- The Washington Times - Sunday, September 26, 2010

Even as the U.S. Postal Service began sliding into the worst financial crisis in its history, some postal executives in recent years found a way to earn more money by resigning from their jobs and returning as highly paid contractors while doing essentially the same work.

In three recent contracts awarded without competitive bidding, for instance, former Postal Service executives were hired to perform what contracting records described as “knowledge transfer,” according to a review of the agency’s multibillion-dollar contracting operation by the Postal Service’s office of inspector general.

“These contracts were put in place, even though highly experienced postal executives filled the positions vacated by the former executives,” the inspector general’s office concluded in a report, which was ordered by two senators amid a procurement scandal involving the agency’s former top marketing officer.

One former vice president retired in May and within two months received a $260,000 no-bid “knowledge transfer” contract for the postal executive who assumed his old job, the report found.

Overall, the inspector general’s office found 17 no-bid contracts awarded to former postal executives within a year of their retirement dates ranging from October 2006 to September 2009.

Citing three of the contracts, the report found the rate was $75 an hour for one former executive and $160 an hour for two others. The fees were between $6 and $72 an hour higher than the hourly rate the executives made at the Postal Service, according to the report.

Such contracting practices raise serious ethics concerns, the inspector general’s office warned in the report: “It appears unethical to hire back former executives at nearly twice their former pay to advise new executives who were placed in their position based on their expertise and years of Postal Service experience.

“There is also employee morale and public image issues management must consider when the Postal Service is closing post offices and seeking a reduced delivery schedule.”

Postal officials acknowledge instances in which they didn’t always follow established policies but said they still received good value for their money. They also point out that the Postal Service has more stringent rules governing no-bid purchases compared with the federal acquisition rules that govern most federal agencies’ purchasing.

Still, postal officials said they have halted any new no-bid contracts with former postal executives pending new policies that should be completed by next month.

“The Postal Service has demonstrated, repeatedly, its ability to control and eliminate costs,” Postal Service spokeswoman Joanne Veto said. “In fact, the Postal Service has realized cost savings of $10 billion since 2008.”

In addition, Ms. Veto said, policies have been enacted to provide more oversight and guard against conflicts of interest.

In a written reply to the inspector general’s report, Joseph Corbett, chief financial officer for the Postal Service, and Anthony Vegliante, chief human resources officer, said the Postal Service is reviewing other federal agency practices before creating an independent “competition advocate” position to review postal purchasing decisions.

The officials also noted that the inspector general’s office report covered about 1 percent of total purchases during a three-year period in which the Postal Service overall executed 63,000 contract actions totaling more than $18 billion.

The report isn’t the first time this year that concerns have surfaced about the Postal Service’s contracting practices. The agency’s former top marketing officer, Robert Bernstock, resigned before the release of a separate inspector general’s office report found that he awarded contracts to former business associates and failed to disclose information about his own outside business interests.

He was not charged with any wrongdoing.

Susan Brownell, vice president of supply management for the Postal Service, acknowledged “cracks in the system” in an interview with agents of the inspector general’s office working on the investigation into Mr. Bernstock earlier this year, according records obtained by The Washington Times through the Freedom of Information Act.

Speaking about a recent management review that found flaws in the handling of sole-source contracts, Ms. Brownell stated that “contracting officers are overloaded, and as a result, some things get ‘short shrift,’” investigators later wrote in a 10-page summary of their March 10 interview with Ms. Brownell.

“Brownell said over 30 percent of their positions are not filled, and there are cracks in the system.”

When The Times reported on Ms. Brownell’s interview last month, Ms. Veto said the Postal Service is not commenting on individual statements made by executives to the inspector general’s office during its investigation.

“It would not be appropriate for the Postal Service to comment on statements out of context or without having personal knowledge of or participation,” she wrote in an e-mail. “It also should be noted that the comments … demonstrate executives answering questions to the best of their knowledge and within their respective roles.”

The latest inspector general’s office report on contracting was ordered in January by Sen. Susan Collins, Maine Republican, and Sen. Claire McCaskill, Missouri Democrat.

The review also found that 35 percent of the 68 no-bid contracts reviewed by the inspector general’s office didn’t have the required justifications, market research or approval requirements. Overall, the inspector general’s office identified 2,788 contracts with former Postal Service employees dating to 1991, including more than 305 awarded to employees who left the Postal Service from Oct. 1, 2006, to Sept. 30, 2009.

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

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