[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



   HEARING ON ASSESSMENT OF ADMINISTRATIVE COMPLIANCE WITH INTERNAL 
                                CONTROLS

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

                                HEARING

                               before the

                           COMMITTEE ON HOUSE
                             ADMINISTRATION
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                  HELD IN WASHINGTON, DC, MAY 21, 2008

                               __________

      Printed for the use of the Committee on House Administration


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                   COMMITTEE ON HOUSE ADMINISTRATION

                ROBERT A. BRADY, Pennsylvania, Chairman
ZOE LOFGREN, California              VERNON J. EHLERS, Michigan
  Vice-Chairwoman                      Ranking Minority Member
MICHAEL E. CAPUANO, Massachusetts    DANIEL E. LUNGREN, California
CHARLES A. GONZALEZ, Texas           KEVIN McCARTHY, California
SUSAN A. DAVIS, California
ARTUR DAVIS, Alabama
                 S. Elizabeth Birnbaum, Staff Director
                 Will Plaster, Minority Staff Director

 
                ASSESSMENT OF ADMINISTRATIVE COMPLIANCE
                         WITH INTERNAL CONTROLS

                        WEDNESDAY, MAY 21, 2008

                          House of Representatives,
                         Committee on House Administration,
                                                    Washington, DC.
    The committee met, pursuant to call, at 11:04 a.m., in Room 
1310, Longworth House Office Building, Hon. Robert A. Brady 
[chairman of the committee] Presiding.
    Present: Representatives Brady, Lofgren, Capuano, Davis of 
California, Ehlers, Lungren, and McCarthy.
    Staff Present: Liz Birnbaum, Staff Director; Charles 
Howell, Chief Counsel; Matt Pinkus, Professional Staff/
Parliamentarian; Ellen McCarthy, Professional Staff Director; 
Kyle Anderson, Press Director; Cristin McCowan, Chief 
Legislative Clerk; Gregory Abbott, Policy Analyst; Fred Hay, 
Minority General Counsel; Alec Hoppes, Minority Professional 
Staff; and Bryan T. Dorsey, Minority Professional Staff.
    The Chairman. Good morning, everyone. I would like to call 
our hearing on House Administration to order and welcome 
everybody, and thank you all for being here. A lot of things 
are happening. Our ranking member is in another committee, and 
he is going to be on his way. And other members are probably 
doing other legislative business, but I am sure that they will 
be here when they get a chance to be here. And we do appreciate 
you being here today.
    During the transition between the 109th and 110th Congress, 
the House Inspector General was conducting a routine audit. He 
was looking at the House system for uncovering and limiting 
duplicate payments. His investigators found the troubling 
record of embezzlement by one employee of the House. An 
employee defrauded the House of more than $160,000, a crime 
that was made easier by the fact that the employee was employed 
by several different congressional offices, and none of them 
knew the duplicate charges were made by the others. The IG 
brought the findings of embezzlement to our committee on 
February 2, 2007. The criminal procedure against that one 
employee took its course. But we then asked the IG to conduct a 
further review, how did the system of shared employees make 
congressional offices vulnerable to waste, misuse of data or 
even outright theft, and what could we do about it?
    The original defendant was sentenced May 2nd. Today we will 
hear the results of the IG's further review. The point of this 
review is not to name any names or point any fingers. I have 
asked the IG not to use any names during this hearing, and I 
asked the Members of the committee to avoid this as well. Our 
purpose here is to find out where we are vulnerable and what we 
can do to secure the House funds and data. We will hear today 
from the IG, and some, not all, but some of these employees 
have ignored the controls we already have in place to prevent 
abuse. Further controls may also be necessary.
    I really want to hear what you have to say about what we 
can do to protect ourselves with further controls so we don't 
have to come in front of you or our employees got to come back 
in front of you. So I look forward to the IG's findings. We 
have no intent to eliminate shared employees or to interfere 
with the benefits they offer to congressional offices. But 
would take all necessary steps to address the problems the IG 
has identified and protect the House. I would like to recognize 
Mr. Lungren if he has anything, or Mr. McCarthy. Mr. Lungren, 
do you have anything to say.
    [The statement of Mr. Brady follows:]
    

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    Mr. Lungren. Just briefly, Mr. Chairman. I agree with you 
that we have no intent to get rid of the idea of shared 
employees. But it is the obligation of this committee to set 
ground rules and make sure it is very clear to Members and 
shared employees as to how they ought to operate. And I think 
that is a bipartisan approach, and I thank you for the hearing.
    The Chairman. Thank you. Right now I would like to welcome 
our panel. Jim Cornell is our inspector general. He has served 
the IG's office since 2004 and is an accountant and certified 
government financial manager by training. I also would like to 
welcome Dan Beard as the Chief Administrative Officer of the 
House. Dan's experience on the Hill is wide and diverse. He 
began his career in CRS, then went to the White House, the 
Department of Interior and then returned to the House in 
numerous capacities. Thank you, Dan and Jim, today for your 
participation.

   STATEMENTS OF JAMES J. CORNELL, INSPECTOR GENERAL, UNITED 
  STATES HOUSE OF REPRESENTATIVES; AND HON. DANIEL P. BEARD, 
      CHIEF ADMINISTRATIVE OFFICE, UNITED STATES HOUSE OF 
                        REPRESENTATIVES

    The Chairman. First we will hear from our IG, Mr. Cornell.

                 STATEMENT OF JAMES J. CORNELL

    Mr. Cornell. Thank you Mr. Chairman and members of the 
committee. I am pleased and honored to appear before you today 
in my capacity as the Inspector General of the House. My office 
plays a vital role in helping to ensure integrity and identify 
opportunities for improvement in our House financial and 
administrative processes. In the past few months, we have 
completed work on several initiatives that have revealed 
significant deficiencies in the controls over shared employees. 
Shared employees fulfill a legitimate need. They provide 
technical expertise in the area of finances, information 
technology and general office administration through part-time 
positions. Recently, we identified 51 shared employees that 
were on the payroll of at least three and up to 14 offices 
each. Their availability allows congressional offices to meet 
their support needs without having to hire full-time personnel 
with requisite skills and experience. However, through our 
audit and investigative work, we have found three major areas 
where the current controls over the practices of shared 
employees are either unenforced or weak and in need of 
significant improvement. If not addressed, these control 
weaknesses place congressional offices at significant risk of 
illegal or other improper activity occurring within their 
financial and administrative functions.
    The first of the three areas of control weakness with 
shared employees is inadequate oversight over their activities. 
In most instances, they have all the freedom of a vendor and 
all the benefits of an employee without the accountability one 
would expect with an employee. Current practices do not provide 
for other office staff to review their day-to-day work, ensure 
they attend appropriate training or stay current on House 
policies and procedures. Congressional offices may know their 
shared employee works for other offices, but they do not know 
how many or which ones.
    Therefore, they cannot determine if there are conflicts of 
interest within the functions performed or with the other 
offices served. We identified seven financial shared employees 
that were employed by ten or more offices and eight IT shared 
employees that were serving as system administrators for 11 or 
more offices. In both disciplines, a few serve both majority 
and minority offices simultaneously. Under current practices, 
the work schedules of shared employees are also not monitored. 
Most of them are paid a flat monthly fee by the offices 
regardless of their time and effort expended. IT shared 
employees with administrator rights present an additional risk 
in that they often have access to multiple office's data 
outside of both the oversight of congressional office staff and 
the visibility of House security personnel. Each of these 
factors points to an inappropriate employer-employee 
relationship.
    A second area where controls over shared employees need 
significant improvement is having mechanisms in place to ensure 
that the practices of this small group of personnel are in 
compliance with current laws and House rules. I have four areas 
of violations to share with you.
    First and foremost, subletting or passing work to another 
individual not employed by the member office violates U.S. Code 
and House rules. A growing number of shared employees are 
working in illegal teaming arrangements where they pass the 
work off to other shared employees not on the payroll of the 
congressional office they are serving.
    For example, three members of one financial shared employee 
team each work on the finances of 15 offices. However, one of 
the team members is only officially on the payroll of three of 
the offices. Six IT shared employee teams have members with 
administrator rights to multiple offices they are not employed 
by. One such team member has administrative rights to 28 
congressional offices, but is only on the payroll of 10 
offices. We suspect that many of these employees we identified 
may not even know that the practice violates current law and 
associated rules. Secondly, telecommuting without an approved 
telecommuting plan detailing the procedures to be followed 
actually violates House rules. Working in a commercial or any 
unapproved personal space, in addition to violating House 
rules, may also place congressional offices at risk for workers 
compensation or Congressional Accountability Act claims. In 
addition, storing official House documents off-site, a common 
practice amongst the financial shared employees we interviewed, 
violates the guidance provided in the model House employee 
handbook and increases the risk that sensitive information may 
be lost, mishandled or inappropriately shared with others.
    And lastly, using their House positions and access as a 
means to market their outside employment interests to other 
congressional offices is another practice of some shared 
employees that could be a violation of House ethics rules. We 
identified a few that can also log into document direct, a 
system not available to House vendors. This access to internal 
House vouchers and other privileged information could create an 
unfair practice since some shared employees are also House 
vendors.
    The absence of compliance with existing laws and House 
rules in each of the above-stated areas has occurred in part 
because of a lack of adequate attention to building in controls 
over the practices of employees serving multiple offices. The 
Government Accountability Office has noted that internal 
controls serve as a defense for preventing and detecting 
violations of laws and regulations as well as preventing abuse.
    Ensuring adequate separation of duties is a third area of 
control that needs significant improvement. We identified 
several IT shared employees serving as system administrators 
for multiple offices who are set up as the only person to be 
alerted or notified if questionable activity occurs within the 
office IT systems they are servicing. Basically without another 
staff member being included in the alert group, a shared IT 
employee could violate the confidentiality, availability and 
integrity standards by inappropriately sharing, deleting or 
changing data without anyone knowing.
    In the financial arena, we found in most instances the 
shared employees were authorizing purchases they initiated and 
approving financial reports on items they recorded. Some shared 
employees routinely provided office approval for reimbursements 
to themselves, entered the transactions into the office 
accounting system, prepared the monthly financial reports and 
kept the records of the individual transactions. Any 
congressional office with inappropriate separation of duties in 
their financial functions and inadequate compensating internal 
controls is operating in an environment conducive to fraud. I 
cannot stress enough the need for offices to examine their 
internal operations and practices to ensure they are operating 
with the appropriate controls. Through our audit work, we 
uncovered a fraud perpetrated by a shared financial 
administrator who provided services for three Member offices. 
In each of her offices, this individual performed a full range 
of financial services without any other Member office staff 
reviewing or approving her work.
    Through manipulation of the trust misplaced in her and the 
excessive authority she was granted, she defrauded the three 
offices of more than $169,000. In another ongoing 
investigation, we found a second financial administrator who 
was paid for thousands of dollars of improper expense 
reimbursements and bonuses that were self-approved and resulted 
in improper payments.
    The three areas of control weakness we have identified work 
together to create an environment that presents significant 
risk to the integrity of our House financial processes and the 
congressional offices' ability to execute their fiduciary 
responsibilities.
    To address them, we recommend that the committee take steps 
directly or through the Chief Administrative Officer to explore 
options for augmenting House provided financial services to 
member and committee offices that will both enhance the control 
environment and reduce the administrative burden on the 
individual offices.
    Secondly, develop official guidelines for shared employees 
that address specific employment conditions and limitations 
based on current employment laws, House rules, policies and 
other CHA guidance. All shared employees should sign an 
acknowledgement that they have read and agree to abide by the 
guidelines.
    Thirdly, prohibit shared employees from serving as both 
House employees and vendors to the House. We found this to be 
especially troubling with IT shared employees who generally 
have administrator rights and access to all records for the 
Member offices they are employed by or otherwise set up to 
service.
    Next, have the Chief Administrative Officer of the House 
provide Member and committee offices with quarterly reports 
identifying the full scope of employment for all of their 
shared employees. This will allow them to make any staffing 
adjustments they deem appropriate due to incompatible interests 
or excessive workload.
    We also recommend requiring shared employees to file 
financial disclosure statements regardless of House 
compensation earned. In addition, depending on the nature of 
the functions, background investigations may be appropriate. 
These steps will help the House identify potential conflicts of 
interest and avoid undue risk. The CAO should also review and 
update as appropriate the content of new Member orientation, 
especially as it applies to shared employees.
    And lastly, and perhaps most importantly, advise Members to 
utilize separation of duties, internal controls in their 
office's financial functions and provide them examples of what 
has happened when controls have not been in place. Mr. 
Chairman, I wish to thank you, Congressman Ehlers, and Members 
of the committee for this opportunity to address some specific 
and significant control weaknesses we have found during the 
course of our recent work. We look forward to continuing our 
role of providing value-added advice and counsel to the 
committee, House leadership, House officers and joint entities 
of the House as we focus on issues of strategic importance to 
the House. At this time, I will be happy to answer any 
questions you may have.
    The Chairman. Thank you, Mr. Cornell.
    [The statement of Mr. Cornell follows:]

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    The Chairman. Before we get to Mr. Beard I would like to 
ask our ranking member, Mr. Ehlers if he has a statement that 
he would like to make.
    Mr. Ehlers. Thank you, Mr. Chairman. I will be very brief. 
I apologize for being late, but I was presenting a bill at 
another committee and I wanted that bill to pass, and so I had 
to stay until they were finished with questioning me. But I 
just want to express my appreciation to the IG for the work 
that has been done and I don't see any impossible problems 
here. It is just a matter of getting our House in order. I 
think that shouldn't be too hard to do. And we will work on 
this cooperatively, make it a nonpartisan effort, to make sure 
that all the rules are understood by everyone involved and are 
followed by everyone involved. With that I yield back. Thank 
you.
    [The statement of Mr. Ehlers follows:]

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    The Chairman. Thank you. I now would like to recognize Mr. 
Beard for his testimony.

               STATEMENT OF HON. DANIEL P. BEARD

    Mr. Beard. Thank you, Mr. Chairman, Members of the 
committee, I appreciate the opportunity to testify this morning 
on the issues associated with the recommendations in the 
Inspector General's report on shared employees. I want to begin 
by complimenting the Committee for requesting the Inspector 
General to undertake this report. We have known for some time 
that the growing use of shared employees could pose management 
risks and directing the IG to undertake a study was the right 
first step to addressing these possible risks. In addition, I 
want to compliment the Inspector General and his team for the 
quality of the report that they have prepared. Their review was 
thorough and professional in every regard and it provides all 
of us with the information we need to develop and implement the 
necessary policies, procedures and management controls to 
address these problems.
    My message to you this morning is very simple. I fully 
support all of the recommendations proposed by the Inspector 
General. My office is fully prepared to implement these 
recommendations should the Committee so direct. The 
recommendations in the report provide a solid foundation on 
which to base corrective actions in both the short and the 
long-term. Given the problems described in the IG's report, the 
recommendation for official guidelines for shared employees is 
an excellent suggestion and we are prepared to work with the 
Committee and the IG's office to complete this document 
expeditiously. The Inspector General recommends we explore 
options for augmenting House provided Internet Technology and 
financial services to Members and committees. I would point out 
that the House budget request, fiscal year 2009, includes $9 
million to provide funding to augment financial and IT 
capabilities for new Members of the 111th Congress. We are 
prepared to develop the appropriate budget request to provide 
additional services for existing Members should the Committee 
so desire. The report's recommendation that there be a 
prohibition against employees serving as both House employees 
and contractors is both reasonable and appropriate. We do not 
see any problem with implementing the recommendations to 
provide Members and committees with a court order report 
identifying the full scope of employment of all shared 
employees.
    And finally, I would highlight the report's recommendation 
that the New Member Orientation stress the risks to Members 
associated with using shared employees without strength and 
management controls. Since you are in the planning stages for 
these orientations, this is an appropriate time to develop the 
information and the approaches for implementing this 
recommendation. Again, I want to thank you for the opportunity 
to testify this morning and would be happy to answer any 
questions you might have.
    [The statement of Mr. Beard follows:]

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    The Chairman. Thank you, Mr. Cornell, and thank you Mr. 
Beard. One little comment real quickly, and then I will yield 
to my panel and to our committee for questions. The new members 
when they get indoctrinated, not all of them get it. I am a 
mut. I didn't get it. I didn't get indoctrinated. I just got 
baptized right away the next day after I won the election. And 
I looked at the list, and I figured I'd put a caucus together 
called the mut caucus. There are like 90 of us, there are like 
90 Members that came in sitting in this Congress right now that 
did not get the orientation that new Members get. And so I just 
need you to understand that, because I didn't get it. I didn't 
know anything about a shared employee at that time. As you go 
along it is a learning process, you know. But I wanted you to 
know there is 90-some members that did not get any guidance at 
all when we first got here, we had to learn on our own and are 
still learning for that matter. Any questions, anybody? I would 
like to recognize Ms. Lofgren for questions.
    Ms. Lofgren. I would just say, first, thanks for the 
report. I think it is helpful. You looked only at IT and 
financial people, you didn't look at the other--there is policy 
shared employees too. For example, the California delegation, 
both Republicans and Democrats meet and have a shared employee, 
each of us. You didn't look at those types of situations, did 
you?
    Mr. Cornell. No, we did not. We were primarily focused on 
shared employees that serviced three or more offices and that 
eliminated a lot.
    Ms. Lofgren. Well, but when you look at both the California 
Republican delegations, they are, in both cases, larger than 
three. I can't imagine that there would be an ability to 
address the kind of problems you have addressed here.
    Mr. Cornell. Exactly.
    Mr. Beard. We generally have not classified employees who 
serve congressional management organizations, CMOs, as shared 
employees, because they really aren't. What is happening now is 
that they are moving from one payroll to the next.
    Ms. Lofgren. It is both, and we would like to fix that if 
we could.
    Mr. Beard. And we do have a number of employees who are 
shared employees that provide other services: either 
photography, legislative correspondence, etc. I am running out 
of examples, but we do have a number in that area. But the 
largest number, and the ones that present the greatest problem, 
are the financial and the IT.
    Ms. Lofgren. In the IT area, did you take a look at--I 
mean, there is a reason why there is shared IT employees, 
because it is a complex situation, it is expensive to hire IT 
professionals, you really can't justify paying that kind of 
money for an IT professional for the amount of time each office 
needs an IT professional. And yet there is no centralized 
services that are really top notch and reliable. We don't have 
centralized servers. We have got them parceled out in all the 
members' offices. Did you take a look at how we are organizing 
our services in the House when it comes to IT or just the 
problems with the shared employees?
    Mr. Cornell. We also looked at some potential solutions, 
one of which would be to develop a centralized pool of 
employees, both in the financial realm and IT, to provide 
comparable services. We think there is a lot of merit to 
exploring that. Even just from a pure financial perspective, we 
found that the average salary of a financial shared employee, 
for instance, is $132,000. The comparable salary for a CAO 
employee with the same requisite skills and experience would be 
about $68,000. If you were able to develop a pool of employees, 
for instance for that service, that could result in, if you 
extrapolate it out over the 20 financial shared employees, 
about $1.2 million of savings a year. If you looked at the same 
thing on the IT side, I think there is a delta of about $45,000 
or so. If you extrapolate that out again, you have a 
significant savings.
    Ms. Lofgren. Actually, you probably have to raise the 
salary cap for employees on the IT side if you are going to 
centralize it to get the people you would really want.
    Mr. Beard. Well, you have to remember what is happening 
here is the shared employees are providing the service to the 
individual office.
    Ms. Lofgren. Right.
    Mr. Beard. But then that work is then sent to the Chief 
Administrative Officer's employees. And so our financial 
counselors and our technical service reps provide a safety net 
for those small businesses.
    Ms. Lofgren. But from the point of view of the member's 
office, it doesn't look like a safety net, it looks like an 
impediment that it's slowed down. And that is not a criticism. 
It is just we are impatient and we want to get stuff done right 
away. We've all got contracts because we have to get stuff 
done. That is not the way businesses do it. And I think it 
might be--maybe we could sit down with you later to see what 
you saw rather than take up all the hearing time, in a kind of 
workshop session. But I think we could make a substantial 
improvement in this area. I thank the gentleman for yielding.
    The Chairman. Any other questions Mr. Ehlers?
    Mr. Ehlers. Thank you Mr. Chairman. I must confess, since I 
don't use shared employees, I was astounded in reviewing your 
report at how many Members used shared employees and the extent 
to which they are used, and also the extent to which the shared 
employees, although they are financed by a number of different 
people, the extent to which they have increased their salary by 
working for a large number of members. It just seems a little 
strange to me, I suppose because we don't use an outside one, 
we do it all within our office. And I just wonder about the 
economy overall to our institution, the House of 
Representatives, to using this many people who are apparently 
earning quite a bit more money than they would if they worked 
for the House of Representatives.
    This all comes about of course because we run this 
institution as if we have 435 independent business people, and 
that they are too free to hire and fire whoever they wish. But 
clearly when you are dealing with money and also with 
information technology because of the possibility of leakage of 
information, we are dealing with some pretty serious stuff 
here. And I would just like your opinion on that. Should we 
have some method of screening the outside employees rather than 
just saying any member can go out and hire any employee? Should 
there be a training for these employees so they understand the 
House rules and the law?
    And I realize this all came to light because of one person 
who did violate the law and is currently serving time in prison 
because of it. Obviously she knew what the law was and she 
violated it. But do we need to instruct all these shared 
employees specifically on the House rules and in the laws 
dealing with operation of the House so that they understand 
those? I don't think any of the--you know, if you read your 
report, it doesn't look like anyone is trying to break the law 
or trying to violate House rules, but I suspect they didn't 
even know that they were.
    So I appreciate your comments of how you think we should 
address this problem. Should we have different employment 
practices? Should we have different training practices for 
shared employees? Should we evaluate whether or not we even 
need trained shared employees? I would appreciate your comments 
on all those issues.
    Mr. Cornell. I think there is definitely opportunity to 
tighten up the controls to start with. Part of that would be 
getting the appropriate training and sharing the constraints on 
the front end. I think the guidelines will go a long way to 
being able to inform the shared employees as to what the 
expectations are, what the limits are, and how they are 
expected to carry out their responsibilities. We also looked at 
options. There are models out there in other areas where you 
could have a certification program, for instance, for a 
financial administrator where you are expecting them to 
demonstrate a certain level of competence and then you could 
periodically have them retested or require certain continuing 
education along the way, just to ensure that they are staying 
current. At the beginning of each Congress probably have a 
session where you go over the rules with them to make sure that 
they are fully informed of what the expectations are and how 
they could go about doing that in a very helpful way. The same 
on the IT side. There are various training options. But a lot 
of it too is just being aware of some controls that are fairly 
easy to execute and put in place. Even in terms of 
notification--if you are going to have a shared administrator, 
making sure that somebody else in that office is identified as 
receiving the appropriate alerts so that should anything be 
changed or any information altered, that there is a higher 
likelihood that they would know something is going on and then 
be able to ask the appropriate questions.
    Mr. Ehlers. And in terms of things such as the workshop or 
ensuring everyone understands the standards, you mentioned that 
perhaps the offices have a role to play. Would you also think 
that the CAO would have a role in establishing these standards 
and running training classes or whether we might decide we are 
needed? I am just trying to get some idea from you.
    Mr. Cornell. I think that would be a very good start. And I 
am sure Dan actually has a comment on that.
    Mr. Beard. Well, I do have a number of comments. You know, 
you've heard the old saying, if it ain't broke don't fix it. 
Well, what we are saying to you in very clear language is it is 
broke and we do need to fix it. We have a problem and we can't 
guarantee to you and the other Members of the House that we 
won't be back here at some point in the future with a similar 
problem unless we make substantial changes in the controls, 
training and a number of other items. We certify contractors. 
The contractors that we employ for maintenance providers, we 
look at those companies, we look at their financials, we look 
at their training, we look at their technical abilities. They 
then provide the maintenance. They are the maintenance provider 
to the individual offices.
    We do nothing like that for system administrators. We are 
assuming that the system administrator is an employee. They are 
not employees, they are vendors, really. So they are providing 
the system administrator service, and we have no controls over 
certification or anything else. Now, they have a fallback 
position, which is if they can't solve a problem they come to 
us and we have to solve it. Which is a pretty good deal if you 
are working as a vendor. We certify contractors, we have our 
contract office pay close attention to each one of the 
maintenance providers and make sure that there are no changes 
along the way.
    The other thing that is important for Members to 
understand, and this is what I would stress, Mr. Chairman, at 
the orientation, the most sensitive information you have is 
contained in your computer system and in your financial 
records. And yet, we have employees who have access to that 
information. In one case, up to 28 offices, that could access 
any information that you have on your computer system. We don't 
allow that in the CAO. If somebody--we do have people who can 
access information, but we have a--what do we call it, the drop 
dead room? The mission impossible room. They can't go in unless 
they get two people to allow them in there. We monitor their 
keystrokes, we film who is in there, what they did and 
everything else. And that is because we want to be overly 
cautious and sensitive with the records and information of the 
individual members.
    The other important thing to remember is the security of 
our computer system is only as secure as the weakest link we 
have. So if we have a weak system administrator in an office 
somewhere, it places all of us at risk, the whole House, from 
the leadership on down to everybody else in the office--
everybody in the institution. And it is a very sensitive area 
and it is one that we have to take--we take very seriously.
    Mr. Ehlers. Finally, Mr. Chairman, let me just say I have 
not seen any evidence of any widespread chicanery or 
misbehavior other than the one case that has been prosecuted, 
and essentially it is finished. But I think this has been a 
great wake-up call. And I recall when the member involved first 
talked to me some time ago and said you know what is going on 
here, why is this problem happening and so forth, and that is 
when we started the investigation. I think all members should 
learn a lesson from this, and I am sure they will. I don't want 
to cast--I also want to make clear I am not casting any 
aspersions on any of the special employees that we have now who 
are, from my experience with them, working with them even 
though we don't have one in our office, but also in talking to 
members who had them, they win high praise for the way they 
handle the finances in the office. I have not had contact with 
any dealing with IT. But certainly in financial affairs, they 
win high praise from the people employing them. So we are not 
saying, look, this is a terrible system, let us throw it out. 
But clearly we have to build safeguards in to make sure that we 
don't have again what we just had. And that, I think, has to be 
something that we have to work cooperatively as a committee 
with Mr. Beard, Mr. Cornell and their respective functions to 
make sure we do it right and we don't have a repeat of this 
again, and we don't have any misappropriation of funds at any 
point. With that I yield back.
    The Chairman. Thank you. Mr. Capuano.
    Mr. Capuano. Thank you, Mr. Chairman. I know it has been 
said, and I know I have read the report and I know what the 
report said, but I want to say it clearly for the record. As I 
understand it there is no current concern about current shared 
employees that you are aware of engaging in inappropriate 
activity, is that a correct statement?
    Mr. Cornell. That is a correct statement.
    Mr. Capuano. I know you said it, but I just want it on the 
record. And as I read the report, I want to make it clear 
again, it has been stated a couple of times, we are talking 
about a specific segment of shared employees, not all shared 
employees?
    Mr. Cornell. That is correct.
    Mr. Capuano. And we are talking mostly about those IT, 
finance, and as I understand it people who are shared employees 
by three or more members?
    Mr. Cornell. Yes, that is correct.
    Mr. Capuano. The reason I say that is because though I 
don't have any shared employees, I have participated in one of 
the caucuses taking one of those employees for a month here, a 
month there, and that is not a problem. I also see a value to 
it in certain instances, particularly between the caucuses. I 
know that there are other ways to do it, there have been other 
ways that have been done in the past, and maybe we should look 
at that in the future as to how to better do it, maybe not. 
There are some shared employees between different members on 
very specific items, policy members. There are some shared 
employees between committees and individuals, and as far as I 
know and as far as you are saying at the moment, we are not 
aware of any concern relative to those shared employees, is 
that correct?
    Mr. Cornell. That is correct.
    Mr. Capuano. I just have a couple of questions. And my 
first question really is more to Mr. Beard and a little bit to 
you, Mr. Cornell. I want to make sure that you agree with 
whatever he says, or don't agree whatever the case might be. Is 
it possible, over a relatively short period of time, for the 
CAO to come up with a program whereby members would be able to 
access the CAO or somebody else to say we want a person who is 
assigned to our office who is my IT person or my finance 
person? Is that a scenario that is possible for CAO to 
accomplish in a reasonable period of time?
    Mr. Beard. Yes. It would depend on the committee helping us 
with the definition of the kind of structure that you want. 
Right now we have a structure where we have House Information 
Resources (HIR) and the system, or the maintenance providers as 
well as the system administrators in each office. But yes, we 
can do that, and in a relatively short period of time.
    Mr. Capuano. Mr. Cornell, do you agree with that 
assessment?
    Mr. Cornell. I do.
    Mr. Capuano. Because I personally, I mean, we haven't had 
that discussion yet, but I would advocate for a person to be 
assigned to me, if I didn't like that person, then try another 
person, a basic pool. But honestly I use, I don't even know who 
he works for, Sterling all the time, I don't know if he works 
for you or who he works for, but he comes to fix my BlackBerry 
all the time.
    Mr. Beard. We didn't hear that.
    Mr. Capuano. Well, his wife makes him do it.
    The Chairman. True to form, Michael, true to form.
    Mr. Capuano. Honestly, I would rather pick up the phone to 
an individual and say, or have an individual come to my office 
that I have had a working relationship that my staff knows for 
a personal, you know a more personal relationship, as opposed 
to simply have a pool of people that just come. Again, if there 
is an emergency, that is a different situation. But that is my 
own personal opinion. And you think that type of situation 
could be worked out again in a reasonable period of time?
    Mr. Beard. Yes. In the IT area, that might be the case. In 
the financial area we do rotate financial counselors for 
reasons of management controls and security. And I wouldn't 
want to get into changing that policy.
    Mr. Capuano. And I would imagine that since there are no 
difficulties with currently shared employees, some of those 
very same shared employees would be considered for some of 
these jobs. I mean, if they know what they are doing and they 
are trusted by Members, is there any reason not to consider 
them for entry into this type of a pool?
    Mr. Cornell. No. I would think they would be perfect 
candidates, except it would probably require a substantial pay 
cut.
    Mr. Capuano. Well, but that is part of the reason we are 
having this discussion, is because there is some concern that 
the House as a whole is paying too much for a service that they 
could get equal or better service from at a reduced cost, is 
that a fair way to put it?
    Mr. Cornell. I would say that is a side point, but 
primarily the emphasis is on the controls in place right now.
    Mr. Capuano. I also want to make it clear that as one 
member I have no problem with people making money. I mean, God 
bless them. That is what America is all about. And if they can 
make money, good luck to them. But at the same time, on this 
side of the table, our obligation is to spend taxpayers' money 
as wisely and as frugally as we can and still get the same 
service. You know, you don't necessarily know what you can get 
until you have options. It seems to me like we have a potential 
option on the table with some discussion to be had, and I, for 
one, look forward to doing it. But I want to make it clear that 
from my perspective of what I have heard you say, and again, I 
am repeating myself because I think it is important, there are 
no allegations against current shared employees, there are no 
concerns that we are aware of their current work habit, this is 
an issue relative to potential problems because of the lack of 
oversight and internal controls which any normal business runs 
into any day of the week.
    I know in my campaign, I guess I can talk about it, I mean, 
I have no treasurer doing one thing and I have someone else 
balancing the books. Not for any reason. It doesn't mean 
somebody can't steal something, it just means that if they do, 
I can catch them more quickly. I think you can't stop people 
from breaking the law, but you can certainly make it a little 
bit easier to catch them. I look forward to working with you to 
make this a system that will, both working financially, will 
work with oversight and will work for the Members because I 
think it is important for the Members to be comfortable with 
the new system as well.
    Mr. Ehlers. Will the gentleman yield briefly?
    Mr. Capuano. Yes.
    Mr. Ehlers. I have just one follow-up on that one point. I 
thought there were cases you had uncovered where employees, 
shared employees were violating House rules in terms of 
contracting out their work to others who are not House 
employees, is that not true?
    Mr. Cornell. That is true, and that is clearly a violation. 
But I thought the question was to the extent of the financial 
fraud that I discussed at one part of the testimony.
    Mr. Ehlers. I just want to get that clear, because there 
are violations of current House rules. Are there any cases you 
uncovered of violations of law?
    Mr. Cornell. The subletting is a violation of law.
    Mr. Ehlers. Pardon?
    Mr. Cornell. The subletting of responsibility is a 
violation of law.
    Mr. Ehlers. So that has to be cleaned up immediately then?
    Mr. Cornell. Yes. And that is something I would definitely 
say would be first and foremost.
    Mr. Ehlers. Thank you. I yield back.
    Mr. Capuano. Thank you. Mr. Chairman.
    The Chairman. Mr. Lungren. 
    Mr. Lungren. Mr. Chairman, may I just ask the two 
witnesses, on the suggestion of building up employees and the 
CAO who would help with IT and help with financial consulting 
or counseling, there is not the suggestion that then we would 
reduce Members' MRAs proportionately, is there?
    Mr. Beard. No, not on my part.
    Mr. Lungren. I am trying to find out where the savings 
occurs then. Ultimately there wouldn't be any savings really 
occurring because I doubt if Members are going to give up their 
MRAs. I happen to think shared employees serve a useful purpose 
if a Member knows how to use them. And in some cases, if I were 
running my office as my office, I might think that a shared 
employee would be more responsive to me than someone who was 
not an employee. And so I think there is some reasons why 
Members would prefer to continue to have shared employees. And 
actually, it works in an efficiency way for Members. If a 
Member pays a partial amount of the salary of a shared employee 
and that shared employee does the job they need, then what 
concern should that Member have that other Members are 
receiving similar service and as a result of similar service 
being achieved the employee makes more than they would if they 
just worked for me. I mean, I don't see what the problem is 
with that so as long as they are not getting more than the 
maximum allowed, so as long as it is all above board.
    So I just want to make that clear, the savings that some 
are suggesting may not actually occur if you don't have a 
proportional diminution in the MRA. One of the things that I 
think is clear from your report, Mr. Cornell, is that both 
Members and shared employees didn't know what all the rules 
were.
    Mr. Cornell. That is correct.
    Mr. Lungren. And it would seem to me one of the very first 
things we should do is follow your recommendation, and Mr. 
Beard has said that he would certainly do that, to come up with 
some sort of guide or brochure or some written material that 
would do that. And I think you both agreed on that. Secondly, 
doesn't it seem to make sense that in addition to that we have 
a mandatory orientation or, what do you want to call it, 
seminar for both Members and shared employees to set these 
things out, wouldn't that make sense?
    Mr. Cornell. That would make a lot of sense.
    Mr. Lungren. And Mr. Beard, could we do that?
    Mr. Beard. Yes, we do.
    Mr. Lungren. And we could do that fairly quickly as soon as 
we have the written material done?
    Mr. Beard. Yes.
    Mr. Lungren. I would also have an additional suggestion, 
which would be because shared employees are a little different 
than an employee that you have full-time, I would suggest that 
at the time a shared employee is employed, that a shared 
employee sign an affidavit, something along these lines, I, a 
shared employee, will abide by all House rules, House 
Administration Committee guidance and laws. And in the event 
that any one of these is violated, I will immediately submit my 
resignation.
    Now, you might say they are supposed to do that anyway. But 
it just seems to me that if you have that along with the packet 
of material they receive, it sort of makes it very clear what 
we are talking about. Do you have any problem with that.
    Mr. Cornell. No, I think that is excellent. That is in line 
with what my thoughts were in that regard.
    Mr. Lungren. Mr. Beard.
    Mr. Beard. I don't see any problem with that. Since we are 
talking about suggestions, there is another solution. We keep 
talking as if these functions have to be performed by an 
employee, and in fact, they don't. Many small businesses 
contract out bookkeeping services to corporations and they 
contract out IT services. If you allowed these services to be 
contracted out in some fashion, as we do with maintenance 
providers and others, there could be central controls on what 
information is divulged, how it can be divulged and look at the 
qualifications. So, that is another possibility.
    Mr. Lungren. I appreciate that if we are just talking about 
bookkeepers. But talking with Members who have used some of 
these financial shared employees, they get more than 
bookkeeping. Many of them have experience in how you project 
forward, what your budget is going to be, how you have to 
figure out bonuses if you are going to give bonuses to, maybe 
we don't use the word bonuses, but if you are going to utilize 
your MRA, you want to make sure that you give staff the amount 
that you can give them prorated over certain months. I mean, 
there is some intricacies of House rules that are different 
than what you would find in just an outside bookkeeping 
operation. And so sometimes that guidance and that working--it 
is more than just guidance. It is sitting down and working with 
them to figure out how you are doing, not just on a static 
analysis at the beginning of the year, but as you go along. 
Because I have told my staff, once we set the rule, that if we 
spend $1 over what the MRA is, I pay for it, they better make 
darn sure we are not a dollar over. And that tends to focus the 
mind. Are there--with the recommendation you suggested, Mr. 
Cornell, that on a periodic basis, Mr. Beard's operation would 
give us reports with respect to the number of employers that a 
shared employee has.
    Mr. Cornell. Yes.
    Mr. Lungren. Is there anything else that a Member who has a 
shared employee ought to know that Mr. Beard's office would 
help them with?
    Mr. Cornell. If we do go to a model where you have a 
periodic certification and required training, he would also be 
able to track and provide you that information, as well as not 
just the number of offices served, but there may be what you 
would consider an incompatibility based upon some of the other 
customers. And that way you could say, well, I am not really 
comfortable with having you do my IT work if you are doing the 
IT work in this other arena.
    Mr. Lungren. And part of the written material that we would 
have and part of the seminar it seemed to me would be to stress 
the confidentiality for each office.
    Mr. Cornell. Yes.
    Mr. Lungren. Because that is something I would have thought 
would just be accepted as a matter of course, but now that you 
have pointed these things out, it seems to me that is something 
we need to say and repeat, both for the Member's benefit and 
for the shared employee's benefit. Well, I thank you very, very 
much, and thank you very much, Mr. Chairman.
    The Chairman. Any questions? Mrs. Davis, yes.
    Mrs. Davis of California. Thank you, Mr. Chairman. Thank 
you both for being here. I think I have gotten the gist, and I 
have looked at the information prior to as well. Mr. Beard, you 
just mentioned about contracting out, and I was curious because 
is there the same concerns we have had and the issue of caps.
    Mr. Beard. No.
    Mrs. Davis of California. Wouldn't that raise some of these 
issues as well?
    Mr. Beard. No, because a Member would pay for a service 
whatever they wanted to pay for it. It would just come out of 
their MRA. Right now, the problem is that many of the shared 
employees, some shared employees actually want to be businesses 
as opposed to employees.
    Mrs. Davis of California. Right.
    Mr. Beard. And they can make more money that way. Right now 
they are limited to a salary of $163,000, and there are 
controls on what additional income they can earn. Now, they do 
get the advantage of having government health care and 
retirement and a number of other things. But they are an 
employee and they are kind of stuck. If they want to become a 
business and actually operate like a business, you know, you 
wouldn't have the limits in that case.
    Mrs. Davis of California. But the internal controls that 
you were suggesting would be there if you were contracting out?
    Mr. Beard. Right.
    Mrs. Davis of California. How do you see that so 
differently?
    Mr. Beard. We sit down with any contractor on the IT side 
right now, I mean, IT providers. We go over all the records, 
their records, their qualifications and we monitor them on a 
regular basis through our contracting office, in our contract 
procurement office. And so as a result, we have a greater set 
of controls over contractors than we do employees.
    Mrs. Davis of California. The problem that we had that 
somebody was working in a number of different offices, you 
don't think that is not possible?
    Mr. Beard. Not unless they changed the name of the company 
in some way.
    Mr. Cornell. I don't know if I fully agree with that in the 
sense that I think there are a lot of controls in place for 
contractors. But we also know in the IT arena, and this is 
something we are still looking at so we are not sure of the 
full extent of this, but we have situations where we could have 
IT vendors that have multiple employees with access per one ID 
access point, which presents a certain amount of risk because 
you may not know who specifically is doing what. We are looking 
into that as we speak and we hope to be able to provide more 
information and insight on that down the road.
    Mrs. Davis of California. Okay. Thank you. I think the 
other just basic question, when you compare what people can 
make on the outside, and you said you know people do get 
benefits, but is there a point at which, you know, it would be 
difficult to find really good people to work here in the 
Capitol under those circumstances. Do you see that as a 
problem?
    Mr. Beard. I don't. As a general rule, shared employees 
make about twice what employees of the CAO make for the same 
functions and activities. So the House itself is providing, is 
paying--the Members, themselves, are paying that delta, if you 
will.
    Mrs. Davis of California. Okay. Obviously we are looking at 
people at a high enough level that they can work quickly and 
move in and out of a number of different offices. And they are 
doing that today. I don't think we are putting restraints, but 
I am just wanting to see that over time, you think that those 
people are still going to be available.
    Mr. Beard. Well, I think we can still be competitive in the 
marketplace. Our salaries have been going up as we work to 
attract and retain employees. And there are other benefits to 
working for the Federal Government or for the House. Our 
benefit package is better and I hope will get much better over 
time.
    Mrs. Davis of California. Thank you.
    The Chairman. Thank you. Mr. McCarthy.
    Mr. McCarthy. Thank you, Mr. Chairman. Mr. Chairman, I 
appreciate this hearing because I have heard a lot. I mean, 
first, if I could follow up on a couple of what some have said, 
we do have a problem. One, you say something is breaking the 
law. Two, the information, people don't know the rules and so 
some people are going beyond the rules. I hear a couple 
different ideas on proposals. Contracting out. But then you 
have the fear of the information security. Mr. Beard brought up 
doing it in-house in your shop. Now, with all due respect, I 
would have concern with that.
    In the past, your position was always a bipartisan one and 
now it is a partisan appointee, so I would probably not be the 
only one with that concern. So the majority would get an 
advantage because if they went to your shop, our MRAs are the 
same so they don't have to pay for it, but the Members would on 
the minority side.
    Then I see the whole idea of shared employees. I am very 
positive about that. You have got experience, you are getting 
something at a lower dollar cost in reality because you are 
only paying a certain amount, but they are working for a number 
of others so you get more perspective there. But you have got 
limits on how high they can go, so that brings some of the 
rules changes. What I think from a couple different 
perspectives here, I think the Members would like to have 
options. If there is a way that you can keep a shared employee 
but you don't hit on a limit that we look at, so you can keep a 
perspective of knowing the rules, then we wouldn't have to--I 
don't know how you do the terminology, but if you don't have to 
do the health care benefits and the others, it is somewhat a 
contracting out, but you are keeping security inside.
    I don't know how we make that together. And then I don't 
know how we go about doing something in a bipartisan manner at 
the CAO's office as well. Are there any other options that are 
not out there that haven't been talked about yet, Mr. Cornell?
    Mr. Cornell. I am not aware of others, but I am sure there 
could be some innovative approaches that we have not 
discovered. I think what you have are several very good options 
to pursue and refine that would provide Members several 
different ways of which they could choose to go.
    Mr. McCarthy. Any other ideas you see, Mr. Beard?
    Mr. Beard. I think throwing out that other idea wasn't such 
a good one. You know, when we read the report we talked about 
it internally, and we concluded that the suggested approaches, 
the recommendations made in the report, were the best ways that 
we could quickly fix the present system for the short and the 
long-term over the next 6 to 9 months certainly. And if the 
committee wants to move in a different direction or have a 
different set of recommendations, it would probably be 
something that we would have to institute in the 111th or 112th 
Congress. It will take a while to figure it out.
    Mr. McCarthy. Have we studied any matrix of seeing what 
technology is today based upon what it was in the past and 
seeing what the MRA is today and the make-up of an office? I 
always see within government that we are the last to modernize 
when it comes to technology than everywhere else because it is 
not driven by the free market within there. Have we analyzed 
the make-up of the office itself, and maybe even the MRA, being 
able to do something in that manner as well?
    Mr. Beard. I am not aware of anything on that side of 
things. I think there has been a change in many of the physical 
aspects associated with an office. Mr. Ehlers, for example, 
doesn't have any filing cabinets. You don't need any filing 
cabinets anymore. There is a technology available to do that. 
But in terms of sitting down and trying to figure out the 
office of the 21st century, are 18 employees sufficient for 
Members, should we have more, should we have less, should we 
have greater flexibility? At least the time I have been here we 
haven't had any of those kind of discussions. I think it would 
be useful.
    Mr. McCarthy. I think it would be very productive. I am one 
that started interning in Congress and we used to have carbon 
paper, the pink sheets and all the names on little cards. In 
today's world, you got much more information at your 
fingerprints by not having those file cabinets in others, and 
in the make-up of the offices where you would look at what 
office you want by the number of file cabinets you had. You 
don't need that. But with the movement of technology we could 
actually talk about saving money in the long-run, maybe even 
having less employees being able to be more efficient and do 
more. So I do appreciate the Chairman having this hearing. I 
just look at some of the recommendations and I don't see the 
answer right out there for us.
    One, I do think we need greater education, but I don't 
think going to the CAO is an answer, because I will tell you 
personally, I won't go there because of a comfort level that it 
became a partisan appointee, so then it becomes an advantage. 
Then I have to spend my MRA on doing something that the 
majority would not be--that have a greater comfort to do. So I 
think there are other options that we can look at and maybe 
discuss in the future, but I yield back.
    The Chairman. Yes, Mr. Capuano.
    Mr. Capuano. Mr. Chairman, first of all, I don't think the 
CAO is a partisan employee. I think the last CAO was a partisan 
employee. This one is not a partisan employee. Different views, 
different opinions. I would hope that the office is not 
partisan regardless of who appoints the individual. That is my 
opinion, and I understand we disagree. But I want to make it 
clear that I do disagree with the fact that the CAO, in your 
opinion, is----
    Mr. McCarthy. Would you yield for one second?
    Mr. Capuano. Sure.
    Mr. McCarthy. And let me clarify my statement. As I came to 
this body, I listened on the floor because one of our first 
moves was the CAO's office. And I listened on your side to Mr. 
Hoyer. Mr. Hoyer told the story of how the CAO came to fruition 
and how you used to have a committee made up of two Democrats 
and two Republicans, regardless of what the make-up was in the 
majority here. And they would interview and he was part of this 
time and time again. And they went through, they interviewed 
somebody and they selected him.
    Mr. Capuano. Reclaiming my time. If that is the case, we 
are going to have to talk about this committee. Because people 
who served on this committee, before I got here, told me 
repeatedly the Democrats, when they were in the minority, 
weren't even consulted, weren't even told about contracts, 
weren't told about telecommunications. And I believe that Mr. 
Brady and Mr. Ehlers are working together to get rid of that 
past history. Just because somebody says what may or may not 
have happened in the past, that is all well and good. But I am 
more interested in the current and I am more interested in the 
future.
    And as far as I am concerned in the current situation, we 
have a bipartisan office of the CAO. There is no history, there 
is no indication that I am aware of that anything they have 
done or anything that they are planning on doing is done on a 
partisan basis that I am aware of. And if you think there is, 
then I think you should bring it to the attention of the 
chairman.
    Mr. McCarthy. Well, if I could just clarify a statement. 
One thing I am saying here, and listening to the point I was 
trying to make, the way it changed in the process is we didn't 
have a committee that selected. This is not about Mr. Beard, 
this is about the office itself.
    Mr. Capuano. Mr. McCarthy, reclaiming my time, I really 
think that maybe you got to do some more work on what the CAO 
did while they were in office. They did things in that office 
that weren't even told to the minority. And I believe that is 
the kind of discussion maybe we should have outside the public 
eye. But I can repeat them point by point on what was not told 
to the minority by the past CAO. My hope and my presumption is 
that is not happening now. And if it is, I will do everything I 
can, and I am sure the chairman will, to rectify that.
    The idea is to have somebody there regardless of how they 
are appointed who will play fair on a day-to-day basis and 
treat us as individual Members as opposed to partisan Members. 
And again, if that is not happening now, I think you should 
bring it to the attention of the chairman and bring it to the 
attention of this committee and we will address it. Because I 
think on a repeated basis, I think this committee thus far has 
worked very well on a bipartisan basis. We have differences on 
philosophies, and that is fine. But I haven't noticed anything 
that has indicated a partisan split on this committee up until 
now.
    Mr. McCarthy. My comment was nothing about this committee. 
Because I will say I am the one who served on looking at 
Florida 13. And we came to a bipartisan--every single motion 
that is in there was unanimous. You and I work on a lot of 
different committees within here, and I feel that we work 
towards in that manner. But what you are telling me is also 
what I feel is making my point. If you felt a CAO that was 
hired in a bipartisan manner was not fair to you, then you have 
got to understand what I am feeling. If it became a bipartisan 
appointee, I would not then feel uncomfortable. But these are 
private things going there, so I am saying that is not the 
answer.
    Mr. Capuano. I am not suggesting you feel comfortable. I am 
suggesting that if you are going to say something is partisan 
or bipartisan or is too partisan that you need to come up with 
specific ideas, a specific concept of what actions have been 
taken. And I am not suggesting this is the place or the forum. 
That is up to you.
    Over time, I would like--I suggest--I am asking you, as a 
Member of this committee--we have worked together on other 
things. I would like to know if you think you are being treated 
unfairly not just by the CAO but by anybody else. Now, again, 
that is philosophical differences. We all understand that. But 
on these things this is not philosophical.
    Mr. McCarthy. I agree. I think the way we work here is 
fantastic. If you want an example, I would say you go back to 
when the CAO goes forward, it is bipartisan, regardless of who 
is in the majority, and equal basis----
    Mr. Capuano. Well, first of all, he has only been around 
for a few years, and last year we were as tired as hell, so I 
think this is an improvement.
    But the last thing I want to say is I want to make it clear 
that, relative to shared employees, that if the idea is to get 
to the free marketplace, which I have no problem with, the free 
marketplace also requires a level playing field. A level 
playing field means the same rules, the same costs, the same 
benefits.
    Now, correct me if I am wrong, but an employee of the House 
gets health insurance. It does not come out of our MRA. It 
comes out of the general House account. An employee gets 
pension payments that do not come out of our MRA. It comes out 
of the taxpayers, but not out of our MRA. A shared employee 
also has payroll taxes paid, not out of our MRA, yet out of the 
general House accounts.
    Yet a contractor has to pay for their own health insurance, 
which is a significant amount of money. A contractor has to pay 
for their own pension benefits, and a contractor has to pay for 
their own payroll taxes. Just off the top of my head. There may 
be other benefits, as well.
    I am not suggesting, I am simply saying that if we are 
going to stick with shared employees that are doing 
contractors' work, then I think we need to find a way to level 
the playing field. So that if you want to feel comfortable--I 
perfectly agree with you that you should have options. We all 
should have options. I totally agree. But those options should 
be on the basis of fair costs and fair returns for those costs.
    If we are going to say we are going to have somebody doing 
something that is not a technical full-time employee, fine, but 
let's level the playing field. If you want to go outside, fine, 
go to a contractor who has the same costs, the same overhead as 
everybody else, as opposed to somebody who has a significant 
benefit, which means no health insurance costs, no retirement 
costs and no payroll tax costs. Those are major costs in the 
private world.
    I am simply saying that these people have a significant 
benefit. If we want to do that, we need to be conscious of it; 
and we have to have that discussion as we go forward. I just 
want to make that point.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. McCarthy, one thing I wanted to share with you--a 
little troubling that you would not go there--I need to try to 
get you to a comfortable level that you would go there.
    Just to give you a couple of examples, I have been to Mr. 
Beard many times on different occasions where people come up to 
me with a problem; and he has never, not once, said who is it? 
Who is it for? Is it for a Democrat? Is it for a Republican? 
There were a couple that were quite evident that it was for 
somebody of--not the same party that I was with, and he gave us 
service. That is the way I would expect him to, no matter who 
it would be.
    I can understand from past experience, because I have a lot 
of issues from past experiences, but I would like to try to 
move forward, especially this committee. If there is a problem, 
I wish that we would do it together. I can't imagine Mr. Beard, 
anything that is legitimate and reasonable, would not bend over 
backwards, as he has done for me many, many times; and I want 
to keep that going.
    I mean, we had a problem. We had an employee have a problem 
that reflected on Congress. We had to fix that problem. We 
didn't fix it. The court fixed the problem. We ask the IG and 
the House Administrator come in and share with us and give us 
his report, which I do accept and I do support the report and 
the recommendation that you make.
    Do we need more? Absolutely. That is why we need to be 
here. Do we need education? I need education. I am a mutt. I 
told you that. I didn't get an education when I first came to 
Congress.
    Do the shared employees need to be educated? Absolutely. 
That is why we are having this hearing.
    Do we want to eliminate them? No, we want to make sure that 
they don't abuse the process.
    In any other way possible, with your cooperation, the best 
thing I heard here is, and the thing that I would like to hear, 
is both of you are cooperating and working together, both saw 
the report, both agree with it.
    Can there be other things that we can do? Absolutely. But 
we need to start and at least get the process going and let the 
people know our heads aren't in that sand. Your head isn't in 
the sand. You are testifying here in front of us. You also, Mr. 
Beard, are testifying in front of us.
    We need to listen. We need to implement them. There is 
something good to be implemented by Mr. Beard that we could do 
tomorrow, what he thinks is right and what you think and you 
think and you think are right. We will try to get that done. We 
need to protect ourselves here. It's just that simple.
    Yes, Mr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman.
    I didn't realize you were a mutt. I am also a mutt.
    The Chairman. Remind me of this.
    Mr. Ehlers. I am a Chihuahua, because I am a mutt without 
hair.
    But I guess we all have different perceptions of certain 
actions that are taken around this place, and I think that is 
showing up here.
    I will freely admit that one of the CAOs we had was quite 
partisan, and I believe the other was not, really tried to be 
fair to everyone. But, as you say, it is in the perception of 
the recipient of the services or lack of services.
    But I think our main point here is that we have discovered 
a problem, the IG has examined it very closely, I believe our 
committee now fully understands the problem, and we are going 
to do up some answers to it.
    Serving in public service brings with it some major 
obligations to the taxpayer, and among those is hard work, 
honesty, and we have to make sure that always takes place. I am 
willing to work with you and with the IG and with the CAO to 
make sure that we solve this problem and that there is no doubt 
in our mind or the public's mind that people working here are 
following the rules of the House, they are following the laws 
of the United States government, and they are getting the job 
done efficiently, expeditiously. That is our goal, and I am 
certainly going to commit to working with you on that.
    The Chairman. Thank you. I think we all agree on that. We 
will get Mr. McCarthy to a comfort level, no matter how long it 
takes.
    I appreciate it, Mr. Cornell. I appreciate it, Mr. Beard. 
Thank you for testimony. Thank you for being here today. We 
appreciate that.
    This hearing is now adjourned.
    [Whereupon, at 12:08 p.m., the committee was adjourned.]



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