Federal Reports

The explosion of e-commerce parcels flooding postal networks is just one symptom of a confluence of forces characterized by increasing globalization, the expanding digital revolution, and changes in manufacturing and transportation. This white paper highlights the forces and trends fueling the revolution, and examines the implications and opportunities for the Postal Service to meet the changing needs of citizens and commerce through value-added logistics. As the Global Logistics Revolution continues to alter many aspects of today’s economy, this paper is intended to be a first look at what it means for the Postal Service.

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements

During this period, our audit work recommended actions for the Department to take to address identified weaknesses in the programs and operations we reviewed, and our investigative work led to significant criminal and civil actions, settlements, and other monetary returns totaling more than $33.3 million.

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The Inspector General Act of 1978 (Public Law 95-452), as amended, requires that the Inspector General report semiannually to the head of the Department and the Congress on the activities of the office during the 6-month periods ending March 31 and September 30. The semiannual reports are intended to keep the Secretary and the Congress fully and currently informed of significant findings and recommendations by the Office of Inspector General.

This Semiannual Report to Congress summarizes the activities of our office for the 6-month period

The Office of the Inspector General audited the savings guaranteed to the Tennessee Valley Authority (TVA) by DeWolff, Boberg & Associates, Inc., (DBA) for work management improvement services. DBA guaranteed efficiency and productivity gains would result in minimum total cost savings to TVA of $17,971,760. Our objective was to determine if DBA complied with the terms of the contract and achieved the guaranteed cost savings. Although we did not find evidence of noncompliance with the contract, we could not determine if DBA achieved the guaranteed cost savings. We could not determine if the metrics used to measure improvements were valid, because TVA did not have management controls in place to ensure consistency. Accordingly, we could not determine the value TVA received from the $16.17 million it paid to DBA. Summary Only

There are ongoing debates regarding what role the Postal Service could and should play in meeting modern communications needs. These discussions often include Postal Service management, the postal regulator, postal employees and customers, members of Congress, and other stakeholders. Largely absent from the debate, however, has been the voice of the American public — the very people that the Postal Service exists to serve. To begin to understand America’s changing communications needs, the OIG commissioned a study to better understand how Americans view the Postal Service now, as well as what role it could play in their lives in the future. This paper provides the results of that survey and is intended to be the basis for more in-depth follow-up research into topics this initial survey identifies as important.

We issued a special report on a specific issue of concern in California that we identified during the course of our nationwide review. We determined that the California Department of Education instructed LEAs that had not previously met the MOE compliance requirement with local-only special education expenditures that they may use local-only special education expenditure information from an improper base year to demonstrate compliance with the LEA MOE requirement. We found two actual instances in which the California Department of Education allowed LEAs to demonstrate MOE compliance by using improper expenditure information. These two LEAs spent less than they should have on special education programs and were not penalized for doing so. It is possible that additional LEAs in California incorrectly represented that they complied with the MOE compliance requirement by also using an improper base year. Based on our findings, we made a number of recommendations, including that the Department revise its regulations as needed to ensure that LEAs are not permitted to reduce the amount of local funds spent on educating children with disabilities below levels required by IDEA, and determine the amount the California Department of Education is required to remit to the Department as a result of the LEAs using an improper year to meet the actual MOE compliance requirement. The Department partially agreed with our concerns, and said it would consider regulatory change and subsequently published a Notice of Proposed Rulemaking on LEA MOE in September 2013.

We performed our audit work at the Michigan Department of Education, Detroit Public Schools (Detroit), Cesar Chavez Academy, and the School District of the City of Inkster. We found that although the Michigan Department of Education performed some internal control activities and on-site monitoring related to administering statewide tests, it could improve controls over preventing, detecting, and taking corrective actions if it finds indicators of inaccurate, unreliable, or incomplete test results. Specifically, we found that Michigan Department of Education did not always monitor schools that it identified as high-risk, did not effectively use contractor-provided reviews of test results and forensic analysis to identify schools with possible administration irregularities, and did not ensure that its contractor provided timely reports on missing test materials. We recommended that Michigan (1) place schools that it identifies as high-risk for possible violations of test administration procedures on the next year’s targeted monitoring list, (2) use test results and erasure analyses to identify schools with possible test administration irregularities, and (3) ensure that its contracts are amended to include specific requirements for contractors to report missing test materials. At Detroit, we found that its building security allowed unauthorized access to test materials, that it did not retain records of its onsite monitoring visits to schools, and did not test all students in a continuous manner, which may render the tests invalid. We recommended that Detroit correct these weaknesses by (1) adequately securing test materials, (2) retaining monitoring visit reports, and (3) testing students in a continuous session and reporting any deviations from required test administration procedures.

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements

FSA paid $448 million in commissions and $8.3 million in bonuses to Private Collection Agencies (PCAs) based on estimates because DMCS2 could not provide the information necessary to calculate actual commissions and bonuses. During FY 2012, FSA had individual contracts with 23 PCAs to perform collection services on defaulted student loans. PCAs are paid commissions based on successfully collecting on defaulted loans, and a PCA qualifies for bonuses based on its performance relative to other PCAs. Before it transitioned to DMCS2 in September 2011, FSA used its previous system to calculate PCA commissions and bonuses based on actual collections data contained in the system. However, as DMCS2 has been unable to produce the data necessary to calculate commissions and bonuses, FSA required PCAs to submit invoices, without supporting documentation that calculated estimated commissions, and paid estimated bonuses based on bonus payments made in previous years. We recommended that FSA calculate any overpayments or underpayments of PCA commissions and bonuses based on actual data, require PCAs to return any overpayments to the Department, address any underpayments, and require PCAs to submit supporting documentation for all commissions invoiced since October 2011.

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements

There have been a number of recent incidents requiring emergency response at TVA fossil plants, including the ash spill at Kingston Fossil Plant and fires at multiple plants. This review was initiated to assess TVA coal and gas fleet emergency preparedness.The objective of this review was to determine if Coal Operations and Gas Operations have made progress in their emergency preparedness and response program since the ash spill at Kingston Fossil Plant. This review looked at the current status of emergency preparedness with respect to both Coal Operations and Gas Operations.Our review found that although progress had been made in emergency preparedness and response, improvements could have been implemented more effectively. In addition, opportunities to improve the program still exist in the areas of site consistency and training. Through interviews and review of documentation, we found a lack of consistency in how emergency preparedness is handled between the sites. Also, training more personnel in National Incident Management System and adding training opportunities could build a more in-depth emergency preparedness program. An additional concern was raised during interviews concerning the responsibilities of the shift operations supervisors. The roles specified for incident commanders are generally in addition to their jobs as shift operations supervisors, and there were concerns that the training was a significant commitment in addition to the daily work load. We made recommendations to management to address the findings in the report.

We notified the Department that FSA was not enforcing a contract requirement that PCAs report verbal complaints from borrowers to FSA. The contracts between PCAs and the Department provide that each PCA will adhere to Department complaint procedures. Those procedures mandate specific actions a PCA must take when it receives a complaint from a borrower, including verbal complaints, such as suspending collection activity on the account. During our site visits at three PCAs—Pioneer Credit Recovery, Performant Financial Corporation, and NCO Financial Systems, Inc.—we learned that none considered verbal complaints to be actual complaints because they believed that they had been able to appease the borrower and defuse the complaint. In addition, we found that no PCAs tracked or reported verbal complaints. As a result, FSA was unaware of the number or severity of verbal complaints filed by borrowers against PCAs and how those complaints were resolved. We recommended that FSA enforce the contract requirement that PCAs report verbal complaints to FSA, and develop a quality assurance program to verify that FSA is receiving all verbal complaints.

Tennessee Valley Authority (TVA) Watts Bar Nuclear Plant Unit 2 (WBN2) management requested the Office of the Inspector General to perform a review of the commodity tracking process being implemented for the WBN2 construction project. This review was intended to help TVA gain confidence in their commodity tracking process, which is used in conjunction with other tools and metrics to gauge the project's progress.We identified minor vulnerabilities in the commodity tracking process for the WBN2 construction project related to potential duplication of data entry and review. We made recommendations to eliminate the duplication. TVA agreed with our findings and the OIG concurs with WBN2 management's planned action. Summary Only

EAC OIG, through the independent public accounting firm CliftonLarsonAllen LLP, audited the EAC's implementation of privacy and data protection policies and its compliance with Section 522 of the Transportation, Treasury, Independent Agencies, and General Government Appropriations Act, 2005.

TVA provides biweekly vehicle allowances to eligible officers and key managers in accordance with Vehicle Allowance Guidelines that were put into effect April 1, 2006. Additionally, TVA maintains a light fleet of about 2,900 vehicles, which are available for assignment to any TVA employee with a business need. Business units with an assigned vehicle pay a monthly fee to TVA Fleet Services for use of the vehicle. In fiscal year 2011, TVA paid $648,050 in vehicle allowances to 65 employees. Also, business units paid approximately $9.66 million in monthly fees during fiscal year 2011 to Fleet Services for use of assigned vehicles.The Office of the Inspector General audited TVA's vehicle allowance and assigned vehicle programs to determine the cost effectiveness of the programs and if proper controls were in place to ensure program eligibility guidelines were being met. Our specific audit objectives were to determine if (1) TVA employees receiving vehicle allowances met established eligibility requirements and if proper controls were in place to determine eligibility criteria were met, (2) TVA employees with assigned vehicles met established criteria for having an assigned vehicle and if proper controls were in place to determine eligibility criteria were met, and (3) the cost effectiveness of both the vehicle allowance and assigned vehicle programs.Our audit found TVA does not document how officers and key managers who are paid vehicle allowances meet the "business need" eligibility criteria specified in TVA's Vehicle Allowance Program Guidelines. Based on the available data, it appears a large percentage of the personnel who receive vehicle allowances may not meet TVA's stated criteria of significant business related travel. We also noted several administrative matters within the guidance that were not followed.TVA's Fleet Service management did not maintain adequate documentation to validate the adequacy of TVA's controls over vehicle assignments. Additionally, we were unable to determine which program is more cost effective because data obtained during the audit indicated the cost differential between the two programs was small. However, overall cost savings may be available, because there are individuals who either receive a vehicle allowance or have an assigned vehicle who do not appear to have a business need for the allowance or vehicle.We made five recommendations that pertained to (1) documentation of vehicle allowances, (2) periodic review of those receiving an allowance, (3) maintenance of the Vehicle Allowance Guidelines, (4) coordination between those with vehicle allowances and those with assigned vehicles, and (5) review of all employees currently receiving an allowance. We made three additional recommendations that pertained to (1) maintenance of TVA Form 9314A, (2) documentation of vehicle replacements, and (3) review of all employees currently assigned a vehicle.

The marketplace for traditional Postal Service products is increasingly competitive. In addition to the long term trend toward electronic media, Postal Service products face intense pressures brought about by the Great Recession. This paper explores an open question raised by these disruptive trends: Are Postal Service customers becoming more price sensitive? Though intuition may suggest that growing competition would have this effect, the answer to this question is best found by letting the data do the talking.

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements

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This report summarizes work we initiated and completed during this semiannual period on a number of critical departmental activities. Over the past 6 months, our office issued 18 audit, evaluation, and inspection reports addressing programs overseen by the Economics and Statistics Administration, International Trade Administration, National Oceanic and Atmospheric Administration, National Telecommunications and Information Administration, U.S. Patent and Trademark Office, and the Department itself.

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During the semiannual period, NEA OIG issued nine reports, which contained forty recommendations based on audits and evaluations. Twenty recommendations were related to NEA programs and twenty were related to NEA grantees. Three recommendations related to NEA grantees were cleared during this reporting period. We also issued one memorandum to the agency related to a NEA grantee which contained one recommendation. The agency implemented the recommendation during this reporting period. We conducted a joint investigation with the OIGs of the National Science Foundation (NSF) and the National Endowment for Humanities (NEH), of a Massachusetts public broadcasting company for allegedly failing to properly track and account for Federal grant funds. Our investigation found that the broadcasting company could not demonstrate that project costs charged to the Federal grants from the three agencies were reasonable, allowable, and allocable. The U.S. Attorney’s Office entered into a civil settlement whereby, without admitting liability, the company repaid $300,173—of which $1,747 was associated with NEA funds—and entered into a five-year compliance plan to strengthen its oversight of Federal funds. The 2012 Financial Statement Audit Report was issued November 8, 2012, and resulted in an unqualified (clean) opinion. The FY 2012 FISMA evaluation concluded that although NEA made progress in complying with FISMA, some additional improvements were needed.

NLRB OIG's April 2013 Semiannual Report

Semiannual Report to the Congress October 1, 2012 - March 31, 2013

This investigation was initiated after the Tennessee Valley Authority (TVA) Office of the Inspector General (OIG) received a complaint alleging the TVA Board of Directors (Board) failed to give proper notice as required by the Government in the Sunshine Act (Sunshine Act) when the Board selected William D. (Bill) Johnson as TVA's President and Chief Executive Officer (CEO).Our investigation found the following:The Sunshine Act requires public meetings by an executive agency be open to the public. However, as a legal matter, the prevailing view as indicated by the District of Columbia, U.S. Appellate Court, is that notational voting does not constitute a meeting, and it does not constitute a violation of the Sunshine Act. Furthermore, because notational voting does not constitute a meeting as described in the Sunshine Act, notice is not required.In selecting a CEO, the Board decided to use the notational process to protect the privacy of applicants and to address the difficulties of obtaining a quorum at that time.The evidence developed by our investigation shows the Board followed notational procedure by not discussing the candidates' qualifications or otherwise deliberating with one another about the selection. Board members voted separately.Because the Sunshine Act does not prohibit the notational procedure and the evidence demonstrates that the Board properly used that procedure, the Board did not violate the Sunshine Act.

This is a publication by GAO's Inspector General that concerns internal GAO operations. The report summarizes the activities of the Office of the Inspector General (OIG) for the first reporting period of fiscal year 2013.