[Senate Hearing 106-691]
[From the U.S. Government Publishing Office]
S. Hrg. 106-691
LEGISLATIVE PROPOSALS AND ISSUES RELEVANT TO THE OPERATIONS OF THE
INSPECTORS GENERAL
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HEARING
BEFORE THE
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
JULY 19, 2000
__________
Printed for the use of the Committee on Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE
66-197 cc WASHINGTON : 2000
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
U.S. Government Printing Office, Washington, DC 20402
COMMITTEE ON GOVERNMENTAL AFFAIRS
FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
Hannah S. Sistare, Staff Director and Counsel
William M. Outhier, Investigative Counsel
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Kenneth R. Boley, Minority Counsel
Darla D. Cassell, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Thompson............................................. 1
Senator Collins.............................................. 2
Senator Levin................................................ 22
WITNESSES
Wednesday, July 19, 2000
Joshua Gotbaum, Executive Associate Director and Controller,
Acting Deputy Director for Management, U.S. Office of
Management and Budget.......................................... 5
Gaston L. Gianni, Jr., Inspector General, Federal Deposit
Insurance Corporation, and Vice Chair, President's Council on
Integrity and Efficiency; accompanied by Patrick E. McFarland,
Inspector General, U.S. Office of Personnel Management, and
Kenneth M. Mead, Inspector General, U.S. Department of
Transportation................................................. 7
Nicholas M. Gess, Associate Deputy Attorney General, U.S.
Department of Justice.......................................... 10
Alphabetical List of Witnesses
Gess, Nicholas M.:
Testimony.................................................... 10
Prepared statement........................................... 46
Gianni, Gaston L. Jr.:
Testimony.................................................... 7
Prepared statement........................................... 34
Gotbaum, Joshua:
Testimony.................................................... 5
Prepared statement........................................... 29
Appendix
Questions for the record submitted by Senator Collins and
responses from Mr. McFarland................................... 27
Copy of S. 870................................................... 50
Letter to Senator Collins from Kenneth A. Konz, Focal Point for
the DFE OIGs, dated March 21, 2000............................. 72
Letter to Senator Levin from Gaston L. Gianni, Jr., dated August
7, 2000........................................................ 76
LEGISLATIVE PROPOSALS AND ISSUES
RELEVANT TO THE OPERATIONS OF THE
INSPECTORS GENERAL
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WEDNESDAY, JULY 19, 2000
U.S. Senate,
Committee on Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:08 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Fred
Thompson, Chairman of the Committee, presiding.
Present: Senators Thompson, Collins, and Levin.
OPENING STATEMENT OF CHAIRMAN THOMPSON
Chairman Thompson. Let's proceed. Thank you all for being
here this morning.
It is not the easiest morning on any of us to deal with any
regular business, but our friend and colleague, Senator
Coverdell, would expect us to proceed.
This morning, the Governmental Affairs Committee is holding
a hearing on two legislative proposals relating to agencies'
Inspectors General. The IGs are the front-line troops in
combating fraud, waste, and abuse, and improving the
performance of Federal agencies.
A report released last week revealed that actions by the
IGs resulted in the recovery of $4 billion in misspent funds
last year and identified another $8.2 billion in additional
savings. The report also revealed that IG investigations
resulted in more than 13,000 successful prosecutions and 1,200
civil actions.
Inspectors General are also an important resource for
congressional oversight. This Committee has come to rely on
them more and more. For example, IGs regularly update us on the
top-ten most serious management problems faced by their
agencies. In fact, we just reported a bill that makes these
top-ten reports statutory. Likewise, the IGs have been a great
help to us in assessing their agencies' implementation of the
Government Performance and Results Act.
Today, we will consider two legislative proposals designed
to help make the Inspectors General even more effective. One is
S. 870, a bill introduced by Senator Collins last year that
would make a number of amendments to the Inspectors General Act
of 1978. The other is the administration proposal to grant
permanent law enforcement authority to some IGs.
Senator Collins' bill would establish a 9-year term of
office for IGs, require periodic external management reviews of
their operations, and change the current IGs' semiannual
reports to annual reports. In addition, it would prohibit IGs
from receiving cash awards from their agencies, raise the pay
level of presidentially appointed IGs, and consolidate some of
the smaller IG offices.
The administration proposal would authorize the Attorney
General to delegate to presidentially appointed IGs and their
investigators permanent authority to carry firearms, to make
arrests without warrant in appropriate circumstances, and to
seek and execute search warrants. They currently exercise these
authorities under temporary deputations from the U.S. Marshals
Service.
The IGs would be required to establish an external review
process to ensure adequate safeguards and management procedures
over the exercise of these authorities.
I look forward to exploring at today's hearing how we can
strengthen and improve the IGs and their operations.
Senator Collins.
OPENING STATEMENT OF SENATOR COLLINS
Senator Collins. Thank you very much, Mr. Chairman. I join
the Chairman and, indeed, all of my colleagues in mourning
Senator Coverdell today. He was an outstanding Senator, and it
is very difficult to go forward with our business. But I, too,
know, as the Chairman says, that that is exactly what he would
want us to do. He was so devoted to the Senate and so
energetic. We will miss him greatly.
Mr. Chairman, I do want to thank you for scheduling this
important hearing today to examine a variety of legislative
reforms and issues regarding the Inspectors General, including
legislation that I have introduced. For more than 20 years, the
Inspectors General have been the watchdogs for Congress and the
taxpayers in the ongoing fight against government waste, fraud,
and abuse.
I have been very active on issues pertaining to the IGs for
a number of years and, most recently, in my position as
Chairman of the Permanent Subcommittee on Investigations. For
example, the Subcommittee has worked very closely with June
Gibbs Brown, the Inspector General for the Department of Health
and Human Services, in our ongoing investigation of Medicare
fraud. Most recently, just a couple of weeks ago, Susan
Gaffney, the Inspector General for the Department of Housing
and Urban Development, testified before the Subcommittee about
the efforts of her office to halt the proliferation of the
nationwide phenomenon of property flipping, which is a kind of
mortgage fraud. She brought to our attention the very lax
controls by the Department in this regard.
Throughout all of my dealings with the Inspectors General,
I have been impressed with the professionalism and commitment
to public service that the hard-working members of the IG
community have repeatedly demonstrated. There can be very
little debate about the fact that the American people have been
well served by the IG community's efforts over the past 22
years.
During this time, the IGs have put forward thousands of
recommendations to Congress, which cumulatively have saved
billions of dollars. In fact, during just the first 10 years
after the original IG Act was signed into law, it was estimated
that the Inspectors General had identified a total of $100
billion in savings through their audits of government programs
and procedures.
Furthermore, as Federal law enforcement personnel,
Inspectors General have conducted countless investigations.
Successful investigations have recovered billions of dollars
for the Federal Government from unethical companies and
individuals and have resulted in numerous criminal
prosecutions, debarments, exclusions, and suspensions. Taken as
a whole, therefore, the Inspectors General have a very strong
record of accomplishment, and the American people have been the
principal beneficiaries of their work.
The record of the IGs is not, however, without blemish. For
example, the very successful overall record was tarnished by
the activities of the Treasury Department's Office of Inspector
General. After an extensive investigation, the Permanent
Subcommittee on Investigations found that the Treasury
Department IG had actually violated Federal law in her award of
two sole-source contracts to people with whom she was
acquainted. The Subcommittee concluded that the Treasury IG
failed to meet the high ethical and performance standards
expected of an IG, and shortly after our hearing, she did, in
fact, resign.
I do want to emphasize, however, that problems like the
ones that we found in the Treasury IG's office are the
exception. They are certainly not the rule.
We have not found a widespread pattern of abuse by the IGs,
and, indeed, just the opposite is the case. However, an
Inspector General is not just like any other government
manager. Inspectors General are the very officials in
government responsible for combating waste, fraud, and abuse in
Federal programs. As such, they have to be held to the very
highest of standards.
Again, I want to stress that my experience with the IGs,
with this one exception, has been a tremendous experience, and
I think they serve the public very well.
I have introduced legislation that would make a number of
changes in the IGs law. They were shaped by my experience with
the IGs as well as the one unfortunate experience with the
Treasury IG, as well as extensive consultations with the IG
community, with GAO, with private sector organizations, and
with the Department of Justice.
The key elements of my legislation are designed to enhance
the accountability and the independence of the IGs. For this
reason, the legislation includes a 9-year renewable term and a
provision against accepting cash awards or bonuses. To offset
that prohibition, my bill includes a proposed pay increase for
the IGs to prevent situations which occur now, where in some
agencies the deputy actually makes more than the IG due to cash
awards and bonuses.
To give the IGs more flexibility in allocating resources,
my legislation would streamline their semiannual reporting
requirement, and, importantly, the bill also requires an
external review of the Inspector General's operations by the
General Accounting Office or another neutral third party
periodically. That would help Congress make sure that someone
is watching the watchdogs.
Finally, we will hear today testimony about the issue of
granting statutory law enforcement authority to the
presidentially appointed IGs. This is a very important issue,
particularly in light of recent developments. From my work with
the IG community and also with the IG office at DHHS, I know
that increasingly IGs are called to investigate dangerous
situations. On the other hand, we want to make sure that we
strike the right balance in this area.
Again, Mr. Chairman, I thank you for convening this hearing
today. I hope the Committee will act to approve S. 870 and
other issues of concern to the IG community this year.
PREPARED STATEMENT OF SENATOR COLLINS
Mr. Chairman, I want to thank you for holding this important
hearing today to examine a variety of legislative reforms and issues
regarding the Inspectors General. For more than 20 years, the
Inspectors General have been the ``watchdogs'' for Congress and the
taxpayers in the ongoing fight against government waste, fraud, and
abuse.
I have been very active on issues pertaining to the Inspectors
General for a number of years, most recently in my position as Chairman
of the Permanent Subcommittee on Investigations. For example, the
Subcommittee has worked very closely with June Gibbs Brown, the
Inspector General for the Department of Health and Human Services, in
our ongoing investigation of Medicare fraud. Most recently, Susan
Gaffney, the Inspector General for the Department of Housing and Urban
Development, testified before the Subcommittee about her efforts to
halt the proliferation of the nationwide phenomenon of property
flipping.
Throughout all of my dealings with the Inspectors General, I have
been impressed with the professionalism and commitment to public
service that the hardworking members of the IG community have
repeatedly demonstrated. And there can be very little debate about the
fact that the American people have been very well-served by the IG
community's efforts over the last 22 years.
During this time, Inspectors General have put forward thousands of
recommendations to Congress, which cumulatively saved literally
billions of dollars. In fact, during just the first 10 years after the
original Inspector General Act was signed into law, it was estimated
that the Inspectors General identified a total of $100 billion in total
savings through their audits of government programs and procedures.
Furthermore, as Federal law enforcement personnel, Inspectors
General have conducted countless investigations. Successful
investigations have recovered billions of dollars for the Federal
Government from unethical companies and individuals, and have also
produced numerous criminal prosecutions, debarments, exclusions, and
suspensions. Taken as a whole, therefore, the Inspectors General have a
very strong record of accomplishment, and the American people have been
the principal beneficiary of their work.
The record of the Inspectors General is not, however, without
blemish. For example, this successful record was tarnished by the
activities of the Treasury Department's Office of Inspector General in
1997. After an extensive investigation, the Permanent Subcommittee on
Investigations found that the Treasury Department Inspector General
violated Federal laws in the sole-source award of two consulting
contracts, engaged in a pattern of careless management, paid for work
unauthorized, and subjected two U.S. Secret Service agents to an
unwarranted investigation and negative publicity. The Subcommittee also
found that the Treasury Inspector General misled Congress about the
nature of this investigation and that official documents were
destroyed. The Subcommittee concluded that the Treasury Inspector
General failed to meet the high ethical and performance standards
expected of an Inspector General. The Inspector General resigned
shortly after our hearings were completed.
Let me stress that, in my view, problems like the ones in the
Treasury Inspector General's office are not widespread in the Inspector
General community. However, an Inspector General is not like any other
government manager. Inspectors General are the officials in government
responsible for combating waste, fraud, and abuse in Federal programs.
And as such, Inspectors General should be held to a higher standard. To
do their job effectively, Inspectors General must be above reproach,
must set an example for other government managers to follow, and must
not create situations where there is even the appearance of
impropriety. Credibility and effectiveness are lost when the office
charged with combating waste and abuse engages in the kind of activity
that the Inspector General is responsible for deterring.
It was with some of these principles in mind that in 1998, I
sponsored legislation, S. 2167, that proposed a series of changes and
reforms to the Inspector General Act of 1978. Last year, I introduced
similar IG reform legislation, S. 870, which is one of the issues
pending before the Committee this morning.
The key elements of my legislation are designed to enhance the
accountability and the independence of the Inspectors General, such as
the renewable 9-year term of office and a prohibition against accepting
cash awards or bonuses. To offset the prohibition against accepting
bonuses, my bill includes a proposed pay raise. To give Inspectors
General more flexibility in allocating resources, my legislation
streamlines their semiannual reporting requirement by requiring only
annual reports to Congress. And, to increase accountability of the
Inspectors General, the bill requires external review of OIG operations
by the General Accounting Office or another neutral third party.
Finally, as I noted in 1998 when I introduced S. 2167, legislation
to grant statutory law enforcement authority to presidentially
appointed Inspectors General deserves careful consideration. The
question of how best to provide Federal law enforcement professionals
with the tools they need and deserve is important, and I look forward
to hearing from our witnesses about this issue today.
In closing, again, Mr. Chairman, thank you for convening this
hearing and I look forward to working with you on S. 870 and other
issues of concern to the Inspectors General community.
Chairman Thompson. Thank you very much. Thank you for your
longstanding leadership in this area.
Our panel today consists of Joshua Gotbaum, the Executive
Associate Director and Controller at the Office of Management
and Budget; Nicholas Gess, Associate Deputy Attorney General at
the Department of Justice; Gaston Gianni, the Inspector General
for the FDIC and the Vice Chair of the President's Council on
Integrity and Efficiency. Mr. Gianni is accompanied by Kenneth
Mead, who is the IG for the Department of Transportation, and
Patrick McFarland, the IG for the Office of Personnel
Management.
Mr. Gotbaum, do you have an opening statement?
TESTIMONY OF JOSHUA GOTBAUM,\1\ EXECUTIVE ASSOCIATE DIRECTOR
AND CONTROLLER, ACTING DEPUTY DIRECTOR FOR MANAGEMENT, U.S.
OFFICE OF MANAGEMENT AND BUDGET
Mr. Gotbaum. Yes, Mr. Chairman, I do. I will be brief. I
made the main points in the written statement, which, with your
permission, I would ask be included in the record.
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\1\ The prepared statement of Mr. Gotbaum appears in the Appendix
on page 29.
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Chairman Thompson. It will be made part of the record.
Mr. Gotbaum. First of all, Mr. Chairman and Senator
Collins, I want to just say thank you. Like you, we appreciate
and consider extremely important the activities of the IGs. We
consider it extremely important that periodically those
activities be reviewed, by the IGs, by the rest of the
administration, and by the Congress, to see what we are doing
that works and what we need to make it work better. And that is
the spirit in which we take your consideration of our proposal
regarding law enforcement authority and Senator Collins' bill,
S. 870.
If I may speak first on the issue of our law enforcement
proposal. To be honest, Mr. Chairman, after you very graciously
confirmed me as controller, this is an issue which I then came
to understand. This is an issue which has been around for a
very long time.
I want to start by saying what this is not. This is not an
issue of whether or not IGs should work in law enforcement.
They do and they have for 22 years, ever since you created
them. Senator Collins was gracious enough to mention June Gibbs
Brown and the work at HHS in terms of Medicare fraud. There are
other equally impressive activities: Child support enforcement,
food stamps, work at the border on border control that involves
money laundering and drug enforcement, etc. So the issue here
is not whether the IGs should work in law enforcement. They do.
We are not proposing any expansion of their activities in law
enforcement. Nor is the issue whether or not this law
enforcement activity should be under the supervision of the
Attorney General, the supreme law enforcement officer of the
land. It should be. It is. It has been. Under our proposal it
would continue to be.
We think the issue instead is whether or not the process by
which the Attorney General exercises oversight can, in fact, be
streamlined. We view this as a good government, nonpartisan
issue.
Historically, IGs who work on law enforcement issues get
deputized on a case-by-case basis. They went to the Marshals
Service and said: Can Mr. X or Ms. X working on the following
case get authority? And the Marshals Service would review it
and grant it.
That became sufficiently cumbersome so that several years
ago the Department of Justice, the Deputy Attorney General
said, ``Why don't we do this on a year-by-year basis?'' And so
what the Department of Justice does now is they give blanket
authority on a year-by-year basis to individual IG agencies.
What we would like to do now, and what we have proposed, is
to take the next step and to turn the presumption the other
way. If those agencies that have received this blanket
authority by the Department of Justice, let them have that
authority now on a permanent basis; but, one, let us keep it
under the supervision of the Attorney General, who can revoke
it; and, two, let us supervise and make sure that we have an
ongoing professional peer review process of how the IGs use
this authority.
So, Mr. Chairman, Senator Collins, we view this as a good
government measure, a measure which respects the
professionalism of the IGs, reduces what is, frankly, an
administrative burden on the Department of Justice, and lets
the IGs continue to do the work that we all recognize and think
is extremely important.
We hope that you would consider this proposal expeditiously
because the Department of Justice, as I think Mr. Gess will
testify, was hoping that we might reduce the administrative
burden on them by arranging such a procedure. So I hope you
will consider this legislation and hope you consider this
expeditiously this year.
Turning to the broader question, Mr. Chairman, I think it
is important that we commend and thank Senator Collins for her
work. It is extremely important that we review the activities
of the IGs because although we support them, but there is no
institution that shouldn't be reviewed, that you shouldn't ask
questions about. And so we view S. 870 as a very good start to
that review.
There are provisions in it we support. We agree with
Senator Collins and the IG community agrees that there ought to
be limitations on bonuses by agency heads. It is simply
undermining the notion of independence to do that. And we agree
that there ought to be some recognition that limiting bonuses
has an effect on IG compensation.
We have concerns about the 9-year fixed term. We just don't
think that that is something which is necessary to guarantee IG
independence, and we think that, paradoxically, it might have
the effect of making it harder to recruit quality people if you
create an expectation that you have got to be in the job for 9
years. And so we hope that we can have an ongoing discussion.
The last point I hope to make about this is that since this
kind of legislation doesn't come along very often, we hope that
the Committee would, also take the opportunity to address some
issues that the bill does not address. We have found working
with the IGs that there is not clarity with regard to the role
of the IG vis-a-vis the agency head in terms of involvement in
agency management.
When I was Assistant Secretary of Defense, the then-IG of
the Department of Defense, Eleanor Hill, came to me and said,
we can be helpful to you because we know a lot about program
management, and you are trying to improve the management of the
Department of Defense, and we can work together. And I said to
her then a question which I know every agency head asks, which
is: Fine, I accept that. If I work with you and don't follow
everything that you recommend, what then?
And so what we have found is that different IGs have
different answers to that question. Some IGs take the view that
their independence requires them to step back from agency
management, from making suggestions about improving agency
management, from involvement in the agency, because that is how
they are independent. Other IGs say no, that is my job.
And so one thing we would hope is that before the Committee
turns out a final bill, you would consider this issue and
address whether or not it makes sense to provide greater
guidance to IGs as to what their ongoing role ought to be with
the agency head.
My time is limited, I understand, and there are going to be
plenty of folks to have this opportunity, but I just wanted to
say in closing: One, thanks; second, if it is not possible to
have the more sustained debate on S. 870 that we think it
deserves, we hope the Committee could find a vehicle this
session to enact the proposed streamlining of the law
enforcement authority into law.
With that, thank you very much.
Chairman Thompson. Thank you very much.
Mr. Gianni, did you have an opening statement?
TESTIMONY OF GASTON L. GIANNI, JR.,\1\ INSPECTOR GENERAL,
FEDERAL DEPOSIT INSURANCE CORPORATION, AND VICE CHAIR,
PRESIDENT'S COUNCIL ON INTEGRITY AND EFFICIENCY; ACCOMPANIED BY
PATRICK E. MCFARLAND, INSPECTOR GENERAL, U.S. OFFICE OF
PERSONNEL MANAGEMENT, AND KENNETH M. MEAD, INSPECTOR GENERAL,
U.S. DEPARTMENT OF TRANSPORTATION
Mr. Gianni. Yes, Mr. Chairman, thank you.
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\1\ The prepared statement of Mr. Gianni appears in the Appendix on
page 34.
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Mr. Chairman, first of all, before I start, I just want to
let you know that we share your loss of the Senator, the fine
Senator from the State of Georgia. And I know it is difficult
to proceed under those circumstances, but we certainly
appreciate your leadership and the Committee's and Senator
Collins' leadership in bringing these hearings today.
I am pleased to be here to discuss legislative proposals
and issues relevant to the operations of the IG community.
Kenneth Mead, to my left, is the Chairman of the PCIE's
Legislative Committee, and Patrick McFarland, to the far left,
is a Chair of our Investigations Committee, and that is why I
have asked them to accompany me today.
My testimony represents the views of the IGs and not
necessarily the administration, and I would ask that my full
testimony be submitted for the record.
Chairman Thompson. It will be made part of the record.
Mr. Gianni. First of all, we would like to thank the
Governmental Affairs Committee for its longstanding, bipartisan
support.
Over the years, we have worked with this Committee on a
wide range of government management issues and stand ready to
assist the Committee in carrying out its legislative and
oversight functions. Of particular note is our ongoing
financial statement work under the Chief Financial Officers Act
and our continuing work to review agency compliance with the
implementation of the Results Act. Moreover, we were pleased to
work closely with you on the Government Information Security
Act to enhance the Federal Government's ability to combat
computer hacking and intrusions.
Certainly, you have referred to our accomplishments over
the years, and we are quite proud of those accomplishments and
stand ready to continue our service to the Federal Government.
Today, we are here to discuss, among other issues,
legislation that is critical to the IG community's ability to
perform its mission.
The Department of Justice's proposal to amend the IG Act to
authorize criminal investigators in the offices of 23
presidentially appointed IGs to exercise law enforcement powers
is extremely important to the IG community. This proposal would
do three things:
First, it would grant no new authorities, but would simply
recognize in statute authorities that are already being
exercised administratively.
Second, it would ensure consistency of law enforcement
powers among the IGs.
And, finally, it would enhance accountability and would
offer greater oversight of the law enforcement authority by the
Department of Justice.
We have learned that the Department of Justice does not
intend to renew the OIG blanket deputation authority after
January 31, 2001. If blanket deputation were not renewed and
statutory law enforcement was not enacted, literally thousands
of open investigations of fraud against government programs, in
the areas of health care, Federal procurement,
telecommunications, Federal construction, bribery of public
officials, crimes in subsidizing housing, corruption of highway
construction programs, child support enforcement, and a host of
others, would be jeopardized. These types of investigations
would simply cease. Moreover, if we were forced to return to a
process in which we sought deputation in each individual case,
it would be burdensome both to the Department and to the IG
community. On behalf of the entire OIG community, I urge the
Committee to endorse this proposal and seek its passage in this
Congress.
Second, I will turn to Senator Collins' bill, which is
under consideration by this Committee. In introducing this
legislation, Senator Collins referred to the IGs as ``an
already invaluable program'' and noted our performance and many
accomplishments over the years. She also challenged her
colleagues and the IG community as a whole to build on its
strengths and remedy its weaknesses. I fully subscribe to this
strategy and look forward to working with her and her staff to
respond to this challenge.
While there is a general consensus within the IG community
in support of the underlying principles embodied in this
proposed legislation, I must note that consensus is different
from unanimity. Our community consists of nearly 60
individuals, each with their own background and experience,
interacting with agencies performing a wide variety of
missions. On most matters, there is distinct minority
viewpoints with suggestions that are worthy of consideration.
Generally there is support for all of the provisions put
forth in the bill with some advice or suggestions for making
some change.
We recently provided your staff with the results of an
updated survey on the revised bill; our specific comments are
included in my written statement. I would like to include for
the record a letter sent to Senator Collins from my colleagues
in the ECIE regarding their concerns related to the
consolidation provision.\1\ We would welcome the opportunity to
work further with your Committee and Senator Collins' staff to
share proposed technical changes that could improve our ability
to better perform our mission.
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\1\ The letter to Senator Collins from Kenneth A. Konz, Focal Point
for the DFE OIGs, dated March 21, 2000, submitted by Mr. Gianni appears
in the Appendix on page 72.
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I'd like to turn next to the other suggested areas that we
would like the Committee to consider. One area needing
attention involves the scope of the IGs' authority. Contrary to
the plain language of the statute, some courts have narrowly
construed the IG Act's grant of authority to allow
investigations of regulated entities only when they are direct
recipients of Federal funds, such as contractors or grantees.
Under this view, IGs may not investigate criminal conduct of
regulated entities, even if the subject has engaged in criminal
conduct knowingly or intentionally to deceive their agency.
Fortunately, the Congress saw fit to clarify this matter as it
related to the DOT IG under the Motor Carrier Safety Act. We
are asking the Committee to revisit a provision that they
passed several years ago and enact language that would extend
that interpretation to the whole community.
The other area that we raise for consideration is the
Paperwork Reduction Act and how it is being implemented. We are
working with OMB to try to work out some procedural matters to
make it more efficient, but still, there is a difference in the
interpretation as far as the authority of the IGs and the
independence of the IGs and how the Paperwork Reduction Act
plays out. We would like to work with the Committee to make
some improvements in that area.
We are also suggesting that the Committee may want to
encapsulate into legislation the PCIE and the ECIE concept,
somewhat like the current codification of the CFO Council and
the CIO Council. We think that codifying the two councils would
provide more accountability, more efficiency, and more
opportunities to work closer with the Congress.
Last, we appreciate your continued support on a bipartisan
basis to advance legislation to provide authorization for the
IG Criminal Investigator Academy and the Forensic Laboratory.
We would like to work with you to expand any further
legislation to authorize funding for our IG Auditor Training
Institute.
Mr. Chairman, this concludes my prepared statement. We
again appreciate the opportunity to share with you this
information and hope it will be useful to the Committee as it
considers ways for improving the operations of the IG
community. We are grateful for the Committee's past support of
the IG community. We look forward to working together to
maximize government's efficiency and effectiveness.
We realize that this is a short legislative session, but
the issues we cited, especially statutory law enforcement
authority, are ones we hope the Congress may be able to
consider before adjournment.
Thank you in advance for your efforts, and we would be
happy to respond to any questions.
Chairman Thompson. Thank you very much.
Do any of you other gentlemen have comments? Mr. Gess, do
you have an opening statement?
TESTIMONY OF NICHOLAS M. GESS,\1\ ASSOCIATE DEPUTY ATTORNEY
GENERAL, U.S. DEPARTMENT OF JUSTICE
Mr. Gess. Thank you. Mr. Chairman, Senator Collins, good
morning. Let me join in expressing my deepest sympathies to
you. I can only imagine how hard it must be this morning after
the loss of a colleague.
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\1\ The prepared statement of Mr. Gess appears in the Appendix on
page 46.
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Let me start by simply asking that my prepared statement be
made a part of the record.
Chairman Thompson. It will be made a part of the record.
Mr. Gess. Thank you, Mr. Chairman. I do not intend to offer
anything from that prepared statement because I think it speaks
for itself. I do, however, want to address three very quick
matters that I think may assist the Committee in its business.
First, is the issue of timing on the part of the Department
of Justice. I want to assure the Committee that approximately 1
year ago we advised the IG community that we needed to move
forward and that effective January 31, 2001, we would no longer
offer blanket deputations. We fully recognize the practical
reality of the fact that it is now the end of July, that there
are 16 days left in this legislative session. I want to assure
the Committee--because we think it would be grossly
inappropriate for a co-equal branch of government to push at
that level--that we will work with the IG community and the
Committee on timing issues. We will not jeopardize the lives of
agents or investigations. I can assure the Committee of that.
Second, there are two particular parts of the proposed
legislation that deserve very brief comment. The first is that
under our proposal there would be limited occasions where the
Attorney General could confer law enforcement authority for
acts taken by an Inspector General outside of the Inspector
General Act. And while that is potentially controversial, I
want to assure the Committee--I want to give you two very brief
examples.
Chairman Thompson. Would you state that again?
Mr. Gess. We have proposed that, as a general matter, IGs
would have law enforcement authority when they are conducting
their business under the Inspector General Act. We have also
proposed that there would be limited occasions when an
Inspector General could undertake law enforcement activities at
the request of the Attorney General, and, obviously with the
concurrence of the Inspector General, when that act falls
outside the IG Act.
The two very brief examples I can give you of where this
has occurred are child support, in which we recognized that we
needed to do something--in fact, there was a resolution of the
Senate that passed 99-0, frankly condemning the Justice
Department's inaction several years ago. The Attorney General
took that to heart, immediately, quite frankly.
In order to get the investigative resources we needed, she
asked the Inspector General of HHS to help out. The IG agreed.
However, his investigative authority for child support cases is
not included in the IG Act. We would not want to lose that
authority in the future.
Second, the Health Care Portability Act, which was passed
by a bipartisan majority, a substantial majority of Congress,
confers certain law enforcement authority on the Inspector
General of HHS. As a matter of drafting, that authority falls
under the Health Care Portability Act, not the IG Act. We would
not want to face a situation where an Inspector General had to
choose statutory authorities for a prosecution by which one
gave him law enforcement authority.
Let me conclude by simply saying that we do not suggest
that law enforcement authority be expanded for Inspectors
General. We simply suggest that the first and primary
responsibility for supervising that law enforcement authority
ought to be in the chain of command of the agent who has that
authority. In this case, it should be the Inspector General of
an agency.
We fully intend and our proposal provides for Attorney
General regulatory authority to assure that there are proper
hiring, training, and conduct standards and that there is the
possibility of sanctions should a problem occur.
With that, I would simply suggest that I am here to answer
the Committee's questions, and I appreciate the opportunity to
appear.
Chairman Thompson. All right. Mr. Mead or Mr. McFarland,
you didn't have any opening comments?
Mr. McFarland. I have no prepared testimony.
Mr. Mead. No, Mr. Chairman.
Chairman Thompson. Well, thank you very much. I hope the
fact that we are having this hearing today, in light of the
increasingly cramped schedule that we have of Senate business
and all the other things that we are involved in, it attests to
how important we feel this issue is, and the fact that we need
to move the ball down the field as much as we can before recess
and during this session. This is something Senator Collins has
been urging for a long time, and it is primarily due to her
leadership that this issue is among the things that this
Committee wants to seriously consider in the near future.
Mr. Gotbaum, thank you for your comments. You reminded me
of several things that I think are important, and that is, the
nature of the Inspectors General and their job, how important
they are to us. They have been extremely important to Congress.
But they have an inherently difficult job. They have a
tightrope to walk. They have not a built-in conflict of
interest as such, but certainly a built-in conflict, even those
who are presidentially appointed. They are trying to help the
agencies on the one hand, and some of them, most of them have
worked well in that regard in trying to assist. I think that is
the way the IGs look at themselves, as somebody there not to
wreak havoc but to try to assist to do a better job, give ideas
and suggestions and so forth. You have seen it from both sides
now.
At the same time, they are the cop also, and how do you
balance that? Well, it is hard to write that down on a piece of
paper in a memo. It has to do with sound judgment.
We have run into a couple of situations with regard to HUD,
with regard to TVA, one presidentially appointed, one not
presidentially appointed that I think should be, and we have
legislation to that effect for TVA, where I think the
Inspectors General were abused in those cases. They were not
cooperated with. And we had this great conflict between the
appointing authority in one case or the head of HUD in the
other and the IGs. And we were never able to resolve those
problems.
So it gets back initially to your office, really. Frankly,
I don't think your predecessor was able to effectively resolve
some of these issues. I know that your position as Chairman of
PCIE is not a statutory one. It is under executive order. And
one of the things I think we ought to look at is whether or not
it ought to be statutory, because I think somebody within the
administration ought to have the authority to resolve these
issues and to balance the legitimate position of these agency
heads who say, after all, we were elected and we ought to be
able to carry out our policies, whether you agree with them or
not, we will have another election in 4 years, versus the IGs
who are seeing things done that are clearly not within the
purview under any normal objective reading of the situation.
And when you have that, there ought to be something short
of a congressional hearing or a lawsuit or something to really
work that out and resolve that, and I am not sure where that is
going to lie, except in your office.
You have been very cooperative with us, and I think you
understand what I am saying. And I know that, as I say, you
have limited authority. But I would urge you to stay in the
middle of all that and not let these situations get out of
hand. Be fair and just apply some common-sense standards.
Obviously, you are part of the administration. I guess you
have a bit of a conflict yourself. But that is, I think, your
responsibility, and if more authority is needed there, perhaps
we need to look at that.
With regard to the statutory criminal law enforcement
authority--and I want to make sure that I understand it
correctly--that what you are suggesting here basically is that
we put in statutory form what is already in practice; that is,
every 2 years, the Marshals Service deputizes all these people,
and there are hundreds of them. It sounds to me like it has
gotten to be more of a pro forma thing. Obviously, they don't
have a chance to do a lot of reviewing. I don't know if there
is any background checks or additional checks or anything of
that nature. You are already there. We are already into these
areas. Every one of these offices has an investigative side,
and statutorily it sounds like here and there we have given
these IGs additional authority that other IGs in other
departments don't have.
It has become kind of a mill, and what you are suggesting
here is that we--first of all, I guess you would take the
Marshals Service out of it, and we would----
Mr. Gotbaum. And the Attorney General.
Chairman Thompson. And we would statutorily
institutionalize that. Now, is that an oversimplification or is
that basically what we are talking about?
Mr. Gotbaum. I think with one addition, Mr. Chairman. You
are right that this is, in a lot of respects, a proposal that
we are making to ratify a practice that already goes on. But
the distinction I would make is that in the law enforcement
proposal, we have proposed something which we don't do now,
which is a peer review process, an automatic, periodic, peer
review process. That is not something we do right now. And what
we propose in this is that the IG community would, through the
PCIE, develop some sort of peer review process, and that
proposed procedure would be itself reviewed by the Attorney
General. That process would provide an ongoing basis for
review. We think this provides, in effect, a better form of
oversight than the one that the Justice Department has been
able to provide currently, given their resources.
So you are right, this is in a lot of respects enabling us
to streamline what we are already doing, but we do think that
it recognizes the professionalism of the IGs and puts in place
some additional safeguards as well.
Chairman Thompson. And the Attorney General, as I recall,
would have the authority to withdraw this authority if
circumstances arose justifying it?
Mr. Gotbaum. Yes.
Chairman Thompson. You are familiar, of course, with the
Commission on the Advancement of Federal Law Enforcement, the
Webster report, that basically has a different view. They are
concerned about the growth and role of the functions of the
Inspector General, and, actually, they propose consolidating
some offices, and perhaps limiting them to the audit side of
things and giving the investigative functions to someone else.
In fact, it seems like they are going in the opposite
direction of what you are suggesting or where we have been
going. They talk about the proliferation of law enforcement
agencies, and they talk about an inherent conflict between the
program review evaluation role of the IGs and their law
enforcement role.
Any of you who would like to comment on that?
Mr. Gotbaum. Mr. Chairman, may I? There are times in life
when being at OMB puts you on the hot seat because your life is
always a set of conflicting issues. From my perspective, from
OMB's perspective, we disagree quite fundamentally with the
Webster report. And I think it would be worthwhile getting the
Department of Justice's view as well.
It is very easy to say as a theoretical matter law
enforcement ought to be in one place and to try to parse out
this very complex thing that IGs do into law enforcement and
program management, etc.
But I think this Committee recognizes--it is very clear
that Senator Collins recognizes and that the IG community
recognizes and the administration recognizes that it is not
that simple. The fact is that we tried to appoint good people,
tried to improve the professionalism and the quality, and have
succeeded, in our view, in creating in the IGs a function of
government that is really very helpful. It helps you and it
helps us.
That doesn't mean that other parts of the government won't
grumble from time to time, as they will: You know, I should be
doing that. And we at OMB get that all the time, and that is
the reason why I think it is important to say to this Committee
that I am not an IG. I am not speaking on behalf of the IGs. I
am speaking on behalf of the administration. We don't think and
we wouldn't propose centralizing all law enforcement authority
within the Justice Department.
We do think it is important in our proposal that the
Justice Department be recognized as the preeminent law
enforcement authority, so that when they say go one way and
somebody wants to go another way, we go the way the Justice
Department says.
So with respect to Mr. Webster, who is obviously an
important and distinguished American, we don't agree with his
notion. We think what we have got is something that is worth
strengthening.
Chairman Thompson. Mr. Gess, what do you say about that?
Mr. Gess. Mr. Chairman, we deeply appreciate the work of
Judge Webster and, in fact, are in the process of implementing
some of his recommendations or the Commission's recommendations
respecting training and coordination in training because we
think it is important.
However, on this particular issue, we frankly disagree. We
think that these are issues that were dealt with roughly 20
years ago when the IG authority was expanded and has expanded
over the years. We don't think that it is necessary, given the
way that we do our law enforcement business, which is
establishing partnerships at the local level between the U.S.
Attorney, with the Federal, State, and local law enforcement
agencies, to centralize everybody in one place. And we don't
think that it would be good practice, but, more importantly,
practical at this point 20 years down the road.
Chairman Thompson. Let me ask you one more final question
in this round. It has to do with, I guess, a broader view of
law enforcement.
I was somewhat surprised at the breadth of the
investigative work that IGs do. You mentioned child support and
all the other. Some of it is statutory and pertains to
particular departments.
You say that this proposal does not expand the jurisdiction
of the IGs, and I am seeing--I think of myself as a graduate of
the U.S. Attorney's Office, and I am wondering how all this
works. You have all these Inspectors General doing all these
things. You have the FBI doing a lot of the same things, it
sounds to me like. And I am wondering how that is coordinated.
As I understand it now, there comes a point where the IGs,
if they reach a certain level in their investigation, are
supposed to report to Justice or to the FBI, are they not?
Mr. Gess. That is correct, Senator.
Chairman Thompson. And that would not change.
Mr. Gess. Absolutely not.
Chairman Thompson. It looks to me like quite a coordinating
job. I am not sure what to do about it or if there is anything
that should be done about it. But if I was the FBI, I would be
mindful of that and make sure that there is a firm
understanding.
Are there any interoffice procedures or understandings as
to how those lines are drawn? I don't think there is anything
statutory.
Mr. Gess. Mr. Chairman, there is nothing statutory, but,
for instance, the Inspector General for HHS and the FBI, who
would share health care fraud investigative responsibilities,
have a written memorandum of understanding.
I can also speak to this issue based on my prior hat as an
Assistant U.S. Attorney in Portland, Maine, where, in fact,
there are few investigative resources. Anything major means
bringing everybody under the sun to the table and begging for
help.
I can assure you, Mr. Chairman, that it is a challenge. It
is hard to do. But the reality is that I don't think
particularly in smaller States we could get the job done if we
didn't basically have everybody at the table contributing a
little bit. And I know that it sounds hard from a management
perspective, but the reality is it seems to work around the
country because everybody at that table really is committed to
doing good law enforcement.
Chairman Thompson. Let me finish with one note of concern
with our little love fest we have got going on here today. We
reached out to the FBI to get their views about this, and
before we got very far, it was closed off. And I don't know
why, but I suspect that the Justice Department wanted to speak
with one voice on this issue. And I understand that, but you
need to understand that before I do anything, I am going to
hear the best candid assessment from the FBI's vantage point,
because we have got everybody singing from the same sheet of
music here today, but there may be some other viewpoints and
some things that I haven't thought of or maybe others haven't
thought of. So I would not be too careful about trying to hold
this thing--I mean, too adamant in trying to hold this thing
close, because we are not going to do anything until we make
sure we understand the ramifications of this from a law
enforcement standpoint.
Mr. Gess. Mr. Chairman, I can assure you that that would
be, among other things, I think, bad law enforcement practice.
Our sole goal here with the FBI is that we be at the table. We
would not try to restrict what anybody would say. To be quite
frank, I think that would be folly.
Chairman Thompson. Well, you have a right to set policy. I
mean, I understand that.
Mr. Gess. Absolutely.
Chairman Thompson. You are the Justice Department. But we
have a right to get the views of the major players involved.
Mr. Gess. And we don't question that, Mr. Chairman, I can
assure you.
Mr. Mead. Mr. Chairman, I would like to make a point about
the relationship of the IGs to the FBI, and I would like to use
the Department of Transportation as an example because I can
speak to that one more credibly.
I think things work well with the FBI. I have enormous
respect for that institution. I think part of the reason they
work so well is because of the U.S. Attorneys and the Justice
Department. Before a case gets too far down the road on the
investigative side, you have got to get buy-in from the U.S.
Attorney, which operates, as a matter of fact, as a very
important internal control, a check and balance.
In some instances, we investigate cases that are highly
specialized. They are not really ``high profile.'' You may not
read about them in the paper. They may involve something where
a motor carrier, a trucker, has been lying to the Department
about the hours that they are driving, for example, or whether
they are carrying hazardous materials. These are areas where
you need a great deal of specialization. In those cases, we
work with the U.S. Attorney, and largely at the U.S. Attorney's
direction, and the FBI may not even get involved.
On the other hand, not too long ago we were involved with a
highway transit construction fraud case, very high profile,
involving a couple of organized crime families. There, we
teamed with the FBI but still operated largely under the
direction of the U.S. Attorney.
As to your question earlier about whether there is some
sort of conflict here because you have program review
responsibilities and you also have criminal investigative
responsibilities, in fact----
Chairman Thompson. What Webster actually suggested he
thought of that report?
Mr. Mead. Yes. In fact, the auditors do not get involved in
the investigations, and the investigators do not get involved
in the audit. But, in fact, the criminal investigators do
develop expertise in a particular program area. For example, in
airline safety, it takes a great deal of specialization to
understand how those maintenance logs have to be filled out and
when you have ``pencil whipping.''
So it is important that you have that reservoir of
expertise in the various agencies of government. Thank you.
Chairman Thompson. Well, I appreciate that, and I think
most U.S. Attorneys want all the help that they can get from
whatever source they can get. And I don't think the FBI is too
jealous about some of these things, but I understand also that
there could be some territorial concerns there, and you may be
concerned that the FBI might come in and say, no encroachment
on our territory.
But we can figure that out. I mean, we know how that works,
and we just need everything on the table.
Mr. Gotbaum. Mr. Chairman, can I just make two points on
this?
Chairman Thompson. You are going to have to let me quit.
Mr. Gotbaum. I will be fast, I promise. One is, again, the
side effect of being in OMB and trying to develop an
administration position, is that we see this. You are, of
course, right that you should hear the FBI's view. All we would
ask is that since the person who best explained to me why,
notwithstanding the FBI's view, he thought the administration
proposal was right was Nick Gess. I would hope that you would
also hear the Justice Department's response to those concerns.
Chairman Thompson. He is here. He is getting his shot.
Mr. Gotbaum. OK.
Chairman Thompson. Senator Collins.
Senator Collins. Thank you very much, Mr. Chairman. I want
to follow up on exactly some of the issues that you were
raising with regard to the statutory law enforcement authority.
Mr. Gess, I first want to welcome you from Maine. I know
you are on detail here from the U.S. Attorney's Office, and I
think it was a clever move of the Justice Department to send
you here today, because some of the questions that I was going
to ask I now have to discard. [Laughter.]
I will pass them right over to my colleagues.
Nevertheless, I must say that I find the Department's
position on granting statutory law enforcement authority, to
put it kindly, to have evolved. And I want to take you back and
try to understand exactly what the Department's position
currently is and how it has changed.
In 1998, when I introduced the first version of Inspectors
General reform legislation, I put in statutory law enforcement
authority. The Justice Department objected to my doing so, and
thus, when I redrafted the bill with the new Congress and
introduced it in 1999, I left that provision out, even though
the IGs were virtually unanimous in urging me to include it and
gave me several very compelling examples of the delays and the
paperwork involved in the process.
Then, in March of this year, I received a letter from
Deputy Attorney General Holder urging me to sponsor statutory
law enforcement authority for the IGs. Then the latest
development, which I learned of from an IG just yesterday, is
that the Department of Justice has decided that the current
deputation process is unduly burdensome for the U.S. Marshals
Service and, in fact, has reached such a crisis point that DOJ
apparently has threatened to revoke the deputation authority
for the IGs effective next year.
So I think given these events, you can understand why I am
a little bit concerned and perplexed as to what the
Department's position is and why it seems to have evolved or
changed dramatically.
Mr. Gess. Senator, I think that your words are perhaps
kind, very kind in their view. I think the simplest answer to
this is that the IG community did a very good job of coming to
us approximately 18 months ago, and then over the next 6 months
spending a significant amount of time with Eric Holder walking
through proposals that might work. There then ensued what I
would term ``high level''--including both the Attorney General,
the Deputy, the other senior staff at the Department--
consideration and our decision ultimately that the IG community
was right.
At the time that we struck this--I don't want to call it a
``deal,'' but effectively this law enforcement comity approach,
we also made the decision approximately a year ago that
statutory law enforcement authority needed to replace these
blanket deputations.
Our selection of the January 2001 date contemplated an
entire legislative session moving through. As I said in my
opening statement, while we very, very much would hope that
there would be rapid action here, we have no intention of using
that date as a hammer in any way, shape, or form. It was simply
seen to be a reasonable date when we set it a year ago.
Senator Collins. But if, in fact, legislation granting the
statutory authority does not make it all the way through into
law, you will not revoke the authority? I mean, the threat is
out there, and that is very disturbing.
Mr. Gess. It was part of--I mean, to be frank, it was--as
this approach was agreed to around Eric Holder's conference
table with representatives of the IG community, we actually had
initially thought that it would be at the end of this
legislative session, but for a variety of administrative
reasons pushed it off.
What I can assure the Committee of, and you personally,
Senator, is no agent will be endangered, no case will be
endangered. We will explore with the IG community and the
Committee ways in which, if we have to, we can make this more
effective and efficient given the fact that we have a system
now in which the Marshals Service has two to three employees,
frankly, doing administrative paperwork processing, not law
enforcement review. And that is our concern.
But we certainly have no intention of--I mean, we are the
lead law enforcement agency. We would never do anything to hurt
law enforcement.
Senator Collins. Mr. McFarland, would you like to add
something?
Mr. McFarland. Yes, Senator. I would like to just respond.
My recollection is quite different than Mr. Gess' recollection.
I for one, and the other IGs that I have talked to, did not
hear that stated at that meeting. If we had, we would have been
in turmoil ever since. We have only been in turmoil for a few
days.
My concern is that if, in fact, we acknowledge that the
blanket deputation is working--and I certainly do--it is
working. It is cumbersome to the Marshals, I am sure. But
everybody has administrative problems, every office. And if
somehow that is revoked, then probably the alternative is to go
back to case-by-case deputation, and that is a horrible
scenario.
Using the Department of Labor IG's office as an example,
the DOL processing costs per case was $500. And you know the
amount of work that comes out of that Labor IG office. It is
staggering. And the different processes that it had to go
through to get to that point was just so time-consuming and
costly that I hope that, first of all, legislation is passed,
and, of course, that is why we are here; but, second of all, I
would hope that it wouldn't be just a working-it-out-later-type
situation with the Department of Justice.
This is a critical thing, and it is critical because--well,
just take HHS as an example. The day that happens that we lose
something in our deputation, 2,400 of their cases cease and
desist. They just come to a stop. Not one of us is going to
send an agent out in harm's way under any circumstances.
So it is a dilemma, and I hope it can be resolved.
Senator Collins. Thank you.
Mr. Gianni. Senator, if I might?
Senator Collins. Mr. Gianni.
Mr. Gianni. Two points. First of all, I think as you said,
it is an evolving process. It has evolved and it has grown. And
the reason it has evolved and grown to this point is that the
Inspectors General have taken their responsibilities seriously
and have carried them out dutifully. We all have entered into
an agreement with the Attorney General, so we each have entered
into a responsible agreement and made some commitments.
Second, I think the important issue is--and why we in the
community would like to see our law enforcement authority in
statute--that it could very easily change from one
administration to another administration. And all of the work
that we have invested in showing this administration how we are
able to perform and why it makes good sense may not be accepted
with another set of leaders, no matter what party they might be
coming from. And so that is why we are pushing for it. We think
it makes sense. We have proven that we are able to accept these
responsibilities and carry them out in a way that coordinates
with the other law enforcement communities, and at the same
time are willing to undergo additional oversight--which I might
say that many of us do at the present time.
Senator Collins. I want to ask Mr. Mead a question about
the training that the IG staff undergoes in order to make sure
that they understand the proper use. For example, it is my
understanding--well, why don't you tell us what kind of
training the IGs who do receive the deputations undergo?
Mr. Mead. Well, they have to go to FLETC.
Senator Collins. Which is?
Mr. Mead. Which is the investigative academy that is also
used by other law enforcement agencies, and they get the
standard portfolio of training. We are very proud of them. In
fact, that is a tradition for the current deputization, and I
assume that would be carried over to the statutory provisions
being proposed here today.
Senator Collins. I think that is an important point because
some of the people who have been opposed to granting the
statutory authority are wrongly assuming that the IG agents are
not trained, that they are just handed a gun, a badge, et
cetera. And I want to get on the record exactly the point that
you have just made.
Mr. Mead. And I have made it a point also to attend
recurrent specialized training of our agents done under the
supervision of senior managers, where they would go through the
various exercises that a law enforcement agent can be expected
to face, such as presenting Miranda warnings and all that, as
well as how to use a weapon.
I don't know if my colleagues here would like to amplify on
that.
Mr. McFarland. Yes, I would, Senator Collins. The
Department of Treasury Federal Law Enforcement Training Center
that Ken was talking about is in Glynnco, Georgia, and it is a
10-week course, and it services 70 agencies of government. It
is big and it is effective. And it is something that every one
of us in the community is very proud of, proud of being able to
go to that school.
After that, then our agents in the IG world go to the IG
Academy, which is also at the same location, for 4 weeks--not
necessarily right after but within a period of time. So we have
our own academy.
And in recent months, that academy is what I would consider
now a model academy because we had the good fortune of being
able to join with the Treasury Tax Administration Academy that
was already in existence, along with our own academy, and we
have got a dynamic force down there, a dynamic curriculum. And
it stands alone.
Senator Collins. Thank you. My time is fast running out, so
I want to just touch on two other points very quickly. Mr.
Gotbaum, I was disappointed this morning to hear you repeat the
administration's opposition to a 9-year renewable term for the
IGs. This provision is intended to help improve recruitment of
IGs and also to give them some sense of security and to avoid a
situation that happened, frankly, in the Reagan Administration
where the IGs were fired, which I thought was inappropriate.
Thus, we chose a 9-year term to try to overlap administrations,
although I am certainly flexible on the number of years. It is
more the concept that I was trying to advocate for.
I am puzzled by the administration's opposition because the
President signed into law a 5-year term of office for the
Inspector General for Tax Administration and a 7-year term of
office for the Inspector General for the U.S. Postal Service.
So, clearly, the administration has found terms of offices for
Inspectors General acceptable in some situations. I don't
understand why the administration thinks that the Postal
Service Inspector General should have a term, the Inspector
General for Tax Administration should have a term, but that
other presidentially appointed IGs should not have terms.
Mr. Gotbaum. Senator Collins, this is an important
question. When you are a Presidential appointee subject to the
appointment of the President, at the end of an administration
you become extremely conscious of when you are working for
government beyond the current administration. I view all of the
things that we are talking about today as not having any
consequence for the current administration. And so when I talk
about them, we really are taking views that we think are of
service to the next administration, of whatever party. And I
want to be very clear about that because our support for law
enforcement authority, for example, whether you legislate this
or not, is not going to change our ability in the next 6
months. What it will do is it will enable IGs in the next
administration.
Getting to the specific proposal about fixed terms, I think
I should say that we don't feel that a long term is necessary
to preserve the independence of the IGs. I can't speak for the
beginning of the Reagan Administration, but since then we think
the history has been pretty clear that IGs have been
independent under the current structure and----
Senator Collins. Is there anything to stop a new President
from firing all of the IGs?
Mr. Gotbaum. Only the fact that that President would have
to explain to the entire world why he should or would do it.
Senator Collins. It has been done before.
Chairman Thompson. How about all the U.S. Attorneys?
Mr. Gotbaum. Right. But if I may, Senator Collins, the
other issue is that if you start making this a job that when
you take it you have to commit for almost a decade, you are
going to affect the kind of people that you can get to take
that job.
Now, the fact is that this President has signed and other
Presidents have signed legislation that provides for fixed
terms for some IGs and other folks. But I want to be clear: I
am expressing the administration's preference or view. Our
preference is that we not constrain IGs in this way. This is
not a statement about IGs. This is a statement on behalf of the
Executive Branch, on behalf of the next administration, which
isn't here yet to take this argument: There ought to be some
ability in the Executive Branch to pick the people who work
particularly in things that, involve agency management. And
that is the reason why we have resisted the notion, and we hope
that you would reconsider.
Senator Collins. Mr. Mead, I want to give you a chance to
respond to that, and then I am going to yield because I know
that I have used a considerable amount of time. I have many
other questions, but I am going to submit them for the
record.\1\
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\1\ The questions for the record submitted by Senator Collins and
responses from Mr. McFarland appears in the Appendix on page 27.
---------------------------------------------------------------------------
Mr. Mead. This is a very central issue, and I want to
respond directly and explicitly to the question on removal
because it is of concern to the Inspectors General.
There is considerable support for some sort of term limit.
I think the reason there is considerable support for some sort
of term limit is because of the removal issue. The law does
require the President, when removing an Inspector General, to
communicate to Congress and explain the reasons therefor. It is
quite different, materially so, from a ``for cause'' removal.
Now, the President could communicate with the Congress and say
``I think I want a new team.'' That statement would satisfy the
law. But you do not want an Inspector General in the last year
of an administration or in the beginning of a new
administration to be pulling any punches.
The law requires very clearly that Inspectors General
report to the Congress and to the Secretary and keep them
currently and fully informed. And I believe that the Congress
would do a service to the Inspectors General if they did
address this removal issue.
I think I am trying to fairly reflect the views of this
community, which is not always unanimous, but I think if there
is any one issue besides law enforcement that there is some
consensus, it is this one.
Mr. Gianni. And we might be able to take care of that by
just putting in a for-cause provision in the act rather than
just a notification provision in the act. The cause is poor
performance, and that is the reason for removal. And that might
solve the problem.
Senator Collins. Thank you, Mr. Chairman.,
Chairman Thompson. Senator Levin.
OPENING STATEMENT OF SENATOR LEVIN
Senator Levin. Thank you, Mr. Chairman.
First, let me thank you for scheduling this hearing. It is
a hearing on kind of a dry and complex subject, and it is
particularly difficult, obviously, today when our thoughts are
elsewhere. We have lost an esteemed colleague who was a very
important part of this family, a very kind and a gentle and a
good man. And all of us in this room are thinking about that, I
am sure, more than this. But, nonetheless, our work must go on,
and that is what Senator Coverdell would want us to be doing, I
am sure.
I also want to thank Senator Collins for taking on this
subject. It is important that we have this kind of review.
These issues are complex. They don't attract a great deal of
media attention so that we just have to be doing our work free
of that, which is a big plus, frankly, but, nonetheless,
sometimes not as attractive or glamorous as some of the other
things in which we might be involved. This is sort of the
grunge work.
But this subject, the Inspector General Act, is really one
of the true feathers in the cap of this Committee over the last
25 years. The Inspectors General Act has really saved billions
of dollars. We have gone after waste and abuse, and our
Chairman has been one of the leaders in that. Again, I want to
thank him and Senator Collins for their leadership in taking on
this review.
I just have a few questions in the areas which have been
discussed. First, on the 9-year term, we have a 5-year term for
the head of the Office of Government Ethics, as I understand
it, and there are two IGs that have terms, I believe one is 7
years and one is 9 years. And so in two of those three cases,
at least, the term of office is less than the 9 years proposed
here, for the IGs. That is a significant grant of a term of
office for a large number of Executive Branch appointees.
So what is the logic in a 9-year term, instead of, for
instance, a 5-year term, as we give to the Director of the
Office of Government Ethics? And, second, what does it really
add when the IGs still serve at the pleasure of the President?
Because I assume we are not eliminating that language in this
proposal. They still would serve at the pleasure of the
President, but have a 9-year term. It seems to me there is an
inconsistency in that.
But two questions: Why a 9-year term, when we have a 5-year
term for the OGE Director and a 5-year term for one of those
other Inspectors General who have a specific term? And, second,
since this bill would maintain serving at the pleasure of the
President, what does this really add? Mr. Gianni?
Mr. Gianni. Senator, from the standpoint of the IG
community, I don't think that we are wed to any specific number
of years. The idea is to set up a situation that goes beyond
one term of an administration. The expertise and knowledge of
an agency should increase the longer an IG is in position. This
should result in better service to the agency and the Congress.
In my opinion, a longer period of time rather than a shorter
period would be better for the government.
As far as the differences between other types of--well, my
two colleagues, one from the Postal Service and one from the
Tax Administration, I must admit I wasn't aware of the term for
my colleague at the Tax Administration. But, again, it is
probably something we would want to look into to make sure that
there is some degree of consistency if we move in that
direction.
Mr. Mead. And, in fairness, Senator Collins, when
constructing her legislation, asked the views of the Inspectors
General, and they ranged the gamut. And I did not envy the
position she was in. What she was trying to do--not to speak
for her, but my understanding--was to give the position some
security, to inject almost an expectation that you do not
remove an IG at the end of a particular administration
regardless of the party that is in power.
There was also consideration given to the Comptroller
General's term, which, of course, is 15 years, and everybody
thought, my God, that is a long time. And I think the idea was
to span at least one full administration, 8 years. But, again,
there is no magic in that number.
I personally think you do want Inspectors General to commit
to stay for a good period of time. Now, whether that is 5 years
or 7 years or 9 years, I do not know. I think a core underlying
issue is that you should not have Inspectors General leaving at
the end of an administration.
Senator Levin. Well, there is no commitment on the part of
the Inspectors General in this proposal.
Mr. Mead. No, sir.
Senator Levin. The commitment is--to the extent there is a
commitment, and there still is a removal without cause.
Mr. Mead. Yes.
Senator Levin. So they are still serving at the pleasure of
the President.
Mr. Mead. The provision does not technically change the
requirements for removal. That is correct.
Senator Levin. Has there been an unusually large turnover
in Inspectors General since they were all removed in 1981.
Senator Levin. Since then, has there been a particularly
large turnover?
Mr. Gianni. Since I came into the community 4 years ago, I
believe we had, at one point in time, seven vacancies, which
would indicate that seven of my colleagues had decided to leave
for one reason or another. I don't view that as a large number.
There seems to be some continuity, and certainly both the Bush
Administration and the Clinton Administration on two occasions
have chosen not to remove the IG and basically listened to the
advice that it was getting from this particular Committee.
Senator Levin. What is the average length of service of the
IGs since 1980?
Mr. Gianni. Senator, I do not have that. We certainly could
get it and provide it for the record.\1\
---------------------------------------------------------------------------
\1\ Letter to Senator Levin from Mr. Gianni, dated August 7, 2000,
appears in the Appendix on page 76.
---------------------------------------------------------------------------
Senator Levin. I think it might be an interesting
statistic.
On the consolidation issue, do we have any example of an IG
serving a free-standing agency, but also serving another
agency, or a department?
Mr. Gianni. I am not aware of one. There might be, but I am
just not aware if that is the case. At the State Department, I
believe that there was an attempt--the Congress was trying to
achieve some consolidation, and I believe at the State
Department there might have been a consolidation of one of
the----
Senator Levin. Wasn't that within the State Department?
Mr. Gianni. Consolidation within the State Department.
Senator Levin. No, I am not referring to that. I think the
Agency for International Development had an IG that was within
the State Department.
Mr. Gianni. Right.
Senator Levin. I am talking about a free-standing entity.
Mr. Gianni. I am not aware of any.
Senator Levin. OK. On the law enforcement issue, I was very
happy to hear about the training that is provided. Is there
some kind of a certificate that is granted at the end of that
training? Do you have to pass a course? Is it that specific?
Mr. McFarland. Yes, Senator, absolutely.
Senator Levin. OK. What is it called when you pass that
course, both the Treasury academy and yours?
Mr. McFarland. Well, I don't know what it is called, but
there is a certificate given at both FLETC and the academy to
acknowledge successful completion.
Senator Levin. That is all I have, again, unless others
wanted to comment on any of those questions that I asked. I
should have offered you, Mr. Gotbaum, or anybody else the
opportunity to comment.
Mr. Gotbaum. Senator Levin, on the consolidation issue,
part of the reason why we view S. 870 as an important start for
conversation is that it raises the sort of issues that you
raised on consolidation. It is not that we don't believe that
smaller IG offices shouldn't find ways to work with each other
or develop some sort of cross-servicing. We think that is
something which makes sense. But the bill in its current form
directs particular consolidations--and we thought that was a
case of a good intention that deserved some discussion before
we went further.
Senator Levin. What are the criteria, Mr. Gianni, that are
used in establishing these particular consolidations or
proposing these? What are the criteria that were used? Or since
you support it, what criteria do you think we should use?
Mr. Gianni. Well, I think I communicated that, in general,
there was some agreement, but there was also some disagreement.
I believe the jury is still out.
I believe what was put forth were some areas where
efficiencies could be acquired because many of my ECIE
colleagues are not in large Inspector General offices compared
to those IGs from departments and larger agencies. But at the
same point in time, there is a trade-off. There is the other
side of the picture. When you consolidate this responsibility
into a larger agency, there is the question of whether
oversight of the smaller agency would receive resources to show
some degree of monitoring. Loss of expertise and knowledge of
that specific agency could also occur.
So there are pros and cons. I think, as I looked at the
agencies that were identified, it appears that they might have
been trying to match up those agencies with like-minded larger
departments or agencies.
Senator Levin. Like-minded being similar types of
functions?
Mr. Gianni. Yes, similar types of functions.
Senator Levin. And if you applied those same criteria to
all of the IGs, would others fall in that same category?
Mr. Gianni. I think certainly so. One could conduct an
exercise of saying ``do we want to have some sort of a
reorganization and consolidation and mergers,'' and certainly
that process could take place. Now, whether that is going to
result in the end of having the degree of oversight both for
the agency and for providing the information that the Congress
needs to carry out its oversight, that is an open question.
Senator Levin. Thank you.
Mr. Mead. We did a survey of the Inspectors General, and
found that this is probably the most controversial component of
the entire proposal. I think it was a strongly held view that
it is important to have a presence at the smaller entities. But
when there are problems, you need the critical mass. And at
many of these agencies, there are just two or three people
there, which is not enough to undertake a comprehensive
investigation or audit.
On your question about the criteria, I think it was by
functionality. Just as an example, FLRA, the Federal Labor
Relations Authority, would have gone to OPM, the Pension
Benefit Guaranty Corporation into the Department of Labor, the
Federal Maritime Commission to us at DOT.
You are quite right that if you were to apply that criteria
government-wide, you could identify other opportunities for
consolidations. But there is a lot of disagreement over this
particular proposal.
Mr. Gianni. Senator, if I might, just a point of
clarification.
On the training for our agents at the academy, this is the
same academy that members from the ATF and the Secret Service
attend, and we receive the same certificates as they do. There
is a grading of their performance during that training.
Chairman Thompson. Gentlemen, thank you very much. This has
been very, very helpful.
It seems to me, just a point of overview, that basically
what we are considering here falls into two categories: One has
to do with the IG's relationship to the outside world, those
who do business with the Department and third parties, and what
that ought to be in coordinating that within Justice; and the
other has to do with the internal part of it with regard to its
own department head, and the difficulty in getting that right.
What we are doing, it seems to me, over a period of years--
and being in the last year of an administration I think helps
us to be a little more objective about it, hopefully--is
balancing the need for an administration to carry out its own
policies versus the need for someone inside there to keep close
tabs on what they are doing, not only from the standpoint of
waste, fraud, and abuse but some other gray areas, perhaps, and
to report to Congress.
I think it is like the other balance-of-power
considerations that we have. Sometimes they go this way and
sometimes they go that way.
My own feeling is that the Executive Branch has gotten so
big and so complex, and the Legislative Branch has gotten so
preoccupied with the budget process and everything else, and
has so little time to do oversight, that the balance is a
little out of whack in favor of the executive power and that we
need more right now than we have at some times in the past,
maybe, to have a little more independence from the IGs than we
have had, because Congress needs all the help that it can get.
And maybe even the head of an administration--obviously, they
don't know what all is going on. They need to help themselves
to monitor what is going on in all of these agencies and
departments that we continue to create.
So I think that is what we are talking about here when we
are talking about the term and how long it should be. We are
talking about the extent of independence that we need. And I
think we need to move in the direction of a bit more
independence than we have had. All the cases that we have had
up here recently have not been cases of the IGs just going in
and looking to create havoc without just cause. The cases have
been where the IGs are trying to do a decent job, and the heads
of departments have tried to squelch them, quite frankly.
So I think we are moving in the right direction. Thanks
again to Senator Collins and Senator Levin today, and perhaps
we can move on this.
Senator Collins, do you have any other comments?
Senator Collins. No, Mr. Chairman. I just want to thank you
so much for holding this hearing. I am grateful to the IGs for
the work that they do, and I think a lot of the issues are very
complex, and we need to strike the right balance. But I hope we
will be able to proceed this year, and I thank you for your
leadership.
Chairman Thompson. Thank you very much.
The record will remain open for 1 week for the submission
of other material.
We are adjourned.
[Whereupon, at 11:39 a.m., the Committee was adjourned.]
A P P E N D I X
----------
QUESTIONS FOR THE RECORD SUBMITTED BY SENATOR COLLINS AND RESPONSES
FROM MR. McFARLAND
The following questions submitted by Senator Collins are directed
to Mr. McFarland in his capacity as Inspector General for the Office of
Personnel Management:
Mr. McFarland. Madam Chairman, thank you for the opportunity to
comment on the questions for the record concerning S. 870, Inspector
General Act Amendments of 1999. Though I testified before your
Committee as the Chairman of the PCIE Investigations Committee, I am
answering your questions as the Inspector General of the Office of
Personnel Management. First, let me go on record as supporting the
overall bill. Below are my responses to each question you have asked:
Question 1. In 1997, the Permanent Subcommittee on Investigations
thoroughly examined the practices of the Treasury Department's
Inspector General, Valarie Lau. The Subcommittee found that Ms. Lau had
actually awarded two sole-source contracts to acquaintances of hers in
violation of standard contracting regulations. Other serious management
problems were also identified during the course of the Subcommittee's
investigation.
As a result of that incident, I have proposed in S. 870, The
Inspector General Act Amendments of 1999, that an external review be
conducted every 3 years of the operations of the Offices of Inspector
General, so that there will be a clear answer to the question, ``Who is
watching the watchdogs?'' Do you agree that an external review of the
Offices of Inspector General is appropriate?
Answer. I wholeheartedly support the concept of external
reviews of the entire operations of the Office of the Inspector
General (OIG). As I am sure you are aware, the OIGs are
subjected to an external peer review of the audit functions
every 3 years. In addition, as part of the proposed law
enforcement authority provisions you are now considering, we
are planning periodic reviews of investigative functions with
results reported to the Attorney General. An external review
encompassing the remainder of the OIG would attest to our
creditability to all interested parties. As the watchdogs of
the government, we need to be able to defend our operations at
all times.
Question 2. S. 870 also proposes a provision prohibiting Inspectors
General from accepting cash awards and bonuses to eliminate the
appearance of any impropriety resulting from acceptance of a bonus from
an agency head that the Inspector General is required to audit and
investigate. Do you support this prohibition?
Answer. I have always opposed bonuses for inspectors general
(IG). I believe they make it difficult for IGs to function in
the independent nature expected by the American public and
Congress. Additionally, acceptance of a bonus award would
indeed create a conflict of interest. Your provision is
strongly supported by the entire IG community.
Question 3. Although I am generally very reluctant to propose pay
raises for any Federal officials, in S. 870, I have included a
provision that would compensate the presidentially appointed Inspectors
General who would be affected by the bill's ban on accepting cash
awards or bonuses. I am aware that it is possible for deputy Inspectors
General to earn a higher salary than an Inspector General. To correct
this disparity, S. 870 proposes a salary increase from Executive Level
IV ($122,400) to Executive Level III ($130,200). Do you support this
provision?
Answer. I concur with the proposed change in salary levels
for IGs. Logically, the inspector general should be the highest
paid staff person in the OIG. In addition, this section of the
bill would provide incentives for retention and recruitment of
qualified IGs.
Question 4. The Inspectors General are currently required to report
their activities to Congress on a semi-annual basis. I have learned
from discussions with the Inspectors General that the production of
semi-annual reports is very resource-intensive. Thus, I have proposed
reducing this requirement to an annual report so that Inspectors
General may reallocate the volume of resources presently devoted to
report production to audits, investigations, and any other activities
the Inspectors General deem necessary. What is your position on
streamlining the reporting requirement in this manor?
Answer. I support the proposed streamlining of reporting. The
semi-annual report is a time consuming and demanding process.
By creating an annual report, we are ensuring reporting on a
timely basis while reducing the workload demands in the OIGs.
If more frequent reporting is necessary, the bill permits
congressional committees or GAO to require it. Most
importantly, an IG is mandated to keep the agency and Congress
fully informed and, therefore, additional reports may be issued
at any time.
Question 5. To enhance their independence from agency heads, I have
proposed, in S. 870, a term of office for the presidentially appointed
Inspectors General. Do you think that a term of office would be helpful
to send a signal to agency heads that the Office of Inspector General
is not a political post, and that there is a strong measure of
independence expected by law?
Answer. By making appointment terms that exceed the maximum of
8 years of a presidential administration, I believe the bill
provides a message to management that IGs are not political,
and, therefore, are independent from the political
considerations of an administration.
Question 6. In S. 870, I have suggested consolidating smaller
Offices of Inspector General into larger offices that perform similar
programmatic reviews. One of the bases for this provision is that
offices with the equivalent of one, two, or even three employees cannot
fulfill the intent of the Inspector General Act. I would like to hear
your thoughts on the objective of making the Offices of Inspector
General more efficient and true to their mission through consolidation.
Answer. I concur with the concept of consolidation for the OIGs
that employ a limited number of staff. When such a
consolidation does in fact take place, it will be incumbent on
the accepting larger OIG to make sure that the mission of the
smaller agency remains a paramount concern and is not relegated
to a lesser status of importance.
I feel that S. 870 addresses many of the issues the IG community
has faced in the last 10 years. Please feel free to contact me if there
are any questions.
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