OFFICE OF INSPECTOR GENERAL 

October 1, 1998 - March 31, 1999

Semiannual Report to Congress Semiannual Report to Congress 

Including Significant Activities of the Inspection Service
Contents

A Message from the Inspector General......................................................1

Executive Summary ..................................................................................3

Major Management Issues Facing the Postal Service ................................9

Overview ................................................................................................17

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

Inspection Service..............................................................................23

Organization ............................................................................................25

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

Inspection Service..............................................................................29

Goals ......................................................................................................31

Voice of the Customer ............................................................................35

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

Inspection Service..............................................................................39

Voice of the Employee ............................................................................45

Office of Inspector General ..............................................................46

Inspection Service..............................................................................51

Voice of the Business ..............................................................................53

Office of Inspector General ..............................................................54

Inspection Service..............................................................................60

Legislative and Regulatory Review..........................................................69

Appendices ..............................................................................................79

Appendix A - Closed Congressional Inquiries ..................................80

Appendix B - Reports Issued to Postal Management ........................83

Appendix C - Findings of Questioned Costs......................................95

Appendix D - Recommendations That Funds Be Put to Better Use 96

Appendix E - Unresolved Reports ....................................................98

Appendix F - Summary of Inspection Service Actions 

Under 39 USC 3005 and 3007..................................................102

Appendix G - Criminal Statistics ....................................................104

Exhibits ................................................................................................105
US Postage Stamps

ISSUED FROM OCTOBER 1, 1998 THROUGH MARCH 31, 1999

8 LOVE-VICTORIAN - represents one of two romantic, Victorian designs that

were the first die-cut, self-adhesive stamps issued by the Postal Service.

15 LUNAR NEW YEAR - celebrates the Year of the Hare, the fourth animal in the

Chinese astrological calendar.

16 ARCTIC ANIMALS - represents five animals uniquely adapted to survive in one

of the harshest environments: Arctic Fox, Arctic Hare, Grey Wolf, Polar Bear,

and Snowy Owl.

30 WREATHS - continues the Holiday Contemporary series with four beautiful

stamps: Evergreen, Tropical, Chili Pepper, and Victorian wreaths.

34 GIVING AND SHARING - recognizes the time-honored tradition of 

humanitarianism and goodwill through the issuance of a philanthropy stamp.

52 ALFRED LUNT & LYNN FONTANNE - pays tribute to the greatest husbandand-wife team in the history of the American stage.

58 HOSPICE CARE - continues the Postal Service tradition of raising awareness of

social causes such as end-of life care.

67 IRISH IMMIGRATION - recognizes the Irish emigration to America of the more

than 40 million Americans who are of Irish descent.

68 FLORENTINE MADONNA AND CHILD - commemorates a master work of

art based on a 15th sculpture.

PAGE

PHOTO TO COME The OIG Management Committee would like

to thank the many OIG staff members who

helped produce this report and our OIG

and Inspection Service employees whose

contributions are included in this

semiannual report.
PAGE 00

A Message from the

Inspector General

I

n our fifth Semiannual Report to Congress, we are proud to report the 

significant accomplishments of the Office of Inspector General (OIG)

and the Inspection Service in helping the United States Postal Service

retain its competitive edge. As we move into the 21st century, the Postal Service enters its third century of delivering the mail and OIG enters its third

year of operation. Both organizations are preparing for some of the greatest

challenges of their existence.

The Year 2000 (Y2K) issue is one of those challenges. Over the past six

months, one of our most significant accomplishments has been our ongoing

and enhanced effort to assist the Postal Service in addressing its Y2K 

challenge. During this reporting period, up to 25 percent of our evaluators

have been devoted to Y2K issues, and we believe our efforts have produced

positive results for the Postal Service. On February 23, 1999, I testified at a

joint hearing of three Congressional subcommittees regarding the Postal 

Service’s Y2K readiness. During my testimony, I communicated the urgency

the Postal Service needs to place on addressing its Y2K readiness and recommended actions to help ensure that it meets its goals. We will continue to

devote considerable resources to assist the Postal Service in meeting this

challenge.

Looking ahead, we are becoming actively involved in protecting Postal

Service information and revenue by establishing a computer intrusion unit.

We believe this area will be increasingly important to the Postal 

Service as it becomes more dependent on computers to move the mail,

process financial transactions, and become more competitive in the world of

electronic commerce.

We are proud of building a new and dynamic organization based on 

cutting-edge technology and the most advanced management principles

available today. Our greatest resource is our staff – 310 of us now – who

understand and appreciate the diverse culture of the OIG and who recognize

the Postal Service as a unique institution. We are committed to helping the

Postal Service maintain and even strengthen its reputation through sound

programs and practices that promote good business.

As we become more established, we have been able to undertake more

projects that add value to the Postal Service. In this reporting period, our

office issued 15 audit reports, 55 management advisory reports and other

products, and closed 31 investigations. The audit and investigative work of

the nearly 2,200 Postal Inspectors included 40 contract audits that identified

$8,954,959 in questioned and unsupported costs and more than $54,715,624

in funds put to better use, plus 161 other audits and 133 investigative reports.

Our combined efforts resulted in more than 372 written products to strengthen Postal Service programs and operations. In addition, Inspection Service

investigations resulted in the arrests of 5,142 individuals and in the convictions of 4,466 individuals stemming from charges brought during this and

prior reporting periods.

KARLA W. CORCORAN

Inspector General
This Semiannual Report to Congress details the significant activities and accomplishments of

the OIG and the Inspection Service from October 1, 1998 through March 31, 1999. Submission

of the report fulfills the OIG reporting requirements of the Inspector General Act and the Inspection Service requirements under the Mail Order Consumer Protection Act. The information presented in this report reflects the work of both the OIG and the Inspection Service, providing a complete picture of what is being done to combat fraud, waste, abuse, and mismanagement within the

Postal Service.

I would like to thank Congress, the Governors, the Postmaster General, and Postal Service

management for their continued cooperation and support. We stand ready to help the Postal Service meet its challenges through efficient and effective practices that will enable it to continue its

vital role in our nation’s communication and commercial infrastructure.

Sincerely,

Karla W. Corcoran

Inspector General

April 30, 1999

PAGE2 A MESSAGE FROM THE INSPECTOR GENERAL

The Postal Service Management Committee

recognizes Sylvia Owens and Tom Coogan

at the National Executive Conference.
Executive Summary

How do OIG responsibilities differ from those of

the Inspection Service? 

The OIG’s main responsibilities are detecting fraud,

waste, abuse, and mismanagement, and 

promoting efficiency of operations. The Inspection

Service is mainly concerned with the security and

safety of Postal Service employees, and the sanctity

of the mail.

DID YOU 

KNOW?

PAGE 3
Our goal is to work in concert to assist the

Postal Service in maintaining its leadership role

of ensuring that the American people continue

to receive the best postal service in the world.

OIG and Inspection Service efforts add value to

the Postal Service by promoting continued

effectiveness and efficiency through audits and

investigations that identify and eliminate waste,

fraud, abuse, and mismanagement in Postal Service programs and activities.

During this reporting period, the Postal

Service:

◆ After holding rates steady for four consecutive years, delayed a rate increase

until January 1999, in effect delivering

an $800 million dividend to the American people.

◆ For the first time in many years, achieved

negotiated agreements with two of its

major unions, and continued negotiations with a third.

◆ Introduced delivery confirmation service

for Priority Mail and Parcel Post, which

lets senders know if their messages

arrived.

◆ Achieved the highest opinion ranking

among federal agencies according to a

national poll, with 78 percent of Americans having a highly favorable or moderately favorable opinion of the 

Postal Service.

◆ Achieved 17 of 23 initiatives approved

by the Board of Governors to improve

diversity, including programs to help

Postal employees better manage their

careers, and new guidelines to expand

the base of suppliers by including eligible

minority and woman-owned small 

businesses.

◆ Confirmed through an independent study

that more than 82 percent of American

households send their packages through

the Postal Service.

◆ Created the Commission on a Safe and

Secure Workplace (sometimes called the

Califano Commission) to provide leadership to eliminate violence at the workplace.

This, our fifth Semiannual Report to Congress, highlights how we and the Inspection Service continue to help the Postal Service

improve operations and services, promote

process improvements and employee integrity,

and achieve CustomerPerfect! goals. Before discussing OIG and Inspection Service activities,

we would like to highlight the top management

issues facing the Postal Service.

MAJOR MANAGEMENT ISSUES 

FACING THE POSTAL SERVICE

With the assistance of Postal Service management, its unions, and its management associations, the OIG’s January 1998 response to a

congressional request identified 10 major management issues facing the Postal Service. We

continued to monitor these issues, which are:

Year 2000 Readiness; Competition, RateMaking, and Legislative Reform; Eliminating

Violence in the Workplace; Financial Management; Service Delivery; Electronic Commerce; Postal Employees Safety Enhancement Act of 1998; Systems Automation 

and Data Integrity; Labor-Management 

and Employee Relations; and Workers’ 

Compensation.

◆ Year 2000 (Y2K) Readiness: It is important for the Postal Service’s automated

and information systems, suppliers, and

data exchange partners to be Y2K compliant by the close of the year in order to

ensure that mail, including millions of

Social Security checks and $9 trillion in

remittance mail, is delivered. 

◆ Competition, Rate-Making, and Legislative Reform: The existing legislative

framework has served the Postal Service

and the nation for almost 30 years. In

that time, however, the evolving marketplace has changed many of the premises

upon which regulation and oversight of

the Postal Service are currently based. 

◆ Eliminating Violence in the Workplace:

The Postal Service is the largest civilian

employer, with over 775,000 career

employees. Over the past several years,

PAGE4 EXECUTIVE SUMMARY

This Executive Summary highlights Office

of Inspector General (OIG) and Inspection

Service accomplishments from October 1,

1998 through March 31, 1999, that are

contained in this Semiannual Report to

Congress.

What is the value of a joint

Office of Inspector

General/Inspection Service

report to Congress? 

A consolidated Semiannual

Report to Congress provides a

complete accounting to Postal

Service stakeholders on the

efforts within the Postal Service

to combat fraud, waste, abuse,

and mismanagement within its

operations and programs.

DID YOU 

KNOW?
PAGE5

there have been a number of instances of

violence within the Postal Service.

These situations diminish Postal 

Service credibility, decrease productivity,

create work-specific tension, and damage

property.

◆ Financial Management: The Postal Service relies on strong financial management to control costs and maximize revenues. Unlike other government agencies, its operations are funded mainly by

revenues, which are derived from mail

services. This year, Postal Service projects that revenues for fiscal year (FY)

1999 will exceed expenses by $200 million. However, the Postal Service faces

significant challenges in meeting this

revenue projection because of costs associated with Y2K readiness, increased capital expenditures, the delay in implementation of the rate increase, the effects of

implementing the Postal Employees Safety Enhancement Act, and increased

competition.

◆ Service Delivery: In a competitive environment, the Postal Service needs to

develop a wider range of messaging and

delivery choices. Timely, accurate, and

consistent delivery performance is one

measure of quality service as perceived by

the customers. Over the past two years,

the integrity of the service delivery measurement system for First-Class Mail has

been questioned. Service delivery performance goals must have integrity to be

effective.

◆ Electronic Commerce: With the advent

of electronic media, the Postal Service

must find ways to keep the revenue generated from remittance mail from being

diverted into electronic means or must

itself become an active participant in

electronic services, while protecting the

integrity of its customers’ electronic

transactions. 

◆ Postal Employees Safety Enhancement

Act of 1998: The new occupational

safety and health requirements require

the Postal Service to renew its commitment to and involvement in the safety

and health programs. The law places the

Postal Service in the same category as

private sector employers. It also prohibits the Postal Service from basing

business decisions upon Occupational

Safety and Health Administration

requirements. 

◆ Systems Automation and Data Integrity:

Successful decision-making by Postal

Service managers depends on the 

accuracy and integrity of computer data.

Further, to maintain excellent customer

service and aggressively manage costs,

the Postal Service must continue to

develop automated solutions to process

mail more efficiently and accurately.

◆ Labor-Management and Employee Relations: While the Postal Service has

reached agreements with two of the

three major unions, improving workplace relationships with employees

remains a key objective of the Postal Service. Postal initiatives focus on conflict

in the workplace, identifying and eliminating root causes of labor disputes,

building knowledge of labor contracts,

and improving the effectiveness of grievance-arbitration procedures to resolve

labor disputes. 

◆ Workers’ Compensation: For FY 1998,

the Postal Service paid $566 million for

employee injury claims. Injury cost containment is key to the Postal Service’s

financial well-being. 

OVERVIEW OF THE OIG AND

INSPECTION SERVICE

Internally the OIG and Inspection Service

have continued to grow and develop. Highlights of the past six months include:

◆ The Postmaster General signed the audit

cognizance letter for the OIG.

◆ The OIG became a Co-Contracting

Officer’s Representative for the financial

statements.

◆ The OIG and Inspection Service participated in team-building to improve cooperation and coordination.

◆ The Chief Inspector testified about

sweepstakes promotions.

◆ The Inspection Service produced a consumer protection video.

The OIG and Inspection Service 

celebrate the retirement of Jim

Hanney and Al Lamden, Senior 

Executives. Chief Inspector Hunter

offers his congratulations.
OIG AND INSPECTION SERVICE 

ACCOMPLISHMENTS UNDER 

CUSTOMERPERFECT! GOALS

The following are the combined accomplishments of the OIG and the Inspection Service that added value to Postal Service programs

and operations.

VOICE OF THE CUSTOMER

The OIG and the Inspection Service help

the Postal Service improve customer satisfaction by assessing its performance in providing customer value, meeting the public’s

expectations, and increasing customer confidence in using the mail. For example:

◆ OIG and the Inspection Service aided

the Postal Service during the 1998

Christmas season by recommending that

contingency plans be developed to divert

mail to other locations and to increase

surface transportation to improve network Priority Mail movement.

◆ OIG and the Inspection Service assisted

the Postal Service in assuring the integrity of service delivery systems by reviewing allegations of the creation of a separate mailstream for external First-Class

test mail in two locations.

◆ OIG completed 48 congressional

inquiries, ranging from questions regarding major Postal Service programs to 

specific constituent concerns.

◆ OIG received more than 7,500 inquiries

to our national hotline. Nearly 1,000

were OIG-related matters, mainly pertaining to employee and labor relations

issues.

◆ The Inspection Service performed two

national audits of the Priority Mail processing and delivery system, and the

logistics and transportation system,

designed to improve customer service.

◆ The Inspection Service helped make the

United States a better place to live by

participating in more than 5,100 arrests

and 4,400 convictions of individuals

involved in child pornography, mail 

bombs, mailing harmful articles, narcotics

trafficking, mail theft, mail fraud, and

other criminal acts.

VOICE OF THE EMPLOYEE

The OIG and the Inspection Service help

the Postal Service improve employee and

organizational effectiveness, ensure employee

safety, prevent and investigate threats, and

enhance the workplace environment for all

its employees. For example:

◆ OIG assisted the Postal Service by 

assessing why workplace disputes were

not resolved before they became formal

grievances or as early as possible. 

◆ OIG made recommendations to improve

the handling of equal opportunity 

complaints.

◆ The OIG completed a workplace assessment at a postal facility and conducted 

a follow-up review of alleged retaliation

against a cooperating employee.

◆ The Inspection Service helped ensure

the safety of the workplace by investigating 551 assaults or credible threats

against employees and making 227

arrests; investigating 75 robberies 

committed against employees at Postal

facilities, letter carriers, or motor vehicle

service operators; and arresting 14

employees for narcotics violations.

VOICE OF THE BUSINESS

The OIG and the Inspection Service help

improve Postal Service financial self-sufficiency by assessing its business strategies

and performance, preventing the loss of revenue and assets, strengthening management

controls, and reducing costs.

◆ OIG provided an independent assessment of Postal Service’s Y2K process in

testimony before Congress. Further, in

its continuing reviews of the Y2K

process, the OIG recommended improvements to the quality and accuracy of Y2K

management reports. 

◆ OIG cautioned management that suffiPAGE6 EXECUTIVE SUMMARY

CONGRESSIONAL INQUIRIES BY AGE

601-820 DAYS

481-600 DAYS

361-480 DAYS

241-360 DAYS 121-240 DAYS 

61-120 DAYS

0-60 DAYS

21 22

21

21

120

8

1

CONGRESSIONAL INQUIRIES BY STATUS

FINAL REPORT

DRAFT RESPONSE

PLANNED AUDIT

SYSTEMIC REVIEW AWAITING FURTHER ACTION

Work On-Going

18

27

9

15

3

12
PAGE7

cient spare parts were not on hand to

ensure that the Tray Management System would maintain its state of readiness.

◆ OIG independently determined that cost

allocations between international and

domestic products were appropriate and

that Postal Service’s corporate treasury

internal control environment was sound.

◆ OIG raised concerns that Postal Service

resources were not being used economically or effectively in the area of personal

service contracts.

◆ OIG audits and reviews identified nearly

$7 million in questioned costs, which

helped the Postal Service contain costs. 

◆ Inspection Service installation financial

audits and business investigations identified over $12 million in revenue deficiencies Postal-wide.

◆ Postal Inspectors helped to ensure the

integrity of Postal Service funds by

arresting 157 Postal employees at all levels who were involved in embezzlements

of nearly $3 million.

◆ Inspection Service Workers’ Compensation investigations identified cost avoidance savings of over $60 million and

resulted in the arrest of 29 individuals.

The OIG Management Committee (sitting,

left to right): Tom Coogan, Karla

Corcoran; (standing): Dutch Merryman,

Sylvia Owens, Norm Hancock, Colleen

McAntee and Billy Sauls.

How is OIG funded? 

The OIG is funded from Postal

Service revenues. The OIG is

not funded through specific 

Congressional appropriations.

DID YOU 

KNOW?
PAGE8 EXECUTIVE SUMMARY
Major Management Issues

Facing the Postal Service

Why must OIG report all of its findings and

issues to the Governors and Congress?

The OIG is required by law to keep the 

Governors and Congress fully and currently

informed. The OIG also reports its findings

and issues to Postal management so that they

can take appropriate action to further improve

the efficiency and effectiveness of Postal 

programs and operations.

DID YOU 

KNOW?

PAGE 9
MAJOR MANAGEMENT

ISSUES FACING THE

POSTAL SERVICE

The mission of the Postal Service is to

provide prompt, reliable, and efficient

universal mail service at reasonable

rates. To fulfill this mission, the Postal Service’s

goals are to satisfy its customers, improve

employee and organizational effectiveness, and

strengthen financial performance. These corporate goals are categorized into three Voices —

Customer, Employee, and Business — emphasizing that the organization is listening to, driven by, and focused on the marketplace and

Postal Service employees.

To achieve these goals, the Postal Service

must address a number of significant challenges.

These challenges arise from external factors

such as new legislation, regulations, and competition. Another major challenge is the increasing use of technology that can divert significant

volumes of mail, particularly in the advertising

and remittance mail areas, away from traditional mail delivery to electronic venues. The

Postal Service must also be continually responding to new customer demands arising from

increased competition in the mail delivery

arena.

In order to identify some of the high-priority challenges that the Postal Service will face,

the OIG — with the assistance of Postal Service

management, unions, and management associations — responded in January 1998, to a Congressional request and identified 10 major management issues facing the Postal Service. The

following ten major challenges have been

updated from the original list: Year 2000 Readiness; Competition, Rate-Making and Legislative Reform; Eliminating Violence in the Workplace; Financial Management; Service Delivery;

Electronic Commerce; Postal Employees Safety

Enhancement Act of 1998; Systems Automation and Data Integrity; Labor-Management

and Employee Relations; and Workers’ Compensation.

YEAR 2000 (Y2K) READINESS

Why Is This Important?

It is important for the Postal Service’s automated and information systems, suppliers, and

data exchange partners to be Y2K compliant by

the close of 1999 in order to ensure that mail,

including millions of Social Security checks and

$9 trillion in remittance mail, is delivered. 

The Y2K problem results from computer

systems using the last two digits rather than four

digits to designate the calendar year. In many

systems, the year 2000 will be indistinguishable

from the year 1900, thereby causing potential

system failures. The Y2K problem, although

technology-based, creates a business problem for

both Postal Service internal operations as well

as key Postal Service vendors and service

providers.

The Postal Service continues to make

progress in achieving Y2K readiness in the areas

of critical core business infrastructure, information systems infrastructure, and business continuity and contingency planning. However, the

Postal Service is still faced with significant challenges as the urgency of this problem multiplies

in the remaining months in 1999.

What Are We Doing to Add Value?

The Postal Service’s Y2K initiative continues to be one of the OIG’s highest priorities for

review. During this reporting period, the

Inspector General testified before Congress on

the Y2K challenges faced by the Postal Service

and the current status of the Y2K initiative. In

addition, the OIG issued a report on the quality

and reliability of Y2K reporting, which recommended additional actions to ensure the Postal

Service meets its readiness goals. Further, the

OIG has expanded the scope of ongoing reviews

to include areas such as the Y2K budget, supplier readiness, and continuity planning and

recovery management.

The Postal Inspection Service assisted

management by reviewing Y2K contract administration and management practices. The OIG

and Inspection Service will continue to work

closely with Postal Service management to help

identify challenges and minimize the risk of

Y2K-related failures.

COMPETITION, RATE-MAKING,

AND LEGISLATIVE REFORM

Why Is This Important?

The existing legislative framework that created the Postal Service has served the Postal

PAGE10 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE

DID YOU 

KNOW?

Can management reinvestigate

an issue after the OIG has

reported on it?

To avoid duplication of effort and 

interference, Postal management

should avoid reinvestigation. If

management has questions or needs

additional information concerning

an OIG report, they should contact

the OIG.
PAGE11

Service and the nation for almost 30 years. In

that time, however, the evolving marketplace

has changed many of the premises upon which

regulation and oversight of the Postal Service

are currently based. Changes to rate-making

mechanisms are being proposed to allow the

Postal Service to respond to a competitive marketplace in a more timely manner. 

Further, the Postal world is changing. Foreign postal services are liberalizing, commercializing, and competing for business within the

United States. Electronic communications are

becoming more commonplace and threaten

some of the Postal Service’s most important

sources of revenue, including bills and correspondence. Established private firms compete

for expedited and package delivery services.

The Postal Service needs to be able to

deliver the promise of quality service today and

into the future considering competition, ratemaking, and legislation. 

What Are We Doing to Add Value?

The OIG will continue to monitor major

management initiatives affecting costs and service quality. For example, the OIG is monitoring the Postal Service’s implementation of the

Government Performance and Results Act. As

legislative reform develops, the OIG will help

management identify issues associated with

implementing, funding, and complying with

aspects of Postal reform. It also will work with

management to identify goals and measures that

promote high performance and help the Postal

Service meet changing customer needs. The

OIG will monitor Postal Service activities in

order to help identify ways to consistently meet

its universal service mandate, increase its levels

of quality while reducing costs, and continue to

be a trusted American institution. 

ELIMINATING VIOLENCE IN THE

WORKPLACE

Why Is This Important?

The Postal Service is the largest civilian

employer, with over 775,000 career employees.

Over the past several years, a number of

instances of violence have occurred within the

Postal Service. These situations diminish Postal

Service credibility, decrease productivity, create

work-specific tension, and damage property.

The Postal Service places strong emphasis

on creating and maintaining a violence-free

work environment for its employees. Workplace antiviolence initiatives are focused on

improving employees’ sense of safety and the

refinement of the employee assistance program

to better meet changing workplace needs. The

components of the workplace violence prevention program include physical security measures, training and education, and the development of threat assessment teams and crisis management plans.

The joint Postal Service Threat Assessment Team and Crisis Management Systems

and Process Team are examples of employees

working together to reduce the risks of workplace violence. These teams address issues

related to pre-employment, post-employment,

and current employees; communication; and

crisis management. The Postmaster General

established a Commission for a Safe and Secure

Workplace to investigate, analyze, and report

on several factors, including work-related stress,

substance abuse, and the workplace environment. In addition, the Postal Service continues

to identify systemic hot spots within the Area

offices and has developed an action plan to deal

with workplace problems and solutions. 

What Are We Doing to Add Value?

To support management’s efforts, the OIG

participates in and monitors the activities of the

Postal Service Threat Assessment Team; the

Crisis Management Systems and Process Team;

and the Commission. The OIG meets regularly with committee representatives of the Postal

Service Workplace Environment Improvement,

Human Resources, and Labor Management to

discuss strategies for improving labor and

employee relations.

The OIG has completed reviews of labor

and management workplace disputes, grievance-arbitration process, information system for

grievance-arbitration cases, and the process

management team for accident reporting. The

OIG also completed 17 other reviews of complaints involving discriminatory hiring, retaliation, unfair labor practices, harassment, equal

employment opportunity, and mistreatment.

Eleven reviews of labor and employee relations

issues are underway, and reviews are planned of

disciplinary actions, Threat Assessment Teams

Assistant Inspector General Sylvia

Owens welcomes Kristen Hammond, one

of the 15 new special agents to 

graduate from the Federal Law

Enforcement Training Center.
processes, and Violence Prevention Program

criteria. 

FINANCIAL MANAGEMENT

Why Is This Important?

The Postal Service relies on strong financial management to control costs and maximize

revenues. Unlike other government agencies,

its operations are funded mainly by the revenues, which are derived from mail services.

This year, Postal Service projects that revenues

for FY 1999 will exceed expenses by $200 million. However, the Postal Service faces significant challenges in meeting this revenue projection because of costs associated with Y2K readiness, increased capital expenditures, the delay

in implementation of the rate increase, the

effects of implementing the Postal Employees

Safety Enhancement Act, and increased competition. 

One of the key business goals of the Postal

Service is to improve its financial performance.

The Postal Service wants to ensure its 

commercial viability as a service provider for

the world-wide movement of mail, merchandise, and money. 

What Are We Doing to Add Value?

The OIG assesses the integrity and reliability of financial data of the Postal Service. OIG

performs reviews at three data centers and

Headquarters, and oversees the installationlevel work performed by the Inspection Service.

Recently, the OIG was designated as the CoContracting Officer’s Representative with

Postal Service Corporate Finance to oversee the

work of the independent public accountant,

who is selected and retained solely by the Board

of Governors. 

In addition to the financial statement

work, the OIG has performed a number of

financial-related audits. The OIG reviewed the

Dinero Seguro program, a Postal Service wire

transfer service between the United States and

Mexico. A review, requested by Postal Service

management, is also being conducted of the

costs associated with the Postal Service Y2K initiative. Further, the OIG contracted for a

review of the effectiveness of the Postal Service

Corporate Treasury’s internal control environment and cash management program. 

Further, the OIG has completed work in

the area of international mail costs and has

work underway in the areas of electronic data

processing controls and the financial statement

opinion. In addition, the OIG performs numerous reviews and investigations of contracts,

facilities, revenue generation, revenue protection, and developmental projects, all of which

may impact the Postal Service’s financial statements. The Inspection Service is continuing to

add value by performing 200 financial installation audits throughout the year at local Post

Offices and bulk mail centers. The Inspection

Service also aids by performing investigations

and audits as established in the designation of

functions. 

SERVICE DELIVERY

Why Is This Important?

In a competitive environment, the Postal

Service needs to develop a wider range of messaging and delivery choices. Timely, accurate,

and consistent delivery performance is one measure of quality service as perceived by the customers. Over the past two years, the integrity of

the service delivery measurement system for

First-Class Mail has been questioned. Service

delivery performance goals must have integrity

to be effective.

Service delivery performance goals are

based on the benefits resulting from aggressive

control of costs through reengineering, decreasing rework and cycle time, improving process

management, and substituting capital for labor.

The Postal Service has made significant capital

commitments of more than $8 billion during FY

1998 and FY 1999. These investments emphasize technologies that produce labor savings or

cost avoidance, and provide customer service

programs that generate revenue or enhance

competitiveness in the marketplace. 

What Are We Doing to Add Value?

One of the primary functions of the Inspection Service is to ensure the sanctity of the mail.

Therefore, service delivery and the Inspection

Service’s Confidence in the Mail program continue to be priority areas. As part of this responsibility, the Inspection Service has dedicated significant resources to investigating mail-fraud

schemes. In addition, the Inspection Service

PAGE12 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
PAGE13

completed reviews of Postal Service logistics

and transportation and Priority Mail processing.

The Inspection Service will continue to fulfill a

major role in service delivery.

Over past years, the Inspection Service has

completed several investigations and reviews of

the accuracy and integrity of First-Class Mail

performance measurements. OIG has reviewed

and continues to monitor First-Class Mail 

performance measurement integrity. 

OIG has also completed a review of the

costs and benefits of the National Change of

Address program. The OIG is currently reviewing periodicals processing, the National Change

of Address program’s impact on the advertising

industry, and the priority mail processing center

network. OIG plans to review the model for

assessing First-Class Mail delivery performance,

delivery confirmation, government mail, preventive maintenance scheduling, and customer

drop shipments. OIG also has ongoing work of

the highway contract route operations and

freight rail trailer use, and plans to review air

and rail carrier performance, mail transport

equipment controls, and route conversions of

two-day and three-day mail.

ELECTRONIC COMMERCE

Why Is This Important?

With the advent of electronic media, the

Postal Service must find ways to keep the revenue generated from remittance mail from

being diverted into electronic means or must

itself become an active participant in electronic services, while protecting the integrity of its

customers’ electronic transactions. 

Customers are becoming more sophisticated and technological innovations more accessible, which is changing the way some Postal customers communicate and do business. Electronic alternatives such as electronic commerce

and banking will affect mail volumes, particularly First Class Mail. 

What Are We Doing to Add Value?

OIG is currently working on a number of

issues that impact the electronic commerce

area, including a survey of electronic commerce

products. The OIG has established a Computer Intrusion Team that will implement and sustain a comprehensive computer intrusion and

monitoring operation to support national infrastructure security. OIG is planning to review

the Postal Service intrusion detection system.

The Inspection Service provides security assistance on the development of new products and

services, such as the Information Based Indicia

Program, Stored Value Cards, and Internet Bill

Payment. 

POSTAL EMPLOYEES SAFETY

ENHANCEMENT ACT OF 1998

Why Is This Important?

The new occupational safety and health

requirements require the Postal Service to

renew its commitment to and involvement in

the safety and health programs. The law places

the Postal Service in the same category as private sector employers. It also prohibits the

Postal Service from basing business decisions

upon Occupational Safety and Health Administration requirements. Fines and sanctions

may be imposed upon the Postal Service for violations of health and safety regulations included

in the Act.

What Are We Doing to Add Value?

The OIG is currently working on reviews

of the Postal Service’s implementation of the

new requirements and the effect of substandard

facilities on the workplace. The Postal Service

is required to perform comprehensive safety and

health evaluations to be completed by June 1,

1999. These evaluations are critical to setting

goals and correcting deficiencies. The OIG

believes that these projects will provide the

groundwork for additional work in this area.

Other reviews are planned to include evaluation of the safety and health program plans for

hazard communication, hazardous waste operations, and emergency response. The OIG also

plans on looking at safety and health training

programs; processes used to identify major violations and corrective action plans for these violations; and the Postal Service’s computerized

record keeping. 

SYSTEMS AUTOMATION AND

DATA INTEGRITY

Why Is This Important?

Successful decision-making by Postal Service managers depends on the accuracy and

Inspector General Corcoran dedicates

the Space Discovery stamp in Orlando,

Florida, on October 1, 1998.
integrity of computer data. Further, to maintain

excellent customer service and aggressively

manage costs, the Postal Service must continue

to develop automated solutions to process mail

more efficiently and accurately.

Technology which is being used to develop

an information-rich mailstream, will allow the

Postal Service to keep pace with competition

and continue to reduce labor and other related

costs.

What Are We Doing to Add Value?

As the OIG reviews all Postal operations

and activities, systems data is analyzed for

integrity. In past reviews, the OIG has identified data integrity problems with several Postal

systems. The OIG reviews proposals for automated systems to ensure that projected cost savings are sound and that management proposals

are based on proven technology. The OIG is

currently reviewing the Tray Management System, which is designed to automate mail handling in the Postal plants, and the development

and deployment of the Point of Service ONE

project, which will replace retail terminals at

selected Post Offices nationwide. Since these

projects involve investments of hundreds of millions of dollars and are major multiyear development and deployment efforts, we will continue to perform reviews in these areas. In addition, OIG plans to review the corporate call

management initiative, decision analysis report

process, automated data processing infrastructure, and Priority Mail redesign.

The OIG also audits major automated

management and information systems to determine whether applications are properly

designed, and systems provide accurate data.

The Postal Service reported that it has more

than 500 computer systems. OIG plans to begin

performing data integrity reviews of many of the

major computer systems in the future.

LABOR-MANAGEMENT AND

EMPLOYEE RELATIONS 

Why Is This Important?

For the first time in many years, the Postal

Service has reached agreements with two of the

four major unions. Improving workplace relationships with employees remains a key objective of the Postal Service. Postal initiatives

focus on conflict in the workplace, identifying

and eliminating root causes of labor disputes,

building knowledge of labor contracts, and

improving the effectiveness of grievancearbitration procedures to resolve labor disputes. 

Tentative agreements were reached with

two of the unions in January 1999. The Postal

Service and a third union have not reached an

agreement and the negotiation process will go

to binding interest arbitration, which will probably last throughout the summer. The Postal

Service and unions were proud that these agreements were achieved through negotiated settlements and approved by the union membership

rather than having a third party make important decisions on the agreements. In 1999,

negotiations will begin to achieve new collective bargaining agreements with the fourth

major Postal union and several smaller bargaining units.

In addition to the workplace changes, the

face of America’s workforce is changing dramatically. Issues of human diversity have taken on

prime importance. Diversity encompasses

much more than just race and gender; it also

includes culture, religion, age, sexual orientation, physical differences, and socioeconomic

status. Postal employees must build a team with

the capacity to deliver services across an array of

cultures. Diversity also impacts the business

environment, which reflects rapidly changing

demographics, attitudes, and economics. The

Postal Service has several initiatives underway

to establish appropriate representation of all

groups at all levels within the organization;

training and skill-building; and additional workplace environment improvement measures.

What Are We Doing to Add Value?

The OIG has been reviewing labor and

employee relations issues within the Postal Service in order to foster a healthy organizational

climate and to improve operational efficiency.

The OIG issued reports on the grievancearbitration process, labor and management

workplace disputes (grievance arbitration), and

the existing accident reporting process. The

OIG has additional work underway this year

that will examine the organizational climate

initiatives and leave administration. The

Inspection Service has local audits planned in

PAGE14 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
the grievance arbitration process and staffing

and scheduling policies.

WORKERS’ COMPENSATION

Why Is This Important?

For FY 1998, the Postal Service paid $566

million for employee injury claims. Containing

these costs is key to the Postal Service’s financial well-being. The Postal Service has placed

constant emphasis on employee safety and

health through a comprehensive program that

includes training and education; workplace

inspections; safety engineering and joint safety

committees; and the efforts of the National

Workers’ Compensation Task Force. 

The Postal Service has also implemented

aggressive accident prevention strategies that

emphasize management accountability and

thorough accident investigation. This permits

trend analyses and appropriate prevention and

control measures. A primary Postal Service performance goal is to ensure a safer work environment by keeping lost workdays due to injury

below 2.04 days per 200,000 work hours.

What Are We Doing to Add Value?

The OIG is conducting audits and investigations designed to prevent and detect fraud,

waste, abuse, and mismanagement related to

the Postal Service health care program costs

and assist in the protection of the health and

welfare of the Postal Service’s work force. The

OIG initiated proactive investigative projects

to identify issues impacting health care

providers and billing practices. Other ongoing

OIG investigations include improper billing

practices, provider kickbacks, and conflict-ofinterest matters. In addition, OIG completed a

limited review of accident reporting processes

and has other related reviews ongoing. 

The Inspection Service continues to be a

major factor in helping to reduce workers’ compensation expense by dedicating substantial

resources to investigating fraud associated with

individual injury claims submitted.

PAGE15
PAGE16 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
Overview

How does the OIG handle Freedom of Information Act requests? 

Public requests for OIG information are processed pursuant to the

Freedom of Information Act (FOIA) by OIG staff. FOIA requests

may be made in writing, or the public can review information posted

on the OIG website at www.uspsoig.gov.

DID YOU 

KNOW?

PAGE 17
OVERVIEW

OFFICE OF INSPECTOR

GENERAL

AN INDEPENDENT MISSION, 

A COMMON GOAL

OIG operates under the mandate of the

Inspector General Act. Under the Act, OIG

conducts independent audits and investigations

of Postal Service programs and operations to

ensure the efficiency and integrity of the Postal

Service. OIG also has oversight responsibility

for all activities of the Postal Inspection Service.

OIG is required to keep the Postal Governors,

management, and Congress fully and currently

informed about problems, deficiencies, and the

progress of corrective actions. 

OIG is independent of Postal Service management and is under the general supervision of

the nine Presidentially-appointed Postal Governors who oversee Postal Service management.

Karla Corcoran was appointed the first independent Inspector General at the Postal Service

in January 1997. From 1988 until the appointment of Inspector General Corcoran, the Postal

Inspection Service served as the Office of

Inspector General. 

Although independent of Postal management, the OIG supports Postal management’s

efforts to address CustomerPerfect!, the Voices of

the Customer, Employee, and Business. The

Inspection Service and the OIG share with

Postal management the common goals of

improving customer satisfaction, employee and

organizational effectiveness, and financial performance. 

OIG Vision and Values

The vision of the OIG is a constellation of

talented people making a difference through

teamwork, service, and innovation. This vision

is important because the mission of an Inspector

General’s office is to shed light on the problems

of its agency and ensure that corrective action is

taken. A constellation sheds greater light than

an individual star.

OIG believes in the fundamental values of:

◆ Teamwork, which combines our diverse

talents in a synergy that individual disciplines alone do not provide;

◆ Leadership, which encourages staff to be

the best they can be; 

◆ Communication, which facilitates honesty, openness, and consideration for the

contributions and opinions of others; 

◆ Creativity, which encourages fresh perspectives in the development of new

processes and techniques that will

improve Postal operations; and

◆ Conceptualization, which leads to viable

solutions based on OIG employees

understanding Postal Service perspectives

and needs. 

OIG Culture

The OIG cultural philosophy demands

that all people be treated fairly and be given the

opportunity to develop their unique and diverse

skills and abilities to their fullest potential. The

OIG is committed to attracting a diverse and

highly qualified workforce from government,

the private sector, the Postal Service, and colleges and universities.

Many of the OIG staff have advanced

degrees and are Certified Public Accountants,

Certified Internal Auditors, Certified Information Systems Auditors, and Certified Fraud

Examiners. Our criminal investigators attend a

rigorous training course at the Federal Law

Enforcement Training Center or equivalent

professional academy. Employee education and

professional certification enhances OIG’s ability

to provide service to our stakeholders. In addition, the OIG is extremely proud of its efforts to

provide all staff with meaningful opportunities

for growth and career advancement.

OIG Diversity 

Our office is an example of the strength

that comes with diversity in the workplace. We

are especially proud of our diversity. Our cultural and professional diversity reflects the hiring of the most qualified staff possible from the

widest spectrum of candidates available. The

OIG has attended numerous conferences, colThe following section provides an overview

of OIG and Inspection Service internal

operations. In order to differentiate the

work reported by the OIG and the 

Inspection Service, the pages containing

the Inspection Service work have been

color screened.

0

20

40

60

80

100

MINORITIES WOMEN WOMEN & MINORITIES OIG EMPLOYEES

41% 46% 62% 100%

126

142

193

310

OIG DIVERSITY

PAGE18

How diverse is the OIG? 

During Fiscal Year 1998, we 

provided opportunities to 30

employees to move into new and

challenging positions. This is

part of our culture and we will

continue to work in this manner.

The OIG is committed to 

attracting and retaining a diverse

and highly qualified work force

from government, private sector,

Postal Service, colleges and 

universities.

DID YOU 

KNOW?
leges, and recruiting fairs in order to attract the

most qualified diverse staff. 

Of the 310 individuals on board as of

March 31, 1999, 142 are women and 126 are

minorities. Minorities include 92 Blacks (30

percent), 19 Hispanics (7 percent), 13 Asians

(4 percent), and 2 Native Americans (1 percent). U.S. Bureau of the Census estimated

data, as of November 1998, shows that the OIG

has exceeded the U. S. percentage of total population for each of these groups except for 

Hispanic, which is 11.4 percent for the United

States. As we grow, we are continuing to

address diversity, particularly Hispanics, by

recruiting these groups. Our senior-level staff is

35 percent female and 23 percent minority.

We have recruited people from numerous

federal agencies, including the Department of

Defense, General Accounting Office, Secret

Service, and Postal Service, as well as from local

government, private industry, and colleges and

universities. These individuals bring with them

a wealth of different experiences, backgrounds,

and specialties that aid the OIG in performing

its mission.

Seeking to Be a Model Organization

OIG seeks to be a model organization by

using the latest available technology, the most

innovative ideas of its employees, and the best

business practices of both the public and private

sectors. Our goal is to become more efficient,

effective, and economical. Some examples of

ways we are trying to achieve this goal are:

◆ Utilizing interdisciplinary project teams

of investigators, evaluators, statisticians,

and attorneys for greater diversity and

objectivity.

◆ Using technology-based teams for computer intrusion, information system

audits, and electronic commerce.

◆ Analyzing more data in a shorter time

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

◆ Using electronic work papers and developing automated investigative programs

that aid in the documentation and analysis of data.

◆ Designing a unique pay-for-performance

system that rewards employees who

demonstrate superior performance and

share the vision and values of the organization. 

NOTABLE OIG ACHIEVEMENTS

OIG continues to grow as a new agency. During the past six months, we have:

◆ Hired 84 talented new employees: 30

investigators and 54 evaluators.

◆ Graduated our first class of 15 criminal

investigators from the Federal Law

Enforcement Training Center.

◆ Recognized two OIG executives, Tom

Coogan and Sylvia Owens, at the Postal

Service National Executive Conference

for their outstanding contributions in

establishing the OIG.

◆ Moved headquarters staff into six floors

of permanent space designed to promote

efficiency, technology, and teamwork.

◆ Established an office in Atlanta, GA, to

allow better location of employee

resources, resulting in less travel time

and expense.

◆ Established a relationship with the Corporate Manager of Internal Audit, Canada Post Corporation. 

◆ Employed more investigative

resources in order to identify potential criminal activity against the

Postal Service. [See chart on the

side.]

◆ Created a computer intrusion unit

to assist the Postal Service in preventing, detecting, and responding

to “cyber attacks” against critical

Postal Service computer systems.

Protecting Whistleblowers

In March 1998, the Deputy Postmaster General wrote to all Postal officers

reaffirming employee rights to report to

the OIG without fear of retaliation. One

of the important functions that the OIG

performs is to protect employees from

retaliation if they report wrongdoing to

the OIG. 

The Postal Service has nearly 800,000

employees, and the OIG encourages them to

report fraud, waste, abuse, and mismanagement. 

0

10

20

30

40

50

60

70

80

90

100

REVENUE HEALTH CARE EXECUTIVE

PROTECTION

CONTRACT AUDIT FACILITIES

4/1/98 - 9/30/98

10/1/98 - 3/31/99

7

13

8

13

45

5

31

18

91

37

OPEN CASES

PAGE19
PAGE20 OVERVIEW

The Postmaster General notifies officers that OIG is responsible for all Postal Service audits.
PAGE21

The Inspector General Act specifically prohibits supervisors from retaliating against

employees who have made complaints or disclosed information to the Inspector General.

Audit Cognizance Letter Issued by Postmaster General

On January 7, 1999, the Postmaster General, in order to help Postal Service officers and

managers better utilize the audit services of the

OIG, notified all Postal Service officers of the

OIG’s responsibilities for audits within the

Postal Service (see facing page.) The OIG performs audits involving systemic reviews but has

delegated audits at the Area, District, and local

levels to the Postal Inspection Service.

First Judicial Enforcement of Inspector

General Subpoenas

The OIG was successful in enforcing two

Inspector General administrative subpoenas for

bank records of a Postal Service employee. The

subpoenas were issued pursuant to an Inspection

Service investigation of allegations that the

employee embezzled Postal funds. The OIG was

required to seek enforcement of the subpoenas

after the employee filed a customer challenge to

the subpoenas under the Right to Financial Privacy Act.

In an unrelated legal action, the OIG legal

staff successfully enforced an Inspector General

administrative subpoena issued in support of an

Inspection Service investigation into alleged

workers’ compensation fraud. The OIG was

required to enforce the subpoena because the

subpoenaed party, a hospital, would not provide

the OIG with the requested record, contending

the records were protected under a state confidentiality statute. 

These subpoena enforcement actions were

successful because of the teamwork of Postal

Inspectors, the United States Attorney’s Office,

and the OIG legal staff.

Since the OIG’s inception in January 1997,

the OIG has reviewed and issued over 1,100 subpoenas for the Inspection Service and OIG.

During this six-month period, the OIG reviewed

and issued 245 subpoenas; most of these were for

the Inspection Service in support of individual

workers’ compensation investigations.

OIG Approved as Co-Contracting 

Officer’s Representative for Financial

Statement Audits 

As reported in the previous Semiannual

Report to Congress, the Board of Governors’

Audit Committee considered the OIG’s request

to serve jointly with the Service’s Corporate

Finance Office as the Contracting Officer’s Representative on the contract with the independent public accounting firm. In March 1999,

the Board of Governors approved the Audit

Committee’s recommendation to have OIG

serve jointly as the Contracting Officer’s Representative. The Board of Governors has the sole

authority to hire and retain the external auditors

responsible for the certification of the financial

statements.

Transitioning Responsibilities Ahead of

Schedule

In March 1997, the Postal Governors

approved the designation of functions between

the OIG and the Inspection Service. The original plan to transition these functions called for

the OIG to assume Inspector General functions

over a five-year period ending in fiscal year

2001. However, in only two years, the OIG has

undertaken most of the audit work identified in

the designation of functions. Further, in March

1999, the OIG assumed responsibility for the

review of Postal policies and regulations. We

now anticipate the transition of planned functions from the Inspection Service to be completed in three years rather than five. (See

Exhibit A at the back of this report.)

OIG Becomes a Member of President’s

Council on Integrity and Efficiency

Investigations Committee and Federal

Audit Executive Council

In our previous Semiannual Report to Congress, we reported that we were working with the

Office of Management and Budget and the President’s Council on Integrity and Efficiency to

become a contributing member of the Council.

We felt our presence would be useful to the

Council and better serve and represent the

Postal Service. Although the request was

denied, the Council subsequently invited the

Postal Service OIG to join the Investigations

Committee of the President’s Council on

Integrity and Efficiency and the Federal Audit

Deputy Assistant Inspector Generals

Richard Chambers, Ronnie Wainwright,

and Richard Trinidad.
PAGE22

OIG Computer Intrusion Team utilizes

computer intrusion training 

sponsored by the OIG community.

OVERVIEW

Executive Council. These two actions will help

to establish the Postal Service’s presence within

the OIG community.

Team-Building Meetings Between the

Postal Inspection Service and OIG

In an effort to work together to best serve

the overall interests of the Postal Service, the

executives from the Inspection Service and the

OIG have met several times during this period.

As a result of these meetings, the group agreed

to establish a process to address issues and

resolve any concerns between the two agencies.

We also agreed to seek ways to strengthen mutual cooperation, develop better coordination,

and commit to learning more about each other’s

roles and individual responsibilities.

Freedom of Information and Privacy

Act Requests

The OIG received and processed 59 Freedom of Information and Privacy Act requests.

Only two requesters challenged an OIG decision to withhold information. In both

instances, the Postal Service Appeals Office

upheld the OIG’s decision to lawfully withhold

the information.

Computer Intrusion Investigation 

Training 

The OIG, which is responsible for investigating computer intrusion of Postal Service systems, is providing reimbursable training to

approximately 60 professionals from 22 agencies, including the Postal Service, the National

Aeronautics and Space Administration, the

Department of Transportation, the Department

of Energy, the Environmental Protection

Agency, and the Department of the Treasury.

Future courses will be offered to prosecutors

from the Department of Justice. This training is

designed to provide the most current information on computer intrusion detection, response,

and investigation, and to train personnel to

identify and respond to attacks from computer

hackers. 

Computer-Assisted Assessment 

Techniques Support Team

OIG needs to obtain timely and accurate

information in order to determine risk and

materiality issues as well as to conduct effective

investigations within the Postal Service. To

address this need, the OIG created a specialized

team that has the ability to access data, conduct

tests, and run exception reports from various

Postal information systems, resulting in statistically valid and supportable evidence.

CONTINUING TO ESTABLISH 

A NEW OIG

Audit Resolution Process

The Postal Service does not have a formal

audit resolution process in place to address disagreements between management and the OIG.

The OIG is working with members of the Postal

Service to develop an audit resolution process.

When developed, the process will be briefed to

the Board of Governors Audit Committee.

Once implemented, the OIG will review outstanding disagreements for resolution.

Pay-for-Performance System 

The OIG has designed a unique pay-forperformance system that allows managers to

recognize and reward employees who demonstrate superior performance and share the vision

and values of the organization. During the coming year, the entire OIG staff will be trained on

the two main components of the new pay-forperformance system. The first component is a

360-degree evaluation that will be used to coach

and mentor employees. The second component

is a performance measurement that will evaluate productivity and job competencies.

The Inspector General thanks the

Dallas General Accounting Office

Regional Manager for providing

Dallas staff with temporary 

office space.
PAGE23

INSPECTION SERVICE

For more than two centuries, the role of

the Inspection Service has been to preserve the

public’s trust in Postal services and products.

Today, over 200 statutes related to crime against

the U.S. mail, the Postal Service, and Postal

employees and customers are enforced by the

Inspection Service. The mission of the Inspection Service has been refined over the years by

Congress, statutes related to the U.S. Mail, creation of a separate OIG, and the needs and

requirements of the Postal Service and its customers. The Inspection Service meets its wideranging responsibilities through a nationwide

complement of approximately 4,500 employees,

which includes about 2,200 Postal Inspectors,

1,400 uniformed Postal Police Officers, and 900

professional support associates. Through its

investigations and audits, the Inspection Service provides a vital service to the American

public as well as a substantial return on the

investment made by the Postal Service. 

The Chief Postal Inspector, who is

appointed by the Postmaster General in consultation with the USPS Board of Governors,

reports to the Postmaster General. Kenneth J.

Hunter was appointed Chief Inspector in 1992.

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

that report to Deputy Chief Inspectors for Business Investigations, Criminal Investigations,

Professional Standards and Resource Development, and Administration. The Inspection

Service includes 23 field divisions, which report

directly to two Deputy Chief Inspectors for

Field Operations. 

Field offices are supported at five Operations Support Groups. Inspection Service

Forensic Laboratories at five strategic sites support field office investigations with state-of-theart technology. Inspection Service offices are

linked nationally via electronic systems with

on-line connections to the National Law

Enforcement Telecommunications System and

the National Crime Information Center. 

Postal Inspectors throughout the United

States conduct criminal investigations, perform

audits, serve warrants and subpoenas, make

arrests for Postal offenses, and present evidence

to prosecutors for action. Day and night, Postal

Inspectors respond to emergencies involving

Postal crimes, natural disasters, or other problems affecting the Postal Service.

Uniformed Postal Police Officers provide

security around the clock at Postal facilities

where risk, vulnerability, and history demonstrate the need for their presence. Postal Police

Officers at facility control centers monitor robbery and burglar alarms to provide protection

for Postal employees, property, and assets.

Postal Police Officers also escort high-value

shipments, such as registered mail and Postal

remittances.

Inspection Service’s professional technical

employees, including forensic specialists and

technical financial analysts, play a vital role in

supporting the audit, investigative, and security

functions of the Inspection Service. They perform a variety of tasks including:

◆ Developing and maintaining management systems.

◆ Providing forensic examinations of evidence.

◆ Developing, procuring, and deploying

electronic security and surveillance

equipment.

◆ Publishing policy, reports, manuals,

handbooks, and consumer publications.

◆ Providing photography, video, and

graphics support.

◆ Providing direct contact with Congress

and the public.

◆ Supplying administrative support.

Postal Inspectors nationwide work cooperatively with the Department of Justice and

other federal, state, and local law enforcement

agencies on joint efforts. Inspection Service

expertise is recognized internationally: Inspectors are assigned to the U.S. National Central

Bureau of Interpol in Washington, DC, and to

Interpol Headquarters in Lyon, France. The

Chief Postal Inspector chairs the Postal Security Action Group of the Universal Postal Union.

The Postal Security Action Group has established these priorities:

◆ Prevent customer injuries resulting from

dangerous goods in the mail.

◆ Prevent the loss or theft of mail entrusted to world Postal administrations by

customers.

How long has the 

Inspection Service protected

the U.S. mails?

For over 200 years, Postal

Inspectors have protected the

mail and U.S. citizens to ensure

that the public’s confidence in the

mail is not undermined. 

DID YOU 

KNOW?

Kenneth Hunter has been Chief Postal

Inspector since September 1992.
PAGE24 OVERVIEW

◆ Prevent revenue and asset losses of world

Postal administrations.

◆ Preserve customers’ confidence in the

mail. 

Postal Inspectors are active members of such

groups and councils as the:

◆ Securities and Commodities Fraud Working Group.

◆ Organized Crime Council.

◆ International Policy Committee of the

International Association of Chiefs of

Police.

◆ Economic Crimes Council.

◆ National Health Care Anti-Fraud Association.

◆ Financial Crimes Enforcement Network.

◆ International Association of Financial

Crimes Investigators.

◆ Asset Forfeiture Policy Advisory Group.

◆ National Law Enforcement Explorers’

Committee.

Postal Inspectors work on child pornography cases with the Child Exploitation and

Obscenity Section of the Department of Justice;

the National Center for Missing and Exploited

Children; and the Standing Working Party on

Offenses Against Minors, an international organization sponsored by Interpol.

NOTABLE INSPECTION SERVICE

ACHIEVEMENTS

Chief Postal Inspector Testifies About

Sweepstakes Promotions

On February 24, 1999, the Chief Postal

Inspector testified on sweepstakes promotions at

public hearing in Indianapolis hosted by the

Indiana Attorney General and other members

of the National Association of Attorneys General Subcommittee on Sweepstakes Promotions.

Through the hearing, which received media

coverage, a national audience was informed

about sweepstakes issues and the need for state

and federal governments to identify and seek

better approaches to deter and punish those

who commit sweepstakes fraud.

Inspection Service Produces Consumer

Protection Video

The Inspection Service produced a video

news release series entitled Fraud Against Older

Americans. The videos began running on television stations during National Consumer

Week and continued to air across the country

throughout February. The series, which highlighted how scam artists take advantage of

senior citizens, how they can protect themselves, and what the Inspection Service is 

doing to combat the problem, aired in approximately 30 cities, reaching an estimated 6 million viewers.

Child Exploitation

The Inspection Service co-sponsored the

Fifteenth National Symposium on Child Sexual Abuse during March 1999 in Alabama. This

symposium was attended by more than 1,800

persons from across the country including local,

state, and federal law enforcement personnel,

prosecutors, judges, child protection service

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

exploitation. The Inspection Service conducted a block of training during the general symposium, and, also concurrent with the symposium,

held a special two-day in-service training conference for Postal Inspectors assigned to conduct

child exploitation investigations.
Organization

DID YOU 

KNOW?

PAGE 25

To whom does the Inspector General report?

The Inspector General reports to the nine Postal

Service Governors. The Inspector General does

not report to the Postmaster General. Further, the

Inspector General is required by statute to keep

Congress informed of OIG activities.
PAGE26 ORGANIZATION

INSPECTOR 

GENERAL

Karla Corcoran

Special Assistant

Laura Whitaker

Executive Assistant

Cindy Monahan

GENERAL 

COUNSEL TO THE

INSPECTOR 

GENERAL 

Thomas Coogan

Legal Counsel

Kirt West

Congressional 

and Public Relations

STRATEGIC 

PLANNING 

& QUALITY

MANAGEMENT

Ronald Merryman

Internal Quality

Jim Nugent

Electronic Commerce

Strategic Planning 

Forensic & Technical Services

Information Technology

Quality Assurance/Internal Affairs

PERFORMANCE

Colleen McAntee

Deputy Richard Chambers

Transportation

Debra Ritt

Delivery/Support

Debbie Pettitt

Financial Statements

John Seeba

Developmental

Tracy LaPoint

Accepting/Processing

REVENUE 

& COST

CONTAINMENT

Sylvia Owens

Deputy Richard Trinidad

Revenue Generation

Wayne Goleski

Revenue Protection

Mike Shiohama

Dan O'Rourke

Contracts

Kim Stroud

Facilities

Bob Buettgens

Health Care Fraud

Kathy Johnson

EMPLOYEE 

Billy Sauls

Deputy Ronnie Wainwright

Administrative Resources

Alan Lamoreaux

Human Resources

Connie Ambush

Information Systems

Dave Berran

Policy & Procedures 

Karen Shaffer

Labor Management

CUSTOMER

Norm Hancock

Computer Intrusion

Howard Cox

Executive Investigations

Tommy Hampton

Oversight

Bob Pemberton

Hotline, Security & Safety

Joe Oliva

Consulting

Quick Response

ASSISTANT INSPECTOR

G

EN

E

R

A

L

ASS

SI TA

N

T

NI SPECTOR GENERAL

A

SS

SI TA

N

T INSPECTOR GENERAL ASSISTANT INSPECTO

R

G

E

N

E

RA

L

ASSISTANT INSPECTOR

G

E

NERA

L
PAGE27

OFFICE OF INSPECTOR

GENERAL

ASSISTANT INSPECTOR GENERAL

FOR STRATEGIC PLANNING &

QUALITY MANAGEMENT

Forensic and Technical Services Team —

provides technical support in such areas as surveillance, evidence recovery, firearms, computer forensics, and polygraph examinations;

maintains close liaison with technical experts

in the law enforcement community. 

Quality Assurance/Internal Affairs

Team — conducts internal reviews of OIG

operations and procedures to ensure that they

are effective and appropriate, and provides

advice on improving operations; conducts

reviews of allegations made against OIG

employees.

Strategic Planning Team — anticipates

and plans for current and future changes in the

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

and statistical analysis, informing Postal Service employees and customers about the OIG

mission, and promoting the vision of the OIG.

Internal Quality Team — instills 

continuous internal improvement processes

and facilitates internal communications

through orientation, teambuilding, and mentoring.

Electronic Commerce Team — conducts

reviews of Postal Service initiatives in the

emerging field of electronic commerce, including areas such as information-based indicia and

electronic bill payment.

Information Technology Team —

manages computer operations and telecommunications within the OIG; operates the local

and wide-area networks; provides computer

security and technical support to OIG staff; and

manages agency-wide information systems. 

ASSISTANT INSPECTOR GENERAL

FOR PERFORMANCE (AUDIT)

Financial Audit Team — conducts audit

work in support of the independent public

accounting firm’s annual financial audit opinion and conducts other financial-related audits

and investigations to identify areas for financial

improvement. 

Developmental Team — conducts audits,

reviews, and investigations of new or

redesigned Postal Service systems, programs

and operations that are under development. 

Accepting/Processing Team — conducts

audits, reviews, and investigations focusing on

mail acceptance and collection operations, and

mail processing and distribution processes.

Transportation Team — conducts audits,

reviews, and investigations focusing on interand intra-transportation and logistics operations, specifically addressing Postal Service fleet

operations and contracts for airline, highway,

and rail services. 

Delivery/Support Team — conducts audits,

reviews, and investigations covering delivery

service processes and operations for delivering

the mail.

ASSISTANT INSPECTOR GENERAL

FOR REVENUE & COST 

CONTAINMENT 

(INVESTIGATIONS)

Revenue Protection Team — investigates

bribery, kickbacks, embezzlement, and other

cases involving revenue losses and contract

fraud, such as defective pricing, product substitution, and cost mischarging.

Revenue Generation Team — examines

and evaluates the major sources of revenue

from the marketing, advertising, stamp services,

retail, and international mail business operations, as well as Postal rate cases.

Facilities Program Team — conducts

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

renovation, and new construction. 

The following section describes the organization of the OIG and the Inspection Service. The OIG is organized along the three

voices of the Postal Service CustomerPerfect! program: Voice of the Customer, Voice

of the Employee, and Voice of the Business.

The Inspector General, Counsel, and the

five Assistant Inspectors General form the

OIG Management Committee. 
PAGE28 ORGANIZATION

Contract Audit Team — assists Postal contracting by conducting audits and investigations of purchasing activities and operations.

Health Care Fraud Team — identifies and

investigates medical providers that have falsely

billed the Postal Service for work-related injury

claims, and systemic issues involving the

Workers’ Compensation Program. 

ASSISTANT INSPECTOR GENERAL

FOR EMPLOYEE

Information Systems Review Team —

audits major automated Postal management

and information systems to determine whether

applications are properly established and

systems are properly designed to provide accurate data to management; provides computerassisted audit techniques to support OIG staff.

Labor-Management Team — audits and

evaluates labor and employee relations issues

within the Postal Service to foster and

maintain a healthy organizational climate for

employees and improve operational efficiency.

Human Resources Team — delivers fullservice human resources programs for the OIG

in the areas of employee relations, pay and

benefits, retirement, awards, performance management, counseling, diversity opportunities,

and training.

Administrative Resources Team — provides OIG staff with facilities, procurement,

financial, budget, and other services necessary

to accomplish the OIG mission.

Policy and Procedures Team — coordinates internal policies and procedures; reviews

and comments on all Postal Service policies

and procedures.

ASSISTANT INSPECTOR GENERAL

FOR CUSTOMER

Oversight Team — conducts audits and

evaluations of Inspection Service programs and

operations. 

Hotline, Safety, and Security Team —

operates the OIG Hotline and assists in resolution of issues where possible. Provides personnel security services to the OIG and assists

OIG in assessing physical security within the

Postal Service.

Executive Investigations Team — investigates allegations of criminal activities and misconduct involving Postal Service Career Executive Service employees. 

Computer Intrusion Team — detects and

investigates “computer hacking” and other

high-technology crimes involving Postal Service computers and telecommunications systems; assists in the identification of computer

systems vulnerabilities so that appropriate

counter-measures may be implemented by

Postal Service management.

Consulting Services Team — assists Postal

Service management by identifying best practices for improving the effectiveness of Postal

Service operations. (Will be established in FY

2000.)

Quick Response Team — evaluates factual

issues promptly when time is of the essence.

(Will be established in FY 2000.)

OFFICE OF GENERAL COUNSEL

TO THE INSPECTOR GENERAL

Legal Counsel Team — provides legal

advice to the Inspector General and OIG staff

on criminal, civil, and administrative issues.

Researches legal issues, processes subpoenas,

reviews legislation, handles Freedom of Information and Privacy Act requests, provides

ethics advice, and serves as liaison with the

Postal Service Law Department and Department of Justice legal staffs.

Congressional and Public Relations

Team — serves as a liaison with members of

Congress and their staffs, the Board of Governors, and the media. Responds to written and

oral inquiries, coordinates congressional 

testimony given by the Inspector General and

OIG staff, facilitates OIG responses to congressional, Board of Governors’, and media

requests, and prepares the Semiannual Report

to Congress.

How does the OIG structure

relate to Postal Service 

CustomerPerfect! goals? 

The OIG organizational 

structure was established to 

effectively respond to the Voices

of the Customer, Employee and 

Business and is outlined in a

chart on page 26 and in 

Exhibit B.

DID YOU 

KNOW?
Inspection Service

FY 1999

Chief Postal Inspector

K. HUNTER

Inspector in Charge

Counsel

H. BAUMAN

Deputy Chief

Administration

J. BELZ

Deputy Chief

Business Investigations

A. KIEL

Deputy Chief

Criminal Investigations

M. BOSWELL

Deputy Chief

Field Operations East

L. CRAWFORD

Deputy Chief

Field Operations West

J. DUPILKA

Deputy Chief

Prof. Standards &

Resource Dev.

D. WRIGHT

Inspector in Charge

Office of Inspections

J. SOMERSET

AIC

Deputy Counsel

Z. HILL

AIC

Deputy Counsel

L. KATZ

INC

Finance and Admin.

Services

M. MUNLEY

INC

Congressional 

& Public Affairs

D. MIHALKO

INC

Information 

Technology

R. COCCIA

INC

Corporate Information

Management

R. LUERS

Mangers

ISOSGs

BALA CYNWYD

L. KLAUS

Newark

V. BELLINGER

So. San Francisco

K. PARAMORE

INC

Finance

T. DENNENY

INC

Performance

(Vacant)

INC

Fraud, Child Expl.

& Asset

Forfeiture Grp.

L. MAXWELL

INC

Revenue Assets

Protection Prog. 

S. SCHMERBECK

Manager

ISOSG

Chicago

D. HARRIS

INC

International

D. HILL

INC

Security

F. MARION

INC

Mail Theft &

Violent Crimes

A. CRAWFORD

INC

Forensic & Tech. Services

Division

R. GEFFEN

AIC

Money Laundering

& Bank Secrecy

C. GIUSTI

Manager

ISISG

Memphis

J. BIRCH

Inspectors in Charge

Atlanta - 

I. CARLE

Northeast - 

M. AHAM

Mid Atl. - 

Vacant

Cincinnati - 

R. BOWDREN

Memphis - 

J. STINCHFIELD

Miami - 

M. GREY

Newark - 

J. SKIDMORE

NY Metro - 

L. HEATH

Phil. Metro - 

B. CHAMBERS

W. Alleghny -

K. NEWMAN

San Juan - 

E. RIOS

Tampa - 

J. SLAVINSKI

Wash Metro - 

T. JOHNSON

Inspectors in Charge

Northern Illinois -

I. GILLIS

Rocky Mtn - 

M. COBOS

Michiana - 

W. MITCHELL

Southwest - 

A. HOLMES

Gulf Coast - 

K. KELL

So. Ca - 

J. FREEMAN

Midwest - 

R. TERLEP

St. Paul - 

C. COPLIN

No. Ca - 

D. DAVIS

Northwest - 

R. MORGAN

INC

Strategic Plng. & Management Process

(Vacant)

INC

Career Develop.

Division

C. MURPHY

Manager Workforce

Strategic Plng.

N. ARROYO

Manager

Exec. Resources

and Ldrship. Dev.

E. LUCERO

Manager Employee

Development

N. JOHNSON

Manager Training

Assessment

S. CLARK

AIC

E. CRESPO

PAGE29
THIS PAGE TEARS OUT FOR YOUR CONVENIENCE

PAGE30 ORGANIZATION
Goals 

What are the OIG “Values”? 

The OIG values are teamwork, leadership, 

creativity, communication, and conceptualization,

and are incorporated into a “TLC3” 360-degree

employee feedback system.

DID YOU 

KNOW?

PAGE 31
LOOKING AHEAD TO

2000 AND BEYOND

As the OIG continues to build a sound

infrastructure, it is able to focus a larger part of

its energy and resources on preventing and

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

and economy. The OIG will continue to work

with the Inspection Service to refine our respective roles to support the CustomerPerfect! goals. 

OUR ROADMAP TO

THE FUTURE

The OIG is reviewing its five-year strategic

plan to ensure that, as the organization grows

and matures, our long-range goals are aligned

with the needs of the Postal Service. OIG executive leadership and a diverse group of staff supported by consultants from the Federal Quality

Consulting Group have begun to shape the

pathway to OIG’s future.

OIG management has decided to 

work within the Malcolm Baldrige framework not only because the Postal Service has 

adopted this model but because it makes good

business sense. This process will be the guiding

force in developing OIG’s annual performance,

human resource, information technology, and

budget plans.

STRATEGIC PLANS 

OIG and the Inspection Service Strategic

Plans, FY 1998–2002, parallel the USPS Strategic Plan by providing a structure to support CustomerPerfect! efforts to address the needs of the

Voices of the Customer, Employee, and Business. Postal Service, OIG, and Inspection Service goal statements are summarized in the

chart below.

GOALS

VOICE 

OF THE

EMPLOYEE

Improve employee 

and organizational

effectiveness by having

the right people in the

right place with the 

right tools at the right

time to consistently

provide superior

customer value and

ensure commercial

viability in a dynamic

market.

Improve employee 

and organizational

effectiveness by

assessing USPS

performance in having

the right people in the

right place with the

right tools at the right

time in a quality

workplace

environment.

Improve OIG employee

and organizational

effectiveness by

building an organization

that encourages,

rewards, and fosters

dedication, teamwork,

excellence, and

productivity.

Ensure employee 

safety. Enhance 

the Inspection 

Service workplace

environment to 

improve 

organizational

performance.

VOICE 

OF THE 

BUSINESS

Improve financial

performance to assure

commercial viability as

a service provider for

the worldwide

movement of messages,

merchandise, and

money.

Improve USPS

financial self-sufficiency

by assessing its business

strategies and

performance. 

Improve OIG

performance by

adopting the most

efficient, effective, and

innovative business

practices.

Prevent loss of 

revenue and assets.

Reduce costs. 

Improve Inspection

Service technological

capabilities.

PAGE32

VOICE 

OF THE 

CUSTOMER

Improve customer

satisfaction by offering

superior customer value

in each market and

customer segment 

that we target.

Improve customer

satisfaction by assessing

USPS performance in

providing customer

value and meeting

public-service

responsibilities.

Improve OIG customer

satisfaction by providing

timely, value-added

services to the

Governors, Postal

management, Congress,

employees, and

customers.

Increase customer

confidence in the use 

of the mail. Improve

Postal Service

performance.

GOAL 

CATEGORY

POSTAL SERVICE

GOAL STATEMENT

OIG EXTERNAL 

GOAL STATEMENT

OIG INTERNAL 

GOAL STATEMENT

INSPECTION 

SERVICE GOAL

STATEMENT

The following section describes the Postal

Service, OIG, and Inspection Service goals

for improving financial performance, meeting customer expectations, and ensuring

employee satisfaction. In addition, this section includes the OIG Annual Performance

Plan and the OIG’s actions to monitor the

Postal Service’s implementation of the Government Performance and Results Act.
PAGE33

Consultants from the Federal Quality

Institute help OIG employees identify

issues to include in the Strategic

Planning Process.

ANNUAL 

PERFORMANCE PLAN

The OIG is committed to conducting

audits, evaluations, reviews, and criminal investigations that will add significant value to the

Postal Service. Through a rigorous planning

and evaluation process, we have identified eight

performance goals and measures. These goals

are supported by more than 146 projects that

addressed such areas as Y2K, transportation,

grievance and arbitration, retaliation, financial

statements, vehicle replacement, facilities, and

computer security.

GOVERNMENT 

PERFORMANCE AND

RESULTS ACT

The OIG is developing a plan to examine

Postal Service efforts to develop and use performance measures and to verify and validate

selected data sources. In 1993, Congress passed

the Government Performance and Results Act

(Results Act) mandating Federal agencies to

establish strategic planning and to prepare

annual performance plans, beginning with a

plan for FY 1999. The annual performance

plans sets out measurable goals that define what

will be accomplished during a fiscal year. The

Results Act also requires that program performance report comparing actual performance

with performance goals be submitted no later

than March 31 of each year, following submission of the plan. The first program report, for

FY 1999, is due March 31, 2000.

In 1998, the House of Representatives

passed a bill (H.R. 2883) that would, among

other things, codify certain responsibilities on

the part of Inspectors General for reviewing

Results Act activities. The House Government

Reform and Oversight Committee sent a letter

to certain Inspectors General asking them to

implement review plans as envisioned by H.R.

2883, regardless of whether or not the bill

becomes law.

The Postal Service’s CustomerPerfect! system complements the Results Act and supports

the law’s mandate to establish a set of measurable goals to uphold the Postal Service’s mission

and to define underlying strategies to achieve

these goals. Consequently, the OIG is taking an

active interest and role in the Postal Service’s

Results Act efforts have involved assessing the

Postal Service's implementation of the General

Accounting Office’s reported observations on

its draft strategic plan and preliminary annual

performance plan. In general, the Postal Service included in the additional information

identified by the General Accounting Office in

its reports on the Postal Service’s plans. However, the OIG suggested that future plans could

be further enhanced by including more detailed

discussion in specific areas.

In addition to these activities, OIG identified other Results Act-related activities that the

OIG will be considering in future reviews.

These include: (1) assessing the adequacy and

reliability of data and management information

and accounting systems supporting Results Act

plans and reports; (2) verifying, validating, and

analyzing the results in annual performance

plans; (3) analyzing the validity and appropriateness of performance measures and goals; (4)

conducting program-evaluation-type audits and

reviews; and (5) addressing labor-management

issues and their potential effect on the Postal

Service’s goals.
PAGE34 GOALS
Voice of the Customer

What is the OIG’s primary responsibility? 

The primary responsibility of the OIG is to 

prevent, detect, and report fraud, waste,

abuse, and mismanagement, and to promote 

efficiency in the programs and operations of the

Postal Service.

DID YOU 

KNOW?

PAGE 35
VOICE OF THE CUSTOMER

OFFICE OF INSPECTOR

GENERAL

SUGGESTIONS TO ENHANCE 

THE POSTAL SERVICE’S FY 2000

ANNUAL PERFORMANCE PLAN

The OIG assessed Postal Service compliance with the Government Performance and

Results Act and implementation of the General Accounting Office’s recommendations to

improve the Postal Service annual performance

plan. In general, the Postal Service’s FY 1999

annual performance plan and FY 2000 preliminary annual performance plan, include the additional information identified by the General

Accounting Office report on the preliminary

plan. However, since the FY 1999 preliminary

plan has been finalized, the OIG suggested the

FY 2000 annual performance plan could be further enhanced by including information in the

following areas:

◆ The Voice of Business goals should

include current levels of performance or

baselines.

◆ Verification and validation of data should

describe challenges involved in obtaining

high-quality performance data; highlight

the verification and validation procedures by presenting them separately;

report separately the general strategies

used for verification and validation and

those that apply to specific performance

data; briefly and clearly identify the

source of data of each reported measure

or indicator; and report the data standards that information providers are

required to meet.

◆ The Y2K initiative discussion should

include goals, indicators, and targets to

gauge progress.

Management comments were responsive to

OIG suggestions, and actions planned should

enhance the Postal Service’s FY 2000 Annual

Performance Plan. (OIG DS-MA-99-001)

COMPLIANCE WITH THE 

GOVERNMENT PERFORMANCE

AND RESULTS ACT

This OIG report is the second in a series of

reports addressing Postal Service compliance

with the Government Performance and Results

Act. While the Postal Service has undertaken

a multiyear initiative to address Government

Accounting Office suggestions to improve the

Postal Service’s strategic plan, the OIG suggested that the next plan could be further enhanced

by a discussion of how labor-management relations could affect the achievement of Postal

Service goals. Postal Service management

agreed with these observations and suggestions

and planned to implement actions accordingly.

(OIG DS-MA-99-004) 

ASSESSMENT OF PRIORITY MAIL

NETWORK CHRISTMAS PLAN

FOR 1998

The OIG and the Inspection Service jointly reviewed planning for the 1998 Christmas

season Priority Mail processing. In April 1997,

a contractor was awarded a $1.7 billion, fiveyear contract to establish a network of ten Priority Mail processing centers on the East Coast.

Five of the ten sites were operational by December 1997, and the remaining five sites were activated by June 1998.

During the 1997 Christmas season, the

contractor experienced problems in processing

Priority Mail. To avoid repeating problems in

1998, the Postal Service and the contractor

developed the Christmas Plan for 1998. The

plan addressed issues such as staffing, facilities

and capacity, transportation, and contingencies

with anticipated improvement. However, the

OIG and Postal Inspection Service review indicated a high potential for mail processing problems in at least two areas:

◆ inadequate facility capacity at one center;

and

◆ limited airlift capacity serving four 

centers.

An interim report, prepared during an

ongoing Priority Mail network audit, was issued

The following section highlights audits,

reviews, and investigations done by the

OIG and the Inspection Service in support

of the Postal Service’s Voice of the Customer. In order to differentiate the work

reported by the OIG and the Inspection

Service, the pages containing the Inspection Service work have been color screened. 

PAGE36
to inform management of OIG and the Inspection Services’ observations and immediate concerns. According to Postal Service management, the actual results of the 1998 Christmas

season were better than those of the 1997

Christmas season. Although similar problems

occurred, they were mitigated by the planning

effort of the Postal Service and the contractor.

Postal Service management does recognize the

long-term capacity problems at one center. As

a result of our report, contingency plans were

developed to divert the mail to other locations

and increase the use of surface transportation at

the four centers with limited airlift capacity.

(OIG DA-LA-99-001)

UNDERPAYMENT OF POSTAGE

The OIG conducted a review of a Postal

Service decision to assess a small weekly newspaper for underpayment of postage on past mailings. The OIG found that Postal Service officials followed proper policy and procedures in

assessing the newspaper for underpayment of

postage once it was identified. The review

found that the newspaper was not eligible for

either the preferred in-county rates that it had

been taking or the periodicals mailing privileges. 

The newspaper publisher had appealed

both the assessment to recover the underpayment and the determination of ineligibility for

the preferred rates. While the assessment was

upheld, no decision was rendered on the issue of

eligibility. Postal Service management has

agreed to discuss payment options with the

newspaper publisher and determine if the newspaper meets the eligibility requirements of a

general publication. (OIG DS-MA-99-003) 

EXTERNAL FIRST-CLASS TEST

MAIL 

The external First-Class mail program uses

a test mail process to measure the time it takes

letters, flats, and postcards to go from deposit to

delivery. This measurement provides national,

area, performance cluster, and city estimates of

delivery time, which are compared with Postal

Service goals.

The Postal Service contracted with an

independent public accounting firm to measure

the performance of First-Class mail service in

selected zip code areas. The external First-Class

test mail pieces are intended to be undetectable

by Postal employees. During this period, the

OIG addressed allegations of the creation of a

separate mailstream for external First-Class test

mail to inflate the performance scores.

Two reviews of management practices conducted by the OIG and the Postal Inspection

Service disclosed that test mail had been handled differently from other First-Class mail.

However, as a result of a prior Postal-wide audit,

the program had been changed and these practices were already discontinued at the two districts reviewed. No additional management

action was required. The OIG will continue to

monitor the test mail program nationwide for

possible future reviews. An audit of the independent public accounting firm’s External FirstClass test mail program methodology is

planned. (OIG DS-LA-99-001 and DS-LA-99-

002)

DELIVERY SERVICE 

The OIG investigated a complaint regarding the quality of operations of a Mississippi

Post Office. Our limited review disclosed that

Postal Service management was aware of the

mail service problems and had taken some corrective actions. Discussions with the district

management and a review of FY 1998 performance measures confirmed that the Post Office

had experienced operational challenges. The

district manager advised that the Postmaster

was removed for performance-related issues in

1998 and said the current Officer-in-Charge is

making progress toward remedying the operational problems. The Postal Service anticipates

the selection of a permanent Postmaster in the

near future. The OIG referred this issue to the

Postal Inspection Service for potential future

audit attention and notified the requesting

member of Congress. (OIG PA-CR-99-001)

LOBBYING

A referral alleged that a Postal Service official sent members of Congress letters in violation of the law against using appropriated

money for lobbying activities. In consultation

with the Department of Justice, the OIG agreed

that the Department of Justice guidelines were

not violated. (OIG CL-CR-99-002 and CLCR-99-003)

How many employees work

at the OIG? 

As of March 31, 1999, 310

employees were on board and

another 51 applicants had

received job offers. Our goal is

to reach a staff level of 480 by

September 1999. We believe

this goal is attainable because of

extensive college recruiting.

DID YOU 

KNOW?

PAGE37
VOICE OF THE CUSTOMER

EXECUTIVE INVESTIGATIONS

The OIG opened 17 investigations of 

executive-level Postal Service employees during

this reporting period. The alleged violations

included conflicts of interest, nepotism, misconduct, splitting of purchases, favoritism, and violations of anti-lobbying provisions. Cases that

contained evidence of criminality were referred

to the Department of Justice for a prosecutorial

decision. 

Also during the reporting period, 13 cases

were closed. In one case, a Postal official pled

guilty to one charge of conflict of interest. The

official was engaging in employment discussions

with a contractor while reviewing the contractor’s proposals and advising Postal officials on

the qualifications of the contractor. 

The results of another investigation substantiated allegations that a Postal official split

purchases to circumvent contract purchasing

thresholds. The official also awarded a contract

to the spouse of a Postal employee, which is

specifically prohibited by Postal regulations.

The official had the same contractor perform

work at the official’s private residence. This

case was referred to management for administrative action. The Area vice president took

action to correct the breakdown in procedures

that allowed the improprieties to transpire. 

OIG HOTLINE

The OIG Hotline serves as an effective and

convenient avenue for employees, contractors,

customers, and others to anonymously or confidentially report situations that could threaten

the economy, efficiency, or effectiveness of

Postal Service programs and operations. The

Hotline provides OIG evaluators, special

agents, and Postal Inspectors with a variety of

leads involving possible criminal violations and

administrative irregularities. In addition to calls

concerning fraud, waste, abuse, and mismanagement, the Hotline is used to refer calls concerning alleged assaults, threats, and potentially violent work situations for appropriate attention. 

The Hotline received more that 7,500

inquiries during this reporting period. Approximately 41 percent of these inquiries pertained

to Inspection Service jurisdictional matters.

These inquiries dealt with areas such as mail

fraud, theft, vandalism, and mail tampering.

Forty-six percent of the inquiries pertained to

Postal employment, postage meters, and customer-service problems. OIG-related matters

accounted for the remaining 13 percent of

inquiries, with the vast majority pertaining to

employee and labor management issues. 

Information received through Hotline

complaints is a valuable tool in identifying systemic issues within the Postal Service. The

OIG records the applicable data from each complaint and identifies trends that may require a

Postal-wide review. For example, complaints

received through the OIG Hotline resulted in a

systemic review of equal employment opportunity processing by district managers. However,

the OIG Hotline does not take the place of formal avenues to resolve disagreements. These

avenues include: (1) contractual grievancearbitration procedures established under the

National Agreement between the Postal Service and Postal unions, which provide a forum

for mediating disputes involving the interpretation of rules, the perception of offensive behavior, or adverse management actions; and (2) the

equal employment opportunity process established under the purview of federal guidelines as

an alternative mediation arena for allegations of

discrimination. 

For OIG matters that do not require investigation or audit, OIG may request Postal management to take appropriate action. However,

OIG is very careful to respect the confidentiality of the individuals contacting the Hotline.

For non-Postal complaints, OIG refers these

matters to other agencies, including the Department of Energy, the Department of Health and

Human Services, and the Department of the

Treasury. 

OIG’s national toll-free hotline number 

(1-888-USPS-OIG) is staffed from 7:00 a.m. to

7:00 p.m., Monday through Friday, except 

federal holidays. Callers to the Hotline are not

required to identify themselves, and if they do

not want to speak to a Hotline analyst, they can

mail, e-mail, or fax their complaint. The mailing address is United States Postal 

Service, Office of Inspector General, 

Attn: Hotline, 1735 N. Lynn Street, Arlington,

VA 22209-2020. The e-mail address is 

hotline@uspsoig.gov. The fax number is (703)

248-2259.

MISCELLANEOUS, 

USPS-RELATED 

INSPECTION SERVICE 

CONSUMER 

 ADVOCATE

OIG RELATED 

42% 13%

4%

41%

HOTLINE CONTACTS

PAGE38
INSPECTION SERVICE

PRIORITY MAIL PROCESSING

AND DELIVERY AUDIT

The Inspection Service completed an audit

of Priority Mail processing and delivery at five

performance clusters within five Postal Areas.

The review disclosed a lack of uniformity in

management procedures for delivery of Priority

Mail that met the service standards. There was

also confusion in the field regarding the reporting of delayed Priority Mail. Lack of reliable air

transportation by commercial carriers was cited

as a significant obstacle in making timely delivery of Priority Mail. Additional factors were:

(1) the manner in which facilities process Priority Mail in manual operations and record it in

the Management Operating Data System; (2)

the absence of a uniform commitment to processing and delivering Priority Mail; and (3)

uneven preparation of mail for collection.

Together, these factors affect the Postal Service’s ability to provide reliable, consistent, and

timely service. To improve the deficiencies

identified in Priority Mail service, it was recommended that Postal Service officials issue a written policy to the field outlining the Postal Service’s corporate philosophy about the processing

and delivery of Priority Mail to ensure that all

performance clusters handle it in the same manner. A recommendation also was made that

instructions be issued to plant managers clarifying how delayed Priority Mail should be reported. (IS 022-1244541-PA(1))

LOGISTICS AND 

TRANSPORTATION AUDIT 

The Inspection Service conducted a

Postal-wide audit on logistics and transportation to determine the consistency and effectiveness of the transportation organizational structure; the reliability, integrity, and usefulness of

the transportation information systems data;

and whether management was monitoring and

controlling the mail transportation function for

two-day and three-day First-Class mail to ensure

the best combination of service and cost. The

audit concluded that a more proactive approach

to managing transportation would allow management to better predict mail flows and control

employee complements to accomplish the most

effective and efficient movement of the mail.

Reported opportunities for improvement related to the logistics and transportation organizational structure, the Transportation Information

Management Evaluation System data inputs,

dispatch discipline, and air-to-surface mail routing. Implementation of the recommendation

regarding air-to-surface mail is projected to save

$43 million annually. Management agreed with

the recommendations, except those related to

organizational structure. (IS 023-1223496-PA (1))

TWO-DAY AND THREE-DAY MAIL

SERVICE 

The Inspection Service conducted an audit

of two-day and three-day mail service within a

Postal Area to identify best practices and to

determine the effectiveness, efficiency, and

economy of processing and transportation. The

audit identified opportunities for improvement

in the areas of surface transportation, dispatch

discipline, scanning, and Area-wide communication of best practices. Implementation of recommendations in these areas would provide

better two-day and three-day mail service.

Management agreed with the audit recommendations. The Postal Area established a goal to

reduce the mail flights within 500 miles by 30

percent in FY 1999 and 50 percent by FY 2000.

The Postal Area will use a percent scanned

indicator to measure the effectiveness of

two-day and three-day scanning operations at

each airport and to increase the percentage of

two-day mail given to airlines for earlier banks

of flights. (IS 038-1243860-PA(2))

AREA AVIATION SECURITY 

PROGRAM 

The Inspection Service conducted an audit

of a Postal Area to determine if established procedures for “target mail,” as set forth in the

revised Aviation Security Guidelines dated May

27, 1998, were being followed. Attention

focused on the handling of 100 parcels, each

weighing over one pound, destined for international sites and U.S. military installations. The

parcels were deposited in collection boxes

domestically by Postal Inspectors. Seventy-six

percent of the test mailings designed to be

returned-to-sender as “target mail” reached

their overseas destination. Thirty-four percent

of the collection boxes reviewed were not propPAGE39
VOICE OF THE CUSTOMER

erly labeled to notify customers of the proper

acceptance procedures for target mail. Management agreed that greater attention needed to be

provided at all districts within the area to ensure

compliance with the procedures. (IS

037-1258944-PA(2))

REGISTERED MAIL HANDLING

The Inspection Service conducted audits at

three districts to determine if: (1) the handling

of registered mail by platform operations was in

compliance with established procedures; (2)

proper controls were in place to effectively

enforce the Security Seat Program; and (3) registry clerks were performing their duties and

providing necessary levels of security. The

audits disclosed exceptions to established guidelines in the areas of platform operations and registry security operations. Highway contract

route trailers were not secured with locks,

accountability for registered mail was not always

maintained, the registry cage was not completely secure, remittances were improperly stored,

and bank deposit procedures were not followed.

Management concurred with all recommended

corrective actions and began implementation. 

(IS 314-1250790-PA(3), IS 314-1250792-PA(3),

and IS 311-1262203-PA(3))

REVIEW OF UNDELIVERABLE

MAIL OPERATIONS AT 

PROCESSING CENTER

The Inspection Service conducted a review

into the potential for increased operating costs

resulting from improper handling of undeliverable mail in the Processing and Distribution

Center. Inspectors recommended close monitoring and supervision of undeliverable mail

operations in plants and delivery units to reduce

multiple handling of mail and delayed mail volumes. Inspectors recommended that customer

mail pieces have correct ZIP+4 add-ons and

barcodes to reduce the volume of missent and

miscoded mail. Management agreed to develop

better standard operating procedures. (IS 070-

1236715-SI(1))

NATIONAL OBSERVATION OF

MAIL CONDITIONS REVIEW

The Inspection Service conducted a

national review of mail conditions involving

facilities in each of the 85 Postal Districts. The

Operating Conditions Report for Accounting

Period 5, year-to-date, FY 1999, disclosed reductions in delayed mail at the plants when compared with the same period last year. During the

first two quarters, the Inspection Service issued

16 reports identifying areas warranting immediate corrective action. Common problems

included delayed mail, underreporting of

delayed mail and mail on-hand, working mail

out of sequence, failing to maintain proper controls (color codes), excess mail transport equipment at some sites, and service failures by transportation contractors. Management used the

information provided in the reports during

weekly teleconferences with operations support

staff. The items identified have been resolved by

management or are in the process of being

resolved. (IS 071-1254358-SI(2)) 

ARROW LOCK AND KEY REVIEW 

The Inspection Service conducted a review

of the arrow lock and key system, including

accountability procedures at two Texas Post

Offices. Loose internal controls governing the

accountability of Arrow keys had raised concern. Recommendations were made to replace

all existing Arrow locks, develop a system of

controls, and initiate a program to ensure that

all apartment wall panel boxes are brought into

compliance. Management agreed with the recommendations. (IS 072-1269061-SI(2))

MAIL THEFT

Postal Inspectors are committed to reducing mail theft to maintain the public’s confidence in the Postal Service and preserve the

sanctity of the mail. Postal Inspectors are currently working with major mailers to prevent

mail theft and related problems. Mail losses

attributed to the Postal Service are often actually the responsibility of business “partners,”

occurring at some point in the process of mail

acceptance, transportation, or delivery. However, thefts by employees remain a concern. During this reporting period, Postal Inspectors made

2,589 arrests and obtained 2,212 convictions

related to mail thefts. Of those figures, Postal

employees represented approximately 11 percent of the arrest and 12 percent of the conviction statistics.

PAGE40
Airline Employee Steals Registered Mail

An employee of a major airline recently

pled guilty to mail theft after Postal Inspectors

arrested him for stealing registered mail worth

over $600,000. The individual was also responsible for thefts that resulted in over $200,000 in

claims that had to be paid by the Postal Service. 

Bank Employees Steal Mail Deposits

Postal Inspectors apprehended a bank

mailroom supervisor and his assistant for stealing bank deposits from the mail. The suspects

admitted stealing from the bank’s mail for a year

and are responsible for the loss of several thousand dollars in cash and over $180,000 in

checks. 

Stolen Mail Used to Commit Bank Fraud 

Postal Inspectors charged one defendant

with 38 counts of mail fraud and access device

fraud for bilking financial institutions of an estimated $20 million over a five-year period. The

defendant stole thousands of pieces of mail from

drive-up collection mailboxes, intercepted 

various financial transactions, and re-routed

checks, credit cards, and personal identification

numbers to various commercial mail receiving

agencies across the country. After pleading

guilty, the defendant was sentenced in October

1998 to 63 months in prison and 5 years probation. 

Commercial Mail Receiving Agency

Destroys Mail

Postal Inspectors in Pennsylvania identified a commercial mail receiving agency franchise owner for the delay and destruction of

mail. The owner abruptly closed one location

and threw away hundreds of pieces of incoming

and outgoing mail. Although the owner had

accepted postage payments for the mail, none

bore postage, and most of the parcels were

rifled. Another 96 pieces of mail, without

postage customers had paid for, were found at

another location. Some of the mail was eight

months old. Prosecution is pending.

Alert Letter Carrier Stops Thefts

As a result of a tip from a letter carrier,

Postal Inspectors arrested an individual for

breaking into apartment mailboxes in Nevada.

The alert letter carrier reported that an individual in the apartment complex was receiving a

large quantity of mail under different names at

the same address, including the names of other

tenants in the complex. Surveillance video

captured the suspect breaking into the mailbox

panels. A search of the suspect’s apartment

revealed hundreds of pieces of stolen mail,

including credit card applications and merchandise orders.

MAIL FRAUD

To preserve the public’s confidence and

trust in the U.S. Mail, the Inspection Service

investigates a variety of mail fraud schemes

Inspectors actively work with law enforcement

and regulatory groups on various fraud-related

task forces, leveraging resources and combining

efforts to target operators that use the mail for

fraudulent purposes. The Inspection Service is

leading an effort called “Project kNOw Fraud”

to develop, test, and implement a national telemarketing fraud prevention campaign. The

centerpiece of the campaign is a national mailing from the Postmaster General advising citizens how to avoid being victimized by telemarketing fraud. The Inspection Service conducts

about 3,300 mail fraud investigations yearly,

and during this reporting period arrested 748

and convicted 664 individuals on charges of

mail fraud.

Identity Theft Investigation Catches 

Murderer

Postal Inspectors worked with the Federal

Bureau of Investigation and local police to solve

two murders involving bank fraud and identity

takeover. The murderer pled guilty to 16 federal charges and was sentenced to 395 years in

prison without parole. He targeted well-to-do

victims so he and his wife could assume their

identities, and then used the mail to conduct

financial fraud with their victims’ accounts.

The Inspection Service Crime Laboratory

played a key role in solving the case. 

U.S. Customs Enlisted to Combat Illegal

Foreign Lotteries

To further combat illegal foreign lotteries,

Postal Inspectors are working with U.S. Customs Service officials to stop such offerings from

entering the U.S. mailstream. Customs agents

now contact Postal Inspectors when they find

such mail during border searches. Postal

Inspectors detain the mail and provide samples

to the Postal Service’s Law Department to

Postal Inspectors arrested over

2,300 non-employees for mail theft.

PAGE41
VOICE OF THE CUSTOMER

determine their mailability. If the pieces are

considered nonmailable, the mailer is notified

that the material is subject to destruction and

may appeal the notice. If the mailer fails to

appeal or loses the appeal, the detained mail is

destroyed upon the issuance of a Destruction

Order. During this reporting period over

316,000 pieces of foreign lottery mail were

destroyed prior to entering the mailstream.

Mail-Order Rebate Fraud Targeted

Postal Inspectors are currently investigating 76 cases relating to rebate fraud. The

Administrative Action Program is an essential

element of rebate fraud prevention and enforcement efforts. To date, the Postal Service Judicial Officer issued 20 cease and desist orders and

197 individuals signed agreements to voluntarily discontinue soliciting refunds for which they

were not entitled.

Prevention First! Strategy Combats Mail

Fraud 

The Inspection Service has launched a

mail order initiative in an effort to reduce losses

to major mailers in measurable terms. It

employs a “Prevention First!” strategy regarding

losses due to mail fraud or theft/non-receipt. To

date, under the mail fraud focus of the initiative,

Postal Inspectors are conducting 195 investigations relating to failure-to- pay scams. To date

44 individuals have been arrested and 22 convicted.

$140 Million Medicare Fraud Uncovered

An Inspection Service investigation of an

Illinois health care provider resulted 

in federal-court-ordered restitution of $140 

million and a $4 million criminal fine for

Medicare fraud. The Department of Justice

indicated it was the largest case ever prosecuted

involving a Medicare contractor, charged in this

case with manipulating work samples, falsifying

reports, concealing poor performance, and falsely claiming superior performance. Two of the

company’s managers have already pled guilty,

and mail fraud and other charges have been

filed against five other upper-level managers.

Investigators were alerted to the case when a

former employee of the company filed a qui tam

complaint (a civil action brought by an individual on behalf of the government and the individual) after he was fired by company managers.

The former employee will receive over $28 million of the civil settlement.

Medicare Fraud Identified

As a result of an Inspection Service investigation, 39 defendants were indicted in Florida

for Medicare fraud. The group included 7 doctors, 12 nurses, and the owners, managers, and

some employees of a Medicare-certified home

health agency. The defendants routinely inflated the cost of service billed to the Medicare program. Losses exceeded $10 million.

Medicare Fraud Stopped

A California doctor was sentenced to two

years in prison, a $50,000 fine, and ordered to

pay $311,000. After pleading guilty to 10

counts of mail fraud, he reimbursed the

Medicare program $1.5 million and will lose his

medical license. Postal Inspectors caught him

hours before he was to flee the county with over

$2 million in cashier’s checks, opium, and a new

passport. The doctor filed claims for home visits to patients who were deceased, in prison, or

living out of state. He was the largest biller to

Medicare of home health care visits in California.

Fraud Against Georgia Medicaid Program

Halted

Following an investigation by Postal

Inspectors, two defendants were sentenced in an

Atlanta federal court in December for a $9 million fraud against the state of Georgia Medicaid

program. The court ordered restitution and

fines for the pair totaling nearly $7 million, as

well as forfeiture of the remaining assets of one

of the defendants. One defendant was sentenced to three years in prison and three years’

probation, and the other man was sentenced to

four years in prison and three years’ probation. 

Counterfeit Immigration Documents via

Mail Uncovered

Two men pled guilty to six federal counts,

including mail fraud, following an investigation

by Postal Inspectors. The men were operating

one of the largest fraudulent immigration document schemes ever prosecuted in Southern California. They were involved in the production

and distribution by mail of counterfeit immigration documents, victimizing over 1,100 individuals, with an average loss per victim of $10,000.

Nationwide Test-Cheating Scheme Exposed

At the conclusion of an Inspection Service

PAGE42
investigation, a New York man was sentenced

to four years in prison for his role in a nationwide test-cheating scheme. The scheme

involved as many as 500 undergraduate and

graduate school candidates, who paid a fee of

$2,000 to $9,000 to receive answers to national

standardized exams. The defendant fled during

a recess in his trial and was captured by the U.S.

Border Patrol while trying to enter Canada.

Tax Evasion and Wire Fraud Charged

An individual in Pennsylvania was charged

with filing a false tax return and wire fraud. The

individual was accused of evading taxes on profits from selling bulk quantities of manufacturers’

cents-off coupons to store owners who paid 20

to 25 percent of the coupons’ face value. The

Inspection Service and Internal Revenue Service jointly conducted the investigation and

believe that coupons in excess of $1 million

were illegally sold between 1990 and 1994. 

Work-at-Home Scam Nets $3.1 Million

Three Minnesota brothers pled guilty to

mail fraud and tax evasion charges in connection with a scheme to sell brochures advertising

work-at-home moneymaking opportunities.

These brochures promised a money-back guarantee of satisfaction. By using different mailbox

addresses and business names, the brothers

received more than $3.1 million from 80,000

victims. The brothers closed the mailboxes

after a short period, thus depriving dissatisfied

customers of an avenue for requesting refunds.

As part of the plea agreement, the brothers forfeited cash, vehicles, and property valued at

$3.1 million. Thus far, the Inspection Service

has returned more than $105,000 to victims of

the scheme. Sentencing is pending.

CHILD EXPLOITATION

Postal Inspectors employ proactive investigative techniques to identify and bring to justice individuals who use the mail to distribute or

knowingly receive child pornography. During

this reporting period, Postal Inspectors made 67

arrests and obtained 80 convictions in this area. 

“Innocent Images” Operation Combats

Internet Child Pornography

The exchange of child pornography by

mail is often preceded by communication over

the Internet. A Federal Bureau of Investigation operation, “Innocent Images,” attempts to

identify child pornographers and molesters on

the Internet. The Inspection Service was asked

to join the operation because of its extensive

experience in child pornography investigations. 

Sentencing for Delivery of Child 

Pornography

As a result of an Inspection Service investigation, an individual in Michigan was sentenced to 60 months’ confinement in a federal

prison to be followed by three years’ supervised

release for receipt of child pornography through

the mail. The judge rejected a plea for a lesser

sentence based on the individual’s admittance

to more than 90 past child sexual assaults.

Child Pornographer Sentenced 

An individual in Virginia was sentenced to

36 months’ detention in a federal prison and a

$10,000 fine. The sentence arose from a guilty

plea to one count of the distribution of child

pornography. The sentence will be followed 

by three years’ supervised release. Postal Inspectors recovered more than 200 child pornography photographs and magazines from the man’s 

residence.

MAIL BOMBS AND BOMB

THREATS

In the interest of protecting customers and

Postal employees, Postal Inspectors place a high

priority on the investigation of explosive

devices sent through the mail. Postal Inspectors

also investigated 553 reports of suspicious items

in the mail and 71 bombs threats against Postal

facilities, during the first half of FY 1998. These

incidents resulted in 4,778 lost work hours at

affected Postal facilities.

Threats and Injurious Articles by Mail

Postal Inspectors report that threatening

communications are on the rise as a result of

abortion rights conflicts. In conjunction with

the Federal Bureau of Investigation, Postal

Inspectors responded to a number of hoax

devices, including 25 threatening letters

allegedly containing anthrax. Most of the mailings were sent to reproductive health service

providers and caused significant disruption,

including evacuations, decontamination, and

inoculation. Each of the threatening mailings

What is the Mail Fraud

Statute?

The Mail Fraud Statute contained

in Title 18 of the United States

Code, Section 1341, makes it a

criminal violation to use the

United States mail or the services

of any private or commercial 

carrier to carry out a fraudulent

scheme.

DID YOU 

KNOW?

PAGE43
VOICE OF THE CUSTOMER

was tested, but none contained anthrax.

Mail Bombs Detonate

Postal Inspectors investigated four mail

bomb incidents during this reporting period.

Two of these were recovered and rendered safe

and two exploded, but neither resulted in injury.

One of the mail bombs detonated on a conveyor belt within a bulk mail center in Texas.

Postal Inspectors learned that the mailer of the

bomb was responsible for building two others,

one addressed to the Bureau of Alcohol, Tobacco, and Firearms, which was rendered safe, and

another addressed to the President, which

exploded in a truck trailer during transit. The

U.S. Secret Service apprehended a suspect who

is being held on charges related to one of the

bombs. Physical evidence recovered from a

search of the suspect’s former residence and

hotel room, along with the remains of the Dallas and Washington, DC, parcel bombs, have

been sent to the Inspection Service Crime Laboratory for analysis. 

Hoax Bomb Mailings

An inmate serving a life term at a federal

correctional facility mailed suspect letter bombs

to several individuals, including the Massachusetts Attorney General’s Office and a federal

judge. The suspect letter bombs contained copper wires, tin foil, and petroleum jelly with coffee grounds. The inmate was upset because a

federal court had dismissed several appeals and

wanted the letter bombs to be realistic so that

someone would suffer a heart attack. The

Inspection Service and the Massachusetts State

Police are still investigating.

Bomb Explodes Under Collection Box

Postal Inspectors were notified that a bomb

exploded under a collection box in Colorado.

The investigation revealed that a pipe bomb

had been taped to the leg of the collection box,

and exploded. No one claimed responsibility

for the bombing and the investigation is continuing.

NARCOTICS TRAFFICKING

The Inspection Service interdicts drug

mailings to protect Postal employees and customers from the violence associated with this

crime and to prevent the abuse of the mail for

such illicit purposes. Inspectors made 735

arrests and obtained 640 convictions in this area

during this reporting period.

Drug Proceeds Seized from Mail

New York Postal Inspectors seized

$490,800 in cash in one week from 12 Express

Mail parcels mailed to Colombia from various

New York addresses.

Drug Shipments Smuggled into Hawaii

A man currently believed to be the largest

distributor of methamphetamine in Hawaii was

arrested by Postal Inspectors and Bureau of

Alcohol, Tobacco, and Firearms agents on a nobail warrant. A total of 35 suspects were arrested in this joint investigation by Postal Inspectors; Bureau of Alcohol, Tobacco, and Firearms

agents; Internal Revenue Service agents; and

Delano, CA, police. The ring imported

$500,000 worth of methamphetamine a month

into Hawaii from California using mail and personal couriers.

Individual Found Guilty of Laundering

Drug Proceeds

A federal jury found an individual guilty on

drug conspiracy and money laundering charges,

resulting in the forfeiture of $1.8 million in cash

and assets. Investigation by the Inspection Service had revealed that this individual facilitated

the laundering of drugs.

Does the Inspection Service

combat child pornography?

The Inspection Service has long

been recognized as a leading law

enforcement agency in the battle

against those who sexually exploit

children through the production

and distribution of child 

pornography.

DID YOU 

KNOW?

PAGE44
Voice of the Employee

What is the OIG Hotline Number?

The number to call for reporting fraud,

waste, abuse, and mismanagement is 

1-888-USPS-OIG (1-888-877-7644).

You can also send e-mail to the Hotline

at hotline@uspsoig.gov.

DID YOU 

KNOW?

PAGE 45
PAGE46 VOICE OF THE EMPLOYEE

OFFICE OF INSPECTOR

GENERAL

ASSESSMENT OF LABOR AND

MANAGEMENT WORKPLACE 

DISPUTES

The OIG conducted an audit relating to

the Postal Service’s grievance-arbitration

process for bargaining employees. The audit disclosed that Postal Service labor and management personnel did not adequately resolve

workplace disputes before they became formal

grievances and did not resolve established grievances as early as possible. Therefore, unresolved

workplace disputes resulted in a high number of

Postal Service grievances estimated to cost at

least $216 million in FY 1997.

The OIG recommended that management

initiate discussions and negotiate with the

national presidents of the American Postal

Workers’ Union, the National Association of

Letter Carriers, the National Postal Mailhandlers’ Union, and the National Rural Letter

Carriers’ Association to foster joint implementation of:

◆ an assessment of the training needs of all

craft employees; and

◆ a mediation program that involves faceto-face communication by the parties

involved in a complaint with the help of

an outside mediator.

Although management’s comments were

generally responsive, they did not concur that

discussions between labor and management

should occur immediately after a workplace dispute has been identified. Postal management

indicated that the training needs of all employees have been assessed and a training program is

being developed to address workplace relations

and interpersonal skills. (OIG LR-AR-99-001) 

IMPROVING THE GRIEVANCEARBITRATION PROCESS

During this review we noted that improvement was needed to monitor and analyze grievance-arbitration cases adequately. OIG found

that the Postal Service does not have a comprehensive management information system to

capture nationwide statistical case data. Consequently, it is difficult for the Postal Service to

identify and correct management practices that

result in grievances or to resolve workplace

issues at the lowest possible level.

The OIG suggested that management

establish a comprehensive nationwide management system to track all appealed grievances. A

comprehensive management information system would allow Postal managers to better analyze trends and patterns within their areas or districts, and would allow headquarters labor relations staff to easily identify systemic issues.

Management was responsive to the OIG suggestions and is continuing efforts to redesign the

tracking system. (OIG LR-MA-99-001)

In a related review, OIG found that grievance arbitration procedures were not generally

administered as required by the national agreements. Management comments were responsive to the issues raised and emphasized the

importance of ensuring that Postal managers

comply with contractual obligations. (OIG LMMA-99-002)

DELAY OF PROCESSING EQUAL

EMPLOYMENT OPPORTUNITY

COMPLAINTS 

The OIG issued the first in a series of

reports to review the equal employment opportunity complaint process in the Postal Service.

In response to a significant number of equal

employment opportunity-related complaints in

a Texas District, the OIG focused first on that

District and limited the review to the timeliness

of complaint processing. The audit revealed

that the District had experienced varying rates

of success in meeting the precomplaint and formal complaint processing timeframes. For

example, management took an average of 78

days to complete inquiries, twice the time

allowed by law, for 998 closed precomplaint

cases. The OIG determined that the delays

resulted from insufficient staffing and turnover

in key positions. The OIG provided three 

The following section highlights audits,

reviews, and investigations done by the

OIG and the Inspection Service in support

of the Postal Service’s Voice of the 

Employee. In order to differentiate the work

reported by the OIG and the Inspection

Service, the pages containing the Inspection

Service work have been color screened. 
PAGE47

recommendations to improve the timelines of

complaint processing. 

Management agreed to the recommendations and has initiatives planned and in progress

addressing the issues in this report. (OIG LRAR-99-010 and LR-CR-99-029.)

ALLEGATIONS OF RETALIATION

The OIG reviewed an allegation of retaliation against an employee at a California Post

Office and found that retaliation had occurred

in part because the employee had participated

in an OIG investigation. The OIG made the

following recommendations to Postal management:

◆ Review the actions of the managers to

determine whether corrective and/or disciplinary action is warranted.

◆ Ensure procedures are implemented to

comply with policy concerning approval

or denial of light-duty assignments.

◆ Reiterate to all management that retaliation against employees is prohibited.

◆ Ensure that all injury compensation

claims from the Office of Workers’ Compensation Programs are processed in a

timely manner.

Postal management agreed with the last

three recommendations but disagreed with the

first, stating that the finding of retaliation had

not been supported. The OIG continues to

work with management to resolve this recommendation. (OIG LR-AR-99-006, LR-CR-99-

028, LR-CR-99-021, and LM-CR-99-001)

The OIG conducted a follow-up audit to

determine whether managers at this California

Post Office and District properly investigated

sexual harassment allegations and whether their

reassignment of a supervisor was in accordance

with the Postal Service report recommendations. The audit disclosed that managers had

not taken action to investigate the sexual

harassment allegations until after OIG inquired

into this matter. Further, despite the District

Manager’s statement that the supervisor would

be reassigned to a position without supervisory

responsibilities, the audit disclosed that the

supervisor was reassigned to a position with

supervisory duties and responsibilities. 

The OIG recommended that Area management:

◆ Report the results of the completed sexual harassment investigation to the Postal

Service Vice President, Labor Relations;

the Vice President, Human Resources;

and the OIG.

◆ Determine why allegations of sexual

harassment were initially not investigated and take the appropriate corrective

action.

◆ Review the former supervisor’s duties to

determine if they can be modified and

still meet the terms of the Merit Systems

Protection Board settlement agreement.

Postal management did not concur with

the OIG conclusions and recommendations.

Management stated that they found no evidence that the supervisor’s behavior was sufficiently severe or pervasive to create a hostile

work environment. In addition, management

stated that the sexual harassment allegations

were now completely investigated and no further action was required. Because the supervisor does not supervise the same employees on a

daily basis, management stated that terms of the

Merit Systems Protection Board settlement

agreement had been met. The OIG did not

agree with management’s responses. Resolution

for these recommendations is pending. (OIG

LR-AR-99-008, LR-CR-99-028, and LR-CR99-021)

IMPROVEMENTS FOR UPDATING

SENSITIVE CLEARANCES

The OIG issued the first in a series of

reports to evaluate the effectiveness of the

Inspection Service’s process for granting and

updating security clearances for Postal Service

employees and contractors. The report showed

that the Inspection Service has not developed

and implemented a system to ensure that sensitive clearances for non-Inspection Service personnel are updated at least every five years as

required by the Postal Service Administrative

Support Manual.

Inspection Service management agreed

with OIG suggestions that it establish such a

system and that the system be implemented in a

manner that facilitates production of an accurate, current security clearance status for all

Postal Service employees. While planning to

develop a permanent system, the Inspection
PAGE48 VOICE OF THE EMPLOYEE

Service is working with the Postal Service’s

Information Technology Division to develop an

interim system that will identify clearances that

need updating. (OIG OV-MA-99-001) 

SUGGESTED IMPROVEMENTS

FOR ACCIDENT REPORTING

PROCESS

The OIG evaluated a Postal Service

process management team to determine if the

team properly identified weaknesses in the

existing accident reporting process and made

appropriate recommendations. The actions will

improve accident reporting, but the OIG suggested additional opportunities for improvement as follows:

◆ Establish a revised plan with target dates

to assess the results of both the headquarters process management team and a

Midwest Area team. Also, determine the

feasibility of implementing the teams’

recommendations.

◆ Reassess the recommendations included

in the headquarters process management

team’s final report to determine if any

changes are necessary to address the

Occupational Safety and Health Administration private-sector requirements

(compliance required effective 

September 28, 1998).

◆ Update the Human Resources Information System Safety Subsystem to ensure

accurate reporting of accidents categorized as property damage. 

Management agreed with the first two suggestions but disagreed with the third. The OIG

will continue to monitor accident reporting and

will review the disputed suggestion once an

audit resolution process is developed. (OIG

DS-MA-99-002)

SUGGESTIONS TO ADDRESS

ALLEGED HARASSMENT AND

DISCRIMINATION

The OIG reviewed Postal Service employee allegations concerning harassment and discrimination actions at a post office. The review

disclosed that the Postmaster had engaged in

inappropriate actions that were perceived by

craft employees as harassing and intimidating.

A review of four cases indicated that the Postmaster’s actions were inconsistent with Postal

Service rules and regulations, federal law, the

National Union Agreement, and the Postal

Service CustomerPerfect! goal.

As a result of a subsequent management

review, the Postmaster was reassigned. Management also required the Postmaster to attend

supervisory and group performance skills training. However, the two cases are awaiting decisions through the collective bargaining agreement and the equal employment opportunity

complaint processes. Management indicated

that decisions rendered through these processes

would be implemented. (OIG LR-MA-99-006)

REVIEW OF ADVANCE SICK

LEAVE PROGRAM AND HEALTH

AND SAFETY ISSUES 

The OIG reviewed the administration of

the advance sick leave program and health and

safety issues at a California Post Office. The

audit disclosed that the Officer-in-Charge had

not implemented adequate communication

procedures regarding the advance sick leave policy and routinely denied advance sick leave

without proper consideration.

The OIG recommended that management

inform all supervisors and employees of the

advance sick leave policy, require review of each

advance sick leave request with a consistent

method to communicate denied requests, and

ensure unsafe working conditions are corrected

as required. Management agreed with the first

two recommendations and disagreed partially

with the third, stating that the unsafe working

conditions were a temporary situation because

new phone lines were being installed in the

building. (OIG LR-AR-99-009, LR-CR-99-

028, and LR-CR-99-021)

REVIEW OF ALLEGATIONS OF

DISCRIMINATORY HIRING 

PRACTICES 

The OIG reviewed allegations of discriminatory hiring practices at a Texas Post Office.

Although the audit revealed no evidence of discriminatory hiring practices, the OIG review

disclosed harassment and intimidation of

employees, a delay in providing injury compensation claim forms, and physical assaults.

Management agreed to all OIG recommendations and stated that many corrective

actions were in the process of being implementWhat is the background of 

OIG staff?

The OIG staff includes auditors,

evaluators, criminal investigators,

lawyers, technicians, and 

administrative personnel from

Federal and state government

agencies, private industry, 

nonprofit organizations, and 

the Postal Service.

DID YOU 

KNOW?
ed prior to the OIG report. (OIG LR-AR-99-

007 and LR-CR-99-033)

ALLEGATIONS OF UNFAIR LABOR

PRACTICES 

The OIG reviewed allegations of unfair

labor practices at a Processing and Distribution

Center in New York. Specifically, employees

alleged harassment and preferential treatment

regarding leave and supervision.

The OIG was not able to validate the allegation concerning harassment and preferential

treatment. However, during the OIG site visit,

the employee assistance program representative

agreed to survey all employees, identify complaints, and provide training to managers,

supervisors, and employees explaining their

roles and responsibilities regarding requesting

and approving leave. This report contained no

suggestions and required no response from management. (OIG ER-MA-99-002, LM-CR-98-

031, and LR-CR-99-016)

OTHER REVIEWS

The OIG generally does not review individual employee complaints. As a new agency,

however, we needed to develop an understanding of the Postal culture and employee concerns. The chart shows the diversity of the

labor relations complaints we received. [see

chart on the side]. We also needed to develop a

working relationship with Postal Management

to ensure that employees’ concerns are

addressed. In this regard, several of the following individual reviews met our objectives.

ALLEGATIONS OF EMPLOYEE

MISTREATMENT

The OIG reviewed allegations from seven

Postal employees. The allegations included

wrongful denial of transfer requests, mishandling of workers’ compensation claims, equal

employment opportunity violations, failure to

accommodate injured employees, noncompliance with terms of settlement agreements, and

harassment or retaliation actions. Some of the

allegations were substantiated, and the 

OIG provided management with the following 

suggestions: 

◆ Assess compliance with procedures for

providing and terminating limited-duty

assignments and resolving discrepancies

in fitness-for-duty examinations. In

instances of noncompliance, take the

necessary corrective actions.

◆ Ensure managers understand that disciplinary actions should be corrective in

nature and when fitness-for-duty examinations are warranted.

◆ Counsel managers and ensure compliance with the terms of Equal 

Employment Opportunity Commission

and Merit Systems Protection Board settlement agreements.

◆ Ensure reasonable accommodation is

given to an injured employee.

◆ Address the importance of following

Postal Service procedures for providing

and terminating limited-duty assignments.

Although management comments were

generally responsive to the issues raised in this

advisory report, the OIG is concerned with

management’s response that employees must

file an enforcement petition for settlement

agreements that are legally enforceable. Also,

compliance with the agreements is not discretionary. (OIG LR-MA-99-005, LR-CR-99-

007, LR-CR-99-008, LR-CR-99-009, LR-CR99-010, LR-CR-99-011, LR-CR-99-012, LRCR-99-013, LR-CR-99-017, LR-CR-99-031,

and LR-CR-99-032)

ALLEGED FEDERAL PRIVACY ACT

AND FREEDOM OF INFORMATION ACT VIOLATIONS

The OIG reviewed allegations of Federal

Privacy Act and Freedom of Information Act

violations and mismanagement of Postal policies and procedures. Specifically, the complainant questioned the release of personal

medical information to the Postal Service’s

Injury Compensation or Employee Assistance

Program without written permission. 

The OIG examined the complainant’s correspondence, as well as pertinent responses from

the Postal Service, and concluded that there

were no Federal Privacy Act violations. The

complainant was informed that the Federal Privacy Act allows for disclosure of medical information without the individual’s written permission in certain circumstances, including disclosure to “a government agency in order to obtain

HOSTILE WORK 

ENVIRONMENT HIRING 

PRACTICES

INTIMIDATION

MENTAL ABUSE 

(STRESS)

VERBAL ABUSE

ADMINISTRATIVE 

ACTION

RETALIATION EEO, 

GRIEVANCES, ETC

DISCIPLINARY 

ACTION

HARASSMENT

DISPARATE 

TREATMENT

EMPLOYEE 

LABOR RELATIONS 

MANUAL

MISC.

34 23

31

31

40

53

69

27 37 41

35

28

29

TOTAL NUMBER OF COMLAINTS 478

LABOR RELATIONS 

COMPLAINTS

PAGE49
PAGE50 VOICE OF THE EMPLOYEE

information relevant to a [Postal Service] decision concerning employment, security clearances, security or suitability investigations or

[to] other persons under contract with the

[Postal Service] to fulfill an agency function.”

The complainant was further informed that it

was, therefore, not necessary to obtain written

authority before disclosing the information.

(OIG ER-CR-99-012 and ER-CR-99-013)

ALLEGATION OF IMPROPER

TRANSFER 

The OIG reviewed allegations by a former

Postal employee regarding an improper transfer

within the Postal Service and an improper handling of an employee’s workers’ compensation

claim. The OIG contacted Postal officials and

reviewed related documents. The OIG substantiated the allegation that the claim was not handled properly, but found that management corrected the problem when the employee brought

it to their attention. (OIG ER-CR-99-003)

ALLEGATIONS OF 

MISMANAGEMENT

The OIG reviewed allegations of mismanagement at a post office. Specifically, the

employees expressed a wide range of concerns

about Postal management. The OIG contacted

the Area Vice President and requested a review

of the problems reported by the employees. The

Vice President advised the OIG that District management had addressed the mismanagement

issues. (OIG ER-CR-99-009 and ER-CR-99-010)

DID YOU 

KNOW?

Kelly Oliver and John Milstead assure

that all OIG employees stay in contact

through the OIG wide-area network.

What is the OIG’s website

address? 

OIG’s website address is

www.uspsoig.gov.
PAGE51

INSPECTION SERVICE

ASSAULTS AND THREATS

The Inspection Service is dedicated to the

prevention of violence in the workplace and

considers early intervention and cooperation

with management and employee groups essential. Assaults of and threats against Postal

employees are taken seriously by Postal Inspectors, who investigated 551 incidents reported

during this period, a 16 percent reduction from

the same period last year. Criminal charges are

initiated when possible, which led to 227 arrests

and 189 convictions from October 1, 1998

through March 31, 1999.

Postal Clerks Threatened with Shotgun

Last December, a customer entered a Colorado postal station with a loaded shotgun to

complain about his mail service. Postal Inspectors responded immediately and placed the customer under arrest without incident. The customer was subsequently convicted in federal

court on three counts of assault, and later sentenced to three years in prison and three years’

probation.

Letter Carrier Assaulted for Welfare Check

The owner-landlord of a New York 

building threatened to kill a letter carrier for

returning the welfare check of a tenant who had

moved out of the building. Following the

threat, the landlord got into a van and attempted to run down the carrier. A witness pulled the

carrier back, but the carrier was still hit by the

van’s mirror. The landlord was charged in federal court and found guilty of assault with a

deadly weapon.

Washington, DC, Letter Carrier’s Shooter

Sentenced

A 1996 case against three juveniles

involved in the murder of a Washington, DC,

letter carrier came to a close in November 1998.

Two defendants previously pled guilty. The

third pled guilty after losing an appeal against

being tried as an adult, was sentenced to 40

years to life for shooting the letter carrier as he

sat in his Postal truck.

POSTAL ROBBERIES

The Inspection Service also regards 

robberies as one of its highest organizational priorities and affords task force attention to facility, carrier, and other Postal robberies to deter

these attacks on employees. Inspection Service

investigated 75 robberies. Robbery related

arrests and convictions for this semi-annual

period totaled 57 and 55, respectively. 

Highway Contract Route Driver Robbed

Robberies of Postal trucks or highway contract route trucks for registered mail containing

cash or other valuables are often based on

“inside” knowledge of when the registers will

arrive and on which truck. In a recent case,

Postal Inspectors arrested a man who robbed a

highway contract route driver of registered mail.

Also arrested was a local Postal employee who

planned the robbery, and the spouse, who was

present during the planning. The truck 

contained remittances from nine post offices,

and losses included over $102,500 in Postal

cash and a significant amount of jewelry mailed

by customers. Postal Inspectors recovered a

large amount of the jewelry and over $58,000

of the cash.

Post Office Robber Sentenced

The robber of a Post Office and a contract

Postal Station in South Carolina was sentenced

to over 52 years in federal prison. The subject

was also indicted for robbing another Post

Office in North Carolina, for escaping from jail,

and for committing a carjacking while awaiting

trial for the two South Carolina robberies.

Gang Members Rob Letter Carriers for

Mailbox Keys

The mastermind behind at least 13 carrier

robberies in Southern California was recently

sentenced to nearly 11 years in federal prison

and faces an additional two years in prison for

committing armed robbery while on federal probation. The subject and an accomplice recruited members of various Los Angeles street gangs

to rob letter carriers of their postal keys. Gang

members used the keys to steal outgoing mail

from collection boxes to obtain checks for a

check-washing scheme. Twenty-eight participants in the scheme were already sentenced.

What are the duties of the

Postal Police Officers?

Postal Police Officers provide

security around the clock at designated Postal facilities, monitor

alarms to provide protection for

Postal employees and property,

and escort high-value shipments 

such as Postal remittances.

DID YOU 

KNOW?
PAGE52 VOICE OF THE EMPLOYEE

DRUGS IN THE WORKPLACE

To help ensure a safe working environment, the Inspection Service investigates narcotics-related offenses, particularly the sale of

narcotics on Postal premises. During this semiannual period, Postal Inspectors arrested 14

employees for narcotics violations.

Postal Supervisor Trafficking Drugs 

on Duty

One recent investigation of narcotic trafficking on Postal premises led to the resignation

of a Postal supervisor and rural carrier in Virginia. The supervisor sold narcotics, most of

which was marijuana, on Postal property while

on duty, and the rural carrier was his middleman supplier. A search of the carrier’s apartment produced approximately three pounds of

marijuana packaged for distribution, many items

of drug paraphernalia, a loaded gun, and 133

rounds of ammunition. The carrier’s supplier

was also arrested. The two employees resigned,

and each pled guilty.

Postal Truck Driver Arrested for Selling

Drugs

A Chicago tractor-trailer operator was

arrested last October for selling crack cocaine.

The operator admitted smoking crack while 

driving the semi-truck. The driver had been 

suspended in September for refusing to take a

drug test.
Voice of the Business

DID YOU 

KNOW?

PAGE 53

Is OIG responsible for 

all audits within the Postal Service?

Yes. In January 1999, the Postmaster General re-emphasized 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 will serve as the focal point with other agencies, to

coordinate work efforts and avoid any duplication.
PAGE54 VOICE OF THE BUSINESS

OFFICE OF INSPECTOR

GENERAL

INSPECTOR GENERAL TESTIFIES

BEFORE CONGRESS 

CONCERNING Y2K ISSUES

In February, Congress invited the Inspector

General to testify at a joint Subcommittee hearing on the Year 2000 (Y2K) challenges facing

the Postal Service. The Inspector General discussed Postal Service progress in pursuing solutions to Y2K problems and also addressed significant challenges ahead. To highlight the issues

requiring attention within the Y2K area, the

Inspector General focused on three major categories:

◆ Critical Core Business Infrastructure

◆ Information Systems

◆ Business Continuity and Contingency

Planning

The Inspector General outlined the process

the Postal Service is using to achieve Y2K readiness and described it as a multiphase process

involving assessing systems for compliance,

reviewing and correcting noncompliant systems, and testing and implementing those solutions or contingency plans Postal-wide. In the

coming months, the OIG will continue to work

closely with Postal Service management to

identify Y2K challenges and minimize the risk

of Y2K-related failures. (OIG IS-TR-99-001)

IMPROVEMENT NEEDED IN

QUALITY OF Y2K REPORTING

During this review, the fourth in a series,

the OIG noted that the quality of Y2K reporting needed improvement and that senior management might be in a position to make more

informed decisions if given regularly scheduled

reports that disclosed the status of all Y2K activities.

Although the Postal Service Y2K Initiative

Program Management Office enhanced the

accuracy and reliability of Y2K reporting,

improvements are needed in the way the Program Management Office conveys the status of

its activities to senior management. The OIG

recommended that the Postal Service:

◆ Develop a standardized report that discloses all Y2K areas and provide them on

a frequent basis to senior management;

◆ Ensure that the standardized report

includes (1) all major Y2K areas, 

(2) original baseline figures, with any

changes and reason for change, and

target dates, and (3) definition of terms;

◆ Consolidate and link Postal Service

Y2K databases to provide a complete,

centralized repository of Y2K project

information; and

◆ Reevaluate priorities given the non-information systems and corporate Y2K issue

areas, and shift or identify additional

resources to address them as soon as 

possible.

Management generally agreed with the

OIG’s recommendations. (OIG IS-AR-99-001)

IMPROVEMENTS NEEDED FOR

TRAY MANAGEMENT SYSTEM

DELIVERABLES 

During an ongoing audit of the Tray Management System, the OIG received concerns

from the Postal Service management that a

contractor had not satisfied requirements for

spare parts’ resupply and had not completed a

required parts provisioning document and a lifecycle support plan. The OIG review disclosed

that the contractor did not meet the resupply

requirements for emergency and nonemergency

spare parts for August 1, 1998, through December 23, 1998.

The Tray Management System plays a vital

role in timely mail processing because it automates the movement and staging of mail

between most sorting operations in a processing

plant. At two Processing and Distribution Centers, emergency part-order deliveries were delinquent more than 70 percent of the time and

nonemergency deliveries were delinquent more

than 50 percent of the time, causing some disruption of operations. Without a provisioning

document to identify parts and a life-cycle supThe following section highlights audits,

reviews, and investigations done by the

OIG and the Inspection Service in support

of Postal Service’s Voice of the Business. In

order to differentiate the work reported by

the OIG and the Inspection Service, the

pages containing the Inspection Service

work have been color screened. 

Inspector General Corcoran testifying

to Congress on the Postal Service’s

Year 2000 readiness.
PAGE55

port plan, the centers were left without adequate spare parts support.

Management agreed with the OIG’s suggestions to bring the contractor into compliance and proposed additional actions to address

the contractor delinquency of deliverables.

The OIG will continue to monitor contractor

performance to ensure that all current and

future deliverables are timely. (OIG DA-MA99-001)

INTERNATIONAL MAIL SERVICES

REVIEWED FOR SUBSIDIZATION

The OIG conducted an audit of cost allocations between international and domestic

products and services to determine if inappropriate cross-subsidization was occurring. The

OIG found that revenues from domestic mail

services did not subsidize international mail services, in aggregate. However, improvements

are needed in statistical sampling designs to

accommodate measurement of international

mail. The OIG recommended that Postal Service management:

◆ Review sample designs to ensure that

sample results yield sufficient data to produce reliable estimates of international

mail;

◆ Evaluate the cost-effectiveness of replacing current manual sampling procedures

with automated solutions; and

◆ Emphasize proper sampling execution in

the field.

Management concurred with the recommendations and responded with a summary of

initiatives the Postal Service has in progress,

completed, or planned addressing the issues.

(OIG FR-AR-99-004)

CORPORATE TREASURY 

EFFECTIVELY MANAGES 

POSTAL SERVICE CASH

The OIG contracted the services of an

independent accounting firm to conduct an

audit of the policies, procedures, and internal

controls over cash management at the Postal

Service’s corporate treasury. The audit disclosed

that adequate controls existed, providing reasonable assurance that Postal Service resources

were safeguarded against fraud and abuse.

Appropriate levels of supervision and oversight

existed, and employees were well informed

about stated goals to obtain better service

including minimizing both debt and cash on

hand, ensuring ongoing liquidity, increasing

electronic payments, and decreasing the number of banks used.

The audit concluded that the Postal Service’s corporate treasury had established an

effective control environment and had the

knowledge and skills to effectively manage a

cash management program in contemporary

financial markets. The report contained no recommendations. (OIG FR-AR-99-005)

IMPROVEMENTS FOR POSTAL

SERVICE MANAGEMENT OF PERSONAL SERVICES CONTRACTS

The OIG conducted this review and found

that without formal policies, procedures, and

controls over the use of contract personnel to

supplement the Postal Service’s workforce,

there is no assurance that Postal resources are

being used economically or effectively. For

example, a contract to support the remote barcode sorter team was originally awarded for

$27,000 in 1992. Since then at least 57 modifications have, in aggregate, increased the cost

to more than $3 million.

The OIG suggested that the Postal Service

develop and strengthen policies, procedures,

and controls over the use of personal services

contracts to ensure that legal, tax, and financial

risks are appropriately assessed and mitigated.

Management concurred with the OIG’s suggestion and indicated that management was

already in the process of working out a plan to

study the matter when the OIG began its

review. Further, the Postmaster General issued

a letter on March 11, 1999, to all officers

expressing concern about the Postal Service’s

growing reliance on consulting services and

other contracting methods used to supplement

the administrative workforce. The letter

announced the establishment of a new Consulting Services Review Committee to review

all new and existing contracts to ensure their

necessity. The OIG considered the corrective

actions taken by the Postal Service management to be responsive. (OIG QR-MA-99-001)

The Postal Service depends on 

automated mail processing equipment

to move the mail.
PAGE56 VOICE OF THE BUSINESS

ATLANTA OLYMPIC FACILITY

IMPROVEMENT PLAN REVIEWED

The OIG reviewed the circumstances 

surrounding the termination of the Atlanta,

GA, Federal Center Post Office construction 

project. During the review, the OIG found that

the construction project was part of the larger

Atlanta Olympic Facility Improvement Plan

and decided to audit the entire plan. The audit

disclosed that the Improvement Plan did not

receive approval and oversight at the appropriate level and that approved deviations were

costly to the Postal Service. In January 1995,

the Improvement Plan consisted of 34 projects

at an estimated cost of $14.6 million. However,

the final program had 42 projects costing

approximately $24 million.

Management agreed with 10 of 13 recommendations and has planned or implemented

actions that are responsive to the respective

audit recommendation. Management did not

agree with recommendations to seek clarification from the Board of Governors concerning

the unitary plan concept; be more prudent in

using indefinite quantity contractors for purposes beyond the original intent; and, when accepting modifications to proposals, document the

rationale for determining that the modifications

are in the best interests of the Postal Service.

The OIG will review the disputed recommendations once an audit resolution process is

developed. (OIG FA-AR-99-001)

LICENSE FEE INCREASES NEEDED

IN NATIONAL CHANGE OF

ADDRESS PROGRAM

This report responds to a congressional

request to determine the full costs, revenues

generated, and related benefits of the National

Change of Address Program. The OIG engaged

the services of an accounting and management

consultant to conduct this audit. This program,

implemented in 1986, makes change-of-address

information available for a fee to Postal Service

business customers who have existing name and

address mailing lists. The Postal Service estimated that 17 percent of the nation’s population moves each year and, in 1997, these moves

resulted in approximately 43.5 million changeof-address cards and 2.7 billion pieces of forwarded mail. Updating mailing lists before mail

enters the mail stream avoids rehandling costs

associated with forwarding mail.

The audit disclosed that although the

National Change of Address Program revenues

exceeded expenses for FY 1998 using the marginal costing method, costs for the National

Change of Address Program exceeded revenues

by over $1 million using the full costing

method. However, rehandling costs avoided by

the Postal Service in FY 1998 were estimated at

$1.194 billion. As such, the benefits of the program outweighed the net costs of the program

for FY 1998. Conversely, the report recommended that management use full costing to

establish rates licensees pay to receive National

Change of Address service in order to recover

full costs of the service provided. Management

agreed to the recommendation and has 

initiatives in progress that will result in approximately $1.2 million in additional revenues

from July 1, 2000, through June 30, 2002. (OIG

DS- AR-99-001)

POSTAL SERVICE ECONOMIC

ANALYSIS AND FORECASTING 

The OIG and the Postal Inspection Service

jointly conducted an audit of the Postal Service

economic analysis and forecasting process. The

purpose of the review was to determine the

effect on long-term improvements and sustained organizational performance. The audit

disclosed differences between actual performance and Postal Service revenue and cost projections. These differences may impair planning for future growth, create difficulties for

increasing market share, and delay timely

implementation of Postal Service projects. 

The OIG made the following recommendations to the Chief Financial Officer and

Senior Vice President:

◆ Continue management meetings with

other key stakeholders to discuss factors

affecting the market environment.

◆ Continue forecasts to track short-term

changes.

◆ Reduce Postal Service contracting costs

through the use of internal resources.

◆ Benchmark the forecasting process to

identify and implement best practices.

What are the locations of the

OIG Headquarters and Field

Offices?

The OIG Headquarters is in

Rosslyn, VA and the Western

Duty Station is in Dallas, TX.

The OIG is also currently located

in Minneapolis, MN, St. Louis,

MO, San Mateo, CA, and

Atlanta, GA.

DID YOU 

KNOW?
PAGE57

Management agreed to the recommendations and has planned or implemented actions

that are responsive to each of the audit recommendations. (OIG RG-AR-99-001)

ASSESSMENT OF SALES FORCE

AUGMENTATION PILOT PROJECT

The OIG reviewed the Sales Force Augmentation Pilot Project in response to a request

from management. This project is a unique

direct-sales marketing strategy designed to generate new revenue to meet the needs of small to

medium-sized businesses through the sale of

four Postal products: Priority Mail, Express

Mail, Global Priority Packaging, and Express

Mail International. The plans are to establish

12 major metropolitan sites during FY 1999.

The current Sales Force Augmentation Pilot

Project revenues are projected at approximately $404 million over three years, and incurred

expenditures are estimated at $70 to $80 million.

This OIG review, the second of the ongoing Sales Force Augmentation Pilot Project,

identified six conditions for review and action

by the Sales Force Augmentation management.

The OIG made suggestions to address the 

following safeguards for expansion of the pilot

project: 

◆ Justification for baseline determinations, 

◆ Support for provider billings, 

◆ Spot audits, and

◆ Operational intranet coordination of

delivery confirmation.

Management comments were responsive

to the issues and suggestions raised in this

report. (OIG RG-MA-99-002)

UNRELATED DOCUMENTS IN

WORKERS’ COMPENSATION

FILES 

During the performance of an audit of

workers’ compensation cases, OIG found unrelated administrative and sensitive medical

records in the injury compensation claims files.

Due to the sensitive nature of the documents,

OIG conducted a limited review to determine

the appropriateness of maintaining these documents in the files. The review disclosed that the

equal employment opportunity records were

unrelated and the medical records were not relevant to the cases reviewed and therefore

should not be included in the files. The review

also found that some injury compensation

offices inappropriately used temporary personnel to assist in maintaining workers’ compensation files that contained confidential documents.

The OIG suggested that management

direct the injury compensation office personnel

to include only relevant documents in the

workers’ compensation files. The OIG reemphasized safeguarding sensitive medical information and the legal obligations imposed under

the Privacy Act. Management comments were

responsive to the issues raised in this report.

(OIG HC-MA-99-001)

VALIDATION OF SOCIAL 

SECURITY NUMBERS

The Department of Labor requested OIG

assistance in verifying the accuracy of 47 selected Postal Service employees’ social security

numbers identified as potentially invalid. The

47 cases were identified by the Department of

Labor during a required social security number

validation of the Thrift Savings Plan database.

Although nine social security numbers were

found to be invalid, seven were due to transposition errors, one was an inadvertent use of a

father’s social security number, and one was

inappropriately used by an illegal alien. In the

last instance, the case was referred to the Immigration and Naturalization Service for appropriate action.

The OIG review disclosed no systemic

problems of recording social security numbers

within the Postal Service Human Resources systems, so no management action was required.

(OIG FR-MA-99-001)

LIABILITY INSURANCE 

COVERAGE APPROPRIATENESS

The liability insurance coverage for the

Postal Service officers and Governors has a

criminal defense provision that provides for

payment of legal expenses unless there is a final

verdict or plea of guilty, at which time the

underwriter can stop benefits and seek recovery.

The OIG review of the liability insurance coverage noted an apparent conflict between the

criminal defense provision and the duty of

Postal Service employees to obey and defend

Aaron Jordan and Jim Baghdadi of OIG 

complete quarterly firearms 

qualifications at the Inspection 

Service range at Bolger Center.
PAGE58 VOICE OF THE BUSINESS

the laws of the United States. The Department

of Justice was contacted and shares the OIG

concern that the payment of an employee’s federal criminal legal defense fees by an agency

before the employee is exonerated is not in the

best interest of the government. Therefore, the

OIG questioned the appropriateness of using

Postal revenues to pay insurance premiums to

cover the legal expenses of any Postal Service

officers and Governors charged with federal

criminal misconduct. 

The OIG suggested that the insurance coverage be amended to allow reimbursement for

legal fees only if the person is exonerated from

federal criminal charges. Management agreed

that the insurance policy should not be used to

pay for any form of criminal misconduct. However, management does believe it is appropriate

to pay legal costs for any officer or governor

charged with a federal criminal violation unless

or until a guilty finding or a guilty plea occurs, at

which time the insurance company would seek

recovery of all legal fees from that individual.

Management contends that the personal liability insurance coverage for the Postal Service

officers and Governors is the kind of benefit

that the Postal Service is required to provide its

officers and employees.

The OIG will continue to recommend that

the current Postal Service liability insurance

coverage be modified to ensure compliance with

the Department of Justice policy. (OIG DALA-99-002)

CONTRACTOR SUBMISSION OF

FICTITIOUS CONTRACT 

DOCUMENTS

A New Jersey contractor was arrested on

mail and wire fraud charges for submitting misleading documents to government agencies in

an attempt to secure contracts exceeding $20

million. The Postal Service OIG, Department

of Veterans Affairs, and Defense Criminal

Investigative Service jointly conducted the

investigation. Federal prosecution is pending.

POSTAL CONTRACTOR REMITTANCE FOR OVERCHARGING THE

POSTAL SERVICE

An OIG proactive investigation resulted in

an Ohio contractor’s voluntary remittance of

over $173,000 to the Postal Service for repayment of an overcharge for postage validation

imprinter labels. The contract required delivery

of a minimum of 1,085 labels per roll, but the

contractor had provided only an average of 992

per roll.

POSTAL EMPLOYEE 

MISAPPROPRIATION OF FUNDS

A joint OIG and Inspection Service investigation revealed a shortage of over $135,000 in

Postal funds. A window clerk in Ohio was

charged with misappropriation of Postal funds.

The clerk was sentenced to five months’ imprisonment, five months’ house arrest, and three

years’ supervised probation, and was ordered to

pay $75,000 in restitution. 

CLEANING SERVICE 

CONTRACTOR BRIBERY

A New Jersey cleaning service contractor

pled guilty to four counts of bribery for paying a

Postal supervisor $1,200 to ensure continuation

of a month-to-month contract at a post office.

The contractor was sentenced to five years’ probation, a $1,500 fine, and an assessment of

$400. Debarment is being considered. The

OIG and the Postal Inspection Service jointly

conducted the investigation. 

RECOMMENDATIONS FOR 

CONTRACTOR SUSPENSION/

DEBARMENT 

The USPS awards over 50,000 contracts

annually worth over $10 billion. The Postal

Service has debarred only 29 contractors in the

last four years. OIG benchmarked with several

other federal agencies with contracting programs similar to the Postal Service and found

these agencies debarred or suspended between

50 and 500 contractors in FY 1998 while the

Postal Service debarred only one. Postal policy

and Rules of Practice for Suspension and 

Debarment closely mirror the Federal Acquisition Regulations; however, the language in the

Postal Purchasing Manual is not quite as explicit

and leaves room for interpretation. Consequently, OIG has placed a priority on this area.

Following are two recent cases in which suspension and debarment were recommended:

◆ The OIG received a congressional
PAGE59

request and opened an investigation into

contract problems and irregularities

regarding a Postal facility in the western

United States. The OIG discovered that

a contractor misrepresented issues to the

Postal Service Office of Facilities involving contract performance. The Postal

Service inadvertently accepted property

that had significant hidden construction

flaws. The OIG recommended that the

Vice President for Purchasing and Materials review the investigation and consider suspension and debarment of the contractor. 

◆ The Vice President for Facilities referred

information to the OIG regarding potentially fraudulent activity by the general

contractor and an electrical subcontractor. The contractors failed to perform

contract requirements in a timely manner and improperly billed the Postal Service. OIG recommended to the Vice

President for Purchasing and Materials

that the Postal Service suspend and

debar both contractors. Federal 

prosecution is pending.

The Postal Service has a fleet of

more than 200,000 vehicles to pick

up, transport and deliver the mail.
PAGE60 VOICE OF THE BUSINESS

INSPECTION SERVICE

ADVERTISING AND PRODUCT

SALES REVIEW 

The Inspection Service and the OIG conducted an audit of the advertising and sales of

products and services within the Postal Service.

The objectives of the audit were to determine

the efficiency, effectiveness, and system integrity of the advertising and sales of products and

services within the Postal Service by evaluating

internal controls, organizational structure, goal

alignment, and industry methods. Recommendations were made for improvement in the

advertising process, corporate messaging, tracking of advertising expenditures, and generation

of revenue through sales. Management generally agreed with the findings and indicated that

many of the recommendations cited are either

currently in place or soon to be implemented.

(IS 020-1230990-PA(1))

PROCESSING AND DISTRIBUTION

CENTERS AUTOMATION 

PROGRAMS

The Inspection Service completed a

national coordination audit on the automation

program at two Processing and Distribution

Centers. The audit concluded that the letter

mail automation program had a positive impact

on mail processing operations. Although the

overall impact on mail processing was positive,

there were opportunities to increase workhour

savings by developing plans for reducing manual letter volumes and work hours. The Inspection Service recommended a reduction in the

number of remote encoding center sites to lower

overhead costs and improve efficiency, and

advised management to review the accuracy of

volumes of first handling piece and total pieces

handled contained in the Management Operating Data System database. Management concurred with the recommendations. (IS 022-

1232391-PA(1))

CAPITAL METRO BUSINESS MAIL

ENTRY UNITS REVIEW 

An audit was conducted of the business

mail entry units in the Capital Metro Area to

evaluate training, transportation, and acceptance and verification procedures. The audit

found that overall, the units were adequately

accepting and verifying customer bulk mailings.

However, 14 mailers were receiving unauthorized Postal Service transportation at an annual

cost of $92,200, and there were no authorized

complements for each of the units reviewed.

Employee Skill Assessment logs and presort verifications were not completed as required, and

no procedure was in place to test, maintain, and

certify bulk mail acceptance scales. Management agreed with the findings and recommendations and initiated corrective action. (IS 046-

1245790-PA (2))

EXPRESS MAIL CORPORATE

ACCOUNT ACTIVITY IN 

MID-AMERICA DISTRICT 

The Inspection Service conducted an audit

of the Express Mail Corporate Account activity

in the Mid-America District to identify opportunities for improvements to enhance account

management and lead to overall reductions in

Postal Service costs. The audit disclosed that

Express Mail acceptance and monitoring activities were not adequate to ensure proper account

verification or posting and collection of account

revenue. 

Required data were not always recorded on

or extracted from Express Mail labels to allow

accurate tracking of this mail and proper reporting of the transactions. The audit also showed

that a large percentage of Express Mail articles

addressed to Guam were not processed and

delivered in time to meet established service

commitments. The audit concluded that opportunities exist at the national level to enhance

the Express Mail Corporate Account program,

improve Express Mail service to Guam, and

increase revenue through a reduction of refunds.

Management agreed with the findings and recommendations and initiated corrective action.

(IS 319-1206621-PA (3))

TORT CLAIM COLLECTION 

PROCEDURES

The Inspection Service found that tort

claim adjudicators did not always follow collection procedures. As a result, adjudicators did

not seek reimbursement for damage to Postal

property that resulted from accidents where private parties were at fault. In six districts

reviewed, Postal Inspectors found $110,000 in

potential collection where action either had not
been taken, or was not timely. The files

reviewed disclosed instances where letters of

demand had not been issued and where letters

were issued, no follow-up action was pursued if

the private party did not respond. Further, files

did not always contain invoices from body

shops or vehicle maintenance facilities to support collection efforts in accidents where the

private party was at fault. The Inspection Service recommended that instructions be issued

requiring District tort claim adjudicators to

review all open tort claims to identify those

claims requiring collection action, and to

review collection modules in the Tort Claim

Office Software at least quarterly to ensure that

proper and timely collection procedures are followed. (IS 045-1248616-PA(2))

FINANCIAL OPINION AUDITS

The Inspection Service and the OIG conducted financial opinion audits at the three

Postal Service accounting service centers and

Postal Headquarters. These audits were conducted in support of the independent public

accounting firm’s overall Postal Service financial opinion audit. The results follow:

◆ For one accounting service center, the

audit resulted in seven findings and nine

financial accounting adjustments. Postal

management agreed with all seven findings and accepted all proposed adjustments. The adjustments increased

income by $20.9 million. The report

also noted that five of the seven prior

years’ findings had been completely

implemented with the other two partially

implemented. (IS 001-1219706-AD(1))

◆ The annual audit of the second accounting service center resulted in six findings

and four financial adjustments. Postal

management agreed with all six findings

and accepted three of the four proposed

adjustments. The accepted adjustments

decreased income by $4.1 million. (IS

001-1224758-AD(1))

◆ The annual audit of the third accounting

service center disclosed: (1) some Postal

supervisors and timekeepers at electronic

time clock sites throughout the country

could add, change, and delete their own

clock rings, resulting in unauthorized

clock changes; (2) database administrators have unrestricted access to specific

accounts receivable applications without

second-party reviews and could write-off

material invoice amounts or process large

credit memos without approval or review

by a manager; and (3) timekeeping errors

for employees who separated before the

end of a pay period resulting in them

being paid for work hours subsequent to

their separation date. (IS 001-1225936-

AD(1))

◆ A Postal Headquarters Division used a

non-standard billing and receipt process

that did not require certification of

invoices based on receiving reports completed by a Material Distribution Center

receiving clerk. Consequently, there was

no independent inspection and physical

counting of goods received to match the

quantities on delivery tickets and bills of

lading. Also, the Division recorded

incorrect goods received dates on invoices and prepared incorrect receiving

reports. Consequently, Postal Service

paid invoices sooner than required under

the Prompt Payment Act, paid for more

goods than were received, and expensed

inventory items. (IS 011-1219706-AD (1))

DISTRICT ACCOUNTING OFFICE

AUDITS

The Inspection Service conducts District

Accounting Office audits to evaluate accounting controls as a supplement to financial installation audits.

◆ The Inspection Service reported that

internal controls over the 16,000 postage

meters generating revenue of more than

$240 million during FY 1998 could be

improved at a District accounting office.

It found that identification and control

of delinquent customer meters tracked in

the Metered Accounting and Tracking

System could be improved. Postage

meter revenue was not always verified

with the revenue reported in the meter

accounting and tracking system as

required. The simultaneous maintenance

of manual and automated forms resulted

in a duplication of work when tracking

meter activity and revenue. Management did not provide the level of attention necessary to ensure that adequate

internal controls were in place to safePAGE61

Retail staff provide a variety of services

to over 7 million customers every day.
PAGE62 VOICE OF THE BUSINESS

guard meter revenue and detect lost,

stolen, or tampered meters. Management

officials agreed and committed to correct

the deficiency by FY 2000. (IS 016-

1256413-AF(2))

FINANCIAL INSTALLATION

AUDITS

The Inspection Service conducted numerous financial installation audits. The purpose of

these audits is to review the adequacy of internal controls at the installation level, and the

results are considered in the overall planning of

the financial opinion audit.

◆ A financial installation audit of a post

office resulted in the identification of

over $75,000 in revenue deficiencies.

Examination of procedures at a detached

mail unit contractor disclosed that a

statement of mailing was unintentionally

attached to another mailing statement

and had not been entered into the permit

system for withdrawal from the proper

account. The unit had also allowed 132

entries to accumulate for a year as a

result of discrepancies on the optional

procedures summary logs. Management

agreed with the finding and recommendations, collected the revenue deficiency,

and initiated corrective action on the

discrepancies. (IS 011-1256279-AF(1))

◆ A financial installation audit of a post

office resulted in the presentation of five

findings and the identification of over

$39,000 in revenue deficiencies. Recommendations that will strengthen internal

controls were presented to management

in the areas of business mail acceptance,

post office box and caller service, office

accountability, disbursements, and capital

property. The failure to collect the appropriate post office box and caller service

fees at the main office and branch resulted in the majority of the revenue deficiencies over $36,000. A $2,598 revenue

deficiency resulted from the identification of eight newspaper editions not

being entered into the permit system.

Management agreed with the findings

and recommendations outlined in the

report. (IS 011-1259853-AF(1))

◆ A financial installation audit at a post

office resulted in the issuance of seven

findings in the areas of financial organization, accounting and reporting, stamp

stock administration, postage due/business reply mail, business mail entry unit,

periodical mailings, station internal controls, and penalty business reply mail.

Revenue deficiencies of over $33,000

were also identified. Uncollected revenue

of over $10,000 in the official mail

accounting system and over $22,000 in

delinquent post office box and caller service fees accounted for the total. Management agreed with the findings and

recommendations and provided an action

plan to take corrective action. (IS 011-

1256430-AF(1))

◆ A financial installation audit at a post

office resulted in the presentation of

three findings in the areas of office

accountability, postage due/business reply

mail, and business mail entry unit operations. The lack of sufficient internal

controls in these areas resulted in the

identification of over $34,000 in revenue

deficiencies. Management agreed with

the findings and recommendations and

provided an action plan to take corrective actions. (IS 011-1256584-AF(1))

◆ A financial audit of a post office resulted

in four internal control findings and the

identification of over $25,000 in revenue

deficiencies. The state prison had

reserved two blocks of caller numbers for

current and future use. While it paid the

annual fees for the four bulk separations

of mail performed at the post office, it

had not paid the reservation fee for the

remaining numbers reserved for the

prison’s use, resulting in over a $23,000

revenue deficiency. Another customer

was paying the lower automation-based

business reply mail rates, for which the

customer was not eligible, resulting in

over a $2,000 deficiency. Internal control

deficiencies were also identified in the

areas of office accountability and registered mail. (IS 011-1255654 AF(1))

CONTRACT AUDITS

The Inspection Service conducts preaward and post-award contract audits. Pre- and

post-award contract audits provide information

on whether contractor’s costs are fair and rea-
PAGE63

sonable. The information is used by contracting officers in negotiating contracts and as the

basis to pay contractors. The audits are requested by management and performed by the

Inspection Service or the Defense Contract

Audit Agency.

◆ Inspectors completed contract audits of

two price proposals. The audit of a

$89.4 million proposal for identification

code sort/code tracking equipment identified questioned costs of approximately

$8.9 million and unsupported costs of

approximately $34 million. The audit of

a $24.5 million proposal for a delivery

barcode sorter with optical character

reader, input subsystem, and output subsystem identified questioned costs of

approximately $5.8 million and unsupported costs of approximately $341,000.

The questioned costs in both proposals

included labor costs, other direct costs,

overhead, materials, installation, general

and administrative costs, warranties, royalties, and profits. The unsupported costs

in both proposals included costs for overhead, materials, and profits. (IS 181-

1252323-AC(1) and IS 181-1252326-

AC (1))

◆ The Inspection Service audited $9.1 million in cost and pricing data associated

with the contract awarded to an airline

for the Priority Mail criminal investigative system. The contracted amount for

the system was $3.1 million. However,

the airline selected a subcontractor to

acquire and install cameras for the system. The subcontract cost exceeded $6

million and was not reviewed or authorized by the contracting officer. The subcontractor denied complete access to

accounting records in support of the system costs. Therefore, the audit identified $5.8 million as unsupported subcontractor costs and questioned $1.2 million

in costs associated with general and

administrative costs submitted by the airline. The audit concluded that the costs

submitted by the airline do not provide

an acceptable basis for negotiating a fair

and reasonable price. (IS 184-1243166-

AC(1))

◆ The Inspection Service completed contract audits of two proposals submitted by

a contractor for the manufacture and

installation of tray sorter systems. A

Pennsylvania bulk mail center system

proposal totaled approximately $1.7 million and a Texas bulk mail center annex

system proposal totaled approximately

$1.9 million. The audits identified over

$274,000 in questioned costs on the first

system proposal and over $131,000 on

the second proposal. The questioned

costs related to labor, materials, overhead, travel, and other direct costs. (IS

181-1270327-AC(1) and

181-1270335-AC(1))

◆ Postal Inspectors audited two guaranteed

maximum price contracts awarded to a

contractor for the construction of an

Indiana and a Michigan postal facility.

Postal Inspectors audited $4.5 million in

project costs for the Indiana facility and

questioned over $186,000. The $4.4

million incurred by the contractor on the

Michigan project was deemed appropriate, and no questioned costs were identified. (IS 182-1267500-AC(1) and

182-1267502-AC(1))

◆ The Inspection Service performed an

audit of the internal controls over a fuel

supplier to determine whether the contractor was providing the product and

services in accordance with the terms of

the contract. The Postal Service had

entered into a contract with a fuel supplier for natural gas to be purchased and

delivered to the Illinois Postal facilities.

The audit determined that Postal Service

internal controls over the contract

required improvement to ensure that the

contractor is properly billing the Postal

Service. Specifically, the inspectors

found that the two Illinois Districts are

not physically conducting meter readings

at the serviced Postal facilities. Reading

gas meters is a viable means of ensuring

that the local distribution company accurately charges the Districts for gas consumed. The inspectors also found that

neither District has designated a contracting officer representative for the gas

services contract. The inspectors recommended that procedures be instituted to

verify the amount of billed gas usage and

that a contracting officer representative

be designated at each of the serviced

Inspection Service personnel 

conduct a search warrant briefing.
PAGE64 VOICE OF THE BUSINESS

postal Districts. Management’s corrective actions were considered responsive

to the recommendations. (IS 187-

1224876-AC(1))

FACILITY PROGRAM AUDITS

◆ The Inspection Service completed an

audit of a Washington Processing and

Distribution Center facility construction

project. The audit concluded that the

driving force in the construction project

decision-making process was the $5 million Area approval level. Specifically, the

site and building size were reduced to stay

under the $5 million level without full

consideration of operational needs. The

report recommended planning facilities

that meet ten-year operational needs

without regard to funding levels; completion of Postal Service Major Facility

Planning Data forms to accurately reflect

space requirement needs; and assurance

that sites are of proper size to support

project needs, including expansion. Area

management agreed with the recommendations. (IS 197-1230607-FPA(2))

◆ An Inspection Service review disclosed

that an inappropriate arrangement existed between the Postal Service and a real

estate consultant providing services to

the Facility Services Office. The office

manager improperly authorized a consultant access to the Facilities Management

System database, and provided other

amenities such as a desk, computer, telephone, and general use of Postal

resources that were not part of the contract. This arrangement permitted the

contractor to maintain almost unlimited

access to Postal Service operating and

financial information through the database, and provided him with a competitive advantage over other contractors at

increased risk of liability to the Postal

Service. Furthermore, this contractor

could potentially profit by the disclosure

of proprietary information to competing

contractors or to other interested parties

and adversely impact the Postal Service’s

ability to obtain the best price for goods

and services in future transactions. This

arrangement has been discontinued, and

management implemented action to

ensure that no other similar arrangement

with contractors existed. (IS 237-

1223153-FPA(1))

WORKERS’ COMPENSATION 

The Inspection Service investigates fraudulent claims and receipt of benefits by individual

employees. Unlike other federal agencies, these

claims are paid from Postal revenues, not appropriations, thereby affecting its bottom-line net

income. 

◆ Workers’ compensation benefits were terminated for a letter carrier following an

Inspection Service investigation. The

carrier misrepresented job duties to the

physician and as a result was placed on

the periodic rolls. The carrier agreed to

return to work and clarified the exaggerated statements made to the physician.

The future cost savings to the Postal Service is over $1,107,000.

◆ As a result of an Inspection Service

investigation, a letter carrier was sentenced to 12 months in prison and one

year of probation for workers’ compensation fraud. In addition, the carrier was

ordered to pay restitution of over

$62,000. The future cost savings to the

Postal Service is over $949,000.

◆ As a result of an Inspection Service

investigation, workers’ compensation

benefits were terminated for a letter carrier. The investigation disclosed that the

carrier consistently participated in activities outside of medical restrictions. The

employee subsequently resigned from the

Postal Service. The future cost savings to

the Postal Service is over $987,000.

◆ Workers’ compensation benefits were terminated for a part-time flexible clerk.

The Inspection Service investigation disclosed that the clerk routinely exceeded

physical limitations and dictated medical

restrictions to the physician. The clerk

was subsequently terminated by the

Postal Service. These efforts resulted in

future cost savings to the Postal Service

of over $793,000.

◆ The Inspection Service investigation disclosed that a letter carrier engaged in

outside employment and failed to report

the earnings to the Department of Labor

while collecting workers’ compensation
benefits. The benefits were terminated

and the carrier resigned. As a result of

this investigation, the future cost savings

to the Postal Service is over $756,000. 

◆ An Inspection Service investigation disclosed that a mailhandler from Florida

consistently exceeded physician’s restrictions and had not received medical

attention for almost a year. Workers’

compensation benefits were terminated

and the mailhandler returned to work

under a modified permanent position.

This action resulted in a future cost savings to the Postal Service of over

$671,000.

◆ An Inspection Service investigation of a

mail processor in California determined

that an employee consistently violated

medical restrictions while collecting

workers’ compensation benefits. The

employee was offered a limited-duty position but failed to report to work. Benefits

were terminated. The future cost savings

to the Postal Service is over $629,000.

◆ A Postal clerk was indicted by a federal

grand jury on 18 counts of workers’ compensation fraud. Investigation by Postal

Inspectors disclosed that the clerk was

receiving workers’ compensation benefits

while working with the Air Force

Reserves. The clerk failed to disclose

$19,000 in earnings to the Department

of Labor. The future cost savings to the

Postal Service is over $614,000.

◆ A mailhandler pled guilty to making false

statements to obtain workers’ compensation benefits. This individual was sentenced to 15 months in prison, followed

by three years’ supervised release, and

was ordered to pay restitution of over

$33,000. As a result of this Inspection

Service investigation, the future cost savings to the Postal Service is over

$555,000.

◆ The Inspection Service undercover

investigation revealed that a Minnesota

mailhandler failed to report $50,000 in

outside employment while collecting

workers’ compensation benefits. Benefits

were subsequently terminated. Prosecution is pending. The future cost savings

to the Postal Service is over $539,000.

REVENUE INVESTIGATIONS

Inspectors report the results of revenue

investigations to help Postal management 

identify deficiencies and strengthen preventive

measures. Following are significant reviews

reported during this semiannual reporting 

period.

◆ The Inspection Service conducted

reviews at 57 meter-manufacturer sites

and the post offices servicing these locations. Opportunities for improvement

were identified at all levels within the

meter fee structure. At some sites, a failure to separate the duties assigned to

Postal employees led to the embezzlement of funds. Inspectors also found that

an outdated costing system left most

clerks confused as to when fees should be

assessed. Management agreed with recommendations related to separation of

duties and updating the fee structure.

However, management did not agree

with a recommendation related to on-site

duties and responsibilities for revenue

loss detection. After management

reviewed stated procedures regarding the

applicability of a surcharge for checking a

meter in or out of service, it was deemed

that a $2.2 million surcharge would not

be appropriate. Management agreed to

review the current regulations and publish clear instructions to the field.

◆ The Inspection Service conducted a

postage meter security review of a business customer to determine whether procedures protected postage meters from

unauthorized use. Five findings were presented to management to improve meter

control and security. Deficiencies were

identified in the areas of meter inventories, meter inspections, control of meters

in service, ascending register adjustments, and improperly set meters. Management agreed with the recommendations and began corrective action.

◆ A university violated the nonprofit mail

regulations when it used its nonprofit status to send joint mailings with several

“for profit” businesses. Following the

receipt of a Postal Inspector’s report, the

Postal Service asked the university to pay

an additional $33,000, the difference

PAGE65

Inspection Service forensic and

technical specialists support 

investigative efforts.
PAGE66 VOICE OF THE BUSINESS

between the nonprofit and regular rates

of postage. Postal regulations allow only

materials belonging to authorized agencies to be mailed using the nonprofit

rates of postage. There has been a

decline in the number of reported violations by nonprofit organizations, but misuse continues despite Postal Service

efforts.

◆ The Inspection Service reviewed acceptance procedures at a business mail entry

unit following the bribery of a bulk mail

clerk by the business mailer in Florida.

The Postal clerk and business mailer were

involved in the bribery scheme and both

pled guilty. Inspectors identified a loss of

$900,000 resulting from mailings over a

two-year period. Inspectors recommended steps to better control documents used

when business mailings are cleared for

acceptance. Management agreed with

the recommendations. 

POSTAL BURGLARIES

The Inspection Service employs sophisticated burglary prevention techniques and

detection devices to make Postal facilities less

vulnerable to attack. Burglaries may result in

property losses or mail thefts and indirect losses

for repair damages from forced entries. During

this reporting period, the Inspection Service

received 154 reports of burglaries, made 90

arrests, and obtained 75 convictions.

◆ In December 1998, Postal Inspectors and

a task force of local and federal law

enforcement agencies in the New York

City and Newark areas arrested 56 individuals who were part of a stolen cargo

ring; eight corporations were also indicted. The case had initiated from a Postal

Inspection Service investigation of a

string of postal burglaries involving the

fencing of stolen stamps. One of the

leaders of the ring was responsible for

selling over $5 million in stolen merchandise, including over $700,000 in

stolen postage stamps. Also charged in

connection with the case were a member

of a New York organized crime family

and the owner of a stamp business. The

ring sold checks stolen from the mail,

ordered merchandise with stolen credit

card information, and filed false insurance claims. 

EMBEZZLEMENTS

Inspection Service investigations resulted

in the following: 

◆ A Postal contract station employee in

Illinois pled guilty to embezzlement of

over $211,000 in funds from stamp sales. 

◆ A window clerk in Massachusetts was

indicted for misappropriation of $90,000

in Postal funds. 

◆ A window clerk embezzled more than

$82,000 in postage meter funds. A technician at the District Accounting Office

discovered a discrepancy with customer

meter control records at the post office.

Postal Inspectors discovered that on several occasions meter records were voided

by the window clerk and reissued for a

lower amount. The clerk disguised the

embezzlement by maintaining two sets of

meter records. Prosecution is pending.

◆ A window clerk in Maine pled guilty to

misappropriation of Postal funds. Investigation by the Inspection Service revealed

that the clerk falsified records and failed

to record customer postage meter sales

transactions, converting over $150,000

for personal use. The scheme ended with

the voluntary resignation by the clerk.

◆ A window clerk in Virginia resigned from

the Postal Service after admitting to the

embezzlement of $5,000. 

◆ A window clerk in California was arrested for misappropriation of $33,000 in

Postal funds. 

◆ A customer service supervisor in Michigan was sentenced to four years’ probation and court-ordered restitution for the

embezzlement of over $49,400. 

◆ A large contractor that packages stamps

for vending and retail stores reported a

stamp shortfall. The contractor’s surveillance camera showed an employee

removing stamps from the area. The

employee admitted stealing 2,000 stamps

to sell for cash to support a cocaine habit.

All of the stamps were recovered. 
PAGE67

EXPENDITURE INVESTIGATION

An Inspection Service investigation

resulted in a former manager of an auto body

shop pleading guilty in federal court to one

count of conspiracy for submission of false

billings for work not performed on Postal

vehicles. The former manager was sentenced

to two years’ probation and restitution of

approximately $8,500 to his employer. The

shop has made restitution of over $55,000 to

the Postal Service.
PAGE68 VOICE OF THE BUSINESS
Legislative and 

Regulatory Review

PAGE 69

Does the Postal Service follow laws that

apply to Federal agencies? 

Except for certain laws, statutes, and regulations

expressly made applicable to the Postal Service,

most Federal laws of government-wide 

applicability do not apply to the Postal Service.

This permits the Postal Service, an independent

establishment of the executive branch, to operate

in a competitive marketplace.

DID YOU 

KNOW?
PAGE70 LEGISLATIVE AND REGULATORY REVIEW

LEGISLATIVE AND 

REGULATORY REVIEW

The following section summarizes OIG

reviews of existing and proposed legislation and

regulations relating to the Postal Service. These

reviews, which are required by the Inspector

General Act, are intended to inform Congress

about how legislation and regulations could

impact economy and efficiency, and the prevention and detection of fraud and abuse, in Postal

Service programs and operations. This portion

of the report summarizes significant legislation

and regulations advanced between October 1,

1998, and March 31, 1999. During this period,

the OIG reviewed approximately 1,300 House

bills, 700 Senate bill and several hundred proposed and final rules and regulations.

ENACTED LEGISLATION

PUBLIC LAW 105-277 — OMNIBUS

CONSOLIDATED AND EMERGENCY

SUPPLEMENTAL APPROPRIATIONS ACT

This public law, a collection of laws affecting many areas of the federal government, contains provisions that affect the Postal Service

and the OIG.

Section 627 provides protection to federal

law enforcement officers who intervene in certain situations. The law, originally known as

the Federal Law Enforcement Officers’ Good

Samaritan Act of 1998, enacts a rule of construction for Chapter 171 of Title 28 of the

United States Code stating that a federal law

enforcement officer will be deemed to be acting

within the scope of the officer’s employment if

the officer takes reasonable action, including

the use of force, to protect an individual in the

officer’s presence from a crime of violence, provides assistance to an individual who has suffered or is threatened with bodily harm, or prevents the escape of an individual whom the officer believes has committed a crime of violence.

This law protects federal law enforcement officers from lawsuits when they take action to help

others in emergency situations. The Postal Service and OIG employees whose primary duties

are to investigate, apprehend, or detain individuals suspected or convicted of committing federal crimes are covered by this law.

Section 633(a) amends Title 39, Section

407 of the United States Code regarding international Postal arrangements. The newly

enacted section prescribes that the Secretary of

State has primary responsibility for formulation,

coordination, and oversight of policy with

respect to United States participation in the

Universal Postal Union. The Postal Service

may not conclude any treaty or convention

related to the delivery of international Postal

services, or establish rates of postage on mail

matter conveyed between the United States

and other countries that is inconsistent with the

coordination and oversight of the Secretary of

State. Prior to the enactment of this legislation,

the Postal Service, without consent from the

Secretary of State, and with the consent of the

President only, negotiated and concluded international Postal arrangements and established

international postage rates. This change could

affect the ability of the Postal Service to capture

revenue in a timely manner for the international services it provides. Changes in the way the

Postal Service raises revenue are of continuing

interest to the OIG.

Section 648 amends Chapter 36 of Title 39

by adding an annual reporting requirement for

international Postal services. The newly enacted section requires the Postal Service to provide

to the Postal Rate Commission such data as the

Commission may require to prepare a report to

Congress on costs, revenues, and volumes

accrued by the Postal Service in connection

with each international mail product or service

the Postal Service provides to its customers.

The OIG provides an audit function for the

information gathered and provided by the

Postal Service.

Known originally as the McDade Amendment but now entitled “Ethical Standards for

Federal Prosecutors,” Section 801 amends

Chapter 31 of Title 28 of the United States

Code. It requires that an attorney for the government be subject to laws and rules, and local

federal court rules, of the state in which the

attorney performs the attorney’s duties. Attorneys for the government include specified categories of attorneys of the Department of Justice,

the Federal Bureau of Investigation, and the

Drug Enforcement Administration, and any

other attorney employed by the Department of
PAGE71

Justice who is authorized to conduct criminal or

civil law enforcement proceedings on behalf of

the United States. This newly enacted law will

make criminal or civil law enforcement proceedings by Justice Department attorneys on

behalf of the Postal Service subject to a variety

of state laws and rules, which formerly had been

superseded by federal laws and rules.

PROPOSED LEGISLATION

H.R. 22 — POSTAL MODERNIZATION

ACT OF 1999

H.R. 22 would modify the nation’s Postal

laws. It is virtually the same bill that was introduced late in the last session of Congress but

never reached the House floor for consideration

and a vote. The OIG reviewed and commented generally on H.R. 22 in the last Semiannual

Report to Congress.

Particularly noteworthy to the OIG is a

provision of the bill that specifies the Inspector

General of the Postal Service would be a presidential appointee, but allows the current

Inspector General to serve for the remainder of

her seven-year term to 2004. The Inspector

General would report to and be under the general supervision of the Postmaster General.

This bill retains the existing provision that no

officer, employee, or Board member of the

Postal Service could prevent the Inspector

General from issuing subpoenas or initiating,

carrying out, or completing any audit or investigation. The Inspector General would retain

oversight responsibilities for the Inspection Service, whose Chief Postal Inspector would still

be required to promptly report on significant

activities. Information from Inspection Service

reports would be included in the Inspector General’s Semiannual Report to Congress. This

would clarify current questions about what

information should be provided to the OIG by

the Inspection Service for inclusion in the

Semiannual Report to Congress.

The Inspector General would retain hiring

authority for officers, employees, consultants,

and experts for the OIG. The OIG would

receive appropriations from the Postal Service

Fund. The Inspector General would have

authority to audit the financial statements of

the Postal Service or hire an independent external auditor to perform the audit. The financial

statement audit is now the responsibility of the

Board of Governors, and the OIG acts as cocontracting officer’s representative with Postal

Service management.

H.R. 22 would dramatically change the

way the Postal Service conducts its business.

Provisions of the bill that clarify the OIG’s relationship with the Postal Service are important

to the OIG in carrying out its statutory responsibilities.

H.R. 305 — THE OFFICE OF 

INSPECTOR GENERAL OVERSIGHT 

ACT OF 1999

This bill would establish a seven-member

council to oversee the operations of Inspectors

General throughout the federal government.

The majority and minority leaders of each

house of Congress would each appoint a member, and the remaining three would be selected

jointly by Inspectors General of federal agencies. The council would hear and investigate

complaints about decisions and actions of

offices of Inspectors General and issue recommendations regarding such complaints. 

H.R. 305 impacts the Postal Service OIG

directly. It would establish a limited form of

oversight at the OIG. While the council’s only

authority over Inspectors General would be to

issue recommendations regarding any decisions

and actions by Inspector Generals, the council

would submit a report to Congress listing its

activities and recommendations. Congress

could take action affecting the Inspector Generals based on the council’s recommendations. 

S. 335 — DECEPTIVE MAIL PREVENTION AND ENFORCEMENT ACT, and

S. 336 — DECEPTIVE GAMES OF

CHANCE MAILINGS ELIMINATION ACT

OF 1999

S. 335 and S. 336 deal with deceptive mailings and sweepstakes letters. The bills would

prohibit the mailing of sweepstakes and other

promotional letters unless they contain clearly

written and easily understood participation

rules and advisories on the recipients’ chances

of winnings. 

In addition to regulating mailings, the legislation augments the ability of the Postal Service in certain instances to obtain temporary

restraining orders and preliminary injunctions

More than 775,000 employees

deliver over 650 million pieces

of mail every day.
PAGE72 LEGISLATIVE AND REGULATORY REVIEW

to detain suspected illegal mailings. Under current law, the Postal Service can apply only to

the court in the district in which the defendant

receives mail for a preliminary injunction or

temporary restraining order. Under the proposed law, the Postal Service could make application in any district in which mail is sent or

received as part of an alleged scheme, device,

lottery, or gift enterprise, or in any district where

the defendant is found. Upon a showing of

probable cause, the court would issue an order

directing the Postal Service to detain, in any

and all districts, the defendant’s incoming and

outgoing mail in furtherance of the scheme. 

Both bills provide additional subpoena

authority for the Inspection Service by adding a

new section to the code authorizing the use of

administrative subpoenas by the Postmaster

General. For use in investigations conducted

under Chapter 30 of Title 39, the Postal Service

could subpoena any records or material relevant

to the investigation. To enforce these subpoenas, the Postmaster General could request the

aid of the Department of Justice in any judicial

district in which the person served resides, is

found, or transacts business. 

This legislation would give the Postal Service, particularly the Inspection Service, more

law enforcement authority. The legislation’s

enhanced law enforcement authority is of interest to the OIG because the OIG has oversight

responsibility for the Postal Inspection Service. 

S. 96 — Y2K ACT, and

S. 461 — YEAR 2000 FAIRNESS AND

RESPONSIBILITY ACT

This legislation addresses anticipated legal

action that might arise as a result of economic

losses suffered because of computer failure at the

beginning of the year 2000. As has been widely reported in recent years, for some computers

now in use, the year 2000 will be indistinguishable from the year 1900. Companies using these

computers may experience disruptions in processing orders and servicing their customers.

This legislation defines a Y2K action, provides

for alternative dispute resolution, and limits liability. It provides for proportionate liability to

the degree that the defendant was responsible

for the loss. The legislation limits the amount

of punitive damages that can be awarded to the

greater of $250,000 or three times the amount

of compensatory damages. If the defendant is

an individual whose net worth does not exceed

$500,000, or is an entity with fewer than 25 fulltime employees, the cap is lower. The legislation also establishes certain defenses for businesses with Y2K problems and provides for a 90-

day waiting period before a plaintiff can bring

suit in order to encourage alternative dispute

resolution.

The Postal Service relies extensively on

external suppliers that are critical to moving

mail, such as airlines, railroads, and the trucking

industry. These suppliers are susceptible to the

Y2K problem. The legislation’s caps on damages would limit the amount recoverable as a

result of a Y2K problem of a supplier. Similarly,

if the Postal Service were sued because of a Y2K

problem, this legislation would limit the

amount of money a plaintiff could collect from

the Postal Service.

H.R. 308 — THE HEALTH FRAUD AND

ABUSE ACT OF 1999

This legislation builds upon Public Law

104-191, the Health Insurance Portability and

Accountability Act. The proposed legislation

attempts to improve through various mechanisms federal law enforcement efforts against

health care fraud and abuse. First, it would

expand activities of law enforcement and state

agencies responsible for licensing and certification of health care providers. Second, it would

establish a health care fraud and abuse control

unit in each of the 50 states, to be funded by

fines received in health care fraud criminal and

civil cases. Monies from this account would also

be used to pay for 75 percent of the costs

incurred by these state health care fraud and

abuse control units. Third, the bill would promote and encourage data-sharing among all federal, state, and local law enforcement groups

and other agencies involved in licensing health

care providers. 

This legislation would strengthen federal

law enforcement authority in combating health

care fraud and abuse. It would provide federal

officials with more tools to investigate and prosecute health care providers who defraud federal

health care recipients and their federal employers. While the Postal Service OIG is not one of

the Inspectors General specifically charged with

Kickoff celebration for OIG’s Combined

Federal Campaign drive.
conducting the audits, civil and criminal investigations, inspections, and evaluations relating

to the prevention, detection, and control of

health care fraud and abuse, the OIG would

work with these offices to assist them in eliminating health care fraud.

H.R. 198 — POSTAL SERVICE CORE

BUSINESS ACT OF 1999

This bill would prohibit the Postal Service

from making available to the public any commercial non-Postal service except those services

that were offered nationwide by the Postal Service as of January 1, 1994. Examples of commercial non-Postal services are volume retail

photocopying, packaging services (including

gift-wrapping services), notary public services,

and the sale of office supplies.

In recent years the Postal Service has been

expanding the services it offers to its customers.

This has resulted in increased convenience 

for postal customers and additional revenue for

the Postal Service. If H.R. 198 becomes law,

any services that began after January 1, 1994,

would have to be eliminated. The result could

be decreased revenue for the Postal Service and

a loss of customers as postal patrons look elsewhere to replace discontinued services and

products.

H.R. 670/S. 556 — POST OFFICE 

COMMUNITY PARTNERSHIP ACT 

OF 1999

This legislation would require the Postal

Service to follow more extensive community

notice procedures than found in existing law

before relocating, closing, consolidating, or

constructing a Postal facility. The legislation

would allow for greater individual and community input before the Postal Service could

implement a facility proposal. It also would

require the Postal Service to take into account

the adequacy of the existing facility; whether

the Post Office is part of a core downtown business area; the potential effect of the proposed

action on the community; reasonable alternatives to the proposed actions; and applicable

zoning, planning, or land use laws. The Postmaster General would have emergency authority to temporarily suspend the application of

these provisions for a period not to exceed 

30 days.

This legislation would affect how the

Postal Service constructs, relocates, consolidates, or closes a Postal facility. It adds “construction” and “relocation” to existing law governing consolidations and closings. Provisions

of the bill would require the Postal Service to

follow procedures established within the community for such actions if these procedures are

more stringent than those contained in the bill.

The legislation also would require the Postal

Service to undertake actions pertaining to facility proposals in accordance with the National

Historic Preservation Act. Upon passage of the

Post Office Community Partnership Act, individuals and downtown communities would be

allowed the opportunity to offer alternatives to

Postal Service facilities proposals. 

H.R. 479 — A BILL TO AMEND THE

DAVIS-BACON ACT

The Postal Service is bound by provisions

of the Davis-Bacon Act pertaining to the use of

mechanics and laborers. If the Postal Service

contracts for laborers and mechanics in a state

where their work is required to be licensed, the

Postal Service would have to use state-licensed

individuals to perform the work under this

amendment to the Davis-Bacon Act.

H.R. 617 — FEDERAL FACILITY SUPERFUND COMPLIANCE ACT OF 1999

This bill would provide for a waiver of sovereign immunity in certain instances, subjecting entities of all three branches of the federal

government to the same federal, state, interstate, and local requirements for response or

restoration actions related to releases or potential releases of hazardous substances, pollutants,

or contaminants that apply to a nongovernmental entity. The legislation authorizes the

Environmental Protection Agency to issue an

abatement order to a federal entity and requires

initiation of administrative enforcement action

by the federal entity in the same manner and

same circumstances as would apply to any other

person. H.R. 617 would preclude remedial

action agreements from impairing or diminishing state authority to enforce requirements of

state law, unless such requirements have been

addressed or waived without objection from the

state. This bill also removes a provision for

application and preemption of state law.

PAGE73

Warren Blank, a renowned lecturer,

spoke on leadership at the OIG Annual

Recognition Day.
PAGE74 LEGISLATIVE AND REGULATORY REVIEW

This legislation could affect Postal revenues to the degree to which the Postal Service

was fined for violations of environmental laws.

The Postal Service would have to factor in possible fines and their impact on its operation for

financial planning purposes. As a result, Postal

revenues could be affected.

H.R. 439 — THE PAPERWORK ELIMINATION ACT OF 1999

This legislation would amend the Paperwork Reduction Act by directing the federal

government to provide those doing business

with the government the option of using electronic communication rather than sending

paperwork through conventional mail delivery.

The bill encourages the use of electronic signatures to facilitate the transmission of documents. If small businesses, educational and

nonprofit institutions, federal contractors, state

and local governments, and other persons take

widespread advantage of electronic filings with

the federal government, as encouraged by this

bill, revenues of the Postal Service could be

affected. 

H.R. 170/S. 301 — HONESTY IN

SWEEPSTAKES ACT OF 1999, and

H.R. 237 — A BILL TO AMEND TITLE

39, UNITED STATES CODE, TO REQUIRE

CERTAIN NOTICES IN ANY MAILING

USING A GAME OF CHANCE FOR 

THE PROMOTION OF A PRODUCT 

OR SERVICE

H.R. 170, S. 301, and H.R. 237 prohibit

the Postal Service from delivering mail in connection with a sales promotion involving any

game of chance and mail that resembles a negotiable instrument, unless that mail complies

with regulations that the Postal Service would

issue. This legislation requires that the envelope carry the following notice or a notice to the

same effect, in words that the Postal Service

could prescribe: “This is a game of chance (or

sweepstakes, if applicable). You may not have

automatically won.” A similar message and the

mathematical probability of winning would

have to appear on the first page of the enclosure.

Other provisions of the bills would make it illegal to send mailings that resemble negotiable

instruments unless they conspicuously display

disclaimers stating they have no cash value. 

This legislation is directed at bulk mailers

of sweepstakes entries and other solicitations

that seem to indicate recipients have already

won a prize or are very close to winning one,

and all that remains to be done is respond to

the sender, usually by agreeing to buy the

pitched product or service. Senior citizens have

been particularly susceptible to such solicitations, not fully appreciating the unlikelihood of

actually winning.

The legislation would require the Postal

Service and the Inspection Service to police

senders of deceitful mailings. The legislation

could affect net revenue from direct mail, not

only by inhibiting prize and sweepstakes mailings, but also by increasing the commitment of

personnel resources needed to identify illegal

mail, suspend its delivery, and destroy it.

S. 301 prohibits the Postal Service from

carrying and delivering any mail sent in violation of this law and requires the Postal Service

to destroy it. The legislation also provides for

penalties for those who violate the law, not to

exceed $2,000,000. Penalty fees collected

would be put into a fund that the Postal Service

could use to increase consumer awareness of

misleading solicitations. Part of this awareness

program would be the annual publication of the

top ten offenders of the law. 

H.R. 229 — THE FREE TRADE WITH

CUBA ACT, and

H.R. 1181 — A BILL TO LIFT THE

TRADE EMBARGO ON CUBA

This legislation would repeal federal laws

that restrict trade with Cuba. A provision of

both bills requires the Postal Service to begin

direct mail service with Cuba. Currently, there

are no direct U.S. commercial flights to Cuba

on which mail can be transported. 

If common carrier service between the

United States and Cuba is not available, the

Postal Service would have to charter carriers to

take the mail between the two countries. Costs

of chartering carrier service could be more

expensive than fees charged for regularly scheduled commercial flights. Thus, initially, revenues generated for the Postal Service by the

restoration of mail service might be depressed.

The Postal Service could also incur extraordinary costs in establishing service. However,

OIG Executives attend the Postal

Service National Executive Conference

in Dallas, Texas.
PAGE75

given the large Cuban-American population in

the United States, direct mail service between

the two countries could eventually generate net

revenues for the Postal Service.

S. 712 — LOOK, LISTEN, AND LIVE

STAMP ACT

This legislation provides for the issuance of

a postage stamp with a special postage rate consisting of the regular First-Class rate, plus a differential not to exceed 25 percent of the FirstClass rate. The difference would be paid to the

Department of the Treasury to fund a program

to improve road crossings at railroad tracks.

The Postmaster General would be responsible

for tracking and reporting the money received

under this program and the amount sent to the

Secretary of the Treasury. 

The mechanism employed in this bill to

garner public support of a worthy cause is patterned after the successful Breast Cancer

Awareness Stamp program. Like the stamp

referred to in S. 712, the breast cancer awareness stamp was sold at an amount higher than

the First-Class rate, and the difference was spent

to fund breast cancer research. The breast cancer stamp was successful in raising awareness of

an important and popular cause, funds for

research, and revenues for the Postal Service. 

S. 712 probably will not be the last bill to use

this approach to raise funds for a popular cause.

Postal revenues should increase whenever the

stamp issued represents a popularly supported

cause.

H.R. 596 — A BILL TO PREVENT 

CERTAIN TYPES OF MAIL MATTER

FROM BEING SENT BY A MEMBER 

OF THE HOUSE OF REPRESENTATIVES

AS PART OF A MASS MAILING 

This bill would limit the use of the congressional franking privilege. A member of the

House of Representatives would not be able to

send, as part of a mass mailing, congressional

newsletters and press releases; reports of public

and official acts taken by members of Congress;

discussions of proposed or pending legislation or

governmental actions and the positions of the

members of Congress regarding such matters;

congressional questionnaires seeking public

opinion on any law, pending or proposed legislation, public issue or subject; and mail matter

congratulating persons who have achieved

some public distinction.

Because the Postal Service is reimbursed

for congressional use of the frank, Postal revenues could be affected if House members,

being barred from using the frank, choose not to

mail these items using their own funds.

REGULATIONS

FINAL RULES

DELIVERY OF MAIL TO A COMMERCIAL

MAIL RECEIVING AGENCY

This final rule amends the Domestic Mail

Manual to update and clarify procedures for

delivery of an addressee’s mail to a commercial

mail receiving agency (CMRA). It is intended

to increase the safety and security of the mail by

reducing the opportunities to use the mail for

fraudulent purposes. The rule is intended to

ensure that mailers are confident that the

addresses provided by prospective customers are

actually used by these customers, and that the

mail will reach the recipient, rather than be

returned to the sender. The rule provides procedures for registration to act as a CMRA, for

an addressee to request mail delivery to a

CMRA, and for delivery of mail to a CMRA.

One of the principal provisions under the final

rule is the required use of the delivery address

designation “PMB” to denote private mailbox.

This rule adopts, with changes, a proposed rule

published for public comment on August 27,

1997, in the Federal Register: Volume 62, Number 66, Pages 45366–45368. This final rule is

effective April 26, 1999. Federal Register:

March 25, 1999 (Volume 64, Number 57, Pages

14385–14391)

DOMESTIC MAIL MANUAL

CHANGES TO IMPLEMENT THE

DELIVERY CONFIRMATION 

PROGRAM CHANGES IN DOCKET

NO. R97-1

This final rule contains the Domestic Mail

Manual standards adopted by the Postal Service

to implement delivery confirmation service,

effective March 14, 1999. A new delivery confirmation service is offered with Priority Mail

and with Standard Mail (B) (Parcel Post,

Bound Printed Matter, Special Standard Mail,

Inspector General Corcoran 

discusses OIG’s vision, values

and philosophy before new 

employee orientation.
PAGE76 LEGISLATIVE AND REGULATORY REVIEW

and Library Mail). This service will provide the

mailer with information about the date and

time an article was delivered and, if delivery was

attempted but not successful, the date and time

of the delivery attempt. Delivery confirmation

may be combined with insured mail, registered

mail, parcel airlift, COD, or special handling.

Delivery confirmation may be combined with

restricted delivery if purchased along with insurance for over $50, COD, or registry service.

Federal Register: March 10, 1999 (Volume 64,

Number 46, Pages 12072–12078)

USE AND DETERMINATION OF

POSTAGE VALUE OF BREAST CANCER

RESEARCH SEMI-POSTAL STAMP

This final rule responds to comments on

the final rule published in the Federal Register

on July 16, 1998 (Volume 63, Number 136,

Pages 38309–38311). The Postal Service had

sought comments concerning the use and determination of the postage value of the Breast

Cancer Research Semi-Postal Stamp. The

Postal Service has made minor changes to the

Domestic Mail Manual standards pertaining to

the exchange value. Specifically, customers

may exchange or convert Breast Cancer

Research Semi-Postal Stamps for their postage

value; that is, the price of the stamps less the

amount designated as a contribution to support

research. The postage exchanged or converted

is equivalent to the First-Class Mail single-piece

rate in effect at the time of the exchange. Federal Register: March 8, 1999 Volume 64, Number 44, Pages 10950–10952)

GLOBAL DIRECT-CANADA ADMAIL

The Postal Service adopted without

change the interim rule, published in the Federal Register on August 21, 1998 (Volume 63,

Number 162, Pages 44789–44792). The Postal

Service, in cooperation with Canada Post Corporation, had offered a new international mail

service on an interim basis. This international

mail service is primarily intended for major

printing firms, direct marketers, mail order companies, and other high-volume mailers seeking

easier access to the Canadian domestic postal

system. It is intended to provide mail delivery

in an average of five to ten business days to

major urban areas throughout Canada. Ancillary services for local business reply and the

return of undeliverable mail had also been

introduced on an interim basis for use with

Global Direct-Canada Admail. This final rule

also adopts the ancillary services described by

the interim rule. Federal Register: January 19,

1999 (Volume 64, Number 11, Pages

2855–2857). This final rule was further modified to reflect a rate change effective March 1,

1999. Federal Register: March 1, 1999 (Volume

64, Number 39, Pages 9915–9916)

INTERNATIONAL PRIORITY AIRMAIL

SERVICE

The Postal Service proposes to change

postage rates and conditions of service for International Priority Airmail service. In addition to

adjusting rates, the Postal Service is changing

country rate groups to be the same as International Surface AirLift service and increasing the

minimum weight from 10 to 11 pounds of mail.

Also, acceptance of this service will be extended to all post offices accepting bulk mail. In

addition, the Postal Service is introducing drop

ship rates for mailers willing to transport their

mail to certain locations. The Postal Service,

with the use of drop ship sites, avoids certain

processing, handling, and transportation costs,

and these savings are being passed on to the

mailer. Federal Register: November 25, 1998

(Volume 63, Number 227, Pages 65153–65161).

The Postal Service adopted this proposed rule,

effective April 4, 1999. Federal Register: 

March 3, 1999 (Volume 64, Number 41, Pages

10219–10227)

ADDRESSING REQUIREMENTS FOR

CERTAIN CUSTOMERS OF RURAL AND

HIGHWAY CONTRACT DELIVERY

ROUTES

This rule amends the Domestic Mail Manual for customers who share mail receptacles on

rural and highway contract routes by clarifying

Postal Service addressing requirements when

local governments implement street name and

number systems. When localities convert to a

street name and number system, customers may

continue to share a mail receptacle. But, they

still must use the address that reflects the particular box — for example, the street name and

number of the receptacle’s owner — rather

than the various street names and numbers now

assigned to their individual properties. This

addressing requirement is familiar to customers

as the “in care of” address format. Federal RegDoes the OIG follow Postal

Service procedures?

To the extent practicable, the

OIG follows Postal Service procedures. However, when necessary,

the OIG develops and publishes

its own procedures.

DID YOU 

KNOW?
PAGE77

OIG staff recruit talented individuals

during career fairs at colleges and 

universities.

ister: January 13, 1999 (Volume 64, Number 8,

Page 2141)

EXPANSION OF LOCATION-BASED

POST OFFICE BOX FEES

The Domestic Mail Manual is amended to

expand the application of location-based fees

for post office box service to an additional 26

specified facilities. The facility-specific fees

place greater emphasis on the space cost and

utilization of post office box service at individual locations. Baseline costs and usage measurement have been validated and will be monitored following implementation to assess

impact on customer activity. In addition, 58

facilities in neighboring areas will be monitored

to serve as a benchmark against which to measure the 26 affected facilities. Federal Register:

December 28, 1998 (Volume 63, Number 248,

Pages 71374–71375) followed by correction on

February 11, 1999 (Volume 64, Number 28,

Pages 6802–6803)

GARNISHMENT OF WAGES

This rule implements Section 9 of Public

Law 103-94, entitled “Garnishment of Federal

Employees’ Pay,” which provides that the pay of

employees of the Postal Service and the Postal

Rate Commission are subject to federal, state,

and local garnishment orders. This regulation

provides detailed procedures on the garnishment process within the Postal Service. Federal Register: December 7, 1998 (Volume 63,

Number 234, Pages 67403–67405)

PROCEDURE BEFORE THE JUDICIAL

OFFICER

This rule amends the Rules of Procedure

Before the Judicial Officer to reflect a new

address for the Judicial Officer, the Office of

Administrative Law Judges, the Office of the

Board of Contract Appeals, and the Office of

the Recorder. The rule also corrects titles and

references and makes other technical and grammatical changes. Federal Register: December 1,

1998 (Volume 63, Number 230, Pages

66049–66053)

AMENDMENT TO THE BY-LAWS OF

THE BOARD OF GOVERNORS 

CONCERNING TELEPHONE 

CONFERENCE CALLS

The Board of Governors of the Postal Service approved an amendment to its by-laws.

The amendment allows Governors attending

special meetings of the Board conducted by

conference telephone call to receive the statutory $300 compensation for a meeting day if the

meeting lasts more than an hour. Federal Register: October 29, 1998 (Volume 63, Number

209, Pages 57911–57912)

MARKET TEST OF MAILING ONLINE

This rule sets forth the Domestic Mail

Manual standards adopted by the Postal Service

on the Recommended Decision of the Postal

Rate Commission on the Market Test of Mailing Online, Docket Number MC 98-1. Mailing

Online is a service that allows Postal customers

with access to a personal computer and the

Internet to transmit electronic documents to a

Postal website for subsequent batching and

transmission to a contract printer, who creates

and enters the consequent physical mailpieces.

There is a limit of 5,000 addresses per mailing.

Payment for postage and mailpiece preparation

is made online via credit card. The market test,

limited to 5,000 customers, will provide a basis

for subsequent nationwide experimental and

permanent services. Federal Register: October

22, 1998 (Volume 63, Number 204, Pages

56565–56568)

NEW SPECIFICATIONS FOR 

AUTOMATED FLATS

This rule sets forth the Domestic Mail

Manual standards adopted by the Postal Service

to implement the discount rate for automation

flat-size mailpieces processed on the Flat Sorting Machine (FSM) 1000. The FSM 1000 is

capable of processing mailpieces that cannot be

processed on the FSM 881. FSM 1000

machines are being retrofitted with barcode

readers. Mailpieces that currently do not qualify for automation flat rates will be eligible if

pieces meet the size and other criteria for processing on the FSM 1000, are prepared with

correct ZIP+4 or delivery point barcodes, and

meet other preparation requirements. Federal

Register: October 15, 1998 (Volume 63, Number 199, Pages 55471–55478)

USE OF INFORMATION FROM METER

LICENSE APPLICATIONS 

This rule provides greater specificity
PAGE78 LEGISLATIVE AND REGULATORY REVIEW

regarding uses of the information derived from

the meter license applications received by the

Postal Service from meter users and authorized

meter manufacturers. Federal Register: October

7, 1998 (Volume 63, Number 194, Pages

53812–53813)

INTERIM RULES

GLOBAL PACKAGE LINK

The Postal Service, by amending the International Mail Manual, is setting new rates and a

new discount structure for Global Package Link,

an international mail service designed for companies sending 10,000 or more merchandise

packages per year to other countries. The Postal

Service is also introducing this service to

Argentina. Federal Register: December 1, 1998

(Volume 63, Number 230, Pages 66043–66049)

PROPOSED RULES

INTERNATIONAL POSTAL RATES

Pursuant to its authority under 39 U.S.C.

407, the Postal Service is proposing changes in

international Postal rates. The proposed 

international rates are needed to accommodate

changes in the cost of providing international

mail service. Federal Register: December 4,

1998 (Volume 63, Number 233, Pages

67017–67026)

NOTICES

INFORMATION-BASED INDICIA (IBI)

PROGRAM PERFORMANCE CRITERIA

FOR INFORMATION-BASED INDICIA

AND SECURITY ARCHITECTURE FOR

CLOSED IBI POSTAGE METERING 

SYSTEMS

The Postal Service has compiled a set of

draft functional performance criteria for closed

systems of the IBI program placed at a Postal

Service website. The current release contains

the performance criteria for indicia and the

Postal security device components of a closed

IBI system. The Postal Service also seeks comments on intellectual property issues raised by

IBI program performance criteria, policy, and

procedures if adopted in their present form.

Federal Register: January 29, 1999 (Volume 64,

Number 19, Page 4728)

CHANGES IN DOMESTIC RATES, FEES,

AND MAIL CLASSIFICATIONS

This notice sets forth the rate and fee

changes and Domestic Mail Classification

Schedule changes to be implemented as a result

of the Decision of the Governors of the United

States Postal Service on the Further Recommended Decision of the Postal Rate Commission on Postal Rate and Fee Changes, Docket

No. R97-1 (October 5, 1998). This notice also

contains minor changes to the notice published

on July 21, 1998 in Volume 63 of the Federal

Register at page 39124. Federal Register:

November 9, 1998 (Volume 63, Number 216,

Pages 60416–60418)

NOTICE OF NEW SYSTEM OF RECORDS

The Postal Service has established a Privacy Act System of Records, Postal Service

300.010, Office of Inspector General Investigative File, which partially mirrors an existing

Inspection Service file. This system of records

covers only the files of investigations that identify by name individuals who are subjects or

sources of information. The files may contain

information about civil, criminal, or administrative wrongdoing; fraud, waste, or mismanagement; or other violations of law or regulation.

This system became effective on November 23,

1998. Federal Register: October 15, 1998 (Volume 63, Number 199, Pages 55416–55418)

OIG investigators are required to meet

and maintain physical fitness standards.
Appendices

DID YOU 

KNOW?

PAGE 79

Where do Postal Inspectors and OIG

Special Agents get their criminal law 

enforcement authority?

Under Title 18 of the U.S. Code, Postal

Inspectors and OIG Special Agents have the

authority to make arrests, carry firearms,

execute search warrants, serve subpoenas,

and seize property.
APPENDICES

APPENDIX A

Closed Congressional Inquiries

This appendix represents the 48 congressional inquiries the Office of Inspector General closed

during this reporting period (October 1, 1998 to March 31, 1999). We reviewed these 48

inquiries to help identify systemic issues, and to determine the need for future Postal-wide audits. 

VOICE OF THE CUSTOMER

Response

Requestor Allegation/Concern Location Date

VOICE OF THE EMPLOYEE

Response

Requestor Allegation/Concern Location Date

Representative,

Indiana 

Senator, 

Illinois

Senator, 

Wyoming

Representative, 

Pennsylvania 

Chairman

Postal Subcommittee

Representative, 

Illinois

Representative, 

New York 

Chairman

Postal Subcommittee 

Representative, 

Florida

Representative, 

Florida

Senator, 

Mississippi 

Chairman

Postal Subcommittee

Representative, 

Alabama

Possible violation of federal Postal

regulations, including mail fraud.

Inefficiencies with Priority Mail 

processing.

Violations of antilobbying provisions of

Title 18, Section 1913 of United States

Code.

Violations of antilobbying provisions of

Title 18, Section 1913 of United States

Code.

Thoroughness of an investigation into the

Postal Service mishandling of election

campaign mail. 

Violation of Postal regulations regarding

Nonprofit Standard Mail rates on

political mailings.

Improper activities in processing mail to

inflate External First-Class performance

scores.

Improper activities in processing mail to

inflate External First-Class performance

scores.

Improper activities in processing mail to

inflate External First-Class performance

scores.

Improper activities in processing mail to

inflate External First-Class performance

scores.

Quality of Postal services and a Freedom

of Information Act request.

Inspection Service investigation into

allegations of “improper criminal conduct

and conspiracy” involving a publisher and

the Postal Service.

Mail fraud regarding computer software. 

Washington, 

District of

Columbia

Rock Island,

Illinois

Postal-wide 

Postal-wide

New Castle, 

Pennsylvania

Washington, 

District of

Columbia

New York, 

New York

Atlanta, 

Georgia

South Florida 

Postal District

South Florida

Postal District 

Greenville, 

Mississippi

Waycross, 

Georgia

Mobile, 

Alabama

10/30/98

11/25/98

11/27/98

11/27/98

12/28/98

12/28/98

3/2/99

3/2/99

3/2/99

3/2/99

3/10/99

3/10/99

3/26/99

Chairman

Postal Subcommittee

Representative, 

Virginia

Working conditions at a Postal station.

Referral from the Postal Service

Government Relations regarding OIG

employment practices.

Bronx, 

New York

Arlington, 

Virginia 

10/30/98

11/27/98

PAGE 80
PAGE81

Response

Requestor Allegation/Concern Location Date

Senator, 

Vermont

Representative, 

Vermont

Senator,

Pennsylvania

Representative, 

Pennsylvania

Representative, 

Florida

Representative, 

New York

Senator, 

New York

Chairman

Postal Subcommittee

Senator, 

Florida

Representative, 

Florida 

Senator, 

Florida

Chairman

Postal Subcommittee

Senator, 

Vermont

Representative, 

Maine

Senator, 

North Carolina

Senator, 

North Carolina

Representative, 

New Jersey

Senator, 

Indiana

Chairman

Postal Subcommittee

Unfair removal of a Postal Service

employee for not following “illegal orders”

and lack of investigation of reports of

physical threats.

Unfair removal of a Postal Service

employee for not following “illegal orders”

and lack of investigation of reports of

physical threats.

Abuse of power and other misconduct by

Postal Service officials, Postal inspectors,

and Assistant United States Attorneys.

Abuse of power and other misconduct by

United States officials, Postal inspectors,

and Assistant United States Attorneys.

Illegal activity by Postal management and

Postal inspectors.

Violations of both the Privacy and

Freedom of Information Acts by the

Postal Service.

Violations of both the Privacy and

Freedom of Information Acts by the

Postal Service.

Sexual harassment, retaliation, and

mishandling of equal employment

opportunity complaints by the Postal

Service.

Sexual harassment, retaliation, and

mishandling of equal employment

opportunity complaints by the Postal

Service.

Sexual harassment, retaliation, and

mishandling of equal employment

opportunity complaints by the Postal

Service.

Sexual harassment, retaliation and

mishandling of equal employment

opportunity complaints by the Postal

Service.

Abusive mismanagement.

Harassment by Postal management.

Harassment and discrimination by Postal

management. 

Federal Labor Standards Act violations

and discrimination and retaliation for

prior Equal Employment Opportunity

complaints.

Unfair treatment of former employment

by management and employees at a Postal

facility.

Injury compensation claim and labor

relations problems with Postal managers.

A Postal Service employee who was

denied a Merit Systems Protection Board

hearing after termination.

Discrimination, assault, and retaliation by

the Postal Service.

Island Pond, 

Vermont

Island Pond, 

Vermont

Malvern, 

Pennsylvania

Malvern, 

Pennsylvania

North Florida 

Postal District

Jordan, 

New York

Jordan, 

New York

St. Petersburg, 

Florida

St. Petersburg, 

Florida

St. Petersburg, 

Florida

St. Petersburg, 

Florida

Warren, 

Pennsylvania

Williston, 

Vermont

Warren, 

Maine

Raleigh, 

North Carolina

Greensboro, 

North Carolina

Clementon, 

New Jersey

Cedar Rapids, 

Indiana

Montclair,

New Jersey

12/21/98

12/21/98

12/28/98

12/28/98

12/28/98

1/8/99

1/8/99

1/15/99 

1/15/99

1/15/99

1/15/99

1/19/99

1/19/99

1/19/99

1/19/99

1/19/99 

1/20/99

3/11/99

3/22/99
APPENDICES

Response

Requestor Allegation/Concern Location Date

VOICE OF THE BUSINESS

Response

Requestor Allegation/Concern Location Date

PAGE82

Chairman

Postal Subcommittee

Representative, 

New York

Chairman

Postal Subcommittee

Chairman

Postal Subcommittee

Representative,

California

Representative,

California

Senator,

Missouri

Senator,

Missouri

Representative, 

Texas

Chairman

Postal Subcommittee

Chairman

Postal Subcommittee

Representative, 

Texas

Athens, 

Tennessee

Long Island,

New York

Postal District

Long Island, 

New York

Postal District

Garden Grove,

California

Garden Grove, 

California

Garden Grove,

California

Springfield,

Missouri

Springfield, 

Missouri

Texarkana, 

Texas

Ponca City,

Oklahoma

San Antonio,

Texas

Postal-wide

3/24/99

3/31/99

3/31/99

3/31/99

1/19/99

3/31/99

3/31/99

3/31/99

3/31/99

3/31/99

3/31/99

3/31/99

Misconduct and corruption by Postal

managers.

Labor management-related complaints of

Postal Service employees.

Labor-management-related complaints of

Postal Service employees.

Misconduct, abuse, and mismanagement.

Unfair relocation of a postmaster.

Misconduct, abuse, and mismanagement.

Discrimination, harassment, and abusive

management.

Discrimination, harassment, and abusive

management.

Improper hiring practices and 

discrimination.

Discrimination, mistreatment, and 

harassment.

Sexual harassment, discrimination, and

retaliation.

Salary expenses incurred by the Postal

Service for administrative leave with pay,

reinstatements, and back pay awards.

Chairman

Postal Subcommittee

Chairman

Postal Subcommittee

Mechanical work performed on Postal

vehicles at a Vehicle Maintenance

Facility.

Mismanagement at the Bulk Mail Center. 

Wilmington, 

Delaware

Cincinnati, 

Ohio

12/17/98

12/28/98
PAGE83

APPENDIX B 

Reports Issued to Postal Management 

OVERVIEW

Office of Inspector General 

The Office of Inspector General (OIG) audit teams are aligned to conduct performance and

financial audits, evaluations, and other reviews to address the business processes of the Postal

Service. Each directorate issues audit reports (AR), letter advisory reports (LA), or management advisory reports (MA) in accordance with the identified needs of the project. 

Inspection Service 

The Inspection Service audit groups are aligned by the type of audits performed, primarily

performance and financial, and include developmental, opinion, and contract auditing. The

Inspection Service has continued to provide Postal-wide attention in selected areas until these

functions are fully transitioned to the OIG.

SUMMARY

The following is a summary by principal areas of reports issued to Postal management between

October 1, 1998 and March 31, 1999. 

Recommend 

Number of Questioned Unsupported Funds Put to

Principal Area Reports Issued Costs Costs Better Use

Contract Audit 40 $ 3,113,396 $ 5,841,563 $ 54,715,624 

Delivery/ Support 7 1,097,395 0 0

Developmental Audit 2000

Developmental Audit 3000

District Accounting Office Audit 8000

Employee Relations 2000

Expenditure Investigation 3000

Facilities Audit 2 5,600,000 0 0

Facility Program Audit 4000

Financial Installation Audit 89000

Financial Investigation 25000

Financial Opinion Audit 34000

Financial Review 6000

Health Care 1000

Information Systems 2000

Labor Management 2000

Labor Relations 9000

Oversight 1000

Performance Audit 24 0 0 92,200

Quick Response 1000

Revenue Generation 2000

Revenue Investigation 89000

Service Investigation 16000

GRAND TOTAL 372 $ 9,810,791 $ 5,841,563 $ 54,807,824 
REPORT LISTING

The following is a list of each audit, grouped by the Postal Service CustomerPerfect! Voice of the

Customer, Voice of the Employee, and Voice of the Business.

OIG REPORTS

October 1, 1998 through March 31, 1999

VOICE OF THE CUSTOMER

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

DA-LA-99-001 Priority Mail Network - Postal-wide $ 0 $ 0 $ 0 11/24/98

Christmas Plan 1998

DS-LA-99-001 Survey Results of the South Florida District 0 0 0 12/23/98

So. Fla. District 

EXFC Test Mail

DS-LA-99-002 Survey Results of the Atlanta, GA 0 0 0 3/26/99

Atlanta District

EXFC Test Mail

DS-MA-99-001 Review of USPS Postal-wide 0 0 0 3/26/99

Compliance with GPRA

DS-MA-99-004 Review of USPS Postal-wide 0 0 0 3/30/99

Compliance with GPRA -

Phase II

DS-MA-99-003 Revenue Deficiencies for St. Louis, MO 0 0 0 3/31/99

Mailing of the St. Louis/

Southern Illinois

Labor Tribune

TOTAL $ 0 $ 0 $ 0

VOICE OF THE EMPLOYEE

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

LM-MA-99-002 Effectiveness of USPS Postal-wide $ 0 $ 0 $ 0 3/26/99

Grievance-Arbitration

Procedures

LR-AR-99-001 Labor and Management Postal-wide 0 0 0 3/30/99

Workplace Disputes

DS-MA-99-002 Accident Reporting Process Postal-wide 0 0 0 3/31/99

LR-MA-99-001 Grievance & Arbitration Postal-wide 0 0 0 3/31/99

Management Information

OV-MA-99-001 Review of USPS Personnel Postal-wide 0 0 0 3/31/99

Security Program - 

Process for Updating

Sensitive Clearances

LR-AR-99-006 Allegations of Retaliation Garden Grove, CA 0 0 0 3/30/99

at the Garden Grove

Post Office

LR-AR-99-008 Follow-up on USPS Garden Grove, CA 0 0 0 3/31/99

Recommendations to

Investigate Sexual

Harassment Allegations and

to Reassign a Supervisor

from His Position

of Authority

PAGE84 APPENDICES
PAGE85

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

LR-AR-99-009 Administration of the Garden Grove, CA 0 0 0 3/31/99

Advance Sick Leave

Program and Health &

Safety Issues at the

Garden Grove Post Office

LM-LA-99-001 EEO Complaint Processing Mid Carolinas District 0 0 0 11/9/98

ER-MA-99-002 Employee Allegations at Manhattan, NY 0 0 0 3/30/99

the Church St. Station

LR-MA-99-005 Employee Allegations in Long Island, NY 0 0 0 3/26/99

the Long Island District

LR-MA-99-006 Employee Allegations at Ponca City, OK 0 0 0 3/30/99

the Ponca City Post Office

LR-AR-99-010 San Antonio District San Antonio, TX District 0 0 0 3/30/99

Delays in Processing of 

EEO Complaints

LR-AR-99-007 Allegations of Texarkana, TX 0 0 0 3/30/99

Discriminatory Hiring

Practices, Harassment,

and Intimidation of

Employees at the

Texarkana, TX. Post Office

TOTAL $ 0 $ 0 $ 0

VOICE OF THE BUSINESS

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

IS-AR-99-001 Year 2000 Initiative Postal-wide $ 0 $ 0 $ 0 2/18/99

Program Management

Office Reporting

IS-TR-99-001 Postal Service Postal-wide 0 0 0 2/23/99

Year 2000 Initiative

(Testimony)

DS-AR-99-001 Performance Audit of the Postal-wide 1,097,395 0 0 3/31/99

National Change of 

Address Program

HC-MA-99-001 Medical Records Postal-wide 0 0 0 3/29/99

Contained in Workers’

Compensation Files

FR-AR-99-001 Audit of Board of Postal-wide 0 0 0 12/28/98

Governors’ Travel

and Meeting Expenses

FR-AR-99-002 Audit of USPS Officers’ Postal-wide 0 0 0 12/28/98

Travel and 

Representation Expenses

FR-AR-99-004 Subsidization of Postal-wide 0 0 0 12/30/98

International Mail Service

FR-AR-99-005 Corporate Treasury Postal-wide 0 0 0 2/23/99

Cash Management

DA-MA-99-001 Tray Management Postal-wide 0 0 0 3/15/99

System Deliverables

FR-MA-99-001 Validity of Employees’ SSN Postal-wide 0 0 0 3/26/99

QR-MA-99-001 USPS Management of Postal-wide 0 0 0 3/29/99

Personal Services Contracts

RG-MA-99-002 Review of the Sales Postal-wide 0 0 0 3/30/99

Force Augment Pilot 

Project Phase II
Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

ER-MA-99-003 Salary Expenses and Postal-wide 0 0 0 3/31/99

Admin Leave &

Back Pay Awards

RG-AR-99-001 Review of USPS Economic Postal-wide 0 0 0 3/31/99

Analysis and Forecasting

FA-LA-99-001 Facility Depreciation Washington, DC 0 0 0 11/25/98

DA-LA-99-002 Liability Insurance Washington, DC 0 0 0 3/31/99

Coverage for USPS

Officers and Governors

FA-AR-99-001 Review of the Atlanta Atlanta, GA 5,600,000 0 0 3/31/99

Olympic Facility

Improvement Plan

FR-AR-99-003 Withholding and Minneapolis, MN 0 0 0 12/15/98

Contribution for Health 55401

Benefits, Life Insurance,

and Employee

Headcount Data

(OPM Request)

TOTAL for the Voice of the Business $ 6,697,395 $ 0 $ 0

GRAND TOTAL $ 6,697,395 $ 0 $ 0

INSPECTION SERVICE REPORTS

October 1, 1998 through March 31, 1999

VOICE OF THE CUSTOMER

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

022-1244541-PA(1) Priority Mail Postal-wide $ 0 $ 0 $ 0 3/17/99

019-1223382-AX(1) Mail Transport Postal-wide 0 0 0 3/26/99

Equipment Service

023-1223496-PA(1) Logistics and Transportation Postal-wide 0 0 0 12/30/98

0071-1254358-SI(2) Observations of Postal-wide 0 0 0 3/30/99

Mail Conditions

096-1257649-SI(3) Observations of Pelham, AL 35124 0 0 0 10/23/98

Mail Conditions

314-1250791-PA(3) Registered Mail Operations Long Beach District 0 0 0 12/21/98

314-1250792-PA(3) Registered Mail Operations Los Angeles District 0 0 0 1/22/99

050-1240192-PA(2) Mail Operations Pasadena, CA 91102 0 0 0 10/26/98

052-1242213-PA(3) Mail Preparation, Pasadena, CA 91102 0 0 0 11/3/98

Distribution and Flow

314-1250789-PA(3) Registered Mail Operations San Diego District 0 0 0 12/16/98

314-1250790-PA(3) Registered Mail Operations Santa Ana District 0 0 0 2/25/99

314-1250793-PA(3) Registered Mail Operations Van Nuys District 0 0 0 12/29/98

072-1211466-SI(2) Observations of Miami, FL 33152 0 0 0 10/26/98

Mail Conditions

052-1234653-PA(3) Commercial Mail Miramar, FL 33027 0 0 0 10/28/98

Receiving Agencies

070-1236715-SI(1) Nixie and Loop Mail Pembroke Pines, FL 33029 0 0 0 12/9/98

072-1211467-SI(2) Observations of W. Palm Beach, FL 33406 0 0 0 12/17/98

Mail Conditions

314-1254913-PA(3) Delivery Units Detroit, MI 48232 0 0 0 12/30/98

PAGE86 APPENDICES
PAGE87

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

052-1272404-PA(3) Mail Operations Kansas City, MO 64111 0 0 0 2/26/99

073-1264079-SI(2) Observations of St. Louis, MO 63199 0 0 0 1/22/99

Mail Conditions

096-1220703-SI(3) Observations of Raleigh, NC 27676 0 0 0 12/10/97*

Mail Service

311-1262203-PA(3) Registered Mail Operations Edison, NJ 08899 0 0 0 2/18/99

072-1248914-SI(2) Priority Mail Service South Jersey, NJ 08031 0 0 0 10/27/98

037-1258944-PA(2) Aviation Security Program New York, NY 10116 0 0 0 2/11/99

040-1241168-PA(2) Special Services New York, NY 10116 0 0 0 2/22/99

071-1227769-SI(2) Mail Handling Procedures Cincinnati, OH 45234 0 0 0 3/5/99

071-1267297-SI(2) Intra-island Priority Mail San Juan, PR 00936 0 0 0 3/1/99

038-1243860-PA(2) Two-Day and Memphis, TN 38107 0 0 0 11/6/98

Three-Day Mail

091-1253470-SI(2) Observations of Nashville, TN 37229 0 0 0 11/2/98

Mail Conditions

072-1269061-SI(2) Arrow Lock and Coppell, TX 75099 0 0 0 2/12/99

Key System

039-1246840-PA(2) Impact of Air Contracts Houston, TX 77205 0 0 0 11/18/98

on Service

037-1254431-PA(2) Aviation Security Program Houston, TX 77315 0 0 0 10/30/98

096-1251108-SI(3) Mail Processing Operations Norfolk, VA 23504 0 0 0 10/8/98

TOTAL $ 0 $ 0 $ 0

VOICE OF THE EMPLOYEE

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

318-1260961-PA(3) Hiring Practices San Bernardino, $ 0 $ 0 $ 0 12/17/98

CA 92423

072-1257106-SI(2) MVS Drivers Newark, NJ 07101 0 0 0 10/23/98

Drug Screening

TOTAL $ 0 $ 0 $ 0 

VOICE OF THE BUSINESS

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

022-1232391-PA(1) Group of Twenty Postal-wide $ 0 $ 0 $ 0 3/12/99

Automation

020-1230990-PA(1) Advertising & Sales of Postal-wide 0 0 0 3/24/99

Products and Services

018-1122461-AX(1) Financial Systems Postal-wide 0 0 0 03/17/98*

004-1264054-AD(1) Imprest Fund Audit Washington, 0 0 0 1/19/99

DC 20260

184-1253428-AC(1) Contract Audit Christensen 0 0 0 10/5/98

Associates, Inc.

181-1252323-AC(1) Contract Audit Siemens 0 0 6,166,150 10/13/98

ElectroCom, L.P.

181-1247177-AC(1) Contract Audit William M. Karr & 0 0 10/16/98

Associates, Inc.

181-1252326-AC(1) Contract Audit Siemens 0 0 42,889,337 10/16/98

ElectroCom, L.P.

186-1253122-AC(1) Contract Audit Pavilion 29,289 0 0 10/21/98

Management, Inc.
Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

181-1253381-AC(1) Contract Audit SELCO Steel Erectors 0 0 5,072 10/23/98

Company, Inc.

193-1252325-AC(2) Contract Audit Siemens 0 0 0 10/26/98

ElectroCom, L.P.

181-1252372-AC(1) Contract Audit The Freeman Companies 0 0 1,710,680 10/30/98

192-1254969-AC(2) Contract Audit Remitco Management 1,548 0 0 10/30/98

Corporation

185-1265628-AC(1) Contract Audit DMK Investment 0 0 11/12/98

181-1252266-AC(1) Contract Audit Remitco Management 0 0 544,519 11/18/98

Corporation

181-1254405-AC(1) Contract Audit Dearborn Mid- 0 0 11/19/98

West Conveyor, Inc.

181-1258675-AC(1) Contract Audit Siemens 0 0 256,377 11/20/98

ElectroCom, L.P.

181-1254410-AC(1) Contract Audit Dearborn Mid- 0 0 137,480 11/24/98

West Conveyor, Inc.

181-1254812-AC(1) Contract Audit North American 0 0 171,823 11/25/98

Conveyor, Inc.

184-1243166-AC(1) Contract Audit Emery Worldwide 1,245,475 5,841,563 0 12/7/98

Airlines

186-1261357-AC(1) Contract Audit Partners in 0 0 0 12/8/98

Brainstorms, Inc.

192-1237967-AC(2) Contract Audit Tad Resources 0 0 0 12/8/98

International, Inc.

181-1251878-AC(1) Contract Audit Key Handling 0 0 516,256 12/11/98

Systems, Inc.

181-1247014-AC(1) Contract Audit Sandvik Sorting 0 0 946,887 12/17/98

Systems, Inc.

184-1251788-AC(1) Contract Audit The Austin Company 0 0 12/17/98

181-1253441-AC(1) Contract Audit Motion System, L.C. 0 0 145,532 12/18/98

182-1254485-AC(1) Contract Audit Payco-General 0 0 12/24/98

American Credits, Inc.

184-1251785-AC(1) Contract Audit The Austin Company 0 0 12/24/98

181-1262079-AC(1) Contract Audit The Freeman Companies 0 0 347,246 1/8/99

181-1262969-AC(1) Contract Audit Remitco Management 0 0 250,252 1/8/99

Corporation

183-1261236-AC(1) Contract Audit Fremont Die Cut 1,550,857 0 0 1/15/99

Products, Inc.

184-1228152-AC(1) Contract Audit Marriott Corporation 28,437 0 0 1/21/99

181-1268524-AC(1) Contract Audit Gauthier, Alvarado & 0 0 0 2/1/99

Associate

187-1224876-AC(1) Contract Audit Midcon Gas Services 0 0 0 2/17/99

Corporation

181-1270327-AC(1) Contract Audit Rapistan Systems 0 0 274,540 3/5/99

181-1273828-AC(1) Contract Audit URS Greiner 0 0 118,650 3/5/99

Woodward Clyde

185-1269272-AC(1) Contract Audit Trammell Crow Co. 615 0 0 2/8/99

181-1270335-AC(1) Contract Audit Rapistan Systems 0 0 131,347 3/8/99

182-1267498-AC(1) Contract Audit Rudolph/Libbe, Inc. 0 0 0 3/8/99

181-1265241-AC(1) Contract Audit GFI Genfare 0 0 103,476 3/9/99

182-1267500-AC(1) Contract Audit Rudolph/Libbe, Inc. 189,226 0 0 3/12/99

182-1267502-AC(1) Contract Audit Rudolph/Libbe, Inc. 0 0 0 3/12/99

PAGE88 APPENDICES
PAGE89

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

184-1265466-AC(1) Contract Audit Marriott Corporation 5,576 0 0 3/18/99

184-1274619-AC(1) Contract Audit Barsh Company 62,373 0 0 3/26/99

061-1260310-RI(1) Postage Meter Anchorage, AK 99518 0 0 0 1/27/99

016-1256585-AF(2) Financial Installation Audit Birmingham, AL 35203 0 0 0 2/22/99

009-1265350-AD(1) Cost and Revenue Analysis Birmingham, AL 35203 0 0 0 3/5/99

011-1256584-AF(1) Financial Installation Audit Birmingham, AL 35203 0 0 0 3/5/99

012-1256582-AF(1) Financial Installation Audit Huntsville, AL 35813 0 0 0 3/30/99

062-1252335-RI(1) Nonprofit Mail Montgomery, AL 36119 0 0 0 10/30/98

062-1260835-RI(1) Standard Mail Montgomery, AL 36119 0 0 0 11/16/98

014-1257695-AF(1) Financial Installation Audit Augusta, AR 72006 0 0 0 12/18/98

178-1254107-AF(2) Financial Installation Audit Phoenix, AZ 85026 0 0 0 09/25/98*

013-1256119-AF(1) Financial Installation Audit Brentwood, CA 94513 0 0 0 3/8/99

011-1255654-AF(1) Financial Installation Audit Folsom, CA 95630 0 0 0 11/20/98

066-1271610-RI(1) Standard Mail Glendora, CA 91740 0 0 0 2/17/99

069-1266708-RI(2) Presort Bureaus Los Angeles, CA 90058 0 0 0 12/18/98

012-1256726-AF(1) Financial Installation Audit Mission Hills, CA 91345 0 0 0 12/18/98

065-1256752-RI(1) Periodical Mail Newport Beach, CA 92660 0 0 0 3/17/99

069-1266709-RI(2) Presort Bureaus Orange, CA 92868 0 0 0 12/18/98

659-1218890-RI(1) Financial Instruments Sacramento, CA 95821 0 0 0 12/21/98

001-1219706-AD(1) ASC Opinion Audit San Mateo, CA 94497 0 0 0 3/12/99

924-1254111-RI(1) Presort Bureaus Santa Ana, CA 92702 0 0 0 10/27/98

061-1262128-RI(1) Postage Meter Santa Ana, CA 92704 0 0 0 1/7/99

014-1256128-AF(1) Financial Installation Audit Tres Pinos, CA 95075 0 0 0 12/4/98

011-1256294-AF(1) Financial Installation Audit Van Nuys, CA 91409 0 0 0 12/4/98

011-1256727-AF(1) Financial Installation Audit W. Sacramento, CA 95799 0 0 0 2/24/99

012-1256126-AF(1) Financial Installation Audit Walnut Creek, CA 94596 0 0 0 12/8/98

066-1262318-RI(1) Standard Mail Boulder, CO 80302 0 0 0 11/30/98

065-1244505-RI(1) Periodical Mail Denver, CO 80202 0 0 0 10/9/98

061-1234435-RI(1) Postage Meter Denver, CO 80202 0 0 0 11/3/98

061-1277504-RI(1) Postage Meter Denver, CO 80202 0 0 0 3/16/99

066-1258682-RI(1) Standard Mail Denver, CO 80202 0 0 0 3/23/99

013-1256134-AF(1) Financial Installation Audit Monument, CO 80132 0 0 0 12/22/98

065-1275345-RI(1) Periodical Mail Windsor, CO 80550 0 0 0 2/25/99

014-1256400-AF(1) Financial Installation Audit Andover, CT 06232 0 0 0 11/12/98

012-1255748-AF(1) Financial Installation Audit Danbury, CT 06810 0 0 0 12/22/98

009-1270869-AD(1) Cost and Revenue Analysis Danielson, CT 06239 0 0 0 12/22/98

009-1273544-AD(1) Cost and Revenue Analysis East Hartford, CT 06118 0 0 0 2/17/99

011-1256087-AF(1) Financial Installation Audit Hartford, CT 06101 0 0 0 12/8/98

009-1265598-AD(1) Cost and Revenue Analysis Hartford, CT 06101 0 0 0 12/22/98

017-1203598-FI(2) Financial Investigation Hartford, CT 06101 0 0 0 1/5/99

013-1256391-AF(1) Financial Installation Audit Litchfield, CT 06759 0 0 0 3/17/99

014-1256399-AF(1) Financial Installation Audit Moodus, CT 06469 0 0 0 11/10/98

013-1256386-AF(1) Financial Installation Audit New Canaan, CT 06840 0 0 0 3/3/99

061-1262023-RI(1) Postage Meter Southington, CT 06489 0 0 0 12/30/98

063-1259093-RI(2) Periodical Mail Washington, DC 20066 0 0 0 11/6/98

046-1245790-PA(2) Business Mail Entry Units Washington, DC 20066 0 0 92,200 11/24/98

068-1254318-RI(1) Standard Mail Boca Raton, FL 33431 0 0 0 10/1/98

016-1256826-AF(2) Financial Installation Audit Jacksonville, FL 32203 0 0 0 3/1/99
Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

013-1256422-AF(1) Financial Installation Audit MacClenny, FL 32063 0 0 0 12/17/98

061-1258946-RI(1) Postage Meter Miami, FL 33016 0 0 0 1/29/99

195-1247869-EI(1) Review Procurement Miami, FL 33152 0 0 0 11/23/98

Activities

006-1250049-RI(1) Business Mail Entry Unit Miami, FL 33152 0 0 0 12/23/98

016-1256375-AF(2) Financial Installation Audit Mid Florida, FL 32799 0 0 0 12/14/98

013-1256419-AF(1) Financial Installation Audit Middleburg, FL 32068 0 0 0 12/17/98

011-1256376-AF(1) Financial Installation Audit Orlando, FL 32862 0 0 0 12/14/98

064-1257809-RI(1) First-Class Mail Tallahassee, FL 32302 0 0 0 3/22/99

384-1257343-RI(1) Express Mail Corporate Tampa, FL 33699 0 0 0 11/25/98

Account System

090-1221915-RI(1) Official Mail West Palm Beach, 0 0 0 07/31/98*

Accounting System FL 33406

062-1266375-RI(1) Standard Mail Athens, GA 30608 0 0 0 2/11/99

064-1281435-RI(1) Business Mail Entry Unit Atlanta, GA 30304 0 0 0 3/15/99

062-1280798-RI(1) Standard Mail Atlanta, GA 30304 0 0 0 3/22/99

062-1277468-RI(1) Standard Mail Atlanta, GA 30326 0 0 0 3/10/99

012-1256580-AF(1) Financial Installation Audit Duluth, GA 30096 0 0 0 12/22/98

062-1268245-RI(1) Standard Mail Fayetteville, GA 30214 0 0 0 1/11/99

066-1283197-RI(1) Standard Mail Fayetteville, GA 30214 0 0 0 3/25/99

012-1256371-AF(1) Financial Installation Audit Gainesville, GA 30501 0 0 0 3/8/99

015-1256574-AF(1) Financial Installation Audit Good Hope, GA 30641 0 0 0 12/31/98

009-1265360-AD(1) Cost and Revenue Analysis Macon, GA 31213 0 0 0 3/5/99

014-1256578-AF(1) Financial Installation Audit Scottdale, GA 30079 0 0 0 3/5/99

016-1257635-AF(2) Financial Installation Audit Honolulu, HI 96820 0 0 0 2/17/99

014-1256121-AF(1) Financial Installation Audit Waimea, HI 96796 0 0 0 2/19/99

011-1257196-AF(1) Financial Installation Audit Mount Pleasant, IA 52641 0 0 0 1/20/99

015-1255385-AF(1) Financial Installation Audit Harrison, ID 83833 0 0 0 3/11/99

384-1258739-RI(1) Postage Meter Alsip, IL 60803 0 0 0 2/4/99

063-1226216-RI(2) Nonprofit Mail Bensenville, IL 60106 0 0 0 12/22/98

063-1205293-RI(2) Nonprofit Mail Chicago, IL 60607 0 0 0 2/2/99

063-1212094-RI(2) Standard Mail Chicago, IL 60611 0 0 0 12/17/98

092-1215615-FPA(1) National Priority System Chicago, IL 60669 0 0 0 1/8/99

009-1264541-AD(1) Cost and Revenue Analysis Chicago, IL 60669 0 0 0 3/10/99

014-1256004-AF(1) Financial Installation Audit Christopher, IL 62822 0 0 0 10/28/98

011-1256275-AF(1) Financial Installation Audit Downers Grove, IL 60515 0 0 0 2/12/99

012-1256284-AF(1) Financial Installation Audit Elmhurst, IL 60126 0 0 0 12/23/98

066-1265079-RI(1) Bulk Mail Acceptance Unit Forest Park, IL 60130 0 0 0 12/10/98

011-1256273-AF(1) Financial Installation Audit Franklin Park, IL 60131 0 0 0 2/26/99

011-1256279-AF(1) Financial Installation Audit Mattoon, IL 61938 0 0 0 12/17/98

012-1257195-AF(1) Financial Installation Audit Moline, IL 61265 0 0 0 12/22/98

011-1256277-AF(1) Financial Installation Audit Mount Morris, IL 61054 0 0 0 3/12/99

017-1254059-FI(2) Financial Investigation Peoria, IL 61614 0 0 0 10/6/98

015-1257193-AF(1) Financial Installation Audit Plymouth, IL 62367 0 0 0 12/21/98

065-1258714-RI(1) Periodical Mail Indianapolis, IN 46204 0 0 0 10/15/98

065-1258716-RI(1) Periodical Mail New Paris, IN 46553 0 0 0 10/15/98

237-1223153-FPA(1) Facilities Service Office Kansas City, KS 66110 0 0 0 2/8/99

014-1256007-AF(1) Financial Installation Audit Meade, KS 67864 0 0 0 11/25/98

PAGE90 APPENDICES
PAGE91

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

069-1270294-RI(2) Postage Due Shawnee Mission, 0 0 0 2/12/99

KS 66202

064-1267287-RI(1) First-Class Mail Covington, KY 41019 0 0 0 2/5/99

014-1255367-AF(1) Financial Installation Audit Taylorsville, KY 40071 0 0 0 12/18/98

064-1274991-RI(1) Official Mail Boston, MA 02114 0 0 0 3/2/99

Accounting System

064-1279490-RI(1) First-Class Mail Boston, MA 02114 0 0 0 3/18/99

064-1268059-RI(1) First-Class Mail Boston, MA 02201 0 0 0 2/5/99

017-1253384-FI(2) Financial Investigation Edgartown, MA 02539 0 0 0 10/9/98

017-1281286-FI(2) Financial Investigation Hanover, MA 02339 0 0 0 3/17/99

013-1256390-AF(1) Financial Installation Audit Hopedale, MA 01747 0 0 0 12/10/98

012-1256382-AF(1) Financial Installation Audit Natick, MA 01760 0 0 0 11/20/98

090-1246564-RI(1) Official Mail North Reading, 0 0 0 3/9/99

Accounting System MA 01889

013-1256393-AF(1) Financial Installation Audit Spencer, MA 01562 0 0 0 12/14/98

090-1246565-RI(1) Official Mail Springfield, MA 01101 0 0 0 3/12/99

Accounting System

061-1231057-RI(1) Postage Meter Waltham, MA 02154 0 0 0 12/4/98

065-1260264-RI(1) Periodical Mail Baltimore, MD 21203 0 0 0 12/2/98

013-1257159-AF(1) Financial Installation Audit Burtonsville, MD 20866 0 0 0 3/19/99

061-1217421-RI(1) Postage Meter Linthicum Heights, 0 0 0 12/31/98

MD 21290

061-1263962-RI(1) Postage Meter Salisbury, MD 21804 0 0 0 1/22/99

198-1235428-FPA(2) New Construction Owned Upper Marlboro, 0 0 0 2/19/99

MD 20772

012-1257073-AF(1) Financial Installation Audit Westminster, MD 21157 0 0 0 11/23/98

017-1256420-FI(2) Financial Investigation Westbrook, ME 04092 0 0 0 11/9/98

830-1265476-FI(1) Financial Investigation Detroit, MI 48223 0 0 0 1/25/99

009-1264025-AD(1) Cost and Revenue Analysis Detroit, MI 48232 0 0 0 1/4/99

016-1253582-AF(2) Financial Installation Audit Detroit, MI 48233 0 0 0 10/9/98

011-1256430-AF(1) Financial Installation Audit Detroit, MI 48233 0 0 0 2/5/99

062-1226027-RI(1) Standard Mail East Lansing, MI 48826 0 0 0 11/6/98

065-1255305-RI(1) Periodical Mail Grand Rapids, MI 49599 0 0 0 1/12/99

014-1261763-AF(1) Financial Installation Audit Manton, MI 49663 0 0 0 12/30/98

017-1263184-FI(2) Financial Investigation Maybee, MI 48159 0 0 0 12/7/98

009-1265280-AD(1) Cost and Revenue Analysis Royal Oak, MI 48067 0 0 0 3/15/99

011-1261754-AF(1) Financial Installation Audit Royal Oak, MI 48068 0 0 0 3/29/99

065-1249099-RI(1) Periodical Mail South Haven, MI 49090 0 0 0 10/21/98

062-1254546-RI(1) Nonprofit Mail Warren, MI 48092 0 0 0 2/12/99

014-1261364-AF(1) Financial Installation Audit Clearwater, MN 55320 0 0 0 3/16/99

001-1225936-AD(1) IS/ASC Opinion Audit Eagan, MN 55164 0 0 0 3/12/99

062-1273535-RI(1) Nonprofit Mail Maple Grove, MN 55369 0 0 0 2/26/99

090-1203705-RI(1) Official Mail Minneapolis, MN 55401 0 0 0 10/19/98

Accounting System

063-1198181-RI(2) Nonprofit Mail Minneapolis, MN 55401 0 0 0 11/9/98

061-1262211-RI(1) Postage Meter Minneapolis, MN 55437 0 0 0 2/9/99

062-1254493-RI(1) Nonprofit Mail Rochester, MN 55901 0 0 0 10/14/98

062-1250428-RI(1) Nonprofit Mail St. Paul, MN 55101 0 0 0 10/2/98

015-1257194-AF(1) Financial Installation Audit Arcola, MO 65603 0 0 0 2/12/99
Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

064-1272221-RI(1) First-Class Mail Cape Girardeau, 0 0 0 2/4/99

MO 63701

017-1261670-FI(2) Financial Investigation Harviell, MO 63945 0 0 0 11/23/98

013-1256008-AF(1) Financial Installation Audit Hermann, MO 65041 0 0 0 11/25/98

319-1206621-PA(3) Express Mail Corporate Kansas City, MO 64108 0 0 0 10/30/98

Account Activity

066-1272800-RI(1) Standard Mail O’Fallon, MO 63366 0 0 0 2/8/99

015-1260054-AF(1) Financial Installation Audit Ponce De Leon, 0 0 0 2/16/99

MO 65728

009-1265371-AD(1) Cost and Revenue Analysis St. Louis, MO 63155 0 0 0 3/26/99

001-1224758-AD(1) ISC Opinion Audit St. Louis, MO 63177 0 0 0 3/12/99

014-1256006-AF(1) Financial Installation Audit Stockton, MO 65785 0 0 0 10/29/98

063-1253486-RI(2) Nonprofit Mail Olive Branch, MS 38654 0 0 0 11/18/98

017-1253849-FI(2) Financial Investigation Pearlington, MS 39572 0 0 0 10/2/98

823-1235506-FI(1) Financial Investigation Missoula, MT 59801 0 0 0 12/10/98

013-1257151-AF(1) Financial Installation Audit Blowing Rock, NC 28605 0 0 0 12/9/98

384-1247475-RI(1) First-Class Mail Charlotte, NC 28211 0 0 0 9/23/98

064-1220308-RI(1) First-Class Mail Charlotte, NC 28228 0 0 0 10/5/98

920-1203791-RI(1) First-Class Mail Charlotte, NC 28228 0 0 0 10/5/98

009-1270412-AD(1) Cost and Revenue Analysis Greensboro, NC 27495 0 0 0 2/17/99

015-1257735-AF(1) Financial Installation Audit Longwood, NC 28452 0 0 0 1/15/99

015-1257734-AF(1) Financial Installation Audit Roaring Gap, NC 28668 0 0 0 1/5/99

012-1257153-AF(1) Financial Installation Audit Wilson, NC 27893 0 0 0 1/11/99

015-1260053-AF(1) Financial Installation Audit Bellwood, NE 68624 0 0 0 2/16/99

061-1268503-RI(1) Postage Meter Omaha, NE 68137 0 0 0 1/20/99

012-1255820-AF(1) Financial Installation Audit East Hanover, NJ 07936 0 0 0 3/10/99

004-1266043-AD(1) Imprest Fund Audit Edgewater, NJ 07020 0 0 0 1/6/99

072-1278578-SI(2) Bank Secrecy Act Edison, NJ 08899 0 0 0 3/11/99

009-1279204-AD(1) Cost and Revenue Analysis Fords, NJ 08863 0 0 0 3/29/99

069-1272194-RI(2) Business Mail Entry Unit Fort Lee, NJ 07024 0 0 0 2/22/99

012-1255821-AF(1) Financial Installation Audit Freehold, NJ 07728 0 0 0 1/4/98

009-1276045-AD(1) Cost and Revenue Analysis Freehold, NJ 07728 0 0 0 3/29/99

010-1206570-AD(1) International Revenue Jersey City, NJ 07096 0 0 0 1/11/99

Piece and Weight Review

045-1248616-PA(2) Tort Claims New Brunswick, NJ 08906 0 0 0 1/4/99

009-1278434-AD(1) Cost and Revenue Analysis Newark, NJ 07101 0 0 0 3/29/99

009-1279200-AD(1) Cost and Revenue Analysis Old Bridge, NJ 08857 0 0 0 3/29/99

013-1255824-AF(1) Financial Installation Audit Pennington, NJ 08534 0 0 0 3/1/99

009-1279202-AD(1) Cost and Revenue Analysis Perth Amboy, NJ 08861 0 0 0 3/29/99

009-1278439-AD(1) Cost and Revenue Analysis Plainfield, NJ 07060 0 0 0 3/29/99

009-1278437-AD(1) Cost and Revenue Analysis South Plainfield, NJ 07080 0 0 0 3/29/99

924-1281479-RI(1) Presort Bureaus Trenton, NJ 08618 0 0 0 3/19/99

009-1274943-AD(1) Cost and Revenue Analysis Trenton, NJ 08650 0 0 0 3/17/99

011-1255816-AF(1) Financial Installation Audit Trenton, NJ 08850 0 0 0 3/2/99

009-1278436-AD(1) Cost and Revenue Analysis Union, NJ 07080 0 0 0 3/29/99

069-1256845-RI(2) Special Services West Orange, NJ 07052 0 0 0 10/14/98

004-1266042-AD(1) Imprest Fund Audit Whippany, NJ 07999 0 0 0 2/21/99

013-1256150-AF(1) Financial Installation Audit Taos, NM 87571 0 0 0 2/5/99

061-1263807-RI(1) Postage Meter Las Vegas, NV 89119 0 0 0 2/17/99

PAGE92 APPENDICES
PAGE93

Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

013-1255750-AF(1) Financial Installation Audit Beacon, NY 12508 0 0 0 3/5/99

004-1265886-AD(1) Imprest Fund Audit Flushing, NY 11351 0 0 0 12/23/98

017-1221549-FI(2) Financial Investigation Hauppauge, NY 11760 0 0 0 10/14/98

017-1260936-FI(2) Financial Investigation Keeseville, NY 12944 0 0 0 12/10/98

017-1221548-FI(2) Financial Investigation Mt. Vernon, NY 10551 0 0 0 10/14/98

065-1279288-RI(1) Periodical Mail New York, NY 10036 0 0 0 3/17/99

013-1255754-AF(1) Financial Installation Audit Sea Cliff, NY 11579 0 0 0 3/5/99

065-1250957-RI(1) Periodical Mail Syracuse, NY 13202 0 0 0 10/15/98

839-1253048-FI(2) Financial Investigation Syracuse, NY 13220 0 0 0 10/2/98

071-1255363-SI(2) Time and Attendance Cincinnati, OH 45234 0 0 0 11/17/98

924-1257646-RI(1) Bulk Mailing Entry Unit Cleveland, OH 44101 0 0 0 12/1/98

011-1255365-AF(1) Financial Installation Audit Cleveland, OH 44101 0 0 0 12/9/98

384-1263867-RI(1) Specialized Programs Columbus, OH 43212 0 0 0 12/10/98

063-1218219-RI(2) Periodical Mail Columbus, OH 43216 0 0 0 10/5/98

090-1253246-RI(1) Official Mail Columbus, OH 43216 0 0 0 10/5/98

Accounting System

015-1255368-AF(1) Financial Installation Audit Cuba, OH 45114 0 0 0 1/7/99

011-1255369-AF(1) Financial Installation Audit Dayton, OH 45401 0 0 0 3/5/99

014-1255370-AF(1) Financial Installation Audit Oak Hill, OH 45656 0 0 0 3/17/99

015-1257760-AF(1) Financial Installation Audit Meno, OK 73760 0 0 0 2/23/99

009-1265359-AD(1) Cost and Revenue Analysis Oklahoma City, OK 73125 0 0 0 3/15/99

011-1257699-AF(1) Financial Installation Audit Oklahoma City, OK 73125 0 0 0 3/30/99

014-1257758-AF(1) Financial Installation Audit Yale, OK 74085 0 0 0 12/18/98

842-1263842-FI(1) Financial Investigation Portland, OR 97206 0 0 0 12/28/98

924-1255583-RI(1) Nonprofit Mail Portland, OR 97208 0 0 0 2/22/99

017-1259512-FI(2) Financial Investigation Springfield, OR 97477 0 0 0 11/27/98

013-1259880-AF(1) Financial Installation Audit Apollo, PA 15813 0 0 0 1/21/99

012-1259867-AF(1) Financial Installation Audit Blue Bell, PA 19422 0 0 0 3/15/99

012-1259868-AF(1) Financial Installation Audit Ephrata, PA 17522 0 0 0 3/5/99

066-1253187-RI(1) Standard Mail Meadville, PA 16335 0 0 0 10/15/98

011-1259853-AF(1) Financial Installation Audit Norristown, PA 19401 0 0 0 2/5/99

017-1256030-FI(2) Financial Investigation Philadelphia, PA 19101 0 0 0 10/29/98

065-1234781-RI(1) Periodical Mail Pittsburgh, PA 15290 0 0 0 12/11/98

062-1256229-RI(1) Standard Mail Pittsburgh, PA 15290 0 0 0 07/31/98*

017-1259737-FI(2) Financial Investigation Toughkenamon, PA 19374 0 0 0 10/9/98

011-1256331-AF(1) Financial Installation Audit York, PA 17402 0 0 0 11/27/98

013-1255829-AF(1) Financial Installation Audit Isabela, PR 00662 0 0 0 12/18/98

062-1226049-RI(1) Standard Mail San Juan, PR 00920 0 0 0 12/1/98

061-1259539-RI(1) Postage Meter San Juan, PR 00920 0 0 0 2/19/99

009-1273240-AD(1) Cost and Revenue Analysis Providence, RI 02901 0 0 0 2/9/99

011-1256089-AF(1) Financial Installation Audit Providence, RI 02904 0 0 0 3/3/99

016-1256413-AF(2) Financial Installation Audit Providence, RI 02904 0 0 0 3/3/99

061-1258803-RI(1) Postage Meter Mount Pleasant, 0 0 0 12/11/98

SC 29464

012-1257141-AF(1) Financial Installation Audit Gallatin, TN 37066 0 0 0 1/15/99

012-1257142-AF(1) Financial Installation Audit Jackson, TN 38301 0 0 0 12/9/98

009-1265210-AD(1) Cost and Revenue Analysis Memphis, TN 38101 0 0 0 3/8/99

065-1266706-RI(1) Periodical Mail Memphis, TN 38101 0 0 0 12/18/98
Un- Recommend

Case/Report Subject Title/ Location/ Questioned supported Funds Put to Issue

Number Project Type Contract Costs Costs Better Use Date

004-1265212-AD(1) Imprest Fund Audit Memphis, TN 38166 0 0 0 12/15/98

462-1272145-EI(1) Insured Parcel Review Memphis, TN 38173 0 0 0 1/4/99

009-1265203-AD(1) Cost and Revenue Analysis Nashville, TN 37229 0 0 0 12/29/98

012-1256575-AF(1) Financial Installation Audit Conroe, TX 77301 0 0 0 3/26/99

017-1252825-FI(2) Financial Investigation Corpus Christi, TX 78401 0 0 0 10/14/98

067-1259760-RI(1) Manifest Mailing Dallas, TX 75247 0 0 0 10/22/98

017-1252739-FI(2) Financial Investigation El Paso, TX 79910 0 0 0 10/15/98

009-1265906-AD(1) Cost and Revenue Analysis Houston, TX 77202 0 0 0 1/19/99

061-1262707-RI(1) Postage Meter Houston, TX 77251 0 0 0 1/25/99

015-1257763-AF(1) Financial Installation Audit Pettus, TX 78146 0 0 0 2/1/99

013-1257752-AF(1) Financial Installation Audit Silsbee, TX 77656 0 0 0 1/25/99

012-1257693-AF(1) Financial Installation Audit Waco, TX 76702 0 0 0 12/18/98

013-1256149-AF(1) Financial Installation Audit St. George, UT 84770 0 0 0 3/17/99

063-1269428-RI(2) Standard Mail Gordonsville, VA 22942 0 0 0 2/3/99

017-1252709-FI(2) Financial Investigation Great Falls, VA 22066 0 0 0 10/9/98

004-1263833-AD(1) Imprest Fund Audit Merrifield, VA 22082 0 0 0 3/19/99

015-1257733-AF(1) Financial Installation Audit Sedley, VA 23878 0 0 0 1/7/99

013-1257154-AF(1) Financial Installation Audit Tappahannock, VA 22560 0 0 0 2/18/99

061-1247365-RI(1) Postage Meter Burlington, VT 05401 0 0 0 12/11/98

014-1256137-AF(1) Financial Installation Audit Brush Prairie, WA 98606 0 0 0 12/18/98

017-1268268-FI(2) Financial Investigation Carbonado, WA 98323 0 0 0 1/13/99

197-1230607-FPA(2) New Construction Owned Olympia, WA 98501 0 0 0 12/29/98

566-1260750-EI(1) USPS Purchasing Contracts Seattle, WA 98109 0 0 0 3/8/99

866-1266019-ICM(3) Financial Installation Audit Seattle, WA 98115 0 0 0 1/29/99

017-1268269-FI(2) Financial Investigation Silvercreek, WA 98585 0 0 0 1/29/99

016-1254207-AF(2) Financial Installation Audit Spokane, WA 99299 0 0 0 10/21/98

833-1254184-FI(1) Financial Investigation Tacoma, WA 98413 0 0 0 12/16/98

014-1256138-AF(1) Financial Installation Audit Toledo, WA 98591 0 0 0 3/8/99

061-1262210-RI(1) Postage Meter LaCrosse, WI 54603 0 0 0 1/22/99

011-1256269-AF(1) Financial Installation Audit Madison, WI 53714 0 0 0 12/1/98

014-1256005-AF(1) Financial Installation Audit Winneconne, WI 54986 0 0 0 10/26/98

065-1260414-RI(1) Periodical Mail Charleston, WV 25305 0 0 0 12/7/98

TOTAL FOR THE VOICE OF THE BUSINESS $ 3,113,396 $ 54,807,824

$ 5,841,563

GRAND TOTAL $ 3,113,396 $ 54,807,824

$ 5,841,563

* Reports with an asterisk(*) were issued in a prior semiannual reporting period; however, they were not

entered into the Inspection Service Database Information System until the current reporting period. To

ensure all reports issued to management are reported to Congress, they are being included during this

reporting period.

PAGE94 APPENDICES
PAGE95

APPENDIX C

Findings of Questioned Costs1

For Period Ending March 31, 1999

Unsupported

Costs

TOTAL Included In

Number of Questioned Questioned

Description Reports Costs Costs

Reports for which no management decision 

was made at the beginning of the reporting period 27 $161,989,656 $7,142,623

Reports requiring a management decision that 

were issued during the reporting period 11 $15,652,354 $5,841,563

TOTAL 38 $177,642,010

Reports for which a management decision was 

made during the reporting period (i + ii) 10 $9,574,825 $42,813

(i) Dollar value of disallowed costs $2,552,389

(ii) Dollar value of costs not disallowed $7,022,436

Reports for which no management decision was 

made by the end of the reporting period. 28 $168,067,185 $12,941,373

Reports for which no management decision

was made within six months of issuance (Table A) 9 $1,619,747 $854,830

Reports for which no management decision 

was made within one year of issuance (Table B) 11 $157,493,094 $6,244,980

Table A – Reports for which no management decision was made within six months of issuance

Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Subject Costs Costs

08/17/98 183-1246298-AC(1) Xeno Technix, Inc. $314,768 $236,559

08/17/98 183-1246324-AC(1) Xeno Technix, Inc. 241,647 217,599

06/16/98 184-1218249-AC(1) First Data Merchant Services Corp. 515,521 398,675

06/10/98 184-1235718-AC(1) Sandvik Sorting Systems, Inc. 139,163 0

09/18/98 184-1244332-AC(1) King-Casey, Inc. 57,213 0

09/18/98 184-1244333-AC(1) King-Casey, Inc. 70,668 0

09/18/98 184-1244335-AC(1) King-Casey, Inc. 31,805 0

04/14/98 184-1248703-AC(1) Christensen Associates, Inc. 4,940 0

09/11/98 192-1238574-AC(1) PhotoAssist, Inc. 244,022 1,997

TOTAL $1,619,747 $854,830

Table B – Reports for which no management decision was made within one year of issuance

Unsupported

Costs

Total Included In

Questioned Questioned

Report Date Case Number Subject Costs Costs

03/12/98 182-1224877-AC(1) MidCon Gas Services Corporation $ 14,920 $ 0

12/29/97 183-1180270-AC(1) Pi Electronic Corporation 156,241,716 6,241,716

05/30/97 182-1213081-AC(1) The Roybal Corporation 47,084 3,264

06/20/97 183-1214057-AC(1) UNARCO Material Handling 39,897 0

01/12/96 184-1171743-AC(1) Greenleaf Steel Rule & Die Corp. 67,399 0

05/20/96 184-1183079-AC(1) King Casey, Inc. 353,962 0

02/28/97 184-1203149-AC(1) King Casey, Inc. 14,542 0

02/28/97 184-1203150-AC(1) King Casey, Inc. 247,133 0

02/28/97 184-1203153-AC(1) King Casey, Inc. 42,946 0

01/27/97 190-1182814-AC(2) Hines Square 678, Inc. 404,418 0

07/22/97 190-1212424-AC(2) Kyla, Inc. 19,077 0

TOTAL $157,493,094 $6,244,980

1 Reflects Findings of Questioned Costs reported by the OIG and the Inspection Service.

Individual agency case listings are included in Appendix B, Reports Issued to Postal management.
APPENDIX D

Recommendations That Funds

Be Put to Better Use1

For Period Ending March 31, 1999

Number of

Description Reports Dollar Value

Reports for which no management decision 

was made at the beginning of the reporting period 85 $172,746,838

Reports requiring a management decision that 

were issued during the reporting period 18 $54,807,824

TOTAL 103 $227,554,662

Reports for which a management decision was made during the reporting period: 22 $97,613,596

(i) Value of recommendations implemented by management $88,085,611

(ii) Value of recommendations that management did not recover $9,527,985

(iii) Value of recommendations that management did not agree to implement $0

Reports for which no management decision was 

made by the end of the reporting period 81 $129,941,066

Reports for which no management decision was 

made within six months of issuance (Table A) 19 $70,356,142

Reports for which no management decision was 

made within one year of issuance (Table B) 46 $47,758,637

Table A - Reports for which no management decision was made within six months of issuance

Recommend

Report Case Funds Put to

Date Number Subject Better Use

06/10/98 181-1226701-AC(1) New Breed Leasing Corporation $26,910,584

04/15/98 181-1231813-AC(1) Motion Systems, L.C. 696,113

04/23/98 181-1231819-AC(1) Motion Systems, L.C. 82,384

04/21/98 181-1231825-AC(1) Motion Systems, L.C. 871,745

08/27/98 181-1233815-AC(1) Siemens ElectroCom, L.P. 1,975,850

04/14/98 181-1237199-AC(1) Siemens ElectroCom, L.P. 14,156,740

08/26/98 181-1238483-AC(1) New Breed Leasing Corporation 6,764,521

04/17/98 181-1238604-AC(1) Siemens ElectroCom, L.P. 505,224

06/05/98 181-1242545-AC(1) Mannesmann Dematic Rapistan Corporation 118,882

07/15/98 181-1244136-AC(1) Motion Systems, L.C. 756,910

09/25/98 181-1246015-AC(1) MOS International 773,938

08/28/98 181-1246017-AC(1) MOS International 280,277

08/14/98 181-1248027-AC(1) Siemens ElectroCom, L.P. 5,541,722

08/17/98 181-1248178-AC(1) Siemens ElectroCom, L.P. 10,687,390

08/20/98 181-1249368-AC(1) Key Handling Systems, Inc. 189,668

09/21/98 181-1249372-AC(1) Key Handling Systems, Inc. 13,851

09/18/98 181-1249374-AC(1) Key Handling Systems, Inc. 14,895

09/18/98 181-1249375-AC(1) Key Handling Systems, Inc. 8,768

09/18/98 181-1249376-AC(1) Key Handling Systems, Inc. 6,680

TOTAL $70,356,142

PAGE96 APPENDICES
PAGE97

Table B - Reports for which no management decision was made within one year of issuance

Recommend

Report Case Funds Put to 

Date Number Subject Better Use

01/03/97 181-1200819-AC(1) Mid-West Conveyor Company, Inc. $564,583

01/15/97 181-1201891-AC(1) ElectroCom Automation, L.P. 338,760

03/21/97 181-1205609-AC(1) Fanuc Robotics North America, Inc. 280,966

05/30/95 181-1165940-AC(1) ElectroCom Automation, L.P. 8,370,460

05/31/96 181-1171732-AC(1) King-Casey, Inc. 174,475

01/31/96 181-1181291-AC(1) Cortron, Inc. 355,978

05/23/96 181-1187389-AC(1) ElectroCom Automation, L.P. 2,799,714

07/25/96 181-1192269-AC(1) ElectroCom Automation, L.P. 89,068

09/25/96 181-1194800-AC(1) ElectroCom Automation, L.P. 9,178,587

09/20/96 181-1195161-AC(1) ElectroCom Automation, L.P. 34,876

06/06/97 181-1191292-AC(1) Accu-Sort Systems, Inc. 10,312,313

07/03/97 181-1204341-AC(1) Key Handling Systems, Inc. 129,326

07/03/97 181-1204343-AC(1) Key Handling Systems, Inc. 134,283

07/03/97 181-1204348-AC(1) Key Handling Systems, Inc. 336,308

05/20/97 181-1204350-AC(1) Key Handling Systems, Inc. 722,503

04/22/97 181-1208530-AC(1) ElectroCom Automation, L.P. 283,626

06/24/97 181-1211002-AC(1) SELCO Steel Erectors Company, Inc. 185,371

08/12/97 181-1211016-AC(1) SELCO Steel Erectors Company, Inc. 182,818

08/20/97 181-1211026-AC(1) SELCO Steel Erectors Company, Inc. 258,122

08/05/97 181-1211033-AC(1) SELCO Steel Erectors Company, Inc. 280,106

07/30/97 181-1211038-AC(1) SELCO Steel Erectors Company, Inc. 833,456

06/09/97 181-1211514-AC(1) Siemens ElectroCom L.P. 20,151

06/30/97 181-1212404-AC(1) Carter Control Systems, Inc. 118,058

07/22/97 181-1212407-AC(1) Carter Control Systems, Inc. 21,578

07/22/97 181-1212414-AC(1) Carter Control Systems, Inc. 11,071

07/22/97 181-1212417-AC(1) Carter Control Systems, Inc. 10,595

09/10/97 181-1213327-AC(1) Motion Systems, L.C. 491,132

09/10/97 181-1213328-AC(1) Motion Systems, L.C. 545,692

09/10/97 181-1213329-AC(1) Motion Systems, L.C. 561,088

09/08/97 181-1213332-AC(1) Motion Systems, L.C. 569,652

08/22/97 181-1214294-AC(1) Mid-West Conveyor Company, Inc. 62,330

08/22/97 181-1214303-AC(1) Mid-West Conveyor Company, Inc. 44,112

08/14/97 181-1215545-AC(1) Carter Control Systems, Inc. 52,347

09/12/97 181-1218347-AC(1) Siemens ElectroCom L.P. 196,086

01/23/98 181-1214298-AC(1) Mid-West Conveyor Company, Inc. 135,198

01/23/98 181-1214305-AC(1) Mid-West Conveyor Company, Inc. 167,714

12/03/97 181-1215690-AC(1) K&T Electrical Contractors 481,301

03/06/98 181-1216419-AC(1) Siemens ElectroCom L.P. 66,317

11/26/97 181-1216446-AC(1) North American Conveyor Inc. 517,017

01/06/98 181-1225136-AC(1) Ashton-Potter, Ltd. 104,757

03/06/98 181-1229831-AC(1) Siemens ElectroCom L.P. 3,215,867

03/06/98 181-1231556-AC(1) Siemens ElectroCom L.P. 24,179

03/27/98 181-1231807-AC(1) Motion Systems, L.C. 892,256

01/09/98 181-1213123-AC(1) Sandvik Sorting Systems, Inc. 1,844,457

01/09/98 181-1213127-AC(1) Sandvik Sorting Systems, Inc. 828,956

01/09/98 181-1213128-AC(1) Sandvik Sorting Systems, Inc. 931,027

TOTAL $47,758,637

1 Reflects Recommendations That Funds Be Put to Better Use reported by the OIG and the Inspection Service.

Individual agency case listings are included in Appendix B, Reports Issued to Postal management.
APPENDIX E

Unresolved Reports

Number of Total 

Number of Inspection Service Number of

Description OIG Reports Reports Reports

Unresolved at Beginning of Period 1 118 119

Resolved from Prior Period (0) (61) (61)

Unresolved from Prior Period 1 57 58

Unresolved from This Period1 7 69 76

Total Unresolved1 8 126 134

Unresolved by Prior Periods:

More than Six Months, 09/30/98 (Table A) 1 47 48

More than One Year, 04/01/98 (Table B) 0 10 10

1 Excludes audits previously reported in Appendix C, Findings of Questioned Costs and Appendix D,

Recommendations That Funds Be Put to Better Use.

PAGE98 APPENDICES
PAGE99

Table A - List of reports pending more than six months

OFFICE OF INSPECTOR GENERAL

Report Case

Date Number Condition

09/17/98 CA-AR-98-002 Fiscal Year 1998 Congressional Mail Accounting and Billing, Washington, DC -

All recommendations have been resolved. Some of the recommendations were

jointly resolved with alternative management actions. Management is working

to implement corrective actions.

INSPECTION SERVICE

Report Case

Date Number Condition

09/30/98 1225145-AD(1) Electronic Data Processing Controls, San Mateo, CA - Management is finalizing

procedures regarding sensitivity classifications and completing security reviews.

09/30/98 1225935-AD(1) Electronic Data Processing Controls, St. Paul, MN - Management is concluding

administrative security issues.

09/30/98 1231082-AD(1) Electronic Data Processing Controls, St. Louis, MO - Management is finalizing

contractual security procedures and physical security improvements.

05/05/98 1169074-AD(1) Inbound International Statistical Systems, Jersey City, NJ - Management is

strengthening controls of international and military mail operations.

09/03/98 1222661-AF(1) Financial Installation Audit, Greenville, SC - Work is in progress to move operations and provide the additional space needed to properly perform operations.

06/30/98 1223267-AF(1) Financial Installation Audit, Boston, MA - Management is reviewing procedures

and providing training to ensure proper financial management of the Bulk Mail

Entrance Unit.

08/13/98 1223405-AF(1) Financial Installation Audit, Washington, DC - Management is implementing

the Meter Accounting Tracking System. Procedures are being developed for the

Bulk Mail Entrance Unit to strengthen internal controls.

07/01/98 1223482-AF(1) Financial Installation Audit, Cincinnati, OH - Management is providing training

to ensure proper administration of the Bulk Mail Entrance Unit.

06/04/98 1225186-AF(1) Financial Installation Audit, Atlanta, GA - Management is providing attention

to ensure proper administration and collection of fees on mailings.

09/04/98 1225189-AF(1) Financial Installation Audit, Norcross, GA - Management is in the process of 

completing training in post office box/caller service mail.

07/08/98 1229345-AF(1) Financial Installation Audit, Wilmington, DE - Management is providing 

additional attention in the shrink-wrap area.

09/10/98 1229346-AF(1) Financial Installation Audit, Wilkes-Barre, PA - Management is developing

procedures regarding window operations.

08/19/98 1223262-AF(1) Financial Installation Audit, New London, CT - Management is developing 

procedures and conducting training in business mail acceptance.

06/12/98 1223339-AF(1) Financial Installation Audit, Lafayette, LA - Management is providing attention

to internal controls in postage due/business reply mail.

08/28/98 1223423-AF(1) Financial Installation Audit, McLean, VA - Management has taken actions in

Collect on Delivery mail and Postal Retail Store areas. Documentation needs to

be submitted for completion.

08/11/98 1223485-AF(1) Financial Installation Audit, Liberty, MO - Management is developing procedures in office accountability.

06/01/98 1223708-AF(1) Financial Installation Audit, Lancaster, CA - Management is implementing 

procedures in Bulk Mail Entrance Unit operations.

05/26/98 1224031-AF(1) Financial Installation Audit, Kirkland, WA - Management has begun employee

training in Collect on Delivery mail.

04/07/98 1229348-AF(1) Financial Installation Audit, Conshohocken, PA - Management has begun

implementing numerous Bulk Mail Entrance Unit procedures.

08/03/98 1240585-AF(1) Financial Installation Audit, Sioux City, IA - Management is developing procedures to ensure proper financial management of the Bulk Mail Entrance Unit.

09/02/98 1222998-AF(1) Financial Installation Audit, South Elgin, IL - Management is acquiring new

equipment for Collect on Delivery operations. Training is being given in Bulk

Mail Entrance Unit operations.
Report Case

Date Number Condition

04/27/98 1223429-AF(1) Financial Installation Audit, Severna Park, MD - Management is providing

training to ensure proper administration of the Bulk Mail Entrance Unit.

07/02/98 1224025-AF(1) Financial Installation Audit, Clearlake, CA - Management is providing training

in business mail acceptance operations.

05/05/98 1229351-AF(1) Financial Installation Audit, Temple, PA - Management is implementing procedures in business mail operations.

08/25/98 1224037-AF(1) Financial Installation Audit, Haines, AK - Management is implementing procedures in business mail operations.

08/13/98 1235951-AF(2) Financial Audit Special Review, Washington, DC - Management is preparing

procedures and reviewing instructions to ensure proper accountability of 

Postal assets.

07/20/98 1242959-AF(2) District Accounting Review, Las Vegas, NV - Management has developed an

action plan to address information systems deficiencies.

07/13/98 1217081-AX(1) Operational Systems, Washington, DC - Management is addressing automation

issues and procedures for implementing security controls.

09/15/98 1220283-PA(1) National Audit on Postal Retail Stores - Management is developing procedures

in retail operations, and a handbook and instructions are being updated.

05/12/98 1209811-PA(1) National Audit on Air Transportation Networks - Management is preparing

operating plans, and corrective actions are being taken.

06/05/98 1214098-PA(1) National Audit on City Route Inspections and Adjustment Process -

Management is developing instructions to review, train, and increase supervision

for the route inspection and adjustment process and the associated monitoring of

savings.

05/11/98 1204380-PA(1) National Audit on Effectiveness of Employee Reassignments - Management is

developing integrated policies and procedures on reassignment processes and 

providing attention in complement planning initiatives.

04/30/98 1217904-PA(1) National Audit on External First-Class Collections - Management is providing

attention to testing induction methods of mail and is issuing instructions restricting the use of the e-mail system to update databases.

06/04/98 1234520-PA(2) Flats Automation, Denver, CO - Management is developing implementation

plans to address flat sorting machine utilization, flat automation processing, performance targets, staffing, and maintenance.

08/20/98 1241721-PA(2) Carrier Transportation, St. Louis, MO - Management is continuing to provide

attention to vehicle maintenance and operations.

08/11/98 1233190-PA(2) Injury Compensation and Safety Programs, Kansas City, MO - Management is

finalizing training material and providing attention to medical contracts and case

management issues.

09/16/98 1238815-PA(2) Limited and Light Duty Program, Dallas, TX - Management is developing

instructions on claim management.

08/10/98 1231591-PA(2) Two-Three Day Mail and Priority Mail, Washington, DC - Management indicates reviews are ongoing and training is being conducted on mail operations.

09/02/98 1241806-PA(3) Priority Mail Operations, Denver, CO - Management is developing an operating

plan, and transportation schedules are being finalized and published.

07/10/98 1244116-PA(3) Service and Efficiency Mail Condition Reporting System, Anchorage, AK -

Management indicated all training is complete and reviews are ongoing.

09/11/98 1243831-PA(3) Highway Contract Route Driver Screening Process, New Brunswick, NJ -

Management stated the driver screening process is in place and action to

implement other recommendations is ongoing.

07/01/98 1245454-PA(3) Commercial Mail Receiving Agencies, Van Nuys District - Management indicated that training will be provided and a new agreement form is being developed.

07/28/98 1245455-PA(3) Commercial Mail Receiving Agencies, San Diego District - Management agreed

with most of the recommendations and will be working to improve 

controls.

06/30/98 1245456-PA(3) Commercial Mail Receiving Agencies, Long Beach District - Management

agreed with the recommendations and will provide attention to improve 

controls.

06/18/98 1244805-RI(2) Periodical Mail, La Junta, CO - Management needs to provide training on 

periodical mail operations.

PAGE100 APPENDICES
PAGE101

Report Case

Date Number Condition

06/05/98 1240865-RI(1) Periodical Mail, Englewood, CO - Management needs to provide training on

periodical mail operations.

07/28/98 1244516-RI(1) Periodical Mail, La Junta, CO - Management needs to provide training on 

periodical mail operations.

Table B - List of reports pending more than one year

INSPECTION SERVICE

Report Report/Case

Date Number Condition

1/21/94 1130250-AD(1) Fiscal Year 1994 Financial Opinion Audit, San Mateo, CA - Management is

preparing instructions on Free on Board Origin payments that will place more

accountability at local offices for reconciliation procedures. 

08/12/97 1199652-AD(1) Electronic Data Processing Controls, San Mateo, CA - Management is progressing in testing critical applications and providing off-site storage for critical files.

07/31/97 1217968-PA(1) Excessive Overtime Usage, Washington, DC - Management has not implemented all recommendations regarding contractual constraints, leave control, and

employee scheduling.

10/10/97 1204520-PA(1) National Audit on Marketing and Customer Research - Management is developing plans to strengthen marketing communications and increase district revenue 

contributions.

02/03/98 1198313-PA(1) National Audit on Office of Workers’ Compensation Program Medical Payments

- Management is awaiting a decision for national implementation of the Nurse

Coordination Program.

11/21/97 1211013-PA(3) Registered Mail Operations Review, San Francisco, CA - Management is developing procedures for handling remittances and improving registry case security.

11/28/97 1196577-AD(1) Fiscal Year 1997 Financial Opinion Audit, San Mateo, CA - Management is in

the process of developing procedures for the inventory contract payment and

reconciliation process.

12/09/97 1200362-AD(1) Fiscal Year 1997 Financial Opinion Audit, Minneapolis, MN - Management has

not implemented all recommendations regarding reconciling general ledger

accounts.

12/31/97 1188871-RI(1) Inbound Verification Procedures, Jersey City, NJ - Management is continuing to

develop action plans on verifying inbound foreign and Canadian mail.

02/13/98 1155587-RI(1) Nonprofit Mailing, Boston, MA - Management has not implemented findings

regarding the Nonprofit Permit System.
APPENDICES

APPENDIX F

Summary of Inspection Service Actions

Under 39 USC 3005 and 3007

For the Period of October 1, 1998 through March 31, 1999

Final Cease &

Type of Scheme Complaints Consent Restraining Desist

(Definitions of schemes follow) Filed Agreements Orders Orders

Advance fee 1111

Boiler rooms/Telemarketing 1 1 1

Contest/Sweepstakes 2537

Rebate fraud 20 20 20

Directory solicitations

Distributorships

Employment

False billings 5234

Fraud against government agencies 1 1 1

Fraud against USPS

Insurance

Investments

Loans 1 1 1

Lotteries (Foreign and Domestic) 39 3 36 3

Medical 1 2 2

Memberships

Merchandise:

Failure to furnish 1

Failure to pay 5445

Misrepresentation 1222

Miscellaneous 2222

Solicitations 1

Travel

Work at home 4534

TOTAL 84 48 56 53

Other Administrative Actions

Administrative Action Requests 79

Temporary Restraining Orders Requested 4

Temporary Restraining Orders Issued 4

Civil Injunctions (1345) Requested 2

Civil Injunctions (1345) Issued 2

Cases Using Direct Purchase Authority 0

Refusals of Direct Purchase Authority 0

Civil Penalties (Section 3012) Imposed 0

Expenditures Incurred for:

Test Purchases $205.82

Expert Testimony $1,254

Witness Travel $2,370.88

Withholding Mail Orders Issued 43

Voluntary Discontinuances 261

PAGE102
PAGE103

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

phony 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” either are never shipped or are inferior 

to what was promised.

Rebate fraud. Redeeming cents-off coupons or manufacturers’ rebates when no merchandise 

was actually purchased; establishing fictitious stores, clearing houses, or addresses; submitting

counterfeit coupons or rebates by consumers.

Directory solicitations. Fraudulent solicitations in the guise of invoices for advertisement or

renewal in business directories.

Distributorships. Pyramid schemes in which it is mathematically impossible for all participants

to recoup their investments. The emphasis is not on the sale of the product, but on getting

others to participate.

Employment. Soliciting money for information or assistance in obtaining nonexistent or 

misrepresented jobs.

False billings. Mailing solicitations in the guise of billings.

Fraud against government agencies. Any scheme that attempts to defraud a government

agency except the Postal Service. 

Fraud against Postal Service. Any scheme that attempts to defraud the Postal Service.

Insurance. Investigation of insurance-related fraud involving false claims, false advertising on

the availability of insurance, or the collection of premiums for nonexistent policies. 

Investments. Misrepresented opportunities to invest in commodities, gems, metals, stocks,

bonds, certificates of deposit, mutual funds, IRAs, coins, stamps, art, etc.

Loans. Mailings soliciting money for information on nonexistent or misrepresented loans.

Lottery. Advertisements seeking money or property by mail for participation in schemes to win

prizes through chance.

Medical. Sales by mail of misrepresented health products or services, including fraudulent

medical degrees.

Memberships. Failure to provide services advertised in connection with organization

membership.

Merchandise failure to furnish. A mail order operator that does not provide ordered

merchandise.

Merchandise failure to pay. Mail order merchandise that is acquired without providing 

payment.

Merchandise misrepresentation. Mail order merchandise or services are materially misrepresented in advertising.

Miscellaneous. Any other scheme not described in a specific category. 

Solicitations. Fraudulent solicitation of funds through the mail for alleged charitable, religious,

or minority-oriented groups and similar causes or organizations.

Travel. Fraudulent vacation or travel opportunities.

Work at home. Schemes, such as envelope stuffing, that do not provide home employment.
APPENDICES

APPENDIX G

Criminal Statistics

For Period Ending March 31, 1999

OFFICE OF INSPECTOR GENERAL

Type of Investigation ARRESTS CONVICTIONS1

Revenue & Cost Containment

Revenue Protection 1 2

Contracts 1 0

OIG Total2 2 2

INSPECTION SERVICE

Type of Investigation ARRESTS CONVICTIONS1

Revenue & Asset Protection Program

Expenditure Investigations 4 6

Financial Investigations 157 146

Workers’ Compensation Fraud 29 29

Revenue Investigation 47 40

Robbery 57 55

Burglary 90 75

Miscellaneous External Crimes 287 213

(includes counterfeit and contraband postage, 

money order offenses, vandalism, and arson)

Assaults Against Employees 227 189

(includes threats and assaults against on-duty Postal employees)

Employee Narcotics Cases 14 13

(includes employees and nonemployees selling narcotics on Postal property)

Mail Theft by Employees 272 271

(includes theft and possession of stolen mail)

Mail Theft by Nonemployees or Contractors 2,317 1,941

(includes theft and possession of stolen mail)

Miscellaneous Employee Crimes 41 34

(includes theft of Postal property and sabotage of equipment)

Bombs/Explosive Devices 34 34

Mailing of Controlled Substances 735 640

(includes narcotics, steroids, drug-related proceeds and drug paraphernalia)

Child Exploitation, Mailing of Obscene Matter and 67 80

Sexually Oriented Advertisements

Mailing of Miscellaneous Nonmailables 16 36

(includes hazardous material, firearms and weapons, intoxicants, 

explosives other than bombs, extortion, and false documents)

Mail Fraud 748 664

Inspection Service Total2 5,142 4,466

GRAND TOTAL 5,144 4,468

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

2 Arrests and convictions include joint investigations with other federal law enforcement agencies.

PAGE104
Exhibits

DID YOU 

KNOW?

PAGE 105

Are Hotline contacts confidential? 

The identities of employees who make

complaints or provide information

regarding alleged wrongdoing are held

confidential unless the individual gives 

permission to disclose their identity or

disclosure is unavoidable.
PAGE106

OFFICE OF INSPECTOR GENERAL

REVENUE

● Bribery, Kickback, and Conflict of 

Interest

● Systemic Reviews

HEALTH CARE FRAUD

● Provider Fraud

● Workers’ Compensation Program 

Oversight

EMBEZZLEMENTS

● Conduct/Partner on cases of $100K or More

EXPENDITURES

● Bribery, Kickback and Conflict of Interest

● Systemic Reviews

● CONDUCT/PARTNER ON CASES INVOLVING EXECUTIVES

✖ TORT CLAIMS: SERIOUS INCIDENTS

● INSPECTION SERVICE INTERNAL AFFAIRS

● Executives

● COMPUTER FORENSICS

● HOTLINE

This exhibit describes the

designation of audit and

investigative functions

agreed to by the OIG and

Inspection Service upon 

passage of the 1996 

amendments to the

Inspector General Act. 

The designation, which 

was approved by the Board

of Governors, identifies 

work already transitioned;

work in transition; and 

new functions now being

performed by the OIG.

OFFICE OF INSPECTOR GENERAL

FACILITIES

✖ New Facilities Construction 

of $10M or More

✖ New Facilities Right of First 

Choice Between $5 – $1 M

✖ Leases of $1M or More

✖ Repair and Alterations of $1M or More

REVENUE FOCUSED

✖ International Mail

● FINANCIAL STATEMENT - OVERALL OPINION

● POSTAL-WIDE PERFORMANCE

● CONTRACTS, EXCEPT PRE-AWARD AND POST-AWARD

● ALL DEVELOPMENTAL

INSPECTION SERVICE

FACILITIES

-New Facilities Construction 

of $5M or Less

-New Facilities Between $5 – $1 M 

if not chosen by IG

-Leases under $1M

-Repair and Alterations under $1M

FINANCIAL STATEMENT - INSTALLATION AND DISTRICT

AREA DISTRICT AND LOCAL PERFORMANCE 

SERVICE INVESTIGATION

CONTRACTS PRE-AWARD AND POST-AWARD

TRANSITION OF

AUDIT

FUNCTIONS

✇ REVENUE GENERATION

✇ OVERSIGHT OF INSPECTION SERVICE

✇ RATE-MAKING REVIEWS

✇ SELF-INITIATED AND PROACTIVE WORK (CONTRACTING/PERFORMANCE)

✇ LABOR-MANAGEMENT

✇ ELECTRONIC COMMERCE

✇ COMPUTER INTRUSION

ADDITIONAL/

EXPANDED OIG

FUNCTIONS

Designation of Functions

OFFICE OF INSPECTOR GENERAL

Key: FY 1999 Status

● Transitioned ✖ In Transition ✇ New Function

INSPECTION SERVICE

REVENUE

-Revenue Loss Detection

WORKERS’ COMPENSATION

-Recipient Cases

EMBEZZLEMENTS

-Under $100 K

EXPENDITURES

-As Referred by IG

-IMPAC Cards

-Local Purchases/Procurements

EMERGENCY RESPONSE ON CASES INVOLVING EXECUTIVES

INTERNAL/EXTERNAL CRIMES

PROTECTION OF EMPLOYEES

SECURITIES FRAUD AND PROHIBITED MAILINGS

TORT CLAIMS

INSPECTION SERVICE INTERNAL AFFAIRS

-Non-executives

FORENSIC AND TECHNICAL SERVICES

Exhibit A

TRANSITION OF

INVESTIGATIVE

FUNCTIONS

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PAGE107

Exhibit B

INSPECTOR 

GENERAL

Karla CorcoranSpecial AssistantLaura WhitakerExecutive AssistantCindy Monahan

GENERAL 

COUNSEL TO THE

INSPECTOR 

GENERAL 

Thomas CooganLegal CounselKirt WestCongressional and Public Relations

STRATEGIC 

PLANNING 

& QUALITY

MANAGEMENT

Ronald MerrymanInternal QualityJim NugentElectronic CommerceStrategic Planning Forensic & Technical ServicesInformation TechnologyQuality Assurance/Internal Affairs

PERFORMANCEColleen McAnteeDeputy Richard ChambersTransportationDebra RittDelivery/SupportDebbie PettittFinancial StatementsJohn SeebaDevelopmentalTracy LaPointAccepting/Processing

REVENUE 

& COST

CONTAINMENT

Sylvia OwensDeputy Richard Trinidad

Revenue GenerationWayne GoleskiRevenue ProtectionMike ShiohamaDan O'RourkeContractsKim StroudFacilitiesBob BuettgensHealth Care FraudKathy Johnson

EMPLOYEE Billy SaulsDeputy Ronnie WainwrightAdministrative ResourcesAlan LamoreauxHuman ResourcesConnie AmbushInformation SystemsDave BerranPolicy & Procedures Karen ShafferLabor Management

CUSTOMERNorm HancockComputer IntrusionHoward CoxExecutive InvestigationsTommy HamptonOversightBob PembertonHotline, Security & SafetyJoe OlivaConsultingQuick Response

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Office of Inspector General

1735 N. Lynn Street 

Arlington, VA 22209-2020

(703) 248-2300

Fax: (703)248-2291

Internet: www.uspsoig.gov

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OFFICE OF INSPECTOR GENERAL

The OIG is organized along the three voices of the Postal Service CustomerPerfect! program: Voice of the 

Customer, Voice of the Employee, and Voice of the Business. The Inspector General, Counsel, and thefive Assistant Inspectors General form the OIG Management Committee. 

ASSISTANT INSPECTOR GENERAL FOR STRATEGIC PLANNING & QUALITY MANAGEMENTForensic and Technical Services Team - provides technical support in such areas as surveillance, 

evidence recovery, firearms, computer forensics and polygraph examinations; maintains close liaison withtechnical experts in the law enforcement community. 

Quality Assurance/Internal Affairs Team - conducts internal reviews of OIG operations and procedures

to ensure that they are effective and appropriate, and provides advice on improving operations; conductsreviews of allegations made against OIG employees.

Strategic Planning Team - anticipates and plans for current and future changes in the Postal Service,

OIG operations, and technology by identifying workload, providing research and statistical analysis,informing Postal Service employees and customers about the OIG mission, and promoting the vision ofthe OIG.

Internal Quality Team - instills continuous internal improvement processes and facilitates internal 

communications through orientation, teambuilding, and mentoring.

Electronic Commerce Team - conducts reviews of Postal Service initiatives in the emerging field of 

electronic commerce, including areas such as information-based indicia and electronic bill payment.

Information Technology Team - manages computer operations and telecommunications within the OIG; 

operates the local- and wide-area networks; provides computer security and technical support to OIG staff;and manages agency-wide information systems. 

ASSISTANT INSPECTOR GENERAL FOR PERFORMANCE (AUDIT)Financial Audit Team - conducts audit work in support of the independent public accounting firm’s

annual financial audit opinion and conducts other financial-related audits and investigations to identifyareas for financial improvement. 

Developmental Team - conducts audits, reviews, and investigations of new or redesigned Postal Service

systems, programs, and operations that are under development. 

Accepting/Processing Team - conducts audits, reviews, and investigations focusing on mail acceptance

and collection operations, and mail processing and distribution processes.

Transportation Team - conducts audits, reviews, and investigations focusing on inter- and 

intra-transportation and logistics operations, specifically addressing Postal Service fleet operations, andcontracts for airline, highway, and rail services. 

Delivery/Support Team - conducts audits, reviews, and investigations covering delivery service processes

and operations for delivering the mail.

ASSISTANT INSPECTOR GENERAL FOR REVENUE & COST CONTAINMENT (INVESTIGATIONS)Revenue Protection Team - investigates bribery, kickbacks, embezzlement, and other cases involving 

revenue losses and contract fraud, such as defective pricing, product substitution, and cost mischarging.

Revenue Generation Team - examines and evaluates the major sources of revenue from the marketing, 

advertising, stamp services, retail, and international mail business operations, as well as Postal rate cases.

Facilities Program Team - conducts audits, management reviews, and investigations of all aspects of 

facilities including repair, renovation, and new construction. 

Contract Audit Team - assists Postal contracting by conducting audits and investigations of purchasing 

activities and operations.

Health Care Fraud Team - identifies and investigates medical providers that have falsely billed the Postal 

Service for work-related injury claims, and systemic issues involving the Workers’ Compensation Program. 

ASSISTANT INSPECTOR GENERAL FOR EMPLOYEEInformation Systems Review Team - audits major automated Postal management and information systemsto determine whether applications are properly established and systems are properly designed to provideaccurate data to management; provides computer-assisted audit techniques to support OIG staff.Labor-Management Team - audits and evaluates labor and employee relations issues within the Postal 

Service to foster and maintain a healthy organizational climate for employees and to improve operationalefficiency.

Human Resources Team - delivers full-service human resources programs for the OIG in the areas of

employee relations, pay and benefits, retirement, awards, performance management, counseling, diversityopportunities, and training.

Administrative Resources Team - provides OIG staff with facilities, procurement, financial, budget, and

other services necessary to accomplish the OIG mission.

Policy and Procedures Team - coordinates internal policies and procedures; reviews and comments on all

Postal policies and procedures.

ASSISTANT INSPECTOR GENERAL FOR CUSTOMEROversight Team - conducts audits and evaluations of Postal Inspection Service programs and operations. Hotline, Safety, and Security Team - operates the OIG Hotline and assists in resolution of issues, where

possible. Provides personnel security services to the OIG and assists OIG in assessing physical securitywithin the Postal Service.

Executive Investigations Team - investigates allegations of criminal activities and misconduct involving

Postal Service Career Executive Service employees. 

Computer Intrusion Team - detects and investigates “computer hacking” and other high-technologycrimes involving Postal Service computers and telecommunications systems; assists in the identification ofcomputer systems vulnerabilities so that appropriate counter-measures may be implemented by PostalService management.Consulting Services Team - assists Postal Service management by identifying “best practices” for improving the effectiveness of Postal Service operations. (Will be established in FY 2000.)Quick Response Team - evaluates factual issues promptly when time is of the essence. 

(Will be established in FY 2000.)

OFFICE OF GENERAL COUNSEL TO THE INSPECTOR GENERALLegal Counsel Team - provides legal advice to the Inspector General and OIG staff on criminal, civil, andadministrative issues. Researches legal issues, processes subpoenas, reviews legislation, handles Freedom of Information and Privacy Act requests, provides ethics advice, and serves as liaison with the Postal Service Law Department and Department of Justice legal staffs.Congressional and Public Relations Team - serves as a liaison with members of Congress and their staffs,

the Board of Governors, and the media. Responds to written and oral inquiries, coordinates congressionaltestimony given by the Inspector General and OIG staff, facilitates OIG responses to congressional, Boardof Governors’, and media requests, and prepares the Semiannual Report to Congress.

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OFFICE OF INSPECTOR GENERAL

1735 N. Lynn Street 

Arlington, VA 22209-2020

(703) 248-2300

Fax: (703)248-2291

Internet: www.uspsoig.gov