September 23, 2010 Press Release from Senator Susan Collins

WASHINGTON, D.C. – Three investigations of the U.S. Postal Service (USPS) by the Postal Inspector General (IG), requested by Senator Susan Collins, have uncovered stunning evidence of contract mismanagement, ethical lapses, financial waste, and excessive executive perks that cost the Postal Service more than $800 million a year in unnecessary costs. The IG examined three areas where the Postal Service could realize significant savings: employee benefits, contracting policies, and area and district field offices.

Among the disturbing deficiencies uncovered by the IG are that:

• * the USPS awarded 359 contracts to former Postal Service executives without competition. In three cases that the IG examined most closely, the former employees were hired at nearly twice their former pay to advise new executives, a practice which the IG found raised serious ethical concerns and hurts employee morale;

• * the Postal Service pays 100 percent of its senior executives’ health benefits, a perk that is not provided to comparable employees in any federal agency;

• * postal employees participate in many of the same health insurance and life insurance programs as federal employees, yet the Postal Services pays a greater share of the premiums;

• * the Postal Service’s contract management did not protect the USPS from waste, fraud, and abuse;

• * the Postal Service could not even identify how many contracts were awarded without competition, and the IG found that 35 percent of the no-bid contracts lacked justification; and

• * significant savings could be achieved by consolidating the USPS’s area and district field offices.

“The findings of these reports are outrageous and prove that if the Postal Service would focus its efforts on reducing costs and increasing efficiencies then it could save more than $800 million in 2011 alone,” said Senator Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, which has oversight of the U.S. Postal Service. “Instead we have disturbing evidence of excessive spending, overly generous executive perks, and no-bid contracts. This is not only a waste of money, but the IG finds that some of the contracts may well be unethical.

“At a time when the Postal Service is pursuing significant rate increases and reducing service in response to its dire financial condition, these IG reports raise extremely troubling questions about the management abilities and core decisions of the Postal Service. The Postal Service is at a crossroads in its history. The survival of this institution, which is vital to our country, depends on its regaining its financial footing.”

As a result of the findings, Senator Collins immediately sent a letter to Postmaster General John Potter, calling upon him to adopt the IG’s recommendations and put the Postal Service on the path to save substantial amounts of money in the coming year.

The IG’s (PDF) reports are linked below:

Employee benefits: http://www.uspsoig.gov/FOIA_files/HR-MA-10-001.pdf

Purchasing policies: http://www.uspsoig.gov/FOIA_files/CA-AR-10-005.pdf

Area and district field office structure: http://www.uspsoig.gov/FOIA_files/FF-AR-10-224.pdf