Twenty-five years ago, Congress passed the Inspector General Act, which formally

recognized the need for independent voices for integrity, efficiency, and effectiveness within the federal government. Today, 57 offices of inspector general, including our own, uphold the principles of the Act by ensuring efficiency and integrity in the

programs and operations of the agencies they oversee. I am pleased to be a part of this

important tradition as I present my first Semiannual Report as Inspector General of the

U.S. Postal Service.

As I begin my term, I look forward to working with an institution that has been a vital

part of the American landscape for over 200 years. With over 750,000 career employees,

the Postal Service is a massive organization with complex operations and advanced

technology. Although the Postal Service faces a very challenging time in its history, it

continues to provide essential services to both businesses and the American public. The

challenges the Postal Service faces present challenges for our office, as well. In order to better meet these challenges and add value to postal operations, we will be implementing a

number of changes in the coming months. One of these changes is the recent re-organization of our audit function to mirror the Postal Service’s most critical issue areas. 

We stand committed to providing timely, accurate, and useful fact-based audits and

investigations to help the Postal Service achieve its goals and succeed in a rapidly-changing environment. We also stand ready to supplement the suggestions in the Transformation

Plan and the President’s Commission on the Postal Service in our efforts to improve efficiency and effectiveness. 

I look forward to working with the Board of Governors and Postmaster General John

Potter as they formulate and execute their vision and strategies for the future. I also look

forward to forming an alliance with Chief Postal Inspector Lee Heath to carve out strategies to better combat misconduct and fraud.

This, our fourteenth Semiannual Report, sets forth the significant activities and

accomplishments of this office from April 1, 2003, through September 30, 2003. It details

our efforts to combat fraud, waste, abuse, and mismanagement within the Postal Service;

and fulfills our reporting requirement under the Inspector General Act. 

In this reporting period, the Office of Inspector General issued 273 audit reports

and 23 management advisory reports and other products. These efforts resulted in over

$250 million in questioned costs, unrecoverable costs, funds put to better use, and

potential additional revenue. In addition, we completed 145 investigations resulting in

19 arrests, 16 indictments, 13 convictions; and over $5 million in fines, restitutions, and

recoveries, of which over $1.6 million was returned to the Postal Service. 

I am appreciative of the support and enthusiasm I have received from the Postal

Service during my first few months as Inspector General. I am confident that together, we

can achieve our common goal: to ensure that the Postal Service continues to serve as a vital

and important communication link binding the nation together. 

Sincerely,

David C. Williams

September 30, 2003

A Message from the

Inspector General
PAGE2 A MESSAGE FROM THE INSPECTOR GENERAL
PAGE3

Table of Contents

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

MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE ............................7

PERFORMANCE REVIEWS......................................................................................13

◆ Accepting and Processing Reviews ........................................................13

◆ Transportation and Delivery Reviews ....................................................14

◆ Marketing Reviews ..................................................................................16

FINANCIAL MANAGEMENT REVIEWS ..................................................................17

◆ Financial Opinion Audits ......................................................................17

◆ Facility Protective Reviews ....................................................................18

◆ Financial-Related Reviews and Investigations......................................18

◆ Contracting and Facilities Reviews........................................................20

TECHNOLOGY REVIEWS ......................................................................................23

◆ Developmental Reviews..........................................................................23

◆ Information Systems Reviews ................................................................24

◆ eCommerce Reviews ..............................................................................25

◆ Technical Crimes Unit Activities ..........................................................26

LABOR MANAGEMENT REVIEWS ........................................................................29

◆ Workplace Environment Reviews..........................................................29

◆ Human Resource Process Reviews ........................................................30

◆ Special Inquiries Team Activities ..........................................................31

◆ Health Care Reviews ..............................................................................31

OVERSIGHT OF THE INSPECTION SERVICE ..........................................................33

◆ Oversight Reviews ..................................................................................33

CUSTOMER SERVICE ............................................................................................35

◆ External Communications ......................................................................35

GOALS AND STRATEGIES ....................................................................................41

ORGANIZATIONAL STRUCTURE ..........................................................................43

APPENDICES ........................................................................................................45

Appendix A – Reports Issued to Postal Management..............................45

Appendix B – Findings of Questioned Costs ............................................55

Appendix C – Recommendations That Funds Be Put to Better Use ....57

Appendix D – Reports with Significant Recommendations Pending

Corrective Actions ............................................................58

Appendix E – Investigative Statistics ........................................................61

Appendix F – Summary of Postal Service Investigative Activities

Under Title 39 USC § 3013..............................................62

Appendix G – Closed Congressional and Board of Governors’ 

Inquiries ..............................................................................65
PAGE4
PAGE

5

EXECUTIVE SUMMARY This Executive Summary provides a synopsis of the work reported from April 1,

2003, to September 30, 2003. This

Semiannual Report addresses the major issues

facing the Postal Service and the work performed by the OIG that helps improve postal

operations. In this reporting period, the OIG

issued 273 audit reports and 23 management

advisory reports and other products. These

efforts resulted in over $250 million in questioned costs, unrecoverable costs, funds put to

better use, and potential additional revenue. In

addition, the OIG completed 145 investigations resulting in 19 arrests, 16 indictments, 13

convictions; and over $5 million in fines, restitutions, and recoveries, of which over $1.6 million was returned to the Postal Service. 

The OIG is responsible for conducting

audits of Postal Service programs and operations. In addition, the OIG conducts investigations to prevent and detect fraud, waste,

abuse, and mismanagement affecting the

Postal Service. Audits and investigations play

a vital role in helping the Postal Service make

improvements. 

In this, the fourteenth Semiannual Report,

the OIG’s work has been categorized into seven

subject areas: performance, financial management, technology, labor management, oversight

of the Postal Inspection Service, customer service, and organizational structure. These areas

include OIG work addressing the following

nine major management issues facing the Postal

Service: ◆ growing revenue, controlling costs, and 

assuring accountability;

◆ maintaining customer confidence; ◆ ensuring physical security and 

safeguarding the mail;

◆ managing acquisitions and contracts; ◆ controlling workers’ compensation 

costs;

◆ leveraging technology; ◆ improving the quality of information for 

decision making and safeguarding the 

integrity and availability of information; 

◆ resolving workforce and workplace 

issues; and

◆ balancing public service and 

commercial enterprise.

This report often refers to “questioned

costs” and other audit-related terms. See the

chart in the margin on the next page for a brief

description of such terms.

The following highlights the accomplishments of the OIG under the specific subject

areas:

(1) Performance focuses on the critical core

business processes needed to succeed in a competitive environment. The OIG conducted 14

reviews in this area, including projects that will

help save the Postal Service over $180 million

in current and future years. Some examples

included: ◆Disclosing that the Postal Service’s spare

parts inventory exceeded demand by a

projected $131 million, or 50 percent of

the inventory.

◆Revealing that the Postal Service could

save approximately $30.5 million by

canceling unnecessary trips between mail

facilities.

◆Identifying that a Postal Service merchandise retail store did not perform as

intended, and cost the Postal Service

$8.3 million, or almost $1.2 million a

year, since the store’s inception in 1996.

(2) Financial Management incorporates financial opinion work, financial-related reviews,

and contracting and facilities reviews. The

OIG completed 258 audits and reviews that

identified over $69.9 million in questioned and

unsupported costs in this area. In addition, the

OIG completed 109 investigations, which

resulted in 11 convictions, 9 indictments, and

$2.3 million in fines, recoveries, and restitutions, of which nearly $1.6 million was directed to the Postal Service. Some examples of

OIG work in this area included: ◆Completing an investigation that resulted in the conviction of a former postal

clerk for misappropriation of postal

funds. The individual was sentenced to 3

years probation and ordered to pay restitution to the Postal Service.

Executive Summary
PAGE6 EXECUTIVE SUMMARY

◆Working with the Defense Contract

Audit Agency to complete 14 audits of

contracts that resulted in over $69.9

million in questioned costs.

◆Conducting an investigation that resulted

in a contractor agreeing to pay $2 million

to the government, $1.6 million of which

will go to the Postal Service, to settle

allegations that the contractor knowingly

provided the Postal Service with defective mail sorting equipment.

(3) Technology encompasses reviews of developmental systems, computer security, and electronic commerce; and Technical Crimes Unit

activities. The OIG performed 14 reviews in

this area. Some of the more significant OIG

activities included:

◆Establishing that certain Areas underutilized the Mailing Evaluation, Readability,

and Lookup Instrument (MERLIN). If

utilization rates continue to remain below

target, the Postal Service could lose a

substantial portion of the projected additional revenue and incur higher costs to

process mail.

◆Recommending improvements to

strengthen and enhance the security of

the Postal Service’s travel reimbursement

system. 

◆Recommending improvements in the

security and reliability of a postal engineering and development facility’s site

and computer environment.

(4) Labor Management focuses on issues related to workplace environment, human

resources, and health care. During this reporting period, the OIG conducted 5 reviews and

26 inquiries in this area, which included:

◆Identifying a former Postal Service

employee who received medical treatment for nonwork-related injuries totaling approximately $350,000.

◆Disclosing unsafe working conditions at a

Connecticut postal facility. These conditions were potential violations of government safety and health requirements and

increased the risk of injury and illness to

Postal Service employees and customers.

◆Participating in a joint investigation that

revealed a physician was submitting

fraudulent workers’ compensation claims

for services not provided. The physician’s

license was suspended pending the outcome of judicial proceedings.

(5) Oversight of the Inspection Service During

this reporting period, the OIG completed 5

oversight reviews, which included:

◆Revealing the Inspection Service’s control over firearms could be improved.

◆Finding that because the Inspection Service did not prepare a zero-based budget,

it could not be determined if requirements have been properly identified or

developed for its $487.5 million FY 2003

budget. In addition, justifications supporting $25.1 million of non-personnel budget line items totaling $36.8 million were

not adequate. 

(6) Customer Service focuses on OIG efforts to

provide customer service, including support

functions to enhance service to internal customers and Hotline operations.

(7) Organizational Structure displays the

OIG’s headquarters and field structure. This

reporting period, the OIG:

◆Reorganized to better align and focus

OIG operations on identifying improvement of Postal Service operations.

◆Initiated a strategic alliance with the

Inspection Service to maximize investigative efforts focused on deterring and

detecting fraud and mismanagement. 

◆Reallocated mission support funds to

directly fund more direct mission activities.

Definitions

Questioned Costs - A cost that is

unnecessary, unreasonable, unsupported, or an alleged violation of

law, regulation, contract, etc.

Unsupported Costs - A cost that

is not supported by adequate documentation.

Funds Put to Better Use - Funds

that could be used more efficiently

by implementing recommended

actions.

Unrecoverable Costs - A cost that

perhaps should not have been

incurred and is not recoverable.

Potential Additional Revenue -

Amounts from revenue generating

functions such as retail sales, rent,

leases, or fees that were underpaid

or not realized. 
PAGE

7

Major Management Issues Facing the Postal Service

MAJOR MANAGEMENT

ISSUES FACING THE

POSTAL SERVICE The Postal Service continues to face significant challenges. In light of declines

in First-Class Mail revenue, it is identifying and implementing long-term strategies to

balance its growing universal service network

with its need to remain a viable commercial

enterprise. The Postal Service believes that at

this pivotal time in its over 200-year history,

every American’s right to send and receive mail

is at stake. 

The Postal Service details its challenges,

and strategies to address them, in its April 2002

Transformation Plan. Implementation of the

plan continues, as described in the recently

released FY 2004-2008 strategic plan. In the

strategic plan, the Postmaster General noted

that the recent enactment of the Postal Civil

Service Retirement System Funding Act of

2003 will enable the Postal Service to reduce

debt levels and hold rates steady until 2006.

However, the strategic plan acknowledges, and

the OIG believes, that the gap between revenues, as well as expenses due to record declines

in First-Class Mail volume and growth in costs,

pose serious implications for the long-term

financial health of the Postal Service. 

The Administration and Congress also recognize the significant challenges facing the

Postal Service. In December 2002, President

Bush established the President’s Commission on

the United States Postal Service to propose a

vision for the future of the Postal Service and to

recommend legislative and administrative

reforms needed to ensure the viability of postal

services. The Commission issued its final report

on July 31, 2003. In Congress, Postal Service

oversight has been raised to the full committee

level. In the House, a bipartisan Special Panel

on Postal Reform and Oversight has been established. In the face of these challenges, the Postal

Service needs to intensify its effort to identify

and implement strategies to balance its growing

universal service network with its need to

remain a viable commercial enterprise. And, as

recognized in its strategic plan, the Postal Service must be ready to respond to the Commission’s recommendations and Congress’ actions

to enact these recommendations into law.

To assist Congress, the Governors, and

postal management as they address these challenges, the OIG has identified the following

major management issues: ◆ growing revenue, controlling costs, and

assuring accountability;

◆ maintaining customer confidence; ◆ ensuring physical security and safeguarding the mail; ◆ managing acquisitions and contracts; ◆ controlling workers’ compensation costs; ◆ leveraging technology; ◆ improving the quality of information for

decision making and safeguarding the

integrity and availability of information; 

◆ resolving workforce and workplace issues;

and

◆ balancing public service and commercial

enterprise.

We will continue to address these issues

through our audits and investigations. 

GROWING REVENUE,

CONTROLLING COSTS, AND

ASSURING ACCOUNTABILITY

Unlike most federal agencies, the Postal

Service relies primarily on its revenues, not

appropriations, to fund its operations. Without

adequate revenues, the Postal Service would

have to reduce services, raise rates, or seek taxpayer subsidies. Thus, each year the Postal Service needs to meet the challenge of increasing

its revenue to cover increasing costs or seek new

ways to reduce costs.

Recent financial data continues to show

that the Postal Service’s financial situation is

improving. For FY 2003, the Postal Service

expects a net income of approximately

$4 billion, compared to a net loss of

$676 million in FY 2002. The Postal Service

attributes most of its projected net income to

legislation passed in April 2003 that reduced

Postal Service payments to the Civil Service

Retirement System (CSRS) by about $6 billion

over the next two years. It was estimated that

unless adjusted, the Postal Service would pay

over $105 billion more than was needed to fund

CSRS retirement benefits. However, the Postal
Service also attributes the positive net income

to its continued cost reduction efforts, including

the reengineering and automating of its field

accounting activities, which resulted in the

closing of 85 district accounting offices and

residual work combined into its three Accounting Service Centers, and postal rate increases

that took effect in June 2002. In addition, the

Postal Service reduced its outstanding debt by

$3.8 billion at the end of FY 2003 to approximately $7.3 billion, a direct result of the retirement fund legislation noted earlier. The legislation requires the Postal Service to reduce its

debt in FY 2004 as well. 

Legislation reducing the amount of retirement fund contributions and cost controls have

significantly helped the Postal Service’s financial position in FY 2003. The legislation provides that the CSRS cost savings must be

specifically used for liquidating outstanding

debt and maintaining current postage rates

during FYs 2003 and 2004, and maintaining

current postage rates through FY 2005. In any

fiscal year after FY 2005, the legislation

requires that the over-funded amount be considered an operating expense of the Postal Service and, until otherwise provided by law, held

in escrow. Additionally, the same legislation

also transferred from the United States Treasury

to the Postal Service the responsibility for funding the costs of retirement benefits that current

and former Postal Service employees have

earned through military service. This has created a direct cost transfer of $27 billion (retroactive to FY 1971) to the Postal Service. Because

this change departs from fundamental public

policy, the legislation provides an opportunity

for the Postal Service, the Department of the

Treasury, and the Office of Personnel Management to submit proposals “detailing whether

and to what extent the Department of the Treasury or the Postal Service should be responsible

for the funding of benefits attributable to the

military service of current and former employees

of the Postal Service.” These proposals are now

under consideration.

Postal Service operations also continue to

be impacted because of the anthrax attacks that

occured in the fall of 2001. Although the

Administration and Congress responded by

providing the Postal Service over $760 million

in appropriations to secure mail and protect the

health and safety of employees and customers,

the Postal Service is still seeking approximately

$800 million more in FY 2005 appropriations to

pay for costs associated with the detection

and/or prevention of another bioterrorism

attack through the mail. 

Finally, in a report issued in July 2003 by

the President’s Commission on the United

States Postal Service, it was recommended that

the Postal Service voluntarily comply with

applicable Securities and Exchange Commission financial reporting requirements for public

corporations. The Commission noted that the

Postal Service should be setting the standard for

financial transparency by which all other federal entities are judged. The Commission added

that while the Postal Service does, in many

respects, conduct financial reporting over and

above what is required today of federal agencies,

it remains behind the level of disclosure required

of its corporate peers. It has been estimated that

the cost of compliance with the Securities and

Exchange Commission requirements could

reach millions of dollars. The costs include both

internal costs (hiring legal and accounting personnel knowledgeable of the applicable requirements) and external costs (required review of

the Securities and Exchange Commission filings

by an independent certified public accountant).

It is crucial that the Postal Service continue its efforts to increase productivity and control

costs, and, more importantly, sustain mail

service in the long term. The Postal Service

must also continue to improve its financial operations to ensure it is accountable to the public

and is providing the best possible service at the

lowest cost. To address this issue, effective

October 1, 2003, the Postal Service replaced the

general ledger, implemented a monthly reporting cycle and realigned its internal reporting

year with the government fiscal year. However,

these efforts must be augmented with other

efforts, such as cost reduction, new revenue generation, and productivity gains.

MAINTAINING CUSTOMER

CONFIDENCE

The Postal Service views its access to the

American household as a unique asset it can

PAGE8 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
PAGE9

leverage as it faces increasing competition. To

remain competitive, the Postal Service must be

customer-focused and deliver the mail in a timely and accurate manner and at affordable rates.

Moreover, the Postal Service needs to adapt its

services and network to address changing customer needs and a changing mailing public. In

today’s marketplace, customers have more

choices about how they conduct postal transactions, transmit messages, and deliver merchandise. The Postal Service is developing a more

flexible and integrated distribution and transportation network that is aligned with customer

and operational needs. Increasing customer confidence will be the key to maintaining current

business and growing new business. 

To effectively transition to a changing customer base, the Postal Service must continue to

develop and provide products and services that

retain relevance and value for customers with

changing needs, identify efficient transportation

and delivery modes, effectively schedule staff,

and maximize technological options. 

ENSURING PHYSICAL SECURITY

AND SAFEGUARDING THE MAIL

With nearly 38,000 facilities and approximately 200 billion pieces of mail delivered each

year, the Postal Service faces the enormous challenge of moving the mail efficiently and economically while effectively safeguarding postal

employees, customers, and the mail. Historically, the Postal Service has dealt with numerous

disasters, both natural and man-made, which

have interfered with mail delivery. The October 2001 anthrax attacks through the mail

exposed a new danger and led to a renewed

emphasis on the security of the nation’s postal

system. The OIG has reviewed the Postal Service’s response to the bioterrorist attacks on the

mail and plans to conduct future audits of the

Postal Service’s response to the biohazard

attacks. 

The Postal Service has acted to ensure the

continued physical security and safety of the

mail and sought new methods to detect biohazardous materials and sanitize the mail. The technological solutions include procuring new

equipment and changing processes that could

impact the efficiency of mail processing and

staffing requirements. Regardless of technology

or any other improvement or expenditures, the

threat of terrorists using the mail to carry out an

attack can be reduced, but not eliminated. To

better protect its employees and customers, the

OIG believes the Postal Service must also

reassess its facility designs, especially the ventilation systems; maintenance practices; and emergency response and evacuation procedures.

Additionally, it must continually monitor its

spending criteria to ensure that funding is available for critical life/safety projects.

MANAGING ACQUISITIONS AND

CONTRACTS

The Postal Service manages contracts with

commitment values totaling over $19.5 billion

annually for its goods, non-transportation services, and facilities-related services. The Postal

Service’s challenge in this area is to balance efficient contracting practices with effective controls to prevent fraud, waste, and abuse. Over

the past several years, the Postal Service has

implemented the supply chain management

philosophy and progressed toward adopting purchasing practices consistent with best commercial practices. Also, as outlined in the Transformation Plan and recommended by the President’s Commission on the United States Postal

Service, the Postal Service plans to continue to

revise its purchasing regulations to reflect commercial best practices and move away from

stricter government regulations. While this

practice allows for certain efficiencies and cost

savings, adequate controls and cost control measures must be established and enforced to

decrease the risk of loss in the procurement area.

The Postal Service must ensure that its supply

chain management contracting practices are

consistent with applicable laws and regulations,

and increase its efforts to ensure that postal contracts contain sufficient language to pursue

action against contractors as necessary. It must

also streamline purchasing practices to achieve

the significant planned cost reductions.

The OIG has proposed numerous revisions

to the Postal Service purchasing manual, including strengthening the examination of records

clause, requiring contractors to have approved

accounting systems, and increasing the use of

suspension and debarment authority. While

many of the other changes the OIG has
proposed to the purchasing manual to prevent

or reduce fraud have been adopted, the OIG

remains concerned that these weaknesses in

current postal processing procedures have not

been adequately addressed. Unless these areas

are addressed, the Postal Service will remain

unnecessarily exposed to fraud, waste, and abuse

in its purchasing operations. In September 2003,

the Postal Service agreed with the OIG’s recommendations and agreed to take steps to implement these changes.

CONTROLLING WORKERS’

COMPENSATION COSTS

The Postal Service was the largest participant in the Federal Workers’ Compensation

Program and accounted for approximately

$760 million, or over one-third, of the $2.2 billion in total federal workers’ compensation cash

outlays from claims for reporting year 2002. The

Postal Service’s workers’ compensation cash

outlays from claims have risen dramatically,

increasing by approximately 35 percent over the

last 4 years. This is a considerable cost for an

agency that pays these costs out of operating revenues. Many factors have contributed to these

increased costs, including the rising age of the

Postal Service workforce; higher costs for medical equipment, medications, and medical treatments; overpayments and duplicate payments by

the program administrator; and increased incidents of fraud by doctors and hospitals. 

LEVERAGING TECHNOLOGY

The Postal Service depends greatly on

technology to help process the mail in the most

productive manner. Further, as the Postal Service addresses biohazard threats, it is identifying

and deploying technology that best fits its operational requirements, is compatible with existing systems, and improves the security and safety of its processing operations.

The Postal Service is working to leverage

technology to improve its service, productivity,

and profitability. While it depends on technology to deliver more than 660 million pieces of

mail daily to over 141 million addresses, the

Postal Service must continue to adapt to each

new wave of technology quickly to maintain its

competitive position in the market. To address

changing customer needs, the Postal Service has

committed resources to help ensure better data

management, track mail piece information, and

improve communication between the Postal

Service and its customers. Additionally, the

Postal Service has undertaken an initiative to

upgrade its distributed computing environment

by replacing obsolete technology and transforming its infrastructure by simplification, standardization, and modernization.

The large size and diversity of the Postal

Service’s customer base presents technological

challenges and demands that solutions be simple, easy to use, and competitive. To be successful, the Postal Service should also ensure that

the corresponding cost savings projected from

technology investments are realized by efficiently redeploying the resources replaced by the new

technology. Decisions on technology investments should continue to be scrutinized more

closely and be based on information that is current, accurate, and reliable. The Postal Service

must also continue to address data integrity of its

systems to ensure accurate and informed decision making.

IMPROVING THE QUALITY OF

INFORMATION FOR DECISION

MAKING AND SAFEGUARDING

THE INTEGRITY AND

AVAILABILITY OF INFORMATION

Accurate measurement of mail delivery is

key to improving and sustaining service performance. Reliable and objective data are also keys

to effective decision making. In addition, this

data must be properly safeguarded to ensure that

it is not vulnerable to manipulation by unauthorized individuals such as computer hackers or

terrorist organizations. 

Data justifying the need for major capital

expenditures must be reliable so that postal

management can decide whether to invest in

the project. In addition, reliable data are needed to assess whether the project’s estimated and

actual return on investment is reasonable and

has been realized. In one instance, the OIG

found that the Postal Service did not consistently track cost data to assess whether expected

return on investment was achieved. 

Furthermore, data supporting results

achieved must be objective so that stakeholders, including postal management, Congress,

PAGE10 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
PAGE11

and the public, receive the information they

need to make appropriate decisions related to

their needs. The OIG has found that the

Postal Service’s annual performance plan

could have provided more comparable, specific, and detailed information to measure how

well they achieved organizational goals. 

Changes in technology and the business

environment emphasize the need for providing

timely, accessible, relevant, and accurate data to

Postal Service decision makers. Similarly, an

effective system of accounting, financial, and

information controls is necessary for measuring

financial performance. The general ledger system is the core of financial reporting systems.

The Postal Service recognized limitations in its

general ledger system, and, beginning October 1,

2003, moved to a commercial off-the-shelf system that will improve support capabilities, adapt

to changing business processes, and support

financial reporting.

Also, given the importance of data quality

in setting postal rates and requests to Congress

for appropriations for ongoing costs related to

the October 2001 anthrax attacks, the Postal

Service must continue demonstrating to Congress, the Postal Rate Commission, stakeholders,

and the public that it is making progress in

improving the quality of its revenue, cost, and

service measurements. 

Critical information needs to be not just

reliable, but also “safe.” Computers and electronic data are vital to the critical operations of

the Postal Service. The same factors that benefit operations—speed and accessibility—also

make it possible for individuals and organizations to interfere with or eavesdrop on operations, possibly for purposes of fraud or sabotage.

For example, terrorist organizations could use

computer networks to attack the federal infrastructure. Attacks that have already occurred on

both government and private industry websites

reveal the damage a computer security breach

can inflict on brand integrity and an organization’s revenue stream.

The OIG’s work on computer security continues to identify vulnerabilities in the security

of computer applications and equipment. These

vulnerabilities are being addressed by postal

management. However, there remains a continuing need to emphasize computer security

throughout the Postal Service. Furthermore, the

Postal Service’s Internet initiatives reinforced

the need for increased security awareness and

compliance. Success in this area will depend on

the level of protection afforded sites such as the

Postal Service’s website and the programs operating on it. In addition, the Postal Service needs

to continually protect customer information and

guarantee customer privacy. 

RESOLVING WORKFORCE AND

WORKPLACE ISSUES

The Postal Service currently has more than

830,000 full and part-time employees and, for

FY 2002, their personnel compensation and

benefits costs totaled over $51.5 billion. This

accounts for more than three-quarters of the

Postal Service’s total operating expenses. Consequently, improving the work environment and

labor relations is key to maximizing the Postal

Service’s operational and financial performance.

In an increasingly competitive environment,

improving labor relations is essential if the

Postal Service is to provide universal service at

reasonable rates. However, past attempts to

improve labor relations have not been as successful as planned.

Future efforts to improve in these areas will

only succeed if the Postal Service can effectively partner with its employees and engage them

in a shared vision of success. This vision must

include eliminating any confrontational environment on the workroom floor and giving

employees the freedom to raise concerns without fear of retaliation. As the Postal Service pursues efforts to partner with employees, it must

also develop programs for recruiting, training,

communicating, compensating, and rewarding

employees consistent with the Postal Service’s

vision for the future. In this regard, the Postal

Service needs to establish an effective way to

link employees’ pay to their performance. 

BALANCING PUBLIC SERVICE

AND COMMERCIAL ENTERPRISE

The Postal Reorganization Act of 1970

requires the Postal Service to operate in a

business-like manner supported by its own revenues. As a public agency, it is charged with

binding the nation together with universal

mail service at affordable rates. Its government
status carries certain advantages, such as a

monopoly on letter mail, exclusive access to

customers’ mailboxes, and a tax-free status.

The universal service obligation requires a significant, costly infrastructure to deliver postal

services, but unlike private corporations, the

Postal Service is bound by statutory constraints

that limit its ability to quickly adjust rates to

respond to changing costs, negotiate with customers and employees, develop and price new

products, close unprofitable outlets, and generate and invest profits. The Postal Service performs a wide range of significant law enforcement duties for the protection of the public,

even in cases that have no direct impact on the

Postal Service. To continue to meet its mission

of providing timely, reliable mail delivery to all

households, the Postal Service must continually seek, develop and implement strategies to

reduce costs, improve service, and generate

revenue. 

The Transformation Plan outlines strategies

to address concerns raised by Congress, the General Accounting Office, and others. The Plan

identifies short-term actions to take under its

existing authority and outlines long-term strategies that require congressional action. Since the

Plan was issued in April 2002, the Postal Service

has earmarked cost reductions of about $5 billion

by 2006, and is pursuing several initiatives.

According to the Postmaster General, postal

managers and employees have improved safety

and performance; indicators demonstrate that

employee attitudes are improving; and independent surveys report very high levels of customer

satisfaction. 

Despite these achievements, without significant change to the existing legislative and

regulatory structure, the Postal Service will face

increasing difficulties in meeting its statutory

mission. As recognized in the President’s

Commission report, the dual role of the Postal

Service in balancing its public service obligation

with its need to remain commercially viable has

become more challenging. These challenges are

increased due to heightened competition in the

delivery and communication industries, especially with electronic communication steadily

eroding First-Class Mail volume. Congress is

currently considering options for legislative

reform as recommended by the President’s

Commission and others. 

Until its statutory framework is changed,

the Postal Service must continue to work within existing law to increase its accountability in

all aspects of operations to achieve profitability

in the near future. The Postal Service must also

continue to ensure that new products and services are self-sustaining and relate to its core

business. 

PAGE12 MAJOR MANAGEMENT ISSUES FACING THE POSTAL SERVICE
PAGE13

Performance Reviews

PERFORMANCE

REVIEWS To deliver world-class service, businesses

and government agencies must excel in

performing their core business processes.

For the Postal Service, these core business

processes and systems encompass accepting, processing, transporting, and delivering the mail, as

well as marketing postal products and services.

The OIG has audit teams specializing in these

areas. During the past 6 months, the OIG completed 14 reviews of the Postal Service’s performance of core business processes, some of which

are highlighted below. The reviews identified

opportunities to save over $180 million during

current and future years.

ACCEPTING AND PROCESSING

REVIEWS 

The Postal Service accepts more than 200

billion pieces of mail per year in a variety of

ways, including mail collected from approximately 295,000 collection points, as well as

residential and business collection mailboxes.

Express Mail, First-Class Mail, Priority Mail,

periodicals, and Standard Mail are sorted at

more than 440 mail processing facilities. In

order to ensure timely and accurate delivery of

mail at affordable rates, accepting and processing operations must improve work inefficiencies,

reduce costs, increase effectiveness, and improve

service. In this regard, the Postal Service continues to explore ways to apply new technology

to mail processing operations and to transform

the Postal Service legacy network into a flexible

processing and distribution system. 

During the past 6 months, the OIG conducted work in the areas of accepting and processing, some examples of which are highlighted

below:

REDUCTION OF WORK-HOURS

NEEDED FOR BUSINESS MAIL

ENTRY UNITS 

In partnership with Postal Service management, the OIG performed two audits of work

performed by Postal Service employees in business mail entry units located in the Pacific Area.

The audits revealed that work-hours were excessive and significant reductions were needed.

Although Postal Service policies require the

efficient use of work-hours, postal management

did not periodically evaluate staffing needs to

improve productivity. 

During the course of these audits, postal

management agreed to aggressively reduce

work-hours in business mail entry units by

46,800 hours by the end of FY 2006. The OIG

calculated the financial impact of this reduction

in work-hours could produce an estimated cost

avoidance of over $16 million over a 10-year

period. In both audits, the OIG obtained rapid

concurrence from postal management to reduce

hours as planned and periodically reevaluate

staffing needs. Postal management’s actions

taken or planned should correct the issues identified in the reports. (AO-AR-03-001 and 

AO-AR-03-002)

POSTAL SERVICE COULD SAVE

MONEY BY IMPROVING

INVENTORY MANAGEMENT

The OIG audited spare parts inventory

management at maintenance stockrooms to

determine whether inventory stock levels were

appropriate. The audit disclosed that as of

November 2002, spare parts inventory levels in

the stockrooms exceeded demand by a projected

$131 million, or 50 percent of the inventory.

The OIG found that if the Postal Service had

better managed this inventory, the $131 million

could have been used more efficiently.

The OIG recommended that Postal Service

management establish controls over reorder procedures, require management approval for

excess quantities, develop a report to track

reorder trends, conduct annual reviews, program

the inventory management system to provide

analysis reports, identify excess parts, use excess

parts before purchasing any new parts, and direct

maintenance personnel to return excess parts to

the Topeka Material Distribution Center for use

by other stockrooms. 

In addition, the OIG recommended that

management develop guidelines and establish

requirements for designating parts as critical;

require maintenance personnel to annually

review parts for the proper critical designation;

and reprogram the field inventory system to

automatically calculate levels for critical parts

needed. Postal management agreed with all of

the recommendations, and actions taken or
planned should correct the issues identified in

the report. (AC-AR-03-007)

ENHANCED CARRIER 

ROUTE STANDARD MAIL

WORKSHARING DISCOUNTS

As a result of a congressional inquiry at the

San Antonio Processing and Distribution Center, the OIG audited Enhanced Carrier Route

Standard Mail worksharing discounts. The audit

disclosed that Enhanced Carrier Route Standard

Mail covered all of its volume variable costs in

FY 2001. However, the OIG found that the

Postal Service’s delivery point sequencing of

Enhanced Carrier Route letter mail with destination delivery unit discounts resulted in transportation and handling inefficiencies and that

internal controls over the acceptance of

Enhanced Carrier Route Standard Mail needed

improvement. 

The OIG recommended that postal management develop a rate case proposal to eliminate destination entry discounts for letters destinating at delivery units that receive delivery

point sequenced mail processed on delivery barcode sorters. Postal management disagreed with

this recommendation, but stated it has been

reviewing the issue and expects to complete the

review before the next Omnibus Rate Case.

The OIG also found that internal controls over

the acceptance of Enhanced Carrier Route

Standard Mail needed improvement and considers postal management’s planned actions

responsive to the intent of the recommendation. 

(AC-AR-03-006)

ENFORCEMENT OF EXPORT

CONTROLS COULD BE

STRENGTHENED

In response to a request from an interagency group of inspectors general reviewing the

enforcement of export controls governmentwide, the OIG reviewed the Postal Service’s role

in enforcing export controls. The OIG evaluated the Postal Service’s procedures, policies, regulations, and laws regarding export enforcement

and found that the process for inspecting outbound mail could be strengthened. Export

Administration regulations state that officials of

the Postal Service, the Customs Service, and the

Department of Commerce, Office of Export

Enforcement, can inspect items declared for

export. However, Postal Service policy does not

allow officials to randomly open and examine

the contents of mail declared for export. Postal

Service and Customs Service officials are working together to establish a program to inspect

outbound mail, but the OIG concluded that

additional coordination efforts were needed

between the Postal Service and the Department

of Commerce, Office of Export Enforcement.

The OIG made two recommendations to

strengthen the Postal Service’s enforcement of

export controls. Postal management’s comments

are responsive to the OIG’s recommendations,

and actions taken and planned should correct

the issues identified in the report. 

(AO-MA-03-001 (R))

TRANSPORTATION AND 

DELIVERY REVIEWS

Transportation and delivery of mail are

vital parts of the Postal Service’s mission of

binding the nation together by providing

prompt, reliable, efficient, and universal mail

delivery at affordable rates. The Postal Service

spends approximately $30 billion to transport

and deliver mail to 38,000 facilities and to

141 million addresses. 

To transport and deliver the mail, the

Postal Service utilizes contractors and a fleet of

over 208,000 owned vehicles and employs a

combination of air, surface, rail, and water

modes. In addition, the Postal Service has an

agreement with Federal Express to transport

Express, Priority, and First-Class Mail. Over

350,000 carriers deliver over 200 billion pieces

of mail—an average of about 1,420 pieces of

mail for every household and business. 

The Postal Service is challenged to increase

efficiency in the transportation and delivery

area because mail volume has not grown sufficiently in recent years to support the extension

of the delivery network needed to cover the

growth in the number of delivery points, which

grows by approximately 1.7 million each year.

During the past 6 months, the OIG issued 6

transportation and delivery-related products,

which identified over $31 million in funds put

to better use and over $1 million in unrecoverable costs. Some of this work is highlighted as

follows:

PAGE14

An OIG audit found that spare parts

inventory levels in stockrooms

exceeded demand by a projected

$131 million. If the Postal Service

had better managed this inventory,

the money could have been used

more efficiently. 

PERFORMANCE REVIEWS
PAGE15

POSTAL SERVICE COULD SAVE

MILLIONS BY CANCELING

UNNECESSARY HIGHWAY

CONTRACT TRIPS

At the request of the vice president,

Network Operations Management, the OIG

completed four audits of Highway Network

Scheduling. The purpose of these audits was to

identify highway contract trips that could be

eliminated to reduce highway transportation

costs. The reviews complemented the Postal

Service’s own breakthrough productivity initiatives in highway transportation, and reflected a

strong cooperative effort between Postal Service

Headquarters, the various Postal Service Areas,

and the OIG. The audits revealed the Postal

Service could save approximately $30.5 million

by canceling unnecessary trips between mail

processing facilities. Specifically, management

in the Southwest, Western, Southeast, and Eastern Areas could terminate 601 unnecessary contracted trips without negatively affecting service

by consolidating low mail volume trips. Postal

Service managers agreed to eliminate 383 trips,

but disagreed with elimination of the remaining

218 trips, stating this would reduce operational

flexibility. However, postal management agreed

to reassess these remaining trips and will cancel

trips as necessary. (TD-AR-03-010, 

TD-AR-03-013, TD-AR-03-014, and 

TD-AR-03-015)

NATIONAL ANALYSIS OF

VOYAGER CARD CONTROL

WEAKNESSES

The OIG initiated an audit of the Postal

Service’s Voyager Card program as a result of

concerns over the Voyager Card controls. Postal

Service employees use the Voyager Card like a

credit card to fuel and maintain Postal Service

vehicles. The audit revealed that from September 2000 until March 2002, the Postal Service

incurred more than $1.1 million in unnecessary

costs because employees used the Voyager Card

to purchase food and premium fuel. Postal Service policy prohibits these types of purchases. 

Of the $203 million in transactions the

OIG examined, the audit also identified at least

$42 million in questionable charges for miscellaneous purchases and multiple fuel purchases for

the same vehicle on the same day as well as other

charges for fuel purchases exceeding tank capacity and exceeding the individual daily purchase

limit. The OIG also determined that managers

and supervisors did not properly reconcile Voyager Card transactions and that guidance provided to users did not properly address segregation of

duties for card reconciliation. Finally, the OIG

identified control weaknesses related to Voyager

Card personal identification number use at two

Postal Service districts visited. The OIG recommended Postal Service officials provide nationwide guidance, policy, training, support, and

oversight necessary to protect the program from

improper, fraudulent, or questionable purchases.

Management agreed with the recommendation

but did not specifically address actions they

would take to correct issues the OIG identified.

Postal management did not agree with the conclusion that the Postal Service spent $1.1 million

on improper purchases and that they could save

$1 million if the purchases were avoided. The

OIG and the Postal Service are working together to resolve these issues. (TD-AR-03-012)

EARLY REPORTING TIMES FOR

CARRIERS DEEMED INEFFECTIVE

In response to a request from the Postmaster General, the OIG audited Capital Metro

Area carrier productivity to determine whether

letter carrier operations were effective and to

identify opportunities for cost savings. The audit

revealed that in delivery units where letter carriers reported at 7:00 a.m., 80 percent of the unit’s

mail was not consistently distributed by the

clerks to the carriers’ cases and available to them

before they reported to work. This occurred

because postal management changed letter carriers’ reporting times from 8:00 a.m. to 7:00 a.m.

without coordinating these new mail dispatch

and delivery unit arrival times with processing

and distribution centers. 

Local supervisors explained the postmaster

verbally instructed them to make the change

because the postmaster wanted letter carriers to

complete their routes before dark or 5:00 p.m.

The OIG noted early reporting times wasted

carriers’ office time in the mornings and exposed

the district to potentially unnecessary overtime

costs in the evenings. Finally, the OIG audit

showed supervisors were not using the Delivery

Operations Information System to manage their

Voyager Cards are used like credit

cards to fuel and maintain postal

vehicles. An OIG audit revealed that

from September 2000 to March 2002,

the Postal Service incurred more than

$1.1 million in unnecessary costs

because of employee misuse of the

cards.
carrier schedules. As a result, the postal supervisors could not evaluate letter carrier scheduling

or take corrective action. Postal management

was responsive to the OIG’s recommendations

and has planned actions to address the major

issues identified in the report. (TD-AR-03-011)

MARKETING REVIEWS 

The Postal Service operates in a globally

competitive environment and its ability to

maintain or increase its market share of the

$900 billion mailing industry is essential to

providing universal service at affordable rates.

The marketing function’s core focus is to follow

six strategies set forth in support of the

Transformation Plan. These strategies are to:

(1) increase revenue, (2) increase customer

retention, (3) service customers through appropriate channels, (4) use data to drive decisions

and make all plans measurable, (5) use pricing

flexibility as a strategic tool, and (6) create

excitement. Some of the OIG’s work in this

area is highlighted below:

POSTAL SERVICE-RELATED

MERCHANDISE STORE NOT

PERFORMING AS WELL AS

INTENDED

An OIG audit of a Postal Service-related

merchandise retail store revealed the store did

not perform as intended nor has it increased

profit for the Postal Service. Based on the OIG’s

calculations, the retail portion of the store is

operating at a loss. The OIG’s audit disclosed

the retail portion of the store has cost the Postal

Service $8.3 million since its inception in 1996,

an average of almost $1.2 million a year. Furthermore, the retail store did not comply with

the Postal Service’s current objectives to only

sell merchandise directly related to traditional

business operations. The OIG estimated that if

the Postal Service renewed and extended the

current lease for an additional 2 years, it would

continue to lose money over this period. Postal

management agreed with the OIG’s recommendation to not renew the retail store lease. However, postal management disagrees with the

OIG’s calculations and believes that the store

has actually generated positive net income.

Postal Service managers agreed with the OIG’s

recommendation to closely monitor inventory

levels at the store through its closing and to

develop a plan to transfer or dispose of any merchandise prior to closing. (OE-AR-03-005)

POSTAL SERVICE’S ALTERNATIVES

TO MAIL RECOVERY CENTER

AUCTIONS DEEMED PROPER 

AND JUSTIFIED

The OIG initiated this review following an

audit of mail recovery center public auctions

through an Internet site. The OIG found the

Postal Service’s goal was to increase operational

efficiency, maximize revenue, and reduce costs

by exploring alternative venues to sell undeliverable mail items. The audit revealed the Postal

Service used proper and justified business practices for a pilot test by awarding the contract to

a specialized contractor. The OIG determined

the Postal Service increased its exposure and

increased revenue prospects for selling undeliverable mail items by having multiple venues for

disposal. 

However, the audit also disclosed the Postal

Service did not maintain proper oversight of

revenue accounts. Due to the lack of integrity of

revenue data, the OIG could not conclude

whether the pilot test was cost-effective when

compared to previous methods used to dispose of

undeliverable mail items. Although not in the

original scope, the OIG found the contracting

officer’s representative did not always involve

the contracting officer in the decision making

process and the Postal Service had inadequate

oversight of contract performance. 

Postal management agreed with all four

contract performance recommendations made

by the OIG but disagreed that there was a lack

of communication between the contracting officer’s representative and the contracting officer.

Postal management has either planned or

already taken corrective action to address the

issues identified. (OE-AR-03-004)

PAGE16 PERFORMANCE REVIEWS
PAGE17

Financial Management Reviews

FINANCIAL

MANAGEMENT

REVIEWS The Postal Service continues to respond

to one of the most challenging financial

periods in its history by focusing its plan

on reducing costs, increasing efficiency, and

improving service. This effort resulted in the

Postal Service ending FY 2002 with a loss that

was almost $700 million below original projections, despite the effects of the recession and the

terrorist attacks. The actions the Postal Service

took in FY 2002 laid a foundation for savings in

2003 and beyond, setting the stage for achievement of the Transformation Plan goal to reduce

costs by $5 billion by the end of FY 2006. As

evidence, the Postal Service’s projected net

income of about $600 million in FY 2003 will be

exceeded largely due to the Postal Civil Service

Retirement System Funding Reform Act of

2003. Overall, it is estimated that the total positive impact on net income because of the Act

could be $3.3 billion in FY 2003. 

The Postal Service relies on strong financial management controls to maximize revenue

and minimize costs. In the past 6 months, the

OIG has completed 258 financial management

reviews and 109 investigations. These efforts

identified over $69 million in questioned and

unsupported costs. These projects add value to

the Postal Service by identifying opportunities

for cost savings and improving financial management, contracting, and facilities practices;

and detecting and deterring fraud, waste, abuse,

and mismanagement.

FINANCIAL OPINION AUDITS

The Postal Reorganization Act of 1970

requires an annual audit of the Postal Service’s

financial statements. The OIG conducts audits

in support of the Board of Governors independent public accountant’s overall opinion on

those statements. These audits assess the integrity and reliability of the financial information

contained in the Postal Service’s financial statements. The Information Technology and

Accounting Service Centers in Eagan, Minnesota; St. Louis, Missouri; San Mateo, California; and at Postal Service Headquarters in

Washington, DC, oversee the collection of over

$66 billion in revenue and the recording and

expense of a similar amount each year. The OIG

conducted audits at these Accounting Service

Centers and headquarters and identified the

following areas for improvement: ◆At the request of the U.S. Office of Personnel Management, the OIG reported

on withholdings and contributions for

health benefits, life insurance, retirement,

and employee headcount data. Generally,

the OIG was able to verify employee

withholdings, employer contributions, life

insurance, and retirement. However, the

OIG identified one reportable issue

regarding an incorrect insurance election

that remained incorrect for approximately

3 months. The OIG report was provided

for information only and required no

management action. (FT-AR-03-012)

◆ During the OIG’s audit of the FY 2003

Postal Service Financial Statements at

the St. Louis Information Technology

and Accounting Service Center, of 6,468

lease schedules analyzed, the OIG found

1,405 instances, totaling $3.5 million, in

which facilities service office personnel

who entered real estate tax payment data

were also authorized to approve tax payments of $10,000 or less per annum.

Postal management agreed with the

OIG’s recommendation and took immediate action by issuing a policy memorandum requiring a second individual, other

than the preparer, to approve all lease

real estate tax payments. 

The OIG also identified six schedules

related to lease payments in which the

preparer was also the approver. However,

this is a significant improvement from

findings noted in prior audits. The OIG

contacted the individuals responsible for

these schedules and reiterated the need

for segregation of duties over lease payment schedules. The OIG commends the

Postal Service for the corrective actions

taken and makes no further recommendations at this time for segregation of duties

related to lease payments. 

(FT-AR-03-013)
FY 2003 FINANCIAL

INSTALLATION AUDITS

The OIG conducted audits at 200 Postal

Service facilities, and generally, financial information was reasonably and fairly represented in

the accounting records, and internal controls

were in place and effective. However, at 179

facilities, the OIG identified minor problems

concerning non-compliance with Postal Service

instructions and minor internal control weaknesses. At two facilities, the OIG found financial transactions were not reasonably and fairly

represented, and internal controls were not in

place and effective, resulting in a shortage of

over $59,800 in the retail floor stock at one of

these facilities. The OIG issued individual

reports to address these issues and will provide a

summary report to postal management with recommendations to address systemic issues. (For

specific reports see Appendix A, pages 45-54)

FACILITY PROTECTIVE REVIEWS

The OIG has instituted a Facility Protective Review program to provide critical coverage

to small Postal Service facilities. The benefits of

the program include: providing a systematic

method for identifying and reviewing problems

at local offices; suggesting valuable and timely

feedback to local and headquarters-level management; and identifying nationwide audits by

developing trends of problems at local facilities.

Areas of coverage during the protective audits

include asset accountability, employee and customer service, information systems security, and

compliance with laws and regulations. In the

past 6 months, the OIG completed 15 facility

protective reviews and found that internal controls were generally in place and effective. However, at those facilities, the OIG found minor

issues relating to accountability, mail operations,

employee and customer service, revenue protection, expense minimization, information system

security, oversight, and compliance with laws

and regulations. For example, the OIG identified discrepancies between reported account

balances and actual stamp stock and cash on

hand; employee safety concerns related in and

around storage and work areas; insufficient

training on handling of hazardous materials;

untimely information system access reviews; and

inadequate control over building keys. 

FINANCIAL-RELATED REVIEWS

AND INVESTIGATIONS 

COMBATING PURCHASINGRELATED FRAUD

The OIG has initiated several efforts to

focus investigations in the following major

postal expenditure areas: procurement of equipment and services, transportation, and facilities.

Specifically, the OIG has focused its investigative efforts in the areas of frauds associated with

IMPAC cards, eVoyager cards, transportation

contracts, the bulk fuel program, and common

area maintenance agreements. In this reporting

period, OIG work in this area included:

◆ An investigation resulting in the conviction of a former postal clerk for misappropriation of postal funds through the

improper use of an IMPAC card. The

subject was sentenced to 3 years probation and ordered to pay over $3,000 in

restitution to the Postal Service.

◆ Two investigations concerning the misuse

of the eVoyager card program. The first of

these investigations resulted in the

removal of a postal employee and the

recovery of $2,800. The second investigation deals with the production and use of

counterfeit Postal Service eVoyager cards.

Five individuals have been arrested in

this case and related investigations are

continuing. 

◆ Investigations concerning transportation

contracts that have resulted in the termination of a highway contract for falsified

documents. The scheme was discovered

and the contractor was terminated prior

to the payments being made. In another

case, a highway contractor, who had been

convicted for defrauding the Postal Service, was debarred for 3 years. The subject agreed to make restitution to the

Postal Service of nearly $2,300. The

OIG and the Inspection Service worked

this investigation jointly.

OIG INVESTIGATIVE EFFORTS

PROTECT POSTAL SERVICE FROM

FALSE CLAIMS

The OIG assists the Postal Service in combating fraudulent claims by working with the

Postal Service Law Department and United

PAGE18

The OIG seized this vehicle during an

investigation into the misuse of the

eVoyager card program. 

FINANCIAL MANAGEMENT REVIEWS
PAGE19

States Attorney Offices to conduct investigations into tort and indemnity claims filed against

the Postal Service.

As a result of one recent investigation, an

Oklahoma postal customer was sentenced to 10

months in jail and ordered to pay over $5,000 in

restitution to the Postal Service for submitting

false indemnity claims. The customer submitted

claims for over $10,000, supported by altered

sales receipts, for international mail that was

reported as damaged, missing its contents, or

undelivered. 

FY 2003 OBSERVATIONS OF

STATISTICAL TESTS FOR THE COST

AND REVENUE ANALYSIS

The OIG performed cost and revenue

analysis audits in 21 districts and found that,

generally, the tests were conducted in accordance with Postal Service procedures. However,

employees did not always adhere to policies for

sampling, equipment use, and data entry in 13

districts. The OIG issued individual reports to

address these issues and will issue a summary

report providing postal management with recommendations to address systemic issues. (For

specific reports see Appendix A, pages 51-52)

UTILITY PAYMENTS NOT ALWAYS

TIMELY OR PROPERLY MADE 

An OIG audit disclosed that utilities, paid

at district accounting offices, generally were paid

accurately in accordance with Postal Service

policies and procedures. However, one district

accounting office did not always make timely

payments, and another office paid unnecessary

state and local taxes. As a result, the Postal Service incurred unnecessary late fees totaling over

$36,700 and inappropriately paid about $91,000

in state and local taxes. The OIG recommended

the Postal Service improve the timeliness of utility payments, collect unnecessary payments of

state and local taxes, and modify policies to

reduce the likelihood and enhance collection of

improper payments. Although postal management disagreed with two of the eight recommendations, the actions taken or planned

should address the issues identified in the report,

including evaluating the propriety of collecting

the unnecessarily paid state and local taxes of

$91,000. 

In a cooperative effort, the district accounting office provided assistance to the OIG to

identify the $91,000 in unnecessary utility taxes

paid. Upon the report’s issuance, the Postal Service took immediate action to collect the

improperly paid sales taxes. As a result, the state

of Maryland agreed to refund the Postal Service

over $82,000 in improperly paid taxes. The

reduction in the amount reflects the disallowance of improperly paid taxes beyond the

applicable statutes of limitation. 

(FT-AR-03-011)

IMPROVEMENTS NEEDED FOR

POSTAL SERVICE’S GOVERNMENT

PERFORMANCE AND RESULTS

ACT REPORTING 

An OIG audit disclosed the Postal Service

complied with the Government Performance

and Results Act by providing plans that met the

Act’s requirements. However, the Postal Service

could have improved its public accountability

and the usefulness of the Fiscal Year 2003 Annual Performance Plan by providing more comparable, specific, and detailed information to measure organizational goal achievement. The OIG

recommended and postal management agreed to

make every effort to provide references, when

appropriate, to documents used in the development of act-related reports, and to consider

incorporating additional goals, objectives, indicators, and targets, especially for those related to

the Transformation Plan initiatives; however,

they will limit the number of strategic goals in

order to focus on key goals. 

In addition, although postal management

agreed to provide a detailed explanation in

future documents when indicators and targets

were changed or eliminated, postal management

believed additional labor relations indicators

were unnecessary at the strategic level at this

time. The OIG noted in its report that it was not

the intent of its recommendation for postal

management to add, without consideration,

indicators and targets to past or future published

documents. Rather, it was the OIG’s intent to

bring to postal management’s attention the

importance that labor relations issues have to

all the stakeholders. The OIG noted that postal

management, as deemed appropriate, should

consider for inclusion labor relations goals, targets, and indicators to provide public accountability and to demonstrate the Postal Service’s

The OIG assists the Postal Service in

combating fraudulent claims.
continued commitment to improving the major

management issues. The Postal Service has

taken positive steps by having transformation

initiatives to address labor relations issues. In

addition, postal management has stated that it is

considering changes or additions to the goals,

objectives, indicators, and targets, especially as a

result of transformation initiatives. 

(FT-AR-03-010)

CONTRACTING AND FACILITIES

REVIEWS

The Postal Service manages nearly

$19.5 billion annually in contracts for essential

goods, non-transportation services, and facilities-related services. Consequently, this makes

the Postal Service one of the largest civilian

contracting agencies in government. During the

second half of FY 2003, Postal Service purchases included over $570 million in noncompetitive contracts and more than $181 million in

purchase credit card transactions. The Postal

Service is also one of America’s largest owners,

developers, and managers of real estate, committing over $274 million for repair, renovation,

and construction of new facilities, and paying

over $569 million in rent for the second half of

FY 2003.

The OIG is responsible for contract audits

designed to assist Postal Service contracting officers in determining fair and reasonable contract

prices as well as providing them with reviews of

contractor financial systems. In the past

6 months, the OIG completed 17 reviews of

contracting and facilities-related issues with the

assistance of a contract audit agency. Also, the

OIG has many open criminal investigations targeting fraud and corruption in these areas. Highlights of some contracting and facilities reviews

follow below:

CONTRACT AUDITS IDENTIFY

OVER $69.9 MILLION IN

QUESTIONED AND

UNSUPPORTED COSTS 

In the past 6 months, the OIG worked with

the Defense Contract Audit Agency and completed 14 audits of contracts valued at over

$511.7 million. These audits resulted in over

$69.9 million in questioned and unsupported

costs. The contract audits primarily include:

incurred cost audits that evaluated the reasonableness of costs incurred by contractors; proposal audits that evaluated the reasonableness of

contractor cost estimates; and claim audits that

evaluated whether claims submitted by contractors were accurate, valid, and properly supported. These audits are summarized in the graph in

the margin and focus on whether contractors’:

◆ proposed and incurred costs were allowable and reasonable; and

◆ pricing data were accurate, complete, and

current.

The following is a summary of 3 significant

contract audits completed in the last 6 months: 

◆ An audit of a contractor’s $329 million

firm fixed price proposal for a biohazard

detection system program revealed the

proposal was not acceptable as a basis for

negotiation of a fair and reasonable price.

The total amount included $266 million

for the basic portion and $63 million for

the options. The audit disclosed questioned costs of nearly $61 million, which

included unsupported costs of approximately $8.4 million. Additionally, direct

material costs based on engineering estimates were questioned because the contractor was unable to provide supporting

documentation, and proposed material

costs normally included in overhead costs

were questioned in their entirety. Labor

hours were also questioned based on

results of the technical evaluation.

Unsupported costs were the result of the

contractor not providing auditable documentation to support certain proposed

costs based on engineering estimates.

Therefore, the OIG recommended that a

downward savings clause be included in

the contract. (CA-CAR-03-15)

◆ A review of a contractor’s equitable

adjustment in the amount of $726,903

disclosed questioned costs of approximately $703,000. Following audit

inquiries, the contractor withdrew proposed general and administrative costs

and profits and fees in their entirety, stating that subsequent work added to the

contract nullified these costs. However,

the contractor’s total questioned costs

were offset by $16,418 due to the contractor’s underestimation of other proposed costs. (CA-CAR-03-014)

PAGE20

The OIG completed 14 audits of

contracts valued at over 

$511.7 million. 

FINANCIAL MANAGEMENT REVIEWS

Types and Number of Contract 

Audits Completed

5

OTHERS

3 INCURRED PROPOSALS

COSTS

3

3

CLAIMS
PAGE21

◆ An audit of a contractor’s revised fixed

price proposal of approximately $32 million disclosed questioned costs of about

$7 million. Questioned costs were primarily proposed profit applied to inter-company costs within the direct material unit

costs. These proposed costs represented a

pyramiding of profit because the summary

proposal contained a separate line item

for proposed profit. The OIG considered

the proposal acceptable as a basis for the

negotiation of a fair and reasonable contract price. However, the OIG believes

the nearly $7 million of questioned costs

also should be considered in the negotiation process. (IR-CAR-03-006)

CHANGES NEEDED TO COMMON

AREA MAINTENANCE CHARGES

An OIG audit found procedures and internal controls for common area maintenance

charges needed strengthening. The OIG found

that lease agreements did not contain necessary

common area maintenance language and a standard common area maintenance definition or

clause did not exist. In addition, the OIG found

that common area maintenance charges were

not tracked or reviewed. As a result, the Postal

Service could be subject to overcharges by

lessors. During the audit, Postal Service management began developing a standard common

area maintenance clause. They were also receptive to establishing procedures to track leases

with common area maintenance clauses and to

obtaining independent audits of common area

maintenance charges. The OIG recommended

that postal management enforce compliance

with existing policies and procedures for common area maintenance costs, establish and

implement a standard common area maintenance definition and clause, establish and

implement a system to track common area

maintenance charges, and establish and implement procedures for audits. Postal management

generally agreed with OIG’s recommendations.

(CA-AR-03-002)

MANAGEMENT OF FACILITY

LEASE PROGRAM 

The OIG’s review of 72 leases totaling over

$14.1 million in annual rent disclosed that the

Postal Service was generally initiating and

renewing its leases in accordance with policies

and procedures. Additionally, the OIG found no

issues when reviewing 11 leases, totaling over

$2.9 million in annual rent, which were terminated before expiration. However, facilities personnel did not always identify and document the

condition of facilities before lease renewal. As a

result, the Postal Service did not always have

sufficient information available to effectively

negotiate leases or resolve maintenance issues.

Postal management agreed with the recommendations to use the new facility condition checklist to identify and document the condition of

facilities prior to lease renewal and to communicate this information to facilities personnel.

Postal management also agreed to enforce the

requirement to send the lessor a letter of outstanding maintenance items when the lessor is

responsible for maintenance, and to document

outstanding maintenance items before assuming

maintenance responsibility from the lessor.

Postal management’s comments are responsive

to the OIG’s recommendations, and actions

taken or planned should correct the issues identified in the report. (CA-MA-03-009) 

OIG CONTRACTOR

INVESTIGATIONS TARGET 

FRAUD AND CORRUPTION

The OIG conducts investigations relating

to the Postal Service’s contracting and facilities

areas. These investigations target contractors

who have attempted to defraud the Postal Service by submitting false invoices, performing

poor work, or using substandard construction

material. These investigations help ensure that

the financial interests of the Postal Service are

protected. In some instances, these investigations result in significant recoveries and improve

the safety of employees and customers. During

the past 6 months, the OIG has reported significant activities in this area, some of which are

highlighted below:

◆ As a result of an OIG investigation, 

a California manufacturer agreed to 

pay $2 million to the government, 

$1.6 million of which will go to the Postal

Service, to settle allegations that the

contractor knowingly provided the Postal

Service with defective mail sorting equipment. The investigation was initiated
based on a “whistleblower” lawsuit alleging

that the manufacturer failed to perform

required product inspections and fabricated documents to make it appear that the

inspections had been performed. During

the OIG investigation, it was also determined that the defective products posed

potential safety hazards. As a result, the

Postal Service issued a nationwide safety

alert to all post offices and safety

managers. 

◆ An OIG investigation resulted in the

indictment of a postal supervisor and an

auto repair shop owner on charges of

conspiracy to commit bribery and conspiracy to submit false claims. This case

was initiated based on a referral from the

Postal Inspection Service regarding irregularities on contracts for repair and maintenance of postal vehicles. The indictment alleged that the postal employee, a

delivery service supervisor, allowed false

claims to be submitted for vehicle repairs,

including inflated labor charges, charges

for repairing and replacing suspect items,

and bills for services not performed. The

auto repair shop owner has pled guilty

and is awaiting sentencing. The Postal

Service halted retirement proceedings for

the indicted supervisor until it can be

determined whether it is owed any

money resulting from his alleged actions.

◆ A Delaware couple presented false claims

to the Postal Service for miles that had

not been driven on a Highway Contract

Route, defrauding the Postal Service of

over $56,000. The couple made full restitution and agreed to refrain from bidding

on or participating in any postal mail

transportation contracts for 3 years. Consistent with that agreement, the Postal

Service debarred the couple from doing

business with the Postal Service. 

◆ As a result of an OIG investigation, a

Postal Service subcontractor pled guilty

to a criminal information charging mail

fraud and false statements. The subcontractor was hired to clean and decontaminate a New York Processing & Distribution Center after anthrax was discovered

there. The subcontractor created bogus

training certifications that falsely represented its employees as having the training needed to clean and decontaminate

the facility. Because the employees did

not actually have the required training,

the resulting claims of $1.6 million that

were submitted were in violation of the

contract.

PAGE22 FINANCIAL MANAGEMENT REVIEWS
PAGE23

T

TECHNOLOGY

echnology Reviews

REVIEWS The Postal Service recognizes that technology is key to productivity and

affordability. Through technology, the

Postal Service handles more than 660 million

pieces of mail every day and maintains its network of nearly 38,000 post offices and facilities.

Its technology strategy is to provide convenient

and secure access to all customers on a daily

basis through increasingly sophisticated retail

systems, expansion in new electronic access

channels, and electronic linkages that integrate customer and postal processes. In addition, the Postal Service is using modern technology, such as USPS.com, Signature ConfirmationTM, and MoversGuide Online.com.

These initiatives will improve and build on its

existing services and relationships with customers and continue meeting traditional customer demands. 

The September 11, 2001, terrorist attacks

demonstrated how the nation’s infrastructure

may be vulnerable to attacks. Computer systems

are a critical component of every aspect of postal

operations and must be protected from potential

cyber-terrorism to prevent disruption in service.

Technology investments need to be scrutinized

not only to minimize the risk of compromise, but

also to ensure that sound business decisions are

made. This is particularly important as the

Postal Service reviews several technologies to

identify an efficient, effective, and safe method

to detect and prevent biohazards. 

OIG reviews have covered developmental

systems, information systems, electronic commerce, and computer intrusion detection activities. In the past 6 months, the OIG performed

14 reviews in the technology area, some of

which are highlighted below: 

DEVELOPMENTAL REVIEWS

The Postal Service develops business systems and mail processing equipment to improve

performance, enhance service, and reduce

operating costs. The typical development

process begins with the identification of a business need. After the business need has been

identified, a solution is developed, followed by

the proof of concept and first article tests and

final deployment. The OIG understands the

importance of reviewing these systems as they

are developed and has completed four audits of

major projects currently under development

during the reporting period. Three of these

reviews are highlighted below: 

MERLIN UNDERUTILIZED IN

SOUTHEAST AND SOUTHWEST

AREAS

At the request of the Board of Governors,

the OIG conducted a limited review of Mailing

Evaluation, Readability, and Lookup Instrument

(MERLIN) operations. MERLIN is an automated system designed for use by acceptance units to

accept and verify discounted mailings. The goals

of the MERLIN program are to automate acceptance, make verifications consistent, and

improve the quality of the mailstream. MERLIN

simultaneously verifies presort makeup, barcode

readability and accuracy, tray label accuracy,

meter identification and dates, piece counts, and

mailpiece characteristics. However, the OIG

audit determined MERLIN was underutilized in

the Southeast and Southwest Areas.

The OIG found these sites were verifying

less than the required 17 percent of mailings

under 10,000 pieces. If utilization rates continued to remain below target, the Postal Service

could lose a substantial portion of the projected

additional revenue and incur higher costs to

process mail. The audit also revealed improvements were needed for communicating policies

and procedures to guide business mail entry unit

personnel in avoiding some computer software

issues, preparing weekly utilization reports, and

performing site readiness reviews.

The OIG determined that local training

provided to MERLIN operators needed to be

more consistent. Specifically, there were discrepancies in the type of training materials used, type

of training records maintained, and course content covered. These discrepancies may negatively impact the quality, effectiveness, and completeness of local training. The OIG made seven

recommendations to improve utilization, communications, and local training for the MERLIN

program. Postal management agreed with all

seven recommendations and all actions were

completed or planned prior to completion of the

audit. (DA-AR-03-006)
RELIABILITY AND TESTING ISSUES

CONCERNING WIDE FIELD VIEW

CAMERA SYSTEM

An OIG review of the new Wide Field

View Camera System identified two areas of

concern. First, the camera system experienced

reliability issues during the field First Article

Test. Specifically, there were ten occurrences of

camera offline conditions and two computer

installation failures. During the test period, if

the vendor performed extensive corrective

maintenance, the test may have been terminated. Thus, the vendor did not attempt to resolve

the reliability issues at that time in order to complete the field First Article Test. 

Subsequently, in order to pinpoint why the

reliability issues occurred, Engineering postponed the national deployment of the Wide

Field of View Camera System. The vendor

determined camera offline conditions occurred

due to human and software errors. In addition,

the vendor could not determine why some computers failed after installation. As a result, the

vendor created an updated software version to

correct the reliability issues. Engineering officials stated postal management plans to follow

the Software Development Life Cycle test procedures to ensure reliability issues will be

resolved in updated software versions. If the

Wide Field of View Camera System is deployed

without correcting these issues and documenting results, productivity in mail processing facilities may decrease. 

The OIG recommended that Engineering

officials continue to monitor and report on the

Wide Field of View Camera System’s reliability

issues. Postal management agreed with the

OIG’s recommendation and actions taken or

planned should correct the issues identified.

Subsequently, all issues were resolved and the

Postal Service is now realizing the benefits projected, especially an improved read rate.

(DA-AR-03-005)

DELIVERY BAR CODE SORTER

MACHINE NOT USED MOST

EFFECTIVELY

The OIG reviewed the Delivery Bar Code

Sorter – Expanded Capability to determine the

adequacy of testing and evaluate machine use.

The Delivery Bar Code Sorter – Expanded

Capability machine allows bulky letter mail,

which is primarily processed manually, to be

sorted on the Delivery Bar Code Sorter

machines. The Postal Service’s business decision

to continue the Delivery Bar Code Sorter –

Expanded Capability program without fully

addressing the First Article Test failures did not

ensure that the program could effectively

process bulky mail without damaging the mail. 

When the machine did not pass First

Article Tests, postal management revalidated

performance through a demonstration and eliminated contractual requirements. In addition,

the review found that many sites processed small

percentages of bulky mail and used Delivery Bar

Code Sorter machines to process regular

automation mail. If this continues, the efficiencies and savings of processing bulky mail on the

machine may not be realized. The concerns

identified could also affect future Postal Service

initiatives.

The OIG recommended postal management direct the Test Evaluation and Quality

group to evaluate the testing process and results

and ensure that all testing of the Delivery Bar

Code Sorter Input Output Subsystem – Expanded Capability is conducted under the direction

and approval of the group. The OIG also recommended that postal management determine

whether the actual performance of the Delivery

Bar Code Sorter – Expanded Capability for processing bulky mail meets the savings projected

in the Decision Analysis Report. Postal management agreed with both recommendations and

actions taken or planned should correct the

issues identified in the report. The Postal Service indicated that volumes processed on the

machines, including bulky and automation

compatible letter mail, will produce the level of

savings contained in the Decision Analysis

Report. (DA-AR-03-007)

INFORMATION SYSTEMS

REVIEWS

The Postal Service relies on a complex

computer infrastructure to accomplish and

streamline operations, manage one of the largest

civilian workforces in the world, and move billions of pieces of mail each year. The Postal Service has initiated several information technology projects to enhance efficiency and increase

PAGE24 TECHNOLOGY REVIEWS
PAGE25

revenue. The Postal Service must continue to

ensure computer security is maintained and

improved to reduce the risk of fraud, inappropriate disclosure of sensitive data, unauthorized disclosure of customer information, and disruption

of critical operations and services. The most significant reviews are highlighted below:

WEAKNESSES FOUND IN

ELECTRONIC TRAVEL VOUCHER

SYSTEM

The OIG conducted a network vulnerability assessment of the electronic travel reimbursement system used by the Postal Service, which

was implemented in 2001. Although the OIG

determined the systems to be well managed,

potential network vulnerabilities in the reimbursement system were identified that merit

improvements to strengthen security over the

system. Detailed results of the network assessment were provided to postal management and

to system administrators in a separate technical

report. This technical report did not provide

recommendations for corrective action. Rather,

the report was intended to provide system

administrators with the technical information

necessary to establish priorities to initiate corrective action. 

Postal Service management generally

agreed with five recommendations in the

report. Although management disagreed with

one recommendation, they took action which

was responsive to the intent of the recommendation and should correct the issue identified.

(IS-CS-03-002 and IS-AR-03-006)

CONTROL WEAKNESSES

IDENTIFIED AT AN ENGINEERING

RESEARCH AND DEVELOPMENT

CENTER

The OIG conducted an audit of a Postal

Service Engineering Research and Development Center to determine whether controls at

the center were adequate to safeguard the

integrity of resources and ensure continuity of

operations. The OIG also conducted a vulnerability assessment of network and computer systems at the center. The audit identified control

weaknesses in the overall security at the maintenance facility and in four of the six general and

management control areas tested. The OIG

considered the lack of a formal, centralized

structure for information systems security management as the cause of many of the control

weaknesses identified. 

The OIG made 17 recommendations to

improve the security and reliability of the engineering facility’s site and computer environment. Postal management agreed with 15 recommendations and disagreed in part with 2 recommendations. However, Postal management’s

actions taken or planned for all 17 recommendations should resolve the issues identified in

the report. (IS-AR-03-008)

OPERATING SYSTEM CONTROL

WEAKNESSES IDENTIFIED AT THE

POSTAL SERVICE NATIONAL

CUSTOMER SUPPORT CENTER

An OIG audit revealed weaknesses in three

of seven operating system control areas tested at

a Postal Service Customer Support Center. The

OIG provided eight recommendations to

strengthen overall controls of the operating system environment and to ensure compliance

with Postal Service requirements. Postal management agreed with all of the recommendations and has initiatives in progress, completed,

or planned to address the issues identified. 

In addition, the audit verified the status of

postal management’s corrective action in

response to 16 recommendations made by the

OIG in a previous review of security access controls at the center. As a result of the follow-up

review, the OIG recommended closure on 12 of

the 16 recommendations made from its previous

review. All of the four remaining follow-up recommendations were subsequently closed.

(IS-AR-03-005)

eCOMMERCE REVIEWS

The Postal Service continues to provide

customers with new online products and services to enhance their personal and professional lives. In addition, the Postal Service continues to improve the performance and usability of

its web presence to ensure secure access and

protect customer privacy. The Postal Service

has also eliminated or consolidated initiatives

that do not fully support the core products and

contribute to revenue. Ongoing OIG efforts

during this period focused on online mailing

services, online change of address and adequacy

The OIG identified network vulnerabilities

in the Postal Service’s travel voucher

system.
of validation process, epayments, and alternatives to using Internet auctions for mail recovery purposes.

NETPOST SERVICES PROGRAM

FALLS SHORT OF ORIGINAL

FINANCIAL PROJECTIONS

The OIG audited the financial performance of the NetPost Services program, which

consists of four components: Mailing Online,

CardStore, Premium Postcards, and Certified

Mail. The audit disclosed that the program has

fallen short of the original financial projections

contained in the Decision Analysis Report. In

addition, in revising its original projections, the

Postal Service used limited actual performance

data instead of incorporating updated market

research data, including data on the impact of

the Postal Service’s partnership under its Direct

Mail program with a competitor of the NetPost

Services program. Projections incorporating

current market data would have been more

credible and have allowed the Postal Service to

better assess the program’s viability. Further,

although the volume assumptions have changed

significantly and the Postal Service has revised

these projections, the Postal Service has not prepared and submitted to the Board of Governors

a modified Decision Analysis Report. The audit

also disclosed that the quarterly Investment

Highlights report, the tool that the Postal Service uses to communicate the status of projects

to the Board of Governors, does not include key

performance measures and results. 

After the end of the OIG’s fieldwork, but

prior to report issuance, the Postal Service

informed the OIG that it was not extending the

Mailing Online experiment and would not file

for permanent service. Furthermore, the Postal

Service entered into a partnership with a

private entity that would own and operate the

Mailing Online component of the NetPost

Services program. 

Postal management disagreed with the

OIG’s recommendations to update market

research data on hybrid mail and to include this

data when revising the program’s financial projections and to assess the impact of the program

on the Postal Service’s partnership with a competitor. Postal management partially disagreed

with the recommendations to assess the viability of the NetPost Services program to determine

whether continued investment in the program is

in the best interest of the Postal Service, and, if

so, to prepare and submit a Decision Analysis

Report Modification Request to the Board of

Governors; and to identify key performance

measures for the NetPost Services program and

require that these measures be reported to the

Board of Governors. Postal management stated

that it monitored the Mailing Online project by

reviewing the profit and loss statements, briefings to the Board’s Strategic Planning Committee

and reporting indicators in the Investment

Highlights. 

Although postal management has recently

announced changes in the Mailing Online component of the NetPost Services program, it has

not provided details of the changes or plans for

the program’s other three components. Without

additional information on the changes to the

entire NetPost Services program, the OIG could

not determine whether postal management

actions will resolve the issues identified in the

report. The OIG will continue to monitor how

recent changes may impact the NetPost Services program. (OE-AR-03-007)

TECHNICAL CRIMES UNIT

ACTIVITIES

The OIG investigates criminal violations

of state and federal laws enacted to protect the

authenticity, privacy, integrity, and availability

of electronically stored and transmitted information. eCommerce ventures make the protection of postal information systems critical to

the financial viability of the Postal Service.

Because such ventures involve connectivity

between postal systems and eCommerce partners, the OIG conducts investigations of

attacks on the security of those systems in order

to maintain the integrity of eCommerce information. The OIG informs postal management

and eCommerce partners regarding emerging

threats to information systems and assists them

in identifying and eliminating potential vulnerabilities. These efforts include assisting the

Postal Service in developing security policies,

information systems, and eCommerce procedures that conform to the best practices in

industry and government. 

The OIG Technical Crimes Unit has one

PAGE26 TECHNOLOGY REVIEWS
PAGE27

investigative team of technology specialists who

conduct forensic examinations and computer

investigations in support of OIG investigations,

and another team of technical services specialists who conduct site surveys to evaluate the

possibility of radio communications and covert

surveillance. 

During this reporting period, the OIG

Technical Crimes Unit supported 84 OIG investigations and provided computer forensics and

technical services to assist the Postal Service

and other government agencies. Some efforts

are highlighted below: 

◆ Worked with the Postal Service Critical

Incident Response Team (CIRT), to

respond to incidents of potential computer compromises. In one incident, the

CIRT and the Technical Crimes Unit

identified and obtained a confession from

an individual who compromised a Postal

Service server, gained unauthorized

access, and was attempting to crack all

the encrypted passwords on the computer

system. 

◆ Seized suspects’ computers for forensic

analysis and interviewed an individual

suspected of being a member of a hacking

group that compromised the Postal Rate

Commission’s website.

◆ Assisted in the installation and monitoring of numerous vehicle tracing devices,

electronic audio interceptions, and covert

video surveillance devices.

◆ Assisted in search warrants for several

investigations of health care providers

suspected of defrauding the government

and conducted forensic analysis on computer hard drives.

The OIG’s Technical Crimes Unit assists

in investigations by seizing suspects’

computers for forensics analysis. 
PAGE28 TECHNOLOGY REVIEWS
PAGE29

Labor Management Reviews

LABOR MANAGEMENT

REVIEWS The Postal Service has characterized

improving labor management relations

as one of the most important challenges

in achieving its mission in the 21st century. A

key Postal Service strategy in the labor management area is to provide a safe, fair, and inclusive

workplace for motivated employees who are

given the tools, training, and support to do their

jobs effectively and efficiently. With more than

830,000 full and part-time employees working at

over 38,000 facilities nationwide, the Postal Service recognizes that it will remain a labor-intensive organization for the foreseeable future, and

success will depend on improving the postal culture to create a more highly skilled, motivated,

and productive workforce. Additionally, in light

of terrorist attacks, including attacks involving

the transport of anthrax through the mail, the

Postal Service must take every precaution to

ensure the safety and well being of its employees.

The OIG supports the Postal Service in its

overall goal to develop a motivated and productive workforce. The labor management area

includes workplace environment, human

resources, and health care. While the OIG has

worked diligently with the Postal Service and

Congress to address these areas of concern,

reviewing labor management areas continues to

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

regard, the OIG has received over 4,000 individual labor management complaints since

1997. During this reporting period, the OIG

completed 5 reviews and closed 26 inquiries in

the labor management area. In addition, the

OIG conducted 18 health care fraud investigations and 10 reprisal investigations and inquiries

in this area.

WORKPLACE ENVIRONMENT

REVIEWS

The Postal Service has identified signs of

workplace stress in many of its facilities and is

developing comprehensive steps to improve the

workplace environment, including improving

relations between managers and employees and

aligning human resources with business requirements. During this reporting period, the OIG

has conducted 2 audits and 156 inquiries into

complaints of a hostile work environment or

other health and safety issues, some of which are

highlighted below:

POTENTIALLY UNSAFE

CONDITIONS AT THE GROTON,

CONNECTICUT MAIN POST

OFFICE

An OIG audit in response to employee allegations confirmed the existence of potentially

unsafe working conditions at the Groton, Connecticut, Main Post Office. Specifically, the

OIG found evidence of leaking roof water,

potential hazards from electrical shock and fire,

damaged ceiling tiles, questionable bacteria,

blocked access to an electrical service area, mold

in delivery vehicles, improper maintenance of

asbestos floor tiles, and chemicals stored improperly and without documentation. These conditions are potential violations of government

safety and health requirements and increase the

risk of injury and illness to Postal Service

employees and customers. 

The OIG recommended that postal management inspect the roof of the Groton, Connecticut, Main Post Office as soon as possible to

determine whether it requires improvement or

replacement; assess the existing electrical system

and make any necessary improvements; replace

all damaged or missing ceiling tiles; and ensure

that repair and safety needs are resolved in a

timely manner. The OIG also recommended

that postal management ensure that delivery

vehicles are cleaned monthly, as required by

Postal Service policy; that periodic asbestos

inspections are performed as required by the

Environmental Protection Agency and the

Postal Service; and that the Groton, Connecticut, Main Post Office complies fully with Occupational Safety and Health Administration

standards and Postal Service policies for the

maintenance of building materials that contain

asbestos.

Postal management agreed with the OIG’s

recommendations, and actions taken or planned

should correct the issues identified in the report.

Postal management did not agree that the OIG’s

corresponding video and fact sheet reflected the

true conditions at the post office and that the

video was an appropriate vehicle for the audit

report. They also stated that the decision to
renew the lease on the facility was a proper business decision. Postal management indicated that

while the building does have maintenance issues

typical of an older facility, these issues are being

addressed, and the facility does provide safe conditions for employees and customers. The OIG

believes the decision to renew the lease might

have been proper from an economic standpoint,

but the safety of employees and customers

should be paramount. (LH-AR-03-010)

GRIEVANCE ARBITRATION

PROCESS COULD BE IMPROVED

The OIG audited the Postal Service’s efforts

to resolve grievances at the lowest possible step

of the grievance arbitration procedures. The

audit found the Postal Service did not fully

implement most of the recommendations and

suggestions made by the OIG in past audits

addressing this issue. The Postal Service

explained that it is difficult to unilaterally implement policies and procedures because all such

changes must be negotiated with the labor

unions according to the collective bargaining

process. The audit also found the Postal Service

and the four major unions also did not fully

implement recommendations made by independent organizations, including the General

Accounting Office. However, they had made

efforts to improve the labor-management relationship and the overall grievance arbitration

process, including reducing the arbitration backlog in FY 2003. The Postal Service and the major

unions have also worked together in developing

the Contract Interpretation and the Joint Contract Interpretation manuals.

Although the Postal Service did not have

cost data on all costs related to labor management issues, and as a result, could not identify

areas for potential cost savings, the OIG

estimated the Postal Service could incur about

$1.1 billion in FYs 1999 through 2003 for costs

related to labor management issues. The OIG

also found that postal management and union

officials did not always follow the grievance arbitration procedures required by the national

agreements to resolve labor-management issues.

The OIG made six recommendations to

management and encouraged union participation to improve the grievance arbitration

process and labor management relations. While

postal management disagreed with the OIG’s

recommendation to modify the Grievance and

Arbitration Tracking System to capture key

costs associated with labor management problems, subsequent discussions on the issue have

resulted in actions taken or planned that will

satisfy the recommendation. Postal management agreed with several other recommendations including the need to explore the potential

benefits of implementing best practices the OIG

identified, as well as the continuance of their

joint efforts with the unions to improve labormanagement relations. Actions taken or

planned should correct some of the issues

identified in the report. (LH-AR-03-012)

HUMAN RESOURCE PROCESS

REVIEWS

Postal Service managers are responsible for

preserving and protecting official records and

privacy information. In addition, managers must

avoid conflicts of interest, which could affect

both the public’s trust and confidence in Postal

Service human resource processes. Postal Service managers are also responsible for complying

with existing policies and procedures regarding

sexual harassment, overtime, leave, compensation and benefits, and training. An example of

work conducted in this area is highlighted

below:

CAPPING REPORT ON SEXUAL

HARASSMENT PREVENTION

MEASURES

The OIG audited sexual harassment prevention measures in 18 district offices and found

their sexual harassment policies and procedures

were adequate, most of the employees found

responsible for sexual harassment or inappropriate actions or comments were appropriately disciplined or corrective action was taken, and

most managers and supervisors found responsible for sexual harassment or inappropriate comments and actions were considered for exclusion

from the Pay for Performance Program. The

OIG also found the districts effectively

addressed more than half of the sexual harassment complaints reviewed. 

Subsequent to report issuance, postal management agreed with the OIG’s recommendation to ensure that managers and supervisors

address sexual harassment complaints and inapPAGE30 LABOR MANAGEMENT REVIEWS
PAGE31

propriate actions and comments of a sexual

nature, and also agreed with the OIG’s recommendation to document detailed evidence of

actions taken to address all complaints. 

(LH-AR-03-011)

SPECIAL INQUIRIES TEAM

ACTIVITIES

The OIG Special Inquiries Team is responsible for reviewing allegations involving Postal

Service executives for misconduct, including

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

possible fraud, abuse, and mismanagement.

During this reporting period, the Special

Inquiries Team investigated 10 allegations of

reprisal, including:

◆ An investigation of a reprisal allegation

from a complainant who alleged postal

management removed her from a postmaster position for reporting fraud, waste,

and abuse in her district to the Postmaster General. The investigation did not

substantiate the allegation.

◆ An investigation of a reprisal allegation

from a retired Postal Service physician

who alleged that his contract was not

renewed by the Postal Service and he was

forced to retire because he provided information to an OIG special agent concerning alleged illegal activity by a contracted

nurse. The investigation did not substantiate the allegation.

HEALTH CARE REVIEWS 

Controlling workers’ compensation costs

continues to be key to the Postal Service’s financial well being because it is self-insured and

makes payments out of operating funds, which

directly affects the Postal Service’s net income.

In FY 2003, the Postal Service paid the Department of Labor over $847 million for workers’

compensation charges, a $62 million increase

over the $785 million in FY 2002.

The OIG assists in protecting the health

and welfare of the Postal Service’s workforce by

conducting audits and investigations to prevent

and detect fraud, waste, abuse, and mismanagement related to Postal Service health care program costs. Involvement in health care fraud

investigations is vital to controlling costs related

to Postal Service health care premiums. To

enhance these efforts, the OIG has partnered

with the Department of Labor Office of Inspector General to conduct joint investigations of

workers’ compensation programs. On December

7, 2002, the OIG assumed responsibility for all

new allegations of employee workers’ compensation fraud within the Capital Metro area. This

new area of responsibility is in addition to the

OIG’s jurisdiction over investigations of fraud

committed by health care providers. 

The OIG investigates allegations of fraud

involving health care providers who are paid by,

or on behalf of, the Postal Service for medical

services rendered to Postal Service employees

related to:

◆ Federal Employees’ Compensation Act.

This act is administered by the Department of Labor with costs charged back to

the Postal Service.

◆ Postal Service-contracted doctors and

facilities. Approximately 1,500 physicians

and facilities are contracted and paid

directly by the Postal Service to provide

medical services to its employees.

◆ Federal Employees Health Benefits

Program. The Postal Service pays 

80 percent of over 830,000 full and 

part-time employees’ insurance premiums.

In the past 6 months, the OIG completed

18 investigations and 9 proactive investigative

initiatives in this area, which resulted in 2 convictions. The investigations identified federal

and state violations of money laundering, conspiracy, racketeering, grand theft, and mail fraud

by licensed or unlicensed health care providers.

In addition, the OIG conducted two reviews of

health care-related issues. Some of the OIG’s

more significant investigations and reviews are

highlighted below:

SOUTHEAST AREA PAID OUT

APPROXIMATELY $350,000 FOR

NONWORK-RELATED INJURIES

An OIG audit disclosed that officials in

two districts located in the Southeast Area

were proactive in managing cases of employees

on the periodic roll. The audit found injury

compensation officials in both districts periodically coordinated with the Office of Workers’
Compensation Programs to initiate actions to

resolve case issues. However, one of the districts

had difficulty in getting responses from the

Office of Workers’ Compensation Programs on

the medical status of employees. In addition, the

Postal Service may be paying medical charges

for nonwork-related injuries for employees separated from employment with the Postal Service.

In one district, the OIG determined that a separated employee received medical treatment for

nonwork-related injuries totaling approximately

$350,000. The OIG plans to conduct a followup audit on this particular issue. 

(HK-AR-03-003)

SAN DIEGO PHYSICIAN INDICTED

FOR WORKERS’ COMPENSATION

FRAUD

As a result of a joint investigation by the

OIG, the Department of Labor, and the California Department of Insurance, a San Diego

physician was indicted on 23 counts for allegedly committing workers’ compensation related

fraud and perjury. The investigation revealed

that the physician was submitting fraudulent

workers’ compensation claims for services he

had not provided. The physician received over

$22,000 in payments for medical services

charged to Postal Service claimants. A San

Diego Superior Court judge has suspended the

physician’s medical license pending the outcome of the judicial proceedings. 

POSTAL UNION OFFICIAL PART

OF CORRUPTION SCHEME

As part of a multi-agency task force case,

the OIG investigated a corruption scheme in

which a postal union official, now retired,

allegedly conspired to solicit and receive kickbacks from health care providers in return for

referring postal employees for medical treatment related to occupational injuries sustained

in the performance of duty. To date, four individuals have been indicted; two have pled

guilty; and two are scheduled for trial in

November. One has been sentenced to 6

months home detention and 3 years probation

and was ordered to pay restitution of nearly

$36,000 to the Department of Labor. 

PAGE32 LABOR MANAGEMENT REVIEWS
PAGE33

Oversight of the Inspection Service

OVERSIGHT OF THE

INSPECTION SERVICE

OVERSIGHT REVIEWS The Inspector General Act, as amended,

provides for the OIG to conduct, supervise, coordinate, and provide policy

direction for the programs and operations of

the Postal Service, including the Inspection

Service. The Inspector General Act also gives

the OIG “oversight responsibility for all activities of the Inspection Service, including any

internal investigations performed by the

Inspection Service.” 

The OIG provides information and analyses to the Governors, Congress, and postal management regarding Inspection Service operations. During the last 6 months, the OIG completed 5 oversight reviews, as well as numerous

monitoring activities, which are highlighted

below:

POSTAL INSPECTION SERVICE

BUDGETING PROCESS COULD BE

IMPROVED

An OIG review of the Postal Inspection

Service’s budgeting process found the Postal

Inspection Service did not prepare a zero-based

budget. The FY 2003 budget was based upon historical projections and management input.

Therefore, it could not be determined if requirements had been properly identified or developed

for its $487.5 million FY 2003 budget. The OIG

audit also revealed that justifications supporting

$25.1 million of non-personnel budget line

items totaling $36.8 million were not adequate.

In some cases, no justifications were provided.

This may have occurred because the Postal

Inspection Service did not provide budget officials with adequate guidance or training for

developing justifications. However, the Postal

Inspection Service provided adequate justifications for $23.8 million for eight Postal Inspection Service programs such as security, equipment, and database development. 

In addition, the OIG audit determined that

the eight programs were consistent with the

Postal Inspection Service’s FY 2003 Annual Performance Plan. It also found the Postal Inspection Service’s Finance and Administrative Services group tracked and monitored variances

between actual and planned expenditures for

their $76.3 million non-personnel budget. The

OIG did not review personnel costs or staffing

because this area was being concurrently

reviewed as part of another OIG audit. Postal

Inspection Service management neither agreed

nor disagreed with the OIG’s recommendation

to establish a process to implement a zero-based

budget program. However, the OIG viewed this

recommendation as unresolved and plans to

pursue it through formal audit resolution

process. (SA-AR-03-005)

CONTROLS OVER FIREARMS

COULD BE IMPROVED

The OIG issued two interim audit reports of

the Postal Inspection Service’s controls over

firearms. The initial interim audit concerned

whether firearms reported as lost, stolen, or missing were accurately transferred from the old

database to the new database system. The audit

revealed the inventory data in the current database and the old database did not reconcile.

Postal management stated they were aware of

the variances between the old and new inventory systems, but they used data in the new database to respond to a General Accounting Office

study without revealing the discrepancies. 

Additionally, a physical inventory conducted in November and December 2002 did not

report any discrepancies, although nine firearms

listed as on hand were listed in the National

Crime Information Center database as lost,

stolen, or missing. The OIG recommended that

postal management conduct a complete physical

inventory and reconciliation of data, notify the

General Accounting Office of the inventory

errors, and report the most current information

to the National Crime Information Center. 

The OIG’s second interim audit report concerned whether the firearms purchased nationally in 1987 from Sturm, Ruger and Company,

Inc., were accurately accounted for through a

reconciliation of the national inventory. The

audit disclosed that seven of the firearms not

listed in the Postal Inspection Service inventory

were reported as lost, stolen, or missing to the

National Crime Information Center by the

Postal Inspection Service. In addition, one of

the seven firearms, reported in the National
Crime Information Center by the Postal Inspection Service in 1999, was transferred in 1995 to

and is currently on hand at the United States

Probation Department. Further, four firearms

not in the national inventory were returned to

the company for credit. The Postal Inspection

Service could not provide any data to support

the location of five firearms, and four firearms

identified as “Returned to Manufacturer” in the

current National Asset Tracking System database were not returned to the company. The

importance of accountability over firearms cannot be overemphasized, considering that loss

may pose serious risks to the public.

The OIG recommended Postal Inspection

Service management ensure that accountability

of the firearms and the associated records, as

identified by the OIG as inadequate, are corrected. The OIG also made a recommendation

concerning the adequacy of internal controls for

firearms documentation in the Postal Inspection

Service National Asset Tracking System.

Although postal management neither agreed

nor disagreed with the recommendations in

both of these interim audit reports, actions

taken or planned are responsive to the intent of

the recommendations and should correct the

issues identified in the reports. (SA-AR-03-002

and SA-AR-03-006)

REVIEW OF COMPLAINTS

REGARDING THE INSPECTION

SERVICE

The OIG’s oversight of the Inspection Service provides customers, employees, and other

interested persons with an avenue to address

concerns regarding the Inspection Service. At

the same time, the OIG provides the Inspection Service with an unbiased review of accusations that, if left unresolved, could harm its

reputation as a professional law enforcement

agency and reduce the public’s confidence in

the Postal Service. 

INSPECTION SERVICE INTERNAL

INVESTIGATIONS

The OIG conducts investigations of misconduct by senior Inspection Service personnel

and monitors the conduct of internal investigations of other Inspection Service employees.

These investigations are conducted when allegations of employee misconduct affect the performance of duties or when managers have

information of employee misconduct. 

The OIG receives information regarding

Inspection Service internal investigations,

including conclusions reached and recommended actions. Inspection Service internal

investigations for this period included allegations of sexual misconduct, physical assault, and

obstructing an internal investigation. 

PAGE34 OVERSIGHT OF THE INSPECTION SERVICE
PAGE35

Customer Service

CUSTOMER SERVICE 

EXTERNAL COMMUNICATIONS The OIG is responsible for keeping members of Congress and the Postal Service

Board of Governors fully and currently

informed. The OIG keeps Congress informed

by issuing Semiannual Reports to Congress, testifying at Oversight and other hearings, and

briefing members and their staff on issues related to the Postal Service. The OIG regularly provides synopses of audit and management advisory reports to Congressional committees and

subcommittees with oversight interest in the

Postal Service. Additionally, the OIG keeps the

Governors informed through regular briefings

at Board meetings, activity reports from the

Inspector General, and responses to requests for

information. 

CONGRESSIONAL TESTIMONY

Each year, since the OIG’s inception, the

Inspector General has testified before Congress

on various matters. While the OIG did not

provide testimony or written statements to

Congress during this reporting period, in the

past the OIG has provided testimony and statements highlighting significant work and identifying opportunities for the Postal Service to

improve accountability and public trust. These

testimonies and statements can be found in

their entirety on the OIG’s website at

http://www.uspsoig.gov. 

RESPONDING TO REQUESTS

FROM CONGRESS AND THE

POSTAL SERVICE GOVERNORS

The OIG provides accurate and timely

responses to requests from Congress and the

Postal Service Governors. The OIG responds to

some of these requests by conducting audits or

investigations. However, the OIG does not

generally perform audits or investigations when

an inquiry involves a non-systemic issue that

may be resolved through existing administrative

or judicial processes, such as the equal employment opportunity complaint process, contractual grievance-arbitration procedures, or the Merit

Systems Protection Board. The OIG may

conduct independent audits or investigations

related to systemic issues affecting Postal Service

programs and operations to help ensure their

economy, efficiency, and integrity. 

During this 6-month reporting period, the

OIG responded to 29 Congressional and Governors’ inquiries. Appendix G of this report lists

the OIG responses to these inquiries by subject

area. Some examples of OIG work in response to

Congressional and Governors’ requests are highlighted below: ◆ The OIG received an allegation regarding

whether Inspection Service employees

should get scheduled overtime, holiday

pay, night differential, and Sunday pay, as

provided for in Title 5 of the United

States Code (USC), and whether Inspection Service employees should get reimbursed for one-half of the premium for

professional liability insurance, as provided for in Public Law 104-208. The OIG’s

review disclosed that neither the Title 5

provisions regarding special pay nor the

law regarding professional liability insurance applies to the Inspection Service.

Postal inspectors who work in excess of

10 hours a day, even if scheduled in

advance, are not entitled to overtime.

However, inspectors do receive Law

Enforcement Availability Pay. 

◆ The OIG reviewed allegations of harassment by Postal Service supervisors in a

Great Lakes Area facility and found a

hostile work environment might have

existed for some employees due to communication failures between postal management and the employees. As a result

of the review, and to address employees’

concerns, Postal Service district management implemented various actions,

including conducting a climate assessment to determine concerns employees

might have about their work place, holding town hall meetings, and providing

communication training for supervisors.

◆ The OIG received allegations concerning

a North Carolina post office, including

allegations of a hostile work environment

created by postal management’s failure to

communicate with employees and safety

and health issues in some areas of the

facility. The OIG did not substantiate the

allegation that a hostile work environment existed. However, the realignment
of certain positions and subsequent transfer of some employees caused some stress

and depression as alleged. Postal Service

district management addressed those concerns by meeting with employees. 

The review substantiated allegations of

health and safety hazards. The ventilation in the mailroom was inadequate for

the number of people working in that

area, and the heating and lighting were

inadequate in the customer service area.

Postal Service’s management relocated

the employees and services to an area

that was properly ventilated and adequately cooled, purchased and installed

additional lighting, and placed space

heaters in the customer service area. 

◆ The OIG reviewed allegations at a

Northeast Area Bulk Mail Center regarding, among other things, supervisory personnel submitting false statements to the

Postal Service and the Department of

Labor Office of Workers’ Compensation

Programs. The OIG found that some of

the statements submitted by a senior

manager were inaccurate. As a result of

the OIG’s review, Postal Service district

management provided training for the

senior manager on how to properly challenge workers’ compensation claims. 

OIG HOTLINE PROVIDES A 

VITAL AND CONFIDENTIAL

COMMUNICATIONS LINK

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

OIG and individuals who contact the Hotline

to report allegations of fraud, waste, abuse, and

mismanagement.

Responding to Hotline Inquiries

The Hotline receives complaints from

employees, customers, and the general public

concerning alleged violations of laws, rules, or

regulations; mismanagement; waste of funds;

abuse of authority; and danger to public health

and safety. Complaints and allegations received

by the Hotline are analyzed to identify systemic

issues affecting the Postal Service, and are

referred for appropriate action. The OIG also

considers Hotline contacts when planning

audits and projects. 

During this reporting period, the Hotline

received almost 9,100 contacts, some of which

were addressed by the OIG in audits and investigations on issues such as waste, fraud, abuse, mismanagement, deficient postal operations, personnel matters, and other concerns. In addition:

◆ Twenty-four percent were addressed by

the Inspection Service and involved

criminal issues such as mail theft, assaults

and threats, and workers’ compensation

fraud;

◆ Twenty percent were addressed by the

Postal Service’s Office of Consumer

Advocate involving complaints related to

customer service issues, particularly mail

delivery;

◆ Fifty percent were related to miscellaneous requests for information such as

ZIP Codes, postage meters, and other

Postal Service-related matters; and

◆ Nearly 6 percent of Hotline contacts

were assigned to OIG staff for further

review for fraud, waste, abuse, and mismanagement.

Some examples of OIG Hotline work are

highlighted here:

◆ Based on contacts from postal employees

alleging that a postal manager created a

hostile work environment, Postal Service

management contracted for a climate

assessment that identified numerous

employee concerns specifically related to

this manager. Based on the assessment

results, the manager was removed from a

managerial role and is no longer a

supervisor. 

◆ Post office employees in Kansas alleged

that two supervisors created a hostile work

environment, and the OIG substantiated

the allegations against one of those supervisors. District management conducted

three climate assessments to identify

employee concerns and to ensure those

concerns were being addressed. The final

assessment revealed the climate at this post

office has improved. Additionally, district

management is taking steps to improve

workplace communication by conducting

communication work groups that include

both employees and supervisors.

PAGE36 CUSTOMER SERVICE
PAGE37

◆ A joint investigation with the Department of Labor Office of Inspector General revealed a significant number of questionable billing transactions for the Office

of Workers’ Compensation Program in

the Chicago District. The investigation

was initiated based on a Hotline allegation received from the Injury Compensation Manager for the Northern Illinois

District. During this reporting period,

over $16,000 was recovered, bringing the

total amount recovered in the case to

over $122,000.

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

5 p.m., Eastern Standard Time, Monday

through Friday (except federal holidays). Calls

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

Threats and any other potentially violent work

situations are routed immediately to the Postal

Police Control Center for action 24 hours a day

either by an OIG Hotline analyst or through a

caller-directed menu system. OIG Hotline contact information is provided in the margin to

the right.

PROPOSED LEGISLATION,

REGULATIONS, AND POLICIES

As required by the Inspector General Act,

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

Governors of the impact of such legislation and

regulations on Postal Service programs and

operations. This reporting period, the OIG commented on the following regulation and policies.

REGULATION

39 CFR Part 230 - Rules governing

compliance with subpoenas, summonses,

and court orders by postal employees

within the Office of Inspector General

where the Postal Service, the United

States, or any other federal agency is not

a party. 

The Postal Service amended the Code of

Federal Regulations to establish the rules to govern Postal Service OIG compliance with subpoenas, summonses, and court orders where the

Postal Service, the United States, or any other

federal agency is not a party. These new regulations ensure the OIG’s control over OIG documents. The practical advantage for the OIG

employee is that someone in the OIG who

knows the work of the agency will decide

whether the employee needs to produce documents or appear in court.

POSTAL SERVICE POLICIES

Comments Regarding Postal Service

Whistleblower Reprisal Policy

The OIG worked with the Postal Service to

strengthen procedures to protect Postal Service

employees who allege reprisal after they blow

the whistle on fraud, waste, and abuse. The

Postal Service intends to give the procedures to

unions and management associations for their

review soon, and to publish the procedures early

next year.

Comments Regarding USPS Purchasing

Manual, Version 3, August 22, 2003

While many of the changes the OIG has

proposed to the Purchasing Manual to prevent

or reduce fraud have been adopted, the OIG

remains concerned that three weaknesses in current postal purchasing procedures need to be

addressed. Unless these areas are addressed, the

OIG believes the Postal Service will remain

unnecessarily exposed to fraud, waste, and abuse

in its purchasing operations. The three areas are:

Adequate contractor accounting systems. As

long as the Postal Service continues to award

cost type contracts, it must ensure that major

contractors receiving such contracts have adequate accounting systems in place to ensure the

Postal Service is not improperly charged for

non-postal costs. Adequate contractor accounting systems are clearly a requirement of other

federal, state and local procurement models,

and are consistent with the internal control

structure now required by federal law for all

publicly traded corporations. OIG audits have

identified problems in important postal contracts that were caused by postal contractors’

failure to establish such accounting systems. In

some cases the failure to establish these systems

made the contractors’ claims virtually unauditable, thereby creating an unacceptable risk

for the Postal Service.

Suspension and debarment of contractors for

fraud. Suspension and debarment are the primary federal mechanisms to protect the

OIG HOTLINE 

◆Toll-Free, 1-888-USPS-OIG

(1-888-877-7644) 

◆TTY (Hearing Impaired) 

1-866-OIG-TEXT

(1-866-644-8398) 

◆To write to the OIG Hotline:

ATTN: OIG Hotline

1735 North Lynn Street

Arlington, VA 22209-2020

◆To e-mail the OIG Hotline:

hotline@uspsoig.gov 

◆To fax information toll-free:

1-866-756-6741
contracting process from fraudulent contractors.

The OIG believes it is essential that the Postal

Service follow the procedures of other federal

agencies in suspending and debarring contractors for fraud. These procedures provide greater

protection than the postal procedures, and have

withstood repeated court challenges. While the

proposed revisions make certain improvements,

they still do not provide adequate protection for

the Postal Service. The procedures set forth in

the proposed revisions are more cumbersome

and time consuming than are necessary and

reflect a role for the Judicial Officer, which is

inconsistent with the stated Postal Service goal

to make purchasing decisions in a more expeditious and business like manner. The OIG

believes that the Postal Service will remain

unnecessarily exposed to fraudulent contractors

unless further revisions are made.

Critical contract clauses. The OIG believes

two mandatory contract clauses (for contracts

over $100,000) must be set forth in the Postal

Service’s Purchasing Manual. First, contractors

must be required to certify critical information

regarding business ethics and integrity and past

performance. Such information is routinely

required by other federal, state, and local agencies and will allow postal contracting officials to

make a more informed determination of contractor responsibility and capability. Second,

postal contracts should have an adequate access

to records clause that will allow Postal Service

officials, including the OIG, to have access to

important contractor books and records. The

OIG has identified instances where postal officials have waived this requirement, or have

agreed to significant modifications of the clause

that would result in the compromise of the

OIG’s ability to conduct audits in accordance

with good business practices and professional

standards. 

The OIG believes that, unless the three

matters set forth above are successfully resolved,

weaknesses will remain in postal purchasing procedures. In response to the OIG’s continued

advocacy for the above matters, the Postal Service Vice President for Supply Management

concurred with the OIG’s position and directed

his staff to work toward the implementation of

OIG proposals. On September 29, 2003, the

Manager, Supply Management Infrastructure

confirmed that the purchasing staff and the OIG

were in substantial agreement and stated that

the staff:

◆ will work to determine how best to incorporate OIG suggestions regarding contractor accounting systems;

◆ is currently drafting new policies for suspension and debarment incorporating the

OIG’s suggested changes, including

requiring the offeror to make certifications concerning whether they are currently suspended or debarred or under

investigation regarding suspension or

debarment, requiring “higher level”

approval before awarding a contract to a

contractor debarred by the General Services Administration; and 

◆ will make the examination of records

clause mandatory in all contracts, and

require that any deviations only occur

after consultation with Postal Service

counsel and the OIG.

FREEDOM OF INFORMATION ACT

REQUESTS

The OIG is committed to making all final

audit and management advisory reports

available to the public, except as neccessary to

protect the Postal Service’s interest. The OIG

website, http://www.uspsoig.gov, contains all

releasable final audit and management

reports.

Before posting a report on the website, the

OIG reviews each report in accordance with the

Freedom of Information Act, the Privacy Act,

and the Postal Reorganization Act. The OIG

may coordinate its review with Postal Service

management and attorneys. In deciding what

information to release, the OIG balances the

public’s right to access federal agency records

with individual privacy rights as well as the

Postal Service’s need to safeguard certain protected information. As a result, OIG reports may

be withheld in whole or in part to protect privacy as well as proprietary or confidential information. The OIG responds to many written

requests for reports and other information under

the Freedom of Information Act. As of July 15,

2002, the OIG began deciding all OIG-related

Freedom of Information Act appeals to more

PAGE38 CUSTOMER SERVICE
efficiently safeguard individual privacy and sensitive OIG information while ensuring maximum access. Freedom of Information Act

appeals are handled by the OIG Legal Services

Team and such authority is outlined under Title

39 Code of Federal Regulations § 230.5(e). 

In this reporting period, the OIG processed

61 Freedom of Information Act requests.

INSPECTOR GENERAL

SUBPOENAS 

Pursuant to the Inspector General Act, the

Inspector General is authorized to issue subpoenas for audits and investigations for which the

OIG has jurisdiction. This includes authority to

issue subpoenas in support of certain investigations of the Inspection Service. An Inspector

General subpoena is a valuable audit and investigative tool. It enables the OIG to secure documentary information and evidence that, unlike

grand jury subpoenas, can be readily used in civil

and administrative proceedings, as well as criminal cases.

Inspector General subpoenas are not selfenforcing. If a subpoena is not complied with,

OIG attorneys and special agents and Postal

Inspectors first attempt to negotiate with the

subpoena recipient to obtain the requested documents. If this is not successful, the OIG seeks

enforcement in United States district court. The

courts generally enforce the subpoena as long as

the inquiry is within the authority of the agency,

the information sought is reasonably relevant to

the agency’s inquiry, and the demand is not

unduly burdensome. 

Since its inception, the OIG has been successful in enforcing every subpoena that has

been challenged in court. Subpoena requests

undergo a rigorous review process. The review is

comprehensive in terms of scope of review, level

of supervisory review, and signature authority.

All subpoenas are processed at OIG headquarters and undergo thorough, progressive investigative and legal reviews. The subpoena process

requires OIG special agents and Postal Inspectors to submit a written justification with their

subpoena request. After supervisory review, the

OIG legal staff evaluates each subpoena to

ensure the subpoena can withstand a legal challenge. The General Counsel signs the subpoenas. This reporting period, the OIG issued 168

subpoenas.

During this reporting period, OIG Legal

Services launched an electronic subpoena processing system. The system is for use by OIG

investigative and legal staff. The system is

designed to streamline the process of creating a

subpoena request and submitting it for review

and approval. Legal Services has had great success in processing subpoena requests expeditiously using this new system and plans to offer

its use to the Postal Inspection Service in the

near future. 

FREEDOM OF INFORMATION ACT REQUESTS

For the period April 1, 2003, through 

September 30, 2003

FREEDOM OF INFORMATION ACT APPEALS

For the period April 1, 2003, through 

September 30, 2003

OIG Number of

Actions Requests

Carryover from prior period 8

Received during the period 58

Total on hand during the period 66 

Processed during the period

Released 30

Withheld 9

Referred to Postal Service 

or other agency 17 

Otherwise closed* 5 

Total processed during the period 61

Balance at end of the period (Pending) 5

*Otherwise closed includes no responsive documents,

improper requests, requests withdrawn, etc.

OIG Number of 

Actions Appeals

Total appealed 5 

Total upheld 4 

Total denied 1

PAGE39
PAGE40 CUSTOMER SERVICE
PAGE41

GOALS AND

STRATEGIES

STRATEGIC GOALS

In March 2001, the OIG published a

revised Five-Year Strategic Plan for FYs 2001-

2005. Each aspect of this plan is in accordance

with the President’s management agenda and

the principles of the Government Performance

and Results Act. The OIG’s strategic plan is

outcome-oriented and focuses on the fundamental mission to increase the efficiency and

effectiveness of Postal Service programs and

operations, while eliminating and preventing

fraud, waste, abuse, and mismanagement. This

plan was designed to address the strategic direction and objectives outlined in the Postal Service’s Strategic Plan for FYs 2001-2005, which

reflected a growing uncertainty about the

impact of emerging technologies, changing customer requirements, and competitors’ actions

on mail volume and postal revenues. 

The OIG begins its strategic planning

process by determining the major management

issues facing the Postal Service. The OIG then

assesses Postal Service operations and activities,

broadly defines realistic goals, sets priorities in

line with the Postal Service business vision, and

develops effective strategies and action plans

that align the OIG’s activities to best help the

Postal Service improve its effectiveness and efficiency. The OIG then measures progress in

meeting those goals; and updates and revises

goals, strategies, and performance measures to

continually align its efforts with the changing

business needs of the Postal Service. 

The OIG’s current strategic plan identified

two goals: to provide timely, accurate, and useful information that contributes to the efficiency and effectiveness of the Postal Service; and

to maximize resources and leverage cuttingedge technology in support of its mission. The

OIG strategic plan will be updated during FY

2004 to reflect new organizational leadership

and focus. 

Goals and Strategies
PAGE42
PAGE43

Office of Inspector General Organizational Structure

DEPUTY

INSPECTOR

GENERAL

SPECIAL

PROJECTS

INSPECTOR

GENERAL

GENERAL

COUNSEL

AIG INTERNAL

BUSINESS

STRATEGIC

ENFORCEMENT

DEPUTY AIG

INVESTIGATIONS

CONTRACT

FRAUD

ATLANTA 

FIELD OFFICE

BOSTON 

FIELD OFFICE

NEW YORK

FIELD OFFICE

PHILADELPHIA

FIELD OFFICE

WASHINGTON

FIELD OFFICE

AIG

INVESTIGATIONS AIG AUDIT

FINANCIAL

STATEMENTS

FINANCIAL

FIELD

SUPPLY

MANAGEMENT

& FACILITIES

DEPUTY AIG

INTERNAL

BUSINESS

HUMAN

RESOURCES

ADMINISTRATIVE

SERVICES

INVESTMENTS

PERFORMANCE

INFORMATION

TECHNOLOGY

DEPUTY

GENERAL

COUNSEL

LEGAL SERVICES

CONGRESSIONAL

FOIA & 

HOTLINE

INVESTIGATIVE

OPERATIONS

AUDIT

OPERATIONS

DEPUTY AIG

FINANCIAL

MGMT.

SPECIAL

INQUIRIES

TECHNICAL

CRIMES UNIT

DALLAS 

FIELD OFFICE

DENVER 

FIELD OFFICE

LOS ANGELES

FIELD OFFICE

ST. LOUIS 

FIELD OFFICE

NETWORK

OPERATIONSLOGISTICS

HUMAN

CAPITAL

DELIVERY &

RETAIL

DEPUTY AIG

OPERATIONS &

HUMAN

CAPITAL

NETWORK

OPERATIONSPROCESSING

ENGINEERING

MARKETING

INFORMATION

SYSTEMS

STRATEGY &

PERFORMANCE

DEPUTY AIG

TECHNOLOGY,

MARKETING &

OVERSIGHT

INSPECTION

SERVICE

OVERSIGHT

DEPUTY AIG

INVESTIGATIONS

Office of Inspector General

Organizational Structure
PAGE44
APPENDIX A

Reports Issued to Postal Service Management

For the period April 1, 2003, through September 30, 2003

OVERVIEW

Office of Inspector General

The OIG audit teams are aligned to conduct performance and financial audits, evaluations and

other reviews to address the business processes of the Postal Service. Each team issues audit

reports (AR) or management advisory reports (MA) in accordance with the identified needs of

the project.

SUMMARY

The following is a summary by principal area of reports issued to Postal Service management.

The following pages list each issued report.

Number of Recommend Additional

Reports Questioned Unsupported Funds Put to Unrecoverable Potential

Principal Area Issued Costs Costs1 Better Use Costs Revenue

Performance 14 $0 $0 $179,020,474 $1,124,000 $0

Financial Management 258 $69,963,257 $8,499,479 $90,535 $1,000 $105,161

Technology 14 $0 $0 $0 $0 $0

Labor Management 5 $0 $0 $0 $0 $0

Oversight 5 $0 $0 $0 $0 $0

Grand Total 296 $69,963,257 $8,499,479 $179,111,009 $1,125,000 $105,161 

PAGE 45

1 Unsupported Costs are included with the amounts shown as Questioned Costs.

2 Represents potential additional revenue.

3 Represents unrecoverable costs.

Appendices

Definitions

Questioned Costs - 

A cost that is unnecessary,

unreasonable, unsupported, 

or an alleged violation of law,

regulation, contract, etc.

Unsupported Costs - 

A cost that is not supported 

by adequate documentation.

Funds Put to Better Use -

Funds that could be used more

efficiently by implementing

recommended actions.

Unrecoverable Costs - 

A cost that perhaps should not

have been incurred and is not

recoverable.

Potential Additional Revenue -

Amounts from revenue

generating functions such as

retail sales, rent, leases, or fees

that were underpaid or not

realized. 
REPORT LISTING

The following is a list of each report grouped by core business processes and enabling functions.

PERFORMANCE

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date

ACCEPTING AND PROCESSING

AC-AR-03-006 Enhanced Carrier Route Standard $0 $0 $0 $0 9/29/03

Mail Worksharing Discounts 

AC-AR-03-007 Inventory Management - $0 $0 $131,148,139 $0 9/30/03

Maintenance Stockrooms 

AO-AR-03-001 Efficiency of Work Performed by $0 $0 $9,256,376 $0 7/31/03

Business Mail Entry Clerks Within 

the Los Angeles District

AO-AR-03-002 Efficiency of Work Performed by $0 $0 $6,963,499 $0 9/25/03 

Business Mail Entry Clerks at the 

San Francisco Business Mail Entry Unit 

AO-MA-03-001 (R ) Enforcement of Export Controls $0 $0 $0 $0 4/17/03 

MARKETING

OE-AR-03-004 Mail Recovery Center Auctions $0 $0 $0 $0 5/13/03 

OE-AR-03-005 Postal Service Postmark America Store $0 $0 $0 $0 7/31/03 

OE-MA-03-006 Follow-up Review of the Citizens’ $0 $0 $0 $0 8/4/03 

Stamp Advisory Committee

TRANSPORTATION AND DELIVERY

TD-AR-03-010 Highway Network Scheduling - $0 $0 $5,989,082 $0 7/11/03

Southwest Area 

TD-AR-03-011 City Carrier Productivity - Letter $0 $0 $0 $0 7/28/03

Carrier Delays in the Baltimore District 

TD-AR-03-012 Voyager Card Control Weaknesses - $0 $0 $1,011,600 $1,124,0002 9/8/03

National Analysis 

TD-AR-03-013 Highway Network Scheduling - $0 $0 $2,721,530 $0 9/23/03

Western Area 

TD-AR-03-014 Highway Network Scheduling - $0 $0 $11,352,881 $0 9/26/03

Southeast Area 

TD-AR-03-015 Highway Network Scheduling - $0 $0 $10,577,367 $0 9/30/03

Eastern Area 

PERFORMANCE TOTALS $0 $0 $179,020,474 $1,124,000

FINANCIAL MANAGEMENT

FISCAL YEAR 2003 FINANCIAL INSTALLATION AUDITS 

FF-AR-03-152 Memphis Business Mail Entry Unit $0 $0 $0 $0 4/8/03 

FF-AR-03-154 Vincennes Business Mail Entry Unit $0 $0 $0 $0 4/8/03 

FF-AR-03-157 Colleyville Self-Service Postal Center $0 $0 $0 $0 4/8/03 

FF-AR-03-158 Milwaukee Business Mail Entry Unit $0 $0 $0 $0 4/8/03 

FF-AR-03-161 Fort Worth Business Mail Entry Unit $0 $0 $0 $0 4/8/03 

FF-AR-03-163 Hammond Business Mail Entry Unit $0 $0 $0 $0 4/8/03

FF-AR-03-164 New Brunswick Business Mail $0 $0 $0 $0 4/8/03

Entry Unit 

FF-AR-03-165 Farmingdale Business Mail Entry Unit $0 $0 $0 $0 4/8/03

FF-AR-03-170 Fort McNair Station $0 $0 $0 $0 4/10/03

PAGE 46 APPENDICES

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-03-175 Fort Worth Stamp Distribution and $0 $0 $0 $0 4/10/03

District Accounting Offices 

FF-AR-03-177 Irvine Business Mail Entry Unit $0 $0 $0 $0 4/10/03

FF-AR-03-171 Hollywood Self-Service Postal Center $0 $0 $0 $0 4/11/03

FF-AR-03-166 New Ringgold Post Office $0 $0 $0 $0 4/15/03

FF-AR-03-169 Valley Forge Business Mail Entry Unit $0 $0 $0 $0 4/15/03

FF-AR-03-172 Phoenix Main Window Office $0 $0 $0 $0 4/15/03

FF-AR-03-173 Tontitown Post Office $0 $0 $0 $0 4/15/03

FF-AR-03-180 Rydal Branch $0 $0 $0 $0 4/17/03

FF-AR-03-097 Moneta Post Office $0 $0 $0 $0 4/24/03

FF-AR-03-174 Ellinwood Post Office $0 $0 $0 $0 4/24/03

FF-AR-03-176 Hollins College Branch $0 $0 $0 $0 4/24/03

FF-AR-03-178 Piney Woods Post Office $0 $0 $0 $0 4/24/03

FF-AR-03-192 Worth Business Mail Entry Unit $0 $0 $0 $0 4/24/03

FF-AR-03-130 Simi Valley Business Mail Entry Unit $0 $0 $0 $0 4/30/03

FF-AR-03-150 Garden Grove Business Mail Entry $0 $0 $0 $0 4/30/03

Unit 

FF-AR-03-205 Baton Rouge Business Mail Entry Unit $0 $0 $0 $0 4/30/03

FF-AR-03-153 Lynchburg Business Mail Entry Unit $0 $0 $0 $0 5/2/03

FF-AR-03-160 Klander Self-Service Postal Center $0 $0 $0 $0 5/2/03

FF-AR-03-185 Holland Branch Contract Postal Unit $0 $0 $0 $0 5/2/03

FF-AR-03-183 Swedesboro Business Mail Entry Unit $0 $0 $0 $0 5/7/03

FF-AR-03-197 Fort Worth Post Office $0 $0 $0 $0 5/7/03

FF-AR-03-200 Wilsonville Business Mail Entry Unit $0 $0 $0 $0 5/7/03

FF-AR-03-208 Seattle Business Mail Entry Unit $0 $0 $0 $0 5/8/03

FF-AR-03-213 Parkway Drug Contract Postal Unit $0 $0 $0 $0 5/8/03

FF-AR-03-215 Fort Lauderdale Business Mail Entry $0 $0 $0 $0 5/8/03

Unit 

FF-AR-03-207 Los Angeles Main Post Office $0 $0 $0 $0 5/13/03

FF-AR-03-182 John A. Farley Business Mail Entry $0 $0 $0 $0 5/14/03

Unit 

FF-AR-03-187 Omaha Business Mail Entry Unit $0 $0 $0 $0 5/14/03

FF-AR-03-188 Indianapolis Self-Service Postal $0 $0 $0 $0 5/14/03

Center #4 

FF-AR-03-202 Yazoo City Business Mail Entry Unit $0 $0 $0 $0 5/14/03

FF-AR-03-204 Royal Oak Business Mail Entry Unit $0 $0 $0 $1,0002 5/14/03

FF-AR-03-193 Lenoir Business Mail Entry Unit $0 $0 $0 $0 5/16/03

FF-AR-03-199 Columbus Business Mail Entry Unit $0 $0 $0 $0 5/16/03

FF-AR-03-201 Cleveland Main Office Window $0 $0 $0 $0 5/16/03

Service 

FF-AR-03-212 Williamstown Post Office $0 $0 $0 $1,2003 5/16/03

FF-AR-03-214 Downers Grove Post Office $0 $0 $0 $0 5/16/03

FF-AR-03-226 Portland Main Post Office $0 $0 $0 $0 5/16/03

FF-AR-03-224 Kent Main Post Office $0 $0 $0 $0 5/20/03

FF-AR-03-242 Alameda Station $0 $0 $0 $0 5/20/03

FF-AR-03-244 Reno Self-Service Postal Center $0 $0 $0 $0 5/20/03

FF-AR-03 229 Fayetteville Self-Service Postal Center $0 $0 $0 $0 5/21/03

FF-AR-03-206 Hatboro Main Post Office $0 $0 $0 $0 5/21/03

FF-AR-03-209 Dyer Post Office $0 $0 $0 $0 5/21/03

FF-AR-03-228 Hazleton Post Office $0 $0 $0 $0 5/21/03

FF-AR-03-240 Cincinnati Self-Service Postal Center $0 $0 $0 $0 5/21/03

PAGE 47

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-03-189 Salt Lake City Business Mail Entry $0 $0 $0 $0 5/22/03

Center #4 

FF-AR-03-217 Mariners Harbor Post Office $0 $0 $0 $0 5/22/03

FF-AR-03-218 Sun Valley Station $0 $0 $0 $0 5/22/03

FF-AR-03-220 Scottsdale Self-Service Postal Center $0 $0 $0 $0 5/22/03

FF-AR-03-221 Salt Lake City Main Post Office $0 $0 $0 $0 5/22/03

FF-AR-03-233 West Caldwell Post Office $0 $0 $0 $0 5/22/03

FF-AR-03-235 Southside Station $0 $0 $0 $0 5/22/03

FF-AR-03-211 Hartford Main Post Office $0 $0 $0 $0 5/23/03

FF-AR-03-222 Eagle Station $0 $0 $0 $0 5/23/03

FF-AR-03-225 Gaines Post Office $0 $0 $0 $0 5/23/03

FF-AR-03-232 Glendale Self-Service Postal Center $0 $0 $0 $0 5/23/03

FF-AR-03-246 Annandale Business Mail Entry Unit $0 $0 $0 $0 5/23/03

Service 

FF-AR-03-190 Indianapolis Main Office Window $0 $0 $0 $0 5/28/03

FF-AR-03-223 Ford Pharmacy Contract Postal Unit $0 $0 $0 $0 5/28/03

FF-AR-03-227 Tucson Davis Monthan Post Office $0 $0 $0 $0 5/28/03

FF-AR-03-230 Brookfield Business Mail Entry Unit $0 $0 $0 $0 5/28/03

FF-AR-03-237 Reading Business Mail Entry Unit $0 $0 $0 $0 5/28/03

FF-AR-03-239 Pattonsburg Post Office $0 $0 $0 $0 5/28/03

FF-AR-03-243 Atlanta Stamp Distribution and $0 $0 $0 $0 5/28/03

District Accounting Offices 

FF-AR-03-245 Illinois Institute of Technology $0 $0 $0 $0 5/28/03

Contract Postal Unit #50 

FF-AR-03-231 McClellanville Post Office $0 $0 $0 $0 5/29/03

FF-AR-03-234 Houston Business Mail Entry Unit $0 $0 $0 $0 5/29/03

FF-AR-03-236 Nashville Stamp Distribution Office $0 $0 $0 $0 5/29/03

and Tennessee District Accounting 

Office 

FF-AR-03-241 White Plains Stamp Distribution $0 $0 $0 $0 5/29/03

Office and Westchester District 

Accounting Office 

FF-AR-03-251 Brandon Business Mail Entry Unit $0 $0 $0 $0 5/29/03

FF-AR-03-184 Santa Ana Business Mail Entry Unit $0 $0 $0 $0 6/5/03

FF-AR-03-186 Woodland Hills Post Office $0 $0 $0 $0 6/5/03

FF-AR-03-247 Pleasantville Post Office $0 $0 $0 $0 6/5/03

FF-AR-03-248 Riceboro Post Office $0 $0 $0 $0 6/5/03

FF-AR-03-250 Jamestown Business Mail Entry Unit $0 $0 $0 $0 6/5/03

FF-AR-03-252 Cincinnati Business Mail Entry Unit $0 $0 $0 $0 6/10/03

FF-AR-03-263 Myrtle Beach Main Post Office $0 $0 $0 $0 6/10/03

FF-AR-03-253 Naperville Business Mail Entry Unit $0 $0 $0 $0 6/18/03

FF-AR-03-258 Portal Post Office $0 $0 $0 $0 6/18/03

FF-AR-03-260 Otoe Post Office $0 $0 $0 $0 6/18/03

FF-AR-03-255 Newburgh Business Mail Entry Unit $0 $0 $0 $0 6/19/03

FF-AR-03-259 Hicksville Post Office $0 $0 $0 $0 6/19/03

FF-AR-03-257 Worth Post Office $0 $0 $0 $0 6/24/03

FF-AR-03-219 Chicago Cardiss Collins Postal Store $0 $0 $0 $0 6/25/03

FF-AR-03-272 Columbia Falls Business Mail Entry $0 $0 $0 $0 6/25/03

Unit 

FF-AR-03-282 Jersey City Main Office $0 $0 $0 $0 6/25/03

FF-AR-03-271 Pearland Business Mail Entry Unit $0 $0 $0 $0 6/26/03

FF-AR-03-273 Indianapolis Stamp Distribution Office $0 $0 $0 $0 6/26/03

PAGE 48 APPENDICES

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-03-274 Greenville Business Mail Entry Unit $0 $0 $0 $0 6/26/03

FF-AR-03-283 Denver Business Mail Entry Unit $0 $0 $0 $0 6/26/03

FF-AR-03-261 Nevada Business Mail Entry Unit $0 $0 $0 $0 7/1/03

FF-AR-03-268 The Photory Contract Postal Unit $0 $0 $0 $0 7/1/03

FF-AR-03-275 Cherokee Business Mail Entry Unit $0 $0 $0 $0 7/1/03

FF-AR-03-284 Mount Morris Business Mail Entry $0 $0 $0 $0 7/1/03

Unit 

FF-AR-03-285 Richmond Main Post Office $0 $0 $0 $22,5243 7/1/03

Windows Operations 

FF-AR-03-277 Milwaukee Stamp Distribution Office $0 $0 $0 $0 7/2/03

FF-AR-03-278 Manchester Stamp Distribution Office $0 $0 $0 $0 7/2/03

FF-AR-03-280 Des Moines Business Mail Entry Unit $0 $0 $0 $0 7/2/03

FF-AR-03-254 Ocean Beach Station $0 $0 $0 $0 7/3/03

FF-AR-03-256 Gustine Post Office $0 $0 $0 $0 7/3/03

FF-AR-03-262 Folsom Business Mail Entry Unit $0 $0 $0 $0 7/3/03

FF-AR-03-238 Fenton Business Mail Entry Unit $0 $0 $0 $0 7/7/03

FF-AR-03-287 Denver Downtown Post Office $0 $0 $0 $0 7/7/03

FF-AR-03-168 Waite Park Business Mail Entry Unit $0 $0 $0 $0 7/10/03

FF-AR-03-181 Wyaconda Post Office $0 $0 $0 $0 7/10/03

FF-AR-03-203 Minneapolis Business Mail Entry Unit $0 $0 $0 $0 7/10/03

FF-AR-03-267 Clarkson Contract Postal Unit $0 $0 $0 $0 7/10/03

FF-AR-03-279 Arcadia Post Office $0 $0 $0 $0 7/10/03

FF-AR-03-286 Edison Post Office $0 $0 $0 $0 7/10/03

FF-AR-03-281 Holly Post Office $0 $0 $0 $0 7/11/03

FF-AR-03-288 Wallace Post Office $0 $0 $0 $0 7/11/03

FF-AR-03-191 Ventura Main Post Office $0 $0 $0 $0 7/15/03

FF-AR-03-196 Margaret L. Sellers Main Post Office $0 $0 $0 $0 7/15/03

FF-AR-03-295 New York Main Office $0 $0 $0 $38,4763 7/15/03

FF-AR-03-198 Mundelein Business Mail Entry Unit $0 $0 $0 $0 7/16/03

FF-AR-03-300 Cedar Elm Self-Service Postal Center $0 $0 $0 $0 7/17/03

FF-AR-03-302 Huntington Business Mail Entry Unit $0 $0 $0 $0 7/17/03

FF-AR-03-292 Little Rock Stamp Distribution Office $0 $0 $0 $0 7/22/03

and Arkansas District Accounting 

Office 

FF-AR-03-297 Stockton Self-Service Postal Center $0 $0 $0 $0 7/22/03

FF-AR-03-299 Captain Video Contract Postal Unit $0 $0 $0 $0 7/22/03

FF-AR-03-301 Farmingdale Post Office $0 $0 $0 $0 7/22/03

FF-AR-03-308 South Hackensack Branch $0 $0 $0 $0 7/24/03

FF-AR-03-304 Oklahoma City Self-Service $0 $0 $0 $0 7/25/03

Postal Center #78 

FF-AR-03-311 Baxter Contract Postal Unit $0 $0 $0 $0 7/29/03

FF-AR-03-313 Berea Business Mail Entry Unit $0 $0 $0 $0 7/29/03

FF-AR-03-316 West Haven Contract Postal Unit $0 $0 $0 $0 7/29/03

FF-AR-03-294 Festus Post Office $0 $0 $0 $0 7/31/03

FF-AR-03-298 Winder Post Office $0 $0 $0 $0 7/31/03

FF-AR-03-315 Oklahoma City Self-Service Postal $0 $0 $0 $0 7/31/03

Center #77 

FF-AR-03-249 Wausau Business Mail Entry Unit $0 $0 $0 $0 8/1/03

FF-AR-03-290 Lake Saint George Contract $0 $0 $0 $0 8/1/03

Postal Unit 

FF-AR-03-293 Green Bay Business Mail Entry Unit $0 $0 $0 $0 8/1/03

PAGE 49

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-03-296 Corpus Christi Self-Service Postal $0 $0 $0 $0 8/1/03

Center 

FF-AR-03-303 Texarkana Self-Service Postal Center $0 $0 $0 $0 8/1/03

FF-AR-03-310 Casper Downtown Station $0 $0 $0 $0 8/1/03

FF-AR-03-305 Scranton Post Office $0 $0 $0 $0 8/5/03

FF-AR-03-306 Station A $0 $0 $0 $0 8/5/03

FF-AR-03-309 Phoenix Stamp Distribution Office $0 $0 $0 $0 8/7/03

and Arizona District Accounting 

Office 

FF-AR-03-322 West Sacramento Business Mail Entry $0 $0 $0 $0 8/7/03

Unit 

FF-AR-03-323 Boise Stamp Distribution Office and $0 $0 $0 $0 8/7/03

Spokane District Accounting Office 

FF-AR-03-314 Farr’s Stationers Contract Postal Unit $0 $0 $0 $0 8/8/03

FF-AR-03-338 Merrifield Post Office $0 $0 $0 $19,4493 8/8/03

FF-AR-03-336 Las Vegas Business Mail Entry Unit $0 $0 $0 $0 8/12/03

FF-AR-03-317 Sycamore Post Office $0 $0 $0 $0 8/13/03

FF-AR-03-332 Midtown Station $0 $0 $0 $1,0473 8/13/03

FF-AR-03-333 Pittsburgh Stamp Distribution Office $0 $0 $0 $0 8/13/03

FF-AR-03-307 Kayenta Post Office $0 $0 $0 $0 8/14/03

FF-AR-03-312 Avon Park Main Office $0 $0 $0 $0 8/14/03

FF-AR-03-342 Tampa Business Mail Entry Unit $0 $0 $0 $0 8/14/03

FF-AR-03-324 Eastside Station Post Office $0 $0 $0 $0 8/12/03

FF-AR-03-325 Memphis Self-Service $0 $0 $0 $0 8/19/03

Postal Center #70 

FF-AR-03-331 Oakland Stamp Distribution Office $0 $0 $0 $0 8/19/03

FF-AR-03-335 Albuquerque Business Mail Entry $0 $0 $0 $0 8/19/03

Unit 

FF-AR-03-339 Charlotte Business Mail Entry Unit $0 $0 $0 $0 8/19/03

FF-AR-03-326 Decatur Self-Service Postal Center $0 $0 $0 $0 8/20/03

FF-AR-03-327 Boring Post Office $0 $0 $0 $0 8/20/03

FF-AR-03-329 Tahoe Valley Station $0 $0 $0 $0 8/20/03

FF-AR-03-337 Boyd’s Pharmacy Station #4 $0 $0 $0 $0 8/20/0

Contract Postal Unit 

FF-AR-03-340 Duluth Self-Service Postal Center $0 $0 $0 $0 8/20/03

FF-AR-03-344 Arispe Main Post Office $0 $0 $0 $0 8/20/03

FF-AR-03-350 Nikiski Contract Postal Unit $0 $0 $0 $0 8/20/03

FF-AR-03-351 Nenana Post Office $0 $0 $0 $0 8/20/03

FF-AR-03-328 Valentine Agency Contract $0 $0 $0 $0 8/21/03

Postal Unit 

FF-AR-03-330 Dubuque Main Post Office $0 $0 $0 $1,9803 8/21/03

FF-AR-03-334 Warsaw Business Mail Entry Unit $0 $0 $0 $0 8/21/03

FF-AR-03-345 Leadville Post Office $0 $0 $0 $0 8/21/03

FF-AR-03-348 Dulles Business Mail Entry Unit $0 $0 $0 $0 8/21/03

FF-AR-03-346 Marion Post Office $0 $0 $0 $4,8653 8/26/03

FF-AR-03-352 Houston Post Office $0 $0 $0 $0 8/26/03

FF-AR-03-357 Avon Lake Post Office $0 $0 $0 $2,2203 8/26/03

FF-AR-03-343 Carabella Post Office $0 $0 $0 $0 9/2/03

FF-AR-03-354 Amherst Branch $0 $0 $0 $0 9/2/03

FF-AR-03-356 Southern Maryland Business $0 $0 $0 $0 9/2/03

Mail Entry Unit 

PAGE 50 APPENDICES

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-03-355 Mount Pleasant Business Mail $0 $0 $0 $0 9/4/03

Entry Unit 

FF-AR-03-353 Chimacum Main Post Office $0 $0 $0 $0 9/5/03

FF-AR-03-358 Atlanta Business Mail Entry Unit $0 $0 $0 $0 9/5/03

FF-AR-03-363 Paauilo Post Office $0 $0 $0 $0 9/11/03

FF-AR-03-361 Wilmington Post Office $0 $0 $0 $0 9/12/03

FF-AR-03-349 Escondido Business Mail Entry Unit $0 $0 $0 $0 9/23/03

FF-AR-03-360 Executive Office Products Contract $0 $0 $0 $0 9/23/03

Postal Unit 

FF-AR-03-365 Hillcrest Station $0 $0 $0 $0 9/23/03

FF-AR-03-347 Wilmington Business Mail Entry Unit $0 $0 $0 $0 9/24/03

FF-AR-03-366 Calumet Main Office $0 $0 $0 $0 9/24/03

FF-AR-03-367 Columbus Main Office $0 $0 $0 $0 9/24/03

FF-AR-03-371 Philadelphia Business Mail Entry Unit $0 $0 $0 $0 9/29/03

FF-AR-03-372 Honolulu Business Mail Entry Unit $0 $0 $0 $0 9/29/03

FF-AR-03-359 Lansing Main Office Window $0 $0 $0 $8,4153 9/30/03

FF-AR-03-364 Fox Creek Station $0 $0 $0 $1,6393 9/30/03

FF-AR-03-368 Mira Vista Station $0 $0 $0 $0 9/30/03

FF-AR-03-369 General Mail Facility Finance Station $0 $0 $0 $3,3463 9/30/03

FF-AR-03-370 San Juan Stamp Distribution Office $0 $0 $0 $0 9/30/03

FINANCIAL RELATED 

FF-AR-03-167 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 4/8/03

Year 2003 Cost and Revenue 

Analysis - Albuquerque District 

FF-AR-03-179 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 4/11/03

Year 2003 Cost and Revenue 

Analysis - Greater Indiana District 

FF-AR-03-194 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 4/29/03

Year 2003 Cost and Revenue 

Analysis - South Florida District 

FF-AR-03-195 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 4/29/03

Year 2003 Cost and Revenue 

Analysis - Spokane District

FF-AR-03-210 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 5/8/03

Year 2003 Cost and Revenue 

Analysis - South Georgia District

FF-AR-03-216 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 5/8/03

Year 2003 Cost and Revenue 

Analysis - New Hampshire District 

FF-AR-03-264 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/18/03

Year 2003 Cost and Revenue 

Analysis - Alabama District 

FF-AR-03-265 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/18/03

Year 2003 Cost and Revenue 

Analysis - Louisiana District

FF-AR-03-266 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/18/03

Year 2003 Cost and Revenue 

Analysis - Boston District 

FF-AR-03-269 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/23/03

Year 2003 Cost and Revenue 

Analysis - Arkansas District 

FF-AR-03-270 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/23/03

Year 2003 Cost and Revenue 

Analysis - Mid-America District

PAGE 51

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
FF-AR-03-276 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 6/25/03

Year 2003 Cost and Revenue 

Analysis - Columbus District 

FF-AR-03-289 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/9/03

Year 2003 Cost and Revenue 

Analysis - Oklahoma District 

FF-AR-03-291 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/9/03

Year 2003 Cost and Revenue 

Analysis - Dakotas District 

FF-AR-03-318 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/29/03

Year 2003 Cost and Revenue 

Analysis - Triboro District 

FF-AR-03-319 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/29/03

Year 2003 Cost and Revenue 

Analysis - Middlesex-Central District 

FF-AR-03-320 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/29/03

Year 2003 Cost and Revenue 

Analysis - Maine District 

FF-AR-03-321 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 7/29/03

Year 2003 Cost and Revenue 

Analysis - Western New York District 

FF-AR-03-341 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 8/12/03

Year 2003 Cost and Revenue 

Analysis - Honolulu District 

FF-AR-03-362 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 9/11/03

Year 2003 Cost and Revenue 

Analysis - Northern New Jersey District 

FF-AR-03-373 Audit of Statistical Tests for Fiscal $0 $0 $0 $0 9/30/03

Year 2003 Cost and Revenue 

Analysis - Westchester District 

FT-AR-03-009 Employee Accounts Receivable $0 $0 $0 $0 5/12/03

FT-AR-03-010 Government Performance and Results $0 $0 $0 $0 6/20/03

Act Implementation at the United 

States Postal Service 

FT-AR-03-011 Propriety of Postal Service $36,714 $0 $90,535 $0 8/21/03

Utility Payments 

FT-AR-03-012 Independent Report on $0 $0 $0 $0 9/10/03

Withholdings and Contributions for 

Health Benefits, Life Insurance, 

Retirement, and Employee 

Headcount Data 

FT-AR-03-013 Segregation of Duties Over Real $0 $0 $0 $0 9/30/03

Estate Tax Payment Schedules for 

Leased Facilities 

FISCAL YEAR 2003 PROTECTIVE REVIEWS 

PR-MA-03-001 Woburn Center Station $0 $0 $0 $0 6/13/03 

PR-MA-03-002 Woodside Plaza Station $0 $0 $0 $0 6/19/03 

PR-MA-03-003 Costa Mesa Main Post Office $0 $0 $0 $0 7/25/03 

PR-MA-03-004 Upper Marlboro Station $0 $0 $0 $0 7/25/03 

PR-MA-03-005 Hazelwood Station $0 $0 $0 $0 8/13/03 

PR-MA-03-006 Colora, Maryland Post Office $0 $0 $0 $0 8/27/03 

PR-MA-03-007 Stafford Post Office $0 $0 $0 $0 8/29/03 

PR-MA-03-008 Bel Air Post Office $0 $0 $0 $0 9/4/03 

PR-MA-03-009 Rome, Georgia Post Office $0 $0 $0 $0 9/8/03 

PAGE 52 APPENDICES

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
PR-MA-03-010 Bowie Post Office $0 $0 $0 $0 9/10/03 

PR-MA-03-011 Owings Mills Post Office $0 $0 $0 $0 9/11/03 

PR-MA-03-012 Southside Post Office $0 $0 $0 $0 9/15/03 

PR-MA-03-013 Chatsworth, Georgia Post Office $0 $0 $0 $0 9/26/03 

PR-MA-03-014 Azusa Post Office $0 $0 $0 $0 9/29/03 

PR-MA-03-015 Uncasville Post Office $0 $0 $0 $0 9/30/03

CONTRACTING AND FACILITIES 

CA-AR-03-002 Common Area Maintenance $0 $0 $0 $0 7/15/03

Charges

CA-CAR-03-014 Evaluation of Equitable $703,466 $0 $0 $0 5/6/03

Adjustment 

CA-CAR-03-015 Evaluation of Proposal $60,825,861 $8,414,595 $0 $0 5/6/03

CA-CAR-03-016 Evaluation of Lease Costs $13,848 $0 $0 $0 5/19/03

CA-MA-03-008 Supplier Certification $0 $0 $0 $0 6/20/03

CA-MA-03-009 Management of Facility $0 $0 $0 $0 9/30/03

Lease Program

IR-CAR-03-001 Evaluation of System $0 $0 $0 $0 6/20/03

IR-CAR-03-002 Evaluation of Incurred Costs $0 $0 $0 $0 7/15/03

IR-CAR-03-003 Evaluation of Incurred Costs $811,589 $0 $0 $0 7/15/03

IR-CAR-03-004 Evaluation of Incurred Costs $0 $0 $0 $0 7/31/03

IR-CAR-03-005 Evaluation of Equitable $0 $0 $0 $0 8/12/03

Adjustment

IR-CAR-03-006 Evaluation of Proposal $7,289,600 $0 $0 $0 8/12/03

IR-CAR-03-007 Evaluation of Incurred Costs $0 $0 $0 $0 8/19/03

IR-CAR-03-008 Evaluation of Lease $87,947 $84,884 $0 $0 9/22/03

Operating Costs 

IR-CAR-03-009 Evaluation of Interim Invoices $0 $0 $0 $0 9/25/03

IR-CAR-03-010 Evaluation of Termination $95,663 $0 $0 $0 9/26/03

Settlement 

IR-CAR-03-011 Evaluation of Equitable $98,569 $0 $0 $0 9/30/03

Adjustment

FINANCIAL MANAGEMENT TOTALS $ 69,963,257 $8,499,479 $90,535 $106,161

TECHNOLOGY 

INFORMATION SYSTEMS 

IS-AR-03-005 General Controls $0 $0 $0 $0 5/12/03

IS-AR-03-006 Server Security Testing $0 $0 $0 $0 8/15/03

IS-AR-03-007 Mainframe Product Conversion and $0 $0 $0 $0 8/15/03

Implementation Process 

IS-AR-03-008 General Controls $0 $0 $0 $0 9/30/03

IS-CS-03-002 Server Security Testing $0 $0 $0 $0 4/30/03

IS-CS-03-003 General Controls $0 $0 $0 $0 9/29/03 

OE-MA-03-004 Warehousing of New and Used $0 $0 $0 $0 4/9/03 

Computer Equipment in Raleigh, 

North Carolina 

ECOMMERCE 

OE-AR-03-006 Retail Data Mart System - Data $0 $0 $0 $0 9/10/03 

Integrity and Expected Benefits 

OE-AR-03-007 Financial Performance of eCommerce $0 $0 $0 $0 9/30/03 

Initiatives - NetPost Services Program 

OE-MA-03-005 Postal Service’s Procedures to Validate $0 $0 $0 $0 5/21/03

Change-of-Address Orders 

PAGE 53

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
DEVELOPMENTAL 

DA-AR-03-004 Follow-up on the Information $0 $0 $0 $0 5/7/03 

Platform Program 

DA-AR-03-005 Wide Field of View Camera Program $0 $0 $0 $0 6/18/03 

DA-AR-03-006 Operational Status of the Mailing $0 $0 $0 $0 9/9/03 

Evaluation, Readability, and Lookup 

Instrument Program 

DA-AR-03-007 Delivery Bar Code Sorter-Expanded $0 $0 $0 $0 9/30/03

Capability 

TECHNOLOGY TOTALS $0 $0 $0 $0 

LABOR MANAGEMENT 

HUMAN RESOURCE PROCESS REVIEWS 

HK-AR-03-002 Shared Service Center Injury $0 $0 $0 $0 6/19/03

Compensation Program

HK-AR-03-003 Southeast Area Employees on the $0 $0 $0 $0 8/8/03 

Periodic Roll with No Wage Earning 

Capacity or Reemployment 

Determination 

LH-AR-03-010 Review of Facility Conditions at the $0 $0 $0 $0 6/30/03 

Groton, Connecticut, Main Post 

Office 

LH-AR-03-011 Capping Report on the Postal $0 $0 $0 $0 9/8/03 

Service’s Sexual Harassment 

Prevention Measures in 18 District 

Offices 

LH-AR-03-012 Postal Service and Union Labor $0 $0 $0 $0 9/30/03

Relations 

LABOR MANAGEMENT TOTALS $0 $0 $0 $0 

OVERSIGHT 

SA-AR-03-002 Postal Inspection Service Controls $0 $0 $0 $0 5/15/03 

Over Firearms Inventory 

Reconciliation 

SA-AR-03-003 Postal Inspection Service Tracking of $0 $0 $0 $0 6/13/03 

Investigative Workhours and Activity 

SA-AR-03-004 Postal Inspection Service Law $0 $0 $0 $0 8/4/03 

Enforcement Staffing Requirements 

SA-AR-03-005 Postal Inspection Service Resource $0 $0 $0 $0 8/20/03 

Allocations for Fiscal Year 2003 

SA-AR-03-006 Postal Inspection Service Controls $0 $0 $0 $0 5/15/03 

Over Firearms - Reconciliation of 

Sturm, Ruger and Company, Inc. 

Firearms 

OVERSIGHT TOTALS $0 $0 $0 $0 

OIG TOTALS $69,963,257 $8,499,479 $179,111,009 $1,230,161 

PAGE 54 APPENDICES

Recommend

Report Subject Title/ Questioned Unsupported Funds Put to Issue

Number Project Type Costs Costs Better Use Other Date
APPENDIX B

Findings of Questioned Costs

For the period April 1, 2003, through September 30, 2003

OFFICE OF INSPECTOR GENERAL AND INSPECTION SERVICE

Unsupported

Costs

Total Included in

Number of Questioned Questioned

Description Reports Costs Costs

A. Reports for which no management decision was made at 22 $166,163,999 $122,592,688

the beginning of the reporting period 

B. Reports requiring management decision that were issued 9 $69,963,257 $8,499,479

during the reporting period

TOTALS 31 $236,127,256 $131,092,167 

C. Reports for which a management decision was made 11 $147,594,054 $118,772,005

during the reporting period (i+ii)*

(i) Dollar value of disallowed cost $22,921,867 $765,400

(ii) Dollar value of cost not disallowed** $124,672,187 $118,006,605

D. Reports for which no management decision was made 20 $88,533,202 $12,320,162

by the end of the reporting period. 

Negotiations are ongoing.

E. Reports for which no management decision was made 4 $7,116,584 $1,744,745

within six months of issuance 

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

F. Reports for which no management decision was made 8 $11,490,075 $2,075,938 

within one year of issuance 

(See Note 2 for a list of individual reports)

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

Unsupported

Costs

Total Included in

Report/ Questioned Questioned

Report Date Case Number Project Type Costs Costs

10/16/2002 CA-CAR-03-002 Contract Audit $343,759 $0

2/11/2003 CA-CAR-03-011 Contract Audit $4,028,935 $0

2/26/2003 CA-CAR-03-012 Contract Audit $1,478,596 $479,451

3/31/2003 HK-MA-03-002 Postal Service’s Death Benefit $1,265,294 $1,265,294

Payments to the Decedent’s Survivor(s) 

OIG TOTAL $7,116,584 $1,744,745

PAGE 55
Note 2 - Reports for which no management decision was made within one year of issuance:

Unsupported

Costs

Total Included in

Report/ Questioned Questioned

Report Date Case Number Project Type Costs Costs

2/29/2000 TR-AR-00-005 Southwest Area Expenditures for $848,000 $0

Extra Highway Trips Using Leased 

Equipment 

5/17/2000 CA-AR-00-001 United States Postal Service Warranty $977,598 $0 

Repair of Tractors 

3/25/2002 CA-CAR-02-032 Contract Audit $772,214 $0 

5/9/2002 CA-CAR-02-041 Contract Audit $96,324 $20,202 

6/28/2002 CA-CAR-02-045 Contract Audit $1,053,263 $134,340 

8/2/2002 FT-MA-02-004 Terminated Station Contract $58,248 $58,248 

9/13/2002 CA-CAR-02-051 Contract Audit $620,681 $187,271 

OIG TOTAL $4,426,328 $400,061 

Unsupported

Costs

Total Included in

Report/ Questioned Questioned

Report Date Case Number Project Type Costs Costs

11/17/1999 181-1294644-AC(1) Contract Audit $7,063,747 $1,675,877

INSPECTION SERVICE TOTAL $7,063,747 $1,675,877

TOTAL $11,490,075 $2,075,938

*Questioned costs of $491,590 identified in Audit Report CA-CAR-02-026 have been removed

from the beginning balance. These costs have been included in the $811,589 of questioned costs

identified in Audit Report IR-CAR-03-003 issued during this reporting period.

**These costs include $117,828,789 in questioned costs for a contract proposal. Documentation

was later provided to support the questioned costs and subsequently the contract was awarded to

another vendor.

***The reported amount includes $1,265,294 in questioned costs that are currently being resolved

and actual amount cannot be determined at this time. 

PAGE 56 APPENDICES
PAGE 57

APPENDIX C

Recommendations That Funds

Be Put to Better Use

For the period April 1, 2003, through September 30, 2003

OFFICE OF INSPECTOR GENERAL

Number of

Description Reports Dollar Value

Reports for which no management decision was made at the beginning 

of the reporting period* 8 $136,439,266 

Reports requiring management decision that were issued during the reporting period 9 $179,111,009 

TOTALS 17 $315,550,275 

Reports for which a management decision was made during the report period 6 $155,861,265 

(i)Value of recommendations agreed to by management $153,329,340 

(ii)Value of recommendations that management did not agree $2,531,925

Reports for which no management decision was made by the end of the reporting period.* 11 $159,689,010 

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

(See Note 1 for a list of individual reports) 4 $7,948,777 

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

(See Note 2 for a list of individual reports) 3 $126,725,169 

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

Recommend

Report Funds Put to

Date Case Number Subject Better Use

1/29/2003 TD-MA-03-001 New York Metro Area Operational Use of Trailers $2,495,344 

3/28/2003 TD-AR-03-007 Highway Network Scheduling - Capital Metro Area 1,144,218 

3/28/2003 TD-AR-03-008 Highway Network Scheduling - New York Metro Area 287,981 

3/31/2003 TD-AR-03-009 New York Metro Area Trailer Acquisition - Lease versus Buy 4,021,234 

TOTAL $7,948,777 

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

Recommend

Report Funds Put to

Date Case Number Subject Better Use

3/29/2002 TD-AR-02-002 Trailer Lease Justification $82,349,739 

9/29/2000 MK-AR-00-001 Review of Stamp Fulfillment Services Performance 28,457,395 

7/27/2001 TR-AR-01-004 Bulk Fuel Purchase Plan 15,918,035 

TOTAL $126,725,169 

*Included herein are amounts where management agreed to take the recommended corrective action

but could not comment on some of the potential savings until analyses were completed. The majority

of identified savings were agreed to and decisions were reflected in a prior reporting period. 
PAGE 58 APPENDICES

APPENDIX D

Reports with Significant Recommendations

Pending Corrective Actions

For the period April 1, 2003, through September 30, 2003

This appendix lists reports containing significant recommendations pending final action by

management. 

OFFICE OF INSPECTOR GENERAL

Report Report Number of Issue 

Number Title Recommendations Date

LM-MA-99-002 Effectiveness of USPS Grievance Arbitration Procedures 2 3/26/99

LR-MA-99-001 Grievance Arbitration Management Information 2 3/26/99

TR-AR-99-003 Emergency and Extra Trip Expenditures on Highway Routes 6 9/29/99

RP-MA-00-001 Indefinite Quantity Contracts 1 11/8/99

TR-AR-00-005 Southwest Area Expenditures for Extra Highway Trips 3 2/29/00

Using Leased Equipment

CA-MA-00-001 Contract Audit Practices 6 3/31/00

DA-AR-00-002 Tray Management System 5 3/31/00

TR-AR-00-009 Extra Trips Expenditures within the Mid-Atlantic Area 2 7/27/00

AC-AR-00-004 Use of Robotic Tray Handling System 2 9/29/00

DA-AR-00-006 Point of Service ONE Stage II 2 9/29/00

MK-AR-00-001 Review of Stamp Fulfillment Services Performance Measures 1 9/29/00

OV-AR-00-005 Review of the United States Postal Inspection Service 2 9/29/00

Budget Process

DA-AR-01-004 Postal One! Business Customer Support Systems Phase One 5 4/9/01

IS-AR-01-001 Network Security 1 4/18/01 

OV-AR-01-002 Inspection Service Support to Postal Service Threat 1 4/30/01

Assessment Teams 

TR-LA-01-001 Review of a Transportation Agreement 2 6/26/01

TR-AR-01-004 Bulk Fuel Purchase Plan 5 7/27/01

TR-MA-01-002 Excise Taxes and Third Party Ground Handling Costs under a 1 8/8/01

Transportation Agreement 

TR-MA-01-003 Security Risks Associated with a Transportation Agreement 1 9/27/01

OV-AR-01-004 Postal Inspection Service Fraud Against Government Program 1 9/28/01

IS-AR-02-001 Fiscal Year 2001 Information System Controls 1 11/8/01

IS-AR-02-003 Review of the Facilities Management System for Windows 4 2/22/02

LH-MA-02-003 Review of Decontamination Activities at the Pentagon Station 2 3/12/02

TD-AR-02-002 Trailer Lease Justification 2 3/29/02

EM-AR-02-009 Public-Key Infrastructure Initiatives by the Postal Service 1 3/29/02

CQ-MA-02-002 Review of Contracts Associated with Biohazard Threat 1 3/29/02

IS-AR-02-007 Network General Controls 2 4/3/02

LH-AR-02-003 Southwest Area's Efforts in Obtaining Appropriate 2 5/8/02

Chargeback Credits for Identified Wage Compensation 

Overpayment and Refundable Disbursements

OV-AR-02-003(R) Postal Inspection Service Health Examination Program 3 7/30/02

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

TD-MA-02-003 New York Metro Area Trailer Acquisition Requirements 2 7/10/02

LH-AR-02-004 Postal Service's Corporate Succession Planning Process 5 9/3/02

DA-AR-02-008 Postal Service's Efforts to Implement Prevention and 1 9/4/02

Detection Technology

DA-MA-02-001 Biohazard Detection System 6 9/24/02

DA-MA-02-002 Biohazard Filtration System 3 9/24/02

FT-AR-02-015 Payments to a Utility Company 1 9/26/02

FT-AR-02-016 Advanced Annual Leave 1 9/26/02
PAGE 59

TD-AR-02-004 Voyager Card Control Weaknesses - Chicago 1 9/26/02

CA-AR-02-004 Undefinitized Contract Actions 1 9/30/02

FT-AR-02-017 Effectiveness of the Postal Service's Asset Locator Program 3 9/27/02

IS-AR-02-015 Fiscal Year 2002 Information System Controls 1 9/27/02

AC-MA-02-002 Review of Nonprofit Standard Mail 1 9/30/02

CA-AR-02-005 Use of Noncompetitive Contracting Process for 2 9/30/02

Tabbing Systems Purchases

LH-AR-02-005 Associate Supervisor Program in the Great Lakes Area 2 9/30/02

TD-AR-02-005 Delivery Vehicle Gasoline 3 9/30/02

IS-AR-03-001 Network General Controls 6 10/24/02

TD-AR-03-001 New York Metro Area Trailer Acquisition - Safety and Length 2 10/28/02

FT-MA-03-001 Postal Service Payments to the Smithsonian Institution 2 11/19/02

TD-MA-03-001 New York Metro Area Operational Use of Trailers 2 1/29/03

FT-AR-03-008 Fiscal Year 2002 Postal Service Financial Statements Audit - 2 1/30/03

St. Louis Information Technology and Accounting 

Service Center

LH-AR-03-003 Sexual Harassment Prevention Measures in the Northern 1 1/30/03

Virginia and Richmond Districts – Capital Metro Operations

DA-AR-03-002 Postal Automated Redirection System, Phase 1 1 2/25/03

LH-AR-03-004 Sexual Harassment Prevention Measures in the Albany and 2 2/25/03

Southeast New England Districts - Northeast Area

LH-AR-03-005 Sexual Harassment Prevention Measures in the Central Florida 1 3/5/03

and South Georgia Districts - Southeast Area

LH-AR-03-006 Sexual Harassment Prevention Measures in the Greensboro 2 3/5/03

and Harrisburg Districts – Eastern Area

LH-AR-03-007 Sexual Harassment Prevention Measures in the Dakotas 1 3/5/03

and Portland Districts - Western Area

TD-AR-03-004 Address Change Service 5 3/12/03

LH-AR-03-008 Sexual Harassment Prevention Measures in the Oakland and 3 3/18/03

Santa Ana Districts - Pacific Area

TD-AR-03-005 Vehicle Maintenance Facilities - Vehicle Inventory Control 3 3/19/03

Weaknesses in the Chicago District

LH-AR-03-009 Sexual Harassment Prevention Measures in the Arkansas 3 3/25/03

and Rio Grande Districts - Southwest Area

CQ-AR-03-001 Work Performed by Business Mail Entry Employees in the 2 3/28/03

Seattle, Minneapolis, and Des Moines Bulk Mail Centers

TD-AR-03-007 Highway Network Scheduling - Capital Metro Area 2 3/28/03

HK-MA-03-002 Postal Service’s Death Benefit Payments to 1 3/31/03

Decedent’s Survivor(s)

OE-AR-03-002 Retail Data Mart System - Security Issues 4 3/31/03

TD-AR-03-008 Highway Network Scheduling - New York Metro Area 2 3/31/03

TD-AR-03-009 New York Metro Area Trailer Acquisition - Lease versus Buy 2 3/31/03

IS-AR-03-005 General Controls 1 5/12/03 

SA-AR-03-003 Postal Inspection Service Tracking of Investigative Workhours 1 6/13/03 

and Activity 

HK-AR-03-002 Shared Service Center Injury Compensation Program 2 6/19/03 

FT-AR-03-010 Government Performance and Results Act Implementation 3 6/20/03 

at the United States Postal Service 

LH-AR-03-010 Review of Facility Conditions at the Groton, Connecticut, 4 6/30/03

Main Post Office 

TD-AR-03-010 Highway Network Scheduling - Southwest Area 2 7/11/03 

AO-AR-03-001 Efficiency of Work Performed by Business Mail Entry Clerks 2 7/31/03

Within the Los Angeles District 

SA-AR-03-004 Postal Inspection Service Law Enforcement Staffing 2 8/4/03 

Requirements 

SA-AR-03-005 Postal Inspection Service Resource Allocations for 1 8/20/03

Fiscal Year 2003 

FT-AR-03-011 Propriety of Postal Service Utility Payments 2 8/21/03 

LH-AR-03-011 Capping Report on the Postal Service’s Sexual Harassment 3 9/8/03

Prevention Measures in 18 District Offices 

Report Report Number of Issue 

Number Title Recommendations Date
PAGE 60 APPENDICES

TD-AR-03-012 Voyager Card Control Weaknesses - National Analysis 1 9/8/03 

DA-AR-03-006 Operational Status of the Mailing Evaluation, Readability, 4 9/9/03

and Lookup Instrument Program 

OE-AR-03-006 Retail Data Mart System – Data Integrity and Expected Benefits 1 9/10/03 

TD-AR-03-013 Highway Network Scheduling – Western Area 2 9/23/03 

AO-AR-03-002 Efficiency of Work Performed by Business Mail Entry Clerks 2 9/25/03

in the San Francisco Business Mail Entry Unit 

SA-AR-03-006 Postal Inspection Service Controls Over Firearms – 2 9/26/03

Reconciliation of Sturm, Ruger and Company, Inc. Firearms 

TD-AR-03-014 Highway Network Scheduling - Southeast Area 3 9/26/03 

AC-AR-03-006 Enhanced Carrier Route Standard Mail Worksharing Discounts 1 9/29/03 

AC-AR-03-007 Inventory Management – Maintenance Stockrooms 1 9/30/03 

IS-AR-03-008 General Controls 8 9/30/03

LH-AR-03-012 Postal Service and Union Labor Relations 5 9/30/03 

TD-AR-03-015 Highway Network Scheduling – Eastern Area 2 9/30/03 

Report Report Number of Issue 

Number Title Recommendations Date
PAGE 61

APPENDIX E

Investigative Statistics1

For the period April 1, 2003, through September 30, 2003

OFFICE OF INSPECTOR GENERAL

Statistics

Arrests 19

Information/Indictments 16

Convictions2/Pretrial Diversions 13

Suspension/Debarments

Individuals 8 

Firms 8

Administrative Actions

Postal Service Employee 8

Contractor 6

Fines, Restitution, and Recoveries $5,036,696

Amount to Postal Service3 $1,618,531

1 Statistics include joint investigations with other federal law enforcement agencies.

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

3 Amount included in total Fines, Restitution, and Recoveries
PAGE 62 APPENDICES

APPENDIX F

Summary of Postal Service Investigative

Activities Under 39 USC § 3013

For the period April 1, 2003, through September 30, 2003

The Postal Reorganization Act requires the Postmaster General to furnish information on the

investigative activities of the Postal Service on a semiannual basis. With passage of the

Deceptive Mail Prevention and Enforcement Act in December 1999, the Postal Service's reporting obligations were changed. 

The Act requires the Postal Service to submit its semiannual report to the OIG rather than to

the Board of Governors, expands the subject matter that must be reported, and revises the reporting schedule to coordinate with the OIG Semiannual Report to Congress. The information in

the report includes actions directed at combating crimes involving the mail; costs and expenditures devoted to Postal Service investigative activities; use of subpoena power; and any additional

information the OIG may require. 

ABUSE OF MAILS

The Postal Service reports to the Office of Inspector General information related to investigative

activities designed to protect the public against unscrupulous mailers perpetrating fraudulent

schemes. The following information summarizes the administrative and judicial actions initiated

and resolved during the reporting period. These actions include the issuance of cease and desist

orders directed to mailers, actions to intercept payments fraudulently induced, and orders seeking

to intercept fraudulent mailings.

INSPECTION SERVICE

False Cease &

Type of Complaints Consent Representation Desist

Scheme Filed Agreements Orders Orders

Advance fee 1 2 1 2

Boiler rooms/Telemarketing 1 1 0 1

Contest/Sweepstakes 0 1 1 2

Employment 0 0 0 0

False Billings 6 5 2 6

Fraud – Internet Schemes 4 4 1 4

Lotteries (foreign and domestic) 40 1 40 1

Merchandise:

Failure to pay 0000

Misrepresentation 0000

Miscellaneous 1 1 0 1

Work at home 37 38 10 39

TOTAL 90 53 55 56

OTHER ADMINISTRATIVE ACTIONS

Administrative Action Requests 124

Temporary Restraining Orders Requested 1

Temporary Restraining Orders Issued 1

Civil Injunctions (1345) Requested 1

Civil Injunctions (1345) Issued 1

Cases Using Direct Purchase Authority 0

Refusals of Direct Purchase Authority 0

Civil Penalties (Section 3012) Imposed 4

Expenditures Incurred for:

Test Purchases 0

Expert Testimony 0

Witness Travel 0

Withholding Mail Orders Issued 64

Voluntary Discontinuances 176
PAGE 63

POSTAL SERVICE ADMINISTRATIVE SUBPOENA AUTHORITY

The Postal Service reports to the Office of Inspector General information on the number of cases

in which the Postal Service issued administrative subpoenas in connection with deceptive mailing. The following section identifies the number and nature of cases in which the Postal Service

exercised this authority to request relevant business and associated records.

Case Number Date Issued Scheme

USPS-03-008 04/15/03 Failure to Render

USPS-03-009 04/30/03 Financial

USPS-03-010 04/30/03 Financial

USPS-03-012 05/27/03 Failure to Render

USPS-03-011 06/12/03 False Representation

FINANCIAL REPORTING ON INVESTIGATIVE ACTIVITIES

The Postal Service reports to the Office of Inspector General information related to the amount

of financial expenditures and obligations incurred pursuing the investigative activities of the

Postal Service. Information related to these activities is summarized below.

Type Semi Annual Report

Personnel $152,356,518

Nonpersonnel $37,992,206

Total Expenditures $190,348,724

Capital Obligations $3,518,392

OTHER INVESTIGATIVE ACTIVITIES

The Postal Service also reports to the Office of Inspector General additional information

related to significant investigative activities and other investigative matters. This section

outlines a number of significant investigative activities the Postal Service has initiated and is

pursuing, to include the Mail Task Forces and the Deceptive Mail Enforcement Team. Office

of Inspector General criminal statistical information is summarized in Appendix E.

MAIL SECURITY TASK FORCE

The Postmaster General established the Mail Security Task Force in October 2001, and appointed the Chief Postal Inspector to lead the team. The task force is committed to reducing the risks

to the safety and security of postal employees and customers. The Steering Committee, comprising Postal Inspectors, senior level postal executives, and presidents of the labor unions and management associations, meets on a regular basis. Seven working groups are contained within the

task force including Mail Center Security, Contingency Planning System-Wide, Mail

Preparation, Mail Screening, Communicating/Messaging, Safety and Security in the Workplace

Environment, and Mail Transportation Security. All of the working groups have presented findings to the Steering Committee, which is in the process if issuing an interim status report.
PAGE 64 APPENDICES

INTERNATIONAL SECURTIY GROUPS

The Inspection Service is an active participant in two international groups focused on security.

The International Security Group targets initiatives to improve the safety, security, and reliability

of international mail products for the U.S. Postal Service. The group also develops strategies and

initiatives to improve quality of service and security of mail for the 189 member countries of the

Universal Postal Union. The Postal Security Action Group of the Universal Postal Union focuses on problems and issues affecting the safety, security, and integrity on international communications products. This group is chaired by the Chief Postal Inspector. 

DECEPTIVE MAIL PREVENTION

The Deceptive Mail Prevention and Enforcement Act, which became effective April 12, 2000,

subjects violators to civil penalties in addition to Cease and Desist Orders and False Representation

Orders. To support this new law, the Postal Inspection Service created the Deceptive Mail

Enforcement Team to identify violators and ensure swift, appropriate, investigative attention.

Questionable promotions identified by team, as well as those received as consumer complaints, are

examined for compliance. During fiscal year 2003, 83 promotions were reviewed for possible

violations, and 12 have been referred for preliminary investigative attention. 

INTERNET FRAUD PREVENTION

The Internet is teeming with schemes, and swindlers have learned how easy it is to exploit innocent

victims. Fraud on the Internet often results in mail fraud, as cyber scammers use the mail to receive

payments or ship items. As a result of the growing trend among fraudsters to use the Internet, the

Postal Inspection Service participates in a multi-federal project known as the Internet Fraud

Complaint Center, which was established by the Federal Bureau of Investigation and National White

Collar Crime Center. The project is aimed at stemming Internet fraud by gathering, analyzing, and

referring Internet complaints. The Internet Fraud Complaint Center offers a central repository for

complaints related to Internet fraud. 

DEFINITIONS OF SCHEMES 

Advance fee. Obtaining fees purporting to secure buyers or obtain loans.

Boiler rooms/Telemarketing. An office or suite of offices with banks of telephones and

telephone solicitors who use high-pressure techniques to persuade consumers to respond to bogus

offers.

Contest/Sweepstakes. Schemes in which the respondent is required to pay a fee to obtain prizes

of money, gifts or other items of value. “Prizes” are either never shipped or are inferior to what

was promised.

Employment. Soliciting money for information or assistance in obtaining nonexistent or

misrepresented jobs.

False billings. Mailing solicitations in the guise of billings.

Fraud Internet Schemes. Fraudulent schemes using the Internet with a nexus to the mail. 

Lottery. Advertisements seeking money or property by mail for participation in schemes to win

prizes through chance.

Merchandise failure to pay. Mail order merchandise that is acquired without providing

payment.

Merchandise misrepresentation. Mail order merchandise or services are materially

misrepresented in advertising.

Miscellaneous. Any other scheme not described in a specific category. 

Work at home. Schemes, such as envelope stuffing, that do not provide home employment.
PAGE 65

APPENDIX G

Closed Congressional and Board of Governors

Inquiries

For the period April 1, 2003, through September 30, 2003

This appendix lists the 29 Congressional and Governors inquiries the OIG closed during this

reporting period. The OIG reviewed these inquiries to help identify systemic issues and to

determine the need for future Postal-wide audits. 

CONGRESSIONAL

PERFORMANCE

Requestor Allegations/Concern Response Date

Senator, North Carolina Allegation of mail tampering 14-May-03 

Senator, Mississippi Allegations of customer being overcharged 25-Jun-03 

Representative, California Allegation of difficulties with claim regarding 08-Jul-03 

goods damaged during shipment 

Senator, Mississippi Allegation of international mail not being delivered 11-Aug-03 

and contents opened and damaged 

Senator, Mississippi Allegation of international mail not being delivered 11-Aug-03 

Representative, Virginia Allegation of unprofessional conduct by a letter carrier 18-Aug-03 

Representative, Ohio Allegation of serious maintenance concerns regarding USPS vehicles 02-Sep-03 

FINANCIAL MANAGEMENT

Requestor Allegations/Concern Response Date

Representative, Kansas Allegation of procedural flaws in the solicitation and 29-Apr-03

contract award processes 

Senator, Colorado Request for review of Postal Service’s bid process 07-Jul-03

Senator, California Allegation of unfair penalty for an administrative error 18-Aug-03 

regarding military retirement 

Representative, Virginia Allegation of non-reimbursement for damage to a package 18-Aug-03 

Representative, Allegation of fraudulent recording of time by managerial staff 23-Sep-03 

Pennsylvania

LABOR MANAGEMENT

Requestor Allegations/Concern Response Date

Representative, Texas Allegation of harassment 29-Apr-03 

Representative, California Allegation of breach of employment offer 17-Jun-03 

Representative, Allegation of supervisory personnel submitting false statements 27-Jun-03

Massachusetts 

Representative, Allegation of favoritism, racial inequality, and hostile work environment 01-Jul-03 

North Carolina 

Senator, California Allegation of abuse of authority and reprisal 16-Jul-03 

Representative, Missouri Allegation of hostile work environment and inconsistent 05-Aug-03

policy enforcement

Representative, Allegation of managerial harassment 24-Sep-03

Massachusetts 

Representative, Texas Allegation of managerial harassment 25-Sep-03 
PAGE 66 APPENDICES

OVERSIGHT OF INSPECTION SERVICE 

Requestor Allegations/Concern Response Date

Representative, New York Request to review Inspection Service’s interpretation of laws 29-May-03

which govern reimbursement and overtime hours worked 

OTHER SIGNIFICANT ISSUES

Requestor Allegations/Concern Response Date

Senator, California Request for assistance regarding OIG’s response to a complaint 01-Apr-03 

Senator, Michigan Allegation that OIG failed to properly investigate a hotline 29-Apr-03

complaint regarding safety issues 

Representative, Florida Request for status of action taken on hotline complaint 29-May-03 

Senator, California Allegation of misconduct by an OIG investigator 19-Jun-03 

Senator, California Request for assistance with OIG response to previous complaints 19-Jun-03 

Senator, Florida Allegation of OIG wasting money on teambuilding activities 15-Jul-03

Representative, Allegation of identify theft through stolen mail 29-Aug-03

Massachusetts

Representative, Request for assistance regarding appeals process for employee 03-Sep-03

District of Columbia 
Notes
Notes