[Senate Hearing 111-127]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-127
 
                  IMPROVING THE ABILITY OF INSPECTORS
                    GENERAL TO DETECT, PREVENT, AND
                      PROSECUTE CONTRACTING FRAUD

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


                                HEARING

                               before the

              AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 21, 2009

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

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



                  U.S. GOVERNMENT PRINTING OFFICE
50-387                    WASHINGTON : 2009
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20402-0001



        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           JOHN McCAIN, Arizona
MARK PRYOR, Arkansas                 GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
JON TESTER, Montana
ROLAND W. BURRIS, Illinois
MICHAEL F. BENNET, Colorado

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


              AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT

                       CLAIRE McCASKILL, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
THOMAS R. CARPER, Delaware           TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina
MICHAEL F. BENNET, Colorado
                     Margaret Daum, Staff Director
                Molly Wilkinson, Minority Staff Director
                       Kelsey Stroud, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator McCaskill............................................     1
    Senator Collins..............................................     9

                               WITNESSES
                        Tuesday, April 21, 2009

Hon. Brian D. Miller, Inspector General, General Services 
  Administration.................................................     2
Richard L. Skinner, Inspector General, U.S. Department of 
  Homeland Security..............................................     4
Charles W. Beardall, Deputy Inspector General for Investigations, 
  Department of Defense..........................................     6
J. Anthony Ogden, Inspector General, U.S. Government Printing 
  Office, and Chairman of the Legislation Committee, Council of 
  the Inspectors General on Integrity and Efficiency.............     7

                     Alphabetical List of Witnesses

Beardall, Charles W.:
    Testimony....................................................     6
    Prepared statement...........................................    53
Miller, Hon. Brian D.:
    Testimony....................................................     2
    Prepared statement with an attachment........................    29
Ogden, J. Anthony:
    Testimony....................................................     7
    Prepared statement...........................................    65
Skinner, Richard L.:
    Testimony....................................................     4
    Prepared statement...........................................    43

                                APPENDIX

Questions and responses submitted for the Record from:
    Mr. Miller...................................................    77
    Mr. Skinner..................................................    86
    Mr. Beardall.................................................    92
    Mr. Ogden....................................................    94


                  IMPROVING THE ABILITY OF INSPECTORS


                    GENERAL TO DETECT, PREVENT, AND


                      PROSECUTE CONTRACTING FRAUD

                              ----------                              


                        TUESDAY, APRIL 21, 2009

                                   U.S. Senate,    
          Ad Hoc Subcommittee on Contracting Oversight,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:30 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Claire 
McCaskill, Chairman of the Subcommittee, presiding.
    Present: Senators McCaskill and Collins.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Good afternoon. The hearing will now 
come to order. I want to welcome everyone to today's hearing. 
It is the first hearing of the Subcommittee on Contracting 
Oversight of the Homeland Security and Government Affairs 
Committee. I am extremely honored to have the opportunity to 
conduct this hearing and many others that will follow. This is 
going to be about our concerted effort to identify the waste, 
fraud, and abuse that has occurred in government contracting.
    Last year, the Federal Government awarded $518 billion in 
contracts. This year, that number will grow even higher due to 
the hundreds of billions of dollars in stimulus money that will 
be awarded through contracting. Even a very small percentage of 
fraud costs taxpayers dearly. That is why we have chosen this 
first hearing to look at the issue of fraud. It is talked about 
a lot, but frankly, I think if all of us are really honest, we 
probably don't get a lot of it.
    I think the witnesses today understand the challenges that 
we have in government in terms of rooting out fraud, and they 
are numerous, and hopefully we will have a chance today to go 
over them in some detail. After this hearing, the important 
work then must begin, and that is continuing to put pressure on 
all parts of the system to make sure that fraud is found and 
that people are held accountable for that fraud. It does no 
good to find it if nothing happens because if you find it and 
nothing happens, that sends a big green light to the next bad 
actor that they can take advantage of taxpayer money in a way 
that is criminal.
    So we are happy to start with contracting fraud. Obviously, 
there are going to be many hearings of this Subcommittee that 
will deal in many different aspects of the challenges we face 
in government contracting, but today is about fraud.
    Let me introduce our witnesses and ask for their testimony, 
and then I will have a number of questions. I want to welcome 
all four of you and I appreciate all of your work.
    Brian Miller is the Inspector General for the General 
Services Administration. He is also the Vice Chair of the 
National Procurement Fraud Task Force and the Co-Chair with Mr. 
Skinner of the National Procurement Fraud Task Force 
Legislation Committee.
    Richard Skinner is the Inspector General for the Department 
of Homeland Security. He serves with Mr. Miller, as I said, as 
the Co-Chair of that National Procurement Fraud Task Force.
    Charles Beardall is the Deputy Inspector General for 
Investigations at the Department of Defense. As the agency with 
the lion's share of government contracting, you are going to 
get a lot of attention in this Subcommittee, Mr. Beardall. The 
Department of Defense also has the lion's share of contracting 
fraud. I welcome your perspective on these issues.
    Tony Ogden is the Inspector General of the U.S. Government 
Printing Office. He is the Chair of the Legislation Committee 
of the Council of Inspectors General on Integrity and 
Efficiency.
    It is the custom of this Subcommittee to swear in all 
witnesses that appear before us, so if you don't mind, I would 
like you all to stand. Raise your hands, please.
    Do you swear that the testimony you will give before this 
Subcommittee will be the truth, the whole truth, and nothing 
but the truth, so help you, God?
    Mr. Miller. I do.
    Mr. Skinner. I do.
    Mr. Beardall. I do.
    Mr. Ogden. I do.
    Senator McCaskill. Thank you all. We will ask you all to 
try to hold your testimony to 5 minutes. Obviously, we will 
include any of your written testimony in the record, and Mr. 
Miller, let us begin with your testimony.

   TESTIMONY OF HON. BRIAN D. MILLER,\1\ INSPECTOR GENERAL, 
                GENERAL SERVICES ADMINISTRATION

    Mr. Miller. Good afternoon, Madam Chairman. Thank you for 
inviting me here today and the opportunity to testify on these 
important matters. I and my distinguished colleagues here today 
would like to thank you for your strong support of Inspectors 
General. We are especially honored to be part of the first 
hearing of this Subcommittee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Miller with an attachment appears 
in the Appendix on page 29.
---------------------------------------------------------------------------
    The American Recovery and Reinvestment Act brings with it a 
sharp mandate to move quickly in addressing our Nation's 
economic problems. Doing so means that traditional oversight 
may need to be modified. This afternoon, I would like to 
highlight four new ideas that I believe will help expedite OIG 
reviews and control fraud and criminal activity.
    I call the first proposal ``Don't tip off the target.'' 
Basic investigative techniques include not tipping off a 
subject about an investigation. Premature disclosure can lead 
to destruction of evidence, intimidation of witnesses, or 
flight. It can also preclude undercover work and provide an 
opportunity for the subject to manipulate his finances to 
frustrate the government's interests.
    As an illustration, telling someone like Bernie Madoff that 
he is under investigation would only give him an opportunity to 
hide or transfer ill-gotten gains before the government had an 
opportunity to understand the full extent and scope of his 
crimes. Therefore, I ask that you treat Inspector General 
subpoenas the same as Grand Jury subpoenas, which are exempt 
from giving the subject notice when financial records are 
sought.
    Second, I propose that you require a simple report from OMB 
regarding how many debarred companies and individuals are 
currently receiving Federal grants and contracts. This can be 
done by a cross-check of the Excluded Parties List System 
(EPLS), and USASpending.gov, which contains all of the Federal 
grants and contracts. Generally, one would not expect to find 
the same companies or individuals on both USASpending.gov and 
EPLS. These reports would highlight the critical need to fully 
check on the status of contractors and grantees before the 
government does business with them.
    My third proposal is in response to the decision by the 
U.S. Court of Appeals for the D.C. Circuit in the case of 
United States v. Safavian. The D.C. Circuit held that Federal 
employees have no legal duty to disclose all material facts 
when they provide information in response to a direct question 
from an OIG special agent. In the absence of such a legal duty, 
Mr. Safavian could not be convicted criminally of concealing 
information when he provided half-truths to a special agent, 
intending to mislead the special agent. To correct this, we 
propose legislation that would clarify that Federal employees 
have a duty to tell the whole truth, not half-truths, to 
special agents.
    My fourth proposal is to restore the contract clause that 
allowed GSA Office of Inspector General to do defective pricing 
reviews when they conduct post-award audits. Essentially, the 
regulations currently provide that we cannot look at pricing 
after the contract is signed under GSA contract terms. So if no 
pre-award review is done of pricing, the contractor gets a free 
pass audit-wise from any look at whether their pricing 
information was defective. Two qui tam lawsuits show that we 
need to have post-award audit rights. One case settled for 
$98.5 million and the other case settled for $128 million, both 
for defective pricing. The irony is that my office does not 
have audit authority under GSA contracts to audit for these 
very issues, these defective pricing issues, when we conduct a 
post-award audit, and we ask the Subcommittee to consider 
correcting this.
    Thank you for your attention. I ask that my statement and 
material records be made part of the record. I would be pleased 
to respond to any questions that you may have. Thank you.
    Senator McCaskill. Thank you very much. Mr. Skinner.

  TESTIMONY OF RICHARD L. SKINNER,\1\ INSPECTOR GENERAL, U.S. 
                DEPARTMENT OF HOMELAND SECURITY

    Mr. Skinner. Thank you, Madam Chairman, and good afternoon. 
I appreciate the opportunity to be here today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Skinner appears in the Appendix 
on page 43.
---------------------------------------------------------------------------
    I want to begin by thanking you for your leadership, 
ensuring that American taxpayers are receiving the biggest bang 
for their dollar in government contracts and for the support 
you have shown the Inspector General community. I also applaud 
the creation of this Subcommittee. The American taxpayer is 
demanding and deserves to know how its tax dollars are being 
spent and that they are being spent wisely. The work of this 
Subcommittee can go a long way to bringing accountability to 
the management of Federal contracts. We in the Inspector 
General community look forward to working with you in this 
endeavor.
    Finally, I wish to commend the Department of Justice and 
the IG community for their hard work on the National 
Procurement Task Force. As my colleague, Brian Miller, already 
pointed out in his testimony, much was accomplished as a result 
of their hard work. But our work is not done. We are in the 
first mile of a marathon. There is still an array of 
legislative proposals that were considered by the Task Force 
but did not make it into legislation or regulation.
    Two proposals in particular, I believe, could go a long way 
in improving the ability of Inspector Generals to detect, 
prevent, and prosecute contract fraud. The first proposal deals 
with IG access to contractor and subcontractor records and 
employees. One can argue that access rights are implicit in the 
IG Act, yet in reality, this is not the case. We are 
continually being challenged by contractors, causing undue and 
prolonged delays in our ability to carry out our audits and 
inspections.
    This problem was recognized by Congress, I believe, when it 
enacted the Recovery Act of 2009. The Act gave IGs explicit 
access rights to contractor employees and records and access 
rights to subcontractor records. Unfortunately, for some 
unexplained reason, the legislation did not give IGs access 
rights to subcontractor employees. In my opinion, this simply 
does not make sense, especially when you consider that many 
government contractors rely heavily on subcontractors to meet 
their contractual obligations.
    For example, after Hurricane Katrina, FEMA awarded four 
major contracts valued at over $2 billion to help with response 
efforts. These four contractors then subcontracted 63 percent 
of their work to subcontractors. Under the Recovery Act, we 
would not have legislative authority to interview subcontractor 
employees during the course of our audits or inspections. To do 
our jobs effectively, IGs should be authorized to interview 
subcontractor employees regarding all transactions involving 
taxpayer money.
    The second proposal deals with the IG's ability to match 
computer data being maintained by Federal, State, and local 
government agencies. The Computer Matching and Privacy 
Protection Act set forth procedural requirements that agencies 
must follow when matching electronic databases for the purpose 
of establishing Federal benefit eligibility, verifying 
compliance with benefit program requirements, or recovering 
improper payments under a benefit program. The procedural 
requirements include formal matching arrangements between the 
agencies, notice in the Federal Register of the agreements 
before any matching could occur, and review of the agreements 
by data integrity boards at both agencies. While the Computer 
Matching Act provides certain exemptions for statistical 
matches, matches for research purposes, and law enforcement if 
a specific target of an investigation has been identified, 
agency decisionmakers and data owners rarely consider OIG 
oversight--its work to fall under any of the exemptions.
    Interagency sharing of information about individuals can be 
an important tool in improving the integrity and efficiency of 
government programs. By sharing data, agencies can often reduce 
errors, improve program efficiency, identify and prevent fraud, 
evaluate program performance, and reduce the information 
collection burden of the public by using information already 
within government databases.
    The work in the IG community in identifying management 
control weaknesses, which is our primary objective here, within 
agency program activities would be facilitated by permitting 
IGs as part of their regular audits and inspections to match 
computer databases being maintained by Federal, State, and 
local government agencies. Because IGs rarely control the 
databases to be matched, valuable time and resources are lost 
persuading system managers that matching is appropriate and 
necessary for us to do our job.
    Finally, I would like to comment briefly on the issue of 
Federal Acquisition Workforce shortcomings. Madam Chairman, as 
you stated in your March 19 open letter to the acquisition 
community, the contracting workforce is no longer adequate to 
handle the volume and complexity of the workload.
    In response to these concerns, acquisition shops throughout 
the government have begun to implement two statutory hiring 
flexibilities to assist in recruiting acquisition-related 
positions: Direct hire authority and reemployed annuitant 
authority. These authorities expedite the hiring process and 
make it easier to hire qualified candidates. Overall, according 
to a recent GAO report, these initiatives are beginning to show 
some preliminary results. Just as agency procurement officers 
across government face a shortage of experienced staff, so do 
we in the IG community. To be effective, we need a mix of 
auditors, inspectors, investigators with acquisition 
experience. It would be extremely helpful as we continue to add 
experienced acquisition professionals to our staffs if those 
same statutory hiring authorities were expanded to the IG.
    Madam Chairman, that concludes my statement, and again, 
thank you for this opportunity to share my thoughts with you 
today.
    Senator McCaskill. Thank you. Mr. Beardall.

 TESTIMONY OF CHARLES W. BEARDALL,\1\ DEPUTY INSPECTOR GENERAL 
           FOR INVESTIGATIONS, DEPARTMENT OF DEFENSE

    Mr. Beardall. Good afternoon, Chairman McCaskill. Thank you 
for inviting me to appear before you to discuss the important 
issue of procurement fraud. I am here representing Acting 
Inspector General Gordon Heddell and the women and men of the 
Office of the Inspector General Department of Defense, 
including the special agents of the Defense Criminal 
Investigative Service, the law enforcement arm of the DOD 
Inspector General.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Beardall appears in the Appendix 
on page 53.
---------------------------------------------------------------------------
    DCIS was established in 1981 in response to the Defense 
contracting scandals of the 1970s and 1980s. From its start as 
an office of seven special agents, DCIS has grown to 366 
agents. Initially, DCIS special agents focused almost 
exclusively on combatting fraud and corruption. However, as the 
organization matured, its priorities expanded. DCIS's current 
top priorities include investigations of contract fraud, 
corruption, terrorism, illegal diversion and theft of sensitive 
technologies and weapons, and the protection of the Global 
Information Grid.
    Although its mission has expanded significantly, DCIS has 
remained true to its roots. Today, 61 percent of over 1,800 
DCIS active investigations involve DOD contracting. Cases in 
which DCIS has led or participated in have recouped $14.67 
billion for the U.S. Government. Clearly relevant to today's 
discussion, $9.9 billion of those recoveries have occurred 
within the last 10 years.
    DCIS has an ever-increasing workload. Implementation of 
critical initiatives related to the Global War on Terrorism and 
technology protection has reduced our ability to devote 
additional resources to fraud and corruption. Further, since 
September 11, 2001, and the beginning of Operations Enduring 
Freedom and Iraqi Freedom, DCIS's law enforcement partners in 
combatting procurement fraud have had to divert significant 
resources to competing priorities, such as terrorism, force 
protection, and counterintelligence.
    During the past 8 fiscal years, DOD contracting increased 
more than 250 percent, while the numbers of DCIS special agents 
has grown 13 percent. During the past 5 fiscal years, 
investigations involving financial crimes increased 35 percent, 
kickbacks increased 66 percent, and bribery increased an 
astounding 209 percent.
    Recent increases in contract fraud and corruption 
investigations are largely the result of overseas contingency 
operations. To date, DCIS has initiated 173 Global War on 
Terrorism contract-related investigations. Of these, 41 percent 
involve procurement fraud and 42 percent involve corruption.
    DCIS is a key participant in various procurement fraud task 
forces and working groups, which have proven to be effective 
alliances to combat contract fraud. The multi-disciplinary, 
multi-agency National Procurement Fraud Task Force has been 
extremely effective in fostering communication and better 
coordination to combat procurement fraud. Worthy of special 
mention, its offshoot, the International Contract Corruption 
Task Force, was formed to target contract fraud and corruption 
in Southwest Asia. Consisting of nine agencies, the Task Force 
is a model of law enforcement cooperation.
    The recommendations in the Legislative and Regulatory 
Reform Proposals, the White Paper, will significantly enhance 
the government's ability to combat procurement fraud. The DOD 
Inspector General strongly supports improving contractors' 
internal oversight and ethics programs to enhance the 
government's ability to prevent and detect fraud. Requiring 
contractors to implement internal compliance programs before a 
contract is awarded will help prevent fraud.
    The DOD IG also supports recommendations to expand the 
authority of Inspectors General to include enhanced subpoena 
authority. We also support establishing a national database to 
determine contractors' suspension or debarment history, and we 
favor extending criminal conflict of interest provisions to 
contractors.
    In response to a recent amendment to the Federal 
Acquisition Regulation imposing mandatory self-reporting, the 
DOD IG has established the DOD Contractor Disclosure Program to 
process the disclosures. We believe this requirement will 
improve the Department's oversight capabilities.
    While the White Paper identifies significant improvements, 
we hope to work with the Legislation Committee on more 
proposals. Two examples derived from the new FAR cases relate 
to the American Recovery and Reinvestment Act of 2009. One 
would expand whistleblower protections to subcontractors and 
the other would enhance contractor reporting requirements. As 
Congress considers the recommendations of the Legislation 
Committee, it is critical that IG resource requirements be 
considered. Adequate numbers of investigators and auditors are 
indispensable, particularly in an era of massive growth in 
contacting and diversification into other national priorities.
    I hope my testimony today has been helpful and I look 
forward to your questions.
    Senator McCaskill. Thank you very much. Mr. Ogden.

   TESTIMONY OF J. ANTHONY OGDEN,\1\ INSPECTOR GENERAL, U.S. 
  GOVERNMENT PRINTING OFFICE, AND CHAIRMAN OF THE LEGISLATION 
 COMMITTEE, COUNCIL TO THE INSPECTORS GENERAL ON INTEGRITY AND 
                           EFFICIENCY

    Mr. Ogden. Good afternoon, Madam Chairman. Thank you for 
inviting me to testify on the role of the Inspectors General in 
detecting, preventing, and helping prosecute contracting fraud. 
While I am the Inspector General at the U.S. Government 
Printing Office, I am here today representing the Council of 
the Inspectors General on Integrity and Efficiency in my 
capacity as the Chairman of the Legislation Committee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Ogden appears in the Appendix on 
page 65.
---------------------------------------------------------------------------
    On behalf of the Council, I would like to echo our 
appreciation to you for your unwavering support of the IG 
community and congratulate you on being the first Senator to 
lead this new Subcommittee on Contracting Oversight. We look 
forward to working with you.
    Senator McCaskill. Thank you.
    Mr. Ogden. My testimony today will focus on the general 
views of the IG community regarding the major recommendation 
proposed by the Legislative Committee of the National 
Procurement Fraud Task Force in their White Paper.
    We are happy to report that some significant 
recommendations proposed by the Task Force have already been 
enacted. For example, in November 2008, the Federal Acquisition 
Regulation Council issued a final rule that imposes, among 
other things, a mandatory requirement on Federal contractors to 
disclose credible evidence of certain criminal violations and 
civil False Claims Act violations, and to establish an ethics 
and internal control program.
    The IG Reform Act of 2008 also included several changes 
recommended by the Task Force. For example, the IG subpoena 
authority language was amended to clarify that its reach 
includes information and data in any medium. In addition, the 
Reform Act granted to IGs from designated Federal entities the 
authority to use the Program Fraud Civil Remedies Act. However, 
IGs from Legislative Branch entities are still excluded.
    Although these changes are encouraging, many other Task 
Force recommendations have not been acted upon. To gauge the 
support of the IG community for some of the remaining 
recommendations, the Council through the Legislation Committee 
conducted an online survey of its members. Our survey covered 
three general Task Force recommendation areas: One, the 
Inspector General subpoenas for compelled interviews; two, 
reform of the Program Fraud Civil Remedies Act; and three, 
other general recommendations, including establishing a 
National Procurement Fraud database and allowing the use of 
Social Security numbers to identify individuals in the Excluded 
Parties List System (EPLS).
    The Task Force proposed that IG subpoena authority include 
the authority to compel witnesses to appear at interviews in 
connection with OIG investigations, audits, and other reviews. 
You have heard some of that testimony already. This proposal is 
similar to recent limited authority provided to some IGs under 
the American Recovery and Reinvestment Act. The proposed 
subpoena authority would not include the power to compel 
witness testimony.
    The survey results show overwhelming support for this 
enhanced IG subpoena authority for all IGs. The issue is about 
access. Supporters cite the need to have access to contractor 
employees, former employees, third-party subcontractors, to 
discuss aspects of civil or criminal investigations still in 
development. In addition, this authority is necessary to be 
able to ask questions regarding voluminous records that 
companies serve in response to a subpoena.
    In 1986, Congress enacted the Program Fraud Civil Remedies 
Act to enable agencies to recovery losses resulting from false 
claims and statements where the claims are $150,000 or less. 
Our survey focused on the major Task Force recommendations 
regarding the use of PFCRA authority, the increase of 
jurisdictional and civil liability amounts, agency retention of 
recoveries, and the revamping of procedural requirements. There 
was overwhelming support for these recommendations, and in the 
interest of time, I will defer discussion to questions.
    The Task Force also recommended specific areas to generally 
prevent and detect procurement fraud. The Task Force 
recommended the creation of a National Procurement Fraud 
Background Check System, the Procurement Inquiry Check System 
(PICS), which would be used by Federal, State, and local 
procurement officials prior to authorization of contract 
actions involving Federal funds. The PICS database would 
include information on debarred or suspended contractors from 
all participating Federal, State, and local government entities 
engaged in procurement and non-procurement activities where 
Federal funds are at use.
    Again, more than 90 percent of the responding IGs supported 
the idea of a National Procurement Fraud database. However, 
many respondents suggested that it would be more efficient and 
cost effective for PICS to be an expanded version of the EPLS, 
given that the EPLS is a mandatory database and could be 
upgraded to include links to State and local government online 
databases on suspended and debarred contractors.
    The Task Force also recommended the use of Social Security 
numbers to enable agencies to properly identify individuals who 
have been debarred or suspended in the EPLS. While there was 
support for this proposal, there was substantial opposition 
generally focused on the privacy concerns with the use of 
Social Security numbers, which is also bolstered by the 
requirements of OMB Memo 716, which requires that agencies 
reduce the use of Social Security numbers and explore 
alternatives.
    Finally, some survey respondents suggested other 
recommendations to combat procurement fraud. Let me identify 
briefly two of those. First, some recommended that a Federal 
contractor be required to certify that he or she has no 
knowledge of any convictions of civil or criminal fraud for 
owners, officers, or managers involved in the contract, with no 
time limit on the convictions or civil fraud judgments.
    And second, survey respondents noted that the FAR does not 
apply to Legislative Branch agencies. Because Legislative 
Branch agencies operate under different acquisition 
regulations, consideration should be given to require 
Legislative Branch agencies to adopt in their acquisition 
regulations the FAR provisions related to the prevention and 
detection of procurement fraud.
    This concludes my testimony and I have submitted written 
comments for the record. I would be pleased to address any 
questions you may have, and thank you again for the opportunity 
to testify before the Subcommittee.
    Senator McCaskill. Thank you, Mr. Ogden.
    We have been joined by the Ranking Member of the Homeland 
Security and Government Affairs Committee. Would you like an 
opportunity to speak now? We just finished testimony.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Madam Chairman. That sounds 
good to you, doesn't it?
    Senator McCaskill. It does.
    Senator Collins. I would welcome the opportunity to make 
just a few comments, and I will put my full statement into the 
record.
    First, let me commend you for taking over the charge of 
this Subcommittee. There is no one in the Congress who has a 
better understanding of Federal contracting of auditing issues 
than you do. I am certain that we will be able to accomplish a 
great deal. In fact, a group of our colleagues were talking 
just the other night that your auditing background is so useful 
to this Subcommittee, so I thank you for your leadership.
    The Inspectors General are vital partners in our effort to 
identify inefficient, ineffective, and improper government 
programs. By leveraging the expertise and the independence of 
the Inspectors General, Congress has been able to better 
identify, and in some cases take action to stop wasteful 
spending. It also helps us by giving us recommendations which 
shape legislation and oversight activities. As General Skinner 
knows, we have worked very closely together on some of the FEMA 
reforms and the anti-waste, fraud, and abuse legislation for 
the Department of Homeland Security.
    In the last Congress, working with the Chairman as well as 
with Senators Lieberman and Levin, our Committee was able to 
pass important reforms to the Federal contracting process as 
well as to strengthen our Nation's IGs.
    I mention those two separate bills together because the 
contracting reforms we successfully enacted were based in part 
on the recommendations of the IGs.
    The most recent report of the President's Council on 
Integrity and Efficiency provides some insight into the 
effectiveness of the IG community, and I will put the list of 
statistics into the record. But suffice it to say that the IGs 
have identified $11.4 billion in potential savings from their 
audit recommendations.
    [The information of Senator Collins follows:]

     L$11.4 billion in potential savings from audit 
recommendations;
     L$5.1 billion in investigative recoveries;
     L6,800 indictments;
     L8,900 successful prosecutions;
     L4,300 suspensions or debarments; and
     Lthe processing of nearly 310,000 hotline 
complaints.

    We do need to make sure, however, that we are constantly 
updating the laws to ensure that the IGs have the tools that 
they need. It was more than 30 years ago when the IG Act was 
first passed in 1978. I believe the legislation which we 
authored last year and which Chairman McCaskill was the chief 
proponent of improves the independence and the effectiveness of 
the IGs. But I recognize that the White Paper produced by the 
National Procurement Fraud Task Force provides additional 
proposals for us to consider.
    Finally, I want to note that two of our witnesses have 
proposed an additional effort that I believe is desperately 
needed to improve our government's acquisition programs, and 
that is a well-trained, properly resourced acquisition 
workforce. No matter how good the reforms, no matter how strong 
the law, if you don't have well-qualified and a sufficient 
number of acquisition personnel to administer the laws, we are 
not going to make a difference.
    So again, I thank the Chairman for convening this hearing 
and I apologize for being late. I was giving a speech, 
unfortunately.
    [The prepared statement of Senator Collins follows:]
                 PREPARED STATEMENT OF SENATOR COLLINS
    The Inspectors General are vital partners in Congress's effort to 
identify inefficient, ineffective, and improper government programs. By 
leveraging the expertise and independence of Inspectors General and 
their staffs, Congress has been able to identify, and take action to 
stop, wasteful spending.
    The investigations and reports of IGs throughout the government 
also help Congress shape legislation and oversight activities--
improving government performance, providing important transparency, and 
giving Americans better value for their tax dollar.
    Last Congress, working with Senators Lieberman, McCaskill, and 
Levin, our Committee was able to pass important reforms to the Federal 
contracting process and to strengthen our Nation's IGs.
    I mention these two separate bills together because the contracting 
reforms we successfully enacted were based, in part, on the 
recommendations of our Nation's Inspectors General. Moreover, the 
reforms themselves will be amplified by the indispensible efforts of 
IGs.
    The most recent report of the President's Council on Integrity and 
Efficiency provides some insight into the effectiveness of the 
Inspector General community. In fiscal year 2007, IG efforts resulted 
in:

      $11.4 billion in potential savings from audit 
recommendations;
      $5.1 billion in investigative recoveries;
      6,800 indictments;
      8,900 successful prosecutions;
      4,300 suspensions or debarments; and
      the processing of nearly 310,000 hotline complaints.

    More than 30 years after the Inspector General Act was passed in 
1978, the Inspector General Reform Act of 2008 improves the 
independence and effectiveness of Inspectors General and contributes to 
better relations among the IGs, the agencies they serve, and the 
Congress. The Act helps to insulate and protect Inspectors General from 
inappropriate efforts to hinder their investigations and preserves 
their independence. Finally, the law explicitly mandates that IG 
appointments be made on the basis of ability and integrity, not 
political affiliation.
    The white paper produced by the National Procurement Fraud Task 
Force provides additional proposals for us to consider.
    I also note that two of our witnesses have proposed an additional 
effort desperately needed to improve our government's acquisition 
programs--a well-trained, properly resourced acquisition workforce. 
These personnel reforms are important for the proper execution of 
government contracts. But a well-trained group of acquisition personnel 
can also help our IGs identify and audit inefficient or ineffective 
procurement programs.
    I look forward to hearing from all our witnesses regarding their 
proposals for reform.

    Senator McCaskill. Thank you, Senator Collins. And speaking 
of champions, no one has been a more aggressive champion on 
acquisition workforce issues than Senator Collins. I have had 
the pleasure of working with her on some of those issues, but 
she has been at it for many years before I got here. And 
clearly, not only IG personnel but acquisition workforce is a 
one-two punch that is going to be needed to do the kind of job 
that we all know we need to do in this area of fraud.
    Let me start by asking each one of you to try to 
prioritize. As a former auditor understanding performance 
auditing, I would like to begin with a challenge to the 
Subcommittee to try to keep track of our metrics, and that is 
at each hearing try to walk away with a list of things that we 
need to try to get done, either through the Homeland Security 
and Governmental Affairs Committee or other places as it 
relates to what we learn in these hearings. I am going to try 
to keep track of this list so we can be publicly accountable 
for it.
    And the list I would like to come out with at this hearing 
is each of you to name the one thing that you think could make 
a meaningful difference in how many bad guys we could catch, 
the one tool that you don't have now. If you could only pick 
one, what would that one tool be that you would add to your 
tool chest to do a better job in finding people who are ripping 
off our government? Mr. Miller.
    Mr. Miller. Thank you, Madam Chairman. That is a difficult 
question because there are so many tools that could help us in 
our jobs. I think, of all the proposals, and there are many 
very good proposals here, I think the one tool that could help 
us immediately is what I call the ``don't tip off the target'' 
proposal, that is, getting financial records without tipping 
off the owner of the financial records. That puts IG subpoenas 
on parity with Grand Jury subpoenas in that respect. It will 
allow us to quickly investigate without having to go around--we 
can plan our investigations better. We don't have to plan to go 
around contacting the subject or going overt, so to speak. And 
we can better plan and move quickly and have a rapid response 
to investigating fraud. So that is the one proposal I would 
choose. Thank you.
    Senator McCaskill. I will come back and follow up on that.
    Mr. Miller. OK.
    Senator McCaskill. So you want to make sure that you don't 
have to tell them ahead of time you are coming after them.
    Mr. Miller. That is right.
    Senator McCaskill. OK.
    Mr. Miller. Thank you.
    Senator McCaskill. That makes perfect sense to me. Mr. 
Skinner.
    Mr. Skinner. As I stated in my testimony, I think the one 
thing that would really help us and other IGs is the ability to 
do electronic computer matching.
    Senator McCaskill. Computer matching for you?
    Mr. Skinner. Yes.
    Senator McCaskill. OK. Mr. Beardall.
    Mr. Beardall. Well, as is probably evident from my written 
and my oral testimony, more agents. I would also probably say 
more auditors and more agents, but certainly with the 
challenges we face in the Department of Defense, 366 agents 
spreads very thin. I am heartened by certain recent 
pronouncements by the Secretary of Defense, including the fact 
that he is going to up DCAA by 600 auditors. Of course, the 600 
auditors are probably going to bring us a whole lot more 
business, I would hope. So I think mainly the challenge for us 
is enough resourcing to do the job in view of today's massive 
spending.
    Senator McCaskill. I heard Secretary Gates say the magic 
words of DCAA auditors and I heard him say acquisition 
personnel. I don't remember him saying anything about DCIS.
    Mr. Beardall. No. He didn't.
    Senator McCaskill. OK.
    Mr. Beardall. And that is one of the points. And again, the 
point is accurate. Not only the auditors, but contracting 
officials, as well. We faced that problem a lot in Southwest 
Asia, seeing folks who were not prepared to undertake the 
duties of contracting officers.
    Senator McCaskill. OK. Mr. Ogden.
    Mr. Ogden. I think that based on the survey results, and 
again, my responses here today are limited to the survey 
results, clearly, it was the expansion of the subpoena 
authority to be able to compel access to contractors and 
subcontractors. It is to compel--to summarize one of the 
comments, it is perhaps the single most important change that 
we seek. It is very important for those of us who do a 
significant amount of oversight work that involves third 
parties. But it really is about access.
    There was some confusion in the National Procurement Fraud 
Task Force White Paper about the issue about compelling 
interviews or compelling testimony, but it is about compelling 
attendance at an interview, and I think that Mr. Skinner 
identified that issue very poignantly, as well.
    Senator McCaskill. That brings me to one of the things that 
I think we are struggling with here, is what are you? I think 
that some people in government see you as someone who is 
causing trouble for the head of the agency, and I am not sure 
enough people in government see you as someone who should have 
the same authority as any other law enforcement entity. You are 
tasked with finding crime as part of your job. Can anyone help 
me figure out where we are getting this push-back? Why is it 
that they are asking you to tip off subjects of an 
investigation with that much notice as it relates to their 
financial documents? Where do we need to drill down to find 
people in government that are pushing back in terms of giving 
you all the subpoena authority and the basic law enforcement 
protocols that are going to allow you to catch criminals?
    Mr. Miller. Madam Chairman, if I could try and respond, I 
think it is a historical quirk. I think that the Right to 
Financial Privacy Act was enacted over 30 years ago at the same 
time as the Inspector General Act, 1978, and I don't think 
there was a whole lot of thought that went into the requirement 
of requiring IGs to give notice but not--IGs when they issue IG 
subpoenas but not prosecutors on the issue of Grand Jury 
subpoenas.
    I think at that time, what the Congress knew and was 
familiar with was the Grand Jury subpoena, so they naturally 
exempted Grand Jury subpoenas. I think it just didn't occur. I 
think it was an historical quirk that they didn't also exempt 
IG subpoenas. That is my speculation as to what the problem is.
    Senator McCaskill. Does anyone else want to speculate on 
why we have difficulty with this? How about compelling 
interviews? Mr. Ogden, do you want to take a shot at that? Why 
is it that people are so unnerved about the idea that an IG 
ought to be able to compel an interview?
    Mr. Ogden. Well, and again, I might defer to Mr. Skinner to 
address this more specifically since he and Mr. Miller have had 
more experience in the area of where this issue has arisen. 
They can share some more specific examples with you. But I 
think that under the circumstances, it is how far do we want to 
let the IGs go? The ability some would perceive giving that 
much authority to IGs would be overstepping the bounds of the 
IGs, but I believe that the community would agree with you 
wholeheartedly, Senator McCaskill, that under the 
circumstances, we need to have the same tools. We need to have 
the ability to be able to go and reach out to those 
subcontractors.
    One of the issues that I know that has occurred within my 
agency and other agencies, as well, is when you have 
contractors and subcontractors, if we don't have the same 
access as we would with our own employees within our agency, it 
does prevent us from being able to do our jobs effectively. The 
contracting workforce has expanded significantly since many of 
these laws and rules were put in place. So in order to kind of 
catch up with the time, we have to look at the entire scope of 
the issue and realize that the reach now for IGs has to be to 
contractors and subcontractors.
    Senator McCaskill. Thank you very much. Senator Collins.
    Senator Collins. Thank you, Madam Chairman.
    Mr. Skinner, I want to follow up on your answer to the 
Chairman about the need to do more computer matching. As I 
understand it, under the Computer Matching and Privacy 
Protection Act of 1988, Federal agencies must follow a number 
of procedures prior to matching electronic databases, and those 
include entering into a formal matching agreement, noticing 
that agreement in the Federal Register, obtaining a review of 
the agreement by the Data Integrity Boards at both agencies.
    Now, a lot of these steps are intended to be safeguards to 
prevent misuse of electronic records. But according to the Task 
Force Legislation Committee, those computer matching 
requirements limit the IGs' ability to detect contracting fraud 
in an expeditious manner because of all the steps that are 
required.
    Is there also an issue where the IGs have to persuade 
multiple agency managers that the process should proceed? Are 
there delays involved that impede your ability to detect fraud?
    Mr. Skinner. Absolutely, and therein lies the problem. We 
agree with the safeguards that are in the Computer Matching and 
Privacy Protection Act. That is not the issue. There are 
exemptions to that Act, for example, to do research, to garner 
statistics, and for law enforcement if you have a target. With 
the IG, it would enhance our ability if we were included in one 
of those exemptions as part of our oversight role so that we 
could do computer matching, so then in turn demonstrate to the 
departments and the respective departments that you have weak 
internal controls. And we can demonstrate to them that they can 
improve their internal controls, be more efficient, and prevent 
fraud up front before it occurs.
    At the same time, when we do this computer matching, of 
course, some of the collateral fallout is we will identify 
cases of fraud. For example, when we did--GAO did computer 
matching after Hurricane Katrina with VA and small businesses, 
we identified people were self-certifying that they were 
disabled vets when, in fact, they were not. As a result, they 
got over $10 million in contracts and excluded qualified small 
businesses in that process. There were other areas, as well, 
with the HUD, for example. We demonstrated that you need to 
have these types of computer matching agreements in place ahead 
of--at all times if you are operating a benefit program, and 
DHS operates many benefit programs, so that you can protect 
yourself.
    When we asked for this authority, yes, there were delays. 
For example, to be able to match HUD housing data with FEMA 
housing data, it took us almost a year. By then, millions and 
millions of dollars were already out the door, and it is very 
difficult to get that money back once it leaves. Had those 
controls been in place beforehand, we could have stopped that.
    Senator Collins. I think that is an excellent point.
    Mr. Ogden, do you have anything to add to that?
    Mr. Ogden. Senator Collins, not with respect to the 
computer matching specifically. I think that Mr. Skinner has 
really summed up the issue directly.
    I can add on behalf of the IG community, we have submitted 
comments and certainly support--I mean, I can represent on 
behalf of the IG community that we support the proposal.
    Senator Collins. At a hearing that our full Committee had 
to look at the stimulus legislation and procedures to prevent 
waste, fraud, and abuse, there was discussion about the hiring 
needs of those entities that have gotten sufficient increases 
in their budgets, such as the IGs and the GAO and the Special 
Oversight Board, and the Acting Comptroller General told us 
that GAO is currently permitted to compensate a returning 
annuitant without offsetting the annuity. In other words, you 
could hire a retired GAO auditor to come back and work for the 
next year on stimulus oversight without there being a financial 
penalty paid.
    GAO has this authority. I believe DOD has this authority. 
But most departments and agencies in the Federal Government do 
not. I have introduced a bipartisan bill with Senator Herb Kohl 
and Senator Voinovich that would seek to provide that authority 
across government, particularly to help out with a situation 
like this where we need trained people quickly, and you have 
got this retired workforce that would be willing to come back 
and help if there were not a financial penalty.
    Starting with you, Mr. Miller, and going across, do you 
support legislation to give that authority?
    Mr. Miller. I strongly support that legislation. That would 
help us respond rapidly and provide the oversight we need, so 
thank you for introducing it.
    Senator Collins. Thank you. Mr. Skinner.
    Mr. Skinner. Yes, I would, and as I said in my opening 
remarks, this is one of the things that we were asking for. 
Some of the departments--right now in the field of acquisition 
management, there are authorities out there. They just need to 
be invoked. And I believe that OPM did, in fact, say 
acquisition--those associated with acquisition management can 
use these authorities, and they defined who those people are. 
What they excluded were the auditors and investigators. And 
that is something I think that legislation would be very 
helpful, to give us that authority, as well, especially now in 
this time and age.
    Senator Collins. Exactly. It doesn't make sense to carve 
out investigators and auditors.
    Mr. Beardall, am I correct that DOD has this authority?
    Mr. Beardall. Yes, we do, and we have used it very 
effectively, as you point out. When you have an agent with 25 
years of experience and who retires and you can bring him back 
in a lot of cases just as a special agent rather than hire 
someone new and I have senior managers who go out and still 
have years left before they hit the mandatory retirement age of 
57. They can come back and help us. We have actually recently 
had the head of our operations in Southwest Asia as a rehired 
annuitant who was one of our Assistant Special Agents in 
Charge. We did a fabulous job.
    Senator Collins. Thank you for that example. Mr. Ogden.
    Mr. Ogden. Senator Collins, your bill, S. 629, I believe is 
what it is, today we actually, lo and behold, had a meeting of 
all the Inspectors General and I raised the issue of S. 629 and 
I can say here today I have been given authorization to say 
there was wholesale support for S. 629 and there was absolutely 
no objection in the room. There is tremendous support from the 
community for----
    Senator Collins. Excellent. I am really happy to hear that. 
I, believe it or not, did not know that in advance of asking 
the question today. If you would be willing to send a letter to 
the Subcommittee to that effect to follow up, that would be 
wonderful.
    Mr. Ogden. We would be happy to do so.
    Senator Collins. Thank you.
    Senator McCaskill. Thank you, Senator Collins.
    Let us talk a little bit about the Department of Justice. 
It is my understanding that Justice has expressed concerns 
about expanding the IG authority as it relates to compelling 
interviews, and let me make clear that I understand that GAO 
now has that authority, correct? GAO now has the authority to 
interview both contractor and subcontractor employees in terms 
of interviews?
    Mr. Skinner. GAO has the authority to have access to 
records and employees at the contractor and subcontractor 
level. I am not clear--you may want to talk to GAO--I am not 
clear whether they have subpoena authority.
    Senator McCaskill. OK. But they have the ability to, in 
fact, interview at the contractor and subcontractor level?
    Mr. Skinner. That is correct.
    Senator McCaskill. OK. And it is my understanding that in 
the stimulus bill, we also gave limited power to compel 
interviews for audits and investigations concerning the 
stimulus funds, correct?
    Mr. Skinner. Under the stimulus bill, the IGs have access 
rights to contractor records and employees and subcontractor 
records----
    Senator McCaskill. But not subcontractor employees?
    Mr. Skinner. For whatever reason, I don't know why, that 
was left out. And the FAR then emphasized that the authority 
does not go to sub-grantees, the recently-published FAR.
    Mr. Ogden. Senator McCaskill, if I might just dovetail on 
that response, as well, under Section 1515(a) of the American 
Recovery and Reinvestment Act, it provides to interview any 
officer and employee of the contractor grantee, sub-grantee, or 
agency. It does not go, as Mr. Skinner has pointed out, to 
subcontractors.
    The other issue, it only applies to the IGs that are 
affected by the stimulus package----
    Senator McCaskill. Right.
    Mr. Ogden [continuing]. So there are 28 IGs and there are 
68 of us in the community. So there is a significant exclusion 
of IGs that do not have that particular----
    Senator McCaskill. And that is what I am trying to figure 
out. It is almost like we are saying it is more important to 
catch crooks in the stimulus money than it is to catch crooks 
anywhere else?
    Mr. Skinner. Exactly.
    Senator McCaskill. I mean, to me, common sense is on a 
vacation. We had the chance to fix it in that stimulus bill. We 
should have made it government-wide. Obviously, if there is not 
an objection to using these tools in the stimulus funds for 
some IGs, I don't understand why there should be objection by 
Justice or anyone else using it----
    Mr. Skinner. I don't believe anyone is objecting to the 
rights of access. I would like to believe it was just an 
oversight in the stimulus bill. Also GAO obtained access right 
authority through the defense authorization bill, which is 
somewhat different than the issue of compelled testimony or 
issuing subpoenas. IGs have the authority to issue subpoenas 
for documents, but we cannot issue subpoenas for testimony of 
employees--testimonial evidence. That is one of the things we 
were asking for, as well. If we can issue subpoenas for 
documents, we should have the authority to issue administrative 
subpoenas----
    Senator McCaskill. So you can't make anybody talk to you?
    Mr. Skinner. With pressure. It takes time. [Laughter.]
    Senator McCaskill. Like if somebody just says, ``I am not 
going to talk to you''--if you have got a contractor and you 
want to talk to them about a contract in FEMA and they just 
say, ``I don't want to talk to you,'' you are done unless you 
go to Justice and get them to issue a subpoena?
    Mr. Skinner. That is correct. It is very difficult. Our 
hands are tied.
    Senator McCaskill. And how often do you get those refusals?
    Mr. Skinner. It has happened to me, since I have been IG, 
in our audit of the Coast Guard Deepwater program, for example.
    Senator McCaskill. All right.
    Mr. Skinner. We asked for records. It took us months to get 
those records because our authority was challenged. The 
contractor challenged our authority to ask for those records. 
Then we asked to talk to employees to help explain what was in 
those records and the contractor would not give us access. We 
had to delay the audit for over a year while we negotiated 
access to the employees. Then when they did give us access, 
they said the supervisor must be present, the attorneys must be 
present, and others, and obviously that sends a chilling effect 
on our relationship with that employee, so therefore we did not 
interview the employees.
    Senator McCaskill. Yes, go ahead.
    Mr. Beardall. To take it a step further, we also would like 
to have subcontractors have whistleblower protection.
    Senator McCaskill. Right.
    Mr. Beardall. The Recovery Act provides for that, but 
otherwise, it is not available to subcontractors in 
investigations. And again, a recent example, we had a 
subcontractor who was willing to talk to us, so we didn't have 
to compel anything, but when she found out that as a 
subcontractor rather than a prime contractor she was not 
afforded whistleblower protections, she refused to talk to us. 
Fortunately, we were able to convince her to do her duty and 
got the information, but that is a no-brainer.
    Senator McCaskill. It makes no sense.
    Mr. Beardall. No, ma'am.
    Senator McCaskill. Absolutely no sense whatsoever.
    On the Deepwater contract that you struggled with, I am 
familiar that the National Reconnaissance Office (NRO) has 
included some contract language now, and I don't know how 
familiar all of you are with this, but the contract clause they 
are including in all of their contracts states the IG shall 
have access to any individual charging directly or indirectly 
to this contract whose testimony is needed for the performance 
of the IG's duties. In addition, the IG shall have direct 
access to all records, reports, auditors, reviews, 
recommendations, documents, E-mails, papers, or other materials 
relating to this contract. Failure on the part of any 
contractor to cooperate with the IG shall be grounds for 
administrative action by the Director, Office of Contract, 
including contractual remedies. Would that have helped?
    Mr. Skinner. I am familiar with that language. I took that 
language and I brought it to the Coast Guard, who referred me 
to the Chief Procurement Officer, who did not act on it. Yes, 
that language would help. I have asked that it be included in 
all contracts.
    Senator McCaskill. And can I get any input from the rest of 
the panel as to whether or not you are seeing this language in 
any government contracts right now, because we can do this by 
contract and not by legislation. If the individual agencies 
decide they want cooperation from people they do business with, 
they can demand it.
    Mr. Miller. Madam Chairman, that would help. That would 
give us access to the employees of contractors and 
subcontractors, and we need that access to do audits as well as 
investigations, because as you know, as an auditor, if you just 
get documents----
    Senator McCaskill. Right.
    Mr. Miller [continuing]. You need to have people explain 
the system and that sort of thing.
    Senator McCaskill. Or you need a lot more people.
    Mr. Miller. You need a lot more people.
    I would point out there is a distinction between that and a 
subpoena authority, for example----
    Senator McCaskill. Right.
    Mr. Miller [continuing]. In an investigation. The Recovery 
and Accountability Transparency Board, I understand, has 
subpoena authority to actually gain access in investigations. 
That may also be helpful, too, because if you have an 
investigation and you have an employee, for example, of GSA who 
may be conspiring with an employee of a contractor, we can talk 
to the GSA employee, but if we talk to the employee of a 
contractor, as you pointed out before, they could just say, 
``Go away,'' and we have no real authority to go back. We can 
try and get a prosecutor interested enough to issue a Grand 
Jury subpoena, but at that point, we have very little 
information to attract the attention of the prosecutor. So that 
may be a very difficult thing for us.
    So I guess my point is there are two different things. 
There is the contract clause that would allow us to gain 
access, and then there is the subpoena authority that would 
actually give us the power to have the attendance at the 
interview.
    Senator McCaskill. But the contract language could maybe 
get you enough information that you could get the attention of 
a prosecutor that could get you the subpoena short of us 
getting Congress to do what I think we should do, which is give 
you all the same identical powers that others have in terms of 
rooting out this kind of fraud.
    Mr. Miller. It certainly would help.
    Senator McCaskill. OK. Speaking of Justice, according to a 
Washington Post article, there are over 900 cases of alleged 
fraud in Iraq, Afghanistan, and at home that are stalled at the 
Department of Justice. Some whistleblowers have evidently been 
waiting as long as 7\1/2\ years while they have waited for the 
Justice Department to decide whether to take on their case. 
Maybe Justice is worried about your subpoena power because they 
don't want any more business. Is that accurate, Mr. Beardall? 
Are there that many cases backed up at Justice?
    Mr. Beardall. I am not aware of that number, and in fact, 
as I stated earlier, the International Contract Corruption Task 
Force (ICCTF) has been a boon to us because we have right in 
country access not only to other Federal law enforcement 
agencies, but also the Department of Justice. If there are 
delays in cases, I can't say that it is because of our support 
from attorneys. Not only that, cases that we get to a certain 
point in Southwest Asia, we then transport back to the States 
so we can have prosecution by AUSAs. I am not aware of that 
type of back-up. There takes time, of course.
    The trouble with a lot of the cases from Southwest Asia are 
the fact that they end up being tendrils. It is a real spider 
web of one main actor and then the others, and of course, as 
you know, you wait to bring to prosecution until you have got 
everybody that you want and use those who have come first to 
help you with others. So, that at times delays it. Otherwise, 
we have had great cooperation, and I am not aware of that kind 
of a backlog.
    Senator McCaskill. Well, if you would, follow up for the 
Subcommittee and find out, what is the backlog at Justice as it 
relates to these fraud cases. I am aware of the spider web you 
have been dealing with in Iraq on several different levels and 
have had the opportunity to be briefed on that. But clearly--I 
am not saying it is not possible that the Washington Post is 
not accurate, but clearly, if you don't think there is a 
serious issue of back-up and the article says there are 900 
cases, we have got to figure out what the problem is there, if 
there is one.
    Mr. Beardall. Well, as I said, my current inventory is 
1,800 cases, so I don't have 900 of those backed up and we are 
the main actors. There are very few things going on in 
Southwest Asia right now that DCIS is not involved in.
    [The information submitted by Mr. Beardall follows:]
                         ADDITIONAL INFORMATION
    After reviewing the July 22, 2008, article in The Washington Post, 
it was apparent that the reference to the 900 cases involved a backlog 
of Qui Tam investigations/prosecutions. Qui Tams are lawsuits brought 
by individuals on behalf of the government under the False Claims Act 
(31 U.S.C. Sec. 3729 et seq.), in which they come forward with 
information of wrongdoing and participate in an investigation and 
potentially litigation against the wrongdoer. The Department of Justice 
(DOJ), Civil Division, is responsible for reviewing Qui Tam 
allegations, determining if an investigation is warranted, and deciding 
whether to join the individual in the litigation. If DOJ determines 
that an allegation may have merit, it refers the allegation to the 
proper investigating agency. As such, the DOJ Civil Division is the 
most appropriate agency to respond to the information contained in the 
Post article. DCIS is not privy to the facts and circumstances 
pertaining to the alleged backlog.
    In regards to how many DOD IG investigations are currently referred 
to the DOJ, and, of those referrals, how many prosecutions has DOJ 
initiated, we provide the following statistics. As of May 11, 2009, 573 
DCIS investigations include subjects that have been referred for either 
criminal or civil prosecution. The number of subjects referred for 
criminal prosecution is 1,445, and 87 percent of those subjects have 
been accepted for prosecution. An additional 237 subjects have been 
referred to DOJ for civil prosecution, of which 88 percent of those 
have been accepted. These figures do not relate to the context of the 
article in The Washington Post but reflect all DCIS cases, whether Qui 
Tams or not. Of DCIS' current caseload of 1,821 open cases, 181 were 
initiated on the basis of a Qui Tam complaint.

    Senator McCaskill. OK.
    Mr. Beardall. And I would certainly know that.
    Senator McCaskill. OK. The next area that I would like to 
ask questions about are whistleblower protections. The Project 
on Government Oversight recently released a report on 
whistleblower protections and they found that in some 
instances, the Offices of Inspectors General had not done as 
much as they should do in terms of whistleblower protection. 
Are you all familiar with the POGO report that I am referring 
to?
    Mr. Skinner. Yes.
    Mr. Miller. Yes.
    Mr. Ogden. Yes.
    Mr. Beardall. Yes.
    Senator McCaskill. One of the places they cited particular 
problems, Mr. Skinner, was, in fact, with the DHS IG in terms 
of the hotline. They found really long waits, operators who 
didn't know anything about the agency, an inadequate system for 
dealing with anonymous calls. Could you tell the Subcommittee 
what your office has done to deal with what the POGO report 
laid out?
    Mr. Skinner. Yes, and I would be happy to talk about that, 
and I think the POGO report was somewhat incomplete. Before I 
became IG, we didn't have a hotline. What you called, you 
called between----
    Senator McCaskill. We call those cold lines.
    Mr. Skinner [continuing]. Between nine and five and you got 
a recording.
    Senator McCaskill. Right.
    Mr. Skinner. And that is all you got.
    Senator McCaskill. Not really hot.
    Mr. Skinner. So what I have done is we tried to create a 
24/7 hotline where someone would answer the phone 24/7, and we 
analyzed the cost of that. It was cost prohibitive because of 
our budget at that point in time. That was back in early 2005, 
calendar year. The only thing--my only options were to take 
agents off the ground, off the line, and put them on the 
hotline, and our workload was so heavy and still is so heavy 
that I could not afford to take those agents off the line to 
operate a hotline.
    I had funds but not staff. So what I chose to do was hire a 
contractor that was doing this for other Federal agencies. I 
believe HUD was one of them who actually made the referral to 
me, and we looked at two or three and hired this company on an 
interim measure until we could build up the resources to 
operate our own hotline.
    I now have a proposal in to--as a matter of fact, I have 
submitted proposals to the full Committee and our 
appropriators, as well as to the new Secretary, Secretary 
Napolitano, proposing that we integrate the two hotlines within 
the Department. The Department operates one and the OIG 
operates one. I proposed that we merge those at a cost savings 
of about $375,000 a year and that we use our people to manage 
that.
    But as it stands right now, I just do not have the FTE that 
I could take off the line to answer those phones. So until I 
can get those FTE, I will have to use a contractor.
    What is transparent to POGO when they made those phone 
calls is that our hotline also has a direct link to the Gulf 
Coast disaster hotline. And depending on your queries, for 
example, if you say, I have allegations of public corruption 
along the border, that will go to a particular operator. If you 
say, I have a question of corruption dealing with Hurricane 
Katrina, there is fraud associated with that program, well, 
that is automatically routed, and it is transparent to the 
caller, down to Baton Rouge, where we have a hotline set up 
there that is run in conjunction with the FBI and the 
Department of Justice and it is operated by LSU students on 
campus, on site at our site.
    I agree, it can be improved. We want to improve it. It is a 
resource issue.
    Senator McCaskill. Well, now we have a reason for you to 
come to another hearing because one of our issues that we have 
got to deal with in contracting is what government agencies 
have done. While some folks have been trying to boast that we 
haven't grown government, what government agencies have done 
when they don't have FTEs is they have hired contractors, and I 
will tell you it is not reassuring to me at a hearing on 
contracting oversight that I find out that maybe the reason 
that we weren't doing as well as we need to do with the hotline 
is because we were hiring contractors to do it. And so 
obviously there is an irony there that I am sure doesn't escape 
anybody in the room that we need to look at.
    And a lot of it is prioritization in deciding whether or 
not the hotline and the information that comes from a hotline 
is--and I don't doubt, Mr. Skinner, I know that you work hard 
as an IG and you have got a great record--I don't doubt that 
you don't realize the value of whistleblowers. But I know how 
long you all have been doing this kind of work. I know you 
understand that the life blood of many investigations that you 
do is, in fact, the whistleblower, and their ability to get 
information to you in a timely way with protection is just 
about as important as it gets.
    So I hope that as we move forward in looking at these 
issues, usually, it is someone who is--especially in the area 
of contracting because there are a lot of good Americans, and I 
know at DOD it happens all the time, people in theater that 
were calling and saying, this is unbelievable what is happening 
over here. And frankly, I don't think the Department of Defense 
believed it at first because the calls were so almost--it 
sounded like some kind of bad movie plot.
    Mr. Beardall. Yes, ma'am. Let me compliment our current IG. 
He has made this a top priority, both his hotline and reprisal 
investigations. Part of my hat as the Deputy Inspector General 
for Investigations is I handle reprisal investigations and he 
has plussed-up my staff significantly in the last couple of 
weeks, and he is also working hard to make the hotline as 
effective as it is. It is a focus of his and he is doing a 
great job.
    Senator McCaskill. Generally speaking, do most IG shops 
have a formalized reprisal investigation protocol? Mr. Ogden, 
could you speak to that, or if not, can you get back to us and 
let us know?
    Mr. Ogden. I can certainly get back to you on that. I think 
the other panelists can probably directly address the question.
    Senator McCaskill, I do want to come back on the hotline 
issue, though, too.
    Senator McCaskill. OK.
    Mr. Miller. Madam Chairman, I can speak for our office. We 
do conduct retaliation investigations from time to time in 
conjunction with the Office of Special Counsel and we will 
conduct those investigations. Ultimately, we can make findings, 
but ultimately, we cannot make the agency do anything. We can 
find that there is a whistleblower, that the whistleblower was 
subject to retaliation, but we don't have the authority to have 
the agency correct it. And then even with our findings, the 
Office of Special Counsel would have to go through and either 
adopt our findings or adopt separate findings. So that is one 
of the weak points. But we do from time to time conduct these 
investigations. As you said, they are very important. We need 
to protect our whistleblowers and we do the investigations.
    Senator McCaskill. OK. Anything else? Mr. Ogden, on the 
hotline?
    Mr. Ogden. Yes. Thank you, Senator McCaskill. Just as part 
of the charge of the Council of Inspectors General on integrity 
efficiency, the Executive Council has adopted some goals and 
objectives as part of the strategic plan and one of the goals 
that has been identified, we do these cross-cutting issues and 
one of the first two goals that was identified is a hotline 
operations and whistleblower protection project, which was 
actually announced today.
    The objective there is to develop best practices for OIGs 
in hotline operations and whistleblower protection for 
effective management and handling of whistleblower allegations, 
and so the purpose there is to really take a look at what the 
IG community is doing, help develop best practices, and then 
communicate that information broadly throughout the community 
so that we can fine-tune the operations in all agencies. So 
that will be one of the cross-cutting goals that we have 
identified and is launched currently.
    Senator McCaskill. That is great, because I think that is 
one of the things that should be embraced, if we could get 
consistency and uniformity as much as possible on whistleblower 
protection and protocols for retaliation investigations, 
because that is what is scary to a whistleblower, and a lot of 
these contractors are working in many different agencies, as 
you all know. In fact, which is another hearing, the shopping 
around of contracts among agencies and buying off other 
people's contracts and all of that that is going on. I think 
the more that we have uniformity and the more that it is 
embraced systemwide in the IG community that whistleblowers are 
sacrosanct and need to be protected at all costs, I think it is 
really important.
    I want to talk about the post-award audits, and I am trying 
to figure out, most people don't understand what that means, a 
post-award audit. It is a little bit like some of the other 
jargon. I have got to be careful in this Subcommittee, because 
I speak it and you all speak it and many of the people who will 
testify in this Subcommittee speak it, but it is like a lot of 
things in the auditing world. Most people out in America don't 
know the language, and so when we talk about a post-award 
audit, I want to clarify what we are talking about is checking 
to make sure that we got the deal that we thought we got when 
we signed the contract.
    Mr. Miller. That is right, Madam Chairman. Thank you for 
bringing this up, too.
    Senator McCaskill. I am trying to figure out, what is the 
rational for you not being allowed--because didn't you used to 
be able to check the price after we signed the contract to make 
sure we aren't getting ripped off?
    Mr. Miller. We did, up until 1997. The Veterans Affairs 
Office of Inspector General also conducts these audits. But for 
some reason, in 1997, I guess OMB decided that we would focus 
more on pre-award audits and catch the pricing problems up 
front and we would eliminate the post-award audit, so that 
after the contract is formed, we can look at a number of 
issues, but we can't look at price issues. Theoretically, we 
were supposed to look at those up front. But, of course, NAS 
contracting has grown exponentially and we only get to look at 
a few pre-award contracts, and over the last couple of years, 
there were attempts to cut those. So in 1997, it was GSA that 
actually cut the clause out of the contract that allowed us to 
look at prices, by the way. But in 1997, that was the 
rationale.
    There was a hearing in 2005, just as I was appointed. I was 
confirmed, but I didn't have my commission, so I was having a 
Marbury moment, and there was a hearing on this very issue 
before a Subcommittee of this Committee, and the issue came up 
again. I think Senator Coburn was the Chairman at the time. 
They, again, looked at those issues and we testified and OMB 
testified again to the same rational, that we will increase 
pre-award audits so there is no need to bring back the 
authority to look at prices post-award. So that is the only 
rational that I have heard.
    Senator McCaskill. And have the pre-award audits, in fact 
flourished?
    Mr. Miller. No, they have not.
    Senator McCaskill. I had a feeling.
    Mr. Miller. In fact, there is an attempt to reduce those, 
as well, over the last couple of years.
    Senator McCaskill. But this is a unilateral decision just 
made by GSA?
    Mr. Miller. GSA was the one making the decision. I am sure 
that OMB supported it. I think the other rationale that they 
would probably give would be somehow it was a burden on small 
companies, which I believe is a total red herring because we 
look at large companies that have a lot of Federal contracts. 
Typically, we don't even get to look at companies that have 
fewer than 50 million in government contracts.
    Senator McCaskill. Well, first of all, that notion is 
insulting to risk assessment done by you as professionals. I 
mean, clearly, you are going to look where you think it is most 
likely that you are going to find problems. That doesn't mean 
you start with little-bitty contracts. You start with the big 
ones----
    Mr. Miller. Indeed.
    Senator McCaskill [continuing]. Where you have the most 
likely chance of making a real difference, a real dent.
    Well, I think this is something that--now is the moment----
    Mr. Miller. Yes.
    Senator McCaskill [continuing]. To work on this issue 
because we have a new Administration and I believe we have a 
head of GSA who has not yet been confirmed?
    Mr. Miller. That is correct.
    Senator McCaskill. Timing is everything.
    Mr. Miller. Indeed.
    Senator McCaskill. So I think this is a very good issue for 
us to look at as we talk to the new GSA Administrator. Now, let 
us talk a little bit about the Safavian fix. Am I saying that 
guy's name right?
    Mr. Miller. Yes, you are, Madam Chairman.
    Senator McCaskill. What is the fix for this? Is this a law 
that we have to do?
    Mr. Miller. Unfortunately, it is. I propose----
    Senator McCaskill. We have to go in and say that when 
somebody from the government comes and asks you questions, a 
material omission or twisting is somehow OK?
    Mr. Miller. Well, no----
    Senator McCaskill. That it is not OK?
    Mr. Miller. That it is not OK.
    Senator McCaskill. Courts have said that we have to 
statutorily inform people of this?
    Mr. Miller. The D.C. Circuit held in the Safavian case that 
under the false statements statute, 18 U.S.C. 1001, that there 
was no duty on the part of the Federal employee, David 
Safavian, to tell the special agent the whole truth.
    Senator McCaskill. So if you go to someone and ask them if 
they used a government contract to, instead of do 
reconnaissance work somewhere, they were doing a charter 
service of the boat for deep sea fishing and they said no, they 
would not be in trouble even if they used it for a party cruise 
where there were no fishing poles?
    Mr. Miller. Well, if they say an actual lie, then the D.C. 
Circuit would say that would count. The problem was that Mr. 
Safavian failed to state a very important fact. When he talked 
to our special agent, he failed to mention that he was actively 
giving assistance to Jack Abramoff in obtaining GSA business at 
the time, and so when he told our special agent that he----
    Senator McCaskill. And your special agent was investigating 
Jack Abramoff?
    Mr. Miller. My special agent was investigating claims about 
David Safavian. The issue that came in, the allegation was that 
Mr. Safavian went on a golfing trip to St. Andrews golf course 
in Scotland at the expense of Jack Abramoff along with a number 
of other individuals and that Mr. Safavian did not pay for the 
trip entirely and that Mr. Abramoff was doing business with 
GSA.
    What Mr. Safavian told our special agent was that he had 
paid for the trip himself, and he produced a check. And he did 
not--specifically what he concealed and what the Department of 
Justice charged him with concealing was the fact that he was 
actively giving assistance to Jack Abramoff in GSA-related 
business.
    Senator McCaskill. I see.
    Mr. Miller. The other part that he didn't tell the full 
truth about was he only partially paid. He paid about $3,100 
for a week in Scotland and a weekend in London with Mr. 
Abramoff. So it was only a partial payment that he had paid. He 
didn't state that Mr. Abramoff did pay for the rest.
    So what we propose are two potential fixes, one to the 
definitional section for 18 U.S.C. 1001, where we specify that 
for a Federal employee, they have a duty to tell all material 
facts when asked. The other potential fix is to a Sarbanes-
Oxley statute, 18 U.S.C. 1519, and we would put a Subsection B 
that would clarify this particular point. So those would be the 
two legislative ideas to clarify that Federal employees have to 
tell the whole truth. They can't hide the truth with a 
deliberate intention of misleading the agent.
    Senator McCaskill. I think that is why the phrase says, the 
truth, the whole truth, and nothing but the truth.
    Mr. Miller. I think it does.
    Senator McCaskill. Finally, an area that I would like to 
talk about is the Excluded Parties List System (EPLS). This 
issue of Social Security numbers or taxpayer identification and 
also the idea that we could maybe expand it to include State 
and local--I know that you all surveyed on this, Mr. Ogden, and 
while you said there was significant opposition, I think 76 
percent of your Inspectors General still agreed that we needed 
to do some kind of identifying information on the Excluded 
Parties List System----
    Mr. Ogden. Correct.
    Senator McCaskill. I mean, believe me, for somebody in my 
line of work, 76 percent is a huge majority. [Laughter.]
    Mr. Ogden. Exactly. Let me clarify the opposition point, 
Senator McCaskill. The opposition was the use of the Social 
Security numbers, not the EPLS, OK.
    Senator McCaskill. Right.
    Mr. Ogden. To the extent that there are problems with the 
EPLS and its administration, that was another issue. But the 
opposition that I referred to is specific to the use of the 
Social Security number because of identity theft issues.
    Senator McCaskill. But don't we have an issue of not being 
able to identify people as to all the companies that have the 
same or similar names? Isn't that a real problem?
    Mr. Ogden. That is a problem. I know we encounter it at my 
agency. I know that it is a universal problem throughout the 
government. Again, the concern, I think, arises in the context 
of specifically the Social Security numbers. Whether or not 
there is another unique identifying number, whether or not 
there is an Employee Identification Number or another 
methodology or a means by which you can protect the data, 
specifically the SSN, if you have to use the SSN, is there a 
way to protect that data and ensure that it is not going to be 
publicly available?
    Senator McCaskill. Right.
    Mr. Ogden. And that is in keeping with--Senator Feinstein 
has introduced, I believe, two bills at this point that are 
dealing with breaches regarding SSNs and the OMB memorandum 
that I referred to earlier addresses this point. I know it is 
an issue within my agency right now, the whole protection of 
PII, sensitive personally identifiable information. So that is 
the only opposition that we really--otherwise, there was 
support for the proposition.
    Senator McCaskill. Well, one of you earlier mentioned the 
self-certification issue as they could certify that none of the 
officers of the company had been convicted of any fraud. Could 
we expand that to include debarment, that no one had ever been 
subject to an act of debarment?
    Mr. Ogden. Yes. Clearly, that could be done, and I am not 
certain that it doesn't call for that right now. I know there 
is a time limitation of only 3 years currently for that 
certification, and the proposal, at least, I believe--and I 
will let Mr. Skinner address this and Mr. Miller address this 
more specifically since they worked on the Task Force on this 
issue, but it would be to expand the--to take away the time 
frame, to take away the time limit to ensure that the 
certification was without limitation.
    Senator McCaskill. Mr. Skinner.
    Mr. Skinner. What I was referring to earlier was not 
necessarily people that had a criminal record per se, but when 
we were doing computer matching, or GAO was actually doing the 
computer matching for us to validate small businesses and 
disabled vet owned businesses to qualify for small business 
contracts after Hurricane Katrina. Without that information, 
without some type of an identifier, and in this case, we did 
have a VA identifier which they put on the form, but oftentimes 
there are no other identifiers.
    Senator McCaskill. Right.
    Mr. Skinner. And until we can come up with some type of 
consistent identifier across government that we can use--and 
right now, the only thing we have available to us is the Social 
Security number. A lot of the procurement fraud that we are 
encountering or benefit fraud that we are encountering can be 
detected by just doing simple computer matches with the Social 
Security Administration.
    Senator McCaskill. Right.
    Mr. Skinner. And if that is taken away from us, it is going 
to make our job even a lot harder.
    Senator McCaskill. We did it all the time in the State 
Auditor's Office. I mean, matches were like the sun coming up 
in the morning. We couldn't have done our work without the 
computer matches.
    Mr. Skinner. I think we have an obligation to ensure that 
the information is protected.
    Senator McCaskill. Right.
    Mr. Skinner. And as long as we can demonstrate that we are 
good stewards of that information and that we can protect and 
safeguard that information, I think we should be allowed to use 
it. These are resources, tools that are available to us that 
are just not being used right now.
    Senator McCaskill. Well, let me say to all of you, there 
are other questions I have that we will direct to you. And any 
information, further information you want to add to the record, 
please feel free to do so. I have got our four performance 
measures now that I know. We have got to work on, don't tip off 
the bad guy before we have to. We have got to do a better job 
on the computer matching. We have got to get more agents for 
DCIS. And we have got to deal with the subpoena authority.
    Mr. Skinner. That is for everyone, Madam Chairman.
    Senator McCaskill. No, I know. I apply all four of these to 
all of you and to the entire IG community. But those are four 
things that could make a meaningful difference for taxpayers in 
terms of how easy it is for you to catch people who are ripping 
us off.
    I thank you. Please tell all the people who work with you 
how much their work is appreciated. They are the kind of people 
that, frankly, never get much attention. There is no brass band 
for them. If their cases go to court, they generally plead. 
They are not even ever on the stand, like ``Law and Order: 
Criminal Intent'' or anything like that. There is no stardom in 
their work. But it is incredibly important. I know you all feel 
that, as leading the agencies you lead. But please convey to 
them on behalf of this Subcommittee how much we appreciate 
their work.
    And if there is anything else that this Subcommittee can do 
in helping you catch people who are stealing from our 
government, let us know and we will get to work on our list of 
four that we have come out of this hearing with. Thank you very 
much.
    The hearing is adjourned.
    [Whereupon, at 3:54 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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