Audit Report – SM-AR-14-007 – 08/05/2014

Background

The U.S. Postal Service’s Supply Management organization is responsible for approving contracts to acquire goods and services. However, the postmaster general and the vice president, Supply Management, can delegate contracting authority to personnel outside of Supply Management.

In response to a U.S. Postal Service Office of Inspector General report issued in September 2010, the Postal Service revoked the majority of its delegations. As of September 2013, the Postal Service reported six delegations for marketing, real estate, confidentiality, and interagency agreements. Our objectives were to determine whether current delegations of authority are reasonable and internal controls are adequate.

What The OIG Found

Five of the six delegations were reasonable and contained adequate controls over delegation requirements; however, internal controls and oversight of the Facilities delegation need improvement. Facilities did not require contracting officers to meet professional qualifications or establish sufficient competition requirements for contracts. Also, Facilities could not identify its active contracts and did not timely submit the required annual reports.

These deficiencies occurred in an environment with no separation of duties in the Facilities program office that identified the need for services, established contracting policy, and secured contracts.

It would benefit the Postal Service to rescind the delegation and transfer the responsibilities for Facilities service contracts to the vice president, Supply Management, to ensure consistent contracting practices for procuring goods and services.

In addition, during our review we found Postal Service officials were not aware that Information Technology personnel executed revenue-generating agreements with mail service providers without a required delegation. Specifically, officials could not locate evidence of a delegation granting authority for personnel to sign agreements with service providers who provide address quality data to mailers. Without sufficient controls and oversight of delegations, the Postal Service is at risk of fraud and waste from improper contracting activity, which could harm the Postal Service’s brand.

What The OIG Recommended

We recommended the postmaster general rescind the delegation to Facilities for service contracts and ensure personnel responsible for signing agreements with service providers have contracting authority.