[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
FOLLOW THE MONEY, PART I AND PART II
=======================================================================
HEARINGS
BEFORE THE
SUBCOMMITTEE ON INVESTIGATIONS AND
OVERSIGHT
COMMITTEE ON SCIENCE AND TECHNOLOGY
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
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March 19, 2009
and
May 5, 2009
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Serial No. 111-12
and
Serial No. 111-25
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Printed for the use of the Committee on Science and Technology
FOLLOW THE MONEY, PART I AND PART IIthe following is for the title
page (inside)
FOLLOW THE MONEY, PART I AND PART II
=======================================================================
HEARINGS
BEFORE THE
SUBCOMMITTEE ON INVESTIGATIONS AND
OVERSIGHT
COMMITTEE ON SCIENCE AND TECHNOLOGY
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
March 19, 2009
and
May 5, 2009
__________
Serial No. 111-12
and
Serial No. 111-25
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://science.house.gov
______
U.S. GOVERNMENT PRINTING OFFICE
47-858 WASHINGTON : 2009
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COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
DAVID WU, Oregon LAMAR S. SMITH, Texas
BRIAN BAIRD, Washington DANA ROHRABACHER, California
BRAD MILLER, North Carolina ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois VERNON J. EHLERS, Michigan
GABRIELLE GIFFORDS, Arizona FRANK D. LUCAS, Oklahoma
DONNA F. EDWARDS, Maryland JUDY BIGGERT, Illinois
MARCIA L. FUDGE, Ohio W. TODD AKIN, Missouri
BEN R. LUJAN, New Mexico RANDY NEUGEBAUER, Texas
PAUL D. TONKO, New York BOB INGLIS, South Carolina
PARKER GRIFFITH, Alabama MICHAEL T. MCCAUL, Texas
STEVEN R. ROTHMAN, New Jersey MARIO DIAZ-BALART, Florida
JIM MATHESON, Utah BRIAN P. BILBRAY, California
LINCOLN DAVIS, Tennessee ADRIAN SMITH, Nebraska
BEN CHANDLER, Kentucky PAUL C. BROUN, Georgia
RUSS CARNAHAN, Missouri PETE OLSON, Texas
BARON P. HILL, Indiana
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
KATHLEEN DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
SUZANNE M. KOSMAS, Florida
GARY C. PETERS, Michigan
VACANCY
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Subcommittee on Investigations and Oversight
HON. BRAD MILLER, North Carolina, Chairman
STEVEN R. ROTHMAN, New Jersey PAUL C. BROUN, Georgia
LINCOLN DAVIS, Tennessee BRIAN P. BILBRAY, California
CHARLES A. WILSON, Ohio VACANCY
KATHY DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
BART GORDON, Tennessee RALPH M. HALL, Texas
DAN PEARSON Subcommittee Staff Director
JAMES PAUL Democratic Professional Staff Member
TOM HAMMOND Republican Professional Staff Member
JANIE WISE Research Assistant
C O N T E N T S
Follow the Money, Part I: Accountability and Transparency in Recovery
Act Science Funding
March 19, 2009
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Prepared Statement by Representative Bart Gordon, Chairman,
Committee on Science and Technology, U.S. House of
Representatives................................................ 12
Statement by Representative Brad Miller, Chairman, Subcommittee
on Investigations and Oversight, Committee on Science and
Technology, U.S. House of Representatives...................... 8
Written Statement............................................ 9
Statement by Representative Paul C. Broun, Ranking Minority
Member, Subcommittee on Investigations and Oversight, Committee
on Science and Technology, U.S. House of Representatives....... 10
Written Statement............................................ 11
Panel I:
Dr. Cora Marrett, Acting Deputy Director, National Science
Foundation
Oral Statement............................................... 13
Written Statement............................................ 14
Biography.................................................... 16
Mr. Ronald R. Spoehel, Chief Financial Officer, National
Aeronautics and Space Administration
Oral Statement............................................... 17
Written Statement............................................ 18
Biography.................................................... 20
Ms. Ellen Herbst, Senior Advisor for Recovery Implementation,
U.S. Department of Commerce
Oral Statement............................................... 21
Written Statement............................................ 22
Biography.................................................... 26
Mr. Matthew Rogers, Senior Advisor, U.S. Department of Energy
Oral Statement............................................... 26
Written Statement............................................ 28
Biography.................................................... 31
Discussion....................................................... 31
Panel II:
Mr. Gregory H. Friedman, Inspector General, U.S. Department of
Energy
Oral Statement............................................... 44
Written Statement............................................ 46
Biography.................................................... 49
Mr. Todd J. Zinser, Inspector General, U.S. Department of
Commerce
Oral Statement............................................... 49
Written Statement............................................ 51
Biography.................................................... 60
Mr. Thomas C. Cross, Interim Inspector General, National Science
Foundation
Oral Statement............................................... 61
Written Statement............................................ 62
Biography.................................................... 65
Ms. Eileen Norcross, Senior Research Fellow, Mercatus Center,
George Mason University
Oral Statement............................................... 65
Written Statement............................................ 67
Biography.................................................... 111
Ms. Patricia Dalton, Managing Director, Natural Resources and
Environment Division, U.S. Government Accountability Office
Oral Statement............................................... 111
Written Statement............................................ 112
Biography.................................................... 117
Discussion....................................................... 117
Appendix 1: Answers to Post-Hearing Questions
Dr. Cora Marrett, Acting Deputy Director, National Science
Foundation..................................................... 124
Mr. Ronald R. Spoehel, Chief Financial Officer, National
Aeronautics and Space Administration........................... 131
Ms. Ellen Herbst, Senior Advisor for Recovery Implementation,
U.S. Department of Commerce.................................... 135
Mr. Matthew Rogers, Senior Advisor, U.S. Department of Energy.... 144
Mr. Todd J. Zinser, Inspector General, U.S. Department of
Commerce....................................................... 150
Mr. Thomas C. Cross, Interim Inspector General, National Science
Foundation..................................................... 155
Ms. Patricia Dalton, Managing Director, Natural Resources and
Environment Division, U.S. Government Accountability Office.... 161
Appendix 2: Additional Material for the Record
NASA Plan for Improvement in the GAO High-Risk Area of Contract
Management, January 31, 2008................................... 166
NASA Government Accountability Office (GAO) High-Risk Scorecard
Status, Contract Management, October 2008...................... 216
NASA High-Risk Corrective Action Plan, Executive Summary and
Definition of Success, September 26, 2008...................... 218
Follow the Money, Part II: Government and Public Resources for Recovery
Act Oversight
May 5, 2009
qWitness List.................................................... 222
Hearing Charter.................................................. 223
Opening Statements
Statement by Representative Brad Miller, Chairman, Subcommittee
on Investigations and Oversight, Committee on Science and
Technology, U.S. House of Representatives...................... 228
Written Statement............................................ 230
Statement by Representative Paul C. Broun, Ranking Minority
Member, Subcommittee on Investigations and Oversight, Committee
on Science and Technology, U.S. House of Representatives....... 231
Written Statement............................................ 232
Panel I:
Mr. Earl E. Devaney, Chairman, Recovery Accountability and
Transparency Board
Oral Statement............................................... 238
Written Statement............................................ 240
Biography.................................................... 242
Mr. Gene L. Dodaro, Acting Comptroller General, U.S. Government
Accountability Office
Oral Statement............................................... 243
Written Statement............................................ 244
Biography.................................................... 260
Discussion
Information Transparency and Compatibility..................... 261
The Level of Detail in Tracking Contracts...................... 262
Keeping Accurate Job Statistics................................ 263
Whistleblowers................................................. 264
Indications of Success......................................... 264
Tracking Money at the Local Level.............................. 265
Preventing Misuse of Grant and Contract Funds.................. 265
Availability of Information.................................... 266
Agency Compliance With Recovery Act Requirements............... 269
Oversight at the State and Local Level......................... 269
Results From the Online Dialogue............................... 270
Panel II:
Dr. Clarence G. Newsome, President, Shaw University
Oral Statement............................................... 272
Written Statement............................................ 274
Biography.................................................... 297
Dr. Gary D. Bass, Founder and Executive Director, OMB Watch
Oral Statement............................................... 297
Written Statement............................................ 299
Biography.................................................... 306
Dr. Jerry Ellig, Senior Research Fellow, Mercatus Center, George
Mason University
Oral Statement............................................... 307
Written Statement............................................ 308
Biography.................................................... 314
Ms. Danielle Brian, Executive Director, Project on Government
Oversight (POGO)
Oral Statement............................................... 314
Written Statement............................................ 317
Biography.................................................... 318
Mr. Eric Gillespie, Senior Vice President of Products,
Technology, and Innovation and Chief Information Officer,
Onvia, Inc.
Oral Statement............................................... 319
Written Statement............................................ 321
Biography.................................................... 329
Discussion
Achieving Detail in Data Tracking.............................. 329
Monitoring Job Creation........................................ 330
Providing Equitable Funding Access............................. 333
Closing........................................................ 334
Appendix: Answers to Post-Hearing Questions
Mr. Earl E. Devaney, Chairman, Recovery Accountability and
Transparency Board............................................. 338
Mr. Gene L. Dodaro, Acting Comptroller General, U.S. Government
Accountability Office.......................................... 340
Dr. Gary D. Bass, Founder and Executive Director, OMB Watch...... 345
Dr. Jerry Ellig, Senior Research Fellow, Mercatus Center, George
Mason University............................................... 347
Ms. Danielle Brian, Executive Director, Project on Government
Oversight (POGO)............................................... 350
Mr. Eric Gillespie, Senior Vice President of Products,
Technology, and Innovation and Chief Information Officer,
Onvia, Inc..................................................... 351
FOLLOW THE MONEY, PART I: ACCOUNTABILITY AND TRANSPARENCY IN RECOVERY
ACT SCIENCE FUNDING
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THURSDAY, MARCH 19, 2009
House of Representatives,
Subcommittee on Investigations and Oversight,
Committee on Science and Technology,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Brad
Miller [Chairman of the Subcommittee] presiding.
hearing charter
SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT
COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
Follow the Money, Part I: Accountability and
Transparency in Recovery Act Science Funding
thursday, march 19, 2009
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
I. Summary
The Subcommittee will meet on March 19, 2009, to receive testimony
relating to the accountability and transparency provisions in the
American Recovery and Reinvestment Act (H.R. 1; hereafter cited as the
``Recovery Act''). The Subcommittee will take testimony on steps taken
by agencies under the Committee's jurisdiction to establish
accountability for the funds they will receive under the Act.
Witnesses on the first panel have been designated as ``senior
accountability officers'' by their agencies and are nominally in charge
of planning for spending Recovery Act funds. The second panel is
composed of Inspectors General (IGs) and the Government Accountability
Office (GAO). These witnesses will describe their roles in overseeing
appropriate distribution of these funds and highlight for the
Subcommittee issues specific to our agencies that will deserve close
oversight attention while these funds are available.
II. Witness List
Panel I
Dr. Cora Marrett, Deputy Director (Acting) and Senior
Accountability Officer, National Science Foundation
Ronald R. Spoehel, Chief Financial Officer, National
Aeronautics and Space Administration
Ellen Herbst, Senior Official for Recovery Implementation,
Department of Commerce
Matthew Rogers, Senior Advisor to the Secretary, Department
of Energy
Panel II
Tim Cross, Inspector General (Acting), National Science
Foundation
Todd Zinser, Inspector General, Department of Commerce
Gregory H. Friedman, Inspector General, Department of Energy
Patricia Dalton, Managing Director, Natural Resources and
Environment Division, Government Accountability Office
At the request of Mr. Broun, we have also invited testimony from
Eileen Norcross, Senior Research Fellow at the Mercatus Center of
George Mason University.
III. Funding Provisions
Funds made available under the Recovery Act are intended to
accomplish certain purposes, defined in Section 3(a):
1. To preserve and create jobs and promote economic recovery.
2. To assist those most impacted by the recession.
3. To provide investments needed to increase economic
efficiency by spurring technological advances in science and
health.
4. To invest in transportation, environmental protection, and
other infrastructure that will provide long-term economic
benefits.
5. To stabilize State and local government budgets, in order
to minimize and avoid reductions in essential services and
counterproductive State and local tax increases.
Further, the Act requires that, ``The President and the heads of
federal departments and agencies shall manage and expend the funds made
available in this Act so as to achieve the purposes specified in
subsection (a), including commencing expenditures and activities as
quickly as possible consistent with prudent management.'' [Section
3(b)]
What follows is a short description of the Recovery Act funds
allocated to the major agencies under the jurisdiction of the Committee
on Science and Technology:
Department of Energy (DOE) $15.9 billion
Of direct interest to the Committee is $1.6 billion provided for
the Department's Office of Science, and $400 million made available for
the Advanced Research Projects Agency-Energy (established in the
America COMPETES Act in the last Congress).
The Department also received $2.5 billion for ``applied research,
development, demonstration and deployment activities'' in energy
efficiency and renewable energy. The bill directed $800 million to
biomass energy efforts, $400 million to geothermal energy projects and
$50 million to standards and efficiency work for information and
communication technologies. Further, $2 billion is provided for grants
in support of advanced battery manufacturing.
For fossil research and development, the Act provides $3.4 billion.
Approximately half ($2.32 billion) supports Round 3 of the Clean Coal
Power Initiative and CO2 capture and storage research.
Another $1 billion is available for general fossil energy research
projects.
Finally, the Act establishes a new loan guarantee program ``. . .
for renewable technologies and transmission technologies.'' The
Department will have $6 billion for this purpose, and the conference
report indicates it is expected this will leverage ten times that
amount in private funds to develop such technologies.
National Aeronautics and Space Administration (NASA) $1 billion
Each of the Agency's appropriation accounts received funding in the
Recovery Act:
The Science account received $400 million to expedite
development of the first round of missions set out in the
National Research Council's 2007 Earth science decadal survey,
and to upgrade NASA's supercomputers.
Aeronautics has $150 million to focus on aviation
safety, mitigation of environmental impacts from aviation and
projects related to replacement of the air traffic control
system.
$400 million is made available for Exploration, which
will likely be used to shrink the current hiatus between
Shuttle retirement and initial operation of new Constellation
systems.
The agency also obtained $50 million to assist in
repairing facilities at the Johnson Space Center damaged by
Hurricane Ike last year.
National Science Foundation (NSF) $3 billion
The majority of funds available to NSF are provided in the Research
and Related Activities account, with $300 million targeted on the major
research instrumentation program and $200 million set aside for
academic facilities modernization. The conference report requires that
all of the research divisions share in at least some of the other $2
billion in the account, after providing for ``. . . advancements in
supercomputing technology.''
Scholarship programs supported by the Foundation receive an
additional $100 million, while $400 million is made available to
programs funded by the Major Research Equipment appropriation.
National Institute of Standards and Technology (NIST) $580 million
The research program at NIST is bolstered by $220 million to
support research, to provide more competitive grants and purchase
needed equipment for laboratories. Remaining funding is split evenly
between the agency's own facility construction efforts and a
competitive grant program for research science buildings.
Not included in the total above is an additional $20 million
transferred from the Department of Health and Human Services to support
NIST's efforts in developing security and inter-operability standards
for health information technology. A further $10 million from the
Department of Energy is intended to assist in bringing intelligence to
the national electrical power grids.
National Oceanic and Atmospheric Administration (NOAA) $830 million
The Appropriations Committee directed NOAA to provide $230 million
to reduce its ``backlog of research, restoration, navigation,
conservation and management activities.'' The remaining $600 million is
split between work on facilities, ships and equipment, weather
forecasting and satellite development ($430 million), and $170 million
targeted on climate activities such as modeling, data records and
studies in mitigation.
IV. Accountability Provisions
For the agencies, the Recovery Act imposes new requirements to
accompany the new funding available. For spending on infrastructure
projects, the agencies are directed to obligate at least half of the
funds available within 120 days of the bill's enactment (February 16,
2009). Grant funding is to be employed ``in a manner that maximizes job
creation and economic benefit.'' Contracts awarded as part of Recovery
Act activities are to be fixed-price and awarded by the competitive
process set forth in the Federal Acquisition Regulation; contracts
awarded by other means are to be highlighted in a special section of
the Recovery.gov website.
The Office of Management and Budget (OMB), on February 9, 2009,
directed the agencies ``to name, no later than February 13, 2009, a
senior official responsible for coordinating recovery-related efforts
across your agency.'' Those officials represent the agency witnesses
here today. Weekly reports on agency activities relating to
implementation of the Recovery Act were to be posted on the agency's
own website for Recovery Act actions beginning March 3. According to
the first weekly reports published by the agencies testifying at the
hearing, there have been no expenditures to date using Recovery Act
funds. The formal plans for distributing Recovery Act resources are due
to OMB by May 1.
The Recovery Act does not relieve the agencies of their normal
requirements for assuring the proper use of funds, such as prohibitions
against discrimination in the Civil Rights Act and the reviews required
by the National Environmental Policy Act. OMB has told the agencies
that they can expect their performance to be measured against the
following criteria:
1. Audits and investigation of Recovery Act funds occurring to
identify wasteful spending and minimize waste, fraud, and
abuse;
2. Qualified personnel overseeing Recovery Act funds;
3. Opportunities to use competitive awards maximized;
4. Timely award of dollars;
5. Timely expenditure of dollars;
6. Timely completion of planned work;
7. Cost overruns minimized; and
8. Improper payments minimized.
However, because of the short window during which Recovery Act
funds will be available (appropriations under the Act will generally
expire at the end of Fiscal Year (FY) 2010 unless otherwise stated) and
specific direction in the Act to expedite disbursement, the agencies
will have to execute their normal processes with alacrity, over and
above the work needed to deal with regular activities.
At the same time, agency staff devoted to acquisition has been
shrinking government-wide, from 67,085 in 1992 to 61,434 in FY 2007,
according to the Federal Acquisition Institute (with half of those at
the Department of Defense). The Professional Services Council, an
organization of government contractors, warned last month that
``[w]ithout a government workforce sufficient to plan, deliver and
manage the contracts and grants that dispense these huge funds, it will
be like constructing an office building on a foundation of sand.'' The
state of these acquisition staffs was a focus of OMB Director Peter
Orszag at the first meeting with the Cabinet to discuss Recovery Act
implementation. Agency witnesses should be questioned closely about
steps they are taking to address their weaknesses in this critical
area.
It is the responsibility of the agency Inspectors General to
monitor agency operations for waste, fraud and abuse, and they will
have similar responsibilities for funds made available by the Recovery
Act. It is anticipated that their work will provide the bulk of the
information related to accountability that will become available on
Recovery.gov (http://www.recovery.gov/, the central information website
created in the Recovery Act). The Inspectors General have a specific
responsibility to receive reports from the public relating to items
funded by the Act and to determine if those reports demonstrate
improper use of those funds. It will also be the IGs investigating
allegations of retaliation against whistleblowers under the protections
for State, local and contractor employees providing information on
misuse of Recovery Act funds. The following table identifies the
additional funding made available to the IGs in the Act:
These funds remain available to the DOE IG until the end of FY
2012, and to the other IGs until FY 2013. The Subcommittee has asked
each of the witnesses to describe how the extra resources will be
employed.\1\
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\1\ The Subcommittee has made an affirmative decision to not invite
the NASA Inspector General, Mr. Robert ``Moose'' Cobb. Both Chairman
Gordon and Subcommittee Chairman Miller have recommended his ouster for
almost two years, most recently in a letter to the White House. Based
on investigative work by the Subcommittee and by the President's
Council on Integrity and Efficiency (PCIE), Mr. Cobb has not lived up
to the high standards of conduct and integrity expected of an Inspector
General. It was apparent from the PCIE investigation that Mr. Cobb
failed to understand how to properly employ auditors and did not
respect the audit staff in his organization. This may explain the
finding in a recent report by GAO (done at the request of Chairman
Gordon and Chairman Miller) that the NASA IG audit operation
demonstrated close to the weakest performance of any IG office in the
Federal Government. For every tax dollar assigned to Mr. Cobb's office,
his audit operation discovers just thirty-six cents in potential
savings. For an agency that puts 80 percent of its budget out the door
in contracts and grants, that is an inexplicably low number. The
Department of Commerce IG and Department of Energy IG were found to
return $2.25 and $2.37, respectively. If anyone wishes more information
on these matters, please contact the Subcommittee staff.
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To coordinate the work of the IGs, Title XV of the Recovery Act
establishes a new entity named the Recovery Accountability and
Transparency Board. The Board will have the power to determine if
contracts and grants issued with Recovery Act funding conform to law
and regulation and if they are appropriately managed. The Board will
also evaluate the performance of the agency acquisition staffs. The
Board will report to Congress and the public regarding the use of
Recovery Act funds at least on a quarterly basis, and can issue
immediate (``flash'') reports in cases requiring immediate attention.
The Board will also maintain Recovery.gov. Given its position at the
apex of the accountability structure, the Board will make
recommendations for the prevention of waste fraud and abuse to the
agencies, to which the agency must respond by report to Congress and
the President within 30 days.
Membership for the Board is drawn from a subset of the departmental
IGs, including two of our witnesses (Inspectors General Zinser and
Friedman). President Obama has appointed the Inspector General of the
Department of the Interior, Earl Devaney, to serve as the Board's
Chairman (Mr. Devaney has taken leave from Interior to fill this job
and has made a promise to Chairman Miller to appear at a future
Subcommittee hearing). The Act specifically tasks the Board to consult
and collaborate with the Inspectors General, the Government
Accountability Office and State auditors in the conduct of its affairs
and in the preparation of the reviews and reports it will publish. The
Board receives a budget of $84 million to fund its activities until its
termination date of September 30, 2013.
With regard to GAO's contribution to Recovery Act oversight, the
acting Comptroller General, Gene Dodaro, testified before the Senate
Committee on Homeland Security and Government Affairs on March 5, 2009.
He described the steps he has taken to begin cooperating with the IG
community, State auditors and OMB as contemplated in the Act. Based on
GAO's prior work, he highlighted fraud prevention, contract management
and grant accountability as areas deserving special focus as Recovery
Act funds are expended. GAO received an additional $25 million in the
Act for salaries and expenses relating to their responsibilities under
the Act.
While we have asked the IG and GAO witnesses to distill general
oversight principles (like those just discussed) from their respective
bodies of work, they also can describe specific management challenges
that relate to Recovery Act programs. Both NASA and the Department of
Energy have spent years on GAO's high-risk list for contract
management. When either agency employs a contract to spend Recovery Act
money, how will the procurement process close the gaps GAO identifies?
A recent report by the Department of Energy Inspector General indicates
that the office managing loan guarantees at the Department is
overstretched with its existing workload, and now faces an additional
$6 billion provided for a new set of guarantees authorized by the
Recovery Act. What will be done to reduce the overload?
Ms. Norcross will address the ability of nongovernmental
organizations, academia, and the private sector to complement existing
oversight of the American Recovery and Reinvestment Act. Additionally,
she will also speak to what tools Congress can provide to these
organizations that will further enable transparency and oversight. As
co-founder of the website StimulusWatch.org, Ms. Norcross will also
discuss the role of technology in promoting accountability.
Mr. Devaney, in a Wall Street Journal article published March 9,
2009, noted that his previous experience indicated that fraud in
federal expenditures averaged ``around seven percent of all big
contracts.'' While he stated that he believes strong agency oversight
can keep losses ``well below'' that level, it is unlikely that it will
end up reduced to zero. The efforts being made on accountability are
themselves an experiment. Depending on their success at minimizing
improper expenditures, they may become the standard for measuring
federal spending distributions in the future.
Chairman Miller. Good morning and welcome to our hearing,
``Follow the Money: Accountability and Transparency in Recovery
Act Science Spending.'' I understand Dr. Broun, the Ranking
Republican of the Subcommittee, will be with us shortly. Mr.
Bilbray is serving in his stead for the moment.
This subcommittee's hearings usually or frequently have as
witnesses people that we think may have done wrong. None of our
witnesses today have done wrong, yet anyway, but we want to
hear from you on how you are going to do right.
Our purpose today is twofold: to learn how agencies in this
committee's legislative jurisdiction intend to distribute funds
available under the American Recovery and Reinvestment Act and
then to examine what will be done to guarantee that those funds
are not awarded improperly or wasted.
Last Thursday President Obama told State officials seeking
guidance on the use of Recovery Act funds that, ``If we see
money being misspent, we are going to put a stop to it.'' I
assume he would give the same warning to universities, to
scientists, to businesses seeking funds from our agencies and
today we will begin to find out how that will be accomplished.
Congress and the President enacted the Recovery Act to
respond to extraordinary circumstances. It leaves the agencies
to walk a fine line. If you want to jump-start the economy by
expanding employment, the money in this bill needs to get into
the pipeline quickly, but Congress did not relieve the agencies
of their responsibility to adhere to federal contracting rules
when distributing the funds, which takes time and skilled
personnel, first to award the grant or contract and then to
manage the contract in a way that ensures a productive outcome.
The innovations in the Recovery Act are not in streamlining
contracting techniques. Rather, the Act requires agencies to
gather more information regarding their awards and to make that
information more available to the public than has ever been
done before. The Act also sets up elaborate systems among the
Inspectors General and the Government Accountability Office,
the GAO, to ensure that waste, fraud and abuse are at a
minimum. It is probably unrealistic to think that they will be
eliminated entirely.
All of this--expanded spending, transparent competition and
awards tracking, and accountability after the award has been
made--must be carried out while dealing with the ordinary
agency, the IG and GAO business.
Our first panel has been asked to explain how they intend
to balance these competing pressures and to accomplish the
goals of the Recovery Act. The witnesses on the panel represent
the designated accountability officers of the Department of
Energy, NASA, NSF and Department of Commerce. They are in the
front line of conversations with OMB and program divisions in
their agencies about carrying out the Recovery Act.
Congress turns to IGs and the Government Accountability
Office, the GAO, for expertise and accountability. Our
witnesses on the second panel bring to bear their experience in
detecting waste, fraud and abuse, something that will be vital
for managing the outflow of Recovery Act dollars. With the
pressure to move the money, we cannot depend solely on audits
after the fact to avoid diversion of those grants and contracts
and I expect to hear that they are closely cooperating with the
agency management to build protections into project evaluation
and procurements.
The late Senator from Illinois, Everett Dirksen, is
credited with the line, ``A billion here, a billion there,
pretty soon you are talking about real money.'' Today we are
talking about 20 times that amount of money.
When the stimulus funds run out next year, we want to know
where the money went, and if those funds succeeded in meeting
the goals that Congress set. This committee will particularly
want to know, did they provide investments needed to increase
economic efficiency by spurring technological advances in
science and health?
I expect to hear from our witnesses that this will not be
an easy task but one that you are prepared to tackle and get
right. Since this is just the first hearing on this subject,
more to look forward to, for this subcommittee, we anticipate
monitoring progress along these lines over the course of the
111th Congress.
I now recognize the Subcommittee's Ranking Member, if he
has caught his breath, the gentleman from Georgia, Dr. Broun,
for his opening statement.
[The prepared statement of Chairman Miller follows:]
Prepared Statement of Chairman Brad Miller
Good morning, and welcome to our hearing, ``Follow the Money:
Accountability and Transparency in Recovery Act Science Spending.''
Our purpose today is twofold--to learn how agencies in the
Committee's legislative jurisdiction intend to distribute funds
available under the American Recovery and Reinvestment Act, and then to
examine what will be done to guarantee that those funds are not awarded
improperly or wasted.
Last Thursday, President Obama told State officials seeking
guidance on the use of Recovery Act funds that, ``If we see money being
misspent, we're going to put a stop to it.'' I assume he would give the
same warning to universities, scientists and businesses seeking funds
from our agencies, and today we will begin to find out how this will be
accomplished.
Congress and the President enacted the Recovery Act to respond to
extraordinary circumstances. It leaves the agencies to walk a fine
line. If you want to jump-start the economy by expanding employment,
the money in this bill needs to get into the spending pipeline quickly.
Yet Congress did not relieve the agencies of their responsibility to
adhere to federal contracting rules when distributing these funds,
which takes time and skilled personnel first to award the grant or
contract and then to manage in a way that ensures a productive outcome.
The innovations in the Recovery Act are not in stream-lining
contracting techniques. Rather, the Act requires agencies to gather
more information regarding their awards and to make that information
more available to the public, than has ever been done before. The Act
also sets up elaborate systems among the Inspectors General and the
Government Accountability Office to insure that waste, fraud and abuse
are at a minimum.
All of this--expanded spending, transparent competition and awards
tracking, and accountability after the award has been made--must be
carried out while dealing with the ordinary agency, IG, and GAO
business.
Our first panel has been asked to explain how they intend to
balance these competing pressures and to accomplish the goals of the
Recovery Act. The witnesses on that panel represent the designated
``accountability officers'' for the Department of Energy, NASA, NSF and
the Department of Commerce. They are on the front line of conversations
with OMB and program divisions in their agencies, about carrying out
the Recovery Act.
Congress turns to Inspectors General and the Government
Accountability Office for expertise in accountability. Our witnesses on
the second panel bring to bear their experience in detecting waste,
fraud and abuse, something that will be vital for managing the outflow
of Recovery Act dollars. With the pressure to move the money, we cannot
depend solely on audits after the fact to avoid diversion of these
grants and contracts. I expect to hear that they are closely
cooperating with agency management to build protections into project
evaluation and procurements.
The late Senator from Illinois, Everett Dirksen, is credited with
the line, ``A billion here, a billion there; pretty soon you're talking
real money.'' Today we'll be talking about some 20 times that threshold
for real money.
When the stimulus funds run out next year, we want to know where
they went and if these funds succeeded in meeting the goals Congress
set forth. This committee will particularly want to know, did they
``provide investments needed to increase economic efficiency by
spurring technological advances in science and health''?
I expect to hear from our witnesses that this will not be an easy
task, but one they are prepared to tackle and get right. Since this is
just the first hearing on this subject for this subcommittee, we
anticipate monitoring progress along these lines over the course of the
111th Congress.
I now recognize the Subcommittee's Ranking Member, the gentleman
from Georgia, Dr. Broun, for his opening statement.
Mr. Broun. I thank the Chairman and I beg his forgiveness
and the panel's forgiveness for running late. Something very
important came up and delayed me a bit and I came running
literally from my office here, so I apologize and I hope you
all will forgive me for running late.
Thank you, Mr. Chairman. I want to thank you for holding
this hearing and commend you for addressing oversight at our
science agencies. This committee has an important
responsibility to ensure that funding from the American
Recovery and Reinvestment Act is spent appropriately, and I
look forward to working with you, Chairman Gordon and Ranking
Member Hall to make sure we do just that.
Addressing oversight, accountability and transparency at
agencies is an important task, but Congress should also be held
to these same principles. In attempting to live up to these
standards, Democratic leadership has failed the American
people. The stimulus bill was bloated with earmarks and pushed
through Congress without a single oversight hearing. We will
hear from witnesses shortly about the importance of preventing
waste, fraud and abuse ahead of time rather than trying to
detect it after the fact. They will speak to the need to get
policies and procedures for spending the money established
early in the process instead of playing ``gotcha'' after the
money has been spent. This is important guidance that we will
insist the agencies follow, yet the irony of the situation is
that Congress never did this work itself.
Without a single hearing by any committee, the Democratic
leadership has tripled our nation's debt and forced us to
borrow from our children, grandchildren and foreign nations. We
spent $787 billion in this bill. To put this into perspective,
last year's budget for non-security discretionary spending was
roughly $390 billion. That is almost twice as much as last
year's budget and doesn't even take into account the omnibus or
other bail-outs that we have passed on top of that. Neither
this committee nor any other had a role in developing
appropriate oversight, accountability and transparency measures
necessary for such an enormous bill. We never held a hearing or
a single markup. Therefore, it is somewhat comical to talk
about stimulus accountability and transparency when there
wasn't any behind this bill's formulation.
Don't get me wrong, making sure our science agencies are
funded at the appropriate authorization levels is important,
but that is not what we are talking about here. We are talking
about not learning from the lessons of post-Katrina disaster
relief, Iraq reconstruction and the Troubled Asset Relief
Program, all instances where expediency trumped accountability
and the taxpayer suffered. I was outraged just as the American
people were to hear that AIG executives received taxpayer money
as bonuses while their company crumbled around them. If the
stimulus bill had seen the light of day, perhaps Democratic
leadership would not have been able to add a loophole for AIG
executive bonuses. History has shown that throwing as much
money as we can out the window as fast as we can has never
ended well. Congress should have known this and taken a more
measured approach to aiding our economy, which brings me to an
important point. Obama Administration economic advisor Larry
Summers indicated numerous times that the stimulus bill would
be ``timely, targeted and temporary.'' I have serious concerns
about the impact that a temporary surge of money will have on
our scientific enterprise. A temporary influx of funds without
a long-term commitment will lead to a boom-and-bust scenario
similar to that experienced by NIH after its budget doubled
earlier this decade. As Science Magazine noted in a 2007
article, ``Between 1998 and 2003, the budget of the National
Institutes of Health rose from $13 billion to more than $27
billion with a plan known as The Doubling. Now that the tsunami
of cash has receded, many life scientists, especially those in
the early phase of their careers, have found conditions no
better and in some ways worse than before the process began.''
While the Obama Administration has clearly indicated that
this enormous influx of money will be ``temporary,'' our
investment in science should be steady and predictable, not
volatile and fleeting.
Thank you, Mr. Chairman. I look forward to the witnesses'
testimony and look forward to working with you going forward,
oversight in a truly nonpartisan endeavor. We have
disagreements on the underlying substance and process
associated with the stimulus bill but I hope now that the dust
has settled, we can work together in a productive manner to
minimize waste, fraud, abuse and mismanagement at our science
agencies.
I yield back.
[The prepared statement of Mr. Broun follows:]
Prepared Statement of Representative Paul C. Broun
Thank you Mr. Chairman. I want to thank you for holding this
hearing, and commend you for addressing oversight at our science
agencies.
This committee has an important responsibility to ensure that
funding from the American Recovery and Reinvestment Act is spent
appropriately, and I look forward to working with you, Chairman Gordon,
and Ranking Member Hall to make sure we do just that.
Addressing oversight, accountability, and transparency at agencies
is an important task, but Congress should also be held to these same
principles. In attempting to live up to these standards, Democratic
Leadership has failed the American people.
The stimulus bill was bloated with earmarks and pushed through
Congress without a single oversight hearing.
We will hear from witnesses shortly about the importance of
preventing waste, fraud, and abuse ahead of time rather than trying to
detect it after-the-fact.
They will speak to the need to get policies and procedures for
spending money established early in the process, instead of playing
``gotcha'' after the money has been spent.
This is important guidance that we will insist the agencies follow,
yet the irony of the situation is that Congress never did this work
itself.
Without a single hearing by any committee, the Democratic
Leadership has tripled our nation's debt and forced us to borrow from
our children, grandchildren, and foreign nations. We spent $787 billion
in this bill. To put this into perspective, last year's budget for-non-
security discretionary spending was roughly $390 billion. That's almost
twice as much as last year's budget, and doesn't even take into account
the Omnibus or other bail-outs that we passed on top of that.
Neither this committee, nor any other, had a role in developing
appropriate oversight, accountability, and transparency measures
necessary for such an enormous bill. We never held a hearing, or a
single markup. Therefore, it is somewhat comical to talk about stimulus
accountability and transparency when there wasn't any behind this
bill's formulation.
Don't get me wrong, making sure our science agencies are funded at
the appropriate authorization levels is important, but that's not what
we are talking about here.
We are talking about not learning from the lessons of post-Katrina
disaster relief, Iraq Reconstruction, and the Troubled Asset Relief
Program--all instances where expediency trumped accountability and the
taxpayer suffered. I was outraged, just as the American people were, to
hear that AIG executives received taxpayer money as bonuses while their
company crumbled around them. If the Stimulus bill had seen the light
of day, perhaps Democratic leadership would not have been able to add a
loophole for AIG executive bonuses.
History has shown that throwing as much money as we can out the
window as fast as we can has never ended well. The Congress should have
known this and taken a more measured approach to aiding our economy.
Which brings me to an important point. Obama Administration
Economic Advisor Larry Summers indicated numerous times that the
stimulus bill would be ``timely, targeted, and temporary.'' I have
serious concerns about the impact that a temporary surge of money will
have on our scientific enterprise. A temporary influx of funds without
a long-term commitment will lead to a boom-and-bust scenario similar to
that experienced by NIH after its budget doubled earlier this decade.
As Science Magazine noted in a 2007 article, ``Between 1998 and
2003, the budget of the National Institutes of Health rose from $13
billion to more than $27 billion in a plan known as ``the doubling.''
Now that the tsunami of cash has receded, many life scientists--
especially those in the early phase of their careers--have found
conditions no better, and in some ways worse, than before the process
began.''
While the Obama Administration has clearly indicated that this
enormous influx of money will be ``temporary,'' our investment in
science should be steady and predictable, not volatile and fleeting.
Thank you Mr. Chairman. I look forward to the witnesses' testimony
and working with you going forward. Oversight it truly a nonpartisan
endeavor. We may have disagreements on the underlying substance and
process associated with the Stimulus bill, but I hope that now that the
dust has settled, we can work together in a productive manner to
minimize waste, fraud, abuse, and mismanagement at our science
agencies.
I yield back.
Chairman Miller. Thank you, Dr. Broun.
I ask unanimous consent, I am not sure I need to, but I ask
unanimous consent that any additional opening statements
submitted by Members will be included in the record, and
without objection that is so ordered.
[The prepared statement of Chairman Gordon follows:]
Prepared Statement of Chairman Bart Gordon
Good morning, Mr. Chairman. I am pleased to see your subcommittee
devoting attention to how our agencies are preparing to spend recovery
money.
In the Recovery Act, Congress placed extra requirements on agencies
to insure that taxpayer money was carefully managed and accounted for.
The Congress expects that money will be put into circulation
quickly to meet the employment goals of the Act, but it is just as
important that the money is awarded fairly and for purposes that serve
real public needs.
I look forward to hearing how the agencies are getting ready to
ramp up awards.
The Recovery Act also provided extra funding for the Inspectors
General and the Government Accountability Office so that they could
expand their operations and monitor the coming surge in government
spending. I look forward to the testimony of our IGs and GAO regarding
their efforts to provide an extra level of oversight and accountability
inside the agencies.
Finally, the Obama Administration has brought a renewed commitment
to transparency in all aspects of government. In our democracy, the
greatest accountability measure you can embrace is to let the public
know what you are doing and how you are doing it.
I am very pleased that an unprecedented level of information will
be made available to the public through Recovery.gov, however I am
interested in learning how agencies intend to provide that information,
where there will be challenges in providing accurate information, and
whether the right policies are in place to guide the agencies in their
reporting requirements.
This will not be the last hearing on the Recovery Act held by this
committee, but I think it is an excellent start.
Thank you, Mr. Chairman and I yield back.
Panel I
Chairman Miller. It is now my pleasure to introduce our
witnesses at this time. Dr. Cora Marrett is the Senior
Accountability Officer and Acting Deputy Director at the
National Science Foundation. Mr. Ronald Spoehel is the Chief
Financial Officer of the National Aeronautics and Space
Administration. Ms. Ellen Herbst is the Senior Officer of
Recovery and Implementation with the U.S. Department of
Commerce, and Mr. Matthew Rogers is the Senior Advisor to
Secretary Chu at the U.S. Department of Energy.
As our witnesses should know, you will each have five
minutes for your spoken testimony. Your written testimony will
be included in the record for the hearing. When you all have
completed your oral testimony, we will have questions. Each
Member will have five minutes to question the panel. It is the
practice of the Committee to receive testimony under oath.
Since I said earlier none of you have done wrong yet, I don't
think you have to worry about anything but we do take testimony
under oath. Do any of you have any objection to swearing an
oath, to take an oath? You also have a right to be represented
by counsel. We are trying to make you at as ease as we can by
asking you these questions. Do any of you have counsel here?
Okay. Now if you would now please stand and raise your right
hand. Do you swear to tell the truth and nothing but the truth?
The record will reflect that all the witnesses took the oath.
We will now begin with Dr. Cora Marrett. Dr. Marrett, you
may begin.
STATEMENT OF DR. CORA MARRETT, ACTING DEPUTY DIRECTOR, NATIONAL
SCIENCE FOUNDATION
Dr. Marrett. Thank you for inviting me on behalf of the
National Science Foundation. I am Cora Marrett, Acting Deputy
Director and Senior Accountability Officer for Recovery Act
activities at NSF.
NSF is honored to have a role in stimulating the American
economy. The $3 billion entrusted to us will sustain and
advance major research initiatives, enhance support for
science, technology, engineering and mathematics education, and
help renew America's research infrastructure. The immediate
impact will be felt by investigators, postdoctoral fellows,
graduate and undergraduate students and teachers throughout the
Nation. We now support nearly 200,000 of these individuals
every year. We expect to add approximately 50,000 in Fiscal
Year 2009 with Recovery funds. Over the long run, our
investments should help the Nation meet the increasing demands
for new knowledge and innovative technologies.
We are confident that NSF can maintain the highest
standards of competitive merit review, distribute the funds in
a timely manner and meet all of the requirements for
accountability and transparency. We have formal policies and
procedures for implementing the guidance and a plan for
allocating the funds.
Moreover, we have proposals and procedures; we have
proposals in place that merit the funding and procedures for
handling expeditiously the other proposals we will receive. For
all of these reasons, NSF is confident that we can make the
first awards within the next few weeks.
Of the $3 billion allotted to NSF, $2.5 billion is for
Research and Related Activities, $400 million for Major
Research Equipment and Facilities Construction and $100 million
for Education and Human Resources. Now, not only is NSF
prepared to distribute the funds, but so are the science and
engineering research and education communities poised to expend
the funds quickly and effectively.
We recognize the importance of building and maintaining the
confidence of Congress and the American people. We maintain an
unwavering commitment to our merit review processes, processes
considered by many to be the gold standard for achieving
excellence, accountability and transparency in grant making.
NSF will not compromise the fairness and competitiveness that
mark our processes and we can make this commitment, given the
caliber of our staff and of our management practices, both
refined over many decades.
Now, we have more than a plan for the Recovery Act funds,
we have a structure in place. As the Senior Accountability
Officer, I oversee a steering committee drawn from across the
Agency. Several members of the committee themselves direct
``tiger teams,'' teams with responsibilities aligned with the
requirements of the Recovery Act. We are working closely with
the National Science Board, our governing body, and our Office
of the Inspector General. These connections will help us meet
the enhanced monitoring and reporting requirements of the Act.
Personally, I take seriously my responsibility to deliver
information in a timely way and to ensure the quality of that
information.
In conclusion then, the high expectations for NSF derive
from the discoveries and the innovations that the agency has
helped generate over the past six decades. The landmark
legislation then enables us to strengthen our contributions and
in so doing move forward the Nation and the American people.
Mr. Chairman, this concludes my remarks. I will certainly
answer any questions should you have them.
[The prepared statement of Dr. Marrett follows:]
Prepared Statement of Cora Marrett
Chairman Miller, Ranking Member Broun, and distinguished Members of
the Subcommittee, thank you for inviting me to speak on the National
Science Foundation's participation in the America Recovery and
Reinvestment Act. I am Dr. Cora Marrett, Acting Deputy Director and
Senior Accountability Officer for Recovery Act Activities for NSF.
The Foundation is grateful and honored that our role in stimulating
the American economy has been recognized. The $3 billion Recovery Act
investment in NSF programs will sustain and advance major research
initiatives, enhance support for science, technology, engineering and
mathematics education, and help renew America's research
infrastructure:
The immediate impact of this investment will be felt by
investigators, post-doctoral fellows, graduate and undergraduate
students, and teachers throughout the Nation. NSF funding now helps to
support nearly 200,000 of these individuals every year. We expect to
add approximately 50,000 in FY 2009 with Recovery Act funds.
Over the longer-term, a vibrant research and education enterprise
will help meet increasing demands for the new knowledge and innovative
technologies that contribute to sustainable economic prosperity and
quality of life.
As you know, the Recovery Act mandates an unprecedented level of
transparency and accountability. NSF is confident that the agency can
maintain the highest standards of competitive merit review, distribute
Recovery Act funds in a timely manner, and meet all requirements for
accountability and transparency.
1. How soon will you begin to allocate funds for your agency programs
funded through the Recovery Act?
The Foundation has developed formal policies and procedures for
implementing the Recovery Act and a plan and framework for allocating
funds. Moreover, we have proposals in place that merit the funding and
we have and procedures for handling expeditiously other proposals we
will receive. For these reasons, NSF is confident that we can begin to
make the first awards within the next few weeks.
As you know, NSF Recovery Act funds total $3 billion. $2.5 billion
is available for Research and Related Activities, and includes $300
million for Major Research Instrumentation (MRI) and $200 million for
Academic Research Instrumentation (ARI). The remaining $2 billion
supports new research grants and critical infrastructure needs; with an
emphasis on deferred maintenance and enhancements for existing research
facilities.
In addition, the Recovery Act stipulates $400 million for Major
Research Equipment and Facilities Construction, and $100 million for
Education and Human Resources. The $100 million includes $25 million
for the Math and Science Partnerships Program and $60 million for the
Noyce Teacher Scholarship Program, and $15 million for a Science
Masters program authorized in the America COMPETES Act.
Not only will NSF distribute these funds expeditiously, we expect
that the science and engineering communities are poised to immediately
expend funds that will advance discovery and innovation, and enhance
the economy. The highly rated proposals we have been unable to support
provide ample evidence of this. Colleges and universities have urgent
needs to retain talented faculty, graduate students and post-doctoral
fellows. They. are also prepared to use Recovery Act funds to refurbish
laboratories and upgrade information systems technology.
2. There will be increased pressure to bypass standard procedures in
order to accelerate the delivery of Recovery funds through grants and
contracts. How will you ensure the expedited awards maintain a
selection and management process that is fair, competitive, and
advances the President's long-term policy agenda?
In awarding Recovery Act funds, the Foundation recognizes the
importance of building and maintaining the confidence and trust of
Congress and the American people. NSF maintains a steadfast commitment
to established merit review processes, considered by many to be the
``gold standard'' for achieving excellence, accountability,
transparency and effectiveness in grant-making activities.
The NSF merit review process, relies on a pool of over 50,000
volunteer reviewers, selected from a pool of national and international
experts, to evaluate the proposals we receive. Proposals are weighed
against two established criteria: intellectual merit and broader
impacts of the proposed research. The second criterion considers the
impact that the research can have beyond the advancement of new
knowledge, for example in teaching, training and learning.
NSF will not, and need not bypass these established procedures in
order to move funds rapidly. We have proposals already reviewed through
the merit process this fiscal year that we could not fund with our
regular budget. The budgets for these highly rated proposals total at
least $2 billion. Reviews underway or to be completed shortly will
generate additional proposals appropriate for Recovery Act funding. NSF
will not compromise the fairness and competitiveness that marks the
review process.
The Foundation's first priority is to fund highly-rated proposals
that would otherwise be declined for lack of funds. These investments
clearly reflect the Administration's commitment to advance science and
innovation to build a sustainable economic future. NSF places a high
priority on using Recovery Act funds to support proposals from first
time principal investigators and for high risk and transformative
research. Both of these goals are also priorities for the
Administration.
3. How will you ensure the agency staff responsible for contracts and
grant management have the knowledge and skills necessary to properly
award and manage contracts and grants funded by Recovery Act resources?
The Recovery Act clearly requires NSF to employ highly qualified
staff to execute the critical responsibilities of grant and contract
management. As you know, awarding and managing grants and contracts is
the bread-and-butter business of the Foundation. In addition to well
established merit review processes, NSF has a cadre of highly
experienced grants management staff. Effective management processes,
refined over many decades, are already in place to ensure that Recovery
Act funds are awarded in a timely-manner while maintaining the
integrity of award management processes.
4. What structures do you plan to establish to ensure compliance with
directions from the Office of Management and Budget? How will these
structures ensure the timely delivery of information on Recovery Act
projects to the public web portal, Recovery.gov, as directed by the Act
and President Obama?
NSF has more than a plan; we have a structure in place. The Senior
Accountability Officer, my role, oversees a Recovery Act Steering
Committee drawn from across the agency. Many members of the Steering
Committee themselves direct ``tiger-teams'' with specific
responsibilities aligned with the requirements of the Recovery Act.
NSF management continues to work closely with the National Science
Board, our governing body, and the Office of the Inspector General to
develop appropriate procedures to meet the enhanced monitoring and
reporting requirements of the Recovery Act. The responsibility for the
timely delivery of information to the Recovery.gov web portal rests
with the Chief Accountability Officer. A single office compiles the
information that currently is required on a weekly basis.
In conclusion, the high expectations accompanying the Recovery Act
are a direct reflection of the discoveries and innovations that NSF and
its partners in the research and education community have brought to
the Nation over the past six decades. This landmark legislation
provides the means to move forward and to greatly strengthen these
contributions to the Nation and the American people.
Mr. Chairman, this concludes my remarks. I would be pleased to
answer any questions.
Biography for Cora Marrett
Dr. Cora Marrett was appointed Acting Deputy Director of the
National Science Foundation, effective January 18, 2009.
She had been the Assistant Director for Education and Human
Resources (EHR), a position she held from February 2007 until becoming
Acting Deputy Director. She led NSF's mission to achieve excellence in
U.S. science, technology, engineering and mathematics (STEM) education
at all levels and in both formal and informal settings. Earlier, from
1992-1996, Dr. Marrett was NSF's Assistant Director for Social,
Behavioral and Economic Sciences (SBE).
Prior to returning to NSF in 2007, Dr. Marrett served as the
University of Wisconsin's Senior Vice President for Academic Affairs
for six years. Before that, she served as Senior Vice Chancellor for
Academic Affairs and Provost at the University of Massachusetts-Amherst
for four years.
Dr. Marrett holds a B.A. degree from Virginia Union University, and
M.A. and Ph.D. degrees from UW-Madison, all in sociology. She received
an honorary doctorate from Wake Forest University in 1996, and was
elected a fellow of the American Academy of Arts and Sciences in 1998
and the American Association for the Advancement of Science in 1996.
Chairman Miller. Thank you, Dr. Marrett.
Mr. Spoehel for five minutes.
STATEMENT OF MR. RONALD R. SPOEHEL, CHIEF FINANCIAL OFFICER,
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
Mr. Spoehel. Chairman Miller, Ranking Member Broun and
distinguished Members of the Subcommittee, thank you for the
opportunity to appear today to discuss steps being taken at
NASA to implement the Recovery Act.
The Recovery Act entrusts NASA with the stewardship of just
over $1 billion of Recovery Act funds, with almost 95 percent
or $950 million designated for expenditure on science,
aeronautics and exploration activities, and $50 million for
cross-agency support activities prioritized for hurricane
damage repair, along with $2 million for the NASA Office of
Inspector General.
While NASA is working aggressively to fulfill the Act's
mandate of commencing Recovery Act activities and expenditures
as quickly as possible, the Agency is also committed to
managing Recovery Act funding under the heightened level of
transparency and accountability demanded by the Congress and
the Administration. We want the American people to rest assured
that they will know where and how each of their Recovery Act
dollars is being spent at NASA.
NASA's planning, execution, reporting and oversight for
Recovery Act activities began early, even before the Act was
signed by the President. NASA is still in the early stages of
implementing Recovery Act specific processes and activities,
and while OMB guidance continues to evolve, it is my view that
the Recovery Act requirements can be successfully implemented
at NASA within a framework that substantially relies on
existing Agency processes and structures. NASA already has
well-established and effective procedures in place for budget
planning and execution and for procurement, as well as for
internal controls and external reporting, and the Agency
intends to leverage those existing capabilities to accomplish
rapid, timely Recovery Act planning and budget execution and
procurements, while fully meeting all the requirements of the
Act, related OMB guidance, and relevant laws and regulations.
The Agency's planning process for Recovery Act activities and
the associated allocation of funds is well underway, consistent
with Recovery Act direction provided by Congress and OMB
guidance, and also consistent with NASA goals and priorities as
established by the President and Congress.
NASA senior management recognizes that meeting the
commitments of the President and Congress will require
sustained focus and accountability from all, particularly in
the awarding, managing and overseeing the contracts and grants
funded by the Recovery Act. NASA's annual procurement
obligations have exceeded $15 billion on average over the last
four years and the $1 billion of Recovery Act funds, most of
which will go to contract awards, is just over six percent of
that amount. For the Recovery Act funding, the Agency intends
to use its well-established processes and procedures for
effectively and efficiently awarding--or planning, awarding and
managing contract and grant awards in a fair and equitable
manner. Oversight of the procurement process is maintained
through several means beginning with a strong internal
communication network within NASA's procurement community,
monthly reviews of major procurements, periodic on-site
intensive reviews of individual procurements, further
supplemented by oversight and internal control reviews
conducted regularly by the Agency. NASA recognizes that these
processes can only be effective if it maintains a skilled and
knowledgeable cadre of acquisition professionals, and the
Agency has established a rigorous procurement training program
as well as a contracting certification program.
In closing, NASA is committed to the effective, efficient
and responsible use of the resources entrusted to the Agency,
and to the implementation of a robust and comprehensive program
that meets the requirements of the Recovery Act and other
relevance guidance and laws with the level of transparency and
accountability demanded.
I would be happy to respond to any questions you or the
Members of the Committee may have. Thank you, Mr. Chairman.
[The prepared statement of Mr. Spoehel follows:]
Prepared Statement of Ronald R. Spoehel
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to appear today to discuss the steps being taken at NASA to
implement the American Recovery and Reinvestment Act of 2009 (P.L. 111-
5), commonly referred to as the Recovery Act. My testimony will outline
NASA's progress to date and the actions the Agency is taking to provide
for the special accountability and transparency called for by the Act.
The Recovery Act entrusts NASA with the stewardship of just over
$1.0 billion in Recovery Act funds. Almost 95 percent of these funds,
or $950 million, are designated for expenditure on Science, Aeronautics
and Exploration activities. Specifically, $400 million has been
appropriated for Science, $150 million for Aeronautics, and $400
million for Exploration. Of the remaining funds, $50 million is for
Cross-Agency Support, with the highest priority being given to
restoring NASA-owned facilities damaged from hurricanes last year, and
$2 million is for the NASA Office of Inspector General.
While NASA is aggressively working to fulfill the Act's mandate of
commencing Recovery Act activities and expenditures as quickly as
possible, the Agency is also committed to managing Recovery Act funding
under the heightened level of transparency and accountability demanded
by Congress and the Administration. We want the American people to rest
assured they will know where and how each of their Recovery Act dollars
at NASA is being invested.
Reinforcing the Structures for Compliance with the Recovery Act and
Initial Implementing Guidance for the Recovery Act
In my role as the senior agency Recovery Act official for the
Agency, as designated by NASA's Acting Administrator, I am coordinating
NASA efforts in planning, execution, reporting and oversight related to
the spending of the Recovery Act funds appropriated for the Agency.
These efforts began even before the Recovery Act was signed by the
President on February 17, and NASA has proactively considered the
implications of the guidance from the Office of Management and Budget
(OMB), even while still in draft form. Although the OMB guidance
continues to evolve and NASA is still in the early stages of
implementing its Recovery Act-specific processes and activities, it is
my view that the Recovery Act can be successfully implemented at NASA
within a framework that substantially relies on existing Agency
processes and structures.
For example, NASA has well-established procedures for budget
planning and execution. The teams involved in that process include
staff from offices across Headquarters. These same teams already have
the processes and internal controls in place, with slight modification,
for the rapid planning and budget execution encouraged by the Recovery
Act. In the month since the Recovery Act was signed into law, NASA
already coordinated with Treasury to establish unique Treasury Fund
Symbols covering all of its Recovery Act funding, identified how it
will implement separate accounting of Recovery Act funds in its
financial systems with new Work Breakdown Structure codes, and
developed and reviewed with the Administration the Agency's initial
spending plans for use of Recovery Act funds for restoration of
hurricane-damaged facilities, together with required apportionments
from OMB and warrants from Treasury. Planning also is well underway for
the Science, Aeronautics and Exploration Recovery Act activities, and
those should be complete in advance of the 60 day deadline for the
Agency spending plan specified in the Conference Report accompanying
the Recovery Act. In all of this activity, NASA is able to leverage its
existing teams and processes to accomplish timely Recovery Act planning
and budget execution.
NASA also will leverage its existing processes for internal
controls and external reporting as the Agency implements the reporting
and oversight requirements of the Recovery Act and the OMB guidance.
Based on the information currently available on requirements, it is
anticipated that NASA's processes or systems will require only minor
modification for compliance with the final requirements. We do know,
for example, that new reports will be required from NASA and other
government contractors, and the Agency is in discussions with OMB about
the need for new government-wide contract clauses to capture these
requirements. Until such clauses and OMB's final requirements are
approved, NASA will not know the full implications for how reporting
and oversight is to be handled. However, our experience with other
requirements, like developing and publicly posting weekly reports on
Recovery Act activities, is that these have been readily implemented by
the functional teams assigned. Overall, what we have seen so far leads
us to believe that our functional teams involved in Recovery Act
implementation are more than capable of developing and overseeing the
timely implementation of the new reports and processes required.
NASA senior management recognizes that meeting the commitments of
the President and the Congress will require sustained focus and
accountability from all, particularly in the awarding, managing, and
overseeing the contracts and grants receiving Recovery Act funds. Close
coordination of the functional teams at NASA, with almost daily
meetings at present, is intended to ensure that the Agency Recovery Act
activities achieve both the quick implementation and the full
accountability and transparency called for by the Recovery Act.
Timeline for Funding of Agency Activities
The NASA planning process for Recovery Act activities and the
associated allocation of funds is well underway, consistent with the
direction provided by Congress and OMB guidance. Initial plans for the
$50 million in Cross-Agency Support appropriations for hurricane repair
have been approved by OMB. Funding has been prepared for obligation
under contract following submission of the spending plan called for in
the Conference Report accompanying the Recovery Act and completion of
the open procurement process. Each of the NASA Mission Directorates--
the organizations responsible for Agency mission programs and
projects--which received appropriations under the Recovery Act are
developing program plans for Agency review. Once these plans are
finalized within NASA, as anticipated in the next few weeks, they will
be provided to OMB for Administration review and, subsequently,
submitted as part of the Agency spending plan as directed in the
Conference Report accompanying the Recovery Act. Following that
submission, the Agency will distribute the funds to the allocated
projects, begin the procurement processes to award new contracts and
tasks on existing contracts, and then obligate these funds.
Ensuring Fair and Competitive Awards, and Knowledgeable Procurement and
Grants Management Staff
NASA has well-established processes and procedures for effectively
and efficiently planning, awarding and managing a substantial volume of
contract and grant awards. Over the last four years, the average amount
of NASA's annual procurement obligations was over $15 billion. As such,
the $1.0 billion of Recovery Act funds, most of which will go to
contract awards, represents just over six percent of NASA's annual
amount of contract and grant obligations. While some changes to Agency
processes will be needed to meet special Recovery Act requirements, the
increase in total procurement activity represents only a modest
increase over current annual levels.
Consequently, NASA intends to continue utilizing its standard
proven procedures for Recovery Act funding, in substantially the same
way as for regular appropriations, in order to ensure that Agency and
Government financial controls and accountability standards are
maintained. These procedures begin with the project planning and
approval process, which in this case includes identifying specific
project activities that meet approved Recovery Act plans, and are
consistent with NASA goals and priorities as established by the
President and the Congress. NASA's financial system provides controls
over the distribution of these funds, so only approved Recovery Act
projects will receive funds--in NASA this occurs through the
centralized financial system via approved Work Breakdown Structure
codes.
The Agency acquisition process complies with the Federal
Acquisition Regulation (FAR) and the NASA FAR Supplement, both of which
provide the regulatory guidance on the announcement, solicitation,
evaluation, and award processes to ensure that each procurement is
conducted in a fair and equitable manner. In addition, in 2007, NASA
developed and published a set of NASA Procurement Tenets, which outline
a framework for conducting procurements that meet the Agency's
requirements with the best business approach for the Agency. These
tenets are consistent with, and in substance reflect, many of the
essential elements of the President's Memorandum on Government
Contracting issued on March 4, 2009. For example, NASA's third tenet
requires the Agency's programs and projects to maximize and optimize
competition when acquiring supplies and services. This requires early
and ongoing communication with all personnel involved in the
procurement process, and the NASA Office of Procurement will be a part
of the review process for specific implementation plans in order to
ensure compliance with procurements regulations, NASA Procurement
Tenets, the OMB Guidance related to the Recovery Act, and the Recovery
Act.
Further, oversight of the procurement process is maintained through
several means. A strong communication network exists between the Office
of Procurement at NASA Headquarters and the procurement staff at each
NASA Center. For example, regular teleconferences are held with the
procurement officers across the Agency, enabling the rapid
dissemination of policy and the honing in on issues as they arise in
the field. In addition, the Assistant Administrator for Procurements
holds monthly reviews of major procurements, providing a regular
opportunity to review each Center's activities in greater detail.
Further, procurement surveys are conducted on-site at each Center on a
periodic basis. These surveys encompass intensive reviews of individual
procurements, permitting a validation that the proper process has been
followed in compliance with applicable laws and regulations. And, those
are further supplemented by oversight and internal control reviews
conducted regularly by the Agency.
NASA recognizes that these processes can only be effective if it
maintains a skilled and knowledgeable cadre of acquisition
professionals. To this end, NASA has established and maintains a
rigorous procurement training program that provides its contracting
workforce with the competencies and skills necessary to perform well in
the increasingly complex and ever changing acquisition environment. In
addition, NASA's contracting certification program requires fulfillment
of education requirements, training, experience, and continuous
learning points. Prior to receiving a new warrant, a contracting
professional must be certified at the appropriate certification level.
NASA also concentrates on continuously improving specific skills of the
procurement workforce, such as cost and pricing skills, to ensure that
the Agency receives the overall best value in the award of contracts
and grants.
In addition to established training, detailed information regarding
the award and administration of contracts and grants, specifically
designed for the Recovery Act funding, is currently being developed and
planned for dissemination by the Office of Procurement to the NASA
procurement community via the Agency's Center Procurement Officers.
This information will be used to supplement the established policies
and procedures at each NASA Center for the review and approval of
processes leading to the award of contracts and grants, and the
subsequent administration of those contractual vehicles. Stringent
oversight will be implemented both at each Center and at Headquarters
to ensure that the Recovery Act milestones and requirements are met.
Conclusion
In closing, NASA is committed to a robust and comprehensive program
that meets the requirements of the Recovery Act and other relevant
guidance and laws. The effective, efficient, and responsible use of the
resources that have been provided to NASA is good stewardship. NASA is
committed to carrying out this stewardship to achieve the objective of
the Administration and Congress to expedite Recovery Act project
spending within increased standards for transparency and
accountability.
I would be happy to respond to any questions you or the other
Members of the Subcommittee may have.
Biography for Ronald R. Spoehel
Ronald R. Spoehel has served as the Presidentially-appointed
Senate-confirmed Chief Financial Officer of the National Aeronautics
and Space Administration since September 2007. As Chief Financial
Officer, he oversees all financial management activities relating to
the programs and operations of the Agency. He serves on the U.S. Chief
Financial Officers Council coordinating agency financial management
activities with other federal agencies and participating with other
agency Chief Financial Officers in supporting implementation of
Presidential objectives.
Mr. Spoehel has held various financial and general management
positions throughout his career, including serving as Executive Vice
President, Chief Financial Officer and Director of ICx Technologies, an
advanced technologies security solutions company; Executive Vice
President, Chief Financial Officer and Director of ManTech
International Corporation, a NASDAQ-listed government technology
solutions company; Chairman and founder of Alpine Partners, a private
investment advisory firm; Chief Executive Officer and Director of
Optinel Systems, an optical communications equipment company; Vice
President-Corporate Development of Harris Corporation, a NYSE-listed
Fortune 500 global communications equipment and defense electronics
company; Senior Vice President of ICF Kaiser International, a NYSE-
listed company with global operations; Vice President, Investment
Banking of Lehman Brothers; Vice President of Bank of America; and,
program financial management with Hughes Aircraft Company.
Mr. Spoehel is an honors graduate of the University of
Pennsylvania, where he received his Bachelor of Science degree in
economics and MBA from the Wharton School and his Master of Science
degree in engineering from the Moore School of Electrical Engineering.
He serves on the U.S. Air Force Audit Committee and he has served on
the Board of Directors of the Professional Services Council and the
Advisory Council for the Wharton and Engineering Schools at the
University of Pennsylvania. Mr. Spoehel has also served on the Boards
of private companies both in the U.S. and in Europe.
Chairman Miller. Thank you, Mr. Spoehel.
Ms. Herbst for five minutes.
STATEMENT OF MS. ELLEN HERBST, SENIOR ADVISOR FOR RECOVERY
IMPLEMENTATION, U.S. DEPARTMENT OF COMMERCE
Ms. Herbst. Chairman Miller, Ranking Member Broun and
distinguished Members of the Subcommittee, my name is Ellen
Herbst. I am the Senior Advisor for Recovery Implementation at
the Department of Commerce, and I appreciate this opportunity
to discuss how the Department of Commerce will implement the
American Recovery and Reinvestment Act.
Under the Recovery Act, the Commerce Department is
receiving $7.9 billion. Commerce agencies receiving funding
include the Economic Development Administration, the National
Institute of Standards and Technology, the National Oceanic and
Atmospheric Administration, the Bureau of the Census and the
National Telecommunications and Information Administration, and
funding is also included for the Office of Inspector General to
conduct audits and oversight. At the Commerce Department,
Recovery Act funds will be used to invest in business
development, innovative research, construction projects,
expanding broadband services and other programs that will
create jobs and build a foundation for recovery.
The Subcommittee asks that my focus be on a number of
important questions related to the Commerce Department's plan
to ensure accountability and transparency. The Department has
established a clear path forward for meeting our
responsibilities under the Act. We are committed to allocating
funding in an expeditious, open and transparent manner that
ensures accountability. To this end, we are working closely
with the senior management in each of the five agencies
receiving Recovery Act funds. Additionally, we are working with
Commerce's Office of Budget and the Administration's Office of
Management and Budget and we are on track to transmit to
Congress spending plans for agency programs funded in H.R. 1
within the timeframe required. These plans will be posted to
Commerce's recovery website.
The Department is also committed to ensuring that all
grants and contracts are awarded in a fair and timely manner.
The Department has engaged its grants and acquisition counsels
to thoroughly review requirements of the Act, establish
standardizing reporting of grants and acquisitions awarded,
ensure consistency in the wide dissemination of information to
be made publicly available, and ensure the correct and complete
recording of award information. Standard processes and
procedures are to be followed in the awards of grants and
contracts. At the same time, we are doing what we can to
streamline and improve the underlying processes.
Another key element of the Department's strategy involves
staff competence. We have made significant progress in ensuring
our acquisition core meets government-wide certification
requirements and they will be working with other senior-level
professionals and management to plan and execute the
appropriate mechanisms for successful implementation of the
Recovery Act. In all cases, our Office of Acquisition
Management will be assisting the grants and acquisitions
communities to ensure both timeliness and that the highest
standards of accountability and transparency are met.
The Department is also making sure we have the structure
and personnel in place to ensure our compliance with OMB
guidance. The Department appointed me as the senior staff
person to coordinate, integrate and manage our implementation
of the Recovery Act. We too have formed a steering committee
and have formed several work teams with representatives from
all Department offices and bureaus receiving funds to plan and
implement the Act across the Department. We are also receiving
proactive advice and education from our Office of Inspector
General.
Mr. Chairman, I will conclude with this: President Obama
has called the American Recovery and Reinvestment Act the most
sweeping economic recovery package in our history. At the
Commerce Department, we are committed to working with the
Congress, the President and the American people to meet the
highest standards of transparency and accountability in
allocating this vital Recovery Act funding.
Thank you, and I would be happy to answer any questions you
may have.
[The prepared statement of Ms. Herbst follows:]
Prepared Statement of Ellen Herbst
Good morning, Mr. Chairman, Ranking Member Broun, and Members of
the Subcommittee. My name is Ellen Herbst. I am the Senior Advisor for
Recovery Implementation at the Department of Commerce. Thank you for
the opportunity to appear before you today to discuss the Department of
Commerce plans for the American Recovery and Reinvestment Act of 2009.
The American Recovery and Reinvestment Act of 2009 (``the Recovery
Act'' ``ARRA'') was signed into law by President Barack Obama on
February 17, 2009. It is an unprecedented effort to jump-start our
economy, create or save millions of jobs, and put a down payment on
addressing long-neglected challenges so our country can thrive in the
21st century. The Recovery Act is an extraordinary response to promote
economic recovery and growth, and includes measures to modernize our
nation's infrastructure, enhance energy independence, expand
educational opportunities, preserve and improve affordable health care,
provide tax relief, and protect those in greatest need.
The U.S. Department of Commerce will receive $7.9 billion to create
and save jobs for American workers as part of the historic economic
stimulus bill recently signed by President Obama. As he stated, ``The
American Recovery and Reinvestment Act is the most sweeping economic
recovery package in our history . . .. We have begun the essential work
of keeping the American Dream alive in our time.'' The President has
noted that the Recovery Act will create or save 3.3 million jobs over
the next two years.
ARRA investments in Commerce agencies, which will be allocated in
an open, transparent and timely manner, include funding for business
development, innovative research, construction projects, expanding
broadband services and other programs that will create jobs in a broad
range of occupations and industries.
Economic Development Administration
The Recovery Act includes $150 million for the Economic Development
Administration to provide grants to economically distressed areas
across the Nation to generate private sector jobs. Priority
consideration will be given to those areas that have experienced sudden
and severe economic dislocation and job loss due to corporate
restructuring. Funds will be disbursed through the agency's traditional
grant-making process and will support efforts to create higher-skill,
higher-wage jobs by promoting innovation and entrepreneurship and
connecting regional economies with the worldwide marketplace.
National Oceanic and Atmospheric Administration
The Recovery Act funding for the National Oceanic and Atmospheric
Administration (NOAA) is $830 million including:
$230 million slated for habitat restoration,
navigation projects and vessel maintenance
$430 million for construction and repair of NOAA
facilities, ships and equipment, improvements for weather
forecasting and satellite development; and
$170 million to be used for climate modeling
activities, including supercomputing procurement, and research
into climate change.
Bureau of the Census
To ensure a successful 2010 Decennial Census, the Recovery Act
includes $1 billion to hire new personnel for partnership and outreach
efforts to minority communities and hard-to-reach populations, increase
targeted media purchases, and ensure proper management of other
operational and programmatic risks.
National Institute of Standards and Technology
Through the Recovery Act, the National Institute of Standards and
Technology (NIST) is provided a total of $610 million, including:
$220 million for NIST laboratory research,
measurements, and other services supporting economic growth and
U.S. innovation through funding of such items as competitive
grants, research fellowships, and advanced measurement
equipment and supplies;
$360 million to address NIST's backlog of maintenance
and renovation projects and for construction of new facilities
and laboratories, including $180 million for a competitive
construction grant program for funding research science
buildings outside of NIST;
$20 million in funds transferred from the Department
of Health and Human Services for standards-related research
that supports the security and inter-operability of electronic
medical records to reduce health care costs and improve the
quality of care; and
$10 million in funds are provided, through the
Department of Energy, for NIST to help develop a comprehensive
framework for a nationwide, fully inter-operable smart grid for
the U.S. electric power system.
National Telecommunications and Information Administration
The Recovery Act provides critical funding for programs at the
National Telecommunications and Information Administration (NTIA)
including:
$4.7 billion to establish a Broadband Technology
Opportunities Program (STOP) for awards to eligible entities to
develop and expand broadband services to rural and under-served
areas and improve access to broadband by public safety
agencies:
Of these funds, not less than $250 million
will be available for innovative programs that
encourage sustainable adoption of broadband services;
At least $200 million will be available to
upgrade technology and capacity at public computing
centers, including community colleges and public
libraries;
Up to $350 million of the BTOP funding is
designated for the development and maintenance of
statewide broadband inventory maps; and
$10 million will be a transfer to the Office
of Inspector General for the purposes of BTOP audits
and oversight; and
$650 million for the DTV Converter Box Coupon Program
to allow NTIA to issue coupons to all households currently on
the waiting list, to start mailing coupons via first class mail
and to ensure vulnerable populations are prepared for the
transition from analog-to-digital television transmission.
Office of Inspector General
The Recovery Act includes $6 million for the Office of Inspector
General (OIG) to conduct audits and oversight of the programs and
activities funded by the ARRA in addition to the $10 million provided
to the OIG for oversight of the Broadband Technology Opportunities
Program. With such a large infusion of cash expected to be obligated
within a short time frame, this oversight will be important in
evaluating the effectiveness of these programs and detecting and
preventing waste, fraud and abuse.
The Subcommittee, in its letter of invitation, asked that my
testimony focus on a number of important questions related to the
Commerce Department's plan to ensure accountability and transparency in
the process of implementing the ARRA.
Mr. Chairman, the Department of Commerce has established a clear
path forward for meeting our responsibilities under the ARRA. First,
the Department is working with the senior management in each bureau
that received ARRA funding, as well as the Department's Office of
Budget and the Office of Management and Budget (OMB), to complete
approved spending plans for the agency programs funded through the
Recovery Act. We expect to complete these plans and transmit them to
Congress within the time frame required in the legislation. Once those
spending plans are approved, they will be posted to the Department's
Recovery website.
The Department is committed to ensuring that all ARRA grants and
contracts are awarded in a fair, impartial and timely manner. We are
working to streamline and improve existing procedures without
compromising transparency and accountability.
The Department has worked closely with OMB to develop and
promulgate standard processes and language to be included in grant and
acquisition awards that address the recipient reporting requirements of
ARRA and follow the specific guidance in the legislation (e.g., Buy
American Act; Davis Bacon Act). As well, the Department has engaged its
Grants and Acquisition Councils to thoroughly review requirements of
the Act, to establish standardized reporting of grants/acquisitions
awarded utilizing ARRA funds, to ensure consistency in wide
dissemination of information to be made publicly available through
Grants.gov, FedBizOps.gov, Recovery.gov and agency and bureau Recovery
Act web pages, and to ensure the correct and complete recording of
award information through existing processes to USASpending.gov.
Recognizing the urgency of getting the funding made available by
ARRA into the community, streamlined processes have been or are being
established for acquisitions. For example, those programs/acquisitions
less than S75 million anal not designated as a ``major investment''
will undergo an Office of Acquisition Management (OAM) review via a
paper process in lieu of monthly Investment Review Board meetings. The
process for reviewing those programs/acquisitions greater than $75
million or those designated as a ``major investment'' is currently
under refinement.
These management reviews will ensure that, to the maximum extent
possible, acquisitions will be made on a fully competitive basis and on
a fixed price basis. Where other than full and open competition is
necessary or appropriate, or where other than a fixed price type
contract will be utilized, the justification will be reviewed for
sufficiency, compliance with Federal Acquisition Regulations, and for
full consideration of all options available.
A reporting process has been established to provide DOC management
with an on-going flow of information regarding planned acquisitions and
grants and the progress of those awards through the process. To a large
degree, existing processes will be utilized, but with a focus on
streamlining the process wherever possible. The ability to expedite
will rely heavily on the thoroughness and quality of the up-front work
done by the acquiring/granting office. OAM will oversee that work to
ensure speed of process does not diminish the quality of the decisions
made or sacrifice quality of the process and award in favor of
expediency.
In order to meet that challenge, OAM has drafted a Risk Management
and Oversight Plan. This Plan has been developed based on the
provisions of ARRA, DOC OIG's Initial Oversight Plan, the guidance
provided in ``A Guide to Grant Oversight and Best Practices for
Combating Grant Fraud'' by the National Procurement Fraud Task Force,
the Statement of the Acting Comptroller General of the United States,
``GAO's Role in Helping to Ensure Accountability and Transparency'' and
historical GAO and OIG reports regarding the acquisition and/or
financial assistance functional areas.
Another key element of the Department's strategy involves staff
competence. The Department has been hard at work making sure that those
with responsibility for carrying out the necessary work to well
implement the ARRA have the knowledge and skills necessary,to properly
award and manage contracts. The Department has been making significant
progress in ensuring that its acquisition corps (including Program/
Project Managers, Contracting Officer Technical Representatives,
Contracting Officers and Contract Specialists) meet government-wide
certification requirements. Depending on the complexity of Recovery
Act-funded acquisitions, Bureau Procurement Officials will be assigning
those acquisitions to individuals within the existing cadre of staff
with the requisite knowledge, skills, expertise and experience
necessary to properly award and administer acquisitions. These
individuals will be supplemented or assisted by others (other senior
level acquisition professionals, the DOC Office of General Counsel, the
Office of Acquisition Management) to strategize, plan and execute the
appropriate contract mechanisms for successful implementation of the
Recovery Act.
We recognize that acquisition resources within DOC and across the
Government will be challenged by the requirements of the Recovery Act.
Therefore, the Department will take advantage of all hiring
flexibilities and options available and will, where appropriate,
transfer acquisitions to other federal agencies for execution where
their resources and expertise surpass the resources available within
DOC, or will utilize contractor support for the acquisition function.
As staff is committed to the execution of the Recovery Act programs,
new hires, transfers to other agencies for acquisition purposes and
contractor support will be utilized to fulfill the other day-to-day
acquisitions necessary outside of the Recovery Act.
In the Grants area, DOC has been developing for the past two years
a formal online Grants training and certification program. The first
module developed, Price Evaluation, is of key importance to the
successful evaluation of applications and the successful oversight of
grant expenditures to mitigate fraud, waste anal abuse in the execution
of a grant. The DOC Grants community has been relatively stable and,
thus, will rely on seasoned, trained and experienced Grants Specialists
and Federal Program Officers to execute programs under the ARRA. All
grants specialists partner with the Financial Assistance Law Division
of the DOC Office of General Counsel, which provides a fresh ``set of
eyes'' to the process and its execution.
In all cases, the Office of Acquisition Management (OAM) will be
assisting the grants and acquisition communities to address developing
issues and to provide guidance and assistance in compliance with the
provisions of this legislation and the governing regulations. As well,
OAM will, as detailed above, be instituting a rigorous oversight and
reporting program associated with ARRA-funded grants and contracts,
which will provide DOC management insight into resource challenges and
allow for input into the process.
Mr. Chairman, the Department is hard at work making sure that we
have the structures and personnel in place to ensure DOC compliance
with OMB guidance and statutory requirements. The Department appointed
me as the senior staff person to coordinate, integrate and manage our
implementation of the Recovery Act. We have formed several cross-
bureau, cross-function work teams to plan and implement the Recovery
Act across the Department. Our Departmental Work Team structure is as
follows:
Senior Advisor and Program Management staff are
responsible for overall coordination and management at the
Department level of ARRA implementation, including timely
delivery of information on Recovery Act projects.
ARRA Working Group structure--provides senior
oversight and management to all subgroups. This Working Group
consists of
Recovery Implementation Steering Committee with
subject matter expertise composed of senior managers
from all Department-level Offices (Acquisition and
Grants, General Counsel, Financial Management, Budget,
Human Resources, Legislative and Intergovernmental
Affairs, Public Affairs, Management and Organization,
Policy and Strategic Planning and the Chief Information
Officer) as well as a senior manager from the Office of
Inspector General, who provide proactive advice and
education. Members of the Steering Committee are
responsible for providing guidance in their area of
responsibility as well as coordinating communication
and activities. They, in turn, work with the functional
offices within each bureau to support specific
activities.
Recovery Implementation Bureau Points of Contact
(POC)--a single senior manager from each of the bureaus
receiving funding (Census, EDA, NIST, NOAA and NTIA) as
well as a representative from the Office of Inspector
General. These bureau POCs are responsible for
coordinating and managing bureau efforts with
Departmental efforts. Each bureau has its own internal
team working on bureau-specific activities and
oversight, and the bureau POC is the communication and
management liaison to the Department.
Leaders of each of the work group sub-teams. There
are multiple sub-teams working on specific issues
including:
Transparency to the public
Detailed data reporting and systems
Grant and contract recipient
reporting.
Mr. Chairman, thank you for the opportunity to testify before the
Subcommittee today. Congress, the President and the American people
have trusted us with this unprecedented effort to invest in our
economy, create or save millions of jobs and build a foundation for
recovery. We do not take this challenge lightly and are committed to
the high standards both you in Congress and the President have charged
us to uphold.
The Department of Commerce is committed to implementing the
provisions of the ARRA in a transparent manner that ensures
accountability. We look forward to working with you, the other Members
of this subcommittee, and the entire Congress, to ensure we do this
right on behalf of the American people. I would be happy to answer any
questions you may have.
Biography for Ellen Herbst
Ellen Herbst joined the Federal Government as Director, National
Technical Information Service (NTIS), effective July 11, 2005. As an
agency of the U.S. Department of Commerce, NTIS serves our nation as
the largest central resource for government-funded scientific,
technical, engineering, and business related information available
today.
Ellen has spent 25 years in private industry with extensive
involvement with growing businesses in the security, processing and
imaging systems markets. She has held senior management positions at
Spectra Systems Corporation, a supplier of security materials, and
Giesecke & Devrient America, a supplier of banknotes, security
documents and currency automation systems. Ms. Herbst has also held
various key management positions at E.I. DuPont De Nemours and Company
where she served as Business Manager for their Digital Systems and
Equipment Service Divisions. In addition to these qualifications Ellen
has extensive experience in financial and strategic planning and
integration of acquisitions.
She received her B.S., in Economics and Accounting in 1979 from the
University of Delaware and her M.B.A., in 1995 from the Wharton School
of Business, University of Pennsylvania.
Chairman Miller. Thank you, Ms. Herbst.
Mr. Rogers for five minutes.
STATEMENT OF MR. MATTHEW ROGERS, SENIOR ADVISOR, U.S.
DEPARTMENT OF ENERGY
Mr. Rogers. Chairman Miller, Ranking Member Broun and
Members of the Subcommittee, thank you for the opportunity to
be here today to discuss the U.S. Department of Energy's
actions to assure accountability and transparency in Recovery
Act funding including our efforts to promote science and
technology.
Today's severe economic conditions demand rapid action.
Effective implementation of the American Recovery Act and
Reinvestment Act of 2009 is an urgent priority of the
Administration, for Secretary Chu and for the Department of
Energy. Congress has given the Department a great opportunity
and a great responsibility to administer $32.7 billion in
Recovery Act grant and contract authority, $6 billion in credit
subsidy costs that will support tens of billions in new loan
guarantees and $6.5 billion in borrowing authority. Secretary
Chu is personally committed to providing the direction,
resources and oversight needed to assure the timely but
accountable distribution of this funding to support short-term
needs and protect taxpayers while investing for the long term
in a new economy powered by clean, reliable, affordable and
secure energy.
When Secretary Chu asked me to serve as his Senior Advisor
for Recovery Act Implementation, he emphasized that we must
deliver on four objectives: get projects underway quickly,
invest in projects with lasting value, exercise an
unprecedented degree of transparency and oversight, and deliver
a tangible down payment on the Nation's energy and
environmental future. We began the public part of this process
last week with the Vice President's announcement of the first
$8.1 billion for weatherization and State energy grant programs
and we will soon have additional funding announcements. These
Recovery Act funds will create jobs and lay the groundwork for
a less carbon intensive, less oil dependent and cleaner energy
economy. All of our efforts are geared toward meeting President
Obama's pledge to act boldly and urgently to put Americans back
to work by reinvesting in a new clean energy economy. At the
time, we recognize that the Recovery Act programs will, and
should, receive heightened public scrutiny and so we are
putting in place the leadership and control procedures
necessary to track performance and account for expenditures.
The Department of Energy is committed to carrying out the
economic recovery plan with the highest level of speed,
discipline, transparency and accountability. Under our Chief
Financial Officer Steve Isakowitz's leadership, the Department
has taken significant steps to improve oversight and strengthen
internal controls to ensure the funds are spent effectively.
Every morning the Recovery Act leadership principals from every
program and every major function get together to ensure clear
alignment on priorities, to report progress and to resolve any
outstanding issues that could impede success. We have developed
strong oversight strategies for Recovery Act implementation
including: building up-front risk assessments, building
specific risk management plans, upgrading process controls,
establishing personal risk assurance accountabilities and
expanding outreach, training and coordination between
headquarters and field offices.
As soon as the Recovery Act was passed, we conducted
Department-wide risk assessments to identify existing or
potential vulnerabilities within our programs that could hinder
our efforts to deliver on the Recovery Act. From these
identified risks, senior management officials have begun
developing risk mitigation plans to increase internal controls
and reduce opportunities for fraud, waste and abuse of recovery
funds. For example, some programs have determined to use a
phased approach to their distribution of funds. This will allow
them to better maintain accountability by measuring performance
against clear project milestones and disbursing new funds on
the basis of successful performance. Several programs have also
significantly expanded fraud training for their program
managers and senior officials. In high-risk programs such as
the Office of Environmental Management, I have met personally
or via phone and video conference with all of the site
managers, major contractors, State regulators and major unions
to make clear the expectations up front for accountability,
delivery, oversight and transparency.
As part of our planning and monitoring efforts, the Chief
Financial Officer's Office of Program Analysis and Evaluation
and the Office of Internal Review have taken steps to address
internal controls, guidance, document standards, external
reporting requirements, outcome validation and early issue
identification.
The Department has also taken several steps to ensure that
all procurement vehicles incorporate a selection process that
is fair and advances the President's long-term policy agenda to
ensure that all solicitations, contracts and financial
assistance awards comply with OMB's Recovery Act requirements.
We have issued standard language for all these procurement
instruments.
Mr. Chairman and Members of the Subcommittee, at the
Department of Energy we are committed to creating jobs by
developing new, innovative ways to provide clean, reliable and
secure energy. Congress has vested the Department with
significant responsibility under the Recovery Act. We have
begun and will continue to institute a culture of transparency,
accountability, integrity and efficiency as we capitalize on
our advances in science and technology to better manage the
Nation's energy resources and contribute to a competitive,
growing and environmentally sustainable U.S. economy.
Mr. Chairman, thank you for the opportunity to appear
before you today. This concludes my testimony and I am happy to
answer questions.
[The prepared statement of Mr. Rogers follows:]
Prepared Statement of Matthew Rogers
Chairman Miller, Ranking Member Broun, and Members of the
Subcommittee, thank you for the opportunity to be here today to discuss
the U.S. Department of Energy's actions to ensure accountability and
transparency in Recovery Act funding, including our efforts to promote
science and technology.
Today's severe economic conditions demand rapid action. Effective
implementation of the American Recovery and Reinvestment Act of 2009 is
an urgent priority for the Administration, for Secretary Chu, and for
the Department of Energy. Congress has given the Department a great
opportunity and a great responsibility to administer $32.7 billion in
Recovery Act grant and contract authority, $6 billion in credit subsidy
costs that will support tens of billions in new loan guarantees and
$6.5 billion in borrowing authority. Secretary Chu has said repeatedly
that getting this money into the economy quickly, carefully, and
transparently is a top priority for him. To this end he has personally
committed to providing the direction, resources, and oversight needed
to assure the timely but accountable distribution of this funding to
support short-term needs and protect taxpayers while investing for the
long-term in a new economy powered by clean, reliable, affordable, and
secure energy.
When Secretary Chu asked me to serve as his Senior Advisor for
Recovery Act Implementation, he emphasized that we must deliver on four
clear objectives:
Get projects under way quickly,
Invest in projects with lasting value,
Exercise an unprecedented degree of transparency and
oversight, and
Deliver a tangible down payment on the Nation's
energy and environmental future.
We began the public part of this process last week with the Vice
President's announcement of $8.1 billion for Weatherization and State
Energy programs, and we will soon have additional funding
announcements. These Recovery Act funds will create jobs and lay the
groundwork for a less carbon-intensive, less oil-dependent, and cleaner
energy economy. All of our efforts are geared toward meeting President
Obama's pledge to act boldly and urgently to put Americans back to work
by reinvesting in a new clean energy economy. At the same time, we
recognize that Recovery Act programs will, and should, receive
heightened public scrutiny, and so we are putting in place the
leadership and control procedures necessary to track performance and
account for expenditures.
Department of Energy and GAO's High-Risk List
In this context, it is critical that the Department have in place
the most rigorous control and oversight processes to manage and account
for the Recovery Act funds--the more so given the Department's past
challenges and difficulties in providing adequate management and
oversight of its major projects. Since 1990, contract and program
management concerns have kept the Department of Energy on the
Government Accountability Office's (GAO) High-Risk List. In recent
years, however, the Department's Office of Management has made
substantial progress and has implemented numerous corrective actions.
For example, the Department has developed an action plan to address the
major Department risk factors and significantly improve not only the
Department's performance in contract and project management, but its
overall culture of spending. The plan includes steps to improve risk
management, strengthen cost estimation, increase oversight, optimize
staff, improve acquisition planning and strategies, and better
incorporate project management requirements. The plan also reflects the
Department's commitment to improved performance and increased
accountability through well-defined metrics and reporting.
As a result of these and other efforts, GAO, in its January 2009
High-Risk Update, noted that the Department has met three of the five
criteria necessary for removal from its High-Risk List. Specifically,
the Department has demonstrated strong leadership, developed a
corrective action plan, and made progress in implementing effective
solutions. Still remaining to be addressed, however, are issues
relating to human capital and contract management, and these have
caused the Department to remain on GAO's High-Risk List. To address the
human resource challenges, the Department is implementing actions based
on other federal agencies' best practices. We have also taken steps to
establish a more structured, disciplined approach to contract and
project management, with an emphasis on improved oversight.
In its update, GAO recognized that the Department's Office of
Science has demonstrated continuous, strong performance in meeting
original cost and schedule targets. As a result, GAO refined the
Department's high-risk area primarily to the National Nuclear Security
Administration and the Office of Environmental Management. And,
accordingly, the Department will be following the project management
requirements of DOE Order 413.3A and paying special attention to the
performance and oversight of those Environmental Management projects
receiving significant funding from the Recovery Act.
Recovery Act Transparency and Accountability
The Department of Energy is committed to carrying out the economic
Recovery plan with the highest level of speed, discipline,
transparency, and accountability. Under our CFO Steve Isakowitz'
leadership, the Department has taken significant steps to improve
oversight and strengthen internal controls to ensure that funds are
spent effectively. Every morning, the Recovery Act leadership
principals from every program and every major function, including
representatives from the Offices of the Chief Financial Officer,
General Counsel, Procurement and Human Capital, get together to ensure
clear alignment on priorities, to report progress, and to resolve any
outstanding issues that could impede success. We have developed strong
oversight strategies for Recovery Act implementation, including up-
front risk assessments and building specific risk management plans,
upgrading process controls, establishing personal risk assurance
accountabilities, and expanding outreach, training, and coordination
between Headquarters and field offices.
As soon as the Recovery Act was passed, we conducted Department-
wide risk assessments to identify existing or potential vulnerabilities
within our programs that may hinder our efforts to deliver on the
Recovery Act. From these identified risks, senior management officials
have begun developing risk mitigation plans to increase internal
controls and reduce opportunities for fraud, waste, and abuse of
Recovery funds. For example, some programs have determined to use a
phased approach in their distribution of funds. This will allow them to
maintain better accountability by measuring performance against clear
project milestones and disbursing new funds on the basis of successful
performance. Several programs have also significantly expanded fraud
training for their program managers and senior officials. In high-risk
programs such as the Office of Environmental Management, I have met
personally or via phone and video conference with all of the site
managers, major contractors, State regulators, and major unions to make
clear the expectations up front for accountability, delivery,
oversight, and transparency.
As part of our planning and monitoring efforts, the Chief Financial
Officer's Office of Program Analysis and Evaluation and the Office of
Internal Review have taken steps to address internal controls guidance,
documentation standards, external reporting requirements, outcome
validation, and early issues identification. On an ongoing basis, we
participate on government-wide teams led by OMB to develop
implementation guidance and requirements. Based on the initial OMB
guidance and subsequent meetings, we have already issued Recovery Act
implementation guidance to aid programs in developing specific
performance plans that detail the status of projects, performance
metrics, major project milestones, and risk management. In addition,
the CFO's office led a two day ``all-hands'' field CFO education
session for financial control officers to make sure everyone
understands his or her responsibilities with respect to oversight and
accountability under the Recovery Act.
Within the CFO's office, we are also aligning our financial systems
to accept Recovery Act data, perform analysis, and track the execution
of Recovery Act plans so that senior management can monitor progress.
Separate Treasury account symbols have been established to comply with
requirements for tracking and reporting Recovery Act funding separately
from existing Department funding. Project codes are being established
in our accounting system as Recovery projects are approved by the
Secretary. These efforts will all allow the Department to better
monitor and assess the progress of Recovery Act projects and will also
facilitate the Department's reporting to Recovery.gov, which in turn
will assure the accountability and transparency for the American people
which the President has promised.
The Department has taken several steps to ensure that all
procurement vehicles incorporate a selection process that is fair and
advances the President's long-term policy agenda. To ensure that all
solicitations, contracts, and financial assistance awards comply with
OMB's Recovery Act requirements, we have issued standard language for
all these procurement instruments. We are also directing our
contracting professionals to pay special attention to the content
quality of specific areas, including clear scope definition, adequate
documentation to support decisions, compliance with transparency
requirements, and small business considerations.
In our efforts to ensure accountability, we have required each
Headquarters program element, field office managers, and Field Chief
Financial Officers to sign an ``Acknowledgement of Management
Accountability of Internal Controls.'' This document will serve as a
commitment from management to maintain a strong internal control
environment. The signed acknowledgements are required prior to any
distribution of Recovery funds. The Department will require an
additional assurance letter at the end of the fiscal year to support
financial statement reporting. These policies and procedures will help
ensure that we achieve the outcomes envisioned by the President and the
accountability expected by our fellow Americans.
Loan Guarantee Program
Title XVII of the Energy Policy Act of 2005 and the 2007 Energy and
Water Appropriations Act authorized the Department of Energy to provide
loan guarantees for advanced technology projects that avoid, reduce, or
sequester anthropogenic greenhouse gas emissions or air pollutants. The
GAO and Office of Inspector General have both identified issues with
management, accountability and transparency in this program. I am
pleased to report to you this morning that the Loan Guarantee Program
has made substantial progress over this past year, and Secretary Chu
has directed us to accelerate the process significantly and deliver the
first loans in a matter of months, while maintaining appropriate
oversight and due diligence to protect taxpayers' interests. We are
taking steps to reduce the cycle time from application to loan
guarantee so that good projects are funded, with all due speed and due
diligence. We have also taken steps to improve the Program's
transparency and to attract quality projects that will result in
environmental benefits, create jobs, and contribute to long-term
economic growth and competitiveness. The Loan Guarantee Program is
expanding its efforts to recruit and hire highly qualified personnel to
complete the necessary project evaluation, environmental compliance,
due diligence, credit underwriting, monitoring, and oversight
activities. The Department is committed to managing the Loan Guarantee
Program carefully to maintain the integrity and objectives of the
program and to ensure that the taxpayers' interests are protected.
Conclusion
Mr. Chairman and Members of the Subcommittee, at the Department of
Energy we are committed to creating jobs by developing new, innovative
ways to provide clean, reliable, and secure energy. Congress has vested
the Department with significant responsibility under the Recovery Act.
We have begun and will continue to institute a culture of transparency,
accountability, integrity, and efficiency as we capitalize on our
advances in science and technology to better manage the Nation's energy
resources and contribute to a competitive, growing, and environmentally
sustainable U.S. economy.
Mr. Chairman, thank you for the opportunity to appear before you
today. This concludes my testimony and I am happy to answer questions.
Thank you.
Biography for Matthew Rogers
Matt Rogers is the Senior Advisor to the Secretary of Energy for
the Recovery Act.
Previously, he was a Senior Partner in McKinsey & Company's San
Francisco Office. Over time with McKinsey he led their, America's
Petroleum Practice and their North American Electric Power and Natural
Gas practice, and helped establish their Clean Technology practice.
Matt spent more than 20 years consulting with leading oil companies and
utilities globally.
Matt played a leading role in developing McKinsey's perspectives on
global energy supply/demand and greenhouse gas abatement economics. He
served the Obama Presidential Transition Team in a special effort to
develop opportunities to reduce the cost and increase renewables
content in federal energy procurement.
Matt graduated magna cum laude from Princeton University. After
graduation he joined Credit Suisse First Boston as an energy investment
banking analyst. He earned an M.B.A. from Yale University's School of
Management.
Matt is married to the Honorable Yvonne Gonzalez Rogers, who serves
as a California Superior Court Judge on the Alameda County bench. They
have three children--ages 13, 10, and 7.
Discussion
Chairman Miller. Thank you, Mr. Rogers.
We will now begin our first round of questions, and the
Chairman recognizes himself for five minutes.
The idea of a stimulus package, of stimulus spending, is
that it does not just help the immediate recipients but it
ripples through the economy; that whoever directly receives
federal funds buys meat, the butcher buys bread, the baker buys
candlesticks, the candlestick-maker buys something else, and we
obviously need that since we have been losing 600,000 jobs a
month and we need it as quickly as we can to spend money
quickly and spend money well, carefully. How quickly do you
think you can get the money out the door so the recipients can
start buying meat and bread and candlesticks? Dr. Marrett, an
approximate date when the money will start going out?
Dr. Marrett. I indicated in my testimony that we are
talking about a matter of weeks. That should be two or three
weeks at the most that we will begin to move the money out of
the door.
Chairman Miller. Mr. Spoehel.
Mr. Spoehel. The timing in NASA's case will depend on the
length of the procurement cycles. The award of contracts that
we have for the initial hurricane repair, for example, will
likely take a month so I would say it is probably at least two
months before the actual work under any of those contracts
would be undertaken and that is again assuming that all the
approvals and requisite reviews by OMB and Congress have been
achieved.
Chairman Miller. Ms. Herbst.
Ms. Herbst. The answer is dependent on the different
bureaus but, for instance, in NTIA we have DTV coupon money
flowing again already. Approximately two-thirds of our monies
we believe will go out as competitive grants and contracts so
we are in that process now of announcing grants and so forth.
Chairman Miller. Mr. Rogers.
Mr. Rogers. In the Department of Energy, the first funds
should be going out in the next couple of weeks. The
weatherization activities, we need to get a short form
application from the states binding them under the Recovery Act
terms and then we are turning around and obligating the first
10 percent of the funds immediately to the states in response
to that. Likewise, as soon as the obligations for the next
departments come through, we will be getting those monies out
the door quickly as well.
Chairman Miller. Ms. Herbst, I understand that NIST had
construction competition last year. You got 100 applications.
You only had the funding for three. But I assume the others are
still on the shelf. Were some of those also strong projects
that would be logical, worthy recipients of funding?
Ms. Herbst. The NIST spend plan is just about approved and
we recognize the flexibility given to award from both 2008
competition and 2009, so we are preserving that flexibility in
our planning to move forward in that fashion.
Chairman Miller. So you will be able to fund some of those
projects without re-bidding them because you already evaluated,
all the work has been done?
Ms. Herbst. Well, we have been given the--the Act
stipulated that we could do it that way and we are certainly
looking at that in our planning.
Chairman Miller. What would be the difference in timing if
you took the plans already evaluated on the shelf versus re-
bidding, going back through all the rigmarole--I am sorry--all
the oversight.
Ms. Herbst. If I could, can I get back to you with that so
I can give you a very specific answer on that?
Chairman Miller. Okay.
Ms. Herbst. Thank you.
Dr. Marrett, I hear from the universities, the research
universities in my district that the researchers love working
with FastLane; they hate working with grants.gov. This all
comes at an awkward time. Is there anything you can do to have
this subject to FastLane so it can remain up and running and
let the bugs in grants.gov be worked out later?
Dr. Marrett. Well, we certainly will be processing our own.
We will continue to use FastLane. We do work with a number of
other agencies with reference to FastLane and have been in
discussion recently. There will be some limits, of course, to
how much we will be able to absorb from everywhere across the
Federal Government, but we are in conversation about how to
have our own processes and what would be available, how to make
that as widely available as possible.
Chairman Miller. Dr. Marrett, I also hear from researchers
in my district that although the grants usually ask who will be
doing this work, how many graduate assistants will you be using
or whatever else, it is not typically--their work is not
typically judged by how many jobs it creates, and they are a
little puzzled by how all that is going to work and how they
are supposed to report back on job creation from grants. What
kind of guidance will they get from OMB--or are you getting
from OMB--to tell the research agencies what to tell
universities on job creation data, how to keep it, what to look
for?
Dr. Marrett. The guidance is emerging from OMB and we are
in conversation with all of the agencies, but in addition, our
grantees have always reported what they are doing, how many
people they are anticipating and in their subsequent reports
how many people they have in fact employed. So some of this
will not be new for gathering the information. What I said
about the numbers of students, post-docs, undergraduate and
graduate students, postdoctoral students, for the programs that
we have in the education world, I talk about teachers, we have
for some time been monitoring these numbers that we are talking
about. We will have additional procedures where this will have
to be reported as a part of the activities for any grant that
is given.
Chairman Miller. I guess this is for all the panelists. Is
there going to be a consistent policy across all agencies on
how that data is going to be collected? What will be required?
Just flip a coin.
Ms. Herbst. All the agencies who receive funding are
working with and through OMB, who is coordinating the guidance
on jobs creation, counting methodology, tracking methodology
and reporting methodology.
Mr. Rogers. And we are working trying to--the Office of
Science within the Department of Energy is trying to work quite
closely with the National Science Foundation to make sure that
the processes are similar across the various agencies because
what you don't want to have is to have different researchers
think one money group is different from another money group,
either because the reporting is different or the application is
different, so we are trying to get consistency between and
among the agencies on that basis.
Chairman Miller. My time has expired, not gloriously but
some.
Dr. Broun. I recognize Dr. Broun for five minutes of
questioning.
Mr. Broun. Thank you, Mr. Chairman.
The first question would be to Mr. Rogers. Mr. Rogers, the
Secretary was here--appeared before this whole committee--and
during the questioning, I asked the Secretary if he realized
that there was not a consensus, not a consensus, I repeat, not
a consensus on human-induced global warming, and he disagreed
with me on that. He talked about that if a scientist came
forward and refuted the consensus, that that individual would
be counted a hero. Well, there are thousands of such scientists
around this country, around this world that refute that there
is any human-induced, if any at the most a very minuscule
effect on human-induced global warming. I am very concerned
about the granting process and accountability that you guys are
going to be doing when the Secretary displays such blatant
scientific blindness. There are many scientists all over this
country, all over the world, that will very readily say that
human-induced global warming is not factual and so if you guys
go forward in the granting process taking the attitude that
this is absolutely the consensus, this is absolutely the fact
and don't do any grants, don't do anything to look at the other
side, first thing, it is not scientifically--there is no
scientific integrity there, and I see a tremendous lack of that
in the attitude of the Secretary.
As you go forward with this granting process, I hope and
pray that you will take into consideration that there are other
views than the Secretary's and will look at granting some of
this money to other people. Would you please reassure me,
because I have no assurance today that that is going to happen?
I see what is happening with this Administration and with your
Secretary and I hope it stops there, but within your agency
there is tremendous scientific blindness about other ideas. Can
you please tell me how you are going to assure me, as a Member
of Congress, and the American people who are watching you this
moment how we are going to make sure that science prevails and
not political policy that is being driven by other things than
scientific methods? Before you answer that question, I want to
tell you, I am a physician. I believe in scientific theory. I
believe totally in scientific integrity and I do not see that
with your Secretary.
Mr. Rogers. One of the things that is helpful about the
Recovery Act is, it actually specifies the blocks of that
spending quite clearly, and my task is very straightforward in
that regard. We need to move those funds out against those
projects with a high degree of transparency and accountability.
What is good about it is, if you take a look at the funds we
have, for example, for grant programs, of the $32.7 billion
that we have for grants and contracts, approximately $13
billion of that is dedicated towards energy efficiency. I would
argue and we would argue that those are among the highest
return investment opportunities that the American public has
and that these--we are working closely with the Council of
Economic Advisors to show what the return on the American
taxpayer's investment is in energy efficiency programs. These
are programs that should put dollars back in the pockets of
hardworking Americans and demonstrate a good investment in
energy efficiency is a high-return one for the overall U.S.
economy. So in those kind of topics, I don't think the issue is
about global warming or not, it is just a good investment for
the American people to make.
In terms of the scientific question, what I think we are
driving towards, and as we get the grant programs defined for
the Office of Fossil Energy or the Office of Electricity, is
what we are trying to do is create a series of experiments at
scale against a broad range of technologies that address the
particular topics that were brought up in the Recovery Act, and
by examining a diverse range of technologies, what we then do
is give the market the opportunity to decide what mix of
capital costs, operating costs and efficiency is the most
appropriate one to be adopted by industry, and so I think it
creates quite a good dynamic where you do the good science
across a broad range and then effectively leave it up to the
market to adopt--to decide on adoption rates and adoption
standards. So those are the approaches that we are taking. We
should approach this with each of the different programs as
they come out and explore whether in fact we are meeting that
test.
Mr. Broun. Well, thank you, sir. My time is expired and I
thank the Chairman, but you still don't reassure me, sir.
Chairman Miller. Thank you, Dr. Broun.
Ms. Dahlkemper for five minutes.
Ms. Dahlkemper. Thank you, Mr. Chairman.
Thank you all for being here. I appreciate the opportunity
to ask you a few questions. I am a new Member from
Pennsylvania, and it is great to be on this type of a committee
because people in my district expect when I vote for something
as important as this Recovery Act that we know where the money
goes and we have transparency. Obviously there is a lot of
anger about money that has been given out, so this is very,
very important to me and to my constituents. I want to ask on a
scale of one to ten, how prepared do you believe you are
currently to really be the stewards of this money, and my goal
is that you are at a ten eventually if you are not there and
how do you plan to get there if you are not?
Dr. Marrett. I am glad you let us know what the scale was
on. I was getting ready to put us down near one thinking that
was at the top. But if 10 is where we are aiming for, it would
depend on which parts. We certainly, as indicated, have the
commitment, we have plans. There are still some matters that we
are working on to ensure that everything is going to be in
place and so I would not want to say that we have reached 10 as
of today. I will guarantee we will be at 10 before that time
period I had given you of when the grants, when the funds will
go out of the door. So that is what we are aiming towards, and
I think we are quite well on the way to being exactly at the
point you are talking about.
Ms. Dahlkemper. Thank you.
Mr. Spoehel.
Mr. Spoehel. I think the processes and structures that NASA
has in place would allow the Agency to meet the requirements as
they are known under the Recovery Act. There are guidances, as
was mentioned before, that are evolving so it is hard to know
until that solidifies exactly what readiness state we are in,
but I believe we are ready.
Ms. Dahlkemper. Ms. Herbst.
Ms. Herbst. For the Department of Commerce, I would echo
that we are following the guidance closely. We have plans in
place. We have created a risk inventory and are looking at risk
mitigation plans. The area that we are working on right now is
staffing up particularly in the contracts and grants
professional area. We have identified the resources we need and
we are working expeditiously to obtain those resources.
Mr. Rogers. I think as Dr. Marrett was arguing, different
programs are different places in this process. Our commitment
to you is that we are going to have the program to a high level
of preparedness before the funds go out. What we did were two
things. First is, we established this risk assessment for each
of the programs and then are having each of the programs
develop risk mitigation plans against the major risk areas that
they have. Until those risk plans are in place and until we
have walked through a series of quite disciplined milestones,
none of the money can be obligated, or no checks can go out,
and so that is the combination between my office and the CFO's
office to make sure that each of them has to certify readiness
before the first check clears, and again, each of the programs
are at different places but all will be ready before the money
moves.
Ms. Dahlkemper. I have another question that I would like
to kind of address to the entire panel. Different areas of this
country are having greater economic issues than other areas.
Where I am from, the northwest part of Pennsylvania, we had a
depressed economy before the rest of the Nation was really
suffering as they are right now. When you are looking at the
monies and granting this money out, are you taking into
consideration at all what areas of the country have the
greatest needs for jobs, for job creation, for economic
development?
Dr. Marrett. As I indicated, we have proposals in place and
proposals will be coming in, and we certainly--for National
Science Foundation, we have to rely on what comes to us. But
one of the things that we did quite recently was to map across
the country where the current proposals that could be
considered under the Recovery Act, where those are located, to
try to make sure that when we talk about trying to have
``broader impacts,'' we mean ``broader impacts'' making sure
that we are addressing the needs as those might vary across the
country. So we are paying close attention to the quality of the
work that is coming to us and the fact that that work is, in
fact, represented across all parts of the Nation.
Ms. Dahlkemper. Would anyone else like to address that?
Mr. Rogers. Within the Department of Energy, every dollar
under the Recovery Act is associated with a job amount, a state
and an impact, and then a set of milestones that that project
has to achieve in order to reach those jobs and that impact,
and so what is nice now is that we are going to be able to
report out by state, which you can see with the existing
formula grants, and then by Congressional district to be able
to show the American people where those funds are going so that
you can see that those dollars are in fact going to work in
your neighborhoods. The good thing again about the Department
of Energy's formula grant activities is both for the State
levels and then as we come out with the energy efficiency
activities for the local levels, we are going to be addressing
every state in the country and we are going to be addressing
1,700 municipalities with direct funds and then as with Dr.
Marrett, there is a whole set of them that are coming in then
from the marketplace but the ability to go back and track jobs
by Congressional district is a really important one so that you
can see where those monies are being spent.
Ms. Dahlkemper. Ms. Herbst, did you want to comment at all?
Ms. Herbst. I would echo Mr. Rogers in terms of in addition
to the criteria around specific program outcomes that are grant
making, the process already has, the jobs creation criteria is
being added and we will track where those jobs are.
Additionally, in Commerce we have the Economic Development
Administration and specifically have been directed to look at
regions that have experienced economic dislocation and job loss
as part of the grant-making criteria.
Ms. Dahlkemper. Okay. Thank you.
Chairman Miller. Thank you, Ms. Dahlkemper. For information
for Members of the Committee, when I exceed the time, I will
generally use that as a rule of thumb of how indulgent I will
be for other Members, so both Dr. Broun and Ms. Dahlkemper
exceeded their time but not by as much as I exceeded my time.
Mr. Bilbray for roughly five minutes.
Mr. Bilbray. Thank you, Mr. Chairman.
In the spirit of full disclosure, Mr. Chairman, I serve as
the Ranking Member for the Government Oversight Committee on
Procurement and Government Oversight so this is sort of a two-
fer for me. But I want to clarify that I think that what has
happened this week with AIG is exactly why somebody like
myself, who has been in government oversight since 1976--it is
kind of scary to think I got elected to city council before
Jimmy Carter was elected. That is how long I have been in the
game. In fact, that was the days when I had a mustache and long
hair. But the one thing I saw when the bail-out under Bush was
being proposed was, it was wide open for this kind of abuse.
Now, the discussion of this bill was the fact that we had a
bill dropped at 10 minutes 'til midnight and we were asked to
start an intelligent debate at 9:00 the next morning, and I
just think that we have to recognize the huge potential for
abuse because of the lack of oversight in the creation, and
that means now the huge responsibility we have to really look
at oversight in the implementation. So we have got to make up
for that, and you think that people are upset right now about
AIG, they are darn well going to be upset about this if we
don't try to correct it, and the one thing I have tried to do
working with my Democratic colleagues on oversight is to use
the opportunity, that this is a new Administration with a whole
new structure and help this new Administration avoid the
pitfalls of the previous Administration. So rather than play
gotcha the way that oversight usually does, we need to be
proactive and point out the mistakes of the Bush and the
Clinton Administrations so that the Obama Administration
doesn't fall into the same problem. So just so you know where I
am coming from and where we are working over on that committee
and there is a lot of information that I receive there that I
will apply here.
Mr. Rogers, we talk about--we can argue the merits of what
my scientists at Scripps say and where we are going and
different scientists are saying whatever, but there are some
scientific facts that we have ignored in the past. A good
example is your choice of the term ``green'' or ``renewable,''
and let me tell you, let me tell you, when you have Duke
University that just came out with a report that said it would
be better never to plant the crop than to grow corn for
ethanol, better for the soil, better for the environment,
across the board. I certainly hope that when we are reviewing
applications that we remember that. When you have the Air
Resources Board of California, which I had the privilege of
serving on for six years, the premiere clean air people--you
would admit that they are cutting-edge when it comes to
admissions issues. When the ARB, the Air Resources board of
California, which there is a slew of states that do nothing but
follow their guidelines, actually adopt their guidelines, and
let us face it, most people don't like following California
anywhere except to Hollywood, when they say that ethanol is no
better for the environment than regular gasoline, in other
words, the word is getting out from the scientists that the
only thing green about burning ethanol is how much money the
industry is making off of the consumer. Are you going to be
able to reflect as you look at this that when you talk about a
gallon, you don't talk about a gallon for gallon like what we
get with ethanol where you lose 30 percent, but mile for mile,
BTU to BTU, the outcome and the efficiency, not what people are
telling you about what is clean and what gives you the mileage,
are you able to be able to reflect that?
Mr. Rogers. In the program evaluation, for example, of some
of the auto loan programs, there is a simple one we have. The
Argonne National Lab has done a very nice set of technical
analysis that reflects a multitude of real-world functions in
terms of the operations in that evaluation. So how do people
really drive cars as a simple model as well as, you know,
issues like the ones that you raised, and I think that is where
the--what the Department can bring to this debate again is good
scientific evaluation that incorporates all the different
factors in a consistent fashion as we go through program
evaluation.
Mr. Bilbray. Okay, because E85, to give credit to E85 and
not give a credit to natural gas compressed gas, even to have
E85 in the same category is really ignoring good science, and I
know politics the way it is and I know where the President is
from and all his buddies, but the fact is, this is one of those
things I am going to be pounding on because just as much as we
need to stand up for good science about climate change is where
the answer is.
Now, we are going to be using non-profits a lot on this and
one of the things we have run into, and Ms. Herbst, we brought
into this issue, everybody is talking about the previous
Administration's contracts with for-profit organizations in
Iraq. The new big scandal is going to be what the Bush
Administration did with so-called non-profits and the lack of
accountability for those contracts in Afghanistan.
Mr. Rogers, are we going to maintain a level of oversight
on non-profits? Because when we do energy retrofits, you know
that is very, very cost-effective, but traditionally non-
profits have jumped into that but the oversight and the
accountability of non-profits have never, ever been up to the
standards that we have held with for-profits. Are we ready to
change that and hold them to the same standard just because
they are so-called community based? Are they going to be
required to hold the same standards that we do for profits?
Mr. Rogers. So one of the most important improvements in
oversight that we are implementing as part of the Recovery Act
is a change in the way that we look at the weatherization
program. Historically, the money flows through the states and
we would look at the State level to figure out how the state is
actually costing or spending those funds and we would do that
every other year with the states. Under the current model, what
we are doing is moving to a much more direct oversight model
where first the States have to issue plans and milestones. They
only get funding with respect to meeting their milestone
objectives. Secondly, we are going to be auditing not just the
funds flow but actually the outcomes from the way the states
are spending the funds. So the states now have to report within
five business days of the close of every month who receives the
checks from the states, which non-profits receive that, and
instead of us going in and just saying can you show us that a
nonprofit did how many houses, we actually now have the ability
to go in and look at which houses actually got done and go to
the house and figure out was it done, to what standard, did
they do it--how much money did they spend, what kind of returns
did they get for that investment, which is something that we
haven't had either the resources or the authority to do in the
past.
Mr. Bilbray. Ms. Herbst, following up on this just to get
down to it is one of the critical components of distributing
these funds was the census of what is the population base, and
we are talking about--let me just follow up with this one,
please. This is a very important issue in California, and that
is, the scientific accurate data that we need for our census is
going to be under your department. We have talk of the use of
ACORN, one of those non-profits that are under investigation.
In California, the criminal investigation is as long as my arm,
and to talk about a non-profit that is under investigation,
that is under that kind of cloud really lends itself to the
kind of outrage that we said that private sector, you know,
being investigated the same way. Are we going to be contracting
with non-profits that have that cloud, and if we are, doesn't
that send a whole message that the entire census if we use
those groups may be suspect down the road when it is a critical
time to be able to try to use that data?
Chairman Miller. I am sorry. Ms. Herbst, Mr. Bilbray has
now exceeded his time by substantially more than I exceeded my
time, so if you could make your answer just a sentence or two
and you can respond further in writing if you like.
Ms. Herbst. Thank you, because I would like to respond in
detail as a follow-up. We are committed to the importance and
the accuracy of the census. The Census Partnership Program
Plan, which is part of the Communication Plan, is under review
regularly and the spending on that is under review and we
intend to continue that. We also intend to have the same
oversight regardless of whether it is a profit or nonprofit.
All of our processes around acquisitions and grants do not
distinguish between those two. Thank you.
Chairman Miller. Thank you. I will now recognize myself for
a second round of questioning. I understand with votes coming,
it probably will not be the case that Members other than Mr.
Broun and I will be able to have a second round.
Dr. Marrett, your agency is getting a $3 billion increase
over two years. You are now a $6 billion agency, so that is a
pretty stiff increase. We have--our staff has heard that many
of your employees, most of your employees are working hard
already and most are in fact working well beyond an eight-hour
day. How is your staff going to manage that really very
significant increase in work to make sure that the money is
managed properly?
Dr. Marrett. Our staff acknowledges, we have to acknowledge
that there are pressures on the Foundation given that the
staffing levels have not been increasing. Against that backdrop
though, there is a great deal of enthusiasm on the part of all
the staff. The level of commitment is amazing. In addition, the
workload is not going to be even across the Foundation and so
some will have more than others and thus we are looking at how
to even out a lot more the workload issues. So we are working
on that. The other matter has to do with something that I think
is affecting all of us. The Office of Personnel Management is
also looking at strategies that might be put into place that
will help with the staffing issues that we are all confronting
at this time, so we are paying a lot of attention to what kinds
of flexibilities we have internally, what kinds of strategies
might be possible through the experiences elsewhere and
certainly working to make sure that we do not place great
stresses on what is still a very enthusiastic staff.
Chairman Miller. Thank you, Dr. Marrett.
Mr. Spoehel, my concerns about NASA are different. You make
the point correctly that the increase for NASA is not really
that much more than your current budget and that you can simply
supervise this funding in the way that you supervise your
existing funding. I think it is a $1 billion increase in a $17
billion budget. The problem is your existing management. NASA
has consistently remained on GAO's list of the agency that is
at highest risk for mismanagement in contract administration,
at risk for waste, fraud and abuse. This committee is now
looking at various acquisition contracts by NASA, generally how
NASA administers contracts and decides what to contract. We are
not entirely reassured by the assertion that you will just
manage this the way you are managing everything else. What
changes does NASA--you are kind of a juncture where you can
make changes. You will shortly have a new director. We devoutly
hope you will have a new IG. What changes do you contemplate
making in NASA's management of contracts now?
Mr. Spoehel. Over a year ago, in response to the continued
portrayal of NASA on the high-risk list, NASA undertook a
comprehensive corrective action plan, and based on the progress
under that, as may have been noted, GAO improved--recognized
the improvement that NASA had made under the high-risk series.
NASA continues to undertake additional actions under that and I
would be glad to provide the Committee with a copy of that if
that is something you would like to go into in more detail [see
Appendix 2: Additional Material for the Record.]
Chairman Miller. Okay. Ms. Herbst, the NPOESS satellite has
been one of this committee's, the Subcommittee's and the
broader Committee's concerns for the last several years and we
have heard again and again, the project has been mismanaged and
the mismanagement has cost taxpayers considerably, and that we
are at some risk by not having the system in place to collect
climate change data and weather prediction data to improve our
weather prediction capability. Have you developed a plan to use
some of the Recovery Act funds to address the many problems
with the NPOESS system?
Ms. Herbst. NOAA is very focused on program execution,
particularly in this program, and is planning on using Recovery
Act funds towards that program to reduce technical and schedule
risk, and again, their spend plans are working their way
through the approval process in the Department. We expect to
have them out shortly. And that will include the plan around
the NPOESS satellite.
Chairman Miller. My time has expired by just a little bit.
Dr. Broun.
Mr. Broun. Thank you, Mr. Chairman. I am always going to
give you leeway because I may need it at sometimes myself.
Chairman Miller. And I have the gavel.
Mr. Broun. And you have the gavel. Correct. I am sure you
will remind me of that over and over again.
I want to start with Ms. Herbst but I would like all of you
to answer this question. I want to associate myself with the
concerns and remarks that my colleague, Mr. Bilbray, said. Ms.
Herbst, would you please reassure me, this committee and the
American people that you all will not be granting any of these
funds to profits or non-profits, either one, to any group that
is under criminal investigation for whatever reason and that
you will take diligent efforts to make sure that that happens?
I think it is atrocious, totally unacceptable the way that the
original TARP funds were handled by the Bush Administration,
and I think it is extremely important for this Administration
to make sure that those funds are expended in a better way, and
one way to do that is to assure us as a committee and assure
the American people that groups such as ACORN, which is under
investigation in numerous states, it is not just one little
enclave of these folks, it is a systemic problem with ACORN,
but would you please reassure us that you will take very
diligent efforts to ensure that the taxpayers' dollars are not
going to be given to groups that are under criminal
investigation, particularly those that are under investigation
for fraud, and then I would like all the rest of you to answer
that if we still have time within my five minutes.
Ms. Herbst. The Department of Commerce has identified the
contracts and grants area in total across all of our bureaus as
a key area of risk to mitigate and manage and we have spent
additional time with our senior people developing risk
management and oversight plans, providing additional guidance.
We also plan from a personnel standpoint to put our senior
experienced contracts and grants people on Recovery Act
contracts and grants. Because of the additional oversight, the
additional reporting and accountability requirements, we feel
we need to put our most experienced people on those. We intend
to then bring in other resources to handle through our normal
processes and oversight the existing underlying grants and
contracts activity. We have also taken a specific look at our
investment review board procedures and processes, which are
used at the department level to review high-level, high-risk,
high-dollar types of contracts, grants and programs, and we are
putting special emphasis on Recovery Act grants and contracts
for the review board. We will be very diligent in reviewing
those grants and contract awards and will use all of the
oversight and management processes that we have to ensure that.
Mr. Broun. I am about to run out of time. I would like for
the other three of you to please answer that in writing. We are
going to present, I think, questions in writing, so if you all
would please answer that question.
But back to Ms. Herbst before my time runs out, would you
assure me that you are not going to give grants to ACORN to do
census?
Ms. Herbst. I would like to be able to get back to you. I
would like to go back to the Department and give you an answer
in very great detail on that if I may.
Mr. Broun. Well, if you don't have that answer, certainly I
will be glad to give you that latitude, but I highly encourage,
just for the sake of integrity of the census which is extremely
important to every single American, and most of them don't
realize how important that is, but this organization is under
criminal investigation, criminal investigation, in numerous
states across this country. And I highly recommend that the
agency absolutely not even begin to consider granting ACORN any
money whatsoever to be involved in the census, and I encourage
all of your agencies to take diligent efforts to make sure that
no contracts are given to anybody, profit or non-profit, that
is under criminal investigation because it is going to lay a
cloud on this Administration, on this Congress, on everything
that is done, so I encourage you all to do so. There is a
database that you all can search. It is not updated enough.
That is a whole other issue. But I encourage you to do that.
With that, I will yield back.
Chairman Miller. Thank you, Ms. Herbst. I actually hold the
435th seat in Congress, so I thought the Census Bureau did an
outstanding job last time. The Members from Utah, not so much.
It turns out we do have time for another round of
questioning, Ms. Dahlkemper, if you have another round of
questioning. If not, it probably makes sense for us to stand at
ease and go to vote and have the next panel. Do you have a
second round?
Ms. Dahlkemper. I just have one question that should be
fairly easy, hopefully, to answer. But it is about other
agencies where desired or needed. Have you been getting the
necessary support and if not, you know, can we do anything to
help you with that because I find that agencies often don't
cooperate as we really would hope that they would here in the
Federal Government.
Dr. Marrett. Well, speaking on behalf of NSF, there has
been quite a bit of interaction across the agencies. You have
heard some of that among us today, but there are other agencies
that we are working with, especially both to learn about what
are potential effective practices to ensure that there are
commonalities. I can't think of, then, any particular problems
that I would say we have encountered in working with the other
agencies.
Mr. Rogers. Indeed, from an Energy Department standpoint,
the level of collaboration among departments has been at a
very, very high level. We have joint ventures now with HUD and
with HHS on community grant activities, with Interior and
Agriculture on a whole set of siting issues, with Labor and
Education on job training issues so that we are actually
getting the most for the taxpayers' funds, that we are either
not leaving big gaps or showing up in duplicative ways. And the
level of commitment to collaboration in a positive way from the
American taxpayer has been extraordinary since the passage of
the Recovery Act.
Ms. Dahlkemper. That is great to hear. Thank you very much.
Chairman Miller. Thank you. Mr. Bilbray, it looks like you
will have time for a couple minutes as well.
Mr. Bilbray. Thank you, Mr. Chairman. Mr. Rogers, we had a
great ability to talk directly to the Energy Secretary. The
Energy Secretary made it very clear that he understands that
the answer for clean fuel is a petroleum-like product with the
BTU's, clean environment, and that alcohol ethanol is not the
answer. Is your department ready to draw the line and make sure
you are not using taxpayers' funds to subsidize technology that
produces a fuel that is not recognized by the best experts as a
clean fuel, i.e., ethanol?
Mr. Rogers. The funding within the Recovery Act focused on
renewables is still going through the consideration process,
and we are still working with the Office of Management and
Budget to be able to talk exactly about how that breaks down.
We should have a very clear set of guidance out on that in the
next several weeks where we can address that issue
specifically.
Mr. Bilbray. Mr. Rogers, were you around in the '90s when
the Federal Government mandated the inclusion of MTBE, a.k.a.
methanol in our gasoline stream in non-attainment areas?
Mr. Rogers. I have been around the Federal Government for
30 days, so I was not here in the 1990's.
Mr. Bilbray. Well, let me just remind you. The fact is, the
Federal Government has gone down roads before thinking it is an
environmental option, not taking the time to talk to the
scientists and creating not only a huge waste of taxpayers'
money but huge environmental damage. Santa Monica now still has
polluted wells from a federally mandated additive that was
supposedly--and I just want to say again. I don't care if it is
even cellulosic. The Secretary made it quite clear in his
hearing that he is looking for an option that produces a fuel
that is not 30 percent less efficient than traditional fossil
fuels and does not create more pollution per mile. And watch
the way they work their numbers. They will say per gallon, and
they will say tailpipe emissions. They won't talk total
emissions. And if I sound really hard-nosed about this, it is
that we have had to live with the environmental damage of a
misguided federal strategy, and if you want to see a scandal
like AIG, in a few months we could have--all this new science
coming out on ethanol and your department subsidizing it, and I
don't think you want to be in that position, sir. So I hope
that you look at these things, apples to oranges, mile for
mile, gallon for gallon, and emissions at a truly environmental
item. Can we do that?
Mr. Rogers. The Secretary's guidance on this topic is quite
clear, and you know, what is good about working for the
Secretary is he sinks his teeth into a set of topics and gets
into the science in great detail, and then that translates
quite quickly into the structure of both the direct options
that we have as well as of the grant-making that we undertake.
As we work through this process, he is directly involved in
that activity.
Mr. Bilbray. Well, I think what I am excited about is I
have got a Californian who knows the frustration of us in
California watching Washington do things in the name of the
environment that has been absolutely disastrous, and now we
finally got somebody at the right place who can sort of try to
wake up this town that there are environmental opportunities
out there and there are some really lost leaders. And I am
still very excited about somebody trying to show me how we are
going to make coal clean from the mining to the transporting to
the use, and I will still stand up and say clean coal is about
as logical as safe cigarettes. In a few years people are going
to understand that, but this one I really do not want us to
waste this money. I don't want the outrage with this
Administration that we have seen with the last Administration,
and we can avoid this if we just are willing to take the time
to make sure we got our facts straight first.
And I don't care if it is the technology we choose or the
people we choose to implement these funds. We darn well better
be careful because Congress was not careful. We did not take
the time, and you have got to make sure you take the time and
do it right because we didn't do it right. Thank you very much,
Mr. Chairman.
Chairman Miller. Thank you. I think we have now completed
with this panel. It does appear we might have time to get
started on the second panel, at least perhaps to do the
introductions. So if we could fairly quickly change places, but
we will shortly be called for votes.
Panel II
I would like to introduce our second panel. Mr. Gregory
Friedman is the Inspector General for the United States
Department of Energy. Mr. Todd Zinser is the Inspector General
for the U.S. Department of Commerce. Mr. Tim Cross is the
Interim Inspector General at the National Science Foundation.
Ms. Eileen Norcross is a Senior Research Fellow at the Mercatus
Center, a think tank at George Mason University, and Ms.
Patricia Dalton is the Managing Director of the Natural
Resources and Environment Division at the U.S. Government
Accountability Office.
As you know, from having been here for the previous
witnesses, you each have five minutes for your oral testimony.
Your written testimony is as long as you would like for it to
be within reasonable limits, and that will be submitted for the
record. After your oral testimony, we will have rounds of
questioning, perhaps just one, in which each Member will have
five minutes to question the panel. It is the practice of the
Subcommittee to receive testimony under oath. Do any of you
have any objection to swearing an oath, to taking an oath?
Okay. You also have the right to be represented by counsel. Do
any of you have counsel here? If you would now all please stand
and raise your right hand, do you swear to tell the truth and
nothing but the truth? Let the record reflect that each of the
witnesses swore the oath.
Mr. Friedman, I think we have time to take your testimony.
STATEMENT OF MR. GREGORY H. FRIEDMAN, INSPECTOR GENERAL, U.S.
DEPARTMENT OF ENERGY
Mr. Friedman. Mr. Chairman and Members of the Subcommittee,
I appreciate the opportunity to testify today on accountability
and transparency issue related to the American Recovery and
Reinvestment Act of 2009. As you know, the Department of Energy
will receive approximately $40 billion for various science,
energy, and environmental programs and initiatives.
Furthermore, based on the Recovery Act and previously approved
programs, the Department has been authorized to make or
guarantee loans totaling up to $127 billion for innovative
technologies as well as auto industry advancements.
The Recovery Act will undoubtedly have a significant impact
on the operations and the activities of the Department and, in
turn, on the Office of Inspector General. The passage of this
legislation makes this a transformative time for the Department
of Energy, particularly in the areas of scientific discovery
and innovation.
My staff and I are committed to evaluating the actions of
the Department to ensure that Recovery Act funds are used both
efficiently and effectively. Utilizing a risk-based oversight
strategy, my office will: First, evaluate the internal control
structure for the most significant programs receiving Recovery
Act funds. Second, through transaction testing, evaluate the
effectiveness of the Department's distribution of funds to key
external recipients. Third, evaluate the Department metrics to
gauge program success. Fourth, provide fraud awareness
briefings throughout the Department complex and coordinate with
federal, State, and local prosecutors and law-enforcement
agencies, and fifth, enhance our program to process and report
on whistleblower retaliation complaints. In addition, the Act
creates the Recovery Accountability and Transparency Board. As
Inspector General for the Department of Energy, I will
participate actively as a member of this Board.
This strategy takes into account management challenges that
we have reported on over time as well as issues that we expect
as a result of new initiatives related to the Recovery Act.
These include concerns about the following: The Department's
ability to administer or manage its large portfolio of
contracts and related financial instruments; the Department's
loan guarantee program, specifically related to having adequate
staffing to manage the programs and the inherent
vulnerabilities and operational risks associated with massive
increases in funding and mission responsibilities, all in a
relatively short timeframe. We will treat these concerns as
priorities as we move forward.
While continuing to focus attention on our customary
responsibilities, in recent weeks my office has accelerated
efforts to provide proactive oversight of Recovery Act funds
and programs. In addition to developing our oversight strategy,
my office will shortly issue two reports to the Department
regarding the Department's implementation of the Act. First we
will provide the Department with a report on lessons learned
based on prior Office of Inspector General work. This report
will provide the Department, we hope, with a resource to
establish a framework to manage the unprecedented amount of
funding under the legislation. Secondly, we will provide a
report on staffing concerns relating to the Department's
acquisition workforce and their impact on the implementation of
the Recovery Act. Using our risk-based approach, my office has
also initiated a review of the Office of Energy Efficiency and
Renewable Energy. This office will be one of the first to put
money on the street as a result of the Recovery Act.
Furthermore, to mitigate potential fraud risks, my office has
launched a proactive effort to communicate with federal and
State prosecutors on strategy for pursuing allegations of
fraud, and we have also delivered over 15 fraud awareness
briefings to various Department elements. Finally, in order to
make the most effective use of available oversight resources,
my office is currently involved in discussions with several
State auditors to establish collaborative efforts, most notably
in the area of weatherization, to follow the expenditure of
Recovery Act funds to project completion. We have also
commenced outreach efforts with the Government Accountability
Office to discuss interaction and communications as it relates
to the Recovery Act.
We appreciate the significance of the Department of
Energy's participation in the Recovery Act and the potential
short- and long-term implications for the U.S. economy. We are
mindful as well of the special responsibilities of the Office
of Inspector General to help ensure transparency and
accountability, all in the interest of the American taxpayers.
We will work diligently to meet these challenges. We look
forward to keeping this Subcommittee and others in Congress
apprised of the results of our work.
Mr. Chairman, this concludes my statement, and I would be
pleased to answer any questions that the Subcommittee may have.
[The prepared statement of Mr. Friedman follows:]
Prepared Statement of Gregory H. Friedman
Mr. Chairman and Members of the Subcommittee:
I appreciate the opportunity to testify today on accountability and
transparency issues related to the American Recovery and Reinvestment
Act of 2009 (Recovery Act). My testimony focuses on the efforts of my
office to provide effective oversight of Recovery Act funds at the
Department of Energy, which will receive approximately $40 billion for
various science, energy, and environmental programs and initiatives.
Furthermore, based on the Recovery Act and previously approved
programs, the Department has been authorized to make or guarantee loans
totaling up to $127 billion for innovative technologies as well as auto
industry advancements.
The Recovery Act will undoubtedly have a significant impact on the
operations and activities of the Department and, in turn, the Office of
Inspector General. Under the Recovery Act, the Federal Government hopes
to stimulate the economy in the shortest timeframe possible, while
fostering an unprecedented level of accountability, oversight, and
transparency. The passage of this legislation makes this a
transformative time for the Department of Energy, particularly in the
area of scientific discovery and innovation.
Consistent with the objectives outlined in the Recovery Act, my
office has developed a strategy to provide the most effective oversight
possible given our available resources. Before discussing the specifics
of the oversight strategy, I would like to outline a few fundamental
principles that I believe must guide the Department's management of
Recovery Act funds.
Prevention and Detection: In terms of oversight, it
is important to note that simply detecting problems after the
fact is not satisfactory. As the Department works to establish
safeguards and internal controls for managing Recovery Act
funds, the prevention of fraud, waste, and abuse must be a top
priority.
Expediency and Accountability: A principle feature of
the Recovery Act involves the allocation of funds with all
possible speed as a means of stimulating the economy. While
expeditious action is an important goal, the Department must be
mindful of the fact that accountability must be maintained over
funds.
Management Responsibility: Responsible program
managers and contracting officials must exercise effective
program management as a primary tool to ensure Recovery Act
success. Inspector General oversight activities supplement,
rather than supplant, program execution.
Office of Inspector General Oversight Strategy
My staff and I are committed to evaluating the actions the
Department takes to ensure that Recovery Act funds are used both
efficiently and effectively. Our risk-based strategy for achieving
these goals includes the following steps:
Evaluate the internal control structure for the most
significant programs receiving Recovery Act funds: To ensure
effective oversight, my office will review the internal control
structure and management of Department programs, beginning with
those receiving in excess of $500 million in funding under the
Recovery Act. To provide immediate feedback on areas needing
improvement, ``real time'' reviews will be initiated as
controls are established, and policies and procedures are
developed.
Evaluate the effectiveness of the Department's
distribution of funds to key external recipients: The vast
majority of funds provided to the Department will be
distributed under various procurement instruments to
contractors, State and local governments, educational
institutions, and non-profit organizations. After reviewing the
Department's internal control structure, my office will
evaluate the controls established by the primary recipients
over the use of funds.
Examine the use of funds through transaction testing,
utilizing a risk-based approach: My office will conduct
transaction testing at the recipient or end-user level to fully
explore the effectiveness and efficiency of Recovery Act
projects.
Evaluate Department metrics to gauge program success:
We will evaluate established goals and metrics to ensure that
they address Recovery Act objectives. We will also test
specific performance and economic information, including
reported performance in the critical area of job creation, to
determine whether objectives are being met.
Provide fraud awareness briefings throughout the
Department complex: On a regular basis, the Office of Inspector
General will provide fraud awareness briefings to groups of
federal employees, contractor officials, and fund recipients.
These briefings aid significantly in preventing fraud, waste
and abuse by heightening managers' awareness of fraud
indicators and familiarizing officials with our operations.
Enhance existing relationships with federal, State,
and local prosecutors and law enforcement agencies: These
relationships are critical to establishing effective networks
for identifying areas that are most vulnerable to fraud, waste,
and abuse as well as bringing to justice those who would
defraud the government.
Expand Hotline capabilities: The Office of Inspector
General maintains a Hotline to facilitate the reporting of
allegations of fraud, waste, abuse, or mismanagement in
Department of Energy programs or operations. On an annual
basis, the Hotline receives approximately 1,300 complaints. We
anticipate receiving an additional 500 Hotline complaints each
year that pertain to Recovery Act funds. In the coming months,
we will expand our Hotline capabilities, as necessary, to
accommodate these complaints.
Enhance our program to process and report on
whistleblower retaliation complaints, to respond to new
requirements under the Recovery Act: The Office of Inspector
General will direct additional resources to review retaliation
complaints relating to Recovery Act programs.
Participate actively as a member of the Recovery
Accountability and Transparency Board: As outlined in the
Recovery Act, I will serve with nine other Inspectors General
on the Recovery Accountability and Transparency Board. This
work will complement my regular duties as Department of Energy
Inspector General. I look forward to working closely with my
colleagues to help ensure that Recovery Act funds are spent
efficiently and effectively throughout government.
Areas Requiring Special Attention
The strategy outlined above takes into account management
challenges that we have reported on over time as well as new issues
that we expect as a result of the sudden influx of substantial
additional Department funding.
For example, for over a decade, the Office of Inspector General has
identified ``contract administration'' as one of the most significant
management challenges facing the Department. We have issued numerous
reports on a wide variety of contract administration and project
management deficiencies. Given the Department's almost total reliance
on contractors to carry out its mission, a commitment to effective
contract administration will be of vital importance as the
unprecedented flow of funds begins under the Recovery Act.
The Office of Inspector General has also reported on the maturity
of the internal control structure of the Department's loan guarantee
program, questioning whether it was adequately staffed to support its
goals and objectives. For example, prior to the signing of the Recovery
Act, we reported that staffing levels were not adequate to, among other
things, monitor disbursed loans and complete credit underwriting for
applicants. We noted that the Department has stated its intention to
augment the staffing levels. We think this is a positive step that
should be pursued aggressively as the process of reviewing and
approving loan guarantee applications proceeds.
As implementation of the Recovery Act continues, all parties should
recognize that the potential risk of fraud increases dramatically when
large blocks of funds are quickly disbursed. Our experience in the
investigative arena has demonstrated that even during periods of normal
operation, the Department is vulnerable to the misuse of funds,
submission of false or fictitious data, employee conflicts of interest,
and other related wrongdoing.
Finally, given the magnitude of the Recovery Act, successfully
infusing funds into existing Department programs will be a significant
challenge. For example, the Office of Electricity Delivery and Energy
Reliability, which will continue to lead efforts to modernize the
electric grid, had a budget of approximately $138 million in Fiscal
Year 2008. Under the Recovery Act, this Office will receive $4.5
billion, the bulk of which will be used for electricity delivery and
energy reliability activities. Such an expansive increase in funding in
a short timeframe carries with it certain vulnerabilities and
operational risks.
These are just a few examples of areas relating to Recovery Act
programs and operations that we believe will require special attention
by Department management. Utilizing the risk-based oversight approach
previously outlined, in conjunction with experience gleaned in part
from existing management challenges, we will continue our efforts in
these, as well as other, critical areas to aid the Department in the
successful implementation of the Recovery Act.
Accomplishments to Date
While continuing to focus attention on our customary
responsibilities, in recent weeks my office has accelerated efforts to
provide proactive oversight of Recovery Act funds and programs. To
date, my office has:
Developed a comprehensive oversight strategy, as
outlined above.
Completed and will shortly issue a ``lessons
learned'' report based on concerns identified in prior work.
The report will provide the Department with a resource as it
works to establish a framework to manage the unprecedented
amount of funding under the Recovery Act.
Initiated a review of the Office of Energy Efficiency
and Renewable Energy's implementation of the Recovery Act.
Launched a proactive effort to communicate with
federal and State prosecutors on strategies for pursuing
allegations of fraud.
Completed and will shortly issue a report on staffing
concerns relating to the Department's acquisition workforce and
its impact on implementation of the Recovery Act.
Delivered several fraud awareness briefings to
various Departmental elements, including the Office of the
Chief Financial Officer, the Office of Energy Efficiency and
Renewable Energy, the Office of Science, the Office of
Environmental Management, and the Bonneville Power
Administration. We have numerous other briefings scheduled in
the near future.
Initiated discussions with the State Auditors in
several states to establish collaborative efforts, most notably
in the area of weatherization, to follow the expenditure of
Recovery Act funds to project completion.
Commenced outreach efforts with the Government
Accountability Office to discuss interaction and communication
as it relates to the Recovery Act.
Applied additional resources for receiving and
reviewing whistleblower retaliation complaints associated with
Recovery Act programs, as outlined in the legislation.
Conclusion
We appreciate the significance of the Department of Energy's
participation in the Recovery Act and the potential short and long term
implications for the U.S. economy. We are mindful, as well, of the
special responsibilities of the Office of Inspector General to help
ensure transparency and accountability, all in the interest of the
American taxpayers. We have already initiated efforts in this arena and
will continue to work diligently to meet these challenges. We look
forward to keeping this Subcommittee and others in Congress apprised of
the results of our work.
Mr. Chairman, this concludes my statement, and I would be pleased
to answer any questions that the Subcommittee may have.
Biography for Gregory H. Friedman
Gregory H. Friedman was nominated by the President and confirmed by
the U.S. Senate as Inspector General of the U.S. Department of Energy
in 1998. Mr. Friedman started his federal career in 1968 and has been
with the Department of Energy, Office of Inspector General, since 1982.
As Inspector General, he is responsible for a nationwide, independent
program of audits, inspections, and law enforcement efforts related to
the Department of Energy's programs and operations. In addition to his
responsibilities as Inspector General, Mr. Friedman now serves as a
member of the newly created Recovery Act Accountability and
Transparency Board.
Mr. Friedman received a Bachelor's degree in Business
Administration from Temple University and a Master's degree in Business
Administration from Fairleigh Dickinson University. In 1979-1980, Mr.
Friedman was selected as a Princeton Fellow in Public Affairs and spent
a year in residence at Princeton University's Woodrow Wilson School for
Public and International Studies.
In 2002, Mr. Friedman was named by the Comptroller General of the
United States to serve as a member of the Advisory Council on
Government Auditing Standards. In addition, he led the development of
the ``Federal Audit Manual,'' for the first time providing universal
guidelines for conducting federal financial audits.
From 2005 to 2008, Mr. Friedman served as Vice Chairman of the
President's Council on Integrity and Efficiency. Mr. Friedman has been
a guest lecturer on the topics of audit, integrity, government
oversight and management. In addition, Mr. Friedman is a member of
several professional organizations, and has served in leadership
positions in the Association of Government Accountants and the
Institute of Internal Auditors. Mr. Friedman has also been active in a
number of community and philanthropic organizations.
During his federal career, Mr. Friedman has received numerous
awards, including the Department of Energy's Meritorious Service Award,
the Meritorious Presidential Rank Award, and the Presidential Rank
Award for Distinguished Executive.
Chairman Miller. Thank you, Mr. Friedman. Dr. Broun and I
need to go and vote now. We have three votes. We should be back
within half an hour, and when we return, Mr. Zinser, you will
be first up. So we are now at ease.
[Recess.]
Chairman Miller. Okay. We are back. Mr. Zinser for five
minutes.
STATEMENT OF MR. TODD J. ZINSER, INSPECTOR GENERAL, U.S.
DEPARTMENT OF COMMERCE
Mr. Zinser. Good afternoon, Mr. Chairman, Ranking Member
Broun. Thank you for inviting us to testify today on the
oversight of the science program and initiatives at the
Department of Commerce that will be funded through the American
Recovery and Reinvestment Act. The Recovery Act requires
unprecedented accountability and transparency on the part of
government agencies receiving stimulus funds and establishes a
strong oversight role for Offices of Inspector General. The
Department of Commerce received approximately $7.9 billion in
stimulus funding; $1.4 billion of this amount is for science
activities at the National Oceanic and Atmospheric
Administration and the National Institute of Standards and
Technology.
The Department has assigned some of its very best people to
lead its Recovery Act efforts, and we have found that all those
involved are committed to meeting the challenges ahead.
Nonetheless, spending stimulus funds effectively poses
significant risks and challenges for the Department of
Commerce. At the outset, we see six areas of risk facing the
Department in spending Recovery Act funds.
First, spending these funds expeditiously with little time
to staff up and gear operations to accommodate the additional
activities significantly increases the risks for fraud and
waste in stimulus-funded initiatives as well as in the
Department's traditionally funded operations.
Second, the executive branch, including the Department of
Commerce, is still in transition. Key leadership positions
remain unfilled. This puts at risk the leadership vision and
the decision-making important in executing a cohesive Recovery
Act plan.
Third, the Act's emphasis on grant and contract spending
puts additional pressure on already overburdened management and
administrative operations, particularly the Department's grants
management and acquisition workforce.
Fourth, construction grants and contracts, which NOAA and
NIST are expressly required to fund, are inherently risky and
difficult to manage effectively. In addition, the construction
grant program to be administered by NIST is a relatively new
program.
Five is specific requirements related to competitive
contracts such as maximizing the use of fixed price contracts
and the Act's Buy American requirements will require extra
vigilance.
And finally the Act's strict oversight requirements and
reporting deadlines will require a greater level of centralized
management of the bureaus than the Department has historically
exercised. This is a significant challenge for the Department
because it has been expected to exercise a greater centralized
management role without sufficient funding to do so in the past
and without funding to do so in the Recovery Act.
Mr. Chairman, my written statement includes examples of
audits and investigations of grants and contracts where we have
found problems. My written statement also includes examples of
important actions the Department is taking to strengthen its
administration of grants and contracts. And you heard from
Ellen Herbst on your first panel this morning about steps the
Department is taking specifically for the Recovery Act.
The Office of Inspector General has established a Recovery
Act task force. We are also participating in the Department's
steering committee in an advisory capacity to reinforce the
recommendations we have made in our past audit work. We are
scheduling fraud awareness briefings by our investigative staff
and technical assistance briefings by our audit staff. We have
hired a risk management expert to lead our task force and have
organized along eight subject matter areas: transparency and
accountability, grants, program acquisition and construction,
scientific and technical research, the broadband technology
program, census, digital TV, and fraud awareness.
Our early work with the Department and its bureaus is aimed
at the prevention of fraud, waste and abuse and reinforcing the
notion that the program offices themselves have the most
critical role in providing oversight of the projects and
contracts they fund. With additional oversight funding we have
received, we will not be able to audit every contract and
grant. We will need to target our resources to those projects
and grants that present the greatest risk.
We would like to commend the Subcommittee for holding this
hearing early in the process and focusing attention on the
importance of oversight in the science programs funded by the
Recovery Act. We would welcome the opportunity to assist the
Subcommittee with your oversight work however we can. That
concludes my statement, Mr. Chairman. I would be pleased to
answer any questions you may have.
[The prepared statement of Mr. Zinser follows:]
Prepared Statement of Todd J. Zinser
Mr. Chairman, Ranking Member, and Members of the Subcommittee:
Thank you for inviting us to testify today on accountability and
transparency in the science programs and initiatives that will be
funded through the American Recovery and Reinvestment Act of 2009. The
Recovery Act requires unprecedented accountability and transparency on
the part of government agencies receiving stimulus funds, both for
their spending decisions and the impact of funded activities--
particularly as they contribute to the Administration's goals of
creating jobs and strengthening the economy.
To ensure this accountability and transparency, the Act establishes
a strong oversight role for Offices of Inspector General in monitoring
their agency's use of stimulus funds and coordinating their collective
Recovery Act oversight throughout the IG community. We have new
responsibilities for investigating whistleblower complaints from
employees of contractors, grantees, and State or local government
entities receiving stimulus funding. And we have a new oversight entity
in the Recovery Accountability and Transparency Board, created by the
Act. As 1 of the 10 inspectors general appointed to serve on the Board,
I believe Congress--in establishing the Board--created an important
mechanism for building on the collective strength of the IG community
to ``follow the money''--ensuring that agencies distribute stimulus
funds effectively and exercise the oversight necessary to ensure that
those funds are used in accordance with the intent of the legislation.
My testimony today will respond to the Subcommittee's questions
regarding science funding the Department has received under the
Recovery Act; risks the Department faces in spending its stimulus
funds, based on our prior audit and investigation work; and our planned
approach for oversight. Specifically, I will address three areas:
1. The Commerce programs and operations that received funding.
2. The challenges and risks facing the Department in using
Recovery Act funds effectively to meet the objectives of the
Act.
3. The Office of Inspector General's initial work plans for
conducting effective oversight of the Department's stimulus-
funded programs.
COMMERCE'S RECOVERY ACT FUNDING IS CONCENTRATED IN FIVE BUREAUS
The Department of Commerce received $7.946 billion in stimulus
funding--$1.440 billion of this amount is for science programs and
activities at two Commerce bureaus--the National Oceanic and
Atmospheric Administration and the National Institute of Standards and
Technology (Table 1).
The Office of Inspector General received a total of $16 million in
stimulus funding to conduct oversight: $6 million for general oversight
over the next four years and $10 million for oversight of the National
Telecommunications and Information Administration's $4.7 billion
initiative to expand access to broadband services.
Bureau Spending Will Focus on Science, Technology, Decennial Census,
and Business Development Initiatives Aimed at Job Creation
NOAA will direct its stimulus dollars toward activities intended to
promote and enhance its broad marine and environmental stewardship
mandates.
$430 million will be used for construction and repair
of NOAA facilities, ships, and equipment; improvements in
weather forecasting; and development of satellites;
$230 million for habitat restoration, navigation
projects, and vessel maintenance; and
$170 million for climate modeling activities,
including procurement of supercomputers and research into
climate change.
NIST will use its Recovery Act funds to expand its technical
research capacity. It will use
$360 million to construct research facilities,
including $180 million in competitive grants for the
construction of research science buildings; and
$220 million for scientific and technical research,
equipment, and services.
NIST will receive an additional $20 million from the Department of
Health and Human Services to accelerate efforts to develop and deploy
electronic health records and a nationwide health care information
technology testing infrastructure, and $10 million from the Department
of Energy to help develop a comprehensive framework for a nationwide,
fully inter-operable ``smart grid'' for the U.S. electric power system.
The remaining Commerce agencies that received stimulus funds will
similarly apply them to activities aimed at enhancing their missions
and supporting a variety of national priorities and needs.
NTIA received $4.7 billion to develop and expand broadband services
in areas that have no service or are under-served and to improve
broadband access among public safety agencies.
NTIA received an additional $650 million for the Digital-to-Analog
Converter Box Program, established under the Digital Television
Transition and Public Safety Act of 2005. NTIA will use these funds to
eliminate the backlog of coupon requests and ensure that consumers who
are currently on the waiting list for coupons receive them promptly.
The Census Bureau will use its $1 billion to staff and conduct
certain 2010 decennial census operations, focusing on partnership and
media efforts designed to increase participation among minority
communities and hard-to-reach populations, and to enhance management of
other 2010 operations and programs.
EDA's stimulus funds will support grant programs in its traditional
lines of business--public works projects, revolving loan funds,
business development and technical assistance--in economically
distressed areas throughout the Nation, with priority given to areas
that have experienced significant job loss due to corporate
restructuring.
A detailed breakdown of the Recovery Act funding received by the
Department is provided in Appendix A.
THE DEPARTMENT FACES SIGNIFICANT CHALLENGES AND RISKS IN SPENDING
RECOVERY ACT FUNDS EFFECTIVELY
The Department has assigned some of its very best people to lead
its Recovery Act efforts and we have found that all those involved are
committed to meeting the challenges ahead. Nonetheless, spending
stimulus funds effectively and in a manner that meets the economic
objectives of the Recovery Act poses significant risks for the
Department of Commerce and will put significant strain on a number of
already stretched resources and vulnerable operations.
The Department's $7.9 billion in stimulus funding, in effect,
doubles Commerce resources over FY 2008 levels. The Department's
enacted budget was $7.7 billion last year. Its FY 2009 budget, apart
from Recovery Act funding, is $9.2 billion. Although a substantial
proportion of the Recovery Act funding received by the Department will
continue to be expended in fiscal year 2010 and, to a lesser degree, in
fiscal years 2011 through 2013, the clear intent of the Act is to award
funds as expeditiously as possible. NOAA's stimulus funding effectively
increases its FY 2009 resources by nearly 20 percent and NIST's
Recovery Act funding increases its available resources by a potential
74 percent.
As the agencies carry out their plans, there will be significant
challenges and risks along the way. At the outset, we see six areas of
risk facing the Department and its bureaus.
1. Spending Recovery Act funding quickly and with little time
to staff up and gear operations to accommodate the new and
expanded programs, grants, and contracts it will support
significantly increases the risks for fraud and waste in both
stimulus-funded activities and the Department's traditionally-
funded operations. This applies across the government--not just
the Department of Commerce.
2. The Executive Branch, including the Department of Commerce,
is still in transition. Key leadership positions remain
unfilled. While the career staff is capable of managing their
programs, this puts at risk the leadership vision and decision-
making important in formulating and executing a cohesive
Recovery Act plan.
3. The Recovery Act's emphasis on grants and contract spending
puts additional pressure on weak management and administrative
operations that we have identified in our audit work over the
years, particularly with regard to
the Department's decentralized grants
management structure, which consists of three separate
management systems operated by three different
bureaus--each managing a subset of Commerce grant
activity according to policies established at the
Department level; and
the Department's shortage of qualified
contracting specialists, technical specialists, and
subject matter experts--particularly in light of the
anticipated shift from cost-type contracts, which are
predominantly used today, to fixed-price contracts,
which require different knowledge and skill sets.
4. Construction grants and contracts funded by the Recovery
Act are inherently risky and historically difficult to manage
effectively. In addition, the construction grant program to be
administered by NIST is a relatively new program for the
agency.
5. There are specific requirements related to competitive
contracts including maximizing the use of fixed-price contracts
and Buy American requirements that will necessitate extra
vigilance.
6. The Act's strict oversight requirements and reporting
deadlines will require a greater level of centralized
management of Commerce bureaus than the Department has
historically exercised.
I would like to focus my discussion on the Act's emphasis on grants
and contract spending at Commerce, particularly as it impacts science
activities; to highlight some examples from our audits and
investigations of potential problems; and to briefly discuss the
special challenges facing NOAA and NIST in managing stimulus-funded
construction projects.
THE RECOVERY ACT'S EMPHASIS ON GRANTS AND CONTRACT SPENDING PUTS NEW
PRESSURE ON THE DEPARTMENT TO SHORE UP WEAKNESSES
IN GRANTS AND PROCUREMENT MANAGEMENT AND OVERSIGHT
We estimate that approximately two-thirds of Commerce's $7.9
billion in stimulus funding will be dedicated to grants and
contracting: in addition to the $215 million NIST will spend for
science, research, and construction grants and contracts, NOAA will use
the bulk of its $830 million for grants and contracts in a variety of
mission activities, including $170 million for grants in coastal and
marine habitat restoration. NTIA will operate a $4.7 billion grants
program for improved broadband access. EDA's $150 million in stimulus
funds is exclusively for economic development grants.
Effective grants and acquisition management has been a long-
standing challenge for the Federal Government because these programs
are susceptible to fraud, waste, and abuse if not adequately monitored.
Acquisition management and shortages in skilled contracting staff are
among the top management challenges we reported as facing the
Department of Commerce this past November.
The Department Needs to Implement Strategies for Ensuring Sound
Management of Recovery Act Grants
We recently concluded an audit of Department-wide grants oversight
and will release our report shortly. This audit identified a number of
weaknesses in grants oversight at the Department. More effective
oversight by the Department and its bureaus is critical in order to
avoid many of the problems we have identified in our grant audits and
investigations over the years: fraud, inadequately documented or
unallowable costs charged to the grant, financial accounting
irregularities, conflicts of interest, improper procurement procedures,
noncompliance with grant terms and conditions, and failure to complete
funded projects. We have questioned millions of dollars in federal
costs and identified millions more to be put to better use.
Our investigation of a NOAA grantee found the
recipient had spent more than one-half of the $109,000 award on
personal items and travel expenses.
An investigation of an EDA grant to establish a
revolving loan fund led to the conviction of four individuals
for fraud, conspiracy, and money laundering after converting
nearly $800,000 in grant funds to personal use.
Another EDA RLF case involved grantees using award
proceeds to make more than $900,000 in unauthorized loans and
payments to benefit themselves and the companies they operated
and controlled.
We questioned $4.5 million in costs claimed by a
grantee who repeatedly failed to comply with federal annual
audit requirements set forth in the award. The Commerce
oversight agency had continued to disburse funds even though
the grantee was not filing its required financial audit
reports.
In operating grant programs funded by the Recovery Act, a major
challenge for the Department will be minimizing or eliminating the
problems we have identified in our prior work and maximizing oversight
strengths within the ambitious spending goals of the stimulus program.
Recommendations we have made in our prior grant audits bear repeating
as the Department prepares to implement these programs. The Department
must ensure that grant administrators:
Are sufficiently trained in pre-award screening
techniques to identify high-risk proposals and grantees.
Maintain documented analysis of a recipient's grants
management and financial capabilities, and past performance in
the award file.
Fully document award activity, using information
technology tools developed specifically for this purpose.
Assign high-risk designations or special award
conditions to grantees if pre-award screening or ongoing
oversight determines that such a designation is warranted.
Are fully versed in grant policies and kept informed
of any changes to them.
Ensure single audits are conducted for grantees
receiving awards of more than $500,000, and review the
resulting audit reports. The Single Audit Act requires these
grantees to obtain this annual audit, prepared by an
independent auditor, to ensure recipients have appropriate
internal controls for safeguarding federal funds and are using
funds in accordance with grant terms and conditions.
Part of the challenge of sound grants management lies in the
Department's decentralized management structure: overall policy and
procedures are set by the Department's Office of Acquisition
Management, but day-to-day grants management is housed in three
bureaus--NOAA, NIST, and EDA. Each has its own management system. NOAA
and NIST manage the grant activities of other bureaus as well as their
own (Figure 1). All grant programs will eventually migrate to NOAA's
Grants Online system, but this consolidation is not scheduled to occur
until 2011.
The strengths we have noted in the grants management operations are
not across the board but apply generally to the individual bureaus. For
example, NIST compares financial status reports against grantee
withdrawals to verify the accuracy of the grantee's financial
reporting, which is a strong internal control practice. NOAA uses the
web-based Grants Online system as a management tracking tool for its
grants activity. EDA has consolidated program and grants management
functions at the regional office level, giving regional oversight staff
the advantage of monitoring both program and administrative
requirements in tandem.
We are taking a number of proactive steps to help the Department
bolster its grants management and curtail the potential for fraud with
respect to Recovery Act funding. We are instituting a strong fraud
awareness training program and conducting briefings on best practices
for competitive grant awards, with a focus on identifying and
monitoring high-risk grantees. As part of these briefings, we will
provide technical advice on incorporating internal controls and risk
analysis into the grants management process.
Recovery Act Spending on Contracts and Procurements Will Require
Improvements in Contract Formulation, Administration, and the
Department's Acquisition Management Workforce
Acquisition and contract management has been a consistent watch
list item for inspectors general, as related government spending has
ballooned in recent years without a commensurate growth in the
acquisition workforce or the higher-level skills needed to properly
oversee complex procurements. Cost overruns, fraud, and a lack of
oversight and accountability are common findings in IG audits and GAO
reviews government-wide.
The accelerated spending called for under the Recovery Act will
undoubtedly further tax an already overwhelmed acquisition workforce at
Commerce and exacerbate contract management weaknesses. Our November
2008 report, Top Management Challenges Facing the Department of
Commerce, described an acquisition infrastructure that does not have
coherent policies to guide systems acquisition or effective oversight
mechanisms. Hiring and retaining a skilled acquisition workforce has
been difficult at the Department, as it has been for all federal
agencies. The Department has a limited number of contracting
specialists to meet its multi-billion-dollar workload. It has no
reliable count of its program and project managers or contracting
officer representatives--critical positions in the contracting
oversight chain.
Our audits have found repeated instances in which
the Department's lack of sufficient skilled
contracting and project management professionals has resulted
in poorly defined requirements for deliverables and inadequate
contract management;
contracts contained poorly structured incentive fees
and performance metrics that were not well aligned with the
goals of the contract; and
communications between contracting officers and
program personnel, including contracting officer
representatives, were extremely ineffective.
As a result of these weaknesses, contracts have experienced
significant cost and schedule overruns and performance shortfalls,
contractors have been paid high fees for poor quality work, and the
Department has at times failed to address important contract
requirements--such as implementation of adequate IT security controls
to protect sensitive government information.
Our recent audit of the Census Bureau's Field Data Collection
Automation contract found that poorly defined requirements were a
significant contributor to the problems encountered in developing the
hand-held computers for automating key operations and the resulting $3
billion increase in estimated costs for conducting the 2010 census. Our
audits of the Census contract and a satellite acquisition at NOAA found
that contractors were receiving high award fees for projects that were
experiencing serious performance shortfalls and large cost overruns.
Acquisition staff may be further challenged by the Administration's
preference for using fixed-price contracts over ``cost type''
contracts, which have greatly increased in popularity in recent years.
The President's policy memorandum on government contracting, issued on
March 4, establishes a clear preference for fixed-price contracts
without prohibiting cost-type contracts. The memorandum leaves
contracting officers with the authority to use cost types when
appropriate, but only after careful analysis leads to the exclusion of
fixed-price options.
Fixed-price contracts are most effective when the cost of
performing the contract is predictable. This requires, among other
things, clear and well-defined requirements. The risk associated with
fixed-price contracts is that when requirements are not well-defined or
new development is called for, the actual cost of performing the
contract will far exceed the contract price. As a result, the
contractor will inevitably seek price adjustments thereby driving up
the cost to the government. Cost-type contracts, on the other hand, are
more appropriate for projects involving significant development and
innovation, and where the requirements are less conducive to detailed
specifications. The shift to a policy preference for fixed-price
contracts will demand an acquisition workforce with the skills to
conduct a rigorous analysis of the appropriate contract type.
The Department has taken several steps to address some of its
contract and procurement weaknesses.
It is working to complete revisions to its major
systems acquisition procedures.
It combined the Commerce IT Review Board and the
Acquisition Review Board into a single Investment Review Board,
which has scheduled reviews for programs that will receive
Recovery Act funding.
It has improved its certification program for
contracting officer representatives, in response to our
recommendation.
And notably, the Office of Acquisition Management recently issued
Implementation of the American Recovery and Reinvestment Act--a quick
guide for the acquisition workforce--and created a Risk Management and
Oversight Plan, currently in draft, to highlight contracting and grant
risks and help agency program leaders and acquisition staff prepare
mitigation plans.
These are important improvements that the Department can use to
ensure that contracts funded by the Act are properly structured and
administered, promote contractor responsibility and accountability,
produce good business deals for the Department, and create new jobs for
the American people.
NOAA and NIST Face Unique Challenges in Managing Construction
Procurements and Grants
I would like to briefly address the additional challenges to
effective oversight and administration that NOAA and NIST face in using
their stimulus funds for grants and contracts to build science
facilities.
The overarching goal of any federally funded construction project
is to complete the project on time, within budget, and free from fraud.
This will require first and foremost that agencies scrub proposals and
cost estimates up-front before committing federal funds. Construction
projects, including those funded by the Department of Commerce, are
also at risk of anti-competitive practices, substandard workmanship,
defective materials, nonperformance, and corruption. Our audits and
investigations of public works projects, for example, have identified
significant instances of nonperformance, misuse of federal funds, and
bribery of a local official.
Our audit of a $6.7 million project to develop a
technology park disclosed the grantee failed to carry out
numerous responsibilities and did not provide the necessary
engineering supervision. More than a year after the grant had
expired, the park remained without water and other
infrastructure and had no prospects for use.
Our audit of a $6.44 million grant for construction
of a 40,000 square-foot business incubator resulted in
termination of the project after we found the grantee was on
the brink of insolvency and had used grant funds to stay
afloat.
An audit of a $900,000 grant awarded for
infrastructure improvements to a proposed industrial park
questioned all claimed costs and recommended termination of the
project. Violations included failure to ensure full and open
competition in procuring materials and services, and allowing
conflicts of interest.
A subcontractor on a construction grant for a public
works project was convicted of bribing a local official to
obtain minority business certificates for use in obtaining
contracts.
Full and open competition is fundamental to ensuring that the
government obtains the best value. However, in some areas obtaining
competitive bids can be difficult when the number of companies and
suppliers qualified to bid on these projects is limited. Increased
demand for contractors and suppliers creates a risk of bid-rigging and
other anti-competitive practices. In such schemes, contractors
ostensibly in competition may secretly collude, agreeing to share
future projects so as to keep prices high.
These are just some of the potential problems NOAA and NIST grants
and procurement specialists must be attuned to. Negotiating fair terms
for construction projects and managing the work requires a distinctly
different skill set from that needed to oversee research projects--the
ability to evaluate architectural and engineering proposals, work
schedules and labor rates, and assess whether proposed and actual
materials costs are reasonable, to name a few. NOAA and NIST, as well
as the other Commerce agencies, must carry out risk assessment as a
fundamental part of its stewardship of Recovery Act funds. Such risk
assessments must determine the agencies capacity to apply the necessary
skills and expertise to these projects.
THE RECOVERY ACT IS REDEFINING ``BUSINESS AS USUAL'' IN GOVERNMENT
OPERATIONS AND EXPANDING THE SCOPE OF IG OVERSIGHT
We have taken several important steps to implement an appropriate
oversight framework that will allow us to track the various stimulus
activities Commerce undertakes and its compliance with the Office of
Management and Budget's accountability and transparency requirements.
On March 2, we issued our Initial Oversight Plan for the American
Recovery and Reinvestment Act of 2009, which laid out four key elements
of that framework:
Dedicated Recovery Act staffing.
Targeted risk-based audit and investigative planning,
and expedited reporting.
Participation in Department steering committee and
working groups.
Fraud awareness training and timely responses to
citizen complaints.
I would like to briefly discuss these elements and our progress in
implementing them.
Dedicated Recovery Act Staffing. We are organizing and staffing OIG to
provide oversight of stimulus spending while continuing to oversee
departmental programs and operations consistent with our ongoing
priority areas.
As a first step, we established within our Office of Audit and
Evaluation a Recovery Act Task Force charged with coordinating our
oversight of the funding received by the five Commerce bureaus. We have
hired an audit expert in the area of risk management and internal
controls to head the task force and assigned seasoned OIG staff as team
leaders with responsibility for specific program and operational
areas--one of those areas is science and research, with three
additional teams--grants, procurements, and fraud prevention, also
directly supporting science oversight.
Targeted Risk-Based Audit and Investigative Planning, and Expedited
Reporting. The task force is developing a comprehensive audit and
investigative oversight plan to guide our work and to track
departmental and bureau compliance with legislative requirements and
OMB guidelines for accountability and transparency. The bureaus are
currently developing their detailed Recovery Program Plans, due to OMB
by May 1, 2009, and making decisions on program design, internal
controls, performance measurement, and reporting requirements, all of
which will be critical in establishing accountability and transparency
for their use of stimulus funds. We are working closely with the
Department and bureaus to provide advice and recommendations on
internal controls and best practices as they prepare these plans.
We have prepared a draft Recovery Act Short-Term Oversight Plan
which we will give to Department and bureau officials shortly. This
plan describes the outreach, advisory, and monitoring activities we
will undertake during the initial 120 days of our oversight efforts.
We have also developed short-turnaround ``flash'' reports to
provide quick, timely feedback to Congress, the Department, and the
public regarding Commerce stimulus activities, with the goal of
identifying potential and emerging program and financial risks and
making recommendations to promptly address them.
Participation in Department steering committee and working groups. The
Department has established a Recovery Act Implementation Team
consisting of senior Commerce officials and headed by the Recovery Act
Steering Committee. Our principal assistant inspector general for audit
and evaluation participates on the Steering Committee in an advisory
capacity so that we can share best practices and make recommendations
up-front regarding internal controls and risk management for stimulus
activities. Our task force is also providing technical assistance and
advice to the working groups established by the steering committee and
the bureaus.
Fraud awareness training and timely responses to citizen complaints.
Our Office of Investigations has developed a Recovery Act fraud
awareness briefing for the Department's grant and procurement
specialists, program officials, financial management staffs, grantees,
and State and local oversight entities. The training focuses on
Commerce programs that will use stimulus funding and Commerce-specific
risks. We have also reconfigured our online hotline system to uniquely
identify incoming Recovery Act complaints for expedited processing.
The Department of Justice is concurrently rolling out a national
fraud awareness training program for the Recovery Act, and we have
invited them be co-presenters at our briefings. The audiences for these
training programs are those on the front line and therefore in the best
position to prevent and deter fraud, waste and abuse and alert the
inspector general about questionable or unusual activities.
A key piece of the training describes the Recovery Act's expanded
whistleblower protections for non-federal employees of firms receiving
stimulus-funded grants or contracts, should they disclose information
regarding the use of those funds that indicates:
gross mismanagement or waste;
substantial and specific danger to public health or
safety;
abuse of authority related to the implementation or
use of covered funds; or
violation of law, rule, or regulation.
Under the Act, employers are prohibited from discharging, demoting,
or otherwise discriminating against employees for making such
disclosures, and OIGs must investigate these complaints within 180
days, unless the complaint is deemed frivolous, does not relate to
covered funds, or is already under consideration by another judicial or
administrative body. Our reconfigured hotline system will help expedite
these investigations to meet our legislative deadline.
SUMMARY OF OIG ACTIONS WITH REGARD TO RECOVERY ACT SCIENCE FUNDING
In closing, I would like to summarize the Subcommittee's questions
and our answers with regard to science stimulus funding at Commerce:
1. How do we plan to monitor this funding to ensure it is
spent promptly, in accordance with the Recovery Act's
objectives, and in compliance with the law?
We continue to emphasize and reinforce that
the program offices have a critical role in providing
oversight of the projects and contracts they fund.
We are participating on the Department's
Recovery Act Steering Committee and working groups to
share best practices and make recommendations regarding
internal controls and risk management.
We have created a Recovery Act Task Force
consisting of multi-disciplinary teams of auditors and
evaluators who will focus on the following program
areas and activities:
-- Grants
-- Procurements, Acquisition, and Construction
-- Scientific and Technical Research
-- Broadband Technologies Opportunities
Program
-- Digital Television
-- Fraud Awareness and Prevention
-- Transparency and Accountability
The task force is developing a long-term oversight plan,
will implement a short-term oversight plan to monitor the
Department's initial Recovery Act activities, and has
established expedited reporting products to promptly
communicate our concerns and recommended solutions.
We have developed Recovery Act fraud
awareness training and reconfigured our hotline system
to identify and expedite our responses to related
citizen complaints.
2. Based on our prior work, are there particular areas of
Recovery Act funding that deserve special attention to ensure
funds are put to best use?
Our prior work has identified a number of weaknesses in the
Department's oversight of grants and contracts. These
activities bear very close watch. Given the particular
susceptibility to fraud and misuse of funds associated with
construction projects, NOAA and NIST stimulus-funded
construction activities also require close scrutiny.
3. To conduct effective oversight, what professional skill
areas do we need to increase and how quickly do we plan to fill
these positions?
Conducting effective oversight of Recovery Act funds will
require increased staffing, including some specialized
expertise. The funding provided to our office will permit us to
hire a mix of permanent, temporary, and term employees, and
contract staff to do this most effectively. We will also need
to use all the flexibilities and authorities that the Office of
Personnel Management will allow. A key flexibility, for
example, would be to have the authority to rehire experienced
retirees without affecting their retirement annuities.
In addition to the risk management expert we have hired to
head our task force, we plan to increase professional staffing
in all the critical skill areas required for stimulus
oversight-grant, contract, and performance audits and
evaluations. We are pursuing options for increasing staff
expertise in science and technology-related work, including
satellite engineers, an expert in climate research
supercomputer techniques, and specialists in fisheries habitat
restoration to help monitor NOAA stimulus spending; and
scientists and engineers to oversee NIST research into ``smart
grid'' energy technology and inter-operable digital health
records management systems.
Mr. Chairman and Members of the Subcommittee, this concludes my
statement. I would be happy to answer questions at this time.
Biography for Todd J. Zinser
On December 26, 2007, Todd J. Zinser was sworn in as the fifth
Inspector General of the U.S. Department of Commerce. As Inspector
General, Mr. Zinser leads a team of auditors, evaluators,
investigators, attorneys, and administrative staff responsible for
promoting economy and efficiency and detecting and preventing fraud,
waste, and abuse in the vast array of business, scientific, economic,
and environmental programs administered by the Department and its 13
bureaus.
Mr. Zinser's appointment as Inspector General by President Bush
follows his 24 years as a career civil servant. He began as an
investigator for the U.S. Department of Labor in 1983. Mr. Zinser
joined the Department of Transportation in 1991, serving as special
agent in charge of OIG's New York regional Office of Investigations,
Deputy Assistant Inspector General for Investigations, and Assistant
Inspector General for Investigations. He was named Deputy Inspector
General in 2001, with responsibility for day-to-day OIG operations and
management of more than 400 auditors, investigators, and evaluators
monitoring the activities funded by Transportation's roughly $60
billion budget.
Mr. Zinser has received numerous awards for superior performance
and leadership throughout his career, including the Secretary of
Transportation's 9-11 Medal and two Gold Medals--the first for his work
with the Department's Hurricane Katrina Task Force (2006); the second
for his involvement in Transportation's response to the collapse of the
I-35W bridge in Minneapolis (2007). Also in 2007, he was awarded the
Transportation IG's Bronze Medal for superior achievement as Deputy
Inspector General.
Mr. Zinser holds a Bachelor's degree in Political Science from
Northern Kentucky University and a Master's degree in Political Science
from Miami University, Oxford, Ohio. He has also completed the Senior
Managers in Government Program at Harvard's John F. Kennedy School of
Government.
Chairman Miller. Thank you, Mr. Zinser. Mr. Cross for five
minutes.
STATEMENT OF MR. THOMAS C. CROSS, INTERIM INSPECTOR GENERAL,
NATIONAL SCIENCE FOUNDATION
Mr. Cross. Good afternoon, Chairman Miller, good afternoon,
Ranking Member Broun, and Members of the Subcommittee. Thank
you for the opportunity to testify today about how the NSF
Office of Inspector General will perform its oversight
responsibilities under the Recovery Act.
I would like to discuss three subjects with you today.
First, the OIG's plan for monitoring NSF's recovery spending;
second, important challenges facing NSF with regard to the
Recovery Act; and finally, how my office will be addressing our
current staffing needs.
We will pursue a strategy aimed not only at safeguarding
Recovery Act funds against waste, fraud, and abuse, but also at
helping assess whether those funds produce the results sought
in the Act. We will develop an implementation plan for our
Recovery Act oversight that includes preparing a thorough risk
analysis, reviewing past OIG audit and investigative findings
that may be relevant, contracting for audits and other reviews
of the agency's financial accounting systems, conducting
focused reviews of the agency's actions to implement its
spending and risk management plans, and initiating detailed
audits and proactive investigation reviews to identify and
evaluate issues flagged in our risk assessments.
We have also launched an outreach effort aimed at both
agency program managers and the public about OIG's role under
the Recovery Act, and this also helps us gather information and
insights that are useful in determining the issues on which we
need to focus.
Given our independent oversight role, we cannot participate
in agency decision-making, but our input at this juncture may
help NSF avoid problems down the road. Like other IG offices,
we prepare a list each year of what we consider the most
significant challenges facing agency management, and there are
several challenges that have particular relevance to the
administration of the Recovery Act. Previous reviews have
identified major research equipment and facilities construction
expenditures and NSF's monitoring of previously made awards as
high-risk activities. Actions that NSF has taken in recent
years in response to past OIG recommendations have mitigated
some of the problems that we identified. However, we still
consider both as high-risk areas for purposes of the Recovery
Act because of the large amounts of money at stake and the fact
that a number of our recommendations remain unimplemented.
We understand NSF intends to use Recovery Act funds largely
to support proposals that have already been submitted. It will
be a challenge for NSF to implement the new requirements on
awards that are based on earlier proposals which most likely
did not envision or address the purposes or additional
reporting requirements of the Act.
Another management challenge that raises concern is the
adequacy of the NSF's workforce, as you heard earlier this
morning. The administration of the Recovery Act funds represent
a significant increase in NSF's workload over at least the next
year-and-a-half, and we are concerned that the work involved in
distributing and monitoring the results of the Recovery Act
funding will severely strain NSF's grant/processing operations,
its staff, and its information systems across the agency.
Further, a fundamental responsibility of my office is the
promotion of research integrity. We devote significant
investigative resources to both preventing and investigating
research misconduct, and we are concerned that the large inflow
of research dollars into an already highly competitive arena
can only increase the opportunities for abuse.
Finally, we will also be watchful of award recipients whose
financial systems may have difficulty handling a sizable influx
of funds. We have identified a number of specific grant
characteristics as fraud indicators that, based on our
experience, may reflect a higher potential for abuse, and we
are sharing these indicators with NSF along with practical
guidance on combating fraud.
I was also asked by the Subcommittee to comment on our own
staffing resources. Because the funding we received in the Act
is temporary, we probably will not be able to use stimulus
funding to hire additional permanent employees. Instead, we are
looking into options for the temporary hiring of auditors and
investigators, and we expect to use the bulk of our Recovery
Act funding to retain contractors to conduct audits and provide
forensic support for investigations.
We expect that the additional workload generated by the
stimulus funds will be significant and extend beyond the
funding period. We are considering some adjustments to our work
methods, such as developing reviews that are shorter and more
focused than traditional audits tend to be in order to provide
more timely results. Our challenge will be to continue to
provide the robust audits and investigations necessary to
address fraud, waste, and abuse issues occurring in NSF's
programs and activities, while also giving top priority to the
special oversight requirements of the Recovery Act, and we look
forward to meeting that challenge.
Chairman Miller, that concludes my testimony, and I would
be happy to answer any questions.
[The prepared statement of Mr. Cross follows:]
Prepared Statement of Thomas C. Cross
Good morning Chairman Miller, Ranking Member Broun, and Members of
the Subcommittee. Thank you for the opportunity to testify today about
how the National Science Foundation (NSF) Office of Inspector General
(OIG) intends to perform its oversight responsibilities under the
Recovery Act for the $3 billion in Recovery Act funds allocated to NSF.
Discussions regarding how best to ensure the accountability of Recovery
Act funds have been ongoing within the IG community, between our office
and NSF, and within our own office for several weeks. Like the hearing
today, these discussions are helping us to better prepare for the many
challenges ahead.
To introduce myself, my name is Tim Cross and I was appointed
Interim Inspector General last January after serving as the NSF Deputy
Inspector General for the past eight years. Our office is unusual among
the Designated Federal Entity OIGs in that we report to the National
Science Board, a policy and oversight body, rather than to agency
management. Over the years, this arms-length relationship from
management has allowed OIG the freedom to pursue a vigorous audit
agenda and provide the Congress and the Foundation with fully
independent analyses and recommendations. NSF's mission to support
education and basic research has also required that my office develop a
strong investigative effort to ensure research integrity and to address
instances of misconduct in research.
I would like to discuss three subjects with you today. First will
be the OIG's plan for monitoring NSF's recovery spending. Second, I
will describe some of the important challenges facing NSF with regard
to the Recovery Act. Finally, I will discuss how my office will be
addressing our current staffing needs.
Planning. Ensuring compliance with the many requirements of the Act
poses a challenge for all the IG offices involved, and we have
appointed a special team within our office to coordinate our planning
of Recovery Act activities. The NSF OIG will pursue a strategy aimed
not only at safeguarding Recovery Act funds against waste, fraud and
abuse, but also at helping assess whether those funds produce the
results sought in the Act. NSF has submitted its Recovery Act plan to
OMB for approval, and once the agency provides this plan to our office,
we will develop an implementation plan for our Recovery Act oversight
that includes:
Preparing a risk assessment based on the agency's
spending plan and its own risk management plan;
Assessing past OIG audit and investigative findings
that are relevant to NSF's management of Recovery Act funds;
Contracting for audits and other reviews of the
capacity of the agency's financial accounting systems to track
separately and report accurately on Recovery Act funds;
Conducting focused reviews of the agency's actions to
implement its spending and risk management plans at the
earliest possible point, when corrective actions will be most
beneficial; and
Initiating detailed audits and proactive
investigation reviews to identify and evaluate issues flagged
in our risk assessments.
We have also launched an outreach effort aimed at educating both
agency program managers anal the public about OIG's role under the
Recovery Act. This effort also helps us gather information and insights
that are useful in determining the issues on which we need to focus.
OIG staff members are attending NSF planning sessions at all levels to
improve our understanding of agency activities and to make our concerns
known at an early stage. Given our independent oversight role, we
cannot participate in agency decision-making, but our input at this
juncture may help NSF avoid problems down the road. We have also been
meeting with the IGs in other agencies that received Recovery Act
funding to brainstorm approaches to oversight. As you know, the Act
requires that OIGs examine issues raised by the public about the funds
and post the results of their inquiries on the OIG websites, with a
link to the Recovery Accountability and Transparency Board's website.
Our office will ensure that Recovery Act-related investigations,
audits, reviews, and information received from the public are handled
in a manner that is both expeditious and thorough. We are also
developing new procedures to address the Act's broad requirements for
investigating whistleblower allegations. In general, we are able to
respond to a question or tip from the public within hours of an e-mail
or hotline call, and we will be giving Recovery Act inquiries priority
attention.
Challenges. Like other IG offices, we prepare a list each year of what
we consider the most significant challenges facing agency management.
With regard to funding areas that deserve special consideration, there
are several challenges that have particular relevance to the
administration of the Recovery Act. Previous NSF OIG reviews have
,identified Major Research Equipment and Facilities Construction
(MREFC) expenditures and NSF's monitoring of previously-made awards as
high-risk activities. Actions that NSF has taken in recent years in
response to past OIG recommendations have mitigated some of the
problems that we identified. However, we still consider both as high-
risk areas for purposes of the Recovery Act because of the large
amounts of money at stake and the fact that a number of our
recommendations remain unimplemented. We will watch both areas closely
to ensure that Recovery Act funds are spent promptly and prudently, and
that:
The agency keeps track of the awards and their
associated funding;
The award outputs and outcomes are clearly identified
and consistent with the intended economic stimulus goals of the
Recovery Act; and
Sub-awardees can accurately account for and report
their spending activities to the prime awardee.
In addition, we understand that NSF intends to use Recovery Act
funds largely to support proposals that have already been submitted. It
will be a challenge for NSF to implement the new requirements on awards
that are based on earlier proposals, which , most likely did not
envision or address the economic stimulus purposes or additional
reporting requirements of the Act.
Another management challenge that raises concern is the adequacy of
NSF's workforce. Despite an increase in workload driven by an
increasing number of research proposals received over the past ten
years, agency staffing levels have remained relatively flat.
Consequently, the NSF workforce has at times struggled to keep pace
with the incoming workflow. The administration of Recovery Act funds
represents a significant increase in NSF's workload over at least the
next year-and-a-half, with no provision for funding additional staff or
overhead. The agency is hoping that the infusion of new funds will
allow the rate of approved proposals to increase from the current 20
percent to as much as 30 percent in the short-term, and we anticipate a
concomitant increase in workload throughout the life of the two- to
five-year standard awards. We are concerned that the work involved in
distributing and monitoring the results of Recovery Act funding will
severely strain NSF's grant-processing operations, staff, and
information systems across the agency. Absent an increase in staffing
resources, the additional workload will make compliance with the Act's
transparency and accountability requirements considerably more
difficult. This is an issue that we are discussing with NSF staff, as
they seek ways to manage the workload strain.
Further, a fundamental responsibility of my office is the promotion
of research integrity, and we are encouraged by recent presidential
statements about its importance to the advancement of science and
technology in this country. In concert with NSF's mission to support
basic research, we devote significant investigative resources to both
preventing and investigating research misconduct, which includes
plagiarism in proposals or reports, falsifying research data, and
fabricating data. We are concerned that the large inflow of research
dollars into an already highly competitive arena, where issues of
questionable research practices and inadequate training in the
responsible conduct of research remain unresolved, can only increase
the opportunities for abuse.
Finally, we will also be watchful of award recipients whose
financial systems may have difficulty handling a sizable influx of
funds. Institutions already under financial strain, for example, may be
tempted to use the new funds for purposes other than those designated
in the awards. We have identified a number of specific grant
characteristics as ``fraud indicators'' that, based on our experience,
may reflect a higher potential for abuse. These include indications of
questionable cost-sharing claims by institutions receiving NSF awards,
abuse of funds intended only for student support under a grant,
duplicate submissions of proposals, and the diversion of grant funds to
unrelated purposes. In addition to participating in NSF's planning and
implementation teams, our investigators are sharing these indicators
with NSF, along with practical guidance on combating fraud Through
these efforts, we have developed a rigorous approach within our office
for handling cases of grant fraud, while also keeping the agency well-
informed on how to identify the warning signs and reduce or prevent its
occurrence.
Staffing. I was also asked by the Subcommittee to comment on our own
staffing resources, specifically whether we planned to add staff and
what professional skills might be needed to perform our Recovery Act
oversight responsibilities. The expected increase in workload over the
next five years creates a critical need for additional audit and
investigations capability. Because the funding we received in the Act
is temporary, we probably will not be able to use stimulus funding to
hire additional permanent employees.
Instead, we are looking into options for the temporary hiring of
auditors and investigators, and we expect to use the bulk of our
Recovery Act funding to retain contractors to conduct audits and
provide forensic support to investigations. We also plan to contract
with IT auditors to conduct technical reviews of specific NSF systems.
However, with so many government organizations--IG offices and federal
agencies alike--seeking contractor support as a result of the Act's
requirements, we are concerned that it will be difficult to procure the
professional assistance we need. In our FY 2010 budget request, we are
seeking approval to add auditors and investigators, some of whom could
conceivably be hired before the start of FY 2010 with Recovery Act
funds. With an appropriation to back up such hires, we would not risk
running out of staff funding when the Recovery Act money is gone. In
any case, it seems clear that we will also be diverting some of our
existing staff from audits and investigations they would normally
handle to instead perform work that is necessary to ensure proper
oversight of NSF's management of its stimulus funds.
Due to the intense public interest and enhanced accountability
requirements associated with the Recovery Act, and because our work
inherently focuses primarily on assessing completed projects and
expenditures, we expect that the additional workload generated by the
stimulus funds in the form of audits, investigations, outreach, and
administration will be significant and extend beyond the funding
period. We are considering some adjustments to our work methods, such
as developing reviews that are shorter and more focused than
traditional audits tend to be, in order to provide more timely results.
We have to be mindful, however, that cutting corners poses intrinsic
risks, and we must avoid any actions that could compromise the quality,
credibility, or usefulness of our work. Our challenge will be to
continue to provide the robust audits and investigations necessary to
address fraud, waste, and abuse issues occurring in NSF's programs and
activities, while also giving top priority to the special oversight
requirements of the Recovery Act. We look forward to meeting that
challenge.
Chairman Miller, this concludes my testimony. I again want to thank
you for the opportunity to share my views. I will be happy to answer
any questions.
Biography for Thomas C. Cross
Tim Cross has served as the Interim Inspector General at the
National Science Foundation (NSF) since January 2009. For the previous
eight years, he was the Deputy Inspector General, managing Office of
Inspector General operations and special projects.
Previously, Mr. Cross was the Assistant Inspector General for
Inspection and Evaluation at the Small Business Administration (SBA)
from 1991 to 2000. He headed a division that assessed the performance
of SBA programs and conducted analyses of related policy and management
issues.
From 1986 to 1991, Mr. Cross served as Chief of the Program
Coordination Division in a crisis management office at the Department
of State. In this capacity, he was responsible for coordinating
interagency activities with the intelligence community, evaluating
crisis management functions, and maintaining a crisis data base.
From 1983 to 1986, Mr. Cross was Director of the Office of Policy
and Management Analysis in the Criminal Division at the Department of
Justice. He managed a staff that performed evaluations of law
enforcement programs, intelligence analyses, planning for new
Departmental initiatives, and policy analyses. He held various
positions in the same office from 1979 to 1983, including Organized
Crime Specialist and Associate Director. From 1978 to 1979, he was a
drug enforcement program analyst in the Management Division at the
Department of Justice.
Prior to his federal employment, Mr. Cross held positions with the
Massachusetts State government, including Coordinator of Staff
Education for the Department of Correction and Director of Community
Services in a maximum-security State prison.
Mr. Cross earned a B.A. with honors in social sciences from Harvard
University (1970), a Master's degree in criminology from the University
of California, Berkeley (1972), and an M.B.A. from Stanford University
(1977).
Chairman Miller. Thank you, Mr. Cross. Ms. Norcross for
five minutes.
STATEMENT OF MS. EILEEN NORCROSS, SENIOR RESEARCH FELLOW,
MERCATUS CENTER, GEORGE MASON UNIVERSITY
Ms. Norcross. Mr. Chairman and Members of the Subcommittee,
thank you for inviting me to testify today on how citizens and
non-governmental entities can help monitor stimulus spending. I
am a Senior Research Fellow at the Mercatus Center, a
university-based research center that works with scholars,
policy experts, and government officials to connect academic
learning with real-world practice. Part of that research
focuses on using technology to improve government transparency,
including accessibility and usability of data for agencies,
Congress, and citizens.
First, I would like to submit to the record a paper by my
colleague, Jerry Brito on crowd sourcing, one of the tools I
will discuss today.
The Committee knows how vital accountability is to the
performance of the nearly $800 billion committed in the
American Recovery and Reinvestment Act. We are entering
unsettling economic territory regardless of any potential
short-term stimulus effect. We face a budget deficit of $1.75
trillion in 2009. That is 12.3 percent of GDP, the highest
deficit as a share of the economy since World War II.
Another effect of the recession and stimulus actions is the
massive uncertainty it has created. Transparency is important
for many reasons, including restoring credibility and certainty
with the public. Following the money as it flows from agencies
to states, localities, contractors, and grantees is a
monumental, if not impossible, task for a centralized entity,
no matter how many auditors and analysts government commits to
the job. The Administration noted why in its memo on
transparency and open government: knowledge is widely dispersed
in society. Those in government charged with stimulus
accountability are being asked to manage an unprecedented
deluge of data. Funds are to be spent quickly while ensuring
prudent management.
Fortunately, that work can be augmented at a low cost. The
public, technically skilled and knowledgeable parties in the
on-line transparency community can help fill that gap, but only
if government provides the data. The data must be deep,
structured, and standardized. With data made publicly
accessible, there are literally no limits to how individuals
can extract patterns, trends, using Internet tools and
applications. One such tool is crowd sourcing.
Crowd sourcing allows a large group of people to make
small, individual contributions to a project. Wikipedia, the
on-line encyclopedia, is the most familiar example. Wikipedia
is built on wikis, a kind of on-line collaborative notebook
built by volunteers who add, edit, and enhance reference
articles on any topic conceivable. The result is a dynamic
resource more extensive and deep than what a limited number of
editors could produce in a traditional organization. The
Internet allows people to gather and analyze data in novel
ways, to take apart impenetrable masses of data quickly to find
patterns. This technique can be used to follow stimulus money.
In fact, it is being used right now at StimulusWatch.org, a
website I co-founded with Jerry Brito and two software
developers, Kevin Dwyer and Peter Snyder.
The premise of StimulusWatch is simple. Using the U.S.
Conference of Mayors' on-line wish list for projects cities
would like to fund with stimulus money, in a manner of weeks
the developers created a key word searchable database, allowing
users to search projects, comment, and vote, and importantly
contribute wikis or factual information on projects. In effect,
StimulusWatch transformed a static, on-line list into a virtual
town hall.
Since the launch in January, the response has been
tremendous. In the first month we had two million unique
visitors and many journalists using the site. Projects deemed
low priority rose to the top within hours. A few weeks after
the site's launch, a local paper in Natchez, Mississippi,
clarified that a nature trail listed at $600 million was only
supposed to cost $3.1. An error had been made, but it had been
caught because so many eyes were scanning the data.
Other projects in transit and light rail quickly emerged as
high priority, stimulating debate by local citizens. Many
project descriptions were enhanced with factual information
beyond what cities provided, in some cases clarifying what were
initially viewed as wasteful projects.
StimulusWatch demonstrates how crowd sourcing can help
monitor projects that are actually funded with stimulus
dollars. But first, the public needs raw, project-level data.
Though Recovery.gov has promised accountability to citizens
through reporting, the provisions of the Act are not
encouraging.
ARRA's reporting requirements are shallow and incomplete.
Only prime, non-federal recipients and sub-awards made by prime
recipients must be reported. The trail stops very high in the
funding chain. Some recipients need not report. In many cases,
that means reporting stops at the level of a city. The granular
project level detail necessary for analysis and tracking may
not be available.
Secondly, ARRA doesn't stipulate how data should be
provided. There is no guarantee of complete data sets or
structured formats such as XML. Why is this important? An
example: it may be possible to account for stimulus spending in
a narrative form and posted online. We may be left with
millions of individual narratives, but it would be impossible
to read them all and make sense of them. Putting this data in a
structured format that can be used by developers can permit any
number of possibilities for monitoring and measuring the
stimulus impact and performance, meshing the data with
interactive maps, economic or industry statistics in
Congressional districts. But short of project-level data
provided in a structured format, the task at hand is not only
an impossibility but a wasted opportunity that will leave more
questions about the efficacy of the stimulus unanswered and
even greater uncertainty among the public.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. Norcross follows:]
Prepared Statement of Eileen Norcross
Mr. Chairman and Members of the Committee:
Thank you for inviting me to testify on ``Follow the Money:
Accountability and Transparency in Recovery Act Science Funding.'' My
research at Mercatus has included considering ways to improve the
access, clarity, and usability of government data so agencies,
Congress, and researchers and citizens can make better use of that
data, while helping ensure greater accountability for government
spending.
The Committee knows how vital transparency and accountability is to
the progress and performance of the nearly $800 billion in funds
committed as part of the American Recovery and Reinvestment Act (ARRA).
Following the stimulus money--as it branches out from agencies to
State and local budgets, contractors, subcontractors, individual
projects and transactions--is a monumental and, frankly, impossible
task for a centralized entity, no matter how many auditors and analysts
the government commits to the job. Simply put: information about how
funding is ultimately spent is dispersed, and knowledge about how funds
are used is local. A central entity cannot possibly marshal or even be
alert to all of the possible transactions and dedications of stimulus
dollars, or comprehensively assess how projects are performing.
Those in government charged with this important task are being
asked to manage an unprecedented deluge of data that accompanies a
funding commitment of this size. There is the added pressure and
paradox of spending funds quickly, while ensuring prudent management.
As the Professional Services Council stated, ``without a government
workforce sufficient to plan, deliver, and manage the contracts and
grants that dispense these huge funds, it will be like constructing an
office building on a foundation of sand.''
Fortunately that workforce can be augmented. The public--
individuals with local knowledge--aided by technology, can fill in the
gap. To help government with the stimulus-monitoring effort, there are
low-cost innovative solutions that embrace the best principles of
government accountability, 21st century Internet technology, citizen,
and community involvement. I would like to highlight one such approach
today--crowdsourcing.
Crowdsourcing or ``peer production'' allows a large group of people
to make small individual contributions to a project or product that
would traditionally have been produced by a single individual or
organization.\1\
---------------------------------------------------------------------------
\1\ Jerry Brito, Hack, Mash & Peer: Crowdsourcing Government
Transparency, 9 Columbia Science and Technology Law Review 119 (2008),
available at http://www.stlr.org/html/volume9/brito.pdf
---------------------------------------------------------------------------
The most familiar example of crowdsourcing is Wikipedia--the online
community-oriented encyclopedia. A wiki is a kind of online
collaborative notebook. Wikipedia is a reference built by volunteers
who add, expand, enrich and edit reference articles on any topic
conceivable.
The result is a vast, ever-evolving, but easy-to-use resource that
is more extensive than what a limited number of editors could produce.
Importantly, Wikipedia is dynamic, continually updated and monitored by
users for content and accuracy.
This kind of informational dynamism, which permits ongoing content
and data enrichment and improvement, has only become possible with
Internet technology. By reducing the transaction costs between
individuals, the Internet and continual software developments allow
people to gather and analyze data in novel and creative ways--to take
apart seemingly impenetrable masses of data and extract patterns and
new meaning.
But it is only possible if government provides data according to a
few basic principles, advanced by my colleague Jerry Brito.
Data must be structured, open, and searchable. In other words, it
must be provided in useful formats, standard, web-friendly, machine-
readable formats that can be aggregated, parsed, and sorted. A loose
analogy is to think of this as data in a spreadsheet--with rows and
columns that allow users to sort according to criteria and uncover
trends and patterns.
This is in contrast to disclosing spending in reporting narrative.
The information might all be there, but it doesn't allow a computer to
analyze it. However, putting information in XML (Extensible Markup
Language) would allow a user to search, for instance, all projects over
$500,000 for a contractor in a particular state, or congressional
district.
Providing data in this form allows users to innovate, building
tools to analyze and improve upon the data, merging maps, economic
statistics, industry information thereby enhancing reporting. This
informs citizens, and also aids the government in the effort to gauge
how federal funds are performing.
I will now turn to a concrete example of how this is working in
practice.
What crowdsourcing can do for stimulus accountability
One of the great benefits of crowdsourcing is that it is low-cost
and fast. The human capital is already in place--made up of volunteer
programmers and good government activists in the online transparency
community.
1) StimulusWatch.org
In early December I came across the online U.S. Conference of
Mayors Ready-to-Go wish list of projects cities submitted detailing how
they would like to spend potential stimulus funds.
The list had several virtues. Importantly it provided granular
details of how federal funds might be spent on the local level. It was
possible to sort by city, and federal funding type. Each project listed
included valuable details: project dollar amounts, potential jobs
created, and in most cases, brief project descriptions.
However, there was a limited amount of information I could extract
by myself not having local knowledge of all of the communities nor
unlimited time. The data was meaningfully displayed, but the format was
relatively rigid and did not allow for keyword searching.
I asked my colleague Jerry Brito if the list might be a good
opportunity for crowdsourcing--to invite people with local knowledge to
improve the content while also proving localities with feedback on the
relative merit of individual projects.
Jerry, with the help of two volunteer software developers, Kevin
Dwyer and Peter Snyder, screen-scraped the data from the Mayor's site
and within a few weeks created StimulusWatch.org. The site uses the
data reported by participating cities to the U.S. Conference of Mayors,
while improving upon its usability by allowing visitors to vote and
comment on individual projects and search projects by keyword.
One of the most important features of the site is that it allows
individuals--citizens and city officials alike--to contribute wikis, or
factual information, on individual projects, in many cases enhancing
and clarifying the project descriptions initially provided by
individual cities. In effect, StimulusWatch.org helped transform a
static report into a kind of online national Town Hall.
We observed some interesting trends. First, the response was
tremendous. In the first month we had two million unique visitors, and
many journalists using the site. Users were actively commenting on
projects and adding information.
Projects deemed low-priority--dog parks, for example, rose to the
top within hours of the site's launch. An official in Natchez,
Mississippi clarified in the local paper a few weeks after the site's
launch that a nature trail project listed on the site as costing $600
million, was only supposed to cost $3.1 million--an error had been
made, and it had been caught, because so many eyes were able to quickly
parse the data.\2\
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\2\ ``City did not ask for $600M for project'' by Mary Hood,
Natchez Democrat, February 7, 2009, http://www.natchezdemocrat.com/
news/2009/feb/07/city-did-not-ask-600m-project/
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Other projects, in particular in transit and light rail, quickly
emerged as high-priority, stimulating active and ongoing debate by
local citizens. Many project descriptions were enhanced by people
contributing factual information, in some cases, clarifying what were
initially regarded as wasteful projects.
The result of StimulusWatch.org to date has been more than
encouraging, it has functioned as a demonstration project--showing how
the public can contribute and help the government keeps its commitment
to accountability by ferreting out potential waste, while also becoming
civically engaged, providing feedback to officials on how dollars are
ultimately used to benefit the community.
2) Crowdsourcing and Stimulus Accountability
The online community is eager to help government in the task of
monitoring stimulus funding. Recovery.gov has made a commitment to
provide information to the public.
In order to meet the government's goals of transparency and
accountability, certain details must be provided to the public.
Specifically,
a) Project-level details on how funds were spent.
Individual should be able to drill down from contractor, to
subcontractor, to the level of individual transaction, up to a
cap of $25,000.
b) Absent government provision of a database, raw data should
be made available.
The government does not have to build such a database to
track spending, it only needs to require that grantees (states,
localities, and grantees) provide raw data according to the
principles mentioned-structured, open, and searchable, and then
make that data available to the public. This will allow users
to access, search, and analyze data for patterns and trends.
But before this is possible, the disclosure and transparency
requirements in the American Recovery and Reinvestment Act must be
strengthened. ARRA does not require data be provided in structured
machine-readable formats. Guidance issued by the Office of Management
and Budget does not remedy other outstanding issues.
The Recovery Accountability and Transparency Board must address
four issues in how it requires and will publish data: detail in
disclosure, standardization of information, aggregation and centralized
access.
a) Detail and Depth in Disclosure
According to OMB's guidance,
``Reporting requirements only apply to the prime non-federal
recipients of federal funding, and the sub-awards, (i.e., sub-
grants, subcontracts, etc.) made by these prime recipients.
They do not require each subsequent sub-recipient to also
report. For instance, a grant could be given from the Federal
Government to State A, which then gives a sub-grant to City B
(within State A), which hires a contractor to construct a
bridge, which then hires a subcontractor to supply the
concrete. In this case, State A is the prime recipient and
would be required to report the sub-grant to City B. However,
City B does not have specific reporting obligations, nor does
the contractor or subcontractor for the purposes of reporting
on the Recovery.gov website.'' \3\
---------------------------------------------------------------------------
\3\ Office of Management and Budget, Initial Implementation
Guidance for the American Recovery and Reinvestment Act of 2009, Feb.
18, 2009, pages 14-15, available at http://www.whitehouse.gov/omb/
asset/aspex?Assetl=703
This, in effect, hobbles the accountability commitment of the
Administration. The trail stops very high in the funding chain, making
the ultimate destination of funds a mystery.
It is not sufficient to know HUD made a grant to New York, which
then made a grant to New York City. We should know to whom the grant
was ultimately made. This level of detail allows citizens with local
knowledge to uncover if funds are being used in accordance with the
law, revealing fraud and misuse.
Every dollar in the funding chain should be accounted for. Further,
the reporting requirements do not stipulate how data should be
provided. There is no guarantee that the complete data set of recipient
reports will be provided, or that they will be provided in a useful
format.\4\
---------------------------------------------------------------------------
\4\ ARRA 1512 (c ) requires stimulus fund recipients report to
awarding agencies how they have spent funds, there is no requirement in
the Act that reports be made available to the public.
b) Standardization
It is currently unclear how data will be provided. To continue the
spreadsheet metaphor, we don't know what the columns and rows look
like. The Act requires initial recipients to base their reporting on
the Federal Funding and Transparency Act. Thus, we expect reports will
contain, award grantee names, amounts, program source, description,
city, and state. But we do not know what data elements will actually be
published, or the format in which we can expect it.
It would be helpful to know what Recovery.gov intends to provide,
and in what form. That way, software developers can begin work on
applications. Ideally data should be in XML format.
c) Aggregation
When information is standardized (the what, who, when and where of
data), then it is possible to aggregate it.
d) Centralized Access
Funding will be widely distributed, thus information will come from
many sources. For the information to be useful, it must be searchable
from central locations. Recovery.gov should function as a web search
engine that houses every single reporting data set. That does not
preclude individual agencies publishing spending data on their
websites. An analogy is to think of reports as books, indexed in a card
catalog. As long as we know where the book is housed, it is possible to
find it. Recovery.gov doesn't have to have all of the data sets, just
the key for finding them.
Conclusion
With the passage of ARRA, the Administration and Congress made a
commitment to citizens that the government would ensure transparency
and accountability for how stimulus funds were spent. That task is only
possible with the involvement of citizens--interested, technically
skilled, and knowledgeable parties from across the political spectrum
who want to participate in and collaborate with their government.\5\
That community needs to know what data will be provided, and how to
build the tools needed to make this effort work.
---------------------------------------------------------------------------
\5\ The Coalition for an Accountable Recovery, at http://
www.ombwatch.org/car
---------------------------------------------------------------------------
The President's Memorandum on Transparency and Open Government
cites three themes: transparency, participation, and collaboration.\6\
The memo makes two important points developed in this testimony:
---------------------------------------------------------------------------
\6\ President Barack Obama, Memorandum for the Heads of Executive
Departments and Agencies on Transparency and Open Government, Jan. 21,
2009, available at http://www.whitehouse.gov/
the-press-office/TransparencyandOpenGovernment/
``Knowledge is widely dispersed in society, and public
officials benefit from having access to that dispersed
---------------------------------------------------------------------------
knowledge.''
``Executive departments and agencies should use innovative
tools, methods, and systems to cooperate among themselves
across all levels of Government, and with non-profit
organizations, businesses, and individuals in the private
sector.''
These are the operating principles upon which Recovery.gov should
build its transparency and accountability effort. Linking citizens with
detailed, structured, and standardized data will make it possible.
Thank you.
Biography for Eileen Norcross
Eileen Norcross is a Senior Research Fellow with the Social Change
Project at the Mercatus Center at George Mason University. Previously,
she was a Senior Research Fellow with the Government Accountability
Project from January 2003 to July 2008.
Her research areas include the U.S. Budget, the use of performance
budgeting in the Federal Government, tax and fiscal policy, and
community and economic development.
Before joining Mercatus, Ms. Norcross was the 2001-2002 Warren
Brookes Fellow in Journalism at the Competitive Enterprise Institute in
Washington, D.C. While there, she focused on trade, regulatory, and tax
policies affecting the European Union and the United States.
Before coming to Washington, Ms. Norcross worked for KPMG as a
consultant with their transfer pricing division and as a research
analyst with Thompson Financial Securities Data where she researched
mergers and acquisitions for domestic and international transactions.
A native of New Jersey, Ms. Norcross earned her Master's in
Economics from Rutgers University in 1996. A member of Phi Beta Kappa,
she graduated summa cum laude from Rutgers University in 1993 with a
Bachelor of Arts degree in Economics and U.S. History.
Chairman Miller. Thank you, Ms. Norcross. Ms. Dalton, five
minutes.
STATEMENT OF MS. PATRICIA DALTON, MANAGING DIRECTOR, NATURAL
RESOURCES AND ENVIRONMENT DIVISION, U.S. GOVERNMENT
ACCOUNTABILITY OFFICE
Ms. Dalton. Thank you, Mr. Chairman, Mr. Broun. I am
pleased to be here today to discuss GAO's plans for carrying
out our oversight roles related to the science funding under
the Recovery Act. Today I want to discuss those
responsibilities and plans that we have under way to oversee
these funds as well as the risks and particular funding areas
in R&D that deserve special attention to ensure that the funds
are best used.
The Recovery Act provides over $21 billion in additional
spending at Energy, Commerce, NSF, and NASA for research and
development-related activities. These range from fundamental
research to demonstration projects to purchases of equipment,
to the building of new facilities.
The accountability community will play an important role in
reviewing the use of Recovery Act funds. In addition to GAO,
the community includes the IGs, the State auditors, local
government auditors, and the Recovery Accountability and
Transparency Board.
Because of the scope of this work, we at GAO have reached
out to the broader accountability community to coordinate our
respective roles, planned approaches, and timelines. Through a
coordinated approach, we feel that we can maximize our overall
effectiveness.
The Recovery Act directs GAO specifically to provide bi-
monthly reviews and reporting on selected states and
localities' use of funds. We have already begun the first
review, which will examine 16 states, the District of Columbia,
and selected localities. These states represent 65 percent of
the U.S. population and approximately two-thirds of the money
going through the State governments under the Recovery Act
program. Our first report will be issued in about a month.
Over the next few years we will be able to provide an
ongoing longitudinal analysis of the use of Recovery Act funds
at the State and local level. We will look at other states as
necessary.
At the federal level, in consultation with the Congress and
in coordination with the IGs, we will also be targeting at-risk
programs for review. We will also incorporate reviews of
stimulus funding in our ongoing reviews-based programs.
In recent years, the accountability community has produced
a wide variety of best practice and related guides in areas
such as grant and contract management that can assist agencies
in ensuring they have the needed internal controls in place
from the outset. Up-front safeguards are critical to the
successful program implementation. It is important to have the
controls built in at the beginning so that we can hopefully
prevent downstream problems.
We at GAO are currently assessing programs for key risk
factors. They include whether it is a new program under the
Recovery Act, a significantly expanded program, there is a new
delivery mechanism, or a program has known problems. A number
of programs receiving science funding have one or more of these
risk factors. For example, $6 billion is being provided for
loan guarantees at the Department of Energy. That is a
significant expansion of a new program that has had some start-
up problems. At NASA, when we examine projects with life cycle
costs exceeding $250 million, 10 out of 13 projects have very
serious implementation problems in terms of cost and budget and
cost and schedule growth.
In summary, to make the most effective and efficient use of
resources, we will work together with the IGs to leverage our
strengths and avoid duplication of effort wherever possible. We
have moved quickly to begin our oversight work with our initial
assessment of State funding currently under way as well as our
program risk assessment.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Dalton follows:]
Prepared Statement of Patricia Dalton
GAO's Role in Helping to Ensure
Accountability and Transparency
for Science Funding
Chairman Miller, Ranking Member Broun, and Members of the Subcommittee:
I am pleased to be here today to discuss our plans for carrying out
our oversight roles related to science funding provided by the American
Recovery and Reinvestment Act of 2009 (Recovery Act).\1\ I will also
provide an overview of prior GAO work that identifies several programs
that deserve special attention from agency managers and from the
Inspectors General (IG) at the Department of Energy, the Department of
Commerce, the National Science Foundation (NSF), and the National
Aeronautics and Space Administration (NASA) to ensure that additional
science funds these agencies will receive under the Recovery Act are
put to the best uses. The Congress and the Administration have
fashioned a significant response to what is generally reported to be
the Nation's most serious economic crisis since the Great Depression.
The Recovery Act's combined spending and tax provisions are estimated
to cost $787 billion, including more than $21 billion in additional
spending at Energy, Commerce, NSF, and NASA for research and
development (R&D) related activities, including supporting fundamental
research, demonstrating and deploying of advanced energy technologies,
purchasing scientific instrumentation and equipment, and constructing
or modernizing research facilities. (See Appendix I.)
---------------------------------------------------------------------------
\1\ Pub. L. No. 111-5 (Feb. 17, 2009).
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The accountability community will play an important role in
reviewing the use of Recovery Act funds. In addition to GAO, the
community includes the IGs, State auditors, local government auditors,
and the Recovery Accountability and Transparency Board. The Recovery
Act has identified the following specific responsibilities for GAO, the
IGs, and the Recovery Accountability and Transparency Board:
GAO is charged with reviewing the use of funds by
selected states and localities and commenting on funding
recipients' estimates of the number of jobs created and
retained as a result of the funding. We also have several other
reporting responsibilities.\2\
---------------------------------------------------------------------------
\2\ See GAO, American Recovery and Reinvestment Act: GAO's Role in
Helping to Ensure Accountability and Transparency, GAO-09-453T
(Washington, D.C.: March 5, 2009).
IGs across government are expected to audit the
efforts of federal agencies' operations and programs related to
the Recovery Act, both individually within their particular
entities and collectively, as many of them are members of the
---------------------------------------------------------------------------
Recovery Accountability and Transparency Board.
The Recovery Accountability and Transparency Board is
intended to help prevent waste, fraud, and abuse by reviewing
contracts and grants to ensure they meet applicable standards,
follow competition requirements, and are overseen by sufficient
numbers of trained acquisition and grants personnel. The Board
has a range of authorities and is charged with reporting to the
President and the Congress any potential problems requiring
immediate attention in addition to reporting quarterly and
annually.
My statement today discusses (1) our responsibilities under the
Recovery Act to provide bimonthly reviews of selected States' and
localities' use of funds; (2) particular R&D funding areas that deserve
special attention to ensure that funds are best used; and (3) our plans
for carrying out our responsibilities under the Recovery Act.
Our Responsibilities Under the Recovery Act and Our Plans to Evaluate
At-Risk Programs
The Recovery Act directs GAO to provide bimonthly reviews and
reporting on selected States' and localities' use of funds. We have
initiated work on the first review, which will examine 16 states, the
District of Columbia, and selected localities. Specifically, we axe
examining how these states and localities are using the Act's funds and
whether they are, among other things, (1) preserving and creating jobs
and promoting economic recovery; (2) assisting those most impacted by
the recession; (3) investing in transportation, environmental
protection, and other infrastructure that will provide long-term
economic benefits; and (4) stabilizing State and local government
budgets in order to minimize and avoid reductions in essential services
and counterproductive State and local tax increases. We will track the
following 16 states, and the District of Columbia, over the next few
years to provide an ongoing longitudinal analysis of the use of funds
under the Recovery Act: Arizona, California, Colorado, Florida,
Georgia, Iowa, Illinois, Massachusetts, Michigan, Mississippi, New
Jersey, New York, North Carolina, Ohio, Pennsylvania, and Texas. These
states contain about 65 percent of the U.S. population and are
estimated to receive about two-thirds of the intergovernmental grants
funds available through the Recovery Act.
Because of the scope of this work, we have reached out to the
broader accountability community to coordinate our respective roles,
planned approaches, and timelines. Soon after the Act was passed, the
acting Comptroller General reached out to the IG community and, with
Ms. Phyllis Fong, the Chairman of the Council of Inspectors General on
Integrity and Efficiency, hosted an initial coordination meeting on
February 25, 2009, with the Inspectors General or their representatives
from 17 agencies. It was a very productive discussion in which we
outlined coordination approaches going forward. The acting Comptroller
General also talked with Mr. Earl Devaney soon after the President
appointed him as Chairman of the Board on February 23, 2009, to ensure
effective coordination of our respective efforts.
In consultation with the Congress in exercising our general
statutory authority to evaluate the results of government programs and
activities, we will target at-risk programs for review. We will also
incorporate reviews of stimulus funding whenever we are examining base
programs. There are many implementation challenges to ensuring adequate
accountability and efficient and effective implementation of the
Recovery Act. Experience tells us that the risk for fraud, waste, and
abuse grows when billions of dollars are going out quickly, eligibility
requirements are being established or changed, new programs are being
created, or a mix of these characteristics. This suggests the need for
a risk-based approach to target for attention on specific programs and
funding structures early based on known strengths, vulnerabilities, and
weaknesses, such as a track record of improper payments or contracting
problems. We currently are assessing all of the programs receiving
Recovery Act funds for key risk factors, including new programs,
significant growth, new delivery mechanisms, and known problems. In
recent years, the accountability community has produced a wide variety
of best practice and related guides that can assist agencies in
ensuring they have the needed internal controls in place from the
outset. These best practices and related guides cover such areas as
fraud prevention, contract management, and grants accountability.
R&D Funding Areas that Deserve Special Attention
Our prior work has identified several areas that deserve special
attention from management and the IG's office to ensure that funds are
put to best use. The following examples highlight problems associated
with (1) a new program--Energy's innovative technology loan guarantee
program--which does not have established management and internal
control activities, (2) an existing program that cannot readily
determine whether private entities would fund a project without the
federal funds, (3) an existing program that awards a large amount of
matching funds to demonstrate or deploy advanced technologies but
cannot ensure that industrial partners will complete the project, axed
(4) an existing program with a history of cost overruns and schedule
slippage for its major projects.
The Recovery Act made $6 billion available to Energy
to support $60 billion in new loan guarantees under its
innovative technology loan guarantee program. However, our July
2008 report entitled Department of Energy: New Loan Guarantee
Program Should Complete Activities Necessary for Effective and
Accountable Program Management (GAO-08-750) found that DOE was
not well positioned to manage the loan guarantee program
effectively and maintain accountability because it had not
completed a number of key management and internal control
activities. To improve the implementation of the loan guarantee
program and to help mitigate risk to the Federal Government and
American taxpayers, we recommended that DOE take several steps,
including (1) completing detailed internal loan selection
policies and procedures that lay out roles and responsibilities
and criteria and requirements for conducting and documenting
analyses and decision making, (2) amending application guidance
to include more specificity on the content of independent
engineering reports and on the development of project cost
estimates to provide the level of detail needed to better
assess overall project feasibility, and (3) further developing
and defining performance measures and metrics to monitor and
evaluate program efficiency, effectiveness, and outcomes. We
are currently engaged in an ongoing engagement to determine the
current state of the loan guarantee program and what progress
DOE has made since our last report.
The Recovery Act made $3.5 billion available to
Energy to fund R&D on renewable energy and fossil energy.
However our December 2008 report entitled Research and
Development: DOE Could Enhance the Project Selection Process
for Government Oil and Natural Gas Research (GAO-09-186) found
that DOE does not formally assess whether industry would
undertake oil and gas R&D without federal funding. To better
ensure that DOE selects oil and gas R&D projects that industry
is unlikely to pursue, we recommended that DOE's project
selection process include a formal assessment of the likelihood
that the R&D would not have occurred without federal funding.
Our review of similar federal programs has found that agencies
may be unable to ensure that their funding is not duplicating
existing or planned research that would be conducted in the
same period in the absence of federal financial assistance. In
addition, our work has questioned a R&D program's ability to
obligate a large influx of appropriations because the review,
selection, and approval of individual project proposals from
the private sector can be lengthy and requires substantially
more scientific peer review panels to assess the technical
merits of each proposal and staff with expertise in making
grant awards.
The Recovery Act made $2.32 billion available to
Energy to jointly fund private sector projects demonstrating
clean coal and carbon capture and sequestration technologies.
However, our June 2001 testimony entitled Fossil Fuel R&D:
Lessons Learned in the Clean Coal Technology Program (GAO-01-
854T) and a series of prior reports on the program found that
many demonstration projects had experienced delays, cost
overruns, bankruptcies, and performance problems. We identified
several lessons learned for improving DOE's selection and
oversight processes. As a result of the projects' problems, the
Congress since 1995 has rescinded or reprogrammed almost $900
million of the funds appropriated for the Clean Coal Technology
Program. More recently, our February 2009 report entitled Clean
Coal: DOE's Decision to Restructure FutureGen Should Be Based
on a Comprehensive Analysis of Costs, Benefits, and Risks (GAO-
09-248) found that DOE did not base its decision to restructure
FutureGen on a comprehensive analysis of factors, such as the
associated costs, benefits, and risks. We recommended that,
before implementing significant changes to FutureGen or before
obligating additional funds for such purposes, DOE prepare a
comprehensive analysis that compares the relative costs,
benefits, and risks of a range of options that includes (1) the
original FutureGen program, (2) incremental changes to the
original program, and (3) the restructured FutureGen program.
The Recovery Act provided a total of $1 billion to
NASA, including $400 million for exploration. However, our
March 2009 report entitled NASA: Assessments of Selected Large-
Scale Projects (GAO-09-306SP) noted that NASA plans to invest
billions of dollars in the coming years in science and
exploration space flight initiatives. Our examination of NASA
projects with life cycle costs exceeding $250 million found
that 10 of 13 that had entered the implementation phase had
experienced significant cost and/or schedule growth--on
average, development costs had increased by 13 percent and
launch had been delayed by 11 months. NASA has acted to adopt
practices that would better ensure that programs proceed based
on a sound business case that addresses technology maturity,
design stability, complexity of heritage technology, contractor
performance and development partner performance. In particular,
NASA has undertaken an array of initiatives aimed at improving
program management, cost estimating, and contractor oversight.
However, until these practices become integrated into NASA's
culture, it is unclear monies will be well-spent and the
achievement of NASA's mission will be maximized.
Our Plans for Carrying Out Our Oversight Responsibilities
To make the most effective and efficient use of our resources, we
plan to fulfill our Recovery Act responsibilities related to science
funding by working together with the IGs to leverage our strengths and
avoid duplication of effort wherever possible. In consultation with the
Congress, we will also target at-risk programs that receive Recovery
Act science funding for review under our general audit authorities, and
we will expand our work on base programs to examine any related
stimulus funding.
In summary, GAO welcomes the responsibility that the Congress has
placed on us to assist it in the oversight, accountability, and
transparency of the Recovery Act. We will continue to coordinate
closely with the rest of the accountability community. We also are
committed to completing our Recovery Act work on the timetable
envisioned by the Act and will keep the Congress fully informed as our
plans evolve.
Mr. Chairman, Representative Broun, and Members of the Subcommittee
this concludes my statement. I would be pleased to respond to any
questions you may have.
Staff Acknowledgments
Key contributors to this testimony were Richard Cheston (Assistant
Director), Karen Keegan, and Stuart Ryba.
Biography for Patricia Dalton
Patricia Dalton became Managing Director of the Government
Accountability Office's Natural Resources and Environment Team in June
2008. The Natural Resources and Environment Team is responsible for
GAO's work in agriculture and food safety, energy, the environment,
federal land stewardship, U.S. and international nuclear security, and
water resources and science and technology. Before assuming her current
responsibilities, Ms. Dalton was Managing Director of GAO's Physical
Infrastructure Team, where she directed work in transportation,
telecommunications, federal property, and the Postal Service. She was
also a Director in GAO's Strategic Issues Team, where she was
responsible for GAO's work related to government management issues,
particularly performance management and the Government Performance and
Results Act, and organization structure and design. She also was
responsible for work related to the decennial census and the Census
Bureau, intergovernmental relations, and tools of government. Before
joining GAO in 2001, Ms. Dalton was the Deputy Inspector General for
the U.S. Department of Labor for seven years. She received her
appointment to the Senior Executive Service in 1993 from the U.S.
Department of Army, where she served as Director of Audit Policy,
Planning and Resources, Army Audit Agency. Ms. Dalton is a Certified
Public Accountant. She holds an MBA from the University of
Massachusetts, and a BA from the College of the Holy Cross.
Discussion
Chairman Miller. We will now have questions. I would
anticipate one round. Do you have more than that?
Mr. Broun. No, that is fine. I know you have a hearing that
you need to go to, and that is fine.
Chairman Miller. Mr. Friedman and Mr. Zinser, the statute
provides that the two of you sit on the Recovery Accountability
and Transparency Board. The Board will meet for the first time
on March 27. What will you take to the Board, what concerns,
what recommendations?
Mr. Friedman. There are 10 IGs on the Board, as you know,
and I think--I of course am not the Chairman of the Board. Mr.
Earl Devaney--who is the sitting IG, I guess, at the Department
of the Interior but is temporarily in this capacity--will be
chairing it. So I don't precisely know what the agenda will be
for that date. My expectation is, number one, that we have a
responsibility under the statute to operate Recovery.gov, and
that will probably consume a good deal of our time at that
meeting.
Secondly I anticipate that we will be talking about the
progress that we have made in proactively providing oversight
at our respective agencies and determining if there are cross-
cutting issues that could be applied throughout the IG
community and certainly throughout the accountability community
in a broader context.
So those are the three--and probably findings to date, you
know, specific to our agencies but which may have application
again across the board. So I anticipate that will be the
primary focus of the meeting, but I am not setting the agenda
so I don't know for sure.
Chairman Miller. Mr. Zinser, any concerns?
Mr. Zinser. Yes, sir. I think there will be a lot of issues
surrounding technical problems with Recovery.gov and reporting
requirements on the agencies and how they are going to fulfill
those reporting requirements. I also think that a cross-cutting
issue, both for the oversight groups as well as the agencies
themselves, and it was discussed here several times this
morning, is workforce issues, about how we staff both the
oversight agencies and the agencies that are spending these
monies. Do we have the right people in the workforce to do it?
Chairman Miller. Okay. Mr. Cross, if I could bring you in,
too, and ask the question of the three IGs. I know that most of
the witnesses and perhaps all the witnesses touched on whether
agency contract and grant management resources are sufficient
or really ready to manage the extra workload. Do you believe
they are sufficient? Are they ready for what is coming at them?
And if not, what needs to be done?
Mr. Cross. I think at NSF they are making strides in that
direction. They didn't get any additional funding for workforce
ameliorations. The workload is going to be there with
essentially the same staff. Given that fact, you have to look
for ways to make that productivity more efficient, and they are
doing that in terms of beefing up their IT, doing some cross-
training, bringing in more support staff, that kind of thing,
also looking at all the different possibilities with OPM for
bringing people in on a temporary basis. So I think that's the
thrust. They still have some new territory to tread in terms of
the reports and the information they need to generate in terms
of figuring out how to do undeclines as they call them, where
you're taking formerly declined proposals and revisiting those
for future funding. There are some new games in play here that
people need to figure out, and I know they have got a lot of
staff and managers looking at those issues and we will be
watching to see how they work them.
Chairman Miller. Mr. Zinser, Mr. Friedman?
Mr. Zinser. I think at the Department of Commerce, it is
mixed. I think some agencies are prepared for contracting but
perhaps not grants and vice-versa. I know for example that a
broadband technology program is going to require an increase in
grants management personnel, and the agency or the Department
has three different agencies that administer grants and I don't
think they have settled on what agency is going to administer
the grants under the broadband program. That is just one
example, but whoever does is going to have to increase that
workforce substantially.
Mr. Friedman. It is a superb question, Mr. Chairman, and
obviously it is one of the biggest problems that we feel the
Department of Energy faces. As you may be aware, the Department
of Energy perhaps is the most contractor-dependent agency in
the civilian sector. Virtually everything is done by contract,
grant, cooperative agreement, a whole series of contractual and
financial instruments. And actually, we wrote to the Deputy
Secretary expressing our concern in 2007, and we have just
updated that. We will be issuing a report on that in the not-
too-distant future. They have made some progress, but given the
influx of huge amounts of fresh dollars that are going to be
flowing into the procurement system broadly defined, it is one
of the most significant challenges that the Department faces
and one that we have reported on regularly.
Chairman Miller. Ms. Dalton, do you have any thoughts on
that?
Ms. Dalton. Well, I would agree with the Inspector Generals
that it is kind of a mixed bag. Some agencies and programs have
more experience in terms of grants and contract management, but
I think across the board we are going to have a capacity issue
because there has been so much money that is going into these
programs, and the agencies are going to have to be looking at
what is the best way to implement the programs, where can I get
the resources and the expertise, and in training the people
that they do have to manage these programs and the grants and
the contracts and following best practices in terms of setting
clear expectations for each of the grants and contracts and
monitoring them.
Mr. Friedman. Can I add one thing, Mr. Chairman, to my
answer?
Chairman Miller. Sure.
Mr. Friedman. First of all, in the interest of being fair
and balanced, which I want to be, the Department's procurement
officials are aggressively trying to retain and recruit. For
example, their retirement eligibility rate is quite high, so
they are making aggressive efforts to try to retain and recruit
the skilled workforce that they need to handle the influx of
additional cash. So I want to be fair to them as well. They are
making Herculean efforts to try to meet their responsibilities.
Chairman Miller. My time is expired. Dr. Broun.
Mr. Broun. Thank you, Mr. Chairman. I assume you all were
here in my previous line of questions with the first panel. I
wasn't convinced by the answers that I got, and I see you guys
as street cops; and I see what you need to do is operate as
street cops, and I know a street cop, when something is out of
place, out of character, they start scratching and digging and
looking into things. And they also look into the people who
they know have already committed crimes or accused of
committing crimes, and we already know that there are entities
out there such as ACORN who are an organization under
investigation in I think it is like 17 or 18 states for
criminal activity. I am extremely concerned about the census
and the possibility of the Department of Commerce contracting
with entities like ACORN. And I just would like a yes or no
answer. Can you all assure me that you will utilize available
data--and I understand maybe it is the GAO that has a list of
entities who are under criminal investigations. Will you all
let the agencies know that you are going to look very strongly
to make sure that criminal entities, or criminally accused
entities, are not given contracts to carry out projects that--
so that the American people can be absolutely sure that there
is not any of this shifty, shady groups that are doing the
people's business? Please, start with Mr. Friedman.
Mr. Friedman. Well, Dr. Broun, I am not sure I can give you
the satisfactory answer that you perhaps desire. We face these
sorts of challenges every day because we have 200 to 300
potential criminal investigations ongoing at any given time
dealing with the Department of Energy or Department of Energy-
related entities. So it is a problem we face.
What I can tell you is the following. When you have a
criminal investigation, and we understand that a contract or a
grant has to be awarded to that entity--assuming that it will
not compromise the investigation, assuming we will not
compromise grand jury information, assuming that we
appropriately coordinate with the Department of Justice, we
will inform the Department's program managers of the ongoing
investigation, and ultimately they will have to make the
decision as to whether they will proceed with the contract of
the procurement or not. Now, I know nothing about the ACORN
investigation other than what I have seen in the media, so I am
not familiar with that. I will tell you as well that, and I
know this is obvious, that the mere fact that there is a
criminal investigation, and I am not defending anyone here,
should not necessarily lead anyone to conclude that ultimately
there will be a charge resulting from the investigation.
So it is a very tricky, difficult area, but I have tried to
explain the steps that we go through to make sure that
management, who ultimately awards the contracts, is aware that
there is an investigation, and they will have to make the
ultimate judgment on that.
Mr. Broun. Mr. Zinser.
Mr. Zinser. Sir, I think you are going to find that ACORN
is working with the census bureau on their partnership efforts.
I don't know----
Mr. Broun. That is what----
Mr. Zinser.--that they are getting any money, sir, but I
think that they are working with the census. But I think what
you have to do is identify those ACORN groups that are under
investigation and see whether they are actually working with
the census, and then if the census has some criteria that they
can use in terms of the groups that they are associating with,
you know, they have to make those decisions. But we would
certainly be willing to help you get answers from the
Department or the census bureau about where that is occurring.
Mr. Broun. Well, I would appreciate that, and I am
extremely concerned about this because of the integrity and the
importance of the census. Just in the sake of time, I will just
let Mr. Cross answer that and Ms. Dalton, too, in writing. And
Ms. Norcross, if you would have any ideas about that, I would
appreciate your thoughts.
But Ms. Norcross, in your testimony you have mentioned a
number of recommendations for Recovery.gov. How early will
these recommendations need to be adopted before more reporting
starts to flow into the website?
Ms. Norcross. The sooner the better. There is no time to
waste. People right now are waiting to know how data is going
to be displayed so they can start building websites and
monitoring data. In anticipation, even if the Administration
just lets people know how they intend to display the data, that
would be a help.
Mr. Broun. Thank you so much. Mr. Chairman, my time is
expired so I will yield back.
Chairman Miller. Thank you. Mr. Zinser, as to the 2010
census, if you just do what you did in 2000, I will be
perfectly happy. If it ain't broke----
Mr. Broun. Chairman, would you yield a moment?
Chairman Miller. Yes, Dr. Broun.
Mr. Broun. I would like to do the same thing. I certainly
don't want to use statistical sampling in the census. People
need to be counted. Real people need to be counted, and that is
my concern. I just don't want any election stolen. As a
scientist, I want to see real data and I would like to see
right over wrong, and statistical sampling to me is a way of
interjecting a tremendous amount of potential for fraud and
abuse. So, thank you.
Chairman Miller. I do not want to defend the position of
wrong over right. I was not speaking to the methodology. I am
not sure it is necessary that you actually touch each nose to
do a nose count. But that ends our testimony today. Thank you
very much. Under the rules of the Committee, the record will
remain open for two weeks for additional statements from the
Members and for any follow-up questions or answers, and I think
at least one or two of the witnesses mentioned that they would
provide further answers in writing. And with that, the
witnesses are excused, the hearing is now adjourned.
[Whereupon, at 12:50 p.m., the Subcommittee was adjourned.]
Appendix 1:
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Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Cora Marrett, Acting Deputy Director, National Science
Foundation
Questions submitted by Chairman Brad Miller
Q1. You heard the concerns expressed by the Subcommittee and by the
Inspector General that the Foundation's grants management staff was
working at full capacity even before the enactment of the Recovery Act.
You testified that by revisiting existing proposals already reviewed,
the Foundation can expedite the award of funds with the available
staff. However, there remains the requirement to monitor the
performance of these additional grants, which is likely to be a
nontrivial increase in workload. Are you still confident no increase is
needed in the Foundation's capacity for this function?
A1. NSF recognizes and is honored by the responsibilities brought by
the Recovery Act. As I noted in my testimony, there will be major
challenges associated with the increased workload, as the agency will
be processing roughly 50 percent more awards than expected in FY 2009.
Given that the Recovery Act did not increase funding for administrative
activities, NSF staff and management will be monitoring the workload
and reprioritizing and redeploying resources as appropriate.
Q2. Should the Foundation's assumption about grant management staff
prove incorrect, what plan is in place to detect and address the
deficiencies?
A2. The NSF Chief Financial Officer is on NSF's Recovery Act Steering
Committee and will provide regular updates on grants management
workload. Should any issues arise, the Steering Committee will address
how best to enhance and/or redeploy resources. Now that the FY 2009
omnibus appropriation has been enacted, NSF has an additional 25 FTE
that may be deployed and we have submitted a request to OPM for a dual
compensation waiver far re-employed annuitants. This, in combination
with continual evaluation of necessary resources by managers, will help
to prepare NSF to manage federal funding. Continued and thoughtful
reinforcement of NSF staff is needed to ensure appropriate monitoring,
administration, oversight, accountability, and stewardship of the
federal funds.
Q3. The Subcommittee is concerned that a too rigid adherence to a
specific level of point scores assigned by reviewers may lead to sub-
optimal award distributions as measured by intellectual promise. What
level of discretion will program officers have in identifying grant
applications already received by the Foundation that were worthy of
funding but, due to insufficient funds, were not previously funded?
A3. A hallmark of NSF's merit review process is the discretion that
resides with program officers. The NSF program officer reviews
proposals and analyzes the input received from the external reviewers.
Reviewer ratings are provided only as assistance to the program
officer. In addition to the external reviews, program officers consider
several factors in developing a portfolio of funded projects.
For example, these factors might include different approaches to
significant research and education questions; potential (with perhaps
high risk) for transformational advances in a field; capacity building
in a new and promising research area; or achievement of special program
objectives. In addition; decisions on a given proposal are made
considering both other current proposals and previously funded
projects. After scientific, technical and programmatic review and
consideration of appropriate factors, the program officer makes an
award/decline recommendation to the division director.
In order to accommodate situations where programs had proposals
that were worthy of funding but they were not able to support them due
to insufficient funds, the Foundation has developed functionality for
reversal of a previous declination decision. The reversal of the
decision must be based on both the high quality of the reviews received
on the initial submission and the lack of available funding at the time
the original decision was made.
Q4. How is the Foundation coordinating distribution of Recovery Act
resources with the Foundation's regular appropriations to maximize the
value of both in achieving the Act's goals and the President's
priorities?
A4. The Foundation is considering all available FY 2003 funds, both
those from the Recovery Act and those provided through the omnibus
appropriation, as it develops its FY 2009 award portfolio.
NSF will utilize the majority of the Recovery Act funds to support
highly-rated proposals that would otherwise be declined due to lack of
available funding. NSF has many proposals already in hand that meet
this criterion. NSF will prioritize funding of new principal
investigators and high-risk, high-return research with Recovery Act
funding. This is in keeping with the goals of the legislation--to
increase economic efficiency by spurring technological advances in
science and health and to jump-start the economy. Support will also be
provided for critical infrastructure needs, with an emphasis on
deferred maintenance and enhancements for existing research facilities.
NSF expects that the science and engineering communities are poised to
immediately expend funds that will advance discovery and innovation,
and enhance the economy.
Along with the funds provided in the Recovery Act, NSF will utilize
funds provided through its regular FY 2009 appropriation to advance the
frontiers of science and engineering, including support for addressing
urgent national priorities, such as energy, environment, and climate
change.
Questions submitted by Representative Paul C. Broun
Q1. One of the selling points of the stimulus bill was that action was
needed immediately. How long will it take you to spend all of the money
directed to your agencies?
A1. NSF plans to obligate the majority of its Recovery Act funding by
the end of FY 2009 and will carefully monitor the expenditure of funds.
Of the $3.002 billion provided to NSF, over two-thirds will be used to
fund highly-rated proposals that have already been received but would
otherwise be declined due to lack of available funding. NSF will ensure
that Recovery Act funds are awarded in a timely manner while
maintaining its commitment to its established merit review process.
NSF expects that some or all of the funds for the following
programs may need to be carried forward into FY 2010:
The Science Master's Program in the Education and
Human Resources Account. NSF is currently developing plans to
establish this program.
The Academic Research Infrastructure (ARI) program in
the Research and Related Activities Account. There will be
multiple categories for ARI proposals, dependent on the size of
the proposal budget. NSF expects to make the majority of ARI
awards (those that are less than or equal to $2 million) in
January 2010. The remaining awards are expected to be made no
later than April 2010.
The Major Research Instrumentation (MRI) program. NSF
intends to utilize approximately $100 million of the $300
million provided in the Recovery Act for MRI to support MRI
proposals already in hand. These awards will be made during FY
2009. The remaining $200 million will be used for a new MRI
solicitation to be issued in spring 2009. NSF expects to make
most of these MRI awards by the end of the 2009 calendar year.
NSF expects to obligate funds for the three projects that will be
supported through the Major Research Equipment and Facilities
Construction (MREFC) account--Ocean Observatories Initiative (OOI),
Alaska Region Research Vessel (ARRV), and Advanced Technology Solar
Telescope (ATST)--either late in FY 2009 or early in FY 2010 so that
construction can begin expeditiously.
In addition, it may be necessary to carry forward into FY 2010 a
small amount of funding within the Research and Related Activities
(R&RA) account. Proposals that have been reviewed but not awarded by
September 30, 2009 and awards to organizations that have not previously
received NSF funding are examples of instances that might require the
carry forward of Recovery Act funds.
Funds provided to the NSF Office of Inspector General (OIG) are
expected to be carried forward into FY 2010.
All NSF awards made with Recovery Act funds will be ``standard''
grants, which means that the awardee receives all funds at the time of
award rather than receiving funds over multiple years. The average
award duration for NSF research grants is approximately three years.
Therefore, NSF expects that the majority of Recovery Act funds will be
spent by awardees within the next three years. Research grant awardees
typically spend the majority of funding in the second year of their
award.
Q2. Current OMB guidance only requires that money be tracked to two
layers down. For example, a state and a city would have to report data,
but not the contractor or the subcontractor. Do you intend to require
additional reporting beyond OMB guidance?
A2. At this time, NSF does not intend to require institutions that
receive Recovery Act funding to report beyond the requirements
established by OMB. The OMB guidance clearly states that ``the prime
recipient is responsible for reporting on their use of funds as well as
any sub-awards they make.'' Further. ``in limited circumstances,
recovery will go from a federal agency to a state, and then to a local
government or other local organization. In these cases, the current
reporting model will not track funds to subsequent recipients beyond
these local governments or other organization.''
NSF agrees and requires that prime recipients report on their use
of funds as well as any sub-awards they make. Per our General Grant
Conditions (GC-1), we state ``The grantee remains responsible for
maintaining the necessary documentation on all sub-awards and making it
available to NSF upon request. The grantee shall include sub-award
activities in the annual and final project reports that are submitted
to NSF.''
NSF already requires extensive technical and financial reporting
for all assistance awards. These reports provide NSF program officers
and administrative offices with information on the progress of
supported projects and the way these funds are used. Awardee
institutions are required to submit annual project reports as well as a
final project report. Quarterly financial reports on the status of
funds received from NSF are also required through submission of a
Federal Financial Report (FFR).
It should be noted that NSF awards very limited funding to State
and local governments. Most NSF awards are made to research
institutions.
Q3. Do you believe two layers of accountability are enough?
A3. As described above, this particular concern is not of great impact
to most NSF-funded organizations. In addition, NSF believes that it has
adequate and appropriate policies and procedures in place to ensure
awardees are held accountable for all funds awarded, inclusive of
Recovery Act funding. Our general Grant Condition provisions hold all
parties expending funds originating from the Federal Government
responsible for expending funds in compliance with applicable federal
and agency-specific requirements.
Q4. Please list the top three risks at your agency associated with
stimulus funding.
A4.
1. Risk of Non-compliance with Recovery Act Requirements: The most
significant risk to the Foundation emanates from the fact that,
although the Recovery Act appropriation represents an increase to the
NSF budget of almost 50 percent, no additional administrative funding
for staff or other resources was provided. Our regularly-appropriated
resources will be used to ensure compliance with the Recovery Act
mandates, in addition to our normal management and administrative
activities.
The Act requires the agency to provide additional information that
was not considered when setting the agency's administrative FY 2009
budget. Some examples include:
Weekly Status Updates on Recovery Act Funding
Monthly Financial Reports
Award Transaction Data Feeds
Agency Recovery Plan
Recovery Program Plans
2. Risk of Systematic Flaws and/or Breakdowns: Additionally, there are
risks inherent in implementing any new program responsibly, on an
expedited time line. The Recovery Act requires additional reporting, on
data not currently collected in recipient and agency systems. The
tracking and reporting requirements have required both agencies and
recipients to modify accounting and award systems in short order. Due
to the expeditious nature of the Act, the time spent testing these
modifications has been limited.
3. Risk of Administrators Not Hawing Sufficient Knowledge: There will
be continuing education needed across multiple sectors in the recipient
and federal awarding communities. Again, due to the expeditious nature
of the Act, both agency and recipient administrators may encounter
limitations as they try to keep up-to-date on Recovery Act guidance,
which is currently in Interim Final status. Recovery Act recipient
reporting data elements are not yet final.
Q5. What contracts at your agency are ``mission critical''? That is,
if the specific contract were to experience cast-overruns, schedule
decays, or performance problems would it affect the mission of the
agency?
A5. With regard to Recovery Act funds, the National Science Foundation
will not award any contracts that are mission critical.
Q6. The DOE IG identified contract administration as ``one of the mast
significant management challenges facing the Department'' Please
discuss the current status of your agency's ability to issue contracts
and manage grants.
A6. Currently, NSF is well positioned to award and administer its
current portfolio inclusive of the additional Recovery Act funding. NSF
employs highly qualified and experienced staff to execute the critical
responsibilities of grant and contract management. These professionals
include grant and contract specialists, cost analysts, policy analysts,
financial staff, and program officers who are vital to monitoring and
administering the performance of awards to ensure appropriate
monitoring, administration, oversight, accountability, and stewardship
of federal funds. Although staffing resources are certainly a concern
considering the increased workload, at this particular juncture, we are
confident that the existing staffing level is sufficient to adequately
award and manage the dollars within our agency's budget.
Q7. Do you have adequate resources?
A7. NSF is aware of the need for continuous evaluation of resources
required to successfully manage the increased responsibilities
associated with the Recovery Act. To this end, NSF has put a Recovery
Act steering committee in place to face the expected challenges by
using all available resources as well as employing appropriate
management oversight and flexibility to meet unforeseen challenges. The
NSF CFO is on the Recovery Act steering committee and will provide
regular updates on the awards management workload. NSF was allocated an
additional 25 FTE in the FY 2009 omnibus appropriation, and a request
for waiver of reemployed annuitants has been prepared for submission to
OPM. Should any resource issues arise, the steering committee will
address how best to enhance and/or redeploy resources to ensure that
the NSF award portfolio receives adequate resources.
Q8. Are your employees adequately trained?
A8. NSF makes every effort to ensure that all employees are adequately
trained. We believe that the combination of experience and training of
our current employees along with our outstanding record of recruiting
and retaining qualified professional and administrative staff serves us
well as we implement the requirements of the Recovery Act.
Q9. Do you have adequate staff levels?
A9. NSF's current staffing levels are adequate at this time. NSF is
committed to fulfilling its responsibilities under the Recovery Act and
it is our intention to move forward expeditiously with all award and
administrative activities using staff resources that are currently
available.
Q10. What can Congress do to help?
A10. NSF appreciates Congress' strong support in recent years far the
agency's stewardship responsibilities. Enactment of the full FY 2310
Request of $318 million for Agency Operations and Award Management--
currently pending before Congress--will be vital to NSF fulfilling its
responsibilities under the Recovery Act.
Q11. Understanding that coordination is sometimes necessary, IGs
should not be used as an agency's internal auditor. What in-house
auditing and program evaluation capabilities do your agencies have?
A11. The NSF IG reports directly to the National Science Board (NSB),
as opposed to the head of the agency, the Director of NSF. This
organizational structure is intended to maintain the IG's independence
in performing both internal and external audits and reviews. Audit
guidelines preclude auditors from making decisions an behalf of
management.
NSF has clearly established these distinct roles and
responsibilities in its structure and NSF's appropriation clearly sets
forth distinct funding for the IG audit function (not to be commingled
with NSF administrative funding for audits and other evaluations).
That being said, NSF realizes that sound financial management
enables the Foundation to pursue critical investments in science and
engineering research and education that ultimately ensure the Nation's
security, prosperity, and well being. Over the past eight years NSF
has, with the encouragement of the IG, continuously refined and
enhanced its post-award oversight process. To that point; NSF senior
management, and notably through the leadership of the Chief Financial
Officer, has made post-award administration one of the agency's highest
priorities. We are confident that, through the strategic analysis of
need and the application of extensive staff and contracting resources,
the Foundation is now postured with one of the most comprehensive
programs of awardee monitoring and business assistance programs in the
Federal Government.
Through a combined set of activities, on-site visits, desk review,
and/or transactional testing, we are ensuring that the entire high risk
award universe receives past award review. We believe that the
extraordinary measures NSF has taken to conceive and implement the
Award Monitoring and Business Assistance program are having a positive
impact on those institutions visited, desk reviewed and tested and are
mitigating the risk of potential misuse of funds. We have been very
careful in designing this program that we complement, rather than
supplant, the auditing responsibilities of the Office of the Inspector
General (OIG). Should we, in the course of the Foundation's post-award
oversight activities find matters that require OIG audit or
investigative scrutiny, we will refer them to the OIG.
Q12. Have your agencies ever tasked IG to conduct work on your behalf?
A12. Annually, the Office of the Inspector General solicits from the
Director of the NSF, recommendations for external audits to be
performed of our recipient institutions. These are considered by the
OIG, along with the results of their independent assessment of the NSF
awardee and award portfolio. The OIG makes its determination as to what
institutions will be audited. As described above, the OIG is
independent from agency management.
Q13. How has the Internet portal www.grants.gov operated recently?
A13. Overall questions on the operations of the Grants.gov portal are
best directed to the managing partner, the Department of Health and
Human Services, as they have program management responsibilities, on
behalf of the Federal Government, for this initiative. As such, they
would collect, maintain, and analyze performance data for Grants.gov.
Consistent with OMB Guidance, NSF has been posting all of our
funding opportunities, and associated application packages, to
Grants.gov. Analysis of submission data consistently demonstrates that
applicants for NSF awards, in large numbers and percentages, continue
to use NSF's own system, FastLane, as the default solution when
submitting research proposals to the Foundation. Less than three
percent of NSF's total proposals are submitted through Grants.gov.
Q14. What is the Federal Government doing to ensure its operation and
effectiveness?
A14. The Office of Management and Budget established the Grants
Executive Board (GEB), comprised of the major grants making agencies,
as an advisory body to the Grants.gov initiative and to the HHS managed
Grants.gov program management office. Among the GEB responsibilities
are:
The review and approval of the annual funding
algorithm that supports the Grants.gov operational budget
Ensuring the timely execution of memoranda of
understanding, and associated funding transfers that support
the Grants.gov operational cost
Review and approval of the HHS-prepared Grants.gov
business case
Ensuring that respective agencies comply in all of
the OMB issued guidance concerning Grants.gov participation and
support
Provision of policy and operation input, review of
documents, and additional staff support to Grants.gov tactical
matters
Consistent communications to respective applicant/
awardee communities concerning Grants.gov
Advice to OMB on the initiative's direction.
Q15. What impact would the crashing of this site have on the ability
to issue grants?
A15. The impact is agency-specific. There will be no impact of
Grants.gov issues on NSF's ability to issue grants. The Foundation's
FastLane system well pre-dates Grants.gov ``Find'' and ``Apply,'' so we
have not been subject to such restrictions. NSF is able to accept
directly its full complement of proposals, both regular submissions and
those additional proposals anticipated through the Recovery Act. We
will use our legacy FastLane capabilities for proposal submission and
acceptance.
In 2006, NSF was also selected by OMB to provide grants management
services beyond the Grants.gov ``Find'' and ``Apply'' services for the
broad research community, using modernized FastLane services in
partnership with other research agencies. This ``next generation
`FastLane' '' system, called Research.gov, provides a menu of service
offerings for 2,200 research institutions in partnership with NASA and
Department of Defense science agencies. In light of the recent issues
with Grants.gov, we are currently exploring the feasibility of
including a new Research.gov ``Application Preparation and Submission''
service as an alternative to Grants.gov for the research community
(only) and for research agencies that may be interested in using the
service to support their research constituents.
Q16. I am concerned that the ``Buy American'' provisions in the
Stimulus legislation could add significant costs to and restrict agency
flexibility in spending for science-related construction and
facilities. How will this provision be implemented with respect to
construction of scientific buildings, facilities, and major research
equipment and how will you work to ensure the restrictions do not
result in cost overruns and delays?
NOTE: the language specifically states: SEC. 1605. USE OF
AMERICAN IRON, STEEL, AND MANUFACTURED GOODS. (a) None of the funds
appropriated or otherwise made available by this Act may be used for a
project for the construction, alteration, maintenance, or repair of a
public building or public work unless all of the iron, steel, and
manufactured goods used in the project are produced in the United
States.
A16. NSF is working with the Office of Management and Budget and the
Office of the U.S. Trade Representative to develop an NSF-specific
implementation strategy in response to the Section 1605 of the Act and
will provide it to the Committee as soon as possible.
Q17. BACKGROUND: The stimulus package provides $200 million for the
Academic Research Facilities Modernization Program, which is a grant-
making program to allow eligible research entities to repair, renovate,
or replace obsolete laboratories and research facilities. This statute
was enacted over 20 years ago and has not even been used by NSF since
the mid-nineties. My question is three-fold:
Q17a. Why has this program not recently been put to use?
A17a. The decision to halt the Academic Research Infrastructure (ARI)
program in the latter 1990s (a) rested on the premise that investing in
the modernization of individual institution's research facilities was
of a lower priority than supporting shared-use, large-scale facilities
which are accessed by the broader the scientific and engineering
research community and (b) was consistent with the National Performance
Review's recommendation that facilities modernization might reasonably
be accommodated by institutions, states, and the private sector.
Q17b. Given that NSF has not utilized the program in many years, is it
even feasible that you have mechanisms in place to formulate guidelines
and appropriately award grants within the timeframe provided in the
stimulus package? If so, how do you plan to accomplish this?
A17b. Mechanisms and Guidelines. NSF's Office of Integrative Activities
(OIA) will oversee the ARI program and coordinate Foundation-wide
efforts. The process is analogous to the current Major Research
Instrumentation program. OIA staffing has been augmented to meet the
added responsibility of managing ARI; (a senior program director has
been seconded to OIA to manage the program and additional staff support
is being secured). An internal office team and a cross-Foundation
working group, including program officers with experience with
infrastructure programs, have been established to implement the
program. The guidelines for the 2009 ARI program have been updated to
reflect the requirements for conducting 21st century research as well
as to conform to current, federal construction-related policies.
Timeline. NSF will fund all ARI awards within the allowable
stimulus package timeframe (i.e., no later than September 30, 2010).
Q18. It is my understanding that these funds will not to used for any
new construction--only repair and renovation. Can you please confirm
this?
A18. The NSF 2009 ARI program will not fund any new construction. It
may accept a proposal for the reconstruction of a research facility.
Consistent with previous ARI solicitations, the 2009 ARI will support
projects to repair, renovate, or in exceptional cases, replace existing
research facilities. If an institution were to demonstrate that it was
more cost-effective to raze and then rebuild a research facility or
research training facility, rather than to try to repair or renovate
the existing structure, then the program would accept a proposal for
replacement.
Answers to Post-Hearing Questions
Responses by Ronald R. Spoehel, Chief Financial Officer, National
Aeronautics and Space Administration
Questions submitted by Chairman Brad Miller
Q1. The Recovery Act directs that the funding available in the Science
account be provided for supercomputing capability and to bring forward
the planning activities for the first of the Earth Science Decadal
Survey missions at NASA. How do you anticipate breaking down the
funding to fulfill that direction?
A1. The NASA spending plan for use of Recovery Act funding, including
the Science program plan, has been submitted to the Committees on
Appropriations. NASA has posted its Recovery Act Program Plans on both
the Agency's website and on the government-wide website and will update
the information as may be appropriate following consultation with the
Committees on the spending plan.
Q2. In developing the plan for using Recovery Act resources, is an
effort being made to contribute to meeting the longer-term missions of
the Agency? For example, can the Recovery Act funds be used for
technology development to support the Europa mission NASA hopes to
conduct with the European Space Agency in the next decade?
A2. Every effort is being made to use Recovery funds to further the
Agency's programmatic goals, as well as stimulate economic activity.
With respect to specific spending plans, the NASA spending plan for use
of Recovery Act funding, including the Science program plan, has been
submitted to the Committees on Appropriations.
Q3. The Recovery Act states that funds are to be awarded primarily
using competitive procedures and with a preference for fixed-price
contracts. NASA, however, regularly employs cost-type and incentive
contracts in its business. How do you expect to meet the law's
direction when issuing contracts using Recovery Act funds?
A3. Consistent with the Federal Acquisition Regulation (FAR), it is
NASA's policy to utilize fixed price contracts when requirements are
relatively certain which permits costs to be estimated with sufficient
accuracy for pricing. When issuing contacts with Recovery Act funds,
NASA will utilize competitive procedures and fixed-price contracts to
the maximum extent practicable. We also anticipate using Recovery Act
funds on contracts that are non-competitive and other than firm fixed-
price, as NASA mission requirements often contain uncertainties that do
not permit costs to be estimated with sufficient accuracy to use a
fixed-price contract. In those cases, NASA will comply with all
requirements of the Recovery Act, including those which require the
publication of the rationale for using other than a competitive and
fixed-price contract as part of the award notice.
Q4. In his March 20th memorandum, the President established a process
for communications with outside sources relating to Recovery Act
activities. What steps has the agency taken to implement the internal
controls needed to assure compliance with the President's direction?
A4. NASA has taken a variety of steps to effectively and efficiently
implement the Recovery Act, including almost daily tag up meetings with
key officials involved in Recovery Act activities. NASA has distributed
the President's Memorandum and the Office of Management and Budget
Interim Guidance on Communications with Registered Lobbyists About
Recovery Act Funds within the Agency and provided appropriate guidance
as to their requirements. In addition, NASA is currently preparing
further guidance tailored for even broader dissemination in the near
future.
Questions submitted by Representative Paul C. Broun
Q1. One of the selling points of the stimulus bill was that action was
needed immediately. How long will it take you to spend all of the money
directed to your agencies?
A1. NASA's Program Plans have been developed, have been finalized with
OMB, include publicly information available on expenditure estimates,
and were filed with OMB on May 15th.
Q2. Current OMB guidance only requires that money be tracked to two
layers down. For example, a state and a city would have to report data,
but not the contractor or the subcontractor. Do you intend to require
additional reporting beyond OMB guidance?
A2. Federal Acquisition Regulation (FAR) interim rules relating to
required recipient reporting have been developed and approved. NASA
will comply with these rules and use our standard reporting procedures
for contracts and grants. These procedures should be sufficient with
some modifications, as necessary, to capture the required two layers
for contract and grant reporting. For NASA activities, two levels of
reporting would typically include the prime contractor and
subcontractor.
Q3. Do you believe two layers of accountability are enough?
A3. Yes.
Q4. Please list the top three risks at your agency associated with
stimulus funding.
A4. Almost all NASA Recovery funds were appropriated for ongoing
operations, so programmatic risks are relatively small. The challenges
to the agency associated with Recovery funding relate to the special
requirements for procurement and resource management processes and
control of these funds, the tension in the Act between speed of
implementation and process control, and the many reporting
requirements--some of which are still being defined.
Q5. What contracts at your agency are ``mission critical''? That is,
if the specific contract were to experience cost-overruns, schedule
delays, or performance problems would it affect the mission of the
agency?
A5. Any individual contract is critical to its specific program, such
that overruns, delays or performance problems would likely affect that
program's commitments, and potentially other activities within the
program's portfolio. No single contract is large enough that it could
put the mission of the Agency at risk.
Q6. The Department of Energy's Inspector General identified contract
administration as ``one of the most significant management challenges
facing the Department.'' Please discuss the current status of your
agency's ability to issue contracts and manage grants.
a. Do you have adequate resources?
b. Are your employees adequately trained?
c. Do have adequate staff levels?
d. What can Congress do to help?
A6. NASA believes that it has a well-trained, experienced workforce,
capable of diligently administering the Recovery Act contracts. The
NASA employees' management and technical expertise will help ensure
that the money is spent as intended and that the process is transparent
with full accountability to the American public.
While our current staff is adequate for the job of awarding
Recovery Act contracts and grants, with an anticipated increase in
contract support activities, including reporting and oversight, we will
be continuously assessing our posture and make reassignments and
changes in resource allocation and staff assignments as needed.
NASA has an aggressive training program for acquisition personnel.
In addition to core classes which serve as a mandatory framework to
bring developmental training to contracting professionals, NASA
provides its workforce with supplemental training on topics that will
improve our administration of Recovery Act contracts. Recent examples
include special training on cost and pricing techniques, and fraud
awareness.
Congress' continued support for hiring flexibilities will permit
agencies to hire qualified procurement personnel in an expedited
fashion.
Q7. Understanding that coordination is sometimes necessary, IGs should
not be used as an agency's in-house auditor. What in-house auditing and
program evaluation capabilities do your agencies have?
A7. NASA has robust capabilities for in-house auditing and program
evaluation. The NASA Office of Internal Controls and Management Systems
(OICMS) serves as the in-house auditor for NASA Headquarters. With
contractor support, OICMS performs in-house audits of Headquarters
organizations on a three-year cycle. OICMS reviews of actions related
to the use of Recovery Act funds will be conducted on a regular basis.
The NASA Office of the Chief Financial Officer also has a Quality
Assurance Division that, among its activities, provides and oversees
internal controls and OMB A-123 Appendix A audits; Improper Payment
Information Act and, as needed, associated recovery audits; and
financial statement audit planning and coordination. NASA Centers have
in-house audit staffs to perform audits of key processes and controls
at the Centers. They, too, will review Recovery Act implementation and
operation at NASA on a regular basis. Additionally, NASA's Office of
Program Assessment and Evaluation (PA&E) serves as an independent
assessment organization that provides objective, transparent, and
multidisciplinary analysis on all aspects of NASA programs and
institutions. PA&E is responsible for evaluating NASA programs,
projects and institutions for cost effectiveness, quality, and
performance in achieving strategic objectives. OICMS also performs
quality assurance reviews over NASA's compliance with FMFIA and the
guidance contained in OMB A-123 as it pertains to performing self
assessments of controls in place to mitigate key risks faced by the
Agency.
Beyond its in-house audit capabilities, NASA uses multiple methods,
processes, and entities for monitoring and evaluating its performance.
These same processes and procedures will be used for activities funded
under the Recovery Act. NASA's programs are assessed for relevance,
quality, and performance. A relevance review assures alignment with
national priorities; alignment with the NASA Strategic Plan; impact on
related fields of research or technology; and alignment with
``customer'' (users of NASA data, research results, etc.) needs.
Determining quality is generally prospective and assures ``best value''
for an investment, using peer review processes. Performance reviews
evaluate whether a program is on track to meet its baseline performance
commitments (cost, schedule, science/technical deliverable).
Reviews are conducted internal and external to the Agency. External
evaluations are performed by entities such as the NASA Advisory Council
(NAC) and the National Research Council to assess NASA's program
content and direction. Additional independent reviews are commissioned
by the NASA Administrator or responsible mission organization to review
programs for relevance and quality, as well as performance. Reviews are
rigorous and methodical and focused on the program's methods, results,
and findings by others in the field with requisite expertise, and
independence.
Responsibility for program and project management and their control
mechanisms (NASA Procedural Requirements (NPR) 7120 series)*,
institutional management (NPR 8500 series)*, and financial management
(NPR 9010 and 9120 series)*, occurs at all management levels of the
Agency. NASA's management monitors different aspects of program or
institutional performance, at the highest Agency levels, and uses a
rigorous structure of program and management reviews for Agency-level
decisions. To continue through each phase of development, programs must
demonstrate, on an on-going basis and at key life cycle junctures, an
ability to manage in a manner that produces identifiable results, and
must document performance against previously defined commitments
including multi-year outputs, annual performance goals, milestones and
other metrics, as appropriate.
NASA internally monitors performance through monthly and quarterly
reviews, at each management level. At the senior management level,
program reviews, accompanied by an independent (internal) assessment,
occur across all mission areas (aeronautics, science, space operations
and exploration systems), with an in-depth review each quarter rotating
among the mission organizations. Senior management also reviews
institutional data (finance, human capital, acquisition,
infrastructure), and aggregated Agency measures and metrics, e.g.,
safety, cross-cutting technical and non-technical issues. The data
reviewed, and the accompanying analysis, allows the Agency to focus on,
and proactively address, issues that could lead to not achieving
desired performance goals.
* The NASA Online Directives Information System Library ensures
access by NASA employees and contractors to the most current
documentation.
Q8. Have your agencies ever tasked IG to conduct work on your behalf?
A8. NASA does not task the IG to conduct in-house audits on
management's behalf.
Q9. How has the Internet portal www.grants.gov operated recently?
A9. Over the past year, both NASA internal users and external grant
proposers have experienced technical issues and difficulties associated
with the ``Apply'' functionality within the Grants.gov application.
Q10. What is the Federal Government doing to ensure its operation and
effectiveness?
A10. NASA fully supports the overall purpose and intent of Grants.gov
and continues to contribute funding to support the maintenance and
operations of the Internet portal. On March 19, 2009, NASA received
approval from OMB exempting the Agency from use of the ``Apply''
functionality within Grants.gov and authorizing the Agency to
exclusively use NASA's proposal data system, NASA Solicitation and
Proposal Integrated Review and Evaluation System (NSPIRES), (http://
nspires.nasaprs.com) for the receipt of all grant proposals. This
measure was taken to help relieve the stress on the Grants.gov Internet
portal based on projected increased demands resulting from the American
Recovery and Reinvestment Act of 2009.
Q11. What impact would the crashing of this site have on the ability
to issue grants?
A11. In the event the Grants.gov Internet portal were to crash, NASA
would be able to temporarily provide a backup posting process using
existing Agency resources. This may create some public confusion until
NASA could educate the public regarding the temporary posting URL. In
addition, any existing announcement of opportunities on Grants.gov
would be lost and would require re-posting on NASA's NSPIRES Internet
portal. Otherwise, the Agency's ability to receive, evaluate, process,
and issue grants would experience little disruption.
Q12. I am concerned that the ``Buy American'' provisions in the
Stimulus legislation could add significant costs to and restrict agency
flexibility in spending for science-related construction and
facilities. How will this provision be implemented with respect to
construction of scientific buildings, facilities, and major research
equipment and how will you work to ensure the restrictions do not
result in cost overruns and delays?
NOTE: the language specifically states: SEC. 1605. USE OF
AMERICAN IRON, STEEL, AND MANUFACTURED GOODS. (a) None of the funds
appropriated or otherwise made available by this Act may be used for a
project for the construction, alteration, maintenance, or repair of a
public building or public work unless all of the iron, steel, and
manufactured goods used in the project are produced in the United
States.
A12. The Federal Acquisition Regulation (FAR) Council has made changes
to the Federal Acquisition Regulation which implements the `Buy
American' provisions of the Recovery Act, and NASA will comply with the
regulations in issuing and administering construction contracts with
Recovery Act Funds. NASA will include clauses in accordance with the
regulations in all appropriate contracts which will require that
contractors provide domestic iron, steel, and manufactured goods in
performing the contract.
NASA will mitigate the impact the restrictions may have on cost
overruns or delays by utilizing, as appropriate, the exceptions in the
Federal Acquisition Regulation which permit waiver of the `Buy
American' requirement when the product is unavailable domestically,
only available at an unreasonable cost, or when domestic item use is
inconsistent with the public interest. Established approval protocols
will be followed to ensure that waiver decisions are supported and
well-documented, and that they are consistent with the intent of the
Recovery Act.
Answers to Post-Hearing Questions
Responses by Ellen Herbst, Senior Advisor for Recovery Implementation,
U.S. Department of Commerce
Questions submitted by Chairman Brad Miller
Q1. NIST receives funding from the Recovery Act to prepare standards
for two areas where the Administration intends to make significant
investments--health information technologies and monitoring and control
technology for the electrical grid. How is NIST cooperating with both
the Department of Health and Human Services and the Department of
Energy to complete development of the standards so that they inform the
expenditure in these areas?
A1. In the area of health information technology (IT), the National
Institute of Standards and Technology (NIST) interacts regularly with
the Department of Health and Human Services' Office of the National
Coordinator for Health Information Technology (ONC). The Recovery Act
funding will accelerate efforts to develop and deploy electronic health
records and a nationwide health care information infrastructure.
Specifically, NIST's efforts will target two critical areas: standards
harmonization and the development of a technology testing and
evaluation infrastructure. This builds on the formal collaboration NIST
has had with ONC since 2005, through which NIST provides expertise in
IT standards, testing for conformance to standards, pilot
implementation of standards-based technologies, security, and
certification processes.
In the area of monitoring and control technology for the electric
grid (Smart Grid), NIST is working closely with the Office of
Electricity Delivery and Energy Reliability in coordinating the
development of Smart Grid standards. NIST participates in the
Department of Energy (DOE) Interagency Smart Grid Task Force and has
organized six expert working groups addressing standards issues under
the umbrella of the DOE-sponsored GridWise Architecture Council. NIST
is also working with DOE in developing an interagency agreement
defining how the $10 million of Recovery Act funding directed to NIST
will be used to establish a Smart Grid Inter-operability Standards
Panel by the end of 2009 to provide ongoing coordination and oversight
of the implementation of the Smart Grid standards roadmap now under
development.
Q2. Your testimony described changes in the agency's acquisition
management process, stating that projects less than $75 million will
now receive only ``paper reviews'' instead of discussion at the
Department Investment Review Board. Projects over $75 million or
declared ``major investments'' are to be handled by a process that is
``currently under refinement.'' In the tug-of-war between speed of
award and oversight, this sounds very much like oversight letting go of
the rope. Please explain why these changes don't represent backsliding
from the accountability requirements of the Recovery Act?
A2. The Department of Commerce has a two-prong oversight approach to
Departmental acquisitions. For those programs with a life cycle cost
exceeding $75 million, the program and associated acquisitions must be
reviewed by the Investment Review Board (IRB) to address management and
oversight of the program and planned acquisition strategies for
acquisitions planned to be processed in support of the program. The
Deputy Secretary has the authority to designate other programs that do
not meet the life cycle cost threshold for IRB review as well. All
Recovery Act programs, regardless of whether the program will be
executed internally, through acquisitions or through grants, or some
combination thereof, have been designated as ``major investments.''
Thus, a more stringent review process is in place for all Recovery Act
acquisitions.
The IRB focuses on all aspects of the program (management, risk,
security, systems architecture, acquisition strategies, etc.). Prior to
the meeting of the IRB, the Office of Acquisition Management (OAM)
conducts a comprehensive review of the acquisition plan, the proposed
statement of work, other specific portions of the proposed
solicitation/contract (schedule of items/services to be provided,
deliverables, award/incentive fee/term plans, evaluation criteria,
proposal instructions) to ensure, generally, all Federal Acquisition
Regulations and Commerce Acquisition Regulations and policies are being
adhered to, and specifically, to ensure compliance with all provisions
of the Recovery Act as it relates to acquisitions. Prior to review by
the IRB, the Office of General Counsel (OGC) and the Office of Small
and Disadvantaged Business Utilization (OSDBU) must concur with the
proposed strategy.
For acquisitions that do not meet the threshold or specific
designation as a major investment, OAM has eliminated a formal, once-a-
month meeting to review acquisition plans and strategies. The same
process of reviewing acquisition plans, statements of work, evaluation
criteria and other associated documents still occurs. The concurrence
of the OGC and OSDBU is still required.
These Department-level procedures are in addition to the individual
bureau's internal review processes and are separate from the
Acquisition Management Reviews (AMR) that are being instituted with
this new review policy. Those reviews will focus on the work products
(contracts, supporting files) for compliance with law, regulation and
policy and for completeness. All Recovery Act acquisitions will undergo
a post-award AMR to focus on decision documentation and effective
oversight and management of the contract once the award has been made.
Q3. How are NIST and NOAA coordinating distribution of Recovery Act
resources and their regular appropriations to maximize the value of
both in achieving the Act's goals and the President's priorities?
A3. Both the National Oceanic and Atmospheric Administration (NOAA) and
NIST have placed a high priority on coordinating reviews and internal
clearances required to move forward with the obligation of funds under
the Recovery Act. In determining the allocation of Recovery Act
funding, NIST and NOAA management took into careful consideration the
resources that were being provided by the FY 2009 Omnibus appropriation
as they made decisions in allocating resources in the Recovery Act.
Investment decisions for Recovery Act funds have focused on activities
promoting near-term recovery by creating and preserving jobs. The
funding will also provide longer-term sustained economic growth by
supporting important science and research activities in critical
national priority areas.
NIST's Recovery Act funding supports the procurement of state-of-
the-art scientific equipment that will greatly benefit NIST's
measurement research. Additionally, Recovery Act funding for
fellowships, Postdoctoral researchers and research contracts will
augment NIST's ability to conduct its mission, while meeting the goals
of the Recovery Act. The FY 2009 Omnibus appropriation provides
additional resources for Scientific and Technical Research and Services
(STRS) that invest in longer term research programs that support NIST's
mission to promote U.S. innovation and industrial competitiveness by
advancing measurement science, standards and technology in ways that
enhance economic security and improve our quality of life. NIST
management coordinated the use of funds from the Recovery Act and FY
2009 Omnibus appropriation for construction to best meet NIST's
facilities construction and renovation needs. Furthermore, the Recovery
Act funding targeted at construction provided a timely and expedient
mechanism to achieve the goals laid out in the Recovery Act of
providing economic stimulus, creating jobs, and introducing funds to
the national economy.
NOAA is also emphasizing coordinated distribution of these funds to
maximize their value in achieving the President's priorities. For those
facility construction investments funded with resources jointly under
the Recovery Act and the FY 2009 Omnibus appropriation, NOAA is
ensuring close coordination of the investment planning efforts to
effectively achieve the intended results of the Recovery Act and
regular appropriations, both in terms of job creations and
stabilization, and in terms of facility construction, replacement and
repair necessary to maintain and improve NOAA mission performance.
Q4. In his March 20th memorandum, the President established a process
for communications with outside sources relating to Recovery Act
activities. What steps has the Department taken to implement the
internal controls needed to assure compliance with the President's
direction?
A4. The Department of Commerce has communicated the President's memo
widely throughout the Department. We have issued interim detailed
guidance for reporting contacts with registered lobbyists. We have
discussed rigorous compliance requirements with our leadership and will
continue to emphasize these requirements to all employees affected by
this requirement. We are preparing training which will be available to
all employees through our online training system to support compliance.
Questions submitted by Representative Paul C. Broun
Q1. One of the selling points of the stimulus bill was that action was
needed immediately. How long will it take you to spend all of the money
directed to your agencies?
A1. We are confident we will meet the legislative requirement to
obligate all programmatic Recovery Act funds by September 30, 2010. The
Department of Commerce did not receive block or formula grant funds.
The $7.9 billion in Recovery Act funding for DOC will be expended
through competitive grants and acquisitions as well as support for the
Decennial Census. We anticipate obligating funds throughout the balance
of FY09 and throughout FY10 with the exception of the Office of the
Inspector General (OIG). The OIG funding is authorized through 2013.
Q2. Current OMB guidance only requires that money be tracked to two
layers down. For example, a state and a city would have to report data,
but not the contractor or the subcontractor.
Do you intend to require additional reporting beyond OMB guidance?
A2. At this time, we do not have plans to require additional reporting
beyond the OMB guidance.
Q3. Do you believe two layers of accountability are enough?
A3. Yes, we believe two layers of reporting are sufficient.
Q4. Please list the top risks at your agency associated with stimulus
funding.
A4. In the Department's planning and risk management activities and
utilizing OMB guidance on risk identification, three areas have been
identified as top risks associated with stimulus funding.
1) Administering the Broadband Technology Opportunities
Program (BTOP). STOP received the largest share of the DOC ARRA
funds ($4.7 billion of the total $7.9 billion that DOC
received). Based on the amount of funding as a percentage of
total funding, and because BTOP is a brand new program, DOC has
focused particular management oversight on this program.
2) Administering the increased volume of funding and
transactions associated with Recovery Act funding. The $7.9
billion of Recovery Act funding represents approximately one
annual appropriation for the entire Department of Commerce. The
volume of funds, transactions and activities require increased
risk management activities to adequately oversee their
administration.
3) Staffing requirements, particularly for contract and grants
professionals. DOC is actively working with the Office of
Personnel Management to use all hiring flexibilities and
options available, including direct hire authority; rehired
annuitant waivers and job fairs. Additionally, DOC will, where
appropriate, utilize existing resources through detail
assignments to meet Recovery Act staffing needs.
Q5. What contracts at your agency are ``mission critical?'' That is,
if the specific contract were to experience cost-overruns, schedule
delays, or performance problems would it affect the mission of the
agency?
A5. NIST: The only contracts that could be considered ``mission
critical'' would be the contracts associated with the Building 1
Extension construction project in Boulder, CO. NIST has put in
management safeguards for this as well as all NIST construction
projects to mitigate the potential of cost overruns or scheduling
delays.
Census: All Decennial contracts are considered critical to the
Census Bureau's mission. Accordingly, these contracts are continuously
monitored to identify problems early and mitigate the risk of cost-
overruns, schedule delays and/or performance problems. When issues
arise in these areas the Census Bureau takes immediate action to
minimize the impact to our Decennial Programs.
NOAA: All contracts that are entered into by NOAA are in direct
support of our missions and functions. They are the result of a process
that has distilled all NOAA requirements into our highest mission
priorities for contract funding. We work very hard to make sure that
contract challenges do not affect direct mission accomplishment by
having appropriate work around actions to provide direct support should
there be delays, overruns, or performance issues. Due to their inherent
complexity, NOAA's satellite programs are our highest risk contract
activities, with the greatest potential impact to our weather
prediction and climate research and services missions. However, ARRA
funding for NOAA's satellite program will be used to mitigate both cost
and schedule risk for the National Polar-orbiting Operational
Environmental Satellite System (NPOESS) program.
NTIA: The National Telecommunications and Information
Administration (NTIA) has contracted with IBM to provide administrative
services for the TV Converter Box Coupon Program, which received
Recovery Act funds to continue to educate the public about the
transition and issue converter box coupons to households wishing to
keep using their analog sets after all broadcasters stop analog
broadcasting on June 12, 2009. IBM performs critical program functions
with respect to coupon distribution and redemption. NTIA provides
extensive oversight of this performance-based contract to ensure that
the contractor performs within budget and according to service levels
and milestones agreed upon in the contract.
Q6. The DOE IG identified contract administration as ``one of the most
significant management challenges facing the Department.'' Please
discuss the current status of your agency's ability to issue contracts
and manage grants.
a. Do you have adequate resources?
b. Are your employees adequately trained?
c. Do have adequate staff levels?
d. What can Congress do to help?
A6. The Department, and its subordinate bureaus, have identified
additional staff resources needed and are taking full advantage of all
hiring flexibilities to recruit and/or acquire the needed resources.
This includes participation in hiring fairs, rehiring annuitants,
contracting for appropriate support and re-assigning appropriate staff
to handle Recovery Act acquisitions and grants.
DOC has a cadre of experienced, well-trained acquisition and grants
specialists for executing this work. Recruiting efforts are focused on
acquiring well-trained and experienced individuals to meet the
increased workload. Where appropriate, more skilled and/or experienced
staff or hires will focus on Recovery Act acquisitions/grants and those
with less training or experience will handle the more routine
acquisitions/grants.
The Department will continue to work to ensure proper management
and oversight of its contracting. We look forward to working with
Congress on this issue.
Q7. Understanding that coordination is sometimes necessary, IGs should
not be used as an agency's internal auditor.
What in-house auditing and program evaluation capabilities do your
agencies have?
A7. The Department of Commerce coordinates its in-house auditing and
program evaluation capabilities with its external auditors.
The Department of Commerce has a Senior Management Council (SMC)
that provides leadership and oversight for internal control assessments
under OMB Circular A-123, Management's Responsibility for Internal
Control. The SMC is co-chaired by the Deputy Chief Financial Officer
and the Director, Office of Management and Organization, and is
composed of all bureau Chief Financial Officers, the Chief Information
Officer, and the heads of Human Resources, Acquisition Management,
Budget and Administrative Services offices. The Department also has a
Senior Assessment Team (SAT) which is responsible for conducting day-
to-day A-123 activities, including review, documentation, and testing
of internal controls. The SAT is composed of representatives from
bureaus and offices that have a material impact on the Department's
financial reporting. To the greatest extent possible, the SAT will be
leveraged to assess the additional risk posed for financial reporting
requirements by the receipt and administration of Recovery Act funds
and will be used to test Recovery Act transactions.
Q8. Have your agencies ever tasked IG to conduct work on your behalf?
A8. We have not asked the IG to do something for us that would
ordinarily be considered a bureau or Department administrative
function. We have of course referred matters to the OIG that fall
within the OIG purview of ``waste, fraud and abuse.''
Q9. How has the Internet portal www.grants.gov operated recently?
A9. NOAA had the first competitive grant program under the Recovery Act
with a closing date of April 6, 2009. So far, applicants report that
they are able to submit applications through the Grants.gov portal. We
are continuing to monitor and will report through the Grants Executive
Board issues that are being brought to our attention. We have
encouraged applicants to use Grants.gov but to allow themselves
sufficient time to submit a paper application if needed.
Q10. What is the Federal Government doing to ensure its operation and
effectiveness?
A10. The Grants Executive Board, in partnership with General Services
Administration and Department of Health and Human Services is actively
working to resolve the capacity problems that exists with Grants.gov
with a goal of ``right sizing'' the capacity to handle not just routine
grant applications but also Recovery Act grant applications.
Q11. What impact would the crashing of this site have on the ability
to issue grants?
A11. We believe this contingency to be remote. Grants.gov has
successfully handled the first round of grant applications for NOAA
where over 600 applications were received with few problems.
However, if there were no electronic means to receive applications,
DOC would need to revert to paper-based processes, which are more time-
consuming and labor-intensive than electronic processes. While paper
applications can be ``input'' into Grants Online, it is a time-
consuming process that is subject to human error.
Q12. I am concerned that the ``Buy American'' provisions in the
Stimulus legislation could add significant costs to and restrict agency
flexibility in spending for science-related construction and
facilities.
How will this provision be implemented with respect to
construction of scientific buildings, facilities, and major research
equipment and how will you work to ensure the restrictions do not
result in cost overruns and delays?
NOTE: the language specifically states: SEC. 1605. USE OF
AMERICAN IRON, STEEL, AND MANUFACTURED GOODS. (a) None of the funds
appropriated or otherwise made available. by this Act may be used for a
project for the construction, alteration, maintenance, or repair of a
public building or public work unless all of the iron, steel, and
manufactured goods used in the project are produced in the United
States.
A12. This provision will be implemented by incorporating the provisions
of Federal Acquisition Regulation (FAR) Sub-part 25.6 and including FAR
Clauses 52.225-21, 22, 23 or 24 in all contract solicitations and
contracts. We will work to ensure the restrictions do not result in
cost overruns and delays by carefully coordinating with the acquisition
team to determine the availability, quantity, quality and cost of
domestic construction material needed for the specific projects. The
appropriate level of acquisition planning and contract administration
will mitigate the risk of construction delays and cost overruns.
Q13. I am concerned that the funding for ``external construction
grants'' at NIST--$180 million for a program that was not authorized or
reviewed by this committee and whose origin was simply a single line in
an appropriation bill.
This program appears to be a particularly high oversight risk--
does the Department plan to take any special action to ensure funding
for this program is spent wisely and in a manner that advances NIST's
mission?
A13. The Recovery Act appropriated $180 million to NIST ``for a
competitive construction grant program for research science
buildings.'' Consistent with the legislation, NIST intends to award the
grant funds on a competitive basis. NIST will comply with all federal
guidelines to ensure maximum competition, fair treatment of proposals
received, and that funding is spent wisely. NIST will also closely
adhere to the additional oversight requirements of the Recovery Act and
OMB Recovery Act guidance.
Q14. In your testimony you indicate that the ``Recovery Act'' was
intended to jump-start the economy and create millions of jobs; yet you
mention several activities that will be funded by the stimulus that do
not seem to do either.
For instance, how many jobs do you expect the $170 million for
climate modeling activities to create?
A14. The Recovery Act funds for climate modeling will be used to
acquire two large-scale supercomputing systems, including associated
networking and storage needs, and to perform modifications to data
center space to house these systems. These funds will also be used for
technical and support activities needed for a systematic, comprehensive
and sustainable Climate Data Record Program. These activities will
create, or maintain, short-term jobs amongst the construction, facility
engineering and management, software development and systems
engineering sectors. In addition, it is estimated the economy will
benefit from a host of indirect jobs that the acquisition will affect
(e.g., manufacturing, shipping, and storage of supercomputers and
facilities equipment).
Q15. How many jobs will the $20 million for research on electronic
medical records at NIST create?
A15. DOC recognizes that the Recovery Act funding carries with it the
additional criteria of creating jobs and stimulating economic activity
along with advancing the underlying program goals. We expect that as we
receive grant applications and contract bids, we will develop an
understanding of what the potential recipients believe the jobs
creation potential of their proposals will be. In addition, the
recipients of these grants and contracts will be required to report on
the jobs created through this funding.
Q16. How many jobs do you expect the $200 million to upgrade computers
at libraries and community colleges to create?
A16. The purpose of the Broadband Technology Opportunities Program is
to stimulate demand for broadband, economic growth, and job creation.
NTIA will structure this program to accomplish these purposes. As NTIA
evaluates any grant application, whether it proposes to expand computer
center capacity to community colleges and public libraries, or offer
broadband to unserved and under-served communities, the agency will
consider the extent to which the applicant proposes to create new jobs.
In this regard, the agency will consider the local employment
opportunities presented by the actual project--such as the procurement
and installation of computers--as well as the long-term employment
opportunities presented by bringing state-of-the-art computing systems
to local communities and thereby enabling such communities to witness
the transformative power of broadband.
Q17. The Recovery Act includes $1 billion for the 2010 Decennial
Census. Your agency performs a decennial census every ten years,
correct?
Given the fact that the Census is expected, allocated and,
appropriated every 10 years, why would it be necessary to provide
additional funds for it in a stimulus bill that was designed to create
jobs that would otherwise not exist?
A17. The U.S. Census Bureau counts America's population every 10 years.
The $1 billion provided in the Recovery Act will help the Census Bureau
conduct a more accurate census in. 2010 and will create jobs.
Consistent with direction in the Recovery Act, the Census Bureau
will use Recovery Act funds to recruit over 2,000 partnership
specialists, partnership assistants and other partnership support
staff. This will quadruple the partnership staff funded through the
regular appropriations process. This program is instrumental in helping
to improve the mail out/mail back response rate. Higher mail back
response rates result in a more accurate and less expensive census. The
additional partnership staff will be hired in areas of the country that
are most difficult to count, including areas with large numbers of
recent immigrants, race and ethnic minorities, dense urban
neighborhoods, rural and tribal areas.
The Census Bureau will be increasing media buys from the current
media contractor. Increasing media buys will provide more exposure for
the upcoming census. A major focus of increased advertising and other
promotions will be in the minority-based areas that have historically
lower than average mail back response rates.
Recovery Act funds will also be used to increase Coverage Follow-Up
(CFU). In this operation, the Census Bureau will contact households
that may have made errors on the census form in reporting the number of
persons in the household. The Census Bureau will hire an additional
1,250 temporary telephone interviewers to conduct this operation, who
will work from commercial call centers.
The balance of Census Bureau Recovery Act funds will focus on
funding early census operations, including staffing 494 local census
offices throughout the country, group quarters data collection efforts
(e.g., college dormitories, prisons, etc.), update/leave (i.e., leave a
form and update the address list for the respondent to mail back in
areas with non-traditional addresses), and update/enumerate (i.e.,
update the address list and conduct the enumeration interview in areas
we believe it is more efficient to get the enumeration in person).
Q18. In your testimony, you mention ``streamlined processes'' that
have been established to get money out the door and into the community.
What types of barriers do you face either in regulations or laws
that would make this more difficult? (Davis-Bacon, Federal bidding
practices, environmental regulations, etc.)
A18. We are committed to complying with all requirements. We have not
identified any of the existing laws or regulations as particularly
burdensome in implementing the Recovery Act.
Q19. It has been widely reported that ACORN is one of the
organizations that may be awarded contracts to assist in producing the
2010 decennial census. As you know, the Federal Government relies on
the Census for allocation of seats in the House of Representatives as
well as determinations on all areas of federal funding. Given the
number of federal investigations and criminal charges that have been
brought against ACORN and a number of its employees, do you feel
confident there will be no misuse of taxpayer dollars and that they can
provide scientifically reliable and accurate data?
A19. The Census Bureau is not contracting with ACORN to assist in
conducting the 2010 Census, nor with any other national or local
partner. No data is being requested or received from ACORN or any other
organization that partners with the Census Bureau. ACORN is among the
hundreds of national organizations that have signed up as a partner
with the Census Bureau to promote participation in the 2010 Decennial
Census. These organizations will assure members of the communities they
serve that participation in the census is safe, and beneficial to local
communities. ACORN will not have any role in hiring or collecting
census data.
Q20. The Recovery Act included $430 million for NOAA acquisition,
construction and repair of ships, facilities, equipment and satellite
instruments.
How has the $430 million been divided up?
A20.
$7.4 million for accelerating improvements (Dual
Polarization capabilities) to the Nation's NEXRAD Doppler
weather radar system
$9 million for accelerating NOAA/National Weather
Service, Alaska Region (Weather Forecast Office) construction
projects in Barrow and Nome, Alaska
$74 million to accelerate climate sensor development
and risk mitigation for the National Polar-orbiting Operational
Environmental Satellite System (NPOESS) program
$78 million to complete the construction of a
Fisheries Survey Vessel
$261.6 million has been allocated for NOAA facility
construction and repairs:
$142 million for construction of the Main
Facility of the NOAA Pacific Regional Center on Ford
Island, Pearl Harbor, Hawaii;
$102 million for construction of the
replacement facility for the NOAA Southwest Fisheries
Science Center in La Jolla, California;
$9 million for construction of the
replacement facility for the NOAA Fairbanks Satellite
Operations Facility in Fairbanks, Alaska;
$8.6 million to address high priority NOAA
facility repair projects.
Q21. How much will be going to the NPOESS and GOES-R programs?
A21. NOAA has allocated $74 million for accelerating satellite
development. $48 million will be used for climate sensor development,
specifically, to complete procurement activities for the Clouds and the
Earth's Radiant Energy System (CERES) FM-6 and to continue development
and production of the Total Solar Irradiance Sensor (TSIS) for NPOESS
C-1. The remaining $26 million will accelerate funding for NPOESS.
Funds will allow NOAA to perform critical NPOESS development activities
and address risk mitigation within the program.
Q22. How do these satellite programs compare with construction and
repair of NOAA ships and other facilities in competing for this
funding?
A22. The projects selected are capital infrastructure investments that
are needed to sustain NOAA's mission. Facility and ship maintenance is
required to ensure the health and safety of our employees, while
satellite observations are required for weather forecasting for the
Nation. These projects have been ongoing, and have previously been
included in NOAA's budget requests. Thus, investments in both capital
infrastructure and satellite programs support NOAA's mission.
Q23. In the Recovery Act, $170 million was set aside for climate
modeling. It is my understanding that President Bush's FY09 budget
request for the Office of Oceanic and Atmospheric Research was about
$382 million. This includes operating and procurement funding for all
of NOAA research labs, the Sea Grant College Program, the Undersea
Research Program AND the NOAA Climate Program Office, the office under
which climate modeling is conducted. The set aside seems to be a
substantial amount compared with the funding of the entire Program
Office in years past. Furthermore, we have learned that other
organizations that conduct world-class climate modeling, like the
National Center for Atmospheric Research, sets aside $5 million from
their budget every year, so that every four years they can make a
substantial upgrade to their computing capacity.
Please explain exactly how this $170 million will be spent in a
responsible manner if similar facilities can do the same level of
upgrades for less than one-quarter of this amount.
A23. NOAA's global climate models are among the best in the world and
played a premier role in the last Intergovernmental Panel on Climate
Change (IPCC). Currently, the high performance computing (HPC)
available to the Nation's climate scientists allows global climate
models to resolve climate research questions down to the scale of
continents. Additional research HPC capacity for climate would be
targeted toward using currently available higher resolution models to
meet stakeholder demand for regional to local scale climate
information. The additional HPC would also be used to produce more
comprehensive climate outlooks with advanced models that improve
treatments of processes critical to our understanding of climate
change, such as aerosols and clouds. These advanced models would also
include processes that are missing in today's models, such as ice sheet
melting that is crucial to address sea-level rise. Another example of
what advanced models would include are complex biogeochemical cycles
that can be applied to answer questions about the carbon cycle and
interaction of climate and ecosystems, such as the effects of ocean
acidification.
NOAA will use money from the Recovery Act to acquire two large-
scale supercomputing systems and associated networking and storage in
support of advanced environmental modeling to address critical gaps in
climate modeling and climate data records. Recovery Act money will also
be utilized to modify data center space to house these systems; NOAA
estimates that construction and outfitting will be complete and the
systems will be in place by mid-to-late FY10.
Below is the proposed spending plan for the High Performance
Computing funding.
Answers to Post-Hearing Questions
Responses by Matthew Rogers, Senior Advisor, U.S. Department of Energy
Questions submitted by Chairman Brad Miller
Q1. The Inspector General has now released the report on the
Department's acquisition workforce he described during the hearing. It
states that, despite the effort the Department has devoted to closing
gaps, sustaining the emphasis will be difficult. Further, the
Department will see an increased need for project directors and
contracting officer representatives as Recovery Act activities
increase. How will you incorporate the Inspector General's
recommendations into the Department's effort to shore up its
acquisition management function?
A1. The Department has long focused attention on both the size and
qualifications of its acquisition workforce. With respect to the
Inspector General's recommendations, the Office of Human Capital
Management is gathering information in accordance with 5 CFR 337.201 to
support a Secretarial approval of Direct Hire Authority to facilitate
hiring of contract specialists and federal project directors, among
other segments of the acquisition workforce. In addition, in August
2008, the Department received approval from the Office of Personnel
Management to waive reduction in the annuity of federal retirees if
necessary to re-hire qualified individuals to augment the acquisition
workforce. This allows us the ability to quickly bring individuals on-
board with the necessary experience and skill to support the
Department's immediate contract and financial assistance support needs.
If Direct Hire Authority is considered to be appropriate and is
approved, such authority will permit the Department to bring applicants
on more quickly and will enable DOE to compete more effectively for
scarce acquisition resources against other federal agencies that
currently have Direct Hire Authority. DOE can also make use of the
special Recovery Act authority that provides for certain excepted
service appointments.
In addition to these workforce initiatives, the Department is
leveraging internal resources by shifting workload and resources from
offices that are not receiving substantial Recovery Act funding to
offices that have received substantial amounts of Recovery Act funding.
The Department will use existing personnel vehicles to ensure proper
alignment of funding and staffing. In essence, the Department is
adopting a virtually mobile workforce model by leveraging its resources
and using technology to allow employees to assist other organizations
without traveling to that site.
As part of the Department's initiative to institutionalize strong
contract and project management practices, DOE has identified
impediments to performance, outlined in the Department's Root Cause
Analysis Corrective Action Plan, dated July 2008. One impediment that
was identified is an inadequate number of federal contracting and
project management personnel with appropriate skills to plan, direct
and oversee project execution. As part of the effort to identify
solutions to inadequate staffing, an algorithm, based on bench-marking
with other federal agencies, was developed to facilitate identification
of the right staff size for a given project. This algorithm will help
identify gaps in current project staffing and inform future staffing
decisions.
Complementary to this effort is the Department's conduct of an
annual Gap Analysis Study to assess current and future skill gaps. The
results of this annual study will serve to drive the Department's
strategies for acquisition workforce development, training, and
recruitment.
Q2. The President has made the expansion of renewable energy a
cornerstone of his energy policy. If we are to get the full benefit of
that new source of supply, the transmission grid will need updates to
compensate for the variability in output that can be expected from the
solar and wind generators. The Department receives Recovery Act funds
to advance both of these goals; how are these resources being managed
to match grid improvements to the expansion of renewable supply
sources?
A2. The Department anticipates applying Recovery Act funding to support
a variety of smart grid technologies through a merit-based, competitive
solicitation process. The term ``smart grid'' encompasses a portfolio
of approaches to integrate information technologies and computer-based
controls more fully into the planning and operations of the electric
power system. These systems can be used to enable greater levels of
renewable power generation.
For example, phasor measurement units can be deployed in the
electric transmission system to collect detailed information about the
status of the grid. These systems can be used to monitor the variable
generation from wind energy systems due to changes in the weather and
can provide the ability to offset dips in generation with other
resources.
Advanced metering infrastructure (AMI) involves a two-way
communications network and smart grid devices installed at the customer
level. AMI devices such as smart meters enable participation in demand
response programs such as dynamic pricing, which can be used by
utilities to lower demand during peak periods or during those times
when variable resources are not available. Smart meters can also be
used to make it easier for customers to install and operate rooftop
photovoltaic arrays and account for the two-way flow of power into the
home and back into the grid.
The Recovery Act will also support energy storage demonstrations
projects. Energy storage will address the effects of increased
renewables on the grid in a variety of ways. Ancillary services
provided by fast storage, such as flywheels and batteries, will
accommodate the additional need for frequency regulation. These
technologies have minimal carbon footprint and are twice as effective
as regulation by fossil fuel generators. Large battery systems in the
tens of megawatts (MW) range will aid in smoothing wind and mitigating
ramps. Compressed air energy storage projects will be able to store
hundreds of MW diurnally. This can greatly enhance the utilization of
renewable energy in areas such as California and Texas where wind is
anti-correlated. Projects in all these areas will be solicited in a
competitive process.
The Recovery Act also provides funding for an assessment of
electricity-related resources and interconnection-level grid planning.
These funds will be used to support collaborative analyses (by federal,
State, industry and Non-Governmental Organization (NGO)
representatives) of a broad range of electricity futures and their
associated transmission requirements. These analyses will also take
into account major uncertainties that could affect transmission
requirements, such as the prospects for offshore wind development, cost
reductions for photovoltaic devices, and improved batteries for plug-in
hybrid electric vehicles.
Q3. The Department transferred $10 million to the National Institute
of Standards and Technology for standards development work related to
the electrical grid upgrades. Will the Department wait to make awards
for grid projects employing Recovery Act funds until these standards
are available? If not, how does the Department address the risk that
projects will invest in incompatible technologies as a result?
A3. The Department is working with the National Institute of Standards
and Technology (NIST) to accelerate the development of standards for
the smart grid. Next steps involve the development of a roadmap to
identify the high value technology interfaces where standards agreement
can significantly reduce costs and unleash innovation.
While final, fully agreed upon and mature standards could enable
deployments to proceed more efficiently, the best way to proceed is for
deployments and standards development to move forward in parallel. The
large extent of our electric system means that standards for automation
are needed in many areas, and indeed, many applicable standards already
exist. But this is a landscape in motion. Given the rapid change in
technology and the emerging value to consumers, the economy, and the
environment that characterize these early stages of market entry for
smart grid, co-development is a reasonable path forward. The Department
therefore does not see the need to delay implementation of the Recovery
Act for smart grid activities. As part of the smart grid project
solicitation process, the Department plans to require applicants to
address how inter-operability considerations will be applied and
updated with any changes in standards.
Q4. In his March 20 memorandum, the President established a process
for communications with outside sources relating to Recovery Act
activities. What steps has the Department taken to implement the
internal controls needed to assure compliance with the President's
direction?
A4. After the President issued the March 20th memorandum, the Office of
General Counsel briefed the Recovery Act leadership principals from
every program and every major function and outlined the communication
process as it relates to outside sources and Recovery Act funding. In
addition, the programs sent out guidance to the field offices
explaining acceptable and unacceptable communication practices.
Secretary Chu also issued a department-wide advisory on this topic. The
Department is committed to complying with the President's direction and
maintaining integrity in the distribution of Recovery Act funds.
Questions submitted by Representative Paul C. Broun
Q1. One of the selling points of the stimulus bill was that action was
needed immediately. How long will it take you to spend all of the money
directed to your agencies?
A1. The Department intends to have all funds obligated by September 30,
2010. Some investments will be spent after September 2011, but these
will generally be large projects that will start in 2009 or 2010 but
require a longer timeframe for full completion.
Q2a. Current OMB, guidance only requires that money be tracked to two
layers down. For example, a state and a city would have to report data,
but not the contractor or the subcontractor. Do you intend to require
additional reporting beyond OMB guidance?
A2a. The Department of Energy will comply with all reporting
requirements in the ``Updated Implementing Guidance for the American
Recovery and Reinvestment Act of 2009'' issued by OMB on April 3, 2009.
Our current internal reporting requirements and data tracking
activities include contracting and grants information that is directly
fed to Recovery.gov from USASpending.gov and the Federal Business
Opportunities (FBO.gov) websites. In addition to that data, we will
gather data that is reported by the recipients of Recovery Act funds
directly to Recovery.gov, both of which have the potential to go beyond
the State and city levels.
Q2b. Do you believe two layers of accountability are enough?
A2b. The Department recognizes the importance of accountability in
managing Recovery Act funds and believes consistency in adhering to
levels of reporting established by OMB is critical. To comply with OMB
guidance, the Department will utilize a variety of methods to ensure
the funds are spent effectively and efficiently. These methods include
tracking funds execution, implementing risk mitigation strategies,
assessing performance, and conducting site visits. These types of
actions taken together with levels of reporting are important
considerations and must be assessed as a whole.
Q3. Please list the top three risks at your agency associated with
stimulus funding.
A3. As the Department distributes and manages Recovery Act funds, we
face some challenges in contract management, grant administration, and
human capital. To address concerns in contract management and grant
administration, we have developed strong oversight strategies, provided
programs with guidance, upgraded process controls, and engaged in risk
mitigation planning. Given the reporting requirements of the Recovery
Act, we recognize the need to significantly improve oversight
activities and we are currently developing plans to monitor award
recipients, validate reported outcomes, and conduct site visits. To
address the human resource challenges, the Department's Office of
Procurement and Assistance Management is aggressively recruiting
additional contracting specialists and will avail itself of
opportunities to increase staffing through direct hire authority,
temporary reassignment of personnel from other programs, and temporary
hires.
Q4. What contracts at your agency are ``mission critical?'' That is,
if the specific contract were to experience cost-overruns, schedule
delays, or performance problems would it affect the mission of the
agency?
A4. The Department of Energy has disparate missions which involve high-
level energy research and development, weapons production and stockpile
management, and environmental remediation, restoration, and site
closure. DOE obligates approximately 85 percent of its annual budget
for executing the functions and activities associated with these
programs to its management and operating and other major site and
facility management contracts. These contractors manage and operate
DOE-owned scientific, engineering, and production facilities, and
environmental cleanup sites in direct accomplishment of DOE's missions.
Currently, these contractors have approximately 100,000 employees as
compared to DOE's approximately 14,000 federal employees. These
management and operations contracts are considered the most critical
contracts supporting the Department's missions.
Q5. The DOE IG identified contract administration as ``one of the most
significant management challenges facing the Department.'' Please
discuss the current status of your agency's ability to issue contracts
and manage grants.
Q5a. Do you have adequate resources?
A5a. The Department, like most federal agencies, is addressing the
challenges of supporting existing acquisition and financial assistance
requirements together with the significant increase in pre-award and
post-award workload resulting from the Recovery Act. The Department's
strategy for meeting these needs is both short- and long-term.
Consistent with the objectives of the Recovery Act to expedite the
obligation of funds, the Department is supplementing its high impact
acquisition workforce with acquisition and program personnel assigned
to areas that are not directly or significantly impacted by the
Recovery Act. DOE is also leveraging existing information management
systems to speed the solicitation, evaluation, and award of Recovery
Act procurement and financial assistance instruments, and to provide
post-award administration. As necessary and appropriate, the Department
is also supplementing its existing acquisition workforce with temporary
contractor support. To ensure that appropriate federal personnel are in
place to manage and oversee the disbursement of Recovery Act funding,
the Department has identified essential staffing needs, in both
acquisition and program organizations and is pursuing expedited hiring
strategies, including Direct-Hire authority and use of the Department
of Veterans Affairs' Veterans and Disability Program and the Reemployed
Annuitant program.
Q5b. Are your employees adequately trained?
A5b. The Department has one of the most comprehensive acquisition, and
financial assistance training and certification programs for both its
acquisition and project management workforce. While some competency
gaps continue to exist, they are moderate to small gaps. Multiple
training classes were delivered in fiscal year 2008 and are being
delivered in fiscal year 2009 to specifically address those gaps. In
addition, the certification program for financial assistance
specialists was recently revised to increase mandatory minimum training
and experience requirements and to establish certification requirements
for Technical Project Officers who oversee the technical aspects of
financial assistance projects and activities.
Q5c. Do you have adequate staff levels?
A5c. The Department has a short-term (one-year) gap of 31 GS-1102s
(contract specialists). While progress has been made in closing the
Department's resource gaps, market conditions present a challenge. The
Department is competing with other federal agencies for a limited pool
of qualified acquisition professionals. Competition is fierce,
particularly in the Washington, DC, metropolitan area, both from other
federal agencies and from the private sector. The Department is using
and/or pursuing a number of tools to effectively recruit and hire
qualified individuals to fill current and future staffing needs,
including Direct-Hire Authority, the Department of Veterans Affairs'
Veterans and Disability Program, and the Re-employed Annuitant Program.
Q5d. What can Congress do to help?
A5d. The Department is currently limited to spending no more than 0.5
percent of its Recovery Act funding on management and oversight of the
programs, projects, and activities funded in that Act, a situation we
face alone among agencies funded in the Act. That limitation seriously
constrains our ability to carry out the Recovery Act, by sharply
limiting the number of additional personnel we can hire to manage and
support these, added programs. Replacing that restriction with the
limited transfer authority which the explanatory statement accompanying
the Act indicates was intended would go a long way in assisting the
Department to carry out the Recovery Act more effectively.
Q6a. Understanding that coordination is sometimes necessary, IGs
should not be used as an agency's internal auditor. What in-house
auditing and program evaluation capabilities do your agencies have?
A6a. The Department recognizes the Office of Inspector General is
required to exercise independence during audits and reviews. Within the
Office of the Chief Financial Officer, the Office of Internal Review is
tasked with performing internal assessments of critical financial
management activities. In addition to performing cyclical assessments
of Departmental operations and maintaining a capability for ad hoc
assessments, the Office of Internal Review coordinates a corporate
management control program to evaluate internal control systems on an
on-going basis. After the Recovery Act was passed, the Office of
Internal Review took a lead role in conducting and facilitating
Department-wide risk assessments to identify existing or potential
vulnerabilities within our programs. The Office of the Chief Financial
Officer's Office of Program Analysis and Evaluation also maintains a
robust program evaluation capability and has taken concrete actions to
ensure corporate planning and evaluation of projects are well managed
and effective. These organizations are also leaders in establishing
internal controls guidance, developing documentation standards, and
coordinating external reporting requirements, outcome validation, and
early issues identification.
Q6b. Have your agencies ever tasked IG to conduct work on your behalf?
A6b. Since the Department of Energy received an unprecedented level of
funding from the Recovery Act, the Department requested that the Office
of Inspector General provide grant fraud training to headquarters and
field offices. In addition, we asked the Office of Inspector General to
prioritize the first round of their Recovery Act reviews on programs
that received substantial funding increases and/or are associated with
high risks.
Q7a. How has the Internet portal www.grants.gov operated recently?
A7a. The Department of Energy's users have experienced significant
problems with the grants.gov system, including lack of advance notice
by the Department of Health and Human Services (HHS) of systems changes
and problems logging onto the system. The applicant community has also
experienced problems in submitting applications due to delays by HHS in
implementing software changes to the system.
Q7b. What is the Federal Government doing to ensure its operation and
effectiveness?
A7b. The Office of Management and Budget (OMB) is working with the
Department of Health and Human Services to resolve performance issues
of the system. In the meantime, OMB has requested that agencies,
including DOE, find alternative systems to receive and manage financial
assistance applications for Recovery Act projects and activities.
Accordingly, while Grants.gov remains a viable tool for the posting
of Funding Opportunity Announcements, DOE is not using Grants.gov to
collect and retrieve proposals for financial assistance actions,
including those relating to Recovery Act projects and activities.
Alternatively, DOE is using FedConnect, a commercial system, and DOE's
Industry Interactive Procurement System (IIPS), an in-house system, for
receiving applications.
Q7c. What impact would the crashing of this site have on the ability
to issue grants?
A7c. The impact on the Department of Energy would be minimal since we
are currently using alternative approaches for receiving applications
for DOE financial assistance opportunities.
Q8. I am concerned that the ``Buy American'' provisions in the
Stimulus legislation could add significant costs to and restrict agency
flexibility in spending for science-related construction and
facilities.
How will this provision be implemented with respect to
construction of scientific buildings, facilities, and major research
equipment and how will you work to ensure the restrictions do not
result in cost overruns and delays?
NOTE: the language specifically states: SEC. 1605. USE OF AMERICAN
IRON, STEEL, AND MANUFACTURED GOODS. (a) None of the funds appropriated
or otherwise made available by this Act may be used for a project for
the construction, alteration, maintenance, or repair of a public
building or public work unless all of the iron, steel, and manufactured
goods used in the project are produced in the United States.
A8. Our goal in implementing the Recovery Act is to stimulate the
economy through jump-starting job creation by accelerating planned
conventional construction projects and the procurement of major items
of equipment. We are evaluating whether the Buy American provision has
significant impacts on a project-by-project basis. The primary area of
concern is scientific equipment and instrumentation within construction
projects already underway. After we better understand the provision's
impacts on our projects, we may consider using one of the Buy American
exception provisions; but to date we have not made any exception
requests.
Q9. Mr. Rogers: GAO's testimony mentions four specific examples that
highlight risks at science agencies--three of which are at DOE.
How do you plan on addressing their concerns?
A9. Loan Guarantee Program
GAO recommended that the Loan Guarantee Program (LGP) complete
internal loan selection policies and procedures, amend application
guidance for more specificity, and further define performance metrics
to measure outcomes. The LGP has finalized a policies and procedures
document.
The Department's generic loan application guidance document states
that the determination of the technical merit of the project will be
influenced by the quality of the independent engineering reports,
including the credentials of the consultants, scope of the undertaking,
and strength of the opinions provided. Due to the unique nature of each
project, the Department will provide more detailed requirements for the
required independent engineering reports during its preliminarily
review of application submissions. The Department notes that two
independent engineering reports will be separately prepared by two
independent engineering firms. This information will then be reviewed
and analyzed for a third time by the LGP's underwriting team. On the
basis of the detailed reports and multiple reviews, the Department will
determine whether the application process should move forward or if
applicants require additional guidance.
The Department has developed an initial draft set of performance
measures and metrics for the loan guarantee program. The Department
will continue to refine these measures with the aim of completing the
effort by the time of the fiscal year 2010 budget submission.
Research and Development Selection Process for Oil and Natural Gas
Projects
The Office of Fossil Energy fully supports GAO's recommendation to
modify the Department's oil and natural gas research and development
selection process. Specifically, the Department agrees with GAO's
recommendation to avoid activities that industry would conduct without
federal funding. The FY 2010 budgets propose to terminate DOE's
mandatory and discretionary oil and gas R&D, except for methane
hydrates, which has a long-termer, higher-risk focus. In FY 2009 the
Department is including an evaluation criterion in all oil and gas R&D
solicitations to formally assess whether industry would undertake the
research without federal funding. The Department is compiling
information on industry's current and planned research activities to
help reviewers make this evaluation and requires that proposers
specifically address this criterion in their application.
Coal Technology Program
The Office of Fossil Energy has taken significant steps in working
with the National Energy Technology Laboratory (NETL) to address GAO's
concerns dealing with a variety of project and program challenges in
jointly funding private sector projects demonstrating clean coal and
carbon capture and sequestration technologies. These actions include
improved project management practices such as the establishment of the
NETL Federal Project Management Center and project manager
certification training. The Department is considering evaluation of the
Center and the additional training on project management. In addition,
recent Funding Opportunity Announcements have been released with
specific time limits on the length of negotiations in order to
facilitate closure on the terms of a cooperative agreement. The
Department is considering more rigorous cost-effectiveness criteria to
address GAO's concerns for project selection. The Department is
implementing GAO's recommendation to require a 50 percent private
sector cost-share (in cash, as opposed to projected revenues from
electricity sale) and full-funding prior to award (vs. incremental
funding). While many demonstration projects have unique risks that are
challenging to mitigate, the Office of Fossil Energy has worked hard to
address these risks and continues to take appropriate actions to limit
their effects.
Answers to Post-Hearing Questions
Responses by Todd J. Zinser, Inspector General, U.S. Department of
Commerce
Questions submitted by Chairman Brad Miller
Q1. What indicators will your office use to determine if the training
provided to Department contract and grant management staff is resulting
in earlier detection of fraud or other problems?
A1. The training we provide has a number of purposes which help to
strengthen our fraud awareness and detection programs across the
Department. The relationships we develop during these training sessions
with the program offices help facilitate open communications which can
result in more timely inquiries and notices to our investigation team
when unusual trends are identified. When calls are received, they are
logged in a tracking system, which will allow us to link those contacts
back to our outreach and training efforts.
Q2. Is the current presentation of Recovery Act information on the
Department's web site adequate to meet the Act's requirement for
transparency? If not, what improvements would you suggest?
A2. We have reviewed the Department's Recovery Act web site and the
requirements established by the Office of Management and Budget in its
Recovery Act Guidelines for recovery related web pages, and discussed
the content and implementation of the web site with Department
officials. Based on our review, we found that the Department's Recovery
Act web site (http://www.commerce.gov/recovery) conforms with OMB's
requirements, including providing a prominent link to Recovery.gov and
a link to the Office of Inspector General's web site. Although
reporting by agencies is still evolving and stimulus funds have just
begun to be disbursed, we expect the Department's Recovery Act web site
will continue to meet the Act's requirement for transparency by posting
major communications, funding notifications, and financial and activity
reports. This site is intended to expand and evolve as additional
information becomes available, so we will continue to assess whether it
is meeting accountability and transparency standards and advise the
Department of any concerns we might have as they arise.
Q3. The Act gives you the responsibility to protect ``. . .
employee[s] of any non-federal employer receiving covered funds . . .''
who provide information concerning waste, fraud, and abuse of Recovery
Act funds. How do you intend to ensure your responses to whistleblower
complaints are made within the mandated 180-day review period? Under
what circumstances will you choose to discontinue or not to conduct a
whistleblower's requested investigation? How will you protect such
whistleblowers from retaliation?
A3. We intend to make whistleblower complaints under the Recovery Act,
a top priority when they are received. Our Office of Investigations has
been tasked with this responsibility. We will meet the statutorily
mandated 180-day review period for these complaints through a tracking
system we have designed and implemented. The system provides for a
focal point to log dates of receipt of complaints, status, and due
dates for follow-up and disposition. The tracking system will be
monitored on a regular basis to ensure that we remain aware of
statutory timeframes.
The Act requires that we investigate unless we find that the
complaint is frivolous, it does not relate to covered funds, or another
federal or State judicial or administrative proceeding has previously
been invoked to resolve the compliant. This will require an initial
determination by our office in that regard. If we determine that a
complaint does not meet the requirements for an investigation we will
close the compliant. The Act mandates that Inspectors General list all
such complaints in their semi-annual reports to Congress. Additionally,
the Act specifically provides for final remedies for the protection of
a whistleblower through a report issued by the IG to the Head of the
Department. In the event that the OIG report establishes a fording of
probable cause that retaliation has occurred, the burden of proof will
shift to the employer to prove that they did not retaliate. It will
then be up to the Secretary to adjudicate the matter and apply remedies
provided under the stature. These include: 1. Order the employer to
take affirmative action to abate the reprisal; 2. Order the employer to
reinstate the employee and provide him/her with appropriate
compensation; or 3. Order the employer to pay the complainant's costs
reasonably incurred in bringing the complaint.
While these remedies are good, the Department should consider
including a standard provision in all contracts and grants awarded
under the Recovery Act, stating that a finding by the Department of
whistleblower reprisal by a contractor or financial assistance
recipient may result in termination of funding under the respective
contract or financial assistance award. We intend to discuss this
recommendation with the Department as another means of strengthening
whistleblower protection.
Questions submitted by Representative Paul C. Broun
Q1. Please list the top three risks at your agency associated with
stimulus funding.
A1. Our top three stimulus funding risks are as follows:
1. Meeting the Act's Aggressive Spending Timeline: The
Recovery Act requires funds to be spent quickly, giving bureaus
little time to staff up and gear operations to accommodate the
new and expanded programs, grants, and contracts that this
funding will support. This aggressive spending timeline
significantly increases the risks for fraud and waste in both
stimulus-funded activities and the Department's traditionally
funded operations. This applies across the government--not just
to the Department of Commerce.
2. Shoring Up Grants and Contracts Management: The Recovery
Act's emphasis on grants and contract spending puts additional
pressure on weak management and administrative operations that
we have identified in OIG work over the years, particularly
with regard to three aspects of the Department's grant and
contract management and operations:
A decentralized grants management structure,
which consists of three separate management systems
operated by three different bureaus--each managing a
subset of Commerce grant activity according to policies
established at the Department level;
The shortage of qualified contracting
specialists, technical specialists, and subject matter
experts--particularly in light of the anticipated shift
from cost-type contracts, which are predominantly used
today, to fixed-price contracts, which require
different knowledge and skill sets; and,
The significant dollars dedicated to funding
construction grants and contracts, two areas that are
inherently risky and historically difficult to manage
effectively.
3. Fraud Potential: Under the Recovery Act the Department of
Commerce received a significant amount of funding, almost
double that which is routinely received on an annual basis.
Regardless of the strength of the existing internal controls,
anytime there is an influx of money of this magnitude, there is
an increased potential for fraud. For example, Internet scams
linked to Recovery Act funding have already been identified.
While Congress provided certain safeguards in the Act,
continued diligence by OIGs and agencies will be essential to
mitigate this increased risk of fraud.
Q2. What contracts at your agency are ``mission critical''? That is,
if the specific contract were to experience cost overruns, schedule
delays, or performance problems, would it affect the mission of the
agency?
A2. We have not conducted an audit to determine all the mission
critical contracts in the Department, but we have discussed with
Departmental officials that each bureau should engage in such an
exercise to identify its mission critical controls. Those we have
identified are as follows:
Contracts for the 2010 decennial census, NOAA satellites, and
digital/broadband expansion support key mission-critical operations for
the Department of Commerce. These contracts, costing billions of
dollars, support programs that are essential to determining
Congressional representation, allocating federal and State funding for
community improvements, public health, education, and transportation,
and public safety and security. Failure to execute these contracts
effectively would seriously impact its mission.
2010 census contracts
Deadlines for the delivery of decennial counts--which are used for
apportionment, to redraw congressional districts, and to distribute
hundreds of billions of dollars in federal funds--are set by law. The
Census Bureau is facing significant challenges in preparing for the
2010 decennial as a result of problems with its plan for automating its
major operations, which had to be significantly scaled back late in the
decade. Four contracts, representing approximately $2.2 billion, are
critical to the bureau's ability to conduct a successful census.
Field Data Collection Automation (FDCA) contract for
hand-held computers and related systems and automation support
for decennial field operations.
Decennial Response Integration System (DRIS) contract
for integration of all data responses, including mail-back
forms and non-response follow-up.
Decennial Access and Dissemination System II contract
for data tabulation and dissemination services.
2010 Communication Campaign contract for integrated
communications that includes a mix of public relations,
partnership materials, grassroots marketing, special events and
more to help ensure that all people are reached in the most
efficient and effective manner.
NOAA contracts
Two NOAA satellite systems currently in development are critical to
the Nation's ability to provide continuous long- and short-term weather
and environmental data: the National Polar-orbiting Operational
Environmental Satellite System (NPOESS) and the Geostationary
Operational Environmental Satellite R-Series (GOES-R). Both of these
systems have experienced significant cost overruns and schedule delays.
They are intended to replace aging satellites that are nearing the end
of their life cycles, and must be deployed in time to avoid a gap in
critical satellite coverage.
Digital/broadband conversion
The National Telecommunications and Information Administration's
(NTIA) $1 billion contract to prepare consumers for the switch to all-
digital programming and the management support contract the agency
expects to award in support of the $4.7 billion broadband program are
also mission-critical initiatives for the Department.
Q3. Where do you believe your office should concentrate its time and
resources--focusing on high-risk programs or on the most expensive
programs?
A3. Our work on Recovery Act oversight is risk-based. As part of the
Recovery Act, the Department's bureaus themselves will be assessing the
risk within their programs and developing plans and operating
procedures to adequately address these risks. As part of our oversight,
we will be reviewing the draft plans and providing feedback to ensure
that the bureaus have implemented adequate preventive, detective and
monitoring controls over Recovery Act programs. While our risk
assessment results are preliminary, we believe the Broadband program
represents the highest risk to the Department.
Q4. Despite campaign promises by the President to not issue signing
statements, and to ensure whistleblower protections, the President
recently issued a signing statement that said the following:
``Sections 714(1) and 714(2) in Division D prohibit the use of
appropriations to pay the salary of any federal officer or
employee who interferes with or prohibits certain
communications between federal employees and Members of
Congress. I do not interpret this provision to detract from my
authority to direct the heads of certain executive departments
to supervise, control, and correct employees' communications
with the Congress in cases where such communications would be
unlawful or would reveal information that is properly
privileged or otherwise confidential.''
How do you reconcile the President's campaign promise with his
recent signing statement?
If you believe that these statements are consistent,
do you believe they have a chilling effect on whistleblowers?
What affect will this have on your ability to uncover
waste, fraud, and abuse?
A4. The IG Act and Departmental orders provide clear authority for the
IG to receive whistleblower complaints, complete investigations, and
protect the identity of whistleblowers regardless of the nature of the
information provided in their complaints.
As part of our Recovery Act efforts we are conducting fraud
awareness briefings, which include a discussion of whistleblower
protections under the Whistleblower Protection Act and the Recovery
Act. In that regard, we do not think that the President's signing
statement will affect our ability to protect the identity of
whistleblowers or to uncover fraud, waste, and abuse.
Q5. The stimulus bill contains $350 million for the IG community and
GAO to provide oversight:
What entity will provide oversight of how these funds
are spent?
How can the taxpayers be sure that the IG community
and the GAO are spending this money wisely?
A5. OMB's Updated Implementing Guidance for the Recovery Act
establishes an independent requirement for OIGs to report monthly on
their total Recovery Act spending. It is our understanding that these
reports will be posted to Recovery.gov, and we will include in our
reporting the office's Recovery Act activities. Stimulus funding
provided to the OIG will be spent primarily on personnel and travel to
conduct oversight, and potentially to hire specialized contract
support. One measure of how we spend these funds will be the work
products that we produce and publish on our Recovery Act web page.
Congress is, however, the entity that is in the best position to
provide oversight to the IG community.
Q6. Are you concerned that the Recovery Accountability and
Transparency (RAAT) Board will create a new level of bureaucracy and
ultimately undermine your independence?
Does the RAAT Board, or anyone in the Administration,
have the ability to terminate your investigations?
What steps are you required to take in order to
maintain an investigation if directed to terminate one?
A6. I serve as a member of the Recovery Accountability and Transparency
Board with 10 other Inspectors General, including the Board's Chairman.
The RAAT Board has discussed this issue and cannot envision a case
where the Board would consider asking an inspector general to terminate
an investigation. Based on these discussions, we do not anticipate this
circumstance arising.
Q7. Understanding that coordination is sometimes necessary, IGs should
not be used as an agency's internal auditor.
Have you ever been asked by an agency to do work?
What was your response?
A7. We have, on occasion, initiated work at the request of the
Secretary. For example, in the past year we conducted work in response
to a request from the Secretary regarding the Decennial Census.
Commerce agencies are familiar with the authority,
responsibilities, and duties accorded to the OIG under the Inspector
General Act, including our mandate for maintaining independence. There
are times, however, when our interactions with Department officials to
prevent and detect fraud, waste, and abuse may result in an audit or
investigation. We are often called on by program managers and grants
officers to provide assistance when they suspect misuse of funds or
other program irregularities. In these instances, we conduct a
preliminary analysis to determine whether additional follow-up work is
warranted and take the appropriate next step based on our findings.
Q8. What lessons can be learned from other initiatives (like the
Reconstruction in Iraq, Katrina Relief, or the Troubled Asset Relief
Program) that attempted to balance expediency with accountability? Are
these lessons currently being included in your oversight plans?
A8. The Department of Commerce received emergency funding to assist
recovery efforts in the aftermath of Hurricanes Katrina and Rita in
2005 and Andrew in 1992. Though the size of these allocations and the
scope of spending were significantly smaller than Commerce's Recovery
Act funds and programming, the Department nonetheless was faced with
some similar challenges: establishing strong internal controls to
safeguard funds, accelerating the awards process, keeping contractors
and grantees accountable, and ensuring programs meet their objectives.
Our oversight of the Department's use of hurricane-related funds
found that Commerce took steps to ensure that contracts and grants were
awarded quickly and appropriately, and that funded projects were sound
in concept and responsive to the economic recovery needs of the area.
But we identified weaknesses in grantees' reporting and in departmental
oversight of their performance. We found that conducting site visits
was critical to effectively monitoring the progress of funded projects,
many of which involved construction and a range of economic development
activities--common focuses for Recovery Act funding.
This work also reinforced the recognition that balancing expedience
with accountability requires vigilant attention to maintaining
comprehensive systems of internal controls; robust mechanisms for
developing accurate budget estimates and tracking project costs;
sufficient staff in terms of both skill and number to oversee
contractor performance; and timely, systematic contractor and recipient
reporting. These lessons learned are being included in our oversight
plans for Recovery Act spending.
Q9. Mr. Zinser: I am particularly concerned with the part of your
written testimony in which you state that a recently completed audit of
NOAA satellite acquisition contracts found that contractors were
receiving high award fees for projects that were experiencing serious
performance shortfalls and large cost overruns. Will you please expand
on your audit findings and explain to the Committee why contractors are
being rewarded for failing?
How will the sudden influx of funding from the
Recovery Act and the Omnibus Appropriations bill affect the
success (or failure) of these satellite acquisition programs?
A9. Our September 2006 audit report, Poor Oversight and Ineffective
Incentives Leave NPOESS Program Well Over Budget and Behind Schedule,
found that the prime contractor (Northrup Grumman) had received more
than $123 million in award fees--84 percent of the available fee pool--
for the first six award periods of the NPOESS contract, despite
ongoing, significant delays and cost overruns. We found that the
contract's award fee plan did not sufficiently tie fee amounts to
critical, high-risk tasks; that program officials were awarding interim
fees even though the contractor was missing key milestones, and that
the contract allowed for unearned fees to be ``rolled over'' to
subsequent fee periods to give the contractor additional chances to
earn them. Our report provided recommendations for correcting these
problems.
The practice of awarding high fees to contractors for programs that
are failing, behind schedule, and over budget is a systemic problem
throughout the government. Other OIGs, as well as GAO, have reported
these abuses. As a result, federal agencies, including the Department
of Commerce, as well as the Office Federal Procurement Policy (OFPP)
are reviewing award-fee policies and practices and are issuing new
guidance to ensure award-fee contracts truly promote and reward
excellent performance.
Sustained funding for NOAA's satellite programs is critical. The
development and launch of these satellites, which will modernize the
government's environmental monitoring capabilities, are high risk
programs that will be at even greater risk if there are any gaps in
satellite funding. Continued congressional support for these programs
is, therefore, critical. It is imperative that NOAA, NASA and the Air
Force address the management and technical issues with the NPOESS
satellite program, however, in our view it is equally important that
the program receives sustained funding.
Answers to Post-Hearing Questions
Responses by Thomas C. Cross, Interim Inspector General, National
Science Foundation
Questions submitted by Chairman Brad Miller
Q1. Your testimony regarding the capability of the Foundation's grants
management staff expressed a concern about their ability to deal with
the increased workload expected from the Recovery Act. How can you
monitor performance in those offices to detect if a workload problem is
occurring?
A1. Any time an agency receives a significant amount of new funding
without a concomitant increase in funding for the administrative costs
associated with managing and overseeing programs, there is an increased
risk of fraud and abuse. With the Recovery Act, NSF will increase the
amount of funding available to the scientific community by $3 billion,
nearly half of NSF's regular annual appropriation. However, NSF did not
receive any additional funding in its salaries and expenses
appropriation. We are already working to monitor how NSF will mitigate
this potential risk. First, we are reviewing the processes through
which NSF intends to award the bulk of these funds. By using already-
existing programs and processes, to the extent possible, NSF can
potentially mitigate the impact on its staff. Second, as NSF begins
making awards and then moves into the post-award monitoring phase, we
will continue to monitor NSF's processes and identify those areas that
may be in need of improvement. Finally, through ongoing communications
with NSF staff at all levels, we can identify potential workload
problems before they occur and assess NSF's actions to reduce those
problems.
Q2. What indicators will your office use to determine if the training
you provided to Foundation contract and grant management staff is
resulting in earlier detection of fraud or other problems?
A2. We believe that the training and resources we have provided to the
agency about uncovering grant fraud, combined with the additional
information required of recipients of Recovery Act funds, will
ultimately yield more referrals to our investigators than what would
otherwise be the case. Although we maintain statistics on hotline
contacts, in the past they have not been categorized according to
source. We are reconsidering this policy to better track how we obtain
our referrals. An increase in referrals from the agency would be an
indication of the effectiveness of the training, and an increase in
queries or other communications concerning potential fraud would show
an improved awareness of fraud issues by agency personnel.
Q3. Is the current presentation of Recovery Act information on the
Foundation's web site adequate to meet the Act's requirement for
transparency? If not, what improvements would you suggest?
A3. The OIG is currently reviewing the NSF's web site presentation of
the Recovery Act and expects to provide suggestions to improve the
transparency and accountability to the public. NSF is generally
following the common Recovery Act web page formats set forth in the
Office of Management and Budget's implementation guidance. In addition,
the Foundation's web page incorporates some of the best practices
suggested in the guidance. For example, the Foundation has placed the
Recovery web page link at a prominent place on the NSF home page and
has made an effort to ensure that as much content as possible is
accessible to a wide audience, including persons with disabilities.
Because the Recovery web page will mostly likely be the primary means
for NSF to inform and communicate with the public and the research
community about Recovery Act activities, we are taking the time to
review the web site more closely to help ensure that it will
disseminate information effectively.
Q4. The Act gives you the responsibility to protect ``. . .
employee[s] of any non-federal employer receiving covered funds . . .''
who provide information concerning waste, fraud and abuse of Recovery
Act funds How do you intend to ensure your responses to whistleblower
complaints are made within the mandated 180-day review period? Under
what circumstances will you choose to discontinue or not to conduct a
whistleblower's requested investigation? How will you protect such
whistleblowers from retaliation?
A4. With OIG resources already stretched and the anticipation of a
significant increase in allegations of fraud, waste, and abuse of
Recovery Act funds, we recognize that meeting these time requirements
will be a challenge. However, we have taken a proactive approach by
educating our staff on the specific whistleblower responsibilities we
have under the Act and emphasizing the new time requirements.
We will incorporate additional milestones specific for Recovery Act
cases into our existing electronic case management tracking system and
monitor them closely to ensure that we adhere to them. We also are
planning to hire additional staff to handle the anticipated increase in
whistleblower and other cases.
Allegations that we receive concerning Recovery Act funding will be
thoroughly reviewed and evaluated. In the case of a whistleblower
complaint, the initial review will include determining if the funds in
question or the alleged retaliation involves Recovery Act funds. We
will also evaluate the substance of the matter and the supporting
evidence to determine its merits and whether a full investigation is
warranted. Decisions to discontinue an investigation are based on the
evidence identified during the investigation and are reviewed by
management to ensure the decision is consistent with the IG community's
Quality Standards for Investigations.
In the case of whistleblowers who allege retaliation, the identity
of the complainant has already been compromised, and the best
protection we can provide is a timely and thorough investigation to
provide them a remedy if appropriate. When a whistleblower submits a
confidential allegation to our office, on the other hand, our standard
practice is to protect him or her from retaliation, as in the case of
anyone who reports fraud, waste, or abuse. It is the office policy not
to identify the source of allegations, and we have procedures to
provide complainants with Confidential Source status, when requested,
to further protect their identity.
One step that we have already initiated is to educate through our
outreach program the recipients of Recovery Act funds of the
requirements they must comply with, including the section covering
whistleblowers. By ensuring that recipients are aware that this
protection covers State and local government employees, as well as
contractors, and that the Act requires our office to investigate any
allegations of retaliation, we reinforce the serious consequences of
retaliation. Additionally, completing timely, thorough investigations
and referring our results to the Agency for action, when appropriate,
serve as a further deterrent.
Questions submitted by Representative Paul C. Broun
Q1. Please list the top three risks at your agency associated with
stimulus funding.
A1. First, while NSF received $3 billion in additional funding, nearly
half of its regular annual appropriation, it did not receive any
additional funding for its administrative activities. Consequently, NSF
faces the risks associated with spending these funds appropriately,
within a very demanding timeframe, without an increase in staffing.
Second, over the past several years, we have identified the management
of large-facility projects as one of NSF's top challenges. Through the
Recovery Act, NSF received an additional $400 million in its Major
Research Equipment and Facility Construction appropriation for these
large science-infrastructure projects. NSF will continue to be
challenged to properly oversee these complex efforts. Finally, NSF's
mission of supporting basic science and engineering research and
education, where outcomes are less tangible in the short-term, is
unique among federal agencies. With respect to stimulus funding, NSF
will be challenged to identify, track, and report on how it will meet
the goals of the Recovery Act in a way that provides meaningful
information to the public on NSF's unique role. This will also require
increased agency effort to monitor a large volume of new grants awarded
over a relatively short period of time to ensure that the associated
funding is accurately accounted for and expended properly.
Q2. What contracts at your agency are ``mission critical?'' That is,
if the specific contract were to experience cost-overruns, schedule
delays, or performance problems would it affect the mission of the
agency?
A2. As you are aware, NSF's mission generally is to support all fields
of science and engineering primarily through providing grants for
research and education. Unlike many other federal agencies, NSF does
not conduct its own research or operate its own laboratories. Thus,
NSF's achievement of its mission is not dependent upon a handful of
contracts, rather it is dependent upon a community of thousands of
researchers in all scientific disciplines.
However, there is one area of NSF's activities to which this
question is particularly germane. NSF has a more direct role in its
management of the United States Antarctic Program (USAP), which is
administered under the agency's largest single contract. In addition to
funding research, NSF provides scientists with logistics, operational,
and laboratory support in Antarctica. This includes a year-round inland
research station at the South Pole; two year-round coastal research
stations with extensive laboratory and computing capabilities; summer
research camps; ice-breaking research ships; U.S. Air Force and Air
National Guard air transports; a fleet of ski-equipped LC-130
airplanes; Twin Otter airplanes; helicopters; U.S. Coast Guard and
commercial icebreakers for channel breaking; treaty inspection
missions; a variety of over-snow vehicles; and automated, unmanned
weather and geophysical observatories. NSF provides the bulk of these
services through a contract, currently with Raytheon Polar Services
Company, and is currently conducting a competition for its renewal. For
USAP, this contract is clearly ``mission critical.''
Q3. Where do you believe your office should concentrate its time and
resources--focusing on high risk programs, or on the most expensive
programs?
A3. Our office will use its process for identifying the highest-risk
programs as the primary means for allocating OIG time and resources. It
should be noted, however, that many of the most expensive programs will
be assessed as high-risk based in part on the amount of funding
involved. To identify high-risk programs, we will evaluate factors such
as significant past audit and investigation findings, current program
management challenges, complexity of the program and related
activities, issues of substantial concern to the Congress and
Administration that impact the program, NSF's own risk assessments, and
the dollar value of the program. Programs that have significant risk
factors in other areas, such as institutions that have been repeatedly
faulted for mishandling of NSF funds, will also be a priority for OIG.
Our established risk-based approach--including consideration of program
expense--will enable our office to target Recovery Act programs that
potentially pose the greatest problems in terms of ineffectiveness,
inefficiency, fraud, waste and abuse.
Q4. Despite campaign promises by the President to not issue signing
statements, and to ensure whistleblower protections, the President
recently issued a signing statement that said the following:
``Sections 714(1) and 714(2) in Division D prohibit the use of
appropriations to pay the salary of any federal officer or
employee who interferes with or prohibits certain
communications between federal employees and Members of
Congress. I do not interpret this provision to detract from my
authority to direct the heads of executive departments to
supervise, control, and correct employees' communications with
the Congress in cases where such communications would be
unlawful or would reveal information that is properly
privileged or otherwise confidential.''
How do you reconcile the President's campaign promise with his
recent signing statement? If you believe that these statements are
consistent, do you believe they have a chilling effect on
whistleblowers? What affect will this have on your ability to uncover
waste, fraud, and abuse?
A4. We do not believe that the President's statement will have any
effect on our ability to uncover waste, fraud and abuse. Given the
independent status of an OIG, we also believe the statement is unlikely
to deter whistleblowers from approaching our office.
Q5. The stimulus bill contains $350 million for the IG community and
GAO to provide oversight. What entity will provide oversight of how
these funds are spent? How can the taxpayers be sure that the IG
community and the GAO are spending this money wisely?
A5. OIGs are subject to oversight by Congress, OMB, and the new CIGIE.
Moreover, specifically in the case of Recovery Act funding, the
Recovery Accountability and Transparency (RAT) Board will provide
coordination and general oversight of related OIG activities and
expenditures. If inappropriate or illegal behavior within an OIG is at
issue, the Integrity Committee of the CIGIE has shown in recent years
that it is capable of policing the OIG community for OIG senior staff
that might be engaged in improper conduct.
With regard to whether or not the money is spent wisely, the IG
community is largely operating in a fish bowl. Under the Act's
requirements for transparency, OIGs must report their activities and
expenditures related to the Recovery Act on a monthly basis. Taxpayers
will be able to decide for themselves, by seeing the products issued
and the expenditures made, whether or not OIG money is being spent
prudently. Our office posted its first Recovery Act report for the
month of March on our web site on April 8.
Q6. Are you concerned that the Recovery Accountability and
Transparency (RAT) Board will create a new level of bureaucracy and
ultimately undermine your independence?
A6. For those of us who administer, receive and oversee Recovery Act
funds, the Act requires an unprecedented measure of transparency and
accountability. It is apparent that the procedures followed in the past
by agencies and their OIGs will not be sufficient to accomplish the
goals of the legislation. We therefore view the Board not as an
impediment to getting things done, but as supporting the efforts of the
community to establish and effectively coordinate oversight in response
to the heightened standards in the Recovery Act.
Our communications with the Board so far have been reassuring in
that regard. It has indicated that it will work to coordinate efforts
of OIGs when appropriate, disseminate best practices, and otherwise be
as supportive as possible. We are satisfied that the protections of our
independence included in the Recovery Act are adequate. We also take
comfort in the fact that the Board is comprised entirely of agency
Inspectors General.
Q7. Does the RAT Board, or anyone in the Administration, have the
ability to terminate your investigations?
A7. No. The Board may request that we refrain from an investigation,
but the Recovery Act states that each IG makes the final decision on
audits and investigations.
Q8. What steps are you required to take in order to maintain an
investigation if directed to terminate one?
A8. We are required to respond within 30 days to the Board, the agency,
and the Congress, with our reasons for rejecting the Board's request.
Q9. Understanding that coordination is sometimes necessary, IGs should
not be used as an agency's internal auditor. Have you ever been tasked
by an agency to do work? What was your response?
A9. Every year, the NSF OIG goes through an annual audit planning
process to determine the most significant areas on which to focus our
audit efforts. As part of this process, the OIG solicits information
and audit ideas from both the National Science Board (NSB) and the NSF.
The agency typically identifies institutions or particular awards that
they believe present a significant risk to NSF and federal funds. After
a thorough review, we choose audits to conduct based on our own risk
assessment, and they may include audit ideas brought to the OIG by NSF
or the NSB. By requesting input from the agency, we are able to focus
our work on substantive matters without compromising our independence.
In addition, the NSB or NSF may make requests for audits anytime
during the year. For example, approximately two years ago at the
request of the NSB, the OIG conducted a review of the Joint Statement
of Understanding entered into between the NSB Chairman and the Governor
of Hawaii. To ensure independence during an agency-requested audit, the
OIG is solely responsible for determining the scope, planning,
execution, and the reporting of audit results. If the agency requests a
review that supports its management function, but OIG decides not to
perform it because it is not a priority for our oversight function, the
agency may expend its own funds to have the review performed by a
contractor.
Q10. What lessons can be learned from other initiatives (like the
Reconstruction in Iraq, Katrina Relief, or the Troubled Asset Relief
Program) that attempted to balance expediency with accountability? Are
these lessons currently being included in your oversight plans?
A10. Although NSF played only a minor role in Katrina relief, we are
aware that the IG community successfully coordinated its efforts to an
unprecedented degree to assure appropriate oversight of the Gulf Coast
recovery funds. IG Phyllis K. Fong, Chair of the CIGIE, recently
outlined a number of key lessons learned by the IG community during the
Hurricane Katrina relief efforts in her testimony before the Senate
Committee on Homeland Security and Government Affairs on March 5, 2009.
From NSF's perspective, the most relevant lessons pertain to: 1) the
efficacy of risk management activities; 2) interagency data sharing
and; 3) staffing.
Risk management activities are of critical importance because not
all programs (or grants) are created equal when it comes to risk, and
they therefore require different levels of oversight. Interagency data
sharing refers to the difficulty of sharing data or conducting matches
of computer databases across agencies due to federal privacy laws. From
an accountability perspective, we know through first-hand experience
that it is not easy to determine whether a grant applicant has received
duplicate funding from another federal agency for doing the same work.
Staffing concerns arose during the Katrina relief oversight effort, as
OIGs had to improvise to ensure proper oversight of both Katrina and
their agencies' normal activities.
Both risk management and staffing issues figure prominently in our
oversight planning. To date, we have shared numerous resources related
to risk with NSF; participated on their implementation planning teams,
in large part to advise them on risk management issues; and are
currently reviewing past audit findings for their relevance to the
implementation of Recovery Act funding. With regard to staffing, we are
mindful of the need to provide active oversight to both Recovery Act
funds and NSF's regular appropriation. Once we see NSF's agency plan,
we will develop our own spending plan to ensure that resources are
effectively allocated between these two imperatives. We are already
preparing to hire at least two more full-time staff by the end of the
fiscal year, and we have submitted a request to OPM for authority to
hire retired annuitants.
Q11. Mr. Cross: In your testimony, you indicate you have launched an
``outreach effort'' to educate agency managers and the public about
your role under the Recovery Act How have you reached out to the public
and what types of issues have you focused your outreach efforts on? How
do you expect the public to be made aware of the use of funds by NSF
and how will they communicate concerns to you?
A11. We maintain a multi-pronged outreach effort to reach personnel
within NSF and the research community, including both principal
investigators and institution officials/research administrators.
Within NSF, we have established a liaison program, whereby a team
from OIG, generally composed of one investigator and one auditor, is
assigned to every directorate and office. Our liaisons meet with their
NSF counterparts in both formal and informal settings providing
briefings; attending staff meetings; and providing outreach resources
and OIG material, such as Semiannual Reports and Audit Plans. We
regularly present to NSF's Program Managers. We also maintain a
presence on NSF's Announce Channel, a system of television monitors
throughout the agency on which important information is shared. Our
Announce presentations include the NSF Hotline information. We are in
the process of producing a new presentation alerting agency personnel
to the requirements for whistleblower allegations under the Recovery
Act. We have an internal (within NSF) web page, from which NSF
personnel can access OIG resources, including presentations, audits,
Semiannual Reports, and material addressing fraud and research
misconduct.
Regarding our outreach to the research community, we maintain
effective lines of communication through presentations, workshops,
briefings, meetings, and site visits. We routinely present to members
of groups like the Society of Research Administrators International and
National Council of University Research Administrators, who have the
best vantage point from which to identify fraud or waste in the
expenditure of NSF grant funds. We also regularly participate in NSF
Regional Grants Workshops, which are forums for new faculty,
researchers, and administrators. At the last such conference, our staff
provided our recently completed brochure entitled A Guide to NSF OIG
and The American Recovery and Reinvestment Act (ARRA) of 2009. This
handout explained the Recovery Act, identified the NSF OIG priorities
regarding the Act, addressed the whistleblower protections under the
Act, and provided contact information regarding misuse of stimulus
funds. Finally, we routinely present to groups involved in applying for
or administering NSF awards or performing supported research. We always
include information for contacting us to report concerns. We are
incorporating Recovery Act-related topics into all such presentations.
We publicize our address, telephone numbers, telephone hotline, e-
mail hotline, and web-based hotline. It is our intention that all
parties involved in the research enterprise--from NSF program personnel
to research administrators to principal investigators and their
collaborators--will know how to communicate with us and bring
information to our attention.
Q12. Mr. Cross: In your testimony, you indicate that your work
generally focuses on completed projects and expenditures; however, with
the stimulus funding the goal is to prevent the waste of taxpayer
dollars before the money is committed I understand your office will
prepare an implementation plan for Recovery Act oversight once the
agencies approved plan is returned from OMB. But other than training
activities you mentioned, will your office have any role prior to the
money being committed to specific projects or research?
A12. While NSF has not yet provided the OIG with its spending plan or
submitted its agency-wide recovery plan to OMB, we believe it is
critical that we start work as early as possible to help ensure
Recovery Act funds are spent appropriately and expeditiously. We have
already started real-time reviews that will enable us to more quickly
respond to potential areas of concern. We plan to conduct these reviews
while NSF develops its plans, policies, and procedures in order to
provide timely feedback to NSF. This timely feedback will allow NSF to
take corrective actions and prevent problems before they arise.
Because NSF will rely in large part on its existing policies,
procedures, systems, and processes, our first review will focus on
whether they are adequate to ensure that its awardees understand and
are accomplishing the goals of the Recovery Act, accounting properly
for ARRA funds, and reporting accurately and in a timely manner on ARRA
funds and activities. By verifying that NSF has sound systems in place,
we can help ensure NSF meets the Recovery Act's expectations for
transparency and accountability.
Q13. Mr. Cross: Since the goal of the stimulus is to create jobs, has
anyone in your office been tasked with verifying the number of jobs a
specific grant or project actually will create or created? Are you
aware of anyone in the agency that will be verifying that?
A13. Chairman Devaney of the Recovery Accountability and Transparency
Board recently told an IG working group on which we participate that
the Council of Economic Advisors is discussing how to define ``jobs
created'' and ``jobs saved'' with regard to the Recovery Act. Once it
has determined standard definitions to be applied government-wide, we
are expecting the administration to provide the agencies and OIGs with
guidance on this key issue. At that time, we will determine what
approach is appropriate. In the meantime, we have been discussing with
NSF issues surrounding how to capture the data and validate it. We are
aware that the agency has had some preliminary internal discussions
about this subject, but it has not yet determined how to verify jobs or
other measurable economic benefits that are generated by Recovery Act
funds.
Answers to Post-Hearing Questions
Responses by Patricia Dalton, Managing Director, Natural Resources and
Environment Division, U.S. Government Accountability Office
Questions submitted by Chairman Brad Miller
Q1. Are you satisfied with the progress DOE has made in implementing
the recommendations in your reports for improving its loan guarantee
programs, and that it is ready to properly handle these projects? Are
you confident that DOE is prepared to appropriately evaluate and manage
the higher-risk projects Secretary Chu wishes to pursue?
A1. DOE has taken several actions in response to the recommendations in
our July 2008 report.\1\ We recently began to evaluate these actions as
part of our annual mandated review of the program. However, because we
have not completed that evaluation, we are not in a position to say
whether we are confident that DOE has taken adequate steps to ensure
that the program will be well managed. The American Recovery and
Reinvestment Act of 2009 (Recovery Act) changed the program by
providing $6 billion to pay the subsidy costs of loan guarantees for
projects that can be started quickly and associated administrative
expenses of up to $25 million. At the same time, Secretary Chu directed
the program to expedite the issuance of loan guarantees. As a result,
DOE is continuing to develop the program while also accelerating its
implementation, which may present challenges and additional risks. We
will evaluate and report on these apparent increased risks as part of
our ongoing review.
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\1\ GAO, Department of Energy: New Loan Guarantee Program Should
Complete Activities Necessary for Effective and Accountable Program
Management, GAO-08-750 (Washington, D.C.: July 2008).
Q2. What improvements would you recommend for agency systems
submitting data to Recovery.gov to meet accountability and transparency
---------------------------------------------------------------------------
requirements?
A2. We are currently in the process of issuing our first report under
the Recovery Act. The focus of this report is the steps the 16 states
and selected localities are taking to comply with federal requirements
and efficiently and effectively use the influx of the Act's funds.
Because the IGs are expected to audit federal agencies' operations and
programs related to the Recovery Act, we have not directly examined
federal agency systems that submit data to the Recovery.gov web site.
However, we plan to examine accountability and transparency issues,
including Recovery.gov web site information, as an element of our
bimonthly reviews.
Q3. Is the current presentation of Recovery Act information on the
agency's web site adequate to meet the Act's requirement for
transparency? If not, what improvements would you suggest?
A3. Transparency issues related to information on the Recovery.gov web
site will be an important element of our bimonthly Recovery Act
reviews. Our first Recovery Act report is focused on the steps the 16
states and selected localities are taking to comply with federal
requirements and efficiently and effectively use the influx of the
Act's funds. [GAO9]Our subsequent reviews will examine the states' use
of Recovery Act funds, including the level of detail of their
submissions, and whether web site information is accurate, well-
organized, understandable, and complete.
Questions submitted by Representative Paul C. Broun
Q1. Please list the top three risks at your agency associated with
stimulus funding.
A1. Our prior work has identified several areas that deserve special
attention from federal agency management and the IG's office to ensure
that funds are put to best use. Specifically, we are concerned about
risks for (1) new programs that do not have established management and
internal control activities; (2) existing programs that do not have
adequate staff to distribute and oversee a significant infusion of
funds; and (3) fraud, waste, and abuse because billions of dollars are
going out quickly and eligibility requirements are being established or
changed.
Q2. To all panelists, what contracts at your agency are ``mission
critical?'' That is, if the specific contract were to experience cost-
overruns, schedule delays, or performance problems would it affect the
mission of the agency?
A2. This question can better be answered by the departmental IGs
because the Recovery Act has directed the IGs to review the federal
agencies' related operations and programs and GAO to review the use of
funds by states and localities. In addition, the Recovery
Accountability and Transparency Board will help prevent waste, fraud,
and abuse by reviewing contracts and grants to ensure they meet
applicable standards, follow competition requirements, and are overseen
by sufficient numbers of trained acquisition and grants personnel.
Q3. Where do you believe your office should concentrate its time and
resources--focusing on high risk programs, or on the most expensive
programs?
A3. We are particularly concerned about high-risk programs because of
the potential for fraud or waste that results in little, if any,
benefit to the taxpayers. Experience tells us that this risk grows when
billions of dollars are going out quickly and eligibility requirements
are being established or changed. Accordingly, we plan to focus on new
programs that lack established policies and procedures for ensuring the
proper use of Recovery Act funds and existing programs with known
vulnerabilities that are receiving a significant infusion of funds.
Q4. Despite campaign promises by the President to not issue signing
statements, and to ensure whistleblower protections, the President
recently issued a signing statement that said the following:
``Sections 714(1) and 714(2) in Division D prohibit the use of
appropriations to pay the salary of any federal officer or
employee who interferes with or prohibits certain
communications between federal employees and Members of
Congress. I do not interpret this provision to detract from my
authority to direct the heads of executive departments to
supervise, control, and correct employees' communications with
the Congress in cases where such communications would be
unlawful or would reveal information that is properly
privileged or otherwise confidential.''
How do you reconcile the President's campaign promise with his
recent signing statement?
If you believe that these statements are consistent,
do you believe they have a chilling effect on whistleblowers?
What effect will this have on your ability to uncover
waste, fraud, and abuse?
A4. While the consistency of the President's campaign promises with the
quoted signing statement is beyond the scope of GAO's work, we can tell
you that our ability to uncover waste, fraud, and abuse is unaffected
by the President's signing statement. GAO has independent authority to
access information needed for our work under both our organic statute
and the Recovery Act.
Under our organic statute, GAO has authority to access information
needed for the effective and efficient performance of GAO reviews and
evaluations. Subject to certain limited exceptions, all agencies must
provide the Comptroller General access to information he requires about
the duties, powers, activities, organization and financial transactions
of that agency.\2\ Under section 902 of the Recovery Act, GAO has
additional authority to examine the records of contractors or their
subcontractors pertinent to contracts they are awarded from funds made
available by the Act. GAO may also interview officers and employees of
such contractors or their subcontractors as well as officers or
employees of any State or local government agency administering the
contract, regarding such transactions.
---------------------------------------------------------------------------
\2\ 31 U.S.C. 716(a), (d).
Q5. To all panelists, the stimulus bill contains $350 million for the
---------------------------------------------------------------------------
IG community and GAO to provide oversight.
What entity will provide oversight of how these funds
are spent?
How can the taxpayers be sure that the IG community
and the GAO are spending this money wisely?
A5. The Recovery Act delineates an important set of responsibilities
for the accountability community to ensure that the Act's $787 billion
maximizes the benefits to the taxpayers. GAO is charged with reviewing
the use of funds by selected states and localities, and IGs will audit
federal agencies' operations and programs. To make the most effective
use of the accountability community's limited funds and, in particular,
to avoid duplication of effort, GAO has outreached to each of the
federal IGs and will continue to coordinate with them in the next years
as we review Recovery Act activities. We believe that many eyes can
best ensure that all of the Recovery Act funds are used efficiently and
effectively. This includes continued oversight by Congressional
committees, including the Subcommittee on Investigations and Oversight.
In addition, the House Committee on Oversight and Government Reform has
oversight responsibility over the Government Accountability Office. GAO
also has its own Inspector General, recently established as a statutory
office rather than an administratively created one by the GAO Act of
2008, who could be requested to investigate GAO's usage of stimulus
funds.
Q6. Are you concerned that the Recovery Accountability and
Transparency (RAT) Board will create a new level of bureaucracy and
ultimately undermine your independence?
Does the RAT Board, or anyone in the Administration,
have the ability to terminate your investigations?
What steps are you required to take in order to
maintain an investigation if directed to terminate one?
A6. GAO is not concerned that the Recovery Accountability and
Transparency Board will undermine our independence. The Board does not
have the ability to terminate our investigations. It must coordinate
its investigations with the Comptroller General pursuant to section
1528 of the American Recovery and Reinvestment Act. Furthermore, no one
in the administration may terminate our investigations because GAO is
an independent legislative agency.
Q7. Understanding that coordination is sometimes necessary, IGs should
not be used as an agency's internal auditor.
Have you ever been tasked by an agency to do work?
What was your response?
A7. This question is not relevant to GAO because it is a Congressional
agency.
Q8. What lessons can be learned from other initiatives (like the
Reconstruction in Iraq, Katrina Relief, or the Troubled Asset Relief
Program) that attempted to balance expediency with accountability?
Are these lessons currently being included in your
oversight plans?
A8. A key lesson learned from our work on disaster relief after
Hurricanes Katrina and Rita is that agencies sometimes do not focus on
the importance of preventive controls, including (1) validating data
used in decision making against other government or third-party
sources; (2) inspecting whenever possible to confirm information prior
to payment; (3) conducting system edit checks to identify problems
before payments are made; and (4) training staff on fraud awareness. In
addition, we testified in February 2009 that businesses and individuals
that have been excluded for egregious offenses ranging from national
security violations to tax fraud have improperly received federal
contracts and other funds.\3\ Also in February 2009, the National
Procurement Fraud Task Force published a white paper that identified
best practices and made recommendations for agencies to consider in
preventing fraud, waste, and abuse in grants they administer.\4\ These
recommendations included enhanced certifications, increased training,
improved communications with grant recipients, increased information
sharing concerning potential fraud, and rigorous oversight of how grant
dollars are spent after they are awarded. Our audit approach includes
verification that states and localities are implementing preventive
controls.
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\3\ GAO, Excluded Parties List System: Suspended and Debarred
Businesses and Individuals Improperly Receive Federal Funds, GAO-09-
419T (Washington, D.C.: Feb. 26, 2009).
\4\ National Procurement Fraud Task Force, Grant Fraud Committee, A
Guide to Grant Oversight and Best Practices for Combating Grant Fraud
(Washington, D.C.: Feb. 2009).
Q9. Given that three of your four high-risk programs are in DOE, how
confident are you that they can manage the creation of a new agency,
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ARPA-E?
A9. ARPA-E has several similarities with DOE's innovative technology
loan guarantee program, one of the four programs that I identified as
needing special attention. Specifically, we are concerned that because
ARPA-E is new, DOE has not completed a number of key management and
internal control activities. As a result, DOE may not be well
positioned to manage the $400 million in Recovery Act funds to ensure
that they are effectively and efficiently used with controls to prevent
fraud or waste.
Q10. The Secretary of Energy recently stated that he would reinstate
FutureGen with some modifications. Please explain the risks of going
forward with FutureGen as originally planned by DOE.
A10. Our February 2009 report found that the former Secretary of Energy
restructured the original FutureGen project primarily because of
concerns that DOE was contractually responsible to pay 74 percent of
the project's rapidly rising costs.\5\ Specifically, we found that the
FutureGen project was projected to grow from $950 million (in 2004
dollars) to about $1.3 billion (in 2005 dollars)--an increase of about
$370 million, or 39 percent. However, because the former Secretary of
Energy's decision was not based on a systematic and comprehensive
comparison of the costs, benefits, and risks of the original FutureGen
versus the restructured FutureGen, we recommended that, before
implementing significant changes to FutureGen or before obligating
additional funds for such purposes, DOE prepare a comprehensive
analysis that compares the relative costs, benefits, and risks of a
range of options that includes (1) the original FutureGen program, (2)
incremental changes to the original program, and (3) the restructured
FutureGen program.
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\5\ GAO, Clean Coal: DOE's Decision to Restructure FutureGen Should
Be Based on a Comprehensive Analysis of Costs, Benefits, and Risks,
GAO-09-248 (Washington, D.C.: Feb. 2009).
Q11. The Stimulus bill requires GAO to provide bimonthly reports of
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states and localities use of funds.
How was the decision made to conduct reviews on only
16 entities at a time?
Are you worried that this is insufficient?
A11. We decided to follow 16 states and the District of Columbia over
the next few years in order to provide an ongoing longitudinal analysis
of the use of funds under the Recovery Act. We selected these 16 states
on the basis of outlay projections, percentage of the U.S. population
represented, unemployment rates and changes, and a mix of states'
poverty levels, geographic coverage and representation of both urban
and rural areas. They contain about 65 percent of the U.S. population
and are estimated to receive about two-thirds of the intergovernmental
grants funds available through the Recovery Act. The states are
Arizona, California, Colorado, Florida, Georgia, Iowa, Illinois,
Massachusetts, Michigan, Mississippi, New Jersey, New York, North
Carolina, Ohio, Pennsylvania, and Texas. We will also sample localities
within these states to provide a perspective on the use of Recovery Act
funds at a local level.
In addition, we will review the recipient reports from all 50
states as part of our responsibilities to review these filings. These
recipient reports are to include information on funds received, the
amount of recovery funds obligated or expended to projects or
activities, and the projects or activities for which funds were
obligated or expended. Depending on our assessments, we may visit
states other than the 16 core group to review targeted areas.
Q12. Given the recent scandals with companies misusing recovery funds
to bestow bonuses to employees, and the lack of oversight that allowed
such actions to take place, would it be beneficial for Congress to
``flex'' its oversight responsibilities by significantly increasing the
number of hearings and other legislative tools to keep a closer eye on
agencies?
Or do you feel that a stepped up effort by GAO and
the Inspector General offices of the different departments will
be able to keep such mismanagement of funding to a minimum?
A12. We believe that Congressional oversight hearings have the salutary
effect of encouraging all parties involved--federal agencies, State and
local governments, and the auditors--to redouble their efforts to
ensure that federal funds are effectively and efficiently spent in
compliance with laws and regulations.
Appendix 2:
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Additional Material for the Record