The U.S. Postal Service Office of Inspector General (OIG) completed an audit in June 2013 of the Postal Service’s real estate management services contract with CBRE.1 We concluded that Postal Service Facilities officials should improve oversight of the CBRE contract to mitigate inherent risks and conflict of interest concerns.2 In response to our recommendations, management implemented a maximum contract amount and appointed contracting officer’s representatives to monitor contract performance and approve payments.
Because of the urgency and sensitivity associated with CBRE contract control weaknesses, we are issuing this alert to make the Postal Service aware of the need to further modify the CBRE contract.
As a result of our audit and ongoing concerns surrounding the CBRE contract, we have identified additional information that increases the financial risks to the Postal Service. Specifically, Postal Service officials modified the contract in June 2012 to allow CBRE to negotiate on behalf of the Postal Service as well as prospective buyers and lessors in the same real estate transaction. Also, CBRE was responsible for soliciting appraisals to determine the fair market value of the properties that it then sells and leases.
The contract modification also requires CBRE to notify the Postal Service of any actual or potential conflicts of interest, such as owning or having an interest in a property that may be part of a Postal Service real estate transaction. To date, CBRE has not notified the Postal Service of any such conflicts. Given the multiple roles CBRE plays within the real estate industry, the Postal Service should take steps to lessen the potential for CBRE to engage in transactions that create conflicts of interest. CBRE conflicts of interest could lead to financial loss to the Postal Service and decrease public trust in the Postal Service’s brand.
Real estate transactions are normally negotiated by agents who stay at arm’s length from each other’s interests. An arm’s length transaction occurs when the buyers and sellers in the transaction act independently and have no relationship with each other. Contract terms that give too much financial control to either party and create interwoven business interests nullify the safeguards of arm’s length transactions. The Postal Service continues to allow CBRE to conduct transactions despite the disclosure of non-arm’s length transactions.
We recommend the vice president, Facilities:
1. Modify the CB Richard Ellis, Inc. (CBRE) contract to prohibit CBRE from representing the Postal Service as well as prospective buyers and lessors in Postal Service real estate transactions.
http://www.uspsoig.gov/sites/default/files/document-library-files/2014/sm-ma-14-003.pdf
CBRE (Blum)is the exclusive agent for the USPS in the selling off of Postal facilities and that building,which formerly housed the OIG and the Pacific Area was sold at well below market value as have other USPS properties to Richard Blum’s cronies…follow the money!
I wonder if CBRE was involved in the sale of the postal facility at 390 Main Street in downtown San Francisco? This was a large 7-story facility (a former National Guard Armory) with a big parking lot that was sold for something like $50 million and flipped a year later for twice that amount. I used to work for USPS in San Francisco and everyone thought this was a shady deal. Multiplied in cities across the USA, choice parcels going for a song in insider deals, and the taxpayers get stiffed. Oh,what a plum for Richard Blum and Senator Di Fi.
The OIG should have recommended to the BOG that this contract be immediately terminated since Downahole and his boys at the top won’t do it and the FBI needs to investigate this since the OIG can’t reveal all that they uncovered an in this and go further since they are not independent of USPS management.
this laurel & hardy team also got a 2 billion dollar deal to put up pre-fab buildings in the “green zone” in Iraq. why would bagel breath Feinstein take a job that pays $190,000……..so she can fed billion dollar govt no bid contracts to her hubby=Blum. OIG should drag them to Levenworth and throw away the key. evil, godless moneychangers.
I know nothing!
#1,the OIG report failed to mention the biggest conflict of interest,that CBRE is owned by Dick Blum and his wife,Sen.Feinstein,and#2,that they will make an estimated $1 billion off the sale of USPS properties.Why isn’t Issa doing his duty as House Government Oversight Committee Chairman and calling for a deeper investigation of this dirty contract and the relationship of this company with PMG Donahoe and top management? I think we know the answer,and La Jolla is in Issa’s district and he is certainly aware of what is going on with this contract with Dick Blum’s CBRE…follow the money.
Feinstein should have to go in front of a senate panel and disclose everything in regards to sales of postal properties.
Boy, the OIG recommends !
That’ll show ’em ! (rolls eyes)
OIG = Office of Incompetent Goofballs.
Richard Blum is chairman of the board at CBRE. U.S. senator Dianne
Feinstein (D California) is Richard Blum’s wife. This is one of
the “conficts of interest” that is eye popping that the article
negated to mention. It is assumed by California residents in the
coastal village of La Jolla one of 4,000 postal properties set for
sale that the senator assumes a viable interest in this because
of the relationship to Mr. Blum, creating the aforementioned C.O.I.
The postal service looks to have secretly modified this contract to
allow CBRE to negotiate on their behalf. Seems that with further
review some other late night deals were done. As the article states CBRE is required to detail any conflicts of interest with the
modification of this contract which they have not to date. Congress
needs to investigate this further before moving forward with postal reform. The interest CBRE has is obvious to all of us in making
money on the sale of our post offices across the country and no
concern about the lives they turn upside down. Greed! Greed! Greed!