Our objective was to determine whether fiscal year (FY) 2020 expenditures of the Postal Service Board of Governors (Board) were properly supported, reasonable, and complied with Postal Service and Board policies and procedures.
The Postal Reorganization Act of 1970, as amended, established the Board which is comprised of nine governors appointed by the president of the United States, the postmaster general, and the deputy postmaster general. While the members of the Board changed through the year, as of September 30, 2020, the Board consisted of the chairman, five governors, and the postmaster general.
The Board directs and controls the expenditures of the Postal Service, reviews its practices and policies, and establishes objectives and goals in accordance with Title 39 of the U.S. Code. In FY 2020, the Board incurred over $1.7 million in travel, meeting, and other expenses, including over $1.5 million in professional services fees. The expenditures substantially increased over recent years with the appointment of additional governors and the search for a new postmaster general.
We determined that, except for transactions related to professional services contracts, the Board’s expenditures were properly supported, reasonable, and complied with Postal Service and Board policies and procedures. We identified minor issues with documentation, accounting codes, and staff travel reimbursements that were discussed with management during the audit.
However, we identified concerns with the contracting processes that Supply Management and the Office of the Board used to conduct an executive search for postmaster general candidates.
Postal Service management, on behalf of the Board, leveraged an existing contract between the Postal Service Law Department and a contractor beyond the scope of the original statement of work. The contract was not properly modified to cover the additional scope or to add the separate pricing structure that was used. Finally, processes were not followed to properly evaluate one of the suppliers that was non-competitively selected to assist in the search.
These actions resulted in about $358,000 paid for services acquired outside established contracting practices in FY 2020. If Supply Management had followed established processes to perform the analyses and document their decisions throughout the purchase, they may have obtained a better balance of price and benefits for the Postal Service as they fulfilled the Board’s request.
In addition, the contracting officer’s representatives in the Office of the Board did not always effectively execute their contract administration responsibilities. We found seven invoices the contracting officer’s representatives certified for payment with charges above the contracted rate or without verifying the charges were prescribed in the pricing schedule. Further, we identified three travel reimbursements that were certified for payment that did not comply with travel policy or contract terms. Finally, we identified an instance in which the contract funding was not effectively monitored, resulting in two late payments and a nominal amount of interest incurred.
We recommended management:
- Develop and provide training and formal communication to all purchasing teams on policies and procedures, including required file documentation, for sensitive requests.
- Implement a process to ensure the Office of the Board’s contracting officer’s representatives administer all contract-related arrangements and certify invoices in accordance with established supply management policies and contract terms.
- Recover the overpayment identified in this report.