[Senate Hearing 110-587]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-587
 
    STRENGTHENING THE UNIQUE ROLE OF THE NATION'S INSPECTORS GENERAL 

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

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 11, 2007

                               __________

        Available via http://www.access.gpo.gov/congress/senate

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

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
                       Holly A. Idelson, Counsel
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                 Melvin D. Albritton, Minority Counsel
                  Trina Driessnack Tyrer, Chief Clerk























                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Collins..............................................     4
    Senator Akaka................................................     7
    Senator McCaskill............................................     8
    Senator Coburn...............................................    34

                               WITNESSES
                        Wednesday, July 11, 2007

Hon. Clay Johnson III, Deputy Director for Management, Office of 
  Management and Budget..........................................    10
Hon. Glenn A. Fine, Inspector General, U.S. Department of Justice    12
Hon. Earl E. Devaney, Inspector General, U.S. Department of the 
  Interior.......................................................    15
Hon. Eleanor J. Hill, Former Inspector General, U.S. Department 
  of Defense.....................................................    19
Danielle Brian, Executive Director, Project on Government 
  Oversight......................................................    23

                     Alphabetical List of Witnesses

Brian, Danielle:
    Testimony....................................................    23
    Prepared statement...........................................    73
Devaney, Hon. Earl E.:
    Testimony....................................................    15
    Prepared statement...........................................    55
Fine, Hon. Glenn A.:
    Testimony....................................................    12
    Prepared statement...........................................    39
Hill, Hon. Eleanor J.:
    Testimony....................................................    19
    Prepared statement...........................................    63
Johnson, Hon. Clay III:
    Testimony....................................................    10
    Prepared statement...........................................    37

                                APPENDIX

Inspectors General Fact Sheet, June 2007, House Committee on 
  Oversight and Government Reform................................    76
Prepared statements submitted for the Record from:
    Hon. David M. Walker, Comptroller General of the United 
      States, GAO................................................    83
    Hon. Phyllis K. Fong, Inspector General, U.S. Department of 
      Agriculture................................................   106
    Jane E. Altenhofen, Inspector General, National Labor 
      Relations Board............................................   120
    Dr. Christine Boesz, Inspector General, National Science 
      Foundation.................................................   123
    Susan Khoury, Former Special Agent, Office of the Inspector 
      General, U.S. Nuclear Regulatory Commission................   129
Responses to Post-hearing Questions for the Record from:
    Mr. Johnson with an attachment...............................   133
    Mr. Fine.....................................................   141
    Mr. Devaney..................................................   144
    Ms. Hill.....................................................   145
    Ms. Brian....................................................   147


    STRENGTHENING THE UNIQUE ROLE OF THE NATION'S INSPECTORS GENERAL

                              ----------                              


                        WEDNESDAY, JULY 11, 2007

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:02 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Akaka, McCaskill, Collins, and 
Coburn.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. Good morning. Welcome to the hearing. I 
am going to begin, unusually, without Senator Collins here 
because she had a prior commitment and she is going to arrive a 
little late. But I thank you all for coming.
    This hearing is on the topic of ``Strengthening the Unique 
Role of the Nation's Inspectors General.'' This morning we are 
going to ask two distinct but related questions fundamental to 
the operation of our Nation's Government watchdogs. One is: Who 
is watching the watchdogs? And the second is: Who is watching 
out for the watchdogs?
    We ask these questions with some intensity because of 
recent events that raise concerns that some Inspectors General 
may have been retaliated against by their agency heads because 
they were, in effect, too independent, while other Inspectors 
General have acted in a way that has led some to claim that 
they were not independent enough.
    In today's hearing, we are going to ask our panelists how 
we can best maintain, indeed strengthen the independence that 
is crucial if these offices are to carry on their vitally 
important jobs of ensuring that taxpayers' money is spent 
efficiently and that the executive departments of our 
government carry out their responsibilities fairly.
    In the United States, the job of Inspector General is 
actually older than the Republic itself, tracing back to 
Prussian Baron Friedrich von Steuben's service as Inspector 
General to General George Washington during the Revolutionary 
War. The conflict inherent in the Inspector General's office 
was clear even then. Washington wanted von Steuben and his 
inspectors reporting only to him. Von Steuben wanted more 
independence.
    The Continental Congress, perhaps in a more harmonious and 
compromising day than our own, split the difference by passing 
legislation requiring that while Inspector General von Steuben 
would report directly to General Washington, his reports would 
go to Congress as well. The system worked so well that many of 
the ideas and systems that von Steuben began putting into place 
in 1778 are still used by military Inspectors General today.
    Building on this model and, interestingly, precisely 200 
years later, in 1978 both Houses of Congress unanimously passed 
the Inspectors General Act that created an office of Inspector 
General in 12 major departments and agencies that would report 
both to the heads of the agencies as well as to Congress. These 
new IGs were empowered with even more independence than their 
military counterparts to ensure that they would be able to 
conduct truly robust oversight. The law was amended in 1988 to 
add an Inspector General to almost all executive agencies and 
departments.
    Overall, I would say that these laws and the Inspectors 
General are working well, as desired, in the public interest to 
combat waste, fraud, and abuse in the Federal Government.
    According to the President's Council on Integrity and 
Efficiency, last year alone IG audits led to $9.9 billion in 
potential savings and another $6.8 billion in savings when the 
results of civil and criminal investigations are added in.
    Two of our witnesses today--Department of Justice Inspector 
General Glenn Fine and Department of the Interior Inspector 
General Earl Devaney--are models, in my opinion, of what an 
Inspector General should be.
    Mr. Fine, for example, recently detailed the sloppy and 
sometimes inappropriate use of National Security Letters to 
conduct wiretaps within our country. Mr. Devaney has uncovered 
costly errors regarding oil and gas leases, while also 
challenging lax ethical conduct by Department of the Interior 
officials.
    While obviously not all IG activities can or should 
generate as much attention as those two investigations I have 
mentioned, this is the kind of independence and credible work 
that really sets a standard and is appreciated.
    Unfortunately, there are recent reports about IGs that are 
more troubling with regard to their relationship to their 
agency heads, and noteworthy here and recent is the former 
Smithsonian Inspector General, Debra Ritt, who said she was 
pressured by the former Director of the Smithsonian, Lawrence 
Small, to drop her investigation into the business and 
administrative practices of Mr. Small and other high-ranking 
officials at the Smithsonian.
    The investigation continued--first by Ms. Ritt and then by 
her successor--and ultimately revealed that Mr. Small had been 
involved in a series of unauthorized expenditures.
    At the General Services Administration, Administrator 
Lurita Doan has been highly and publicly critical of Inspector 
General Brian Miller's audits of the agency's office practices 
and into prices vendors were charging the government for 
products or services, at one point, according to Inspector 
General Miller, actually calling his auditors ``terrorists'' 
and threatening to cut his budget and responsibilities.
    At a different end of the spectrum, we have had some IGs 
step down amid allegations about their misconduct. At NASA, for 
instance, an Administration investigation of IG Robert Cobb 
concluded that he had created an appearance of lack of 
independence by his close relationship with the NASA 
Administrator and that he had created an ``abusive work 
environment.''
    So today I think this Committee wants to reaffirm its 
support of the Inspectors General and the critical work that 
they do on our behalf and on the taxpayers' behalf, and we want 
to ask how best to balance the need for the IG offices to be 
independent investigative forces for good government, while 
still ensuring that those investigations are thorough and fair.
    I know that both Senator Collins and Senator McCaskill have 
given much thought to this topic and have made proposals for 
change that I hope we will have the opportunity to discuss this 
morning.
    [The prepared statement of Senator Lieberman follows:]
                PREPARED STATEMENT OF CHAIRMAN LIEBERMAN
    Good morning. In today's hearing, ``Strengthening the Unique Role 
of the Nation's Inspectors General,'' this Committee will examine two 
distinct but related questions fundamental to the effective operation 
of our nation's government watchdogs.
    One: ``Who is watching the watchdogs?
    And two: ``Who is watching out for the watchdogs?''
    We need to ask these questions because recent news stories have 
said that some Inspectors General may have been retaliated against by 
their agency heads, while other Inspectors General have created the 
appearance of not being independent enough, sweeping problems and 
complaints under the rug.
    With today's hearing, we are going to ask our panelists for advice 
on how we can improve the existing Inspectors General legislation to 
encourage and maintain the independence that is crucial if these 
offices are to carry on their vitally important jobs of ensuring that 
taxpayers' money is spent efficiently and that the executive 
departments of our government carry out their jobs fairly.
    In the United States, the job of Inspector General is older than 
the Republic itself, tracing back to Prussian Baron Friedrich von 
Stueben's service as Inspector General to General George Washington 
during the Revolutionary War.
    The conflict inherent in the Inspector General's office became 
clear even back then. Washington wanted von Steuben and his inspectors 
reporting only to him. Von Steuben wanted more independence.
    The Continental Congress split the difference by passing 
legislation requiring that while Inspector General von Steuben would 
report directly to General Washington, his reports would go to Congress 
as well.
    The system worked so well that many of the ideas and systems von 
Steuben began putting into place in 1778 are still used by military 
Inspectors General today.
    Building on this model, precisely 200 years later, in 1978, both 
Houses of Congress unanimously passed the Inspectors General Act that 
created an office of Inspector General in 12 major departments and 
agencies that would report both to the heads of the agencies as well as 
Congress.
    These new IGs were empowered with even more independence than their 
military counterparts to ensure they would be able to conduct robust 
oversight.
    The law was amended in 1988 to add an Inspector General to almost 
all executive agencies and departments to combat waste, fraud, and 
abuse.
    Overall, the law is working as desired. According to the 
President's Council on Integrity and Efficiency, last year alone IG 
audits resulted in $9.9 billion in potential savings and another $6.8 
billion in savings when the results of civil and criminal 
investigations are added in.
    Two of our witnesses today--Department of Justice Inspector General 
Glenn Fine and Department of the Interior Inspector General Earl 
Devaney--are in my view models of what an IG should be.
    Among the many efforts of his office, Mr. Fine recently detailed 
the sloppy and often inappropriate use of National Security Letters to 
conduct wiretaps within the United States. Mr. Devaney has uncovered 
costly blunders regarding oil and gas leases, while challenging lax 
ethical conduct by department officials.
    While not all IG activities can or should generate as much 
attention as those investigations, this is the kind of independent and 
credible work we want to make the standard for all Inspectors General 
offices and that means we have to examine where the system has flaws.
    On the one end, we have heard reports of the independence of 
Inspectors General threatened, such as former Smithsonian Inspector 
General Debra S. Ritt, who said she was pressured by former Smithsonian 
Director Lawrence Small to drop her investigation into the business 
practices of Small and other high-ranking officials at the Smithsonian.
    The investigation continued--first by Ritt then by her successor--
and ultimately revealed that Small, among other things, had charged the 
Smithsonian $90,000 in unauthorized expenditures, including chartered 
jet travel, his wife's trip to Cambodia, hotel rooms, luxury car 
service, and expensive gifts.
    Over at the General Services Administration, Administrator Lurita 
Doan has been highly and publicly critical of Inspector General Brian 
Miller's audits of the agency's office practices and into prices 
vendors were charging the government for products or services, at one 
point even reportedly calling his auditors ``terrorists,'' and 
threatening to cut his budget and responsibilities.
    At the other end of the spectrum, we've had several IGs step down 
amid allegations about their conduct and some have called for the 
resignation of the NASA Inspector General Robert Cobb.
    As many in this room are aware, an Administration investigation of 
Mr. Cobb concluded that he has created an appearance of lack of 
independence by his close relationship with the NASA Administrator, and 
has created an ``abusive work environment.''
    With today's hearing, we want to start exploring the question of 
how best to balance the need of the IG offices to be an independent 
investigative force for good government practices within their 
departments and agencies, while still ensuring that those 
investigations are thorough and fair.
    I know both Senators Collins and McCaskill have given much thought 
to this topic and have proposals for change that I hope we'll have the 
opportunity to discuss this morning.
    With that, I want to thank today's expert witnesses for agreeing to 
share their thoughts and experience with this Committee to help guide 
our legislative efforts.

    Chairman Lieberman. I am delighted that I was able to offer 
my opening statement in just the right length so that Senator 
Collins has arrived. I thank you and I yield to you now.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you very much, Mr. Chairman. I 
apologize for not being here to listen to your opening 
statement, which I am sure was, as always, brilliant and 
insightful and eloquent, and I look forward to reading it in 
the record, if not sooner.
    Chairman Lieberman. Yes, copies are available. [Laughter.]
    Senator Collins. Thank you, Mr. Chairman.
    The Inspectors General in the Federal Government perform 
invaluable services for the people of this country. They serve 
the taxpayers' interest in making government operations more 
efficient, effective, and economical. They assist those of us 
who serve in Congress in performing our oversight duties and in 
determining whether or not investigations or legislative 
reforms are in order. They detect and report criminal activity. 
They alert agency heads to problems within their organizations.
    In its most recent report, the President's Council on 
Integrity and Efficiency reported that the work of the 
Inspectors General has resulted in nearly $10 billion in 
potential savings from audit recommendations; $6.8 billion in 
investigative recoveries, and more than 6,500 indictments.
    The IGs have, in fact, undertaken many major investigations 
that have benefited the taxpayers of this country. To cite just 
a few of the many possible examples:
    The DHS IG investigated waste, fraud, and abuse in the wake 
of Hurricane Katrina--an effort that ultimately revealed an 
astonishing loss of taxpayers' funds exceeding a billion 
dollars.
    The Special Inspector General for Iraq Reconstruction not 
only uncovered nearly $2 billion of waste, fraud, and abuse, 
but also detected criminal activity in contracting that led to 
four convictions.
    Just last week, the DHS IG reported that FEMA has not 
applied minimum security standards to its laptop computers and 
has not implemented an adequate inventory management system. 
These findings indicate continuing vulnerability to equipment 
and data theft, as well as exposure to computer viruses and 
hackers.
    And to cite the work of one of our witnesses, IG Glenn Fine 
has performed vital work in monitoring the Justice Department's 
implementation of the PATRIOT Act and the FBI's use of National 
Security Letters.
    Clearly, the Inspectors General that have been provided by 
statute for 64 Federal entities perform a vital role. Whether 
they are working in a Cabinet Department like Justice, 
Interior, or Defense, at the Export-Import Bank, or at the 
Postal Service, they are indispensable watchdogs for auditing 
and improving government performance.
    It is, therefore, important that we help to ensure that the 
Inspectors General are selected, compensated, protected, and 
empowered in ways that will enhance their service to our 
country.
    As the Chairman mentioned, I have authored legislation 
toward this end with the support of the Chairman and Senator 
McCaskill. Our legislation, S. 680, would take some important 
steps toward strengthening the role and independence of our 
Inspectors General.
    For example, the bill would raise the level of pay for the 
IGs while prohibiting cash bonuses from agency heads. We have a 
situation right now where the Deputy IGs in some departments 
make more money than the Inspectors General themselves because 
they receive cash bonuses. Now, clearly, it would be 
inappropriate for an IG to receive a bonus from the agency head 
because it sets up an obvious conflict of interest. So I think 
the answer to this is to move the IG up on the pay scale, but 
prohibit the award of bonuses.
    Another provision of the bill would provide that IGs who 
are appointed by agency heads rather than by the President be 
selected for their job qualifications and not their political 
affiliations--in other words, the same kind of criteria that 
are used for the presidential appointments.
    Another provision of the bill would bolster the 
independence of IGs appointed by agency heads by requiring a 
15-day notice to Congress of intent to terminate.
    The bill would strengthen the subpoena power of the IGs 
with respect to electronic documents--really just updating the 
law.
    And it would grant all IGs the ability to use the Program 
Fraud Civil Remedies Act to recover fraudulently spent money.
    As I mentioned before she arrived, there are other Members 
of the Senate, including Senator McCaskill, who have proposed 
further changes in the laws on Inspectors General. All of this 
activity and the Chairman's holding this hearing demonstrates 
an encouraging level of appreciation for and interest in the 
work of the IGs.
    Today's hearing should provide us with a valuable resource 
as we study the legislative options, and I join the Chairman in 
welcoming our distinguished panel, and I look forward to 
hearing their observations.
    [The prepared statement of Senator Collins follows:]
                 PREPARED STATEMENT OF SENATOR COLLINS
    The Inspectors General in the Federal Government perform invaluable 
services for the people of the United States.
    They serve the taxpayers' interest in making government operations 
more efficient, effective, and economical. They assist Congress in 
performing its oversight duties and in determining when investigations 
or legislative reforms are in order. They detect and report criminal 
activity. They alert agency heads to problems within their 
organizations.
    In its most recent report, the President's Council on Integrity and 
Efficiency reported that the work of Inspectors General has resulted 
in:

      $9.9 billion in potential savings from audit 
recommendations;
      $6.8 billion in investigative recoveries;
      6,500 indictments;
      8,400 successful prosecutions;
      7,300 suspensions or debarments; and
      4,200 personnel actions.

    The IGs have undertaken major investigations. To cite just a few of 
many possible examples,

      The DHS IG investigated waste, fraud, and abuse in the 
wake of Hurricane Katrina--an effort that ultimately revealed a loss of 
taxpayer funds exceeding a billion dollars.
      The Special Inspector General for Iraq Reconstruction not 
only uncovered nearly $2 billion of waste, fraud, and abuse, but also 
detected criminal activity in contracting that led to four convictions.
      Just last week, the DHS Inspector General reported that 
FEMA has not applied minimum security standards to its laptop computers 
and has not implemented an adequate inventory-management system. These 
findings indicate continuing vulnerability to equipment and data theft, 
as well as exposure to computer viruses and hackers.
      And, to cite the work of one of our witnesses, IG Glenn 
Fine has performed vital work monitoring the Justice Department's 
implementation of the Patriot Act and the FBI's use of national 
security letters, ensuring that the government's response to terrorist 
threats does not undermine civil liberties.

    Clearly, the Inspectors General that have been provided by statute 
for 64 Federal entities perform a vital role. Whether they are working 
in Cabinet Departments like Justice, Interior, or Defense, at the 
Export-Import Bank, or at the Postal Service, they are indispensable 
watchdogs for auditing and improving government performance.
    It is, therefore, important that we help to ensure that the 
Inspectors General are selected, compensated, protected, and empowered 
in ways that will enhance their services to our country.
    I have authored legislation toward this end with the support of 
colleagues, including Senator Lieberman and Senator McCaskill.
    My bill, S. 680, would take some important steps toward 
strengthening the role and the independence of our Inspectors General. 
For example, it would:

      raise the pay of Presidentially appointed IGs to Level 
III while prohibiting cash bonuses from agency heads;
      provide that IGs appointed by agency heads be selected 
for their job qualifications, not their political affiliation;
      bolster the independence of IGs appointed by agency heads 
by requiring a 15-day notice to Congress of intent to terminate;
      strengthen the subpoena power of the IGs with respect to 
electronic documents; and
      grant all IGs the ability to use the Program Fraud Civil 
Remedies Act to recover fraudulently spent money.

    Other Members of Congress have also proposed changes to the laws on 
Inspectors General. All of this activity demonstrates an encouraging 
level of appreciation for and interest in the work of the IGs.
    Today's hearing should be a valuable resource as we study our 
legislative options. Our witnesses bring to our hearing deep experience 
in the IG process as well as views from within and outside of 
government. I join the Chairman in welcoming the witnesses, and I look 
forward to hearing their observations.

    Chairman Lieberman. Thanks very much, Senator Collins.
    Normally we just have the two of us make opening 
statements, but since we only have one panel and only four 
Senators here, I want to give Senator Akaka and Senator 
McCaskill a chance for an opening statement, if they would like 
to offer one.
    Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Mr. Chairman. I join 
you and the Ranking Member in welcoming our distinguished panel 
members.
    I want to thank you for organizing this important hearing, 
and as a matter of history, it was 30 years ago, in 1978, that 
the Inspector General Act was passed. And since then really 
there has not been a review. So, Mr. Chairman, I am so glad 
that we are taking the time to review the IGs' responsibilities 
here at this time. And it is an opportune time to review not 
only the successes of our Nation's Inspectors General but to 
consider how their role can be strengthened.
    Inspectors General serve as watchpersons for the Executive 
Branch, promoting honesty, integrity, and efficiency throughout 
the Federal Government. IGs, along with Federal whistleblowers 
and the Office of Special Counsel, make sure the Federal 
Government works for the American people.
    I am deeply troubled by recent allegations of agency 
attempts to interfere with the independence of Inspectors 
General. Among the most important duties of the IG is to 
investigate and report the facts when there is evidence of 
high-level wrongdoing in an agency. This is also perhaps an 
IG's most difficult duty, and it is a time when the IG's 
independence is most likely to be challenged.
    Recent allegations of agency attempts to interfere with the 
IGs' investigations remind us that IG independence is not an 
academic matter but a pressing policy concern. For example, 
Chairman Lieberman mentioned then-Secretary of the Smithsonian 
Institution Lawrence Small who reportedly attempted to 
interfere with the Smithsonian IG's audit of his expenses 
before allegations of top-level wrongdoing were revealed.
    I am particularly interested in learning more about 
ensuring that IG offices have adequate resources. Perhaps they 
should be required to submit their budget requests directly to 
Congress. Inspectors General save taxpayers billions of dollars 
by promoting efficiency and rooting out waste, fraud, and 
abuse. So, ensuring that IG offices are adequately funded is a 
wise investment of taxpayer money.
    Again, Mr. Chairman, I want to thank you for holding this 
hearing, and I look forward to the testimony of our witnesses.
    [The prepared statement of Senator Akaka follows:
                  PREPARED STATEMENT OF SENATOR AKAKA
    Thank you Mr. Chairman. I join you in welcoming our distinguished 
panel members. I want to thank you for organizing this important 
hearing. As the thirty-year anniversary of the Inspector General Act of 
1978 nears, it is an opportune time to review the many successes of our 
nation's Inspectors General (IG) and to consider how their role can be 
strengthened.
    Inspectors General serve as watchdogs for the Executive Branch, 
promoting honesty, integrity, and efficiency throughout the federal 
government. IGs--along with federal whistleblowers and the Office of 
Special Counsel--make sure the federal government works for the 
American people.
    I am deeply troubled by recent allegations of agency attempts to 
interfere with the independence of Inspectors General. Among the most 
important duties of an IG is to investigate and report the facts when 
there is evidence of high-level wrongdoing in an agency. This is also 
perhaps an IG's most difficult duty, and it is the time when the IG's 
independence is most likely to be challenged. Recent allegations of 
agency attempts to interfere with IGs' investigations remind us that IG 
independence is not an academic matter, but a pressing policy concern. 
For example, then-Secretary of the Smithsonian Institution, Lawrence 
Small, reportedly attempted to interfere with the Smithsonian IG's 
audit of his expenses before allegations of top-level wrongdoing broke.
    I am particularly interested in learning more about ensuring that 
IG offices have adequate resources. Perhaps they should be required to 
submit their budget requests directly to Congress. Inspectors General 
save taxpayers billions of dollars by promoting efficiency and rooting 
out waste, fraud, and abuse, so ensuring that IG offices are adequately 
funded is a wise investment of taxpayer money.
    Again, Mr. Chairman, I thank you for holding this hearing today, 
and I look forward to learning more about these important issues.

    Chairman Lieberman. Thanks very much, Senator Akaka.
    Senator McCaskill, as I assume many know, if not everyone, 
comes to the Senate with the unique experience of having been 
the auditor for the State of Missouri, and she has submitted 
legislation regarding the Inspectors General. So I am glad to 
call on her now for a statement, if she would like.

             OPENING STATEMENT OF SENATOR McCASKILL

    Senator McCaskill. Thank you so much, Mr. Chairman.
    First, I want to say that my experience as an auditor 
defines my interest in this area, but I certainly acknowledge 
that I am merely adding to the great work of this Committee and 
hopefully can be a contributor to legislation that would 
hopefully move forward that I know that the Ranking Member and 
the Chairman have been engaged in long before I got here. And I 
am anxious to be a bit player and contribute as we try to make 
something that is very good better.
    It is interesting how audits are perceived by the people 
that are being audited, and really how that perception is 
reflected in the public tells the public how effective that 
work is going to be.
    If an investigation is received by the agency with good, 
constructive criticism--``We are going to fix these things''--
then that is the kind of dynamic that the public should 
celebrate.
    On the other hand, when someone takes the attitude that 
``We are as good as we are, and we don't need to be any better, 
and you are meddling or you are trying to improve something 
that doesn't need to be improved,'' that is a bad sign. And, 
really, what we are trying to do here today is embrace the 
attitude that we can make something that is good better; that 
we can foster the independence; that we can promote the 
aggressive stance that IGs must take on behalf of the public 
and make sure that their work is, in fact, consumed by the 
public.
    One of the provisions in the law that I have introduced 
deals with that public consumption of the product. The way an 
audit gets juice and heat behind it is for the public to 
understand what has happened.
    I was surprised to learn how many agencies did not have the 
IG's link on their home page. It is a big problem that you have 
to search for Inspector General reports on the Internet, that 
they are not immediately available to anyone who wants to see 
what the Inspector General has found. And, frankly, they ought 
to also put on the home page what the response to that finding 
was and whether or not the findings have been addressed.
    I notice in some of the testimony that we are going to hear 
today that there is talk about potential savings that have 
occurred. Well, ``potential'' is not a good word for an 
auditor. We want to be much more exact than ``potential.''
    I think we need to begin to turn the page on accountability 
on the Inspector General corps and say to the agencies in a 
public way, ``You must tell us if you have, in fact, 
implemented the findings of your Inspector General. And if not, 
why not?'' That is an important part of this public 
accountability piece that the Inspectors General represent.
    I have had the opportunity to read hundreds of pages of IG 
reports and GAO reports since I have been here. My staff 
accuses me of being a little weird because I like to read IG 
reports and GAO reports. I would rather read that work than any 
other work that they bring to me. As I read them, I am struck 
by the level of professionalism that we have in the Federal 
Government in this area.
    There are some bad apples, and I think the legislation that 
the Ranking Member has proposed and the legislation that I have 
proposed try to get at a system where the bad apples are easily 
discovered and easily removed from the orchard so that we can 
celebrate the professionalism of the Inspectors General within 
the Federal Government and the very important work they do.
    I thank you all for being here today and for your 
testimony, and I look forward to an opportunity to ask 
questions.
    Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks, Senator McCaskill. I want to 
certify for the record that in the time I have known you, I 
have never thought of you as ``weird.'' [Laughter.]
    Senator McCaskill. Thank you.
    Chairman Lieberman. Incidentally, I do want to say that 
Senator Collins and I and this Committee like to legislate. We 
feel we have a responsibility to legislate when there is a need 
to do so. So I want the witnesses to know that your testimony 
is important to us because both in the proposal of Senator 
Collins that I am privileged to cosponsor and Senator 
McCaskill's legislation, there are recommendations for 
legislative changes that relate to the IGs. And we are going to 
move ahead this year and try to mark those up, so your 
testimony will have direct relevance to that.
    Our first witness is Clay Johnson III, Deputy Director for 
Management of the Office of Management and Budget. This 
position--I believe in Administrations before this one as 
well--has been the one--certainly in this one--that has tended 
to be the coordinator and overseer and including some Committee 
responsibility for the Inspectors General. So, Mr. Johnson, I 
thank you for being here, and we welcome your testimony now.

  TESTIMONY OF HON. CLAY JOHNSON III,\1\ DEPUTY DIRECTOR FOR 
          MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Johnson. Mr. Chairman, Senator Collins, Senator Akaka, 
Senator McCaskill, thank you for having me up here. I am, by 
Executive Order, the Chair of the President's Council on 
Integrity and Efficiency (PCIE) and the Executive Council on 
Integrity and Efficiency (ECIE). Also, by statute or Executive 
Order, I am the Chair of the CFO Council, and the CIO Council. 
I am the Vice Chairman of the Chief Human Capital Officer 
Council. I am the Chair of the Chief Acquisition Officer 
Council. I am involved in a lot of different entities in the 
Federal Government whose job it is to make sure that the money 
is well spent, that we get what we pay for.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Johnson appears in the appendix 
on page 37.
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    Chairman Lieberman. Tell us just for a moment about PCIE 
and ECIE, what they are, for the record.
    Mr. Johnson. They were created by Executive Order, I think 
in 1996, by President Clinton. The PCIE is a council or 
association of the Senate-confirmed, presidentially appointed 
IGs for the larger agencies. I think there are 26 of them. Then 
the ECIE is the same thing for the not-presidentially appointed 
but the head-of-agency appointed IGs, the smaller agencies. And 
it is the entity by which they come together and look at common 
opportunities, common problems, training, orientation, 
legislation, that sort of thing. And my involvement is I am the 
Chair and the person that really runs each of those is the vice 
chair of each of them--who is an IG--and I used to think that 
my involvement was largely non-substantive until the last year 
or year and a half, and it has become a significant part of 
what I do because of all these issues that you are talking 
about here in this hearing.
    My association with the IGs is something I enjoy as much as 
anything I do. There has been reference here to the quality and 
quantity of the work of the IG community, and it is superb. And 
I really enjoy being associated with it. I like fixing things. 
I like bringing order to chaos and method to madness, and that 
is what IGs do. And we want the money to be better spent. We 
want to achieve desired goals.
    You talk about liking to legislate. What we like doing in 
the ``M'' world at OMB is we like to take the policies that 
have been agreed to and the money that has been appropriated 
and make sure that the money is well-spent to implement the 
policies to achieve the desired outcomes. And the CFOs, CIOs, 
etc., and the IGs help do that.
    You talked about how important the IGs are to the 
Legislative Branch. They are equally important to the Executive 
Branch. They are the means by which the heads of agencies 
understand what is not working as well as it should or as well 
as desired in their agencies, and so energies can be focused on 
fixing those things.
    I look forward to working with you on all the different 
legislation that has been proposed to see if there are 
opportunities to make the IG community create the potential for 
it to be even more effective. Some parts of the legislation I 
disagree with. Some I agree with. Some I agree with the goal 
but think there might be a different way of doing it. My 
general statement is: I agree with the findings of the report 
by the General Accountability Office when they had their open 
forum, I think last fall or some time, that report, I agree 
with the findings there.
    One of the things I would like to comment on here at the 
beginning is about trying to guarantee certain things for the 
IG community, guaranteeing certain levels of independence, 
guaranteeing a certain relationship between the agency head and 
the IG. And I do not think we can legislate a level of 
independence or we can legislate a relationship between an 
agency head and an IG. It is just impossible.
    I think the key is that we are very clear about what we 
expect IGs to do, that there are high levels of accountability, 
there is a lot of clarity, that we want lots of--the numbers 
that were quoted here earlier, $9 billion and $8 billion. We 
want lots of identification of waste, fraud, and abuse, lots of 
recommendations about how to fix it, lots of follow-through on 
whether agencies, in fact, did what they said they were going 
to do and so forth. We need lots and lots of that. We need lots 
of transparency, lots of assurance that is happening.
    I think we need a very clear definition of--not 
prescriptively, but in general--what we think an effective 
working relationship is between an IG and an agency and what is 
the desired relationship, what is too much dependence, too much 
independence. And then I think we need to hold IGs and agency 
heads accountable for accomplishing those goals.
    That is the way we achieve desired outcomes as opposed to 
trying to guarantee in legislation that a level of independence 
will be this and not this.
    There are mechanisms in place--the Integrity Committee, 
hearings, notification of Congress, and so forth--that 
guarantee that if an agency head or an IG gets off base, there 
are mechanisms that bring that to everybody's attention to get 
it back on track.
    If we are not having those hearings, if we are not finding 
that people are challenging the nature of an IG and agency head 
relationship, something is wrong, our IGs are not being 
aggressive enough, our agency heads are being too compliant, 
and so forth.
    So let's not be surprised if we waver off track here on 
occasion. That happens when people are involved, and the key is 
are there mechanisms in place to bring it to everybody's 
attention very quickly so we can get it back on track.
    In general, I believe that it is important that IGs not be 
feared by their agency heads. As David Walker said, their goal 
at GAO is to be respected, not feared. I do not like the idea, 
as Mr. Devaney points out in his written testimony, of the dog 
metaphors, but it is important that IGs not be lapdogs or 
junkyard dogs. And I think it is very important that 
independence be primarily a focus of what the findings of an IG 
are, not what kind of personal relationship they have with the 
agency head. I know two really well-respected IGs, and one 
would not be troubled by going to the agency head's Christmas 
party. The other one would not think of going to the agency 
head's Christmas party. And yet they are both exceptional IGs. 
That says to me that how they manifest their dependence or 
independence of the agency head has little to do with the 
quality of their work.
    Anyway, those are my comments. Sorry I ran long, but it is 
with great honor that I am here to talk to you about these IGs 
and to work with you subsequent to this hearing on the 
legislation that we will be considering.
    Chairman Lieberman. Thank you, Mr. Johnson. That is a good 
beginning, and I know we will have questions for you.
    Next is the Hon. Glenn Fine, Inspector General of the 
Department of Justice. Thanks for your good work, and welcome.

  TESTIMONY OF HON. GLENN A. FINE,\1\ INSPECTOR GENERAL, U.S. 
                     DEPARTMENT OF JUSTICE

    Mr. Fine. Thank you. Mr. Chairman, Senator Collins, Members 
of the Committee, thank you for inviting me to testify at this 
hearing as the Committee considers how to strengthen the 
independence and accountability of Inspectors General.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Fine appears in the appendix on 
page 39.
---------------------------------------------------------------------------
    IGs are given broad authorities to perform a challenging 
job, and I believe that, overall, most IGs have performed their 
responsibilities independently and effectively. But I believe 
that it is useful to regularly assess IG authorities, 
performance, and accountability, particularly because of the 
importance of their work and the impact they can have 
throughout the government.
    In my testimony today, I will discuss my personal views on 
the proper role of an effective Office of Inspector General. 
Next I will comment on various proposals to strengthen the role 
of IGs, including proposed amendments to the IG Act. Finally, I 
will briefly discuss a limitation on the jurisdiction of the 
Justice Department OIG that I believe is inappropriate and 
should be changed.
    First, with regard to the role and attributes of an 
effective IG, the IG Act notably describes our offices as 
``independent and objective'' units within Federal agencies. 
This is a critical requirement for an Inspector General. We 
must be and we must be perceived as both independent and 
objective. While OIGs are part of their agencies, we are 
different from other components within the agency. For example, 
while we listen to the views of the agency and its leadership, 
we make our own decisions about what to review, how to review 
it, and how to issue our reports.
    At the DOJ OIG, we independently handle contacts outside 
the agency, such as communicating with Congress and the press 
separately from the Department's Offices of Legislative and 
Public Affairs.
    An important role for an Inspector General is to provide 
transparency on how government operates. At the DOJ OIG, we 
believe it is important to release publicly as much information 
about our activities as possible, without compromising 
legitimate operational or privacy concerns, so that Congress 
and the public can assess the operations of government.
    An Inspector General also must be tenacious. It is not 
enough to uncover a problem, issue a report with 
recommendations, and move on to the next topic. We must 
continue to examine critical issues again and again in order to 
gauge the agency's corrective actions and improvements over 
time.
    In carrying out our responsibilities, we also must 
recognize that the job of an IG is not designed to make us 
popular. I am sure that I am not the most popular person in the 
Justice Department. However, I hope our work is respected and 
that we are viewed as being tough but fair.
    By the nature of the role, IGs cannot please everyone, nor 
should we try. We regularly are accused of being either too 
harsh or too soft, of acting like junkyard dogs or lapdogs, of 
being out to ``get'' someone or out to ``cover up'' a problem, 
of engaging in a witch hunt or a whitewash. Sometimes we are 
described in each of these ways by different sides in the same 
matter. Ultimately, our goal should not be focused on whether 
our work makes our agency look good or bad, but whether we help 
improve its operations. Our role is to be independent, to 
objectively identify problems, and to provide effective 
solutions to correct deficiencies.
    To be an effective IG, it is important to develop a 
professional working relationship with agency leadership. I 
have been fortunate to have professional relationships with all 
of the Department leaders during my tenure. Since I have been 
the IG, the Justice Department has had three Attorneys General 
and four Deputy Attorneys General--all of whom have appreciated 
the importance and difficulty of the OIG's work. I met with 
them on a regular basis, but none of them ever attempted to 
direct or interfere with our work. They recognized that, to be 
effective and credible, the OIG had to be scrupulously 
independent in how we conducted our work and reported our 
findings.
    In general, I believe the IG Act has worked well and 
provides IGs with the tools and independence necessary for us 
to perform our mission. Nevertheless, I believe it is useful to 
examine proposals to strengthen the role of Inspectors General, 
and I appreciate this Committee's willingness to consider that 
topic.
    I will now turn to various proposals that have been 
advanced to amend the IG Act and will offer my personal view on 
additional changes I believe the Committee should consider.
    One proposed change to the IG Act would provide Inspectors 
General a fixed term of office, subject to possible 
reappointment, and removal during that term only for cause. In 
my mind, the need for and benefits of this change is a close 
question. The change seeks to strengthen the independence of 
IGs by giving them more job security. However, I do not believe 
that the threat of removal currently undermines the 
independence of IGs or the willingness of IGs to address the 
hard issues or to confront their agencies when necessary.
    In addition, the proposal could create a different problem. 
If an IG seeks reappointment near the end of his or her term of 
office, he or she would be dependent on the recommendation of 
the agency head, which could create both a conflict and an 
appearance of a conflict. While I agree that ensuring the 
independence of IGs is critical, I am not convinced that this 
proposed change would accomplish that important goal without 
creating additional problems.
    I believe that the most important issue that can directly 
undermine the effectiveness of IGs relates to the adequacy of 
resources. On the whole, I believe that OIGs have been 
underfunded, particularly when compared with the growth of our 
agencies and the increased demands placed on us. While the size 
of OIGs have remained flat, our agencies and our 
responsibilities have grown dramatically. I believe that with 
the added responsibilities and the growth of the agencies, OIGs 
should receive a commensurate increase in resources, which has 
not happened.
    I am proud of the work of OIG employees and their 
dedication in handling their many important assignments. But 
our resources are significantly constrained, and I am concerned 
that inadequate resources can affect both the thoroughness and 
timeliness of projects that are by necessity staffed more 
thinly than warranted. While I recognize that this Committee 
cannot solve the resource issue on its own, I agree with the 
proposal to allow OIGs to submit their budget requests directly 
to OMB and Congress and to independently make the case for 
resources.
    As discussed in my written statement in more detail, I also 
support other proposed changes to the IG Act, such as providing 
a dedicated source of funding for the IG training academies, 
addressing the issue of IG pay, which has lagged significantly 
behind the salaries of other Federal employees, and amending 
the IG Act to allow ECIE IGs to petition the Attorney General 
for statutory law enforcement powers.
    Finally, in line with the intent of this hearing to 
consider ways to strengthen the role of Inspectors General, I 
want to raise an issue that affects the Justice Department OIG 
only, but which I believe is a critical issue that contravenes 
the principles and spirit of the IG Act. Unlike all other OIGs 
throughout the Federal Government who can investigate 
misconduct within their entire agencies, the Justice Department 
OIG does not have complete jurisdiction within the Department. 
We do not have the authority to investigate allegations against 
DOJ attorneys acting in their capacity as lawyers, including 
such allegations against the Attorney General, Deputy Attorney 
General, or other senior Department lawyers. Instead, the DOJ 
Office of Professional Responsibility (OPR) has been assigned 
jurisdiction to investigate such allegations.
    As I discuss in my written statement, the limitation on the 
Justice Department OIG's jurisdiction arose from the history of 
the creation of OPR and the OIG, and now only Congress can 
change it. For several reasons, I believe Congress should 
remove the limitation of the Justice Department OIG's 
jurisdiction.
    First, the current law treats DOJ attorneys differently 
from all other DOJ employees and from all other Federal 
employees, all of whom are subject to the jurisdiction of their 
agency's OIG. No other agency has a group of its employees 
carved out from the oversight of the OIG.
    The limitation on the Justice Department IG can create a 
conflict of interest and contravenes the rationale for 
establishing independent Inspectors General throughout the 
government. This concern is not merely hypothetical. Recently, 
the Attorney General directed OPR to investigate aspects of the 
removal of U.S. Attorneys. In essence, the Attorney General 
assigned OPR--an entity that does not have statutory 
independence and reports directly to the Attorney General and 
Deputy Attorney General--to investigate a matter involving the 
Attorney General's and the Deputy Attorney General's conduct. 
The IG Act created OIGs to avoid this type of conflict of 
interest.
    In addition, while the OIG operates transparently, OPR does 
not. The OIG publicly releases its reports on matters of public 
interest, but OPR does not release its reports publicly.
    Finally, dividing oversight jurisdiction within the Justice 
Department between the OIG and OPR is inefficient and 
duplicative.
    In sum, I believe that the current limitation on the 
Justice Department OIG's jurisdiction is inappropriate, 
violates the spirit of the IG Act, and should be changed. Like 
every other OIG, the Justice Department OIG should have 
unlimited jurisdiction within the Department. I believe 
Congress should amend the IG Act to give the Justice Department 
OIG that authority.
    In conclusion, I appreciate the Committee's willingness to 
hold this hearing. Inspectors General perform a valuable and 
challenging service, but we, like our agencies, should always 
consider ways to improve. Thank you for examining these issues, 
and thank you for your support of our work.
    That concludes my statement, and I would be happy to answer 
any questions.
    Chairman Lieberman. Thanks, Mr. Fine. Very interesting 
statement. Again, we look forward to some questioning.
    Next is Hon. Earl Devaney, Inspector General of the U.S. 
Department of the Interior. Welcome, and please proceed.

 TESTIMONY OF HON. EARL E. DEVANEY,\1\ INSPECTOR GENERAL, U.S. 
                   DEPARTMENT OF THE INTERIOR

    Mr. Devaney. Mr. Chairman and Members of the Committee, I 
want to thank you for the opportunity to address the Committee 
this morning about several emerging issues that affect the 
unique role played by Inspectors General. My hope is that we 
will have ample time for a long overdue dialogue this morning 
about these important issues. I also want to make it clear that 
my testimony today reflects my own views, which may or may not 
be shared by my colleagues.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Devaney appears in the appendix 
on page 55.
---------------------------------------------------------------------------
    Mr. Chairman, I believe that the original IG Act and its 
subsequent amendments have effectively stood the test of time 
and have served the American public well. I do not think that a 
wholesale change of the Act is necessary. That having been 
said, however, I believe that there are a number of 
improvements that could be made to enhance the effectiveness 
and the independence of IGs. In particular, I would like to 
offer my thoughts about IG independence, IG pay, and IG budget 
submissions.
    Committee staff has informed me that you would also like to 
hear my views on the appropriate relationship between the IGs 
and their agency heads and the role that the Integrity 
Committee, established in 1995 by a Presidential Executive 
Order, plays in ensuring that ``someone is watching the 
watchers.''
    Since I have experienced both difficult and excellent 
relationships with the Secretaries I have served with during my 
8-year tenure at the Interior Department and since I have been 
a member of that Integrity Committee for over 5 years, I am in 
a position to informatively discuss these issues, and would be 
pleased to do so.
    I believe that an independent IG is someone who possesses 
both integrity and courage. I personally define integrity as 
not only being truthful and honest but consistently doing the 
right thing for the right reasons. Courage is easier to define, 
but in this context I am talking about the ability to ``speak 
truth to power.''
    Given the dual reporting obligation that IGs have to both 
the Congress and the agency head, making somebody unhappy is 
not difficult to do. In fact, trying to make everybody happy is 
the fastest way I know of for an IG to get into trouble. Of 
course, it goes without saying that IGs should be selected 
without any regard to political affiliation and solely on the 
basis of demonstrated integrity and professional abilities 
related to the roles and responsibilities of this position.
    For instance, when I was appointed as an Inspector General, 
I had nearly 30 years of Federal law enforcement experience, 
and no one involved in my nomination process ever inquired 
about my political affiliation. Far too often, IGs are 
characterized as either being lapdogs or some type of attack 
dog. And as Mr. Johnson stated earlier, I reject that premise 
that either is a desirable trait of an independent IG, and I do 
not like the indignity of being compared to a dog on a regular 
basis.
    My own view is that an independent IG needs to strike a 
balance between being tough on the Department, when called for, 
and being equally willing to stand up and say that a particular 
program is running well or that allegations against a senior 
official are unfounded, when the facts warrant such 
conclusions. At the end of the day, an IG who consistently 
proffers professional, fact-based audits and/or investigations, 
without regard to whom they might offend, will end up meeting 
the standards of independence that the IG Act envisioned and 
that the American public deserves.
    Mr. Chairman, several pieces of pending legislation in both 
the Senate and the House would attempt to enhance IG 
independence by adding a specified term of office for an IG and 
a removal-for-cause provision. Personally, while I have no 
objection to these proposals, I do not think that they would 
either enhance or detract from my own ability to act 
independently. I am, however, attracted to the idea that the 
President should have to provide Congress with prior written 
notification together with an explanation of the reasons behind 
the removal of any IG. A reasonable time frame of 30 days would 
give Congress the opportunity to enter into a discussion with 
the Executive Branch concerning the circumstances of any 
removal.
    Of greater concern than removal, perhaps, is the 
recruitment and retention of highly qualified IGs. There is a 
huge pay disparity affecting the presidentially appointed and 
Senate-confirmed (PAS) IGs that needs to be corrected as soon 
as possible. I cannot overstate the effect this is having on IG 
morale, the long-term ability to attract the best candidates 
for IG positions, and the near-term potential for losing some 
of our best IGs. PAS IG salaries are currently capped by 
statute at Level IV of the Executive Schedule, currently 
$145,400, and are appropriately excluded from the bonus 
benefits of the performance-based pay system Congress 
established with the passage of the 2004 Defense Authorization 
Act for career SES. Of course, PAS IGs have, as a matter of 
practice, chosen not to accept bonuses from agency heads since 
the early 1990s to further preserve their independence. As a 
result, virtually all PAS IGs are paid at a level significantly 
below the average annual compensation of the SES personnel they 
supervise--currently capped at $168,000, excluding bonuses.
    Retirement annuities are equally affected. Considering that 
the average salary of a SES in fiscal year 2005 was $150,000, 
and the average SES bonus was $13,814, IGs frozen at the ES-IV 
level stand to make, on average, over $19,000 less than the 
average career SES member. Practically speaking, this results 
in both present and future IGs drawing lesser salaries than 
many of their SES subordinates. In my case, three of my seven 
SES subordinates earned more compensation than I did in fiscal 
year 2006. Obviously, this disparity is a significant concern 
for current PAS IGs and could soon have an adverse effect on 
the government's ability to retain its best and most 
experienced IGs.
    Perhaps more importantly, however, is the impact this pay 
disparity has on the willingness of qualified and talented 
Federal career executives to serve as IGs in the larger and 
more challenging Federal departments and agencies. My 
understanding is that the Administration expressed a 
willingness to support a pay raise for all PAS IGs to Level III 
of the Executive Schedule, which currently stands at $154,600. 
While this would appear generous, and something for which I and 
many other PAS IGs would be most grateful, I would strongly 
urge that PAS IG pay be adjusted to mirror the current SES cap 
and match any future increases of the SES cap.
    Of course, all PAS IGs should, in my opinion, continue to 
forego any bonus opportunities and thus would still be left 
with lesser compensation than their highest-level, highest-
achieving subordinates. Bridging the significant salary gap to 
which PAS IGs are presently subject would enhance the 
attraction of IG appointments for the most qualified candidates 
and help prevent the most talented sitting IGs from leaving 
government service for more lucrative private sector positions.
    While I personally have never experienced any problems with 
the Secretary regarding my annual budget submission, I can 
certainly understand the interest by some of my IG colleagues 
in legislation that would have annual IG budgets submitted 
directly to OMB and/or Congress. This would have the obvious 
benefit of insulating IGs from the potential for many agency 
heads to retaliate with personnel or other resource cuts. 
Ironically, despite my propensity for upsetting Secretaries, I 
have routinely received decent support of my budget at the 
Department and OMB level with most cuts coming at the 
congressional level. In fact, I have often felt that the 
Secretaries I have served with have gone out of their way to 
avoid even the appearance of retaliation, regardless of our 
working relationship.
    This leads me to that relationship. A good working 
relationship between an IG and an agency head is essential. The 
relationship with the Secretary ought to be built on mutual 
respect and trust. An IG must be independent, but should never 
blindside or surprise the Secretary. I have always pledged not 
to surprise any of the three Secretaries with whom I have 
served and, to my knowledge, none has ever been caught unaware 
by the findings of our audits or investigations. While more 
than one Secretary has occasionally requested that I tone down 
my rhetoric, none has ever tried to tell me what to say.
    IGs are also responsible to do more than simply identify 
problems, but rather achieve that balance between criticism and 
commendation, which I spoke of earlier. Audits, to the extent 
possible, should highlight Department successes and be as 
solution-based as auditing standards allow. For example, 
because most problems we encounter are not unique to the 
Department of the Interior, my audit teams routinely include 
best practices from other Departments or the private sector in 
their audit recommendations. Our investigations often present 
an opportunity to inform the Department of how to prevent the 
reoccurrence of a problem. My view is that IGs have an equal 
duty to prevent fraud, waste, or abuse as they do in detecting 
it.
    My office's role in the 4-year task force investigation of 
the Abramoff scandal profoundly tested my relationships with 
two Secretaries. Quite understandably, my relationship with 
former Secretary Norton was negatively affected by the two 
separate investigations of Deputy Secretary Griles conducted by 
my office and our FBI partners, although I will allow his 
recent conviction and pending prison term to speak to the 
efficacy of those endeavors.
    While Secretary Norton and I disagreed about virtually 
everything concerning Mr. Griles, my relationship with 
Secretary Norton remained professional. On the other hand, 
Secretary Kempthorne has used this unfortunate scandal as an 
opportunity to foster an increased awareness and emphasis on 
ethics and integrity at the Department. I am impressed with his 
leadership in this area, and I believe that he and I have 
achieved the desired level of respect and trust for each other. 
Secretary Kempthorne has also come to understand that he can 
count on me to provide him with the facts, whether good or bad, 
which in turn helps him avoid the risks inherent in the 
tendency of well-meaning subordinates to overemphasize the 
positive. He and I both understand that it is not an IG's job 
to tell an agency head what he or she wants to hear but, 
rather, what he or she needs to hear.
    As I mentioned earlier, I have served on the PCIE/ECIE 
Integrity Committee for over 5 years. Although I have dropped 
several hints that my time on this Committee has been served, I 
have not found any of my colleagues eager or willing to take my 
place. The truth is that no one could possibly enjoy sitting in 
judgment of one's peers; it can be a very difficult role to 
play. That having been said, I can, without reservation, 
commend to you each individual that I have served with on this 
Committee. To a person, they have been highly professional, 
impartial, and interested only in arriving at the truth of each 
matter that has come before us.
    I would remind you that the Committee is always chaired by 
the FBI Assistant Director of Investigations, staffed by career 
FBI agents, and its members consist of three IGs and the 
Directors of the Office of Government Ethics and the Office of 
Special Counsel, and a staff member of the Public Integrity 
Unit attends each meeting in an advisory role.
    As I noted earlier, an Executive Order created this 
Committee in 1995, with a principal mandate of adjudicating 
allegations of wrongdoing against IGs. It is important to 
understand that every allegation is first screened by the 
Public Integrity Unit for criminal consideration. If that 
allegation does not rise to the level of a potential crime, it 
is then forwarded to the Integrity Committee for administrative 
review.
    From 1997 through June 30, 2007, the Integrity Committee 
has received 387 complaints against IGs. Of those 387 
complaints, only 17 have resulted in the Committee ordering a 
full administrative investigation, usually conducted by another 
IG's office.
    Mr. Chairman, I have had a long and rewarding career in the 
Federal Government. My years as IG of the Interior Department, 
however, have been at once the most challenging, the most 
frustrating, and the most gratifying. I sincerely believe in 
the critical importance of the work IGs do, and I appreciate 
the interest that you and other committees in both the Senate 
and the House have shown in the work of my office and that of 
my colleagues.
    This concludes my written statement. I would be glad to 
answer any questions.
    Chairman Lieberman. Thanks very much, Mr. Devaney. Very 
helpful statement. Thanks for your public service. I couldn't 
help but comment to Senator Collins when you made the 
understandable statement that an IG should not be considered as 
either a lapdog or an attack dog that if we compared public 
opinion of the Federal Government with public opinion of dogs 
in general, I would say that the canines are ahead. [Laughter.]
    So I will thank you and Mr. Fine here for your doggedness, 
in the best sense of that term.
    The next witness is Eleanor Hill, a very familiar and 
respected person here. It is great to welcome you back here 
today in your capacity as a former Inspector General of the 
Department of Defense, a distinguished record of public 
service, which in the contemplation of this Committee reached 
its height when you were a Staff Director of the Permanent 
Subcommittee on Investigations of this Committee under the 
chairmanship of our distinguished former colleague and dear 
friend, Sam Nunn.
    So, Ms. Hill, it is good to see you, and we welcome your 
testimony.

TESTIMONY OF HON. ELEANOR J. HILL,\1\ FORMER INSPECTOR GENERAL, 
                   U.S. DEPARTMENT OF DEFENSE

    Ms. Hill. Thank you, Mr. Chairman. It is especially great 
to be here this morning. Senator Collins, Senator McCaskill, 
Members of the Committee, good morning. Thank you for the 
opportunity to discuss the role of IGs in promoting good 
government.
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    \1\ The prepared statement of Ms. Hill appears in the appendix on 
page 63.
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    As you mentioned, I have had a long career in public 
service. It was a great privilege for me to be in public 
service for all those years, including my tenure as IG of the 
Department of Defense and also as the Vice Chair of the PCIE. 
But as the Chairman mentioned, I have to say I am especially 
pleased to be here today. This room holds many fond memories 
for me because of my long years of service with the Permanent 
Subcommittee on Investigations. I have great respect and 
appreciation for the work not only of that Subcommittee but 
also of this Committee. And so thank you again for the chance 
to return here this morning.
    My experience in government has convinced me that the 
statutory IGs play an absolutely critical--and unique--role in 
our Federal system. In creating IGs, Congress was driven by a 
need to provide objective, independent, and professional 
oversight on a sustained basis throughout the incredibly vast 
and complex operations of the Federal Government. In today's 
world, where new issues and new technologies further complicate 
those operations, the IGs, with their focused, professional 
expertise regarding Federal programs, are perhaps more 
important than ever before.
    Although the IG concept originated in the military context 
in 17th Century Europe and, as the Chairman mentioned, was 
brought to this country in the form of Baron von Steuben, the 
idea of a truly ``independent'' Inspector General, as we know 
them today, is a relatively recent modern phenomenon. Congress, 
and the IG Act of 1978, went far beyond the traditional 
military concept in creating IGs within Federal agencies and 
departments. The biggest and most critical difference is that 
military IGs continue to work within their chain of command. 
They do not have the statutory independence that set the 
Federal IGs completely apart, in my view, from other military 
and departmental oversight mechanisms.
    My work at the Pentagon when I was the IG with the military 
IGs brought home to me the importance of independence. Military 
IGs often requested that our office conduct top-level, 
particularly sensitive investigations since they did not 
believe that they had the independence needed to conduct an 
investigation that would both be and appear to be objective.
    I had similar conversations with some Defense agency IGs, 
who also are appointed and serve at the pleasure of their 
directors, without statutory independence. Those IGs recognized 
that in investigations of very senior officials or in audits of 
programs dear to the agency head, the statutory independence of 
a departmental IG is key to both the integrity of the inquiry 
and to the credibility of the findings in the Department, on 
Capitol Hill, and with the American public.
    I could not help but recall those conversations when I read 
reports last year that oversight of what has been termed the 
National Security Agency's ``terrorist surveillance program'' 
had been handled by the NSA IG, who has limited resources and 
no statutory independence, and not by the Department of Defense 
IG. In my view, that is exactly the kind of program where the 
oversight should have been conducted, from the very beginning, 
by the independent departmental IG.
    All of this underscores the fact that, more than anything 
else, independence goes to the heart of the IG mission. It is 
what makes IGs a critical and a unique link in ensuring 
effective oversight by both the Executive and the Legislative 
Branches. The IG Act provisions make the IG the most 
independent and the most unfiltered voice below the Secretary 
in any Federal department.
    As one example, IG testimony to Congress, unlike that of 
other Executive Branch officials, was not--at least in my 
experience--edited or approved by non-IG departmental or OMB 
officials before being delivered to Congress.
    Unfortunately, while the statutory protections for 
independence are excellent, they are not foolproof. Not all IGs 
felt as secure in their independence as I did. Operating under 
the same statute, some IGs are extremely independent while 
others have been less so. Other factors do impact independence. 
The department or agency head's view of the IG role and the 
relationship that develops between the IG and senior management 
is especially important. I was fortunate to work under two 
Secretaries of Defense who understood, appreciated, and 
accepted the role of the IG--Bill Perry and Bill Cohen. 
Secretary Cohen, of course, knew well about the IGs from his 
service on this Committee as a Senator.
    The IG's own experience and background can also be a 
factor. I had the benefit of becoming an IG only after being 
schooled for years in jobs where independent, fact-driven 
investigation was the norm. I was a Federal prosecutor, and I 
was a congressional investigative counsel on many inquiries 
that followed the strong bipartisan tradition of this 
Committee.
    IGs must be comfortable with their independence. They must 
fully understand its importance. They must be willing to 
exercise it, and they must be prepared to defend it, if 
necessary. IGs should be agents of positive change, but they 
must insist on doing so in an environment where independence is 
understood and respected. Congress must ensure, during the 
confirmation process, that those who would serve as the 
department or agency head and as IGs understand the IG mission 
and the statutory independence on which it rests. The success 
of the statute, the process, and the mission depends to a large 
degree on the quality and the judgment of the people entrusted 
with those positions.
    Congress itself also plays an important role in assuring 
independence, excellence, and effectiveness for the IGs. During 
my term as Defense IG, various congressional committees were 
extremely interested in what our OIG was doing in terms of 
oversight. Congress needs to maintain focus on what IGs are 
doing and what it is that they are--or are not--finding. Both 
our OIG and the senior management of the Department of Defense 
were very aware of the congressional interest in our work. In 
those circumstances, it would have been very difficult for 
management to undercut our independence without incurring the 
wrath of those committees--something which most departments 
clearly want to avoid.
    At its core, the IG Act relies on the tension that usually 
exists between Congress and the Executive Branch to reinforce 
and protect IG independence. For the concept to work, Congress 
has to be an active player, remaining alert to IG findings and 
fully engaged in exercising its own oversight authority. In my 
mind, that is perhaps the single biggest non-statutory factor 
that impacts IG independence.
    Congress has to be willing to insist on objective oversight 
from the IG, separate and apart from the views of any 
department and any Administration. When that happens, the IG 
must walk a fine line between what may be the very different 
views of Congress and the Department. The overwhelming 
incentive in those circumstances is for IGs to resist attempts 
at politicization from either side. The best way to succeed 
when answering to these two masters is to conduct independent, 
professional, and fact-based inquiries--which is, of course, 
what we want IGs to do.
    Some have suggested additional ways to strengthen the IGs, 
and both Senator Collins and Senator McCaskill have mentioned 
their proposals. Generally, I support all reforms that are 
designed to bolster IG independence, and I have mentioned some 
of those in my statement. One example, for instance, is that I 
very strongly support the idea of the direct transmittal of IG 
budget appropriation estimates and requests to both OMB and 
Congress because, obviously, it supports and bolsters IG 
independence.
    I just want to briefly mention accountability. Independence 
unquestionably gives IGs a great amount of power, and with that 
power comes the responsibility to use it wisely and in keeping 
with the highest ethical and legal standards. While we hope 
that all IGs take the high road, the system has to be capable 
of addressing allegations of abuse of power within the IG 
community. The public must be assured that those who enforce 
high ethical standards on others are themselves held to those 
same standards.
    This was a focus of PCIE discussion in the mid- to late-
1990s. In 1995, the PCIE created an Integrity Committee to 
review allegations of misconduct by IGs and Deputy IGs. While 
well intended, the Committee initiative lacked clear 
investigative authority, was limited by insufficient resources, 
and encountered recordkeeping problems. Those problems and 
increasing public concerns about accountability prompted an 
effort to formally address accountability in the Executive 
Order that Mr. Devaney mentioned.
    Some have now proposed consolidation of the PCIE and the 
ECIE into a single statutory council. My experience with the 
PCIE was, frankly, mixed. The Federal IG community is large and 
clearly not homogeneous. There are huge differences in size, in 
capabilities, and in focus among the various IG offices. The 
issues that were of paramount importance in some large offices 
had little relevance to the smaller ones. Some IGs were very 
accustomed to dealing with Congress. Others had relatively 
minimal contact.
    While the PCIE and ECIE do facilitate communication across 
the community and consensus on internal IG issues, it was 
difficult in my memory to develop a community position on 
important governmentwide issues of effectiveness and 
efficiency. Statutory authorization of an IG Council would be a 
step in the right direction. Working together, IGs have 
tremendous potential for the identification of common 
governmentwide problems and the search for common 
governmentwide solutions. A statutory mission for the council, 
coupled with appropriate funding and resources, could help the 
IG community realize that potential.
    Any statutory IG Council should also have statutorily 
mandated reporting responsibilities, not just to the President, 
but also to the Congress. The independence that has been so 
crucial to the work of individual IGs should be available to 
support independent and professional governmentwide assessments 
by an IG Council.
    In closing, let me just note that I have been genuinely 
dismayed by reports in recent years of less congressional 
oversight and less independence and professionalism in the IG 
community. As an investigator, I know better than to prejudge 
the accuracy of reports without access to all the facts, and so 
I do not know to what degree all those reports are true. I can 
only say that for the good of the country, I hope they are not. 
My own experience over the years has convinced me that the 
rigorous but always objective and fair exercise of the 
congressional oversight power, bolstered by the work of an 
independent and professional IG community, is clearly the 
surest way to promote integrity, credibility, and effectiveness 
in government. The American people deserve and, quite rightly, 
expect no less.
    Thank you and I welcome any questions you may have.
    Chairman Lieberman. Thank you for a very thoughtful 
statement.
    Our last witness this morning is Danielle Brian from the 
Project on Government Oversight. Tell us what--of course, it is 
hard not to notice that it spells POGO.
    Ms. Brian. Yes, it does. [Laughter.]
    Chairman Lieberman. Which, for those of us of an earlier 
generation, brings back happy memories of a particularly astute 
cartoon strip.
    Ms. Brian. That is not unintentional, the acronym.
    Chairman Lieberman. Thanks, Ms. Brian. Welcome.

TESTIMONY OF DANIELLE BRIAN,\1\ EXECUTIVE DIRECTOR, PROJECT ON 
                      GOVERNMENT OVERSIGHT

    Ms. Brian. Thank you, Chairman Lieberman and Senator 
Collins, for inviting me to testify. We are an independent 
nonprofit organization that has for 25 years investigated and 
exposed corruption and misconduct in order to achieve a more 
accountable Federal Government.
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    \1\ The prepared statement of Ms. Brian appears in the appendix on 
page 73.
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    The subject of this hearing raises a number of timely 
issues. IG offices play a tremendously important role in 
advancing good government practices, but only if they are led 
by independent and qualified IGs and those IGs are allowed to 
do their job. Next year will be the 30th anniversary of the 
1978 Inspector General Act, and this is the perfect time to 
determine the strengths and weaknesses of the IG system.
    The intent of Congress in creating these watchdogs--with my 
apologies to Mr. Devaney--was to have an office within the 
agencies that would balance the natural inclinations of agency 
or department heads to minimize bad news and instead give 
Congress a more complete picture of agency operations. That 
intention is clearly shown by Congress' decision to break with 
tradition and create a dual-reporting structure where IGs would 
report not only to the agency head, but also directly to 
Congress itself.
    It is this independence from the agency the IG is 
overseeing that gives the office its credibility. Not only the 
actual independence, but also the appearance of independence 
allows the IG's stakeholders, including the Congress, the 
agency head, the IG's auditors and investigators themselves, 
and potential whistleblowers to have faith in the office. Over 
the past year, POGO has held monthly bipartisan Congressional 
Oversight Training Seminars for Capitol Hill staff, and we 
regularly tell participants that the IGs at agencies within 
their jurisdiction can be important allies and sources of 
honest assessments. Unfortunately, we also have to point out 
that not all IGs are well qualified or appropriately 
independent.
    I have the honor today of sitting on this panel with model 
Inspectors General. However, in the past few years, the ranks 
of the Nation's IG community have not always been filled with 
such stars. Investigations of the current NASA IG and former 
Commerce, Postal Service, and HHS IGs have substantiated 
allegations of improper conduct by those offices. Some of the 
types of improper conduct included illegal retaliation against 
IG employees, not maintaining the appearance of independence 
required of an IG, and interfering with IG investigations.
    At the same time, several IGs have suffered retaliation for 
doing their jobs too well. In addition to the formerly 
mentioned Smithsonian IG, the Special Inspector General for 
Iraq Reconstruction, the GSA and Legal Services Corporation 
IGs, as well as the former Homeland Security IG, have all 
suffered some form of retaliation--ranging from budget cuts by 
their agencies to personal attacks and even threats to 
eliminate their office entirely.
    The House Committee on Oversight and Government Reform has 
created a Fact Sheet outlining these instances, and I request 
that it be submitted for the record.\1\
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    \1\ The Fact Sheet appears in the Appendix on page 76.
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    Chairman Lieberman. Without objection.
    Ms. Brian. While POGO believes improvements can and should 
be made to the IG system and we applaud the Committee for 
holding this hearing, any changes to that system need to be 
very careful and deliberate. The balance between independence 
and accountability is a difficult one to maintain. On the one 
hand, an IG must be afforded the opportunity to pursue audits 
and investigations without fear of reprisal. On the other, 
there needs to be enough accountability that an IG does not 
pursue a partisan agenda or become otherwise ineffective. Every 
legislative change needs to be considered through both prisms 
to ensure it does not have unintended consequences.
    POGO is in the beginning stages of a major investigation 
into the IG system to determine best practices as well as 
weaknesses. There are significant unanswered questions, one of 
which is the question of who is watching the watchdogs, and we 
look forward to presenting you with our findings in the future. 
There are, however, a few improvements to the system that we 
have already determined make good sense.
    The first is to better ensure that people chosen to be IGs 
are of the caliber of those sitting on this panel. The recent 
improper conduct to which I referred above has made it clear 
the process of selecting IGs, unique people who can thrive in 
the unpopular job of being an Inspector General, perhaps needs 
to be improved. During the Reagan Administration, a small group 
of IGs from the PCIE used to recruit and screen IG nominees. 
They then supplied lists of candidates from which the White 
House could select. This peer review helped ensure that 
unqualified or partisan people were not placed in the role of 
IG. Congress should consider recreating and formalizing that 
model.
    The second improvement is that presidentially appointed IGs 
should have their own General Counsel's office. While most do, 
we know of at least one that does not--the Department of 
Defense IG. As a result, the DOD Office of Inspector General 
has relied on lawyers assigned to it by the Pentagon's General 
Counsel for legal advice. You can see how this could 
significantly undermine the independence of an IG: A General 
Counsel's role is to protect the agency, whereas an IG's role 
is to investigate it if need be. Furthermore, General Counsels 
have the power to undermine IG investigations because they 
affect such decisions as criminal referrals and what to redact 
from documents released through FOIA.
    I realize that for many of the smaller ECIE IGs, having 
their own General Counsel might double the size of their office 
and could unnecessarily create a new bureaucracy. One solution 
to this dilemma might be to allow small ECIE IGs to use the 
General Counsel's office of a PCIE IG for necessary legal 
resources, or perhaps to create a General Counsel's office to 
be shared by the smaller ECIE IGs, rather than turning to the 
counsels of their own agency.
    Another improvement, and a way to mitigate any possible 
bias caused by being appointed by the President or agency head, 
is to create a term of office longer than 4 years and to 
stipulate that an IG can only be removed for specific cause. I 
respect and understand the point that Mr. Fine made on this 
that it does raise important questions, but our concern and our 
support of this idea is focused more on the IGs that enjoy 
less--that have a weaker stature within their agency or in the 
public eye or in the Congress than those IGs that are here. 
There are many IGs that do not enjoy the kind of strength that 
the IGs here have, and we are concerned about those IGs in 
particular with this provision.
    A further improvement is to allow IGs to submit their 
budgets directly to both OMB and Congress, and we absolutely 
support that, especially because it will ensure for Congress 
that the IG's budget is commensurate with the size of the 
agency they are overseeing.
    Finally, it is clear that IGs need to be paid in accordance 
with their position of responsibility. There are a number of 
problems with the pay system for both PCIE and ECIE IGs, which 
have been discussed, but it appears fixing the pay problems 
would be more akin to housekeeping than significantly changing 
policy and should be addressed quickly by the Congress so that 
these issues do not dissuade good and qualified people from 
becoming IGs.
    Legislation introduced by Senator Collins, Senator 
McCaskill, and Representative Jim Cooper are all important 
steps toward making the IG system stronger. Even with the 
perfect legislation, however, the IGs will only thrive when the 
relevant congressional committees are actively engaged with 
their offices and regularly ask them to report on their 
findings. I look forward to presenting you with POGO's 
investigative findings once they are complete and to working 
toward implementing these recommendations.
    Thank you.
    Chairman Lieberman. Thanks, Ms. Brian.
    There is a vote that apparently will go off around 11:30 
a.m., so I would like to limit our questioning to 5 minutes 
each so each of us can get a chance before we have to go.
    Ms. Brian, let me briefly start with you. You cited an 
interesting earlier practice in your testimony under which the 
PCIE would prepare a list of qualified candidates for IG 
openings, and then the selection would be made from that list. 
Is your suggestion of that based on a concern that in recent 
times the IGs have either been less qualified or less partisan 
than you would like them to be?
    Ms. Brian. Or perhaps more partisan I think is the concern. 
There have been a couple----
    Chairman Lieberman. Excuse me. I do mean ``more partisan.''
    Ms. Brian. There have been a few instances where there 
really are questions about the qualifications of the IGs that 
were appointed and whether their appointment was more because 
of relationships they had with the White House or people in the 
Administration than their real qualifications for the job.
    Chairman Lieberman. Yes. So, in fairness, it may not, as 
your answer suggests, be partisanship so much as lack of 
independence.
    Ms. Brian. Yes, absolutely right.
    Chairman Lieberman. Right. Three of the witnesses--Mr. 
Fine, Mr. Devaney, and Ms. Brian--have commented on the idea of 
a fixed term for the IGs as a guarantee of independence. Ms. 
Hill and Mr. Johnson, I wanted to ask you if you have an 
opinion on that.
    Ms. Hill. Mr. Chairman, I have said that I would support a 
fixed term. I agree with Mr. Fine that there are pluses and 
minuses to it. The obvious minus is if you get someone in there 
that is not very good, you are going to have that person in 
there for a while. But I believe that a fixed term, coupled 
with termination for-cause in the statute so that there is some 
guidance as to what grounds you would have to have to terminate 
somebody, would bolster independence. I would support that.
    Chairman Lieberman. Right. Mr. Johnson.
    Mr. Johnson. I am opposed to the idea of a fixed term and 
the idea of dismissal for cause only. The reasons, the causes 
that have been suggested would not have applied to any of the 
IGs that people have been suggesting be replaced. The GAO 
assembled that group of people several months ago. It was the 
opinion of the vast majority of these very informed people in 
this forum that a term accomplished nothing, in fact, it might 
even be dysfunctional.
    The key is that there be accountability for performance. We 
talk about the potential for this and the potential for that. I 
do not think anybody is suggesting that, in fact, there is not 
independence of findings in what the IGs are doing. We talk 
about there have been allegations of dependence or not enough 
independence, but there has never, to my knowledge, been a 
finding by the Integrity Committee or any other entity that, in 
fact, we haven't had fully independent investigations by the 
existing IG community. And I do not think that there is a 
problem that warrants a term, and I think it is the opinion of 
the vast majority of the people that have looked at it that a 
term and a listing of causes buys you anything.
    Chairman Lieberman. Thanks. Mr. Fine, let me----
    Ms. Hill. Mr. Chairman, can I just add to that point? I 
think independence does not just go to findings. It also goes 
to the willingness to initiate the investigation and cover all 
the issues.
    Chairman Lieberman. Right.
    Ms. Hill. And as I mentioned, the NSA case is an example of 
where there was apparently not sufficient independence to 
conduct that kind of oversight.
    Chairman Lieberman. That is an important point.
    Mr. Fine, you cite in your testimony this anomaly in the 
law that prohibits you from investigating lawyers at the 
Department of Justice, and you recommend that we eliminate that 
exception, which makes them the only group so protected in any 
agency.
    From my point of view, you make a very strong argument. I 
am interested to ask you the kind of question my law professors 
used to ask me. What is the argument on the other side?
    Mr. Fine. I think the argument on the other side is that 
lawyers are different. They have specialized duties, and you 
need a special office to look at the conduct of lawyers. And 
you do not want to chill the conduct of lawyers by being too 
aggressive about your oversight of them. In addition, it has to 
do with the historical practice, and OPR has existed for a 
while and has experience in this realm.
    I think those arguments are not persuasive. They remind me 
of the arguments that had to do with our jurisdiction over the 
FBI. We originally did not have jurisdiction over the FBI, and 
they said that they were too special, that they were somehow 
different, that they had to look at their own misconduct, and 
that the IG should not come in and look at FBI actions. I think 
that was wrong, and I think that has been proved wrong by the 
experience since we did get jurisdiction over the FBI in 2001. 
I think the same principles should apply to lawyers in the 
Department of Justice. There should not be this carve-out of a 
special class that is not subject to the jurisdiction of the 
Office of the Inspector General.
    Chairman Lieberman. I agree with you. And just finally, am 
I correct that, notwithstanding that, in response to your 
request you are now involved in the investigation of the 
supervisors in DOJ who were involved in the firing of the U.S. 
Attorneys?
    Mr. Fine. Yes. When we learned about the assignment to OPR, 
we objected and said that we thought it was our jurisdiction. 
We discussed it. There was a dispute. Eventually, because of 
the unique circumstances of this, we agreed to do a joint 
investigation with OPR. So we are jointly investigating this 
matter. It is moving forward. But in my view, it is an example 
and an instance, an illustration of why the OIG, the IG, should 
have unlimited jurisdiction throughout the Justice Department, 
just like every other agency.
    Chairman Lieberman. Thank you. Senator Collins.
    Senator Collins. Thank you.
    Mr. Johnson, recently there was a dispute between the head 
of GSA and the IG concerning the budget for the IG. That became 
public only because the IG went public to complain about the 
budget cuts. Some of the witnesses here today have recommended 
that the IGs' submission of the budget requests go not only to 
OMB but to Congress. That way we would always know if the 
budget has been cut by the agency head before it is presented 
to us.
    What is your judgment, what is your opinion on having the 
IG do a direct budget submission not only to OMB but to 
Congress?
    Mr. Johnson. I believe that an IG office is part of an 
agency, and you have to look at the total budget for each 
agency, and that includes the IG operation. Just like at Social 
Security, there are disability claims, investments that can be 
made or not. In the disability claims, people at Social 
Security do not submit a separate budget to Congress or 
separate budget to OMB, separate from the Social Security 
Administration, or the IRS does not submit a separate budget to 
Congress for auditing of people's tax returns and so forth. It 
is done in the context of the overall Treasury budget.
    So I believe that it should not be a separate submission. I 
think it ought to be part of the agency's submission. I think 
there should be lots of transparency about what budget is being 
recommended this year versus prior years so that the Congress 
has that information before it. But I do not believe it should 
be an independent submission.
    Senator Collins. Ms. Brian, I want to follow up with you on 
the issue of the effectiveness of IG offices. There are some IG 
offices in smaller agencies that are extremely small. They have 
maybe one person, literally, or two people.
    Several years ago, I proposed legislation to consolidate 
some of those smaller IG offices. For example, I remember there 
was one for the National Endowment for the Arts and a separate 
one for the National Endowment for the Humanities. So I 
proposed combining those into a larger office that would have 
more critical mass.
    My proposal went nowhere on that. It turned out every 
agency had a stake in having its own IG. So we still have this 
problem where we have very small offices, literally in some 
cases one- or two-people offices, that really cannot accomplish 
much because they do not have a critical mass.
    What is your judgment on whether we should take a look at 
some of the smaller IG offices and try to consolidate them?
    Ms. Brian. Senator, I think that is an excellent question. 
I do not have an answer to it yet. It is the kind of thing that 
we would enjoy looking at and coming back to you with a 
recommendation. But I think the points you are making are very 
well taken.
    Senator Collins. I really hope you will come back to us on 
that. It would help us if an outside group found that it was a 
good idea to overcome the bureaucratic turf battles that always 
occur whenever you try to do consolidation.
    Ms. Hill, I want to follow up with you on the issue that 
has been raised about whether the IG offices need separate 
General Counsels so that they are not borrowing from the agency 
because DOD does not have a separate counsel for the IG's 
office.
    Ms. Hill. Right.
    Senator Collins. You served very effectively as the DOD IG. 
Did you feel hampered by the lack of your own General Counsel, 
or did it work fine for you?
    Ms. Hill. Senator, in our particular circumstance, it 
worked. And I will tell you, when I became IG, my knee-jerk 
reaction was: This is not going to work; I need to have my own 
counsel.
    However, I had a 1,500-person shop at the time, and I 
wanted to take a few months to make sure I knew what was 
working in the organization and what was not before I made 
major changes. So I gave everything a few months to watch. The 
General Counsel issue was one of them. There was strong 
sentiment in the IG office senior leadership, the professional 
long-term people, that it was a good thing to have a lawyer 
that was a Deputy General Counsel of the Department of Defense. 
That lawyer is housed in the IG's building right down the hall 
from the IG, serves daily under the IG, and has a team of 
lawyers serving under him. So there are about seven or eight 
lawyers there.
    I watched it for several months, and it worked in our 
circumstances. They argued that it was good to have someone who 
could get the input from the other much larger General 
Counsel's office at the Pentagon on procurement issues, 
contracting issues, and other very technical issues. You have 
the benefit of getting their expertise because you are part of 
that office.
    It worked for us because, one, we had a very good lawyer 
there who had been with the IG for a long time and really was 
loyal to the IG. I never sensed there was any division of 
loyalty.
    Second, the General Counsel at the time for the Department 
of Defense was a very good General Counsel who understood and 
appreciated IG independence. I had a very good relationship 
with her. She never tried to tread on our territory.
    And, third--and this probably made me feel the most 
comfortable--I was a lawyer, and I was a fairly experienced 
lawyer. I had been a prosecutor for 6 years. I had been in 
congressional oversight for 15 years. I knew the IG issues. So 
I was not reluctant to question my lawyers and probe and push 
them back a little and do the kind of things that you would 
want to do to make sure you are getting solid, independent 
advice. Had I not been a lawyer, I might have felt differently. 
So in our unique situation, it worked.
    On the other hand, as a rule institutionally, I will tell 
you that I would probably say my recommendation would be that 
IGs should have their own counsel. I think our situation was 
unique at the time. I do not know if that situation still 
exists today because it was dependent on the IG's background, 
on the Department's attitude, on the person that was in the 
job--all of which can change very easily.
    Senator Collins. Thank you.
    Chairman Lieberman. Thanks, Senator Collins. Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. Johnson, good to see you again. Over the past year and 
a half, Mr. Johnson, the OPM IG, at your request as head of the 
PCIE, has been investigating Special Counsel Scott Bloch, who 
is a member of the PCIE but not an IG. To my knowledge, this is 
the first investigation of this kind.
    Do you believe any change should be made to the PCIE or 
Integrity Committee structure to address this type of 
investigation?
    Mr. Johnson. Well, there is a particular issue with 
investigation of a Special Counsel because there is no 
mechanism for inspecting complaints against a Special Counsel, 
and they could not inspect themselves. And so we thought the 
best thing to do was to help the Office of Special Counsel 
create an Economy Act agreement with an IG's office to come in 
and do the inspection of the Office of Special Counsel.
    So one issue is how do we deal with future complaints 
against the Office of Special Counsel, or the Office of 
Government Ethics is another one that we have to deal with. 
That is one issue.
    Another issue is does the Integrity Committee apparatus 
need to be modified or enhanced or something, and I think the 
second issue there is a bigger issue, potential issue, than the 
first one. We probably need to do something to make sure there 
is a formal mechanism for dealing with complaints against the 
Special Counsel and the Office of Government Ethics in the 
future to clarify that.
    On the question of does the Integrity Committee need to be 
revised, I think I would defer and engage in conversation with 
Mr. Devaney and the other members of the Integrity Committee to 
see what they think the strengths and weaknesses of it are. I 
know a lot of the people that have been the target of 
investigation by the Integrity Committee would like to see it 
change, more open notification to them of what the charges are 
and more opportunity to respond to the charges against them and 
so forth.
    So I think the Integrity Committee process does need to be 
looked at. I don't have any specific recommendation for 
changing it now. But I think a thorough review of that is in 
order, and maybe we decide to leave it the way it is, but it 
ought to be looked at.
    Senator Akaka. What is the status of that OPM 
investigation?
    Mr. Johnson. Well, it has gone on for a very long time. In 
my mind, too long a time. But we do not say you should only 
take so many months to conduct this investigation. It is not 
clear to me all the reasons why it has taken this long, but it 
is what it is. I am not satisfied, nor are you, with the fact 
that we do not have findings yet on that, but it would be 
totally improper for me or anybody to step in and say you only 
have this much time to conduct this investigation.
    Senator Akaka. Thank you.
    My next question is to any of the current and former IGs--
Mr. Fine, Mr. Devaney, and Ms. Hill. I am concerned that the 
PCIE and ECIE, particularly the Integrity Committee, may not be 
strong enough. Earlier this year, the Integrity Committee 
concluded that the NASA IG, Robert Cobb, had abused his 
authority and had not maintained an appearance of independence 
from NASA officials. The Committee took the unusual step of 
recommending disciplinary action, which they normally do not, 
up to and including removal. Mr. Cobb rejected the Committee's 
findings, and he remains in office.
    What should be done if the Integrity Committee's 
recommendations are ignored? Can the Committee's role be 
strengthened? Mr. Fine.
    Mr. Fine. I think that is an important question dealing 
with accountability, and I do think the PCIE and the Integrity 
Committee are a fundamentally important concept to ensure 
accountability over IGs.
    I do think it can be strengthened. I think one of the 
things that can be done to strengthen the PCIE is to make it 
statutory, make it a statutory council and provide designated 
funding for it. The people who work on the PCIE--either the 
Vice Chair or the people on the Integrity Committee--are IGs 
who have enormous other responsibilities, and this is a 
collateral duty piled on top of all their other 
responsibilities. So to the extent it can be made more 
concrete, codified, and provided funding, I think it would be a 
positive thing.
    Mr. Devaney is on the Integrity Committee, and I am sure he 
has ideas as well.
    Senator Akaka. Mr. Devaney.
    Mr. Devaney. Senator, without commenting specifically on 
that case that you mentioned, the Committee looks at these 
allegations. They are first screened by the Public Integrity 
Unit of the Department of Justice, which eliminates any 
possibility of criminal wrongdoing, and then we look for 
administrative review, if necessary. And as I mentioned 
earlier, in the some 300-odd cases that have come down in the 
last decade or so, only 17 have been forwarded for a full 
administrative investigation.
    My observation, having been on the Committee, is that each 
of those investigations that I was on the Committee while those 
investigations took place were all done very professionally and 
in keeping with Federal investigative standards. And then the 
Committee forwards, sometimes with and sometimes without 
recommendation, to the person who sits in Mr. Johnson's 
position for whatever action they deem appropriate, 
particularly with a presidentially appointed IG.
    I would never advocate that the Committee that does the 
investigation also act as the judge and set the sentence. It is 
not appropriate for both duties and roles to be in the same 
place.
    So I think in the case you mentioned and in other cases 
that I have observed while I have been there, it has worked 
right. There is always a cry that it is not as transparent as 
people would like it to be. There are obvious due process 
considerations that we have of the people that are being 
investigated. We have changed some of the internal guidelines 
of the Committee recently to allow the people being 
investigated to understand the extent of the allegations being 
made against them, to provide an opportunity for them to 
provide the other side of the story. But I would never advocate 
that the Committee take on the role of final adjudicator of 
what happens to an IG if, in fact, the facts substantiate the 
allegations.
    Senator Akaka. Ms. Hill.
    Ms. Hill. Well, Senator, obviously I am not a member of the 
PCIE now, so I do not have facts on current cases and I really 
cannot speak to that. But I clearly would, based on my own 
experience, echo what Mr. Fine said in terms of strengthening 
the Committee. My recollection from my years with PCIE was 
that, as Mr. Fine said, everything connected with PCIE, 
including the Integrity Committee, is an additional burden on 
various IG offices. And in my experience, when it came time to 
get manpower to conduct investigations, for instance, for the 
Integrity Committee back in the 1990s, there was always an 
issue of trying to find an IG who was willing to give enough 
resources to do that because usually the answer was: I have 
other things going on; I cannot do this, etc. The PCIE was kind 
of out there as sort of this amorphous thing that was a 
council, but it really was not a statutorily authorized 
function or a statutory requirement.
    So I think codifying it, making it statutory, giving it 
resources, and giving it funding would certainly give it a lot 
more authority and make it a more serious effort.
    Senator Akaka. Thank you very much for your----
    Mr. Johnson. Senator Akaka, could I clarify one thing? The 
recommendations of the Integrity Committee were not ignored by 
Administrator Griffin. There was a range of opinion on the 
Committee. Some felt up to a dismissal. But there was not a 
consensus recommendation. It was recommended that some action 
be taken and some action was taken.
    Senator Akaka. Thank you.
    Chairman Lieberman. Thanks, Senator Akaka. A vote has just 
gone off, but that should give us time to have questioning by 
our two remaining Senators.
    Senator McCaskill.
    Senator McCaskill. I do not want to dwell on Inspector 
General Cobb, but I had the opportunity to sit on that hearing 
in Commerce, and I was shocked at the level of denial that this 
Inspector General had about the findings against him, 
understanding that the Committee on Integrity is made up of 
cautious, conservative people. I know this. These are cautious, 
conservative people that are fact-driven. It was a unanimous 
decision that disciplinary action be taken. I think a lot of 
Americans would quarrel with the idea that a management course 
is disciplinary action.
    And to add insult to injury, this Inspector General came in 
front of a Committee of the Senate and basically called out the 
Committee of Integrity as being bogus, basically said their 
findings were not valid, that they were not fair.
    I think it is breathtaking that an Inspector General would 
be so dismissive of a body of his peers that had made that kind 
of unanimous determination for disciplinary action. And I will 
tell you, I am disappointed that you would see that as an 
appropriate outcome based on that investigation because it 
seems to me if the Committee on Integrity says unanimously that 
disciplinary--and, by the way, after that management course 
was--after a ``de novo investigation'' by the counsel at NASA, 
and after the Committee learned of that, they wrote another 
letter to that agency saying, Hello, we said in this letter 
that this was serious and this was a real problem.
    So from my chair, listening to Inspector General Cobb, he 
believes that he has been wronged, that he has done nothing 
wrong, that somehow this Committee has dealt him dirty. And so 
I am frustrated that we have a system--and I realize this is an 
exception to the rule. I realize in most instances the 
Committee does their investigation and issues findings, and I 
have got many examples in my preparation for today's hearing 
where the work of the Committee on Integrity has had that 
validity and had the kind of oversight it should have. But in 
this instance, it failed, and we have to figure out how we fix 
that.
    I would ask you, either Ms. Hill or Mr. Devaney, as to what 
we can do in Congress to make sure that we do not have an 
Inspector General that gives the back of his hand to the 
Committee on Integrity.
    Mr. Devaney. Well, I certainly did not enjoy being on the 
receiving end of those comments.
    Senator McCaskill. I am sure you did not. It was very 
insulting to you.
    Mr. Devaney. I was not there. I did read them later. Of 
course, I disagree with them.
    I have thought about this a lot, and I will go back to what 
I said earlier. The Committee cannot itself be the body that 
exercises the final decision on what happens to an IG. We 
proffered a long, I might add, professional investigation with 
some recommendations to the appropriate official.
    Now, we do that every day at our departments. We do 
professional, fact-based investigations. We ultimately give 
them to a Secretary or an agency head for whatever action they 
deem appropriate. And I would like to think that when that 
happens, people who have done wrong are held accountable. That 
does not always happen. I have been disappointed at the 
Department of the Interior on many occasions on that issue, but 
that is part of the process. And from my perspective, I just 
keep coming back and doing the right thing and hoping that 
sooner or later people get the idea that accountability is 
important.
    Senator McCaskill. If those of you who are currently in--
and I am certainly aware of your work, Mr. Fine, and it is 
extraordinary, and your background. I read a long article about 
you. Along with reading all the reports, I also read about you 
guys. I would appreciate all three of you, if you could give 
input as to what we could do to make sure a situation like this 
does not become more commonplace. I was shocked at the 
testimony of the Inspector General after the kind of peer 
review that he had undergone to be as dismissive as he was.
    Briefly, let me ask one question, Ms. Hill. I have learned 
that the Inspectors General in the branches of the military are 
not really Inspectors General. The Inspectors General within 
the branches do not have any independence or requirement to 
report to the Congress or to the public. They are really apples 
and oranges.
    Now, the Department of Defense Inspector General is an 
Inspector General and has that independence and has that 
obligation. But we are calling them Inspectors General within 
the branches, and they have no obligation to anyone other than 
their commander.
    I would like your idea as to whether we should rename those 
Inspectors General because they are not doing the work that the 
other Inspectors General in the Federal Government are doing.
    Ms. Hill. Well, you are absolutely right, Senator, that 
they have a very different role than the statutory IGs. But I 
would venture to guess--as DOD IG, I worked very closely with 
the military IGs. I oversaw what they did. I met with them 
regularly. And I will tell you, if you told them that they are 
misusing the name, they would probably say, ``Well, it was our 
name first.''
    Senator McCaskill. That is exactly what they told me. 
[Laughter.]
    Ms. Hill. Because they are very proud of the military 
Inspector General concept, which goes back, as the Chairman 
said, in this country to Baron von Steuben, and even before 
that into the 17th Century European military. So it has been 
around for a long time. But it is a very different concept than 
what Congress did in 1978. The military concept is much more 
focused on inspections, on assisting military members. They do 
investigations, but the big difference, as I mentioned in my 
statement, is their investigations go up that chain of command, 
and in the military, the chain of command is not about 
independence. It is within the chain of command in the very 
traditional military sense.
    That is why the role of any DOD IG, because you do have the 
statutory independence, is to oversee all the military 
Inspectors General in the Department and in certain cases to 
actually take investigations from them. We used to take the 
very senior military officer investigations because they did 
not have the independence to do that.
    I would also just mention--and you may be interested in 
this--the military also has Auditor Generals.
    Senator McCaskill. Oh, I am aware.
    Ms. Hill. Each branch of the service has an Auditor 
General, and it is a very similar thing. They also do audits 
within that military branch, but they do it up the chain of 
command and do not have the statutory independence the 
departmental IG does.
    So part of the role of the Defense IG, the statutory IG, is 
to oversee and routinely meet with all the service IGs and the 
service Auditor Generals and make sure they are doing good 
work, oversee what they do, and if they are not doing solid 
work, to take that work up a level and do it at the statutory 
level.
    Senator McCaskill. The problem is we have thousands of 
auditors within the Department of Defense.
    Ms. Hill. Correct.
    Senator McCaskill. But a huge chunk of those auditors, 
their work the public never sees, and I think that is a problem 
because ultimately, as I said in my opening statement, the 
strength of an audit product lies with the public being aware 
of it and holding government accountable as a result of those 
audits.
    So I would welcome your input on how we can work within DOD 
to change some of those things.
    Ms. Hill. Right, because you do have--I mean, DCAA, when I 
was there, had 5,000 auditors, and I am sure they probably have 
more now.
    Senator McCaskill. I counted. I think there are 20,000 
auditors within the Department of Defense. I think most 
Americans would be shocked to know that we have 20,000 auditors 
within the Department of Defense.
    Ms. Hill. Right.
    Senator McCaskill. Especially in light of the fact they 
have been on the high-risk list now for an awful long time.
    Ms. Hill. Forever, right.
    Chairman Lieberman. Thanks, Senator McCaskill. Senator 
Coburn.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Well, first of all, let me thank each of 
you for your contribution and your service. In the last 2 years 
prior to this Congress, we used what you did a lot in the 
Federal Financial Management Subcommittee, and I value your 
work a great deal.
    My criticism is not really of the IG program. It is of 
Congress because we do not use what you give us, and that is 
the biggest problem. That has to be the most frustrating thing 
for you because you develop it and then we do not highlight it 
to the American people and then make changes.
    If there ought to be anything coming out of this Committee, 
it is the great work that the IGs most normally do and the fact 
that it is not acted on by Congress to make a difference for 
the American taxpayer.
    I am impressed by the bill that Senator McCaskill has. I 
think it needs to be fine-tuned a little bit.
    I also would like to spend some time in trying to figure 
out, if any of you all can tell us--the Defense Department is 
broken in terms of its procurement, in terms of its auditing, 
in terms of its oversight. We need to have a skull session on 
how we get better value. I am convinced, of the $640 billion 
that we are going to spend this year, we are going to waste $60 
billion of it. And we do not have $60 billion to waste.
    So I would offer an open invitation to any of you that 
would want to come into our office to talk about how do we 
fix--even though we have Inspectors General and we have a 
statutory Inspector General in the Defense Department, how do 
we fix that system to where it works and there is 
accountability? Because I am convinced that there is not any 
transparency, and without transparency, you are not going to 
have any accountability.
    Other than that, I do not have any additional questions, 
Mr. Chairman. I thank you for holding this hearing. This is one 
of the most critical aspects for restoring confidence to the 
American people in this government, what you all do every day. 
And I want you to know I, as a Senator, and I think most of us 
really appreciate what you do. Thank you
    Chairman Lieberman. Thanks, Senator Coburn. I agree with 
you. We will bring forth legislation in this session on the 
IGs.
    I think Senator Coburn makes a good point. Part of the 
problem is that Congress does not respond comprehensively 
enough to what the IGs tell us.
    This has been a very helpful hearing. I thank each of you 
for your testimony and for the considerable experience that you 
brought to the table.
    We are going to leave the record of the hearing open for 15 
days, either for additional testimony that you or others might 
want to submit or we may want to ask you another question.
    In the meantime, I thank you very much. The hearing is 
adjourned.
    [Whereupon, at 11:50 a.m., the Committee was adjourned.]






















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