A polite tiff has broken out between the U.S. Postal Service and its inspector general over whether a pension should count in determining whether a top officer’s compensation exceeded a legal pay cap.
The officer, who was not named in the report, but whom sources identified as Paul Vogel, president of digital solutions, made a total last year of $306,250 in annual salary, pension and bonus, IG auditors found in a newly released report. That would be well above the maximum pay limit of $276,840 for USPS executives holding specially designated “critical” positions, according to the audit, which said the Postal Service is misinterpreting the 2006 law that set the cap.
USPS management begged to differ, saying that the officer’s $131,952 annual pension should not have been considered part of the pay package. According to the audit, however, the officer’s employment agreement defined “basic salary” as the pension plus a yearly salary of $113,048 for a total of $245,000. On top of that, the officer received a $61,250 performance bonus last year. The Postal Service and the inspector general’s office have agreed to seek an outside advisory opinion on the issue from the Justice Department’s Office of Legal Counsel.
“We are confident that the compensation that we paid to our senior executives did not exceed the statutory compensation caps,” USPS spokesman Mark Saunders said in an email.
For the record, the USPS Board of Governors notified Congress and the Office of Personnel Management in January that five positions–including those of Postmaster General Patrick Donahoe, Chief Financial Officer Joe Corbett and Chief Operating Officer Megan Brennan–were considered critical, according to the report. But auditors also found that the board gave three other posts the same designation without making the required notifications.
And for anyone who’s counting, the report noted that two former top USPS officials are in line for deferred executive retention bonuses well into six figures. For former Postmaster General John Potter, now president and CEO of the Washington Metropolitan Airports Authority, the balance was $786,301 as of the end of December. For former Chief Information Officer Ross Philo, the total was $642,999.
[This post has been updated with additional information.]
More than half of the conference spending reported by the Commerce Department in the first quarter of fiscal 2012 was based on estimated and unsupported costs, according to a new inspector general report.
The IG found that 65 percent or $1.1 million of the total $1.7 million in conference spending reported by Commerce was not based on actual costs for things such as meals and incidental expenses, transportation and lodging costs. This also included budgeted expenses that the department could not provide sufficient documentation for.
Some bureaus said they used estimates because the actual expenses were not available at the end of the reporting quarter, or they had not received invoices, according to the Oct. 17 report.
However, the IG found instances where actual cost data was available at the bureaus but not submitted.
Census Bureau, International Trade Administration, National Oceanic and Atmospheric Administration, National Telecommunications and Information Administration and the Patent and Trademark Office reported more than $1.7 million in spending for 24 conferences in the first quarter of fiscal 2012, the report said.
“The department accepted bureau’s conference spending data with only limited validation of the reported data and planning procedures, which resulted in incorrect reporting for select conferences,” the report said.
Two of the five bureaus over-reported some conference costs by a combined total of about $37,000 and under-reported other costs by more than $70,000, the report found. For example, the bureaus under-reported their transporation costs by nearly $28,000.
A 2012 appropriations provision requires the department to submit quarterly reports on conference spending to the IG. When the provision was enacted last year, the department had not fully developed policies or processes for doing the quarterly reports.
Since then, however, the IG noted that Commerce has created written policies for reporting conference spending and has made other drastic changes.
In a response letter to the IG, Commerce’s chief financial officer, Scott Quehl, said the act that requires Commerce to report conference spending does not make the distinction between reporting estimated and actual costs, but Commerce will review the IG’s concerns.
Quehl also said a comprehensive policy with guidance for requesting conference pre-approval, quarterly reporting and other related matters is undergoing final review.
IG recommendations for Commerce include:
- Strengthen operating policy to ensure bureaus accurately report actual conference spending, identify estimated costs and update them when actual costs become available.
- Require bureaus to maintain supporting documentation for costs incurred, planning considerations and decision justifications.
- Acquire assurance from bureaus that all required conferences are included in quarterly reports.
- Develop a process to examine questionable costs and document results.
After pushing the Air Force last year to recoup $4.3 million spent on repairs caused by poor contractor work, Sen. Jeanne Shaheen is now proposing that all agencies explain why they decide not to take action against poorly performing contractors in Afghanistan.
The bill, S. 3505, would require agencies to explain to Congress why they do not act on recommendations by the Special Inspector General for Afghanistan Reconstruction (SIGAR) to recoup money from poorly performing contractors, when the SIGAR’s recommendations would result in at least $500,000 in savings.
The bill would cover instances when the agency fails to respond, disagrees with the SIGAR or only accepts part of the SIGAR’s recommendations to seek reimbursement for a contractor or subcontractor’s failure to complete a construction contract due to poor contractor performance, cost-overruns or other reasons.
Shaheen, D-N.H., who sits on the Senate Armed Services and Foreign Relations committees, pushed the Air Force last year to follow the SIGAR’s October 2011 recommendations to seek reimbursement from London-based AMEC Earth and Environmental, Inc. The SIGAR found that sub-standard construction by AMEC was to blame for electrical failures that cost $4.3 million to repair.
The Air Force initially rejected the inspector general’s recommendation to seek a refund from the contractor, but the Air Force agreed to open a new investigation after Shaheen intervened.
“The United States government has an obligation to the American people to ensure that our resources are used in a cost-effective manner,” Shaheen said in a press release, after the Air Force decided in July that AMEC should reimburse the government for the repairs. “Government contractors must be held accountable when they cut corners.”
A Commerce Department agency’s security program is under review, following a January cyber attack that crippled its networks.
As part of an annual audit, the inspector general is reviewing the Economic Development Agency’s security program, according to a June memo. The review will determine the program’s effectiveness, significant factors that led to the cyber attack and how EDA has responded.
The computer virus was discovered Jan. 20, and the agency shut down employees’ Internet access the following week. Workers were eventually given new computer workstations with access to Internet and email, and the Department of Homeland Security’s U.S. Computer Emergency Readiness Team launched an investigation.
Despite the systems disruption, the agency’s job still got done: It announced 72 grants totaling $32.6 million during that period.
It looks like the end of the road for a long-lived inquiry into possible misappropriation of funds by a (now former) Postal Regulatory Commission employee.
In a new activity report covering the six-month period from October through March, the PRC’s inspector general said he referred the case to the U.S. Attorney for the District of Columbia, who declined to prosecute. The matter dates back to a 2008 IG audit related to bookkeeping practices at the commission, a five-member panel that oversees the U.S. Postal Service.
Among other no-nos, auditors flagged a non-interest-bearing checking account containing almost $192,000. That came as a surprise to commission managers, who thought the account had been closed a year earlier. While no money had been withdrawn, “the funds were at increasing risk of misuse and were not available for other PRC purposes,” the inspector general said in the audit. Following the finding, the commission shut down the account and sent the money to the Postal Service Fund, where it was supposed to have gone all along.
The employee, who was not named in the report, retired in 2009, PRC spokeswoman Ann Fisher said today. She declined further comment.
The U.S. Postal Service’s inspector general is out with a new overview of employee retirement options. This is a hot topic nowadays, given that USPS leaders have been open about their interest in using early-out incentives as a glide path to a much smaller agency.
One finding: More than 189,000 postal employees (that’s well above one-third of the current career workforce) are eligible to retire in fiscal 2012. That number appears to be a good bit higher than the figure used by postal execs, who generally put the ratio at around one in four. The report also notes that the Postal Service already has the authority to offer early retirements in fiscal 2012, and “may request an extension to” 2013.
The IG also makes no recommendations on how USPS leaders should proceed, but does offer a handy summary of annuity formulas, the mechanics of early retirement options, etc. Definitely worth a look.
Hard to believe, but the State Department’s Office of Inspector General has been without a permanent head for more than four years.
That fact, highlighted this week by the Project on Government Oversight, puts the office in an unlucky class of four IG agencies that have had vacancies at the top for at least 1,000 days.
The others are the Interior and Labor departments and the Corporation for National and Community Service. While the Obama administration last fall nominated attorney Deborah Jeffrey for the inspector general’s job at the national service corporation, the Senate has yet to confirm her.
But the White House has named no one for the top positions at the other three offices. Although there are undoubtedly plenty of competent career folks to carry on in the meantime, ‘”a permanent IG has the ability to set a long-term strategic plan, . . . including setting investigative and audit priorities,” POGO said on its web site, adding that the administration has “no good excuse” for failing to nominate someone for a post that has been vacant for years.
The White House press office did not respond to a request for comment today.
After their agency took an almost 50 percent budget hit, officials with the inspector general that monitors AmeriCorps and other community service programs warned that big reductions in staffing and oversight weren’t far behind.
They weren’t bluffing. From 33 employees in mid-January, the IG’s workforce has since shrunk to 17—in part because of a reduction-in-force–and another four employees are expected to leave soon for other jobs, Counsel Vincent Mulloy said in an email last week.
The office’s acting chief, deputy IG Ken Bach, was “heartened” that many employees were able to find work elsewhere, Mulloy said, “and regretted that he had to RIF those who had not.”
The workload has been downsized accordingly. Five planned audits have been postponed, for example, including a review of conference spending by the Corporation for National and Community Service, a look at space utilization at the corporation’s headquarters, and an evaluation of administrative costs incurred by AmeriCorps’ National Civilian Community Corps.
Also on hold are audits of five state commissions that receive corporation grant money, along with reviews of several Senior Corps grant recipients, Mulloy added. Although the IG will consider specific audit requests, the focus for now is on mundane but legally required work such as an audit of the corporation’s financial statement and a Federal Information Security and Management Act evaluation.
The cutbacks ensued after lawmakers whacked the inspector general’s budget from $7.7 million last year to $4 million now. The rationale remains mysterious. Sen. Tom Harkin, D-Iowa, who chairs a subcommittee that helps write the IG’s budget, blamed House Republicans for the cut. A spokesman for Rep. Denny Rehberg, R-Mont., who heads the comparable panel in the House, has not responded to requests for comment.
Next year looks only marginally better: Under the Obama administration’s fiscal 2013 budget request, the inspector general’s office will receive $5 million.
A new inspector general report questions how much revenue the General Services Administration is setting aside for operations and future investments.
GSA Federal Acquisition Service (FAS) officials say the agency hasn’t met its goals for funding reserve accounts that pay for administering, managing and improving the schedule program. But the account thresholds have not been reviewed in several years and may not reflect actual needs, according to a report released last week by the GSA deputy assistant inspector general for acquisition audits.
The inspector general last audited GSA’s revenues – earned by charging agencies for use of its schedule contracts – in 1999.
GSA then reviewed its accounts in fiscal 2004 and returned $92 million in excess funds to the U.S. Treasury, the report states. The 2004 review also led GSA to lower the fee it charges agencies for using its schedule contracts from 1 percent of schedule sales to 0.75 percent, the report states.
The agency’s plan for funding its reserve accounts recommends that up to 8 percent of revenues be retained to pay for current needs and potential risk, and up to 4 percent be retained for future investments before money is returned to the Treasury, FAS Commissioner Steve Kempf said in a written response to the report. Currently, the account balances have not met those thresholds, Kempf said.
FAS had $688 million in its reserve accounts as of September 2009, the report states.
Since the fee was reduced in 2004, revenue has not kept up with an increase in business costs on the schedule, Kempf said.
“If anything, given the trend of increasing growth of costs and decreasing growth of revenues, one might conclude that the fee customers are paying is actually too low,” he wrote.
The inspector general’s office is not convinced that FAS has checked to make sure those thresholds are appropriately set, said Ted Stehney, assistant IG for auditing.
“We hear what they’re saying but it doesn’t go far enough,” he said. “It doesn’t satisfy us.”
You can’t call this a game-changer, but the U.S. Postal Service’s inspector general is offering some indirect support for the mail carrier’s plans to close more than half of its mail processing plants.
In a newly released round-up, the IG’s office pulled together audits of 32 previous area mail processing consolidations and found that 31 had a valid business case. Those business cases “were supported by adequate capacity, increased efficiency, reduced work hours and mail processing costs, and improved service standards,” the roundup says. The IG’s office did note, however, that four of the 31 consolidations were poorly executed and recommended that the Postal Service improve communications with stakeholders.
For USPS executives, the findings nonetheless offer evidence that they know what they’re doing in pushing to close up to 252 of about 461 remaining processing facilities. That plan, which would erase some 28,000 jobs, has sparked a torrent of opposition from postal workers and politicians. Last week, Sen. Olympia Snowe, R-Maine, became one of the latest members of Congress to go on record against the proposed downsizing.
“This plan has profoundly negative implications for timely and reliable mail service in northern, western and eastern Maine, a geographically vast and rural area of our state,” Snowe said in a news release after visiting an eastern Maine processing and distribution facility that employs 183 people and is slated for consolidation with another plant.
According to Snowe, the consolidation is supposed to save $7.6 million. But in the release, she declared herself “unpersuaded.” She is convinced, however, that it would “disproportionately slow down mail delivery to rural areas of Maine.”
Sentiments like that prompted the Postal Service last month to freeze closings of all processing plants and post offices until mid-May, although studies will proceed. As part of the downsizing, the mail carrier is also pursuing a change in service standards that will drop overnight delivery of some first-class mail.