OIG recommends terminating the USPS-CBRE contract and refers cases for criminal investigation

April 30, 2105

The Postal Service’s Office of Inspector General has issued its fourth report criticizing the Postal Service’s oversight of the contract with its real estate broker, CBRE.  It’s entitled “Postal Service Management of CBRE Real Estate Transactions.”

The OIG finds fault with both the leasing deals and the sales of postal property, and it recommends terminating the contract with CBRE.  The OIG has also turned several cases over to the OIG’s Office of Investigations to determine if laws have been broken.

The possibility that illegalities occurred involves both the lease negotiations and sales.  The OIG examined about 4,700 leases that had been negotiated by CBRE and found 57 where there was a huge rate increase — 200 percent or more than the previous lease rate.  Considering that the average increase was about 8 percent, that looks suspicious. 

The OIG also found many cases where the lessors said that CBRE was including commission fees in rents paid by the Postal Service, which is contrary to the contract, so this matter has also been referred to the Office of Investigations. 

Finally, in the case of several property sales, the OIG found potential relationships between the buyer and CBRE.  Those cases have been referred to the Office of Investigations as well.

Given these and many other problems in the arrangement with CBRE, the OIG has recommended that the Postal Service terminate the current contract with CBRE and “recompete” it, i.e., put it out for bid again with a new "request for proposals."

The OIG leaves it to the Postal Service to decide whether the new contract should be with CBRE, another contractor, or a group of contractors (the GSA’s model) — or if Postal Service personnel should do more of the work (as in years past).  Whatever happens, says the OIG, “the idea of terminating the current contract is to ensure that future lease and sale negotiations are done with the Postal Service’s best interest in mind.”

The Postal Service has already rejected the idea of terminating the CBRE contract.  In his letter responding to a draft of the OIG’s report, Mr. Tom Samra, USPS Vice President of Facilities, says that the Postal Service has hired a consultant to evaluate the leasing program with CBRE against industry best practices. 

Pending review of the consultant’s report, Mr. Samra says that the Postal Service has insufficient personnel to manage all the lease renewals.  Besides, Mr. Samra says he doesn't think CBRE is doing anything wrong.


The sales

The sales of postal properties came under scrutiny in 2013, when investigative journalist Peter Byrne published Going Postal: U.S. Senator Dianne Feinstein’s husband sells post offices to his friends, cheap.  (Available on Amazon here.)

Byrne’s year-long research into over 50 sales (concluded from May 2010 to April 2013) indicated that about 80 percent of the properties had been sold below their assessed value, sometimes to CBRE’s clients and business partners. 

The discovery was particularly troubling because the chairman of CBRE at the time was Richard Blum, the husband of California Senator Feinstein.  (He’s still a major stockholder and remains on the Board of Directors.)

The OIG looked at 21 sale transactions, “judgmentally selected” from the 48 sales that were conducted by CBRE between January 2012 and September 2013.  The OIG found problems with 14 of the 21 sales.

The period of the OIG’s study overlaps with the timeframe examined by Byrne, so the OIG and Byrne looked at many of the same sales, but the OIG report does not list which sales it reviewed, so it’s not possible to determine if the OIG included the more egregious examples that Byrne uncovered.

The OIG compared the sale prices with the appraised values obtained by CBRE, not the assessed value that Byrne used, so the two reports don’t examine the same data, but they come to many of the same conclusions.

Actually, Byrne had submitted a FOIA request to the Postal Service for the appraisals on the properties he was examining, but it was denied, so he spent months researching the 52 properties to determine their assessed value.

A word here on the terminology.  The assessed value is the most recent sale price for a property, adjusted to reflect local market trends.  The appraised value is an estimate of the fair market value of a property based on comparables, market trends, potential rental revenues, etc.  Normally, property values go up, so the appraised value is usually higher than the assessed value.

That’s why when Byrne found that properties were being sold below assessed value, it was compelling evidence that they were being sold below their market value.  Now it seems that there’s even more to the story: The appraisals are themselves a problem.

Oregon's Congressional delegation asks to meet with PMG on plant consolidations

April 28, 2015

The members of Oregon’s Congressional delegation have written to Postmaster General Megan Brennan requesting a meeting to discuss the Postal Service’s plan to consolidate mail processing facilities and the future of delivery standards.

The letter is signed by Senators Ron Wyden and Jeff Merkley and Representatives Peter Defazio, Kurt Schrader, Greg Walden, Suzanne Bonamici, and Earl Blumenauer.

 “We have concerns,” states the letter, “that moving forward on closing processing facilities will cause delays in on-time delivery, hurt local businesses, eliminate middle class jobs, and impair the Postal Service’s long-term viability.

“As you know, three mail processing facilities in Oregon are set to close by the end of July 2015, which will leave only two mail processing facilities in the state.  Oregon communities depend on reliable and quick mail delivery to support local business, receive medications, keep up with current events, and to vote.  We would like to better understand how USPS intends to meet the timely needs of our constituents, if mail processing facility consolidations continue and service standard times are extended.

“We understand that USPS has already started to consolidate mail processing facilities, with Bend and Pendleton plants set to close by mid-April. Due to the urgency of these pending closures and the severe ramifications for our state, we would like to schedule a meeting with you as soon as possible.”

The three Oregon processing centers slated for closure are located in Bend, Eugene, and Pendleton.  The Pendleton facility is formally known as the John F. Kilkenny Post Office and Courthouse.  It's located at 104 S.W. Dorion in a historic building that dates back to 1916, and it's on the National Register of Historic Places.  (The nomination form is here.)  The Postal Service has not said much about the future of the building, but it could be headed for sale if the processing operations move out.  

(Photo credit: John F. Kilkenny Post Office and Courthouse; Pendleton PO in 1984, National Register nomination)

USPS suspends delivery due to dog, judge files complaint with PRC

April 27, 2015

It’s not uncommon for the Postal Service to suspend delivery to a residence or even a whole block as a result of a dog problem.  The issue usually gets resolved after the customer takes steps to restrain the dog.  It’s not the kind of thing that typically ends up going to the Postal Regulatory Commission for adjudication. 

But that’s what happened last week.  A complaint has been filed with the PRC challenging the Postal Service’s suspension of mail to a resident in Pomona, California, over a dog issue.  It may be the first such PRC complaint of its kind.

In January, the Postal Service stopped delivering the mail to the home of Rosalyn Goodman because there was allegedly a “vicious dog” on the premises.  Mrs. Goodman is 91 years old and unable to get around very well, so she depends on the Postal Service to deliver food and other necessities. 

As it turns out, Mrs. Goodman’s son is James D. Goodman, an Administrative Law Judge who works in the Office of Disability Adjudication and Review (ODAR) in Pasadena.

As one might expect, Judge Goodman’s complaint is extremely formal and thorough, and it includes lengthy excerpts from several relevant statutes in postal law and federal disability law.

The complaint states that “the contention that there is a ‘vicious dog’ on the premises is a pure canard calculated to avoid the requirement that mails be delivered to the standard mail box located on the curb, adjacent to the street, or to the front door of the house, where the mails exceed the capacity of the standard mail box.”  It goes on to note that over the past four years there have been many mail delivery problems at this address.

According to the complaint, “The dog, on the premises, is a good natured animal used for comfort and companionship, and is never outside the interior of the premises, except in a gated backyard, while Rosalyn Goodman is at home alone.  All of these facts were made known to Alejandro L. Peralta and other employees and other agents of the U.S. Postal Service.  Despite knowledge of these circumstances, Rosalyn Goodman has been deprived of reasonable accommodation as required under Title 26, Chapter 126 (Americans With Disabilities Act).”

In January, Judge Goodman also filed a FOIA request for documents related to the case, but the complaint states that “the Postmaster General, the Postmaster of Pomona California and their employees have failed or refused to comply with FOIA as demanded in Exhibit B.”

The Postal Service has informed Mrs. Goodman that in order to have her mail service restored, she will need to meet with a delivery supervisor at the post office. She is also being required to bring a copy of the current Dog License and Rabies Vaccination Certificate for her dog and to sign a commitment to restrain the animal.

The Goodman complaint states that “there is no authority of the postal service to impose documentary indemnification, bonding or other assurances from home owners as a condition of mail delivery.  Absent reasonable cause, carriers are required to make home delivery to the mail recipient at the addresses designated for delivery. “

The complaint concludes by asking the Commission to order the Postal Service to re-institute mail service to the Goodman residence “without condition or limitation, impose sanctions upon each of the respondents including removal, award damages, costs and fees as allowed under the circumstances and provide such other additional relief may be appropriate.”

There’s no procedural schedule for the complaint yet.  The regulations say that the Commission has 90 days to rule.  The Postal Service will probably file a response in a few days. 

(Photo credit: USPS delivering mail)

Civil Disobedience and the Mailman

April 21, 2015

From the Tampa Bay News, "Ruskin gyrocopter pilot says postal officials are telling him not to talk to media," April 20, 2015

The Ruskin mail carrier who last week flew a gyrocopter into restricted airspace over Washington D.C., to make a political statement says he has been put on paid leave with the U.S. Postal Service with orders not to discuss his story with the media.

"I was informed by the acting postmaster—and he sounded like he was reading from a script—that I was on administrative leave pending an investigation," Hughes wrote in an email to the Tampa Bay Times.

"I am NOT allowed on postal property without advance permission and I can only enter the building through the front if I do visit with permission. (This injunction always precedes a termination.) I asked about the nature of the administrative leave—it's with pay BUT I'm not allowed to talk to the media AT ALL."

It is another restriction that Hughes said he intends to violate. He said the move amounted to a "gag order" that he did not respect.

A spokeswoman for the U.S. Postal Service said she could not discuss Hughes' employment status.

"I can confirm that he is a rural mail carrier," said Enola Rice, the USPS regional communications director for Central Florida. "We don't discuss the status of employees.  All I can do is confirm that he is an employee."

*   *   *  *  *

From NBC News, "Gyrocopter Pilot, Doug Hughes, Frustrated His Message Isn't Getting Through," April 19, 2015

Hughes spent a night in jail after Capitol Police arrested him.  The ultralight aircraft and its cargo—a U.S. Postal Service bin carrying the letters—were seized.

Hughes' Russian-born wife, Alena, told the AP that her husband acted out of patriotism for the United States.

Asked Sunday if he too thinks he's a patriot or simply crazy, Hughes said. "Everyone gets to make up their own mind about me, that's what I'd say."

"But do you consider yourself a patriot?" a reporter asked.

"No, I'm a mailman," he said.

*   *   *  *  *

From his Letter to Congress, Doug Hughes, April 15, 2015

“The unending chase for money I believe threatens to steal our democracy itself. They know it.  They know we know it.  And yet, Nothing Happens!" —John Kerry, 2-13

In a July 2012 Gallup poll, 87% tagged corruption in the federal government as extremely important or very important, placing this issue just barely behind job creation.  According to Gallup, public faith in Congress is at a 41-year record low, 7%. (June 2014)  

Kerry is correct. The popular perception outside the DC beltway is that the federal government is corrupt and the US Congress is the major problem.  As a voter, I’m a member of the only political body with authority over Congress.  I’m demanding reform and declaring a voter’s rebellion in a manner consistent with Jefferson’s description of rights in the Declaration of Independence.

*   *   *  *  *

From Hugh Hewitt's radio show, Interview with Senator Lindsey Graham, April 15, 2015

Hewitt: Look, today gives a whole new definition of the term going postal, and I want to start there.  61-year-old Florida mailman, Doug Hughes, landed a gyrocopter on your Capitol, your office front lawn this morning.  Do you think he should have been shot out of the sky before he got that close to the Capitol?

Graham: Yes. He should have been subject to being shot out of the sky. I don’t know why he wasn’t, but our nation is under siege.

Radical Islam is a threat to our homeland.  There are probably radical Islamic cells in our backyard already.  And if somebody is willing to, you know, approach vital government infrastructure, they should do so at their own peril.  

I don’t know if he’s mentally ill. I’m glad he’s alive in that regard, if he’s mentally ill, but we’ve got to be more serious about our national security.

*   *   *  *  *

From “Hardball,” Chris Matthews, April 16, 2015

I have got an idea for Congress and the Capitol Police.  Instead of charging this guy on the helicopter, gyrocopter, why don`t you give him community service?  And his community service can be one hour.  And his one hour should be spent addressing a joint session, a joint meeting of the Congress.  He should walk in there and tell them why he did that. And that must all be there to watch it`s.  That can be his community service and we can all watch.  If they put this guy in jail, what a bunch of clowns that would be to do that.

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