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Dozens of ex-postal officials got generous no-bid deals, report says

By Ed O'Keefe

Who says you can't go back? Apparently you can at the U.S. Postal Service.

Dozens of former top executives and hundreds of former employees have returned to the agency in recent years as private contractors, sometimes making double the salaries they made as full-time workers, according to a new watchdog report.

Three audits released this week said the cash-strapped Postal Service is doing a poor job tracking its use of no-bid contracts, contributes more to worker health and life insurance benefits than other federal agencies and should consider closing more of its regional offices to help address an anticipated $230 billion, 10-year budget gap.

The three reports come as the Postal Service is set to report billions of dollars in losses Wednesday because of declining mail volume, awaits permission from postal regulators to raise postage rates and is locked in negotiations with two of its largest unions.

The Postal Service has awarded more than 2,700 contracts to former employees since 1991 and awarded 17 no-bid deals to former executives between 2006 and 2009, according to one of the reports. Most of those executives made six-figure sums, the report said. One unnamed executive received a $260,000 no-bid deal in July 2009 to train his successor just two months after retiring.

"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," the report said. "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."

Beyond employment contracts, the Postal Service improperly classified the status of 5 percent, or $910 million of its $18 billion annual contracting costs, according to the report.

"The Postal Service, like the federal sector and private industry, will use noncompetitive purchases in those instances when a noncompetitive purchase is the best contracting method to meet our business needs," Postal Service spokeswoman Joanne Veto said. The mail agency is also reviewing its deals with former employees and has instituted new policies to guard against potential conflicts of interest, Veto said.

The federal government procures about 30 percent of its goods and services, and the Postal Service has stringent approval requirements for noncompetitive purchases, she said.

A separate report detailed the Postal Service's contributions to worker health care and life insurance benefits. The mail agency's contribution rate to the Federal Employees Health Benefits program is 79 percent for most postal workers, higher than the 72 percent contribution rate the federal government pays for civilian workers. Postal officials involved in ongoing labor negotiations hope to win concessions from labor unions to reduce that contribution rate in coming years.

But postal auditors told the office of Sen. Susan Collins (R-Maine) Friday that the Postal Service pays 100 percent of health benefits for senior executives, some administrative staffers and directors of its office of inspector general.

A third report published this week presented plans to save $289 million to $894 million in the next decade by merging or closing dozens of administrative offices. Auditors recommended either merging several nearby offices into a central location, closing district offices with low work hours and mail volume, or moving regional offices into its Washington headquarters.

USPS has trimmed $10 billion in costs since 2008, and this year ceased hiring and promoting administrative staff. But Collins and Sen. Claire McCaskill (D-Mo.) plan to use the audits to urge an additional $800 million in cuts in fiscal 2011.

Aides said the senators requested the reports after auditors revealed this year that former postal executive Robert F. Bernstock had awarded millions of dollars in noncompetitive employment contracts to former colleagues. Bernstock left the Postal Service in May before auditors issued their report.

Collins called on Postmaster General John E. Potter to immediately consider the recommendations from the three reports.

"These IG reports raise extremely troubling questions about the management abilities and core decisions of the Postal Service," Collins said, adding that the mail agency "is at a crossroads in its history. The survival of this institution, which is vital to our country, depends on its regaining its financial footing."

The Maine Republican opposes a Senate bill unveiled Thursday that would give the Postal Service more flexibility to cut Saturday mail deliveries and close thousands of post offices. She also opposes plans to raise first-class stamp prices to 46 cents in January. The Postal Regulatory Commission must issue a binding decision on the rate increase by Oct. 4.

Leave your thoughts in the comments section below.

By Ed O'Keefe  | September 24, 2010; 3:44 PM ET
Categories:  Oversight, Postal Service  
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People have lost all sense of what is right and what is wrong. It seems that all people care about is money. I think the US post office is a waste of tax payers money, shut it down.

Posted by: jsantana1 | September 24, 2010 5:51 PM | Report abuse

How is the Postal Service a "waste of tax payers money" jsantana1? It is fully funded and takes absolutely no monies from the Feds. Do your homework before making such an asinine assumption.

As far as the budget deficit is concerned, the Postal Service always fabricates its gloom and doom predicitions whenever any of the Union's contracts are up for negotiation. Once the contracts are settled and employees lives are adversely impacted, the Postal Service ALWAYS shows how in the black they are.

And really, if the budget was their primary concern, rather than charging everyday people more money to mail just one letter, how about charging the discount mailers more to mail out their crap. You can find the rates on That Kohls, JC Penney, LL Bean, etc. catalog that floods just about all American households every few weeks costs these companies less than 20 cents each to mail to everyone. Maybe the beancounters have been removed from reality for far too long to find creative, effective ways to balance their budget rather than constantly attacking the very people who actually process the mail.

Posted by: Solidarity70 | September 25, 2010 8:37 PM | Report abuse

.. and we wonder why we're going broke? The Good Old Boys Club is at it again! Where's the OIG? The USPSIS? The FBI???

Guy Nohrenberg

Posted by: Tindad | September 26, 2010 3:50 AM | Report abuse

It is almost laughable to read the so-called "studies" that purport to compare USPS compensation with that of other federal employees and the blind acceptance, by the Washington Post, of the half-truths and deliberately misleading information contained therein. The "studies" report that USPS pays a higher percentage of health care costs than other agencies - wonderful. Why then, did the so-called "studies" fail to notice that USPS does not pay locality pay like the other agencies - around 24% in the Washington area - yes, 24%. Why do the so-called studies not report that USPS non-bargaining unit employees do not receive COLA, unlike all the other federal agencies - and have not received COLA in around 20 years? Why do the so-called studies not report that USPS does not give its Washington DC employees MetroChek as do all the other agencies? Why do the so-called studies not report that USPS employees do not receive annual pay raises as do all the other agencies? The gap between postal pay and other federal pay for similar levels of work and responsibility is around 30% - why have the so-called studies not noticed such an enormous disparity? Why have the studies not mentioned the "brain drain" at USPS as its employees unceasingly seek out transfers to other agencies? Does anyone imagine that employees are leaving USPS for other agencies for any reason other than the greater compensation package in every other federal agency? Most importantly, why has the Washington Post not looked at these facts, instead relying on callow but glib pseudo-journalists to blindly report the results of the so-called "studies" without casting so much as a questioning eye on the methodologies and the untold stories? Wake up, Washington Post - take a couple of minutes away from drinking the Kool Aid and try a little analysis and journalism - you used to like it.

Posted by: mycroftt | September 27, 2010 8:15 AM | Report abuse

Contracting retired employees has become the "in thing" to do in all federal agencies. Does this mean it is valido? NO!
There are many "I never made this call", calls going out to favored retired employees asking that they return as contracted individuals. The fact that the feds hired people with degrees and no experience may be part of the need or perhaps the promotion of friends and family who have become "dead wood" may be or perhaps both! I have not made the comparison, but flat contract, no medical, and no TSP match, may benefit the budget and save face when bringing someone in to do the job of those employees you have on payroll can not.

Posted by: lynnc412 | September 28, 2010 7:13 AM | Report abuse

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