[Senate Hearing 114-573]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 114-573
 
                 NOMINATION OF HON. PEGGY E. GUSTAFSON,
                    TO BE INSPECTOR GENERAL FOR THE
                         DEPARTMENT OF COMMERCE

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

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 10, 2016

                               __________

    Printed for the use of the Committee on Commerce, Science, and Transportation
    
    
    
    
    
    
    
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                       Nick Rossi, Staff Director
                  Adrian Arnakis Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Jason Van Beek, Deputy General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
       
       
       
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 10, 2016.....................................     1
Statement of Senator Blunt.......................................     1
    Prepared statement...........................................     2
    Prepared statement of Hon. John Thune, U.S. Senator from 
      South Dakota...............................................    15
Statement of Senator McCaskill...................................     3
    Prepared statement of Hon. Bill Nelson, U.S. Senator from 
      Florida....................................................    18
Statement of Senator Klobuchar...................................    20
Statement of Senator Blumenthal..................................    22

                               Witnesses

Hon. Peggy E. Gustafson, to be Inspector General for the 
  Department of Commerce.........................................     5
    Prepared statement...........................................     7
    Biographical information.....................................     9

                                Appendix

Response to written questions submitted to Hon. Peggy E. 
  Gustafson by:
    Hon. John Thune..............................................    27
    Hon. Roy Blunt...............................................    34


                 NOMINATION OF HON. PEGGY E. GUSTAFSON,



                    TO BE INSPECTOR GENERAL FOR THE



                         DEPARTMENT OF COMMERCE

                              ----------                              


                         TUESDAY, MAY 10, 2016

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:03 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Roy Blunt, 
presiding.
    Present: Senators Blunt [presiding], McCaskill, Klobuchar, 
and Blumenthal.

             OPENING STATEMENT OF HON. ROY BLUNT, 
                   U.S. SENATOR FROM MISSOURI

    Senator Blunt. So let me call the hearing to order. And 
we're certainly pleased to have Peg Gustafson here today to 
testify before the Committee to be the next Inspector General 
of the Department of Commerce. For 6 years, she served as the 
Senate-confirmed Inspector General for the Small Business 
Administration. During her time there as Inspector General of 
the SBA, Ms. Gustafson worked to address challenges at the SBA, 
like fraudulent schemes affecting several SBA programs, 
significant losses from defaulted loans, procurement flaws that 
allow large firms to obtain small business awards, and 
excessive improper payments.
    The U.S. Department of Commerce, of course, with 12 bureaus 
and nearly 47,000 employees located in 50 states and 
territories, and in more than 86 countries worldwide, has a 
broad, wide-ranging stewardship, from the oceans to satellites 
to the census to telecommunications, and it's important that 
the new Inspector General be able to hit the ground running. I 
believe that Ms. Gustafson will be well positioned to have an 
immediate impact at the Department of Commerce.
    Prior to her role at SBA, she served as the General Counsel 
to Senator McCaskill, a member of this committee. She advised 
the Senate on Government oversight issues and helped write the 
Inspector General Reform Act of 2008, among other things she 
has done.
    Senator McCaskill will be introducing Ms. Gustafson in just 
a minute, but I want to say a couple more things about the 
challenge at the Department of Commerce. First of all, it has 
been without an Inspector General since June of last year. Last 
August, Chairman Thune and Homeland Security Committee Chairman 
Johnson called on the President to nominate a suitable 
candidate to be the permanent Inspector General of the 
Department of Commerce. Both committees were concerned that a 
lengthy absence of a permanent Senate-confirmed Inspector 
General at the Department of Commerce would diminish 
independent oversight and destabilize the Office of Inspector 
General.
    The mission of the office, of course, is to improve the 
efficiency and effectiveness of the Department. This mission 
has been impacted by an unwillingness of the Department in a 
number of areas to cooperate with the Inspector General. Those 
are--those issues are covered in my prepared statement, which 
I'm going to put in the record.
    [The prepared statement of Senator Blunt follows:]

    Prepared Statement of Hon. Roy Blunt, U.S. Senator from Missouri
    Today we are very happy to welcome Peg Gustafson to testify before 
the Committee as we consider her nomination to be the next Inspector 
General at the Department of Commerce. For the past six years, Ms. 
Gustafson has served as the Senate-confirmed Inspector General of the 
Small Business Administration (SBA).
    During her tenure as the Inspector General of the SBA, Ms. 
Gustafson worked to address challenges at SBA, such as fraudulent 
schemes affecting all SBA programs, significant losses from defaulted 
loans, procurement flaws that allow large firms to obtain small 
business awards, and excessive improper payments.
    With 12 bureaus and nearly 47,000 employees located in all 50 
states and territories, and in more than 86 countries worldwide, the 
Department's mission is broad, ranging from stewardship of the oceans 
and satellites, to the census and telecommunications.
    It is important for the new Inspector General to be able to hit the 
ground running, and I believe Ms. Gustafson will be well positioned to 
make an immediate impact at the Department of Commerce.
    Prior to her role at SBA, Ms. Gustafson served as General Counsel 
to Senator Claire McCaskill, a member of this committee. She advised 
the Senator on government oversight issues and helped write the 
Inspector General Reform Act of 2008, among other things.
    Senator McCaskill will be introducing Ms. Gustafson shortly.
    From 1997 to 2007, Ms. Gustafson served as General Counsel in the 
Missouri State Auditor's Office, and before that, she served as an 
assistant prosecuting attorney for Jackson County, Missouri.
    The Department of Commerce has been without a permanent Inspector 
General since June of last year.
    Last August, Chairman Thune and Homeland Security Committee 
Chairman Johnson called on the President to nominate a suitable 
candidate to be the permanent inspector general of the Department of 
Commerce.
    Both committees were concerned that a lengthy absence of a 
permanent, Senate-confirmed inspector general at the Department of 
Commerce would diminish independent oversight and destabilize the 
Office of Inspector General.
    The mission of the Office of Inspector General (OIG) is to improve 
the efficiency and effectiveness of the Department's programs and 
operation, as well as to detect and deter waste, fraud, and abuse.
    This mission to protect taxpayer dollars is best served when a 
permanent Inspector General is in place.
    I strongly support the mission of inspectors general at the 
departments and agencies within the Committee's jurisdiction. Indeed, 
their independence is absolutely critical to their success.
    I am particularly concerned about information access issues the 
Commerce Department's Office of Inspector General recently faced.
    A bedrock principle of the Inspector General Act of 1978, which 
established an Office of Inspector General within 72 agencies across 
the Federal Government, is that inspectors general must have access to 
``all'' agency records and information necessary to conduct oversight.
    Unfortunately, since the early days of the Obama Administration, 
many agencies have systematically thwarted access to ``all records'' 
agency inspectors general need to do their job. Even the New York Times 
Editorial Board, in a March 9, 2016, editorial entitled ``Let 
Inspectors General Do Their Job,'' has underscored this concern.
    Sadly, this pattern of obstruction of inspectors general audits and 
investigations by the Obama Administration has even involved the 
Department of Commerce.
    The Department of Commerce Office of Inspector General has twice 
been forced to terminate an audit of the International Trade 
Administration's Enforcement and Compliance unit after Commerce 
Department officials refused to grant access to requested information, 
based on a highly dubious interpretation of a 68-page legal opinion 
issued by the Obama Justice Department that essentially argued 
inspectors general were not entitled to ``all'' agency information.
    This opinion from the Obama administration is in direct 
contradiction of the Inspector General Act of 1978.
    The second time the Department of Commerce Inspector General was 
forced to terminate an audit of the International Trade Administration 
occurred as recently as last month.
    As the New York Times editorial states, ``for nearly three decades 
no one questioned the authority of inspectors general to obtain 
sensitive or protected information.'' No one, that is, except the self-
described ``most transparent administration in history.''
    Last month, the Office of Inspector General advised that the 
Commerce Department's latest refusal to provide access has now been 
reversed, allowing the planned audit to proceed.
    This is welcome news, but we need to ensure that future presidents 
will not seek to obstruct the mission of inspectors general as the 
Obama Administration has done.
    Department officials must not hinder the Inspector General's work 
by denying access to records necessary to complete audits and 
investigations.
    Furthermore, significant delays in granting access to key 
information are often tantamount to denial, and prevent both the 
Department and the public from understanding challenges within the 
Department and the steps it is taking to address them.
    In conclusion, although it has been nearly a year since the last 
Inspector General resigned, we are pleased to have the President's 
nominee before the Committee.
    Once the Senate received Ms. Gustafson's nomination on April 25--
only two weeks ago--this Committee acted swiftly to schedule this 
hearing.
    I turn now to Ranking Member Nelson for any remarks he would like 
to make.

    Senator Blunt. But I want to move now to Senator McCaskill 
to introduce the nominee.

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. Thank you, Mr. Chairman. It is a 
pleasure for me to get to introduce Peg Gustafson to the 
Committee. There are two things that you need to be an 
Inspector General: one is fearlessness and the other is focus. 
Rarely do I know a nominee for these jobs, and never have I 
known a nominee as well as I know Peg. Her background is one of 
public service. She was raised in Chicago by a father who was a 
police officer. In fact, two of her sisters went on to work in 
law enforcement. Peg chose to go to law school. But because of 
that influence in her childhood, she was drawn to the 
prosecutor's job.
    And I was the elected prosecutor in Kansas City when Peg 
interviewed for a job. And this story tells you really all you 
need to know about Peg in terms of her fearlessness. She had 
come and asked for a job, and I said, ``Listen, I think you're 
a great candidate. I just don't have room right now to hire 
you.''
    So she was hired by the county legal counsel and was 
working for the county in a capacity as their lawyer. There was 
a lawsuit that I care deeply about, as the elected prosecutor 
of the county, and I'm sure it will be a shock to Senator Blunt 
and Senator Gardner that I had very strong opinions about it 
and that I was not shy about letting those opinions be known to 
everyone.
    So I went to this meeting with the legal counsel for the 
county. And keep in mind, now, Peg is in this meeting and she 
has applied for a job with me. Now, we all know there are two 
kinds of staff, lots of bright staff, but there's the kind of 
staff that shades what they tell you based on what they know 
you want to hear, and there's the kind of staff that stands up 
to you and makes you better and stronger and more capable.
    So at this meeting, I kind of expected Peg, based on her 
demeanor in our interview, to kind of take a low-key approach 
and shade what she said in order not to offend me because it 
was very clear to everybody in the room how strongly I felt 
about this. So imagine my surprise when Peg Gustafson squared 
her shoulders and stood up to me and told me exactly why I was 
wrong on the law and exactly why the county should proceed in a 
different way.
    I went back to my office and I called my Chief of Staff in, 
and I said, ``We better hire Peg Gustafson.'' And we did. And 
she was a great assistant prosecutor, widely respected by 
judges and defense counsel and police department because of the 
work she did.
    I took her with me to the State Auditor's Office, where she 
was the point person on access issues, which is very important 
for her job as Inspector General because a lot of your job as 
Inspector General is getting access, and she was the one when a 
part of government decided they didn't really want to talk to 
us or didn't want to cooperate with us, she was the one who 
went toe-to-toe with them on those legal issues.
    Once again, she uprooted her family and moved. They're here 
today, Patrick and Amy and Doug, her two children and her 
husband, made them come along, came to Washington, and worked 
in my office, where she did the work in the IG community and 
was instrumental in passing the IG Empowerment law, which gives 
more independence to Inspector Generals than they've ever had 
in our Government.
    I think the job she has done at SBA is remarkable. I think 
she has shown that fearlessness and focus, and I know that she 
will be that same kind of Inspector General at Commerce, and I 
only hope that our inability to get our work done here does not 
impact her swift confirmation because if there was ever a 
department of Government that needs an Inspector General and 
needs it now, it's Commerce. There have been a string of 
failures in that position and the stability and the continuity 
that Peg would provide to that office are essential at this 
moment.
    So I urge her swift confirmation, and I sit here with a 
great deal of pride at her success, which she has everything to 
do with. I have been a big player in watching her rise through 
the level of public service to obtain this honor to serve in 
this capacity, and I know she'll do well.
    Thank you, Mr. Chairman.
    Senator Blunt. Thank you, Senator McCaskill.
    And, Ms. Gustafson, we're pleased you're here. And if you 
want to say more about your family, we're pleased they're here 
as well. But we appreciate your opening statement.

 STATEMENT OF HON. PEGGY E. GUSTAFSON, TO BE INSPECTOR GENERAL 
                 FOR THE DEPARTMENT OF COMMERCE

    Ms. Gustafson. Senator Blunt, Senator McCaskill, Senator 
Fischer, hello. It's an honor to be here today and to be under 
consideration to serve as Inspector General for the Department 
of Commerce. I have prepared a written statement and request to 
have it submitted for the record.
    It's been an incredible honor to serve as the IG for the 
Small Business Administration since October 2009. I'm extremely 
excited about this new opportunity and possibility to serve at 
the Department of Commerce, which performs vital functions and 
provides services to propel America's economy forward.
    I want to take just a couple minutes to introduce myself to 
you and explain why I believe my career in public service and 
tenure as SBA Inspector General has prepared me to take on the 
role of Inspector General at Commerce.
    I do want to thank my husband, Doug, and my kids, Patrick 
and Amy, for their love and their support. I want to thank my 
family for their continued support, my siblings, especially 
Kelly, my sister, and her husband, John, who flew out on pretty 
short notice from Chicago to be here. I'm so excited to have 
their support.
    I was born and raised in Chicago. Our father was a sergeant 
for the Chicago Police Department. I attended public schools in 
Chicago from kindergarten through high school, had the 
privilege of attending Grinnell College in Iowa, where I 
received my bachelor's in political science in 1989 and 
subsequently received my law degree from Northwestern in 
Chicago.
    After law school, I moved to Missouri and began my legal 
career as a judicial clerk for the Honorable Don Kennedy at the 
Missouri Court of Appeals in Kansas City. And from there, I 
spent 6 years in government serving the people of Jackson 
County, Missouri. I was an assistant county counselor 
representing the county in civil litigation. I can't believe 
you remember that story, but I remember very well, what Senator 
McCaskill just referred to. I worked as an assistant county 
prosecutor handling all stages of criminal prosecution for a 
wide variety of cases, from drug cases to arson to murder to 
white collar crime.
    In 1999, I was asked to serve as the General Counsel for 
the Missouri State Auditor and handled many oversight 
responsibilities for the state level auditing activities. I was 
an integral part of the management team. It was there when I 
first became familiar with the ``yellow book,'' which are, of 
course, the government auditing standards promulgated by GAO, 
and did indeed have a lot of experience and became pretty 
skilled at ensuring that auditors had access to the records 
necessary to perform their oversight responsibilities and 
report on the issues that the taxpayers needed to know about.
    After 8 years in the Auditor's Office, I served as General 
Counsel to Senator McCaskill and assisted the Senator in areas 
related to government oversight and financial management. And, 
again, that is indeed where I became very familiar with the IG 
community, through that work, especially the work on the IG 
Reform Act of 2008.
    In March 2009, I was nominated to serve as Inspector 
General of the Small Business Administration, and I was sworn 
in on October 2, 2009. I am humbled to have been nominated a 
second time by the President.
    As Inspector General, I seized the opportunity to promote 
integrity and efficiency within the SBA and have strived to 
make a positive impact within the Federal Inspector General 
community. Since 2009, I've led an investigative and audit 
staff numbered at approximately 100 people, and we've provided, 
I believe, effective oversight over SBA's programs, which 
encompass more than $100 billion in guaranteed loans and $100 
billion in Federal Government contracting dollars. In that 
time, our office has averaged over an eightfold return on 
investments to the taxpayer relative to our budget.
    As Inspector General, I have actively participated as a 
member and leader in the Council of Inspectors General of 
Integrity and Efficiency, CIGIE for short. After becoming 
Inspector General, I accepted the position of Vice Chair of the 
Legislation Committee, and then took over as Chair of the 
Legislation Committee for CIGIE, where I served 5 years, both 
as the Chair of the Legislation Committee and a member of 
CIGIE's Executive Council. In that role, I testified several 
times on behalf of the IG community and telling Congress the 
tools that we would like to help us perform our function.
    I'm very proud of the reputation I've earned in the course 
of my career in public service, particularly as Inspector 
General. I bring to these positions a strong commitment to 
earning and keeping the public trust and to using taxpayer 
dollars wisely. I always push those who work for and with me to 
go the extra mile when I feel it's important to press harder 
and get to the root of a problem. And, additionally, I believe 
that those of us in positions of oversight must demand of 
themselves the highest level of ethical activity and serve as a 
role model for those with whom we interact.
    While the Department of Commerce is clearly a larger agency 
with a more diverse mission, in the realm of the Office of 
Inspector General, the mission and focus will be the same, to 
promote economy, efficiency, and effectiveness in the 
administration of and prevent and detect fraud and abuse in the 
programs of the agency.
    If confirmed, I will focus resources on the areas of 
highest risk to the Department and against areas identified as 
top management challenges. I'll also make it a priority, as I 
have in this position, to maintain a good working relationship 
with Congress, with this committee certainly, Congress, as a 
whole, the Secretary, and all the stakeholders, but I also 
intend to exercise complete independence in regards to choosing 
and pursuing audits and investigations.
    I believe I have the skills, knowledge, the judgment, 
demeanor, and track record to serve as the Inspector General 
for the Department of Commerce, and I cannot thank you enough 
for your consideration, and look forward very much to your 
questions.
    Thank you.
    [The prepared statement and biographical information of Ms. 
Gustafson follow:]

      Prepared Statement of Hon. Peggy E. Gustafson of Maryland, 
            to be Inspector General, Department of Commerce
    Chairman Thune, Ranking Member Nelson, and Members of the 
Committee. It is an honor to be here today and to be under 
consideration to serve as Inspector General of the Department of 
Commerce.
    I believe public service is a noble profession and it has been a 
privilege to serve as the Inspector General of the U.S. Small Business 
Administration (SBA) since October 2009. I am very excited about this 
new opportunity to serve at the Department of Commerce, which works to 
promote job creation, economic growth, sustainable development, and 
improved standards of living for Americans. I would like to take the 
next few minutes to introduce myself to you, and to explain why I 
believe my career in public service and tenure as SBA Inspector General 
has prepared me to take on the role of Inspector General at the 
Department of Commerce. But first, I would like to express my 
appreciation to this Committee for considering my nomination 
expeditiously. I also want to thank my husband, Doug Micheel, and my 
children, Patrick and Amy, for their love and their support, especially 
at this time as I seek the Committee's approval for becoming Inspector 
General at the Department of Commerce. If I may, I also want to thank 
my family for their continued support, especially those who are here 
with me today: my sister, Kelly, and her husband, John.
    I was born and raised in Chicago, on the near north side. My family 
has a long history in law enforcement. My father was a sergeant in the 
Chicago Police Department and my sisters both continue to serve in law 
enforcement, with my older sister as a sergeant with the Chicago Police 
Department and my younger sister Jennifer as a Lieutenant in the Cook 
County Sheriff's Department. I attended Chicago public schools from 
kindergarten through high school and then had the privilege of 
attending Grinnell College in Iowa, receiving my bachelor's in 
political science in 1989, and Northwestern University in Chicago, 
where I earned my law degree. After law school I moved to Missouri and 
began my legal career as a judicial clerk for the Honorable Don Kennedy 
at the Missouri Court of Appeals in Kansas City.
    From there, I spent six years in government serving the people of 
Jackson County, Missouri. First, I was an Assistant County Counselor, 
representing the county in civil litigation, including the defense of 
Federal lawsuits filed by jail inmates, personal injury suits filed by 
persons alleging they were injured on county property, and representing 
the county in personnel actions. I then worked as an assistant county 
prosecutor, handling all stages of criminal prosecution for a wide 
variety of cases, from drug cases to arson to white collar crime to 
murder. I also represented the county in cases when we sought to remove 
public officials from office for violations of conflict-of-interest and 
nepotism laws.
    In 1999, I was asked to serve as General Counsel for the Missouri 
State Auditor. In this capacity, I handled many oversight 
responsibilities for state-level auditing activities. In addition to 
the traditional duties of a general counsel, such as advising the 
auditor and her staff on legal questions arising in the course of 
audits, I was an integral part of the management team of the office. I 
became very familiar with the ``yellow book,'' the government auditing 
standards promulgated by the Government Accountability Office, as well 
as the appropriate scope of the Auditor's constitutional and statutory 
duties. I also became skilled at ensuring the auditors were provided 
access to the records necessary for them to perform their audits and 
report on any issues of waste, fraud or abuse of the taxpayers' money.
    After eight years in the auditor's office, I was provided with the 
opportunity to serve as General Counsel in the office of Senator Claire 
McCaskill. In this capacity, I assisted the Senator in areas related to 
government oversight and Federal financial management as well as on 
issues related to the Judiciary, Rules and Ethics Committees. It is in 
this role that I had an opportunity to become very familiar with the 
Federal Inspector General community, most notably through my work as 
one of the key staffers who worked on the Inspector General Reform Act 
of 2008. I also worked extensively on the legislation which gave 
expanded authority and powers to the Special Inspector General for the 
Troubled Asset Relief Program. I would be remiss if I did not express 
my appreciation to my former boss, Senator McCaskill, for these 
opportunities.
    In March 2009, the President nominated me to serve as the SBA 
Inspector General, and, following confirmation of my nomination by the 
U.S. Senate, I was sworn in on October 2, 2009. I am humbled to have 
been nominated a second time by the President. As Inspector General, I 
seized this opportunity to promote integrity and efficiency within the 
SBA, and I also have strived to make a positive impact within the 
Inspector General Community.
    SBA was created in 1953 as an independent agency of the Federal 
Government to aid, counsel, assist and protect the interests of small 
business concerns, to preserve free competitive enterprise and to 
maintain and strengthen the overall economy of our Nation. The 
President elevated SBA to his Cabinet in 2012. Though the Department of 
Commerce is much more expansive in size and mission, SBA parallels some 
of its activities focusing on building America's future and helping the 
United States compete in today's global marketplace by providing 
assistance to small businesses across the Nation through credit, 
contracting, and counseling programs. The SBA helps Americans start, 
build, and grow businesses. Through an extensive network of field 
offices and partnerships with public and private organizations, SBA 
delivers its services to people throughout the United States, Puerto 
Rico, the U.S. Virgin Islands, and Guam.
    With 12 bureaus and nearly 47,000 employees located in all 50 
states and territories and more than 86 countries worldwide, the 
Department of Commerce is substantially more diverse in its critical 
programs that touch the lives of every American. However, in the realm 
of the Office of Inspector General, the mission and focus is the same--
to promote economy, efficiency, and effectiveness in the administration 
of, and to prevent and detect fraud and abuse in, such programs and 
operations of the establishment.
    Since 2009, I have led an investigative and audit staff of 
approximately 100, and my office has provided effective oversight of 
SBA's programs, encompassing more than $100 billion in guaranteed loans 
and nearly $100 billion in Federal contracting dollars. In this time, 
we have averaged over an eight-fold return-on-investment to the 
taxpayer relative to our office budget and have issued 136 reports 
containing 747 recommendations for corrective action. We have promoted 
the suspension and debarment process within the SBA and have balanced 
the focus of our investigative resources to combat fraud in both the 
credit and the contracting programs.
    Early in my tenure, I recognized the importance of an Office of 
Inspector General's Hotline operation. Not only does the Hotline 
provide a means for the public to report fraud, waste, and abuse, but 
it is also a lifeline to whistleblowers. At SBA Office of Inspector 
General, I've made the Hotline the heart of operations, serving as a 
principal tool in promoting the integrity, efficiency, and 
effectiveness of SBA programs. The Hotline receives and processes 
reports of fraud, waste, abuse, mismanagement, or misconduct involving 
SBA programs or employees--approximately 700 annually involving 
millions of dollars of Federal funds. I have worked with the Congress 
to direct additional resources toward our Hotline, and I have taken a 
number of actions to enhance its functionality. We elevated the Hotline 
to be under the purview of the Chief of Staff and implemented a 
comprehensive Hotline policy, which balanced the information needs of 
complainants with the operational needs of the office. Importantly, 
this policy has enhanced privacy protections for complainants and other 
interested persons. I also integrated our Hotline across multiple 
platforms, including the public website, a complaint tracking system, 
and an Integrated Voice Response system for telephone callers. If 
confirmed, I will ensure an effective and secure Hotline operation is 
available to those wanting to report fraud, waste, or abuse to the 
Department of Commerce Office of Inspector General. I also will ensure 
these complaints are processed in an efficient manner.
    As noted, I have worked with the Congress to secure necessary 
resources to provide effective oversight over SBA programs and 
operations. I strive to keep the Congress and the Administrator fully 
and currently informed, dedicating a member of my immediate staff to 
communicate with the Congress. In these communications, my office has 
demonstrated fiscal responsibility and long term savings, which has 
resulted in an approximate 22 percent increase in budget authority from 
the beginning of my tenure to the present. We've increased 
investigative capacity while simultaneously pursuing reduced cost for 
full time equivalent positions. Specifically, we are utilizing unsworn 
law enforcement personnel to support the investigative efforts of our 
criminal investigators. Such personnel have significantly reduced costs 
to that of criminal investigators and have increased the investigative 
capacity of our traditional law enforcement resources.
    I recognize technology acquisition and development pose significant 
challenges to Federal agencies. At SBA, I focused resources against 
such challenges, and one technology initiative is particularly 
noteworthy for being over budget and delayed in its delivery. I fully 
understand the critical role that Offices of Inspectors General have in 
overseeing such projects and the positive results that recommendations 
for corrective action can achieve. I am proud of my office's part in 
ensuring taxpayer money was not squandered as SBA upgraded its Loan 
Management and Accounting System (LMAS), a project that was subject to 
significant Congressional scrutiny and vital to SBA operations. If 
confirmed, I am poised to provide leadership to ensure similar projects 
at the Department of Commerce receive scrutiny by the Office of 
Inspector General.
    As SBA Inspector General, I have actively participated as a member 
and a leader on the Council of the Inspectors General on Integrity and 
Efficiency, otherwise known as CIGIE. I was elected by my peers to 
serve two consecutive terms as the Chair of CIGIE's Legislation 
Committee, and as such, served as a member of CIGIE's Executive Council 
for five years. In this leadership capacity, I endeavored to keep the 
Congress informed of the matters of most pressing interest to the 
Inspector General Community. I testified on several occasions on behalf 
of CIGIE, whereby legislative priorities to promote independence and to 
facilitate effective oversight were championed. I've also led several 
cross-cutting projects within CIGIE resulting in products, including 
CIGIE's Congressional Relations Handbook and a Program Fraud Civil 
Remedies Act Practitioners Guide.
    I am proud of the reputation I have earned in the course of my 
career in public service, particularly as an Inspector General. I bring 
to each new position a strong commitment to earning and keeping the 
public trust, and to using taxpayer dollars wisely. At the same time, 
my teams have consistently been cited for being reasonable, fair, and 
honest with our stakeholders. I have always pushed those who work for, 
and with, me to go the extra mile when I feel that it is important to 
press harder and get to the root of a problem. Additionally, I believe 
that those of us in positions of oversight must demand of themselves 
the highest level of ethical activity, serving as a role model for all 
of those with whom we interact.
    I believe my leadership abilities and style have had a positive 
impact at the SBA, and if confirmed, I believe I can create a culture 
of ownership and pride for those who work in the Office of Inspector 
General. With my executive team, I will ensure workplace policies are 
up-to-date and implement new policies where gaps may exist. Ensuring 
effective policies and procedures are in place and holding personnel 
accountable to the same standard is the foundation to a workplace that 
is considered fair and equitable. Though policies and procedures can be 
reviewed and implemented in reasonable time frames, the ensuing culture 
change begins to take root when the trust of staff is earned. I have 
led through changes of leadership at the SBA and also through changes 
of my own executive staff. If confirmed, I intend to be a steady hand 
during the change in Administration and also commit to providing 
steady, independent leadership within the Office of Inspector General.
    Finally, if confirmed, I will focus resources on the areas of 
highest risk to the Department and also against areas identified as top 
management challenges. I also will make it a priority to maintain a 
good working relationship with this Committee, Congress as a whole, the 
Secretary, and others--but I also intend to exercise complete 
independence in regards to choosing and pursuing audits and 
investigations. I believe that I have the skills, knowledge, judgment, 
demeanor, and overall track record to serve as the Inspector General of 
the Department of Commerce.
    Thank you for your consideration, and I look forward to your 
questions.
                                 ______
                                 
                      a. biographical information
    1. Name (Include any former names or nicknames used):

        Peggy Elizabeth Gustafson.

    2. Position to which nominated: Inspector General, Department of 
Commerce.
    3. Date of Nomination: April 25, 2016.
    4. Address (List current place of residence and office addresses):

        Residence: Information not released to the public.
        Office: Small Business Administration, Washington, DC 20416.

    5. Date and Place of Birth: September 21, 1967; Chicago, IL.
    6. Provide the name, position, and place of employment for your 
spouse (if married) and the names and ages of your children (including 
stepchildren and children by a previous marriage).

        Douglas Micheel, Assistant General Counsel, PEPCO, Washington, 
        DC.

    7. List all college and graduate degrees. Provide year and school 
attended.

        Grinnell College, Grinnell, IA, BA Political Science 1989.
        Northwestern University School of Law, Chicago, IL JD, 1992.

    8. List all post-undergraduate employment, and highlight all 
management-level jobs held and any non-managerial jobs that relate to 
the position for which you are nominated.

        Inspector General, Small Business Administration, October 2009 
        to present.

        General Counsel, Sen. Claire McCaskill, 2007-October 2009.

        General Counsel, Missouri State Auditor 1999-2007.

        Assistant Prosecuting Attorney, Jackson County, MO 1995-1999.

        Assistant County Counselor, Jackson County, Missouri 1993-1995.

        Judicial Law Clerk, Missouri Court of Appeals 1992-1993.

    9. Attach a copy of your resume. See Attachment A.
    10. List any advisory, consultative, honorary, or other part-time 
service or positions with Federal, State, or local governments, other 
than those listed above, within the last ten years: None.
    11. List all positions held as an officer, director, trustee, 
partner, proprietor, agent, representative, or consultant of any 
corporation, company, firm, partnership, or other business, enterprise, 
educational, or other institution within the last ten years.
    Board member, Senate Employees Child Care Center, 2007-2009
    12.Please list each membership you have had during the past ten 
years or currently hold with any civic, social, charitable, 
educational, political, professional, fraternal, benevolent or 
religious organization, private club, or other membership organization. 
Include dates of membership and any positions you have held with any 
organization. Please note whether any such club or organization 
restricts membership on the basis of sex, race, color, religion, 
national origin, age, or handicap.
    Member, Missouri Bar, 1992 to present (currently inactive)
    13. Have you ever been a candidate for and/or held a public office 
(elected, non-elected, or appointed)? If so, indicate whether any 
campaign has any outstanding debt, the amount, and whether you are 
personally liable for that debt. No.
    14. Itemize all political contributions to any individual, campaign 
organization, political party, political action committee, or similar 
entity of $500 or more for the past ten years. Also list all offices 
you have held with, and services rendered to, a state or national 
political party or election committee during the same period. None.
    15. List all scholarships, fellowships, honorary degrees, honorary 
society memberships, military medals, and any other special recognition 
for outstanding service or achievements. None.
    16. Please list each book, article, column, or publication you have 
authored, individually or with others. Also list any speeches that you 
have given on topics relevant to the position for which you have been 
nominated. Do not attach copies of these publications unless otherwise 
instructed. None.
    17. Please identify each instance in which you have testified 
orally or in writing before Congress in a governmental or non-
governmental capacity and specify the date and subject matter of each 
testimony.
    Congressional testimony in my capacity as Inspector General of SBA 
and Chair of the Legislation Committee of Council of Inspectors general 
for Integrity and Efficiency. (a position I held from 2010-2015). 
Testimony is available at https://www.sba.gov/oig/category/oig-
navigation-structure/reading-room/congressional-testimony. See also, 
Attachment B.
    18. Given the current mission, major programs, and major 
operational objectives of the department/agency to which you have been 
nominated, what in your background or employment experience do you 
believe affirmatively qualifies you for appointment to the position for 
which you have been nominated, and why do you wish to serve in that 
position?
    In my current role as Inspector General of the Small Business 
Administration, I believe I have developed a skill set which will 
enable me to meet the responsibilities as Inspector General of the 
Department of Commerce if I am confirmed. In my previous roles in 
public service, I have demonstrated an ability to identify challenges, 
formulate recommended solutions and work constructively with senior 
leaders of an agency to resolve problems and overcome challenges. If 
confirmed, I would welcome the opportunity to apply the skills and 
lessons I've learned in my previous roles to promote integrity and 
efficiency within the Department of Commerce to help the agency achieve 
its mission.
    19. What do you believe are your responsibilities, if confirmed, to 
ensure that the department/agency has proper management and accounting 
controls, and what experience do you have in managing a large 
organization?
    Having served as an Inspector General for a cabinet-level Federal 
agency since 2009, I am well versed in the office's responsibilities 
under the Inspector General Act of 1978 as amended. IG offices are 
tasked with performing reviews and investigations of their agency with 
the goal of improving the economy, efficiency and effectiveness of the 
agency's programs. I have been the Inspector General for the SBA, which 
office has an annual budget of approximately $20 million and 103 FTE 
for over six years. The Department of Commerce Office of Inspector 
General is slightly larger but I believe I have the experience 
necessary to manage the organization successfully.
    20. What do you believe to be the top three challenges facing the 
department/agency, and why?
    As Inspector General of the Small Business Administration, I find 
that one of our most useful reports is our annual report on the Top 
Management Challenges facing the SBA. This report is used not only by 
Congress, but by the agency to inform their decisions on where to focus 
their attention when it comes to making the agency more efficient. 
Should I be confirmed as Inspector General of the Department of 
Commerce, I would refer to the office's Management Challenges report to 
determine what I believe the top management challenges for the agency 
are. I would also confer with my staff, as well as agency stakeholders 
and Congress when considering that question.
                   b. potential conflicts of interest
    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients, or customers. Please include information related to retirement 
accounts.
    I have been a public servant my entire career, and possess one 
defined compensation plan from the State of Missouri to which I no 
longer contribute. I also have two defined benefit plan accounts, from 
Missouri and from Jackson County, Missouri, which will pay me a monthly 
amount upon retirement at age 62 or 65. Details are available on my OGE 
Form 278e, filed with the Office of Government Ethics.
    2. Do you have any commitments or agreements, formal or informal, 
to maintain employment, affiliation, or practice with any business, 
association or other organization during your appointment? If so, 
please explain. No.
    3. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. None.
    4. Describe any business relationship, dealing, or financial 
transaction which you have had during the last ten years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated. None.
    5. Describe any activity during the past ten years in which you 
have been engaged for the purpose of directly or indirectly influencing 
the passage, defeat, or modification of any legislation or affecting 
the administration and execution of law or public policy.
    None, save for the Congressional testimony in my capacity as SBA 
IG, noted above.
    6. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items.
    In connection with the nomination process, I have consulted with 
the Office of Government Ethics and Department of Commerce ethics 
officials to identify potential conflicts of interest. Any potential 
conflicts of interest will be resolved in accordance with the terms of 
an ethics agreement that I have entered into with the Department of 
Commerce and that has been provided to this committee. I am not aware 
of any other potential conflicts of interest.
                            c. legal matters
    1. Have you ever been disciplined or cited for a breach of ethics, 
professional misconduct, or retaliation by, or been the subject of a 
complaint to, any court, administrative agency, the Office of Special 
Counsel, professional association, disciplinary committee, or other 
professional group? If yes:
    a. Provide the name of agency, association, committee, or group;
    b. Provide the date the citation, disciplinary action, complaint, 
or personnel action was issued or initiated;
    c. Describe the citation, disciplinary action, complaint, or 
personnel action;
    d. Provide the results of the citation, disciplinary action, 
complaint, or personnel action.
    No.
    2. Have you ever been investigated, arrested, charged, or held by 
any Federal, State, or other law enforcement authority of any Federal, 
State, county, or municipal entity, other than for a minor traffic 
offense? If so, please explain. No.
    3. Have you or any business or nonprofit of which you are or were 
an officer ever been involved as a party in an administrative agency 
proceeding, criminal proceeding, or civil litigation? If so, please 
explain. No.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? If so, please explain. No.
    5. Have you ever been accused, formally or informally, of sexual 
harassment or discrimination on the basis of sex, race, religion, or 
any other basis? If so, please explain. No.
    6. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be disclosed in 
connection with your nomination. None.
                     d. relationship with committee
    1. Will you ensure that your department/agency complies with 
deadlines for information set by congressional committees? Yes.
    2. Will you ensure that your department/agency does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the Committee with requested 
witnesses, including technical experts and career employees, with 
firsthand knowledge of matters of interest to the Committee? Yes.
    4. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.
                              Attachment A
                      Resume of Peggy E. Gustafson
Professional Experience
October 2009-Present
Inspector General, Small Business Administration

   Head of office responsible for conducting audits, 
        investigations and other reviews of the programs of the Small 
        Business Administration.

   From 2009-2015 also served as Vice Chair, then Chair of the 
        Legislation Committee of Council of Inspectors General on 
        Integrity and Efficiency (CIGIE) and member of CIGIE's 
        executive council.

January 2007-October 2009
General Counsel, Senator Claire McCaskill

   Served as aide to United States Senator in areas of homeland 
        security, government oversight, judiciary issues, and ethics.

   Staffed Senator at hearings of Homeland Security and 
        Government Affairs Committee, and hearings in other committees 
        involving legal issues, such SASC hearing on interrogation 
        methods used at Guantanamo Bay.

   Granted TOP SECRET clearance, December 2008

February 1999-January 2007
General Counsel, Missouri State Auditor's Office

   Represented State Auditor's Office in litigation relating to 
        fiscal notes prepared for statewide ballot initiatives, up to 
        and including briefs before Missouri Supreme Court.

   Served as legal counsel for Auditor's office in personnel 
        matters.

   Advised audit staff on legal questions arising in course of 
        audits.

   Counseled State Auditor on legal issues regarding official 
        duties and powers of State Auditor, such as access to records 
        and permissible scope of audits.

   Involved in management of auditor's office as member of 
        executive staff.

1995-February 1999
Assistant Prosecuting Attorney, Jackson County, Missouri

   Tried felony criminal cases of every type, including first 
        degree murder cases

     Had sole responsibility for charging and trying of 
            arsons.

     Team leader of white collar crime trial team.

   Worked with U.S. Attorneys' Office as Special Assistant U.S. 
        Attorney, in areas of white collar crime and public corruption.

   Attended ATF Arson School for Prosecutors at FLETC in 
        Georgia.

   Attended two week arson investigator school at National Fire 
        Academy, Emmitsburg, Maryland.

   Had sole responsibility for appellate practice (misdemeanor 
        appeals and appeals of rulings in limine to exclude evidence.) 
        for prosecutor's office.

   Had primary responsibility for drafting motions for writs of 
        prohibition and mandamus and handled appeals in those cases.

   Assisted Prosecutor with cases involving removal of 
        officials for misconduct through writ of quo warranto.

October 1993-1995
Assistant County Counselor, Jackson County Counselor's Office

   Represented Jackson County in litigation, including defense 
        of county and corrections officers in cases arising out of 42 
        U.S.C. Sec. 1983.

     Tried Federal jury trial in which county prevailed in 
            case brought by prisoner alleging abuse.

     Represented county in Federal case defending county's 
            adult business zoning ordinance.

     Represented county hospital and doctors in hearings 
            seeking involuntary commitment of mentally ill individuals.

     Prosecuted county ordinance violations in Jackson 
            County Associate Circuit Court.

May 1992-October1993
Law Clerk, the Honorable Don Kennedy, Missouri Court of Appeals

   Researched and drafted appellate opinions in all issue 
        areas.

May-August 1991
Summer Associate, Williams and Montgomery, Chicago, Illinois

   Drafted legal memoranda and general legal research for law 
        firm in area of insurance defense litigation.

May-August 1990
Research Assistant, Professor Richard Speidel, Northwestern University 
School of Law, Chicago Illinois

   Assisted professor with revision of casebook on contract 
        law.

1985-1989
Worked at Grinnell College Library, Grinnell, Iowa for work-study 
program.
                              Attachment B
                              
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Senator Blunt. Well, thank you. We are glad you're here.
    Let me ask unanimous consent that Chairman Thune's 
statement be included in the record without objection.
    [The prepared statement of Senator Thune follows:]

 Prepared Statement of Hon. John Thune, U.S. Senator from South Dakota
    Today we are very happy to welcome Peg Gustafson to testify before 
the Committee as we consider her nomination to be the next Inspector 
General at the Department of Commerce. For the past six years, Ms. 
Gustafson has served as the Senate-confirmed Inspector General of the 
Small Business Administration (SBA), an agency I'm very familiar with, 
having once worked as the Chief of Staff for then-Administrator Jim 
Abdnor.
    During her tenure as the Inspector General of the SBA, Ms. 
Gustafson has worked to address challenges at the SBA such as 
fraudulent schemes affecting all SBA programs, significant losses from 
defaulted loans, procurement flaws that allow large firms to obtain 
small business awards, and excessive improper payments.
    I believe Ms. Gustafson's experience at SBA will serve her well in 
her new role as the Inspector General at the Department of Commerce, 
should she be confirmed. With 12 bureaus and nearly 47,000 employees 
located in all 50 states and territories and more than 86 countries 
worldwide, the Department's mission is broad, ranging from stewardship 
of the oceans and satellites, to the census and telecommunications. It 
is important for the new Inspector General to be able to hit the ground 
running, and I believe Ms. Gustafson will be well positioned to make an 
immediate impact at the Department of Commerce.
    Prior to her role at SBA, Ms. Gustafson served as General Counsel 
to Senator Claire McCaskill, a member of this committee. She advised 
the Senator on government oversight issues and helped write the 
Inspector General Reform Act of 2008, among other things and Senator 
McCaskill will be introducing Ms. Gustafson shortly. From 1997 to 2007, 
Ms. Gustafson served as General Counsel in the Missouri State Auditor's 
Office, and before that, she served as an assistant prosecuting 
attorney for Jackson County, Missouri.
    The Department of Commerce has been without a permanent Inspector 
General since June of last year. Last August, along with Homeland 
Security Committee Chairman Johnson, I called on the President to 
nominate a suitable candidate to be the permanent Inspector General of 
the Department of Commerce. Senator Johnson and I did this because we 
were concerned that a lengthy absence of a permanent, Senate-confirmed 
Inspector General at the Department of Commerce would diminish 
independent oversight and destabilize the Office of Inspector General.
    The mission of the Office of Inspector General (OIG), which is to 
improve the efficiency and effectiveness of the Department's programs 
and operation as well as to detect and deter waste, fraud, and abuse, 
in order to protect taxpayer dollars, is best served when a permanent 
Inspector General is in place.
    I strongly support the mission of inspectors general at the 
departments and agencies within the Committee's jurisdiction. Indeed, 
their independence is absolutely critical to their success. That is why 
I have directed my staff to work closely with these IGs to ensure that 
they have the tools they need to carry out their important work and 
that departments and agencies heed and implement OIG recommendations in 
a timely manner.
    I am particularly concerned about information access issues the 
Commerce Department's Office of Inspector General has faced recently. A 
bedrock principle of the Inspector General Act of 1978, which 
established an Office of Inspector General within 72 agencies across 
the Federal Government, is that inspectors general must have access to 
``all'' agency records and information necessary to conduct oversight. 
Unfortunately, since the early days of the Obama Administration, many 
agencies have systematically thwarted access to ``all records'' agency 
inspectors general need to do their job. Even the New York Times 
Editorial Board, in a March 9, 2016, editorial entitled ``Let 
Inspectors General Do Their Job,'' has underscored this concern.
    Sadly, this pattern of obstruction of inspectors general audits and 
investigations by the Obama Administration has even involved the 
Department of Commerce--something Chairman Johnson and I wrote to 
Secretary Pritzker about last year, making the case for OIG access. The 
Department of Commerce Office of Inspector General has twice been 
forced to terminate an audit of the International Trade 
Administration's Enforcement and Compliance unit after Commerce 
Department officials refused to grant access to requested information, 
based on a highly dubious interpretation of a 68-page legal opinion 
issued by the Obama Justice Department that essentially argued that 
inspectors general were not entitled to ``all'' agency information, in 
direct contradiction of the Inspector General Act of 1978.
    The second time the Department of Commerce OIG was forced to 
terminate an audit of the International Trade Administration occurred 
as recently as last month.
    As the New York Times editorial states, ``for nearly three decades 
no one questioned the authority of inspectors general to obtain 
sensitive or protected information.'' No one, that is, except the self-
described ``most transparent administration in history.''
    Last month, the OIG advised that the Commerce Department's latest 
refusal to provide access has now been reversed, allowing the planned 
audit to proceed. This is welcome news, but we need to ensure that 
future presidents will not seek to obstruct the mission of inspectors 
general as the Obama Administration has done. Department officials must 
not hinder the Inspector General's work by denying the OIG access to 
records necessary to complete audits and investigations.
    Furthermore, significant delays in granting access to key 
information are often tantamount to denial, and prevent both the 
Department and the public from understanding challenges within the 
Department and the steps it is taking to address them.
    In conclusion, although it has been nearly a year since the last 
Inspector General resigned, and more than eight months have passed 
since Senator Johnson and I called on President Obama to nominate a 
permanent Inspector General at the Department of Commerce, we are 
pleased to have the President's nominee before the Committee. Once the 
Senate received Ms. Gustafson's nomination on April 25--only two weeks 
ago--I acted swiftly to schedule this hearing. I promised a prompt and 
thorough vetting of the President's nominee, and today's hearing is a 
fulfillment of that promise. I turn now to Ranking Member Nelson for 
any remarks he would like to make.

    Senator Blunt. My first question would be to talk a little 
bit about the fact that the Inspector General's Office two 
times now has been forced to terminate Commerce audits, 
specifically an audit of the International Trade 
Administration's Enforcement and Compliance Unit, after 
Commerce Department officials refused to grant access to 
requested information based on I think it's a highly dubious 
interpretation of a 68-page legal opinion issued by the Justice 
Department that essentially argued that the Inspector General 
was not entitled to all--``all'' being the operative word--
agency information. This appears to me to be in direct 
contradiction to the Inspector General law. The second time, 
the Inspector General was forced to terminate an audit of the 
International Trade Administration just last month. The New 
York Times editorial, a group I don't quote very often----
    [Laughter.]
    Senator Blunt.--said that, ``For nearly three decades, no 
one has questioned the authority of inspectors general to 
obtain sensitive or protected information, no one, that is, 
according to them, except, according to them, the most 
transparent administration in history.''
    Last month, the Office of Inspector General advised that 
the Commerce Department's latest refusal to provide access has 
now been reversed, allowing an audit to proceed, but what I'm 
wondering is, What do you think you've learned in the work 
you've done at SBA that particularly prepares you to meet with 
that kind of resistance that has now terminated two different 
audits at the Commerce Department?
    Ms. Gustafson. Thank you, Senator Blunt. I think that not 
only my tenure as SBA Inspector General, which I certainly will 
talk about, but also my 8 years in that Auditor's Office, if 
it's taught me one thing, and it's taught me a great deal, it's 
that first and foremost the oversight entity, be it the auditor 
or the Inspector General, has to be completely independent and 
be able to make the decisions on where they need to go, what 
they need to look at, and what they need to be able to see in 
order to do those reviews. And what I've learned is if there 
are issues with that, and if there's interference, that really 
is a direct threat upon the independence of that entity and has 
to be dealt with swiftly and quite strongly such that, you 
know, be it a delay of access to materials, which happens very 
often, you know, I think those even need to be managed in such 
a way that we are certain, as the oversight entity, that we're 
getting what we need when we need it, that we're clear what we 
need and why we need it and when we need it. And if those--if 
there are issues with that and if there are problems with that, 
that is a situation that needs to elevated and dealt with.
    I certainly don't know anything outside of what the process 
reported as far as the issues that have been facing certain 
inspectors general, but my thoughts on when that happens is 
that simply needs to be elevated and brought to the 
stakeholders, brought to Congress' attention, and being given 
attention, and people's feet need to be held to the fire to 
make sure that we get the access.
    I agree with you, Senator, 6A, the access provisions in the 
Inspector General Act, are extraordinarily clear, and as you 
noted, it says ``all'' and it says the IG shall have access to 
all records that they need. And when we don't get access, that 
has to be something that immediately is discussed and figured 
out and resolved.
    Senator Blunt. And so you would be willing to challenge a 
Justice Department legal opinion that--basically the opinion 
we're talking about.
    Ms. Gustafson. So I don't profess to be a legal expert on 
what that legal opinion says, but I do commit to fighting for 
that access that we need under the IG Act, no matter what the 
agency is saying, bringing that to attention and not giving up 
on our insistence when we need that information when it's 
information in the hands of the agency, that we are to get it. 
So what that means as far as what steps I would take, I 
certainly think it takes an elevation, and it needs to be 
brought to people's attention and not--and dealt with, whatever 
the----
    Senator Blunt. Did you have any similar situations as the 
Inspector General? Have you had any similar situations at SBA 
where information was not provided?
    Ms. Gustafson. We have not had any denial of access to 
information that we have asked for. What my message to my 
auditors was, and is, even when I first came into the office 
is, what I wanted to know, immediately upon taking that job, 
is, Are we having issues getting information timely? Not even 
just access in general, but are we having issues getting it 
timely? Because, again, I think that that interferes with our 
ability to do our job.
    And so I wanted to know, Are there times when we're not 
getting it when we need it? And if so, let's stop that from 
happening. Let's work on that and make sure that the agency is 
getting us what we need and work through it. Because the timing 
of an audit can be--is crucial as well, too. If an audit is 
taking longer than it needs to take, because you're not getting 
the information you need to, even if you eventually get it, 
that's a problem, and that's something that I think needs to be 
faced with. It happened in the Auditor's Office, as Senator 
McCaskill noted, and it had to be managed, and I think 
sometimes it happens in IG offices.
    So none of that is--all of that has to be managed and we 
have to be serious and sincere and intent on getting what we 
need.
    Senator Blunt. Thank you.
    Senator McCaskill. I would just like to place in the record 
the statement that Senator Nelson wanted to add.
    [The prepared statement of Senator Nelson follows:]

   Prepared Statement of Hon. Bill Nelson, U.S. Senator from Florida
    Good morning.
    Let me start off by welcoming Ms. Gustafson, and extending my 
congratulations on your nomination to be the Inspector General at the 
U.S. Department of Commerce.
    I thank you for your many years of public service at the Small 
Business Administration.
    And I also want to thank Chairman Thune for quickly scheduling this 
hearing--and to get the process moving to fill this critical position.
    Inspectors General have the important task of combating waste, 
fraud, and abuse within Federal agencies.
    Their work plays a key role in government oversight and helps 
improve the efficiency and effectiveness of our Federal agencies.
    IGs keep the agency and Congress informed of serious problems at 
the agency, and they also play the important role of receiving 
whistleblower complaints.
    The independent nature of IGs contributes to the success of their 
work, which ultimately increases the trust that the American people 
have in our government.
    The Commerce Office of Inspector General oversees the expansive 
portfolio of the Department, including the National Oceanic and 
Atmospheric Administration, the National Institute of Standards and 
Technology, and the National Telecommunications and Information 
Administration.
    The important programs and operations of these bureaus contribute 
to a wide variety of sectors including telecommunications, science, and 
weather--and we need strong, effective oversight of those programs.
    I look forward to hearing about your plans to bring long-overdue, 
stable leadership to the Commerce IG.
    Again, thank you for appearing before us today, Ms. Gustafson.

    Senator McCaskill. And the only question I have for Ms. 
Gustafson is a question about testimonial subpoena. Just so 
everybody understands, IGs can get documents, but they can't 
get information from witnesses if the witness has no longer--
has left Government, and we are trying very hard to get this 
changed. It is very difficult for investigations to be thorough 
and complete if you are thwarted from getting information 
because of your inability to have a testimonial subpoena.
    And I know that you have been Chairman of CIGIE, which is 
the Council of Inspector Generals. You have worked with the 
Inspector General community now for a number of years. You also 
are familiar with the Department of Justice and having worked 
with the Department of Justice, certainly when you were a 
prosecutor, in a cooperative fashion and worked with them on 
various cases.
    Based on your experience in the IG community, Ms. 
Gustafson, do you think testimonial subpoena power is any more 
susceptible to abuse within the IG community than it is within 
the Department of Justice?
    Ms. Gustafson. Senator McCaskill, as you noted, I am keenly 
aware of this issue. We personally, at SBA IG, did have an 
instance when we were trying to look at somebody who has been--
who had bid for a contract, and we wanted to talk to them, and 
so, again, we didn't--they weren't Federal employees, and they 
basically told us to go pound sand, they didn't want to talk to 
us. And so I know that that's a real problem.
    In all candor, I think it's offensive to think that for 
some reason the Inspector General community can't handle 
testimonial subpoena authority. I think it's something--I think 
it's a tool that we have personally, speaking as the former 
Chair of the CIGIE Legislation Committee and having worked on 
that bill, your bill, quite frankly, in 2008, where at one 
point it was a part of the bill, and this new bill, that's a 
Senator Johnson, Grassley, McCaskill bill, I think is an 
important tool, and I guess I never really understood why there 
seems to be some feeling out there that inspectors general 
would want to run amok if being given that authority. And, 
again, I think given the track record that inspectors general 
have, as the broad authority that we have now, and how I think 
we do a pretty good job in Government and are good stewards for 
the taxpayers, I don't understand that argument.
    Senator McCaskill. I don't either, and it's being blocked, 
and I think it's something that everyone needs to understand, 
that the oversight function performed by the Inspector General 
community will never be thorough and never be complete as long 
as there is information that is not available to the Inspector 
General community. And sometimes arm wrestling ``Mother 
Justice'' over their cooperation, and keep in mind that it's 
not uncommon for an investigation at DOJ--and I know both 
Senator Klobuchar and Senator Ayotte will back me up on this 
because they have worked with Department of Justice--they have 
a different timetable than State and local law enforcement, and 
that's putting it politely. I mean, their investigations can 
literally take years and years. And the notion that we cannot 
do important policy work through oversight, waiting for them to 
complete what they're doing or not doing, I think is really 
shortsighted. So I hope that we can continue to work on that 
and get you all testimonial subpoena.
    Thank you, Mr. Chairman.
    Senator Blunt. Senator Klobuchar.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much, Mr. Chairman. And 
congratulations, Ms. Gustafson, on your nomination, and it's 
good to be here with Senator McCaskill after all the work she 
has done in this area, and I'm sure she'll make sure everything 
goes smoothly, if you get confirmed here and everything gets 
done.
    But I did want to ask you one question somewhat along the 
lines of what Senator McCaskill was talking about. One reason 
that we have inspectors general, of course, is to make sure 
that Government is more accountable, but you can only fulfill 
this goal if you have access to the information and if the 
public then has information to your reports. And there are 
concerns that some IGs have not released their findings or have 
taken too long to release them. What are the legal and policy 
guidelines? Do you think this needs clarification? And do you 
commit to releasing your reports as soon as possible?
    Ms. Gustafson. I think that one of the really great, quite 
frankly, protections for inspectors general built into not only 
the IG Act of 1978, that created the IGs, but the 2008 Act 
which mandated publishing on the website the reports of the 
Inspector General. The wonderful thing about that is it ensures 
that the agency understands that we need to tell the public 
what is going on. Our biggest job and our biggest stakeholders, 
Congress is a huge stakeholder, the agency is a huge 
stakeholder, but the American taxpayer is really our biggest 
stakeholder. We are there to try to ensure that the agency is 
being a good steward for the money and running these programs 
the way that they need to be run. And by having that, by having 
a law that envisions that our work is public really helps that 
happen, really helps the agency understand that our role is, 
you know, although we are inside the agency, we have a dual 
reporting requirement to Congress and, again, the public gets 
to know what we're doing.
    So to your point, I think that the law has gotten better, 
even in 2008, and that it did kind of acknowledge that now it's 
easier to get the reports published faster and get the public 
access to them because now every IG has a website, as every 
agency has a website.
    So it's certainly--I can certainly commit to you that 
that's always been a priority for me, that our work get 
published that way and be made public, and I would continue 
that practice at the Department of Commerce. I see no reason--
quite frankly, I think it only benefits an Inspector General 
because our work gets noticed.
    Senator Klobuchar. Right. And so you have this dual role 
where you, of course, are an independent voice----
    Ms. Gustafson. Right.
    Senator Klobuchar.--to uncover whatever ways fraud, abuse, 
is going on. At the same time, you work closely with the agency 
that you're tasked to monitor. And so what's your view of the 
appropriate working relationship between the Office of the 
Inspector General and the Secretary of Commerce? And how would 
you balance consulting with senior Commerce leadership and 
maintaining independence?
    Ms. Gustafson. Again, my experience, both having gotten to 
know the IG community when I was on the Hill, and then being 
the IG for six and a half years, it's really--it's such a 
unique position in Government and really was designed by 
Congress since, of course, it was created by an Act of 
Congress, in this amazing way where, yes, we're within the 
agency, but we have such strong independence.
    We have so many tools and protections for our independence 
built into the way that we are designed, such as the dual 
reporting role, where we have to keep Congress fully informed 
in addition to the agency head, such as the removal provisions 
where any IG, who, should they be removed, first Congress gets 
to know that first, you know, and 30 days with a reason why, 
such as very specific language that says the agency shall not 
direct us and tell us what to do or what not to do.
    And I think that the way I balance that role is I go--I 
strive to have a collaborative relationship and a collegial 
relationship with the agency because a good working 
relationship makes things run smoother, and you want--I want to 
have a good relationship with the agency because I want them to 
pay attention to the work of the IGs, to the work of the IG 
employees.
    So it's important that we have that understanding that 
we're there to help make the agency better, but, on the other 
hand, nobody can tell us what to do, you know. And so with that 
understanding, I think that really fashions the relationship. 
And my experience so far, and there have been two 
administrators at the SBA since I've been there, it has helped 
to have a very professional yet independent relationship with 
them, and that's something that I would bring to Commerce, just 
kind of my knowledge of that's what you need to do to be a 
strong and independent IG, and approach my relationship with 
the stakeholders and the agency in that manner.
    Senator Klobuchar. All right. Thank you very much.
    Ms. Gustafson. Thank you, Senator.
    Senator Blunt. So while Senator Blumenthal settles in, you 
mentioned in March in your testimony before the House Small 
Business Committee, you talked about the serious shortcomings 
at SBA in securing information. You know, cybersecurity is 
obviously something that the Government has not been nearly as 
good at as we would have hoped the Government would have been. 
What do you think, taking from SBA to this bigger agency, that 
you can bring to that important discussion there?
    Ms. Gustafson. One of the things that's patently clear to 
me both through my work as the IG at the Small Business 
Administration, of course, being within the IG community and 
being part of the community where we discuss issues, as to your 
point, Senator, cybersecurity is an issue in every single 
agency for several reasons. One, because it's such an important 
issue because vulnerabilities in IT systems can wreak such 
havoc both with the public's information and just with the 
systems in general. Also the fact that cybersecurity, the 
understanding that that's always going to be a moving target 
because there's always going to be people out there figuring 
out different ways to try to take advantage of vulnerabilities 
within systems.
    So one of the things that I noted in reviewing, for 
example, the top management challenges at Commerce and 
comparing them to our top management challenges at SBA is 
cybersecurity is on both of those lists for clear reasons. I 
think it's one of those issues that has to--I kind of think of 
it as something that will probably always be there, and it 
doesn't mean that it doesn't deserve attention, what it means 
is it kind of deserves constant attention, not overwhelming, 
but constant attention, and both on behalf of the agencies and 
on behalf of the overseers. You know, it would not be 
surprising for that to be a longstanding management challenge 
just because of the very nature of the technology, which is 
changing as I speak.
    Senator Blunt. Senator Blumenthal.

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thank you, Mr. Chairman. Welcome to our 
Committee, and thank you for your service and to your family, 
for their service.
    Ms. Gustafson. Thank you.
    Senator Blumenthal. I want to focus on a perhaps very 
specific and limited issue--NOAA recognizes the importance of 
promoting aquaculture. And as you know, aquaculture is an 
industry of growing significance to many states, including 
Connecticut because it has the potential to greatly increase 
marine-related jobs in the United States, meet consumer demand 
for domestically grown shellfish, and other products. Beyond 
its economic benefits, it has the potential to increase water 
quality through filtration, and aquaculture research has 
produced a great many techniques and best practices for 
strengthening marine environmental conditions.
    The reports reaching me through a number of sources in my 
state, shellfish producers and others, are that one of the 
Nation's key contributors to the United States aquaculture 
industry, the Northeast Fisheries Science Center in Milford, 
Connecticut, has been asked to work on stock assessment and 
other NOAA priorities, but they have not been provided 
essentially with the resources or the support to do so.
    If confirmed, what do you see as your role in ensuring that 
the work occurring at the Milford Lab and other facilities and 
institutions promoting aquaculture is in synch with NOAA's own 
stated priorities of increasing domestic aquaculture production 
and shellfish consumption? And in the course of your 
preparation to come here, have you heard anything about these 
issues?
    Ms. Gustafson. Senator Blumenthal, I want to thank you very 
much for a question that I absolutely cannot give you a really 
good answer to because it's a fascinating question. One of the 
things that has been so interesting to me as I'm going through 
this confirmation process, that clearly, I mean, it comes as no 
surprise to me, was that the intense--the incredible breadth of 
what Commerce is and all the bureaus.
    And I will tell you actually, and it has been very 
heartening and it has been really wonderful, I've met with a 
lot of staffs, including your staff, even though this was on 
very short notice, which is nice because it's great to already 
begin to hear what issues are of interest to Members and are 
important.
    And so while I cannot speak about aquaculture, I will tell 
you that I have heard it many times. I mean, I can tell that 
this is an area of great interest to Members. I actually had a 
staffer come up to me right before the hearing and said, 
``Fish.'' I wish--I know it's more complex than that, but it's 
already apparent to me that this is something of interest. And 
I look forward to, should this process go forward and should I 
be confirmed, to listening----
    Senator Blumenthal. I will give you, happily give you, a 
pass----
    [Laughter.]
    Ms. Gustafson. OK.
    Senator Blumenthal.--as long as you commit to doing a 
report, giving me some response on this question.
    Ms. Gustafson. I'm very happy and absolutely commit to 
meeting with you because what I would want to do is hear from 
you on if anything has been done before by the IG's Office, and 
what type of review is wanted.
    My general attitude toward Congress--``attitude'' is a 
terrible word--but I think it's important to know what Congress 
is interested in for several reasons. Congress is a stakeholder 
much as the agency. Again, we have a dual reporting requirement 
to Congress. But also it's been my experience that if Congress 
isn't paying attention to the work of the IG Office, then 
nobody is paying that much attention.
    So I definitely want to hear from the Members and to hear 
further, should I be confirmed, on what issues are--would be of 
interest and would be--what you would be interested in.
    Senator Blumenthal. I want to ask you another question that 
also relates to fishing, and this one is equally, if not more, 
a priority and has broader reach. As you know, quotas for 
specific amounts of fish that can be taken in all varieties and 
species of fish are set by an elaborate structure under the 
Federal law that provides authority to the Department of 
Commerce to oversee that structure. There have been claims 
about unfairness and inefficiency, and both environmental and 
economic detrimental impacts from the current structure, as it 
is now implemented. To give you one example, Connecticut 
fishermen are limited as to the numbers of flounder and sea 
bass they can take, and yet the warming of waters has driven 
more of those fish to Connecticut offshore and Rhode Island 
fisheries as opposed to the middle Atlantic states, Virginia 
and North Carolina, where just a short time ago they were in 
much greater abundance.
    So, in effect, the fish population has moved; the quotas 
have not kept pace. It's a matter of basic science. It seems to 
me that's an issue that ought to be within your purview, 
particularly if those quotas or the misapplication of those 
quotas are the result of potential improper influence on those 
councils. Would you agree?
    Ms. Gustafson. You are speaking about a lot of stuff that I 
don't know about, but what I would agree with is it sounds like 
that at some--first off, I would note that somewhere sitting 
behind me is somebody from the Commerce Inspector General 
Office, and I certainly know and hope that they are listening 
because if it's a concern to you today, it needs to be a 
concern to them whether or not, you know, I'm IG. So hopefully 
those are conversations that----
    Senator Blumenthal. I see somebody may be taking notes----
    Ms. Gustafson. Taking notes.
    [Laughter.]
    Ms. Gustafson. So, and if you have concerns about the 
efficiency of a program or whether a program is serving the 
people that it should serve, you know, whether the right--
which, quite frankly, we do deal with a lot at SBA because we 
have, for example, the set-aside contracting programs that are 
meant to provide economic development opportunities to certain 
groups of people.
    And so if there are similarities there, that's something 
that I would be happy to sit down and talk to you about, and, 
again, in the context of wanting to know where, should I be 
confirmed as IG, where we should be devoting our resources, the 
reviews that we should be doing. And I'm happy to commit to you 
to have--talk to you.
    Senator Blumenthal. Well, I would like you to give me a 
commitment that you will look into this issue and report back.
    Ms. Gustafson. Into the issue of? The quota issue.
    Senator Blumenthal. Exactly.
    Ms. Gustafson. So----
    Senator Blumenthal. Well, the structure of the 
implementation process, the question of what kinds of 
influences may have been brought to bear, and other questions 
relating to implementation of this process.
    Ms. Gustafson. I will commit to you to making that a 
priority as far as bringing that to, were I to be confirmed to 
Commerce IG, bringing that to the IG staff and the audit staff 
and saying this is something that is important to a Senator, 
and it is very important to Senator Blumenthal that that be 
looked at, and having that discussion early on. And I certainly 
would commit that to you, you know, as I would to----
    Senator Blumenthal. Well, I appreciate your doing that.
    Ms. Gustafson. Yes.
    Senator Blumenthal. I would also like a commitment that you 
will respond to the question that I've raised----
    Ms. Gustafson. Right.
    Senator Blumenthal.--as to whether it is a proper topic for 
inquiry.
    Ms. Gustafson. Right.
    Senator Blumenthal. If it's outside your jurisdiction for 
some reason, I don't believe it's outside your jurisdiction----
    Ms. Gustafson. Right.
    Senator Blumenthal.--but if for some reason it is, it is a 
Department of Commerce program----
    Ms. Gustafson. Right.
    Senator Blumenthal.--it's a Department of Commerce 
responsibility----
    Ms. Gustafson. Right.
    Senator Blumenthal.--which has been delegated, but still 
remains legally within your jurisdiction, and the Department of 
Commerce ought to be held accountable. Your job is to hold the 
Department of Commerce accountable for its legal 
responsibilities, so I want to know why there should be no 
further inquiry or report if that's the decision by the Office 
of the Inspector General.
    Ms. Gustafson. I will definitely commit to you to getting 
an answer to that. Again, you are talking about a fact 
situation about which I will not even say I have limited, I 
have no knowledge, but to your point, if you're saying, ``I 
want to know if you're saying it's not within the purview,'' or 
something, absolutely, I think you would be owed an answer to 
that, and I would commit to giving you an answer to that.
    Senator Blumenthal. I appreciate it.
    Ms. Gustafson. OK.
    Senator Blumenthal. Thank you.
    Ms. Gustafson. Sure.
    Senator Blunt. Senator McCaskill, do you have any 
additional?
    Senator McCaskill. I do not.
    Senator Blunt. Well, following up on that discussion, just 
sort of give me a sense of having done this for six and a half 
years, what do you see as your relationship with the Congress 
when Members reach out or when committees reach out?
    Ms. Gustafson. So, as I've noted before, I am keenly aware, 
and I think it's a tremendous protection actually for 
inspectors general that we have a dual reporting requirement, 
and we have a legal duty to keep Congress fully and currently 
informed of any issues going on in the agency, you know, almost 
concurrently, or concurrently, with the agency. The sentence in 
the IG Act actually says agency and Congress fully and 
currently informed.
    So I'll tell you that my practice has always been even in 
the context of developing our audit work plan, when our 
auditors sit down to decide, ``Where is it within our limited 
resources at SBA IG that we should be looking?'' before that 
plan is finalized, we have meetings.
    I make sure that we have meetings with our stakeholders, 
and that's not only the program heads at SBA, but it's the 
congressional stakeholders. Where is it that they think, 
because they often have a lot of knowledge that would be 
helpful for us, not only where do they think the IG should be 
focusing, but where do they know that there are problems?
    And I think it's important to do that because, again, as 
I've noted before, the agency pays a lot more attention to the 
work of an IG when Congress is paying attention to the work of 
an IG, so I think it's important to have that very open dialog 
and to have an understanding of what the priorities are for the 
authorizers in the chambers for the appropriate--for anybody, 
for any of the stakeholders in Congress, and that's something 
that we do at SBA when we are devising our work plan, which, 
you know, is constantly changing.
    And I think that that's something that I would certainly 
envision doing, as I was hoping I was making clear to Senator 
Blumenthal, you know, that that's something that I would bring 
to Commerce IG, sitting down with anybody who wants to sit 
down, ``Where do you think we should be? Here's where we are. I 
do think we're on the right track.''
    And I will tell you just anecdotally when we have those 
meetings, we often get a lot of good insight from Congress on 
areas of concern. We don't get it so much from the agency, 
shockingly enough, you know, they don't tend to say, ``I want 
you to look at this,'' but the meetings with Congress I think 
are extraordinarily helpful and important when we're fashioning 
and deciding where to use those, you know, limited resources to 
look at any agency that we're looking at.
    Senator Blunt. Well, the flounder count and how it relates 
to the middle Atlantic states would only be something that a 
Member of Congress would be likely to bring to attention----
    [Laughter.]
    Senator Blunt.--and there may be more of that.
    Well, thank you for your work so far, both in Missouri and 
in Senator McCaskill's office here and in the job you're doing 
now. And we appreciate your responsiveness today.
    The hearing record will remain open for 2 weeks. A number 
of conflicts this morning, including Senator Bennett's funeral.
    And so I think there will be Members that may have some 
questions to submit, and they are asked to do that upon 
receipt. You're asked to submit your written answers to the 
Committee as soon as possible.
    Senator Blunt. And with that, the hearing is concluded with 
our great thanks to you and your family for being here.
    Ms. Gustafson. Thank you.
    [Whereupon, at 10:45 a.m., the hearing was adjourned.]

                            A P P E N D I X

     Response to Written Questions Submitted by Hon. John Thune to 
                        Hon. Peggy E. Gustafson
    Question 1. The Department of Commerce (DOC) Office of Inspector 
General (OIG) reduced the audit scope for Federal Information Security 
Management Act (FISMA) compliance for the Fiscal Year 2014. As a 
result, the Office of Management and Budget (OMB) was unable to compute 
a compliance score for DOC as compared to the other Chief Financial 
Officers Act agencies in OMB's Annual Report to Congress on FISMA.

    Question 1a. During your tenure at the U.S. Small Business 
Administration (SBA), how did the SBA OIG work with the agency to 
improve information security protection? What have you learned in 
performing those audits that will inform how you will conduct FISMA 
reviews at the DOC?
    Answer. As SBA Inspector General, I ensured that the OIG met its 
statutory obligation to conduct an annual audit in compliance with the 
FISMA and publish its findings. Given the complexity and resources 
necessary to perform this review, we contracted with an independent 
public accountant to perform this audit; we oversaw their work. Through 
our FISMA reviews, the OIG has identified systemic problems with the 
SBA's IT systems, and this remains one of the most serious management 
challenges facing the Agency.
    FISMA requires that the OIG review the SBA's Information Technology 
Security Program. This review found that the SBA continues to progress 
in certain FISMA evaluation categories. However, the SBA still needs to 
implement 32 longstanding open recommendations and related unresolved 
vulnerabilities in the SBA's FISMA areas. Until the SBA takes steps to 
address these longstanding weaknesses in its IT systems and control 
structures, the Agency will be at risk of data loss or system 
penetration.

    Question 1b. If confirmed as the Inspector General, will you commit 
to performing a comprehensive annual independent evaluation of the 
Department's information security programs and practices, as required 
under FISMA?
    Answer. If confirmed, I will provide leadership to ensure mandated 
reviews are completed in a timely manner, and if necessary, work with 
the Congress to ensure the OIG has the necessary resources to fulfill 
these mandates.

    Question 2. The DOC OIG has issued a number of recommendations that 
remain open and unimplemented.

    Question 2a. In your role at SBA, what specific actions do you take 
to ensure that agency officials implement the OIG's recommendations in 
a timely manner?
    Answer. As Inspector General, I ensured that there is an 
established standard operating procedure (SOP) to conduct follow up on 
open recommendations in compliance with OMB Circular A-50 Revised. When 
the SBA rescinded its SOP in 2012 that set forth review follow up 
procedures, I immediately directed my staff to engage Agency 
stakeholders. As a result, a new SOP was implemented that achieves 
timely responses from the Agency on draft reports in compliance with 
the Government Auditing Standards (the ``Yellow Book''), as well as a 
recommendation dispute resolution process that parallels OMB's 
circular. In addition, I have directed our Assistant Inspector General 
for Audit to seek a status update on open recommendations not more than 
every 90 days until corrective action is implemented.

    Question 2b. In your role at SBA, have you ever escalated an open 
and unimplemented OIG recommendation to a higher level of agency 
management? If so, please describe.
    Answer. Yes, as part of the review follow up process, unresolved 
recommendations (i.e., recommendations that the SBA either disagreed 
with or did not provide a sufficient plan for corrective action) are 
elevated to the Audit Followup Official (AFO) in accordance with OMB 
Circular A-50.
    If management disagrees with an audit recommendation or finding, or 
if OIG disagrees with the management decision, then management and OIG 
has 60 days after the date of the final audit report to attempt to 
reach agreement or notify the Audit Follow-up Official (AFO) of the 
disputed issue. At SBA, the Deputy Administrator is designated the 
Agency AFO. This process has occurred on several occasions during my 
tenure.
    In May 2015, my office published a report titled Improvements 
Needed In SBA's Management Of The Women-Owned Small Business Federal 
Contracting Program. Aside from the resolved recommendations of this 
report, the report pointed out that the Women-Owned Small Business 
Federal Contracting Program (WOSBP) would undergo some major 
programmatic changes based on the National Defense Authorization Acts 
for FY 2013 and 2015. Specifically, the changes in law permitted 
contracting officers to award sole-source, unlimited value contracts 
and mandated SBA to implement a certification program. When SBA 
increased programmatic risk and implemented the contracting provisions 
without the certification program, I directed that our office provide 
public comments during the rulemaking process and notified 
Congressional overseers of the risk to promote corrective action. The 
SBA subsequently initiated a rulemaking process to comply with the 
statutory mandate.

    Question 2c. If confirmed, what steps will you take at DOC to 
ensure that any open and unimplemented recommendations are closed and 
implemented?
    Answer. If confirmed, I commit to reviewing the audit follow up 
process in place at the Department of Commerce. If necessary, I will 
provide leadership to ensure a process is implemented that complies 
with OMB Circular A-50 Revised. I also will endeavor to keep the Agency 
Head and the Congress fully and currently informed, to include 
statutory processes to alert the Agency Head and the Congress of any 
particularly serious or flagrant problems, abuses, or deficiencies 
relating to the administration of programs and operations of the 
Department of Commerce.

    Question 3. A bedrock principle of the Inspector General Act of 
1978, as amended, is that inspectors general must have access to all 
agency records and information necessary to conduct oversight and 
investigations. On August 5, 2014, 47 inspectors general wrote to the 
then-chairmen and ranking members of the House Committee on Oversight 
and Government Reform (OGR) and the Senate Committee on Homeland 
Security and Government Affairs (HSGAC) about access to records issues 
impeding the work of the inspectors general at the Peace Corps, the 
Environmental Protection Agency, and the Department of Justice (DOJ). 
You were not among the signatories. At the time, you also served as 
Chair of the Legislation Committee for the Council of the Inspectors 
General for Integrity and Efficiency (CIGIE). Why did you choose not to 
sign this letter? Do you concur with the letter?
    Answer. I believe Inspectors General have a duty to keep the Agency 
and Congress fully and currently informed, and the letter signed by 47 
Inspectors General is a means to do so. As Inspector General of SBA, I 
had not experienced access denials. Nonetheless, I testified on several 
occasions on behalf of CIGIE that I believe ``all means all'' relative 
to Section 6(a)(1) of the Inspector General Act, as amended, and my 
perspective is consistent with those who independently decided to sign 
this letter.
    As Chair of the Legislation Committee, I also served on CIGIE's 
Executive Council. The Executive Council had previously expressed a 
strong opinion to the Department of Justice's Office of Legal Counsel 
(OLC) that ``all means all.'' Given this dialogue was open between the 
Executive Council and the OLC, it was prudent as an Executive Council 
member representing CIGIE to receive OLC's response on the matter prior 
to transmitting a letter to the Congress. After a great deal of 
discussion of this matter at Executive Council, and in light of the 
dialogue being undertaken at that time, all but one member of Executive 
Council decided to refrain from signing the letter. After OLC issued 
its opinion, I believe CIGIE was best-positioned to inform the Congress 
and seek redress on behalf of the Inspector General community, to 
include any legislative remedies. As such, I was a signatory to the 
letter responding to the OLC opinion, which was consistent with the 
decision of the Executive Council.

    Question 4. On July 20, 2015, the Justice Department's Office of 
Legal Counsel (OLC) issued a 68-page opinion arguing that the IG Act's 
general instruction that inspectors general have access to ``all 
records'' in an agency's possession necessary to complete their work 
cannot be read to override more narrow prohibitions on the disclosure 
of certain types of information. Using this opinion as justification, 
the DOC has twice declined to grant the DOC OIG information necessary 
for an audit of the International Trade Administration (ITA), leading 
to cancellation or suspension of the audit.

    Question 4a. On August 3, 2015, CIGIE wrote to the chairmen and 
ranking members of House OGR and Senate HSGAC expressing serious 
concerns with this July 20, 2015, OLC opinion, stating ``[t]he OLC 
opinion's restrictive reading of the IG Act represents a potentially 
serious challenge to the authority of every Inspector General and our 
collective ability to conduct our work thoroughly, independently, and 
in a timely manner.'' You signed this letter, along with 67 of your 
inspector general colleagues. Why did you sign this letter and not the 
prior August 5, 2014, letter?
    Answer. Please see my response to question #3.

    Question 4b. At your confirmation hearing, in response to a 
question from Senator Blunt, you stated that you were not an expert on 
this OLC opinion. Yet, you had signed the August 2015 letter referenced 
above. Please elaborate further on your response to Senator Blunt and 
provide your analysis of the opinion. Do you agree with its conclusions 
regarding restrictions on OIG access to agency records?
    Answer. I believe Congress intended Inspectors General to have 
access to all records, reports, audits, reviews, documents, papers, 
recommendations, or other material available to the applicable 
establishment which relate to programs and operations with respect to 
which that Inspector General has responsibilities under the Inspector 
General Act of 1978, as amended. The only exceptions to this access are 
those principally found in Section 8 of the Act such as Section 8(e). 
My testimony was meant to indicate that I do not have first-hand 
knowledge of the specific records to which the Inspector General of the 
Department of Justice is being denied access relative to their bearing 
on Section 8(e), Special Provisions Concerning the Department of 
Justice. I am unaware of any such special provisions that apply to the 
Department of Commerce, and as such, my position is that as far as 
access to records as provided in Section 6(a), ``all means all.''

    Question 4c. Do you still agree with CIGIE's warning in the letter 
you signed that the OLC opinion ``represents a serious threat to the 
independent authority of not only the DOJ-IG but to all Inspectors 
General?'' Please answer yes or no.
    Answer. Yes.

    Question 4d. In your view, does the plain language of the Inspector 
General Act entitle you to obtain all necessary information and 
materials to complete the audits and investigations you undertake? 
Please answer yes or no.
    Answer. Yes.

    Question 5. A second OLC opinion, issued on April 27, 2016, revised 
the first opinion in the context of a rider in the FY 2016 omnibus 
appropriations bill that clarified that DOJ may not use appropriated 
funds ``to deny [its] Inspector General . . . timely access to any 
records . . . or prevent or impede that Inspector General's access to 
such records . . . under any provision of law, except a provision of 
law that expressly refers to the Inspector General and expressly limits 
the Inspector General's right of access.'' Only then did DOC officials 
reverse course, finally granting DOC OIG access to the required records 
for its ITA audit. Given that the appropriations rider only applies to 
FY 2016 and may not be permanent, DOC may in future years resume using 
the July 20, 2015, OLC opinion as justification for denying the OIG 
access to requested information. If confirmed, how will you overcome 
such an obstacle to information access if this situation arises? Please 
describe the specific steps you will take if Commerce Department 
officials deny you access to information you require.
    Answer. Any denial of access by the Department of Commerce or its 
components would represent a serious threat to the independent 
authority of my office. It is my position that no one can prevent or 
prohibit the Inspector General from initiating, carrying out, or 
completing any audit or investigation, or from issuing any subpoena 
during the course of any audit or investigation. Denying or delaying 
access to records strikes at the core of my independent authority to 
conduct such reviews.
    The Inspector General Act of 1978, as amended provides several 
powerful tools to Inspectors General to resolve any access questions. 
First, in accordance with Section 6(b)(2), I would independently make a 
determination whether or not access has been unreasonably refused or 
not provided. I would then report the circumstances to the head of the 
establishment involved without delay. If the head of the establishment 
makes a decision that in any way prohibits a review or investigation 
from proceeding independently, I would deem this as being significant 
and flagrant and invoke Section 5(d) of the Inspector General Act of 
1978, as amended, whereby the Agency Head would be compelled to provide 
my report and their comments to the Committees of jurisdiction. 
Notwithstanding these tools, I see no limitations to engage the 
Congress directly to seek assistance as part of my duty to keep the 
Congress fully and currently informed.

    Question 6. Following Superstorm Sandy, which struck the 
northeastern United States in October 2012, the SBA OIG received $5 
million in appropriated funds to conduct investigations and audits of 
SBA disaster loans made as a result of Superstorm Sandy to identify 
potential waste, fraud, and abuse.

    Question 6a. What was your approach to handling this increased 
responsibility and funding?
    Answer. I directed that an Audit Work Plan specific to oversight of 
Superstorm Sandy be developed and implemented. We utilized term 
auditors and full time staff to perform this oversight fully 
appreciating the value of this oversight to the Congress. As planned, 
we recently increased our investigative capacity by hiring a criminal 
investigator and contracting for analytical support to combat fraud 
that begins to evidence itself as the loans mature and potentially 
default. We anticipate these supplemental funds will be fully expended 
as oversight is ongoing.

    Question 6b. What were the results of this oversight? Please 
describe in detail any reports issued, hearing testimony, referrals for 
criminal prosecution, or any other related activity.
    Answer. To date, we have issued 6 audit reports containing 18 
recommendations for corrective action. The monetary impact of these 
recommendations is $520,264 in Questioned Costs and $9,141,309 in Funds 
for Better Use. A list of these reports is as follows:

   Report 14-14: Improving Accuracy of Performance Reporting to 
        Better Manage Disaster Loan Processing Time Expectations

   Report 14-16: Effectiveness and Timeliness of the Hurricane 
        Sandy Disaster Loan Closing and Disbursement Processes

   Report 15-05: SBA's Evaluation of Principal's Repayment 
        Ability for Hurricane Sandy Business Loans

   Report 15-13: Hurricane Sandy Expedited Loan Processes

   Report 15-14: SBA's Controls to Prevent Duplication of 
        Benefits with Community Development Block Grants.

   Report 15-15: SBA Needs to Improve Its Management of 
        Disaster Technical Assistance Grants

    Due to the nature of SBA disaster loans, fraudulent loans are not 
immediately identified, as they have a deferment period for repayment 
and take years to default. Based on past experience, fraud 
investigations normally do not begin to materialize until two to three 
years after the disaster. There is a five-year statute of limitations 
(from the date of the last false statement) to prove a false statement 
to the SBA. With the passage of the RISE Act, the potential for 
Superstorm Sandy-related criminal and civil investigations will 
continue until at least 2022. As of May 25, 2016, we have opened 54 
criminal investigations involving SBA disaster assistance loans related 
to Superstorm Sandy. Our investigative efforts have resulted in 30 
indictments/informations/complaints/summons, 9 arrests, 22 convictions, 
and $912,414 in criminal monetary recoveries. We also have participated 
in approximately 19 training and outreach opportunities.

    Question 6c. What lessons from performing this oversight will you 
apply at DOC OIG if confirmed?
    Answer. The work we have performed related to Superstorm Sandy, as 
well as the other work we have performed using appropriated funds given 
to us for a specific purpose (such as Hurricanes Ike and Gustav, and 
the Recovery Act) has taught me how to manage situations where new and 
pressing needs occur and resources need to be allocated to perform 
oversight work not originally included on a work plan. Many of the same 
rules apply such as seeking input from stakeholders on what reviews 
should be undertaken and formulating a work plan which spells out the 
anticipated time the reviews will take. However, there also are 
decisions that need to be made as far as how to staff up to meet the 
new needs, and in what manner (e.g., term employees vs. permanent FTEs, 
how many auditors are needed, how many investigators). And all this 
must be done while making every effort to ensure that these new 
responsibilities do not impede our ability to continue to perform the 
already-planned work in a timely, efficient manner.

    Question 7. I believe that strong leadership of the DOC OIG is 
critical to the successful performance of its mission. Having served as 
the Inspector General for the SBA for many years, I ask that you 
provide an assessment of your own leadership.

    Question 7a. How would you describe your management and leadership 
style?
    Answer. I think my management style can be described as involved 
and collaborative. I strive to learn from my senior managers and make 
sure they know they are an invaluable part of the process. I want 
people to know they should not be afraid to give me unvarnished advice, 
and that the last thing I want or need are ``yes men'' (or women). I 
care very deeply about my employees and know how hard it can be to be a 
public servant, and I strive to make sure that the SBA OIG employees 
know that their contributions are valued. Additionally, I establish 
reasonable expectations and create a culture of ownership and pride for 
those who work in the Office of Inspector General.

    Question 7b. How do you think your subordinates would describe your 
management and leadership style?
    Answer. As noted in my statement for the record, I believe I 
provide steady and consistent leadership, ensuring our workforce can 
independently conduct reviews and investigations. I believe 
subordinates would describe me as approachable and fair, having a high 
degree of integrity. I have promoted work life balance within the 
office, and I believe there is a positive morale in the office, which 
is high functioning.

    Question 7c. How often do you meet with senior division heads 
within the SBA OIG?
    Answer. As SBA Inspector General, I have an open door policy to not 
only my senior leaders but all OIG employees. Early in my tenure, I met 
weekly with my senior leaders at an executive staff meeting. These 
weekly meetings were in addition to my daily interaction on matters of 
interest. Currently, I have recurring executive staff meetings every 
three weeks, though I meet one on one as-needed, and on a regular 
basis.

    Question 7d. How often do you receive updates on pending OIG 
matters and from whom?
    Answer. I receive updates from my senior leaders in real time on 
matters of interest to me and as determined by those senior leaders.

    Question 7e. How would you characterize the frequency and quality 
of your engagement with your subordinates at the OIG?
    Answer. I would characterize the frequency of engagement with my 
subordinates relative to the daily operations of my office as more than 
adequate. I strive to achieve a shared understanding in all these 
engagements.

    Question 7f. What has been your mission guidance to OIG staff and 
how has it been conveyed and reinforced?
    Answer. The SBA OIG operates under a five-year strategic plan that 
I implemented in Fiscal Year 2012. Our mission is clear: Provide 
independent, objective oversight to improve the integrity, 
accountability, and performance of the SBA and its programs for the 
benefit of the American people. My vision for the SBA OIG also is 
clear: To be the most effective OIG in the Federal Government.

    Question 7g. During your tenure at the SBA OIG, have you used 
climate surveys or other formal or informal tools to assess your 
performance or the performance of other agency managers and the morale 
of employees? If so, what has been the result of these efforts?
    Answer. A ``climate survey'' was conducted during development of 
SBA OIG Strategic Plan for Fiscal Years 2012-2017. The results of the 
survey were the basis for establishing the three strategic goals set 
forth in the strategic plan.

    Question 7h. What steps have you taken to build, maintain, or 
improve employee morale or esprit de corps within the SBA OIG?
    Answer. In context of SBA OIG's strategic goal #3, to create a work 
environment that attracts, develops, and retains quality staff and 
promotes innovation, we have taken a variety of actions to achieve 
three objectives:

  1.  Improve internal communications and collaborations.

  2.  Ensure that the OIG has a professional, technically proficient 
        and satisfied workforce.

  3.  Leverage technology and people to improve OIG methods in carrying 
        out our mission.

    Question 8. I believe a strong relationship with Congress and key 
stakeholders is also critical to the success of an inspector general.

    Question 8a. As SBA Inspector General, how would you characterize 
your relationship with Congress?
    Answer. As SBA Inspector General, I have strived to build an open 
and collaborative relationship with the Congress. I established a goal 
in our strategic plan to ``enhance relationships with Congress, the 
SBA, and other entities.'' To achieve the objectives of this goal, I 
established a new position on my leadership team to serve as a single 
point-of-contact for congressional and external affairs. As a result, 
the office is positioned to keep the Congress fully and currently 
informed of the work of our office and to provide timely responses to 
congressional inquiries and correspondence.

    Question 8b. How would you characterize your responsiveness to 
congressional inquiries?
    Answer. I would characterize my responsiveness to congressional 
inquiries as timely, thorough, and complete.

    Question 8c. Please describe your relationship and level of 
interaction with other key stakeholders in your current position.
    Answer. As with the Congress and SBA leadership, I have strived to 
build open and collaborative relationship with other key stakeholders. 
I am an active and contributing member of the Council of the Inspectors 
General for Integrity and Efficiency (CIGIE), having served five years 
in leadership on the Legislation Committee and four years on the 
Executive Council. I also have accepted invitations or made my staff 
available to provide briefings or presentations to external 
stakeholders to promote the mission and work of the OIG. I view this as 
a regular and recurring part of my duties as SBA Inspector General.

    Quesiton 8d. Will you commit to meeting with and updating Commerce 
Committee staff on a periodic basis, and upon request, if confirmed?
    Answer. If confirmed, I commit to meeting with and updating 
Commerce Committee staff on a periodic basis, and upon request.

    Question 9. What is your relationship with the SBA Administrator? 
Do you have regular meetings with the SBA Administrator and with senior 
agency officials?
    Answer. I believe I have a respectful, working relationship with 
the SBA Administrator. As prescribed by the Inspector General Act of 
1978, as amended, I have ensured I have an open and direct line of 
communication to the Administrator. I have met with the SBA 
Administrator on matters of interest to her, such as achieving a shared 
understanding of the role of the semi-annual Report to Congress. More 
routinely, I interact not less than monthly with the Deputy 
Administrator or the Chief of Staff to keep all parties apprised of 
current initiatives within the office or to resolve any concerns that 
may be brought to my attention by my staff.

    Question 10. If confirmed, what would your approach be to building 
a relationship with the Secretary of Commerce and other senior DOC 
officials?
    Answer. If confirmed, I would envision having a similar 
relationship with the Secretary and the Deputy Secretary as I do with 
the Administrator and the Deputy Administrator of SBA. I would expect 
open lines of communication and to be afforded access to them whenever 
I might need it. I would approach them as stakeholders and would seek 
to engage them regularly on the work of my office. My expectation will 
be that the Secretary, Deputy Secretary and other senior leaders of the 
Department will work constructively with me and my office to make the 
Department of Commerce the most efficient and effective department 
possible, including using OIG reports as a valuable tool in identifying 
areas that can be improved.

    Question 11. In your current role, how do you identify areas of 
inquiry for the SBA OIG? Do you take a proactive role in creating the 
office's work plan? How is the office work plan created and how are 
priorities determined?
    Answer. The Audit Work Plan is developed by the Assistant Inspector 
General for Audit. The Work Plan is risk-based, and uses criteria with 
which I agree. It is developed by the AIGA in consultation with the 
Audit Directors and their respective teams. Legislative mandates, 
congressional interest, and Hotline and investigative activity are key 
factors in prioritizing work. To ensure the Work Plan reflects the most 
current priorities of the office, I have directed that the Work Plan be 
updated quarterly, with Congressional outreach occurring prior to each 
publication.

    Question 12. Based on your tenure at the SBA OIG, what is your view 
as to the biggest challenge the SBA faces in carrying out its mission? 
What is your view as to the biggest challenge the DOC faces in carrying 
out its mission?
    Answer. SBA's programs encompass more than $100 billion in 
guaranteed loans and nearly $100 billion in Federal contracting 
dollars. Currently, SBA OIG has identified ten top management concerns 
facing the SBA--Report On The Most Serious Management And Performance 
Challenges In Fiscal Year 2016. The overall goal is to focus attention 
on significant issues with the objective of working with Agency 
managers to enhance the effectiveness of SBA's programs and operations. 
The Challenges are not presented in order of priority, as we believe 
that all are critical management or performance issues. That said, I 
believe information technology transcends many of these challenges, and 
I anticipate the Department of Commerce faces this challenge as well.

    Question 13. You have described one of your notable successes 
during your tenure as IG at SBA as the completion of ``Operation Five 
Aces,'' which resulted in Federal criminal convictions stemming from a 
bribery scheme in which a defendant in the case paid millions of 
dollars in bribes to corrupt public officials from the U.S. Army Corps 
of Engineers in return for lucrative government contracts. Please 
describe in detail your involvement and leadership in ``Operation Five 
Aces.''
    Answer. Operation FIVE ACES was a bribery scheme in which the 
defendant paid millions of dollars in bribes to public officials from 
the U.S. Army Corps of Engineers in return for lucrative government 
contracts. Twenty individuals and one corporation have pled guilty to 
Federal charges. The investigation uncovered the largest domestic 
bribery and bid-rigging scheme in the history of Federal contracting 
cases, according to the U.S. Attorney's Office. Overall, participants 
in the scheme stole over $30 million in government money through 
fictitious invoices and conspired to steer a nearly $1 billion 
government contract to a favored government contractor. To date, 
through forfeiture, restitution, and civil settlements, the U.S. 
Attorney's Office has been able to recover over $30 million of the 
stolen money.
    My role in this investigation was to provide leadership to the 
Assistant Inspector General for Investigations and the criminal 
investigators assigned to this investigation. I ensured necessary 
resources were authorized and provided to support their investigative 
efforts. Once the initial arrests were made public, I provided 
briefings to Congressional authorizers and appropriators and 
participated in an interagency press conference with the U.S. Attorney. 
I made myself available to the media, as well as the criminal 
investigator who conducted the investigation. I believe my efforts to 
champion the outcome of this investigation provides for a longstanding 
deterrent effect across the Federal contracting community for those who 
may contemplate wrongdoing. I also believe raising awareness of the 
impact of our office informs the Congress relative to ensuring the OIG 
is provided the resources it needs to achieve its mission.

    Question 14. If confirmed, what steps will you take to engage with 
DOC OIG employees in an office that is significantly larger than your 
current office? Will you commit to making an effort to meet with senior 
agency officials on a frequent and regular basis, as well as senior 
division heads within the OIG?
    Answer. Clear communication is key to managing. I think a manager 
should always strive to ensure that their employees have a clear 
understanding of the processes in place and the decisions being made. 
Employees want to know that they are part of the process and that their 
work and input is valued. Further, I am committed to meeting with 
senior agency officials on a frequent and regular basis to promote the 
work of the OIG and understand program concerns to inform our oversight 
plan. DOC OIG managers should expect to be active members of my 
management team and not be afraid of change (when change is necessary). 
I will engage OIG managers frequently and regularly to break down 
communication barriers to avoid the ``stovepiping'' and tunnel vision 
that sometimes gets in the way of collaboration, particularly in larger 
organizations. I think it's important that all divisions within an OIG 
strive to work together as a cohesive, high functioning office.

    Question 15. If confirmed, how would you plan to direct the DOC 
OIG? Are there issues that you have already identified that the office 
could tackle to improve the efficiency and effectiveness of DOC 
programs? How would you develop the list of OIG priorities?
    Answer. If confirmed, I would hope to forge strong relationships 
with stakeholders to help ensure that the work of the OIG is respected 
and promotes corrective action, which helps ensure that the OIG's work 
leads to positive change. I anticipate that I would spend most of my 
time initially with two goals in mind: introducing myself to the 
employees of the OIG and learning about the current state of the office 
and what changes and improvements may need to be made. Secondly, I will 
focus on becoming familiar with the audit work plan and the risk 
assessment used to develop the work plan, to become familiar with what 
the DOC OIG believes are the priorities as far as where to direct the 
resources of the office in conducting oversight of the Department of 
Commerce. Once I have established that foundation of knowledge, I would 
then be prepared to more thoroughly consider the short and longer term 
priorities of the DOC OIG and what changes and improvements may be 
warranted to ensure those priorities are addressed.

    Question 16. Political and institutional independence is critical 
for an inspector general to be able to be effective in rooting out 
waste, fraud, and abuse to protect taxpayer dollars. Should you be 
confirmed, how will you maintain the independence of the OIG?
    Answer. The Inspector General Act as amended has provided IGs with 
tremendous protections and tools to maintain their independence, such 
as the dual reporting requirement to Congress, transparency of IG 
budget requests, and the seven day letter provision. If confirmed, I 
will leverage and exercise every authority available to me to maintain 
my independence and the independence of the office. Having already 
served as an IG for over six years, I am proud of the reputation I have 
earned as a fair, but steadfastly independent Inspector General.

    Question 17. Unfortunately, the previous three DOC inspectors 
general resigned in the midst of controversy. This is a troubling track 
record. Should you be confirmed, what do you intend to do to restore 
confidence in the DOC OIG?
    Answer. I believe strongly in personal accountability. If 
confirmed, I intend to meet with senior leaders and OIG staff to gain 
an understanding of the culture that exists at the office. I will take 
decisive action to resolve any structural inefficiencies or other 
causes that may contribute to negative perceptions within the office. I 
intend to hold myself to the highest standard and will demand the same 
of the management team, and expect them to carry forth this ethos to 
the front line staff.
    I believe my leadership abilities and style have had a positive 
impact at the SBA, and if confirmed, I believe I can create a culture 
of ownership and pride for those who work in the Office of Inspector 
General at the Department of Commerce. With my executive team, I will 
ensure policies are up-to-date and implement new policies where gaps 
may exist. I will ensure effective policies and procedures are in place 
and hold personnel accountable to the same standards. I have led 
through changes of leadership at the SBA and also through changes of my 
own executive staff. If confirmed, I intend to be a steady hand during 
the change in Administration and also commit to providing steady, 
independent leadership within the Office of Inspector General.

    Question 18. The Middle Class Tax Relief and Job Creation Act of 
2012 created an independent authority within the Commerce Department's 
National Telecommunications and Information Administration (NTIA) to 
develop an interoperable nationwide broadband network for first 
responders known as the First Responder Network Authority, or FirstNet. 
A high priority of mine is to maintain robust oversight of FirstNet, 
both here by the Committee and at the DOC OIG. Will you commit to me 
that you will ensure there is robust, objective oversight of the 
FirstNet program by the OIG, should you be confirmed?
    Answer. FirstNet is subject to oversight by the Inspector General 
of the Commerce Department. I am aware the DOC OIG has already 
conducted audits which have examined various aspects of the FirstNet 
organization and operations. Also, the DOC OIG included FirstNet in its 
most recent Top Management Challenges report for FY 2016 which 
indicates FirstNet faces challenges ahead in fulfilling its mission.
    Considering the scope and magnitude of the program together with 
its early stage of organizational development, I believe FirstNet will 
continue to benefit from OIG engagement and oversight in the future. If 
confirmed, I will want to learn more details about the audit work which 
has already been completed and what work is currently planned before 
making any specific decisions regarding future DOC OIG oversight. I 
will also seek input from Members of Congress who have an interest in 
FirstNet in determining how best to allocate OIG resources.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Roy Blunt to 
                        Hon. Peggy E. Gustafson
    Question 1. I understand you began your career in public service in 
Missouri, as assistant prosecuting attorney for Jackson County, and 
then as General Counsel in the Missouri State Auditor's office. What 
are some of the skills you learned working in, and for, Missouri that 
prepared you for your current role at SBA, and that you will take to 
the Department of Commerce?
    Answer. I spent six years in government serving the people of 
Jackson County, Missouri. First, I was an assistant county counselor, 
representing the county in civil litigation, including the defense of 
Federal lawsuits filed by jail inmates, personal injury suits filed by 
persons alleging they were injured on county property, and personnel 
actions. I then worked as an assistant county prosecutor, handling all 
stages of criminal prosecution for a wide variety of cases, from drug 
cases to arson to white collar crime to murder. I also represented the 
county in cases when we sought to remove public officials from office 
for violations of conflict-of-interest or nepotism laws.
    In 1999, I was asked to serve as General Counsel for the Missouri 
State Auditor. In this capacity, I handled many oversight 
responsibilities for state-level auditing activities. In addition to 
the traditional duties of a general counsel, such as advising the 
Auditor and her staff on legal questions arising in the course of 
audits, I was an integral part of the management team of the office. 
Perhaps most importantly, I helped make strategic decisions about which 
audits and investigations deserved highest priority. I became very 
familiar with the ``yellow book,'' the government auditing standards 
promulgated by the Government Accountability Office, as well as the 
appropriate scope of the Auditor`s constitutional and statutory duties. 
I also became skilled at identifying and gaining access to the records 
necessary to ensure that state taxpayer money was being spent 
responsibly and transparently.
    I believe all these skills have been extremely useful to me in my 
time as an Inspector General. These jobs also solidified my love of 
public service and my belief that a career in public service is one of 
the most rewarding things one can do.

    Question 2. I understand that you when you were in the Senate, you 
worked on the Inspector General Reform Act of 2008 (P.L. 110-409). As a 
sitting Inspector General, and now nominated to serve in the same 
capacity at a much larger Department, what are your thoughts on further 
legislation to strengthen or empower Inspectors General?
    Answer. In my capacity as SBA Inspector General and Chair of the 
Legislation Committee for the Council of the Inspectors General for 
Integrity and Efficiency (CIGIE), I have strongly advocated for 
additional tools to enhance independence of Inspectors General and to 
increase the efficiency and effectiveness of their oversight. The 
following are among the legislative proposals I have championed:

   Relief from the Computer Matching and Privacy Protection Act

   Relief from the Paperwork Reduction Act

   5 USC Sec. 552(b)(3) Exemption to Protect Sensitive 
        Information Security Data

   Testimonial Subpoena Authority

   Appropriate Use of Paid or Unpaid, Non-duty Status in Cases 
        Involving Inspectors General

   Program Fraud Civil Remedies Act Enhancements

    Question 2a. Do you have any feedback on Senator Grassley's 
Inspector General Empowerment Act (S. 579)?
    Answer. S. 579 contains many of the legislative proposals and 
perspectives noted above that I have championed as an Inspector General 
and on behalf of CIGIE. CIGIE has expressed its position at various 
stages of the legislative process for S. 579 on behalf of the Inspector 
General community. I am supportive of CIGIE's views and am grateful for 
the work of Senators Johnson and Grassley, as well as their co-
sponsors, on this important piece of legislation.

    Question 3. Political and institutional independence is critical 
for the IG to be able to be effective in rooting out waste, fraud, and 
abuse and to protect taxpayer dollars. Should you be confirmed, how 
will you maintain the independence of the Office of the Inspector 
General?
    Answer. The Inspector General Act as amended has provided IGs with 
tremendous protections and tools to maintain their independence, such 
as the dual reporting requirement to Congress, transparency of IG 
budget requests, and the seven day letter provision. If confirmed, I 
will leverage and exercise every authority available to me to maintain 
my independence and the independence of the office. Having already 
served as an IG for over six years, I am proud of the reputation I have 
earned as a fair, but steadfastly independent, Inspector General.

    Question 4. As an Inspector General, how do you view your 
relationship with Congress?
    Answer. As SBA Inspector General, I have strived to build an open 
and collaborative relationship with the Congress. I established a goal 
in our strategic plan to ``enhance relationships with Congress, the 
SBA, and other entities.'' To achieve the objectives of this goal, I 
established a new position on my leadership team to serve as a single 
point-of-contact for congressional and external affairs. As a result, 
the office is positioned to keep the Congress fully and currently 
informed of the work of our office and provide timely responses to 
congressional inquiries and correspondence.

    Question 5. Ms. Gustafson, you have served for over six years as 
the Inspector General at the Small Business Administration. If 
confirmed, you would be moving from a position as the IG of a 
relatively small agency to become the IG of a large department with 12 
bureaus and nearly 47,000 employees. Should you be confirmed, how will 
you apply your experience as SBA IG to the greater scope of programs at 
the Department of Commerce?
    Answer. Working as SBA Inspector General has allowed me to take the 
knowledge I possess about the importance of the role of the Inspector 
General and the importance of the independence of the role and put it 
into practice. I have gained experience in ensuring that the agency and 
Congress are fully informed about challenges affecting the agency's 
programs while steadfastly maintaining the independence of the office.
    While the Department of Commerce is a larger organization than SBA 
with more diversity in its programs, I view the essential role of the 
Inspector General as the same--to promote economy, efficiency and 
effectiveness, and prevent and detect fraud and abuse in the 
administration of the agency's programs and operations.

    Question 5a. What challenges do you anticipate in making the 
transition from SBA to the Department of Commerce?
    Answer. I am aware that the Department of Commerce OIG has operated 
without a Senate confirmed IG for almost a year. If confirmed, I intend 
to meet with senior leaders and OIG staff to gain an understanding of 
the culture that exists within the office. I believe my leadership 
abilities and style have had a positive impact at the SBA, and if 
confirmed, I believe I can create a culture of ownership and pride for 
those who work in the Office of Inspector General at the Department of 
Commerce. With my executive team, I will ensure policies are up-to-date 
and implement new policies where gaps may exist. I will ensure 
effective policies and procedures are in place and hold personnel 
accountable to the same standards. I have led through changes of 
leadership at the SBA and also through changes of my own executive 
staff. If confirmed, I intend to be a steady hand during the change in 
Administration. I will provide steady, independent leadership within 
the Office of Inspector General.

                                  

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