Contract Fraud

USPS OIG Investigations

The U.S. Postal Service presently manages billions in contracts, ranging from multi-million dollar national contracts for services such as transportation networks and IT infrastructures, to local contracts for supplies and services at individual postal facilities. The sheer volume of contracts and the huge dollar value provide opportunities for contractors and employees to defraud the Postal Service. The U.S Postal Service Office of Inspector General (OIG) aids the Postal Service by investigating allegations of contract fraud, waste, and misconduct. When contract improprieties are documented, Special Agents present the evidence for criminal and civil prosecution and administrative remedies. Contract fraud is defined as any intentional, unlawful deception designed to deprive the federal government of something of value or to secure from the United States for individuals a benefit, privilege, allowance, or consideration to which they are not entitled.

During Fiscal Year 2009, the OIG conducted 147 contract fraud investigations, resulting in 19 arrests and nearly $12 million in funds returned to the Postal Service.

Contractor Pays Postal Service $1.46 Million in Lieu of Debarment

In May 2009, the OIG was notified by the Department of Justice (DOJ) that the Postal Service would receive $4.5 million as a result of an anti-trust investigation where a $45 million fine was imposed against an air cargo company. This anti-trust investigation was a joint effort by the OIG, FBI, Department of Transportation, the Defense Criminal Investigative Service, and U.S. Immigration and Customs Enforcement under the direction of the DOJ investigating the international air cargo industry. The Postal Service is one of the nation’s largest air cargo customers and is the largest governmental victim in this antitrust case. In 2006, the Postal Service accounted for 37.6 percent of the air cargo market share and the Postal Service spends about $700 million annually on air cargo costs. The investigation centered on allegations that carriers were artificially increasing profits through a price fixing scheme, where air cargo carriers were engaged in a conspiracy to fix the rates and surcharges the carriers charged their customers. Dozens of air cargo carriers were allegedly involved in the conspiracy that involved not only base cargo rates charged per kilogram, but also surcharges related to fuel, security, war risk, and U.S. Customs fees. The investigation is continuing.