Federal Reports

• The magnitude and immediacy of the impact of high inflation on the Postal Service vary widely according to the category of costs and revenue. For example, inflation has a direct impact on cost-of-living adjustments (COLAs), which are pegged to the inflation rate.• Price increases for market dominant products, such as First-Class Mail, are also directly tied to inflation, albeit with a lag.• USPS can only invest cash in short-term Treasury securities, whose low interest rates do not compensate for inflation. A primary way that inflation impacts labor costs, which account for two-thirds of Postal Service’s expenses, is through cost-of-living adjustments (COLAs), which are pegged to the inflation rate. However, COLAs increase wages less than the rate of inflation, and only 72 percent of USPS employees receive COLAs. While inflation also affects the cost of products and services USPS purchases in the market, the immediacy of the impact depends on contract terms concerning price adjustments and contract lengths. For example, fuel price increases can have an immediate impact through monthly adjustments to the contracts with suppliers of contracted transportation services.Price increases for market dominant products, such as First-Class Mail, are directly tied to inflation in the year before USPS filed a notice of price changes, as measured by the Consumer Price Index for All Urban Consumers (CPI-U). However, the Postal Service can increase prices above CPI-U when certain conditions are met.Lastly, inflation erodes the purchasing power of the Postal Service’s cash on hand and borrowing limit. In particular, USPS is restricted to investing its liquidity in short-term Treasury securities, whose low interest rates do not compensate for inflation. The Postal Service should work with stakeholders to strengthen mechanisms in place to mitigate the risks of high inflation.

We audited costs claimed and grant compliance by the CNMI, Department of Lands and Natural Resources, under grants awarded by the FWS.

For our final report on our audit of the United States Patent and Trademark Office’s (USPTO’s) oversight of Patent Data Capture (PaDaCap) contracts, our audit objective was to determine whether USPTO awarded and administered PaDaCap contracts in compliance with applicable laws and federal regulations and U.S. Department of Commerce policies and procedures. To address this objective, we assessed the justification and approval of noncompetitive acquisitions, risk assessment and mitigation activities, and oversight of contractor performance. Overall, we found that USPTO did not fully comply with relevant requirements when awarding and administering the PaDaCap contracts. Specifically, we found the following: I. Ineffective acquisition planning delayed the use of competition and achieving lower prices; II. USPTO inadequately managed contract risks; III. USPTO did not timely inspect contractor deliverables and track errors; and IV. USPTO inadequately addressed contractor security issues.

BackgroundCybersecurity, a major enterprise risk consideration, is the practice of protecting systems, networks, and programs from cyberattacks. Cyberattacks targeting the critical infrastructure are increasing in frequency and sophistication, making a well-defined, proactive cybersecurity approach critical. To address these threats, the U.S. Postal Service’s Corporate Information Security Office (CISO) focuses on five cybersecurity strategic objectives: protect, monitor, respond, manage, and innovate. What We DidOur objective was to assess the effectiveness of the Postal Service’s state of cybersecurity, specifically evaluating its (1) risk profile and organizational alignment with the cybersecurity strategy, (2) cybersecurity risk management process and vulnerability management program for consistency and appropriateness, and (3) enterprise security architecture processes for alignment with best practices.