank sent

several registered bags to two other banks

located in Texas. A transfer point

reported one of the bank bags missing,

which contained $25,000 in cash.

Polygraph assistance was requested. In

January 2001, during the pretest interview, a postal clerk admitted taking the

registered bank bag containing the cash.

During the interview process, the

employee retrieved $24,500, was terminated, and has been indicted on federal

mail theft charges.

◆ A postal clerk submitted a claim for

allegedly being injured while on duty at a

postal station in Texas. A review of a

video tape revealed that the employee

had not lifted any parcels on the day the

claimed injury occurred. A polygraph test

was administered and the employee

admitted that the injury occurred in a

nonwork-related incident. As a result of

the admission, the Department of Labor

denied the claim for worker’s compensation. This resulted in savings of over

$41,000 to the Postal Service.

DIGITAL EVIDENCE RECOVERY

Inspection Service personnel also preserve,

access, retrieve, and recover evidence stored on

computers, and conduct forensic examinations

of audio and video media. This reporting period,

the Inspection Service received 431 new

requests and completed 275 requests. An example of the use of digital evidence follows:

◆ Forensic analysis of a notebook computer

identified several documents and databases relevant to a financial investments

mail fraud case that promised customers a

70 percent per month return on investments. Following a 6 week trial in a federal district court, a jury convicted the

defendants on all counts.

The Inspection Service 2000 Annual

Report of Investigations summarizes 

its achievements and investigative

accomplishments.
PAGE48
OFFICE OF INSPECTOR GENERAL

Accepting and Processing Reviews

Transportation Reviews

Delivery Reviews

Marketing Reviews

Legislative and Regulatory Reviews

INSPECTION SERVICE

Mail Theft Investigations

Service Investigations

PAGE 49

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

worldwide. During 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. OIG reviews

and investigations identified opportunities to

save about $40.5 million during current and

future years.

ACCEPTING AND PROCESSING

REVIEWS

On average, over 660 million pieces of mail

are accepted each day by the Postal Service in a

variety of ways, including collections from more

than 300,000 blue collection boxes as well as

residential and business collection mailboxes.

Express Mail, First-Class Mail, and some Priority

Mail and periodicals are sorted at more than 470

processing and distribution plants, while

Standard Mail is generally handled at the 21

bulk mail centers. In order to ensure timely and

accurate delivery of mail, accepting and processing equipment must be state-of-the-art.

Situations that result in delayed mail processing

must be vigorously evaluated and the underlying

causes must be promptly resolved. The Postal

Service continues to explore ways to enhance

the acceptance and processing of mail through

innovative automation. During the past six

months, the OIG issued two reports in the

accepting and processing area, which are

discussed below:

DELAYS IN CERTIFIED MAIL

DELIVERY IDENTIFIED

At the request of a Congressional subcommittee chairman, the OIG reviewed allegations

of delayed certified tax mailings reported by the

media. The audit confirmed that mail was

delayed in four of the five reported locations.

The delays, ranging from 2 to 38 days, were primarily due to a lack of planning and supervision.

Additionally, one postal facility processed 1,417

pieces of certified mail, but the courier only

picked up 294 pieces. Of the 1,123 remaining

pieces, 1,003 were not picked up for approximately three weeks. The Postal Service could

not account for the remaining 120 pieces. 

The OIG also identified that in some locations, delays were caused by manual processing

and inaccurate reporting. The OIG recommended and Postal Service management agreed

to establish standard procedures for processing,

measuring, and reporting certified mail.

Management also agreed to develop methods to

leverage existing mail processing technology

and establish plans to handle seasonal increases

in certified mail processing.

(OIG AC-AR-01-001)

MAIL CONTAINERS IMPROPERLY

LABELED

In response to complaints to the OIG

Hotline, the OIG conducted a review of alleged

mail processing delays at a Mid-Atlantic Area

post office. The OIG found no evidence of

delays; however, mail containers were improperly labeled and mail was arriving late from a

processing and distribution facility. The review

also identified two contracted delivery trailers

that did not comply with safety standards. The

OIG suggested and Postal Service management

agreed to repair or remove unsafe trailers from

service and to determine the feasibility of reassigning responsibility for the post office’s mail to

a processing and distribution facility that was 57

miles closer to the existing facility.

(OIG AC-MA-01-001)

TRANSPORTATION REVIEWS

Transportation of mail is a vital part of the

Postal Service’s mission of binding the nation

PAGE50 PERFORMANCE REVIEWS

This section highlights audits, reviews, and

investigations performed by the OIG and

the Inspection Service in the Performance

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

Also, the OIG legislative and regulatory

reviews are included at the end of this section. In order to differentiate the work

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

color screened.

The OIG evaluates operations that utilize

automation such as the advanced facer/

canceler, which faces, cancels, and

sorts incoming letter-size mail for

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

mission, the Postal Service spends in excess of

$4.7 billion annually for air, highway, rail, and 

water transportation contracts. For example, in

January 2001, the Postal Service contracted

with Federal Express to transport Express,

Priority, and First-Class mail. This contract is

expected to provide more reliable service,

reduce costs, and manage future cost growth.

Contractors provide most transportation; however, the Postal Service operates its own fleet of

trucks for some highway routes. During the past

six months, the OIG completed three transportation related audits and a number of investigations, some of which are highlighted below:

OIG INVESTIGATION LEADS 

TO COST AVOIDANCE OF 

$23 MILLION 

An OIG investigation revealed that a

Postal Service manager developed a questionable relationship with a contractor and provided favorable treatment during the Postal

Service’s testing and assessment of a transportation contract. As a result, the Postal Service

decided not to proceed with the $23.5 million

expenditure for the system as initially proposed

to the Board of Governors. 

The product ultimately experienced catastrophic failures on critical safety testing measures, a fact that the manager did not fully

disclose to senior Postal Service management.

The OIG was able to prove that during the time

the manager was providing favorable treatment

to the contractor, he was receiving gratuities

from the contractor. The manager was given a

notice of proposed removal; however, prior to

removal, the manager resigned. In addition, this

program was drastically scaled back. The current proposal is to purchase significantly fewer

units from a different contractor at a cost of only

$500,000, resulting in a cost avoidance of $23

million.

AUDIT OF SAFETY AND SECURITY

OF LEASED TRAILER FLEET 

IDENTIFIES POTENTIAL COST

REDUCTION OF $17.5 MILLION

The OIG conducted a nationwide audit of

the Postal Service’s leased fleet of about 8,700

trailers to determine compliance with federal

safety standards and identify opportunities for

cost savings. The audit projected that more

than 25 percent of the leased trailers did not

meet standards because the Postal Service did

not have adequate procedures to verify contractor compliance with preventive maintenance

and safety requirements. Specifically, the OIG

found bald tires, damaged or missing lights,

reflectors, mud flaps, doors, load restraint systems, and bumpers. The OIG also found that

the Postal Service could not account for $5 million in leased trailer inventory and did not

always secure and protect trailers. 

In addition, the OIG identified that the

Postal Service paid trailer damage claims to

contractors without determining fault or verifying the cost of the repairs, and trailers leased for

transportation were being used for storage. As a

result, the OIG projected that the Postal

Service could reduce costs by more than $17.5

million over a 5-year period by properly administering damage claims on leased trailers, and

improving controls over trailer use. The OIG

recommended and Postal Service management

agreed to include requirements regarding safety,

maintenance, and liability insurance in contracts; establish procedures to account for trailer

inventory; secure and protect trailers; and

update policies governing damage claims. 

(OIG TR-AR-01-002)

LEASED TRAILER SAFETY 

DEFICIENCIES FOUND

The OIG conducted a review of the New

York Metro Area’s leased trailer fleet involving

six locally negotiated contracts for over 2,400

trailers. The OIG’s review was intended to

determine compliance with safety standards

and identify opportunities for cost savings. The

OIG observed trailers that appeared in substandard condition and which reflected poorly on

the Postal Service. The OIG brought the substandard condition of the trailers to the attention of Postal Service management who

conducted an inspection of 1,300 trailers and

identified 239 that were unsafe, required repair,

or needed to be completely refurbished. In addition, management performed a survey of trailer

usage and identified over 1,000 trailers, or more

than 41 percent of the trailers leased for transportation, were being used for equipment storage. As a result, the Postal Service paid for

PAGE51

The OIG found trailers in substandard

condition and some used improperly for

storage. 
trailers that were not needed. The OIG suggested and Postal Service management agreed

to require contractors to meet provisions regarding trailer safety, maintenance, and appearance;

to evaluate equipment and storage requirements

in the New York Metro Area; and to prohibit

storing equipment in trailers leased for transportation. (OIG TR-MA-01-001)

POSTAL SERVICE MANAGER

ACCEPTS GRATUITIES - OIG

RECOUPS COST OF 

INVESTIGATION 

The OIG investigated allegations that a

Postal Service manager accepted gratuities and

provided favorable treatment to a subcontractor

regarding the procurement of transportation

equipment. Postal Service management issued a

termination letter to the manager. In lieu of

debarment, the subcontractor agreed to repay

the Postal Service over $125,000 as reimbursement for the cost of the OIG’s investigation. In

addition, the subcontractor has agreed to adhere

to a set of ethical standards, receive ethical

training, and make its internal records available

for OIG inspection. The subcontractor has also

agreed to repay the Postal Service for the cost of

reviewing their internal records. 

LACK OF CONTROLS ON MAIL

TRANSPORT EQUIPMENT 

SERVICE CENTER NETWORK

Based on a request from a Governor, the

OIG assessed the internal controls over the

Mail Transport Equipment Service Center

Network. This network, consisting of 22 contractor operated centers, supplies Postal Service

facilities and customers with mailbags, trays,

sleeves, pallets, hampers, and rolling containers

to move the mail. The audit found equipment

processing was improperly invoiced, repairs

were incorrectly reported, and serviceable

equipment was inappropriately condemned and

discarded. The OIG recommended and Postal

Service management agreed to segregate network oversight from service center operations;

have qualified staff test and verify the serviceability of equipment before it is discarded; and

require documentation for container repair and

service histories. Management also agreed to

fully staff the quality assurance function. 

(OIG TR-AR-01-001)

DELIVERY REVIEWS

Universal service—delivering mail to

everyone, 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 over

235,000 mail routes that are serviced by nearly

300,000 letter carriers and 200,000 delivery

vehicles. During FY 2000, the Postal Service

delivered almost 208 billion pieces of mail to

136 million homes and businesses—a yearly

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

six months, the OIG issued the following report:

IMPROVEMENTS NEEDED IN 

THE DELIVERY CONFIRMATION 

PROGRAM

In response to complaints to the OIG

Hotline regarding improper scanning of mail

delivery times, the OIG conducted an audit of

the Postal Service’s delivery confirmation program at five locations. The review substantiated

that improper scanning of mail occurred and

that computer connection problems at one

facility resulted in the inaccurate reporting of

delivery information to customers. For example,

the OIG identified that two of the five facility

managers instructed employees to scan mail as

delivered or attempted delivery, before actual

delivery was attempted. As a result, Postal

Service customers were not provided with accurate delivery status information and facility

scanning scores were inflated. The OIG recommended and Postal Service management agreed

to monitor procedures to detect and prevent

improper scanning, and determine if improper

scanning was occurring at other facilities.

However, Postal Service management did not

fully agree that connectivity tests should be performed because of recent software modifications. (OIG DE-AR-01-001)

MARKETING REVIEWS 

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. Therefore, the Postal Service designs its

products and features to build customer awareness and loyalty. The Postal Service also wants

to ensure that its services are available at places

PAGE52 PERFORMANCE REVIEWS

The OIG audits delivery processes and

operations which utilize nearly

300,000 letter carriers. Pictured

above are a city letter carrier in

1890 and present day.
PAGE53

where customers choose to do business. During

this reporting period, the OIG completed one

review of marketing operations, which is highlighted below: 

INABILITY TO MEET 

REQUIREMENTS OF AN 

eCOMMERCE MAILER MAY LEAD

TO ANNUAL REVENUE LOSS OF

$25-40 MILLION

The OIG determined whether the Postal

Service had the flexibility to compete in the

eCommerce parcel delivery market by conducting an audit of one of its largest eCommerce

mailers. The audit found that, although the

Postal Service met the basic requirements of the

mailer, regulatory constraints prevented Postal

Service officials from quickly meeting the

mailer’s requests for discount rates and deferred

payments. As a result, the mailer signed a threeyear agreement with a Postal Service competitor. Postal Service officials estimate they may

lose $25–40 million annually in future revenue.

(OIG MK-AR-01-001)

LEGISLATIVE AND REGULATORY

REVIEWS

During this reporting period, the OIG

identified the following legislation and regulation affecting Postal Service performance.

ENACTED LEGISLATION

Public Law 106-384 - Nonprofit Relief

Act of 2000

This legislation modified rates on nonprofit

mailings. In January 2000, the Postal Service

Board of Governors proposed postage rate

increases for all classes of mail. Under the

ratemaking schedule in effect at that time, some

nonprofit rates would have been higher than

corresponding commercial rates. In October

2000, Congress passed legislation proposed by

the Postal Service and nonprofit mailers to correct this anomaly. As a result, the Postal Rate

Commission was able to employ the new rate

formula for nonprofit mailers to ensure that

nonprofit rates are lower than corresponding

rates.

This legislation was a corrective measure

that addressed a rare and specific situation. It

has minimal impact on Postal Service operations. 

PROPOSED LEGISLATION

H.R. 76 - George Thomas ‘Mickey’

Leland Hunger Relief Stamp Act 

H.R.116 - Book Stamp Act 

Both bills require the Postal Service to

establish a semipostal stamp with a special rate

of postage no higher than 125 percent of the

current First-Class rate to promote certain

causes. Postal Service patrons who desire to support the cause depicted on the stamp pay the

higher rate to purchase the stamp. The George

Thomas ‘Mickey’ Leland Hunger Relief Stamp

bill would fund emergency food relief programs

in the United States; the Book Stamp bill

would fund child literacy programs. The organizations would receive revenues in excess of the

First-Class rate, less any reasonable costs

incurred by the Postal Service for printing, selling, and distributing the stamps. 

Last year, Congress enacted the Semipostal

Authorization Act, authorizing the Postal

Service to issue and sell semipostals to promote

causes the Postal Service considers to be in the

national public interest. H.R. 76 and H.R. 116,

if enacted, would require the Postal Service to

issue particular semipostal stamps authorized by

Congress outside of the Postal Service’s established review and selection process set forth in

the Semipostal Authorization Act.

The OIG previously audited the Breast

Cancer Research Semipostal Stamp program,

the first semipostal initiative. The audit raised

concerns about the Postal Service’s ability to

account for its costs in producing and marketing

semipostal stamps. The Postal Service needs

adequate controls in this area to keep track of

costs associated with the production and marketing of the semipostal stamp.

S.122 - Armed Services Voting Rights

Protection Act of 2001 

This bill prohibits a state from determining

that a ballot submitted by an absent uniformed

services voter was improperly or fraudulently

cast unless that state finds clear and convincing

evidence of fraud. It requires the Postal Service

to conduct joint studies with each branch of the

armed services to examine why state election

officials threw out many overseas military ballots cast in the 2000 election. 

During Fiscal Year 2000, the

Postal Service delivered over

208 billion pieces of mail to 

136 million homes and 

businesses.

DID YOU 

KNOW?
PAGE54

The Postal Service would be expected to

cooperate fully with the armed services in this

effort. However, because the armed services are

responsible for military mail and its postmarking, it would be appropriate for the armed services to provide the majority of resources to

support this effort. 

PROPOSED REGULATION

Semipostal Stamp Program, Proposed

Rule, Postal Service, Federal Register,

February 15, 2001 

This proposed rule creates implementing

regulations for the Semipostal Authorization

Act, enacted July 28, 2000. The Act authorizes

the Postal Service to determine which causes

will be selected for semipostal stamp issues, and

then produce and market the stamps. The regulations establish evaluation criteria and procedures for selecting causes and agencies to

receive funds raised. Under the proposed regulations, the Postal Service must establish a baseline in order to determine the amount of

reasonable costs to be recovered from the revenue in excess of the First-Class rate.

The OIG provided written comments to

the regulations. The OIG raised concerns that

the proposed regulations do not require the

Postal Service to establish a baseline of reasonable costs before any costs for the semipostal are

incurred. In addition, the OIG recommended

that the regulations be revised to clearly define

the advertising costs recoverable from the revenue in excess of the First-Class rate. 

PERFORMANCE REVIEWS
PAGE55

INSPECTION SERVICE

The Inspection Service is responsible for

investigations that ensure the sanctity of the

mail. This section describes some of its work in

the areas of mail theft and service investigations.

MAIL THEFT INVESTIGATIONS

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. During this

reporting period, Postal Inspectors arrested over

390 employees and almost 3,100 non-employees

or contractors for mail theft. 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. 

NON-EMPLOYEE MAIL THEFT

Thieves frequently concentrate on targets

that offer a large volume of mail. Despite

Inspection Service efforts to lessen the vulnerability of such targets, volume attacks continue to

be a challenge. To date, volume attacks equal

2,950 compared to 2,062 for the same period last

year. An example of case activity related to mail

theft by non-employees is highlighted below:

◆ Postal Inspectors in the Southwest Area

arrested an individual involved in mail

theft in New Mexico, Colorado, Nebraska, Utah, and Idaho. After searching the

vehicle, inspectors found guns, drugs,

credit cards, counterfeit identification

cards, and forged birth certificates.

Approximately $1 million in losses have

been attributed to this individual. 

EMPLOYEE MAIL THEFT

The overwhelming majority of Postal

Service employees work conscientiously to

move the nation’s mail to its proper destination

and they take their responsibilities seriously.

Unfortunately, a small number of employees

abuse the public’s trust. It is the job of the

Inspection Service to identify these individuals

and take steps to have them prosecuted and

removed from the Postal Service. According to

the revised designation of functions between the

OIG and Inspection Service, effective April

2000, the Inspection Service is responsible for

conducting mail theft investigations including

those involving postal employees. Examples of

case activity related to mail theft by employees

follow:

◆ Postal Inspectors and local law enforcement officers in New York conducted an

undercover operation that resulted in the

arrest of a mail handler at a local airmail

center. This employee sold undercover

agents 31 credit cards that were stolen

from the mail. 

◆ A Louisiana processing and distribution

clerk was arrested for conspiracy and possession of stolen mail. At the time of the

arrest, this employee was in possession of

120 U.S. Treasury checks totaling almost

$85,000, and 124 First-Class letters containing personal checks for credit card

payments. The employee subsequently

pled guilty to all charges.

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.

During the reporting period, the Inspection

Service reported completing two service investigations: return-to-sender mail on hand and

national mail condition review.

DID YOU 

KNOW...

The Post Office Department

operated the telephone and

telegraph systems of the United

States from July 31, 1918, to 

July 31, 1919.
PAGE56 PERFORMANCE REVIEWS
Financial Management

Reviews

OFFICE OF INSPECTOR GENERAL

Financial Opinion Audits

Financial-Related Reviews

Contracting and Facilities Reviews

Legislative and Regulatory Reviews

INSPECTION SERVICE

Revenue Investigations

PAGE 57
OFFICE OF INSPECTOR

GENERAL

The Postal Service is a $65 billion business that relies on strong financial management controls to maximize revenue

and minimize costs. In the past six months, the

OIG has completed 108 financial management

reviews. These reviews resulted in the identification of $49 million in questioned costs and

funds that could be put to better use. In

addition, OIG investigations resulted in 6

convictions, 7 arrests, 14 indictments, and over

$6 million in recoveries, restitution, and cost

savings. These projects add value to the Postal

Service by identifying opportunities for cost 

savings and improving financial management,

contracting, and facilities practices, and 

detecting and deterring fraud, waste, abuse, and 

mismanagement. 

FINANCIAL OPINION AUDITS

The Postal Reorganization Act of 1970

requires annual audits of the Postal Service’s

financial statements. The OIG conducts these

audits in support of the independent public

accounting firm’s overall opinion on those statements. These audits assess the integrity and reliability of the financial information contained in

the Postal Service financial statements. These

centers and headquarters oversee the collection

of approximately $65 billion in revenue and the

recording and disbursement of about a similar

amount each year. Examples of reviews in this

area are highlighted below:

◆ The OIG conducted audits at Postal Service headquarters in Washington, D.C.,

and the Information Technology and

Accounting Service centers located in

Eagan, Minnesota; St. Louis, Missouri;

and San Mateo, California. 

The OIG disclosed that management’s

policies, accounting procedures, and

internal controls conformed with generally accepted accounting principles.

However, OIG identified weaknesses in

the following areas:

◆ remittance processing; 

◆ tax liability reporting;

◆ protection and destruction of 

obsolete money orders and 

imprinters;

◆ processing of money order data;

◆ capitalization of new equipment; and

◆ adjustments of fuel inventory. 

The OIG recommended and Postal Service management generally agreed to

these recommendations for improvements in these areas. In addition, OIG

recommended adjustments to the financial statements totaling about $94 million. Postal Service management accepted approximately $77 million of these

adjustments. The remainder of the

adjustments Postal Service management

waived, rejected, or partially accepted

were evaluated together and we determined that they did not have a material

impact on the financial statements.

(OIG FT-AR-01-007 through 

OIG FT-AR-01-009)

◆ An audit at Postal Service Headquarters

examined cash, investments, workers’

compensation, and unemployment compensation totaling over $1.6 billion. This

audit disclosed that the Postal Service

policies, accounting procedures, and

internal controls complied with generally

accepted accounting principles. 

(OIG FT-AR-01-003)

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

Board of Governors and travel and 

representation expenses for Postal Service officers. The reviews determined

expenses were properly supported, 

reasonable, and complied with Postal

PAGE58

This section highlights audits, reviews,

and investigations performed by the OIG

and the Inspection Service in the financial

management area. Report numbers are

shown in parentheses after the narrative,

as appropriate. Also, the OIG legislative

and regulatory reviews are included at the

end of this section. In order to differentiate the work reported by the OIG and

Inspection Service, the pages containing

the work reported by the Inspection Service

have been color screened.

PAGE58 FINANCIAL MANAGEMENT REVIEWS

DID YOU 

KNOW?

What is a seven-day letter?

Although rarely used, under

Section 5 of the Inspector

General Act, the Inspector

General must report to the

Governors any serious or flagrant

problems relating to the administration of Postal Service programs. Within seven calendar

days, the Governors must transmit the letter to Congress.
PAGE59

Service policies and procedures and

Board of Governors’ guidelines. 

(OIG FT-AR-01-004 and 

OIG FT-AR-01-005) 

FY 2001 FINANCIAL

INSTALLATION AUDITS

The OIG successfully transitioned financial installation audit work from the Inspection

Service and began its FY 2001 audit work in

October 2000, as scheduled. In addition, the

OIG contracted with four accounting firms to

assist in conducting the financial installation

audit work. The OIG completed financial

transactions audits at seven Postal Service facilities and determined that transactions were reasonably and fairly represented in the accounting

records, and that internal controls were in place

and effective. (OIG FF-AR-01-002 through

OIG FF-AR-01-008)

FINANCIAL-RELATED REVIEWS

Financial related audits examine areas that

have significant financial implications and offer

the Postal Service an opportunity to save

resources. The OIG has taken a proactive

approach to identify areas that offer potential

cost savings and improve postal operations. In

the past six months, the OIG has completed

over ten financial-related audits and investigations. The most significant reviews and investigations are highlighted below:

POSTAL SERVICE’S FY 2000 

BUDGET FORMULATION

PROCESS GENERALLY EFFECTIVE

The Postal Service’s FY 2000 budget formulation process was generally effective in allocating funds for programs and operations for the

six functional areas reviewed. However, budget

allocations were not always based on current

and complete analyses and may not have been

sufficient to support the Postal Service’s strategic goals for reducing costs and increasing revenue. In addition, program budget officials did

not have complete financial information to

effectively evaluate and manage their programs.

The lack of a comprehensive accrual accounting system and a cost accounting methodology

prevented managers from effectively making

informed decisions about the benefits of funding, delaying, or eliminating programs. The

OIG recommended and management generally

agreed to update and fully document studies,

analyses, and program benefits; and evaluate

the benefits of implementing accrual and cost

accounting systems at the program level.

(OIG FT-AR-01-006)

TORT CLAIMANT CONVICTED ON

PERJURY CHARGES 

Based on a referral from the U.S.

Attorney’s Office, Northern District of

California, the OIG investigated a tort claimant

who filed a $1 million lawsuit against the Postal

Service. The claimant filed the lawsuit as a

result of a car accident with a postal vehicle.

Although the claimant’s car sustained less than

$64 in property damage, the claimant later

alleged physical and emotional trauma totaling

$1 million as a result of the accident. However,

the claimant failed to disclose a prior car accident occurring the month before, in which the

claimant suffered extensive injuries. The

claimant, who was arrested during the previous

reporting period, was found guilty and is awaiting sentencing. 

OIG EFFORTS REDUCE CIVIL

CLAIMS AGAINST POSTAL 

SERVICE BY OVER $2.8 MILLION 

◆ As a result of an OIG investigation, a 

$1 million federal tort claim was reduced

to $45,000. An individual overstated the

extent of injuries in a $1 million lawsuit

claiming that a letter carrier’s mailbag

caused the individual to trip, fall, and

sustain severe and protracted personal

injuries. The OIG investigation revealed

that the subject’s claims were exaggerated. 

◆ As a result of an OIG investigation, the

federal district court for the Northern

District of Illinois reduced a $1.5 million

claim by more than $1 million. The

investigation determined that a contracted truck driver, injured in the performance of Postal Service work, had exaggerated disabilities. The driver filed a

$1.5 million tort claim against the Postal

Service alleging permanent knee damage

that would prohibit returning to work.

However, the OIG investigation revealed

that the subject owned, operated, and

was actively working at a restaurant and

bar. The awarded damages were reduced

to $411,000. 
PAGE60

◆ An OIG investigation resulted in a

$135,000 settlement in the case of a former postal employee who filed a

$800,000 tort claim against the Postal

Service. The subject claimed that the

Postal Service failed to accommodate a

disability while employed as a maintenance technician. The OIG investigation

revealed that the disability was overstated and the subject was capable of operating with no visible limitations. 

◆ A $360,000 tort claim was reduced

almost by half after an OIG investigation

determined that a private citizen

exaggerated injuries after being involved

in an accident with a postal delivery

truck. The subject claimed sustained

lifestyle changing injuries. The OIG

investigation determined that the subject

overstated injuries and the damages were

reduced to $175,000. 

POSTAL SERVICE EMPLOYEE

PLEADS GUILTY TO 

MISAPPROPRIATION OF 

POSTAL FUNDS 

An OIG and Inspection Service joint

investigation disclosed that a Postal Service tort

claims coordinator fraudulently prepared,

approved, and submitted vehicle accident

claims. The embezzlement scheme resulted in

14 checks being fraudulently issued with the

employee receiving almost $68,000. The

employee has pled guilty and sentencing is

pending. 

REVIEW OF WITHHOLDINGS

AND CONTRIBUTIONS FOR

EMPLOYEE BENEFITS 

The OIG assisted the United States Office

of Personnel Management in a review of

employee withholdings and employer contributions for health benefits, life insurance, and

retirement, totaling almost $8 billion. The

review did not identify any errors or differences

that exceeded the materiality limits established

by the Office of Personnel Management and the

OIG made no recommendations regarding the

sufficiency of the procedures. 

(OIG FT-AR-01-001)

WEAKNESSES IN MANAGEMENT

CONTROLS OVER STATISTICAL

TESTS FOR FISCAL YEAR 2000

COST AND REVENUE ANALYSIS 

The OIG issued a report on the adequacy

of statistical tests used to validate costs and revenues supporting postal rates. The OIG identified minor test errors and weaknesses in

management controls in 17 of the 33 districts

reviewed. Incorrect data in Postal Service systems could affect postal rate decisions. The OIG

recommended and Postal Service management

agreed to reinforce policies and procedures

related to marking sample items and coordinating test schedules; provide training in areas

identified; and modify specific training topics.

Postal Service management also agreed to coordinate with district officials to ensure that supervisors and employees provide accurate

information to data collectors. 

(OIG FF-AR-01-001) 

SUBJECTS IN BID-RIGGING

SCHEME SENTENCED 

As a result of an OIG investigation, two

subjects of a bid-rigging scheme involving violations of the Sherman Antitrust Act have pled

guilty. The investigation revealed that the individuals conspired to defraud the Postal Service

by rigging bids for various lots of books being

auctioned at the Postal Service Mail Recovery

Center auction in the San Francisco District. In

this case, the subjects conspired not to bid

against each other, resulting in the book lots

being sold at the minimum bid price. The subjects were each sentenced to 2 months in

prison, with 1 year supervised probation, and

ordered to pay a fine of $20,000. 

CONTRACTING AND FACILITIES

REVIEWS

The Postal Service awards approximately

$9 billion in contracts per year for essential

goods and services, including facilities, transportation, mail processing equipment, and supplies. During FY 2000 purchases included over

$592 million in noncompetitive contracts and

$348 million in credit card purchases. The

Postal Service is also one of America’s largest

owners, developers, and managers of real estate,

committing nearly $1 billion in FY 2000 for

repair, renovation, and construction of new

FINANCIAL MANAGEMENT REVIEWS

DID YOU 

KNOW?

Are copies of previous

Semiannual Reports to

Congress available?

Yes, electronic copies of previous

Semiannual Reports to Congress

can be accessed at website 

www.uspsoig.gov and printed

copies can be obtained by

contacting the OIG.
PAGE61

facilities, and paying $780 million in rent.

The OIG is responsible for contract audits

designed to assist Postal Service contracting

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

reviews of contractor financial systems. In the

past six months, the OIG conducted 38 reviews

of contracting and facilities related issues with

the assistance of a contract audit agency, which

specializes in pre-award and post-award contract audits. Also, the OIG has many open

criminal investigations targeting fraud and corruption in these areas. The most significant

contracting and facilities reviews and investigations are highlighted below:

CONTRACT AUDITS IDENTIFIED

OVER $26 MILLION IN 

QUESTIONED COSTS

In the past six months, the OIG completed

36 audits of contracts valued at over $227 million. These audits resulted in over $26 million

in questioned and unsupported costs. These

contract audits include: incurred cost audits

that evaluate the reasonableness of costs

incurred by contractors; proposal audits that

evaluate the reasonableness of contractor cost

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

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

systems, such as accounting, estimating, and

billing systems that are reviewed to determine

their adequacy to account for contract costs.

These audits, which are summarized in the

graph in the margin, focused on whether contractors’: 

◆ Proposed and incurred costs were allowable and reasonable;

◆ Pricing data was accurate, complete, and

current; and

◆ Accounting systems for allocating costs

to the Postal Service were adequate. 

In addition to raising questions about costs,

the audits disclosed that a major contractor did

not have an adequate accounting system.

Inadequate accounting systems may affect accuracy of costs charged to Postal Service contracts. Following is a summary of five significant

contract audits completed in the last six

months:

◆ Audits of three contractor cost proposals

valued at $139.1 million disclosed questioned and unsupported costs of $23.1

million. These proposals were for the following services: expanded capability for

the delivery bar code sorter; an optical

character reader/video coding system;

and optional character readers for Flat

Sorting Machine 1000. The OIG found

that none of the three proposals were

acceptable for negotiation because of the

contractors’ inability to provide supporting documentation for some of the proposed costs. Postal Service contracting

officers were still in the process of determining whether to withhold questioned

costs identified by these audits. 

(OIG CA-CAR-01-002, 

OIG CA-CAR-01-013, and 

OIG CA-CAR-01-026) 

◆ An audit of another contractor’s

accounting system disclosed that the system was partially inadequate for reporting costs. The contractor provides delivery of Priority Mail. The report also identified that the contractor lacked formal

written accounting policies and procedures, costs were not segregated by contract line item, and subcontract rate

agreements and modifications were not

maintained. The OIG recommended

that the Postal Service contractor take

corrective actions to address the issues

identified and improve the reliability of

the data. The Postal Service has not yet

provided the OIG with adequate documentation that corrective actions have

been implemented. 

(OIG CA-CAR-01-001) 

◆ An audit of a contractor’s $24.5 million

proposal for control system upgrade

options for a small parcel bundle sorter

questioned almost $1.3 million in costs.

The audit determined the proposal was

adequate as a basis for negotiating a fair

and reasonable contract price. Postal

Service contracting officers entered into

negotiations with the contractor. 

(OIG CA-CAR-01-011) 

POSTAL CONTRACTOR RECEIVES

ILLEGAL KICKBACK

As the result of a joint OIG investigation

Types and Number of Contract 

Audits Completed

OTHERS

DEFECTIVE PRICING

SYSTEM REVIEWS

INCURED COSTS

CLAIMS

PROPOSALS

17

8

8

1

1

1
PAGE62

with other federal agencies, two former employees of a Postal Service contractor pled guilty to

charges relating to conspiracy, receiving kickbacks, and tax evasion. The investigation disclosed that a contractor in the New York Metro

Area conspired with its subcontractors to get

kickbacks while performing work on various

environmental and construction engineering

projects for the Postal Service, the Department

of Defense, and other government agencies. For

approximately 5 years, the company’s invoices

to the Postal Service and other federal agencies

were based on subcontractor invoices, which

included approximately $800,000 in kickbacks

remitted to a shell company created by a company manager. The Postal Service had an estimated $26 million in contracts with the

contractor. In addition, the contractor’s accountant pled guilty to filing false tax returns by failing to disclose $315,000 received by the client

in the form of kickbacks and gratuities.

Sentencing is pending.

FORMER POSTAL MANAGERS

ORDERED TO REPAY OVER 

$3 MILLION

A joint investigation by the OIG, the

Inspection Service, and the Internal Revenue

Service disclosed that two former Postal Service

managers, a married couple, devised a scheme to

defraud the Postal Service of several million

dollars. The postal employees conspired with

the owner of two computer companies to submit

fraudulent invoices to the Postal Service for

computers and supplies not received. The

employees then laundered the proceeds overseas. This investigation was reported in the

September 30, 2000, Semiannual Report to

Congress. 

During this reporting period, the managers

pled guilty and were sentenced to 71 months in

prison, 3 years supervised probation, and over

$31,000 in fines. The couple was also ordered to

jointly make restitution of over $3 million. In

addition, they were ordered to forfeit their residence, boat, jewelry, and other tangible property

as well as their Postal Service pensions as payment toward the restitution amount. The computer company pled guilty and was ordered to

pay almost $257,000 in restitution and a

$10,000 fine. A criminal information was filed

charging an accountant with aiding and assisting in the fraudulent activities of the postal

managers. The accountant has pled guilty and is

awaiting sentencing. As of March 31, 2001, the

Postal Service has recovered over $1.2 million

of the court-ordered restitution.

UNSAFE STRUCTURAL 

CONDITIONS RESULT IN 

RELOCATION OF POSTAL 

FACILITY

The OIG requested the Army Corps of

Engineers to assess structural deficiencies at a

renovated postal facility. The assessment indicated that the roof posed a potential safety risk

and required immediate attention. It was determined that the roof could not support the

design load and that any additional weight or

stress brought onto the roof by snow, rain, or

wind could result in failure of the roof system.

As a result, management took immediate action

to relocate the facility temporarily. The retail

operation and the carriers have since returned

to the facility. As of March 31, the carriers were

able to use about 80 percent of the facility and

repairs are continuing on the dock area.

Negotiations are ongoing regarding the contractor’s financial liability for costs associated with

the relocation.

POSTAL MANAGER INDICTED

FOR VEHICLE REPAIR SCAM 

A former vehicle maintenance facility

manager in the Northeast Area was indicted on

embezzlement and conspiracy charges relating

to having his family’s vehicles repaired at Postal

Service expense. The manager conspired with a

repair contractor who inflated bills by $87,000

to cover the costs of repairs to the vehicles. The

manager has been fired from the Postal Service

and is awaiting trial and the contractor was

given immunity for cooperating with the investigation. 

POSTAL SERVICE COULD PAY 

MILLIONS MORE BECAUSE OF

NONCOMPETITIVE CONTRACTS

An audit of the mail transport equipment

service center project disclosed that the Postal

Service could save almost $11 million by renegotiating a noncompetitive contract. In addition,

the Postal Service may pay up to $42 million

more than necessary on three contracts awarded

noncompetitively to the same contractor. The

FINANCIAL MANAGEMENT REVIEWS
PAGE63

Does the OIG employ in-house

experts?

Yes. For example, the OIG has

two statisticians, an economist, a

cost benefit analyst and an activity-based cost analyst who provide

expert support to OIG staff.

OIG also found that the three noncompetitive

contracts were initially awarded with undefined

contract prices and terms, which potentially

exposed the Postal Service to performance and

cost risks. Additionally, a Postal Service manager improperly directed contractors to perform

over $12.5 million of additional work that was

not authorized. Postal Service management

generally agreed with the OIG’s recommendations. (OIG CA-AR-01-001)

CONSTRUCTION CONTRACTS

FRAUDULENTLY OBTAINED 

The OIG, working with other federal and

state agencies, investigated allegations that a

contractor defrauded the Postal Service and

other federal and state agencies, by fraudulently

obtaining construction contracts valued at over

$11 million under programs designed to give

preferential treatment to small, minorityowned businesses. The contractor purported to

own and operate a general construction company; however, the company was established as

a pretext to commit fraud and was actually run

out of an apartment. 

The fraud scheme involved submitting fictitious contract documents in an effort to

obtain government contracts. The total Postal

Service contract amount was over $530,000.

The subject brokered the contract to a nonminority company for approximately 12 percent less than the contract amount, resulting in

a loss to the Postal Service of over $68,000. The

company and its president defaulted on several

contracts, causing a loss to the government of

approximately $1 million. The company president pled guilty in New Jersey on behalf of himself and his company to charges of major fraud

against the government and making false statements. The company president also pled guilty

in New York to mail fraud charges. Sentencing

is pending. 

CONTRACTOR DEBARRED FOR

SUBMITTING FALSE CLAIMS 

A construction company executive pled

guilty to submitting false claims for constructing

a post office in the Mid-Atlantic Area. As part

of a plea agreement, the company agreed to be

debarred from doing business with the federal

government for a period of 3 years. The plea

agreement was the result of an OIG investigation that exposed multiple counts of false

claims by the company. Sentencing is pending.

LEGISLATIVE AND REGULATORY

REVIEWS

During this reporting period, the OIG

identified the following legislation affecting

Postal Service financial management.

ENACTED LEGISLATION

Public Law 106-554 - Consolidated

Appropriations Act of 2001

Section 401 of the Miscellaneous

Appropriations Act of 2001, incorporated by

reference into the Consolidated Appropriations

Act, adds a new Subparagraph (5) to Section

43-1552(b) of the District of Columbia Code

requiring Inspectors General to analyze and

report to Congress on each agency’s promptness

of payment for water services to the District of

Columbia. Similar language amending Section

43-1612(b) requires the same report for sewer

services.

The Postal Service appears to be within

the scope of this law. However, the Postal

Service does not pay into the U.S. Treasury’s

“Federal Payment for Water and Sewer

Services” account. Bills from the District of

Columbia Water and Sewer Authority are

forwarded to the financial accounting center in

San Mateo, California, for payment. In a letter

to the District of Columbia Appropriation

Committees and Subcommittees, the OIG

informed Congress of this procedure and plans

no further reporting on the matter. 

PROPOSED LEGISLATION

S. 95 - Federal Energy Bank Act 

This bill would promote energy conservation investments in federal facilities, including

postal facilities. The legislation requires agencies at the beginning of fiscal years 2002, 2003,

and 2004 to transfer to the Secretary of the

Treasury five percent of the amount of their

utility bill for the previous fiscal year. The

money would be used for loans to agencies to

assist in financing energy efficient projects. 

This legislation would have an impact on

Postal Service finances and could result in

further postal rate increases. 

DID YOU 

KNOW?
PAGE64

INSPECTION SERVICE

Within the financial management area,

the Inspection Service performs various types of

revenue investigations. 

REVENUE INVESTIGATIONS

The Inspection Service conducts revenue

investigations to help ensure that Postal Service

revenue is properly assessed and collected.

Priority is given to investigations of alleged

schemes to avoid payment of postage and to

identify, pursue, and seek prosecutive actions

against violators through civil, administrative,

and criminal remedies.

Postal Inspectors focus on revenue investigations where there is customer intent to

defraud the Postal Service. In the last six

months, there were 45 arrests and 33 successful

criminal convictions resulting from revenue

investigations. 

Embezzlements may occur when employees

steal money from cash drawers or in sophisticated kiting schemes involving postal money

orders and through the falsification of financial

records. Postal Inspectors initiated 187

employee embezzlement investigations this

reporting period, which documented losses of

over $2.2 million. Examples in this area are

summarized below.

◆ A former postmaster in Maryland was

sentenced to 18 months supervised

release and community service for

embezzling 150 postal money orders 

valued at over $58,000. The postmaster

made full restitution to the Postal 

Service.

◆ A window clerk in Maryland was sentenced to 8 months in prison, 3 years

supervised release, and ordered to pay full

restitution of over $49,000 for embezzling

postal stamp stock.

◆ A postal timekeeper in Connecticut was

sentenced to 10 months imprisonment, 

3 years supervised release, and ordered to

pay over $34,000 in restitution for overstating time records and altering payroll

records to receive compensation for

hours not worked.

FINANCIAL MANAGEMENT REVIEWS
OFFICE OF INSPECTOR GENERAL

Developmental Reviews

Information Systems Reviews

eCommerce Reviews

Computer Intrusion Detection Activities

Legislative and Regulatory Reviews

INSPECTION SERVICE

eCommerce Activities

PAGE 65

Technology Reviews
PAGE66

The OIG evaluated the Postal Service’s

use of the Robotics Containerization 

System, which automates the dispatch 

of letters and flat tubs within mail 

processing facilities. 

OFFICE OF INSPECTOR

GENERAL

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

Through technology, the Postal Service is able

to handle more than 660 million pieces of mail

every day and maintain its network of over

38,000 post offices and facilities. Its technology

strategy is to provide convenient access to all

customers on a daily basis through increasingly

sophisticated retail systems, expansion in new

electronic access channels, and electronic linkages that integrate customer and postal

processes. In addition, the Postal Service is

using modern technology, such as NetPost

Mailing Online,TM NetPostTM Cardstore, and

eBillPay.TM These initiatives will improve and

build on its existing services and relationships

with customers and continue meeting traditional customer demands.

OIG reviews have covered developmental

systems, information systems, electronic commerce, and computer intrusion detection activities. In the past six months, the OIG performed

18 reviews and investigations in the technology

area, some of which are highlighted below.

DEVELOPMENTAL REVIEWS

The Postal Service is developing business

systems and mail processing equipment to

improve performance, enhance service, and

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

business need. After the business need has been

identified, a solution is developed which is followed by the proof of concept test, and first

article test and final deployment. The OIG 

recognizess the importance of reviewing these

systems as they are developed and has completed four audits of major projects currently

under development during the reporting period.

These reviews are highlighted below:

ROBOTICS CONTAINERIZATION

SYSTEM WORK HOUR SAVINGS

QUESTIONABLE

The Robotics Containerization System

automates the dispatch of letter trays and flat

tubs within the mail processing facilities. The

OIG audit of the system disclosed that the total

work hour savings of $346.6 million, as forecasted by Postal Service management, would

only be realized if planned staffing levels are

achieved. Work hour savings were based on the

assumption that one person would be required

to operate a robotic system. However, during

testing, between four and eight persons were

used to operate one system. The audit also disclosed that the system could only process 10

trays of mail per minute instead of the 15 as

forecasted. Finally, the audit identified an additional $4.1 million needed for repair parts and

maintenance training that had not been

included in the project justification. The OIG

recommended changes to the program and

management agreed to address the issues identified. (OIG DA-AR-01-002)

COMPUTER CONTROLS OVER

ROBOTICS CONTAINERIZATION

SYSTEM SHOULD BE REVISED

An OIG audit found that computer access

controls over the Robotics Containerization

System did not comply with Postal Service

policy that requires, “data and information

handled by computer equipment and associated

telecommunication equipment systems to be

properly safeguarded.” The audit identified

concerns with the length, format, and apparent

sharing of logon identifications and passwords.

These concerns could impact the ability to

identify, report, and assign accountability for

potential compromises of system integrity. The

OIG suggested computer access controls over

the Robotics Containerization System be

revised to meet Postal Service policy and that

statements of work include standards for access

TECHNOLOGY REVIEWS

This section highlights audits, reviews,

and investigations performed by the OIG

and the Inspection Service in the technology area. Report numbers are shown in

parentheses after the narrative, as appropriate. Also, the OIG legislative and regulatory reviews are included at the end of

this section. In order to differentiate the

work reported by the OIG and Inspection

Service, the pages containing the work

reported by the Inspection Service have

been color screened.
PAGE67

control. Postal Service management agreed

with OIG’s suggestions. 

(OIG DA-MA-01-001) 

DELIVERY OPERATIONS INFORMATION SYSTEM DID NOT

ADDRESS BUSINESS GOALS

The OIG conducted an audit to evaluate

the deployment of the Delivery Operations

Information System. The System is a management tool intended to help delivery unit supervisors manage mail carriers’ workload. The

audit disclosed that the system did not fully

address emerging business goals in support of

the Postal Service Information Platform. The

OIG also found conditions that affected the

ability of the System to provide accurate,

timely, and useful information. Postal Service

management agreed with OIG’s recommendations. (OIG DA-AR-01-003)

CONSOLIDATION OF SAN

MATEO ACCOUNTING SERVICE

AND DATA CENTER WOULD

PRODUCE SAVINGS

The OIG evaluated the potential benefits,

costs, and operational issues relating to the

potential consolidation of the Postal Service’s

Information Service Centers. The Postal

Service had estimated that consolidating the

San Mateo data center operations with other

Information Service Centers located in Eagan,

Minnesota; St. Louis, Missouri; and WilkesBarre, Pennsylvania, could produce approximately $78 million of savings in staffing,

utilities, maintenance, and contractor systems

software support. These savings include approximately $49 million from the sale of the San

Mateo facility. 

However, the OIG found that the projected $78 million in savings understated the

cost of leasing space for the remaining San

Mateo accounting service center personnel by

$4–8 million. Despite this understatement,

the Postal Service would still realize savings and

a positive cash flow from the consolidation. The

Postal Service has updated the cash flow analysis and disclosed that the consolidation could

impact workforce diversity and has planned or

taken corrective actions to address OIG’s recommendations. (OIG DA-AR-01-001) 

INFORMATION SYSTEMS 

REVIEWS

The Postal Service relies on a massive

computer infrastructure to accomplish and

streamline operations, manage one of the

largest civilian workforces in the world, and

move billions of pieces of mail each year. The

Postal Service has initiated several information

technology projects to enhance efficiency and

increase revenue. However, computer security

overall needs to be improved and maintained to

reduce the risk of fraud, inappropriate disclosure

of sensitive data, unauthorized disclosure of customer information, and disruption of critical

operations and services. The OIG has initiated

a postalwide telecommunications review and an

annual assessment of general controls at major

processing centers. The most significant reviews

are highlighted below:

NETWORK VULNERABILITIES

IDENTIFIED 

The OIG issued four technical reports on

the results of vulnerability tests of selected networks within the Postal Service’s network infrastructure. The OIG noted various weaknesses in

the server systems that required remedial action

to reduce security risks. As requested by Postal

Service managers, OIG categorized the risks

into high, medium, and low vulnerabilities to

help management focus its resources for corrective action. 

The reports give the results of tests run

against four networks covering more than 140

servers at one location. The reports contain a

CD-ROM with detailed information on the

vulnerabilities identified for each server, and

the potential impacts if the security exposures

are exploited. The reports will assist managers

and system administrators in locating weaknesses, establishing priorities for corrective

action, making immediate repairs, and evaluating the completeness of baseline security models for the selected servers. Postal Service

management plans to use this information to

strengthen network security. 

(OIG IS-CS-01-001 through 

OIG IS-CS-01-004)

The OIG evaluates vital mail systems

including the Automated Flat Sorting

Machine 100, which automates

processing of mail larger than a letter

incorporating on-site barcode technology.
WEAKNESSES IDENTIFIED IN

GENERAL CONTROLS OVER 

INFORMATION SYSTEMS 

The OIG audited the adequacy of general

controls over financial systems and included

information system security and software at the

Eagan, Minnesota; San Mateo, California; and

St. Louis, Missouri, Information Technology

and Accounting Service Centers. General controls, such as passwords, detect and prevent

unauthorized or inaccurate transactions in

financial systems and help ensure the reliability

of financial data and reports. The audit revealed

that controls over software and data security at

these sites were generally adequate. However,

controls over local area network, mainframe

security, and change control procedures needed

improvement. Postal Service management

agreed with the recommendations and provided

a summary of initiatives that are planned, in

progress, or completed to address these issues. 

(OIG FT-AR-01-002)

eCOMMERCE REVIEWS

The Postal Service continues to provide

customers with new online products and

services to enhance customers’ personal and

business lives. Some of the newer services 

available through the website, www.usps.com,

include NetPost Mailing Online,TM NetPostTM

Cardstore, The Postal Store,TM and eBillPay.TM

In addition, the Postal Service continues to

improve the performance and usability of its

web presence to ensure secure access and the

protection of customer privacy. The Postal

Service has recently appointed a Chief Privacy

Officer and a Manager, Information Security, to

help focus Postal Service management’s efforts

in these important areas.

The OIG is committed to helping the

Postal Service meet the eCommerce challenge.

OIG efforts during this period focused on

eCommerce architecture, customer privacy, and

ensuring the Postal Service enters into sound

strategic eCommerce agreements. OIG efforts

are highlighted below: 

eCOMMERCE AUDITS

One of the main concerns faced by

eCommerce companies today is the preservation of personal privacy and the continued

availability of Internet services. The OIG conducted two audits focusing on security and privacy and reported concerns involving the protection of information and disaster recovery. In

one audit, OIG recommended updating the preimplementation security review process and

establishing minimum requirements for the collection, use, and disclosure of information gathered via the Internet. In another audit, OIG

recommended improvements to backup and

recovery procedures to restore functionality in

emergencies. Postal Service management

agreed with OIG’s recommendations and has

implemented or plans to implement procedures

and controls to address the issues identified in

the reports. (OIG EC-AR-01-001 and 

OIG EC-AR-01-002)

OIG PROVIDES INPUT ON

INTERNET PRIVACY POLICY 

Working with the Postal Service’s Chief

Privacy Officer, the OIG commented on the

Postal Service’s Web Privacy Commitment

Statement. The OIG recommended expansion

of the privacy policy in the areas of information

disclosure, collection, and data retention. The

OIG also suggested changes to the policy that

would clarify the customer information that

would be collected, how it would be collected,

and what would be done with the information

that was collected. Postal Service management

generally agreed with the comments and is in

the process of updating its privacy statement.

OIG COMMENTS ON ADEQUACY

OF COMPUTER SECURITY 

The OIG issued an advisory letter addressing the lack of adequate computer security and

privacy provisions in an agreement with a major

business partner. Although the agreement has

been in place for almost a year, a formal contractual agreement is not in place to ensure the

protection of the Postal Service and customer

interests. The OIG recommended that management execute formal agreements granting the

Postal Service authority to review and monitor

the business partner’s activities and require the

business partner to follow minimum security

and privacy requirements. Postal Service management has not addressed this issue and we

remain concerned about the computer security

and privacy of this important program.

PAGE68 TECHNOLOGY REVIEWS

What is Voice Over Internet

Protocol capability? 

Voice Over Internet Protocol

allows the OIG to transmit voice

communications over its data 

network, reducing telecommunications costs. 

DID YOU 

KNOW?
PAGE69

COMPUTER INTRUSION 

DETECTION ACTIVITIES

The OIG Computer Intrusion Team investigates criminal violations of laws enacted to

protect the authenticity, privacy, integrity, and

availability of electronically stored and transmitted information. Rapidly expanding

eCommerce ventures make the protection of

postal information systems critical to the financial viability of the Postal Service. Because such

ventures involve connectivity between postal

systems and eCommerce partners, the

Computer Intrusion Team conducts investigations of attacks upon the security of those systems in order to maintain the integrity of

eCommerce information. 

The team proactively informs Postal

Service management and eCommerce partners

regarding emerging threats to information systems, and assists them in identifying and eliminating potential vulnerabilities. These efforts

include assisting the Postal Service in developing security policies, information systems, and

eCommerce procedures that conform to the

best practices in industry and government. The

most significant activities are highlighted

below:

OIG PARTICIPATES IN SEARCH

WARRANT RELATED TO 

ELECTRONIC CRIMES

The OIG participated in the execution of

a search warrant in a joint investigation involving the theft and fraudulent use of an Internet

provider’s personal identification numbers. Task

force members included several California state

law enforcement agencies, the OIG, the Federal

Bureau of Investigation, the Internal Revenue

Service, and the United States Secret Service.

The investigation is ongoing.

OIG TESTS SECURITY OF POSTAL

ELECTRONIC INFRASTRUCTURE

The OIG continued testing postal information systems to identify weaknesses that

cyber criminals can exploit to impair the

authenticity, privacy, integrity, and availability

of electronically stored and transmitted information. When security holes are discovered,

the OIG investigates to determine whether the

vulnerabilities have been exploited and may

refer such intrusions for criminal prosecution.

The OIG provides timely information to Postal

Service management so that it can eliminate

vulnerabilities and mitigate risks to the Postal

Service’s and customers’ sensitive information.

During this six month period, OIG completed

tests of eight postal computer facilities.

MEMBER OF A NOTORIOUS

HACKER GROUP CONVICTED

AND SENTENCED

A member of a notorious hacker group

pled guilty under Texas law to six charges of

breach of computer security and one charge of

aggravated theft for hacking into websites operated by the OIG, Canadian Department of

National Defense, State of Texas, and a corporation. The OIG initiated and directed this

international multi-agency, criminal investigation into the online activities of the “High

Voltage 2000” hacking group. This group compromised and defaced more than 60 websites

between September 1999 and January 2000.

The OIG coordinated and led the activities of

various Canadian and American law enforcement agencies, including the Royal Canadian

Mounted Police, Canadian Defense Forces

National Investigative Service, Texas

Department of Public Safety, and Army

Criminal Investigations Division.

The hacker received a 2-year suspended

sentence for each charge of breach of computer

security and a 10-year suspended sentence for

the aggravated theft charge. In addition, the

hacker was placed on 2 years probation and

ordered to pay $45,000 in damages to the victims. After the hacker was subsequently arrested

on an unrelated drug charge and brought back

before the same Texas court, probation was

revoked and the hacker was ordered to serve 2

years in jail for probation violations related to

the breach of computer security and aggravated

theft charges, and to serve 5 years probation

upon release from prison. The hacker subsequently pled guilty to two additional breach of

computer security charges and was sentenced to

an additional 30 days in jail and fined.

OIG PROPOSES COMPUTER

SECURITY CLAUSES

The OIG proposed developing and including standard clauses in Postal Service contracts

and agreements with its eCommerce business

Packet magazine recognized OIG for being the

first entity in federal government to make 

extensive use of this technology.
PAGE70 TECHNOLOGY REVIEWS

partners. These clauses would address standard

requirements regarding computer security,

Privacy Act compliance, and access to contractor records, computers, and facilities by the

Postal Service and the OIG. The Postal

Service’s recent eCommerce agreements have

not adequately addressed these issues or contained the standard clauses found in the Postal

Service’s procurement manual. The Postal

Service agreed with the OIG’s concerns and

continues to refine the agreement language.

OIG ASSISTS POSTAL SERVICE IN

STRENGTHENING eCOMMERCE

INFRASTRUCTURE

The OIG assisted Postal Service

Information Technology management in:

◆ Developing a Computer Incident

Response Team to be a first-responder for

suspected computer intrusions. The team

will perform initial assessments of suspected computer intrusions and will notify the OIG of unauthorized intrusions in

Postal Service systems.

◆ Revising the Postal Service computer

security policy to ensure that the operations and the integrity of eCommerce

remain protected in the cyber crime

environment.

OIG CRIMINAL INVESTIGATOR

ASSIGNED TO NATIONAL 

CYBERCRIMES CENTER

The OIG assigned a criminal investigator

to the FBI’s National Infrastructure Protection

Center to keep abreast of trends in cyber crime

and emergent cyber threats. The Center was

established by the President in 1998 to serve as

the federal government’s focal point for threat

assessment, warning, investigation, and

response for threats or attacks against America’s

critical infrastructure. OIG participation in the

Center will further assist the OIG in protecting

postal computer systems from criminal attacks.

LEGISLATIVE AND REGULATORY

REVIEWS

During this reporting period, the OIG

identified the following legislation affecting

Postal Service information technology.

ENACTED LEGISLATION

Public Law 106-398 - Government

Information Security Reform Act

The Government Information Security

Reform Act, enacted on November 30, 2000,

provides a framework for ensuring the security

of federal information systems. It did so by

amending the Paperwork Reduction Act of

1995, which is not specifically applicable to the

Postal Service. The Act requires the Postal

Service to report to Congress on its information

security policies. However, the Postal Service is

not governed by other provisions of the Act.

Does the OIG use a backup and

recovery system for its laptop

computers? 

Yes. This technology allows

employees to restore any files that

may have accidentally been deleted from their hard drive up to 90

days ago. In addition, if an

employee’s system crashes, or gets

damaged, lost, or stolen, the

complete system can be recovered

without losing any data.

DID YOU 

KNOW?
PAGE71

INSPECTION SERVICE

The Inspection Service plays an important

role in the support of Postal Service eCommerce

initiatives and technical applications. The

Inspection Service evaluates the need for and

processes security clearances of employees and

contractors accessing postal systems or sensitive

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

eCOMMERCE ACTIVITIES

The Inspection Service monitors the development of new postal electronic products and

services and consults with Postal Service managers on the capabilities for security, loss prevention, revenue protection, and data retention.

The Inspection Service has developed and conducted training on computer crimes, particularly

those involving the Internet, and provides program management and guidance to field divisions conducting online investigations.

The Inspection Service continues to review

security clearance requirements for all Postal

Service new electronic products, including:

eBillPay,TM NetPost,TM Mailing Online,TM and

NetPost Certified,TM and enterprise public key

infrastructure. The Inspection Service is evaluating the risks associated with contractor employees having access to sensitive customer

information and the appropriate security clearance for those individuals.

DID YOU 

KNOW...

On average, each household and

business receives 1,500 pieces of

mail annually.
PAGE72 TECHNOLOGY REVIEWS
OFFICE OF INSPECTOR GENERAL

Violence in the Workplace Reviews

Workplace Environment Reviews

Human Resource Process Reviews

Health Care Reviews

Legislative and Regulatory Reviews

INSPECTION SERVICE

Workplace Safety Investigations

Postal Robbery Investigations

Drugs in the Workplace Investigations

Workers’ Compensation Investigations

PAGE 73

Labor Management

Reviews
PAGE74 LABOR MANAGEMENT REVIEWS

OFFICE OF INSPECTOR

GENERAL

The Postal Service has characterized

labor management as one of the most

important challenges in achieving its

goals in the 21st century. To operate effectively

in a rapidly changing environment, the Postal

Service recognizes the need to give employee

issues a higher priority and enhance each

employee’s contribution to organizational performance. The OIG supports the Postal Service

in its overall goal of fostering an inclusive and

welcoming workplace consistent with the Postal

Service values of fairness, opportunity, safety,

and security. The labor management area

includes issues involving workplace violence,

workplace environment, human resource

processes, and health care. 

While the OIG has worked diligently and

closely with the Postal Service and Congress to

address these issues, reviewing labor management areas continues to be one of the OIG’s

greatest challenges. The OIG has received over

3,100 individual labor management complaints

since 1997. During this reporting period, the

OIG conducted 79 reviews and investigations

in the labor management area. 

VIOLENCE IN THE WORKPLACE

REVIEWS

Recognizing that workplace stress continues to be an issue and comprehensive steps are

needed to improve the work environment, both

the OIG and the Postal Service are dedicated to

preventing violence and consider early intervention and cooperation with management and

employee groups essential. During this reporting

period, the OIG completed 19 reviews of workplace violence issues, which are highlighted

below:

OIG REVIEWS OF VIOLENCE 

PREVENTION PROGRAMS 

IDENTIFY NEED FOR 

IMPROVEMENT

OIG reviews of Postal Service’s violence

prevention program in 19 postal districts disclosed that management generally followed the

Postal Service’s Threat Assessment Team

Guide; however, some controls designed to prevent violence had not been fully implemented.

Specifically, these reviews disclosed that

although all 19 districts established threat

assessment teams, the districts did not proactively monitor and evaluate climate indicators

and mandate violence awareness training. In

addition, some districts did not conduct the

required physical security reviews, measure team

performance, and fully engage in case management. The OIG recommended and Postal

Service management agreed to improve controls to prevent violence. 

(OIG LB-AR-01-001 through OIG LB-AR01-012; OIG LB-AR-01-015 and OIG LB-AR01-016; OIG LC-AR-01-001 through OIG

LC-AR-01-003; OIG LC-AR-01-005 and OIG

LC-AR-01-006)

WORKPLACE ENVIRONMENT

REVIEWS

The Postal Service believes that signs of

workplace stress are present and that comprehensive steps are needed to improve the workplace environment, including aligning human

resources with business requirements. In addition, the Postal Service became subject to the

monetary penalties of the Occupational Safety

and Health Act in September 1998. To assist

the Postal Service in this area, the OIG conducted five reviews of workplace environment,

three of which are highlighted below:

MANAGERS NOT HELD

ACCOUNTABLE FOR SAFETY 

VIOLATIONS 

An OIG review found that local Postal

Service management did not promptly cease

operations of unsafe mail processing equipment

or warn employees of safety hazards. As a result,

employees were exposed to potential hazards

This section highlights audits, reviews, and

investigations performed by the OIG and

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

parentheses after the narrative, as appropriate. Also, the OIG legislative and regulatory reviews are included at the end of

this section. In order to differentiate the

work reported by the OIG and Inspection

Service, the pages containing the work

reported by the Inspection Service have

been color screened.

DID YOU 

KNOW...

The Pony Express originally

charged $5 per letter. Rates 

were later reduced to $2 per 

letter; later, under the Post 

Office Department, mail was 

carried for only $1 per letter.
PAGE75

including electrical shock and fire. In addition,

the OIG found that managers responsible for

the unsafe operation were not held accountable

for their actions. Postal Service management

did not agree with our findings but stated they

would discipline some of the managers and issue

a directive to all districts reemphasizing the

importance of complying with Postal Service

safety policies. (OIG LB-AR-01-014)

SAFETY AND HEALTH 

INSPECTIONS IN THE PACIFIC

AREA NEED IMPROVEMENT

An OIG audit found that Postal Service

officials did not conduct all required safety

inspections at postal facilities in the Pacific

Area. The lack of safety and health inspections

could put the Postal Service at risk for fines and

penalties by the Occupational Safety and

Health Administration and expose employees

to possible injury and sickness. The OIG recommended and Postal Service management

agreed to conduct necessary inspections, and

establish a system to track when inspections are

needed and ensure they are completed. 

(OIG LC-AR-01-004)

ALLEGATIONS OF A HOSTILE

WORK ENVIRONMENT 

CONFIRMED

An OIG review confirmed contentious

labor management relations at a post office in

the Mid-Atlantic Area. Additionally, the

review found that district officials were aware of

the long-standing labor management problems;

however, past approaches to resolve these issues

were unsuccessful. The OIG recommended and

Postal Service management agreed to develop a

plan to improve the work environment at the

post office. (OIG LB-MA-01-001)

HUMAN RESOURCE PROCESS

REVIEWS

Postal Service managers are responsible for

preserving and protecting official records and

privacy information. In addition, managers

must avoid conflicts of interest, which could

affect both the public’s trust and confidence in

human resource processes. The OIG conducted

the following audits to assess controls over these

processes: 

DEFICIENCIES FOUND IN EQUAL

EMPLOYMENT OPPORTUNITY

SETTLEMENT PROCESS 

An OIG review found that a former Postal

Service executive settled an equal employment

opportunity complaint filed against that

executive, and authorized a $52,000 payment to

the individual who filed the complaint. The

OIG recommended that current policy be

changed to require a higher-level review of

Equal Employment Opportunity complaint settlements involving executives. Postal Service

management agreed to take appropriate corrective action. (OIG LB-AR-01-013) 

ABANDONED PERSONNEL

RECORDS FOUND

An OIG audit found records, which were

subject to the Privacy Act, abandoned on

unused floors at a Southwest Area postal facility. These records included Equal Employment

Opportunity complaints, payroll, recruiting,

and workers compensation files. In response to

OIG concerns that the records were not safeguarded, Postal Service officials directed custodians to remove and properly store active

records and dispose of inactive files. 

(OIG LB-LA-01-001)

HEALTH CARE REVIEWS

In FY 2000, the Postal Service paid over

$670 million for employee injury claims, a $90

million increase over the $580 million paid in

FY 1999. Controlling injury claims costs continues to be a key to the Postal Service’s financial well being because the Postal Service is

self-insured for workers’ compensation costs and

makes payments out of operating funds, which

directly affects the Postal Service’s net income.

The OIG assists in protecting the health

and welfare of the Postal Service’s workforce by

conducting audits and investigations to prevent

and detect fraud, waste, abuse, and mismanagement related to Postal Service health care program costs. As part of its investigative program,

the OIG has initiated proactive projects to

identify improper billing practices, such as false

claims and false statements by health care

providers. During this reporting period, OIG

health care fraud investigations have resulted in

22 arrests, 19 indictments, and 9 convictions.
PAGE76 LABOR MANAGEMENT REVIEWS

Some activities are highlighted below:

◆ A two-year undercover multi-agency

investigation resulted in 11 arrests and

indictments for violations related to

health care fraud. The investigation

identified medical providers who routinely submitted claims for services not rendered, inflated fees to maximize insurance reimbursements regardless of medical necessity, and misrepresented services

rendered through widespread billing

manipulation, including workers’

compensation fraud. 

◆ As a result of a task-force investigation,

five individuals were arrested since the

last reporting period for violations related

to health care fraud. Two individuals,who

were indicted, allegedly fabricated or

stole employee health insurance information from the Postal Service to generate

and submit fraudulent medical claims.

These claims resulted in fraudulent payments to the individuals of $20 million. 

◆ An unqualified individual who billed for

psychotherapy services provided to a

Postal Service employee agreed to pay

restitution in a pre-trial diversion agreement. To qualify for payment workers’

compensation psychotherapy services

must be performed or supervised by a psychiatrist. A joint agency investigation

found that the individual, who was not a

psychiatrist, fraudulently billed for the

services as if they were provided or supervised by a psychiatrist when they actually

were not. Of the $125,000 restitution

paid almost $29,000 was returned to the

Postal Service. 

◆ The OIG participated in a joint investigation involving the diversion of rejected

or substandard pharmaceuticals to health

care providers. The investigation resulted

in five arrests and four indictments during the reporting period. The investigation disclosed that pharmaceuticals,

which were rejected after failing quality

control tests, were stolen from their place

of manufacture and sold to a suspected

drug trafficker. The trafficker resold the

pharmaceuticals to pharmacies and other

health care providers used by Postal Service employees. 

LEGISLATIVE AND REGULATORY

REVIEWS

During this reporting period, the OIG

identified the following legislation affecting

Postal Service labor management.

PROPOSED LEGISLATION

H.R.135 – A bill to require that the

same transit pass transportation fringe

benefits that are currently being offered

to certain executive branch employees

in the National Capital Region be

extended to other federal employees,

including Postal Service employees 

This legislation would create a local travel

benefit subsidy, not to exceed $65 monthly, for

Postal Service employees in the Washington

Metropolitan area. This benefit was extended

last year to nearly every federal employee in the

region by executive order. This legislation

would have an impact on the Postal Service’s

finances and the additional costs could result in

further postal rate increases.

H.R. 250 (companion bill: S.177) —

Postmasters Fairness and Rights Act of

2001 

This bill would amend provisions of Title

39, United States Code, relating to the manner

in which pay policies, schedules, and fringe benefit programs for postmasters are established.

The legislation would require the Postal Service

to propose changes in pay policies, schedules,

and fringe benefit programs for postmasters

within 45 days of the date on which a collective

bargaining agreement is made with the largest

postal union. The bill provides for binding arbitration if the postmasters and the Postal Service

are unable to reach agreement.

The bill also defines “postmaster” and

“postmasters’ organization” and gives the postmasters’ organization the right to participate in

the planning and development of pay policies

and schedules, fringe benefit programs, and

other programs relating to supervisory and other

managerial employees. This legislation would

have an impact on Postal Service negotiations

with management associations.

DID YOU 

KNOW?

Who controls the OIG’s

documents and information?

The OIG controls its own records.

Requests for information pertaining to OIG documents and information go directly to the OIG.
PAGE77

H.R. 1049 — A bill to amend Chapter

89 of Title 5, United States Code, to

make available to federal employees the

option of obtaining health benefits coverage for dependent parents 

This bill will establish a third enrollment

category for federal employees participating in

the federal health benefit plan—that of “self

and extended family.” It defines extended family to include a dependent parent of the

enrolled employee.

Under the Postal Reorganization Act,

Congress gave the Postal Service broad authority to set employee compensation and terms of

employment. Most laws dealing with federal

employees do not apply to the Postal Service.

However, by statute, Postal Service employees

are covered under the federal health benefit

programs. The Postal Service pays a higher portion of the premiums than other federal agencies because of its collective bargaining

agreements with the employee unions.

Adding dependent parents to postal

employees’ health plans may result in higher

premiums. Health insurance premiums are an

expense to the Postal Service, and are higher

than in other federal agencies. This legislation

would have an impact on Postal Service

finances and could result in further postal rate

increases.

FINAL REGULATIONS

Occupational Injury and Illness

Recording and Reporting Requirements

Final Rule, Department of Labor,

Occupational Health and Safety

Administration, Federal Register,

January 19, 2001 

This rule revises the procedure for recording and reporting occupational injuries and illnesses, including the forms employers use to

record those injuries and illnesses. The objectives of the rule are to produce more useful

records, collect better information, simplify the

recordkeeping process, make better use of technology, and to promote employee awareness

and involvement in occupational safety. 

Implementing a new reporting system

throughout the Postal Service could increase

costs. However, if the efficiencies anticipated by

the rule are realized, any initial implementation

costs for the Postal Service could be later offset

by savings in the record-keeping process.

Implementation of this rule was postponed

pending completion of a presidentially mandated review. The OIG will continue to monitor this rule and will take appropriate steps to

follow implementation of the rule if it goes into

effect on January 1, 2002. 

Ergonomics Program Standard, Final

Rule, Occupational Safety and Health

Administration, Federal Register,

November 14, 2000, Repealed by Public Law 107-5

Congress recently voted to repeal new

workplace ergonomics regulations issued by 

the Occupational Safety and Health

Administration. Issued at the close of the

Clinton Administration and set to take effect in

October 2001, the new regulations would have

required employers to design workplace

routines to guard against repetitive motion

injuries, such as carpal tunnel syndrome. The

Occupational Safety and Health Administration

estimated compliance costs to be $4.5 billion

nationally, but that figure was widely contested.

The Postal Service estimated that implementing the rules might have cost over $3.4 billion

in the first year and $1.5 billion per year thereafter. While the Occupational Safety and

Health Administration is not precluded from

issuing new regulations on this matter, it may

not re-issue the same regulations as those that

were repealed. The OIG will continue to monitor further developments with this issue.

Standards for Privacy of Individually

Identifiable Health Information, Final

Rule, Department of Health and

Human Services, Federal Register,

December 28, 2000

This rule sets forth standards to protect the

privacy of an individual’s medical records, outlines procedures for accessing these records, and

delineates the authorized uses and disclosures of

such information. Because it targets only health

care providers, health plans, and their administrative contractors, the rule would not apply to

the Postal Service. However, it may have an

impact on OIG operations. For example, the

rule specifically states that it shall not be construed to limit the authority of any Inspector
General, but there is a concern that the exception language is not sufficiently clear. This,

when read in conjunction with other restrictive

provisions of the rule, could lead health care

providers to refuse OIG access to an individual’s

medical records. The OIG will continue to

monitor further developments on this rule.

PAGE78 LABOR MANAGEMENT REVIEWS
PAGE79

INSPECTION SERVICE

The Inspection Service reviews a number

of labor management relations areas, including

workplace safety, postal robberies, drugs in the

workplace, and workers’ compensation investigations involving individual Postal Service

employees.

WORKPLACE SAFETY 

INVESTIGATIONS

The Inspection Service is committed to

employee safety in the workplace, and partners

with Postal Service management and employee

groups in early interventions and other efforts

to prevent violence in the workplace. There

were 190 arrests and 148 convictions for

assaults and threats in this reporting period.

Examples of significant investigations follow:

◆ An individual was sentenced to 14 years

and 6 months in prison for the shooting

of a city carrier. The individual was also

ordered to pay restitution to the Postal

Service over $261,000 to cover the cost

of the employee’s medical expenses. 

◆ An individual was sentenced to 10

months in prison for the attempted

abduction and sexual assault of a city letter carrier. At the time of this assault, the

individual was on probation for a prior

abduction and assault conviction. 

POSTAL ROBBERY

INVESTIGATIONS

The Inspection Service regards the prevention of robberies as one of its highest organizational priorities and affords task force attention

to facility, letter carrier, and other postal robberies to deter these attacks on employees.

Letter carrier robberies are generally committed

for the purpose of stealing mail and postal keys

to mail receptacles while robberies of facilities

are committed for cash and money orders. The

total number of robberies this six month period

is down compared to the same period last year.

There have been 45 arrests and 41 convictions

this reporting period related to robberies compared to 32 and 55 , respectively, for the same

period last year. An example of an investigation

follows:

◆ In November 2000, an individual was

sentenced in a North Carolina courtroom to a Federal prison term of 272

months followed by 5 years supervised

probation for his role in the 1999 armed

robbery of a postal employee. A codefendant was previously sentenced to a

term of 141 months in prison.

DRUGS IN THE WORKPLACE

INVESTIGATIONS

Postal Inspectors investigate the possession, personal use, and sale of narcotics by

Postal Service employees or others while on

postal property. Information regarding the possession or personal use of illegal drugs by postal

employees is referred through Postal Service

management to the Employee Assistance

Program for attention. In the last six months,

Postal Inspectors arrested 32 individuals for the

sale of drugs on postal property. 

◆ In January, a part time flexible postal carrier in Illinois was sentenced to two years

and six months probation, with fines and

restitution in the amount of $620 for

possession of cocaine with the intent to

deliver. The carrier sold drugs while in

uniform and on official duty.

◆ Working with U.S. Customs Service

agents, Postal Inspectors intercepted an

Express Mail parcel shipped from Columbia to Connecticut. The parcel was

found to contain one pound and ten

ounces of cocaine. The parcel was delivered and a federal search and arrest warrant executed. A loaded handgun was

found in the individual’s residence. In

January, an indictment was returned

charging the individual with importation

of cocaine, attempted possession of

cocaine with intent to distribute and

possession of a firearm as a prohibited

person. Each of the drug charges carries a

mandatory minimum 5 year prison sentence and the firearm charge carries a 10

year prison sentence.

◆ Postal Inspectors arrested a Bulk Mail

Center mail handler, who was charged

with possession and delivery of 

marijuana while on duty at the local

Bulk Mail Center.

WORKERS’ COMPENSATION

INVESTIGATIONS

The Inspection Service assists the OIG by

Walt Disney was a substitute 

carrier and former presidents

Abraham Lincoln and Harry 

S. Truman were postmasters.

DID YOU 

KNOW...
investigating fraudulent claims and receipt of

workers’ compensation benefits by individual

employees. Unlike other federal agencies, these

claims are paid from postal revenues, 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 over $53 million in long-term and continuation-of-pay cost savings for this reporting

period, compared to over $66 million for the

same period last year. In the last six months, 15

individuals were arrested for workers’ compensation fraud. 

◆ A former Ohio mail handler was sentenced in February to one year in prison

and three months probation for failure to

report income and misrepresenting a

physical condition while receiving workers’ compensation benefits. The former

employee received these benefits for 31

years. The investigation revealed that the

former employee had worked as a restaurant manager and was being paid “under

the table.” As a result of the investigation, the Postal Service realized over

$347,000 in future cost savings.

◆ In March, a former Georgia carrier was

sentenced to six months in prison, three

years and two months home detention,

and a $200 penalty assessment. The former carrier had been on the periodic rolls

since 1994 for a traumatic left wrist

injury and a subsequent claim in 1995 for

carpal tunnel to the right wrist. The

Department of Health and Human Services partnered with the Inspection Service because this individual also received

social security disability benefits for the

alleged injuries. The investigation resulted in court ordered restitution of over

$45,000 and the Postal Service realized

over $841,000 in future cost savings.

PAGE80

To whom does the OIG report

information?

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

and timely action to improve the

efficiency and effectiveness of

postal programs and operations. 

DID YOU 

KNOW?
Oversight of the

Inspection Service

PAGE 81

OFFICE OF INSPECTOR GENERAL

Oversight Reviews

Legislative and Regulatory Reviews
PAGE82 OVERSIGHT OF THE INSPECTION SERVICE

OFFICE OF INSPECTOR

GENERAL

One of the primary reasons the OIG 

was established within the Postal

Service was to provide oversight of all

Inspection Service activities. The Inspector

General Act as amended provides for the OIG

to conduct, supervise, coordinate, and provide

policy direction for investigations, including

those of the Inspection Service, relating to the

programs and operations of the Postal Service. 

In addition, the 1996 amendment of the

Inspector General Act provided specific

“oversight responsibility for all activities of the

Postal Inspection Service, including any internal investigations performed by the Postal

Inspection Service.” This additional authority

means that any and all activities of the Postal

Inspection Service are subject to the OIG’s

scrutiny and review, except as it may be limited

by the Governors, for specified reasons and with

notification to Congress. 

The OIG’s oversight efforts provide an

independent voice with objective information

and analyses of Inspection Service operations

and issues. In addition, the OIG keeps the

Governors, Congress, and postal stakeholders

fully informed of Postal Service law enforcement efforts to detect and prevent fraud, waste,

abuse, and mismanagement, by reporting the

activities of the OIG and the Inspection

Service. 

Finally, the OIG works with the Inspection

Service to ensure that all relevant Inspection

Service statistics are accurate, complete and

included in OIG publications such as the

Semiannual Report to Congress and the

President’s Council on Integrity and Efficiency’s

Annual Report to the President. The OIG indicates which organization is responsible for the

statistics so that each organization receives

appropriate credit. The OIG believes it is

important to include both organizations’ statistics because some Inspection Service activities

involve fraud, waste, and abuse.

The Inspection Service has 4,300 employees including 2,000 Postal Inspectors who are

criminal investigators, and 1,400 Postal Police

Officers. The Inspection Service also operates

five forensic science laboratories. The agency’s

annual budget for FY 2001 is $465 million,

including salary and benefits and nonpersonnel

expenses. During this reporting period, the

Inspection Service reported 6,379 arrests and

over $407 million in fines and restitutions.

OVERSIGHT REVIEWS

As a law enforcement agency, it is essential

that the Inspection Service be held to the highest standards of conduct to maintain the public’s

trust and the Postal Service’s reputation of reliability. During the last six months, the OIG

focused on security issues impacting the Postal

Service, the appropriate use of Postal Police

Officers, and the international travel and overseas assignments of Postal Inspectors. During

this reporting period, the OIG completed 19

oversight reviews, as well as numerous monitoring actions, some of which are highlighted

below:

ENHANCED SECURITY BADGE

CONTROLS NEEDED

An OIG review determined that building

access controls at Postal Service Headquarters

could be improved. Specifically, Postal Police

Officers did not request photo identifications

from all personnel with temporary badges entering the Headquarters building because

Inspection Service management required only

spot checks of photo identifications. As a result,

there was an increased risk that unauthorized

personnel may have been admitted into Postal

Service Headquarters. Inspection Service management agreed with our observations and

stated that they would work with Postal Service

management to ensure that photo identifications would be reviewed for all persons holding

temporary nonphoto badges during the modification of existing systems and the implementation of new security systems at field locations. 

(OIG OV-LA-01-001)

This section highlights audits, reviews,

and investigations performed by the OIG

in conducting its oversight of the Inspection Service. Report numbers are shown

in parentheses after the narrative, as

appropriate. Also, the OIG legislative

and regulatory reviews are included at

the end of this section.

Postal Police Officers, the uniformed

branch of the Postal Service, provide

access security at postal facilities. The

OIG review of security badge controls

should further enhance the security at

postal facilities.
PAGE83

FULL COST SHOULD BE 

RECOVERED FOR POSTAL POLICE

OFFICERS USED ON 

CONSTRUCTION PROJECT

Postal Police Officers were used for traffic

and pedestrian control on postal property

impacted by the Massachusetts Highway

Department’s Central Artery/Tunnel construction project. The OIG review found that Postal

Service and Inspection Service officials acted

within the scope of their authority when performing these services; however, they needed to

improve the billing process for postal police services. 

Specifically, Postal Service officials did not

bill the Massachusetts Highway Department

using current rates or for indirect expenses associated with services provided. The audit further

revealed that controls were not in place to

ensure the highway department was billed for

total labor hours worked and that all payments

were received. The OIG suggested and

Inspection Service management agreed to seek

reimbursement for an additional $26,000 from

the Highway Department and to adjust labor

rates to include indirect expenses. 

(OIG OV-MA-01-001) 

DOCUMENTED APPROVAL AND

JUSTIFICATION NEEDED FOR

INSPECTION SERVICE 

INTERNATIONAL TRAVEL 

An OIG audit disclosed that the

Inspection Service could not provide evidence

that all international travel was properly

approved and justified for fiscal years 1997-

2000. Although international travel practices

could be improved, we found that international

assignments of Postal Inspectors were in the

best interest of the Postal Service. The OIG

recommended and the Chief Postal Inspector

agreed to establish additional controls to ensure

that international travel requests are properly

justified and approved prior to the travel. 

(OIG OV-AR-01-001)

REVIEW OF COMPLAINTS

REGARDING THE INSPECTION

SERVICE 

The OIG’s oversight of the Inspection

Service provides customers, employees, and

other interested persons with an independent

avenue to address their complaints regarding

the Inspection Service. At the same time, the

OIG provides the Inspection Service with an

unbiased review of accusations that, if left unresolved, could harm its reputation as a professional law enforcement agency. 

Over the past six months, the OIG closed

16 Congressional inquiries and 8 Hotlines

related to the Inspection Service. The inquiries

resulted from complaints made by Postal

Service and Inspection Service employees, and

the general public concerning a variety of issues

including the inadequate conduct and selection

of investigations. Examples of Congressional

and Hotline inquiries are highlighted below:

◆ An OIG review determined that an allegation that the Inspection Service failed

to properly investigate a mail-tampering

incident was unsubstantiated. However,

based in part on the allegation that correspondence submitted as evidence was

never returned, the OIG has planned an

audit of Inspection Service evidence

handling. 

◆ The OIG reviewed an allegation that

Postal Service and Inspection Service

management were not responsive to a

claim of a hostile work environment.

The OIG determined that it was unsubstantiated. However, based in part on

this information, the OIG initiated an

audit of the Inspection Service’s support

to Postal Service threat assessment

teams, which included an assessment of

the Inspection Service’s efforts in reducing workplace violence. 

◆ The OIG reviewed a Hotline allegation

that the Inspection Service was inappropriately conducting surveillance of a former Postal employee and the employee’s

family. The individual threatened to take

legal actions if the surveillance did not

stop. The OIG investigated the allegation and found that another federal

agency had conducted the surveillance.

◆ An OIG review found that a Hotline

allegation concerning Postal Inspectors

sponsoring “beer parties” using

Inspection Service funds was unsubstantiated. The allegation, if true, would

have been a violation of postal policy.

The investigation revealed that Postal

Inspectors annually sponsored a hospitality room during a Sheriff’s Conference,

The OIG Hotline poster must be posted in all Postal

facilities. 
and served food and beverages at their

own personal expense. 

MONITORING INSPECTION

SERVICE INTERNAL

INVESTIGATIONS

The OIG’s Oversight Team is responsible

for monitoring internal investigations of

Inspection Service non-executive employees

performed by the Inspection Service. These

investigations are conducted when allegations

of employee misconduct affect the performance

of duties or when managers have information of

employee misconduct. The OIG’s Oversight

Team continually reviews the results of internal

investigations, including conclusions reached

and recommended actions. Internal investigations reviewed this period include the inappropriate use of official position, accidental

discharge of a duty weapon, loss of investigative

funds, and an accident in a law enforcement

vehicle while a postal inspector was under the

influence of alcohol. 

At the beginning of the reporting period,

the Inspection Service had 49 open internal

investigations. During the reporting period, 27

cases were closed and 20 new cases were

opened. As of March 31, 2001, 42 cases remain

open. During this fiscal year, the OIG plans to

establish a program to perform a quality review

of the results of Inspection Service internal

investigations to ensure they are performed in a

consistent and fair manner and in accordance

with best practices in the federal law enforcement community.

LEGISLATIVE AND REGULATORY

REVIEWS

During this reporting period, the OIG

identified the following legislation affecting the

mission of the Inspection Service. 

PROPOSED LEGISLATION

S. 118 - Fruit, Vegetable, and Plant

Smuggling Prevention Act of 2001 

This bill will strengthen the penalties for

violating plant quarantine laws, including

plants sent through the mail. The bill also provides for the forfeiture of any property used by a

person in committing a plant quarantine felony,

or any real or personal property acquired with

proceeds derived by violating the plant quarantine law. When this property is sold, the proceeds

can be used to reimburse the Postal Service for

any costs incurred to initiate and complete the

forfeiture proceeding. This legislation would

benefit the Postal Service by providing additional revenue and ensuring the security and

sanctity of the mail.

PAGE84 OVERSIGHT OF THE INSPECTION SERVICE
Other Significant

Reviews

PAGE 85

OFFICE OF INSPECTOR GENERAL

Executive Investigations

Support Operations Reviews

Legislative and Regulatory Reviews

INSPECTION SERVICE

Prohibited Mail Investigations

Physical Security Activities

Narcotics Offenses and Trafficking Investigations

Child Exploitation Investigations

Postal Burglary Investigations

Mail Fraud Investigations

Money Laundering Investigations
PAGE86 OTHER SIGNIFICANT REVIEWS

OFFICE OF INSPECTOR

GENERAL

The OIG has completed 40 investigative

efforts and reviews of other significant

issues related to Postal Service operations.

EXECUTIVE INVESTIGATIONS 

The OIG is responsible for reviewing allegations involving Postal executives for criminal

violations and misconduct, including retaliation

against individuals who have previously provided the OIG with information about possible

fraud, waste, abuse, and mismanagement. This

reporting period, the OIG completed 26 executive investigations, two of which are highlighted below:

IMPROPER USE OF POSTAL 

VEHICLES BY POSTAL EXECUTIVE

An OIG investigation disclosed that over a

period of four years, an area executive was

frequently transported by postal employees from

the executive’s residence to the workplace in

postal vehicles. In lieu of being transferred, the

executive retired.

POSTAL EXECUTIVE SUBMITS

FRAUDULENT RELOCATION

VOUCHER

An OIG investigation determined that an

area executive submitted a fraudulent relocation expense voucher in an amount over

$3,000. The executive retired and was required

to repay the amount of the fraudulent expense.

SUPPORT OPERATIONS REVIEWS

The OIG is responsible for reviewing

Postal Service support operations such as government relations and customer service. During

this reporting period, the OIG conducted two

reviews in this area, which are highlighted

below:

CONTROLS OVER SIGNATURE

DEVICES INADEQUATE

At the request of the Board of Governors,

the OIG audited controls over signature devices

used by Postal Service officers. Devices such as

signature machines and signature stamps are

used when postal officers are absent for

extended periods. The audit revealed that controls over signature devices were not adequate

to prevent unauthorized use of these devices on

official documents. Postal Service management

agreed to develop policies and procedures recommended by the OIG to improve controls

over signature devices. However, while policies

are being developed, Postal Service management decided to continue using signature

devices on a limited basis. 

(OIG OS-AR-01-001)

NEW INDEMNITY CLAIMS 

SYSTEM IMPROVES CUSTOMER

SERVICE

The OIG reviewed the Postal Service’s

efforts to redesign its indemnity claims system.

The Postal Service redesigned this system

because of lengthy claims processing times,

which resulted in poor customer service and lost

revenue to commercial insurance services. The

OIG found that controls over the redesigned

claims process were generally adequate; however, customer service, product tracking, record

retention, and the reliability of insurance claims

data could be improved. The OIG suggested

and Postal Service management agreed to handle customer inquiries and to determine the feasibility of modifying the product tracking

system. Management disagreed with the OIG’s

suggested record retention period; however,

they proposed a satisfactory alternative. 

(OIG OS-MA-01-001) 

LEGISLATIVE AND REGULATORY

REVIEWS

During this reporting period, the OIG also

identified the following significant legislation

affecting the Postal Service. 

This section highlights reviews and investigations performed by the OIG and the

Inspection Service in other significant

areas. Also, the OIG legislative and regulatory reviews are included at the end of

this section. In order to differentiate the

work reported by the OIG and Inspection

Service, the pages containing the work

reported by the Inspection Service have

been color screened.

The Postal Service has developed

a delivery network of over

235,000 mail routes.

DID YOU 

KNOW...
ENACTED LEGISLATION

Public Law 106-422 - Amending the

Inspector General Act of 1978 

This law established a Criminal

Investigator Academy and an Inspectors

General Forensic Laboratory within the

Department of the Treasury. The Academy will

train investigators working in the OIG community. The laboratory will perform forensic services for the OIG community. Training for

existing and newly hired agents is essential for

maintaining a high level of investigative expertise and professionalism. The OIG community

will benefit by having its own training academy

and forensics lab. The legislation also authorizes

annual appropriations for these establishments. 

PROPOSED LEGISLATION

H.R. 44 - Inspector General Act

Amendments of 2001 

This bill would amend the Inspector

General Act of 1978 to increase the efficiency

and accountability of OIGs within federal

departments. The bill specifies reporting

requirements, prohibits the receipt of any cash

award or cash bonus by an Inspector General;

increases the rate of pay of Inspectors General to

offset the prohibition against bonus and awards;

and provides for an external review of OIGs at

least every three years by the General

Accounting Office or a private entity. 

In addition, the legislation changes the

Congressional reporting requirement from semiannually to annually, although, a Congressional

oversight committee or the Comptroller

General may request a semiannual report. A

final provision calls for a study by the

Comptroller General to determine whether any

OIGs should be consolidated. 

Privacy Act of 1974, Implementation,

Proposed Rule, Postal Service, Federal

Register, December 27, 2000 

This proposed rule modifies existing regulations to exempt the OIG Investigative File

System from certain provisions of the Privacy

Act and corresponding agency regulations in

order to prevent disclosures that may compromise investigations or violate the privacy of

third parties. This rule is central to preserving

the integrity of information contained in investigative files. The exemption has been previously published in the Postal Service’s

Administrative Support Manual, Appendix

Section 300.010. Disclosure of information

otherwise covered under these exemptions

could alert a subject to the fact that he or she is

the target of an investigation. This could compromise investigation and evidence, endanger

the witnesses or law enforcement personnel, or

intrude upon the personal privacy of the third

parties. 

PAGE87

The Reports Processing staff prepares

and finalizes electronic and print

versions of all OIG reports.
PAGE88

Why does the Office of

Inspector General review

proposed legislation,

regulations, and policy?

Section 4 of the Inspector General Act requires the Office of

Inspector General to review all

proposed legislation, regulations,

and policies and make recommendations to the Postal Service.

OTHER SIGNIFICANT REVIEWS

INSPECTION SERVICE

The Inspection Service conducted

numerous investigations and reviews

relating to significant issues in the following areas: prohibited mail; physical security;

narcotics offenses and trafficking; child

exploitation; postal burglaries; mail fraud

including fraud against consumers, fraud against

businesses, fraud against government; and

money laundering.

PROHIBITED MAIL 

INVESTIGATIONS

The Inspection Service considers the

investigation of mail bombs among its highest

priorities. In the last six months, Postal

Inspectors arrested 33 individuals and convicted

22 defendants 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 and devices placed

in private mail receptacles. Examples of significant investigations follow:

◆ Three members of a gun smuggling ring

that hid more than 100 guns inside children’s toys and electronics gear and then

shipped the guns to Ireland were arrested

in Florida and sentenced to five years in

prison. 

◆ The writer of a threatening letter that

was sent through the U.S. mail was sentenced to 10 months in prison and 3

years probation. In the letter, the writer

threatened to sexually abuse the young

child to whom the letter was mailed as

well as the child’s father, mother, and

grandmother.

PHYSICAL SECURITY ACTIVITIES

The Inspection Service devotes significant

resources to prevent crimes by conducting

employee and customer awareness training programs and implementing security measures.

Potential problems and deficiencies are identified and priorities set based on trend analyzes of

criminal activity. When 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. 

◆ The Inspection Service kicked off a security messaging program on Postal Service

television. The campaign is designed to

encourage postal employees to get personally involved in workplace security.

Employees are being asked to wear their

identification badges and politely challenge strangers in postal facilities to

ensure that they are properly secure. The

Postmaster General and the Chief Postal

Inspector jointly signed a letter to all

postal employees explaining this campaign. In March, post offices began to

receive a copy of the new Poster 66 on

workplace security.

◆ The Inspection Service Division has

been responsible for coordinating and

implementing the rollout of MARIA

2000 worldwide. This program enables

countries to identify high loss route segments by comparing the effects of various

routings with documented mail losses

and thefts. The program supports our customer confidence initiatives by identifying international mail loss trends, which

have an adverse effect on customers,

since over 40 percent of the world’s international mail originates in the United

States.

NARCOTICS OFFENSES AND

TRAFFICKING INVESTIGATIONS

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 843 individuals

during this semiannual period for drug trafficking and money laundering via the mail. Seizures

from the mail for this period included over

5,700 pounds of illegal narcotics and about

170,000 units of steroids. Investigations also

resulted in the seizure of over $1.8 million in

cash and monetary instruments, 9 vehicles, and

54 firearms. Examples of significant investigations follow:

◆ A major figure in a heroin conspiracy

ring who mailed heroin from California

to Iowa was found guilty in an Iowa

federal court and stands to receive in

excess of 40 years in prison.

DID YOU 

KNOW?
PAGE89

◆ Three former California processing and

distribution employees were indicted by a

federal grand jury and subsequently

arrested by Postal Inspectors for

possession and distribution of

methamphetamine.

CHILD EXPLOITATION 

INVESTIGATIONS

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, 72 child pornographers

were identified and stopped as a result of the

Inspection Service’s efforts to rid the mail of

child pornography. In addition, 75 children

were rescued from further incidents of ongoing

child sexual abuse, and three other previously

victimized children were identified. Postal

Inspectors nationwide are investigating 636

cases involving child exploitation. 

During this reporting period, Inspection

Service efforts have resulted in 179 arrests and

126 convictions. Some of the more significant

child exploitation cases are highlighted below:

◆ In a joint federal criminal investigation,

Postal Inspectors in Texas arrested and

convicted a husband and wife team on

88 counts of conspiring with an 

international webmaster to distribute and

possess child pornography. In this investigation, which is believed to be the

largest case of commercialized child

exploitation ever encountered in the history of U.S. law enforcement, the subjects made a profit of over $1 million.

◆ A South Carolina individual was sentenced to nine years in prison for trafficking in child pornography by mail and

the Internet. This investigation by the

Inspection Service found that the subject

had been continually molesting a minor

daughter.

◆ Postal Inspectors arrested a husband and

wife and charged them with possession of

child pornography. This investigation

began after the couple mailed film to a

commercial film developer that depicted

minor females being sexually abused. A

search of the couple’s residence disclosed

a large quantity of child pornography and

the identification of the children who

were being molested.

POSTAL BURGLARY

INVESTIGATIONS 

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. In the last 6 months, there were

74 arrests and 72 convictions related to burglaries compared to 90 arrests and 85 convictions

for the previous reporting period. Examples of

significant investigations follow:

◆ In October 2000, an individual was sentenced to life imprisonment without the

possibility of parole for robbing a postal

facility. This sentence was based on a

federal “three strikes” law and followed

the subject’s earlier conviction in 1995

for the robbery of a letter carrier and the

attempted murder of a witness to this

robbery. 

◆ An individual was sentenced to 11 years

and 6 months in prison, 5 years probation, and ordered to pay restitution over

$8,200 for the armed robbery of a

California post office and the attempted

robbery of another California post office. 

◆ An individual was sentenced to 9 years

and 7 months in prison, and 5 years probation for involvement in the armed robbery of a New Jersey post office, two

bank robberies, and the robbery of a jewelry store.

MAIL FRAUD

INVESTIGATIONS 

Postal Inspectors protect postal customers,

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 depend on mail delivery for

purchases are particularly susceptible to fraudulent schemes. These citizens trust the Postal

Service to maintain the integrity of the mail

while opportunists take advantage of the

anonymity the mail offers. Postal Inspectors are

currently conducting over 3,500 mail fraud

investigations. As a result, 937 individuals were

arrested and 756 individuals were convicted.

Examples of significant investigations follow:
PAGE90 OTHER SIGNIFICANT REVIEWS

◆ Postal Inspectors arrested an account

executive of a finance company who was

charged with conspiracy to submit false

loan applications using the identity of

elderly victims. Using this scheme, the

executive stole over $400,000 from the

finance company. 

◆ Postal Inspectors along with other law

enforcement agencies arrested three individuals and charged them with identity

theft from more than 90 victims that

they used to steal in excess of $500,000.

These individuals used six different commercial mail receiving agency addresses

as mail drops to obtain the identification. 

◆ Postal Inspectors and local law enforcement officers arrested two individuals for

the theft of personal identification from

numerous unsuspecting victims. The

identification was then used to establish

fraudulent bank accounts that resulted in

the loss of over $1 million. Federal prosecution is pending. 

FRAUD AGAINST CONSUMERS

Consumers are targeted by sweepstakes,

telemarketing, work at home, lottery, merchandise misrepresentations, vacation, real estate

and investment scams, just to name a few. Postal

Inspectors are currently conducting 1,447 investigations relating to mail fraud against consumers. During this reporting period, Postal

Inspectors have made 328 arrests and 243 convictions have been obtained. Examples of significant investigations follow:

◆ In December 2000, an individual was

imprisoned for 36 months for participating in a mortgage flipping scheme.

Mortgage flipping occurs when distressed

properties are purchased for a small 

price and then are sold to low-income,

first-time homebuyers at a substantially

inflated price. This case was highlighted

in a Senate Appropriations

Subcommittee hearing on nationwide

mortgage flipping and predatory lending

practices.

◆ Three individuals were convicted in connection with operating two illegal telemarketing operations in California.

These companies defrauded 2,200 victims

(mostly elderly) of over $1.2 million.

◆ In New York, a telemarketer was found

guilty of operating a fraudulent investment vending machine business. No

vending machines were delivered and the

telemarketer subsequently went out of

business. Victims’ investments ranged

from $2,000 to $25,000, with total losses

exceeding $250,000. 

FRAUD AGAINST BUSINESSES

Postal Inspectors devote considerable

resources to protecting the business community

from being victimized by mail fraud scams.

Postal Inspectors are currently conducting 1,440

investigations relating to frauds against businesses. During this reporting period, there have

been a total of 339 arrests and 302 convictions.

Following are a few examples of actions taken.

Examples of significant investigations follow:

◆ Florida Division Postal Inspectors, U.S.

Secret Service Agents, and other law

enforcement officers arrested two people

for operating large-scale credit card fraud,

identity theft, and mail diversion

schemes from recently deceased individuals. Total losses exceeded $1 million. 

◆ Postal Inspectors working with representatives of the recording industry arrested a

Florida resident for using the Internet and

U.S. mail to sell pirated compact discs,

audiocassettes, and videos. This individual also established a Postal Service customer account and received over 700

Domestic and Global Priority Mail

envelopes to further fraudulent sales.

◆ An Illinois doctor and the hospital the

doctor controlled agreed to pay the

United States and the State of Illinois a

total of $14 million to settle allegations

that both the doctor and the hospital

defrauded Medicare and Medicaid for

over 8 years.

◆ In October 2000, the U.S. Attorney’s

office in New York forwarded a check in

the amount of over $3.1 million to the

Postal Service as a representative share of

the net proceeds realized from an investigation where Postal Inspectors discovered

that the owner of a company defrauded

various manufacturers by improperly

redeeming manufacturers’ coupons. The

overall net worth of the coupon scheme

was in excess of $5 million.

DID YOU 

KNOW?

Is employee diversity 

important to OIG?

Yes. The OIG is proud of the

diverse talents, skills, and professional experience of our staff.

The OIG believes diversity has

enhanced our work environment.
PAGE91

FRAUD AGAINST GOVERNMENT

A total of 270 individuals have been

arrested and 211 convicted for fraud against the

government. The mail is used to commit a variety of frauds against government agencies at all

levels, including Medicare/Medicaid fraud, false

claims for tax refunds, and false claims for a

variety of benefits such as education, housing,

and welfare. Examples of significant investigations follow:

◆ As a result of an investigation by Postal

Inspectors and agents from the

Department of Labor for the State of

Massachusetts, the ringleader of an

unemployment scheme was convicted of

filing more than 40 fraudulent claims for

unemployment benefits under fictitious

company names. The fraudulent claims

exceeded over $350,000.

◆ In Missouri, a clinical psychologist pled

guilty to defrauding Medicare of at least

$442,600 by submitting over 3,000 fraudulent claims for undocumented psychotherapy services on behalf of nursing

home patients.

MONEY LAUNDERING

INVESTIGATIONS 

The Inspection Service investigates criminals who use postal money orders and other

postal financial products to launder illicit proceeds and avoid federal reporting requirements

in violation of the Money Laundering Control

Act and the Bank Secrecy Act. Illicit proceeds

may include those gained through narcotic

sales, the smuggling of illegal aliens, tax evasion,

or the selling of counterfeit merchandise.

Following are examples of investigated money

laundering cases:

◆ In February 2001, Postal Inspectors seized

$148,000 from two bank accounts in

California after an investigation disclosed that the proceeds in these

accounts were directly derived from the

deposit of postal money orders. These

accounts were specifically structured to

avoid federal reporting regulations.

◆ On March 29, Postal Inspectors and

High Intensity Financial Crimes Area

task force agents in Puerto Rico arrested

an individual for structuring bank

accounts to avoid federal reporting regulations. The individual purchased numerous postal money orders at different

postal stations from January 2000

through March 2001, with each purchase

totaling under $3,000. A total of over

$133,000 was seized, with over $72,000

representing postal money orders. 
PAGE92 OTHER SIGNIFICANT REVIEWS
PAGE 93

Appendices

DID YOU 

KNOW?

PAGE 93

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

Reports Issued to Postal Management

For the period October 1, 2000, through March 31, 2001

OVERVIEW

Office of Inspector General

OIG 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

Inspection Service audit groups were aligned by the type of audits performed which are primarily

performance, financial, contract, and facility audits. The Inspection Service provided Postalwide

attention in selected areas until September 30, 2000, when all audit functions were transitioned

to the OIG.

SUMMARY

The following is a summary by principal area of reports issued to Postal Service management for both

the OIG and Inspection Service. The following pages list each organization's reports separately.

Recommend 

Number of Questioned Unsupported Funds Put to Unrecoverable

Principal Area Reports Issued Costs Costs1 Better Use Costs

Performance 9 $0 $0 $17,561,800 $0

Financial Management 57 39,031,995 5,988,850 10,684,162 42,315,838

Technology 10 0 0 0 0

Labor Management 24 0 0 0 0

Oversight 3000

Other Significant Review 29 0 0 0 0

GRAND TOTAL 132 $39,031,995 $5,988,850 $28,245,962 $42,315,838

PAGE 94 APPENDICES

Definitions

Questioned Costs - A cost that is

unnecessary, unreasonable, unsupported, or an alleged violation of

law, regulation, contract, etc.

Unsupported Costs - A cost that

is not supported by adequate documentation.

Funds Put to Better Use - Funds

that could be used more efficiently

by implementing recommended

actions.

Unrecoverable Costs - A cost that

perhaps should not have been

incurred and is not recoverable.

1 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 UnReport Subject Title/ Questioned supported Funds Put to recoverable Issue

Number Project Type Costs Costs Better Use Costs Date

ACCEPTING AND PROCESSING

AC-AR-01-001 Certified Mail Processing $0 $0 $0 $0 3/9/01

and Delivery Functions

AC-MA-01-001 North Carolina Post 0000 3/30/01

Office Mail Delays

DELIVERY

DE-AR-01-001 Review of the $0 $0 $0 $0 1/26/01

Postal Service Delivery

Confirmation Program at

Selected Facilities

MARKETING

MK-AR-01-001 The Postal Service's $0 $0 $0 $0 3/27/01

Ability to Meet

Requirements of an

Electronic Commerce

Mailer

TRANSPORTATION

TR-AR-01-001 Adequacy of Mail $0 $0 $0 $0 10/31/00

Transport Equipment

Service Center Network

Internal Controls

TR-AR-01-002 Safety and Security of 0 0 17,561,800 0 3/30/01

Postal Service Leased

Trailer Fleet

TR-MA-01-001 Leased Trailer 0000 3/30/01

Deficiencies in the 

New York Metro Area

PERFORMANCE TOTALS $0 $0 $17,561,800 $0

FINANCIAL MANAGEMENT

FINANCIAL-RELATED

FF-AR-01-001 Audit of Statistical Tests $0 $0 $0 $0 10/26/00

for the Fiscal Year 2000

Cost and Revenue 

Analysis - capping report

FT-AR-01-001 Withholdings & 0000 10/27/00

Contributions for

Health Benefits,

Life Insurance,

Retirement, and

Employee Headcount Data

FT-AR-01-002 Fiscal Year 2000 0000 10/31/00

Information System

Controls, Eagan,

San Mateo, and

St. Louis Information

Technology & Accounting

Service Centers

PAGE 95
Un- Recommend UnReport Subject Title/ Questioned supported Funds Put to recoverable Issue

Number Project Type Costs Costs Better Use Costs Date

FT-AR-01-003 FY 2000 Postal Service $0 $0 $0 $0 12/21/00

Financial Statement Audit

Washington, D.C.

Headquarters

FT-AR-01-004 Postal Service Board of 0000 12/22/00

Governors' Travel and

Miscellaneous Expenses

for FY 2000

FT-AR-01-005 Postal Service Officers' 0000 12/22/00

Travel and Representation

Expenses for FY 2000

FF-AR-01-002 Fiscal Year 2001 Financial 0000 1/25/01

Installation Audit - 

South Georgia Stamp

Distribution Office

FF-AR-01-003 Fiscal Year 2001 Financial 0000 1/25/01

Installation Audit - 

Cleveland Stamp 

Distribution Office

FF-AR-01-004 Fiscal Year 2001 Financial 0000 1/25/01

Installation Audit - 

Self-Service Postal Center

Miami, Florida

FT-AR-01-006 Audit of the Postal 0000 2/22/01

Service's FY 2000 Budget

Formulation Process

FT-AR-01-007 FY 2000 Postal Service 0000 3/6/01

Financial Statement Audit -

Eagan Information

Technology and Accounting 

Service Center

FT-AR-01-008 FY 2000 Postal Service 0000 3/6/01

Financial Statement Audit - 

San Mateo Information

Technology and Accounting

Service Center

FT-AR-01-009 FY 2000 Postal Service 0000 3/6/01

Financial Statement Audit - 

St. Louis Information

Technology and Accounting

Service Center

FF-AR-01-005 Fiscal Year 2001 Financial 0000 3/16/01

Installation Audit - 

Village Station Post Office

FF-AR-01-006 Fiscal Year 2001 Financial 0000 3/16/01

Installation Audit - 

Northern Illinois District

Accounting Office

FF-AR-01-007 Fiscal Year 2001 Financial 0000 3/16/01

Installation Audit - 

Stamp Distribution Office

Las Vegas

FF-AR-01-008 Fiscal Year 2001 Financial 0000 3/16/01

Installation Audit - 

Stamp Distribution Office

Midway San Diego

PAGE 96 APPENDICES
CONTRACTING

CA-CAR-01-001 Evaluation of $0 $0 $0 $0 10/10/00

Accounting System

CA-CAR-01-002 Evaluation of Firm 14,277,059 4,971,627 0 0 10/19/00

Fixed Price Proposal

CA-CAR-01-003 Evaluation of Firm 764,035 0 0 0 10/19/00

Fixed Price Proposal

CA-CAR-01-004 Evaluation of Firm 0000 10/19/00

Fixed Price Proposal

CA-CAR-01-005 Evaluation of Equitable 0000 10/24/00

Adjustment Proposal

CA-CAR-01-006 Evaluation of Compliance 0000 10/24/00

with Cost Accounting

Standard

CA-CAR-01-007 Evaluation of Compliance 0000 10/24/00

with Cost Accounting

Standard

CA-CAR-01-008 Evaluation of Compliance 0000 10/24/00

with Cost Accounting

Standard

CA-CAR-01-009 Evaluation of Timekeeping 0000 10/24/00

Procedures and Observation

of Work Areas

CA-CAR-01-010 Evaluation of Incurred Costs 0000 10/24/00

CA-CAR-01-011 Evaluation of Firm 1,274,207 0 0 0 11/17/00

Fixed Price Proposal

CA-CAR-01-012 Evaluation of 738,508 379,646 0 0 11/22/00

Termination Claim

CA-CAR-01-013 Evaluation of Firm Fixed 7,264,275 361,997 0 0 12/14/00

Price Subcontract Proposal

CA-CAR-01-014 Evaluation of Costs Billed 3,624 3,624 0 0 12/15/00

CA-CAR-01-015 Evaluation of Proposal 0000 12/15/00

CA-CAR-01-016 Evaluation of Proposal 0000 12/29/00

CA-MA-01-001 Privacy Data Contained 0000 12/29/00

in Contract Files

CA-CAR-01-017 Evaluation of Proposal 0000 1/2/01

CA-CAR-01-018 Evaluation of Proposal 0000 1/2/01

CA-CAR-01-019 Evaluation of Proposal 0000 1/2/01

CA-CAR-01-020 Evaluation of Proposal 0000 1/12/01

CA-CAR-01-021 Evaluation of Costs Incurred 0000 1/12/01

CA-CAR-01-022 Evaluation of Proposal 0000 1/29/01

CA-CAR-01-023 Verification of Incurred 0000 2/1/01

Costs Claimed

CA-CAR-01-024 Evaluation of Leasing Costs 101,768 0 0 0 2/2/01

CA-CAR-01-025 Evaluation of Firm Fixed 11,191 0 0 0 2/7/01

Price Change Proposal

CA-CAR-01-026 Evaluation of Firm 1,609,538 0 0 0 2/9/01

Fixed Price Proposal

CA-CAR-01-027 Review of Subcontract 0000 2/16/01

Incurred Costs

CA-CAR-01-028 Evaluation of Incurred Costs 0000 2/16/01

CA-CAR-01-029 Evaluation of Indefinite 0000 2/16/01

Delivery, Indefinite

Quantity Proposal

PAGE 97

Un- Recommend UnReport Subject Title/ Questioned supported Funds Put to recoverable Issue

Number Project Type Costs Costs Better Use Costs Date
Un- Recommend UnReport Subject Title/ Questioned supported Funds Put to recoverable Issue

Number Project Type Costs Costs Better Use Costs Date

CA-CAR-01-030 Evaluation of Final Voucher $0 $0 $0 $0 2/21/01

and Incurred Costs 

CA-CAR-01-031 Evaluation of Firm 487,790 271,956 0 0 2/26/01

Fixed Price Proposal

CA-CAR-01-032 Post Award Evaluation 0000 2/26/01

CA-AR-01-001 Contracting Practices for 12,500,000 0 10,684,162 42,315,838 2/27/01

the Procurement of Mail

Transport Equipment Services

CA-CAR-01-033 Evaluation of Firm Fixed 0000 3/7/01

Price Change Proposal

CA-CAR-01-034 Review of Final Vouchers 0000 3/7/01

and Incurred Cost

CA-CAR-01-035 Evaluation of Compliance 0000 3/7/01

with Cost Accounting

Standard

CA-CAR-01-036 Evaluation of Incurred Costs 0000 3/8/01

FINANCIAL MANAGEMENT TOTALS $39,031,995 $5,988,850 $10,684,162 $42,315,838

TECHNOLOGY

INFORMATION SYSTEMS

IS-CS-01-001 Server Security Testing $0 $0 $0 $0 3/14/01

IS-CS-01-002 Server Security Testing 0000 3/22/01

IS-CS-01-003 Server Security Testing 0000 3/22/01

IS-CS-01-004 Server Security Testing 0000 3/22/01

DEVELOPMENTAL

DA-AR-01-001 Consolidation of the Postal $0 $0 $0 $0 11/24/00

Service Accounting Service

and Data Centers

DA-AR-01-002 Robotics Containerization 0000 2/26/01

System

DA-MA-01-001 Robotics Containerization 0000 3/9/01

System Access Controls

DA-AR-01-003 Delivery Operations 0000 3/29/01

Information System

ELECTRONIC COMMERCE

EC-AR-01-001 Protection of Internet $0 $0 $0 $0 3/26/01

Users' Information

EC-AR-01-002 USPS.com Disaster 0000 3/28/01

Recovery Plan

TECHNOLOGY TOTALS $0 $0 $0 $0

LABOR MANAGEMENT

VIOLENCE IN THE WORKPLACE

LB-AR-01-002 Review of the Violence $0 $0 $0 $0 11/28/00

Prevention and Response

Programs in the 

San Jose District

LB-AR-01-003 Review Violence 0000 11/28/00

Prevention and Response

Programs in the 

Santa Ana District

LB-AR-01-004 Review of the Violence 0000 11/28/00

Prevention and Response 

Programs in the 

Sacramento District

PAGE 98 APPENDICES
LB-AR-01-005 Review of the Violence $0 $0 $0 $ 0 11/28/00

Prevention and Response 

Programs in the 

Long Beach District

LB-AR-01-006 Review of the Violence 0000 11/28/00

Prevention and Response 

Programs in the 

Van Nuys District

LB-AR-01-007 Review of the Violence 0000 11/30/00

Prevention and Response 

Programs in the 

Mid-Carolinas District

LB-AR-01-008 Review of the Violence 0000 11/30/00

Prevention and Response 

Programs in the 

Richmond District

LB-AR-01-009 Review of the Violence 0000 11/30/00

Prevention and Response 

Programs in the Greater 

South Carolina District

LB-AR-01-010 Review of the Violence 0000 11/30/00

Prevention and Response 

Programs in the 

Greensboro District

LB-AR-01-011 Review of the Violence 0000 11/30/00

Prevention and Response 

Programs in the 

Kentuckiana District

LB-AR-01-012 Review of the Violence 0000 11/30/00

Prevention and Response 

Programs in the 

Appalachian District

LB-AR-01-001 Review of the Violence 0000 12/11/00

Prevention and Response

Programs in the

Honolulu District

LB-AR-01-015 Review of the Violence 0000 3/29/01

Prevention and Response 

Programs in the 

Portland District

LC-AR-01-001 Review of the Violence 0000 3/29/01

Prevention and Response 

Programs in the 

Spokane District

LC-AR-01-002 Review of the Violence 0000 3/29/01

Prevention and Response 

Programs in the 

Alaska District

LC-AR-01-003 Review of the Violence 0000 3/29/01

Prevention and Response 

Programs in the 

Big Sky District

LB-AR-01-016 Review of the Violence 0000 3/30/01

Prevention and Response 

Programs in the 

Las Vegas District

LC-AR-01-005 Review of the Violence 0000 3/30/01

Prevention and Response 

Programs in the 

Colorado/Wyoming District

PAGE 99

Un- Recommend UnReport Subject Title/ Questioned supported Funds Put to recoverable Issue

Number Project Type Costs Costs Better Use Costs Date
Un- Recommend UnReport Subject Title/ Questioned supported Funds Put to recoverable Issue

Number Project Type Costs Costs Better Use Costs Date

LC-AR-01-006 Review of the Violence $0 $0 $0 $0 3/30/01

Prevention and Response 

Programs in the 

Arizona District

WORKPLACE ENVIRONMENT

LB-AR-01-014 Assessment of Management $0 $0 $0 $0 1/5/01

Actions in Response to 

Safety Violations at a 

Facility

LC-AR-01-004 Review of Safety and 0000 3/27/01

Health Inspections in 

the Pacific Area

LB-MA-01-001 Review of Allegations of a 0000 3/29/01

Hostile Work Environment 

at a Post Office in 

the Greater South 

Carolina District

HUMAN RESOURCE PROCESSES

LB-AR-01-013 Equal Employment $0 $0 $0 $0 12/21/00

Opportunity Complaint 

Settlement Agreement

LB-LA-01-001 Abandoned Postal Records 0000 12/29/00

Found at a Dallas Facility

LABOR MANAGEMENT TOTALS $0 $0 $0 $0

OVERSIGHT

OV-LA-01-001 Security Badge Controls at $0 $0 $0 $0 3/26/01

Postal Service Headquarters

OV-MA-01-001 Use of Postal Police Officers 0000 3/27/01

on the Central Artery/

Tunnel Construction Project

OV-AR-01-001 Audit of Inspection Service 0000 3/30/01

International Travel 

and Assignments

OVERSIGHT TOTALS $0 $0 $0 $0

OTHER SIGNIFICANT REVIEWS

SUPPORT OPERATIONS REVIEW

OS-AR-01-001 Controls Over $0 $0 $0 $0 11/21/00

Signature Devices

OS-MA-01-001 Review of Indemnity 0000 11/27/00

Claims Process Redesign

EXECUTIVE INVESTIGATIONS

0CX013EX000 Executive Investigations $0 $0 $0 $0 10/04/00

00CX021EX000 Executive Investigations 0000 10/16/00

00CX030EX000 Executive Investigations 0000 10/19/00

97CX005EX000 Executive Investigations 0000 10/30/00

00CX019EX000 Executive Investigations 0000 11/03/00

00CX051EX000 Executive Investigations 0000 11/06/00

00CX016EX000 Executive Investigations 0000 11/14/00

00CX003EX000 Executive Investigations 0000 11/21/00

00CX038EX000 Executive Investigations 0000 11/22/00

00CX064EX000 Executive Investigations 0000 11/22/00

99CX014EX000 Executive Investigations 0000 11/22/00

00CX057EX000 Executive Investigations 0000 11/22/00

PAGE 100 APPENDICES
00CX044EX000 Executive Investigations $0 $0 $0 $0 11/22/00

00CX012EX000 Executive Investigations 0000 11/22/00

00CX063EX000 Executive Investigations 0000 11/24/00

01CX007EX000 Executive Investigations 0000 11/27/00

00CX049EX000 Executive Investigations 0000 11/28/00

00CX056EX000 Executive Investigations 0000 11/28/00

00CX040EX000 Executive Investigations 0000 11/28/00

00CX036EX000 Executive Investigations 0000 12/04/00

00CX050EX000 Executive Investigations 0000 12/04/00

00CX055EX000 Executive Investigations 0000 12/11/00

98CX011EX000 Executive Investigations 0000 12/18/00

98CX033EX000 Executive Investigations 0000 12/18/00

00CX034EX000 Executive Investigations 0000 12/18/00

00CX039EX000 Executive Investigations 0000 01/19/01

OTHER

IG-TR-01-001 September 2000 $0 $0 $0 $0 10/31/00

Oversight Testimony

OTHER SIGNIFICANT REVIEWS TOTALS $0 $0 $0 $0

OIG TOTALS $39,031,995 $5,988,850 $28,245,962 $42,315,838

INSPECTION SERVICE REPORTS

PERFORMANCE 

SERVICE INVESTIGATIONS

0072-1328202-SI(2) Return-to-Sender Mail $0 $0 $0 $0 01/02/01

on Hand 

0071-1314927-SI(2) National Mail Condition 0000 02/23/01

Review 

PERFORMANCE TOTALS $0 $0 $0 $0

FINANCIAL MANAGEMENT

REVENUE INVESTIGATIONS

0061-1318200-RI(1) Postage Meter $0 $0 $0 $0 03/20/01

0061-1297848-RI(1) Postage Meter 0000 03/26/01

FINANCIAL MANAGEMENT TOTALS $0 $0 $0 $0

INSPECTION SERVICE TOTALS $0 $0 $0 $0

GRAND TOTALS $39,031,995 $5,988,850 $28,245,962 $42,315,838

PAGE 101

Un- Recommend UnReport Subject Title/ Questioned supported Funds Put to recoverable Issue

Number Project Type Costs Costs Better Use Costs Date
APPENDIX B

Findings of Questioned Costs

For the period October 1, 2000, through March 31, 2001

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 40 $76,890,998 $17,898,909

made at the beginning of the reporting period

Reports requiring management decision that were 11 $39,031,995 $5,988,850

issued during the reporting period

TOTALS 51 $115,922,993 $23,887,759

Reports for which a management decision was 

made during the reporting period (i+ii) 14 $5,608,794 $1,805,781

(i) Dollar Value of disallowed cost $5,101,869

(ii) Dollar value of cost not disallowed $506,925

Reports for which no management decision was made by 

the end of the reporting period. Negotiations are ongoing 37 $110,314,199 $22,081,978

Reports for which no management decision was made within 

six months of issuance (See Note 1 for a list of individual reports) 20 $56,243,795 $8,525,127

Reports for which no management decision was made within 

one year of issuance (See Note 2 for a list of individual reports) 8 $15,806,068 $7,571,625

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

4/27/00 CA-CAR-00-024 Contract Audit $131,750 $0

4/27/00 CA-CAR-00-026 Contract Audit 3,531,433 0

5/17/00 CA-AR-00-001 United States Postal Service 

Warranty Repair of Tractors 977,598 0

6/6/00 CA-CAR-00-029 Contract Audit 13,107 0

6/26/00 CA-CAR-00-031 Contract Audit 5,065,428 0

7/28/00 CA-CAR-00-042 Contract Audit 580,338 0

8/25/00 CA-CAR-00-046 Contract Audit 82,314 61,065

8/25/00 CA-CAR-00-045 Contract Audit 160,053 0

8/25/00 CA-CAR-00-047 Contract Audit 917,345 0

8/29/00 CA-CAR-00-051 Contract Audit 3,583,880 3,264,062

9/13/00 CA-CAR-00-054 Contract Audit 6,172,504 0

9/20/00 CA-CAR-00-055 Contract Audit 10,565,117 0

9/20/00 CA-CAR-00-058 Contract Audit 159,388 0

9/20/00 CA-CAR-00-059 Contract Audit 49,120 0

9/26/00 CA-CAR-00-062 Contract Audit 21,665 0

9/29/00 CA-CAR-00-064 Contract Audit 17,726,329 0

9/20/00 FT-LA-00-002 Terminated Cleaning and 

Station Contracts 216,861 0

9/29/00 MK-AR-00-002 Audit of the Management Controls 

Over the Sales Force

Augmentation Program 5,200,000 5,200,000

OIG TOTALS $55,154,230 $8,525,127

PAGE 102 APPENDICES
Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Project Type Costs Costs

4/3/00 184-1126310-AC(1) Contract Audit $514,696 $0

8/30/00 184-1210121-AC(1) Contract Audit 574,869 0

INSPECTION SERVICE TOTALS $1,089,565 $0

TOTAL $56,243,795 $8,525,127

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

2/21/00 CA-CAR-00-006 Contract Audit $121,452 $54,185

3/14/00 CA-CAR-00-014 Contract Audit 38,607 0

3/14/00 CA-CAR-00-015 Contract Audit 464,644 0

3/29/00 CA-CAR-00-018 Contract Audit 90,366 0

3/31/00 CA-MA-00-001 Contract Audit Practices 92,214 0

2/29/00 TR-AR-00-005 Southwest Area Expenditures for Extra 

Highway Trips Using Leased Equipment 848,000 0

OIG TOTALS $1,655,283 $54,185 

Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Project Type Costs Costs

12/7/98 184-1243166-AC(1) Contract Audit $7,087,038 $5,841,563 

11/17/99 181-1294644-AC(1) Contract Audit 7,063,747 1,675,877 

INSPECTION SERVICE TOTALS $14,150,785 $7,517,440 

TOTAL $15,806,068 $7,571,625 

PAGE 103
APPENDIX C

Recommendations That Funds

Be Put to Better Use

For the period October 1, 2000, through March 31, 2001

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 11 $108,132,118

Reports requiring management decision that were 

issued during the reporting period 2 $28,245,962

TOTALS 13 $136,378,080

Reports for which a management decision was made during the report period (i + ii) 7 $97,433,672

(i) Value of recommendations agreed to by management $97,301,628

(ii) Value of recommendations that were not agreed to by management $132,044

Reports for which no management decision was made by the end of the reporting period 6 $38,944,408

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

(See Note 1 for a list of individual reports) 1 $28,457,395

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

(See Note 2 for a list of individual reports) 5 $10,487,013

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

9/29/00 MK-AR-00-001 Review of Stamp Fulfillment Services $28,457,395

Performance Measures 

TOTAL $28,457,395

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

10/30/98 181-1252372-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

05/20/95 181-1165940-AC(1) Contract Audit 8,370,460

08/27/99 181-1294162-AC(1) Contract Audit 122,861

TOTALS $10,487,013

PAGE 104 APPENDICES
APPENDIX D

Reports with Significant

Recommendations Pending 

Corrective Actions

For the period October 1, 2000, through March 31, 2001

The name and format of this appendix has changed to provide a more detailed illustration of

reports containing significant recommendations pending final action by management. On

October 1, 2000, the OIG assumed complete responsibility for tracking corrective actions for all

significant recommendations. As a result, the OIG performed an extensive analysis to identify

reports with significant recommendations requiring confirmation that appropriate corrective

actions have been taken. This appendix identifies those reports. During the next 6 months, the

OIG will be working with Postal Service management to validate whether appropriate corrective

actions have been taken, and if so, enable us to remove them from this appendix.

OFFICE OF INSPECTOR GENERAL

Report Report Number of Issue 

Number Title Recommendations Date

FL-AR-98-001 The Sugar House Renovation Project 1 3/30/98

RG-MA-98-001 Kansas City Fulfillment Services Center 1 3/30/98

CA-MA-98-002 Irregularities at the Greensboro, NC Bulk Mail Center 2 3/31/98

PA-MA-98-001 Enhancement of USPS Audit Reporting and Follow-up Process 4 3/31/98

CAG-AR-98-001 Unisite 4 4/22/98

QR-MA-98-001 Drug-Free Workplace Program 1 6/2/98

PA-MA-98-002 Violence in the Workplace - Identification of Area Hot Spots 3 8/28/98

LM-AR-98-001 Diversity and Human Skills Training Program - 

Milwaukee District Compliance 4 9/29/98

CA-AR-98-003 Procurement Prequalification Process 9 9/30/98

CA-MA-98-003 Supplier Diversity and Minority Contracting 5 9/30/98

FA-MA-98-001 Stamp Services 1 9/30/98

FR-LA-98-001 Bank Secrecy Act 1 9/30/98

HC-AR-98-001 Workers’ Compensation Case Management 3 9/30/98

OV-MA-98-002 Crime Laboratories’ Accreditation Progress 1 9/30/98

PA-AR-98-001 Bulk Mail Center Manual Operations 4 9/30/98

PA-AR-98-002 Total Factor Productivity 2 9/30/98

PA-MA-98-003 Retroactive Contributions to the Thrift Savings Plan 1 9/30/98

PA-MA-98-004 Status of Management Actions Taken for Inspection

Service Reports on Labor Management 1 9/30/98

RG-MA-98-005 Review of Revenue Forecasting - International Business Unit 3 9/30/98

RG-MA-98-007 Stamp Out Breast Cancer Act and Stamp 1 9/30/98

LM-MA-99-002 Effectiveness of USPS Grievance Arbitration Procedures 2 3/26/99

LR-MA-99-001 Grievance Arbitration Management Information 2 3/26/99

QR-MA-99-001 USPS Management of Personal Services Contract 1 3/29/99

FA-AR-99-001 Review of Atlanta Olympics Facility Improvement Plan 2 3/31/99

OV-MA-99-001 Review of USPS Personnel Security Program - 

Process for Updating Sensitive Clearances 1 3/31/99

DA-AR-99-002 Point of Service ONE 1 9/20/99

TR-AR-99-001 Compliance Opportunities for Savings in Rail Detention Costs 3 9/23/99

FR-AR-99-010 Fiscal Year 1999 Information Systems Controls, St. Louis 2 9/28/99

Information Service Center

DA-AR-99-003 Corporate Call Management 1 9/29/99

FR-AR-99-008 Fiscal Year 1999 Information Systems Controls, San Mateo 1 9/29/99

Information Service Center

PAGE 105
TR-AR-99-003 Emergency and Extra Trip Expenditures on Highway Routes 6 9/29/99

CA-AR-99-001 Opportunities to Increase Savings Through the 2 9/30/99

Use of Natural Gas Vehicles

CA-AR-99-002 Removal of Underground Storage Tanks 1 9/30/99

CA-AR-99-003 Responsibilities of Contracting Officer's Representatives 9 9/30/99

RP-MA-00-001 Indefinite Quantity Contracts 1 11/8/99

FR-LA-00-001 Sure Money Electronic Funds Transfer Service Expansion 2 11/23/99

to Dominican Republic

RG-MA-00-001 Cost and Benefit of the International Collection Program 1 12/3/99

DS-MA-00-001 Acceptance of Delivery Vehicles 1 12/15/99

FR-MA-00-001 Budget Cost Containment Measures 1 12/22/99

TR-AR-00-003 Commercial Air Carrier: Performance Measurement System 2 1/31/00

TR-AR-00-004 Commercial Air Carrier Performance: 2 1/31/00

Effectiveness of Pay for Performance

TR-AR-00-005 Southwest Area Expenditures for Extra Highway Trips 3 2/29/00

Using Leased Equipment

DS-AR-00-001 External First-Class Mail Measurement System 2 3/27/00

TR-AR-00-006 Commercial Air Carrier Performance: 2 3/27/00

Payment for Ground Handling Services

CA-MA-00-001 Contract Audit Practices 7 3/31/00

DA-AR-00-002 Tray Management System 5 3/31/00

RG-AR-00-002 Breast Cancer Research Stamp Program Review-Phase II 1 3/31/00

FR-FA-00-010(R) Relocation Benefits for Postal Service Officers - Revised 2 5/2/00

AC-AR-00-002 Integrity of Plant Verified Drop Shipment 1 5/11/00

BI-MA-00-001 Highway Transportation Contracts 1 5/11/00

DA-MA-00-002 Priority Mail Processing Center Network 1 6/30/00

1999 Christmas Operations

FA-AR-00-002 Salt Lake City District 2002 Winter Olympic Plans 2 6/30/00

TR-AR-00-008 Extra Trip Expenditures at the Dallas Bulk Mail Center 1 6/30/00

AC-AR-00-003 Revenue Assurance Process 3 7/14/00

CA-LA-00-001 Review of Minority Contracting Opportunities 2 7/14/00

Under Advertising Contract

OV-MA-00-002 Review of Postal Inspection Service Forensic Scientist Salaries 1 7/17/00

TR-AR-00-009 Extra Trips Expenditures within the Mid-Atlantic Area 4 7/27/00

FA-MA-00-007 Review of the Managed Network Services Contract & 1 7/28/00

Billing Process of the Contractor

FT-FA-00-001 Money Order Blank Stock and Imprinters 6 8/25/00

FT-AR-00-002 International List Service Transmittal of 1 8/29/00

Funds Bank Secrecy Act Compliance

TR-AR-00-010 Use of Chauffeur-Driven Vehicles by Postal Service Executives 3 8/29/00

EC-AR-00-001 USPS eBillPay Security and Privacy Issues 1 9/5/00

DA-AR-00-004 Information Platform Planning 1 9/28/00

FT-AR-00-001 Miscellaneous Relocation Expense Payments 2 9/28/00

AC-AR-00-004 Use of Robotic Tray Handling System 2 9/29/00

AC-AR-00-005 International Mail Processing 2 9/29/00

DA-AR-00-006 Point of Service ONE Phase II 2 9/29/00

FA-AR-00-005 Seattle Processing and Distribution Center 1 9/29/00

FT-AR-00-004 Equity Loss Payments 1 9/29/00

IS-AR-00-004 State of Computer Security in the Postal Service 4 9/29/00

LB-AR-00-003 Evaluation of Postal Service Criteria for Workplace Violence 3 9/29/00 

Prevention and Response Program

MK-AR-00-001 Review of Stamp Fulfillment Services Performance Measures 1 9/29/00

OV-AR-00-005 Review of the United States Postal Inspection Service 2 9/29/00

Budget Process

TR-AR-00-011 Dedicated Christmas Air Network - Phase 1 3 9/29/00

MK-AR-00-002(R) Management Controls over the 3 10/31/00

Sales Force Augmentation Program - Revised

PAGE 106 APPENDICES

Report Report Number of Issue 

Number Title Recommendations Date
TR-AR-01-001 Adequacy of Mail Transport Equipment Service Center 4 10/31/00

Network Internal Controls

LB-AR-01-013 Equal Employment Opportunity Complaint 1 12/21/00

Settlement Agreement

CA-MA-01-001 Privacy Data Contained in Contract Files 2 12/24/00

INSPECTION SERVICE

Report Report Number of Issue 

Number Title Recommendations Date

0069-1188871-RI(2) Inbound Foreign Mail Verification 1 12/13/97

0061-1234452-RI(1) Meter Security Review 1 9/28/98

0061-1262023-RI(1) Meter Security Review 1 12/30/98

0061-1263973-RI(1) Meter Security Review 1 5/21/99

0188-1300042-AF(2) Financial Audit, Stamp Distribution Office, 1 8/24/00

Seattle District

0061-1305144-RI(1) Meter Security Review 2 3/16/00

0027-1204380-PA(1) Effectiveness of Employee Reassignments 1 5/11/98

0024-1214098-PA(1) City Route Inspections and Adjustments 1 6/5/98

0038-1292495-PA(2) Delivery Automation 1 2/8/00

0044-1248530-PA(2) Small Post Office Cost Study 2 8/1/00

0020-1220283-PA(1) Postal Retail Stores 3 9/15/98

0022-1244541-PA(1) Priority Mail 1 3/17/99

0023-1209811-PA(1) Air Transportation Network 3 5/12/98

0052-1290664-PA(3) City Carrier and Flat Sorting Machine 2 10/5/99

Operations Cost Savings

0061-1296645-RI(1) Meter Security Review 6 7/5/00

0016-1298651-AF(2) Financial Audit, Westchester District Accounting Unit 1 11/23/99

0016-1298678-AF(2) Financial Audit, San Francisco District Accounting Office 2 8/29/00

CONTRACT AUDITS

Report Number Contractor Report Date

0181-1165940-AC(1) Contract Audit 5/20/95

0181-1237199-AC(1) Contract Audit 4/14/98

0181-1252372-AC(1) Contract Audit 10/30/98

0181-1253441-AC(1) Contract Audit 12/18/98

0181-1254410-AC(1) Contract Audit 11/24/98

0181-1294162-AC(1) Contract Audit 8/27/99

0181-1294644-AC(1) Contract Audit 11/17/99

0184-1126310-AC(1) Contract Audit 4/3/00

0184-1210121-AC(1) Contract Audit 8/30/00

0184-1243166-AC(1) Contract Audit 12/7/98

PAGE 107

Report Report Number of Issue 

Number Title Recommendations Date
APPENDIX E

Investigative Statistics1

For the period October 1, 2000, through March 31, 2001

OFFICE OF INSPECTOR GENERAL

Statistics

Arrests2 30

Information/Indictments 34

Convictions3/Pretrial Diversions 16

Suspension/Debarments 1

Administrative Actions

Postal Service Employee 3 

Contractor 0

Fines, Restitution, and Recoveries $3,236,800

Cost Avoidance, Savings and Funds Put To Better Use $25,893,263

INSPECTION SERVICE

Type of Investigation Arrests2 Convictions3

Revenue & Asset Protection Program

Expenditure Investigations 2 2

Financial Investigations 133 135

Workers' Compensation Fraud 15 15

Revenue Investigations 45 33

Robbery 45 41

Burglary 74 72

Miscellaneous External Crimes

Includes counterfeit and contraband postage, 

money order offenses, vandalism, and arson 330 289

Assaults Against Employees

Includes threats and assaults against on-duty postal employees 191 148

Employee Narcotics Cases

Includes employees and non-employees selling narcotics on postal property 32 18

Mail Theft by Employees, Non-Employees or Contractors

Includes theft and possession of stolen mail 3,451 2,526

Miscellaneous Employee Crimes

Includes theft of postal property and sabotage of equipment 34 27

Bombs/Explosive Devices 33 22

Mailing of Controlled Substances

Includes hazardous material, firearms and weapons, intoxicants, 

explosives other than bombs, extortion and false documents 843 535

Child Exploitation, Mailing of Obscene Matter, and 

Sexually Oriented Advisement 179 126

Mailing of Miscellaneous Nonmailables

Includes hazardous material, firearms and weapons, intoxicants, 

explosives other than bombs, extortion, and false documents 32 42

Mail Fraud 937 756

INSPECTION SERVICE TOTALS 6,376 4,787

1 Statistics include joint investigations with other federal law enforcement agencies.

2 Some of these arrests occurred in a prior semiannual reporting period, however, they were not

reported until the current reporting period.

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

PAGE 108 APPENDICES
APPENDIX F

Summary of Postal Service Investigative

Activities Under 39 USC § 3013

For the period October 1, 2000, through March 31, 2001

The Postal Reorganization Act requires the Postmaster General to furnish information on the

investigative activities of the Postal Service on a semiannual basis. With passage of the

Deceptive Mail Prevention and Enforcement Act in December 1999, the Postal Service's reporting obligations were changed. 

The Act requires the Postal Service to submit its semiannual report to the OIG rather than to

the Board of Governors, expands the subject matter that must be reported, and revises the reporting schedule to coordinate with the OIG Semiannual Report to Congress. The information in

the report includes actions directed at combating crimes involving the mail; costs and expenditures devoted to Postal Service investigative activities; use of subpoena power; and any additional

information the OIG may require. This change in reporting requirements was effective the

beginning of this reporting period.

ABUSE OF MAILS

The Postal Service reports to the OIG information related to investigative activities designed to

protect the public against unscrupulous mailers perpetrating fraudulent schemes. The following

information summarizes the administrative and judicial actions initiated and resolved during the

reporting period. These actions include the issuance of cease and desist orders directed to mailers, actions to intercept payments fraudulently induced, and orders seeking to intercept fraudulent

mailings. This information is reported in appendix E - Summary of Inspection Service Actions

Under 39 USC § 3005 and § 3007.

INSPECTION SERVICE

False Cease &

Type of Complaints Consent Representation Desist

Scheme Filed Agreements Orders Orders

Advance fee 2313

Boiler rooms/Telemarketing 1

Contest/Sweepstakes 4 1

False billings 2 1 1

Fraud against government agencies 3313

Lotteries (foreign and domestic) 24 24

Medical 2112

Merchandise:

Failure to furnish 1

Failure to pay 2 2 2

Misrepresentation 1 2

Miscellaneous 2 2 1

Work at home 1 1 1

TOTAL 43 14 28 16

PAGE 109
ADMINISTRATIVE ACTIONS

Administrative Action requests 50

Temporary Restraining Order requests 0

Temporary Restraining Orders issued 0

Civil Injunction (1345) requests 3

Civil Injunctions (1345) issued 3

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

Withholding Mail Orders issued 73

Voluntary Discontinuances 186

POSTAL SERVICE ADMINISTRATIVE SUBPOENA AUTHORITY

The Postal Service reports to the Office of Inspector General information on the number of cases

in which the Postal Service issued administrative subpoenas in connection with deceptive mailing. The following section identifies the number and nature of cases in which the Postal Service

exercised this authority to request relevant business and associated records.

Case Number Date Requested Scheme

USPS-00-013 09/08/00 Work at Home

USPS-01-001 10/10/00 Medical Fraud-Quackery

USPS-01-002 10/23/00 Advance Fee

USPS-01-003 10/11/00 Merchandise-Failure to Pay

USPS-01-004 10/11/00 Merchandise-Failure to Pay

USPS-01-005 10/11/00 Merchandise-Failure to Pay

USPS-01-006 11/13/00 Work at Home

USPS-01-007 12/20/00 Internet Fraud

USPS-01-008 12/20/00 Internet Fraud

USPS-01-009 02/06/01 Medical Fraud-Quackery

USPS-01-010 02/06/01 Medical Fraud-Quackery

USPS-01-011 02/15/01 Sweepstakes Fraud

USPS-01-012 02/20/01 Sweepstakes Fraud

USPS-01-013 03/21/01 Sweepstakes Fraud

USPS-01-014 03/21/01 Sweepstakes Fraud

USPS-01-015 03/21/01 Sweepstakes Fraud

USPS-01-016 03/21/01 Sweepstakes Fraud

USPS-01-017 03/21/01 Sweepstakes Fraud

USPS-01-018 03/21/01 Sweepstakes Fraud

USPS-01-019 03/21/01 Sweepstakes Fraud

PAGE 110 APPENDICES
INVESTIGATIVE EXPENDITURES AND OBLIGATIONS

The investigative expenditures and obligations for this reporting period are as follows:

Type Year End Report

Personnel $157,491,729

Nonpersonnel $34,688,397

Total Expenditures $192,180,126

Capital Obligations $6,626,289

OTHER INVESTIGATIVE ACTIVITIES

The Postal Service also reports to the Office of Inspector General additional information related

to significant investigative activities and other investigative matters. This section outlines a

number of significant investigative activities the Postal Service has initiated and is pursuing, to

include the Mail Task Forces and the KNOW FRAUD Program. Inspection Service and Office

of Inspector General criminal statistical information is summarized in Appendix F. 

MAIL TASK FORCES

The Postal Inspection Service has partnered with the financial services, manufacturing, and

direct marketing industries on behalf of the U.S. Postal Service to form three task forces to combat fraud: Credit Card Mail Security, Rebate Fraud and Mail Order Security. Each task force

helps to reduce mail fraud, theft, and processing problems by identifying and exchanging information on best practices, fraud trends and loss-prevention techniques; and to develop improved

processes and procedures.

The Credit Card Mail Security Task Force was created in 1992 and has dramatically reduced

nonreceived issued credit card fraud losses by 68 percent, while credit card purchases have

increased more than 86 percent. In 1995, the Postal Inspection Service teamed with the coupon

rebate industry to combat mail-in rebate fraud. The group’s efforts reduced fraud by an estimated

$100 million in 1997. In 1996, the Postal Inspection Service and the direct marketing industry

created the Mail Order Task Force to facilitate this continued success by joining together to prevent and detect fraud and theft. In a pilot program, the Mail Order Task Force has reduced nonreceipt losses by 10 to 15 percent for direct marketing companies experiencing mail processing

problems.

KNOW FRAUD

In an effort to educate and help consumers, President Clinton launched KNOW FRAUD, a consumer protection effort, in November 1999 and cited it as an excellent example of “coordination

among the federal government’s consumer protection agencies.” To launch the KNOW FRAUD

program, the Inspection Service joined forces with several federal, state, and private agencies,

including the Department of Justice, Federal Bureau of Investigation, Federal Trade Commission,

Securities and Exchange Commission, National Association of Attorneys General, American

Association of Retired Persons, and Better Business Bureau. The KNOW FRAUD initiative has

included a postcard mailing to 120 million American households alerting consumers to the dangers of telemarketing and mail fraud. 

The KNOW FRAUD partnership is now focusing on identity theft. Work is underway by the

partners to get an identity theft prevention message to consumers. A toll-free ID theft hotline, 

1-877-438-4338, and a KNOW FRAUD website were established to provide consumers with

additional information and to link consumers with law enforcement officials who would share

information.

PAGE 111
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 either never shipped or are inferior to what

was promised.

False billings. Mailing solicitations in the guise of billings.

Fraud against government agencies. Any scheme that attempts to defraud a U.S. government

agency except the U.S. Postal Service. 

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.

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 are materially misrepresented in advertising.

Miscellaneous. Any other scheme not described in a specific category. 

Work at home. Schemes, such as envelope stuffing, that do not provide home employment.

PAGE 112 APPENDICES
APPENDIX G

Closed Congressional and Governors

Inquiries

For the period October 1, 2000, through March 31, 2001

This appendix lists the 103 Congressional and Governors inquiries the OIG closed during this

reporting period. The OIG reviewed these inquiries to help identify systemic issues and to determine the need for future Postalwide audits.

CONGRESSIONAL

PERFORMANCE

Requestor Allegations/Concern Response Date

Senator, New York Mail delivery problem 13-Oct-00

White House Allegation of delayed mail 17-Oct-00

Representative, Virginia Allegation of delayed mail 17-Oct-00

Senator, Virginia Allegation of delayed mail 17-Oct-00

Senator, Virginia Allegation of delayed mail 18-Oct-00

Representative, California Allegation of threats to shut down a commercial mail receiving agent 19-Oct-00

Representative, Virginia Allegation of delivery problem 25-Oct-00

Senator, New York Allegation of delivery problem 25-Oct-00

Representative, Arkansas Allegation of mailers confusing customers 25-Oct-00

Chairman, House Postal Allegation of customer needs not being met 09-Nov-00

Subcommittee

Representative, Allegation of falsified mail processing times 09-Nov-00

Pennsylvania

Chairman, House Postal Review of hazards due to height regulations not being enforced on 31-Jan-01

Subcommittee the mail boxes

Chairman, House Postal Review of recurring concerns regarding the delivery of 26-Feb-01

Subcommittee small newspapers and periodicals

Senator, Arizona Customer Service complaint 29-Mar-01

Chairman, House Postal Allegation of problems with certified mail service 30-Mar-01

Subcommittee

FINANCIAL MANAGEMENT

Requestor Allegations/Concern Response Date

Chairman, House Postal Allegation of inappropriate site selection process 18-Oct-00

Subcommittee

Senator, Tennessee Allegation of problems with the POS accounting system 19-Oct-00

Representative, Virginia Allegation of inappropriate contract practices 19-Oct-00

Senator, Virginia Allegation of inappropriate contract practices 19-Oct-00

Representative, California Review of funds used for retirement ceremony 26-Oct-00

Chairman, House Postal Review of a case concerning obtain equitable leasing 21-Feb-01

Subcommittee 

LABOR MANAGEMENT

Requestor Allegations/Concern Response Date

Chairman, House Postal Allegation of harassment, intimidation, and abuse of authority 16-Oct-00

Subcommittee 

Chairman, House Postal Allegation of managerial abuses in the form of age, race, 16-Oct-00

Subcommittee disabled veteran status, and union participation discrimination

Chairman, House Postal Allegation of improper request for medical information from 18-Oct-00

Subcommittee health care provider

PAGE 113
Representative, Maryland Allegations of abusive management, including harassment, 18-Oct-00

intimidation, and discrimination

Chairman, House Postal Allegation of management misconduct creating a 18-Oct-00

Subcommittee hostile work environment

Chairman, House Postal Allegation of retaliation, harassment, and abuse 18-Oct-00

Subcommittee

Representative, Review of working conditions at a post office 18-Oct-00

New Mexico

Representative, California Allegation of a hostile working environment and age discrimination 19-Oct-00

Chairman, House Postal Allegation of retaliation 19-Oct-00

Subcommittee

Chairman, House Postal Allegation of violence, retaliation, and ineffective 19-Oct-00

Subcommittee labor management dispute procedures

Senator, Indiana Allegations of mismanagement and hostile work environment 19-Oct-00

Senator, Mississippi Allegations of intimidation 19-Oct-00

Senator, Michigan Allegation of unethical conduct by management 20-Oct-00

Representative, Alabama Allegations of harassment and punitive, prejudicial, 23-Oct-00

and discriminatory treatment

Senator, Washington Allegation concerning the Health Care Financing Administration 23-Oct-00

Representative, California Allegation of management violating regulations and harassing employees 23-Oct-00

Representative, New Jersey Allegation of egregious acts of management abuse 23-Oct-00

Chairman, House Postal Allegation of a hostile environment 24-Oct-00

Subcommittee

Chairman, House Postal Allegation of managerial harassment 24-Oct-00

Subcommittee 

Chairman, House Postal Allegation of retaliation 26-Oct-00

Subcommittee

Representative, California Allegation of Code of Ethics violations 06-Nov-00

Chairman, House Postal Allegations of management misconduct 06-Nov-00

Subcommittee 

Senator, Tennessee Allegation of unjust termination 06-Nov-00

Representative, Tennessee Concerns with labor and safety issues 16-Nov-00

Senator, Minnesota Review of denial of a transfer 04-Dec-00

Representative, Request for review of customer service, labor management, 12-Dec-00

Washington and bidding irregularities

Chairman, House Postal Allegation of mismanagement by postmaster 20-Dec-00

Subcommittee

Representative, New York Allegation of problems with workers’ compensation benefits 22-Dec-00

Representative, Arizona Allegation of mismanagement 22-Dec-00

Representative, Virginia Allegation of a hostile and volatile work environment 29-Dec-00

Chairman, House Postal Allegation of a hostile and volatile work environment 29-Dec-00

Subcommittee 

Senator, New Jersey Allegations that enough jobs for the elderly are not 29-Dec-00

listed in www.usps.gov

Chairman, House Postal Allegation of sexual harassment and retaliation 01-Feb-01

Subcommittee 

Chairman, House Postal Allegations of sexual harassment, assault, discrimination, 01-Feb-01

Subcommittee retaliation, and other violent crimes

Representative, Allegation of repeated denials for transfers and 01-Feb-01

New Jersey promotions, and retaliation

Chairman, House Postal Review of discrimination complaint 02-Feb-01

Subcommittee 

Representative, Allegation of rural carriers not receiving just compensation 07-Feb-01

South Carolina for extra hours worked

White House Allegations of a hostile work environment 13-Feb-01

PAGE 114 APPENDICES

Requestor Allegations/Concern Response Date
Senator, North Carolina Allegation of employment problems with the Postal Service 16-Feb-01

Senator, Washington Allegations of non-responsiveness by OIG 16-Feb-01

Senator, Pennsylvania Allegation of denial of promotion due to nepotism 23-Feb-01

Representative, California Allegation of ongoing harassment and extremely hostile 09-Mar-01

working conditions

Chairman, House Postal Allegations of sexual harassment and a hostile work environment 15-Mar-01

Subcommittee

Representative, Illinois Allegations of sexual harassment and retaliation 15-Mar-01

Chairman, House Postal Concern over work environment 16-Mar-01

Subcommittee 

Chairman, House Postal Allegation of inappropriate sexual involvement by a 16-Mar-01

Subcommittee manager and misuse of government vehicles

Senator, Tennessee Allegation of personal mistreatment 16-Mar-01

Representative, California Allegation of management misconduct 30-Mar-01

Chairman, House Postal Allegation of discrimination 30-Mar-01

Subcommittee

Senator, Michigan Allegation of racial discrimination and retaliation 30-Mar-01

OVERSIGHT OF INSPECTION SERVICE 

Requestor Allegations/Concern Response Date

Chairman, House Postal Request for information regarding an assault prosecution declination 13-Oct-00

Subcommittee

Representative, New York Allegation of Inspection Service mishandling of 18-Oct-00

hostile work environment claim 

Representative, Maryland Allegations of mail tampering not handled properly by 19-Oct-00

Inspection Service 

Representative, Maryland Review of postal police duties for classification 19-Oct-00

Chairman, House Postal Review of postal police duties for classification 19-Oct-00

Subcommittee

Chairman, House Postal Allegation of Inspection Service not following risk abatement plans 19-Oct-00

Subcommittee 

Senator, Maryland Allegation of Inspection Service handling of an investigation 19-Oct-00

Representative, Allegation of failure to address mail tampering complaint 07-Nov-00

Washington

Senator, Maryland Review of initial Inspection Service investigation of criminal conduct 07-Nov-00

Senators, Maryland and Allegation of Inspection Service willful neglect in 07-Nov-00

Tennessee conducting an investigation 

Chairman, House Postal Allegations of Inspection Service handling of 17-Nov-00

Subcommittee allegations of wrongdoing 

Representative, California Allegations of incorrect practices in compensation case 29-Nov-00

Chairman, House Postal Review of the effectiveness of changes to the consistency of 29-Dec-00

Subcommittee disciplinary actions of the Postal Inspection Service

Representative, California Allegations of Inspection Service handling of 09-Feb-01

delayed or lost mail, or stolen items investigation

Senator, Montana Allegation of Inspection Service handling 13-Feb-01

of contractor 

OTHER SIGNIFICANT ISSUES

Requestor Allegations/Concern Response Date

Representative, Privacy act information disclosure 16-Oct-00

Connecticut

Representative, Maryland Request for information concerning employment with OIG 16-Nov-00

Chairman, House Postal Oversight questions from the September 19th hearing 03-Jan-01

Subcommittee 

PAGE 115

Requestor Allegations/Concern Response Date
Chairman, House Postal Questions about OIG hiring practices 01-Feb-01

Subcommittee 

Representative, Request for information regarding an OIG investigation 09-Feb-01

South Carolina

Representative, California Request for information concerning OIG employment 13-Feb-01

Representative, Request for information regarding an OIG investigation 13-Feb-01

South Carolina

Representative, Request for a copy of report on investigation of retaliation 21-Feb-01

Massachusetts

GOVERNORS

PERFORMANCE

Requestor Allegations/Concern Response Date

Chairman Allegations of improprieties surrounding the procurement process 19-Oct-00

Chairman Allegations of various violations of Postal Service purchasing 07-Nov-00

policies and regulations, ethical conflicts of interest, vandalism of 

Postal Service property, and racial discrimination

Governor Allegations of mismanagement by Postal Service managers 12-Jan-01

Governor Review of improper acceptance of tickets 22-Jan-01

FINANCIAL MANAGEMENT

Requestor Allegations/Concern Response Date

Governor Review of relocation benefits 08-Nov-00

TECHNOLOGY

Requestor Allegations/Concern Response Date

Governor Allegations of violations of computer information security laws 19-Oct-00

and regulations

LABOR MANAGEMENT

Requestor Allegations/Concern Response Date

Chairman Allegations that management (1) intentionally manipulated the 20-Oct-00

EEO process causing a backlog of complaints, (2) spent over $150,000 

defending their position against his complaint filings over the last 

5-years, and (3) covered up Inspection Service audit of postal executives

OVERSIGHT OF INSPECTION SERVICE

Requestor Allegations/Concern Response Date

Governor Review of potential for mail theft 10-Oct-00

OTHER SIGNIFICANT ISSUES

Requestor Allegations/Concern Response Date

Governor Concerns about handling of employment application for OIG 14-Feb-01

PAGE 116 APPENDICES

Requestor Allegations/Concern Response Date
,

THIS PAGE TEARS OUT FOR YOUR CONVENIENCE
Notes
Notes
Notes
U.S. Postage Stamps

ISSUED FROM OCTOBER 1, 2000, THROUGH MARCH 31,

2001

3 U.S. CAPITOL – honors the U.S. Capitol, which houses the chambers

of the Senate and House of Representatives. 

11 WASHINGTON MONUMENT EXPRESS MAIL – honors the

Washington Monument as a great tribute to the first American

President, George Washington.

12 ROY WILKINS – commemorates this advocate for change, civil rights

and peace, who is the 24th honoree in the Black Heritage series.

19 DEEP SEA CREATURES – provides a view of fascinating and

mysterious sea life—showing a glimpse into a vast and alien world seen

by few people.

20 FLOWERS – features photographs of pastel-colored flowers by Robert

Peak, of Winter Park, Florida.

25 AMERICAN EAGLE – celebrates the style that decorated U.S. mail

collection boxes in the 1920s and 1930s. 

33 GEORGE WASHINGTON – utilizes a black and white photograph of

a bust by Jean-Anioine Houdon, signed and dated 1785 and on display

at Mount Vernon.

45 HATTIE W. CARAWAY – honors Mrs. Caraway who was appointed

to the Senate in 1931 and became the first woman to chair a Senate

committee.

48 THE PAN-AMERICAN INVERTS – celebrates the Pan-American

exposition held in Buffalo, New York, featuring reproductions of the

rare, original artwork from the exposition.

56 STATUE OF LIBERTY – features a photograph of the Statue of

Liberty which was dedicated on October 28, 1886.

71 YEAR OF THE SNAKE – celebrates the lunar new year, featuring

intricate paper cut design of a snake and grass style calligraphy.

72 AMERICAN ILLUSTRATORS – brings together the creations of 

20 Society of Illustrators Hall of Fame artists from the classic era of

American illustration.

84 FRUIT – colorfully illustrates apples and oranges.

91 NOBEL PRIZE – jointly honors the centennial of the distinguished

Nobel Prize by issuing commemorative stamps in the U.S. and Sweden.

101 FARM FLAG – portrays the U.S. flag flying over a farm to celebrate 

agricultural life.

PAGE

ACKNOWLEDGEMENTS

This report represents the

outstanding efforts and

accomplishments of OIG and

Inspection Service staff. The

production of this report would

not have been possible without

the contributions and dedication

of the many OIG and Inspection

Service staff who contributed to

this effort, particularly,

Laurence Hawkins and Jim

Nugent of the OIG; and

Kenneth Newman 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