[Senate Hearing 109-113]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-113

                   NOMINATION OF HON. LINDA M. COMBS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                 ON THE

NOMINATION OF HON. LINDA M. COMBS, TO BE CONTROLLER, OFFICE OF FEDERAL 
         FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET


                               __________

                              MAY 25, 2005

                               __________

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs



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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia

           Michael D. Bopp, Staff Director and Chief Counsel
            Jennifer A. Hemingway, Professional Staff Member
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
         Adam R. Sedgewick, Minority Professional Staff Member
                      Trina D. Tyrer, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Coburn...............................................     1
    Senator Lautenberg...........................................     6
    Senator Carper...............................................     7

                                WITNESS
                        Wednesday, May 25, 2005

Hon. Linda M. Combs, to be Controller, Office of Federal 
  Financial Management, Office of Management and Budget:
    Testimony....................................................     3
    Prepared statement...........................................    15
    Biographical and financial information.......................    17
    Responses to pre-hearing questions...........................    28

                                APPENDIX

Senator Burr, prepared statement.................................     2
Senator Dole, prepared statement.................................     2

 
                   NOMINATION OF HON. LINDA M. COMBS

                              ----------                              


                        WEDNESDAY, MAY 25, 2005

                                       U.S. Senate,
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:31 p.m., in 
room SD-562, Dirksen Senate Office Building, Hon. Tom Coburn, 
presiding.
    Present: Senators Coburn, Carper, and Lautenberg.
    Senator Coburn. The hearing will come to order. Good 
afternoon.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. The purpose of today's hearing is to 
consider Linda M. Combs to be Controller, Office of Federal 
Financial Management, Office of Management and Budget. It is 
the responsibility of the Controller to carry out the financial 
management policy of the Federal Government. I believe this is 
a key position in government because the Controller is one of 
the primary Federal officials responsible for ensuring that 
taxpayers' dollars are being spent wisely.
    It is my hope that under Ms. Combs' leadership government 
spending practices will become much more transparent and much 
more accountable. Furthermore, I am confident that she will 
make every effort to reduce waste, fraud and abuse and 
mismanagement throughout the Federal Government.
    President Bush nominated Ms. Combs for this position 
because she possesses the experience, training and motivation 
to oversee the U.S. Government's financial management 
practices. Given that Ms. Combs has extensive experience 
working in the Federal Government in numerous departments where 
she had oversight authority for financial management and the 
budget, I believe this makes her a very credible choice to be 
the next Controller.
    I would like to say that both Senator Dole and Senator Burr 
from your home State send their best wishes. Senator Burr 
actually came to me and apologized that he could not be here to 
introduce you. They both send their best wishes and regrets 
that they could not be here today. They both have submitted 
written statements for the support of your confirmation that 
will be entered into the record, and there is no objection to 
that.
    [The prepared statements of Senators Dole and Burr follow:]

                   PREPARED STATEMENT OF SENATOR DOLE

    It is with great pleasure that I introduce Dr. Linda M. combs, who 
has been appointed by President George W. Bush to be Controller for the 
Office of Management and Budget (OMB). I am honored and pleased to give 
my support for the appointment of Dr. Combs, who is a fine North 
Carolinian. I am very confident that she is well qualified for this 
important position, which is responsible for financial management of 
the Federal Government.
    If confirmed as OMB Controller, Dr. Combs will be responsible for 
leading the Office of Federal Financial Management and will provide 
government-wide leadership for strengthening financial management in 
Federal agencies and programs. The Controller will lead the Improved 
Financial Performance Initiative for the President's Management Agenda, 
which focuses on bettering the quality and timeliness of Federal 
financial information. I am confident that Dr. Combs possesses the 
critical leadership skills needed to succeed in this position.
    Dr. Linda Combs currently serves as the Assistant Secretary for 
Budget and Programs and Chief Financial Officer of the Department of 
Transportation (DOT). In this role, she has significant experience with 
oversight and management of all budgetary functions for the Department 
of Transportation. Dr. Combs was responsible for oversight of the 
Department of Transportation's $57 billion appropriation, the 
government Performance and Results Act, as well as general monitoring 
of programs. During her tenure as Assistant Secretary, the Department 
of Transportation was the first Cabinet level Department to achieve 
four coveted ``green'' scores on the President's Management Agenda.
    Prior to her appointment to the Department of Transportation, Dr. 
Combs served as Chief Financial of the Environmental Protection Agency 
from 2001 to 2003. She has been successful in various oversight roles 
and executive level management positions at the Departments of 
Education, Veterans Affairs, and Treasury, where she has garnered years 
of experience and management skills, which further qualify her for this 
appointment.
    Dr. Combs is a well-respected and valued member of the North 
Carolina family. She served more than 10 years in the Winston-Salem/
Forsyth County school system. Dr. Combs earned an Associate of the Arts 
degree at Gardner-Webb University, Bachelor of Science and Masters 
degrees from Appalachian State University, and a Doctorate in Education 
Administration from Virginia Polytechnic Institute and State 
University. She is also a graduate of the Program for Senior Managers 
in Government at Harvard University.

                               __________

                   PREPARED STATEMENT OF SENATOR BURR

    Mr. Chairman, it is an honor to introduce to you Linda Combs of 
North Carolina, nominated to be the next Controller of the Office of 
Federal Financial Management at the Office of Management and Budget.
    A resident of my hometown of Winston-Salem, N.C., I know that Linda 
will continue to serve this President with honor and distinction, in 
the same manner that she has loyally served her community.
    Linda has been the president of Combs Music International in 
Winston-Salem and has served on various boards since 1991. She is also 
a former member of the Winston-Salem/Forsyth County Board of Education.
    At the U.S. Department of Education, she was the Executive 
Secretary from 1982 to 1984 and the Deputy Under Secretary for 
Management from 1984 to 1986.
    From 1986 to1987, Ms. Combs returned to the great state of North 
Carolina to serve Governor James Martin as an advisor.
    From 1987 to 1989, she was Associate Administrator for Management 
at the Department of Veterans Affairs and from 1989 to 1991 she served 
at the U.S. Department of the Treasury, as Assistant Secretary for 
Management, and on the President's Council for Management Improvement.
    Beginning in 1990, she concurrently held the position of Chief 
Financial Officer of the Department of the Treasury.
    She previously was CFO at the Environmental Protection Agency and 
during President George H.W. Bush's administration was Assistant 
Secretary for Management and CFO at the Treasury Department.
    Most recently, Ms. Combs served as the CFO and Assistant Secretary 
of Transportation for Budget and Programs.
    Throughout her career, Linda has won several awards. She was the 
recipient of the Department of Education Secretary's Citation and the 
Exceptional Service Awards at the Department of the Treasury and the 
Department of Veterans Affairs.
    Ms. Combs holds a bachelor's and a master's degree from Appalachian 
State University and a doctorate degree from Virginia Polytechnic 
Institute and State University, and chairs the Board of Directors of 
the Appalachian State University Foundation.
    I have no doubt that Ms. Combs will prove to be an asset to the 
Office of Management and Budget.

    Senator Coburn. As I mentioned in my opening remarks, this 
nominee has an impressive resume that will prepare her well for 
this important position. Linda Morrison Combs has filed 
responses to biographical and financial questionnaires, 
answered pre-hearing questions submitted by the Committee, and 
had her financial statements reviewed by the office of 
Government Ethics. Without objection, this information will be 
made part of the hearing and, with the exception of the 
financial data that are on file and available for public 
inspection in the Committee's offices.
    Our Committee rules require that all witnesses at 
nominations hearings give their testimony under oath. Ms. 
Combs, at this time if you would, please stand and raise your 
right hand.
    Do you swear that the testimony you are about to give is 
the truth, the whole truth, so help you, God?
    Ms. Combs. I do.
    Senator Coburn. Ms. Combs, I understand that you have 
family members present that you might want to introduce. Please 
feel free to do that.
    Ms. Combs. Yes, I do. Senator Coburn, I would like to 
introduce my husband, David M. Combs.
    Senator Coburn. David, welcome. I bet you are proud. We 
welcome you to this hearing today and I would ask that you 
proceed with your opening statement at this time.

 TESTIMONY OF HON. LINDA M. COMBS,\1\ TO BE CONTROLLER, OFFICE 
   OF FEDERAL FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND 
                             BUDGET

    Ms. Combs. Thank you, Senator Coburn and Members of the 
Committee. I really appreciate the opportunity to appear before 
you today as you consider my nomination for the position of 
Controller of the Office of Management and Budget within the 
Executive Office of the President.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Combs appears in the Appendix on 
page 15.
---------------------------------------------------------------------------
    It is an honor to be here and I am privileged to have been 
nominated by President Bush to this post.
    As you mentioned, Senator Coburn, given the specific duties 
and responsibilities under the Chief Financial Officers Act of 
1990, the OMB Controller position is an especially important 
one in the Federal Government today.
    If confirmed it will indeed be my goal to carry out those 
responsibilities and to continue the work and the efforts that 
are underway to achieve the most meaningful results in Federal 
financial management and performance throughout government.
    I look forward to working with you and other Members of the 
Committee as we find solutions that may not have been thought 
about to date.
    In each of my previous positions in the Federal Government, 
I have been guided by one singular overriding principle, that 
public service is indeed a public trust. So I pledge to you and 
to my fellow Americans today my continued commitment to 
upholding these high standards of honesty, fairness and 
integrity. The American people deserve no less from those of us 
who are very fortunate to be able to serve in such honored 
positions.
    I thank you, Senator Coburn, for the great opportunity to 
appear before you today and I look forward to answering any 
questions you or any other Members of the Committee may have. 
And in deference to your time and the time of this Committee, I 
ask that the remainder of my statement that was presented to 
the Committee be presented in its entirety and entered into the 
record.
    Senator Coburn. It will be, without objection.
    Ms. Combs, I have some questions, some are boilerplate that 
we will go through, and then I have some very specific 
questions for you.
    Is there anything you are aware of in your background which 
might present a conflict of interest with the duties of the 
office to which you have been nominated?
    Ms. Combs. No, sir.
    Senator Coburn. Do you know of anything, personal or 
otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Ms. Combs. No, sir.
    Senator Coburn. Do you agree without reservation to respond 
to any reasonable summons to appear and testify before any duly 
constituted committee of Congress if you are confirmed?
    Ms. Combs. Yes, sir.
    Senator Coburn. We will start with specific questions and 
since I get to have the Chair, as well as be the only person 
here at the present time, I have several questions that I would 
like to ask you.
    Tell me what your top priorities will be if you are 
confirmed as Controller of the Federal Financial Management at 
OMB?
    Ms. Combs. Senator Coburn, my absolute top priority is to 
bring first-class financial management to the entire Federal 
Government. I think that there are many opportunities where we 
have to increase our fiscal accountability and discipline. As 
you and I had the opportunity to discuss this morning, I have 
been blessed to serve in a number of other departments and 
agencies. And I hope to help other departments and agencies 
throughout government be able to do some of the things that we 
were able to do in some of the other departments, as well.
    Senator Coburn. I am very happy to see that the Ranking 
Member of the Federal Financial Management, Government 
Information, and International Security Subcommittee, Senator 
Carper, has joined us. If you would care to make an opening 
statement, we would love to have that now.
    Senator Carper. I do not have an opening statement at this 
time, but what I would welcome is the opportunity to ask some 
questions of our witness. I welcome her today. Thank you.
    Ms. Combs. Thank you, Senator.
    Senator Coburn. I will finish my first round and then we 
will go to you, if that is OK.
    Tell me your thoughts about the termination of the Joint 
Financial Management Improvement Program.
    Ms. Combs. The Joint Financial Management Improvement 
Program, as I understand it, the principles are still in place 
with the JFMIP and will meet and discuss various matters that 
need to come before the Committee.
    I also understand that I have not had an opportunity to 
fully explore that. And if given the honor of confirmation, I 
will certainly commit to explore the entire transition that 
took place, which I believe was in December 2004.
    Senator Coburn. You and I have discussed, as a matter of 
fact this morning, on transparency in the Federal Government. 
Several people have questioned, with the elimination of the 
Joint Financial Management Improvement Program, that 
transparency might be less rather than better. And their 
concern is how do we, as citizens, know what the government is 
doing without transparency and without accountability?
    I can tell you in Subcommittee hearings that Senator Carper 
and I have both already had, in terms of getting transparency 
just from USAID, the last information we can get from them on a 
malaria program is 2001. That is unacceptable here. Presently, 
I am having difficulty getting the Corps of Engineers to give 
us a budget.
    The fact is that any good management system has that out 
there. It is the public information, it cannot be guarded. And 
when it is guarded and it is guarded inappropriately, that 
raises red flags in Congress, I assure you.
    I just would wonder how you would respond. How are we going 
to get to the point where you can get online and you can find 
out what every section, every action, other than intelligence 
and maybe certain areas of the military, how they are spending 
taxpayers money?
    Ms. Combs. As you know from our brief conversation this 
morning, we both are indeed committed to transparency. It is 
quite ironic that in our audience today I was chatting with 
some folks who just happened to be here from the State of 
California. And I was able to talk with them for just a few 
moments about some of the things that we are doing in 
results.gov.
    We are moving forward in terms of transparency and I 
certainly am committed to any transparency that will not only 
show the American people, our fellow taxpayers, and us exactly 
what the results are of what we are doing in the Federal 
Government.
    I have that major commitment, along with you, and look 
forward to working with you and your staff to answer the 
specific problems that you have encountered as well as a more 
overall transparency situation.
    Senator Coburn. When an improper payment should occur, what 
are the steps adopted to attempt recovery of such sums?
    Ms. Combs. There are a couple of steps here and I really 
look forward to working with you and the Committee on this 
because this is really--it was a hot button for me when I first 
came back into government in 2001 after being out for 10 years.
    One of the things I realize that if we can avoid making 
those payments to begin with, that is a good first step. We had 
put that out through the offices at EPA. And I am pleased to 
report to you that not only are there some individual 
circumstances that I could cite to you of how payments were not 
made in error because of controls and measures that we put in 
place, but because of sensitivities that we engaged the 
workforce in.
    A lot of consolidation was done relative to where the 
payments are made and how they are made. And I have some 
wonderful stories that I would love to share with you and your 
staff about how these improper payments were avoided to begin 
with.
    At EPA the actual improper payments rate today is less than 
0.5 percent. And I say to you that is one, because of 
commitment of a great workforce that we engaged and we engaged 
properly, putting wonderful controls in place. Obviously, it 
does not happen 100 percent of the time. We have less than 1 
percent, but still that is more than we need to have.
    So the one thing you can do following that is to engage 
companies to come in who will do an assessment of these 
improper payments. And they will do it based on how much they 
recover. They are called recovery audits. I actually checked up 
on some of the recovery audits as I was preparing to come and 
talk with you folks today. And I learned from EPA that they had 
a recovery audit even on that 0.5 percent. There is no reason 
we cannot do that in every department and agency and have that 
commitment.
    Senator Coburn. Thank you. My time is expired.
    I welcome Senator Lautenberg, and if you have an opening 
statement, now would be a great time.

            OPENING STATEMENT OF SENATOR LAUTENBERG

    Senator Lautenberg. I appreciate that, Mr. Chairman and I 
am delighted to have a chance to be here to take a few minutes 
to talk about Ms. Combs and the position that she is going to 
assume. And obviously, we welcome her here.
    The position for which you have been nominated, Controller 
for the Office of Federal Financial Management, is obviously 
very important. And we make that statement based on some of the 
experiences that we see, unfortunately, on a continuing basis.
    The office is responsible for establishing government-wide 
financial management policies of executive agencies government-
wide. Now I have spent a fair amount of time in the business 
world before I came here and financial management was a big 
part of our business. You try to watch everything that you can. 
There are things, no matter how careful one might be, no matter 
how intricate or appropriate the system is, the fact of the 
matter is that there is a part science in the financial 
management. The critical incidents review is when there are 
things that you look for that trigger further review or 
expansion.
    What I see happening and what I have seen happening is that 
in some parts the errors or the waste is of major magnitude. 
Again, I do not believe that in an organization the size of our 
government that we can ever get down to the last nickel and 
dime. You forego that.
    But the Defense Department gives out contracts and they are 
not adequately examined by Congress or the Executive Branch, in 
my view, and I am talking particularly about Halliburton's 
contract in Iraq. Halliburton was awarded a no-bid contract 
worth $2.5 billion and a cost-plus contract worth more than $7 
billion.
    Now both of these contracts have been riven with waste, 
fraud, and abuse, to use the common term. A typical example is 
Halliburton, in overcharging the government by $1.09 a gallon 
for 57 million gallons of gasoline.
    Other incidents, they paid $45 for cases of soda that 
supermarkets sell for $7. And we are talking about huge 
numbers.
    In response to this charge, Army auditors recommended that 
Halliburton be punished. They said DOD should withhold 15 
percent of future payments to offset these overcharges. But 
instead of administering punishment to Halliburton, the 
Pentagon rewarded it with $72 million in bonuses.
    Now that is giving the fox in the chicken coop some more 
hens for a dish. And I find it inexplicable. I think the 
policies and procedures that allowed it to happen need severe 
scrutiny and review.
    And Dr. Combs, I think it is essential that in this new 
position that you do that. I would like to explore it more 
specifically but it is fair to say that we need to really crack 
the whip on DOD here and demand some accountability.
    And finally, Mr. Chairman, we know that Senator Voinovich 
is doing some excellent work in his Subcommittee to take a 
close look at DOD's business practice and I know that he will 
continue to work diligently, as we should here. And I commend 
you for doing this.
    When we get to questions, I have a few questions.
    Senator Coburn. I want to assure the Senator that we are 
going to look at every nook and cranny on our Subcommittee. 
Senator Carper and I, we are going to work joined at the hip to 
do that.
    I might note for the record that we had testimony from 
General Walker that the Pentagon has a 10 percent mispayment 
rate, $5 billion that they did not pay for and $35 billion that 
they paid for that they should not have. So we have a lot of 
work to do at the Pentagon in terms of cleaning up this mess. I 
will assure you that we will do that.
    I would like to recognize Senator Carper now.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thanks, Mr. Chairman. I would like to ask 
unanimous consent that my statement be submitted for the 
record.
    Senator Coburn. Without objection.
    [The prepared statement of Senator Carper follows:]

                  PREPARED STATEMENT OF SENATOR CARPER

    Thank you, Mr. Chairman. We have before us today a very important 
nomination. Financial management has hardly been one of the Federal 
Government's strengths, unfortunately. According to the Office of 
Management and Budget's latest scorecard, while progress is being made, 
most agencies continue to receive failing grades for financial 
performance.
    This is probably the major reason why we've been unable to get a 
clean audit opinion on the Federal Government's combined financial 
statement for some time now. Many people probably read about this and 
other Federal financial management problems in the paper, Mr. Chairman, 
and shrug our shoulders and move on. I think most of our constituents 
assume that the Federal Government isn't a good steward of their tax 
dollars and believe little can be done about it.
    I believe we can do better. We need to do better. Poor financial 
management has a real impact on the Federal budget. It also leads to 
waste and, a time when the budget deficit is rising and every dollar is 
precious, cheats worthy programs of much-needed funding that could be 
used to help people.
    I was shocked to learn at a recent hearing Senator Coburn and I 
held on the President's Management Agenda that the Federal Government 
makes about $45 billion in improper payments each year. We just can't 
afford to allow management weaknesses to be such a drain on resources.
    I believe Linda Combs recognizes this. She has a distinguished 
record of service at a number of agencies. This includes her recent 
service as Chief Financial Officer at both the Environmental Protection 
Agency and the Department of Transportation. I've had the pleasure of 
meeting with Ms. Combs one-on-one and look forward to hearing some more 
today about her qualifications and her views on how we can continue to 
improve financial management across the Federal Government.

    Senator Carper. Thank you, sir.
    Ms. Combs welcome and thank you for being here.
    You look at the size of the audience and we have had more 
people in this Committee hearing room in other instances. 
Sometimes it is when there is controversy. So when you look 
around and you do not see a packed house, it might actually be 
a good sign rather than a bad one.
    What I would like to do today is, first of all, just ask 
you what do you think, what kind of skills, attributes should 
we be looking for and should the President be looking for in 
filling this position?
    Ms. Combs. I think the skills that are necessary to be a 
Controller are twofold. One, a commitment to honesty and 
integrity, a commitment to instilling in every other CFO the 
idea that we truly, as a Federal Government, can be a first-
class financial institution. We do not have to continue to look 
at situations that persist in various departments and say I do 
not think we can do anything about that.
    I think we have to instill and change the culture and 
change the attitudes of our fellow legislative people, as well 
as our Executive Branch folks, and work together and have a 
tremendous commitment to doing something that has not been done 
before.
    And I think the commitment is the number one priority.
    The number two priority, I think, of a controller or a CFO 
in any of these other departments and agencies is to garner the 
respect for controls and fiduciary responsibilities and make 
sure that everyone who works in those departments and agencies 
believes that part of their responsibility is financial and 
fiduciary, not just programmatic.
    I think if we could start there with a great elevation of 
thought and ideas and vision, I think we could achieve a whole 
lot. And I am really looking forward, assuming I am confirmed, 
to being able to do that.
    Senator Carper. Given the criteria you have laid out, how 
do you measure up to those standards in terms of what we are 
looking for? And I admire modesty but this is not a time to be 
modest.
    Ms. Combs. I think standards are very important. They are 
very critical. And one of the things that I have done, 
particularly in the last two positions, the two CFO positions I 
have held in this Administration, is put a number of metrics 
out there that we hold people accountable for in the 
departments and agencies in which I have served.
    I actually worked as a subcommittee chair on the Chief 
Financial Officers Council, as well, to put into play eight 
financial metrics across government. We CFOs got together and 
we decided there were certain metrics that every departmental 
CFO needed to have that would show that they were doing a good 
job managing their finances. And they were very rudimentary for 
many of us who worked in a banking industry or other industries 
like that in the past. Yes, they were rudimentary. Are you 
balancing your books on time? And I would love to share those 
with you at a later date.
    But they do wonders for pulling the organization together 
into a way of saying, hey, these are things we can agree upon, 
that everybody in this department has responsibility for these 
particular areas. So whether your responsibility is in a 
program or whether it is in a financial office, you have 
responsibility for finances as well.
    Senator Carper. In talking with others about you, I heard 
from them that you have very good financial skills. They have 
also talked about your remarkable skills in mathematics. I was 
just wondering what might be the genesis of your interest in 
mathematics and your understanding and your facility with 
mathematics?
    Ms. Combs. Thank you, Senator. Unbeknownst to probably a 
couple of other Members on the Committee, when Senator Carper 
and I met, we realized that Senator Carper's father-in-law, Dr. 
Starr N. Stacy, Jr., taught me math at Appalachian State 
University, and specifically probability. And he was a most 
inspiring teacher, and a most inspiring leader.
    And even though I went into education after that, I have 
always come back to many of the things that he taught me. He 
was such an inspiring person. And after our visit, I actually 
went back and looked him up in the annual. And yes, he was 
exactly as I remembered how he looked, and I was able to share 
my thoughts with your wife.
    Senator Carper. I was pleased to share with my wife the 
kind words you had to say about her father. She thinks that she 
has grown up to be just like him. And she is my teacher too, in 
a lot of ways.
    Senator Lautenberg. You inherited this from your father-in-
law.
    Senator Carper. I suppose. I do not know.
    A more serious question. You mentioned financial officers 
and CFOs. You served in government, both before and after the 
passage of the 1990 Chief Financial Officers Act. I just 
wondered if you could share with us what impact you think those 
reforms have had that were included in the bill, and also in 
the President's Management Agenda? And how have you seen it 
impact on our Federal financial performance?
    Ms. Combs. I think the President's Management Agenda has 
done an awful lot to pull departments and agencies together and 
to focus on four or five discrete elements that we can all 
agree are the things we are going to work hard on. And I am 
pleased one of these is financial management, of course. That 
has done a great deal to bring a focal point to where we all 
want to go in this Administration.
    The CFO Act itself, since it was passed in 1990, and yes, I 
was the first CFO at the Department of Treasury at the time. 
And it was a watershed moment. And one of the things that I 
have done after coming back into government in 2001 after a 9 
or 10 year hiatus between 1991 and when I came back in 2001, is 
to look at the differences. What are the things that have 
happened? Well, there was other additional legislation also 
that was passed in the 1990's.
    But, when I came back to EPA and looked at the CFO Act of 
1990, I did just what you suggested. What has changed? What has 
made a difference?
    One of the things that, in reading the CFO Act and 
rereading it again, you realize the people who worked on that 
at the time really had a great command for what could and 
should be done in Federal departments and agencies. And even 
now, I have looked at the tenets of the CFO Act and have used 
those to formulate some of the things that I put into place, 
both at EPA and at the Department of Transportation, in terms 
of holding people accountable for their financial duties, and 
putting financial people in place. The CFO Act gives CFOs a 
tremendous responsibility for seeing that the right people are 
in the other subsidiary CFO positions within the departments 
and agencies as well.
    It is up to a good CFO to decide what kind of people you 
need in those specific fiduciary roles; to put the processes in 
place that you need to put in place and hold people 
accountable; and to put the tools in place, whether it is new 
IT tools or whether it is other mechanisms that will help you 
manage an organization better.
    Each one of the tenets of the CFO Act spells out in great 
detail how that can be done. And I think taking it very 
seriously and honoring the Act, in and of itself, both in the 
spirit as well as the actual concept of the law, gives CFOs and 
the Controller a great deal of latitude and responsibility.
    Senator Carper. Thank you.
    Senator Coburn. Senator Lautenberg.
    Senator Lautenberg. Thank you, Mr. Chairman.
    If you saw me smiling when you heard Senator Carper ask you 
the questions about what qualities you think should be there 
for someone in this position, I once asked a nominee for a 
District Court judgeship about that. And I said what qualities 
do you think we ought to be looking for in someone sitting on 
the bench. And he said all the ones I have got.
    On the very serious side of things, Sarbanes-Oxley, we will 
not argue how it got started and the necessity of it. But to 
me, and I came out of the business world and ran a pretty good-
sized company, the one thing that I saw that threaded through 
the whole notion of establishing the law was that it was to say 
to companies, tell the truth. Tell the truth.
    And the chief executive now, I think in most cases, has to 
sign off on the financial statement. And I think it should be 
that way. And again, I am not defending the law. But what I am 
defending is the notion that people have to tell the truth.
    In government it is a particularly tortuous proposition 
because there are so many people involved, departments 
involved, and so forth.
    But I assume that you are aware, Dr. Combs, of the fact 
that contracting abuses have taken place in Iraq.
    Ms. Combs. I have read quite a bit about it, as you have, 
in the media.
    Senator Lautenberg. Do you think some of that again, and 
this may be pointed, but I think as they say if the shoe fits, 
that no-bid contracts are appropriate unless it is a dire 
emergency? Do you think that you can control things well if you 
give a contract out with no bid, no indication some other 
company might be able to do it better?
    Ms. Combs. I think there are a lot of avenues that we have 
to explore in contractual management. You mentioned the skills 
a moment ago of people in specific jobs. Obviously people who 
have contractual responsibilities need to know what the 
vehicles are and to work through them in an appropriate way.
    But the one skill that absolutely must be in all of these 
roles and responsibilities is the ability to manage large 
contracts such as that. So that is something that I would 
certainly need to take a look at from a policy perspective.
    Senator Lautenberg. I would urge you to do it because if we 
know A, where we are going; and B, how we get there, and that 
is the best way to find out things is competitively. If there 
is no one else to do the work, then the choices are limited. 
But if there are other people who can do the same work--and 
another question, in terms of financial structuring, the cost-
plus contracts.
    There were instances, and we have had whistleblowers 
testify and lots of sources of information, about the total 
abandonment of care and caution and in spending because it has 
been said, according to testimony that we had, that people 
would say do not worry about it, throw perfectly good things 
away. We are going to get paid for it. There was talk even of 
abandonment of vehicles because the truck was stuck with a flat 
tire, an $80,000 vehicle. Just forget about it and go.
    On these LOGCAP contracts, there has to be some mechanism 
to say it is cost-plus but the cost has to first be verifiable 
and worry about the plus at a later time.
    Will you have a chance to review the policies that led to 
Halliburton being paid bonuses despite findings that it 
overcharged the government? And again, the findings were 
released by the Department of Defense, that said you have 
overcharged us $60 million for the gasoline and we are going to 
take it back. And then there was apparently other information 
that came back and said no, we should not take it back.
    I would appreciate it if you could make a commitment here 
that you will review the policies that led to Halliburton being 
paid bonuses despite findings that it overcharged the 
government. Is that something you can commit to?
    Ms. Combs. Senator Lautenberg, I think my overriding 
responsibility here is certainly to see that the dollars of 
every taxpayer are monitored and looked at appropriately. I see 
this as an over-encompassing role. I see that every taxpayer's 
dollar needs to be spent appropriately. And I am making a 
commitment to go into that.
    Senator Lautenberg. I would ask you to review the past so 
that we, as is said, can look at the future with a little more 
experience to throw into our judgment.
    Ms. Combs. Thank you.
    Senator Lautenberg. Thanks, Mr. Chairman.
    Senator Coburn. Thank you, Senator Lautenberg. Let me 
follow up on Senator Lautenberg's questions.
    Is there a policy within the Federal Government now on 
cost-plus bids or no-bid contracts, where they will have post-
purchase review?
    Ms. Combs. Senator Coburn, I do not know the answer to 
that, but I will commit to finding that out.
    Senator Coburn. Would you get the answer to that for this 
Committee? And if there is not, there certainly should be, 
because just the thought of a post-contract review will change 
a lot of behavior.
    Ms. Combs. Yes.
    Senator Coburn. As I know you are aware, OMB has not 
succeeded in implementing the President's Management Agenda 
initiative. In fact, OMB has the worst performance of the 24 
agencies included in the last scorecard. OMB's Deputy Director 
for Management, Clay Johnson, indicated that OMB is having 
particular difficulty improving its financial performance 
because it is tied to the Executive Office of the President, 
which is not required to have an annual financial statement 
audit.
    I would appreciate it if you would provide the Committee 
with an explanation as to why the Executive Office of the 
President is not subject to the requirement for an annual 
financial statement audit? And is there any way to separate out 
the different organizations within the Executive Office of the 
President so they can be scrutinized?
    Ms. Combs. I will be more than happy to look into that and 
work with you and provide what you need on that.
    Senator Coburn. And then my final questions really have to 
do with credit card purchases. We have seen a lot with that. 
How can we best restrain open-ended spending by employees using 
government purchasing cards? And what steps can we take to 
reduce the purchase card program's vulnerability to wasteful, 
improper and questionable purchases?
    Ms. Combs. That was something, as well, that I worked very 
hard on, both at the EPA as well as the Department of 
Transportation, and was able to make a lot of headway in 
reducing those numbers that we had presented. We had a number 
of problems with those when I went into both of those 
organizations. And now I am pleased to say that their numbers 
are some of the best in government.
    So I have a very strong commitment for that and it is 
actually one of the metrics that we look at government-wide.
    Senator Coburn. You are talking about re-creating 
reimbursement concepts for employees expenditures; is that 
correct?
    Ms. Combs. Yes.
    Senator Coburn. Senator Carper.
    Senator Carper. I just want to revisit briefly an area we 
have already had some discussion on and it is the Department of 
Defense. We were led to believe, I think GAO noted in January 
in their high risk update, that tangible evidence of 
improvement in DOD's financial management can only be seen in a 
few areas.
    Given how much money we are spending in defense--in fact, I 
understand we spend more on defense now than the rest of the 
world combined. That is a lot of money. And in any big 
organization there is opportunities to spend money poorly, 
wastefully, and so forth. My guess is the same is obviously 
true in the Department of Defense.
    Any thoughts that you might have beyond what you have 
already said, or just to reiterate what you have already said, 
in what we might do to help clean up DOD's books? I know you 
have served well at EPA and DOT and elsewhere. Just talk about 
some of the things again that could be applied from your 
previous experience and what we could apply at DOD.
    Ms. Combs. I think one of the things that we must do, DOD 
is a very complex organization, I do not need to tell you that. 
We all understand that.
    But any time you have a complex problem, whether it is in 
life or whether it is in finances, it has to be broken down 
into manageable parts. And broken down in such a way that you 
have a committed group of people working on each piece of it, 
so that you come together at the end and you have exactly what 
you envision, clean audits, no material weaknesses and many of 
those things that we have talked about and are committed to.
    And I think without us working together and coming up with 
those solutions, and working with the Department of Defense, 
that probably is not going to happen or going to happen in our 
lifetimes or in our tenure.
    But what I would like to do is to work with the Committee 
and to continue the work that we would normally be doing from 
OMB with DOD and work toward a great solution. And maybe it is 
not time driven. A lot of times we get hung up on when is it 
going to happen? Maybe there is another creative solution that 
we have not thought about. Maybe there is some percentages of 
work that we could be pleased with if they get to a certain 
percentage point.
    I do not know what it is, but I am certainly more than 
willing to commit to work with the Committee.
    Senator Carper. Thanks very much.
    Senator Coburn and I bring to these two positions a 
commitment to doing what we can to ratchet down the Federal 
budget deficit. It is alarming to me and I know it is to him 
and I suspect everyone in this room, that our budget deficit is 
so high. We know that in some cases we are spending money that 
we do not have. In other cases, we are spending money for 
things that are inappropriate or may be unlawful. In other 
cases, monies that should be collected as revenues are not 
being collected.
    We are determined to do what we can with this little 
Subcommittee of ours to try to make progress in all of those 
areas.
    We have spoken with the Comptroller General, David Walker, 
to enlist his cooperation and to see how we might partner with 
GAO. I would not pretend to speak for both of us, but I would 
welcome a similar kind of partnership with you and the folks 
that you're going to be leading. We wish you well.
    Thank you for returning to government service, the service 
of our people. And good luck.
    Senator Coburn. Thank you, Senator Carper.
    My staff advises the IG at VA has recommended pre- and 
post-audits for contacting at the VA. So you might want to look 
at that.
    One other question. I just want to get a commitment for 
this Committee from you that as we seek to find out what we 
need to know to help you do your job that you will be a conduit 
for us for assisting us in finding the numbers. The most 
frustrating thing for me is to ask an agency for their numbers 
and, first of all, be told you cannot have them. Number two is 
we do not have them.
    Well, if they do not have them, then we have got much 
bigger problems than what we think we do. I would just like a 
commitment from you for both Senator Carper and myself. Our 
goal is we are after the waste and the inefficiencies. It is 
not partisan at all. Money that is wasted hurts everybody in 
this country. We are committed to that. And I would like a 
commitment from you that when we are stuck, we want to be 
coming to you. We want the pressure run down the flagpole so we 
get what we need.
    Ms. Combs. I hope you will call me. I almost hope you call 
me as a first resort, because I would love to know what you are 
trying to get and see if we can help you, because what you told 
me this morning I find unacceptable.
    Senator Coburn. Thank you again for coming. We appreciate 
your willingness to serve this country and the hearing is 
adjourned.
    [Whereupon, at 3:13 p.m., the Committee was adjourned.]


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