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Views, and Investigations Relating to Postal Service Programs and Operations To OFFICE OF INSPECTOR GENERAL SEMIANNUAL REPORT TO CONGRESS October 1, 2007 — March 31, 2008 Promoting Integrity and Accountability in America’s Postal System MISSION Office of Inspector General Semiannual Report to Congress October 1, 2007 — March 31, 2008 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. A MESSAGE FROM THE INSPECTOR GENERAL 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 customer- focused 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. SUMMARY OF PERFORMANCE Office of Inspector General Semiannual Report to Congress October 1, 2007 — March 31, 2008 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. TABLE OF CONTENTS 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 ASSESSING STRATEGIC TRANSFORMATION PROGRESS Office of Inspector General Semiannual Report to Congress October 1, 2007 — March 31, 2008 GENERATE REVENUE Offi ce of Inspector General Semiannual Report to Congress October 1, 2007 — March 31, 2008 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 customer- focused culture, enhance sustainability, and address regulatory studies and reporting obligations. Each of these strategic goals presents signifi cant challenges to the Postal
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