- The Washington Times - Wednesday, June 30, 2010

The former $232,500-per-year president of shipping and mailing for the U.S. Postal Service regularly worked on outside corporate business while in the office, even enlisting his postal staff to schedule meetings and arrange for his private travel, postal investigators have found.

Robert Bernstock also helped steer millions of dollars in no-bid postal contracts to former business associates he knew from his days as a top executive at companies such as pickle producer Vlasic Foods and lawn care giant Scotts Miracle-Gro, according to a new report by the office of inspector general for the U.S. Postal Service and contract records.

The Washington Times first reported in January that Mr. Bernstock received more than $250,000 in outside corporate board fees at the same time he worked full time for the Postal Service, an arrangement that postal officials said they approved.

When The Times inquired about Mr. Bernstock’s outside business activities in December, postal officials said he used personal time and vacation days to conduct business involving his directorship positions at Nutrisystem and Pantry Inc., a convenience store chain.

The inspector general’s office concluded otherwise.

The report found that Mr. Bernstock had “improperly utilized Postal Service employees and property to conduct his outside business interests,” including having postal staff work on matters involving a business he owned called City Barbeque.

Mr. Bernstock, reached by phone at his home in Ohio, declined to discuss findings in the inspector general’s report, saying only that he was proud to have worked for Postmaster General John E. Potter and his team.

“I’ve moved on and the Postal Service has moved on,” Mr. Bernstock said.

Postal officials declined to comment on findings in the inspector general’s report. The inspector general’s findings were reported by the Federal Times, which has previously reported on contracts involving Mr. Bernstock and various former business associates.

As a director for two publicly traded companies, Mr. Bernstock was paid $112,498 in stock and cash at Nutrisystem last year, and $155,799 from Pantry Inc., according to Securities and Exchange Commission filings.

At the Postal Service, he earned a $232,500 salary and was awarded an $85,000 hiring bonus and an $85,000 retention bonus, records show. He worked for the Postal Service for about two years.

Mr. Potter allowed Mr. Bernstock to participate in board teleconferences for Pantry Inc. and Nutrisystem while at work for the Postal Service, the report said.

Mr. Potter told investigators that Mr. Bernstock’s corporate meetings were to last between 30 minutes and an hour. He said if Mr. Bernstock had to conduct the meetings elsewhere, he would have had to travel back and forth from a hotel to participate.

He said he did not give any approval for Mr. Bernstock to use staff on private business activities. Mr. Bernstock told an investigator that Mr. Potter “authorized him to use his Postal Service office, computer equipment and telephone system.” Mr. Potter, however, said he only gave Mr. Bernstock permission to transfer messages he couldn’t read on his BlackBerry to his Postal Service e-mail account to read, according to the report.

The Postal Service’s top attorney, Mary Anne Gibbons, told investigators she thought there were two sets of rules governing the so-called “de minimis” policies on the use of postal equipment for outside activities: one rule for hourly employees and another for executive employees such as Mr. Bernstock.

“Gibbons said, for example, that Bernstock had the ability to conduct nonpostal activities from his office behind a closed door and would not encounter a perception problem because other employees would not know that he was engaged in activities not related to the Postal Service,” the report stated.

But as a side note in the report, an investigator said only one standard, applying to all postal employees, could be found. That policy prohibits the use of Postal Service equipment for private business activities.

Mrs. Gibbons also said Mr. Bernstock’s use of staff to conduct private business was “unacceptable and should not have happened.”

Still, the report included statements by Mr. Bernstock saying he had asked Mrs. Gibbons back in June 2009 about using his staff on private business activities. He told the inspector general’s office that Mrs. Gibbons had “covered her ears” and said she “didn’t want to talk about the past.”

Postal Service policy requires that violations of postal law be reported immediately to the inspector general.

In addition, the report found that Mr. Bernstock did not report all of his business affiliations in a required financial disclosure form at the Postal Service.

“The message that ought to be coming in loud and clear is that transparency is the key,” said Pete Sepp, vice president at the National Taxpayers Union. “Here is someone who is brought in from the private sector and while their business ties can’t be expected to be severed completely, but they ought to be expected to reveal them and make sure it’s all out in the open. And that didn’t happen.”

Much of the inspector general’s review focused on Mr. Bernstock’s role in brokering millions of dollars in no-bid contracts to former business associates he knew from his work in the private sector, including at Vlasic Foods, where he was a top executive.

In addition, the report said, he was involved in a bulk stamp sale to Costco while owning $30,000 in stock in the company, a violation rules requiring officials to recuse themselves if they have more than $15,000 in stock.

While postal officials declined to comment on specific findings in the report Wednesday, a spokeswoman said the Postal Service enacted several changes to its no-bid contracting rules.

For example, managers cannot approve sole-source contracts for professional, technical or consulting services valued at $1 million or more. Such contracts now must be approved by a vice president.

In addition, language in contract papers also “make clear that contracting officers, managers and executives avoid a professional conflict of interest or the appearance of a conflict of interest when considering sole-source contracts,” Postal Service spokeswoman Joanne Veto said.

The inspector general discussed its findings on Mr. Bernstock with federal prosecutors, but the U.S. attorney’s office in Washington declined to press charges.

• Jim McElhatton can be reached at jmcelhatton@washingtontimes.com.

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