From the USPS Office of Inspector General
This report presents the results for our fiscal year (FY) 2008 review of U.S. Postal Service imprudent spending using the SmartPay Purchase Card .
Employees have made, and are continuing to make, imprudent and unnecessary purchases during a time of severe economic uncertainty in the Postal Service. While such purchases are generally not in direct violation of Postal Service policies, they conflict with the Postal Service’s objective of driving down costs in all operations and processes. Moreover, the public’s view of such imprudent purchases could have a detrimental effect on the Postal Service’s public image due to the perception that the agency is using funds from sales of stamps to purchase expensive items.
Imprudent Purchases Made by Postal Service Employees
Employees have made purchases, primarily gifts and items for meetings, which we believe are imprudent and unnecessary during a time of severe economic uncertainty in the Postal Service. In a recent report on the Postal Service’s progress in the areas of network strength, realignment planning, accountability, and improved communication, the Government Accountability Office (GAO) stated the Postal Service “must increase efficiency and decrease costs across all its operations” in order to respond to declining mail volumes. In addition, the Vice President, Controller, has directed employees to “continue efforts to control expenses” by making “prudent choices and deferring or eliminating non-critical activity.” Some examples of imprudent purchases we identified follow.
Employees put these purchases into the eAwards System (eAwards):
1. Electronic and household items such as Global Positioning Systems (GPS), navigational systems, video game consoles, camcorders, digital cameras, personal computers, printers, an espresso machine, and a TiVo® system given as employee awards/recognition, purchased in late fall 2007, and costing a total of $93,234.
2. Thirteen 23-inch high-definition televisions given as employee awards, purchased in fall 2007, and costing $6,435.
3. Three designer watches given as employee awards, purchased in fall 2007, and costing $4,370.
Employees did not put these purchases into eAwards:
4. Carnival type games and amusements for an employee appreciation and family day event, purchased in fall 2007, and costing $7,995. Cardholders are not required to put purchases related to employee appreciation into eAwards.
5. A 2-day year-end meeting held in November 2007 by one area costing $26,884, including the cost of breakfast, lunch, and dinner; meeting rooms; audio-visual equipment; and incidentals such as baggage handling and gratuities for 60 people. The purchase included lodging for 14 attendees whose duty station was less than 50 miles from the meeting place. Cardholders were not required to put these purchases into eAwards since this was a business meeting and not an employee recognition award event.
6. Tickets for sporting events, purchased in late fall 2007 and winter 2008, costing a total of $28,498. These purchases included a professional basketball game that 450 employees attended and where they received food and hats, and season tickets for a major league baseball team. Cardholders were not required to put these purchases into eAwards because the per ticket cost was less than $50.
We found the documentation supporting the purchases listed above and others did not always provide sufficient detail to identify the number of items purchased, the number of people attending events or recognized for awards, or the specific purpose or reason for the purchase. Without extensive testing, it is not possible for management or the U.S. Postal Service Office of Inspector General (OIG) to determine the extent to which some of these purchases (i.e., events) occur because they are not always tracked separately.
Items of value – such as GPS and navigational systems, electronic appliances, watches and gift cards – are captured in eAwards. Some of the purchases we identified – tickets to sporting events, business meetings and appreciation days – are associated with recognition or events; therefore, they are not required to be put into eAwards. As cited in a recent OIG report, expenses associated with internal and external events (meals, refreshments, employee recognition gifts, gift cards, et cetera) should be separately tracked to facilitate transparency and accountability.
In addition to the types of purchases noted above, we identified spending for food and meals made using Purchase Cards totaling over $7 million in FY 2008. However, we did not include specific examples in our report, as the Postal Service recognized the need to strengthen its policy in this area and recently issued a management instruction that provides additional guidance. The Postal Service travel policy states that anyone in travel status must deduct all meals provided from their per diem expense. Managers told us that meals are provided only under specific circumstances, often to ensure that people in travel status are available for a meeting for the maximum amount of productive time. We plan to continue to monitor these purchases throughout FY 2009 to determine whether the new management advisory is effective.
Although most of the purchases we tested were not in violation of Postal Service purchasing procedures, the nature of the purchases is in direct conflict with the Postal Service’s objective of driving down costs in all operations and processes. In addition, due to the perception that the Postal Service is using funds from stamp sales to purchase expensive items, this kind of imprudent spending could damage the Postal Service’s public image (goodwill). Both managers and those with awards approval authority should consider the costs of the awards and the perception of these awards to outside individuals. The imprudent purchases we identified represent items of value that are above and beyond employee salaries and bonuses.
We believe a reduction in purchases is feasible based on our analysis of Purchase Card data from October 2006 through September 2008. In fact, chart 1 shows that in Quarter 4, FY 2008, purchases decreased to an average of $24 million per month, down from an average of nearly $32 million per month for the first 9 months of FY 2008. We believe this is due to a recent emphasis on cost cutting, and further reductions are possible to realize additional cost savings by emphasizing the need to limit the amount of spending on non-cash items.
Footnote: There were 183,208 award transactions and $43,633,292 recorded in eAwards for 183,208 career and non-career employees during FY 2008, compared with a total of 765,088 career and non-career employees