OFFICE OF INSPECTOR GENERAL 

SEMIANNUAL REPORT TO CONGRESS

October 1, 2007 — March 31, 2008

Promoting Integrity and Accountability 

in America’s Postal System
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

MISSION

MISSION

The mission of the U.S. Postal Service Office of Inspector General (OIG) is 

to conduct and supervise objective and independent audits, reviews, and 

investigations relating to Postal Service programs and operations to:

■ Prevent and detect fraud, theft, and misconduct.

■ Promote economy, efficiency, and effectiveness.

■ Promote program integrity.

■ Keep the Governors, Congress, and Postal Service 

management informed of problems, deficiencies, and 

corresponding corrective actions.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

A MESSAGE FROM THE INSPECTOR GENERAL

This report, submitted pursuant to the Inspector General Act, outlines our 

work and activities for the 6-month period ending March 31, 2008. It focuses 

on the Postal Service’s updated strategic goals that respond to changes in 

the oversight and management of postal business expressed in the Postal 

Accountability and Enhancement Act of 2006 (Postal Act of 2006). The six goals 

are to generate revenue; increase efficiency; improve service; have a customerfocused culture; enhance sustainability; and address regulatory studies and 

reporting obligations. We discuss the Postal Service’s progress towards these 

goals and explain how our work adds value. We conclude with 

a separate chapter that discusses our work to preserve integrity and feature 

reports on the Voyager and SmartPay® Purchase Card programs.

In this period, we issued 233 audit reports and management advisories. 

These efforts resulted in a total monetary impact of nearly $831 million. We had 

158 significant audit recommendations, of which 155 were accepted by the 

Postal Service.

In addition, we closed 3,754 investigations and management took administrative 

action on 1,398 cases. Our investigations led to 778 arrests and indictments, 

$95 million in long-term cost avoidances in the Office of Workers’ Compensation 

Program, $13 million in fines, restitutions, and recoveries, of which more than 

$9 million went to the Postal Service. I would also like to bring to your attention 

that this will be the last semiannual report that details OIG work solely. The 

Chief Postal Inspector, of the U.S. Postal Inspection Service, and myself have 

agreed that combining related programs within a single cover will provide a 

comprehensive treatment of law enforcement and audit activities.

I appreciate the continuing support of the Governors, Congress, and 

Postal Service management as we continue to assess the strategic 

transformation progress.

A MESSAGE FROM THE INSPECTOR GENERAL
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

SUMMARY OF PERFORMANCE

SUMMARY OF PERFORMANCE

For the period October 1, 2007 — March 31, 2008

AUDIT

Reports issued 233

Significant recommendations issued 158

Total reports with financial impact 95

Funds put to better use $547,637,127

Questioned costs1 $190,209,049 

Revenue Impact $92,823,873 

TOTAL2 $830,670,049 

INVESTIGATIONS3

Investigations completed 3,754

Arrests 418

Indictments/informations 360

Convictions/pretrial diversions4 302

Administrative actions taken 1,398

Cost avoidance $97,596,288

Fines, restitutions and recoveries $13,605,987

Amount to Postal Service5 $9,244,750

HOTLINE CONTACTS

Telephone calls 51,681

e-Mail 14,028

Virtual Front Office calls 5,198

Mail 1,068

Voice mail messages 1,043

Facsimile — FAX 324

TOTAL CONTACTS 73,342

1

 Includes unsupported costs of $59,945,723.

2

 The Postal Service agreed to recommendations or proposed alternative corrective actions that, if implemented, 

could result in nearly 

$831 million in savings.

3

 Statistics include joint investigations with other law enforcement agencies.

4

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

5

 Amount included in fines, restitution, and recoveries.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

TABLE OF CONTENTS

ASSESSING STRATEGIC TRANSFORMATION PROGRESS ..................7

Generate Revenue........................................................................................................................................................ 7 

Increase Efficiency ....................................................................................................................................................... 9 

Improve Service ......................................................................................................................................................... 13 

Customer-Focused Culture ......................................................................................................................................... 15 

Enhance Sustainability................................................................................................................................................ 17 

Regulatory Studies and Reporting Obligations .............................................................................................................. 17

PRESERVING INTEGRITY .................................................................19

Audit Activities ........................................................................................................................................................... 19 

Investigative Activities ................................................................................................................................................. 25

FEATURE STORIES ..........................................................................35

Voyager Card Program ............................................................................................................................................... 35 

SmartPay® Purchase Card Program ............................................................................................................................ 35

MAP OF OFFICE LOCATIONS ...........................................................37

APPENDICES ...................................................................................38

Appendix A — Reports with Quantifiable Potential Monetary Benefits ............................................................................ 38

Report Listing ..................................................................................................................................... 43

Appendix B — Findings of Questioned Costs ............................................................................................................... 48 

Appendix C — Recommendations That Funds Be Put to Better Use .............................................................................. 50 

Appendix D — Reported Non-monetary Benefits ......................................................................................................... 51 

Appendix E — Reports with Significant Recommendations Pending Corrective Actions ................................................... 52

Appendix F — Significant Management Decisions in Audit Resolution ........................................................................... 63

Appendix G — Investigative Statistics ......................................................................................................................... 64

Appendix H — Summary of Postal Service Investigative Activities Under Title 39 USC § 3013 ........................................ 65

Appendix I — Closed Congressional and Board of Governors Inquiries ......................................................................... 67

SUPPLEMENTAL INFORMATION .......................................................72

Freedom of Information Act ......................................................................................................................................... 72

Workplace Environment .............................................................................................................................................. 73

Glossary .................................................................................................................................................................... 74

TABLE OF CONTENTS
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

ASSESSING STRATEGIC TRANSFORMATION PROGRESS
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

7

Management 

Response to OIG Work

We adhere to professional 

audit standards and 

present our audit work to 

management for comments 

prior to issuing a fi nal report. 

Unless otherwise noted in the 

selected audit work discussed 

in this report, management 

has agreed or partially agreed 

with our recommendations 

and is taking or has already 

taken corrective action to 

address the issues we raised. 

GENERATE REVENUE

The Postal Service recognizes that the market for 

mailing and shipping volume and revenue is shaped 

by competition, new technologies, and rising customer 

expectations. The Postal Service has a strategic goal to 

generate revenue. To accomplish this goal, it plans to 

create more value in core products and services, thereby 

increasing mail volume and revenue to continue fi nancing 

universal service and the growing delivery network. 

Customer value is defi ned as increased product utility, 

improved ease of use and access, and more reliable, 

predictable performance at affordable prices.

Our audit work during the last 6 months showed 

opportunities to protect and increase revenue by 

strengthening application controls in the Electronic 

Verifi cation System (eVS), increasing the accuracy of 

international mail volume data, and appropriately collecting 

revenue on stamps and Click-n-Ship transactions. We 

further believe the Postal Service could increase emphasis 

on accurately collecting, recording, and reporting all 

revenue, and strengthening internal controls to minimize 

risks relating to fi nancial transactions.

Electronic Verifi cation System

The eVS allows high-volume package mailers to document 

and pay postage using electronic fi les rather than paper 

forms. The Postal Service has strengthened application 

controls in eVS; however, edits could be strengthened for 

some transactions to avoid erroneous postage calculations 

and lost revenue. We made seven recommendations to 

strengthen controls over input data validation, sampling, 

and reconciliation and data storage procedures.

Additionally, we reported that weaknesses in the primary 

fi le transfer method place the confi dentiality, integrity, and 

availability of about 66.7 million data records at risk in eVS. 

Strengthening controls over business-sensitive fi nancial 

information would assist in preserving customer goodwill 

and the Postal Service brand. Management agreed to 

strengthen fi le transport security; however, they did not 

agree with two of our recommendations to strengthen 

user authentication and stated they would accept the risk 

associated with the existing user access controls.

International Mail Volume Data

Volume data used to bill foreign postal administrations for 

inbound air Parcel Post mail at the New York International 

Service Center (ISC) was accurate. However, this type of 

data for inbound Express Mail and letter class service 

was not always accurate. As a result, we calculated that 

the Postal Service underbilled foreign countries almost 

$3.5 million. If this issue had 

gone undetected, we project 

that underbillings would have 

been more than $10 million 

over a 2-year period.

Stamp Revenue

The local Stamps on 

Consignment (SoC) program 

allowed local businesses to 

sell stamps, which the Postal 

Service had consigned to 

them. In December 2004, 

management rescinded 

the delegation of authority 

previously granted to area and 

district offi cials to administer 

these programs, directing local 

offi cials to incorporate their 

SoC programs into the national 

GENERATE REVENUE

ASSESSING STRATEGIC 

TRANSFORMATION PROGRESS

In this report, we assess the status of the Postal Service’s progress toward the strategic goals articulated in its Strategic 

Transformation Plan: 2006-2010, 2007 Update, published in December 2007. The Postal Service issued this update to 

respond to changes in the oversight and management of postal business expressed in the Postal Accountability and 

Enhancement Act of 2006 (Postal Act of 2006). The Postal Service’s revised plan describes how it intends to improve 

the value of mail services and sustain a fi nancially stable enterprise that best serves the nation’s mailing needs while 

providing affordable and reliable service.

The Postal Service’s strategic goals are to generate revenue, increase effi ciency, improve service, have a customerfocused culture, enhance sustainability, and address regulatory studies and reporting obligations. Each of these 

strategic goals presents signifi cant challenges to the Postal Service. This section discusses audits and reviews we 

completed during the reporting period in each of these areas.

The local Stamps on Consignment (SoC) program allowed local 

businesses to sell stamps, which the Postal Service had consigned 

to them; however, in December 2004 local SoC programs were 

incorporated into a national SoC program.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

8

SoC program, and soon thereafter asking them to close all 

existing local SoC agreements.Despite instructions from 

senior management, some Retail Access Channels offi cials 

did not terminate all local SoC agreements nor properly 

account for stamp shipments to consignees. These offi cials 

stated that area and district management did not always 

provide the documentation needed to take these actions. 

Our audit identifi ed more than $800,000 in recoverable 

and $50,000 in unrecoverable revenue.

We recommended that retail and marketing managers 

for each Postal Service cluster provide information about 

their local SoC programs, including existing agreements 

and amounts that consignees owed, to the Manager, 

Retail Access Channels. We also recommended that the 

Postal Service terminate existing local SoC agreements, 

incorporate them into the national program, and collect the 

past due amounts.

Click-N-Ship Transactions

We assessed whether Postal Service offi cials implemented 

controls to protect revenue generated from the ClickN-Ship program and whether it was functioning in 

accordance with policies and procedures. We found that 

revenue was not suffi ciently protected. (Click-N-Ship 

enables customers to print either postage or shipping 

labels with postage from their computer with the Postal 

Service or one of its approved vendors.)

We recommended that management strengthen controls 

over the Click-N-Ship program to better protect revenue. 

In addition, delivery and retail employees can improve 

processing when customers present Shipment Acceptance 

Notifi cation forms at the retail window or at carrier pickup. Further, management needs to closely monitor VISA 

Merchant chargeback fees and improve Click-N-Ship 

program management by developing written policies and 

procedures for the Click-N-Ship Program Offi ce. Our audit 

identifi ed $37 million in unrecoverable and $37 million in 

recoverable revenue relating to Click-N-Ship packages.

Negotiated Service Agreement. We responded to a 

request from the Board of Governors Chairman to review 

a Negotiated Service Agreement (NSA) following an Opinion 

and Recommended Decision by the PRC As background, 

an NSA is a written contract between the Postal Service 

and a mailer that provides for customer-specifi c rates, 

fees, or terms of service. This “pay-for-performance” NSA 

was designed to pay incentives primarily for improvements 

to the quality of the company’s mail. An additional key 

aspect of this NSA involved the company implementing the 

Intelligent Mail Barcode.

In summary, our internal review found that additional 

information was needed to determine whether the Postal 

Service should implement the agreement, and NSA 

processes needed to be strengthened to ensure suffi cient, 

accurate information is provided for future NSA decisions. 

More specifi cally, key portions of the required NSA process 

were not followed in the preparation and negotiation of 

this NSA, especially the requirement for cross-functional 

involvement of key Postal Service managers. In addition, 

the Postal Service had relied upon information that 

included data that were 8 years old and had pursued 

capital investments in the interim that were intended to 

improve mail processing. Further, the NSA data presented 

to the Board (1) was signifi cantly different than that in 

the PRC fi ling, (2) was not appropriately characterized 

as preliminary, and (3) did not effectively describe the 

GENERATE REVENUE

Click-N-Ship enables customers to print either postage or shipping labels with postage from their computer 

with the Postal Service or one of its approved vendors.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

9

risks associated with the NSA. Finally, because the Postal 

Service did not obtain data specifi c to the company, it was 

diffi cult to analyze the potential benefi ts of the NSA as a 

“pay-for-performance” agreement or to determine whether 

incentives were appropriate.

Subsequently, we evaluated a revised Postal Service 

presentation to the Governors. We found that the newer 

proposal relied upon more recent data, and we confi rmed 

the involvement of other key Postal Service functions in the 

review and validation of the data presented.

INCREASE EFFICIENCY

A perennial challenge facing the Postal Service is to 

increase operational effi ciency. The Postal Service’s 

strategy in this area is to:

■ Expand standardization and process control. 

■ Reduce the cost of meeting universal service 

obligations by focusing on major cost drivers, especially 

delivery operations and supply chain management.

■ Capture improvements from existing equipment 

and technology.

■ Target new investments to improve productivity.

The strategy emphasizes continued partnerships with 

customers by developing low-cost forms of customer 

access via technology and product simplifi cation. 

Additionally, the Postal Service plans to examine facility 

capacities to transition from overlapping single-product 

networks to an integrated multi-product network.

The Postal Service focused on reducing its costs and 

reports that it has achieved some success. Our work in this 

area assisted the Postal Service in identifying signifi cant 

opportunities to reduce costs. These opportunities include 

maximizing the cost-effectiveness of contracts, improving 

transportation effi ciency, optimizing the mail processing 

network, and controlling facility and operational costs.

Maximizing the Cost-Effectiveness 

of Contracts

We issued 20 contract-related audit reports during the 

reporting period, evaluating 13 accounting systems, three 

proposals, one invoice, one incurred cost submission, one 

termination, and one forward pricing rate submission. 

These audits identifi ed unsupported and questioned costs 

of more than $96 million. This information was provided to 

contracting offi cers for their consideration in negotiating the 

best terms for the Postal Service. Here is one example of 

signifi cant work in this area:

A supplemental audit of a $518 million fi rm-fi xed-price 

proposal for the Biohazard Detection System Operations 

and Maintenance/Consumables disclosed more than 

$14 million in questioned costs. Subcontractors did not 

provide cost or pricing data to support their proposed costs. 

In addition, subcontractor proposals contained numerous 

related party transaction concerns, and unallowable costs 

that resulted from a pyramiding of profi ts. We considered 

the non-compliances and inadequacies to be signifi cant, 

and therefore did not believe the contractor’s overall 

proposal was an acceptable basis for negotiation of a fair 

and reasonable contract price. In response, the contracting 

offi cer with assistance from the Law Department, reduced 

the contract price by the full $14 million in questioned 

costs plus an additional $39 million, resulting in a contract 

price of $467 million.

Optimizing the Transportation Network

The Postal Service operates one of the largest and most 

complex transportation and logistical support networks in 

the world, reaching every community in the United States. 

The network is dynamic with changing requirements, so 

the challenge for the Postal Service is to optimize it while 

maintaining service. Since transportation is the second 

INCREASE EFFICIENCY

The Postal Service operates one of the largest and most complex transportation and logistical support 

networks in the world, reaching every community in the United States.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

10

INCREASE EFFICIENCY

largest cost segment in the Postal Service budget — only 

employee compensation and benefi ts are greater — it is 

critical that the Postal Service seize opportunities to reduce 

costs in this area, particularly as mail volume and revenue 

projections decline in fi scal year (FY) 2008.

During this reporting period, we issued three audits 

covering air network and surface network transportation 

and identifi ed monetary impacts exceeding $153 million.

Air Network Transportation

Management implemented its nationwide Integrated 

Air Strategy in 2006, intending to reduce reliance on 

passenger airlines, expand transportation by dedicated 

cargo carriers, and shift mail to less costly ground 

transportation. We conducted two audits of the Postal 

Service’s air network transportation in the context of its 

overall strategy.

Air Networks — Issues in the Pacifi c Area. We 

assessed the implementation of the Postal Service’s 

Integrated Air Strategy and its impact on the FedEx 

transportation operations under a Postal Service contract. 

Implementing comprehensive strategies in a complex 

environment frequently presents unanticipated challenges. 

This was the case in the Pacifi c Area involving a very 

large mailer. The Postal Service’s reduced reliance on 

commercial airlines, the transition from commercial 

airlines to FedEx, and certain unique circumstances in the 

Pacifi c Area resulted in unanticipated expenditures. While 

management reacted rapidly and appropriately to mitigate 

and correct these conditions, the Postal Service incurred 

about $18.3 million in unnecessary costs. The Postal 

Service has an opportunity to save about $62.1 million, if 

transportation managers optimize use of FedEx to fl y this 

mailer’s First-Class Mail, and if they properly prepare the 

mail for shipment. However, management did not fully 

agree with our monetary impact estimates due to analytical 

differences relating to the calculation of FedEx container 

density. Management agreed to work with us to resolve 

these analytical differences.

FedEx Transportation Agreement — Pacifi c Area.

We assessed whether the Postal Service’s use of FedEx 

transportation was effective and whether there were 

opportunities for savings. We found that during FYs 2005 

and 2006, the Pacifi c Area incurred about $17.8 million 

in unnecessary costs because they used FedEx to move 

mail that could have been moved on less costly surface 

transportation or passenger airlines. The Postal Service 

also paid FedEx to sort mail when they could have avoided 

those costs by sorting the mail or properly preparing it for 

transport. Additionally, the Pacifi c Area has an opportunity to 

save about $45 million over the next 10 years by not using 

FedEx to transport mail that could be transported on surface 

networks, by transporting First-Class Mail on passenger 

airlines when capacity is available, and by sorting the mail 

before giving it to FedEx to avoid their sorting charges.

Surface Network Transportation

The Postal Service’s surface network transportation 

includes ground transportation using Postal Service 

vehicles, employees, and contracted transportation. During 

this period, we audited the effectiveness of Postal Vehicle 

Service (PVS) operations at the San Francisco Processing 

and Distribution Center (P&DC) and found that management 

could improve PVS processes, allowing them to remove 

26,698 excess hours from existing PVS schedules and 

save more than $10.1 million over 10 years. Offi cials 

could eliminate the hours without negatively affecting 

service because schedules contain unassigned times when 

drivers are not needed for a specifi c trip or related activity, 

duplicate trips, and trips that were not as full as possible. 

Management agreed to conduct a review of all PVS 

schedules at the San Francisco P&DC and eliminate the 

excess hours from driver schedules.

Network Optimization

In response to a management request, we initiated a series 

of Airport Mail Center (AMC) outsourcing reviews. In our 

review of the St.. Louis AMC outsourcing initiative, we 

determined the decision to outsource some operations was 

supported and should reduce costs with minimal impact 

We found that during FYs 2005 and 2006, the Pacifi c Area incurred about $17.8 million in unnecessary 

costs because they used FedEx to move mail that could have been moved on less costly surface 

transportation or passenger airlines.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

11

INCREASE EFFICIENCY

on service performance; however, management could 

have improved planning for this initiative. We also found 

the former AMC building remained on the Postal Service’s 

records after ownership had been transferred to the city 

of St. Louis. While management generally complied with 

policies and procedures, opportunities exist to formalize 

lessons learned and best practices from AMC closures, and 

to strengthen guidance for measuring results. In addition, 

we recommended management develop guidance for 

planning and implementing outsourcing of AMC operations.

Facilities Single Source Provider. We completed an 

audit assessing the effectiveness of the Facilities Single 

Source Provider system (FSSP) as a means to repair and 

maintain Postal Service facilities. We found the majority of 

users are satisfi ed with the FSSP as an effective means 

to repair and maintain Postal Service facilities. However, 

Facilities Service Offi ces (FSO) did not consistently manage 

repair calls through the FSSP, FSOs did not adequately 

track more than $18 million in expenditures charged to the 

repairs and alterations budget line, FSOs did not adequately 

control more than $9 million in Facilities Knowledge Center 

(FKC) invoicing and payments, and data in the FSSP system 

was not reliable. We recommended that management 

ensure consistent processing and monitoring of FSSP 

calls; keep accurate information in the FSSP database; 

establish controls over FKC invoicing and reimbursement 

and expenditure of funds; and establish guidelines for 

acceptance of maintenance and repair work. We reported 

more than $27 million in non-monetary assets at risk, 

and recommended the Postal Service collect more than 

$9,000 of recoverable questioned costs.

Management agreed with all of our recommendations 

except a portion of one regarding controls over certifying 

FKC repairs. They believed that adequate procedures 

were already in place to certify that FKC repairs were 

completed satisfactorily prior to payment. Work by district 

maintenance charged to credit cards is certifi ed by Postal 

Service personnel separate from the credit cardholder, 

which is the same procedure followed for all credit card 

charges. In addition, management did not agree with the 

assets at risk, stating that the FSOs are responsible for 

monitoring spending and that transactions are subject to 

audit by the FSO. However, management did not provide 

documentation to demonstrate that FSOs were monitoring 

spending or conducting reviews of transactions.

Processing & Distribution 

Center Consolidations

At management’s request, we audited the Kansas City, 

Kansas, Area Mail Processing (AMP) consolidation proposal. 

We concluded it was generally accurate and supported, and 

showed evidence of management review. Our analyses 

provided confi rming evidence for the consolidation. 

However, we identifi ed discrepancies in workhour and 

personnel savings, as well as transportation and annual 

associated costs, resulting in a savings overstatement of 

$2.4 million. Further, we identifi ed mail volume transferred 

from the Kansas City, Kansas, P&DC to the Kansas City, 

Kansas, Bulk Mail Center for processing that was not 

documented in the AMP proposal, and noted a slight 

downgrade in First-Class Mail, Priority Mail, and Periodicals 

service and some risk factors. We recommended 

management revise the AMP proposal to accurately 

document savings and potential service impacts and 

resubmit it to headquarters for review.

Additionally, management requested we review selected 

aspects of the consolidation of outgoing mail at the 

Marysville Processing and Distribution Facility (P&DF), 

in California, into the Sacramento P&DC. We concluded 

that district management did not route mail volumes in 

accordance with the approved AMP proposal, and that the 

rerouted mail was not reported in the post-implementation 

review (PIR) because of management oversight, which 

was the same reason that service impacts associated 

with the consolidation were not accurately reported in 

the AMP or PIRs. Management subsequently decided to 

reverse the AMP consolidation because overnight service 

between Chico, California, and San Francisco, Oakland, and 

Stockton, California, was downgraded. The AMP reversal 

reverted the ZIP Codes to their original service standard. 

We recommended that management document costs and 

Streamlining the network presents the Postal Service with many challenges.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

12

INCREASE EFFICIENCY

service implications from reversing the consolidation of the 

Marysville P&DF outgoing mail into the Sacramento P&DC.

Streamlining the network presents the Postal Service with 

many challenges. These challenges include developing 

a fl exible network that can adjust to changing market 

conditions and mail volumes; measuring the results of 

network streamlining initiatives; balancing service with 

cost; keeping stakeholders informed to prevent surprises; 

and maintaining resilience in the event of major disruptions, 

natural disasters, or acts of terrorism. We will continue to 

review initiatives to streamline the network to ensure they 

are adequately planned, supported, and achieve desired 

results without sacrifi cing service.

Project Management Challenges in the 

Engineering Program

During our reviews of various engineering programs, we 

identifi ed several project management challenges that 

increase the risk to performance, schedule, or cost of 

engineering programs. We believe consistent application 

of life cycle project management guidelines, such as 

those contained in the draft Technology Acquisition 

Manual Process Guide, may help alleviate some of these 

challenges. Specifi cally, the draft guide addresses the 

production and deployment phase to include fi rst article 

test, acceptance, deployment, and fi nancial management.

Equipment Maintenance Opportunities

Preventive maintenance is the scheduled, systematic 

servicing of equipment necessary to maintain optimal 

operating conditions. To complete maintenance routines, 

management traditionally used machine run time to 

determine the extent of preventive maintenance needs. 

Production or condition-based maintenance (PBM) was 

introduced to align the timing and extent of preventive 

maintenance to wear and tear on machines caused by 

actual usage — as it more accurately refl ects when 

preventive maintenance is needed. As such, PBM achieves 

more effi cient use of maintenance hours by making 

more hours available for proactive maintenance and 

supplementing the hours needed for other equipment.

In December 2006, the Maintenance Technical Service 

Center issued PBM guidelines for the Automated 

Facer Canceller System (AFCS). We assessed whether 

opportunities existed to reduce AFCS preventive 

maintenance workhours through the PBM program. 

We found that facilities equipped with AFCS have not 

implemented PBM guidelines because the Electronic 

Maintenance Activity Reporting & Scheduling system is 

incapable of automatically generating production-based 

checklists that facilitate daily maintenance routines. 

Additionally, staff was reluctant to deviate from former 

maintenance procedures. As a result, the Postal Service 

incurred excessive maintenance costs of $11.6 million 

for the year ending December 21, 2007. Successful 

implementation of the tested PBM guidelines would also 

avoid costs of $130.1 million over the next 10 years 

through attrition and reduced overtime.

City Delivery Vehicle Mileage

Incorrect and unreliable Automated Vehicle Mileage 

Utilization System (AVUS) information jeopardizes 

supervisors’ ability to make decisions. This is especially 

important since the Postal Service plans to extend the 

useful life of their primary delivery vehicles an additional 

10 years beyond their normal 24-year useful life.

First-Class Permit Reply Mail (PRM) mailpieces and two-way DVD mailpieces are processed manually at the 

Portland, Oregon, Processing and Distribution Center.

Incorrect and unreliable Automated Vehicle Mileage Utilization System (AVUS) information jeopardizes 

supervisors’ ability to make decisions and impacts the safety and reliability of vehicles.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

13

IMPROVE SERVICE

Overall, our four area reports concluded that vehicle 

mileage information in AVUS was not consistently accurate 

and reliable. We identifi ed that more than 682,000 miles 

recorded as driven by carriers were unsupported. This 

adversely impacted supervisors’ effectiveness in making 

daily delivery decisions. We questioned more than 

$5.8 million in costs, and recommended that the Postal 

Service improve the accuracy and reliability of vehicle 

mileage information in AVUS by establishing a central 

reference policy with clear guidance on recording and 

maintaining mileage information, and standards for 

carrier mileage deviation. Additionally, AVUS input control 

modifi cations could reduce input errors and the associated 

variances between authorized miles and recorded miles.

Permit Reply Mail Review. We assessed whether 

First-Class Permit Reply Mail (PRM) mailpieces were 

processed according to their approved classifi cation and 

pricing. We found that most PRM mailpieces are processed 

according to the Domestic Mail Manual (DMM). However, 

approved First-Class two-way digital versatile disk (DVD) 

return mailpieces from one DVD rental company sustained 

damage, jammed equipment, and caused missorts 

during automated processing. About 70 percent of these 

mailpieces are not machinable due to the envelope design, 

so employees must process them manually. We estimated 

the Postal Service paid $41.9 million in additional labor 

costs over the past 2 years and will pay about $61.5 million 

over the next 2 years.

We also found that, although nonmachinable mailpieces 

are subject to a surcharge, the DMM does not address 

the characteristics of the mailer’s two-way DVD return 

mailpiece that make it nonmachinable. Although the DVD 

rental company’s two-way DVD return mailpiece adheres to 

the DMM machinability criteria, Engineering’s testing of this 

and similar mailpieces has consistently shown that this type 

of mailpiece is not machinable.

We made recommendations for management to revise the 

DMM’s Nonmachinable Criteria for First-Class letter-size 

mail, to notify mailers that the Postal Service must test 

their two-way DVD return mailpieces against the revised 

criteria, and to collect the 17 cents per piece surcharge for 

nonmachinable mailpieces. Management agreed with the 

recommendations; however, they did not identify actions to 

address them.

IMPROVE SERVICE

The Postal Service recognizes that improving service is the 

key to increasing competitiveness and profi tability. Further, 

evolving customer needs, shaped by the Internet and a new 

generation of customers, are redefi ning expectations for 

service and convenience. Continuous service improvement, 

aligned to customer needs, is essential for all products, 

services, and channels.

The Postal Service’s strategy to improve service is to 

provide timely, reliable delivery and improved customer 

service across all access points. Specifi cally, it is focusing 

on the quality and consistency of service provided at 

all customer contact points as well as the speed and 

reliability of end-to-end mail delivery across all product 

lines. However, improving service is challenging to do 

while simultaneously working to cut costs, and service 

issues can quickly come under scrutiny from external 

stakeholders. Our work in this area is aimed at helping the 

Postal Service improve operational effi ciencies related to 

customer service.

Reducing Excess Capacity

The Postal Service’s business environment is challenging 

due to an uncertain economy, lower than expected mail 

volumes, the implementation of new automation and 

technology to enhance mail sorting and tracking, and 

an expanding delivery network. In addressing these 

challenges, the Postal Service is reducing excess capacity 

in the plant network and the redundancy inherent in 

maintaining separate transportation networks for different 

mail classes. With less mail coming in, the mail processing 

infrastructure must be fl exible and resources must be 

adjusted to match volume. Key components of network 

streamlining include mail processing plant consolidations, 

plant closings, and outsourcing some mail processing 

operations to eliminate excess capacity, increase effi ciency, 

and better use resources. 

Key components of network streamlining include mail processing plant consolidations, plant closings, and 

outsourcing some mail processing operations to eliminate excess capacity, increase effi ciency, and better 

use resources.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

14

IMPROVE SERVICE

Management is making progress to streamline the network, 

but efforts to date have achieved limited results and 

future improvements may be harder to realize. Our recent 

reviews focused on the process for consolidating plants, 

whether consolidation and outsourcing proposals were 

supported, and whether consolidations and outsourcing 

realized projected cost savings. In general, we found the 

consolidations and outsourcing initiatives were supported 

and realized cost savings, but we identifi ed a few concerns. 

In response to a Postal Service management request, we 

assessed proposed changes to Handbook PO-408, AMP 

Guidelines, which provides the framework for consolidating 

mail processing operations and performing PIRs. The Postal 

Service’s revisions to AMP guidance provide signifi cant 

improvements. Management incorporated 32 of our 

prior recommendations on AMP policy into the revisions. 

Our review identifi ed ten additional recommendations 

to improve AMP guidance with regard to workhours, 

transportation, communications, service, performance 

indicators, and supervisory ratios. Management agreed 

with nine of our recommendations and on the remaining 

one, management provided an alternate process that met 

the intent of the recommendation.

Web Mail Condition Reporting System. The Postal 

Service processes more than 212 billion mail pieces a year 

and has a number of systems supporting its operations. 

Critical among these is the Web Mail Condition Reporting 

System, which is vital to managing the day-to-day domestic 

and international operational mail activities. In cooperation 

with the Postal Service, we reviewed data integrity and 

found the mail condition reports for the Chicago J.T. 

Weeker ISC were submitted on a timely basis, but data was 

incomplete and inaccurate. Management could not always 

rely on the data to make distribution decisions, identify 

problems in achieving operational targets, or analyze 

operational trends. We recommended improving controls 

over reporting and training employees.

Delayed Mail — Waco. In response to an inquiry, we 

reviewed allegations of delayed mail at the Waco, Texas, 

P&DF. The audit found that since FY 2005, the Waco P&DF 

had diffi culties with the timely processing of Standard Mail, 

resulting in mail delays. While the Waco P&DF signifi cantly 

reduced the amount of delayed mail since March 2007, it 

continues to experience periods with relatively high volumes 

of delayed Standard Mail. We recommended improving 

controls over the timely processing of mail.

Chicago Mail Processing, Transportation, and 

Delivery Operations. We followed up on our previous 

reviews of the timeliness of mail processing, transportation, 

and delivery operations in the Chicago District based on 

requests from the Postmaster General, Chief Executive 

Offi cer, and Congress. We concluded the Chicago District 

made noticeable improvements at the end of FY 2007, 

but continue to have diffi culty with the timely and effi cient 

processing and delivery of mail, resulting in mail delays, 

service degradation, and customer complaints. The Postal 

Service acknowledged these conditions and took a number 

of actions to remedy the situation. As a result, service 

scores improved as of Quarter 4 FY 2007, compared to the 

prior three quarters. We recommended process effi ciency 

improvements for the Cardiss Collins P&DC to reduce 

workhours by 697,245 for a savings of more than $231 

million by FY 2017.

Business Over the Counter

Each day, millions of customers visit post offi ces to 

purchase postal products and services, send mail, pick 

up items that could not be delivered to their homes, place 

temporary holds on their mail, and more. From FY 2005 

through Quarter 2 FY 2007, retail associates completed 

about 5.35 billion transactions at the retail counter. 

Almost 6 percent of these transactions were non-revenue 

generating, accounting for almost 7 percent of retail 

associates’ total transaction time. Over half of non-revenue 

transactions were to pick up or hold mail.

The Postal Service could divert some non-revenue 

generating transactions from the retail counter to other 

means by promoting the use of the its website and 

contact center, expanding automated services available 

The Postal Service could divert some non-revenue generating transactions from the retail counter to other 

means by promoting the use of their website and contact center, expanding automated services available in 

the retail lobby, and exploring new channels that its domestic competitors and foreign postal entities use.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

15

CUSTOMER-FOCUSED CULTURE

in the retail lobby, and exploring new channels that its 

domestic competitors and foreign postal entities use. 

We recommended that management make customers 

aware — by advertising and revising certain forms — that 

they can place mail on hold or request redelivery through 

its website and contact center. Further, we suggested 

management explore ways to expand automated services 

in the retail lobby. We also suggested that management 

explore installing parcel kiosks, adding fee-based premium 

delivery options to available services, and giving customers 

the option to have their packages intercepted and 

redelivered for a fee.

Automated Workforce Projection System and 

Business Plans

Following our FY 2006 review of the implementation of the 

Delivery and Retail Standard Operating Procedures, we 

assessed whether management completed all scheduled 

on-site reviews, implemented the review recommendations 

at units where the reviews were completed, and updated 

the Automated Workforce Projection System (AWPS) with 

workload information from the on-site and administrative 

reviews. We found that management did not complete all 

the scheduled on-site reviews, did not always implement 

the review recommendations at units where the reviews 

were completed, and did not always update AWPS with 

workload information. We estimate the annual value of 

recommended budget reductions in units that did not 

implement the on-site review recommendations at about 

$2.7 million. In addition, the information in AWPS, which 

management uses for operational planning, may not be 

accurate because officials did not always update the 

system with workload information.

We recommended that management adhere to the on-site 

review schedule and ensure that qualified teams are 

available to conduct the targeted reviews, as scheduled. 

In addition, we recommended that management monitor 

performance and track adherence to the approved business 

plans. We also recommended that management provide 

AWPS training to field officials so that they are aware of 

the requirement to update the system, and ensure the field 

offices update the AWPS workload annually.

CUSTOMER-FOCUSED CULTURE

The Postal Service manages a large and dynamic 

workforce. A challenge is optimizing its workforce 

planning by placing the right mix of employees, in the right 

location, at the right time. Optimizing the workforce also 

means aligning it with changing customer needs, new 

technologies, and emerging markets. Further, controlling 

costs associated with workplace programs is also important 

to the Postal Service’s success.

The Postal Service’s strategy is to achieve results with 

a customer-focused culture by engaging and motivating 

the workforce. The Postal Service is focusing on four 

critical human resource strategies: engaging employees, 

developing and managing talent, establishing and 

maintaining market-based compensation, and managing 

the workforce to assure flexibility.

The need to create a flexible workforce is part of the Postal 

Service’s network optimization initiative. To that end, the 

Postal Service successfully negotiated changes in most of 

the new labor contracts to more effectively use part-time 

and temporary employees as changes in mail volume 

dictate adjustments to operations. It also implemented the 

National Reassessment Process, which finds appropriate 

and productive assignments for employees covered 

under the Department of Labor’s Office of Workers’ 

Compensation Programs.

Further, the Postal Service is committed to providing a 

safe workplace for its employees, and describes a number 

of initiatives in its 2007 Annual Report. For example, 

the Voluntary Protection Program brings management, 

employees, and union representatives together to work to 

reduce injuries and illnesses. 

During this reporting period, we assessed the Postal 

Service’s ability to resolve workforce and workplace 

issues, particularly those related to violence prevention 

and response programs. We also responded to a complaint 

regarding the Equal Employment Opportunity (EEO) 

contracting function in Tampa, Florida. Additionally, to 

help ensure employee safety we conducted work on the 

ventilation filtration system — another important human 

capital area.

Violence Prevention and Response Programs

We conducted five audits during this reporting period on 

the violence prevention and response programs in 15 

performance clusters located in five areas of operation. 

Our reviews concluded that all of the performance clusters 

established threat assessment teams and took some 

positive steps to reduce the potential for violence such as 

conducting climate assessments and Voice of the Employee 

focus groups. However, the performance clusters’ violence 

prevention and response programs may not be fully 

effective in reducing the potential for violence because the 

performance cluster managers and the threat assessment 

teams did not implement many of the required policies 

and procedures. In addition, the areas and performance 

clusters did not provide adequate oversight of the violence 

prevention and response programs to ensure compliance 

with policies and procedures. 
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

16

CUSTOMER-FOCUSED CULTURE

Equal Employment Opportunity 

Contracting Function

In response to a complaint that questioned the need to 

establish the National Equal Employment Opportunity 

Investigative Services Offi ce (NEEOISO), we reviewed the 

Postal Service’s EEO contracting function. The complaint 

also alleged that the contracting process for obtaining 

EEO investigators was not consistent with Postal Service 

contracting policies, and that management engaged in 

discriminatory practices when compensating the contract 

investigators, resulting in excessive annual amounts paid 

to some of them.

Our review concluded that the business purpose for 

contracting for EEO investigations and fi nal agency 

decision (FAD) letter writing services was to improve the 

EEO process, which is consistent with federal regulations. 

We also concluded that the delegation of contracting 

authority to the NEEOISO complies with Postal Service 

Supplying Principles and Practices. However, we could not 

determine whether the selection process for EEO contract 

investigators and FAD letter writers complied with the 

delegation of authority requirements because the business 

justifi cation for how the process followed required business 

principles was not documented. NEEOISO Management 

agreed to document how the processes and procedures 

ensure compliance with the principles set forth in the 

delegation of authority.

Ventilation Filtration System Utilization

As a result of the anthrax attack in 2001, the Postal Service 

developed an Emergency Preparedness Plan (EPP) that 

outlines programs and activities to mitigate and deter future 

biological attacks that use the mail system. The Ventilation 

Filtration System (VFS) is one of the major programs 

identifi ed in the EPP. The VFS is attached to the AFCS 

to limit the dispersion of particulate matter ejected from 

in-process mail, thereby reducing the risk that biological or 

chemical agents could contaminate employees.

We assessed utilization of the VFS and whether its 

operation occurred in tandem with AFCS at certain 

locations. We determined VFS machines were operated for 

shorter run times than the AFCS machines and, therefore, 

did not fully support program runtime requirements that 

they operate 45 minutes after AFCS machines were 

The Postal Service manages a large and dynamic workforce. A challenge is optimizing its workforce planning by placing the right mix of employees, in the right location, at the right time.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

17

ENHANCE SUSTAINABILITY

turned off. We also noted some sites did not change fi lters 

according to program requirements, which potentially 

reduces the effectiveness of the VFS machines. We 

recommended the Postal Service develop and implement 

a mechanical lockout device for the VFS control panel 

and distribute standard operating policy and procedures 

concerning the operation of VFS machines. We also 

recommended that maintenance managers monitor and 

change VFS fi lters according to program requirements.

ENHANCE SUSTAINABILITY

The Postal Service added enhancing sustainability as a 

strategic goal in its updated plan. It defi nes sustainability 

as meeting the needs of the present without compromising 

the future. To achieve this strategic goal, the Postal Service 

plans to focus on expanding environmentally-friendly 

business practices and increasing energy conservation.

Enhancing sustainability is an important challenge facing 

the Postal Service and by seriously addressing this issue, 

it demonstrates its environmental leadership. Further, 

the Postal Service’s approach is built on the principle 

of integrating environmental activities within day-to-day 

operations and engaging employees to take responsibility 

for minimizing their environmental impact. The Postal 

Service believes that these efforts enhance the value of 

mail and reduce waste and energy consumption. Our work 

in this area assessed the Postal Service’s facility energy 

management strategies and savings opportunities.

Energy Management Savings Opportunities

The current Postal Service energy management program 

focuses on facilities of more than 100,000 square feet. In 

the Northern Virginia District, there are 127 facilities with 

less than 100,000 square feet. In FY 2007, payments to 

electricity providers for these facilities totaled about $2 

million, or 73 percent of the Northern Virginia District’s total 

electricity costs.

We evaluated the Northern Virginia District’s program 

to reduce electricity consumption and costs at facilities 

between 10,000 and 100,000 square feet and determined 

that efforts had not been directed toward these facilities 

primarily because the Northern Virginia District, following 

national strategic direction, focused on the larger facilities. 

As a result, the Northern Virginia District has not completely 

seized opportunities to reduce energy consumption and 

lower energy costs. For example, our audit revealed 

several low- or no-cost opportunities to improve energy 

effi ciency at these smaller sites. Further, insuffi cient internal 

controls over the payment of the Northern Virginia District’s 

electricity bills put about $2 million of assets at risk in 

calendar year 2007.

REGULATORY STUDIES AND 

REPORTING OBLIGATIONS

The Postal Act of 2006 is the fi rst major legislative change 

to the Postal Service since 1970. Among other things, it 

requires the Postal Service to conduct certain regulatory 

studies and mandates a number of reporting obligations. 

In its plan published in December 2007, the Postal Service 

outlines its Sarbanes-Oxley Act of 2002 implementation 

timeline, annual report plan, and plan for additional reports 

and studies.

A number of important 

requirements of the Postal Act 

of 2006 affect the OIG. Below, 

we report on the status of our 

work related to the SarbanesOxley Act. Further, our work 

in this area assessed the 

adequacy and fairness of the 

revenue defi ciency assessment 

and appeals process, the 

In-Offi ce Cost System, and 

the internal controls over the 

Revenue, Pieces, and Weight 

Adjustment System.

Sarbanes-Oxley Act

We coordinated with the 

Postal Service and Ernst & 

Young (E&Y), its independent 

public accounting fi rm, 

to monitor its efforts to 

become Sarbanes-Oxley Act 

compliant by FY 2010. We 

also started realigning our 

fi nancial reporting structure 

and processes to better assist 

in supporting the overall 

opinion on internal controls 

over fi nancial reporting 

issued by E&Y. Also, for the 

fi rst quarter in FY 2008, we assisted E&Y in reviewing the 

quarterly fi nancial information to be in full compliance with 

Securities and Exchange Commission requirements. We 

will continue to coordinate with the Postal Service as they 

identify key controls over fi nancial reporting and move 

towards compliance; and will further refi ne and coordinate 

our work and incorporate process effi ciencies in the overall 

opinion process. 

The current Postal Service energy management program focuses on 

facilities of more than 100,000 square feet.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

18

REGULATORY STUDIES AND REPORTING OBLIGATIONS

Assessment of Rate Defi ciencies

In response to our January 2000 audit, mailer complaints, 

and congressional inquiries, the Postal Service made 

several organizational changes. It also updated its 

management instruction, Assessing and Collecting 

Defi ciencies in Postage or Fees, that documents the 

revenue defi ciency reporting, recording, notifi cation, and 

appeal and collection process. However, members of 

Congress continued to express concerns. As a result, the 

Postal Act of 2006 included a requirement that we study 

and report on the adequacy and fairness of the process 

by which nonprofi t rate defi ciency assessments are 

determined and appealable.

Our audit found the assessment and appeals process to 

be adequate and fair, and we did not fi nd a compelling 

reason for Congress to assign an outside body a role in 

this process. Further, we determined there was no need 

to establish a statute of limitations because management 

issued, and generally adhered to, guidance establishing a 

12-month time limit for revenue defi ciency assessments. 

However, we did identify issues with the Postal Service’s 

monitoring of revenue defi ciencies and updating of 

procedures. As a result, the Postal Service is taking 

a number of actions, such as updating its guidance 

for reporting revenue defi ciencies, providing concise 

instructions for those with roles in the process, and 

clarifying the 12-month time limit.

In-Offi ce Cost System

The Postal Act of 2006 requires us to regularly audit the 

data collection systems and procedures the Postal Service 

uses to prepare its reports analyzing costs, revenues, rates, 

and quality of service for the Postal Regulatory Commission. 

As part of this effort, we reviewed the In-Offi ce Cost System 

(IOCS), which is used in the ratemaking process to distribute 

more than $32 billion in labor costs of clerks, mail handlers, 

city delivery carriers, and supervisors to the activities carried 

out by those employees, and to classes and subclasses of 

mail and special services. We determined that management 

actions improved the quality of data obtained via telephone 

on employee work activities. However, at the three districts 

we visited, data collection policies and procedures were 

not always followed, and 43 percent of the telephone 

responses we examined contained inaccurate information. 

In addition, a nationwide analysis of IOCS telephone 

responses indicated some bias when telephone responses 

were completed. We provided fi ve recommendations to 

strengthen controls over the integrity of IOCS data collection 

and to improve the accuracy and integrity of management 

data used in the ratemaking process.

Internal Controls over the Revenue, Pieces, 

and Weight Adjustment System

Overall, the Revenue, Pieces, and Weight Adjustment 

(ARPW) system’s internal controls were effective and 

included an established control environment, identifi cation 

of risks, functioning control activities, effective 

communication, and adequate system monitoring. We 

made two recommendations to provide for succession 

planning and improve written procedures detailing 

key internal control activities, which will assist in the 

preparation of timely, accurate reports used in the 

ratemaking process, helping preserve customer goodwill 

and the Postal Service brand.

The Postal Act of 2006 is the fi rst major legislative change to the Postal Service since 1970.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

19

AUDIT ACTIVITIES

AUDIT ACTIVITIES

By focusing on key vulnerabilities of Postal Service 

installations, our audits have shown how the Postal 

Service can further protect the integrity of the mailstream. 

Ultimately, assessing the integrity and accuracy of 

management data helps to maintain a stable and sound 

Postal Service.

Financial Statements Account for Postal 

Service Costs and Revenues

Following is an outline of the Postal Service’s fi nancial 

position and a summary of the fi nancial audits performed 

in support of the independent accountant’s opinion on the 

fi nancial statements.

Postal Service’s Financial Position

The Postal Act of 2006 made signifi cant reforms in 

the governance of the Postal Service and signifi cantly 

altered some of the Postal Service’s fi nancial 

responsibilities, with some major provisions directly 

affecting the fi nancial statements.

The Postal Act of 2006 returned the obligation to fund 

the portion of the Civil Service Retirement System (CSRS) 

retirement benefi t earned while serving in the military 

by participants who retire as Postal Service employees 

back to the United States Treasury. Accordingly, the Offi ce 

of Personnel Management (OPM) estimated the Postal 

Service has fully funded its CSRS pension obligation as 

of September 30, 2006. As such, the Postal Act of 2006 

suspended the employer contribution to CSRS until 

FY 2017, when OPM will determine whether additional 

funding is required. It also required OPM to determine the 

CSRS surplus attributable to Postal Service employees as 

of September 30, 2006. This surplus amount, determined 

by OPM to be $17.1 billion, was transferred to the newly 

created Postal Service Retiree Health Benefi t Fund 

(PSRHBF) on June 29, 2007.

Further, beginning in FY 2007, the Postal Act of 2006 

requires the Postal Service to make annual payments into 

the PSRHBF, averaging $5.6 billion for 10 years. After that 

time, OPM will determine whether any further payments 

are required. In FY 2007, the Postal Service paid into the 

PSRHBF and expensed $5.4 billion. The Postal Act of 2006 

also required the Postal Service to transfer previously 

escrowed funds, calculated by OPM as $2.958 billion, to 

the PSRHBF and to expense the entire amount. Since the 

Postal Service no longer holds funds in escrow, interest 

PRESERVING INTEGRITY

The OIG works to preserve the integrity of Postal Service processes and personnel, which are essential elements for 

safeguarding Postal Service products, customers, services, and assets. To deal with potential natural or man-made 

disasters, the Postal Service renewed its emphasis on developing initiatives to more effectively secure the nation’s mail 

system. This is a signifi cant challenge due to the sheer size and geographic dispersion of the Postal Service.

The OIG helps assure integrity by conducting fi nancial audits of Postal Service installations and information systems 

audits, and by providing oversight of the U.S. Postal Inspection Service.

OIG investigative efforts assist the Postal Service in protecting the mail, safeguarding the Postal Service’s revenue and 

assets, and helping maintain the integrity of postal personnel.

This section discusses audit and investigative activities during this period to preserve integrity in the Postal Service.

By focusing on key vulnerabilities of Postal Service installations, our audits have shown how the Postal 

Service can further protect the integrity of the mailstream.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

20

AUDIT ACTIVITIES

income substantially decreased for the second half of 

FY 2007 and that will continue into the future.

The Postal Act of 2006 also establishes the former Postal 

Rate Commission as a regulatory body, renamed the 

Postal Regulatory Commission (PRC); mandates fully 

SEC-compliant fi nancial reporting beginning in FY 2008; 

requires compliance with the Sarbanes-Oxley Act in 2010; 

and divides mail services into two broad categories: 

market-dominant (mailing services) and competitive 

(shipping services) with separate rate-setting process rules 

and reporting requirements for each category. Its provisions 

set the Postal Service on a new path to profi tability and 

performance, with new opportunities for growth that will 

defi ne the Postal Service of the future.

Without the payments required by the Postal Act of 2006, 

the Postal Service would have marked its fi fth consecutive 

year of positive net income and fourth straight year of 

positive retained earnings, with net income of more than 

$1.6 billion. However, with the required funding of health 

benefi ts for FY 2007 and related fi nancial adjustments, 

the Postal Service reported a $5.1 billion loss. Still, 

the Postal Service increased productivity for the eighth 

consecutive year and delivered 96 percent of local FirstClass Mail overnight.

Revenues increased to $75 billion (more than $2.2 billion 

over FY 2006) primarily due to a rate increase across all 

rate classifi cations, implemented in May 2007. However, 

operating expenses increased from $71.7 billion in 

FY 2006 to $80.1 billion in FY 2007, primarily due to a 

516 percent increase in retiree health benefi ts resulting 

from the Postal Act of 2006 requirements. The Postal 

Service expects continued sluggish economic growth to 

affect the business outlook of the Postal Service for FY 

2008, but it expects revenues to increase by $3.2 billion, or 

4.3 percent, primarily due to the May 2007 price increase. 

Conversely, it expects expenses to decrease 1.6 percent 

from FY 2007 primarily due to the one-time $2.958 billion 

payment from escrow that was expensed in FY 2007. 

Excluding that payment, personnel costs (including 

retiree health benefi ts) are expected to increase about 

$700 million or 1.2 percent primarily due to cost of living 

pay adjustments, and increases in contractual pay and 

health benefi ts costs. The Postal Service plans to offset this 

increase by reducing 28 million workhours, equal to 

14,000 full-time equivalent positions. These costs are 

expected to account for 79 percent of total expenses. The 

Postal Service has not yet determined additional costs 

associated with the new fi nancial reporting requirements, 

PRC regulations, or Section 404 of the Sarbanes-Oxley Act.

Throughout most of FY 2006 and FY 2007, the Postal 

Service was debt-free and borrowed only to meet year-end 

cash disbursement requirements. At the end of FY 2007, 

During FY 2007, we issued two reports summarizing 210 post offi ce and Business Mail Entry Unit audits. 

We concluded that fi nancial transactions were reasonably and fairly presented in the accounting records, 

and that generally, internal controls were in place and effective.

The Postal Act of 2006 also established the former Postal Rate Commission as a regulatory body and 

renamed it the Postal Regulatory Commission.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

21

AUDIT ACTIVITIES

the Postal Service had $4.2 billion in debt outstanding, a 

$2.1 billion increase from FY 2006. As was the case for 

FY 2007, the Postal Service does not expect cash fl ow 

from operations to be suffi cient to fund capital investments 

and legislative payment requirements. Consequently, 

it anticipates increasing debt in FY 2008 by about 

$1 billion. Since the Postal Service’s debt since FY 2004 

has consisted of short-term obligations that allow payment 

on a daily basis, interest expense on borrowings has been 

at the lowest levels since the early 1970’s.

Financial Audits. During FY 2007, we issued two reports 

summarizing 210 post offi ce and Business Mail Entry Unit 

(BMEU) audits. We concluded that fi nancial transactions 

were reasonably and fairly presented in the accounting 

records, and that generally, internal controls were in place 

and effective. However, we identifi ed fi ve post offi ces where 

internal controls were not effective and nine post offi ces 

and BMEUs where major segments of the internal controls 

were not effective. To address a signifi cant defi ciency 

regarding mail acceptance at BMEUs, the Postal Service 

created a cross-functional team that included the SarbanesOxley compliance group, Marketing management, and the 

Financial Control and Support group. We also recommended 

that the Postal Service develop and implement a nationwide 

corrective action plan to measurably reduce or eliminate 

these reported, recurring defi ciencies.

We also issued one report summarizing our work conducted 

at 11 stamp distribution offi ces (SDO) and one stamp 

services center (SSC). In general, the internal controls 

at the 12 offi ces were in place and effective, except for 

one offi ce in which controls over stamp stock destruction 

were not effective. In addition, there were internal control 

and compliance issues related to stamp destruction and 

security at 11 of the 12 offi ces. For example, supervisors 

or employees did not always follow prescribed policies and 

procedures related to stamp transfers, notifi cations of and 

accounting for discrepancies, and access to and storage 

of stock and merchandise. In addition, management did 

not always notify investigative authorities about, or properly 

account for, discrepancies. We identifi ed $155 million in 

non-monetary impact for accountable items at risk.

Our audits of Postal Service headquarters and the 

Information Technology and Accounting Service Centers 

(IT/ASC) concluded that management’s fi nancial 

accounting policies and procedures provided for an 

adequate internal control structure and conformed to 

accounting principles generally accepted in the United 

States; transactions affecting general ledger account 

balances were stated in accordance with those same 

accounting principles; and general ledger account 

balances conformed to the general classifi cation of 

accounts on a basis consistent with the previous year. 

We did not identify any 

instances of noncompliance 

with laws and regulations that 

have a direct and material 

effect on the fi nancial 

statements; however, we 

identifi ed a signifi cant 

defi ciency regarding 

international mail accruals 

and rates. To address this, the 

Postal Service implemented a 

quarterly review process and 

started a business process 

improvement plan to develop a 

stronger system.

We also conducted 15 audits 

addressing cost and revenue 

analyses. We concluded that 

the Postal Service generally 

conducted these statistical 

tests in accordance with 

established policies and 

procedures. However, we 

noted some areas where the 

Postal Service could make 

improvements to maintain the 

integrity of the statistical data. 

Security and Controls in 

Technology Investments

We perform information systems general controls reviews 

to support the annual fi nancial statement audit and to 

assess the adequacy of controls over information systems 

security and software.

FY 2007 Information Systems Access Controls. Access 

controls limit or detect access to computer data, programs, 

equipment, and facilities. They also protect these resources 

against unauthorized modifi cation, loss, and disclosure. 

Access controls can use computer hardware and software 

to prevent or detect unauthorized access (logical), or 

restrict physical access to computer resources and protect 

these resources from intentional or unintentional loss or 

impairment (physical). Inadequate access controls diminish 

the reliability of computerized data and increase the risk of 

destruction or inappropriate disclosure of data.

During the reporting period, we determined that access 

controls were in place and functioning adequately. 

However, testing identifi ed opportunities to improve 

compliance with these controls. Specifi cally, management 

could improve access controls for the Injury Compensation 

Performance Analysis System (ICPAS) by strengthening 

database security settings, reconciling user lists, 

During the reporting period, we determined that access controls 

were in place and functioning adequately. However, testing identifi ed 

opportunities to improve compliance with these controls. 
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

22

AUDIT ACTIVITIES

and providing application documentation. In addition, 

management should modify the Windows default domain 

password settings to comply with policy, and complete 

ongoing inventories of all door keys at the Information 

Security Centers. Addressing these issues would enhance 

the security of access to more than 680 million records 

that include sensitive data in the ICPAS database and 

protect the Postal Service brand by reducing the potential 

for improper disclosure of sensitive information.

External Public Key Infrastructure Services. Homeland 

Security Presidential Directive 12 (HSPD-12 — Policy for 

a Common Identifi cation Standard for Federal Employees 

and Contractors, dated August 27, 2004) established a 

federal policy to create and use a government-wide secure 

and reliable form of identifi cation for federal employees 

and contractors. Currently, the Postal Service operates an 

internal certifi cate authority-public key infrastructure (CAPKI) to generate internal digital certifi cates for machines, 

software, and employees. However, a requirement of Federal 

Information Processing Standard 201 is that every HSPD-12 

credential the government issues must contain an external 

digital certifi cate, too.

We reviewed whether the Postal Service’s external PKI 

environment complies with Postal Service certifi cate 

policy, certifi cate practice statements, and any applicable 

agreements. We found the environment generally complies, 

but the Postal Service could improve it by addressing 

14 items not in compliance at the time of the review. 

These items included 11 minor issues in the areas of 

physical security controls, documentation, and operational 

procedures; and three issues that involved audit log 

backups, active directory settings, and role separation.

eAccess System. The eAccess access control system 

has become an integral part of the day-to-day operations 

of the Postal Service. The system grants access and 

monitors who obtains access to various Postal Service 

resources, automates the creation and maintenance of 

user accounts, and provides effi ciencies that allow for 

the elimination of certain paper forms and the associated 

manual effort necessary to approve and create user 

accounts. Employees and contractors use the eAccess 

system to obtain automated access to registered Advanced 

Computer Environment (ACE) and some mainframe 

systems. If employment status data does not fl ow 

accurately from feeder systems into Active Directory and 

the mainframe security system (CA-ACF2 — Computer 

Associates Access Control Facility 2), or if internal controls 

in these systems are not in place or working properly, it 

could result in improper or unauthorized user access to 

information systems.

We reported that the automated and manual processes 

accurately extracted employment status changes that were 

transmitted to Active Directory and CA-ACF2; however, 

Human Resources management needed to improve 

controls defi nition to better separate duties for users who 

can update the Human Capital Enterprise System (HCES) 

and the Payroll systems. Additionally, management needed 

to evaluate the business processes that change employee 

status between HCES and eAccess to adequately separate 

duties between managers and users in eAccess, and to 

better manage employee status changes — particularly 

detail assignments that affect user access to critical or 

sensitive systems. Finally, management needed to improve 

eAccess system documentation.

Management identifi ed as many as 20 security 

enhancements to eAccess, planned for mid-2008, 

but some of these system improvements depend 

on corresponding changes to HCES. We made four 

recommendations to address these issues, and while 

management did not agree with some facts in two of the 

recommendations, they recognized that the conditions were 

valid and agreed to correct them.

Oracle® Financial Processing. Oracle® Accounts 

Payable (AP) processes all non-payroll related payments 

totaling approximately $14 billion annually. Business 

processes include supplier maintenance, purchase 

orders, and invoice management. Oracle AP receives and 

processes invoices, receipts, and purchase orders from 

30 electronic subsystems. Each subsystem represents 

an individual application with its own inherent risks and 

unique controls.

We assessed whether Oracle® AP processing controls 

are suffi cient and operating as intended to ensure that 

transactions are valid, authorized, and completely and 

Homeland Security Presidential Directive 12 established a federal policy to create and use a governmentwide secure and reliable form of identifi cation for federal employees and contractors.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

23

AUDIT ACTIVITIES

accurately processed. We found that controls over 

electronically processed invoices are adequate to ensure 

available discounts are taken prior to payment. However, 

the Postal Service has an opportunity to further improve 

its capability to take advantage of discounts on manually 

processed invoices through timely certification of invoices 

and timely delivery of certified invoices for payment, 

reduced errors, and a re-worked discount calculation 

and certification process. Our audit determined that the 

Postal Service missed taking more than $450,000 in 

discounts from August 12, 2005, through July 11, 2007. 

We recommended strengthening controls to more timely 

process payments, reduce overall outlays, and increase 

discounts earned.

Additionally, we found that Postal Service managers did not 

detect duplicate and inactive suppliers because they did 

not perform or delegate reviews of supplier master data 

that would identify these conditions. We recommended the 

Postal Service establish comprehensive standard operating 

procedures, and establish and document quality control 

reviews, to address these issues.

National Accounting Oracle Financials Application 

Database. The National Accounting Oracle Financials 

Application (NAOFA) is the hub for all financial reporting for 

the Postal Service. The NAOFA consists of three commercial 

off-the-shelf Oracle modules focused on the general ledger, 

property and equipment, and accounts payable.

At management’s request, we assessed the strength of 

encryption used to store or transmit sensitive NAOFA 

data as a follow-up review to the security vulnerability 

assessment we conducted on servers and databases 

supporting the NAOFA. The scope of our review was limited 

to analysis of data transmitted to and from the NAOFA 

database as well as sensitive credit card and personally 

identifiable information stored within the database.

We believe the Postal Service has adequately secured 

sensitive information transmitted to and from the NAOFA 

Oracle database by way of Assured File Transfer. However, 

we identified areas where management could strengthen 

their implementation of encryption used to secure sensitive 

data for storage and transmission. During the review, we 

also identified concerns related to the key management 

process and identification of credit cardholder data in the 

application Business Impact Assessment. Based on current 

industry data reports, the Postal Service could incur costs 

of $83 per record in the event sensitive credit card or 

personally identifiable information is compromised — a 

potential non-monetary impact of $62,997 relating to 

the safeguarding of information technology assets and 

preserving the integrity of the Postal Service brand. 

Enterprise Payment Switch Solution Phase 3: 

Security Testing. In FY 2007, the Postal Service 

processed more than 293 million debit and credit card 

transactions involving more than $9.6 billion. To meet 

updated performance, reliability, flexibility, and cost 

objectives associated with debit and credit card transaction 

processing, the Postal Service has developed the Enterprise 

Payment Switch solution. The Payment Switch is an offthe-shelf hardware/software solution that resides between 

the retail environment and vendors that process the 

transactions for payment. Placed into limited production 

in 2007, the Payment Switch supports a broad range of 

electronic payment types, including credit card, debit card, 

checks, and Internet payments. As a merchant accepting 

debit and credit card payments, the Postal Service is 

required to comply with the terms of the Payment Card 

Industry (PCI) Data Security Standard.

We partnered with the Postal Service to evaluate the 

security of the proposed credit and debit processing 

solution to verify that the routing and storage of customer 

information is secure within the Postal Service systems and 

the Payment Switch environment. This project was divided 

into multiple phases to facilitate timely reporting in step 

with the Postal Service development and implementation 

of the Payment Switch solution. We reviewed the security 

testing documentation and methodology during Phase 3.

The Postal Service elected to incorporate the tests 

associated with PCI security requirements into their internal 

security testing for the Payment Switch solution to address 

all security requirements in a combined effort. During the 

audit, we identified concerns related to disaster recovery 

capabilities for the Payment Switch solution while security 

representative verifications also disclosed security concerns 

not previously recognized by management. We presented 

our concerns to senior Postal Service managers prior to the 

implementation date. Management agreed with the findings 

presented in the Phase 3 OIG report and stated that most of 

the issues identified involve the many pre-existing systems 

and processes that were not changed by the Payment 

Switch solution.

Inspection Service Security Controls, 

Processes, and Programs

We issued a report assessing Inspection Service security 

controls and processes. We concluded that management 

has opportunities to improve security controls and 

processes to protect employees, customers, the mail, and 

critical assets. Specifically, the Postal Service could realize 

a cost savings of at least $6.4 million over the next 10 

years by using physical security specialists, rather than 

postal inspectors, to conduct security surveys and reviews. 

In addition, postal inspectors should be required to take 
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

24

AUDIT ACTIVITIES

training that will help them identify and mitigate risks, and 

provide more effective oversight of the security program. 

Management’s planned actions to establish mandatory 

training for postal inspectors will address the training 

issues identifi ed.

Identity Theft

Identity theft — the unauthorized use of another 

individual’s personal information to commit fraud — is 

America’s fastest growing crime. Commission of this crime 

depends on access to personal data, and recent studies 

indicate annual losses in the billions of dollars. The Postal 

Service is combating identity theft by strengthening the 

protection of its customers’ and employees’ sensitive 

and personally identifi able information. Initiatives include 

security clearances for appropriate individuals; protection of 

social security numbers and other sensitive data processed 

in information systems; access management; and identity 

theft communication and awareness activities.

Our audit showed the Postal Service should enhance 

controls surrounding the protection of sensitive and 

personally identifi able information in the seven systems 

reviewed. Specifi cally, management needs to make 

improvements in the areas of user access, data protection, 

and the collection and use of personally identifi able data on 

Postal Service forms. Additionally, the Postal Service should 

discontinue one of its employment verifi cation systems. We 

made seven recommendations to address these issues, 

safeguard assets, and protect the Postal Service brand, 

and identifi ed funds put to better use and questioned costs 

totaling almost $140,000.

Unsecured Trailers

During unrelated audit work at the San Francisco P&DC, 

we observed Postal Service-owned and leased trailers and 

mail transport equipment (MTE) stored at an unsecured lot 

near the P&DC. This lot had no fences, cameras, guards or 

other security measures, so we immediately notifi ed senior 

Postal Service offi cials and the Inspection Service. During 

our observations at the unsecured lot, we found some 

trailers defaced with graffi ti, some with other damage, and 

most unlocked. In many cases, the unlocked trailers were 

loaded with mailbags, hampers, pallets, and other MTE. Our 

discussions with employees indicated transient or homeless 

people were using the lot, sleeping in Postal Service 

trailers, and using Postal Service equipment. The unsecured 

conditions presented a danger to public safety and security; 

subjected Postal Service vehicles and equipment, worth 

approximately $1.6 million, to theft or misuse; diminished 

the Postal Service’s image, reputation, and brand; and 

A family set up camp on the Postal Service leased lot, potentially to take advantage of adjacent parklands exposed the Postal Service to unrecoverable fi nancial loss.

along San Francisco Bay. This photo was taken on August 7, 2007.

Depicted is a Postal Service-owned trailer covered with graffi ti sitting on the San Francisco P&DC’s 

unsecured storage lot on August 7, 2007.

A mail transport equipment trailer and other trailers were stored at an unsecured lot near the San Francisco 

Processing and Distribution Center on January 9, 2008.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

25

INVESTIGATIVE ACTIVITIES

INVESTIGATIVE ACTIVITIES

The investigative efforts of OIG special agents assist the 

Postal Service in protecting the mail, safeguarding the 

Postal Service’s revenue and assets, and helping maintain 

the integrity of postal personnel. These special agents — 

federal law enforcement offi cers — play a key role in 

maintaining America’s trust in the postal system.

The vast majority of postal personnel are dedicated, hardworking public servants whose daily efforts instill trust 

in America’s postal system. However, it takes only one 

incident of theft, fraud, or misconduct to potentially diminish 

that trust. The charge of our special agents is to investigate 

these internal crimes and frauds against the Postal Service 

and help deter postal crimes. With more than 600 special 

agents stationed in more than 100 offi ces nationwide, the 

OIG carries out that mission by investigating internal postal 

crimes involving:

■ Theft, delay, or destruction of mail by employees 

and contractors.

■ Injury compensation fraud.

■ Embezzlements and fi nancial crimes.

■ Contract fraud.

■ Computer crimes.

■ Internal affairs and executive investigations.

■ Whistleblower reprisals.

■ Employee misconduct and general crimes.

■ Narcotics.

Special agents also investigate bribery, kickbacks, 

extortion, confl icts of interest, and allegations against 

postal executives. Investigative analysts examine data and 

analyze trends to augment investigators’ work in the fi eld. 

Analysts and special agents partner to fi nd solutions to help 

detect and prevent fraud. They operate as a headquarters 

intelligence unit, providing investigative analysis and 

research, reviewing investigative trends, and facilitating 

strategic initiatives.

Countermeasures

This program involves a continuous examination of 

investigative results to identify trends and to develop 

effective countermeasures to prevent or minimize future 

violations. The Countermeasures group uses trend 

surveys to capture information on investigations and 

develop business cases for proposed countermeasures. 

It works with other OIG components to ensure 

proper implementation and monitoring of approved 

countermeasures.

An example of a 

countermeasure is the 

enforcement of policy 

prohibiting employees 

from carrying personal 

items like a backpack or 

gym bag on the workroom 

fl oor to help prevent 

or minimize employee 

mail theft at a plant. 

An alternative would 

allow employees on the 

workroom fl oor to carry 

personal items in clear 

plastic bags.

In addition, the 

Countermeasures 

group works closely 

with key mailers (such 

as Netfl ix, Blockbuster, 

QVC, HSN, GameFly, and 

the U.S. Department of 

Veterans Affairs) and 

major fi nancial industry 

associations (such as the 

Financial Industry Mail 

Security Initiative [FIMSI]) 

on proactive initiatives to more quickly identify non-receipt 

of mailed items and possible points of loss within the 

postal network.

Theft, Delay, or Destruction of Mail by 

Employees and Contractors

The American public expects to receive letters and parcels 

on time and intact. Citizens have an expectation that 

their mail will not be stolen, rifl ed, read, or obstructed 

while in the possession of Postal Service employees. 

That expectation and trust extends to every one of the 

700 million mailpieces that travel across the country daily. 

Whether it is a First-Class letter or a Priority Mail piece; 

Express Mail overnight service; a magazine; or a family 

heirloom in Registered Mail, all are handled by the women 

and men of the Postal Service.

Following are examples of mail theft investigations.

“Operation First-Class Mail” Nabs Los Angeles Postal 

Manager. We launched “Operation First-Class Mail” in Los 

Angeles to determine the cause of high-mail loss. A video 

game company told us the losses began after it had mailed 

9,170 pieces in August 2007, and approximately 4,500 

customers did not receive their mailed product.

As part of our crime prevention and awareness outreach, a Mail Theft/Delay of 

Mail insert was distributed to more than 600,000 Postal Service employees 

with a March pay statement.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

26

INVESTIGATIVE ACTIVITIES

Our investigation determined a Los Angeles P&DC Manager 

was stealing the DVDs. Our agents observed the Manager, 

who was also assisting in their investigation, hide the 

company’s mailers in a hamper of waste mail. She later 

retrieved the mailings and took them to her apartment.

Additionally, the video company security team provided loss 

reports indicating an abnormally high amount of loss from 

customers in ZIP Code prefixes 900 to 904.

Our investigation determined 1,050 opened mailers from 

the video company appeared outside the normal mail 

stream and in the possession of the Manager.

In January, a federal grand jury indicted the Manager and 

charged her with one count of Delay of Mail by a Postal 

Service Employee and three counts of Embezzlement of 

Mail Matter by a Postal Service Employee. Special agents 

arrested the Manager in January. The Manager had been 

placed on off-duty status in November.

Florida Postal Union President Pled Guilty to Mail 

Theft. We investigated a former American Postal Workers 

Union local President and Sales and Service Associate 

(SSA) for rifling mail and removing articles from the mail 

stream for his personal use. During surveillance, our special 

agents observed the SSA rifling mail and stealing the 

contents. Later, during an interview with agents, the SSA 

acknowledged the thefts. The Postal Service removed the 

SSA in June 2007.

The former postal employee was sentenced in federal court 

to 7 months in prison, followed by 2 years of supervised 

release for two counts of mail theft.

Colorado Mail Processing Clerk Indicted for Rifling 

Mail. During our investigation, agents observed a Denver 

Mail Processing Clerk rifling mail and removing the 

contents from several First-Class letters. Agents also 

observed the Clerk taking $30 in currency from the rifled 

letters. A consent search of the Clerk’s residence revealed 

he had stolen 87 DVDs from the Denver P&DC.

The investigation further revealed the Clerk stole more 

than 600 mailpieces since the summer of 2006 and 

$1,200 in cash. He resigned from the Postal Service in 

January. In March, he was sentenced in federal court to 

3 years probation.

Special Agents Foil New Jersey Clerk’s Resale 

Business. We received information from two video rental 

services regarding significant DVD losses mailed to and 

from the north-central New Jersey area. In December, 

we observed a Casual Clerk making several trips to 

his personal vehicle and then driving it off the postal 

parking lot. Special agents pulled the Casual Clerk over 

to determine whether he had removed mail from the post 

office. Within plain view in the Casual Clerk’s vehicle, 

agents saw a hand-made sign advertising jewelry for 

sale and invoices from a major shopping network service 

addressed to New Jersey residents. After receiving a 

verbal consent to search the Casual Clerk’s vehicle, agents 

found jewelry, a cell phone charger, and magazines. Agents 

next searched the Casual Clerk’s residence and recovered 

70 DVDs.

The OIG investigation revealed the Casual Clerk had stolen 

DVDs from the post office for at least 2 months. It was 

also determined the Casual Clerk stole parcels from two 

shopping network services and sold them from his car 

at a nearby shopping center using the cardboard sign to 

advertise merchandise for sale.

Management removed the Casual Clerk in January. In 

February, the Casual Clerk was arrested and he was 

charged with one count of Obstruction of Mail Generally.

Postal Service Terminates Louisiana Highway 

Contract Route Driver For Stealing Checks. In 

September, the Baton Rouge Police Department told us an 

arrestee allegedly received stolen checks from a Highway 

Contract Route (HCR) Driver working in Louisiana. 

We interviewed the HCR Driver who admitted stealing 

13 checks, including Social Security and state-issued 

child support enforcement checks, from postal customers 

on his route. The HCR Driver supplied the checks to two 

co-conspirators in exchange for cash. The co-conspirators 

used the HCR Driver’s vehicle to drive to a bank, where they 

set up an account to deposit and cash the checks. The total 

amount deposited from the stolen checks was $15,608.

In October, management terminated the HCR contract. 

A Louisiana federal grand jury charged the former HCR 

Driver with three counts of theft of mail and one count of 

bank fraud. 

Targets for Mail Theft

Items that are attractive to mail thieves have evolved over 

the years. Here is a list of traditional targets and today’s 

list of new desirables.

Traditional: Checks, credit cards, greeting cards with 

cash, jewelry, and video tapes.

New: DVDs, CDs, Home Shopping Network/QVC 

branded parcels, gift cards, mail-order prescriptions, and 

eBay branded parcels.
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

27

INVESTIGATIVE ACTIVITIES

Injury Compensation Fraud

The Postal Service funds workers’ compensation benefi ts 

for employees who sustain job-related injuries. The 

monetary and medical benefi ts paid by the Postal 

Service to workers’ compensation claimants totaled 

$880 million in 2007. At the end of 2007, the Postal 

Service’s estimated total liability for future workers’ 

compensation costs was more than $7.77 billion. 

Administered by the U.S. Department of Labor (DOL), 

the Offi ce of Workers’ Compensation Programs (OWCP) 

provides direct compensation to providers, claimants, 

and benefi ciaries. The Postal Service later reimburses 

OWCP in a process known as “charge-back billing.”

Most employees receive workers’ compensation 

benefi ts because of legitimate job-related injuries. 

However, a small percentage of postal employees and 

healthcare providers abuse the system. These schemes 

cost the Postal Service millions of dollars each year in 

compensation payments, medical costs, administrative 

expenses, and enforcement costs.

We initiate criminal investigations when we suspect 

individuals or healthcare providers of defrauding the 

DOL’s Federal Employees’ Compensation Act benefi ts 

fund. Criminal prosecutions are an effective deterrent to 

fraud and may permanently prevent the payment of any 

additional compensation. Any cases that may require 

administrative action are referred to the Postal Service 

and the DOL. Special agents work closely with injury 

compensation specialists from the Postal Service on all 

phases of these investigations.

During this reporting period, injury compensation fraud 

investigations resulted in more than $95.4 million in cost 

savings/avoidances. Our investigations resulted in the 

arrests of 23 suspects and in 134 administrative personnel 

actions, including removals, suspensions, and letters of 

warning. Following are examples of injury compensation 

fraud cases investigated during this reporting period.

Michigan Tattoo Artist Draws Conviction in 

Compensation Scam. In August 2006, we received a 

tip that a Letter Carrier was working in a tattoo booth at 

a Michigan county fair. At the time, the Letter Carrier was 

receiving $2,087 in workers’ compensation payments every 

28 days because of an on-the-job injury. The Letter Carrier 

had submitted documents to the OWCP claiming he had 

not been employed or involved in any business enterprise 

during the previous 15 months.

We conducted surveillance of the Letter Carrier while he 

worked at numerous fairs and carnivals. We videotaped him 

carrying equipment, lifting heavy objects, jogging, bending, 

twisting, sitting, and standing for extended periods.

In October 2007, a Michigan federal grand jury charged the 

Letter Carrier with two counts of fraud to obtain employees’ 

compensation, eight counts of mail fraud, and four counts 

of false statements. The Letter Carrier was convicted on 

all counts in December. This conviction will save the Postal 

Service $1,012,663 in future compensation costs.

Western Area Clerk Guilty of Workers’ Compensation 

Fraud. In July 2006, management reported that a Western 

Area Processing and Distribution Clerk was allegedly 

exceeding her physical restriction while receiving workers’ 

compensation payment on the daily roll.

A federal grand jury in Baton Rouge, Louisiana, charged eight people for postal-related crimes. “Those who violate laws regulating the 

postal system must be punished,” U.S. Attorney David Dugas said at a press conference. “The mail must be sacrosanct. It’s been that way 

since this nation started, and we intend to keep it that way.”
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

28

INVESTIGATIVE ACTIVITIES

Agents subsequently observed the Clerk helping to 

construct a parade fl oat, on which she rode for 

2 1⁄2 hours. During that time, the Clerk displayed no 

obvious pain behaviors, although she had told her doctor 

she could not sit for more than 10 minutes. During 

additional surveillances (including a surveillance of the 

Clerk dancing at a Halloween party), we observed the 

Clerk continuing to exceed her physical restrictions, and 

at no time did she appear to be in pain. In an undercover 

interview at the Injury Compensation and Control Offi ce, 

the Clerk reported being unable to work a limited duty job 

answering a telephone for 2 hours per day.

In February 2007, management removed the Clerk from 

duty. In September, OWCP terminated the Clerk from the 

daily roll, saving the Postal Service more than $1.1 million 

in future compensation benefi ts. In November, the Clerk 

was found guilty in federal court of one count of Wire Fraud 

and fi ve counts of making false statements or fraud to 

obtain federal employee’s compensation. She is scheduled 

to be sentenced in May.

OWCP Claimant Plays Golf Instead of Working; 

Gets Jail Time. In September 2006, an anonymous 

person reported seeing a Letter Carrier golfi ng regularly 

at a Southeast Area golf course. This activity exceeded 

the physical limitations under which the Letter Carrier 

received workers’ compensation payments on the periodic 

roll. Between September 2006 and May 2007, special 

agents and Workers’ Compensation analysts conducted 

surveillances of the Letter Carrier. On 11 separate 

occasions, they videotaped him playing golf at a local golf 

club. One day, the Letter Carrier was observed playing 36 

holes of golf. At no time during any of these surveillances 

did the Letter Carrier show signs of discomfort. 

During an interview with DOL personnel, the Letter Carrier 

said that he could no longer play golf because of his back 

injury. He was limited to merely walking on the golf course 

for exercise.

In September 2007, the Letter Carrier was indicted by 

a federal grand jury on 30 counts of Mail Fraud and 

one count of false statements or fraud to obtain federal 

employee’s compensation. He pled guilty in federal district 

court to one count of False Statements or Fraud to Obtain 

Federal Employee’s Compensation. The Letter Carrier was 

sentenced to 30 months incarceration, 3 years supervised 

release, and was ordered to pay $71,514 in restitution. The 

OWCP also terminated him from the periodic roll, saving the 

Postal Service $1,054,258 in future compensation benefi ts.

A letter carrier on workers’ compensation, who claimed he could no longer play golf, was observed by 

special agents playing 36 holes of golf in 1 day and showing no signs of physical distress. 

During surveillance of a Clerk receiving workers’ compensation, she was observed helping to construct 

a parade fl oat, on which she rode for 2 1⁄2 hours. During that time, the Clerk displayed no obvious pain 

behaviors, although she had told her doctor she could not sit for more than 10 minutes.

Injury Compensation Fraud Investigative Results

October 1, 2007 – March 31, 2008

■ 734 fraud investigations resolved

■ $95 million in compensation payments 

avoided

■ 23 arrests

■ 21 indictments

■ 13 convictions

■ 134 personnel actions taken by postal 

management
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

29

INVESTIGATIVE ACTIVITIES

OWCP Medical Provider Fraud

We also investigate allegations of fraud against medical 

providers who treat multiple Postal Service OWCP 

claimants. The following is an example of our medical 

provider fraud investigations during the reporting period.

Doctor Pled Guilty to Overcharging the Offi ce of 

Workers’ Compensation. In February 2004, we launched 

an investigation in response to a qui tam involving a Missouri 

plastic surgeon. A qui tam is a private action under the False 

Claims Act, 31 U.S.C. It allows a private person, “known as 

the “relator,” who has knowledge of fraud committed against 

the federal government, to bring suit on the United States’ 

behalf when the private person has information that the 

named defendant has knowingly submitted or caused the 

submission of false or fraudulent claims.

We discovered after querying a postal database that the 

OWCP had paid $92,489 to the surgeon. We consulted 

a government medical expert, who reviewed the medical 

records of the postal worker who the surgeon operated on 

in April 2002. The medical expert determined the surgeon 

falsely and fraudulently stated the employee sustained a 

“large avulsion injury,” an injury in which a body part has 

been severed from the body. The postal employee had 

actually injured himself when a mail tray fell on his right 

index fi nger. The surgeon falsely reported he performed 

extensive medical and surgical procedures for the postal 

worker. Additionally, the medical expert discovered 

other fi les in which the surgeon charged for medically 

unnecessary procedures or for services not performed.

In October 2007, the surgeon pled guilty to fraudulently 

billing the OWCP by “up-coding” and billing the OWCP 

$128,855 for services he never rendered to postal 

employees. “Up-coding” is the act of billing for a higher 

level of service than actually provided to receive higher 

payment. During plea negotiations, the surgeon agreed to 

surrender his medical license, and he and his company 

agreed to pay $1 million in criminal fi nes, $400,000 in 

restitution, and $100,000 in investigative costs.

Embezzlements and Financial Crimes

Employee embezzlements may involve postal employees 

stealing money from cash drawers, using sophisticated 

schemes to manipulate postal money orders or money 

order funds, or falsifying fi nancial retail records. When 

post offi ces experience unusual or signifi cant shortages, 

our investigators employ various investigative techniques 

to uncover embezzlements. Improper or lax procedures 

are reported to management for corrective action. When 

employees are found to be responsible for missing postal 

funds, they are reported to management for appropriate 

administrative action. In cases that warrant criminal 

prosecution, offenders not only face the loss of their jobs, 

but also may face jail time and court-ordered restitution.

Following are examples of fi nancial fraud cases 

we investigated. 

Texas SSA Sentenced to Home Confi nement for 

Stealing Postal Funds. In April 2007, we began 

investigating a report of suspicious refunds recorded by an 

SSA working in a Texas post offi ce. Management reviewed 

the SSA’s transaction reports for the past month and 

identifi ed more than $9,000 in suspicious refunds. During 

our investigation, we determined the SSA defrauded the 

Postal Service of $60,544 by reducing the amount of cash 

she submitted in daily deposits by falsely claiming refunds. 

The SSA embezzled postal funds over a 5-month period 

from November 2006 to April 2007.

During our interview, the SSA said the money was used to 

pay medical bills and her house note. She said it also 

helped four people purchase plane tickets and repair 

a home in New Orleans. The SSA provided a written 

statement detailing her embezzlement of postal funds. She 

resigned from the Postal Service in May 2007.

In October, a federal district court 

sentenced the SSA to 6 months of 

home confi nement and 5 years of 

probation. The court also ordered the 

SSA to pay restitution of $60,544 to 

the Postal Service.

Alaska Postmaster Convicted of 

Embezzling $130,000. We began 

investigating an Alaska Postmaster 

after discovering numerous deposits 

were missing between November 

and December 2005. We learned 

the Postmaster later submitted 

some deposits, but an audit of the 

post offi ce disclosed a shortage 

of $129,692. Our investigation 

revealed the Postmaster stole 

cash from postal funds over an 

8- to 10-month period because 

of her gambling addiction. She 

resigned from the Postal Service in 

December 2005.

In October 2007, the Postmaster was sentenced to 12 

months at a halfway house and 5 years of probation. The 

federal district court also ordered the former Postmaster to 

pay restitution of $129,692 to the Postal Service.

Employee embezzlements may involve postal employees 

stealing money from cash drawers, using sophisticated schemes 

to manipulate postal money orders or money order funds, or 

falsifying fi nancial retail records. 
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

30

INVESTIGATIVE ACTIVITIES

Former Texas SSA Convicted 

for Embezzling $108,000.

We reviewed postal accounting 

records at a Texas post offi ce 

and discovered irregularities in 

the handling of refunds and bank 

deposit remittance procedures. 

We investigated a former SSA 

responsible for the funds (selling 

stamps and money orders, 

issuing refunds, assisting major 

mailers, and performing audits). 

Our investigation revealed the 

SSA took postal funds to pay 

gambling debts and reused 

postal forms from legitimate 

refunds to obtain cash. He said 

he was “fl oating” the money, and, 

on some occasions, he would 

replace money he took from the 

Postal Service.

In December, a federal district 

court sentenced the SSA to 15 

months in prison followed by 3 

years of supervised release for 

misappropriating postal funds. 

The court also ordered the SSA to 

pay restitution of $108,262.

Texas SSA Convicted of 

Misappropriating $129,000 

in Postal Funds. A 2004 

proactive review of postal units 

and their postage validation 

imprinter (PVI) usage found a 

post offi ce in Texas routinely 

reporting PVI usage inconsistent 

with the actual meter usage. We 

launched a joint investigation with 

the Inspection Service into the 

shortages and covertly observed 

an SSA improperly processing 

transactions into the Point of 

Sale terminal. Several times, 

he removed cash from his cash 

drawer and co-mingled that cash 

with his own funds by placing the 

postal funds in his pants pocket. 

Our review of records disclosed PVI losses of $128,691 

from June 1999 through June 2004.

The SSA, who pled guilty in June 2007, was sentenced 

to 14 months in prison in November. Additionally, the 

federal district court ordered the SSA to pay restitution of 

$128,691 to the Postal Service.

Contract Fraud

The Postal Service is presently managing more than 

$40.4 billion in contracts, ranging from multi-million dollar 

national contracts for services such as transportation 

networks and IT infrastructures, to local contracts for 

supplies and services at individual postal facilities. The 

sheer volume of contracts and the huge dollar value provide 

opportunities for contractors and employees to defraud the 

Postal Service. The Offi ce of Investigations aids the Postal 

Service by aggressively investigating allegations of fraud, 

waste, and misconduct. When contract improprieties are 

documented, we present the evidence for criminal/civil 

prosecution or administrative remedies. 

Contract fraud is defi ned as any intentional, unlawful 

deception designed to deprive the U.S. Government, 

unlawfully, of something of value or to secure from the 

United States for an individual a benefi t, privilege, allowance, 

or consideration to which he/she is not entitled. Following 

are examples of contract fraud that we look to uncover:

■ Billing for services not rendered and/or fraudulently 

charging for “extra costs.”

■ Making false statements and/or false claims.

■ Misrepresenting material facts.

■ Offering bribes/gratuities.

■ Falsifying records.

■ Arranging for secret profi ts, kickbacks, or commissions.

■ Engaging confl ict of interest.

The National Procurement Fraud Task Force, (NPFTF) 

formed by the Criminal Division of the U.S. Department 

of Justice, promotes the “early detection, prevention, 

and prosecution of procurement fraud associated with 

increased contracting activity for national security and other 

government programs.”

In conjunction with the national task force initiative, 

various OIG fi eld offi ces joined regional working groups 

formed by U.S. Attorney’s Offi ces to coordinate and 

organize procurement fraud investigations and implement 

the strategies and mission of the national task force. 

These regional working groups will also facilitate the 

exchange of information among agencies at the regional 

level. In January, we attended the Forensic Auditing 

OIG contract fraud brochure to help Postal Service contracting 

offi cers and procurement specialists identify contract fraud.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

31

INVESTIGATIVE ACTIVITIES

Forum sponsored by the NPFTF. The forum examined 

how to integrate audit, investigative, and legal skills to 

identify procurement fraud in forms. The forum promoted 

the application of forensic auditing as a tool to fight 

procurement fraud.

During the reporting period, we conducted 69 contract 

fraud investigations, resulting in five arrests and more 

than $2.9 million in funds returned to the Postal Service. 

Following are examples of contract fraud investigations we 

conducted during this reporting period follow.

$1.2 Million Settlement Agreement Reached with 

Vehicle Leasing Vendor. Beginning September 2003, 

based on an anonymous lead, we investigated allegations 

that Mike Albert Leasing (MAL) was submitting false repair 

estimates for end-of-lease damage claims on Postal Service 

vehicles. The investigation subsequently determined that 

from January 1996 to November 2004, MAL was paid 

in excess of $3.1 million on approximately 3,200 vehicle 

damage claims. Many claims were supported by repair 

estimates inflated by approximately 25 percent over the 

actual repair expense. Our investigation further found MAL 

repaired a significant percentage of vehicles before the 

damage claims were actually submitted to the Postal Service 

for payment and knew the actual cost of the repairs before 

the submission of the claims.

In November, MAL signed a $1.2 million settlement 

agreement with the Department of Justice to resolve 

a contract appeal claim. The Postal Service received 

$825,000 in value from the settlement. 

$1.5 M Settlement Agreement, in Lieu of Debarment, 

with Bell & Howell. The Postal Service contracted with 

Bell & Howell (B&H) to supply 200 Mailing Evaluation 

Readability Lookup Instrument (MERLIN) machines, which 

verify address hygiene, barcode readability, and the mail 

presort sequences of bulk mailings claiming discount 

postage rates.

In March 2002, we initiated the investigation after 

receiving a referral from a Postal Service contractor who 

oversaw e-mails containing previously undisclosed cost or 

pricing data.

Our investigation disclosed that during the contract 

negotiations in September 2000, B&H withheld cost or 

pricing data that was lower than the proposed costs of 

$41,000 per supplier machine. In the weeks preceding the 

negotiations, there was an internal supplier communication 

that its cost per unit was declining and was more than 

$5,000 lower than the submitted bid. In November 2005, 

a $3.3 million demand letter was issued to B&H by the 

Department of Justice, based on a Defense Contract Audit 

Agency defective pricing damage report.

In January 2007, B&H agreed to settle the claim for 

$1.5 million. In February 2008, the Postal Service and B&H 

entered into an agreement in which the Postal Service 

agreed not to debar the contractor. B&H paid the settlement 

amount in full.

Pennsylvania Lead Automotive Technician Indicted.

We investigated a Postal Service Lead Automotive 

Technician after receiving information that he accepted 

an all-expense paid trip to Las Vegas, Nevada, for himself, 

his wife, and two friends. He also received other illegal 

gratuities from the owner of a Pennsylvania automobile 

service center. Postal Service repair orders provided 80 to 

90 percent of the owner’s revenues ($1.5 million).

When interviewed, the Technician said he knew accepting 

the trip was wrong, based on his relationship with the 

shop owner. The Technician also said he accepted four 

tires for a personal vehicle and another trip from the 

vendor to a local area casino before the Vegas trip. He 

also attended a Christmas party hosted by the shop owner. 

The investigation disclosed the Technician had attended 

“ethics” training.

The Technician was indicted in federal court for accepting 

illegal gratuities from a shop owner in November. 

In January, the employee was placed on Indefinite 

Contract Fraud Phases

Contract fraud can occur at various stages during the life 

of the contract:

■ Pre-Solicitation Phase (attempted/actual bribes 

and kickbacks).

■ Solicitation Phase (falsification of certifications 

such as Woman/Minority-Owned Business, bid 

submissions by non-existing companies, kickbacks, 

bribery, conflicts of interest, and/or bid rigging).

■ Proposal Phase (bid-rigging among contractors, 

including bid rotation, sporadic bidding, token bids, 

market allocation, and/or change-order schemes).

■ Negotiation and Award Phase (bid-rigging 

among contractors, including bid rotation, sporadic 

bidding, token bids, market allocation, and/or 

change-order schemes).

■ Contract Performance Phase (cost mischarging 

including material and labor mischarging, defective 

pricing false invoices, over billing, duplicate billing, 

fraudulently charging “extra costs” for work not 

performed, and/or product/service substitution).
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

32

Suspension as a result of our 

investigation. The shop owner 

was also indicted.

Computer Crimes

As the Postal Service 

information infrastructure 

expands and the number 

of products and services 

available over the Internet 

increases, the agency faces 

increased exposure to online 

risks. Unauthorized access 

into Postal Service networks 

and improper usage of 

computers by employees are 

just two types of computer 

crimes to which the Postal 

Service may fall victim. 

Training for and investigating 

these computer crimes is 

a top priority to ensure the 

Postal Service’s networks and 

databases remain secure.

Our Computer Crimes Unit 

(CCU) initiates investigations 

and provides digital forensics 

support to our investigations. 

During the reporting period, 

the unit proactively generated 

23 investigations, 10 of which 

pertained to felony allegations. 

The Unit has responded to 

more than 563 requests for 

investigative support to our 

investigations. Following are 

examples of computer crimes 

investigations.

CCU’s Web Intervention Nabs Postmaster Viewing 

Child Porn on Postal Service Computer. A former West 

Virginia Postmaster was sentenced to 70 months in federal 

prison followed by 10 years of supervised release for 

possessing child pornography. He was ordered to pay more 

than $13,500 in restitution to the Postal Service for money 

orders he converted to his own use.

In October 2005, the Postmaster contacted Postal Service 

Information Technology Technicians after his postal 

computer ‘crashed’. While servicing the computer, the 

technicians discovered unauthorized software.

We conducted forensic analyses (web log analysis) on 

the Postmaster’s computer and discovered pornographic 

images, including numerous images that appeared to 

be child pornography. Our special agents and the FBI 

executed a search warrant at the Postmaster’s residence. 

During the search, investigators obtained evidence that 

the Postmaster misappropriated more than $7,700 of 

postal money order funds. Further investigation disclosed 

additional $5,800 embezzlement.

Executive Investigations and Internal Affairs

We maintain both Special Inquiries (SI) and Internal 

Affairs (IA) units as part of the Offi ce of Investigations. 

SI/IA conducts criminal and administrative investigations 

of Postal Service executives, Inspection Service and OIG 

personnel, and whistleblower reprisal investigations. Among 

the investigative activity for the reporting period was the 

following case.

Postal Executive Investigated for Submitting False 

Mail Condition Reports. We received an anonymous 

allegation that inaccurate Daily Mail Condition Report 

(DMCR) data was being submitted by an Executive at 

a Texas P&DC. We discovered the Executive routinely 

reviewed DMCR data before it was reported and reduced 

the volume count numbers signifi cantly. Witnesses stated 

the Executive directed them to change the mail volume 

count by up to one-half on certain occasions. The fi ndings 

were presented to area-level management. Management 

demoted the executive in grade, salary, and position, to a 

non-executive position.

Whistleblower Activity

In the Postal Service, a whistleblower is an employee, or 

an applicant for employment, who reports misconduct to 

individuals or entities that have power to take corrective 

action. Generally, the misconduct is a violation of law, rule, 

or regulation, and/or a direct threat to public interest — 

fraud, health, safety violations, and corruption are just a few 

examples. To be eligible for whistleblower protection, the 

employee must reasonably believe his or her employer has 

committed a violation of some law, rule, or regulation. 

OIG whistleblower activity during 

this period:

Allegations received: 

OIG investigations initiated:

Investigations closed with no fi nding 

of retaliation or deferred to other 

adjudicative body:

Open investigations:

OIG found reprisal:

51

30

16

11

0

INVESTIGATIVE ACTIVITIES

Our Computer Crimes Unit initiates investigations and provides digital 

forensics support to our investigations.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

33

INVESTIGATIVE ACTIVITIES

Employee Misconduct and General Crimes

Misconduct on the part of Postal Service employees 

includes the following offenses committed in the course of 

their official duties: misuse of Postal Service computers, 

destruction, or theft of Postal Service property, falsification 

of official documents/forgery, theft of funds, abuse of 

authority, sabotage of operations, narcotics usage, or sale 

of drugs while on duty, and alcohol abuse. Following are a 

few examples of work performed under this program area.

Virginia Supervisor Pled Guilty to Falsifying Postal 

Records. We investigated a Supervisor, working at a 

Virginia post office, who fraudulently logged hours in the 

postal time and attendance system to inflate his pay. Our 

investigation revealed that from May 2007 to July 2007, 

the Supervisor arrived to work late and left work early 

almost every day. During that period, the Postal Service 

paid the Supervisor approximately $5,945 for hours 

fraudulently entered into the postal time and attendance 

system. Our investigation also revealed another employee 

fraudulently entered the Supervisor’s extra time and work 

hours on Mondays, which was one of the Supervisor’s 

scheduled days off. Additionally, we determined the 

Supervisor conducted personal real estate business during 

his work hours at the post office.

The Supervisor resigned from the Postal Service in August 

2007. He pled guilty in federal district court in December. 

In March, he was sentenced to 5 months in prison followed 

by 1 year of supervised release. He was also ordered to pay 

more than $20,300 in restitution to the Postal Service.

Pennsylvania Postal Tractor Trailer Operator 

Convicted of Selling Bulk Mail Containers. The 

Inspection Service told us about a Postal Tractor Trailer 

Operator (TTO) who was possibly selling aluminum Bulk 

Mail Containers-Over the Road (BMC-OTRs) as scrap metal. 

We conducted surveillance from July through October 

2007, and on several occasions observed the TTO loading 

containers into a rental truck. He and two non-postal 

accomplices drove the containers to area scrap yards 

where they unloaded them.

In October, we arrested the TTO and his two non-postal 

accomplices. The TTO admitted one of the accomplices 

paid him cash ($50 to $300 per truckload) for the 

containers, which he had been stealing since December 

2006. We recovered 64 containers. The replacement cost 

of one container is $2,600.

The TTO pled guilty in federal district court in February 

to charges of theft/embezzlement of public property and 

conspiracy to defraud the United States. As part of his 

plea agreement, he resigned from the Postal Service. 

His accomplices pled guilty to similar charges. Each pled 

guilty to stealing 104 bulk containers, valued between 

$120,000 and $200,000. Sentencing for the trio is 

scheduled for May.

District of Columbia Employee Guilty to Fraudulently 

Claiming Jury Service. A former Mail Processing Clerk, 

who fraudulently claimed he served jury duty beyond his 

actual service, may serve up to 20 months in prison for 

defrauding the Postal Service of approximately $34,000. 

Our investigation determined the former Mail Processing 

Clerk falsified court documents by adding months and days 

to his jury duty status so he could be paid for jury service 

he had not performed. The Mail Processing Clerk had 

worked for the Postal Service for 34 years and served jury 

duty in 2003, 2004, and 2006.

In February, in the same courtroom where the Mail 

Processing Clerk fraudulently claimed to have performed 

jury service beyond his actual service, the former Clerk pled 

guilty to Mail Fraud. As a part of his guilty plea, he agreed 

to pay restitution of $38,923 to the Postal Service.

Narcotics

Illegal drugs in the workplace can negatively impact 

employee productivity and safety. They also affect 

employee judgment and can increase stress levels, leading 

to acts of violence or hostility. Use and sale of narcotics 

on duty by employees can contribute to other crimes 

such as theft, embezzlements, and fraudulent workers’ 

compensation claims.

Our mission in dealing with illegal drugs in the workplace 

focuses on detection, investigation, and prevention. 

Detection of illegal drug sales, distribution, and usage in 

the workplace is the first step in this overall approach. 

Employees selling or distributing illegal drugs are vigorously 

investigated and prosecution is pursued. Postal employees 

who are using drugs are normally referred to the Postal 

Service Employee Assistance Program for treatment.

Prevention remains a key long-term strategy for providing a 

safe and drug-free work environment for postal employees. 

Deterring employee drug use is the desired outcome 

for the prevention effort. Following are typical narcotics 

investigation involving a postal employee.

Letter Carriers Lose Job for Smoking Marijuana 

While On Duty in Uniform. In January, the New Jersey 

Police Department notified us about a Letter Carrier who 

was selling narcotics from his residence. Our investigation 

determined the Letter Carrier distributed narcotics from his 

residence while on duty and wearing his postal uniform. We 

conducted a search with the New Jersey Police Department 

at the residence of the Letter Carrier and discovered 

approximately 42 “baggies” of marijuana packaged for 
Offi ce of Inspector General Semiannual Report to Congress

October 1, 2007 — March 31, 2008

34

INVESTIGATIVE ACTIVITIES

distribution, estimated street value of $20 per bag. Our 

search also revealed another Letter Carrier smoking 

marijuana while on duty and wearing his postal uniform. 

Management immediately placed both Letter Carriers in offduty status without pay. These cases have been accepted 

for criminal prosecution.

Arkansas Rural Letter Carrier Guilty of Distributing 

Drugs on Route. An Arkansas Sheriff’s Department told 

us a Rural Letter Carrier was expected to deliver illegal 

drugs to a postal customer. On the targeted day, we 

interviewed a postal customer who confi rmed the Rural 

Letter Carrier had previously supplied Valium pills and 

solicited selling additional Valium pills. We stopped the 

Rural Letter Carrier and performed a consent search of her 

vehicle and seized an unlabeled bottle containing Valium 

pills. The Rural Letter Carrier admitted she had previously 

provided Xanax pills to the customer and had solicited the 

sale of Valium pills to the customer.

Management removed the Rural Letter Carrier from duty in 

November. Later that month, she pled guilty to Possession 

of an Instrument of a Crime in state court. The court 

sentenced her to a 12-month suspended jail term.

Carrier Observation Program

Improper conduct by postal employees who are on duty 

and in uniform casts the Postal Service in a negative light. 

This improper conduct includes, but is not limited to, Letter 

Carriers purchasing or consuming alcohol in public places, 

selling illegal narcotics from their postal vehicle, driving 

with suspended state driver’s licenses, and deviating 

from their routes and conducting non-postal business, all 

while on duty and in uniform. Letter Carriers who drive 

postal trucks while intoxicated or under the infl uence of a 

narcotic also present a threat to others, themselves, and 

Postal Service property while placing the security of the 

mail at risk.

Investigations we completed during this reporting period 

resulted in 108 administrative personnel actions including 

removals, suspensions, and letters of warning. 

Stakeholder outreach includes exhibiting at shows such as the Mailer’s Education Day trade show in 

Williamsburg, Virginia, sponsored by the Hampton Roads and Central Virginia Postal Customer Councils.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

35

FEATURE STORIES

VOYAGER CARD PROGRAM

The Postal Service teams up with U.S. Bank and Voyager 

Fleet Management to provide a single credit card, known as 

Postal Fleet Card, to purchase fuel and routine maintenance 

for all Postal Service-owned vehicles

During FY 2007, there were about 9.3 million eFleet 

transactions totaling approximately $389.3 million. We 

performed detailed audits at 10 judgmentally selected 

Postal sites and determined that officials at nine of the sites 

did not implement effective controls over the security and 

use of the Postal Fleet cards. Control weaknesses existed in 

the following areas at the nine sites:

■ Training.

■ Reconciliations.

■ Voyager card security.

■ Personal identification number security.

■ Missing receipts.

■ Segregation of duties.

■ Vehicle numbers.

■ File administration and record retention.

Nationally, for FY 2007, the Web Enterprise Information 

System identified 220,344 transactions totaling $13.7 

million as non-reconciled transactions. If transactions have 

not been properly reconciled, there is greater potential 

for fraud, waste, and misconduct. Therefore, we identified 

the $13.7 million in non-reconciled transactions as 

disbursements at risk. We are concerned, however, that this 

amount is understated, as our audit noted that some post 

offices were marking transactions as reconciled when they 

were not. We made local recommendations to address the 

specific issues found, and national recommendations to 

make sure district personnel ensure compliance with eFleet 

policies and procedures.

Alabama Postal Contractor and Boyfriend Indicted 

for Voyager Card Misuse. In November, a former 

Alabama postal contractor and her boyfriend were indicted 

in federal district court for theft of more than $90,000 

in government monies. Our investigation into excessive 

fuel purchases made between April 2005 and April 2007 

revealed the highway contractor/driver used a postal-issued 

Voyager card to purchase beer and cigarettes, which were 

subsequently traded for illegal drugs. The merchant in 

the store where the purchases were made fraudulently 

submitted beer and cigarette purchases as fuel purchases. 

In addition, the driver provided her personal identification 

number to her boyfriend, who also made unauthorized 

purchases using the Voyager card. In March, the former 

contractor/driver was sentenced to 3 years of probation, 

and her boyfriend was sentenced to 4 years of probation. 

They were also ordered to pay restitution of more than 

$83,600. Management cancelled the contract during the 

course of the investigation.

HCR Driver Convicted of Voyager Card Fraud; Ordered 

to Pay $13,000 in Restitution. Postal management 

advised us that groceries were charged to a Voyager fuel 

card assigned to an Oklahoma Highway Contract Route 

(HCR). Our investigation disclosed the HCR contractor/driver 

had three routes. For two of the routes, the contractor/

driver was authorized to purchase fuel on the postal-issued 

Voyager cards. One route required the contractor/driver to 

submit out-of-pocket fuel purchases for reimbursement. 

The contractor/driver used the Voyager card from 

March 2006 through December 2006 to purchase 

approximately 8,000 gallons of fuel to operate the route 

that was not issued a Voyager card. 

In addition, we learned she transferred two routes to 

her former husband as part of a divorce settlement, in 

violation of the terms of her contract. Further, she had been 

operating the remaining route for more than a year without 

active insurance coverage. The contractor/driver had 

altered original insurance documents, prior to faxing them 

to the area transportation office, to indicate that her policy 

was still in effect.

In December, the former highway contractor/driver was 

sentenced to 5 years of federal probation and was ordered 

to pay more than $13,000 in restitution to the Postal 

Service for the unauthorized Voyager card purchases. 

The three contracts were cancelled during the course of 

the investigation.

SMARTPAY® PURCHASE 

CARD PROGRAM

In November 1991, the Postal Service joined the 

government-wide Commercial Credit Card Program under 

the General Services Administration. The contractor for 

this program is the U.S. Bank and the card company is 

VISA®. The program within the Postal Service is called the 

SmartPay® Purchase Card Program, and the purchase 

FEATURE STORIES

Following are two feature stories on our audit and investigative work covering the Postal Fleet Card 

Program and the SmartPay® Purchase Card Program.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

36

FEATURED STORIES

card was formerly known as the International Merchant 

Purchase Authorization Card (IMPAC). The Postal Service 

pays no administrative fees for the services U.S. Bank 

provides and earns refunds based on the aggregate 

volume of Postal Service transactions. When operational 

needs cannot be satisfied through other priority sources, 

the purchase card is the primary means to delegate local 

buying authority (the authority to buy and pay for day-today operational needs). A single purchase card transaction 

may not be greater than $10,000. Five types of purchase 

cards are currently issued to Postal Service personnel:

■ Cards to purchase expense items.

■ Cards to purchase capital property.

■ Cards issued only to vehicle maintenance facilities for 

the purchase of vehicle parts.

■ Cards issued only to select employees for the purchase 

of inventory parts.

■ Cards issued only to select Engineering employees for 

the purchase of research and development equipment 

and supplies.

As purchase card programs are highly vulnerable to fraud 

and misuse, we have numerous coordinated activities 

underway, such as data mining and continuous auditing, to 

monitor Postal Service purchase card usage and to assess 

internal controls. During the reporting period, we used 

data from various information systems to judgmentally, 

and statistically, select transactions for testing. We initially 

reviewed 355 purchase card transactions made from 

December 2006 through February 2007, involving 138 

cardholders and totaling more than $750,000. 

We summarized the results of this initial effort in a report 

that disclosed weaknesses in internal controls such as 

purchase card transactions for meals and refreshments that 

did not comply with Postal Service policy. In addition, we 

identified systemic issues related to approvals, inadequate 

justification of purchases, supporting documentation and 

certification of credit card statements. Overall, we identified 

$244,626 in monetary impact and more than $177,000 

in non-monetary disbursement at risk in this initial 

effort. Postal management did not agree with our impact 

projections, but concurred with $46,917 in monetary and 

$115,885 in non-monetary impacts.

As part of our work in support of the audit of the Postal 

Service’s financial statements, we audited 17 judgmentally 

selected district SmartPay Purchase Card programs in FY 

2007. We identified various internal control and compliance 

issues in all 17 sites. For example, cardholders and/or 

approving officials did not always follow procedures for 

documenting purchases; review and reconcile, or review 

and reconcile timely, purchase card statements; or follow 

purchase approval procedures.

We made recommendations to address the issues; 

identified $1.2 million in monetary and $2.6 million in 

non-monetary impact; and made five referrals to our 

Office of Investigations for situations that warranted 

further examination.

North Carolina Postal Managers Convicted of 

Purchase Card Fraud. In 2006, we investigated a North 

Carolina Manager after receiving a referral regarding 

irregularities on his travel voucher. The Manager had 

made unauthorized charges for hotels and other unusual 

purchases using an International Merchant Purchase 

Authorization Card (IMPAC). During an interview, the 

Manager told us that he also used postal funds to replace 

a roof and purchase a lawn irrigation system for his home. 

He perpetuated this scheme with the help of another 

postal Manager, who authorized the eBuy request. Our 

investigation into the co-conspirator’s IMPAC purchases 

turned up similar irregularities, including purchases for 

fishing reels, flat screen televisions, sound systems, 

luggage, tools, and a tool chest. Investigation determined 

the second Manager fraudulently purchased 20 computers, 

which he sold for personal gain.

In January, a North Carolina federal district court sentenced 

the first Manager to 6 months of home detention, 3 years of 

supervised released upon completion of his term, and 300 

hours of community service for making fraudulent credit 

card purchases. He paid $26,778 in restitution to the Postal 

Service. In December 2007, the second Manager pled 

guilty to misappropriating postal funds and agreed to repay 

more than $135,000 to the Postal Service. Both Managers 

resigned from the Postal Service in November 2006.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

37

MAP OF OFFICE LOCATIONS

OFFICE OF INSPECTOR GENERAL AREA FIELD OFFICE LOCATIONS

The OIG currently has more than 1,100 employees located in more than 100 offices nationwide in each of the Postal Service’s nine areas.

PACIFIC

SOUTHWEST

SOUTHEAST

NORTHEAST GREAT LAKES

CAPITAL METRO

NEW YORK 

METRO

EASTERN

WESTERN

National Headquarters

Area Offices

Financial Audit Field Offices
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

38

APPENDIX A

Reports Issued to Postal Service Management

For the period October 1, 2007 — March 31, 2008

OIG audit teams conduct performance and financial audits, evaluations, and other reviews to address the business of the Postal Service. Each team issues audit 

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

Management Goals Number of Reports

Funds Put to 

Better Use

Total 

Questioned Costs

Unsupported 

Questioned Costs Revenue Impact

Generate Revenue 5 — — — $88,649,009 

Increase Efficiency 34 $308,907,598 $188,022,675 $59,106,533 — 

Improve Service 6 $231,337,397 — — — 

Customer-Focused Culture 7 — — — — 

Enhance Sustainability 1 — — — — 

Regulatory Studies and 

Reporting Obligations 3 $12,355 — — $13,505 

Preserving Integrity 177 $7,379,777 $2,186,374 $839,190 $4,161,359 

TOTAL 233 $547,637,127 $190,209,049 $59,945,723 $92,823,873 

APPENDIX A

APPENDICES

The Inspector General Act of 1978 requires semiannual reports on the immediately preceding 6-month periods ending March 31 and 

September 30. These reports are sent to Congress and made available to the public.

This report summarizes OIG activities and illustrates significant problems, abuses, and deficiencies, along with recommendations and 

corrective actions related to the administration of U.S. Postal Service programs and operations during the reporting period. 

The appendices on the following pages fulfill the requirements of the Act.

Definitions:

Questioned Costs. A cost that is unnecessary, unreasonable, unsupported, or an alleged violation of law, regulation, contract, and so forth.

Unsupported Costs. A cost that is not supported by adequate documentation. Unsupported costs are included with the amounts shown as 

Questioned Costs.

Funds Put to Better Use. Funds that could be used more efficiently by implementing recommended actions.

Revenue Impact. Amounts from revenue generating functions such as retail sales, rent, leases, or fees that were underpaid or not realized. In addition, this 

category includes increased revenue from existing functions and generating revenue from new sources.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

39

Reports With Quantifiable Potential Monetary Benefits

Report Title

Funds Put to 

Better Use

Total 

Questioned Costs

Unsupported 

Questioned Costs

Revenue 

Impact

GENERATE REVENUE

Financial Reporting

New York International Service Center – Inbound International Mail; 

FT-AR-08-005; 1/24/2008 — — — $13,700,604 

Sales & Service

Click-N-Ship Program; MS-AR-08-004; 3/31/2008 — — — $74,079,700 

Local Stamps on Consignment Programs; MS-AR-08-003; 3/19/2008 — — — $868,705 

INCREASE EFFICIENCY

Delivery

City Delivery Vehicle Mileage – Base Versus Actual – Capital Metro Area 

DR-AR-08-003; 10/26/2007 — $2,117,349 $2,117,349 — 

Engineering

Equipment Maintenance Opportunities; DA-AR-08-002; 2/15/2008 $130,063,240 $11,612,797 — — 

Inspection Service & Facilities

Postal Service Facilities Single Source Provider System; SA-AR-08-004; 3/3/2008 — $9,379 — — 

Sales & Service

First-Class Permit Reply Mail; MS-AR-08-001; 11/8/2007 $61,542,721 $41,860,508 — — 

Supply Management

Firm Fixed Price Proposal Submitted by Siemens Energy and Automation, Incorporated, 

Postal Automation Division; CA-CAR-08-011; 1/04/2008 — $11,002,117 — — 

Firm Fixed Price Proposal, Revision A, Submitted by Siemens Energy and Automation, 

Incorporated, Postal Automation Division; CA-CAR-08-019; 3/27/2008 — $69,876,229 $56,989,184 — 

Supplemental Report on Audit of Proposal Submitted by Northrop Grumman Corporation, 

Electronic Systems Company; CA-CAR-08-001; 10/15/2007 — $14,417,441 — — 

Termination for Convenience Settlement Proposal Submitted by Minnesota Diversified 

Industries; CA-CAR-08-004; 10/30/2007 — $1,038,210 — — 

Transportation

Air Networks – Federal Express Transportation Agreement – Pacific Area; 

NL-AR-08-002; 2/19/2008 $45,031,871 $17,756,411 — — 

Air Networks – Issues in the Pacific Area Associated with a Major Postal Service Customer; 

NL-AR-08-001; 11/23/2007 $62,148,585 $18,332,234 — — 

Postal Vehicle Service Transportation Routes – San Francisco Processing and Distribution 

Center; NL-AR-08-003; 3/26/2008 $10,121,181 — — — 

Network Processing

Summary Audit on the Timeliness of Mail Processing, Transportation, and Delivery 

Operations in the Chicago District; NO-AR-08-003; 3/28/2008 $231,337,397 — — — 

REGULATORY STUDIES AND REPORTING OBLIGATIONS

Cost, Revenue, & Rates

In-Office Cost System Telephone Readings; CRR-AR-08-004; 3/31/2008 $12,355 — — — 

Fiscal Year 2007 Financial Installation Audit

Postal Accountability and Enhancement Act, Section 709, Assessment of Certain Rate 

Deficiencies; FF-AR-08-030; 11/29/2007 — — — $13,505 

APPENDIX A
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

40

Report Title

Funds Put to 

Better Use

Total 

Questioned Costs

Unsupported 

Questioned Costs

Revenue 

Impact

PRESERVING INTEGRITY

Fiscal Year 2007 Financial Installation Audit

Alamo Main Post Office – Alamo, Texas; FF-AR-08-031; 11/27/2007 — $1,064 $1,064 — 

Brewer Post Office – Brewer, Maine; FF-AR-08-004; 10/4/2007 — $4,298 — — 

Cardiss Collins Postal Store – Chicago, Illinois; FF-AR-08-024; 11/7/2007 — $24,055 $24,055 $67,355 

Cleveland Main Office Window Service – Cleveland, Ohio; FF-AR-08-028; 11/15/2007 $443,439 $410,450 — — 

Mooresville Business Mail Entry Unit – Mooresville, North Carolina; 

FF-AR-08-018; 11/1/2007 — — — $2,670 

Newark Main Post Office – Newark, California; FF-AR-08-014; 10/22/2007 — $114 — $5,943 

Ogdensburg Business Mail Entry Unit – Ogdensburg, New York; 

FF-AR-08-013; 10/15/2007 — — — $2,342 

Paoli Business Mail Entry Unit – Paoli, Pennsylvania; FF-AR-08-006; 10/4/2007 — — — $4,312 

Parker Main Post Office – Parker, Colorado; FF-AR-08-035; 11/29/2007 — $7,467 — $1,440 

Pricing and Classification Service Center – New York, New York; 

FF-AR-08-001; 10/23/2007 — — — $62,251 

SmartPay Purchase Card Program – Atlanta District, Atlanta, Georgia; 

FF-AR-08-012; 10/18/2007 — $2,792 $1,740 — 

SmartPay Purchase Card Program – Baltimore District, Baltimore, Maryland; 

FF-AR-08-022; 11/7/2007 — $70,485 $34,621 — 

SmartPay Purchase Card Program – Chicago District, Chicago, Illinois; 

FF-AR-08-021; 11/7/2007 — $73,415 $37,556 — 

SmartPay Purchase Card Program – Fort Worth District, Fort Worth, Texas; 

FF-AR-08-025; 11/13/2007; — $31,028 $14,955 — 

SmartPay Purchase Card Program– Los Angeles District, Los Angeles, California; 

FF-AR-08-026; 11/14/2007 — $166,693 $159,871 — 

SmartPay Purchase Card Program – Massachusetts District, North Reading, Massachusetts; 

FF-AR-08-037; 11/30/2007 — $107,517 $66,509 — 

SmartPay Purchase Card Program – New York District, New York City, New York; 

FF-AR-08-048; 12/17/2007 — $99,157 $18,701 — 

SmartPay Purchase Card Program – Northern Virginia District, Merrifield, Virginia; 

FF-AR-08-027; 11/15/2007 — $5,712 $3,882 — 

SmartPay Purchase Card Program – Pittsburgh District, Pittsburgh, Pennsylvania; 

FF-AR-08-019; 11/1/2007 — $11,056 $6,726 — 

SmartPay Purchase Card Program – Richmond District, Richmond, Virginia; 

FF-AR-08-023; 11/7/2007 — $45,705 — — 

SmartPay Purchase Card Program – Santa Ana District, Santa Ana, California; 

FF-AR-08-038; 11/30/2007 — $103,694 $94,481 — 

SmartPay Purchase Card Program – Sacramento District, West Sacramento, California; 

FF-AR-08-015; 10/24/2007 — $16,052 $12,290 — 

Southwest Area SmartPay Purchase Card Program; FF-AR-08-072; 1/11/2008 — $63,511 $56,427 — 

Yauco Post Office – Yauco, Puerto Rico; FF-AR-08-017; 10/30/2007 — $38,230 — $2,592 

Fiscal Year 2007 Financial Statements Audit

Board of Governors' Travel and Miscellaneous Expenses for Fiscal Year 2007; 

FT-AR-08-008; 2/15/2008 — $2,527 — — 

Eagan Information Technology and Accounting Service Center; FT-AR-08-007; 2/8/2008 — — — $2,706,979 

APPENDIX A
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

41

APPENDIX A

Report Title

Funds Put to 

Better Use

Total 

Questioned Costs

Unsupported 

Questioned Costs

Revenue 

Impact

St. Louis Information Technology and Accounting Service Center; FT-AR-08-010; 3/31/2008 — $6,644 — — 

San Mateo Information Technology and Accounting Service Center; 

FT-AR-08-009; 3/20/2008 $32,850 $50,024 — — 

Fiscal Year 2008 Financial Installation Audit

Aloha Station – Beaverton, Oregon; FF-AR-08-142; 3/27/2008 — $1,082 $1,082 $254 

Arcadia Business Mail Entry Unit – Arcadia, California; FF-AR-08-054; 12/26/2007 — — — $9,958 

Baltimore Main Office Window – Baltimore, Maryland; FF-AR-08-064; 1/07/2008 — $34,222 $240 $10,563 

Birmingham Business Mail Entry Unit – Birmingham, Alabama; FF-AR-08-091; 2/5/2008 — — — $44,838 

Burlington Business Mail Entry Unit – Essex Junction, Vermont; FF-AR-08-114; 2/26/2008 — — — $180,840 

Caldwell Business Mail Entry Unit – West Caldwell, New Jersey; FF-AR-08-083; 1/30/2008 — — — $112,709 

Champaign Business Mail Entry Unit – Champaign, Illinois; FF-AR-08-087; 1/31/2008 — — — $2,015 

Columbia Business Mail Entry Unit – Columbia, Missouri; FF-AR-08-140; 3/26/2008 — — — $5,805 

Dallas Business Mail Entry Unit – Dallas, Texas; FF-AR-08-117; 3/3/2008 — $32,378 $32,378 $95,599 

Dulles Business Mail Entry Unit – Dulles, Virginia; FF-AR-08-105; 2/14/2008 — $7,583 — $205,513 

East Hanover Business Mail Entry Unit – East Hanover, New Jersey; 

FF-AR-08-095; 2/6/2008 — — — $1,690 

Escondido Business Mail Entry Unit – Escondido, California; FF-AR-08-123; 3/7/2008 — — — $19,495 

Fresno Business Mail Entry Unit – Fresno, California; FF-AR-08-132; 3/19/2008 — $693 $693 $3,151 

Grand Haven Business Mail Entry Unit – Grand Haven, Michigan; 

FF-AR-08-144; 3/28/2008 — — — $1,107 

Grass Valley Business Mail Entry Unit – Grass Valley, California; FF-AR-08-079; 1/22/2008 — — — $3,324 

Gurnee Business Mail Entry Unit – Gurnee, Illinois; FF-AR-08-128; 3/17/2008 — — — $8,338 

Heath Branch Post Office – Newark, Ohio; FF-AR-08-108; 2/25/2008 — $11,666 — — 

High Mar Station – Boulder, Colorado; FF-AR-08-102; 2/13/2008 — $1,113 $701 $80 

James C. Brown Jr. Facility Post Office – Las Vegas, Nevada; FF-AR-08-049; 12/18/2007 — $347 — $1,836 

Janesville Business Mail Entry Unit – Janesville, Wisconsin; FF-AR-08-040; 12/18/2007 — — — $1,012 

Kennesaw Business Mail Entry Unit – Kennesaw, Georgia; FF-AR-08-0125; 3/11/2008 — — — $9,524 

Kilmer Lobby Branch – Edison, New Jersey; FF-AR-08-118; 3/4/2008 — — — $6,640 

Lake Hughes Post Office – Lake Hughes, California; FF-AR-08-145; 3/27/2008 — $1,227 — — 

Long Beach Business Mail Entry Unit – Long Beach, California; FF-AR-08-068; 1/10/2008 — — — $33,848 

Madison Business Mail Entry Unit – Madison, Connecticut; FF-AR-08-082; 1/28/2008 — — — $20,347 

Manassas Main Office Window – Manassas, Virginia; FF-AR-08-135; 3/19/2008 — $20,166 $17,524 $19,480 

Manchester Main Post Office – Manchester, New Hampshire; FF-AR-08-075; 1/15/2008 — $17,583 — $42,448 

Maplewood Business Mail Entry Unit – Maplewood, New Jersey; FF-AR-08-090; 2/4/2008 — — — $2,761 

Mary Esther Post Office – Mary Esther, Florida; FF-AR-08-098; 2/7/2008 — $5,999 $5,999 $1,600 

Marysville Business Mail Entry Unit – Marysville, Ohio; FF-AR-08-032; 11/29/2007 — — — $13,417 

Merrifield Post Office – Merrifield, Virginia; FF-AR-08-070; 1/10/2008 — $1,898 — $23,382 

Miami General Mail Facility Post Office – Miami, Florida; FF-AR-08-042; 12/7/2007 — — — $1,158 

Milpitas Main Post Office – Milpitas, California; FF-AR-08-107; 2/20/2008 — $380 $380 $5,119 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

42

APPENDIX A

Report Title

Funds Put to 

Better Use

Total 

Questioned Costs

Unsupported 

Questioned Costs

Revenue 

Impact

Naperville Post Office – Naperville, Illinois; FF-AR-08-134; 3/19/2008 — $15,698 $3,180 $3,099 

Niles Branch – Niles, Illinois; FF-AR-08-112; 2/25/2008 — — — $1,591 

North Haven Post Office – North Haven, Connecticut; FF-AR-08-119; 3/4/2008 — — — $17,193 

O'Fallon Post Office – O'Fallon, Missouri; FF-AR-08-133; 3/19/2008 — — — $34,715 

Reno Main Office – Self-Service Postal Center – Reno, Nevada; FF-AR-08-097; 2/6/2008 — $952 $952 — 

Roselle Branch Post Office – Roselle, New Jersey; FF-AR-08-110; 2/25/2008 — — — $1,517 

San Antonio Business Mail Entry Unit – San Antonio, Texas; FF-AR-08-146; 3/28/2008 — — — $27,345 

Smithtown Business Mail Entry Unit – Smithtown, New York; FF-AR-08-051; 12/17/2007 — — — $25,180 

Strasburg Business Mail Entry Unit – Strasburg, Virginia; FF-AR-08-104; 2/14/2008 — — — $223,790 

Sylacauga Business Mail Entry Unit – Sylacauga, Alabama; FF-AR-08-069; 1/10/2008 — — — $7,400 

Toledo Business Mail Entry Unit – Toledo, Ohio; FF-AR-08-077; 1/16/2008 — — — $46,507 

Warminster Business Mail Entry Unit – Warminster, Pennsylvania; 

FF-AR-08-065; 1/11/2008 — — — $6,513 

Webb Bridge Station – Alpharetta, Georgia; FF-AR-08-096; 2/5/2008 — $8,285 — $22,774 

Information Systems

Identity Theft Potential in Postal Service Information Systems; IS-AR-08-006; 3/6/2008 $102,699 $34,729 — — 

Oracle Application Control Review – Invoice Processing and Discounts; 

IS-AR-08-003; 1/10/2008 $361,108 $404,057 — — 

Inspection Service & Facilities

Postal Inspection Service Security Controls and Processes; SA-AR-08-003; 12/19/2007 $6,439,681 — — — 

Supply Management

National Review of SmartPay Purchase Card Transactions; CA-AR-08-002; 11/8/2007 — $244,626 $243,183 — 

TOTAL $547,637,127 $190,209,049 $59,945,723 $92,823,873 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

43

APPENDIX A

Report Listing

For the period October 1, 2007 – March 31, 2008

Complete listing of all OIG reports issued to Postal Service management.

GENERATE REVENUE

Cost, Revenue, & Rates

Security Review of the Electronic Verification 

System; CRR-AR-08-002; 2/12/2008

Financial Reporting

New York International Service Center — 

Inbound International Mail; FT-AR-08-005; 

1/24/2008Generate Revenue

Information Systems

Application Controls Review of the Electronic 

Verification System; CRR-AR-08-003; 3/31/2008

Sales & Service

Click-N-Ship Program; MS-AR-08-004; 3/31/2008

Local Stamps on Consignment Programs; 

MS-AR-08-003; 3/19/2008Generate Revenue

INCREASE EFFICIENCY

Delivery

City Delivery Vehicle Mileage — Base 

Versus Actual — Capital Metro Area; 

DR-AR-08-003; 10/26/2007

City Delivery Vehicle Mileage — Base 

Versus Actual — National Capping Report; 

DR-AR-08-004; 3/4/2008

Engineering

Equipment Maintenance Opportunities; 

DA-AR-08-002; 2/15/2008

Project Management Challenges in Engineering 

Programs; DA-MA-08-001; 10/11/2007

St. Louis Equipment Preventive Maintenance 

and Waste Disposal Follow-Up; 

DA-MA-08-002; 2/21/2008

Inspection Service & Facilities

Postal Service Facilities Single Source Provider 

System; SA-AR-08-004; 3/3/2008 

Use of Existing Postal-Owned Space — Capping 

Report; SA-AR-08-007; 3/21/2008

Use of Existing Postal-Owned Space in the 

New York Metro Area; SA-AR-08-002; 11/9/2007

Network Optimization

Kansas City, Kansas Processing and Distribution 

Center Consolidation; EN-AR-08-001; 1/14/2008

St. Louis Airport Mail Center Outsourcing; 

EN-AR-08-002; 2/29/2008

Sales & Service

First-Class Permit Reply Mail; 

MS-AR-08-001; 11/8/2007

Function 4 Business Plan Process; 

MS-AR-08-002; 11/16/2007

Supply Management

Financial Risk Assessment Audit of Automated Control 

Technologies, LLC; CA-CAR-08-012; 1/29/2008

Firm Fixed Price Proposal Submitted by Siemens 

Energy and Automation, Incorporated, Postal 

Automation Division; CA-CAR-08-011; 1/4/2008

Firm Fixed Price Proposal, Revision A, Submitted by 

Siemens Energy and Automation, Incorporated, Postal 

Automation Division; CA-CAR-08-019; 3/27/2008

Incurred Costs of American Bank Note 

Company; CA-CAR-08-010; 12/17/2007

Pre-award Accounting System Survey of 

CAGE Inc.; CA-CAR-08-016; 2/28/2008

Pre-award Accounting System Survey of Code 

Plus, Inc.; CA-CAR-08-013; 1/29/2008

Pre-award Accounting System Survey of Design 

Systems, Incorporated; CA-CAR-08-007; 11/26/2007

Pre-award Accounting System Survey of Facilities 

Partners, LLC CA-CAR-08-003; 10/29/2007

Pre-award Accounting System Survey 

of Foth Production Solutions, LLC; 

CA-CAR-08-018; 2/28/2008

Pre-award Accounting System Survey of 

Material Handling Systems, Incorporated; 

CA-CAR-08-005; 11/9/2007

Pre-award Accounting System Survey of 

Mechanized Systems Designs, Incorporated; 

CA-CAR-08-015; 2/5/2008

Pre-award Accounting System Survey 

of Omega Automation, Incorporated; 

CA-CAR-08-008; 11/29/2007

Pre-award Accounting System Survey 

of S/D Engineers, Incorporated; 

CA-CAR-08-006; 11/26/2007

Pre-award Accounting System Survey of Scio 

Systems Incorporated; CA-CAR-08-017; 2/28/2008

Pre-award Accounting System Survey of Thinkpath, 

Incorporated; CA-CAR-08-002; 10/15/2007

Pre-award Accounting System Survey of TranSystems 

Corporation; CA-CAR-08-009; 11/30/2007

Revision “B” Forward Pricing Rate Proposal for Fiscal 

Years 2008 through 2012 Submitted by Siemens 

Energy and Automation, Incorporated, Infrastructure 

Logistics Division; CA-CAR-08-014; 2/4/2008

Supplemental Report on Audit of Proposal Submitted 

by Northrop Grumman Corporation, Electronic 

Systems Company; CA-CAR-08-001; 10/15/2007

Termination for Convenience Settlement Proposal 

Submitted by Minnesota Diversified Industries; 

CA-CAR-08-004; 10/30/2007

Transportation

Air Networks — Federal Express 

Transportation Agreement — Pacific 

Area; NL-AR-08-002; 2/19/2008

Air Networks – Issues in the Pacific Area 

Associated with a Major Postal Service 

Customer; NL-AR-08-001; 11/23/2007

Postal Vehicle Service Transportation Routes — 

San Francisco Processing and Distribution Center; 

NL-AR-08-003; 3/26/2008 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

44

APPENDIX A

IMPROVE SERVICE

Delivery

Timely City Delivery — Chicago District; 

DR-AR-08-001; 10/11/2007

Network Optimization

Automated Area Mail Processing Worksheets; 

EN-MA-08-001; 10/19/2007

Network Processing

Delayed Mail at the Waco Processing and 

Distribution Facility; NO-AR-08-002; 3/13/2008

Mail Condition Reporting at the 

J.T. Weeker International Service Center; 

NO-AR-08-001; 3/13/2008

Summary Audit on the Timeliness of Mail Processing, 

Transportation, and Delivery Operations in the 

Chicago District; NO-AR-08-003; 3/28/2008

Sales & Service

Business Over the Counter; 

MS-MA-08-001; 3/26/2008

CUSTOMER-FOCUSED CULTURE

Engineering

Ventilation Filtration System Utilization; 

DA-AR-08-001; 1/08/2008

Human Capital 

Equal Employment Opportunity Contracting 

Function; HM-MA-08-001; 2/21/2008

Violence Prevention and Response Programs 

in Four Northeast Area Performance Clusters; 

HM-AR-08-005; 1/14/2008

Violence Prevention and Response Programs in 

Three Capital Metro Area Performance Clusters; 

HM-AR-08-001; 10/16/2007

Violence Prevention and Response Programs 

in Three Southeast Area Performance Clusters; 

HM-AR-08-002; 11/2/2007

Violence Prevention and Response Programs 

in Three Southwest Area Performance Clusters; 

HM-AR-08-003; 11/7/2007 

Violence Prevention and Response Programs 

in Two Pacific Area Performance Clusters; 

HM-AR-08-004; 11/13/2007

ENHANCE SUSTAINABILITY

Engineering

Northern Virginia District Energy Management 

Savings Opportunities; DA-AR-08-003; 3/20/2008

REGULATORY STUDIES AND 

REPORTING OBLIGATIONS 

Cost, Revenue, & Rates

In-Office Cost System Telephone Readings; 

CRR-AR-08-004; 3/31/2008

Internal Controls over the Revenue, 

Pieces, and Weight Adjustment System; 

CRR-MA-08-001; 12/14/2007

Fiscal Year 2007 Financial Installation Audit

Postal Accountability and Enhancement Act, Section 

709, Assessment of Certain Rate Deficiencies; 

FF-AR-08-030; 11/29/2007

PRESERVING INTEGRITY

Financial Reporting

Peak Season (Christmas 2006FY 2007) Fuel; 

FT-AR-08-003; 12/14/2007

Fiscal Year 2007 Cost and Revenue Analysis

Northern New Jersey District, New Jersey 

International and Bulk Mail Center 

FF-AR-08-016; 10/24/2007

San Francisco District, San Francisco International 

Service Center; FF-AR-08-011; 10/11/2007

Cost and Revenue Analysis; 

FF-AR-08-084; 1/30/2008

Fiscal Year 2007 Financial Installation Audit

Alamo Main Post Office — Alamo, Texas; 

FF-AR-08-031; 11/27/2007

Allentown Business Mail Entry Unit — Allentown, 

Pennsylvania; FF-AR-08-029; 11/16/2007

Atlantic City Business Mail Entry Unit — Atlantic City, 

New Jersey; FF-AR-08-008; 10/9/2007 

Birdsboro Post Office — Birdsboro, Pennsylvania; 

FF-AR-08-010; 10/10/2007

Brewer Post Office — Brewer, Maine; 

FF-AR-08-004; 10/4/2007

Business Mail Entry Units; FF-AR-08-131; 3/19/2008

Cardiss Collins Postal Store — Chicago, 

Illinois; FF-AR-08-024; 11/7/2007

Cleveland Main Office Window Service — Cleveland, 

Ohio; FF-AR-08-028; 11/15/2007

Holland Post Office — Holland, Michigan; 

FF-AR-08-007; 10/4/2007

Horsham Business Mail Entry Unit — Horsham, 

Pennsylvania; FF-AR-08-005; 10/4/2007

Kansas City Stamp Service Center — Kansas City, 

Missouri; FF-AR-08-020; 11/2/2007

Langhorne Business Mail Entry Unit — Langhorne, 

Pennsylvania; FF-AR-08-003; 10/4/2007

Mooresville Business Mail Entry Unit — Mooresville, 

North Carolina; FF-AR-08-018; 11/1/2007

Newark Main Post Office — Newark, California; 

FF-AR-08-014; 10/22/2007

Ogdensburg Business Mail Entry Unit — Ogdensburg, 

New York; FF-AR-08-013; 10/15/2007

Ogdensburg Post Office — Ogdensburg, 

New York FF-AR-08-009; 10/10/2007

Paoli Business Mail Entry Unit — Paoli, 

Pennsylvania; FF-AR-08-006; 10/4/2007

Parker Main Post Office — Parker, Colorado; 

FF-AR-08-035; 11/29/2007

Post Offices, Stations, and Branches; 

FF-AR-08-122; 3/5/2008

Potsdam Business Mail Entry Unit — Potsdam, 

New York; FF-AR-08-002; 10/3/2007

Pricing and Classification Service Center — New 

York, New York; FF-AR-08-001; 10/23/2007

SmartPay Purchase Card Program; 

FF-AR-08-094; 2/4/2008

SmartPay Purchase Card Program — 

Atlanta District — Atlanta, Georgia; 

FF-AR-08-012; 10/18/2007
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

45

APPENDIX A

SmartPay Purchase Card Program — 

Baltimore District, Baltimore, Maryland; 

FF-AR-08-022; 11/7/2007

SmartPay Purchase Card Program — Chicago 

District, Chicago, Illinois; FF-AR-08-021; 11/7/2007

SmartPay Purchase Card Program — 

Fort Worth District Fort Worth, Texas; 

FF-AR-08-025; 11/13/2007; 

SmartPay Purchase Card Program — 

Los Angeles District, Los Angeles, California; 

FF-AR-08-026; 11/14/2007

SmartPay Purchase Card Program — Massachusetts 

District, North Reading, Massachusetts; 

FF-AR-08-037; 11/30/2007

SmartPay Purchase Card Program — 

New York District, New York City, New York; 

FF-AR-08-048; 12/17/2007

SmartPay Purchase Card Program — Northern 

Virginia District, Merrifield, Virginia; 

FF-AR-08-027; 11/15/2007

SmartPay Purchase Card Program — 

Pittsburgh District, Pittsburgh, Pennsylvania; 

FF-AR-08-019; 11/1/2007

SmartPay Purchase Card Program — 

Richmond District, Richmond, Virginia; 

FF-AR-08-023; 11/7/2007

SmartPay Purchase Card Program — 

Sacramento District, West Sacramento, California 

FF-AR-08-015; 10/24/2007

SmartPay Purchase Card Program — 

Santa Ana District, Santa Ana, California; 

FF-AR-08-038; 11/30/2007

Southwest Area SmartPay Purchase Card Program; 

FF-AR-08-072; 1/11/2008

Stamp Distribution Offices; FF-AR-08-062; 1/4/2008

Yauco Post Office — Yauco, Puerto Rico; 

FF-AR-08-017; 10/30/2007

Fiscal Year 2007 Financial Statements Audit

Board of Governors’ Travel and 

Miscellaneous Expenses for Fiscal Year 

2007; FT-AR-08-008; 2/15/2008

Control Issues; FT-WP-08-001; 2/8/2008 

Eagan Information Technology and Accounting 

Service Center; FT-AR-08-007; 2/8/2008

Manual Transportation Payments; 

FT-AR-08-001; 11/15/2007

Officers’ Travel and Representation Expenses for 

Fiscal Year 2007; FT-AR-08-004; 12/20/2007

St. Louis Information Technology and Accounting 

Service Center; FT-AR-08-010; 3/31/2008

San Mateo Information Technology and Accounting 

Service Center; FT-AR-08-009; 3/20/2008

Special-Purpose Financial Statements; 

FT-AR-08-002; 11/16/2007

Washington, D.C., Headquarters; 

FT-AR-08-006; 2/8/2008

Fiscal Year 2008 Financial Installation Audit

Aloha Station — Beaverton, Oregon; 

FF-AR-08-142; 3/27/2008

Arcadia Business Mail Entry Unit — Arcadia, 

California; FF-AR-08-054; 12/26/2007

Ash Flat Business Mail Entry Unit — Ash Flat, 

Arkansas; FF-AR-08-086; 1/30/2008

Auburn Business Mail Entry Unit — Auburn, New 

York; FF-AR-08-076; 1/15/2008

Aurora Business Mail Entry Unit — Aurora, Missouri; 

FF-AR-08-067; 1/08/2008

Aurora Main Office — Self-Service Postal Center — 

Aurora, Colorado; FF-AR-08-130; 3/17/2008

Baltimore Main Office Window — Baltimore, 

Maryland; FF-AR-08-064; 1/7/2008

Birmingham Business Mail Entry Unit — 

Birmingham, Alabama; FF-AR-08-091; 2/5/2008

Burlington Business Mail Entry Unit — Essex 

Junction, Vermont; FF-AR-08-114; 2/26/2008

Cabool Main Post Office — Cabool, Missouri; 

FF-AR-08-053; 12/20/2007

Caldwell Business Mail Entry Unit — West Caldwell, 

New Jersey; FF-AR-08-083; 1/30/2008

Castle Rock Automated Postal Center — Castle Rock, 

Colorado; FF-AR-08-139; 3/25/2008 

Champaign Business Mail Entry Unit — Champaign, 

Illinois; FF-AR-08-087; 1/31/2008

Chattahoochee Business Mail Entry Unit — 

Chattahoochee, Florida; FF-AR-08-143; 3/27/2008

Chattanooga Business Mail Entry Unit — 

Chattanooga, Tennessee; FF-AR-08-089; 2/1/2008

Circleville Post Office – Circleville, Ohio; 

FF-AR-08-138; 3/24/2008

Columbia Business Mail Entry Unit — Columbia, 

Missouri; FF-AR-08-140; 3/26/2008

Coraopolis Business Mail Entry Unit — Coraopolis, 

Pennsylvania; FF-AR-08-059; 12/28/2007

Covington Business Mail Entry Unit — Covington, 

Kentucky; FF-AR-08-033; 11/29/2007

Dallas Business Mail Entry Unit — Dallas, Texas; 

FF-AR-08-117; 3/3/2008

Daly City Main Office Automated Postal Center — 

Daly City, California; FF-AR-08-113; 2/26/2008

Decatur Business Mail Entry Unit — Decatur, 

Georgia; FF-AR-08-092; 2/1/2008

Doyle Main Post Office — Doyle, California; 

FF-AR-08-088; 2/1/2008

Dulles Business Mail Entry Unit — Dulles, 

Virginia; FF-AR-08-105; 2/14/2008

East Hanover Business Mail Entry Unit — East 

Hanover, New Jersey; FF-AR-08-095; 2/6/2008

Eastman Business Mail Entry Unit — Eastman, 

Georgia; FF-AR-08-085; 1/29/2008

Escondido Business Mail Entry Unit — Escondido, 

California; FF-AR-08-123; 3/7/2008

Falconer Post Office — Falconer, New York; 

FF-AR-08-129; 3/17/2008

Farmingdale Business Mail Entry Unit — 

Farmingdale, New York; FF-AR-08-056; 12/28/2007

Flushing Mobile Post Office — Flushing, 

New York; FF-AR-08-109; 2/25/2008

Forest Business Mail Entry Unit — Forest, 

Mississippi; FF-AR-08-126; 3/11/2008

Fresno Business Mail Entry Unit — Fresno, 

California; FF-AR-08-132; 3/19/2008
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

46

APPENDIX A

Gloucester City Post Office — Gloucester City, 

New Jersey; FF-AR-08-055; 12/28/2007

Grand Haven Business Mail Entry Unit — 

Grand Haven, Michigan; FF-AR-08-144; 3/28/2008

Grants-Milan Station — Milan, New Mexico; 

FF-AR-08-057; 12/27/2007

Grass Valley Business Mail Entry Unit — Grass Valley, 

California; FF-AR-08-079; 1/22/2008

Gravois Mills Post Office — Gravois Mills, Missouri; 

FF-AR-08-111; 2/25/2008

Green Bay Business Mail Entry Unit — Green Bay, 

Wisconsin; FF-AR-08-080; 1/23/2008

Gurnee Business Mail Entry Unit — Gurnee, Illinois; 

FF-AR-08-128; 3/17/2008

Hazelwood Business Mail Entry Unit — Hazelwood, 

Missouri; FF-AR-08-081; 1/24/2008

Heath Branch Post Office — Newark, Ohio; 

FF-AR-08-108; 2/25/2008

Hemlock Post Office — Hemlock, New York; 

FF-AR-08-045; 12/11/2007

High Mar Station — Boulder, Colorado; 

FF-AR-08-102; 2/13/2008

Hudson Business Mail Entry Unit — Hudson, 

Wisconsin; FF-AR-08-066; 1/8/2008

Huntingdon Post Office — Huntingdon, 

Pennsylvania; FF-AR-08-101; 2/12/2008

Huntington Main Post Office — Huntington, 

New York; FF-AR-08-058; 12/28/2007

Ida Jean Haxton Station Automated Postal 

Center — Huntington Beach, California; 

FF-AR-08-043; 12/07/2007

Irvine Self-Service Postal Center — Irvine, 

California; FF-AR-08-141; 3/27/2008

Jackson Business Mail Entry Unit — Jackson, 

Ohio; FF-AR-08-073; 1/15/2008

James C. Brown Jr. Facility Post Office — Las Vegas, 

Nevada; FF-AR-08-049; 12/18/2007

Janesville Business Mail Entry Unit — Janesville, 

Wisconsin; FF-AR-08-040; 12/18/2007

Keene Business Mail Entry Unit — Keene, New 

Hampshire; FF-AR-08-074; 1/15/2008

Kennesaw Business Mail Entry Unit — Kennesaw, 

Georgia; FF-AR-08-0125; 3/11/2008

Kilmer Lobby Branch — Edison, New Jersey; 

FF-AR-08-118; 3/4/2008

La Salle Post Office — La Salle, Colorado; 

FF-AR-08-052; 12/20/2007

Lake Hughes Post Office — Lake Hughes, 

California; FF-AR-08-145; 3/27/2008

Liguori Business Mail Entry Unit — Liguori, 

Missouri; FF-AR-08-093; 2/5/2008

Long Beach Business Mail Entry Unit — Long Beach, 

California; FF-AR-08-068; 1/10/2008

Madison Business Mail Entry Unit — Madison, 

Connecticut; FF-AR-08-082; 1/28/2008

Manassas Main Office Window — Manassas, 

Virginia; FF-AR-08-135; 3/19/2008

Manchester Main Post Office — Manchester, New 

Hampshire; FF-AR-08-075; 1/15/2008

Maplewood Business Mail Entry Unit — Maplewood, 

New Jersey; FF-AR-08-090; 2/4/2008

Marion Business Mail Entry Unit — Marion, Kentucky; 

FF-AR-08-034; 11/29/2007

Marion Main Post Office — Marion, South Dakota; 

FF-AR-08-047; 12/11/2007

Mary Esther Post Office — Mary Esther, Florida; 

FF-AR-08-098; 2/7/2008

Marysville Business Mail Entry Unit — Marysville, 

Ohio; FF-AR-08-032; 11/29/2007

Matteson Business Mail Entry Unit — Matteson, 

Illinois; FF-AR-08-044; 12/11/2007

McArthur Main Post Office — McArthur, California; 

FF-AR-08-116; 3/3/2008

McKnight Branch Automated Postal Center — 

Pittsburgh, Pennsylvania; FF-AR-08-103; 2/13/2008

Merrifield Post Office — Merrifield, Virginia; 

FF-AR-08-070; 1/10/2008

Miami General Mail Facility Post Office — Miami, 

Florida; FF-AR-08-042; 12/7/2007

Milledgeville Business Mail Entry Unit — Milledgeville, 

Georgia; FF-AR-08-106; 2/15/2008

Milpitas Main Post Office — Milpitas, California; 

FF-AR-08-107; 2/20/2008

Mount Hermon Main Post Office — Mount Hermon, 

California; FF-AR-08-060; 12/28/2007

Murphysboro Post Office — Murphysboro, Illinois; 

FF-AR-08-063; 1/7/2008

Naperville Post Office — Naperville, Illinois; 

FF-AR-08-134; 3/19/2008

Newton Upper Falls Post Office — Newton Upper 

Falls, Massachusetts; FF-AR-08-046; 12/11/2007

Niles Branch — Niles, Illinois; 

FF-AR-08-112; 2/25/2008

North Haven Post Office — North Haven, 

Connecticut; FF-AR-08-119; 3/4/2008

Norwood Young America Business Mail Entry 

Unit — Norwood Young America, Minnesota; 

FF-AR-08-061; 1/02/2008

Novato Business Mail Entry Unit — Novato, 

California; FF-AR-08-050; 12/18/2007

Oakridge Post Office — Oakridge, Oregon; 

FF-AR-08-100; 2/12/2008

O’Fallon Post Office — O’Fallon, Missouri; 

FF-AR-08-133; 3/19/2008

Palos Verdes Business Mail Entry Unit — 

Palos Verdes Peninsula, California; 

FF-AR-08-099; 2/7/2008

Peotone Post Office — Peotone, Illinois; 

FF-AR-08-039; 11/30/2007

Red Rock Vista Station — Las Vegas, Nevada; 

FF-AR-08-036; 11/29/2007

Reno Main Office — Self-Service Postal Center — 

Reno, Nevada; FF-AR-08-097; 2/6/2008

Roselle Branch Post Office — Roselle, 

New Jersey; FF-AR-08-110; 2/25/2008

San Antonio Business Mail Entry Unit – San Antonio, 

Texas; FF-AR-08-146; 3/28/2008

Santa Rosa Business Mail Entry Unit — Santa Rosa, 

California; FF-AR-08-136; 3/20/2008

Scottsville Post Office — Scottsville, 

Kentucky; FF-AR-08-121; 3/5/2008 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

47

APPENDIX A

Smithtown Business Mail Entry Unit — Smithtown, 

New York; FF-AR-08-051; 12/17/2007

Southington Post Office — Southington, 

Connecticut; FF-AR-08-120; 3/5/2008

Strasburg Business Mail Entry Unit — Strasburg, 

Virginia; FF-AR-08-104; 2/14/2008

Sylacauga Business Mail Entry Unit — Sylacauga, 

Alabama; FF-AR-08-069; 1/10/2008

Temple City Main Post Office — Temple City, 

California; FF-AR-08-124; 3/10/2008

Toledo Business Mail Entry Unit — Toledo, Ohio; 

FF-AR-08-077; 1/16/2008

Warminster Business Mail Entry Unit — Warminster, 

Pennsylvania; FF-AR-08-065; 1/11/2008

Watertown Business Mail Entry Unit — Watertown, 

New York; FF-AR-08-041; 12/6/2007

Watsonville Business Mail Entry Unit 01 — 

Watsonville, California; FF-AR-08-071; 1/10/2008

Wayne Business Mail Entry Unit — Wayne, 

New Jersey; FF-AR-08-078; 1/18/2008

Webb Bridge Station — Alpharetta, Georgia; 

FF-AR-08-096; 2/5/2008

West Palm Beach Main Office Window Unit — West 

Palm Beach, Florida; FF-AR-08-115; 2/29/2008

West Rutland Post Office — West Rutland, 

Vermont; FF-AR-08-137; 3/20/2008

Winder Business Mail Entry Unit — Winder, 

Georgia; FF-AR-08-127; 3/17/2008

Information Systems

Compliance Audit of the Postal Service’s 

External Public Key Infrastructure Services; 

IS-AR-08-001; 10/5/2007

Enterprise Payment Switch Solution Phase III: 

Security Testing; IS-AR-08-004; 2/6/2008

Fiscal Year 2007 Information Systems 

General Computer Controls Capping Report; 

IS-AR-08-007; 3/11/2008

Identity Theft Potential in Postal Service Information 

Systems; IS-AR-08-006; 3/6/2008 

Information Systems Access Controls at Selected 

Information Technology Facilities for Fiscal Year 2007; 

IS-AR-08-002; 11/6/2007

National Accounting Oracle Financials 

Application Data Encryption Follow-Up; 

IS-AR-08-008; 3/11/2008

Oracle Application Control Review — Invoice 

Processing and Discounts; IS-AR-08-003; 1/10/2008

Oracle Processing — Application Control Review — 

Processing Phase; IS-AR-08-005; 3/3/2008

Update Processes for Active Directory 

and CA-ACF2; IS-AR-08-009; 3/14/2008

Inspection Service & Facilities

Assessing Management Controls, Processes, and 

Programs Regarding U.S. Postal Inspection Service 

Security; SA-AR-08-001; 10/29/2007

Emergency Preparedness Plans for the New York 

Metro Area; SA-AR-08-005; 3/21/2008

Emergency Preparedness Plans for the 

Western Area; SA-AR-08-006; 3/21/2008

Postal Inspection Service Security Controls and 

Processes; SA-AR-08-003; 12/19/2007

Postal Service’s Personnel Security Process; 

SA-MA-08-001; 2/12/2008

Supply Management

Estimated Supply Chain Management Impact 

Associated with Waste, Trash, and Recycling 

Services; CA-MA-08-001; 1/10/2008

National Review of SmartPay Purchase Card 

Transactions; CA-AR-08-002; 11/8/2007

Voyager Card Program — Alexandria, Louisiana 

South Park Station and Baton Rouge, Louisiana 

Downtown Station; CA-AR-08-004; 12/31/2007

Voyager Card Program — Denver, Colorado Vehicle 

Maintenance Facility and Longmont, Colorado Post 

Office; CA-AR-08-001; 10/19/2007

Voyager Card Program — Hayward and Concord, 

California Post Offices; CA-AR-08-003; 11/16/2007

Voyager Card Program — Orlando, Florida Lee Vista 

Station and Boynton Beach, Florida Main Office 

Station; CA-AR-08-005; 2/29/2008 

Voyager Card Program; CA-AR-08-006; 3/21/2008

Transportation

Vehicle Management — Unsecured Trailers — San 

Francisco Processing and Distribution Center; 

NL-AR-08-004; 3/29/2008
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

48

APPENDIX B

APPENDIX B

Findings Of Questioned Costs

For the period October 1, 2007 — March 31, 2008

Questioned Cost: A cost that is unnecessary, unreasonable, unsupported, or an alleged violation of law, regulation, or contract.

As required by the IG Act, the following pages show the total number of audit reports and the total dollar value of questioned costs in audit reports.

Description Number of Reports Questioned Costs

Unsupported Costs Included 

in Questioned Costs

Reports for which no management decision was made at the beginning of the 

reporting period 

28 $290,673,034 2,314,919*

Reports requiring management decision that were issued during the reporting period 53 $190,209,049 $59,945,723

TOTAL 81 $480,882,083 $62,260,642 

Reports for which a management decision was made during the reporting period (i+ii) 66 $432,666,383 $61,889,945

 (i) Dollar Value of disallowed cost — $70,180,280 $4,900,761

 (ii) Dollar value of cost not disallowed — $362,486,103 $56,989,184

Reports for which no management decision was made by the end of the reporting period; 

negotiations are ongoing

15 $48,215,700 $370,697

Reports for which no management decision was made within 6 months of issuance 

(See Note 1 for a list of individual reports)

3 $2,624,316 $71,956

Reports for which no management decision was made within 1 year of issuance 

(See Note 2 for a list of individual reports)

2 $45,221,850 — 

Note 1 — Reports for Which No Management Decision Was Made Within 6 Months of Issuance:

Subject Report/Case Number Report Date Questioned Costs

Unsupported Costs Included in 

Questioned Costs

6/15/2007 NL-AR-07-005 Vehicle Management – National Trailer Lease 

Renewal – Southwest Area

997,016 —

9/28/2007 NL-AR-07-009 Vehicle Management – National Trailer Lease 

Renewal – Pacific Area

1,555,344 —

7/18/2007 CA-CAR-07-015 Audit of Price Adjustment Claim Submitted by Bertsch 

Properties, Limited Liability Corporation (LLC)

71,956 71,956 

TOTAL $2,624,316 $71,956

* The unsupported amount shows an increase of $572 from what was reported in the September 2007 Semiannual Report to Congress.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

49

Note 2 — Reports for Which No Management Decision Was Made Within 1 Year of Issuance:

Subject Report/Case Number Report Date Questioned Costs

Unsupported Costs Included in 

Questioned Costs

9/30/2004 NL-AR-04-005 Vehicle Management – Delivery Vehicles – Buy 

Versus Lease

$42,751,032 —

7/5/2006 CA-CAR-06-027 Report on Audit of Settlement Proposal Under 

Contract Number 102591-03-Q-0454 Submitted by 

Hasler Incorporated

$2,470,818 —

TOTAL $45,221,850 —

Note 3 — Contract Reports With a Significant Audit Finding:

Questioned 

Costs Disallowed Unsupported Costs Finding Description

Firm Fixed Price Proposal Submitted 

by Siemens Energy and Automation, 

Incorporated, Postal Automation Division; 

CA-CAR-08-011; 01/04/2008

$11,002,117 — — The cost or pricing data submitted by the contractor was not 

adequate and the proposal was not prepared in accordance with 

the U.S. Postal Service Supplying Principles and Practices.

Firm Fixed Price Proposal, Revision A, 

Submitted by Siemens Energy and Automation, 

Incorporated, Postal Automation Division; 

CA-CAR-08-019; 3/27/2008

$69,876,229 — $56,989,184 The cost or pricing data submitted by the contractor was not 

adequate and the proposal was not prepared in accordance with 

the U.S. Postal Service Supplying Principles and Practices.

Supplemental Report on Audit of Proposal 

Submitted by Northrop Grumman Corporation, 

Electronic Systems Company; 

CA-CAR-08-001; 10/15/2007

$14,417,441 $14,417,441 — The cost or pricing data submitted by the contractor was not 

adequate and the proposal was not prepared in accordance with 

the U.S. Postal Service Supplying Principles and Practices.

TOTAL $95,295,787 $14,417,441 $56,989,184

APPENDIX B
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

50

APPENDIX C

Description Number of Reports Dollar Value

Reports for which no management decision was made at the beginning of the reporting period 6 $59,285,542 

Reports issued during the reporting period 12 $547,637,127 

TOTAL 18 $606,922,669 

Reports for which a management decision was made during the report period 11 $552,681,919 

 (i) Value of recommendations agreed to by management $415,578,050 

 (ii) Value of recommendations that were not agreed to by management $137,103,869 

Reports for which no management decision was made by the end of the reporting period. 7 $54,240,750 

Reports for which no management decision was made within 6 months of issuance (See Note 1 for a list of individual reports) 2 $9,717,525 

Reports for which no management decision was made within 1 year of issuance (See Note 2 for a list of individual reports) 2 $41,811,124 

Note 1 - Reports for Which No Management Decision Was Made Within 6 Months of Issuance:

Subject Report Number Report Date

Recommend Funds Put to 

Better Use

Vehicle Management — National Trailer Lease Renewal — Pacific Area NL-AR-07-009 9/28/2007 $5,960,140

Vehicle Management — National Trailer Lease Renewal — Southwest Area NL-AR-07-005 6/15/2007 $3,757,385

TOTAL $9,717,525 

Note 2 - Reports for Which No Management Decision Was Made Within 1 Year of Issuance:

Subject Report Number Report Date

Recommend Funds 

Put to Better Use

Vehicle Management — Delivery Vehicles — Buy versus Lease NL-AR-04-005 9/30/2004 $40,296,954

Vehicle Management — National Trailer Lease Requirements — Capital Metro Area NL-AR-06-013 9/29/2006 $1,514,170

TOTAL $41,811,124

APPENDIX C

Recommendations That Funds Be Put to Better Use

For the period October 1, 2007 — March 31, 2008

As required by the IG Act, the following pages show the total number of audit reports and the total dollar value of recommendations for funds that can be put to 

better use by management.

Funds Put to Better Use. Funds that could be used more efficiently by implementing recommended actions.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

51

APPENDIX D

APPENDIX D

Reported Non-Monetary Benefits

For the period October 1, 2007 — March 31, 2008

Overview

Many of our audit reports identify areas for improvement that result in non-monetary benefits to the Postal Service. These benefits include improvements to 

service, protection of assets, and improvements in the reliability of data.

Type of Measure Value or Amount

IMPROVED SERVICE

Recommendations that address the Postal Service’s efforts to improve the quality and accessibility of its 

products and services

Number of recommendations 47 

Number of customer service audits conducted Number of audits 10 

SAFEGUARDING ASSETS

Assets or Accountable Items at Risk

Inadequate internal controls put the value of assets or accountable items (such as cash and stamps) at risk of loss Dollar value $69,917,447 

Physical Safety and Security

Dollar value of physical assets (plant, computer equipment, vehicles, and so forth) at risk of loss due to 

inadequate physical protection

Dollar value $1,600,000 

Recommendations that address the safety and security of Postal Service employees and/or the work environment Number of recommendations 92 

Number of employee/facility safety and security audits conducted Number of audits 15 

Information Technology Security

Inadequate controls/protection put the value of data, IT assets (software, networks), and employee work time at risk of loss Dollar value $587,997 

Number of data security/IT security audits conducted Number of audits 17 

Revenue at Risk

Dollar value of revenue that the Postal Service is at risk of losing (mailer seeking alternative solutions for current services) Dollar value $3,323,080 

Disbursements at Risk

Dollar value of disbursements made where proper Postal Service internal controls and processes were not followed Dollar value $25,633,856 

Goodwill / Branding

An “adverse impact” on goodwill is an actual event/problem that harms the Postal Service’s reputation or a potential 

problem that could negatively impact the Postal Service “brand name”

Number of issues identified 22 

RELIABILITY OF DATA

Records at Risk

Data at risk of corruption or loss due to inadequate internal controls and or protection Number of data 

records at risk

791,948,447 

Dollar value of data used to support management decisions that are not fully supported or completely accurate Dollar value $890,959,332 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

52

APPENDIX E

APPENDIX E

Reports With Significant Recommendations Pending Corrective Actions

For the period through March 31, 2008

As required by the IG Act, the following pages include a list of each audit report for which no management decision has been made by the end 

of the reporting period.

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

NO-AR-05-011 6/17/2005 Efficiency of the Los Angeles International Service Center

R-1 — Reduce mail processing workhours by 85,000. TID: October 2010

HM-AR-05-009 7/22/2005 Complaints Regarding Personnel Issues in the Caribbean District

R-13 — Ensure employees are properly recording their clock rings in accordance with policy. TID: Management working on closure request

R-19 — Establish a team to conduct a review of all calendar years 2002 through 2004 special job opportunity hiring of casual and transitional 

employees to ensure there were no additional individuals improperly hired. TID: Management working on closure request

HM-AR-06-004 5/19/2006 Postal Service’s Injury Compensation Programs’ Controversion and Challenge Process in Selected Areas

R-2 — Provide sufficient oversight of injury compensation control offices by including steps to validate the proper tracking and monitoring of 

controverted and challenged claims in the Human Resource Information System and the Claim Control Register in their Area Program reviews. 

TID: Management working on closure request

IS-AR-06-003 2/10/2006 Security Vulnerability Assessment and Audit of Automated Postal Center Systems

R-1 — Identify appropriate corrective action for identified vulnerabilities. TID: April 2008

R-7 — Implement appropriate maximum file sizes to ensure desired data is captured and retained for designated periods. TID: April 2008

FT-AR-06-016 3/31/2006 Postal Service’s Share of Health Insurance Premiums for Retired Employees

R-1 — Establish and communicate policies and procedures to continuously monitor the accuracy of the Postal Service’s share of health insurance 

premiums paid for retires and survivors. TID: June 2008

NL-AR-06-008 7/25/2006 Surface Transportation — Processing and Distribution Center Transportation Routes – Great Lakes Area

R-1 — Verify the actual cancellation, modification, or substitution of the 20 trips identified during our audit by management. 

TID: March 2008 (management has not provided a revised date)

R-2 — Verify the actual cancellation, modification, or substitution of the 73 trips with which Postal Service officials agreed. 

TID: March 2008 (management has not provided a revised date)

R-3 — Reassess the 14 trips which managers still feel are necessary and cancel or modify the trips as indicated by the reassessment, or 

document the reasons for retaining the trips. TID: March 2008 (management has not provided a revised date)

DR-AR-06-007 8/9/2006 Overdrawn Express Mail Corporate Accounts

R-3 — Convert all trust Express Mail Corporate Accounts to Automated Clearing House or credit card accounts. TID: March 2009

HM-AR-06-006 8/29/2006 Postal Service’s Grievance-Arbitration Service Centers

R-8 — Automate the processing and payment of arbitrator invoices using an existing Postal Service electronic purchasing system. TID: April 2007

R-9 — Assess the benefits of transitioning the grievance-arbitration processing function to the shared services center or another feasible 

alternative. TID: Not provided

IS-AR-06-017 9/27/2006 Enterprise Payment Switch Solution Phase 1: Requirements and Design

R-1 — Create or revise polices and procedures to provide guidance for Payment Card Industry compliance. TID: June 2008

R-2 — Resolve the inconsistencies between Postal Service polices and the Payment Card Industry Data Security Standard TID: June 2008 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

53

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

DR-MA-06-008 9/29/2006 Delivery and Retail Standard Operating Procedures – Great Lakes Area

R-2 — Resolve and close Integrated Operating Plan discrepancies timely as required by Standard Operating Procedures. TID: September 2007 

(management has not provided a revised date)

R-3 — Document unauthorized overtime using PS Form 1017-B, Unauthorized Overtime Record, and take corrective actions. TID: September 2007 

(management has not provided a revised date)

R-4 — Use Delivery Operations Information System performance reports to document carriers’ performance feedback. 

TID: September 2007 (management has not provided a revised date)

HM-AR-06-007 9/29/2006 Postal Service’s Schedule Awards Program in the New York Metro Area — Report I

R-5 — Revise the Basic Injury Compensation Course to include training on how to calculate and verify the schedule award amounts the OWCP 

authorizes and include the revised portion as mandatory training for all injury compensation managers and specialists. TID: Not provided

R-7 — Revise Postal Service policy to require injury compensation managers to monitor compensation payments via chargeback summaries and 

detail reports. Immediately notify the OWCP district offices of any underpayments. TID: Not provided

DA-AR-06-006 9/30/2006 Biohazard Detection System

R-1 — Procure and implement a technological solution to ensure Automated Facer Canceller System and Biohazard Detection System operations 

are synchronized for starts and stops. TID: August 2008

EN-AR-06-001 9/26/2006 Pasadena, California, Processing and Distribution Center Consolidation

R-3 — Update the Area Mail Processing policy. TID: April 2008

EN-AR-07-001 11/9/2006 Sioux City, Iowa, Processing and Distribution Facility Consolidation

R-1 — Complete revisions to the Sioux City Area Mail Processing (AMP) proposal. TID: December 2008

R-2 — Communicate updated information on the Sioux City AMP to stakeholders. TID: December 2008

R-3 — Provide detailed instructions for completing facility information. TID: December 2008

R-4 — Provide detailed instructions for estimating employee relocation. TID: April 2008

EN-AR-07-002 12/5/2006 Service Implications of Area Mail Processing Consolidations

R-1 — Improve instructions for completing service standards worksheets. TID: April 2008

R-2 — Revise Area Mail Processing (AMP) Guidelines to outline a specific methodology for measuring service performance. TID: April 2008

R-3 — Revise AMP Guidelines to include the impact on collection box pick-up times and any planned changes for business mail entry units 

and retail operations. TID: April 2008

R-4 — Revise the Collection Point Management System to track changes to collection box pick-up times. TID: September 2009

IS-AR-07-003 12/7/2006 Security Vulnerability Assessment of Legacy Applications at the Eagan Host Computing Services, Eagan, Minnesota

R-1 — Implement an automated asset management solution. TID: December 2008

IS-AR-07-006 12/26/2006 National Customer Management System Encryption

R-1 — Replace the current encryption methodology. TID: March 2008 (management has not provided a revised date)

R-2 — Verify all encryption algorithms used in the storage or transmission of sensitive cardholder data comply with Postal Service and Payment 

Card Industry Security requirements. TID: July 2008

IS-AR-07-007 2/23/2007 Enterprise Payment Switch Solution Phase II: Preparations for Security Testing

R-2 — Complete the Payment Card Industry Compensating Controls Worksheet. TID: June 2008 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

54

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

SA-AR-07-002 3/30/2007 Postal Service Security Controls and Processes for the Capital Metro Area

R-1 — Provide consolidated standard operating procedures and guidance to assist in performing duties and responsibilities consistently 

and in a timely manner. TID: July 2008

R-2 — Establish and implement appropriate internal controls, such as an internal review and approval process, to ensure that security personnel 

complete facility security surveys (FSS) accurately and in a timely manner. TID: October 2008

R-3 — Establish a formal process for conducting FSSs, including timeframes for addressing deficiencies and follow-up reviews. TID: October 2008

R-4 — Establish requirements for mandatory security training including periodic refresher training, for responsible security personnel at the area-, 

district-, and facility-levels. TID: January 2009

R-5 — Develop performance measures to assess the achievement of security goals. TID: January 2009

NL-AR-07-004 4/20/2007 Surface Transportation - Processing and Distribution Center Transportation Routes – Southwest Area

R-1 — Verify the actual cancellation, modification, or substitution of the 32 trips with which Postal Service managers agreed. 

TID: May 2007 (management has not provided a revised date)

NO-AR-07-004 4/25/2007 Efficiency Review of the Bridgeport Processing and Distribution Facility – Bridgeport, Connecticut

R-1 — Consolidate the Bridgeport Processing and Distribution Facility’s incoming mail processing operations into the Stamford Processing and 

Distribution Center. TID: Not provided

SA-AR-07-003 5/9/2007 Postal Service Security Controls and Processes for the Pacific Area

R-1 — Establish and implement appropriate internal controls (such as an internal review and approval process) to ensure security personnel 

complete facility security surveys accurately and in a timely manner. TID: October 2008

R-2 — Develop appropriate performance measures for physical security to assess the achievement of security goals and incorporate them into 

performance plans for area-, district-, and field-level security personnel. TID: January 2009

HM-AR-07-002 5/16/2007 Postal Service’s Workplace Safety and Workplace-Related Injury Reduction Goals and Progress

R-1 — Closely monitor conversion to the SAP Environmental Health and Safety module. Ensure the upgraded system captures costs by facility, 

district/performance cluster, and area office, as well as the costs for identified key categories. TID: March 2009

DR-MA-07-004 6/14/2007 Management of Retail Work Hours in Relation to the Workload for Mobile Units – Triboro District

R-1 — Revise the Handbook for Retail Operations, to include standard procedures for mobile units. TID: December 2008

R-2 — Distribute the revised Handbook for Retail Operations to Area officials for implementation. TID: December 2008

NL-AR-07-005 6/15/2007 Vehicle Management - National Trailer Lease Renewal – Southwest Area

R-1 — Strengthen management control over National Trailer Lease equipment allocated to the Southwest Area. TID: Not provided

R-2 — Analyze the number of trailers needed to transport mail and equipment and return unneeded trailers. TID: Not provided

R-3 — Analyze storage requirements and procure storage space in the most cost-effective manner. TID: Not provided

EN-MA-07-001 6/26/2007 Area Mail Processing Initiation Process

R-1 — Validate current consolidation opportunities with changes in the network realignment strategy. TID: June 2008

R-2 — Revise Area Mail Processing Guidelines to integrate the “bottom-up” and “top-down” approaches to identifying consolidation opportunities. 

TID: April 2008

EN-AR-07-003 7/18/2007 Bronx, New York, Processing and Distribution Center Consolidation

R-1 — Revise Area Mail Processing Guidelines to include a more objective and supportable method for determining workhours required to process 

mail volume transferred between mail processing facilities. TID: April 2008

IS-AR-07-012 7/25/2007 Review of Controls Over Postal Inspection Service Network Switches

R-2 — Apply the updated hardening standards and guidelines. TID: May 2008
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

55

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

EN-AR-07-004 8/14/2007 Post-Implementation Reviews of the Marina Processing and Distribution Center Area Mail Processing Consolidation

R-2 — Clarify the Area Mail Processing (AMP) Guidelines to identify and use the most current four postal quarters prior to the AMP 

submission as a source for review baseline data. TID: April 2008

R-3 — Include a description of other cost-saving initiatives underway concurrently with the consolidation in the review. TID: April 2008

R-4 — Establish a more rigorous review process to more effectively identify misstatements and errors in methodology. TID: April 2008

IS-AR-07-016 8/20/2007 Audit of Database Administration Practices

R-2 — Establish policies and procedures for the protection and use of sensitive data in the test, development, and production environments. 

TID: September 2008

CA-MA-07-005 8/2/2007 Commodity Sourcing Activities Within the Automation Category Management Center

R-1 — Explore options for developing alternative sources for mail automation equipment. TID: October 2008

R-2 — Negotiate mail automation technology rights that protect the Postal Service in the event of supplier debarment or suspension, while staying 

within the scope of existing and new technology protection clauses. TID: Management working on closure request

R-3 — Obtain cost or pricing data when negotiating noncompetitive, share-in-savings, incentive-type contracts for mail automation equipment. 

TID: September 2008 

IS-AR-07-017 8/29/2007 Separation of Duties at the Eagan, Minnesota; San Mateo, California; and St. Louis, Missouri Information Technology and 

Accounting Service Centers

R-1 — Assess the risk of the duties of all Information Technology and Accounting Service Center positions for the purpose of assigning these 

positions as sensitive. TID: March 2008 (management has not provided a revised date)

R-4 — Coordinate with the Inspection Service to ensure the proper clearance level is attributed to employees. TID: September 2008

DA-AR-07-005 9/10/2007 Automated Flat Sorting Machine 100 Enhancements

R-3 — Establish formal procedures for validating baseline throughput figures. TID: April 2008

DA-MA-07-002 9/13/2007 St. Louis Equipment Maintenance and Waste Disposal

R-1 — Continue to support initiatives for an effective maintenance program and formalize the training initiatives, including specific 

timeframes for completion. TID: September 2008

DR-MA-07-005 9/21/2007 Maintenance and Repair Payments to Commercial Vendors Using Postal Service Form 8230, Authorization for Payment

R-6 — Eliminate one clerk position at the San Mateo Accounting Center through attrition. TID: June 2008

HM-AR-07-004 9/26/2007 The Postal Service’s Comprehensive Strategic Workforce Plan

R-1 — Develop guidance and procedures for creating a comprehensive strategic workforce plan to address current and future workforce 

requirements. TID: December 2008

R-2 — Coordinate the agency-wide development and implementation of the comprehensive strategic workforce plan with the vice presidents 

responsible for human capital issues and other vice presidents responsible for workforce planning and operations. TID: December 2008

NL-AR-07-007 9/27/2007 Postal Vehicle Service Transportation Routes – Milwaukee Processing and Distribution Center

R-1 — Verify elimination of the 11,283 hours that management agreed to remove from trip schedules. TID: April 2008 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

56

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

FF-AR-07-254 9/28/2007 Audit Report - Chicago District Financial Accountability

R -1 — Develop and implement a mandatory financial training program for all unit managers and supervisors. TID: September 2008

R-2 — Establish a system to monitor compliance with financial procedures, establish, and enforce accountability for non-compliance. 

TID: April 2008

R-3 — Collect cash/stamp shortages and post office box/caller service fees identified in the individual site memoranda, as appropriate. 

TID: April 2008

R-5 – Provide a quarterly and annual summary of unit compliance with financial procedures regarding remediation of the findings contained 

in this report. TID: October 2008

R-6 — Monitor monthly compliance with the cash deposit procedures for the Grand Crossing Station, until remediation of the issue has been 

maintained for 12 months. TID: August 2008

MS-AR-07-004 9/28/2007 Postal Service Passport Program

R-1 — Develop a reconciliation process to ensure that both the Postal Service’s Facilities Database and the Department of State’s database contain 

identical passport acceptance facilities information. TID: Management working on closure request

NL-AR-07-008 9/28/2007 The Impact of Transportation on Chicago District Performance

R-1 — Analyze Chicago District operations to identify excess postal vehicle resources. TID: Not provided

R-2 — Improve communication and coordination between processing facilities and local post offices by improving local transportation planning and 

scheduling. TID: Not provided

R-3 — Require managers to plan transportation between the two facilities and properly account for mail in trailers. TID: Not provided

R-4 — Improve data collection by properly supervising employees and properly training employees on the Surface Visibility system. 

TID: Not provided

NL-AR-07-009 9/28/2007 Vehicle Management — National Trailer Lease Renewal — Pacific Area

R-1 — Strengthen management control over National Trailer Lease equipment allocated to the Pacific Area. TID: March 2008 (management has 

not provided a revised date) 

R-2 — Analyze the number of trailers needed to transport mail and equipment. Return unneeded trailers. TID: March 2008 (management has not 

provided a revised date)

R-3 — Analyze the number of 28-foot trailers needed, fill operational requirements with 53-foot trailers where feasible, and return unneeded 

equipment to the leasing contractor. TID: March 2008 (management has not provided a revised date)

R-4 — Analyze storage requirements and procure storage space in the most cost-effective manner. TID: March 2008 (management has not 

provided a revised date)

NO-AR-07-012 9/28/2007 Timeliness of Mail Processing at the Chicago, Illinois, Cardiss Collins, Processing and Distribution Center

R-1 — Monitor delayed mail on a daily basis and develop action plans to ensure timely processing of the mail. TID: Not provided (follow-up work 

will be done by September 2008)

R-2 — Ensure supervisors are properly trained and held accountable for results in their operations. TID: Not provided 

R-3 — Establish performance goals for employees, monitor achievement of those goals, and rate performance based on goals. TID: Not provided

R-4 — Ensure timely and proper preventive maintenance is conducted. TID: Not provided 

R-5 — Ensure proper staffing and use of overtime in relation to workload. TID: Not provided

R-6 — Ensure proper plans are developed and followed for events that will affect mail processing operations. TID: Not provided (follow-up work will 

be done by September 2008)

R-7 — Develop contingency plans in the event that mail cannot be processed at the Cardiss Collins Processing and Distribution Center. 

TID: Not provided (follow-up work will be done by September 2008) 

R-8 — Provide constant supervision to improve the timely processing of the mail. TID: Not provided
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

57

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

DR-AR-07-016 9/29/2007 Implementation and Utilization of the Growth Management Tool 

R-1 — Update Delivery and Retail Growth and Delivery Point Management Standard Operating Procedures. TID: July 2008

DR-AR-08-001 10/11/2007 Timely City Delivery — Chicago District

R-1 — Implement Delivery Standard Operating Procedures in all delivery units. TID: Not provided

R-2 — Provide appropriate oversight to ensure delivery unit Standard Operating Procedures are in place, operating as intended, and 

achieving desired results. TID: Not provided

R-3 — Validate that the Chicago District has implemented Delivery Standard Operating Procedures in all delivery units. TID: Not provided

R-4 — Provide appropriate oversight to ensure the Chicago District is monitoring delivery unit performance. TID: Not provided

EN-MA-08-001 10/19/2007 Automated Area Mail Processing Worksheets

R-1 — Enhance Area Mail Processing guidelines to use facility-specific historical productivity rates. TID: April 2008

R-2 — Analyze Highway Contract Route (HCR) variable and fixed–cost data to determine the average price to mileage increase ratio. TID: April 2008

R-3 — Document major concerns and input provided by stakeholders. TID: April 2008

R-10 — Include specific instructions to retain all documentation and reports used to complete the area mail processing proposal. TID: April 2008

HM-AR-08-002 11/2/2007 The Postal Service’s Violence Prevention and Response Programs in Three Southeast Area Performance Clusters

R-1 — Implement an internal control to ensure current zero tolerance policy is properly posted in all facilities, at least annually. TID: May 2008

R-2 — Update the zero tolerance policy to include the lead plant managers’ signatures. TID: May 2008

R-5 — Instruct Human Resources managers of their responsibility to conduct periodic reviews to determine if management has met the mandatory 

workplace violence awareness training requirements for all employees; implement a control to determine which managers and supervisors did not 

receive the violence awareness training. TID: May 2008

R-7 — Implement a control to ensure threat assessment teams comply with the Threat Assessment Team Guide when responding to and assessing 

reports of potentially violent situations and inappropriate behavior. TID: May 2008

R-8 — Direct the threat assessment teams to review the incidents that had insufficient supporting documentation and determine if they were 

resolved in accordance with the Threat Assessment Team Guide. TID: May 2008

R-9 — Direct Performance Cluster managers to ensure the threat assessment teams document their evaluations of climate indicators to identify 

trends and potential hotspots. TID: May 2008

R-11 — Implement controls to ensure threat assessment teams document the processes used to measure the team’s performance and ensure the 

measurements used are adequate for determining success and identifying areas for improvement. TID: May 2008

R-12 — Implement an internal control to ensure Performance Cluster managers provide adequate oversight of their threat assessment teams to 

improve the effectiveness of the violence prevention and response programs. TID: May 2008 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

58

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

HM-AR-08-003 11/7/2007 The Postal Service’s Violence Prevention and Response Programs in Three Southwest Area Performance Clusters

R-1 — Implement an internal control to ensure current zero tolerance policy is properly posted in all facilities, at least annually. TID: May 2008

R-3 — Notify Performance Cluster managers that workplace violence awareness training is a fiscal year mandatory requirement; and it is their 

responsibility to ensure that training occurs. TID: May 2008

R-4 — Determine which managers, supervisors, and 204b supervisors have not received the 8-hour (one-time) workplace violence awareness 

training; and provide the training as soon as possible. TID: May 2008

R-5 — Instruct Human Resources managers of their responsibility to conduct periodic reviews to determine if management has met the mandatory 

workplace violence awareness training requirements for all employees; and to determine which managers and supervisors did not receive training. 

TID: May 2008 

R-7 — Implement a control to ensure threat assessment teams comply with the Threat Assessment Team Guide when responding to and assessing 

reports of potentially violent situations and inappropriate behavior. TID: May 2008 

R-8 — Direct the threat assessment teams to review the incidents that had insufficient or no supporting documentation and determine if they were 

resolved in accordance with the Threat Assessment Team Guide. TID: May 2008

R-9 — Ensure threat assessment teams document their evaluations of climate indicators to identify trends and hotspots. TID: May 2008 

R-11 — Ensure threat assessment teams implement performance measures that gauge whether the team’s efforts and processes to prevent 

violent incidents in the workplace are successful or need improvement. TID: May 2008 

R-12 — Implement controls to ensure threat assessment teams document the processes used to measure the teams’ performance, as required 

by the Threat Assessment Team Guide, and ensure the measurements used are adequate for determining success and identifying areas for 

improvement. TID: May 2008

R-13 — Implement an internal control to ensure Southwest Area Performance Cluster managers provide adequate oversight of their threat 

assessment teams to improve the effectiveness of the violence prevention and response programs. TID: May 2008 

R-14 — Ensure management implements adequate controls. TID: May 2008

IS-AR-08-002 11/6/2007 Information Systems Access Controls at Selected Information Technology Facilities for Fiscal Year 2007

R-2 — Reconcile the number of users between two applications and disable all unused or inactive accounts. TID: February 2008 (management 

has not provided a revised date)

R-5 — Change the password expiration and password length default settings to comply with Postal Service policy. TID: February 2008 

(management has not provided a revised date)

MS-AR-08-001 11/8/07 Review of Postal Service First-Class Permit Reply Mail

R-1 — Revise Domestic Mail Manual nonmachinable criteria. TID: Management working on closure request

R-2 — Notify affected mailers that their two-way Digital Video Disk return mailpieces must be tested by Postal Service Engineering staff to ensure 

that the affected mailpieces are machinable, or be subject to the $0.17 nonmachinable surcharge. TID: Management working on closure request

R-3 — Ensure Business Mail Entry Unit employees begin collecting the $0.17 per piece nonmachinable surcharge for all affected mailpieces. 

TID: Management working on closure request 
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

59

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

HM-AR-08-004 11/13/2007 The Postal Service’s Violence Prevention and Response Programs in Two Pacific Area Performance Clusters

R-1 — Implement an internal control to ensure current zero tolerance policy is properly posted in all facilities, at least annually. TID: June 2008

R-2 — Notify Performance Cluster managers that workplace violence awareness training is a fiscal year mandatory requirement and it is their 

responsibility to ensure that training occurs — preferably during non-peak operational periods. TID: October 2008

R-3 — Determine which managers and supervisors have not received the 8-hour (onetime) workplace violence awareness training, and provide the 

training as soon as possible. TID: September 2008

R-4 — Direct Performance Cluster managers to ensure the remaining managers and supervisors receive the 8-hour (one-time) workplace violence 

awareness training as soon as possible. TID: April 2008

R-5 — Instruct Human Resources managers of their responsibility to conduct periodic reviews (at least quarterly); determine if management 

has met the mandatory workplace violence awareness training requirements for all employees (special supervisors) and threat assessment team 

members; implement a control to ensure Human Resources managers conduct periodic reviews. TID: October 2008

R-7 — Implement a control to ensure threat assessment teams comply with the Threat Assessment Team Guide when responding to and assessing 

reports of potentially violent situations and inappropriate behavior. TID: September 2008

R-8 — Direct the threat assessment team to review the incidents that had insufficient supporting documentation and determine if they were 

resolved in accordance with the Threat Assessment Team Guide. TID: June 2008

R-9 — Ensure the threat assessment teams document their evaluations of climate indicators to identify trends and potential hotspots. 

TID: June 2008

R-11 — Ensure the threat assessment team has the requisite number and type of threat assessment team members. 

TID: March 2008 (management working on closure request)

R-12 — Implement controls to ensure the threat assessment team document the processes used to measure the team’s performance, as required 

by the Threat Assessment Team Guide; and ensure the measurements used are adequate for determining success and identifying areas for 

improvement. TID: September 2008 

R-13 — Implement an internal control to ensure Performance Cluster managers provide adequate oversight of their threat assessment teams to 

improve the effectiveness of violence prevention and response programs. TID: October 2008

R-14 — Ensure management implements adequate controls. TID: October 2008

FT-AR-08-001 11/15/2007 Manual Transportation Payments

R-2 — Communicate policies and procedures to appropriate personnel. TID: June 2008

MS-AR-08-002 11/16/2007 Function 4 Business Plan Process

R-1 — Adhere to the Function 4 on-site review schedule and ensure qualified teams are available to conduct scheduled reviews. TID: July 2008

R-2 — Monitor performance and track adherence to the approved Function 4 Business Plans. TID: July 2008

R-3 — Provide Automated Workforce Projection System training to ensure awareness of the requirements to update the system with the Function 4 

on-site and administrative reviews. TID: July 2008

R-4 — Update the Automated Workforce Projection System workload annually for every unit. TID: July 2008

FF-AR-08-030 11/29/2007 Postal Accountability and Enhancement Act, Section 709, Assessment of Certain Rate Deficiencies

R-1 — Update guidance to improve the revenue deficiency monitoring and collection process; and to reflect current Postal Service regulations, 

terminology, and accounting codes. TID: June 2008

R-2 — Clarify and communicate the 12-month time limit for assessing revenue deficiencies to appropriate officials and mailers. TID: June 2008

SA-AR-08-003 12/19/2007 Postal Inspection Service Security Controls and Processes

R-1 — Assess the allocation of resources to ensure the appropriate assignment of personnel to effectively and efficiently perform security surveys 

and reviews. TID: Not provided

DA-AR-08-001 1/8/2008 Review of Ventilation Filtration System Utilization

R-1 — Develop and implement a mechanical lockout device for the VFS control panel. This will limit control panel access for making operating 

mode changes to authorized personnel. TID: June 2008
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

60

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

HM-AR-08-005 1/14/2008 The Postal Service’s Violence Prevention and Response Programs in Four Northeast Area Performance Clusters

R-3 — Notify Performance Cluster managers that workplace violence awareness training is a fiscal year mandatory requirement, and it is 

their responsibility to ensure training occurs, preferably during non-peak operational periods. TID: March 2008 (management has not 

provided a revised date)

R-9 — Implement a control to ensure threat assessment teams comply with the Threat Assessment Team Guide when responding to and assessing 

reports of potentially violent situations and inappropriate behavior. TID: March 2008 (management has not provided a revised date)

R-10 — Direct threat assessment teams to review the incidents that had insufficient supporting documentation and determine if they were resolved 

in accordance with the Threat Assessment Team Guide. TID: March 2008 (management has not provided a revised date)

R-11 — Ensure the threat assessment teams document their evaluations of climate indicators to identify trends and potential hotspots. 

TID: March 2008 (management has not provided a revised date)

R-14 — Implement controls to ensure teams document the process used to measure team’s performance and ensure they are adequate for 

determining success and identifying areas for improvement. TID: March 2008 (management has not provided a revised date)

FT-AR-08-005 1/24/2008 New York International Service Center — Inbound International Mail

R-1 — Establish and communicate policies and procedures to address the complete processing and billing cycle for inbound international mail. 

TID: March 2009

R-2 — Evaluate, modify, and test the program used to prepare inbound Express Mail data for billing. TID: March 2008 (management has not 

provided a revised date)

R-3 — Direct International Accounting Branch and appropriate systems personnel to establish controls to ensure that foreign postal administrations 

are correctly billed for all valid dispatches, including dispatch numbers used more than once in a calendar year. TID: December 2008

IS-AR-08-004 2/6/2008 Enterprise Payment Switch Solution Phase III: Security Testing

R-1 — Complete the Information Security Assurance process in accordance with Postal Service policy. TID: February 2008 (management has not 

provided a revised date)

R-2 — Review the Information Security Assurance document package completed in Recommendation 1 to ensure compliance with Postal Service 

and Payment Card Industry security requirements. TID: February 2008 (management has not provided a revised date) 

R-3 — Include in the Postal Service’s 2007 Payment Card Industry Report on Compliance a description of planned actions for all uncorrected risks 

identified by the Information Security Assurance process. TID: January 2008 (management has not provided a revised date)

CRR-AR-08-002 2/12/2008 Security Review of the Electronic Verification System

R-2 — Revise Publication 91, Confirmation Services Technical Guide, to require mailers to utilize a secure file transfer method when transmitting 

manifests for electronic verification to the Postal Service. TID: September 2008 

DA-AR-08-002 2/15/2008 Equipment Maintenance Opportunities

R-1 — Develop an automated system support solution for production-based maintenance to facilitate daily maintenance routines. TID: May 2008

R-3 — Provide training to field maintenance supervisors on production-based maintenance capabilities, usage, and benefits. TID: May 2008

R-4 — Require site maintenance managers to adhere to requirements to implement production-based maintenance. TID: Not provided

FT-AR-08-008 2/15/2008 Postal Service Board of Governors’ Travel and Miscellaneous Expenses for Fiscal Year 2007

R-1 — Implement and communicate formal, written policies and procedures for processing Board of Governors’ travel vouchers, 

including requirements for payment with only two original signatures, to all applicable personnel. TID: March 2008 (management has 

not provided a revised date) 

NL-AR-08-002 2/19/2008 Air Networks — Federal Express Transportation Agreement – Pacific Area

R-1 — Use surface transportation to move mail that does not require air transportation to meet Postal Service on-time standards. 

TID: March 2008 (management has not provided a revised date)

R-3 — Maximize the use of bypass containers by using bypass sorting as much as possible at processing plants and by dispatching mail to airports 

in time for terminal handling service contractors to load it into bypass containers. TID: Not provided
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

61

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

HM-MA-08-001 2/21/2008 The Postal Service’s Equal Employment Opportunity Contracting Function

R-1 — Fully document the processes and procedures used to select EEO contract investigation and final agency decision letter writing services. 

TID: September 2008.

EN-AR-08-002 2/29/2008 St. Louis Airport Mail Center Outsourcing

R-2 — Establish a post-implementation review program for Airport Mail Centers (AMC) that compares anticipated savings with actual results. 

TID: March 2008 (management has not provided a revised date)

R-3 — Conduct a post-implementation review for the St. Louis AMC closure and outsourcing initiative using the guidance established in 

recommendation 2. TID: Not provided

DR-AR-08-004 3/4/2008 City Delivery Vehicle Mileage — Base Versus Actual — National Capping Report

R-2 — Revising the Automated Vehicle Utilization System to eliminate the possibility of negative miles being recorded by modifying the system to 

prevent input of the ending mileage being less than the beginning mileage. TID: Not provided

IS-AR-08-006 3/6/2008 Identity Theft Potential in Postal Service Information Systems

R-1 — Ensure that employees and contractors accessing identified systems have the appropriate security clearance and that the clearance status 

is documented with the access request. TID: September 2008

R-3 — Establish and implement host encryption solutions for data back-up dates prior to off-site shipping and storage. TID: May 2008

IS-AR-08-008 3/11/2008 National Accounting Oracle Financials Application Data Encryption Follow-Up

R-2 — Perform verification tests to ensure management identifies and adequately protects all sensitive information in accordance with policy. 

TID: March 2008 (management has not provided a revised date)

IS-AR-08-009 3/14/2008 Update Processes for Active Directory and CA-ACF2

R-1 — Review the manager roles in the two systems to determine how these roles can be integrated. TID: May 2008 

R-2 — Review the capabilities and establish requirements for tracking employees assigned to detail positions and how to pass on timely and 

accurate data to another system. TID: December 2008

R-3 — Develop and implement planned enhancement that will ensure access reviews take place when significant changes occur in job

assignments. TID: May 2008

FF-AR-08-131 3/19/2008 Fiscal Year 2007 Financial Installation Audits — Business Mail Entry Units

R-1 — Provide proper management oversight and instructions to schedule periodic verifications when Periodicals mailings are received during nonbusiness hours. TID: September 2008

R-2 — Develop and implement an action plan to measurably reduce the current deficiency and its likelihood of continuing. TID: September 2008

R-3 — Properly train all employees, including supervisors, who accept business and Periodicals mail. TID: September 2008

R-4 — Review existing policies and procedures for consistency. TID: September 2008

MS-AR-08-003 3/19/2008 Local Stamps on Consignment Programs

R-1 — Provide information about local Stamps on Consignment programs to the Manager, Retail Access Channels. TID: Not provided

R-2 — Terminate existing local Stamps on Consignment agreements, incorporate them into the national program, and collect the past due amounts 

that consignees owe the Postal Service for stamp consignments. TID: Not provided

DA-AR-08-003 3/20/2008 Northern Virginia District Energy Management Savings Opportunities

R-1 — Establish energy awareness programs. TID: Not provided

R-2 — Explore the use of low- and no-cost energy conservation initiatives. TID: Not provided

R-3 — Direct applicable personnel to perform periodic walk-through inspections at facilities to measure compliance with energy 

management program initiatives. TID: June 2008

R-4 — Direct applicable personnel to review and monitor energy bills to ensure accuracy and to review the adequacy of rate plans. 

TID: Not provided
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

62

APPENDIX E

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

CA-AR-08-006 3/21/2008 Voyager Card Program

R-1 — Reiterate to district personnel the importance of complying with Voyager Card policies and procedures. TID: Not provided

R-2 — Direct district personnel to provide sufficient oversight of their Voyager Card Programs. TID: Not provided

MS-MA-08-001 3/26/2008 Review of Business Over the Counter

R-1 — Add language to Postal Service (PS) Form 3849, “Sorry We Missed You,” to make customers aware they can request redelivery through 

USPS.com and the contact center. TID: May 2008

R-2 — Add language to PS Form 8076, “Authorization to Hold Mail,” to make customers aware they can place mail on hold through USPS.com and 

the contact center. TID: June 2008

R-3 — Use advertisements to inform customers that hold mail and redelivery services are available via USPS.com and the contact center. 

TID: Not provided

NL-AR-08-003 3/26/2008 Postal Vehicle Service Transportation Routes – San Francisco Processing and Distribution Center

R-1 — Verify elimination of the 26,698 hours that management agreed to remove from trip schedules. TID: May 2008

R-2 — Coordinate and conduct a zero-base review to determine if all facility driver tasks are necessary, determine how much time is necessary for 

drivers to perform the tasks, and adjust driver schedules accordingly. TID: May 2008 

NO-AR-08-003 3/28/2008 Summary Audit on the Timeliness of Mail Processing, Transportation, and Delivery Operations in the Chicago District

R-1 — Monitor the processing and delivery of mail to ensure these operations are timely. TID: Not provided

R-2 — Conduct safety talks, correct potential hazards, and follow up on limited duty employees and unscheduled absences. TID: Not provided

R-3 — Reduce workhours by 697,245 by fiscal year 2017. TID: Not provided

R-4 — Improve delivery operations efficiency by improving supervision and holding employees accountable. TID: Not provided

NL-AR-08-004 3/29/2008 Vehicle Management — Unsecured Trailers — San Francisco Processing and Distribution Center

R-1 — Secure Postal Service property and equipment stored on the unsecured lot have damaged or defaced trailers repaired or removed from 

operation. TID: Not provided

CRR-AR-08-003 3/31/2008 Application Controls Review of the Electronic Verification System

R-1 — Re-evaluate all warning messages in the Product Tracking System to determine whether they impact the postage calculation. 

TID: March 2009

R- 2 — Strengthen the edit rules in the Product Tracking System to enforce the requirements for destination entry discounts. TID: June 2009

R-3 — Develop and implement formal procedures for sampling and monitor delinquent sampling. TID: December 2009

R-5 — Develop reconciliation solution. TID: September 2008

CRR-AR-08-004 3/31/2008 In-Office Cost System Telephone Readings

R-1 — Expand existing quality control programs to assist area and district management with identifying and monitoring data collectors with a high 

number of inaccurate In-Office Cost System readings. TID: December 2008 

R-4 — Implement the expanded quality control program developed by Statistical Programs to identify and monitor data collectors with a high 

number of inaccurate In-Office Cost System readings. TID: December 2008

R-5 — Follow the quality control procedures Statistical Programs has established to handle the In-Office Cost System readings that do not meet 

data integrity standards to prevent such data from inclusion in national aggregation. TID: December 2008

FT-AR-08-010 3/31/2008 Fiscal Year 2007 Postal Service Financial Statements Audit — St. Louis Information Technology and Accounting Service Center

R-1 — Implement and communicate complete written policies and procedures to require employees to enter and update rates timely, to obtain 

support for rates as necessary, and periodically verify international rates. TID: Not provided

R-2 — Modify policies and procedures to include the destination facility validation in the highway extra trips payment process. TID: June 2009
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

63

APPENDIX F

Report Number Issue Date

Report Title, Recommendation Summary 

 R = Recommendation number 

TID = Target Implementation Date

MS-AR-08-004 3/31/2008 Click-N-Ship Program

R-1 — Disable customers’ ability to print labels without purchasing postage from the Click-N-Ship application. TID: May 2008

R-2 — Emphasize Click-N-Ship Website instructions. TID: June 2008

R-3 — Communicate Postal Service policies and procedures to affected employees pertaining to items with omitted postage, insufficient postage, 

and mailed with stale dates. TID: May 2008 

R-4 — Strengthen policies and procedures to include methods to detect packages retrieved from collection boxes with omitted postage and with 

stale dates. TID: May 2008

R-5 — Educate delivery and retail employees on policies and procedures relating to accepting Click-N-Ship packages mailed with omitted postage, 

insufficient postage, and with stale dates. TID: May 2008

R-6 — Provide instructions on the SCAN form for delivery and retail employees to follow when handling Click-N-Ship items. TID: June 2008

R-7 — Educate delivery and retail employees on SCAN forms when accepting Click-N-Ship packages. TID: April 2008

R-8 — Consolidate the three Click-N-Ship merchant identification numbers into one. TID: September 2008

R-9 — Develop written policies and procedures for the Click-N-ship program office. TID: September 2008

APPENDIX F

Significant Management Decisions in Audit Resolution

For the period October 1, 2007 — March 31, 2008

As required by the IG Act, the following page discusses information concerning any significant management decision with which the Inspector General disagrees 

and is currently in audit resolution.

Status

The OIG has no significant management decisions in audit resolution as of March 31, 2008.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

64

APPENDIX G

APPENDIX G

Investigative Statistics1

For the period October 1, 2007 — March 31, 2008

Contract Fraud Financial Fraud Health Care Fraud

Internal 

Mail Theft

Official 

Misconduct TOTAL

Investigations completed 69 422 724 945 1,594 3,754

Arrests 5 99 23 166 125 418

Indictments/informations 3 98 21 151 87 360

Convictions/pretrial diversions2 7 75 13 115 92 302

Administrative actions taken 25 181 134 330 728 1,398

Cost avoidance — $2,100,411 $95,495,877 — — $97,596,288

Total fines, restitutions, and recoveries 3,466,719 2,068,429 6,175,255 251,769 1,643,815 $13,605,987

Amount to the Postal Service3 2,919,219 1,913,047 2,724,366 164,774 1,523,345 $9,244,750

Cases referred to management for 

administrative action

— — — — — 1,891

1

 Statistics include joint investigations with other law enforcement agencies. 

2

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

3

 Amount included in fines, restitutions, and recoveries.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

65

Type of Scheme Complaints Filed

Consent 

Agreements FROs

Cease & 

Desist Orders

Advance fee 3 — 1 1

Contests/sweepstakes 4 1 — 1

Coupon fraud 4 4 — 4

False billings 9 6 3 8

Internet auction 8 3 4 7

Lotteries (foreign and domestic) 2 1 — 2

Medical 5 — — —

Merchandise:

Failure to furnish 4 1 — 1

Failure to pay 17 7 1 7

Misrepresentation 10 — — —

Miscellaneous 11 3 — 4

Telemarketing 2 1 2 2

Work at home 15 5 4 9

TOTAL 94 32 15 46

Other Administrative Actions

Administrative action requests 96

Temporary restraining orders requested —

Temporary restraining orders issued —

Cases using direct purchase authority 2

Civil penalties (Section 3012) imposed $329,800 

Test purchases $204 

Withholding mail orders issued 79

Voluntary discontinuances 8

APPENDIX H

APPENDIX H

Summary of U.S. Postal Inspection Service Actions Under 39 USC 3005 and 3007

For the period October 1, 2007 — March 31, 2008

The Postal Reorganization Act requires the Postmaster General to furnish information, on a semiannual basis, on the investigative activities of the Postal 

Service by the U.S. Postal Inspection Service. 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 on investigative activities to the OIG rather than to the 

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 Inspection Service investigative 

activities; use of subpoena power; and any additional information the OIG may require.

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.

FY 2008 Financial Reporting 

On Investigative Activities

Type

Personnel $143,267,671 

Nonpersonnel $24,789,227 

TOTAL $168,056,898 

Capital obligations $4,740,645 

Note: 

1) There is a significant increase in the number of subpoenas issued this past summer due to a growing increase in inbound foreign lottery solicitations mailed from Canada. 

2) There is a significant increase in the number of administrative actions and civil penalties due largely to renewed emphasis on that program by the Postal Service’s Office of Counsel.
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

66

Administrative Subpoenas Requested by the Inspection Service: 

October 1, 2007 — March 31, 2008

Defendant: Violation: Date Issued: Date Returned:

08-001 American Online, Inc. 39 USC 3005; 3016 Sweepstakes promotion 10/26/07 —

08-002 Electric Lightwave, Inc. 36 USC 3005; 3016 false representation; invoice 10/26/07 —

08-003 Fonorola Corporation 39 USC 3005; 301 Deceptive mailings 10/26/07 Not served

08-004 Lightyear Network Solutions, LLC 39 USC 3005; 3016 Deceptive mailing; sweepstakes 10/26/07 —

08-005 Lightyear Network Solutions, LLC (second submission) 39 USC 3005; Deceptive mailing; sweepstakes 10/26/07 —

08-006 AdBoutique 39 USC 3005; 3016 Deceptive mailing 10/26/07 12/5/07

08-007 Clifford Robison 39 USC 3005; 3016 Deceptive mailing; sweepstakes 10/18/07 1/31/08

08-008 Mastiff Consultants, Inc. (second submission) 39 USC 3005; 3016 Deceptive mailing; sweepstakes 11/1907 11/28/07

08-009 Jo Lee Smith, and Smithhaven, Inc. 39 USC 3005; 3016 Deceptive mailing; sweepstakes Withdrawn; to be resubmitted 

as two subpoenas

—

08-010 Libbey J. Tiefer (International Express Awards, Inc.) 39 USC 3016; False representation; sweepstakes mailing 12/4/07 1/11/08

08-011 U.S. Bank National Association 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/14/08

08-012 Todd Hoover 39 USC 3016; False representation; sweepstakes mailing 12/7/07 To be personally served

08-013 Scott Diltz 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/8/08

08-014 Kevin Kasday (trustee for Greyhound Trust) 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/8/08

08-015 Kelly Fyffe 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/8/08

08-016 Alisa Williams 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/9/08

08-017 Nicole Scott 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/9/08

08-018 Jo Lee Smith 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/10/08

08-019 Smithhaven, Inc 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/10/08

08-020 Andrea Burrow 39 USC 3016; False representation; sweepstakes mailing 12/7/07 1/14/08

08-021 Don Lyon 39 USC 3016; False representation; sweepstakes mailing 12/10/07 1/14/08

08-022 Michael S. Fox 39 USC 3016; False representation; sweepstakes mailing 12/10/07 1/9/08

08-023 Sheilah Williams 39 USC 3016; Sweepstakes Mailing 12/10/07 —

08-024 Paul Ivaska 39 USC 3016; False representation; sweepstakes mailing 12/10/07 1/24/08

08-025 Pam Nagel 39 USC 3016; False representation; sweepstakes 12/10/07 1/18/08

08-026 Transmonde USA, Inc. (Hartford Direct) 39 USC 3016; Psychic scheme 2/13/08 —

08-027 Prize Paradise, Inc. 39 USC 3016; False representation; sweepstakes 3/27/08 —

08-028 Cashorama, Inc. 39 USC 3016; False representation; sweepstakes 3/27/08 —

08-029 Elwood & Stanley, Inc. 39 USC 3016; False representation; sweepstakes 3/27/08 —

APPENDIX H
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

67

APPENDIX I

APPENDIX I

Closed Congressional and Board of Governors Inquiries

For the Period October 1, 2007 — March 31, 2008

This appendix lists the Congressional and Board of Governors inquiries the OIG closed during this reporting period. We reviewed these inquiries to help identify 

systemic issues and to determine the need for future Postal Service-wide audits. Inquiries are listed in the chronological order of receipt.

Investigations

Requestor Allegation/Concern Our Findings Closure Date

Representative, New York Unlicensed contractor illegally used another's New York State 

Alarm License to obtain work at a postal facility.

Our investigation resulted in an arrest and a guilty plea. We provided 

information on the resolution of the case to management.

3/10/08

Senator, Massachusetts Whistleblower reprisal after reporting waste and 

mismanagement to the OIG.

We reviewed, found concerns communicated to us were not covered 

by the Postal Service whistleblower protection rules. Employee 

has pending Equal Employment Opportunity (EEO) complaints, we 

declined additional work.

11/14/07

Representative, Maryland Management intentionally delayed or hid mail in trailers at 

multiple facilities.

We investigated, did not substantiate allegations. However, we 

identified significant mail delay problems in the area and reported 

our findings to management. 

10/25/07

Representative, Oversight 

Committee Ranking Member 

Fraud, waste, and abuse by a postal manager. We investigated, did not substantiate allegations. 10/31/07

Representative, Florida Management used forged and falsified records as a basis for 

distributing federal retirement account benefits and insurance 

proceeds following the death of a postal employee.

We investigated, found management followed proper regulations 

and procedures.

10/4/07

Representative, California An employee intentionally delayed bulk political mail to help 

the local opposition party.

We investigated, did not substantiate allegations. 10/4/07

Representative, New Jersey Mishandling of mail at a P&DC. We investigated, did not substantiate allegations. However, 

we found delayed mail problems and provided our findings to 

district management.

10/31/07

Representative, Florida Mail tampering by an employee. We investigated, did not substantiate allegations. 10/4/07

Senator, Florida Retaliation for contacting Congress about 

employment-related issues.

We reviewed, found the case met none of the four necessary 

elements of whistleblower reprisal.

10/31/07

Representative, Illinois A Postmaster took mail and stole bank account 

information to sell to others. 

Our investigation did not substantiate allegations and found no 

similar complaints or instances of tampering or losses for this ZIP 

Code; we noted the complainant refused to cooperate in procedures 

to track and report lost mail.

10/10/07

Representative, New Jersey Lost or stolen Registered Mail originating in Israel. We investigated. We could not determine the point where the loss 

occurred; but we found no evidence of misconduct on the part of 

postal employees and no pattern in the area.

11/14/07

Representative, New York Retaliation for contacting the OIG on workplace issues. We reviewed, found case did not meet the four necessary 

elements of whistleblower reprisal. 

2/6/08

Senator, Massachusetts Employment-related complaint. The employee had a pending Equal Employment Opportunity 

complaint; we deferred any work pending the EEO review.

10/22/07

Representative, California In retaliation for reporting a physical assault, management 

withheld overtime pay.

We investigated, did not substantiate allegations; we noted pay 

errors had been corrected, and assisted in explaining earnings 

statement to complainant.

11/30/07

Representative, Virginia Letter Carrier signed for but did not deliver a registered 

package; investigating agents harassed complainant.

We confirmed the Letter Carrier signed for package, as a courtesy, 

which we reported to management. We found no misconduct on the 

part of the Special Agents.

11/6/07

Senator, California Mail tampering by postmasters and employees of 

multiple post offices.

Our investigation did not substantiate allegations and found no similar 

complaints, instances of tampering, or losses for these post offices.

11/15/07
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

68

APPENDIX I

Requestor Allegation/Concern Our Findings Closure Date

Representative, New York Theft of greeting cards, possibly by a postal employee. Our investigation revealed a postal employee had unauthorized 

possession of U.S. Mail and was stealing cash. We arrested 

the employee and provided our findings to management and 

the U.S. Attorney.

1/10/08

Senator, Delaware Theft of two parcels, both originating in the United Kingdom, 

possibly by a postal employee.

We investigated, found no evidence of misconduct or theft on the 

part of the postal employees, and unsuccessfully attempted to locate 

the missing items.

1/7/08

Representative, Texas Agent harassed subject of an investigation; request for 

expungement of investigatory records under the Privacy Act.

We investigated, found no evidence of misconduct on the part 

of the agent; we discretionarily chose to add subject's account 

to our database.

10/30/07

Senator, Florida Postal Service managers gave false testimony in connection 

with a claim of discrimination filed in an EEO case.

We were unable to investigate due to unwillingness of complainant 

to cooperate with our agents.

12/20/07

Senator, Florida Postal Service managers gave false testimony in connection 

with a claim of discrimination filed in EEO case.

We were unable to investigate due to unwillingness of complainant 

to cooperate with our agents.

12/20/07

Representative, Texas A complainant sought to appeal findings from an investigation. Our office does not adjudicate appeals and issues no appealable 

investigative findings. We reviewed the claimant's allegations, 

management activities, and pending EEO actions. We concluded 

no additional investigative work was indicated.

12/20/07

Representative, Ohio Mail tampering. We investigated, did not substantiate allegation. 10/29/07

Senator, Virginia Letter Carrier signed for but did not deliver a registered 

package; investigating agents harassed complainant.

We confirmed the Letter Carrier signed for package as a courtesy, 

which we reported to management. We found no misconduct on the 

part of the Special Agents.

11/6/07

Representative, Kentucky A business reported late or missing inbound and 

outbound mail.

We investigated, found no evidence to indicate misconduct or 

illegal activity by postal employees; we noted that the design of 

the mailpiece, especially its window, may cause delays.

12/19/07

Senator, Oversight Committee 

Chairman 

Employment-related complaint. The employee had a pending EEO complaint; we deferred any work 

pending the EEO review.

11/16/07

Representative, Maryland Mail theft of a registered package, possibly by 

postal employee.

Our investigation revealed the Letter Carrier violated postal 

procedure and improperly delivered registered package to an 

individual other than the intended addressee. We forwarded our 

findings to postal management.

12/10/07

Representative, New York Mail theft, possibly by a postal employee. We investigated, did not substantiate allegation. Since the sender 

did not elect delivery confirmation, we could not determine where in 

the mail stream the loss occurred.

1/24/08

Senator, Georgia Mail tampering. We investigated, found no evidence of mail tampering 

by postal employees.

1/24/08

Representative, Texas Theft of gift card. We investigated, determined theft occurred external to the 

Postal Service. We referred our findings to the Inspection 

Service for investigation. 

12/11/07

Senator, Delaware Theft from or rifling of package. We investigated, noted the delay in local dispatch was unusual, but 

alone not conclusive proof of misconduct. We identified no patterns, 

indicators, or trends of suspicious activity that would give rise to 

further investigation or substantiate allegations.

11/30/07

Representative, Georgia Theft from or rifling of package. We investigated, did not determine if damage more likely resulted 

from machinery, or handling, or mail theft. We are continuing to 

monitor postal databases to see if this incident may be part of a 

systemic problem.

1/7/08

Senator, Massachusetts Request that we revisit allegations of falsification of documents 

related to an OWCP claim and that the agent behaved 

improperly during the investigation.

We declined further review and noted the matter had been heard in 

the EEO process. We found no misconduct on the part of the Agent.

2/19/08

Representative, Ohio Mail tampering and/or delay in delivery. We investigated, found that employees attempted delivery of an 

Express Mail piece within a day of its being mailed.

1/24/08
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

69

APPENDIX I

Requestor Allegation/Concern Our Findings Closure Date

Senator, Ohio Loss of a Priority Mail package with Delivery Confirmation. We investigated, found no evidence of mail theft by postal 

employees, but were unable to determine the point of loss. 

3/12/08

Representative, California Alleged delayed or discarded mail at a post office. We reviewed, found management properly documented significant 

amounts of Standard "flats" mail that was backlogged or delayed. 

We did not substantiate intentional delay of mail.

2/25/08

Senator, Maryland Theft of gift card sent via Priority Mail service, possibly by a 

postal employee.

We attempted but were unable to investigate due to insufficient 

information from complainant.

3/27/08

Senator, Texas Mail tampering. We investigated, found no evidence of mail tampering by postal 

employees or mail tampering in general, but noted that the tears in 

mail were consistent with damage from automated machinery.

3/12/08

Senator, Vermont Delay or length of time the for completion of 

an investigation.

We reported that the investigation and report to management 

concluded prior to receipt of the inquiry.

3/13/08

Senator, Texas Postal Service documents, containing personal employee 

information, were improperly discarded in trash receptacles at 

a post office.

We investigated, confirmed documents containing personal 

information of Postal Service employees were left unsecured in a 

trash receptacle. We forwarded our findings to postal management.

3/12/08

Audits

Requestor Allegation/Concern Our Findings Closure Date

Representative, Illinois Request we evaluate mail delivery issues in the Chicago 

area and recommend improvements.

Issues were addressed in the following Audit Reports:

■ Timely City Delivery — Chicago District, 

issued 10/11/07

■ Timely City Delivery — Chicago District, 

issued 10/11/07

■ Chicago District Financial Accountability, 

issued 9/28/07

■ The Impact of Transportation on Chicago 

District Performance, issued 9/28/07

11/1/07

Representative, Oversight 

Committee Chairman 

The Committee on Oversight and Government 

Reform requested the OIG provide a list and details of 

recommendations made by the OIG from January 1, 

2001, to present that have not been implemented by 

agency officials or by Congress.

The Office of Audit submitted a Compendium of Open Significant 

Recommendations on January 31, and a Final Compendium on 

February 29. With the second submission, we reported that working 

with the Postal Service we closed 30 of the 228 open significant 

recommendations we addressed in January.

2/29/08

General Counsel

Requestor Allegation/Concern Our Findings Closure Date

Representative, Texas Harassment and falsification of mail counts 

at a Texas post office.

We confirmed management took steps to resolve and prevent 

harassment. We referred the falsification allegations to the Office 

of Investigation.

12/6/07

Senator, Florida Postal Service did not compensate complainant for 

suggested service improvement idea submitted 

to management.

We noted an arbitrator denied a related grievance in 2002 and declined 

to open a formal review.

11/19/07

Representative, Washington Whistleblower reprisal after reporting corruption 

and mismanagement. 

Employee's formal grievance, EEO complaint, and legal action covering 

the same issues were pending; we declined action. 

10/11/07
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

70

APPENDIX I

Requestor Allegation/Concern Our Findings Closure Date

Senator, Maine A coworker created a hostile environment; a manager 

shared confidential personal information with 

complainant's coworker.

We reviewed and found management took steps to address the hostile 

environment, including assembling a Threat Assessment Team to 

address workplace safety issues. Although it had been referred to the 

Inspection Service, we attempted to review management's response 

to the disclosure allegation but were unable, due to the manager's 

extended unavailability.

2/5/08

Senator, Connecticut Request for agency records concerning noise levels 

from the Advanced Facer Canceling System.

We treated the request as a FOIA matter and determined records are 

part of a draft audit report and not releasable at this time.

12/5/07

Representative, Ohio Request for expungement of records under the Privacy Act. We discretionarily chose to insert the information the requestor provided 

into the investigative file.

12/5/07

Representative, Missouri Request for an investigation into the way 

management implements the incentive awards 

program at a Missouri facility.

We reviewed, found employee had a pending grievance and EEO 

complaint. Our review did show at least an appearance of inequity in 

how management decides on awards; we provided information to District 

Management for action deemed appropriate.

2/29/08

Senator, Washington Alleged fraud, mismanagement, and racial discrimination. We reviewed and found these to be isolated issues; we 

declined further review.

11/29/07

Representative, New Jersey Postmaster and Supervisor created a threatening and 

hostile work environment.

We reviewed, found these to be individual issues subject either to union 

grievance or EEO processes and declined further work.

11/19/07

Senator, Virginia Request for the identity and a review of the approach 

taken by an OIG employee who conducted an evaluation of 

allegations of a hostile work environment.

We reviewed, found no wrongdoing on the part of the employee. 1/29/08

Representative, New York Hostile work environment created by a Supervisor in a 

training position.

We confirmed several of the allegations to some degree and found 

District management had already responded to the alleged unprofessional 

conduct. We did not substantiate the remaining allegations.

3/31/08

Representative, Florida FOIA request for findings of an investigation into 

management's distribution of proceeds from a 

deceased employee's retirement account, insurance, 

and savings plans.

Our FOIA Office provided redacted records approved for release. 2/20/08

Senator, Georgia FOIA request for an investigative report. Investigative work remained open. We declined to release so as not to

interfere with on-going investigative work.

2/26/08

Representative, Tennessee Discrimination and harassment by management. We reviewed, found these to be individual issues subject either to union 

grievance or EEO processes, and decline further work.

2/7/08

Representative, New Jersey Employment-related request. We declined assistance. 2/21/08

Senator, New York Alleged harassment, discrimination, and intimidation by 

management at a post office.

We reviewed, found to be individual issues subject either to union 

grievance or EEO processes, and declined further work.

3/5/08

Senator, Missouri Mismanagement at a postal plant. We were unable to investigate due to insufficient information from the 

anonymous source.

3/20/08

Referrals

Requestor Allegation/Concern Referred To Closure Date

Senator, Michigan Package sent to England but returned to the 

U.S. marked undeliverable.

Postal Service Government Relations Office 1/3/08

Representative, Georgia Mail fraud. Inspection Service 1/30/08

Representative, New Mexico Delay of campaign mail. Request for reimbursement for 

printing, designing, and mailing of the campaign mail 

delivered after the elections.

Government Relations Office 2/4/08

Senator, Maryland Mail theft; our initial review indicated involvement of a 

person external to the Postal Service.

Inspection Service 3/10/08
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

71

APPENDIX I

Requestor Allegation/Concern Referred To Closure Date

Senator, Missouri Delay of mail at two facilities, and concerns with 

contracting out mail delivery by hiring subcontractors.

Government Relations Office 3/3/08

Representative, Illinois Management wrongfully terminated an employee after 

he filed a Workers' Compensation claim for injuries as a 

temporary Letter Carrier in inclement weather.

Government Relations Office 3/6/08

Representative, Florida Trinity area is not offered full postal services. Government Relations Office 3/6/08

Representative, Connecticut Working and physical plant conditions at a post office. Government Relations Office 3/27/08
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

72

FREEDOM OF INFORMATION ACT

Requests Number of Requests

Carryover from prior period 34

Received during period 156

Total on hand during period 190

OIG Actions Number of Requests

Processed during the period 185

 Requests released in full 11

 Requests partially granted 53

 Requests not granted 24

 Requests referred to another agency 50

 No Records 42

 Not proper FOIA requests 1

 Refusal to comply 2

 Other 2

Balance Number of Requests

Balance at the end of the period (pending) 5

Processing Days Number of Days

Median processing days to respond to a FOIA request 5

SUPPLEMENTAL INFORMATION

Freedom of Information Act

The Freedom of Information Act (FOIA) Office for the Postal Service Office of Inspector General operates independently of, but frequently coordinates 

with, its counterparts at the Postal Service and the Inspection Service. The FOIA Office receives requests for records from the public, the media, and Postal 

Service employees. The Freedom of Information Act, according to the Department of Justice, “generally provides that any person has a right, 

enforceable in court, to obtain access to federal agency records, except to the extent that such records (or portions of them) are protected from public 

disclosure by one of nine exemptions.

Activities

For the period October 1, 2007 — March 31, 2008
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

73

WORKPLACE ENVIRONMENT

Workplace Environment

For the period October 1, 2007 — March 31, 2008

The OIG’s Workplace Environment team receives referrals involving workplace environment and operational issues from multiple sources, which include the 

Hotline, Congress, the Board of Governors (BOG), and Postal Service and OIG management. Complaints reviewed by the team include sexual harassment; 

discrimination; harassment and intimidation; nepotism; mail delivery and processing; and workplace safety issues. Workplace Environment closely coordinates 

efforts with management to ensure Postal Service employees have a stress-free and adversity-free work environment. The team also reviews complaints 

received from OIG staff, which provides them with another avenue to report their concerns, in addition to the Equal Employment Opportunity process. Once the 

review is completed, the team may issue a Fact-Finding Report to OIG management. This process has been successful in assisting employees and the OIG in 

resolving workplace issues that may have a negative impact on employee moral and productivity, or that may not have been addressed until an EEO is filed or 

other adverse consequences occur. 

Referrals Total

Carryover from prior period 44

Complaints received from OIG Hotline 301

Congressional/BOG/Postal Service management 6

Internal 6

Other 3

Total on hand during this period 360

Workplace environment actions Total

Complaints closed during this period 339

 Referred to Postal Service management 57

 Referred to OIG Office of Investigations 7

 Referred to OIG Office of Audit 1

 Summary of findings reported to Congress/BOG/Postal Service management 5

 Conducted limited inquiry into allegations/issues 208

 Referred to database for statistical analysis and possible systemic reviews 57

 Fact-finding reports issued to OIG management 4

Referrals pending at the end of the period 21
Office of Inspector General Semiannual Report to Congress 

October 1, 2007 — March 31, 2008

74

GLOSSARY

Advance Fee Scheme. Obtaining fees purporting 

to secure buyers or obtain loans.

BMC. Bulk Mail Center where packages and 

standard mail are processed.

Bulk Mail. Mail that is rated for postage partly 

by weight and partly by the number of pieces in 

the mailing. The term is generally used to refer to 

Standard Mail (A).

Express Mail Service. A mail class that provides 

expedited delivery service for mailable matter 

subject to certain standards. 

False Billings Scheme. Mailing solicitations in 

the guise of billings.

First-Class Mail. A class of mail that includes all 

matter wholly or partly in writing or typewriting, all 

actual and personal correspondence, all bills and 

statements of account, and all matter sealed or 

otherwise closed against inspection. First-Class 

Mail comprises three subclasses: postcards, letters 

and sealed parcels, and Priority Mail.

Any mailable matter may be sent as FirstClass Mail. First-Class Mail is a Postal 

Service trademark.

Flat–Size Mail. A mailpiece that exceeds one of 

the dimensions for letter-size mail (11-1/2 inches 

long, 6-1/8 inches high, 1/4 inch thick) but that 

does not exceed the maximum dimension for the 

mail processing. Flat-size mail may be unwrapped, 

sleeved, wrapped, or enveloped.

FY. Fiscal year.

Highway Contract Routes. A route served by a 

postal contractor to carry mail by highway between 

designated points. 

Lottery Scheme. Advertisements seeking money 

or property by mail for participation in schemes to 

win prizes through chance.

Merchandise Failure To Pay Scheme. 

Mail order merchandise acquired without 

providing payment.

Merchandise Misrepresentation Scheme. Mail 

order merchandise or services that are materially 

misrepresented in advertising.

OWCP. Administered by the U.S. Department 

of Labor, the Office of Workers’ Compensation 

Programs provides direct compensation to 

providers, claimants, and beneficiaries.

PCIE ECIE. The President’s Council on Integrity 

and Efficiency and Executive Council on Integrity 

and Efficiency address integrity, economy, and 

effectiveness issues that transcend individual 

government agencies.

This organization also seeks to increase the 

professionalism and effectiveness of IG personnel 

throughout the government.

Postal Act of 2006. Abbreviation for the Postal 

Accountability and Enhancement Act passed by 

Congress in December 2006.

Postal Regulatory Commission (PRC).

An independent federal agency that makes 

recommendations on Postal Service requests for 

changes in postal rates and mail classifications. 

The five commissioners are nominated by the 

President and approved by the U.S. Senate. The 

name was changed from Postal Rate Commission 

on December 20, 2006.

Priority Mail. First-Class Mail that weighs more 

than 13 ounces and, at the mailer’s option, any 

other mail matter weighing 13 ounces or less. 

Priority Mail provides expedited delivery.

Processing And Distribution Center/Facility 

(P&DC/F). A central mail facility that processes 

and dispatches part or all of both incoming mail 

and outgoing mail for a designated service area. 

It also provides instructions on the preparation of 

collection mail, dispatch schedules, and sorting 

plan requirements to mailers.

Retail Facility. A postal unit of a post office 

and its subordinate units as well as military Post 

Offices that sell postage stamps and provide 

other postal retail services to customers. The 

subordinate units are within the service area of a 

main post office and include post office stations, 

post office branches, contract postal units, and 

nonpersonnel units.

SmartPay® Purchase Card. SmartPay®

Purchase Cards are how the Postal Service 

acquires goods and services through contracts.

Standard Mail. A class of mail that includes 

advertisements, circulars, newsletters, magazines, 

small parcels, and merchandise.

Unsupported Costs. Costs that are questioned 

because of inadequate supporting documentation 

for the proposed/ claimed costs.

Verification. Process to check a mailing 

presented by a mailer to determine proper 

preparation and postage payment.

Voyager Fleet Cards. These are credit cards are 

used by postal employees to acquire automotive 

goods and services, such as gasoline or repairs.

Work At Home Scheme. Schemes, such as 

envelope stuffing, that falsely purport to provide 

home employment.

Glossary

The following are among the many trademarks owned by the United States Postal Service: United States Postal Service®, U.S. Postal Service®, USPS®, 

First-Class Mail®, USPS.com®, Click-N-Ship®, Automated Postal Center®, APC®, Express Mail®, Priority Mail®, Standard Mail®, Parcel Post®, Media 

Mail®, Customized Market Mail®, United States Postal Service Office of the Inspector General®, Post OfficeTM, Postal ServiceTM, Signature ConfirmationTM, 

Certified MailTM, Delivery ConfirmationTM, Registered MailTM, Post Office BoxTM, Zip CodeTM, Carrier PickupTM, Quick, Easy, ConvenientTM and Postmaster 

GeneralTM. The Sonic Eagle Logo, Round Top Collection Box design, Letter Carrier Uniform design, and the Mail Truck Design are also registered trademarks belonging to the United States Postal Service.
OFFICE OF INSPECTOR GENERAL

Report 

Fraud, Theft, 

and Misconduct 

in the Postal Service

CONTACT THE HOTLINE AT:

1.888.USPS.OIG

1.888.877.7644 

Fax: 1.866.756.6741

or www.uspsoig.gov

TTY (HEARING IMPAIRED)

1.866.OIG.TEXT

1.866.644.8398
U.S. POSTAL SERVICE OFFICE OF INSPECTOR GENERAL 

1735 N. Lynn Street, Arlington, VA 22209-2020 

703.248.2100 Fax: 703.248.2291 www.uspsoig.gov