Potter Knew of Bernstock's Sole-Source Contracts

The Postal Service's sole-source contracts with associates of former executive Robert F. Bernstock had the tacit approval of Postmaster General Jack Potter, according to documents published last night.

"Potter stated he was aware of Bernstock bringing in outside contractors to the Postal Service 'almost from the start because he needed to get an infusion of new thinking and talent as quickly as possible,'" says an investigators' report of a Feb. 4 interview with Potter. "Bernstock informed Potter 'he was considering using people he was aware of as consultants, who he personally knew.'"

The report and related documents from the USPS Office of Inspector General were made public last night by The Washington Times as part of its ongoing investigation into Bernstock's brief and controversial stint as head of marketing for USPS. The Times article published last night focuses on discrepancies among the accounts given by Potter and other key officials regarding Bernstock's outside work.

"Potter advised Bernstock 'the bottom line was to follow the Postal Service procurement rules, have lawyers review the contracts, and do not circumvent the Postal Service rules and regulations,'" the OIG report said.

"Regarding whether Bernstock hired friends as contractors, Potter thinks the term 'friends' is too strong of a word. He said, "'Of course Bernstock is going to go back to his pool of resources, like former colleagues, people he worked with and thought had good skill sets.'

"Potter said it is normal for 'some people to trail each other their whole career.' He believes Bernstock reached out to people with the skills he needed and does not have a problem with Bernstock hiring former colleagues."

Potter also said some of the contracts were turning out to be excellent deals for the Postal Service because it would have cost far more to use either USPS employees or traditional contractors like McKinsey to accomplish the tasks.

Related articles:

•  "What About Bernstock?" And Other Tough Questions for Postal Execs 
• Bernstock Gone But Not, Um, Quite Gone  
• Bernstock Just Won't Go Away

Bernstock Just Won't Go Away

If postal executives want everyone to forget about the Robert F. Bernstock fiasco, they should tell the Internet search engines and their own webmasters.

Type the query "bernstock usps" into Google, Yahoo!, or Bing, and the first link that comes up is for a glowing biography of the disgraced postal official on the Postal Service's Web site. A search of "bernstock" on the Postal Service's own Web site has the biography among the first few links.

Bernstock left USPS in June after several questionable practices came to light, including issuing no-bid contracts to his cronies. But the Postal Service's Web site continued to list Bernstock as a top postal official until Dead Tree Edition pointed out the error. (See Bernstock Gone But Not, Um, Quite Gone and That Was Quick!.)

The online biography, which no longer seems to have a link from the Postal Service's main Web pages, says Bernstock "is responsible for all product management, product development, retail and commercial products and services and commercial sales. The division that he leads produces more than $70 billion in annual revenue, and has integrated roles in pricing, operational support, service enhancements, partnerships, and investment activities — all critical to the success of postal products."

For more about the Bernstock scandals, please see "What About Bernstock?" And Other Tough Questions for Postal Execs.

"What About Bernstock?" And Other Tough Questions for Postal Execs

The U.S. Postal Service's failure to address some inconvenient questions will hurt its chances of winning approval for several controversial measures, including the rate increase it will request tomorrow.

The questions include "What about the Bernstock fiasco?", "Why are you offering discounts on a product that loses money?", and "Why do you hope attrition will eliminate excess employees, then discourage people from retiring?"

Various sources report that the USPS will file for unprecedented "exigent" rate increases tomorrow of roughly 5% for most mail, with even higher price hikes for such allegedly money-losing products as Periodicals and Standard flats. Along with the elimination of Saturday delivery, reversal of overpayments to a pension account, and elimination of so-called pre-funding of retiree health benefits, that will give postal officials an ambitious slate of proposals requiring Congressional or regulatory approval.

Postal executives argue that they need these rules changes because they have done all they can under current rules to get the USPS's finances into line. But it will be hard for Congress, the Postal Regulatory Commission, or the public to believe them as long as they avoid answering some tough questions. Over the next few days, Dead Tree Edition will be exploring five of these questions.

The first question is: Why was a top executive allowed to run amok, and what are you doing to prevent this kind of problem from recurring?

Bad news keeps dribbling out about Robert F. Bernstock, the former president of mailing and shipping services, in what must seem like Chinese water torture for the folks at L'Enfant Plaza. (Which is why public relations experts say that if you've got bad news, release it all at once on your own terms rather than having the news media drag it out of you bit by bit.)

First there were the no-bid contracts to Bernstock's cronies, then the use of his Postal Service staff to conduct private business, and most recently the revelation that top postal officials looked the other way as Bernstock broke the rules.

In a pickle
Noting Bernstock's checkered history, Brian Sheehan at postalnews blog recently questioned why the Postal Service even hired him in the first place. (Answer: The Postal Service was in a pickle, so why not hire a guy who used to run a pickle company?)

Even the worst-case scenario is that the money Bernstock wasted would not cover one day of the Postal Service's losses (or its interest-free loans to the federal government that are euphemistically called prepaid retiree health benefits). But the incident certainly doesn't inspire confidence in Postal Service management.

There's a limit to what postal executives can say without running the risk of slandering Bernstock or violating his privacy. They did at least overhaul their contracting rules recently.

But they need to go further to put the incident behind them. They should openly discuss the mistakes they made, reiterate that no one in the organization is exempt from rules or oversight, and reveal whether the USPS got its money's worth from the no-bid contracts.

For related articles, please see:

• Legal Challenge Likely for Exigent Rate Increase 
• Bernstock Gone But Not, Um, Quite Gone  

Tomorrow: Is the Flats Sequencing System a boondoggle?

That Was Quick!

Here's proof that someone at L'Enfant Plaza is reading Dead Tree Edition: The erroneous Postal Service Web page I wrote about yesterday was corrected early this morning.

An alert commenter notified me at 4:53 a.m. Eastern time that Susan Plonkey had replaced the disgraced Robert F. Bernstock on the list of USPS executives. That was about 14 hours after the article was posted and about 12 hours after it started being cited by influential sites like Postalnews.com.

The USPS Web site had not been updated when I checked it a few hours before the comment came in, so someone at Postal Service headquarters was obviously burning the midnight oil. Or maybe Bernstock's buddies who got the "Web modernization" contract outsourced the work to Asia.

Now let's hope USPS officials are paying attention to more important issues addressed by Dead Tree Edition, such as the costs of "automation refugees" and employees' difficulties in getting accurate estimates of retirement benefits.

Bernstock Gone But Not, Um, Quite Gone

More than two weeks after Robert F. Bernstock left the U.S. Postal Service under a cloud of scandal, a USPS Web site still lists him as a key executive.

Just as the controversy was heating up over Bernstock's awards of sole-source contracts to former business associates, Postmaster General Jack Potter announced last month that Bernstock would be quitting on June 4.

Federal Times' investigations early this year revealed four different occasions where Bernstock awarded a total of $5.8 million in questionable contracts. The USPS Office of Inspector General took up the case shortly before Bernstock's resignation for the euphemistic "to pursue other opportunities in the private sector." (Today's management tip: If you don't want everyone to know that you made someone walk the plank, don't use the "pursue other opportunities" in the resignation announcement.)

Before Bernstock was even out the door, Susan M. Plonkey was named to succeed him. But it's still Bernstock, not Plonkey, who appears on the list of the USPS's 10-person executive committee on a USPS Web page.

One of the controversial sole-source contracts was for "Web site modernization". Perhaps Bernstock's cronies decided that Web site modernization did not include keeping information up to date.

Please see That Was Quick! for an update on this article.