oversight

USPS OIG FY 2020 Congressional Budget Justification

Published by the United States Postal Service, Office of Inspector General on 2019-03-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                  




Congressional Budget Justification

                 Fiscal Year 2020
 


                               Executive Summary
The President’s fiscal year (FY) 2020 budget provides funding of $250 million to the
U.S. Postal Service Office of Inspector General (OIG) for on-going operational
expenses. This document presents perspective and context for our budget needs and
planned areas of focus for FY 2020 and highlights prior year accomplishments and
activities.

The OIG aligns its mission resources to concentrate on the highest-risk areas for the
U.S. Postal Service. We achieve significant results with an efficient, lean staff, with only
one OIG employee for every 607 postal workers. The Office of Investigations (OI) helps
prevent fraud and protect assets by identifying and investigating high impact cases to
minimize loss and maximize recoveries for the Postal Service. The Office of Audit (OA)
focuses on making impactful recommendations, identifying cost savings, and
highlighting postal revenue opportunities.

Our law enforcement staff in OI accounts for more than one-half of the OIG by size and
requires 66 percent of our overall budget, a reflection of the size of the postal workforce
and its nationwide distribution. Last year, this group’s work resulted in over 2,700
investigations, 1,053 convictions, and almost $514 million in fines, restitutions,
recoveries, and cost avoidances. Any reductions in our budget directly impact the
number of investigations we can conduct, which is of serious concern as the postal
infrastructure is at increasing risk of being exploited by employees and others to traffic
narcotics, such as dangerous opioids.

In addition to investigative results, we returned nearly $9 for every $1 invested in our
budget in FY 2018. Much of this financial impact was due to work conducted by our
audit staff, which completed 166 reports and issued 326 recommendations. Their efforts
identified $1.7 billion in financial impact, including funds put to better use, questioned
costs, and revenue impact.

A fully funded OIG is vitally important in protecting our nation’s Postal Service. The FY
2020 budget of $250 million will allow our agency to largely maintain on-going
operations in both our audit and investigative offices at current staffing levels.




      1    U. S. Postal Service Office of Inspector General – Congressional Budget
           Justification Fiscal Year 2020
 
 


Table of Contents


    I. OIG HISTORY AND MISSION                                             3

    II. PROPOSED FISCAL YEAR 2020 BUDGET                                   4

      A. Meeting the President’s Management Agenda                         4

      B. OIG Mission Critical Work                                         5

    III. BUDGET DETAILS                                                    7

      A. Budget Summary                                                    7

      B. Appropriations Table                                              7

      C. Budget Adjustments Table                                          8

      D. Budget Increases and Decreases Descriptions                       9

      E. Reimbursable Authority                                           10

      F. Appropriation Language                                           10

      G. Legislative Mandates                                             10

    IV.    OIG PRIORITIES AND RESULTS                                     12

      A. Investigative Priorities and Results                             12

      B. Audit and Evaluation Priorities and Results                      15

      C. Other Mission Areas                                              19




      2    U. S. Postal Service Office of Inspector General – Congressional Budget
           Justification Fiscal Year 2020
 
 


I. OIG HISTORY AND MISSION

The U.S. Mail traces its roots back to 1775, when Benjamin Franklin was appointed the
first postmaster general of the United States. In 1971, the U.S. Postal Service was
created as an independent establishment of the Executive branch, with a mandate to
provide universal service to bind the nation together and operate like a business. Over
634,000 Postal Service employees serve every U.S. business and residence at least six
days a week, operating more than 31,000 retail and delivery units in all 50 states and
the U.S. territories. The U.S. Department of Homeland Security considers the Postal
Service to be a national critical infrastructure because of its ability to reach all U.S.
citizens in a crisis. In fiscal year (FY) 2018, the Postal Service delivered over 146 billion
pieces of mail to more than 159 million U.S. residential and business addresses. With
so much at stake, postal business operations and employees must be held to the
highest standards.

The U.S. Postal Service Office of Inspector General (OIG) is an independent oversight
organization operating within the Postal Service under the authority of the Inspector
General Act of 1978, as amended. We are the leanest of the 73 federal inspectors
general relative to its parent agency – with only one full-time employee (FTE) for every
607 Postal Service employees. The inspector general is appointed by and reports to
the governors of the Postal Service and keeps Congress fully and currently informed of
its activities.

The OIG’s mission is to promote the economy, efficiency, and effectiveness of Postal
Service programs and operations and to protect against fraud, waste, and abuse. In
carrying out its mission, the OIG:

    -   Conducts audits, evaluations, and investigations;
    -   Reviews existing and proposed legislation and regulations; and
    -   Keeps the governors and Congress fully and currently informed of problems and
        deficiencies relating to Postal Service programs and operations.

The OIG aligns its mission resources to concentrate on the highest-risk areas for the
Postal Service. The Office of Investigations (OI) helps prevent fraud and protect assets
by identifying and investigating high impact cases to minimize loss and maximize
recoveries for the Postal Service. Using the Postal Service’s own data as a strategic
asset, the Office of Audit (OA) focuses on making impactful recommendations,
identifying cost savings, and highlighting postal revenue opportunities.




        3    U. S. Postal Service Office of Inspector General – Congressional Budget
             Justification Fiscal Year 2020
 
 


II. PROPOSED FISCAL YEAR 2020 BUDGET

The OIG receives its funding level through the appropriations process, but none of this
funding comes from taxpayers or the U.S. Treasury. All of our operating funds originate
from the Postal Service, which is not appropriated and earns its funds from ratepayers.

Our budget has been essentially flat since FY 2010, with a FY 2018 enacted budget and
a FY 2019 estimated budget amount of $245 million. On February 15, 2019, the
Consolidated Appropriations Act of 2019 was enacted, which provides $250 million in
funding for the OIG for FY 2019 and includes a retroactive 1.9 percent cost of living
increase. The President’s FY 2020 budget provides $250 million, which represents a 2-
percent increase from our FY 2018 enacted budget and no increase from our FY 2019
enacted budget. The FY 2020 budget supports an authorized staffing level of 1,034.1

The FY 2020 budget supports the following salaries and benefits costs:

       -      $151.5 million, or 61 percent, for personnel compensation, and
       -      $57.5 million, or 23 percent, for personnel benefits.

The remaining $41 million, or 16 percent, is for other mission critical costs.

              A. Meeting the President’s Management Agenda

In keeping with the government-wide management agenda, the OIG recognizes the
criticality of infrastructure management and is, accordingly, driving towards information
technology (IT) modernization. In FY 2017, the OIG initiated a multiyear effort to
transition from a traditional data center environment to a cloud-based solution. This
modernization of our IT architecture involves the migration of services and tools from
costly in-house solutions to more flexible, less expensive cloud-based solutions. This
strategic investment was made possible by a $5 million increase to our budget in FY
2017 that allowed us to transition much of our infrastructure at once, rather than through
a piecemeal approach.

The OIG is committed to creating an infrastructure that will enable a robust data
strategy for the future. Our work in FY 2020 will focus on enhancing current tools and
developing new models that offer predictive analytics (what is going to happen) and
prescriptive analytics (what the Postal Service should do).


                                                            
1 Note.—A full-year 2019 appropriation was not enacted at the time the budget was prepared; therefore, the budget

assumes this account is operating under the Continuing Appropriations Act, 2019 (Division C of P.L. 115–245, as
amended). The amounts included for 2019 reflect the annualized level provided by the continuing resolution, with no
cost of living increase. 


              4       U. S. Postal Service Office of Inspector General – Congressional Budget
                      Justification Fiscal Year 2020
 
 


Finally, to build an OIG workforce for the 21st Century, the OIG undertook a top-to-
bottom review of FTE and non-personnel resource deployment and made changes and
adjustments to our resource allocations in all of our components. As a result, we have
increased the resources allocated to investigating postal employees trafficking narcotics
through the mail, with 114 agents assigned to work these cases nationwide. We are
automating our on-boarding process to eliminate inefficient paperwork and replacing
legacy performance management systems in human resources management. We focus
on hiring the best candidates, maintaining a fully engaged workforce by recognizing
exceptional achievement, and swiftly addressing those who underperform. The OIG
participates in the government-wide Employee Viewpoint Survey and in FY 2018, we
scored significantly higher than the federal government average on both satisfaction
with dealing with poor performance and hiring people with the right skills.

        B. OIG Mission Critical Work

To prepare for potentially reduced budgets in FY 2020 and beyond, we reviewed our
strategic plans to enhance the alignment of our workforce to our mission, further
focusing on maximizing effectiveness. We continuously mine Postal Service and
government data assets for decision making, to enhance accountability, and inform our
responsible deployment of limited resources. In keeping with the President’s
Management Agenda, we evaluated what critical work we can and cannot do.

To date, these efforts have identified important initiatives and priorities where funding
would be directed, including:

    -   Continuing our cross-agency work focusing on the use of postal infrastructure by
        employees and others to traffic narcotics, such as dangerous opioids. In FY
        2018, we opened 243 new narcotics cases, which is 33 percent higher than the
        previous year and almost 120 percent higher than the cases opened in FY 2014
        (see chart below);

                              Narcotics Cases Opened by Fiscal Year
         300
         250
         200
         150
         100
                                                                             243
                                    145         158            183
          50         111
           0
                    FY 2014        FY 2015     FY 2016        FY 2017       FY 2018


        5    U. S. Postal Service Office of Inspector General – Congressional Budget
             Justification Fiscal Year 2020
 
 


    ‐   Maintaining an audit and investigative focus on mail service and delivery. In FY
        2018, our Hotline received 13,092 complaints related to theft of mail, compared
        to 11,225 complaints in FY 2017 and 10,470 in FY 2016. This reflects a nearly 17
        percent increase in overall complaints, and we do not expect that trajectory to
        slow down;

    -   Evaluating the legal basis and profitability of the Postal Service’s business
        partnerships and its relationships with other third parties in the competitive parcel
        market; and

    -   Ensuring that the law enforcement activities conducted by the U.S. Postal
        Inspection Service (USPIS) are meeting Postal Service needs and complying
        with law enforcement standards.

In addition to insights within the President’s Management Agenda, Congress has also
made clear their priorities for our agency within the appropriations process. In a press
release from the U.S. House of Representatives Appropriations Committee, they
highlighted the fact that their FY 2018 proposal, “Adds an extra $10.4M above the
budget request to the U.S. Postal Service Office of the Inspector General to continue
drug interdiction efforts and investigations, providing a total of $245M to investigate illicit
drugs coming through the mail.” The U.S. House of Representatives and the U.S.
Senate appropriations committees also both cited in press statements that our narcotics
efforts were the reason for the increase in our FY 2019 funding to $250 million.

    -   As a result of receiving additional funds from Congress in March 2018, our office
        was able to train over 80 agents from other program assignments in how to
        conduct or support narcotics investigations, so they could join the efforts of our
        existing 25 trained agents. Through these training efforts and selective recruiting
        of experienced narcotics investigators, we now have 114 agents assigned to
        conduct these investigations. Those agents have initiated 206 new narcotics
        cases since March 2018, which are in addition to our existing inventory of on-
        going narcotics investigations.

Consistent with our mission, we will continue to focus on returning significant value to
the Postal Service by concentrating on the highest risks to the organization. In FY 2018,
our OIG had a return on investment (ROI) of $8.97 for every dollar spent. This ROI is in
addition to the criminal, civil, and administrative actions resulting from our investigations
of employee misconduct and frauds against the Postal Service.




        6    U. S. Postal Service Office of Inspector General – Congressional Budget
             Justification Fiscal Year 2020
 
 


       III.            BUDGET DETAILS

              A. Budget Summary

As required by Public Law 110-409 and the Inspector General Reform Act of 2008 (as
amended), the OIG submits the following information related to its budget for FY 2020:

              ‐       The aggregate budget for the operations of the OIG is $250,000,000.
              ‐       The portion of the budget allocated for OIG training is $1,557,642, which
                      satisfies our FY 2020 training requirements.
              ‐       The portion of the budget to support CIGIE is $650,000, which is 0.26 percent
                      of the $250,000,000.

              B. Appropriations Table

The OIG FY 2020 budget plan is based on a level of effort for the two mission programs
of OI and OA. The table below shows the budget by program area for appropriations in
FYs 2018, 2019, and 2020.2




                                                            
2 Note.—A full-year 2019 appropriation was not enacted at the time the budget was prepared; therefore, the budget

assumes this account is operating under the Continuing Appropriations Act, 2019 (Division C of P.L. 115–245, as
amended). The amounts included for 2019 reflect the annualized level provided by the continuing resolution.

 

              7       U. S. Postal Service Office of Inspector General – Congressional Budget
                      Justification Fiscal Year 2020
 
 


           C. Budget Adjustments Table (in thousands)

                                                  FY 2018          FY 2019          FY 2020
           Office of Inspector General
                                                  Enacted          Estimate         Request

    FTE:                                           1,045             1,019            1,034
    11.1 Full-time Permanent Positions                $142,696         $143,027           $147,751
    11.3 Other than Full-time Permanent                    $926          $1,215             $1,215
    11.5 Other Personnel Compensation                   $2,699           $2,506             $2,506
    11.9 Total Personnel Compensation                 $146,321         $146,749           $151,472
    12.0 Personnel Benefits                            $55,632          $55,618            $57,459
    21.0 Travel                                         $5,528           $6,615             $6,179
    22.0 Transportation of Things                          $607              $912             $912
    23.2 Rent Payments to Others                        $6,324           $7,026             $7,226
    23.3 Communications, Utilities, & Misc.             $2,570           $2,112             $2,112
    24.0 Printing and Reproduction                          $17               $23              $23
    25.1 Advisory & Assistance Services                $13,931          $12,971            $12,362
    25.2 Other Services (Goods / Services)                 $149              $158             $158
    25.3 Government Agencies                               $787              $755             $768
    25.4 Operation & Maintenance of Facilities             $105              $138             $138
    25.6 Medical                                           $330              $316             $316
    25.7 Operation and Maintenance of
                                                        $6,843           $6,293             $6,138
    Equipment
    26.0 Supplies and Materials                            $748              $676             $676
    31.0 Equipment                                      $5,108           $4,049             $4,062
    32.0 Lands and Structures                               $0               $589              $0
    Total Budget Authority                            $245,000         $245,000           $250,000




           8    U. S. Postal Service Office of Inspector General – Congressional Budget
                Justification Fiscal Year 2020
 
 


      D. Budget Increases and Decreases Descriptions (in thousands)




    Increase to Personnel Compensation…………………….………….….....$4,723,602

      $2,387,537 funds requested to allow the OIG to increase OI by 15 FTEs. This will
      result in a complement level of 1,034 FTEs.

      $2,336,065 funds requested for the annualization of performance based
      increases.

    Increase to Personnel Benefits……………………..………….…...……….$1,840,846

      $932,376 funds requested for personnel benefits for OI’s additional 15 FTEs.

      $908,470 funds requested for annual increases to benefits premiums.

    Decrease to Non-personnel Costs…………………………..…….…..….$1,564,448

      This amount is the cumulative change in all non-personnel costs. The largest
      reduction is in Advisory and Assistance Services, which correlates to a reduction
      in training and anticipated cost avoidance from investments made to a new cloud
      infrastructure in prior fiscal years.




      9    U. S. Postal Service Office of Inspector General – Congressional Budget
           Justification Fiscal Year 2020
 
 


      E. Reimbursable Authority

In FY 2020, reimbursable authority work to be performed is estimated at $500,000. The
primary mission for the OIG reimbursable program is to develop partnerships with other
government agencies to provide unique value-added support to the Postal Service. The
OIG intends to leverage its resources with these groups to share knowledge while
meeting stated work requirements.

                  Other Resources:             FY 2018       FY 2019     FY 2020
                Offsetting Collections         Enacted       Estimate    Request
                                                (000’s)       (000’s)     (000’s)
        Offsetting Collections
        Reimbursable Authority                   $500             $500     $500
             Total: Offsetting Collections       $500             $500     $500


      F. Appropriation Language

                                 Appropriation Language
                                    Office of Inspector General

                                  SALARIES AND EXPENSES

                                   (Including Transfer of Funds)

       For necessary expenses of the Office of Inspector General in carrying out the
       provisions of the Inspector General Act of 1978, $250,000,000 to be derived by
       transfer from the Postal Service Fund and expended as authorized by section
       603(b)(3) of the Postal Accountability and Enhancement Act (Public Law 109-
       435).



      G. Legislative Mandates

In FY 2018, almost $5.8 million of our budget was used to support reviews that were
either legislatively mandated by Congress or to support the Postal Service in meeting its
legislative mandates. As indicated in the table below, the OIG spent $340,000 to
oversee activities of the Postal Inspection Service and $2.8 million to audit the data
collection systems and procedures the Postal Service uses to prepare reports related to
costs, revenue, rates, and quality of service for all products. The OIG also spent $2.2
million to help the Postal Service meet its legislative mandates by performing work such
as audits supporting the public accountant’s opinion on the Postal Service’s financial
statements and compliance with the Sarbanes-Oxley Act (SOX) and Securities and


     10      U. S. Postal Service Office of Inspector General – Congressional Budget
             Justification Fiscal Year 2020
 
 


Exchange Commission financial reporting requirements. The OIG also spent $451,000
to perform audits in support of Postal Service mandates.

               Legislative Mandates - Dollar Value by Identified Mandates
                           FY 2018 (as of September 30, 2018)
                                                                         Cost*
     Public Law Reference           Mandate Description
                                                                        (000’s)
         5 U.S.C. App. 3 §
                                   Oversight of the Postal Inspection Service           $340
             8G(f)(2)

                                    Audits of Postal Service Data Collection
         39 U.S.C. § 3652                                                              $2,779
                                                    Systems

                                      Financial Statement/SOX Audit and
            PL 109-435                                                                 $2,193
                                                Quarterly 10Q**
                                      Audits in Support of Postal Service
              Various                                                                   $451
                                                  Mandates**

     Total Dollar Value                                                                $5,763

    *Based on FY 2018 audit work, as of September 30, 2018.
    **Although not legislatively mandated for the OIG, these financial and network optimization-related
    audits support mandates for the Postal Service.




      11    U. S. Postal Service Office of Inspector General – Congressional Budget
            Justification Fiscal Year 2020
 
 


IV. OIG PRIORITIES AND RESULTS

         A. Investigative Priorities and Results

Because of the large, geographically dispersed Postal Service workforce, the
nationwide distribution of facilities, and the reactive nature of criminal work, our OIG
must maintain a large investigative workforce. About 66 percent ($162 million) of our
budget is committed to conducting investigations to ensure the integrity of postal
processes, finances, and personnel as well as to protect the mail.

In FY 2018, the results of OI’s work included over 2,700 investigations, 1,053
convictions, and almost $514 million in fines, restitutions, recoveries, and cost
avoidances. Reductions to the budget impact our law enforcement work the most, and
results in this area’s decline when we receive less funding.

OI organizes its work into five major programs:

    -    The Internal Mail Theft program focuses on investigating mail theft by postal
         employees and postal contractors.

    -    The Official Misconduct and Narcotics program is responsible for investigating
         misconduct by postal employees, including executives and USPIS employees,
         and contractors for various crimes, including use of the mail to transport and
         traffic narcotics, misuse of Postal Service computers, destruction or theft of
         Postal Service property, falsification of official documents, forgery, theft of funds,
         abuse of authority, and sabotage of operations.

    -    The Healthcare Fraud program includes investigations of both claimant and
         medical provider fraud. The Postal Service is the single largest contributor to the
         U.S. Department of Labor’s (DOL) Office of Workers’ Compensation Program
         (OWCP) and, in FY 2018, it paid nearly $1.4 billion for disability-related benefits.
         These disability payments are funded by Postal Service customers rather than
         tax dollars, and any portion of those funds lost to fraud has a direct impact on the
         Postal Service and its operations.

    -    The Contract Fraud program is responsible for investigations of contract fraud,
         waste, and misconduct. The Postal Service manages contracts, ranging from
         multimillion-dollar national service contracts to local contracts for supplies and
         services at individual Postal Service facilities.

    -    The Financial Fraud program focuses on the theft of Postal Service money and
         products. A large portion of the revenue generated by the Postal Service is



        12    U. S. Postal Service Office of Inspector General – Congressional Budget
              Justification Fiscal Year 2020
 
 


         handled at over 31,000 Postal Service retail locations. Stamps, cash, and money
         orders can all become targets for theft.

Some of OI’s recent significant cases and results include:

    -    In November 2018, the last defendant of a group of 16 career employees working
         in locations across the metro-Atlanta area was sentenced to federal prison for
         accepting bribes to deliver packages of cocaine – two kilograms or more at a
         time – in a wide-reaching undercover operation. The defendants were willing to
         make the deliveries for bribes as low as $250 and received sentences of
         between three and nine years in prison.

    -    Also in November 2018, five postal employees were indicted and arrested in
         Fayetteville, NC, for conspiring to sell marijuana from U.S. mail parcels that they
         intercepted and removed from the mail stream at the Fayetteville Processing and
         Distribution Center Annex.

    -    In April 2018, a carrier in Florida was sentenced to four years in prison for his
         role in facilitating the trafficking of narcotics, including fentanyl. Another on-going
         investigation involves a carrier in New Jersey who was arrested for facilitating the
         trafficking of narcotics, including over 200,000 fentanyl pills. Two employees and
         four civilians were arrested in November and December 2017 in this case, and all
         individuals are awaiting prosecution.

    -    In September 2018, the OIG participated with a number of other law enforcement
         agencies in the arrest of 64 individuals suspected of trafficking narcotics in
         Puerto Rico. Two of the individuals arrested were postal employees who were
         allegedly conspiring with members of the drug trafficking organization to help
         facilitate the shipment of narcotics parcels through the mail.

    -    In January 2018, a federal judge sentenced the owner and controller of a
         California hospital to 63 months in prison for overseeing a 15 year-long,
         healthcare fraud scheme that involved more than $40 million in illegal kickbacks
         paid to doctors and other medical professionals in exchange for referring
         thousands of patients who received spinal surgeries. The scheme led to more
         than $500 million in fraudulent bills being submitted during the last five years of
         the scheme – much of which was paid by the California worker’s compensation
         system as well as by DOL’s OWCP.

    -    In June 2017, a former postal executive, was sentenced to two months
         incarceration, one year of supervised release, and ordered to pay restitution of



        13    U. S. Postal Service Office of Inspector General – Congressional Budget
              Justification Fiscal Year 2020
 
 


         $84,498 as a result of providing false information on a background questionnaire
         to conceal negative credit history, a past conviction, and a 2013 civil judgement.

    -    In April 2018, U.S. professional cyclist Lance Armstrong agreed to pay $5 million
         as a result of a multiyear federal investigation into allegations that he defrauded
         the government by using performance-enhancing drugs when the Postal Service
         sponsored his cycling team. This will return $3.75 million to the Postal Service.

    -    In August 2018, a former postal employee was sentenced to more than 16 years
         of incarceration and five years of supervised release after being convicted of
         sexual exploitation of a child and possession of child pornography. While the
         crime of sexual exploitation did not occur as a result of his employment, the OIG
         discovered the former employee when he attempted to use a postal computer to
         view pornography online. An OIG forensic analysis of images collected by the
         former employee identified a child he victimized 16 years earlier.

OI would allocate its FY 2020 program budget to cover the primary program areas
described above as well as the following emerging areas of focus:

    -    Narcotics trafficking by employees – We are seeing a significant increase in the
         number of postal employees willing to facilitate the trafficking of opioids and other
         narcotics for cash. In addition to our investigative efforts, we are working with
         other OIGs to map out the opioid epidemic and identify additional work to be
         done in this area, including opportunities to compare data from multiple agencies
         to help solve this problem.

    -    Mail theft – In FY 2018, over 30 percent of the Postal Service’s total revenue was
         generated through the delivery of nearly 6.2 billion packages. An increasing
         number of postal employees, particularly part-time employees, are stealing
         prescription medication and other items of value shipped through the mail. In
         addition, a variety of complex frauds rely on theft of mail, and postal employees
         could be the trusted insider who enables ready access to sensitive mail.
         Examples include the systematic theft of passports or green cards for use by
         organized criminal organizations as well as stolen identity refund fraud schemes
         where stolen personal information is used to file fraudulent tax returns.

    -    Healthcare fraud – Postal Service employees represent nearly 40 percent of all
         federal employees who receive OWCP benefits. These benefits represent a
         significant on-going cost to the Postal Service, and frauds associated with those
         benefits are a continuing area of focus for our OIG.




        14    U. S. Postal Service Office of Inspector General – Congressional Budget
              Justification Fiscal Year 2020
 
 


         B. Audit and Evaluation Priorities and Results
Though we are the leanest OIG when compared to our parent agency, we returned
nearly $9 for every $1 invested in our budget in FY 2018. Much of this impact was due
to the work of OA, which completed 166 reports and issued 326 recommendations. This
work identified $1.7 billion in financial impact, including funds put to better use,
questioned costs, and revenue impact.

Because the Postal Service does not receive its funds from taxpayer dollars and instead
earns revenue from the sale of its products and services, it is critical that the OIG’s
audits and evaluations focus on the areas of greatest financial and business impact. OA
focuses on reviews that provide the Postal Service with information to address its
emerging strategic issues, major risks, and management challenges, and to highlight
revenue opportunities.

OA organizes its audit work into five functional areas:

    -    The Mission Operations audit area reviews two of the largest cost center
         functions within the Postal Service — network processing and transportation.
         These business segments annually spend over $16 billion.

    -    The Finance and Pricing audit area focuses on finance, cost, and pricing. These
         audit areas help ensure that the Postal Service is following regulatory
         requirements.

    -    The Supply Management and Human Resources audit area focuses on
         contracting, facilities, human resource management, security, emergency
         preparedness, and sustainability.

    -    The Retail, Delivery, and Marketing audit area focuses on Postal Service
         operations related to retail, delivery, vehicles, sales, revenue generation, revenue
         protection, customer service, international mail, and marketing.

    -    The Information Technology and Inspection Service audit area focuses on the
         Postal Service’s ability to use technology to manage operations, maximize ROI,
         and secure data. This area also oversees the role of the USPIS in protecting the
         Postal Service from criminal activity, as required by the Inspector General Act of
         1978, as amended.

Some of the OIG’s recent and on-going significant audits and evaluations include:

    -    Processing Readiness for Election and Political Mail for the 2018 Midterm
         Elections – We conducted an audit to evaluate the Postal Service’s readiness for
         timely processing of election and political mail for the 2018 midterm elections.

        15    U. S. Postal Service Office of Inspector General – Congressional Budget
              Justification Fiscal Year 2020
 
 


         We found that the Postal Service was not ready for the January 2018 special
         elections; however, since starting our audit, the Postal Service had improved
         processes to be ready for the timely processing of election and political mail for
         the 2018 midterm elections.

    -    Controls Over the Release of Personnel Information – In response to a request
         from Congress, we conducted an audit examining the improper release of a
         former employee’s, and current Congressional candidate’s, complete personnel
         file in response to a Freedom of Information Action (FOIA) request. We found
         that the Postal Service did not have adequate controls in place to ensure proper
         release of employee information in response to FOIA requests. As a result, the
         Postal Service released the personnel files of seven former employees without
         authorization. Both an audit report and a report of investigation were issued on
         this matter.

    -    Operational Window Change (OWC) Savings – The Postal Service revised
         certain service standards in 2015, which allowed the agency to expand its mail
         processing operational window. We conducted an audit to determine if the Postal
         Service achieved its projected savings for the OWC. The Postal Service
         projected the OWC would save over $805 million annually. We determined that
         the Postal Service did not achieve the anticipated savings and we could only
         verify about $323.5 million of savings since the inception of OWC.

    -    Treasury Inflation-Protected Securities (TIPS) – We conducted an audit to
         determine the impact of investing Postal Service retirement fund assets in TIPS.
         We found that investing in TIPS could increase the Postal Service’s three
         retirement funds’ asset balances by about $1.4 billion annually. To do this, the
         Postal Service would need to exchange a portion of its current, fixed-rate
         Treasury securities, and the Secretary of the Treasury would have to determine
         that investments in TIPS would be in the public interest.

    -    Use of Postal Service Network to Facilitate Illicit Drug Distribution – In response
         to a request from Congress, we conducted an audit examining the role of the
         Postal Service’s network in facilitating illicit drug distribution, explored associated
         risks and vulnerabilities in the system, and identified opportunities to mitigate
         those risks. We found that the Postal Service has made efforts to combat use of
         its network to facilitate illicit drug distribution, but a number of vulnerabilities
         remain.

    -    Opioids Safety Preparedness – Based on a request from Congress, we
         conducted an audit to assess measures the Postal Service has implemented to
         prepare its workforce for the risks posed by shipments of synthetic opioids. We

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         found the Postal Service has not implemented specific measures to prepare its
         entire workforce for risks posed by synthetic opioids shipped through the mail. In
         addition, employees are also not always adhering to existing protocols when
         handling hazardous or suspicious mail.

    -    Facility Condition Review Capping Report – We conducted an audit to capture
         trends or systemic issues identified as a result of previous OIG facility condition
         reviews of Postal Service retail facilities and to assess the effectiveness of
         management’s corrective actions. We found, collectively, that the Postal Service
         was not consistently adhering to building safety, security, and maintenance
         standards, corrective actions were either not implemented as indicated or were
         not effective in remedying the issue identified, and there were systemic issues
         with monitoring local customer complaints.

    -    Management Alert – Inbound International Mail Operations – We conducted a
         review of Inbound International Mail Operations at various facilities and issued an
         alert to facilitate immediate corrective actions regarding the Postal Service’s
         ability to fulfill the U.S. Customs and Border Protection’s advanced electronic
         data-based holds for inbound international mail. The issues in that alert
         presented potential public safety and security concerns to the U.S. Postal
         Service, its employees, and the general public.

    -    Carrier Leave without Pay for Union Activities – Based on a request from
         Congress, we conducted an audit to evaluate the Postal Service’s authorization
         of carrier leave without pay for union activities. We found that the Postal Service
         granted leave without pay to 97 carriers nationwide for periods ranging from four
         to 50 days to participate in political activities on behalf of the union. This project
         resulted in a hearing in the U.S. Senate and a broader review of this type of
         leave usage in other federal agencies.

    -    Delayed Mail Validation – We conducted an audit to determine the accuracy of
         the Postal Service’s delayed mail reporting. We found that the Postal Service
         frequently did not accurately count on-hand delayed mail. We estimated about
         $85.1 million of postal revenue is at risk due to underreporting late arriving mail.

    -    Package Delivery Scanning ― Nationwide – We conducted an audit to examine
         the Postal Service’s package scanning processes. Of the two billion scans for the
         period July 1 – December 31, 2016, we found 1.9 million scans that were
         improper stop-the-clock scans that occurred at delivery units instead of at the
         delivery location. We also found 8.3 million scans with no corresponding location
         data, which made it impossible to determine whether they were improper.



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    -    Customer Retail Experience – We conducted an audit evaluating key factors
         affecting the customer experience in retail units and identifying opportunities to
         enhance the overall retail customer experience. We found the Postal Service has
         opportunities to enhance customer satisfaction in each of the five factors
         affecting customer experience, including engagement, executional excellence,
         brand experience, expediency, and problem recovery.

    -    Change of Address Controls – We conducted an audit based on concerns from
         customers and an inquiry from a congressman about potential fraudulent use of
         change of address services for mail or identity theft. We determined the Postal
         Service could enhance its internal controls by requiring customers present a
         government-issued identification when submitting a hardcopy Change of Address
         request and by requiring dynamic authentication for online requests.


OA also conducted work that was either legislatively mandated by Congress or was to
support the Postal Service in meeting its own legislative mandates. This work included
oversight of the USPIS and auditing the data collection systems and procedures the
Postal Service uses to prepare reports related to costs, revenue, rates, and quality of
service for all products. The OIG also conducted audits supporting the public
accountant’s opinion on the Postal Service’s financial statements and compliance with
both the SOX and U.S. Securities and Exchange Commission financial reporting
requirements. This work is described more fully in section G of Part III. Budget Details.

OA would allocate its FY 2020 program budget to cover the primary program areas
described above, as well as the following emerging areas of focus:

    -    Evaluating the Postal Service’s role in combatting the opioid crisis;

    -    Evaluating ways to improve service and reduce costs for Postal Service
         operations related to delivery, vehicle maintenance, fleet management, post
         office operations, call centers and social media operations, and other facilities;

    ‐    Increasing oversight of the USPIS and its activities, to include strategic direction,
         resource allocation, case management, property, and training; and

    ‐    Evaluating postal partnerships and negotiated service agreements in the
         competitive parcel market.




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       C. Other Mission Areas
           1. Human Capital

Our budget has essentially been flat since FY 2010 when our authorized complement
was 1,196 FTEs. The absence of funding for normal salary increases and inflationary
adjustments during that time has steadily reduced the number of FTEs that can be
maintained to support audits and investigation. The President’s FY 2020 budget of $250
million will result in our organization having an authorized staffing level of 1,034.

                                             FY 2018     FY 2019       FY 2020
                    Description
                                             Enacted     Estimate      Request

                        FTEs                  1,045        1,019         1,034

            Net change from prior start of
                                                -          (26)           15
             year to budget end of year



We are committed to building and maintaining a highly engaged and talented workforce
to achieve mission success, both now and in the future. We recognize that without a
strong human capital strategy – one that manages and invests in our workforce talent –
we cannot succeed as an organization. Our OIG has undertaken a number of human
capital initiatives to maintain our competitive edge and retain a highly skilled workforce.
           2. Information Technology

The Office of Chief Information Officer (OCIO) maintains and integrates IT solutions that
rapidly respond to the needs of the OIG. In FY 2020, our focus will be to strengthen the
security and resilience of critical OIG infrastructures against cyberattacks. In addition to
these security enhancements, OCIO will work on developing processes and
infrastructure for storing large datasets. The exponential growth of digital information
used for data analytics and computer forensics will require investment in increasingly
large amounts of cloud storage. Storing data with a cloud provider will enable OCIO to
provide “storage on demand” for specific projects and allow the OIG to cost effectively
retain data for long periods for historical analysis.

           3. Data Analytics

Over the past 10 years, the OIG has integrated data analytics into its core mission of
combatting fraud, waste, and abuse. Since FY 2016, our analytic tools have directly
resulted in 1,354 investigations, including 701 criminal actions, 653 administrative
actions, and more than $5.1 billion in financial impact.


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Some recent tools that our Office of the Chief Data Officer (CDO) has developed
include:

    ‐    Domestic Mail Narcotics Tripwire and the High-Risk Inbound International
         Shipment Model – CDO has developed two tools to help combat opioids and
         other narcotics shipped through the mail. The Domestic Mail Narcotics Tripwire
         identifies mail delivery routes with high-risk indicators of an employee colluding to
         steal or deliver narcotics packages. The High-Risk Inbound International
         Shipment Model identifies high-risk packages that are being shipped to the
         United States but have not yet arrived at the border. Initial testing has resulted in
         a very high success rate for both tools.

    ‐    Claimant Risk Analysis Model (CRAM) – This predictive model identifies high-risk
         indicators of OWCP claimants committing fraud. Investigations initiated using
         CRAM tend to be much more efficient, with successful cases resolved 32 percent
         faster and unsubstantiated leads investigated 19 percent faster.

    ‐    eCC Tripwire – The Postal Service receives thousands of customer complaints
         daily that are stored in the electronic Customer Care (eCC) database. Our eCC
         tripwire automatically searches each day’s complaints using text matching to
         identify allegations of internal mail theft. Thus far, use of the tool has resulted in
         over 800 investigations, 150 criminal results, and 175 administrative actions.

    ‐    Retail Marketing Model – To identify retail facilities with poor customer service,
         CDO again made use of the eCC database. Using a keyword search, customer
         sentiment scores were produced for each retail facility.

Our work in FY 2020 would be to enhance our current tools and develop new models
that offer predictive analytics (what is going to happen) and prescriptive analytics (what
the Postal Service should do). Emerging areas of focus that will require additional
funding and specialized staff include:

    ‐    Big Data Analysis – The Postal Service uses numerous data systems to manage
         its mail processing systems and customer interfaces, and this data changes
         constantly. To proactively address process issues and respond to fraud, CDO
         tools must be able to examine this data in near-real time. This presents a
         challenge from an ETL (“extract / transform / load”) perspective, which the OIG
         will invest in new tools and platforms to address.




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              Justification Fiscal Year 2020
 
 


     Continuous Auditing – Once we address the “big data” challenge, our OIG will
     enhance and combine existing standalone products to produce actionable
     reports that OA, using data analytics, can issue quickly to identify control
     breakdowns. This will allow OA to efficiently highlight systemic issues, thus
     allowing our auditors to focus more deeply on other high-impact, more labor-
     intensive projects.




    21    U. S. Postal Service Office of Inspector General – Congressional Budget
          Justification Fiscal Year 2020