Audit Reports

Objective

The control environment is the foundation on which an organization builds and operates an effective system of internal control. The U.S. Postal Service had an annual contract spend of $12.9 billion in FY 2018; therefore, it is critical that Supply Management (SM) maintains an effective control environment over its contracting officers (CO).

COs are appointed by the Vice President of SM or an appointing official and given a contracting warrant to process and execute contracting actions up to a designated warrant amount. Assignment of a warrant is provided to individuals only upon demonstrating that they have met the required experience and training qualifications for that level. To sustain their contracting warrant level, COs must attend 21 hours of formal purchasing training annually. As of February 12, 2019, the Postal Service had 151 COs.

The objective of our audit was to assess the effectiveness of SM’s control environment over COs, specifically, staff competencies, oversight of contract activities, and workload management. The scope period was October 1, 2017 through June 30, 2019. This is the first of several audits to assess SM’s overall control environment.

What the OIG Found

The Postal Service could improve the control environment over CO staff competencies and management oversight to ensure that COs are adhering to training requirements and are awarding and managing contracts in compliance with policy and procedures. We also identified that SM did not have a consistent process for managing and assigning CO workload.

Specifically, we identified the following:

• Eleven of the 151 (7 percent) COs did not have the required 21 hours of formal purchase-related training per year or documentation to support compliance. As of FY 2018, these 11 COs managed a total committed contract amount of about $488 million.

• Training records are not tracked or maintained in a consistent manner or centralized system.

• SM did not define a reporting period for completing CO annual training which, per policy, could include calendar year, fiscal year, or any other defined 12-month period.

Additionally, the Postal Service could improve oversight controls to ensure contracts are awarded or managed in compliance with requirements. Only eight of 13 category management center managers indicated that they (or their team leads) reviewed contracts prior to execution.

Finally, SM did not have a consistent process for assigning or managing COs’ workload. In FY 2018, COs across the five portfolios managed 9,805 contract awards, which ranged from one to 1,175 contracts per CO. The average number of contracts managed by CO varied by portfolio from 19 to 135 contracts per CO.

These issues occurred because:

• There are no formal processes for validating purchasing-related training such as guidelines on acceptable training to meet the requirement, where training records should be maintained, what documentation is required to support the training, and during what period the training should occur.

• Current policy does not require reviews of contract actions below $250,000 prior to execution and managers stated that not all team leads were required to conduct these management reviews.

• The process for assigning contracts to COs is manual and discretionary based on COs’ experience, warrant level, and existing workload.

When COs do not meet, or cannot support compliance with training requirements, they are at risk of losing their warrant and the Postal Service is at risk of having a CO without the current competencies managing contracts/contracting actions on its behalf. Additionally, appropriate and timely management reviews of contracting activities prior to contract award are critical to ensuring compliance with requirements and reducing potential financial and legal risks to the Postal Service. Finally, absent a consistent process, SM cannot ensure management of CO workload is transparent, efficient, or balanced.

What the OIG Recommended

We recommended management:

• Implement a formal portfolio review process to ensure COs obtain the required annual 21 hours of formal purchasing-related training, including validation of training content and supporting documentation of attendance/completion.

• Designate a centralized system for SM to record, track, and manage COs’ training activities.

• Establish a standard 12-month training reporting period for all COs and update policy accordingly.

• Provide organizational training on review and approval processes for contract actions prior to contract execution, as required.

• Assess the feasibility of establishing commodity specific metrics or tools to provide for a consistent workload management process.