A contracting officer awards a lucrative deal to a friend or relative. Several contractors who realize they're always among the winning bidders decide to compare notes and take turns splitting profitable contracting jobs among them. Or perhaps internal staffers collude with one or more outside businesses or individuals to subvert the competitive bidding process and gain unfair advantage.
However it happens, it's called fraud.
And in an organization the size of the US Postal Service, with its estimated 800,000 employees, 37,000 facilities, $70 billion in revenue, and $30 billion awarded in outside contracts annually, fraud spells big trouble. Cost is one issue; lack of resources for locating and investigating suspicious situations is another.
Enter Elder Research, Inc. (ERI), a data mining consulting firm the Postal Service commissioned to help identify fraudsters inside and outside its ranks. With the organization contracting out everything from trucking services to printing to telecommunications and even some property management services, the possibilities for suspicious activity are almost limitless, as Antonia de Medinaceli, director of business analytics and fraud detection at ERI, described during a presentation yesterday at Predictive Analytics World in New York.
"This is the quintessential needle in a haystack problem," she said. However, she added, ERI had focused on a solution that removes 90 percent of the hay, metaphorically speaking, of course.
Though being deliberately vague on details, Medinaceli discussed some capabilities of the Postal Service's customized fraud detection tool. Using more than 30 indicators to search a wide variety of data, the fraud detection tool flags and ranks instances of suspicious activity, allowing investigators in the Postal Service's Office of the Inspector General to decide which leads to pursue.
During her presentation, Medinaceli showed off a dashboard created by the fraud detection tool depicting a US map with 250,000 Postal Service contracts represented by circles of different colors and sizes. The color-coding helps immediately identify potential risk factor while the size of each circle signals the contract's dollar value.
In a separate presentation Thursday, Jennifer Boyce, senior manager at Deloitte Financial Advisory Services, discussed some of the key indicators used to flag potential fraud and other abuses in forensic analytics.
Deloitte uses analytics to predict likelihood of fraud, improper payments, and money laundering in a variety of organizations. It mines internal data as well as external data collected from blogs, social media, and other sources. Flagged activities often include instances of increased expenditure with decreased time put in on projects or an increase in the number of vendors or instances with no segmentation -- in other words, situations in which one person is in charge of all functions or vendors in a particular department.
Fraudsters, of course, are a tricky bunch, always modifying their techniques with the hopes of evading detection. With that in mind, Medinaceli noted the importance of regularly adjusting fraud detection tools.
Considering all things, I think the U.S. Post Office is efficient. It coordinates over a half of million employees and over two-hundred thousand vehicles. Part of it's problem isn't efficiency but that Congress enacted legislation that the Post-Office has to pre-fund it's pension plans ten years in advance. Additionly, it's revenue is declining because the amount of mail has been reduced due to the internet and Congress controls if it can raise it's rates. This has put a huge burden on the Post Office that otherwise would have a profit of about 400 million per year.
I think the data mining for fraud is a a great leap forward. I like the explanation of the dash board and how understanabe it sounds.
And I might add, because the USPS can't even do its primary purpose right -- getting mail to you untampered with, on time, and cost-effectively -- I wouldn't hold my breath that they'll be able to properly execute analytics initiatives over the long term.
Joe, I wouldn't go as far as saying no one cares about this fraud. If all else was well at the USPS, then this initiative would be great and everyone (meaning, taxpayers) would love it. But as I and you and many folks have noted, the USPS has too many other critical existential problems to get excited by this initiative. And as you implied, this whole analytics initiative might have started through the same ol' shady contracting process.
Without the financial/ROI data, I'm suspicious here.
Between this and special committees to determine who should go on the next stamp, it's no wonder they want to jack up prices every year and repeatedly threaten to restrict service to four or five days a week. The real fraudsters, I suspect, are the USPS decisionmakers.
Using analytics to search for fraud in the competitive bidding process? This is the best use of their time, money, and resources when they're supposedly on the risk of being broke all the time and regularly raising postage costs?
The truth is: Nobody cares how the hot dogs get made, so long as they taste good.
Good point, Broadway. The competitive secret bidding process has its flaws -- especially because contractors will often underbid to win the contract and then tack on many more added costs later. One wonders what their ROI really is -- and if it's even positive.
Since they're not funded with taxpayer money, I really don't care how much nepotism and favoritism they engage in as long as the mail gets to where it needs to go when it needs to be there, untampered with, and the price of postage doesn't go up.
Personally, I'm far less concerned about the supposed fraud of two contractors deciding to take turns for contracts and far more concerned about the fraud of the USPS representative telling me, "Really? Your packages and envelopes are coming in opened? Well, the guy we have there would never do open someone else's mail, so I have no idea why that's happening."
It’s an interesting solution for many organizations to alert them to possible issues before they occur—kind of like the unusual spending patterns used by credit cards. Unfortunately, I agree with the other poster this may not help the USPs be viable as that issue far reaching.
ahdand, yeah, I wonder if it's just a pr stunt. Then again, if the data mining would impact directly some of the key problems of the sinking enterprise, then it might be worth it. But in this case with the USPS, its problems go way beyond fraud.
In Wednesday's e-chat, we discussed the analytics of identification and whether the technology might find a bigger role one day in marketing intelligence.
The 9th Annual SAS Health Care & Life Sciences Executive Conference convened this week as thought leaders gathered to discuss how to improve care while reducing costs.
LEADERS FROM THE BUSINESS AND IT COMMUNITIES DUEL OVER CRITICAL TECHNOLOGY ISSUES
The Current Discussion
Visual Analytics: Who Carries the Onus? The Issue: Data visualization is an up-and-coming technology for businesses that want to deliver analytical results in a visual way, enabling analysts the ability to spot patterns more easily and business users to absorb the insight at a glance and better understand what questions to ask of the data. But does it make more sense to train everybody to handle the visualization mandate or bring on visualization expertise? Our experts are divided on the question. The Speakers: Hyoun Park, Principal Analyst, Nucleus Research; Jonathan Schwabish, US Economist & Data Visualizer
To save this item to your list of favorite AllAnalytics content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
Dynamic data visualizations let analysts and business users interact with the data, changing variables or drilling down into data points, and see results in a flash. Advance your use of data visualization with tools that support features like auto-charting, explanatory pop-ups, and mobile sharing.
No doubt your enterprise is amassing loads of data for fact-based decision-making. Hand in hand with all that data comes big computational requirements. Can traditional IT infrastructure handle the increasing number and complexity of your analytical work? Probably not, which is why you need a backend rethink. Big data calls for a high-performance analytics infrastructure, as Fern Halper, a partner at the IT consulting and research firm, Hurwitz & Associates, discusses here.
Redbox's bright-red DVD kiosks are all but ubiquitous these days, located in more than 28,000 spots across the country. Jayson Tipp, Redbox VP of Analytics and CRM, provides an insider's look at how the company has accomplished its phenomenal nine-year growth.
InterContinental Hotels Group (IHG), a seven-brand global hotelier, has woven analytics into the fabric of its operations. David Schmitt, director of performance strategy and planning, shares IHG's analytics story and his lessons learned.
Elizabeth Barth-Thacker, a BI and informatics technology manager at Humana, tells us how her team is creating data transparency and building engagement with the business – with the help of an internal collaboration portal called Humanalytics.
Speaking at SAS Global Forum Executive Conference, Rajeev Kaul, SVP of pricing at OfficeMax, uses a Chinese proverb to explain one of the reasons he's deploying SAS Visual Analytics.
In an All Analytics interview, Mike Cavaretta, technical leader, predictive analytics at Ford Research & Advanced Engineering, shares how big-data is fueling vehicle decisions.
Analytics professionals and SAS executives share how organizations can get on with their work so much faster when working in a high-performance and visual analytics environment.
Analytics professionals who attended SAS's recent Executive Briefing in New York share how they think visual analytics might help their organizations get better value from data.
At Boeing, effective decision making comes down to this simple formula: QxA=E, as executive Jerry Allyne explained at the recent INFORMS analytics conference.
Whether working in major league sports, financial services, or healthcare, analytics, and data, professionals are checking out how visual analytics and high-performance technologies can help them optimize their environments, shrink their cycle times, and improve decision making, as attendees at the recent SAS Executive Briefing in New York share with us.
SAS CEO Jim Goodnight speaks with us at a recent SAS Executive Briefing about getting a feel for what's in your big-data and other new realities powered by advanced analytics.
Jim Davis, SVP and CMO at SAS, talks with us at a recent SAS Executive Briefing about how high-performance analytics and visual analytics take away the concerns over big-data and let companies get down to business with their data.
Tweet This
19 
7 
