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Retaliating against an employee for reporting safety violations, the U.S. Postal Service asserted baseless terrorism charges against him. As a result, the employee was dismissed from his job, arrested, detained, harassed, criminally charged with committing acts of terrorism, and subjected to an extended campaign of public disparagement. That sounds like the exaggerated ranting of a would-be whistleblower seeking to cash in on a big pay day. But it’s not. These are the allegations made by the U.S. Department of Labor in a lawsuit it filed against its sister agency, the U.S. Postal Service, in an action filed in the U.S. District Court for the Eastern District of Missouri, Eastern Division, Case No. 4:14-cv-1233.

De-regulation of the U.S. Postal Service’s purchasing policies has stymied the prosecution of defective pricing fraud cases, according to a September 18, 2013 report issued by the USPS Office of Inspector General (OIG).  U.S. Attorney’s offices have thus declined to criminally prosecute suppliers for submitting defective cost or pricing data in procurement actions valued at $36 million. The OIG therefore recommends that the Postal Service require suppliers to certify that cost or pricing data are accurate, complete, and current. USPS management, however, disagrees. The Postal Service believes its interests are already fully protected and the disadvantages of imposing a new certification requirement would outweigh any benefits.

The Postal Service spent $2.8 billion on 16,993 Highway Contract Route (HCR) contracts in 2011, according to a newly released audit report by the U.S. Postal Service Office of Inspector General (OIG).  The OIG conducted the audit to assess the integrity of data in the Transportation Contract Support System (TCSS). OIG found the TCSS data is accurate. In a spot-check of 196 sampled contracts, OIG did not find a single data error. But there was one area of disagreement with management. OIG contended that 94% of the sampled contracts did not have proper funding approval documentation prior to contract award. Postal management disagreed with this conclusion, saying that advance funding approval was obtained through other methods.

Yet another U.S. Postal Service manager has pled guilty to fraud and corruption charges relating to USPS transportation contracts. In March 2012, the former USPS Manager of Postal Vehicle Service Operations for the Bay Valley District in Oakland, CA was indicted in a $4.4 million fraudulent billing scheme. Last year, five Postal Service officials at the Detroit, MI Vehicle Maintenance Facility were charged with similar crimes. One might well wonder how many more such episodes need to be uncovered before the Postal Service issues binding procurement regulations and institutes effective protest procedures. Here’s what happened in the most recent case.

Personal use of an undeliverable coupon by a mail delivery contractor violated postal regulations but did not justify the default termination of her contract.  The particular post office had allowed others in the office to use such undeliverable items, though that local practice violated postal regulations.  Although the Postal Service Board of Contract of Contract Appeals (PSBCA) decided the case in the contractor’s favor, one judge dissented and believed the termination was justifiable.  See Laura K. McNew, PSBCA No. 6286, April 23, 2012.

Contractors beware: the U.S. Postal Service Office of Inspector General (OIG) thinks that $1 out of every $20 spent by USPS on its contractors is fraudulent, and OIG is itching to find it. According to a July 18, 2011 OIG blog article, “conservative business estimates project up to 5 percent of contracted dollars are lost to fraud, meaning $1.45 billion of Postal Service funds are potentially at risk.” While these numbers are fanciful, there is no doubt that the OIG is taking this seriously. Read on for more details.