The US Postal Service’s Office of Inspector General found that Robert Bernstock, the agency’s former president of mailing and shipping services, improperly used his position to conduct outside business and to help award noncompetitive contracts to former business associates.
The Postal Service had previously credited Bernstock with spearheading the “Summer Sale” pricing incentive, the Priority Mail Flat Rate Box integrated marketing campaign and the Intelligent Mail barcode app.
Bernstock resigned June 4. He was replaced in an acting capacity by Susan Plonkey.
The inspector general’s report, obtained by a Freedom of Information request by DMNews, noted that Bernstock “improperly utilized Postal Service employees and property to conduct his outside business interests,” and “used his subordinate staff to conduct work that supported his outside business activities.”
Bernstock also requested that contracts be awarded noncompetitively to specific suppliers, resulting in six contracts going to persons or companies that had prior business relationships with him, according to the report. It also said he entered into an unauthorized oral contract with a business colleague representing Goldman Sachs, agreeing to pay the company a minimum of $350,000 per quarter. The investment firm has not commented on the report, which has not been released publicly.
The report also stated that the USPS’ Media Planning and Advertising group inappropriately attributed advertising expenses and erroneously reported other expenses to the Postal Service’s finance office, resulting in misstatements in the USPS’ annual compliance report to the Postal Regulatory Commission.
“Agents and auditors confirmed that advertising managers consciously misstated $10.4 million in expenses in the FY 2009 ACR and would have continued to misstate expenses in FY 2010, but for the OIG inquiry, which had the effect of making the product appear more profitable,” the OIG’s office said in the report.
The news comes at a time when the USPS is requesting new rate increases and defending its plan to reduce its delivery services to five days in order to stem financial losses at the organization.
Joanne Veto, senior manager of PR and promotional communications at the USPS, said via e-mail that the Postal Service has adjusted its contract-awarding procedures in response to OIG questions. The Postal Service now requires Susan Brownell, its VP of supply management, to approve noncompetitive contracts of $1 million or more, and includes clear language on avoiding conflicts of interest.
The inspector general’s office investigated Bernstock’s activities from July 2009 to June 21, 2010.