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Wednesday, June 30, 2010

The difference between public and private work

IG: Former postal marketing exec misused staff, contractors
The U.S. Postal Service's former top marketing executive repeatedly used government staff — and at least two business associates he hired with sole-source contracts — to manage his personal finances and outside business interests, according to a new report.

Bernstock told OIG investigators that in June 2009 — about a year after Bernstock joined the Postal Service — he told Postal Service general counsel Mary AnneGibbons that his staff sometimes worked on his personal business, which he thought was allowed.

Gibbons told him using postal staff to conduct his private business was "inappropriate."

"Gibbons physically ‘covered her ears' and was adamant that ‘she didn't want to talk about the past … do not do it,' " the report quoted Bernstock as saying.

"He said that was when he first appreciated the difference between working for the government and working in the private sector."

Among other findings by the OIG:

• Bernstock conducted negotiations with Costco to allow the company to sell Christmas stamps in bulk while owning $30,000 in the company's stock. Postal rules require an official owning more than $15,000 in stock in a company to recuse himself from any Postal Service dealings with that company.

• Bernstock failed to tell the Postal Service about several companies on whose boards he sat, and he used his office, computer and telephone to participate in teleconferences and meetings for several private companies on whose boards he serves.

• Bernstock tried to hire an unnamed postal staffer as a private employee to handle his personal affairs, but the agency's legal department advised against it. So Bernstock got that staffer a $10,000 annual retention bonus for the rest of his postal career, even though he admitted that staffer was not planning to leave the Postal Service.

• Between June 2008 and February 2010, one or more unnamed postal staffers sent or received 1,422 e-mails regarding Bernstock's outside businesses or from his tax accountant and financial adviser.

• An unnamed postal staffer created documents that supported an Ohio barbeque restaurant chain called City Barbeque, of which Bernstock is a co-owner. A postal staffer also e-mailed Bernstock's personal financial adviser to wire Bernstock money as a down payment to invest in the restaurant.

• Contractors Kimberly Wolfson and Lynne Alvarez, to whom Bernstock steered separate sole-source contracts in 2008, also sent one or more postal staffers e-mails with personal business documents related to City Barbeque and the convenience store chain The Pantry. Bernstock serves on the board of directors for The Pantry.

Postal Service spokeswoman Joanne Veto said the agency has tightened rules on noncompetitive contracting in response to the IG's investigation:

• Most postal executives no longer can approve their own department's sole-source contracts worth more than $1 million. Those deals now must be approved by Vice President for Supply Management Susan Brownell. Under the old rules, all noncompetitive contracts worth more than $250,000 had to be approved by the vice president of the organization requesting the contract, which allowed Bernstock to steer contracts to former business associates and approve the deals with little outside oversight.

• Contracting officers also must make sure that all necessary reviews and approvals, price determinations and supplier evaluations are documented and included in the contract file. The IG report found that many of Bernstock's sole-source contracts lacked documents explaining why they needed to be awarded noncompetitively.

• And Veto said the new rules "make clear that contracting officers, managers and executives avoid a professional conflict of interest or the appearance of a potential conflict of interest when considering sole-source contracts."

COMMENTARY: The ABA Model Procurement Code, and Guam law, contain provisions dealing with Ethics in Public Contracting, which note that public employment is a public trust and prohibit certain dealings involving conflicts of interest, among other things. See Guam Code Annotated Article 11, Chpt 5, Title 5, 5 GCA § 5601 et seq.

Of course, having the rules and paying attention to them are separate matters. There must be effective enforcement provisions and actions or they are worthless.

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