[Senate Report 109-368]
[From the U.S. Government Publishing Office]
109th Congress
2d Session SENATE Report
109-368
_______________________________________________________________________
ACTIVITIES OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS
__________
R E P O R T
of the
COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE
and its
SUBCOMMITTEES
for the
ONE HUNDRED EIGHTH CONGRESS
December 22, 2006--Ordered to be printed
Filed, under authority of the order of the Senate of December 9, 2006
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Deleware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Brandon L. Milhorn, Staff Director
Michael L. Alexander, Minority Staff Director
Trina Driessnack Tyrer, Chief Clerk
COMMITTEE ON GOVERNMENTAL AFFAIRS DURING THE 108TH CONGRESS
SUSAN M. COLLINS, Maine, Chairman
JOSEPH I. LIEBERMAN, Connecticut, Ranking Member
TED STEVENS, Alaska CARL LEVIN, Michigan
GEORGE V. VOINOVICH, Ohio DANIEL K. AKAKA, Hawaii
NORM COLEMAN, Minnesota RICHARD J. DURBIN, Illinois
ARLEN SPECTER, Pennsylvania THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah MARK DAYTON, Minnesota
PETER G. FITZGERALD, Illinois FRANK LAUTENBERG, New Jersey
JOHN E. SUNUNU, New Hampshire MARK PRYOR, Arkansas
RICHARD C. SHELBY, Alabama
------
SUBCOMMITTEES OF THE 108TH CONGRESS
FINANCIAL MANAGEMENT, THE BUDGET, AND INTERNATIONAL SECURITY
PETER G. FITZGERALD, Illinois Chairman
DANIEL K. AKAKA, Hawaii, Ranking Member
TED STEVENS, Alaska CARL LEVIN, Michigan
GEORGE V. VOINOVICH, Ohio THOMAS R. CARPER, Delaware
ARLEN SPECTER, Pennsylvania MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
JOHN E. SUNUNU, New Hampshire MARK PRYOR, Arkansas
RICHARD C. SHELBY, Alabama
------
OVERSIGHT OF GOVERNMENT MANAGEMENT, RESTRUCTURING AND THE DISTRICT OF
COLUMBIA
GEORGE V. VOINOVICH, Ohio, Chairman
RICHARD J. DURBIN, Illinois, Ranking Member
TED STEVENS, Alaska DANIEL K. AKAKA, Hawaii
NORM COLEMAN, Minnesota THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETER G. FITZGERALD, Illinois MARK PRYOR, Arkansas
JOHN E. SUNUNU, New Hampshire
------
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
NORM COLEMAN, Minnesota, Chairman
CARL LEVIN, Michigan, Ranking Member
TED STEVENS, Alaska DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
ARLEN SPECTER, Pennsylvania THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah MARK DAYTON, Minnesota
PETER G. FITZGERALD, Illinois FRANK LAUTENBERG, New Jersey
JOHN E. SUNUNU, New Hampshire MARK PRYOR, Arkansas
RICHARD C. SHELBY, Alabama
CONTENTS
------
Page
I. Highlights of Activities.........................................1
Intelligence Reform....................................... 1
Postal Civil Service Retirement Funding................... 3
Homeland Security......................................... 4
General Governmental Affairs.............................. 4
II. Committee Jurisdiction...........................................4
III. Bills and Resolutions Referred and Considered....................7
IV. Hearings.........................................................7
V. Reports, Prints, and GAO Reports................................16
VI. Official Communications.........................................20
VII. Legislative Actions.............................................21
Measures Enacted Into Law................................. 21
Postal Naming Bills..................................... 31
Measures Favorably Reported by Committee and Passed by the
Senate................................................... 37
Selected Measures Reported by the Committee............... 42
VIII.Presidential Nominations........................................43
IX. Activities of the Subcommittees.................................47
International Security, Proliferation, and Federal Services
Subcommittee
I. Hearings........................................................47
II. Legislation.....................................................55
III. GAO Reports.....................................................60
Oversight of Government Management, Restructuring, and the District of
Columbia Subcommittee
I. Hearings........................................................61
II. Legislation.....................................................68
Measures Enacted Into Law................................. 68
Measures Favorably Reported by the Subcommittee and Passed
by the Senate............................................ 70
Measures Referred to the Subcommittee upon which Hearings
were held or other Legislative Action was taken.......... 71
Measures which did not advance beyond referral to
Subcommittee............................................. 72
III. GAO Reports.....................................................74
Permanent Subcommittee on Investigations
I. Historical Background...........................................77
A. Subcommittee Jurisdiction.............................. 77
B. Past Investigations.................................... 78
II. Subcommittee Hearings during the 108th Congress.................82
III. Legislation Activities during the 108th Congress...............106
IV. Reports and Prints.............................................110
V. Requested and sponsored GAO Reports............................115
109th Congress
SENATE
Report
2d Session 109-368
======================================================================
ACTIVITIES OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS DURING THE 108TH
CONGRESS
_______
December 22, 2006.--Ordered to be printed
Filed, under authority of the order of the Senate of December 9, 2006
_______
Ms. COLLINS, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
REPORT
This report reviews the legislative and oversight
activities of the Committee on Governmental Affairs during the
108th Congress. These activities reflect the broad scope of
responsibilities vested in the Committee by the Legislative
Reorganization Act of 1946, as amended; by Rule XXV(k) of the
Standing Rules of the Senate; and by additional authorizing
resolutions. Senator Collins was Chairman of the Committee
throughout the 108th Congress, and Senator Lieberman was the
Ranking Member.
I. Highlights of Activities
INTELLIGENCE REFORM
The Committee's most notable effort during the 108th
Congress was a bipartisan push to reform the Nation's
intelligence apparatus to improve capabilities to detect and
thwart plans for terror attacks. The result was Congressional
passage and Presidential signing of S. 2845, the Intelligence
Reform and Terrorism Prevention Act of 2004.
On July 22, 2004, the Congressionally chartered,
independent, and bipartisan National Commission on Terrorist
Attacks Upon the United States (the ``9/11 Commission'')
reported on its 20-month investigation into the terror attacks
of September 11, 2001. It made voluminous findings and issued
more than 40 recommendations, including two key items on
intelligence: First, that the U.S. Intelligence Community,
still configured for multiple efforts focused on a Cold War
adversary, needed a National Intelligence Director (NID) to
coordinate activities against terrorists and other 21st Century
threats; and second, that the Executive Branch, lacking an
effective, unified planning mechanism for counterterrorism
operations and a mechanism to coordinate intelligence analysis
of terrorist threats, needed a National Counterterrorism Center
(NCTC).
The 9/11 Commission noted that a key factor in U.S.
intelligence agencies' failure to ``connect the dots'' among
various clues that a major terrorist operation was imminent in
2001 was the very structure of the Intelligence Community. That
community comprised at least 15 agencies, with functional and
organizational differences amounting to ``stovepipes'' where
information could move up and down, but seldom across or
beneath any unifying gaze and direction. Some agencies focused
on gathering intelligence abroad; among these, the Central
Intelligence Agency (CIA) conducted human-intelligence
collection and all-source analysis, while signals and imagery
intelligence were carried out by agencies within the Department
of Defense. Federal law restricted CIA's conduct of internal-
security functions, and the Federal Bureau of Investigation
(FBI) guarded its role as chief domestic-intelligence and law-
enforcement agency. Information sharing and coordination among
these agencies was limited by law, by structure, and by
practice.
Meanwhile, no one official or entity had the vantage point
or the express authority to review the overall flow of data and
analysis, to reallocate assets, or to coordinate efforts among
intelligence agencies.
These limitations--which survived several special-
commission recommendations for change published over a period
of decades--were not critical problems during the protracted,
nuclear-restrained confrontation with the Soviet Union and its
Warsaw Pact allies. Some level of U.S. intelligence and
counter-intelligence synchronization emerged naturally from the
common focus on a known set of nation-state actors who
generally operated through standard military, diplomatic,
intelligence, and client-state instrumentalities.
The main challenge facing the United States changed,
however, when the Soviet Bloc collapsed and Islamic extremist
movements like al Qaeda arose as stateless, geographically
dispersed threats able to use unofficial financing, high-speed
travel, advanced technologies, and Web or wireless
communications to plan and carry out deadly attacks like the
1993 and 2001 World Trade Centers strikes and bombings directed
at American citizens, ships, and facilities overseas.
On the night of July 22, 2004--the day of the 9/11
Commission report's release--U.S. Senate leadership tasked the
Governmental Affairs Committee with drafting legislation to be
submitted to the full Senate by October 1 of that year. Some of
the 9/11 Commission's recommendations could be moved forward by
Executive Orders from the President, but matters like creating
the NID position and the NCTC would require legislation. The
Governmental Affairs Committee was given the assignment of
preparing legislation because it has jurisdiction over
Executive Branch reorganization, as with the legislation that
created the Department of Homeland Security (DHS). In light of
the normal pace of legislative drafting, the multiplicity of
agencies and operations affected, and the urgency of the task,
this was a formidable assignment.
Chairman Collins and Ranking Member Lieberman agreed that a
sustained bipartisan effort would be required to meet the
target date for draft legislation. The Committee held eight
hearings from late July until mid-September 2004. Majority and
Minority staffs collaborated through the Senate's traditional
August recess to move the work along.
The Committee met in mid-September to debate its draft
legislation and to consider more than 30 offered amendments.
The intelligence-reform bill was introduced and reported on
September 23, 2004, with Chairman Collins as sponsor.
Nearly 2 weeks of floor debate saw more than 300 additional
amendments offered. As in earlier proceedings, bipartisan
negotiations and votes accepted some changes while preserving
the essence of the bill. The Senate passed S. 2840, the
Intelligence Reform Act of 2004, on October 6, 2004, by a vote
of 96 to 2.
The bill enacted by the Senate provided for a NID and for
the NCTC, but also for a protective Privacy and Civil Liberties
Oversight Board and a structure to expand information sharing
within the Executive Branch.
Meanwhile, the House of Representatives had enacted its own
intelligence-reform legislation. The House measure included
immigration and criminal-penalty clauses not addressed in the
9/11 Commission report, kept top-level intelligence funding
amounts classified, configured the NID and NCTC differently,
and did not include a Privacy and Civil Liberties Oversight
Board.
Senate and House conferees were appointed to resolve
differences between the bills, but difficult negotiations
dragged on past the 2004 general election. Conferees finally
reached agreement on a bill on Sunday night, December 5, 2004.
The House passed the final bill, now known as S. 2845, the
Intelligence Reform and Terrorism Prevention Act of 2004, by a
336-75 vote on December 7. Chairman Collins and Ranking Member
Lieberman were recorded as Senate sponsor and original
cosponsor, respectively. The Senate passed it by an 89-2 vote
on December 8. The President signed the Act on December 17,
2004, making it Public Law 108-458.
The law established the DNI as the head of the Intelligence
Community and as the principal intelligence adviser to the
President, with the responsibility and the authority to oversee
and direct implementation of the National Intelligence Program.
The DNI was also granted the authority to task intelligence
collection and analysis, as well as significant budget and
personnel authority.
The NCTC established by the Act is intended to provide
horizontal integration of counterterrorism intelligence
analysis and operational planning among Executive Branch
departments.
Other provisions in the Act dealt with security clearances,
FBI restructuring, policy guidelines and technologies for
information sharing, public diplomacy and outreach,
transportation-security strategy, biometric personal-
identification technology, terrorist travel and screening
standards, border-protection measures, the Incident Command
System, and interoperable communications, among other matters.
POSTAL CIVIL SERVICE RETIREMENT FUNDING
During the 108th Congress, the Committee also deliberated
on, and reported, S. 380, the Postal Civil Service Retirement
System Funding Reform Act of 2003.
The measure revised rules for calculating and paying U.S.
Postal Service contributions to the Federal Civil Service
Retirement and Disability Fund (CSRDF). By replacing a static
formula that underestimated investment earnings and required
high Postal Service payments into the CSRDF, the measure
secured savings for the Postal Service that were expected to
offset the need for postal rate increases for several years.
The change did nothing to impair the retirement assets
accumulating for Postal Service employees, but reduced cash-
flow demands that the Federal Office of Personnel Management
(OPM) estimated would have led to a $78 billion actuarial
overfunding of retirement liabilities.
The measure was introduced on February 12, 2003, by
Chairman Collins with Senators Brownback and Carper as original
cosponsors, and with bipartisan support from 21 other Senators.
The Senate adopted the legislation by unanimous consent on
April 2, 2003, and it passed the House on a 424-0 roll-call
vote on April 8, 2003. The President signed the Act on April
23, 2003, whereupon it became Public Law 108-18.
HOMELAND SECURITY
As described elsewhere, the Committee devoted considerable
time and attention to issues and legislative proposals relating
to homeland security. As part of these activities, on August
13, 2003, Ranking Member Lieberman released a staff report,
``State and Local Officials: Still Kept in the Dark About
Homeland Security'' (S. Rept. 108-83). The report found that
too often State and local officials are asked to fight the war
against terrorism with incomplete and unreliable access to
homeland security information from Federal agencies. The report
noted that there is no effective mechanism for allowing
hundreds of thousands of local law enforcement officials to
systematically provide information to, or receive information
from, the Federal Government. The report made eight
recommendations for improving the relationship and the
information sharing between the Federal and local levels.
GENERAL GOVERNMENTAL AFFAIRS
During the 108th Congress, the Committee also considered
several matters affecting the Federal Government operations
that became public law. These measures included: H.R. 3054
(Public Law 108-133), which allowed retirement-annuity credit
for military service performed by current or former members of
the U.S. Secret Service, the U.S. Park Police, and the District
of Columbia Police and Fire Departments; S. 610 (Public Law
108-201), which provided increased workforce flexibilities and
other personnel provisions for the National Aeronautics and
Space Administration; and H.R. 2751 (Public Law 108-271), which
provided human-capital administrative flexibility for the U.S.
General Accounting Office (GAO).
II. Committee Jurisdiction
The jurisdiction of the Committee (which operated as the
Committee on Governmental Affairs throughout the 108th
Congress, and was renamed the Committee on Homeland Security
and Governmental Affairs when the 109th Congress convened)
derives from the Rules of the Senate and from Senate
Resolutions:
Rule XXV
* * * * * * * *
(k)(1) Committee on Governmental Affairs, to which
committee shall be referred all proposed legislation, messages,
petitions, memorials, and other matters relating to the
following subjects: 1. Archives of the United States. 2. Budget
and accounting measures, other than appropriations, except as
provided in the Congressional Budget Act of 1974. 3. Census and
collection of statistics, including economic and social
statistics. 4. Congressional organization, except for any part
of the matter that amends the rules or orders of the Senate. 5.
Federal Civil Service. 6. Government information. 7.
Intergovernmental relations. 8. Municipal affairs of the
District of Columbia, except appropriations therefore. 9.
Organization and management of United States nuclear export
policy. 10. Organization and reorganization of the executive
branch of the Government. 11. Postal service. 12. Status of
officers and employees of the United States, including their
classification, compensation, and benefits.
(2) Such committee shall have the duty of (A) receiving and
examining reports of the Comptroller General of the United
States and of submitting such recommendations to the Senate as
it deems necessary or desirable in connection with the subject
matter of such reports; (B) studying the efficiency, economy,
and effectiveness of all agencies and departments of the
Government; (C) evaluating the effects of laws enacted to
reorganize the legislative and executive branches of the
Government; and (D) studying the intergovernmental
relationships between the United States and the States and
municipalities, and between the United States and international
organizations of which the United States is a member.
SENATE RESOLUTION 66, 108TH CONGRESS
COMMITTEE ON GOVERNMENTAL AFFAIRS
Sec. 11. (a) * * *
* * * * * * *
(e) INVESTIGATIONS
(1) In General--The committee, or any duly authorized
subcommittee of the committee, is authorized to study or
investigate--
(A) the efficiency and economy of operations of all
branches of the Government including the possible existence of
fraud, misfeasance, malfeasance, collusion, mismanagement,
incompetence, corruption, or unethical practices, waste,
extravagance, conflicts of interest, and the improper
expenditure of Government funds in transactions, contracts, and
activities of the Government or of Government officials and
employees and any and all such improper practices between
Government personnel and corporations, individuals, companies,
or persons affiliated therewith, doing business with the
Government; and the compliance or noncompliance of such
corporations, companies, or individuals or other entities with
the rules, regulations, and laws governing the various
governmental agencies and its relationships with the public;
(B) the extent to which criminal or other improper
practices or activities are, or have been, engaged in the field
of labor-management relations or in groups or organizations of
employees or employers, to the detriment of interests of the
public, employers, or employees, and to determine whether any
changes are required in the laws of the United States in order
to protect such interests against the occurrence of such
practices or activities;
(C) organized criminal activity which may operate in or
otherwise utilize the facilities of interstate or international
commerce in furtherance of any transactions and the manner and
extent to which, and the identity of the persons, firms, or
corporations, or other entities by whom such utilization is
being made, and further, to study and investigate the manner in
which and the extent to which persons engaged in organized
criminal activity have infiltrated lawful business enterprise,
and to study the adequacy of Federal laws to prevent the
operations of organized crime in interstate or international
commerce; and to determine whether any changes are required in
the laws of the United States in order to protect against such
practices or activities;
(D) all other aspects of crime and lawlessness within the
United States which have an impact upon or affect the national
health, welfare, and safety; including but not limited to
investment fraud schemes, commodity and security fraud,
computer fraud, and the use of offshore banking and corporate
facilities to carry out criminal objectives;
(E) the efficiency and economy of operations of all
branches and functions of the Government with particular
reference to--
(i) the effectiveness of present national security methods,
staffing, and processes as tested against the requirements
imposed by the rapidly mounting complexity of national security
problems;
(ii) the capacity of present national security staffing,
methods, and processes to make full use of the Nation's
resources of knowledge and talents;
(iii) the adequacy of present intergovernmental relations
between the United States and international organizations
principally concerned with national security of which the
United States is a member; and
(iv) legislative and other proposals to improve these
methods, processes, and relationships;
(F) the efficiency, economy, and effectiveness of all
agencies and departments of the Government involved in the
control and management of energy shortages including, but not
limited to, their performance with respect to--
(i) the collection and dissemination of accurate statistics
on fuel demand and supply;
(ii) the implementation of effective energy conservation
measures;
(iii) the pricing of energy in all forms;
(iv) coordination of energy programs with State and local
government;
(v) control of exports of scarce fuels;
(vi) the management of tax, import, pricing, and other
policies affecting energy supplies;
(vii) maintenance of the independent sector of the
petroleum industry as a strong competitive force;
(viii) the allocation of fuels in short supply by public
and private entities;
(ix) the management of energy supplies owned or controlled
by the Government;
(x) relations with other oil producing and consuming
countries;
(xi) the monitoring of compliance by governments,
corporations, or individuals with the laws and regulations
governing the allocation, conservation, or pricing of energy
supplies; and
(xii) research into the discovery and development of
alternative energy supplies;
(G) the efficiency and economy of all branches and
functions of Government with particular references to the
operations and management of Federal regulatory policies and
programs:
Provided, That, (1) in carrying out the duties herein set
forth, the inquiries of this committee or any subcommittee
thereof shall not be deemed limited to the records, functions,
and operations of any particular branch of the Government; but
may extend to the records and activities of any persons,
corporation, or other entity.
(2) Nothing contained in this subsection shall affect or
impair the exercise of any other standing committee of the
Senate of any power, or the discharge by such committee of any
duty, conferred or imposed upon it by the Standing Rules of the
Senate or by the Legislative Reorganization Act of 1946, as
amended.
(3) For the purposes of this subsection, the committee, or
any duly authorized subcommittee thereof, or in chairman, or
any other member of the committee or subcommittee designated by
the chairman, from March 1, 2003, through February 28, 2005, is
authorized, in its, his, or their discretion--
(A) to require by subpoena or otherwise the attendance of
witnesses and production of correspondence, books, papers, and
documents;
(B) to hold hearings;
(C) to sit and act at any time or place during the
sessions, recess, and adjournment periods of the Senate;
(D) to administer oaths; and
(E) to take testimony, either orally or by sworn statement,
or, in the case of staff members of the Committee and the
Permanent Subcommittee on Investigations, by deposition in
accordance with the Committee Rules of Procedure.
(4) All subpoenas and related legal processes of the
committee and in subcommittees authorized under S. Res. 66 of
the One Hundred Eighth Congress, second session, are authorized
to continue.
III. Bills and Resolutions Referred and Considered
During the 108th Congress, 148 Senate bills and 79 House
bills were referred to the Committee for consideration. Also,
nine Senate Resolutions, eight Senate Concurrent Resolutions,
one Senate Joint Resolution, one House Joint Resolution, and
one House Concurrent Resolution were referred to the Committee.
The Committee reported 120 bills; an additional 28 measures
were discharged.
Of the legislation received by the Committee, 89 measures
became public laws, including 74 postal naming bills.
IV. Hearings
During the 108th Congress, the Committee held 106 hearings
on legislation, oversight issues, and nominations. Issues
addressed in the Committee's legislative and oversight hearings
ranged from waste in Federal programs and dangers of medicine
purchases through the Internet, to problems with college
savings plans and patient-safety practices at hospital.
The Committee also held 14 business meetings. Major topics
examined during Committee hearings included:
HOMELAND SECURITY
On April 9, 2003, the Committee conducted a hearing titled
``Investing in Homeland Security: Challenges on the Front
Line.'' The Committee heard from first responders, including
firefighters, police, and emergency medical personnel, as part
of an examination of how effectively the Federal Government is
assisting first responders and State and local governments in
their homeland-security efforts. Witnesses spoke of challenges
facing first responders and the lack of resources reaching the
local level.
At the Committee's May 1, 2003, hearing on ``Investing in
Homeland Security: Streamlining and Enhancing Homeland Security
Grant Programs,'' Homeland Security Secretary Tom Ridge
discussed challenges in providing Federal resources to States,
localities, and first responders.
On May 15, 2003, the Committee's hearing on ``Investing in
Homeland Security: Challenges Facing State and Local
Governments,'' continued to examine challenges facing State and
local homeland-security efforts and the distribution of Federal
funds for those efforts. Testimony focused on how best to
distribute homeland-security resources, and whether to provide
resources at the State, city, or county level.
INTELLIGENCE
On February 14, 2003, the Committee conducted a hearing on
``Consolidating Intelligence Analysis: A Review of the
President's Proposal to Create a Terrorist Threat Integration
Center'' (TTIC). Four witnesses testified about the proposed
TTIC: Senator Warren Rudman, Governor James Gilmore, Jeffrey
Smith, and James Steinberg. Senator Rudman spoke of the need
for more clarity on the structure and functions of the TTIC,
and recommended further study of legal issues in the proposed
widespread information sharing between the FBI and CIA.
Governor Gilmore testified on the work, since 1999, of the
Congressional Advisory Commission on Terrorism and Weapons of
Mass Destruction (the ``Gilmore Commission''). In December
2002, the Gilmore Commission issued its fourth report, which
recommended creating an intelligence-fusion center: The
National Counter Terrorism Center, a stand-alone agency outside
of the FBI, CIA, and DHS, charged with analyzing foreign and
domestic intelligence on terrorists and terror organizations.
The Gilmore Commission recommended that this entity be an
independent agency, with a head appointed by the President and
confirmed by the Senate, and that intelligence collection on
international terrorist activities within the United States,
including intelligence collected through the Foreign
Intelligence Surveillance Act, be transferred to this new
entity. Mr. Steinberg, who served as Deputy National Security
Advisor in the Clinton Administration, testified that a strong
entity was needed to analyze domestic and foreign intelligence
regarding terrorism, and that it should be based in the
Department of Homeland Security. Mr. Smith, who previously
served as General Counsel of the CIA, recommended combining the
counterterrorism centers of the FBI and CIA into a single
national counterintelligence center under the supervision of
the Director of Central Intelligence (DCI). He also urged
serious consideration be given to creating a domestic security
service along the lines of Britain's MI5, responsible for
domestic intelligence collection, but without arrest authority.
On February 26, 2003, the Committee held a hearing titled,
``Consolidating Intelligence Analysis: A Review of the
President's Proposal to Create a Terrorist Threat Integration
Center--Day 2,'' a sequel to the February 14 session. Three
Administration officials testified on the proposed TTIC:
Winston Wiley of the CIA, Pasquale D'Amuro of the FBI, and
Gordon England of the DHS. Mr. Wiley said the TTIC would be a
joint venture that would give participating agencies complete
access to other agencies' relevant intelligence. Mr. D'Amuro
described the FBI's ongoing efforts to reform its intelligence
collection and analysis capabilities. Deputy Secretary England
testified that the DHS would not conduct its own analysis of
terrorist intelligence, but would participate in the TTIC's
analytical efforts.
INTELLIGENCE REFORM
``Making America Safer: Examining the Recommendations of
the 9/11 Commission'' was the theme of a Committee hearing on
July 30, 2004. Witnesses were Thomas Kean, Chairman, and Lee
Hamilton, Vice-Chairman, of the 9/11 Commission. The
Commissioners' testimony focused on the Commission's four main
structural recommendations: (1) creating an NCTC; (2) creating
the position of NID; (3) unifying Intelligence Community
participants in a network-based, information-sharing system;
and (4) strengthening the ability of the FBI and homeland
defenders to carry out their counterterrorism responsibilities.
The Commissioners envisioned the NCTC as a civilian-led,
unified joint command for counterterrorism, with tasking
authority for all counterterrorism collection and analysis
across government, but with individual agencies executing
operations. The NID would be part of the Executive Office of
the President and would have authority over all Intelligence
Community elements, including personnel, security, and
information technology. Noting that a key failing before the
attacks of September 11, 2001, was a lack of effective
information sharing, the Commissioners recommended creating a
decentralized network to allow agencies' databases to be
searchable across agency lines. The Commissioners did not
support creating a domestic intelligence agency, but suggested
that the FBI needs to strengthen the intelligence and national-
security aspects of its workforce and institutional culture.
On August 3, 2004, the Committee held a hearing titled
``Assessing America's Counterterrorism Capabilities.'' The
first panel of witnesses comprised John Brennan, Director,
TTIC; John Pistole, Executive Assistant Director for
Counterterrorism and Counterintelligence, FBI; Lieutenant
General Patrick Hughes, Assistant Secretary for Information
Analysis, DHS; and Philip Mudd, Deputy Director,
Counterterrorist Center, CIA. Director Brennan supported
establishing the NCTC, but cautioned against adversely
affecting ongoing activities in the war on terror. Assistant
Director Pistole focused his testimony on the FBI's expanded
intelligence capabilities, and its efforts to build a workforce
with an expertise in intelligence. Lt. Gen. Hughes said
creation of the NID and NCTC would enhance DHS's ability to
identify threats and to map them against vulnerabilities.
Deputy Director Mudd said the relationship between the CIA's
Counterterrorist Center and the FBI must continue in the NCTC.
The second panel consisted of Philip Zelikow, Executive
Director, and Christopher Kojm, Deputy Executive Director, of
the 9/11 Commission. They submitted joint testimony that said
the Executive Branch is currently organized according to
management principles of the 1950s, with large, vertically
integrated agencies. Each agency does its job, and then tries
to get others to cooperate. To do so, each agency sets up its
own interagency process, and each agency sets up its own fusion
center. As a result, there is a willingness to cooperate, but
no joint analysis and no joint planning. Messrs. Zelikow and
Kojm recommended that the NCTC Directorate of Intelligence have
primary responsibility for analysis of terrorism from all
sources of information, while the NCTC Directorate of
Operations would be responsible for providing guidance and
plans for joint counterterrorism operations. They also said
that it is essential that the NID have authorities at least as
strong as the 9/11 Commission recommendations, or risk becoming
a bureaucratic ``fifth wheel.''
On August 16, 2004, the Committee conducted a hearing,
``Reorganizing America's Intelligence Community: A View from
the Inside.'' William Webster, a former Director of the FBI and
DCI, testified that if Congress intends to create a National
Intelligence Director position, it must grant the NID authority
to manage the intelligence budget, name or approve leaders of
the main intelligence agencies, and review their performance.
Former DCI R. James Woolsey supported creating an NID and an
NCTC reporting to the NID, but argued for giving the Secretary
of Defense the ability to appeal NID decisions to the
President. The third former DCI testifying, retired Admiral
Stansfield Turner, said the NID should have strong budget
authority, and argued for clear delineations among the National
Foreign Intelligence Program (NFIP) at the FBI, the Joint
Military Intelligence Program (JMIP) at DOD, and the Tactical
Intelligence and Related Activities (TIARA) program within DOD.
He argued that only assets tasked by field commanders belong in
JMIP or TIARA, and that everything else should go into the
NFIP.
The August 17, 2004, hearing on ``Voicing a Need for
Reform: The Families of 9/11,'' brought family members affected
by the terrorist attacks of September 11, 2001, before the
Committee. Kristen Breitweiser urged intelligence reform,
including establishing a NID. Mary Fetchet told the story of
her son, Brad, who died on the 89th floor of Tower Two of the
World Trade Center because there was no directive to evacuate.
Ms. Fetchet said the country remains ``amazingly ill prepared''
to prevent another terrorist attack, and supported implementing
all of the 9/11 Commission recommendations. Steve Push urged
creating an NID position with ample authority, able to marshal
all resources for collecting and analyzing intelligence.
On August 26, 2004, the Committee held a closed hearing on
``Reorganizing the Intelligence Community: To What Extent
Should the NID Have Budget Authority and the National
Counterterrorism Center Play a Role in Operational Planning?''
Classified testimony was presented by Dr. Stephen A. Cambone,
Under Secretary of Defense for Intelligence, DOD; Larry C.
Kindsvater, Deputy Director of Central Intelligence for
Community Management; Arthur Cummings, Section Chief,
International Terrorism Operations Section I, Counterterrorism
Division, FBI; a counterterrorism operations specialist from
the CIA; and Lt. Gen. Norton A. Schwartz, Director for
Operations, J-3, Joint Staff, DOD. Highlights from their
unclassified written statements follow. Dr. Cambone described
intelligence formulation as a shared, checks-and-balances
process between the DCI and the Secretary of Defense. Deputy
Director Kindsvater supported the 9/11 Commission's proposal to
give the NID substantial control over the NFIP budget,
personnel, and management. Mr. Cummings testified about
significant reform steps at the FBI since September 11, 2001,
such as forming an Office of Intelligence and a Terrorist
Financing Operations Section, participating in TTIC and the
Terrorist Screening Center, and expanding from 34
intergovernmental Joint Terrorism Task Forces (JTTFs) to 100
JTTFs across the country. Mr. Cummings testified in support of
the creation of a NID and NCTC, but noted the importance of
addressing civil liberties concerns as both offices are
created.
On September 8, 2004, the Committee conducted a hearing,
``Building an Agile Intelligence Community to Fight Terrorism
and Emerging Threats.'' Director Robert Mueller testified on
FBI improvements since the 9/11 terrorist attacks in
collecting, analyzing, and distributing intelligence. He
identified three principles that should guide any attempt to
reform the Intelligence Community: (1) providing analysts
transparency into sourcing, i.e., analysts should not be
separated from operators; (2) maintaining the operational chain
of command, i.e., the NID and the NCTC chief should not have
operational authority over the FBI or other agencies; and (3)
protecting civil liberties, noting that ``concentrating
domestic and international counterterrorism operations in one
organization represents a serious risk to American civil
liberties.'' Acting DCI John McLaughlin advanced five
principles for reform: (1) fostering speed and agility, (2)
creating form that follows function, (3) achieving consensus on
expectations for intelligence agencies, (4) promoting ``some
competition,'' and (5) preserving foreign partnerships.
Director McLaughlin's view was that the NID should (1) maintain
objectivity and independence as the President's principal
intelligence advisor; (2) have full authority to determine,
reprogram, and execute all funding for the core national
intelligence agencies--CIA, NSA [National Security Agency], NGA
[National Geospatial-Intelligence Agency], and NRO [National
Reconnaisance Office]; (3) have clear authority to provide
strategic direction to agencies and drive their collection and
analytic priorities; (4) have authority to reorient
intelligence capabilities to meet new threats; (5) have direct
access to substantive experts; (6) be able to bridge any
remaining foreign-domestic divide in areas of policy and
information technology; (7) set education, training and career-
development standards; and (8) ensure continued synergy from
close interaction of operators and analysts.
On September 13, 2004, the Committee conducted a hearing,
``Ensuring the U.S. Intelligence Community Supports Homeland
Defense and Departmental Needs,'' with testimony from Secretary
of State Colin Powell and Secretary of Homeland Security Tom
Ridge. Secretary Powell supported the President's intelligence-
reform proposal to create a strong NID with budgetary
authority. He described the State Department's needs for
intelligence, and suggested that Intelligence Community
products tended to be tailored more for military than
diplomatic use. He noted the unique capabilities of the State
Department's Bureau of Intelligence and Research (INR), and
urged that they be preserved as a departmental asset in any
intelligence reform. Secretary Powell also emphasized the need
for competitive analysis and critical evaluation of
Intelligence Community performance. Secretary Ridge described
how recent Executive Orders would improve intelligence and
homeland security. He noted that under the Executive Order
strengthening the DCI's management of the Intelligence
Community, DCI will perform the functions of the NID ``within
the constraints of existing law'' until intelligence-reform
legislation is enacted. Secretary Ridge said the President's
proposal to strengthen management of the Intelilgence Community
will ``greatly enhance'' DHS's ability to protect the homeland.
TERRORISM
During the March 20, 2003, hearing on ``Cargo Containers:
The Next Terrorist Target?,'' the Committee heard testimony
from five witnesses regarding the potential for terrorist
exploitation of the global cargo-container system and
government response efforts. Witnesses were Under Secretary of
Homeland Security Asa Hutchinson, Vermont U.S. Attorney Peter
Hall, Stephen Flynn, Captain Jeffrey Monroe, and Michael
O'Hanlon. Under Secretary Hutchinson testified that securing
the global container system was a high priority because of its
current vulnerability to attack. He gave examples of how
smugglers have routinely compromised the system and discussed
how terrorists could similarly exploit containers in the
future. He explained the programs that the Directorate for
Borders and Transportation Security is undertaking to mitigate
the threat: The Container Security Initiative (CSI), the 24-
hour rule, the Customs-Trade Partnership Against Terrorism (C-
TPAT), and Operation Safe Commerce. U.S. Attorney Peter Hall of
the District of Vermont described his participation, as co-
chair of a regional Law Enforcement Coordinating Committee, in
Phase One of Operation Safe Commerce, which tracked a test
shipment of cargo from Slovakia to New Hampshire in a container
outfitted with tracking and intrusion-detection technology.
Stephen Flynn of the Council on Foreign Relations argued that
the current approach is insufficient to secure the container
system. He said public outcry over a major terrorist event
involving a container would lead to shutting down the entire
system, with catastrophic economic consequences because of
widespread reliance on just-in-time inventory. Captain Jeffrey
Monroe, Director of Ports and Transportation for the City of
Portland, Maine, testified about the lack of Federal
coordination and information provided to local port
authorities. He indicated that it was unclear to local
authorities which Federal agencies had the lead in setting
policy regarding container security or port security in
general. He opposed consolidating container traffic into a few
major ports and eliminating small feeder ports, arguing that
small ports are more likely to spot anomalies in a container
and that concentrating container traffic simply makes for more
attractive targets.
On July 31, 2003, the Committee held a hearing on
``Terrorism Financing: Origination, Organization, and
Prevention.'' The first panel of witnesses at the hearing
consisted of FBI Acting Assistant Director for Counterterrorism
John Pistole and Office of Foreign Assets Control Director
Richard Newcomb. They testified about the Executive Branch's
efforts to combat terrorism financing. The second panel
consisted of former Ambassador Dore Gold, Steven Emerson, and
Jonathan Winer. Ambassador Gold testified about support for
Hamas from sources inside of Saudi Arabia. Mr. Emerson
testified about the support for Wahhabist extremism, largely
based in Saudi Arabia. Mr. Winer testified about his
experiences in the State Department attempting to address
terrorism financing issues.
On September 23, 2003, the Committee held a closed hearing
on ``Combating Terrorist Financing: Are We on the Right
Track?'' Witnesses presenting classified testimony were: David
Aufhauser, General Counsel, Department of Treasury; Ambassador
J. Cofer Black, Coordinator for Counterterrorism, Department of
State; E. Anthony Wayne, Assistant Secretary, Bureau of
Economic and Business Affairs, Department of State; and John S.
Pistole, Assistant Director, Counterterrorism Division, FBI. A
representative from the CIA was also present to answer Members'
questions.
The November 19, 2003, hearing on ``Agroterrorism: The
Threat to America's Breadbasket,'' considered the stated
intentions of international terrorist organizations such as al
Qaeda to wage their terror war on the United States in ways
that cause maximum economic damage. America's trillion-dollar
agriculture and food industry accounts for a sixth of gross
domestic product and an eighth of the Nation's jobs, offering a
tempting and vulnerable target. The U.S. Government Accounting
Office (GAO) (renamed the U.S. Government Accountability Office
after the close of the 108th Congress) estimates that an
outbreak of foot-and-mouth disease at a single farm could soon
spread nationwide, inflicting billions of dollars in costs for
control and eradication, and billions more in losses from
reduction in trade. Terrorist organizations such as al Qaeda
have explored the use of easily produced toxins, such as ricin
and botulinum, to poison human food. Such an attack would cause
human illness and death and create public panic. Witnesses for
the hearing spoke of threats to, and vulnerabilities of, the
U.S. agriculture and food industry, and of steps being taken to
improve security and response capabilities. Testifying were:
Senator Talent of Missouri; Dr. Tom McGinn, North Carolina
Department of Agriculture; Dr. Peter Chalk, RAND Corporation;
Dr. Colleen O'Keefe, Illinois Department of Agriculture;
Penrose Albright, Assistant Secretary for Science and
Technology, DHS; Dr. Lester M. Crawford, Deputy Commissioner,
Food and Drug Administration; and Dr. Charles Lambert, Deputy
Under Secretary for Marketing and Regulatory Programs, U.S.
Department of Agriculture.
On June 15, 2004, a Committee hearing was devoted to ``An
Assessment of Current Efforts to Combat Terrorism Financing.''
The focus of the hearing was the second report by the
Independent Task Force on Terrorism Financing, sponsored by the
Council on Foreign Relations. Witnesses were David Aufhauser,
former General Counsel, U.S. Department of Treasury; Lee
Wolosky, Co-Director, Independent Task Force on Terrorism
Financing; and Mallory Factor, Vice Chair, Independent Task
Force on Terrorism Financing. Mr. Wolosky discussed the
background of the report and its findings. According to Mr.
Wolosky, since May 12, 2003, when al Qaeda bombed housing
compounds in Riyadh used by U.S. and other foreign residents,
Saudi Arabia has taken significant steps to combat terrorism
financing, including new laws, regulations, and institutions
governing money laundering, charitable oversight, and
supervision of the formal and informal financial services
sector. The task force also found, however, that Saudi Arabia
has not yet fully implemented these new laws and regulations.
Ms. Factor discussed the report's recommendations, including a
recommendation that Saudi Arabia fully implement its recently
enacted laws and regulations pertaining to terrorism financing.
In order to deter the continued financing of terrorism, the
report also recommended that Saudi Arabia publicly punish those
individuals and organizations that have funded terrorism. After
Ms. Factor's testimony, Mr. Aufhauser discussed the origin of
Saudi extremism. He testified that while al Qaeda has been
damaged, it is still extremely lethal, as it consists of
autonomous cells increasingly funded through local criminal
activity.
POSTAL REFORM
During the 108th Congress, the Committee pursued its long-
standing and bipartisan interest in reforming the rate-making
process and business flexibility of the U.S. Postal Service to
put the USPS on a sustainable business footing and to make rate
changes more predictable and supportable for customers. Postal-
reform legislation was not enacted during the 108th Congress,
but a series of hearings helped pave the way for future action:
The Committee launched its new series of inquiries on
September 17, 2003, with a hearing titled, ``U.S. Postal
Service: What Can Be Done to Ensure Its Future Viability?''
Members heard extended testimony from James A. Johnson, Co-
Chair of the Presidential Commission on the U.S. Postal
Service, and Vice Chairman of Perseus, L.L.C.
On November 5, 2003, the Committee held a hearing titled,
``The Report of the Presidential Commission on the U.S. Postal
Service: Preserving Access and Affordability.'' Members heard
extended testimony from two witnesses on the findings and
implications of a special-commission report: John E. Potter,
Postmaster General, United States Postal Service, and David M.
Walker, Comptroller General, General Accounting Office (as GAO
was then known, later being renamed the Government
Accountability Office).
On February 4, 2004, the Committee conducted a hearing
titled, ``Preserving a Strong United States Postal Service:
Workforce Issues.'' Two panels of witnesses testified. The
first panel comprised Wally Olihovik, National President,
National Association of Postmasters of the United States; Steve
LeNoir, President, National League of Postmasters; and Ted
Keating, Executive Vice President, National Association of
Postal Supervisors. Witnesses on the second panel were John
Calhoun Wells, private consultant and former Director of the
Federal Mediation and Conciliation Service; James L. Medoff,
Ph.D., Meyer Kestnbaum Professor of Labor and Industry, Harvard
University; and Michael L. Wachter, Ph.D., Co-Director,
Institute of Law and Economics, University of Pennsylvania Law
School.
On February 24, 2004, the Committee conducted a second
hearing on ``Preserving a Strong United States Postal Service:
Workforce Issues.'' Witness for the first panel was Dan G.
Blair, Deputy Director, U.S. Office of Personnel Management. A
second panel consisted of William Young, President, National
Association of Letter Carriers; Dale Holton, National
President, National Rural Letter Carriers; William Burrus,
President, American Postal Workers Union, AFL-CIO; and John F.
Hegarty, President, National Postal Mail Handlers Union.
On March 9, 2004, the Committee held a hearing titled,
``Postal Reform: Sustaining the 9 Million Jobs in the $900
Billion Mailing Industry (Day 1).'' The first panel of
witnesses consisted of Ann Moore, Chairman and CEO of Time,
Inc., and Mark Angelson, Chairman, President, and CEO of RR
Donnelley. The second panel comprised Chris Bradley, President
and CEO of Cuddledown, Inc.; Max Heath, Vice President of
Landmark Community Papers, on behalf of the National Newspaper
Association; William Ihle, Senior Vice President for Public
Relations, Bear Creek Corp.; and Shelley Dreifuss, Director,
Office of the Consumer Advocate, Postal Rate Commission.
On March 11, 2004, the Committee conducted the hearing,
``Postal Reform: Sustaining the 9 Million Jobs in the $900
Billion Mailing Industry (Day 2),'' featuring two panels of
witnesses. The first panel consisted of Fred Smith, Chairman
and CEO of FedEx, and Michael Eskew, Chairman and CEO of United
Parcel Service. Witnesses for the second panel were Gary
Mulloy, Chairman and CEO of ADVO, Inc.; Gary Pruitt, Chairman,
President and CEO of McClatchy Company, on behalf of the
Newspaper Association of America; and Robert Wientzen,
President and CEO of the Direct Marketing Association.
On March 23, 2004, the Committee participated in ``The
Postal Service in Crisis: A Joint Senate-House Hearing on
Principles for Meaningful Reform.'' The joint hearing at the
Rayburn House Office Building heard testimony from Secretary of
the Treasury John W. Snow; David Fineman, Chairman, U.S. Postal
Service Board of Governors; and Postmaster General John E.
Potter. Brian C. Roseboro, Acting Undersecretary for Domestic
Finance, U.S. Department of Treasury, accompanied Secretary
Snow.
On April 7, 2004, the Committee held a hearing titled,
``Postal Reform: The Chairmen's Perspectives on Governance and
Rate-Setting.'' Testifying were George Omas, Chairman, U.S.
Postal Rate Commission, and David Fineman, Chairman, U.S.
Postal Service Board of Governors. Chairman Omas was
accompanied by Stephen L. Sharfman, General Counsel, U.S.
Postal Rate Commission.
V. Reports, Prints, and GAO Reports
During the 108th Congress, the Committee prepared and
issued 37 reports and 3 prints on the following topics:
To amend chapter 83 of title 5, United States Code, to
reform the funding of benefits under the Civil Service
Retirement System for employees of the United States Postal
Service, and for other purposes. (S. Rept. 108-35)
To amend chapter 84 of title 5, United States Code, to
provide that certain Federal annuity computations are adjusted
by 1 percentage point relating to periods of receiving
disability payments, and for other purposes. (S. Rept. 108-108)
To amend section 5379 of title 5, United States Code, to
increase the annual and aggregate limits on student loan
repayments by Federal agencies. (S. Rept. 108-109)
To establish the United States Consensus Council to provide
for a consensus building process in addressing national public
policy issues, and for other purposes. (S. Rept. 108-110)
To amend chapter 10 of title 39, United States Code, to
include postmasters and postmasters organizations in the
process for the development and planning of certain policies,
schedules, and programs, and for other purposes. (S. Rept. 108-
112)
To amend the provisions of title 5, United States Code, to
provide for workforce flexibilities and certain Federal
personnel provisions relating to the National Aeronautics and
Space Administration, and for other purposes. (S. Rept. 108-
113)
To ensure the continuation of non-homeland security
functions of Federal agencies transferred to the Department of
Homeland Security. (S. Rept. 108-115)
To strengthen and improve the management of national
security, encourage government service in areas of critical
national security, and to assist government agencies in
addressing deficiencies in personnel possessing specialized
skills important to national security and incorporating the
goals and strategies for recruitment and retention for such
skilled personnel into the strategic and performance management
systems of Federal agencies. (S. Rept. 108-119)
To preserve existing judgeships on the Superior Court of
the District of Columbia. (S. Rept. 108-200)
To provide a site for the National Women's History Museum
in the District of Columbia. (S. Rept. 108-204)
To provide for a report on the parity of pay and benefits
among Federal law enforcement officers and to establish an
exchange program between Federal law enforcement employees and
State and local law enforcement employees. (S. Rept. 108-207)
To amend title 31, United States Code, to improve the
financial accountability requirements applicable to the
Department of Homeland Security, and for other purposes. (S.
Rept. 108-211)
To amend the District of Columbia Home Rule Act to provide
the District of Columbia with autonomy over its budgets, and
for other purposes. (S. Rept. 108-212)
To make technical corrections to the Homeland Security Act
of 2002. (S. Rept. 108-214)
To provide new human capital flexibility with respect to
the GAO, and for other purposes. (S. Rept. 108-216)
To establish a technology, equipment, and information
transfer within the Department of Homeland Security. (S. Rept.
108-217)
To provide for reform relating to Federal employment and
for other purposes. (S. Rept. 108-223)
To provide for homeland security grand coordination and
simplification, and for other purposes. (S. Rept. 108-225)
To establish a servitude and emancipation archival research
clearinghouse in the National Archives. (S. Rept. 108-282)
To amend chapter 90 of title 5, United States Code, to
include employees of the District of Columbia courts as
participants in long term care insurance for Federal employees.
(S. Rept. 108-283)
To amend chapter 84 of title 5, United States Code, to
provide for Federal employees to make elections to make,
modify, and terminate contributions to the Thrift Savings Fund
at any time, and for other purposes. (S. Rept. 108-290)
To establish a Federal Interagency Committee on Emergency
Medical Services and a Federal Interagency Committee on
Emergency Medical Services Advisory Council, and for other
purposes. (S. Rept. 108-291)
To amend the Stewart B. McKinney Homeless Assistance Act to
provide for emergency food and shelter. (S. Rept. 108-308)
To reform the postal laws of the United States. (S. Rept.
108-318)
To authorize the Congressional Award Act. (S. Rept. 108-
339)
To provide for additional responsibilities for the Chief
Information Officer of the Department of Homeland Security
relating to geospatial information. (S. Rept. 108-348)
To amend the District of Columbia Access Act of 1999 to
permanently authorize the public school and private school
tuition assistance programs established under the Act. (S.
Rept. 108-349)
To enumerate the responsibilities of the Officer for Civil
Rights and Civil Liberties of the Department of Homeland
Security, to require the Inspector General of the Department of
Homeland Security to designate a senior official to investigate
civil rights complaints, and for other purposes. (S. Rept. 108-
350)
Original bill to reform the Intelligence Community and the
intelligence and intelligence-related activities of the United
States Government, and for other purposes. (S. Rept. 108-359)
To provide for a report of Federal entities without
annually audited financial statements. (S. Rept. 108-383)
To amend chapter 23 of title 5, United States Code, to
clarify the disclosures of information protected from
prohibited personnel practices, require a statement in
nondisclosure policies, forms, and agreements that such
policies, forms, and agreements conform with certain disclosure
protections, provide certain authority for the Special Counsel,
and for other purposes. (S. Rept. 108-392)
To amend part III of title 5, United States Code, to
provide for the establishment of programs under which
supplemental dental and vision benefits are made available to
Federal employees, retirees, and their dependents, to expand
the contracting authority of the Office of Personnel
Management, and for other purposes. (S. Rept. 108-393)
To amend the Homeland Security Act of 2002 to provide for
homeland security assistance for high-risk nonprofit
organizations, and for other purposes. (S. Rept. 108-408)
To ensure that a Federal employee who takes leave without
pay in order to perform service as a member of the uniformed
services or member of the National Guard shall continue to
receive pay in an amount which, when taken together with the
pay and allowances such individual is receiving for such
service, will be no less than the basic pay such individual
would then be receiving if no interruption in employment has
occurred. (S. Rept. 108-409)
To provide for continued health benefits coverage for
certain Federal employees, and for other purposes. (S. Rept.
108-410)
To amend the Office of Federal Procurement Policy Act to
establish a governmentwide policy requiring competition in
certain executive agency procurements. (S. Rept. 108-415)
To establish an intergovernmental grant program to identify
and develop homeland security information, equipment,
capabilities, technologies, and services to further the
homeland security needs of Federal, State, and local
governments. (S. Rept. 108-420)
Organization of Federal Executive Departments and Agencies.
Agencies and Functions of the Federal Government Established,
Abolished, Continued, Modified, Reorganized, Extended,
Transferred, or Changes in Name by Legislative or Executive
Action During Calendar Years 2001 and 2002. (S. Prt. 108-28)
State and Local Officials: Still Kept in the Dark About
Homeland Security. (S. Prt. 108-33)
Self-Dealing and Breach of Duty at ULLICO, Inc. (S. Prt.
108-45)
Also during the 108th Congress, 51 reports were issued by
the GAO at the request of the Committee:
Review of the Office of Personnel Management's Analysis of
the United States Postal Service's Funding of Civil Service
Retirement System Costs, GAO-03-448R (January 31, 2003)
Civil Penalties: Agencies Unable to Fully Adjust Penalties
for Inflation Under Current Law, GAO-03-409 (March 14, 2003)
Financial Audit: Independent Counsel Expenditures for the
Six Months Ended September 30, 2002, GAO-03-445 (March 31,
2003)
U.S. Postal Service: Better Guidance Is Needed to Improve
Communication Should Anthrax Contamination Occur in the Future,
GAO-03-316 (April 7, 2003)
Federal Procurement: Spending and Workforce Trends, GAO-03-
443 (April 30, 2003)
Smallpox Vaccination: Implementation of National Program
Faces Challenges, GAO-03-578 (April 30, 2003)
Human Capital: Building on DOD's Reform Effort to Foster
Governmentwide Improvements GAO-03-851T (June 4, 2003)
Privacy Act: OMB Leadership Needed to Improve Agency
Compliance, GAO-03-304 (June 30, 2003)
Posthearing Questions Related to Proposed DOD Human Capital
Reform, GAO-03-965R (July 3, 2003)
Federal Vacancies Reform Act: Key Elements for Agency
Procedures for Complying with the Act, GAO-03-806 (July 15,
2003)
Child Welfare and Juvenile Justice: Several Factors
Influence the Placement of Children Solely to Obtain Mental
Health Services, GAO-03-865T (July 17, 2003)
Energy Markets: Additional Actions Would Help Ensure That
FERC's Oversight and Enforcement Capability Is Comprehensive
and Systematic, GAO-03-845 (August 15, 2003)
GAO's Proposed Human Capital Legislation: Views of the
Employee Advisory Council, GAO-03-1162T (September 16, 2003)
GAO: Transformation Challenges, and Opportunities, GAO-03-
1167T (September 16, 2003)
Electronic Rulemaking: Efforts to Facilitate Public
Participation Can Be Improved, GAO-03-901 (September 17, 2003)
Rulemaking: OMB's Role in Reviews of Agencies' Draft Rules
and the Transparency of Those Reviews, GAO-03-929 (9/22/2003)
Breast Cancer Research Stamp: Effective Fund-Raiser But
Better Reporting and Cost-Recovery Criteria Needed, GAO-03-1021
(September 30, 2003)
Financial Management: Sustained Efforts Needed to Achieve
FFMIA Accountability, GAO-03-1062 (September 30, 2003)
Federal Real Property: Actions Needed to Address Long-
standing and Complex Problems, GAO-04-119T (October 10, 2003)
Office of Personnel Management: Health Insurance Premium
Conversion, GAO-04-168R (October 20, 2003)
U.S. Postal Service: Bold Action Needed to Continue
Progress on Postal Transformation, GAO-04-108T (November 5,
2003)
Travel Cards: Internal Control Weaknesses at DOD Led to
Improper Use of First and Business Class Travel, GAO-04-229T
(November 6, 2003)
Electricity Restructuring: 2003 Blackout Identifies Crisis
and Opportunity for the Electricity Sector, GAO-04-204
(November 18, 2003)
Bioterrorism: A Threat to Agriculture and the Food Supply,
GAO-04-259T (November 19, 2003)
Postal Pension Funding Reform: Issues Related to the Postal
Service's Proposed Use of Pension Savings, GAO-04-238 (November
26, 2003)
Postal Pension Funding Reform: Review of Military Service
Funding Proposals, GAO-04-281 (November 26, 2003)
Smallpox Vaccination: Review of the Implementation of the
Military Program, GAO-04-15R (December 1, 2003)
Need for Comprehensive Postal Reform, GAO-04-455R (February
6, 2004)
Human Capital: Preliminary Observations on Proposed DHS
Human Capital Regulations, GAO-04-479T (February 25, 2004)
Contract Management: Agencies Can Achieve Significant
Savings on Purchase Card Buys, GAO-04-430 (March 12, 2004)
U.S. Postal Service Key Reasons for Postal Reform, GAO-04-
565T (March 23, 2004)
Agencies' Use of Procurement Flexibilities Provided in the
Homeland Security Act of 2002 (P.L. 107-296), GAO-04-447R
(March 31, 2004)
Purchase Cards: Increased Management Oversight and Control
Could Save Hundreds of Millions of Dollars, GAO-04-717T (April
28, 2004)
Diploma Mills: Federal Employees Have Obtained Degrees From
Diploma Mills and Other Unaccredited Schools, Some at
Government Expense, GAO-04-771T (May 11, 2004)
Federal Acquisition: Increased Attention to Vehicle Fleets
Could Result in Savings, GAO-04-664 (May 25, 2004)
Aviation Security: Further Steps Needed to Strengthen the
Security of Commercial Airport Perimeters and Access Controls,
GAO-04-728 (June 4, 2004)
DOD Travel Cards: Control Weaknesses Resulted in Millions
of Dollars of Improper Payments, GAO-04-576 (June 9, 2004)
DOD Travel Cards: Control Weaknesses Led to Millions in
Fraud, Waste, and Improper Payments, GAO-04-825T (June 9, 2004)
Internet Pharmacies: Some Pose Safety Risks for Consumers
and Are Unreliable in Their Business Practices, GAO-04-888T
(June 17, 2004)
Federal Aircraft: Inaccurate Cost Data and Weaknesses in
Fleet Management Planning Hamper Cost Effective Operations,
GAO-04-645 (June 18, 2004)
International Taxation: Tax Haven Companies Were More
Likely to Have a Tax Cost Advantage in Federal Contracting,
GAO-04-856 (June 30, 2004)
U.S. Postal Service: USPS Needs to Clearly Communicate How
Postal Services May Be Affected by Its Retail Optimization
Plans, GAO-04-803 (July 13, 2004)
Financial Management: Department of Homeland Security Faces
Significant Financial Management Challenges, GAO-04-774 (July
19, 2004)
Electricity Markets: Consumers Could Benefit from Demand
Programs, But Challenges Remain, GAO-04-844 (August 13, 2004)
U.S. Postal Service: Better Guidance Is Needed to Ensure an
Appropriate Response to Anthrax Contamination, GAO-04-239
(September 9, 2004)
Best Practices: Using Spend Analysis to Help Agencies Take
a More Strategic Approach to Procurement, GAO-04-870 (September
16, 2004)
No Child Left Behind Act: Additional Assistance and
Research on Effective Strategies Would Help Small Rural
Districts, GAO-04-909 (September 23, 2004)
Financial Management: Improved Financial Systems Are Key to
FFMIA Compliance, GAO-05-20 (October 1, 2004)
U.S. Postal Service: Physical Security Measures Have
Increased at Some Core Facilities, but Security Problems
Continue, GAO-05-48 (November 16, 2004)
Electronic Government: Federal Agencies Have Made Progress
Implementing the E-Government Act of 2002, GAO-05-12 (December
10, 2004)
Homeland Security: Further Action Needed to Promote
Successful Use of Special DHS Acquisition Authority, GAO-05-136
(December 15, 2004)
VI. Official Communications
During the 108th Congress, 1,023 official communications
were referred to the Committee. Of these, 1,005 were Executive
Communications, 16 were Petitions or Memorials, two were
Presidential Messages. Reports on District of Columbia
legislation accounted for 390 of the official communications.
VII. Legislative Actions
During the 108th Congress, the Committee reported
significant legislation--most notably, the sweeping reform of
the national intelligence apparatus--that was approved by
Congress and signed into law by the President.
The following are brief legislative histories of measures
referred to the Committee and, in some cases, drafted by the
Committee, which (1) became public law or (2) were favorably
reported from the Committee and passed by the Senate, but did
not become law. In addition to the measures listed below, the
Committee received during the 108th Congress numerous
legislative proposals that were not considered or reported, or
that were reported but not passed by the Senate. Additional
information on these measures appears in the Committee's
Legislative Calendar for the 108th Congress, S. Prt. 108-61,
Government Printing Office (December 31, 2004).
MEASURES ENACTED INTO LAW
S. 380--To amend chapter 83 of title 5, United States Code, to reform
the funding of benefits under the Civil Service Retirement
System for employees of the United States Postal Service, and
for other purposes. (Public Law 108-18)
This legislation amends Federal civil service law to revise
the statutory formula for funding benefits under the Civil
Service Retirement System for U.S. Postal Service employees
using dynamic rather than static assumptions, and requires (1)
when computing actuarial present value of future benefits,
taking account of the full value of benefits attributable to
military and volunteer service for Postal Service employees
first employed after June 30, 1971, and a prorated share for
Postal Service employees first employed before that date; and
(2) computing interest at the rate used in the most recent
dynamic actuarial valuation of the Civil Service Retirement
System when creating amortization schedules for liquidation of
Postal supplemental pension benefit liability. The legislation
requires that savings accruing to the Postal Service from these
changes and attributable to Fiscal Years (FY) 2003 and 2004 be
used to reduce the postal debt, and prohibits the Postal
Service from incurring additional debt to offset the use of the
savings to reduce the postal debt in FY 2003 and 2004. It
further requires that: (1) savings attributable to FY 2005 be
used to continue holding postage rates unchanged and to reduce
the postal debt; and (2) savings attributable to any fiscal
year after FY 2005 be considered Postal Service operating
expenses and, until otherwise provided for by law, be held in
escrow and not be obligated or expended.
S. 380 was introduced by Senator Collins on February 12,
2003, with 23 cosponsors. It was reported out of Committee on
April 1, 2003, by Senator Collins with an amendment in the
nature of a substitute, and without a written report. It passed
the Senate with an amendment by Unanimous Consent on April 2,
2003. The House passed the bill by a 424-0 roll-call vote on
April 8, 2003, on which date Senator Collins filed the written
report, S. Rept. 108-35. The Postal Civil Service Retirement
System Funding Reform Act of 2003 was signed into law by the
President on April 23, 2003.
S. 678--To amend chapter 10 of title 39, United States Code, to include
postmasters and postmasters organizations in the process for
the development and planning of certain policies, schedules,
and programs, and for other purposes. (Public Law 108-86)
This legislation amends Federal law to authorize an
organization (other than one representing supervisors) that
represents at least 20 percent of certain postmasters to
participate directly in planning and developing pay policies
and schedules, fringe-benefit programs, and other programs
relating to supervisory and other managerial employees. It
grants postmasters and postmasters' organizations the same
consultation and other rights afforded to supervisors and
supervisors' organizations. The legislation provides that if
two or more postmasters' organizations exist, they shall: (1)
be treated as if they constituted a single organization and in
accordance with such arrangements as they may agree upon; and
(2) in the case of any fact-finding panel convened by the
Federal Mediation and Conciliation Service at the
organizations' request, be jointly and severally liable for the
cost of such panel, apart from the portion to be borne by the
Service.
S. 678 was introduced in the Senate on March 20, 2003, by
Senator Akaka, with 39 cosponsors. It was reported from the
Committee by Senator Collins on July 25, 2003, with an
amendment in the nature of a substitute, and with written
report, S. Rept. 108-112. It passed the Senate with an
amendment by Unanimous Consent on July 29, 2003, and passed the
House by a 426-0 vote under suspension of rules on September
16, 2003. The Postmasters Equity Act of 2003 was signed into
law by the President on September 30, 2003.
S. 926--To amend section 5379 of title 5, United States Code, to
increase the annual and aggregate limits on student loan
repayments by Federal agencies. (Public Law 108-123)
This legislation increases the annual and aggregate limits
(to $10,000 and $60,000, respectively) on the amount of an
employee's student loan an agency may repay.
S. 926 was introduced in the Senate on April 28, 2003, by
Senator Voinovich, with one cosponsor. It was reported out of
Committee by Senator Collins on July 21, 2003, without
amendment, and with written report, S. Rept. 108-109.
Additional views were filed. It passed the Senate by Unanimous
Consent on July 30, 2003, and passed the House by voice vote on
October 28, 2003. The Federal Employee Student Loan Assistance
Act was signed by the President on November 11, 2003.
H.R. 3054--To amend the Policemen and Firemen's Retirement and
Disability Act to permit military service previously performed
by members and former members of the Metropolitan Police
Department of the District of Columbia, the Fire Department of
the District of Columbia, the United States Park Police, and
the United States Secret Service Uniformed Division to count as
creditable service for purposes of calculating retirement
annuities payable to such members upon payment of a
contribution by such members, and for other purposes. (Public
Law 108-133)
This legislation amends the Policemen and Firemen's
Retirement and Disability Act to permit a member or former
member of the District of Columbia Metropolitan Police force,
the District of Columbia Fire Department, the United States
Park Police force, and the U.S. Secret Service to count
previously performed military service as creditable service for
purposes of calculating the retirement annuity payable to such
member. To qualify, the member or former member must pay the
member's employment office (or former member's appropriate
benefits administration) an amount equal to 7 percent of the
military basic pay paid to the member for each period of
military service after December 1956, with payment to be
completed before the member's date of retirement, or October 1,
2006, whichever is later.
H.R. 3054 was introduced in the House on September 10,
2003, by Representative T. Davis of Virginia, with seven
cosponsors. The bill, as amended, was agreed to in the House by
voice vote on October 8, 2003. It was discharged by Unanimous
Consent of the Senate from the Committee on November 11, 2003,
and passed without amendment that same day by Unanimous
Consent. The District of Columbia Military Retirement Equity
Act of 2003 was signed by the President on November 22, 2003.
S.J. Res. 18--A joint resolution commending the Inspectors General for
their efforts to prevent and detect waste, fraud, abuse, and
mismanagement, and to promote economy, efficiency, and
effectiveness in the Federal Government during the past 25
years. (Public Law 108-139)
This resolution recognizes the Inspectors General for, and
commends their role in, preventing and detecting waste, fraud,
abuse, and mismanagement and promoting economy, efficiency, and
effectiveness in Federal programs and operations.
S.J. Res. 18 was introduced in the Senate on September 29,
2003, by Senator Collins, with eight cosponsors. It was
discharged by Unanimous Consent from the Committee on October
14, 2003, and passed the Senate without amendment by Unanimous
Consent that same day; the House passed the resolution on a
326-3 roll call on November 17, 2003. The President signed the
resolution on December 1, 2003.
S. 1683--To provide for a report on the parity of pay and benefits
among Federal law enforcement officers and to establish an
exchange program between Federal law enforcement employees and
State and local law enforcement employees. (Public Law 108-196)
This legislation requires the Office of Personnel
Management to report to the President of the Senate, the
Speaker of the House of Representatives, and appropriate
congressional committees and subcommittees on: (1) a comparison
of classifications, pay, and benefits among Federal law
enforcement officers; and (2) recommendations for ensuring the
elimination of disparities in such classifications, pay, and
benefits. It directs the President to establish an employee
exchange program between Federal agencies that perform law
enforcement functions and State and local agencies that perform
such functions.
S. 1683 was introduced in the Senate on September 30, 2003,
by Senator Voinovich, with one cosponsor. It was reported from
Committee by Senator Collins without amendment on November 22,
2003, and with written report, S. Rept. 108-207. It passed the
Senate without amendment by Unanimous Consent on November 25,
2003. Discharged from the House Committee on Government Reform
and considered on December 8, 2003, it passed the House without
objection that same day. The Federal Law Enforcement Pay and
Benefits Parity Act of 2003 was signed by the President on
December 19, 2003.
S. 610--To amend the provisions of title 5, United States Code, to
provide for workforce flexibilities and certain Federal
personnel provisions relating to the National Aeronautics and
Space Administration, and for other purposes. (Public Law 108-
201)
This legislation amends the National Aeronautics and Space
Act of 1958 to provide the Administrator of the National
Aeronautics and Space Administration (NASA) authority to
compensate certain excepted personnel at the basic rate payable
for level III of the Executive Schedule. It amends Federal
employee provisions to establish separate workforce authorities
and personnel provisions for NASA. It requires the NASA
Administrator, before exercising any such authorities, to
submit to specified congressional committees a written
workforce plan and to obtain plan approval from the Office of
Personnel Management (OPM), and establishes requirements for
the plan. It requires plans to be submitted to NASA employee
representatives and requires the Administrator to give
recommendations from such representatives full and fair
consideration. It requires: (1) the current workforce plan to
be submitted to the Office of Management and Budget whenever a
NASA performance plan is so submitted for any year; and (2) the
Administrator, within 6 years, to submit to the Committees on
Government Reform, Science, and Appropriations of the House of
Representatives and the Committees on Governmental Affairs,
Commerce, Science, and Transportation of the Senate an
evaluation and analysis of the actions taken under this
section. The legislation includes the authority to: (1) pay
recruitment, redesignation, relocation, and retention bonuses
in exchange for service agreements; (2) make term appointments
of one to 6 years and permanent conversions; (3) fix basic
rates of pay for critical positions; and (4) extend
intergovernmental personnel act assignments to up to 4 years.
It also directs and sets rules for the Administrator to
establish a NASA Science and Technology Scholarship Program to
award scholarships to individuals in return for contractual
agreements under which such individuals agree to serve as full-
time NASA employees for 2 years for each year of such
scholarships. It authorizes the Administrator to appoint
directly to the General Schedule of Compensation for Federal
Employees in GS-7 through GS-12 positions individuals in
professional and research fields who meet specified educational
requirements. Provides for the consideration of veterans'
preference eligibles who meet the criteria for appointment
ahead of non-preference eligibles and requires public notice of
vacancies. Other provisions include authorizing the
Administrator to pay the travel, transportation, and relocation
expenses of certain new appointees to the same extent and in
the same manner as the payment of such expenses for transferred
employees; allowing the Administrator to deem a period of
qualified non-Federal career service of an individual as an
equal period of service performed as a Federal employee for
purposes of annual leave eligibility; and permitting
appointment of limited SES appointees to career reserved
positions as long as the limited appointee, immediately before
the limited appointment, was serving under a career or career-
conditional appointment outside the SES (or an appointment of
equivalent tenure). The Act requires the Administrator to
submit to appropriate committees, not later than February 28 of
each of the next 6 years, a report on the effectiveness of
exercising such separate workforce authorities.
S. 610 was introduced in the Senate by Senator Voinovich,
with nine cosponsors, on March 13, 2003. Senator Collins
reported it from Committee with an amendment in the nature of a
substitute on July 28, 2003, with written report, S. Rept. 108-
113. Additional views were filed. The Senate passed it with an
amendment by Unanimous Consent on November 24, 2003. It was
passed in the House by voice vote on January 28, 2004. The NASA
Workforce Flexibility Act of 2003 was signed by the President
on February 24, 2004.
H.R. 2751--To provide new human capital flexibilities with respect to
the GAO, and for other purposes. (Public Law 108-271)
This legislation amends Federal law to make permanent: (1)
the entitlement of certain U.S. General Accounting Office (GAO)
officers and employees who separate from service voluntarily to
receive annuities under the Civil Service Retirement System or
the Federal Employees' Retirement System, and (2) authority of
the Comptroller General to provide voluntary separation
incentive payments to GAO employees. It authorizes the
Comptroller General, under specified conditions, to adjust
annually the basic rates of GAO officers and employees whose
performance is at a satisfactory level, and provides the same
authority under the same conditions with respect to Senior
Executive Service officers and employees. It requires the
Comptroller General to prescribe regulations under which a GAO:
(1) officer or employee shall be entitled to pay retention if
any reduction in force or other workforce adjustment, position
reclassification, or other appropriate circumstances place an
officer or employee in a lower grade or band with a maximum
rate of basic pay less than the rate of basic pay payable to
the officer or employee immediately before the reduction; (2)
officer or employee may, in appropriate circumstances, be
reimbursed for certain relocation expenses for which they would
not otherwise be eligible; and (3) key officer or employee with
less than 3 years of service may accrue 6 hours of annual leave
biweekly in those circumstances appropriate for his or her
recruitment or retention. It authorizes the Comptroller General
to establish by regulation an executive-exchange program under
which GAO officers and employees may be assigned to private
sector organizations, and employees of private sector
organizations may be assigned to GAO to further the
institutional interests of GAO or Congress. The Act renames the
U.S. General Accounting Office as the U.S. Government
Accountability Office. It modifies requirements of the GAO
personnel management system to include: (1) a link between the
performance management system and the agency's strategic plan;
(2) adequate training and retraining for supervisors, managers,
and employees in the implementation and operation of the
system; (3) a process for ensuring ongoing performance feedback
and dialogue between supervisors, managers, and employees
throughout the appraisal period and setting timetables for
review; (4) effective transparency and accountability measures
to ensure that the management of the system is fair, credible,
and equitable, including appropriate independent
reasonableness, reviews, internal assessments, and employee
surveys; and (5) a means to ensure that adequate agency
resources are allocated for the design, implementation, and
administration of the system. It requires the Comptroller
General to include in GAO's annual report to Congress, during
the 5-year period beginning on the enactment of this Act, a
summary review of actions taken with respect to: (1) GAO's
permanent authority to offer voluntary early retirements and
voluntary separation payments to certain officers and
employees; (2) annual pay adjustments; (3) pay retention; (4)
increased annual leave for key employees; (5) the executive
exchange program; (6) the performance management system; and
(7) GAO's consultation with interested groups or associations
that represent GAO employees before the implementation of any
changes authorized under this Act.
H.R. 2751 was introduced in the House on July 16, 2003, by
Representative J. Davis of Virginia, with two cosponsors. It
was reported as amended by the House Committee on Government
Reform on November 19, 2003, with written report, H. Rept. 108-
380. The House passed the bill on a roll call of 382-43 on
February 25, 2004. The Senate discharged it without amendment
from Committee on June 24, 2004, and the Senate passed it
without amendment by Unanimous Consent that same day. The GAO
Human Capital Reform Act of 2004 was signed by the President on
July 7, 2004.
H.R. 1303--To amend the E-Government Act of 2002 with respect to
rulemaking authority of the Judicial Conference. (Public Law
108-281)
This legislation amends the E-Government Act of 2002 to
provide for court rules allowing parties in a Federal court
proceeding to file under seal a reference list that would
include both a complete and partially redacted version of
protected information (e.g., Social Security numbers and
credit-card account numbers) contained in pleadings. It
specifies that such rules: (1) provide that all references in a
case to redacted data shall be construed to refer to the
unredacted information in the sealed reference list; and (2)
allow parties to file unredacted exhibits or other evidentiary
matter under seal for evidentiary purposes.
H.R. 1303 was introduced in the House on March 18, 2003, by
Representative L. Smith of Texas, with one cosponsor. The House
Committee on Judiciary reported it with amendment on July 25,
2003, and with written report, H. Rept. 108-239. The House
passed the bill by voice vote on October 7, 2003. After an
exchange of papers with the House and vitiation of a previous
report, the bill was discharged from the Committee on
Governmental Affairs by Unanimous Consent of the Senate on July
7, 2004, and passed without amendment by Unanimous Consent that
same day. The Act to Amend the E-Government Act of 2002 with
Respect to Rulemaking Authority of the Judicial Conference was
signed by the President on August 2, 2004.
H.R. 4259--To amend title 31, United States Code, to improve the
financial accountability requirements applicable to the
Department of Homeland Security, to establish requirements for
the Future Years Homeland Security Program of the Department,
and for other purposes. (Public Law 108-330)
This legislation amends the Chief Financial Officer Act of
1990 and the Homeland Security Act of 2002 to direct the
President to appoint a Chief Financial Officer (CFO) for the
DHS, who is to report directly to the Secretary of DHS and to
the Under Secretary for Management; it also removes the Federal
Emergency Management Agency (FEMA) from the list of agencies
required to have a CFO. The Act amends the Reports
Consolidation Act of 2000 to instruct the Secretary of DHS to:
(1) submit a specified performance and accountability report,
including an audit opinion of DHS internal controls over its
financial reporting; and (2) design and implement DHS-wide
management controls that reflect the national homeland security
strategy of the Homeland Security Act of 2002, and that permit
assessment by Congress and DHS managers of DHS performance in
executing such strategy. Other provisions: Require performance
and accountability reports for fiscal years after 2005 to
include an assertion of the internal controls that apply to
financial reporting by the DHS, and amend the Homeland Security
Act of 2002 to require the Future Years Homeland Security
Program to include certain kinds and forms of information, set
forth the homeland-security strategy used to develop program
planning guidance, and explain how the resource allocations in
the Program correlate to homeland security strategy. The Act
instructs the Secretary to establish an Office of Program
Analysis and Evaluation, Creates the position of Director of
Program Analysis and Evaluation, and requires the CFO of DHS to
notify simultaneously specified congressional committees
whenever appropriations earmarked for DHS are either
transferred or reprogrammed.
H.R. 4259 was introduced in the House by Representative
Platts of Pennsylvania on May 4, 2004. The House Committee on
Government Reform reported it on June 9, 2004, with written
report, H. Rept. 108-533, Part I; on that same day, the House
Committee on Homeland Security (Select) discharged the bill. It
passed the House by voice vote on July 20, 2004. By Unanimous
Consent of the Senate, the bill was discharged from Committee
and passed without amendment on September 29, 2004. The
Department of Homeland Security Financial Accountability Act
was signed by the President on October 16, 2004.
H.R. 3478--To amend title 44, United States Code, to improve the
efficiency of operations by the National Archives and Records
Administration and to reauthorize the National Historical
Publications and Records Commission. (Public Law 108-383)
This legislation requires the Archivist of the United
States to promulgate regulations establishing a streamlined
process for extending agency records retention periods beyond
those periods specified in disposal schedules; authorizes the
Records Center Revolving Fund of the Treasury to cover expenses
for uniforms for National Archives and Records Administration
(NARA) personnel; authorizes the Archivist to collect
reasonable fees for the occasional, non-official use of NARA
facilities and related services by the public and to use such
fees for educational and public program purposes; authorizes
the Archivist to enter into cooperative agreements that involve
the transfer of NARA funds to State and local governments,
other public entities, educational institutions, or private
nonprofit organizations to carry out NARA programs; and
authorizes appropriations to the National Historical
Publications and Records Commission for FY 2006 through 2009
for the Commission to carry out its duties and for the
Archivist to make grants to State and local agencies and to
nonprofit organizations, institutions, and individuals for
historical publications and records programs.
H.R. 3478 was introduced in the House on November 7, 2003,
by Representative Putnam of Florida, with one cosponsor. It was
reported by the Committee on Government Reform on December 8,
2003, with written report, H. Rept. 108-403. The House passed
the bill, as amended, by voice vote on September 13, 2004. By
Unanimous Consent of the Senate, the bill was discharged from
the Committee on Governmental Affairs and passed without
amendment on October 11, 2004. The President signed the
National Archives and Records Administration Efficiency Act on
October 30, 2004.
H.R. 3797--To authorize improvements in the operations of the
government of the District of Columbia, and for other purposes.
(Public Law 108-386)
This legislation amends the District of Columbia Home Rule
Act to require the Board of Education, by March 1 of each year
or the date on which the Mayor of the District of Columbia
makes the proposed annual budget for a year available
(whichever occurs later), to submit to the District Council a
plan for the allocation of the Mayor's proposed budget among
various object classes and responsibility centers. It also
amends the District of Columbia Code to authorize the
District's Executive Officer, under certain conditions, to
enter into: (1) a contract for procurement of severable
services in the same manner and to the same extent as the head
of an executive agency may enter into such a contract under the
Federal Property and Administrative Services Act of 1949; (2) a
lease agreement for the accommodation of the District of
Columbia courts in a building which is in existence or being
erected by the lessor to accommodate them; and (3) a multiyear
contract for the acquisition of property or services in the
same manner and to the same extent as an executive agency may
enter into such a contract under the Act. Other provisions
affect fiscal years for the Armory Board, the DC Public
Schools, and the University of the District of Columbia; revise
the deadline for Council adoption of the annual budget for
District government; revise overtime requirements under the
Fair Labor Standards Act for certain District government
employee hours; and amend the District of Columbia Government
Comprehensive Merit Personnel Act of 1978 regarding
disciplinary action. The Act also amends the Federal Deposit
Insurance Act, National Housing Act, Bank Holding Company Act,
Bank Protection Act of 1968, Depository Institution Management
Interlocks Act, Securities Exchange Act of 1934, the Federal
Reserve Act, and the National Bank Receivership Act to provide
for regulation of District of Columbia-chartered banks by the
Federal Deposit Insurance Corporation in lieu of the Office of
the Comptroller.
H.R. 3797 was introduced in House on February 11, 2004, by
Representative T. Davis of Virginia, with one cosponsor. The
House Committee on Government Reform reported it on June 17,
2004, with written report, H. Rept. 108-551, Part I. The bill
was discharged from the House Committee on Education and the
Workforce and the Committee on Financial Services on June 17,
2004, and passed the House by voice vote on June 21, 2004. By
Unanimous Consent of the Senate, it was discharged from the
Committee and passed without amendment on October 11, 2004. The
2004 District of Columbia Omnibus Authorization Act was signed
by the President on October 30, 2004.
S. 129--A bill to provide for reform relating to Federal employment,
and for other purposes. (Public Law 108-411)
This legislation comprises three titles. Title I contains
reforms relating to Federal human-capital management,
including: Amending Federal employment law to allow the Office
of Personnel Management (OPM) to authorize the head of a
Federal agency to pay, in defined circumstances, a recruitment
or relocation bonus to an individual appointed, moved, or
relocated to a position that could otherwise be difficult to
fill; allows OPM to authorize an agency head to pay an
employee-retention bonus under defined circumstances; requires
annual reports for 5 years on bonuses paid under this Act; and
allows OPM, upon the request of a Federal agency, to grant
authority for such agency to fix the rates of basic pay for
critical positions in such agency. Title II affects Federal
employee career-development and benefits. Provisions include:
Requiring each agency head to evaluate its training against
performance plans and strategic goals, to appoint a training
officer, to establish a comprehensive management-succession
program, and provide special training to managers for dealing
with employees with unacceptable performances; authorizing
annual leave for newly hired Federal employees with relevant,
qualified non-Federal experience; and requiring Senior
Executive Service positions to receive the maximum authorized
biweekly annual leave (8 hours); and requiring Federal agencies
to provide employees compensatory time off for time spent in
travel status away from their official duty stations, to the
extent such time is not otherwise compensable. The pay-
administration provisions of Title III include: Amending
Federal employment law on pay comparability, and including the
position of Administrator of the Office of Electronic
Government as a Level III Executive Schedule position.
S. 129 was introduced in the Senate on January 9, 2003, by
Senator Voinovich. Senator Collins reported it with an
amendment in the nature of a substitute on January 27, 2004,
with written report, S. Rept. 108-223. The bill passed the
Senate with an amendment by Unanimous Consent on April 8, 2004.
It was reported, amended, by the House Committee on Government
Reform on October 5, 2004, with written report, H. Rept. 108-
733, and passed the House by voice vote on October 6, 2004.
Following Senate acceptance of the House amendment, the Federal
Workforce Flexibility Act of 2004 was signed by the President
on October 30, 2004.
H.R. 4012.--To amend the District of Columbia College Access Act of
1999 to permanently authorize the public school and private
school tuition assistance programs established under the Act.
(Public Law 108-457)
This legislation amends the District of Columbia Access Act
of 1999 to authorize the public school and private school
tuition assistance programs established under the Act through
FY 2007.
H.R. 4012 was introduced in the House on March 23, 2004, by
Representative T. Davis of Virginia, with one cosponsor. The
House Committee on Government Reform reported it with written
report, H. Rept. 108-527 on June 8, 2004. The House passed the
bill, as amended, by voice vote on July 14, 2004. Senator
Collins reported the bill without amendment or written report
on July 22, 2004. The Senate passed it with an amendment and an
amendment to the title by Unanimous Consent on November 24,
2004. Following House acceptance of the Senate amendment, the
Act was signed by the President on December 17, 2004.
S. 2657--To amend part III of title 5, United States Code, to provide
for the establishment of programs under which supplemental
dental and vision benefits are made available to Federal
employees, retirees, and their dependents, to expand the
contracting authority of the Office of Personnel Management,
and for other purposes. (Public Law 108-496)
This legislation provides for establishing programs through
which current and retired Federal employees and their family
members and dependents may obtain enhanced dental and vision
benefits to supplement those available under the Federal
Employees Health Benefits Program (FEHB). It directs the Office
of Personnel Management to submit a report to Congress
describing and evaluating options whereby health insurance
coverage under FEHB could be made available to unmarried
dependent children under 25 years of age who are enrolled as
full-time students at institutions of higher education.
S. 2657 was introduced in the Senate on July 14, 2004, by
Senator Collins, with five cosponsors. Senator Collins reported
it without amendment and with written report, S. Rept. 108-393
on October 8, 2004. The Senate passed the bill with an
amendment by Unanimous Consent on November 20, 2004. It passed
the House by voice vote on December 6, 2004. The Federal
Employee Dental and Vision Benefits Enhancement Act of 2004 was
signed by the President on December 23, 2004.
S. 2845--To reform the Intelligence Community and the intelligence and
intelligence-related activities of the United States
Government, and for other purposes.
This legislation was the first comprehensive reform of the
Intelligence Community in half a century. Its text is
extensive, so only broad summaries of component titles is
presented here. See the discussion under ``Highlights of
Activities: Intelligence Reform'' in part I of this Report.
Title I involves reform of the Intelligence Community,
including establishing the position of DNI, and assigning
numerous responsibilities including oversight of a new NCTC.
This title also establishes a National Intelligence Center, an
Information Sharing Council, a National Counter Proliferation
Center, and a Privacy and Civil Liberties Oversight Board
within the Executive Office of the President. Title II contains
provisions affecting the FBI and its Director that are intended
to improve the intelligence capabilities of the FBI and to
develop and maintain within the FBI a national intelligence
workforce. Title III directs the President to select a single
executive branch department, agency, or element to be
responsible for security clearances and investigations, and
adds other requirements and directives in that area. Title IV
requires the Secretary of Homeland Security to: (1) develop and
implement a National Strategy for Transportation Security and
transportation modal security plans; and (2) submit such plans
and periodic progress reports to appropriate congressional
committees. Title V comprises measures relating to border
protection, immigration, and visas, including pilot programs
for advanced technologies, increased staffing levels for Border
Patrol agents and immigration and customs enforcement
investigators. Title VI comprises terrorism-prevention measures
involving money laundering and terrorist financing, reports on
cross-border electronic transmittals of funds, background
checks of private security officers, grand jury information
sharing, and revising laws on terrorist access to destructive
weapons. Title VII includes numerous measures to implement
recommendations of the 9/11 Commission. Title VIII deals with
assorted matters including information sharing between the
elements of the Intelligence Community and the National
Infrastructure Simulation and Analysis Center, coordination of
DHS geospatial information needs, protections for civil rights
and civil liberties, and information technology planning.
S. 2845 was introduced (then as S. 2840) in the Senate on
September 23, 2004, by Senator Collins, with 10 cosponsors. The
Senate passed the bill with amendments by a 96-2 vote on
October 6, 2004. On October 16, 2004, under provisions of H.
Res. 827, S. 2845 was considered to have passed House as
amended. Following disagreement on the House amendment,
conferees from each Chamber met and filed conference report H.
Rept. 108-796 on December 7, 2004. The House agreed to the
conference report by a 336-75 vote on that same day; the Senate
agreed to the conference report by an 89-2 vote on December 8,
2004. The President signed the Intelligence Reform and
Terrorism Prevention Act of 2004 on December 17, 2004. (Public
Law 108-458)
Postal Naming Bills
H.R. 1505, a bill to designate the facility of the United
States Postal Service located at 2127 Beatties Ford Road in
Charlotte, North Carolina, as the ``Jim Richardson Post
Office.'' (Public Law 108-17).
H.R. 1625, a bill to designate the facility of the United
States Postal Service located at 1114 Main Avenue in Clifton,
New Jersey, as the ``Robert P. Hammer Post Office Building.
(Public Law 108-33).
H.R. 825, a bill to redesignate the facility of the United
States Postal Service located at 7401 West 100th Place in
Bridgeview, Illinois, as the ``Michael J. Healy Post Office
Building.'' (Public Law 108-46).
H.R. 917, a bill to designate the facility of the United
States Postal Service located at 1830 South Lake Drive in
Lexington, South Carolina, as the ``Floyd Spence Post Office
Building.'' (Public Law 108-47).
H.R. 925, a bill to redesignate the facility of the United
States Postal Service located at 1859 South Ashland Avenue in
Chicago, Illinois, as the ``Cesar Chevez Post Office.'' (Public
Law 108-48).
H.R. 981, a bill to designate the facility of the United
States Postal Service located at 141 Erie Street in Linesville,
Pennsylvania, as the ``James R. Merry Post Office.'' (Public
Law 108-49).
H.R. 985, a bill to designate the facility of the United
States Postal Service located at 111 West Washington Street in
Bowling Green, Ohio, as the ``Delbert L. Latta Post Office
Building.'' (Public Law 108-50).
H.R. 1055, a bill to designate the facility of the United
States Postal Service located at 1901 West Evans Street in
Florence, South Carolina, as the ``Dr. Roswell N. Beck Post
Office Building.'' (Public Law 108-51).
H.R. 1368, a bill to designate the facility of the United
States Postal Service located at 7554 Pacific Avenue in
Stockton, California, as the ``Norman D. Shumway Post Office
Building.'' (Public Law 108-52).
H.R. 1465, a bill to designate the facility of the United
States Postal Service located at 4832 East Highway 27 in Iron
Station, North Carolina, as the ``General Charles Gabriel Post
Office.'' (Public Law 108-53).
H.R. 1596, a bill to designate the facility of the United
States Postal Service located at 2318 Woodson Road in St.
Louis, Missouri, as the ``Timothy Michael Gaffney Post Office
Building.'' (Public Law 108-54).
H.R. 1609, a bill to redesignate the facility of the United
States Postal Service located at 201 West Boston Street in
Brookfield, Missouri, as the ``Admiral Donald Davis Post Office
Building.'' (Public Law 108-55).
H.R. 1740, a bill to designate the facility of the United
States Postal Service located at 1502 East Kiest Boulevard in
Dallas, Texas, as the ``Dr. Caesar A.W. Clark, Sr. Post Office
Building.'' (Public Law 108-56).
H.R. 2030, a bill to designate the facility of the United
States Postal Service located at 120 Baldwin Avenue in Paia,
Maui, Hawaii, as the ``Patsy Takemoto Mink Post Office
Building.'' (Public Law 108-57).
S. 1399, a bill to redesignate the facility of the United
States Postal Service located at 101 South Vine Street in
Glenwood, Iowa, as the ``William J. Scherle Post Office
Building.'' (Public Law 108-65).
H.R. 1761, a bill to designate the facility of the United
States Postal Service located at 9350 East Corporate Hill Drive
in Wichita, Kansas, as the ``Garner E. Shriver Post Office
Building.'' (Public Law 108-71).
H.R. 2826, a bill to designate the facility of the United
States Postal Service located at 1000 Avenida Sanchez Osorio in
Carolina, Puerto Rico, as the ``Roberto Clemente Walker Post
Office Building.'' (Public Law 108-97).
S. 1591, a bill to redesignate the facility of the United
States Postal Service located at 48 South Broadway, Nyack, New
York, as the ``Edward O'Grady, Waverly Brown, Peter Paige Post
Office Building.'' (Public Law 108-103).
H.R. 1610, a bill to redesignate the facility of the United
States Postal Service located at 120 East Ritchie Avenue in
Marceline, Missouri, as the ``Walt Disney Post Office
Building.'' (Public Law 108-110).
H.R. 1882, a bill to designate the facility of the United
States Postal Service located at 440 South Orange Blossom Trail
in Orlando, Florida, as the ``Arthur `Pappy' Kennedy Post
Office.'' (Public Law 108-111).
H.R. 2075, a bill to designate the facility of the United
States Postal Service located at 1905 West Blue Heron Boulevard
in West Palm Beach, Florida, as the ``Judge Edward Rodgers Post
Office Building.'' (Public Law 108-112).
H.R. 2254, a bill to designate the facility of the United
States Postal Service located at 1101 Colorado Street in
Boulder City, Nevada, as the ``Bruce Woodbury Post Office
Building.'' (Public Law 108-113).
H.R. 2309, a bill to designate the facility of the United
States Postal Service located at 2300 Redondo Avenue in Long
Beach, California, as the ``Stephen Horn Post Office
Building.'' (Public Law 108-114).
H.R. 2328, a bill to designate the facility of the United
States Postal Service located at 2001 East Willard Street in
Philadelphia, Pennsylvania, as the ``Robert A. Borski Post
Office Building.'' (Public Law 108-115).
H.R. 2396, a bill to designate the facility of the United
States Postal Service located at 1210 Highland Avenue in
Duarte, California, as the ``Francisco A. Martinez Flores Post
Office.'' (Public Law 108-116).
H.R. 2452, a bill to designate the facility of the United
States Postal Service located at 339 Hicksville Road in
Bethpage, New York, as the ``Brian C. Hickey Post Office
Building.'' (Public Law 108-117).
H.R. 2533, a bill to designate the facility of the United
States Postal Service located at 10701 Abercom Street in
Savannah, Georgia, as the ``J.C. Lewis, Jr. Post Office
Building.'' (Public Law 108-118).
H.R. 2746, a bill to designate the facility of the United
States Postal Service located at 141 Weston Street in Hartford,
Connecticut, as the ``Barbara B. Kennelly Post Office
Building.'' (Public Law 108-119).
H.R. 3011, a bill to designate the facility of the United
States Postal Service located at 135 East Olive Avenue in
Burbank, California, as the ``Bob Hope Post Office Building.''
(Public Law 108-120).
H.R. 1883, a bill to designate the facility of the United
States Postal Service located at 1601-1 Main Street in
Jacksonville, Florida, as the ``Eddie Mae Steward Post
Office.'' (Public Law 108-124).
S. 1590, a bill to redesignate the facility of the United
States Postal Service, located at 315 Empire Boulevard in Crown
Heights, Brooklyn, New York, as the ``James E. Davis Post
Office Building.'' (Public Law 108-141).
S. 867, a bill to designate the facility of the United
States Postal Service located at 710 Wick Lane in Billings,
Montana, as the ``Ronald Reagan Post Office Building.'' (Public
Law 108-143).
S. 1718, a bill to designate the facility of the United
States Postal Service located at 3710 West 73rd Terrace in
Prairie Village, Kansas, as the ``Senator James B. Pearson Post
Office.'' (Public Law 108-144).
H.R. 2744, a bill to designate the facility of the United
States Postal Service located at 514 17th Street in Moline,
Illinois, as the ``David Bybee Post Office Building.'' (Public
Law 108-149).
H.R. 3175, a bill to designate the facility of the United
States Postal Service located at 2650 Cleveland Avenue, NW in
Canton, Ohio, as the ``Richard D. Watkins Post Office
Building.'' (Public Law 108-150).
H.R. 3379, a bill to designate the facility of the United
States Postal Service located at 3210 East 10th Street in
Bloomington, Indiana, as the ``Francis X. McCloskey Post Office
Building.'' (Public Law 108-151).
H.R. 1822, a bill to designate the facility of the United
States Postal Service located at 3751 West 6th Street in Los
Angeles, California, as the ``Dosan Ahn Chang Ho Post Office.''
(Public Law 108-239).
H.R. 2130, a bill to redesignate the facility of the United
States Postal Service located at 650 Kinderkamack Road in River
Edge, New Jersey, as the ``New Bridge Landing Post Office.''
(Public Law 108-240).
H.R. 2438, a bill to designate the facility of the United
States Postal Service located at 115 West Pine Street in
Hattiesburg, Mississippi, as the ``Major Henry A. Commiskey,
Sr. Post Office Building.'' (Public Law 108-241).
H.R. 3029, a bill to designate the facility of the United
States Postal Service located at 255 North Main Street in
Jonesboro, Georgia, as the ``S. Truett Cathy Post Office
Building.'' (Public Law 108-242).
H.R. 3059, a bill to designate the facility of the United
States Postal Service located at 304 West Michigan Street in
Stuttgart, Arkansas, as the ``Lloyd L. Burke Post Office''
(Public Law 108-243).
H.R. 3068, a bill to designate the facility of the United
States Postal Service located at 2055 Siesta Drive in Sarasota,
Florida, as the ``Brigadier General (AUC-Ret.) John H. McLain
Post Office'' (Public Law 108-244).
H.R. 3175, a bill to designate the facility of the United
States Postal Service located at 2650 Cleveland Avenue, NW in
Canton, Ohio, as the ``Richard D. Watkins Post Office
Building'' (Public Law 108-150).
H.R. 3234, a bill to designate the facility of the United
States Postal Service located at 14 Chestnut Street in Liberty,
New York, as the ``Ben R. Gerow Post Office Building'' (Public
Law 108-245).
H.R. 3300, a bill to designate the facility of the United
States Postal Service located at 15500 Pearl Road in
Strongsville, Ohio, as the ``Walter F. Ehrnfelt, Jr. Post
Office Building'' (Public Law 108-246).
H.R. 3340, a bill to redesignate the facility of the United
States Postal Service located at 7715 and 7748 S. Cottage Grove
Avenue in Chicago, Illinois, as the ``James E. Worsham Post
Office'' and the ``James E. Worsham Carrier Annex Building,''
respectively, and for other purposes (Public Law 108-294).
H.R. 3353, a bill to designate the facility of the United
States Postal Service located at 525 Main Street in Tarboro,
North Carolina, as the ``George Henry White Post Office
Building'' (Public Law 108-247).
H.R. 3379, a bill to designate the facility of the United
States Postal Service located at 3210 East 10th Street in
Bloomington, Indiana, as the ``Francis X. McCloskey Post Office
Building'' (Public Law 108-151).
H.R. 3536, a bill to designate the facility of the United
States Postal Service located at 210 Main Street in Malden,
Illinois, as the ``Army Staff Sgt. Lincoln Hollinsaid Malden
Post Office'' (Public Law 108-248).
H.R. 3537, a bill to designate the facility of the United
States Postal Service located at 185 State Street in Manhattan,
Illinois, as the ``Army Pvt. Shawn Pahnke Manhattan Post
Office'' (Public Law 108-249).
H.R. 3538, a bill to designate the facility of the United
States Postal Service located at 201 South Chicago Avenue in
Saint Anne, Illinois, as the ``Marine Capt. Ryan Beaupre Saint
Anne Post Office'' (Public Law 108-250).
H.R. 3690, a bill to designate the facility of the United
States Postal Service located at 2 West Main Street in Batavia,
New York, as the ``Barber Conable Post Office Building''
(Public Law 108-251).
H.R. 3733, a bill to designate the facility of the United
States Postal Service located at 410 Huston Street in Altamont,
Kansas, as the ``Myron V. George Post Office'' (Public Law 108-
252).
H.R. 3740, a bill to designate the facility of the United
States Postal Service located at 223 South Main Street in
Roxboro, North Carolina, as the ``Oscar Scott Woody Post Office
Building'' (Public Law 108-253).
H.R. 3769, a bill to designate the facility of the United
States Postal Service located at 137 East Young High Pike in
Knoxville, Tennessee, as the ``Ben Atchley Post Office
Building'' (Public Law 108-254).
H.R. 3855, a bill to designate the facility of the United
States Postal Service located at 607 Pershing Drive in Laclede,
Missouri, as the ``General John J. Pershing Post Office''
(Public Law 108-255).
H.R. 3917, a bill to designate the facility of the United
States Postal Service located at 695 Marconi Boulevard in
Copiague, New York, as the ``Maxine S. Postal United States
Post Office'' (Public Law 108-256).
H.R. 3939, a bill to redesignate the facility of the United
States Postal Service located at 14-24 Abbott Road in Fair
Lawn, New Jersey, as the ``Mary Ann Collura Post Office
Building'' (Public Law 108-257).
H.R. 3942, a bill to redesignate the facility of the United
States Postal Service located at 7 Commercial Boulevard in
Middletown, Rhode Island, as the ``Rhode Island Veterans Post
Office Building'' (Public Law 108-258).
H.R. 4037, a bill to designate the facility of the United
States Postal Service located at 475 Kell Farm Drive in Cape
Girardeau, Missouri, as the ``Richard G. Wilson Processing and
Distribution Facility'' (Public Law 108-259).
H.R. 4176, a bill to designate the facility of the United
States Postal Service located at 122 West Elwood Avenue in
Raeford, North Carolina, as the ``Bobby Marshall Gentry Post
Office Building'' (Public Law 108-260).
H.R. 4222, a bill to designate the facility of the United
States Postal Service located at 550 Nebraska Avenue in Kansas
City, Kansas, as the ``Newell George Post Office Building''
(Public Law 108-296).
H.R. 4299, a bill to designate the facility of the United
States Postal Service located at 410 South Jackson Road in
Edinburg, Texas, as the ``Dr. Miguel A. Nevarez Post Office
Building'' (Public Law 108-261).
H.R. 4327, a bill to designate the facility of the United
States Postal Service located at 7450 Natural Bridge Road in
St. Louis, Missouri, as the ``Vitilas `Veto' Reid Post Office
Building'' (Public Law 108-298).
H.R. 4380, a bill to designate the facility of the United
States Postal Service located at 4737 Mile Stretch Drive in
Holiday, Florida, as the ``Sergeant First Class Paul Ray Smith
Post Office Building'' (Public Law 108-292).
H.R. 4381, a bill to designate the facility of the United
States Postal Service located at 2811 Springdale Avenue in
Springdale, Arkansas, as the ``Harvey and Bernice Jones Post
Office Building'' (Public Law 108-392).
H.R. 4427, a bill to designate the facility of the United
States Postal Service located at 73 South Euclid Avenue in
Montauk, New York, as the ``Perry B. Duryea, Jr. Post Office''
(Public Law 108-300).
H.R. 4556, a bill to designate the facility of the United
States Postal Service located at 1115 South Clinton Avenue in
Dunn, North Carolina, as the ``General William Carey Lee Post
Office Building'' (Public Law 108-395).
H.R. 4618, a bill to designate the facility of the United
States Postal Service located at 10 West Prospect Street in
Nanuet, New York, as the ``Anthony I. Lombardi Memorial Post
Office Building'' (Public Law 108-397).
H.R. 4632, a bill to designate the facility of the United
States Postal Service located at 19504 Linden Boulevard in St.
Albans, New York, as the ``Archie Spigner Post Office
Building'' (Public Law 108-398).
H.R. 5039, a bill to designate the facility of the United
States Postal Service located at United States Route 1 in
Ridgeway, North Carolina, as the ``Eva Holtzman Post Office''
(Public Law 108-403).
S. 2214, a bill to designate the facility of the United
States Postal Service located at 3150 Great Northern Avenue in
Missoula, Montana, as the ``Mike Mansfield Post Office.''
(Public Law 108-440).
S. 2640, a bill to designate the facility of the United
States Postal Service located at 1050 North Hills Boulevard in
Reno, Nevada, as the ``Guardians of Freedom Memorial Post
Office Building'' and to authorize the installation of a plaque
at such site, and for other purposes. (Public Law 108-442).
S. 2693, a bill to designate the facility of the United
States Postal Service located at 1475 Western Avenue, Suite 45,
in Albany, New York, as the ``Lieutenant John F. Finn Post
Office.'' (Public Law 108-443).
MEASURES FAVORABLY REPORTED BY COMMITTEE AND PASSED BY THE SENATE
S. 481--To amend chapter 84 of title 5, United States Code, to provide
that certain Federal annuity computations are adjusted by 1
percentage point relating to periods of receiving disability
payments, and for other purposes.
This legislation would increase by one percentage point the
percentage otherwise applicable for a Federal Employees'
Retirement System annuity computation that includes, in the
aggregate, at least two months of credit for any period of
receiving disability compensation benefits.
S. 481 was introduced in the Senate on February 27, 2003,
by Senator Allen, with seven cosponsors. Senator Collins
reported it from the Committee without amendment on July 21,
2003, with written report, S. Rept. 108-108. It passed the
Senate without amendment by Unanimous Consent on July 28, 2003,
and was referred to the House Committee on Government Reform
the next day.
S. 589--To strengthen and improve the management of national security,
encourage Government service in areas of critical national
security, and to assist government agencies in addressing
deficiencies in personnel possessing specialized skills
important to national security and incorporating the goals and
strategies for recruitment and retention for such skilled
personnel into the strategic and performance management systems
of Federal agencies.
This legislation comprises: Title I, establishing a pilot
program for student loan repayment for Federal employees in
national-security positions, subject to regulations to be
drafted by the Office of Personnel Management; Title II,
amending the David L. Boren National Security Education Act of
1991 to require the National Security Education Board to
establish a program for awarding National Security Fellowships
to eligible graduate students who agree to employment with the
Government in national security positions, and amending the Act
to direct the Board to create a National Security Service
Corps, under the direction of the Board, to provide rotational
opportunities for mid-level employees in national-security
positions within and between specified agencies; and Title III,
which requires affected agencies to develop annual strategic
plans that describe training required to achieve goals and
objectives, and evaluates the extent to which specific skills
in human capital are needed to achieve the mission, goals, and
objectives of the agency.
S. 589, the Homeland Security Federal Workforce Act of
2003, was introduced in the Senate on March 11, 2003, by
Senator Akaka, with eight cosponsors. Senator Collins reported
it from the Committee on July 31, 2003, without amendment and
with written report, S. Rept. 108-119. Additional views were
filed. The bill passed the Senate with an amendment by
Unanimous Consent on November 5, 2003. It was referred to the
House Subcommittee on Civil Service and Agency Organization on
July 13, 2004.
S. 2688--To provide for a report of Federal entities without annually
audited financial statements.
This legislation instructs the Director of the Office of
Management and Budget to list for certain congressional
committees each Federal entity that receives an exemption or
waiver from the statutory requirement for an annually audited
financial statement, and to list other Federal entities,
including special-purpose entities, that do not prepare
independently audited annual financial statements. It requires
OMB to assess: (1) the capability of the listed entities to
prepare annual financial statements and have them independently
audited; (2) how to reduce the costs of preparing the financial
statements and performing independent audits; and (3) the
benefits of improved financial oversight encompassing the
Executive Branch, including the feasibility of preparing annual
financial statements and independently audited statements for
certain executive branch entities.
S. 2688, the Executive Branch Financial Accountability
Reporting Act, was introduced in the Senate on July 19, 2004,
by Senator Fitzgerald, with one cosponsor. Committee on
Governmental Affairs. Senator Collins reported it from the
Committee without amendment on October 4, 2004, with written
report, S. Rept. 108-383. The bill passed the Senate with an
amendment by Unanimous Consent on October 11, 2004. It was
referred to the House Committee on Government Reform on
November 16, 2004.
S. 2639--To reauthorize the Congressional Award Act.
This legislation would amend the Congressional Award Act to
extend through calendar 2009 the requirement that the
Comptroller General determine and report to Congress whether
the Director of the Congressional Award Board is complying with
requirements for financial operations of the Congressional
Award Program. The bill extends the authorization of the Board
from October 1, 2004, to October 1, 2009; allows the Board to
use Federal sources to carry out its functions and make
expenditures; allows the Board to accept a maximum of one-half
of all funds accepted from Federal sources; and authorizes
appropriations for FY 2005 through 2009.
S. 2639 was introduced in the Senate on July 13, 2004, by
Senator Lieberman, with four seven cosponsors. Senator Collins
reported it from Committee without amendment and with written
report, S. Rept. 108-339 on September 14, 2004. It passed the
Senate with an amendment by Unanimous Consent on September 29,
2004, and was referred to the House Committee on Education and
the Workforce the next day.
S. 2635--A bill to establish an intergovernmental grant program to
identify and develop homeland security information, equipment,
capabilities, technologies, and services to further the
homeland security needs of Federal, State, and local
governments.
This legislation establishes the U.S.-Israel Homeland
Security Grant Program to identify, develop, or modify existing
or near term homeland security information, equipment,
capabilities, technologies, and services to further the
homeland security of the United States and to address the
homeland security needs of Federal, State, and local
governments. It directs the Secretary of Homeland Security to
assess the homeland security needs of Federal, State, and local
governments and first responders and areas where specific
homeland security information, equipment, capabilities,
technologies, and services could address those needs; survey
near-term and existing homeland-security information developed
within the United States and Israel; and provide grants to
eligible applicants to develop, manufacture, sell, or otherwise
provide homeland security information, equipment, capabilities,
technologies, and services to address such needs.
It authorizes the Secretary to require grant recipients to
make available non-Federal matching contributions of up to 50
percent of the total proposed project cost, and to repay the
amount of the grant with interest and administrative charges.
The bill was introduced in Senate on July 8, 2004, by
Senator Collins, with three cosponsors. Senator Collins
reported it from the Committee on November 11, 2004, with an
amendment in the nature of a substitute and with written
report, S. Rept. 108-420. It passed the Senate with an
amendment by Unanimous Consent on November 21, 2004. The bill
was held at the desk in the House on November 24, 2004.
S. 2479--To amend chapter 84 of title 5, United States Code, to provide
for Federal employees to make elections to make, modify, and
terminate contributions to the Thrift Savings Fund at any time,
and for other purposes.
This legislation allows a Federal employee or member to
elect to make contributions under the Thrift Savings Plan (TSP)
of the Federal Employees' Retirement System to be made at any
time, and provides that such an election shall remain in effect
until modified or terminated. It also instructs the Federal
Retirement Thrift Investment Board to periodically evaluate
whether the tools available to TSP participants provide the
information needed to understand, evaluate, and compare
financial products, services, and opportunities offered through
the TSP; and to use these evaluations to improve its program.
The Thrift Savings Plan Open Elections Act of 2004 was
introduced in the Senate on May 21, 2004, by Senator Collins,
with four cosponsors. Senator Collins reported it from the
Committee without amendment, and with written report, S. Rept.
108-290, on June 25, 2004. The bill passed the Senate without
amendment by Unanimous Consent on July 16, 2004. It was
referred to the House Committee on Government Reform on July
19, 2004.
S. 2322--To amend chapter 90 of title 5, United States Code, to include
employees of the District of Columbia courts as participants in
long term care insurance for Federal employees.
This legislation amends Federal law to include employees of
the District of Columbia courts as participants in long-term
care insurance for Federal employees.
The bill was introduced in the Senate on April 20, 2004, by
Senator Akaka, with one cosponsor. 6/21 Senator Collins
reported it from the Committee without amendment and with
written report, S. Rept. 108-283 on June 21, 2004. It passed
the Senate without amendment by Unanimous Consent on June 24,
2004, and was referred to the House Committee on Government
Reform the next day.
S. 2249--To amend the Stewart B. McKinney Homeless Assistance Act to
provide for emergency food and shelter.
This legislation Amends the portions of the Stewart B.
McKinney Homeless Assistance Act regarding its emergency food
and shelter program to authorize appropriations, change the
name of one of the Board nominating organizations, and provide
for inclusion of homeless individuals, homeless advocates, or
food and shelter recipients on local boards.
The Emergency Food and Shelter Act of 2004 was introduced
in the Senate on March 29, 2004, by Senator Collins, with eight
cosponsors. Senator Collins reported it from the Committee
without amendment and with written report, S. Rept. 108-308 on
July 15, 2004. It passed the Senate without amendment by
Unanimous Consent on July 21, 2004. The bill was referred to
the House Subcommittee on Housing and Community Opportunity on
August 3, 2004.
S. 1741--To provide a site for the National Women's History Museum in
the District of Columbia.
This legislation requires the Administrator of General
Services to enter into an occupancy agreement for up to 99
years to make the Pavilion Annex adjoining the Old Post Office
in Washington, D.C., available for rent to the National Women's
History Museum, Inc., and provides for execution and cost
treatment of renovations and modification of the property.
The bill was introduced in the Senate on October 16, 2003,
by Senator Collins, with 20 cosponsors. Senator Collins
reported it from the Committee without amendment and with
written report, S. Rept. 108-204 on November 20, 2003. It
passed the Senate without amendment by Unanimous Consent on
November 21, 2003. On January 28, 2004, it was referred to the
House Committee on Transportation and Infrastructure.
S. 1612--To establish a technology, equipment, and information transfer
within the Department of Homeland Security.
This legislation would amend the Homeland Security Act of
2002 to include a multi-agency program to allow for transfer of
technology, equipment, and information to State and local law
enforcement agencies. It allows the program Director, upon
approval of the Secretary, to expand the program to first
responders other than law-enforcement agencies and to revise
the advisory committee accordingly.
S. 1612 was introduced in the Senate on September 11, 2003,
by Senator Collins, with 10 cosponsors. Senator Collins
reported it from the Committee on November 25, 2003, with an
amendment in the nature of a substitute, and submitted a
written report, S. Rept. 108-217, on December 9, 2003. The bill
passed the Senate with an amendment by Unanimous Consent on
February 4, 2004. It was held at the desk in the House on
February 6, 2004.
S. 1567--To amend title 31, United States Code, to improve the
financial accountability requirements applicable to the
Department of Homeland Security, and for other purposes.
This legislation amends the Chief Financial Officers Act of
1990 and the Homeland Security Act of 2002 to require the
President to appoint a Chief Financial Officer for the
Department of Homeland Security (DHS), subject to Senate
confirmation. It also instructs the Secretary of Homeland
Security to submit an annual performance and accountability
report incorporating the Government Performance and Results Act
program performance report, including an audit opinion on DHS's
internal controls over its financial reporting.
The bill was introduced in the Senate on August 1, 2003, by
Senator Fitzgerald, with five cosponsors. Senator Collins
reported it from the Committee with an amendment in the nature
of a substitute on November 20, 2003. The bill passed the
Senate with an amendment by Unanimous Consent on November 21,
2003. A written report, S. Rept. 108-211, was submitted on
November 25, 2003. The bill was held at the desk in the House
on November 25, 2003.
S. 1561--To preserve existing judgeships on the Superior Court of the
District of Columbia.
This legislation amends the District of Columbia Code to
increase from 58 to 61 the number of associate judges on the
District's Superior Court. The bill was introduced in the
Senate on August 1, 2003, by Senator Collins, with two
cosponsors. Senator Collins reported it from the Committee
without amendment on November 18, 2003, with written report, S.
Rept. 108-200. The bill passed the Senate without amendment by
Unanimous Consent on November 20, 2003. It was referred to the
House Committee on Government Reform on November 21, 2003.
S. 1522--A bill to provide new human capital flexibility with respect
to the GAO, and for other purposes.
This legislation amends Federal law to make permanent: The
entitlement of certain U.S. General Accounting Office officers
and employees who separate from service voluntarily to
annuities under the Civil Service Retirement System or the
Federal Employees' Retirement System; and (2) authority of the
Comptroller General to provide voluntary separation incentive
payments to GAO employees. It also authorizes the Comptroller
General, under specified conditions, to adjust annually the
basic rates of GAO and Senior Executive Service officers and
employees whose performance is at a satisfactory level. Other
provisions require regulations on pay retention following
specified job changes, authorize an executive-exchange program
under which GAO officers and employees may be assigned to
private sector organizations, and employees of private sector
organizations may be assigned to GAO, rename the U.S. General
Accounting Office as the U.S. Government Accountability Office,
and modify requirements of the GAO personnel management system.
The bill was introduced in the Senate on July 31, 2003, by
Senator Voinovich, with one cosponsor. Senator Collins reported
it from the Committee with amendments on November 21, 2003. The
bill passed the Senate with amendments by Unanimous Consent on
November 24, 2003. Written report, S. Rept. 108-216 was
submitted on December 9, 2003. The bill was held at the desk on
November 25, 2003.
S. 1267--To amend the District of Columbia Home Rule Act to provide the
District of Columbia with autonomy over its budgets, and for
other purposes.
This legislation amends the District of Columbia Home Rule
Act to provide that the District of Columbia budget passed by
the Council of the District of Columbia shall be enacted
without referral to the President or approval by the Congress,
unless it is the budget for a fiscal year which is a control
year; it prohibits obligations or expenditures by District
government officers and employees without the Council's
approval or, in the case of a control year, congressional
approval. Other provisions modify rules on reenacting measures
vetoed as line items; control authorizations for hirings or
transfers; provide an opt-out mandate for metered cab fares;
create, assigns powers and duties, and define reporting
relationships for the position of Chief Financial Officer; and
require fiscal-impact statement for many measures before final
adoption by the Council.
The bill was introduced in the Senate on June 16, 2003, by
Senator Collins, with six cosponsors. Senator Collins reported
it from the Committee on November 25, 2003, with an amendment
and with written report, S. Rept. 108-212. It passed the Senate
with an amendment by Unanimous Consent on December 9, 2003. On
January 20, 2004, the bill was referred to the House Committees
on Government Reform, Rules, and Appropriations.
S. 1292--To establish a servitude and emancipation archival research
clearinghouse in the National Archives.
This legislation directs the Archivist of the United States
to establish, as part of the National Archives, a national
database consisting of historic records of servitude and
emancipation in the United States to assist African Americans
in researching their genealogy, and requires the National
Historical Publications and Records Commission to maintain the
database.
The bill was introduced in the Senate on June 19, 2003, by
Senator Landrieu, with seven cosponsors. Senator Collins
reported it from the Committee with amendments and with written
report, S. Rept. 108-282 on June 21, 2004. It passed the Senate
with amendments by Unanimous Consent on June 25, 2004. On July
1, 2004, it was referred to the House Subcommittee on
Technology, Information Policy, Intergovernmental Relations and
the Census.
SELECTED MEASURES REPORTED BY THE COMMITTEE
A number of measures considered, adopted, and reported to
the Senate by the Committee during the 108th Congress were not
enacted by the full body. Two of these measures, described
here, were notable as signs of the Committee's focus on
improving homeland security.
S. 1245--Homeland Security Grants Enhancement Act.
The bill, which was introduced by Senator Collins on June
12, 2003, was originally marked up by the Committee on June 17,
2003, and was approved by a vote of 9-0. The legislation
included a number of provisions to improve the administration
of homeland-security grants, and authorized formula grants to
States for planning, exercises, and equipment for first
responders. Senator Lieberman proposed a Committee amendment
which included increasing the portion of the grant funds
provided directly to local government in high-threat areas from
10 percent to 25 percent, and loosening restrictions on use of
funds to pay overtime compensation. The proposed compromise was
agreed upon unanimously by the Committee on June 23, 2004. The
full Senate later adopted these provisions as an amendment to
the Intelligence Reform and Terrorism Prevention Act of 2004.
However, agreement could not be reached in conference with
House lawmakers.
S. 2701--Homeland Security Interagency and Interjurisdictional
Information Sharing Act of 2004.
S. 2701, introduced by Senator Lieberman on July 21, 2004,
would have improved the sharing of homeland security
information among first responders and all levels of
government. It would also have helped with inoperability issues
among first responders. The legislation would have authorized
$3.3 billion over 5 years to provide a reliable and consistent
funding source specifically for interoperability solutions and
would have created an Office of Information Sharing within the
Department of Homeland Security. Modified versions of several
provisions in this legislation were included in the landmark
Intelligence Reform and Terrorism Prevention Act of 2004.
VIII. Presidential Nominations
During the 108th Congress, the Committee received a total
of 48 Presidential nominations. Of these, 27 were reported
favorably and confirmed by the Senate, 6 were discharged from
Committee and confirmed, 2 were withdrawn by the President, and
13 were not acted upon by the Committee.
The following 27 nominations were favorably reported by the
Committee and confirmed by the Senate:
Penrose C. Albright, to be Assistant Secretary of
Homeland Security, Department of Homeland Security.
(Hearing held July 29, 2003)
Joshua B. Bolten, to be Director of the Office of
Management and Budget, Executive Office of the
President. (Hearing held June 25, 2003)
Scott J. Bloch, to be Special Counsel, Office of
Special Counsel. (Hearing held November 12, 2003)
Jerry Stewart Byrd, to be Associate Judge of the
Superior Court of the District of Columbia, The
Judiciary. (Hearing held June 18, 2003)
Dale Cabaniss, to be Member of the Federal Labor
Relations Authority. (Hearing held September 30, 2003)
Terrence A. Duffy, to be Member of the Federal
Retirement Thrift Investment Board. (Hearing held May
15, 2003)
Gordon England, to be Deputy Secretary of Homeland
Security, Department of Homeland Security. (Hearing
held January 24, 2003)
Michael J. Garcia, to be Assistant Secretary,
Department of Homeland Security. (Hearing held June 5,
2003)
Janet Hale, to be Under Secretary for Management,
Department of Homeland Security. (Hearing held February
27, 2003)
Brian F. Holeman, to be Associate Judge of the
Superior Court of the District of Columbia, The
Judiciary. (Hearing held September 30, 2003)
Craig S. Iscoe, to be Associate Judge of the Superior
Court of the District of Columbia, The Judiciary.
(Hearing held September 30, 2003)
Gregory E. Jackson, to be Associate Judge of the
Superior Court of the District of Columbia, The
Judiciary. (Hearing held October 5, 2004)
Joel David Kaplan, to be Deputy Director of the
Office of Management and Budget, Executive Office of
the President. (Hearing held July 29, 2003)
James M. Loy, to be Deputy Secretary of Homeland
Security, Department of Homeland Security. (Hearing
held November 18, 2003)
Judith Nan Macaluso, to be Associate Judge of the
Superior Court of the District of Columbia, The
Judiciary. (Hearing held June 18, 2003)
Neil McPhie, to be Chairman of the Merit Systems
Protection Board. (Hearing held July 19, 2004)
C. Suzanne Mencer, to be Director of the Office for
Domestic Preparedness, Department of Homeland Security.
Fern Flanagan Saddler, to be Associate Judge of the
Superior Court of the District of Columbia, The
Judiciary. (Hearing held June 18, 2003)
Thomas J. Ridge, to be Secretary of Homeland
Security, Department of Homeland Security. (Hearing
held January 17, 2003)
Joseph Michael Francis Ryan III, to be Associate
Judge of the Superior Court of the District of
Columbia, The Judiciary. (Hearing held June 18, 2003)
David Safavian, to be Administrator for Federal
Procurement Policy, Executive Office of the President.
(Hearing held April 29, 2004)
Barbara J. Sapin, to be Member of the Merit Systems
Protection Board. (Hearing held July 19, 2004)
Linda M. Springer, to be Controller, Office of
Federal Financial Management, Office of Management and
Budget, Executive Office of the President. (Hearing
held February 27, 2003)
David M. Stone, to be Assistant Secretary of Homeland
Security, Department of Homeland Security. (Hearing
held April 8, 2004)
Dawn A. Tisdale, to be Commissioner of the Postal
Rate Commission, Postal Rate Commission. (Hearing held
April 29, 2004)
C. Stewart Verdery, Jr., to be Assistant Secretary,
Department of Homeland Security. (Hearing held June 5,
2003)
Joe D. Whitley, to be General Counsel, Department of
Homeland Security. (Hearing held July 29, 2003)
Six nominations were discharged with the concurrence of the
Committee and confirmed by the Senate. Of these, four were for
Inspectors General, which by Standing Order of the Senate are
sequentially referred to the Committee and discharged after 20
days:
Harold Damelin, to be Inspector General, Small
Business Administration.
J. Russell George, to be Inspector General for Tax
Administration, Department of the Treasury.
Clay Johnson III, to be Deputy Director for
Management, Office of Management and Budget, Executive
Office of the President. (Hearing held April 2, 2003)
James C. Miller III, to be Governor of the United
States Postal Service.
Patrick P. O'Carroll, Jr., to be Inspector General,
Social Security Administration.
Richard W. Moore, to be Inspector General, Tennessee
Valley Authority.
The following two nominations were withdrawn by the
President:
Albert Casey, to be Governor of the United States
Postal Service.
Susanne T. Marshall, to be Chairman of the Merit
System Protection Board.
The following 13 nominations were not acted upon by the
Committee:
Jennifer M. Anderson, to be Associate Judge of the
Superior Court of the District of Columbia, The
Judiciary.
Albert Casey, to be Governor, United States Postal
Service.
Laura A. Cordero, to be Associate Judge of the
Superior Court of the District of Columbia, The
Judiciary.
Peter Eide, to be General Counsel of the Federal
Labor Relations Authority.
Clark Kent Ervin, to be Inspector General, Department
of Homeland Security.
Carolyn L. Gallagher, to be Governor of the United
States Postal Service.
Louis J. Giuliano, to be Governor of the United
States Postal Service.
Tony Hammond, to be Commissioner of the Postal Rate
Commission.
Noel Anketell Kramer, to be Associate Judge of the
District of Columbia Court of Appeals, The Judiciary.
Juliet JoAnn McKenna, to be Associate Judge of the
Superior Court of the District of Columbia, The
Judiciary.
Brian David Miller, to be Inspector General, General
Services Administration.
Allen Weinstein, to be Archivist of the United
States, National Archives and Records Administration.
Edwin D. Williamson, to be Director of the Office of
Government Ethics, Office of Personnel Management.
IX. ACTIVITIES OF THE SUBCOMMITTEES
SUBCOMMITTEE ON FINANCIAL MANAGEMENT, THE BUDGET, AND INTERNATIONAL
SECURITY
Chairman: Peter G. Fitzgerald
Ranking Minority Member: Daniel K. Akaka
I. Hearings
The Subcommittee on Financial Management, the Budget, and
International Security held the following hearings during the
108th Congress:
Drugs, Counterfeiting, and Weapons Proliferation: The North Korean
Connection (May 20, 2003)
The hearing featured first-time testimony from two North
Korean defectors: A former high-level official in the North
Korean government and a former missile scientist. The hearing
was intended to raise international awareness regarding North
Korea's use of illicit enterprises to help finance its
military. As an example of these illicit enterprises, a news
broadcast was downloaded and played for the audience from ONE
News of New Zealand regarding an April 20th incident in which a
North Korean vessel called the Pong Su was spotted trying to
off-load approximately $80 million of heroin to a fishing boat
off the coast of Australia.
Testimony indicated that the North Korean government runs a
drug production and trafficking business that functions as a
State-level crime syndicate. Money from the sale of illegal
drugs, counterfeited currency, and smuggling of counterfeited
goods is used to finance the North Korean military and its
exportation of dangerous weapons to other nations, according to
testimony that was given at the hearing. Due to the sensitive
nature of the defectors' testimony, a portion of the hearing
was closed to the public.
Witnesses: Andre D. Hollis, Deputy Assistant Secretary for
Counternarcotics, U.S. Department of Defense; William Bach,
Director, Office of Asia, Africa, and Europe, Bureau of
International Narcotics and Law Enforcement Affairs, U.S.
Department of State; Dr. Nicholas Eberstadt, American
Enterprise Institute; Dr. Robert L. Gallucci, Georgetown
University Walsh School of Foreign Service; Dr. Larry M.
Wortzel; Heritage Foundation; Former North Korean High-Ranking
Government Official; Identity Protected; and Bok Koo Lee
(alias), former North Korean Missile Scientist.
Oversight of Government-Sponsored Enterprises: The Risks and Benefits
of GSEs to Consumers (July 21, 2003)
The purpose of this oversight hearing was to examine the
current financial status of the dominant housing GSEs, Fannie
Mae and Freddie Mac in particular, and to engage in a debate
about the risks and benefits of GSEs to consumers. On the one
hand, housing GSEs provide an important social mission.
Especially in the early years of Fannie Mae and Freddie Mac,
consumers benefited from lower mortgage rates and enhanced
opportunities for home ownership by low to moderate income
consumers. GSEs have also created liquidity for mortgage
financing through their debt securities. Additionally, the
housing GSEs have served a useful and important public function
of educating Americans regarding home ownership. On the other
hand, recent news reports have raised a number of important
questions regarding the size, complexity, and financial status
of housing GSEs, and this hearing sought to address those
questions. The hearing considered questions such as: Is there
adequate market discipline on Fannie and Freddie? Would more
competition help in ensuring that Fannie and Freddie do not
take unnecessary risks? Are they adequately capitalized? Are
some of the features of their special status as GSEs necessary
in today's sophisticated marketplace? What are the implications
of interest rate volatility? If lower interest rates lowered
Fannie Mae's earnings, as was recently reported, what would the
possibility of higher rates do to its financial status?
Witnesses: Alex J. Pollock, President and CEO, Federal Home
Loan Bank of Chicago, Chicago, Illinois; Peter J. Wallison,
Senior Fellow, American Enterprise Institute; Bert Ely,
President, Ely and Company, Inc.; W. Michael House, Executive
Director, FM Policy Focus; James C. Miller III, Chairman,
CapAnalysis Group, LLC; F. Barton Harvey III, Chairman and CEO,
The Enterprise Foundation; and Dr. Susan M. Wachter, Wharton
School of Business, University of Pennsylvania.
Safeguarding America's Retirement Security: An Examination of Defined
Benefit Pension Plans and the Pension Benefit Guaranty
Corporation (September 15, 2003)
This hearing was held in response to increasing reports
regarding record pension underfunding. In July 2003, the U.S.
General Accounting Office designated the PBGC's single-employer
pension insurance program as a ``high risk'' program requiring
more oversight. In September, the Pension Benefit Guaranty
Corporation reported that its financial condition had
deteriorated sharply since 2001, largely due to financially
weak companies which made pension promises that they could not
deliver. These developments raised several concerns: That
benefits to retirees could be reduced; that companies could be
forced to increase their contributions to the government
insurance plan; and that taxpayers might ultimately have to
bail out the Pension Benefit Guaranty Corporation.
The overall focus of the hearing was to help ensure the
retirement security of hardworking Americans by determining
ways to reform defined benefit pension plans. In broad terms,
the hearing examined (1) the financial condition of the Pension
Benefit Guaranty Corporation; (2) how Congress can help
strengthen the PBGC; and (3) how Congress and the
Administration can help improve the accuracy of the actuarial
and funding practices of company-sponsored plans.
More specifically, the issues discussed included: Improving
the accuracy of plan sponsors' liability calculations;
increasing the transparency of pension plan information;
replacement of the 30-year Treasury bond rate; current
liability vs. termination liability; declining PBGC revenue;
increasing the extent to which pension contributions are tax
deductible; the allowance of alternative investments; and the
effect of cash balance plans.
Witnesses: Hon. Peter R. Fisher, Under Secretary for
Domestic Finance, U.S. Department of the Treasury; Steven A.
Kandarian, Executive Director, Pension Benefit Guaranty
Corporation; Christopher W. O'Flinn, Vice President, Corporate
Human Resources, AT&T, on behalf of the ERISA Industry
Committee; Kathy Anne Cissna, Director of Retirement Plans,
R.J. Reynolds, on behalf of the American Benefits Council;
Norman P. Stein, Professor of Law, University of Alabama, on
behalf of the Pension Rights Center; John P. Parks, Vice
President, Pension Practice Council, American Academy of
Actuaries; J. Mark Iwry, Senior Fellow, The Brookings
Institution; and guest of the Committee: Malcolm Wicks,
Minister for Pensions, British Government.
Mutual Funds: Trading Practices and Abuses That Harm Investors
(November 3, 2003)
The hearing was held in order to investigate the breadth
and the extent of the illicit trading practices that had been
uncovered in recent months and to identify statutory and
regulatory reform proposals that could be enacted in order to
prevent a recurrence of the abuses and to better protect fund
shareholders.
Witnesses: Hon. Richard H. Baker (R-LA), Chairman,
Subcommittee on Capital Markets, Insurance and Government
Sponsored Enterprises, Committee on Financial Services, U.S.
House of Representatives; Stephen M. Cutler, Director, Division
of Enforcement, U.S. Securities and Exchange Commission; Paul
F. Roye, Director, Division of Investment Management, U.S.
Securities and Exchange Commission; Hon. William F. Galvin,
Secretary of the Commonwealth of Massachusetts; Hon. Eliot L.
Spitzer, Attorney General for the State of New York; Mary L.
Schapiro, Vice Chairman and President of Regulatory Policy and
Oversight, National Association of Securities Dealers; John C.
Bogle, Founder and Former CEO, The Vanguard Group; Mercer E.
Bullard, Founder and President, Fund Democracy, Inc.; and
Matthew P. Fink, President, Investment Company Institute.
Oversight Hearing on Mutual Funds: Hidden Fees, Misgovernance, and
Other Practices That Harm Investors (January 27, 2004)
The purpose of this oversight hearing was to examine the
propriety of mutual fund fees and the adequacy of fee
disclosure. The hearing attempted to lift the veil off hidden
fees such as revenue sharing, directed brokerage, and soft
money arrangements. The hearing also examined hidden loads such
as 12b-1 fees. Finally, there was a discussion of how statutory
and regulatory changes might improve the disclosure and allow
for more informed comparisons between funds.
Witnesses: Richard J. Hillman, Director, Financial Markets
and Community Investment, U.S. General Accounting Office; Hon.
Eliot L. Spitzer, Attorney General, Office of the New York
State Attorney General; Peter T. Scannell, Weymouth Landing,
Massachusetts; James Nesfield, Nesfield Capital; John C. Bogle,
Founder and Former CEO, The Vanguard Group and President, Bogle
Financial Markets Research Center; Jeffrey C. Keil, Vice
President, Global Fiduciary Review, Lipper, Inc.; Travis B.
Plunkett, Legislative Director, Consumer Federation of America;
Paul Schott Stevens, Partner, Dechert LLP, on behalf of the
Investment Company Institute; Marc E. Lackritz, President,
Securities Industry Association; and John P. Freeman, Professor
of Law, University of South Carolina Law School.
Oversight of the Thrift Savings Plan: Ensuring the Integrity of Federal
Employee Retirement Savings (March 1, 2004)
The Thrift Savings Plan provides Federal employees with the
equivalent of a private sector 401(k) plan. The TSP is the
largest defined contribution plan in the world, and currently
has 3.2 million participants with $13 billion in investments.
The purpose of this oversight hearing was to ensure the
financial integrity of the Thrift Savings Plan, making certain
that the TSP continues to provide plan participants with high-
quality service, while keeping administrative fees and
transaction costs to a minimum.
The hearing also examined TSP's oversight mechanisms, its
audits, and its daily investment and management activities.
This hearing provided the opportunity to examine the
implementation of the new automated record keeping system; new
fund initiatives including the life cycle fund; and proposed
administrative changes to the TSP, such as the introduction of
new fees.
Witnesses: Hon. Andrew M. Saul, Chairman, Federal
Retirement Thrift Investment Board; Gary A. Amelio, Executive
Director, Federal Retirement, Thrift Investment Board; Alan D.
Lebowitz, Deputy Assistant Secretary for Program Operations,
Employee Benefits Security Administration, U.S. Department of
Labor; James M. Sauber, Chairman, Thrift Advisory Council; and
Blake R. Grossman, Global Co-Chief Executive Officer and
Managing Director, Barclays Global Investors.
The Federal Government's Role in Empowering Americans to Make Informed
Financial Decisions (March 30, 2004)
The purpose of the hearing was to examine the current
status and effectiveness of Federal financial literacy
programs, and to assess the proposed activities of the new
Federal Financial Literacy and Education Commission. Title V of
the Fair and Accurate Transactions Act created the Financial
Literacy and Education Commission in December 2003. The
Commission is charged with developing a national strategy to
promote financial literacy and education among all American
consumers. It will review financial literacy and education
efforts throughout the Federal Government including programs
run by the SEC, FDIC, Federal Reserve, Department of the
Treasury, and the Department of Education; identify and
eliminate duplicative financial literacy efforts; and
coordinate the promotion of Federal financial literacy efforts
including outreach partnerships between Federal, State, and
local governments, non-profit organizations, and enterprises.
Through increased collaboration and coordination between
agencies, the effectiveness of financial literacy efforts can
be improved, helping to empower consumers of all ages to create
effective budgets, accumulate savings, use credit wisely, and
make smart investment decisions.
Witnesses: Hon. Paul S. Sarbanes, U.S. Senator; Hon. Mike
Enzi, U.S. Senator; Hon. Debbie Stabenow, U.S. Senator; Hon.
Brian C. Roseboro, Acting Under Secretary for Domestic Finance,
U.S. Department of the Treasury; Nina Shokraii Rees, Deputy
Under Secretary for Innovation and Improvement, U.S. Department
of Education; Susan Ferris Wyderko, Director, Office of
Investor Education and Assistance, U.S. Securities and Exchange
Commission; Don M. Blandin, President, American Savings
Education Council; Dara Duguay, Executive Director, Jump$tart
Coalition for Personal Financial Literacy; and Dr. Robert F.
Duvall, President and CEO, National Council on Economic
Education.
Legislative Hearing on S. 346, a Bill to Amend the Office of Federal
Procurement Policy Act to Establish a Governmentwide Policy
Requiring Competition in Certain Procurements From Federal
Prison Industries (April 7, 2004)
S. 346 would repeal the ``mandatory source'' authority
found in the 1934 legislation that created Federal Prison
Industries. The bill would thus require that all Federal
agencies conduct a competition for any products those agencies
would otherwise have purchased from FPI on a sole-source basis.
The bill provides three exceptions to the competitive
bidding requirement: (1) the Attorney General determines that
the FPI cannot reasonably expect fair consideration in a
competitive bidding scenario, and the award to FPI is necessary
to maintain safe and effective prison administration; (2) the
product is only available from FPI; and (3) the agency head
determines that the product would otherwise be furnished by
prison labor abroad.
Section three of the bill would expand the Federal statute
prohibiting the sale of prison-made goods into interstate
commerce to apply to both products and services. Currently, FPI
is allowed to provide goods across State lines to other Federal
agencies, but not to the commercial market. UNICOR currently
provides some services to the commercial market.
This legislative hearing provided the Subcommittee with an
opportunity to assess the implications of S. 346 for the
Federal Prison Industries program. Issues the hearing explored
included how inmates receive work experience in prisons, and
how this work experience helps maintain discipline within the
correctional facilities; the impact work experience has in
equipping prisoners for re-entry into society; and the extent
to which the products and services inmates produce impact the
private sector--both positively and negatively.
Witnesses: Hon. Craig Thomas, U.S. Senator; Hon. Debbie
Stabenow, U.S. Senator; Harley G. Lappin, Director, Federal
Bureau of Prisons; Jack R. Williams, Jr., Assistant Regional
Administrator, Federal Supply Service, Region 3, U.S. General
Services Administration; John M. Palatiello, President,
Management Association for Private Photogrammetric Surveyors,
on behalf of the U.S. Chamber of Commerce; Kurt Weiss, Senior
Vice President and General Manager, U.S. Business Interiors, on
behlaf of the Office Furniture Dealers Alliance; Andrew S.
Linder, President, Power Connector, Inc., on behalf of the
Correctional Vendors Association; and Philip W. Glover,
President, Council of Prison Locals, American Federation of
Government Employees, AFL-CIO.
Oversight Hearing on Expensing Stock Options: Supporting and
Strengthening the Independence of the Financial Accounting
Standards Board (April 20, 2004)
The purpose of this oversight hearing was to explore the
importance of the Financial Accounting Standards Board's
independence in setting financial reporting and accounting
standards. In addition, the witnesses evaluated FASB's proposal
that would require public companies to recognize the expense
for employee stock options measured using only the fair value
method on grant date, based on the estimated number of awards
that are expected to vest. The Subcommittee also examined the
economic, accounting, and financial reporting impact of
expensing stock options.
Witnesses: Hon. Barbara Boxer, U.S. Senator; Hon. Mike
Enzi, U.S. Senator; Robert H. Herz, Chairman, Financial
Accounting Standards Board; Hon. Paul A. Volcker, Chairman,
International Accounting Standards Committee Foundation, and
former Chairman, Board of Governors, Federal Reserve System;
Jack T. Ciesielski, President, R.G. Associates, Inc.; Damon
Silvers, Associate General Counsel, The American Federation of
Labor--Congress of Industrial Organizations (AFL-CIO); Donald
P. Delves, President, The Delves Group; Mark Heesen, President,
National Venture Capital Association; and James K. Glassman,
Resident Fellow, American Enterprise Institute.
International Smuggling Networks: Weapons of Mass Destruction
Counterproliferation Initiatives (June 23, 2004)
International smuggling of weapons of mass destruction
poses a grave and dangerous threat to U.S. national security.
On May 31, 2003, President Bush acknowledged this threat when
he announced the Proliferation Security Initiative, which seeks
to combine the use of existing national and international legal
authorities with enhanced intelligence sharing to improve WMD
interdiction efforts. The PSI also includes a strong focus on
multilateral efforts to combat the smuggling of WMD. The
purpose of this hearing was to examine the current status of
the PSI, as well to review it in light of the recent
revelations of the WMD smuggling network orchestrated by
Pakistani scientist Abdul Qadeer Khan.
The hearing further sought to review the past success made
by the PSI, and to gain a better understanding of the role the
Bush Administration intends in terms of global security.
Witnesses testified on a series of issues directly concerning
the smuggling of weapons of mass destruction including export
controls and post shipment verification of dual use
technologies in the United States and abroad.
Witnesses: Hon. Peter Lichtenbaum, Assistant Secretary of
Commerce for Export Administration, U.S. Department of
Commerce; Mark T. Fitzpatrick, Acting Deputy Assistant
Secretary for Nonproliferation Controls, U.S. Department of
State; David Albright, President and Founder, Institute for
Science and International Security; Michael Moodie, President,
Chemical and Biological Arms Control Institute; Leonard S.
Spector, Deputy Director, Center for Nonproliferation Studies,
Monterey Institute of International Studies;and Baker Spring,
F.M. Kirby Research Fellow in National Security Policy, The
Heritage Foundation.
The Federal Government's Financial Statement and Accountability of
Taxpayer Dollars at the Departments of Defense and Homeland
Security (July 8, 2004)
For the seventh year in a row, the financial statement of
the United States failed to receive an audit opinion from the
U.S. Government Accountability Office (formerly the U.S.
General Accounting Office) for fiscal year 2003. The GAO cited
significant material deficiencies that affected both the
financial statement and the management of government
operations. Specifically, the GAO was unable to render an
opinion because of serious financial management problems at the
Department of Defense and the Federal Government's inability to
account for billions of dollars of transactions between Federal
Government entities, and the Federal Government's ineffective
process for preparing the consolidated financial statements.
The purpose of the hearing was to examine the issues hindering
an opinion on the consolidated financial statements while
focusing on the financial management issues at the Department
of Defense.
The hearing also sought to identify potential financial
management risks at the Department of Homeland Security (DHS),
a newly created department with 22 financial management legacy
systems. DHS is the only cabinet department not yet subject to
CFO Act requirements, but is required under the Accountability
of Tax Dollars Act to prepare and have audited financial
statements.
Witnesses: Hon. David M. Walker, Comptroller General, U.S.
Government Accountability Office; Hon. Linda M. Springer,
Controller, Office of Federal Financial Management, U.S. Office
of Management and Budget; Donald V. Hammond, Fiscal Assistant
Secretary, U.S. Department of the Treasury; Lawrence J.
Lanzillotta, Acting Under Secretary of Defense for
(Comptroller), U.S. Department of Defense; Francis E. Reardon,
Deputy Inspector General for Auditing, U.S. Department of
Defense; Gregory D. Kutz, Director, Financial Management and
Assurance, U.S. Government Accountability Office; Andrew B.
Maner, Chief Financial Officer, U.S. Department of Homeland
Security; Hon. Clark Kent Ervin, Inspector General, U.S.
Department of Homeland Security; and McCoy Williams, Director,
Financial Management and Assurance, U.S. Government
Accountability Office.
Oversight Hearing on Section 529 College Savings Plans: High Fees,
Inadequate Disclosure, Disparate State Tax Treatment and
Questionable Broker Sales Practices (September 30, 2004)
Section 529 College Savings Plans are administered at the
State level and encourage families to save money for their
children's college educations by providing investment
opportunities. Each State, as well as the District of Columbia,
offers 529 Plans. These plans are considered municipal
securities and therefore are not subject to disclosure
requirements of the Investment Company Act of 1940. Given the
complex cost structure of these plans, the lack of standardized
disclosure often leads to confusing and frustrating comparison
of plans for the less sophisticated investors.
Another interest of the hearing was to discuss the layers
of fees incurred by investors because of the State Governments,
brokers, and fund managers all participating in the investment
process. Chairman Fitzgerald voiced his opinion that Congress
should limit or minimize the fees charged by third parties.
Witnesses: Steven T. Miller, Commissioner, Tax Exempt and
Governmental Entities Division, Internal Revenue Service; Mary
L. Schapiro, Vice Chairman and President, Regulatory Policy and
Oversight, NASD; Ernesto A. Lanza, Senior Associate General
Counsel, Municipal Securities Rulemaking Board; Hon. Michael A.
Ablowich, Treasurer, State of New Hampshire, on behalf of the
National Association of State Treasurers; Jacqueline T.
Williams, Executive Director, College Advantage Savings Plan,
Ohio Tuition Trust Authority, on behalf of the College Savings
Plan Network; Martin M. Noven, Deputy Chief of Staff, on behalf
of Judy Baar Topinka, State Treasurer, State of Illinois;
Richard O. Davis, Deputy Executive Director for Finance and
Administration, Utah Higher Education Assistance Authority;
Daniel McNeela, CFA, Senior Analyst, Morningstar, Inc.; and
Mercer E. Bullard, Founder and President, Fund Democracy, Inc.
Oversight Hearing on Insurance Brokerage Practices, Including Potential
Conflicts of Interest and the Adequacy of the Current
Regulatory Framework (November 16, 2004)
The purpose of this oversight hearing was to investigate
insurance brokerage practices and the impact of these practices
on consumers. The hearing focused especially on contingent
commission arrangements, which a broker receives based upon
volume or profitability of business it sends to insurers.
Because the broker owes a duty to its client, the insured, to
represent its best interests, contingent commissions raise the
specter of a conflict of interest. In any instance of
recommending an insurance policy to a client, is the broker
acting in the client's best interests or its own interests
based upon compensation agreements with particular insurers?
New York Attorney General Eliot Spitzer's recent lawsuit
against industry giant Marsh and McLennan raises these issues,
and further alleges that contingent commissions give rise to
more egregious practices such as illegal bid-rigging and price-
fixing.
On the other hand, as a dominant market player, Marsh was
arguably in a position to leverage its market power in ways
that companies in more competitive industry sectors could not.
The hearing thus additionally examined the impact of market
power, and whether additional or more aggressive antitrust
enforcement would be an appropriate policy response. Finally,
the hearing inquired whether the brokerage controversy shed any
further illumination on current insurance reform proposals,
such as the optional Federal charter and the State
Modernization and Regulatory Transparency (SMART) Act.
Witnesses: Hon. Eliot L. Spitzer, Attorney General, State
of New York; Hon. Richard Blumenthal, Attorney General, State
of Connecticut; Hon. Gregory V. Serio, Superintendent of
Insurance, State of New York, on behalf of the National
Association of Insurance Commissioners; Hon. John Garamendi,
Insurance Commissioner, State of California; Albert R.
Counselman, President and CEO, Riggs, Counselman, Michaels and
Downes, Inc., on behalf of the Council of Insurance Agents and
Brokers; Alex Soto, President, InSource, Inc., on behalf of the
Independent Insurance Agents and Brokers of America; Ernst N.
Csiszar, President and CEO, Property Casualty Insurers
Association of America; Janice Ochenkowski, Senior Vice
President for External Affairs, Risk and Insurance Management
Society; J. Robert Hunter, Director of Insurance, Consumer
Federation of America.
II. Legislation
The following bills were considered by the Subcommittee on
Financial Management, the Budget, and International Security
during the 108th Congress:
Measures enacted into law
S. 481, the Kurtz bill, a bill to amend chapter 84 of title
5, United States Code, to provide that certain Federal annuity
computations are adjusted by 1 percentage point relating to
periods of receiving disability payments. This bill provides
that the percentage otherwise applicable for a Federal
Employees' Retirement System annuity computation that includes,
in the aggregate, at least 2 months of credit for any period of
receiving disability compensation benefits shall be increased
by 1 percentage point. S. 481 was introduced on February 27,
2003, by Senators George Allen and John Warner, and was
referred to the Senate Committee on Governmental Affairs.
Senators Daniel Akaka, Hillary Clinton, Susan Collins, Richard
Durbin, Olympia Snowe, and Ted Stevens were cosponsors. On
March 21, 2003, the bill was referred to the Subcommittee on
Financial Management, the Budget, and International Security.
S. 481 was favorably polled out of the Subcommittee on May 12,
2003, and was reported by the Governmental Affairs Committee
without amendment on July 21, 2003 (S. Rept. 108-108). On July
28, 2003, S. 481 passed the Senate with no further action. On
July 29, 2003, the bill was received in the House and referred
to the House Government Reform Committee. A companion bill,
H.R. 978, was signed by the President and became law on October
3, 2003 (P.L. 108-92).
S. 2657, the Federal Employee Dental and Vision Benefits
Enhancement Act of 2004. This bill amends part III of title 5,
United States Code, to provide for the establishment of
programs under which supplemental dental and vision benefits
are made available to Federal employees, retirees, and their
dependents to expand the contracting authority of the Office of
Personnel Management. S. 2657 was introduced by Senators Susan
Collins and Daniel Akaka on July 14, 2004, and was referred to
the Governmental Affairs Committee. Senators George Allen,
Joseph Lieberman, Rick Santorum, and George Voinovich were
cosponsors of this legislation. On July 15, 2004, S. 2657 was
referred to the Subcommittee on Financial Management, the
Budget, and International Security. The bill was favorably
polled out of the Subcommittee on July 20, 2004, and was
favorably reported without amendment by the Governmental
Affairs Committee on July 21, 2004 (S. Rept. 108-393). S. 2657
passed the Senate on November 20, 2004, with an amendment by
unanimous consent. The House passed the bill on December 6,
2004. On December 23, 2004 the bill was signed by the President
and became P.L. 108-496.
Measures favorably reported by the Subcommittee and passed by the
Senate
S. 2322, a bill to amend chapter 90 of title 5, United
States Code, to include employees of the District of Columbia
courts as participants in the long term care insurance program
for Federal employees. S. 2322 was introduced on April 20, 2004
by Senators Daniel Akaka and George Voinovich and was referred
to the Governmental Affairs Committee. On May 6, 2004, S. 2322
was referred to the Subcommittee on Financial Management, the
Budget, and International Security. The bill was favorably
polled out of the Subcommittee on May 27, 2004, and was
favorably reported from the Governmental Affairs Committee
without amendment on June 21, 2004 (S. Rept. 108-283). The
Senate passed S. 2322 by unanimous consent without amendment on
June 24, 2004.
S. 2479, the Thrift Savings Plan Open Elections Act of
2004. This bill would amend chapter 84 of title 5, United
States Code, to allow a Federal employee or member to make,
modify, or terminate contributions under the Thrift Savings
Plan (TSP) of the Federal Employees' Retirement System at any
time. Senators Susan Collins, Daniel Akaka, Peter Fitzgerald,
Joseph Lieberman, and George Voinovich introduced S. 2479 on
May 21, 2004. On May 21, 2004, the bill was referred to the
Subcommittee on Financial Management, the Budget, and
International Security. S. 2479 was favorably polled out of the
Subcommittee on June 1, 2004. On June 2, 2004, the Governmental
Affairs Committee favorably reported the bill without amendment
to the Senate (S. Rept. 108-290). S. 2479 passed the Senate by
unanimous consent without amendment on July 16, 2004.
Measures referred to the Subcommittee upon which hearings were held or
other action was taken
S. 1358, the Federal Employee Protection of Disclosures
Act. This bill would amend chapter 23 of title 5, United States
Code, to clarify the disclosure of information protected from
prohibited personnel practices, require a statement in non-
disclosure policies, forms, and agreements that such policies,
forms, and agreements conform with certain disclosure
protections, provide certain authority for the Special Counsel,
and for other purposes. Senators Daniel Akaka, Richard Durbin,
Charles Grassley, Patrick Leahy, and Carl Levin introduced S.
1358 on June 26, 2003. Senators Mark Dayton, Tim Johnson, Frank
Lautenberg, and Mark Pryor were later added as cosponsors. On
August 1, 2003, the bill was referred to the Subcommittee on
Financial Management, the Budget, and International Security.
The full Committee held a hearing regarding this legislation on
November 12, 2003.
On July 8, 2004, Senators Daniel Akaka, Susan Collins, Mark
Dayton, Richard Durbin, Peter Fitzgerald, Charles Grassley, Tim
Johnson, Frank Lautenberg, Patrick Leahy, Carl Levin, Joseph
Lieberman, Mark Pryor, and George Voinovich introduced S. 2628,
an amended version of S. 1358. S. 2628 was referred to the
Subcommittee on Financial Management, the Budget, and
International Security on July 9, 2004. On October 8, 2003, S.
2628 was favorably polled out of the Subcommittee. On October
8, 2004, the Governmental Affairs Committee favorably reported
the bill without amendment (S. Rept. 108-392).
S. 346, a bill to amend the Office of Federal Procurement
Policy Act to establish a governmentwide policy requiring
competition in certain executive agency procurements. S. 346
was introduced on February 11, 2003, by Senators Carl Levin and
Craig Thomas. Senators Conrad Burns, Saxby Chambliss, Elizabeth
Dole, Charles Grassley, Richard Lugar, Richard Shelby, and
Debbie Stabenow were cosponsors of this legislation. On
September 24, 2003, the bill was referred to the Subcommittee
on Financial Management, the Budget, and International
Security. The Subcommittee held a hearing regarding S. 346 on
April 7, 2004. The bill was favorably polled out of the
Subcommittee on June 1, 2004. The Governmental Affairs
Committee favorably reported the bill with an amendment on
November 18, 2004 (S. Rept. 108-415).
S. 2409, a bill to provide for continued health benefits
coverage for certain Federal employees. S. 2409 was introduced
by Senators George Voinovich, Daniel Akaka, Susan Collins,
Richard Durbin, and Joseph Lieberman on May 11, 2004, and was
referred to the Governmental Affairs Committee. On May 17,
2004, the bill was referred to the Subcommittee on Financial
Management, the Budget, and International Security. The bill
was favorably polled out of the Subcommittee on May 27, 2004.
The Governmental Affairs Committee favorably reported S. 2409
with an amendment on November 16, 2004 (S. Rept. 108-410).
S. 1369 and its companion bill, H.R. 2631. These bills
would ensure that prescription drug benefits offered to
medicare eligible enrollees in the Federal Employees Health
Benefits Program are at least equal to the actuarial value of
the prescription drug benefits offered to enrollees under the
plan generally. S. 1369 was introduced on June 27, 2003, by
Senators Daniel Akaka, George Allen, Barbara Mikulski, Paul
Sarbanes, and John Warner. Senators Jon Corzine, Thomas
Daschle, Byron Dorgan, Daniel Inouye, Tim Johnson, Frank
Lautenberg, Carl Levin, Patty Murray, Harry Reid, and Jay
Rockefeller were later added as cosponsors. On July 7, 2003, S.
1369 was referred to the Subcommittee on Financial Management,
the Budget, and International Security. H.R. 2631 was referred
to the Subcommittee on August 1, 2003. Both bills were
favorably polled out of the Subcommittee on May 27, 2004.
Measures which did not advance beyond referral to the Subcommittee
S. 81, Clinical Social Workers' Recognition Act of 2003.
This bill amends chapter 81 of title 5, United States Code, to
authorize the use of clinical social workers to conduct
evaluations to determine work-related emotional and mental
illnesses. The bill was introduced by Senator Daniel Inouye on
January 7, 2003 and referred to the Senate Committee on
Governmental Affairs. The bill was referred to the Subcommittee
on Financial Management, the Budget, and International Security
on March 21, 2003.
S. 90, a bill to extend certain budgetary enforcement to
maintain fiscal accountability and responsibility. This bill
amends the Balanced Budget and Emergency Deficit Control Act of
1985 (Gramm-Rudman-Hollings Act) to extend Pay-As-You-Go
(PAYGO) requirements. The bill was introduced on January 7,
2003 by Senator Judd Gregg and Russell Feingold, and
cosponsored by Senators Lincoln Chafee, and John McCain, and
referred to the Senate Committee on Governmental Affairs. The
bill was referred to the Subcommittee on Financial Management,
the Budget, and International Security on June 20, 2003.
S. 319, Federal Employees Health Benefits Improvement Act
of 2003. This bill increases the biweekly contribution payable
by the Government for a Federal employee or annuitant enrolled
in a Federal employee health insurance plan. The bill was
introduced on February 5, 2003 by Senator Barbara Mikulski and
Paul Sarbanes, and cosponsored by Senators Richard Durbin and
Tim Johnson, and referred to the Senate Committee on
Governmental Affairs. The bill was referred to the Subcommittee
on Financial Management, the Budget, and International Security
on March 21, 2003.
S. 417, Osteoporosis Federal Employee Health Benefits
Standardization Act of 2003. This bill prohibits contracts from
being made or plans approved under the health insurance program
for Federal employees which do not include coverage of bone
mass measurements of qualified individuals. The bill was
introduced on February 14, 2003 by Senators Olympia Snowe, Tom
Harkin, Mary Landrieu, and Patty Murray, and cosponsored by
Senator Barbara Mikulski, and referred to the Senate Committee
on Governmental Affairs. The bill was referred to the
Subcommittee on Financial Management, the Budget, and
International Security on March 21, 2003.
S. 530, Federal Firefighters Fairness Act of 2003. This
bill provides that, with regard to an individual federally
employed in fire protection activities: (1) heart disease, lung
disease, and specified cancers and infectious diseases shall be
presumed to be proximately caused by the individual's
employment; (2) such individual's disability or death due to
such a disease shall be presumed to result from personal injury
sustained while in the performance of duty; and (3) such
presumptions may be rebutted by a preponderance of the
evidence. The bill was introduced on March 5, 2003 by Senator
John Kerry, and cosponsored by Senator Mark Dayton, and
referred to the Senate Committee on Governmental Affairs. The
bill was referred to the Subcommittee on Financial Management,
the Budget, and International Security on June 20, 2003.
S. 640, Federal Prosecutors Retirement Benefit Equity Act
of 2003. This bill amends Federal civil service law to include
Federal prosecutors within the definition of ``law enforcement
officer'' (LEO). The bill would extend LEO benefits under the
Civil Service Retirement System and the Federal Employees'
Retirement System to Federal prosecutors, including Assistant
United States Attorneys (AUSAs), and such other attorneys in
the Department of Justice (DOJ) as may be designated by the
Attorney General. The bill would exempt Federal prosecutors
from mandatory retirement provisions for LEOs under the civil
service laws. The bill was introduced on March 18, 2003 by
Senator Patrick Leahy, and cosponsored by Senators Barbara
Boxer, John Breaux, Jim Bunning, Saxby Chambliss, Jon Corzine,
Michael Crapo, Christopher Dodd, Richard Durbin, Dianne
Feinstein, Orrin Hatch, Mary Landrieu, Barbara Mikulski, Bill
Nelson, Jay Rockefeller, Gordon Smith, Debbie Stabenow, and Ron
Wyden, and referred to the Senate Committee on Governmental
Affairs. The bill was referred to the Subcommittee on Financial
Management, the Budget, and International Security on June 20,
2003.
S. 675, a bill to require the Congressional Budget Office
and the Joint Committee on Taxation to use dynamic economic
modeling in addition to static economic modeling in the
preparation of budgetary estimates of proposed changes in
Federal revenue law. The bill was introduced on March 20, 2003
by Senator John Ensign, and cosponsored by Senators Michael
Crapo, Jon Kyl, and Jeff Sessions, and referred to the Senate
Committee on Governmental Affairs. The bill was referred to the
Subcommittee on Financial Management, the Budget, and
International Security on June 20, 2003.
S. 776, a bill to amend chapters 83 and 84 of title 5,
United States Code, to authorize payments to certain trusts
under the Social Security Act, and for other purposes. The bill
was introduced on April 3, 2003 by Senator Ben Nighthorse
Campbell, and referred to the Senate Committee on Governmental
Affairs. The bill was referred to the Subcommittee on Financial
Management, the Budget, and International Security on June 20,
2003.
S. 819, Law Enforcement Officers Retirement Equity Act.
This bill redefines the term ``law enforcement officer'' under
provisions of the Federal Employees Retirement System (FERS)
and the Civil Service Retirement System (CSRS) to include: (1)
Federal employees not otherwise covered by such term whose
duties include the investigation or apprehension of suspected
or convicted individuals and who are authorized to carry a
firearm; and (2) such employees of the Internal Revenue Service
whose duties are primarily the collection of delinquent taxes
and the securing of delinquent returns. The bill was introduced
on April 8, 2003 by Senator Barbara Mikulski, and cosponsored
by Senators Ben Nighthorse Campbell, Patrick Leahy, and Paul
Sarbanes, and referred to the Senate Committee on Governmental
Affairs. The bill was referred to the Subcommittee on Financial
Management, the Budget, and International Security on June 20,
2003.
S. 1229, Federal Employee Protection of Disclosure Act.
This bill serves as a protected disclosure by a Federal
employee any lawful disclosure an employee or applicant
reasonably believes is credible evidence of waste, fraud,
abuse, or gross mismanagement, without restriction as to time,
place, form, motive, context, or prior disclosure. The bill was
introduced on June 10, 2003 by Senator Daniel Akaka, and
cosponsored by Senators Mark Dayton, Richard Durbin, Patrick
Leahy, and Carl Levin, and referred to the Senate Committee on
Governmental Affairs. The bill was referred to the Subcommittee
on Financial Management, the Budget, and International Security
on June 20, 2003. An adjusted version of this bill, S. 1358 was
subsequently introduced.
S. 1252, Domestic Partnership Benefits and Obligations Act
of 2003. This bill entitles domestic partners of Federal
employees to benefits available to spouses of Federal
employees. Specifies certifications required for benefit
eligibility, filing requirements regarding partnership
dissolution, and confidentiality requirements. Amends the
Internal Revenue Code to extend to domestic partners under this
Act the tax exemption for employer contributions to accident
and health plans. The bill was introduced on June 12, 2003 by
Senator Mark Dayton, and cosponsored by Senators Barbara Boxer,
Maria Cantwell, Hillary Rodham Clinton, Jon Corzine, Daniel
Inouye, John Kerry, Frank Lautenberg, Joseph Lieberman, Patty
Murray, and referred to the Senate Committee on Governmental
Affairs. The bill was referred to the Subcommittee on Financial
Management, the Budget, and International Security on June 20,
2003.
S. 2367, a bill to amend chapters 83 and 84 of title 5,
United States Code, to provide Federal retirement benefits for
U.S. citizen employees of Air America, Inc., its subsidiary Air
Asia Company Limited, or the Pacific Division of Southern Air
Transport, Inc. This bill was introduced on April 29, 2004 by
Senator Harry Reid, and cosponsored by Senators Daniel Inouye
and Ted Stevens, and referred to the Senate Committee on
Governmental Affairs. This bill was referred to the
Subcommittee on Financial Management, the Budget, and
International Security on May 6, 2004.
S. 2418, a bill to amend chapter 83 and 84 of title 5,
United States Code, to authorize payments to certain trusts
under the Social Security Act, and for other purposes. This
bill was introduced on May 13, 2004 by Senator Ben Nighthorse
Campbell and referred to the Senate Committee on Governmental
Affairs. This bill was referred to the Subcommittee on
Financial Management, the Budget, and International Security on
July 14, 2004.
S. 2612, a bill to amend the Law Enforcement Pay Equity Act
of 2000 to permit certain annuitants of the retirement programs
of the U.S. Park Police and U.S. Secret Service Uniformed
Division to receive the adjustments in pension benefits to
which such annuitants would otherwise be entitled as a result
of the conversion of members of the U.S. Park Police and U.S.
Secret Service Uniformed Division to a new salary schedule
under the amendments made by such Act. This bill was introduced
on July 7, 2004 by Senator Barbara Mikulski, and cosponsored by
Senator Paul Sarbanes, and referred to the Senate Committee on
Governmental Affairs. This bill was referred to the
Subcommittee on Financial Management, the Budget, and
International Security on July 14, 2004.
III. GAO Reports
The following reports were issued by the Government
Accountability Office at the request of the Chairman and/or
Ranking Member of the Subcommittee on Financial Management, the
Budget, and International Security:
Weapons of Mass Destruction: Additional Russian Cooperation
Needed to Facilitate U.S. Efforts to Improve Security at
Russians Sites, GAO-3-482 (March 24, 2003).
Nuclear Nonproliferation: DOE Action Needed to Ensure
Continued Recovery of Unwanted Sealed Radioactive Sources, GAO-
03-483 (May 13, 2003).
Nuclear Nonproliferation: U.S. and International Assistance
Efforts to Control Sealed Radioactive Sources Need
Strengthening, GAO-30-638 (June 16, 2003).
Nuclear Security: Federal and State Action Needed to
Improve Security of Sealed Radioactive Sources, GAO-03-804
(August 6, 2003).
Pending request to the GAO for review of the International
Atomic Energy Agency's role in assisting countries to control
sealed radioactive source, July 28, 2003.
Pending request to the GAO for review of Executive Branch
entities that do not prepare annual financial statements and
have those statements independently audited, December 13, 2004.
SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT
MANAGEMENT, THE FEDERAL WORKFORCE,
AND THE DISTRICT OF COLUMBIA
Chairman: George V. Voinovich
Ranking Minority Member: Richard J. Durbin
I. Hearings
The Subcommittee on Oversight of Government Management, the
Federal Workforce, and the District of Columbia held the
following hearings during the 108th Congress:
Evaluating Human Capital at the National Aeronautics and Space
Administration (March 6, 2003)
This was the Subcommittee's eleventh oversight hearing on
the human capital challenge of the Federal Government. The
purpose of the hearing was to examine the current condition of
the workforce at the National Aeronautics and Space
Administration (NASA). This hearing also considered the
personnel reform proposal NASA brought to Congress.
Representative Sherwood Boehlert expressed concern that the
human capital challenge at NASA is a need that must be
addressed by Congress immediately. NASA faces increasing
competition from the private sector and academia for the
globally shrinking talent pool. Mr. O'Keefe identified the
Scholarship for Service program as the most needed tool to
ensure NASA's success in the future. He also identified
enhanced leave provisions and enhanced recruitment, retention,
and relocation provisions, as necessary tools for NASA to meet
its current workforce challenge.
Witnesses: Hon. Sherwood Boehlert, Chairman, House Science
Committee, and Hon. Sean O'Keefe, Administrator, National
Aeronautics and Space Administration.
The Human Capital Challenge: Offering Solutions and Delivering Results
(April 8, 2003) Joint Hearing with House Subcommittee on Civil
Service and Agency Organization
The Subcommittee hearing was held jointly with the House
Subcommittee on Civil Service and Agency Organization of the
Government Reform Committee and was co-chaired by Senator
Voinovich and Representative Jo Ann Davis. The purpose of the
hearing was twofold: (1) to examine the Federal Government's
strategic human capital management as a GAO High-Risk List
item, and (2) to consider pending legislation to reform the
Federal workforce.
Witnesses testified on current human capital practices, pay
for performance, and external views of the governments'
recruitment policies. Witnesses promoted increasing recruitment
among young people, as well as developing a mid-career
presidential management fellows program.
Witnesses: Hon. David M. Walker, Comptroller General of the
United States; Hon. Dan G. Blair, Deputy Director of the Office
of Personnel Management; Bobby L. Harnage, National President,
American Federation of Government Employees (AFGE); Colleen M.
Kelley, President, National Treasury Employees Union (NTEU);
Carol A. Bonosaro, President, Senior Executives Association
(SEA); Karen Heiser, Treasurer, Chapter 88, Federal Managers
Association (FMA); Hannah S. Sistare, Executive Director,
National Commission on the Public Service; Dr. Steven J.
Kelman, Weatherhead Professor of Public Management, John F.
Kennedy School of Government, Harvard University; Max Stier,
President and Chief Executive Officer, Partnership for Public
Service; and Jeff Taylor, President and Chief Executive
Officer, Monster.
An Overlooked Asset: The Defense Civilian Workforce (May 12, 2003)
Field Hearing at Wright-Patterson Air Force Base, Dayton, Ohio
This was the Subcommittee's thirteenth oversight hearing
since July 1999 on the Federal Government's human capital
challenges. The hearing was conducted in the Philip E. Carney
Auditorium, United States Air Force Museum, Wright-Patterson
Air Force Base. The purpose of the hearing was to examine the
status of the civilian workforce at the Department of Defense
(DOD), including the Air Force and at the Base level.
Witnesses testified on the Defense Department's proposed
National Security Personnel System (NSPS), workforce
reductions, the makeup of the Air Force's civilian employees
and their progress in recruiting a younger, more diverse
workforce, and the use and frequency of current workforce
flexibilities.
Witnesses: Hon. David S. C. Chu, Under Secretary of
Defense, Personnel and Readiness; Hon. David M. Walker,
Comptroller General of the United States; Hon. Michael L.
Dominguez, Assistance Secretary of the Air Force, Manpower and
Reserve Affairs; General Lester L. Lyles, Commander, Air Force
Materiel Command (AFMC); Dr. Vincent J. Russo, Executive
Director, Aeronautical Systems Center; Dr. Beth J. Asch, Senior
Economist, RAND; Scott Blanche, President, American Federation
of Government Employees, Council 214; Michael Durand, Deputy
Treasurer, American Federation of Government Employees, Local
1138; and John P. Nauseef, Vice President, Aerospace, Defense,
and Technology, Dayton Development Coalition.
Great Lakes Restoration Management: No Direction, Unknown Progress
(July 16, 2003)
The purpose of this hearing was to review a U.S. General
Accounting Office (GAO) report, ``An Overall Strategy and
Indicators for Measuring Progress Are Needed to Better Achieve
Restoration Goals--GAO-03-515,'' and management of the various
Great Lakes environmental programs and to discuss options to
improve restoration efforts. The GAO report, released in April
2003, identified the Federal and State environmental programs
operating in the Great Lakes Basin and funding devoted to them,
evaluated the restoration strategies used and how they are
coordinated, and assessed overall environmental progress made
in the basin restoration effort. GAO found that there are
numerous strategies that are not coordinated or unified and
that EPA's Great Lakes National Program Office has coordination
authority over many activities but has not fully exercised it
to this point. Additionally, the GAO found that available
information does not allow for a comprehensive assessment of
restoration progress in the Great Lakes and that success of an
ongoing binational effort to develop overall indicators for the
Great Lakes is uncertain.
Questions and discussion during the hearing focused on how
to develop a coordinated strategy for Great Lakes restoration
and who or what should coordinate the various programs and
actors involved at the local, State, Federal, and international
level.
Witnesses: Senator Mike DeWine; Senator Carl Levin; John
Stephenson, Director of Natural Resources and Environment
Issues, U.S. General Accounting Office; Robyn Thorson, Region 3
Director, U.S. Fish and Wildlife Service; Thomas Skinner,
Region 5 Administrator, U.S. Environmental Protection Agency;
Colonel William E. Ryan, III, Deputy Commander, Great Lakes
Ohio River Division, Army Corps of Engineers; Timothy Keeney,
Deputy Assistant Secretary, National Oceanic and Atmospheric
Administration; Dennis Schornack, Chairman, United States
Section, International Joint Commission; Susan Garrett,
Illinois State Senator, District 29; Chris Jones, Director,
Environmental Protection Agency, State of Ohio; Margaret
Wooster, Executive Director, Great Lakes United.
Then and Now: An Update on the Bush Administration's Competitive
Sourcing Initiative (July 24, 2003)
The hearing was, in part, a follow-up to the March 6, 2002,
full Committee hearing to consider Federal contracting issues.
The purpose was to consider the various changes the
Administration has made to its competitive sourcing initiative,
originally detailed in the 2002 President's Management Agenda.
Testimony indicated that changes are taking place to the
ambitious competitive sourcing agenda first established in
2002, but there is still much to be done. The cost
effectiveness of competitive sourcing is believed to be an
effective tool for government cost cutting.
Witnesses: Hon. Angela Styles, Administrator, Office of
Federal Procurement Policy; Hon. David Walker, Comptroller
General, U.S. General Accounting Office; Hon. Jacques Gansler,
Center for Public Policy and Private Enterprise, University of
Maryland; Dr. Paul C. Light, Senior Fellow, The Brookings
Institution; Charles Tiefer, Professor of Law, University of
Baltimore; and Dr. Frank Camm, Senior Analyst, RAND.
Keeping the Lights On: The Federal Role in Managing the Nation's
Electricity, Parts I and II (September 10, 2003 and November
20, 2003)
The Subcommittee held a series of two hearings regarding
the Federal Government's role in ensuring the reliability of
the electricity supply following the August 14, 2003 blackout,
which affected the northern Midwest and the Northeast, causing
approximately 50 million people to lose power. The hearing was
held in two parts. Part I considered future energy policy,
including ways to modernize the country's electrical grid, the
Federal role in electricity regulation, and how to prevent
future blackouts from occurring. Part II reviewed a draft
report issued by the U.S.-Canada Joint Task Force regarding the
August 14 blackout from the Federal Energy Regulatory
Commission, the Department of Energy, and the North American
Electric Reliability Council (NERC).
Witnesses for Part I, September 10, 2003: Kyle E.
McSlarrow, Deputy Secretary of Energy; Hon. Pat Wood, III,
Chairman Federal Energy Regulatory Commission; Dr. Alan R.
Schriber, Chairman, Public Utilities Commission of Ohio; Craig
A. Glazer, Vice President Government Policy, PJM
Interconnection; James P. Torgerson, President and Chief
Executive Officer, Midwest Independent Transmission System
Operator, Inc.; William J. Museler, President and CEO, New York
Independent System Operator; and James Y. Kerr, II, North
Carolina Utilities Commission.
Witnesses for Part II, November 20, 2003: Hon. Pat Wood,
III, Chairman, Federal Energy Regulatory Commission; James W.
Glotfelty, Director, Office of Electric Transmission and
Distribution, Department of Energy; and Michael Gent, President
and CEO, North American Electric Reliability Council.
Fair or Foul: The Challenge of Negotiating, Monitoring, and Enforcing
U.S. Trade Laws (December 9, 2003 )
This hearing focused on the human capital challenges at the
United States Trade Representative (USTR) and the Department of
Commerce's International Trade Administration (ITA). Throughout
the 1990s, employment figures within ITA fluctuated from year-
to-year. According to GAO, even though staffing levels have
increased, several additional human capital challenges exist
for these agencies. In particular, the need for specialized
knowledge and the demand for individuals with experience in
trade compliance and litigation creates unique recruitment and
retention challenges for our trade agencies.
Assistant Secretary Jochum noted that Commerce will be
ready to appoint a new Assistant Secretary of Manufacturing as
soon as the FY 2004 omnibus legislation, which contains funding
for this new position, is passed. The creation of a new Office
of China Compliance with Commerce, which brings together for
the first time, in one office, various Commerce staff who
handle China issues, will also be implemented when the omnibus
bill is passed.
Witnesses: Dr. Loren Yager, Director of International
Affairs and Trade at the U.S. General Accounting Office; Hon.
James Jochum, Assistant Secretary, Import Administration; Hon.
Charles Freeman III, Deputy Assistant U.S. Trade
Representative; Frank Vargo, Vice President of the National
Association of Manufactures; Dr. Thomas Duesterberg, President
and Chief Executive Officer of the Manufactures Alliance; Tim
Hawk, Superior Metal Products and American Trim LLC, Lima,
Ohio.
The Key to Homeland Security: The New Human Resources System (February
25, 2004)
This hearing, held jointly with the House Subcommittee on
Civil Service and Agency Organization of the Government Reform
Committee, was co-chaired by Senator Voinovich and
Representative Jo Ann Davis. The purpose of the hearing was to
examine the new human resource management system designed
jointly by the Department of Homeland Security and the Office
of Personnel Management. The proposed regulations for the new
system were published in February in the Federal Register for
public comment.
Testimony offered differing views of the effect that the
New Human Resources System would have on the Federal workforce.
Union representatives argued against the changes in pay,
performance, and classification that would take place, while
Director Kay Coles James disputed their claims.
Witnesses: Hon. James Loy, Deputy Secretary, Department of
Homeland Security; Hon. Kay Coles James, Director of the Office
of Personnel Management; Hon. David M. Walker, Comptroller
General of the U.S. General Accounting Office; John Gage,
National President, American Federation of Government Employees
(AFGE); Colleen M. Kelley, President, National Treasury
Employees Union (NTEU); and Mike Randall, President, National
Association of Agriculture Employees.
The Road to Recovery: Solving the Social Security Disability Backlog
(March 29, 2004) Field Hearing at the Vocational Rehabilitation
Guidance Service Building, Cleveland, Ohio
This hearing examined the problems associated with the
backlog of the Social Security Administration's (SSA)
disability cases. The primary focus of the hearing, however,
was to explore Social Security Commissioner Jo Anne Barnhart's
comprehensive strategy to improve the entire disability claims
process, which includes short- and long-term solutions.
Overall, all witnesses recognized that there were problems
with the disability process, but believed that Commissioner
Barnhart was taking comprehensive steps to address the
shortcomings.
SSA Commissioner Barnhart discussed her approach to solving
the disability backlog. Her plan includes several long-term
nationwide strategies, including the development of an
Accelerated Electronic Disability System. This initiative will
move all components involved in disability claims adjudication
and review to an electronic disability folder.
Witnesses: Hon. Jo Anne Barnhart, Commissioner of the
Social Security Administration; Hon. Hal Daub, Chairman of the
Social Security Advisory Board; Robert Robertson, GAO Director
of Education, Workforce, and Income Security; Erik Williamson,
Assistant Director of the Ohio Bureau of Disability
Determination; Hon. Kevin Dugan, Executive Vice President of
the Association of Administrative Law Judges; James A. Hill,
President, National Treasury Employees Union Chapter 224, SSA
Office of Hearings and Appeals, Cleveland Ohio; Marcia
Margolius, Attorney with Brown and Margolius, L.P.A.,
Cleveland, Ohio.
Does CMS Have the Right Prescription? Implementing the Medicare
Prescription Drug Program (April 8, 2004)
The hearing focused on a variety of administrative
challenges facing CMS as the agency works toward implementing
the new prescription drug benefit by January 2006. Special
attention was paid to CMS's ability to educate and assist
beneficiaries in enrolling in and understanding the new
benefit.
Testimony indicated that this program will constitute one
of the most fundamental changes in Medicare's history. In order
for it to be implemented successfully, the agency must use all
available human and financial resources. Medicare has had a
history of successes for implementing programs such as the
Medicare drug card.
Witnesses: Michael McMullan, Deputy Director, Center for
Beneficiary Choices, Centers for Medicare and Medicaid
Services; Gail Wilensky, Senior Fellow, Project HOPE; and Nancy
Ann Min DeParle, Senior Advisor, J.P. Morgan Partners, LLC.
Pirates of the 21st Century: The Curse of the Black Market (April 20,
2004)
This hearing focused on the effectiveness of the Federal
Government's various efforts to enforce existing intellectual
property rights (IPR). Specifically, the hearing examined the
activities of the Department of Commerce (Commerce), the Office
of the United States Trade Representative (USTR), and the
Department of Homeland Security (DHS) to protect U.S.
intellectual property interests both at home and abroad. It
should be noted that the Office of the United States Trade
Representative did not send a witness to the hearing, although
an invitation was extended to the agency.
The overarching focus of the hearing was how the current
U.S. intellectual property enforcement policies relate to the
loss of over 2.7 million jobs in the U.S. manufacturing sector.
The International Chamber of Commerce estimates that
counterfeiting drains between $300 and $350 billion annually
from the world's economy. This is roughly 5 to 7 percent of
total world trade, and each dollar lost to American citizens
and companies winds up lining the pockets of criminals. For
U.S. manufacturers, protection of intellectual property is not
an abstract concept. America's competitive edge is derived from
innovation and rising productivity, and the protection of
intellectual property remains one of the best means for
ensuring that American manufacturers enjoy the benefits of
their investments.
Witnesses: Jon Dudas, Acting Undersecretary, Intellectual
Property and Director, U.S. Patent and Trademark Office;
Francis Gary White, Unit Chief, Commercial Fraud, Immigration
and Customs Enforcement, U.S. Department of Homeland Security;
Professor Daniel C. K. Chow, Michael E. Moritz College of Law,
The Ohio State University; Phillip A. Rotman II, Assistant
Patent and Trademark Counsel, Dana Corporation; and Jeff
Gorman, President and CEO, The Gorman-Rupp Company.
Trimming the Fat: Examining Duplicative and Outdated Federal Programs
and Functions (May 6, 2004)
The purpose of this hearing was to examine Senator Sam
Brownback's legislation, S. 1668, the Commission on the
Accountability and Review of Federal Agencies Act (CARFA).
Senator Brownback introduced S. 1668, the Commission on the
Accountability and Review of Federal Agencies Act (CARFA), on
September 26, 2003, which creates a commission to evaluate
domestic Federal agencies and programs to maximize the
effectiveness of Federal funds. The Commission established by
this legislation would recommend plans for realignment or
elimination of Federal programs that are duplicative, wasteful,
outdated, or irrelevant. Upon completion of its work, the
Commission would report back to Congress with draft legislation
to implement its recommendations. Congress would subsequently
be required to vote either up-or-down on the recommendations.
This is similar to the procedure employed by past base
realignment and closure commissions.
Witnesses: Senator Sam Brownback; Hon. Clay Johnson III,
Deputy Director for Management, Office of Management and
Budget; Hon. Dick Armey, Citizens for a Sound Economy, and
former Majority Leader of the House of Representatives; Paul
Weinstein Jr., Senior Fellow, Progressive Policy Institute and
Adjunct Professor at Johns Hopkins University.
Dietary Supplement Safety Act: How is the Food and Drug Administration
Doing 10 Years Later? (June 8, 2004)
This hearing examined the challenges and successes the U.S.
Food and Drug Administration (FDA) has experienced since the
passage of the Dietary Supplement Health and Education Act of
1994 (DSHEA). DSHEA amended the Federal Food, Drug, and
Cosmetic Act (FD&C) to establish a regulatory framework for
dietary supplements in an attempt to create the right balance
between providing consumers access to dietary supplements and
giving the Food and Drug Administration (FDA) the regulatory
power to take action against supplements that present safety
problems, have false or misleading claims, or are otherwise
adulterated or misbranded. Although dietary supplements are
regulated as foods, pre-market approval is not mandatory.
Witnesses: Robert E. Brackett, Ph.D., Director of the
Center for Food Safety and Applied Nutrition, Food and Drug
Administration (FDA); Alice M. Clark, Ph.D., Vice Chancellor
for Research and Sponsored Programs, The University of
Mississippi; Dr. Ronald M. Davis, M.D., Member, Board of
Trustees, American Medical Association; Charles Bell, Program
Director, Consumer Reports; Bruce Silverglade, Director of
Legal Affairs, Center for Science in the Public Interest;
Anthony L. Young, General Counsel, American Herbal Products
Association (AHPA); and Annette Dickinson, Ph.D., President,
Council for Responsible Nutrition.
Dr. Bracket discussed in detail the statutory framework of
DSHEA, as well as how the FDA enforces DSHEA. Both Dr. Davis
and Silvergrade advocated the pre-market approval by the FDA
for dietary supplements, just as with prescription drugs. Mr.
Young and Dr. Dickinson talked about the need to change DSHEA
to require Adverse Event Reporting.
Building the 21st Century Federal Workforce: Assessing Programs in
Human Capital Management (July, 20, 2004)
The purpose of this hearing was to review governmentwide
workforce flexibilities available to Federal agencies, with a
focus on those enacted in the Homeland Security Act. The
hearing examined their implementation, use by agencies, and
training and education related to using the new flexibilities.
Testimony indicated that progress for improving hiring
processes and human capital management is taking place
throughout government. NASA in particular has made great
strides with the flexibilities allowed for hiring necessary
personnel.
Witnesses: Hon. Dan Blair, Deputy Director, Office of
Personnel Management; Hon. Clay Johnson, III, Deputy Director
for Management, Office of Management and Budget; J. Christopher
Mihm, Managing Director of Strategic Issues, U.S. General
Accounting Office; Dr. Ed Sontag, Assistant Secretary for
Administration and Management, Department of Health and Human
Services; Joanne Simms, Deputy Assistant Attorney General for
Human Resources and Administration, Department of Justice; and
Vicki Novak, Assistant Administrator for Human Resources,
National Aeronautics and Space Administration.
The 9/11 Commission Human Capital Recommendations: A Critical Element
of Reform (September 14, 2004)
The hearing was held to examine the personnel issues
addressed in the recommendations of the National Commission on
Terrorist Attacks Upon the United States (9/11 Commission).
The 9/11 Commission noted several areas for Federal
personnel reform, including (1) improving the presidential
appointments process for national security positions; (2)
establishing a single agency that conducts security clearance
background investigations; and (3) providing some additional
personnel flexibilities to the Federal Bureau of Investigation
(FBI) to reflect its increased counterterrorism and
intelligence responsibilities.
Witnesses: Fred Fielding, Commissioner, National Commission
on Terrorist Attacks Upon the United States; Jamie Gorelick,
Commissioner, National Commission on Terrorist Attacks Upon the
United States; Mark Bullock, Assistant Director of
Administrative Services, Federal Bureau of Investigation; John
A. Turnicky, Special Assistant to the Director of Central
Intelligence for Security; Chris Mihm, Managing Director of
Strategic Issues, Government Accountability Office; Dr. Paul
Light, Senior Fellow, The Brookings Institution; C. Morgan
Kinghorn, President, National Academy of Public Administration;
Max Stier, President and Chief Executive Officer, Partnership
for Public Service; and Doug Wagoner, Chairman, Security
Clearance Task Group, Information Technology Association of
America.
II. Legislation
The following bills were considered by the Subcommittee on
Oversight of Government Management, the Federal Workforce, and
the District of Columbia during the 108th Congress:
MEASURES ENACTED INTO LAW
S. 129--The Federal Workforce Flexibility Act of 2003
amends provisions of title 5, United States Code, to make
reforms to Federal employment. This bill revises existing
authority to pay recruitment, relocation, and retention
bonuses. S. 129 provides for enhanced annual leave for
individuals beginning Federal employment mid-career and
authorizes compensatory time for employees required to travel
during nontraditional work hours. The bill transfers oversight
of critical pay authority from the Office of Management and
Budget to the Office of Personnel Management. It also improves
the effectiveness of the special salary rates by correcting
numerous pay administration anomalies associated with the
locality pay provisions of the General Schedule. S. 129
requires employee training be linked with agency performance
plans and strategic goals. S. 129 was introduced on January 9,
2003, by Senator Voinovich and referred to the Governmental
Affairs Committee. On March 21, 2003, the bill was referred to
the Subcommittee on Oversight of Government Management, the
Federal Workforce and the District of Columbia. The bill was
favorably reported out of the Subcommittee on June 13, 2003. S.
129, as amended, was reported to the Senate by the Governmental
Affairs Committee on January 27, 2004 (S. Rept. 108-223). On
April 8, 2004, S. 129, further amended, passed the Senate by
unanimous consent. On April 20, 2004, the bill was received in
the House of Representatives and referred to the House
Government Reform Committee and the Subcommittee on Civil
Service and Agency Organization. The Subcommittee on Civil
Service and Agency Organization reported the bill to the House
Government Reform Committee with amendment on May 18, 2004. The
Government Reform Committee further amended S. 129 on October
5, 2004, and reported the measure. The House passed S. 129 by
voice vote on October 6, 2004. The Senate passed by unanimous
consent S. 129, as amended by the House, on October 11, 2004.
S. 129 was signed by the President and became law on October
30, 2004 (P.L. 108-411).
S. 610--The NASA Flexibility Act of 2004 adds chapter 98 to
title 5, United States Code, to provide the National
Aeronautics and Space Administration additional workforce
authorities. S. 610 was introduced by Senator Voinovich on
March 13, 2003, and referred to the Governmental Affairs
Committee. The bill was cosponsored by Senators Allen, Senator
Carper, Cochran, Coleman, Lott, Nelson, Sessions, Shelby, and
Stevens. On April 30, 2003, the bill was referred to the
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia. The bill was favorably
reported out of the Subcommittee on June 13, 2003. S. 610, as
amended, was reported to the Senate by the Governmental Affairs
Committee on June 28, 2003 (S. Rept. 108-113). On November 24,
2003, S. 610, further amended, passed the Senate by unanimous
consent. On November 25, 2003, the bill was received in the
House of Representatives and held at the desk. On January 28,
2004, the House passed S. 610 by voice vote without amendment.
S. 610 was signed by the President and became law on February
24, 2004 (P.L. 108-201).
S. 926--The Federal Employee Student Loan Assistance Act
amends section 5379 of title 5, United States Code, to increase
the annual and aggregate amount to $10,000 and $60,000 that
agencies can repay to a highly qualified employee for a student
loan. S. 926 was introduced by Senator Voinovich on April 28,
2003, and referred to the Governmental Affairs Committee.
Senator Stevens is a cosponsor of the bill. On April 30, 2003,
the bill was referred to the Subcommittee on Oversight of
Government Management, the Federal Workforce and the District
of Columbia. The bill was favorably reported out of the
Subcommittee on June 13, 2003. S. 926 was reported to the
Senate without amendment by the Governmental Affairs Committee
on June 17, 2003 (S. Rept. 108-109). On July 30, 2003, the
Senate passed S. 926 by unanimous consent. The bill was
received in the House of Representatives on September 3, 2003,
and referred to the Committee on Government Reform. On
September 16, 2003, S. 926 was referred to the Subcommittee on
Civil Service and Agency Organization. On October 28, 2003, the
House passed S. 926. On November 11, 2003, S. 926 was signed by
the President and became law (P.L. 108-123). H.R. 3797--The
2004 District of Columbia Omnibus Authorization Act was the
first annual omnibus authorization bill for the District of
Columbia. It authorizes improvements in the operations of the
government of the District of Columbia. H.R. 3797 was sponsored
by Representative Tom Davis and cosponsored by Delegate Norton.
H.R. 3797 was introduced in the House of Representatives on
February 11, 2004, and referred to the House Committee on
Government Reform (House Rept. 108-551). On June 21, 2004, H.R.
3797 was passed by the House. H.R. 3797 was received in the
Senate and referred to the Governmental Affairs Committee on
June 22, 2004. On July 14, 2004, the bill was referred to the
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia. On July 15, 2004, the
Subcommittee favorably reported H.R. 3797. On July 21, 2004, by
voice vote, the Governmental Affairs Committee ordered H.R.
3797 reported favorably without amendment. The Senate passed
H.R. 3797 by unanimous consent on October 11, 2004. On October
30, 2004, the President signed the bill into law (P.L. 108-
386). S. 1683--The Federal Law Enforcement Pay and Benefits
Parity Act of 2003 provides for a report on the parity of pay
and benefits among Federal law enforcement officers and to
establish an exchange program between Federal law enforcement
employees and State and local law enforcement employees. S.
1683 was introduced by Senator Voinovich on September 30, 2003,
and referred to the Governmental Affairs Committee. Senator
Collins is a cosponsor. The bill was referred to the
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia on October 1, 2003 and
reported favorably out of the Governmental Affairs Committee on
October 22, 2003 (S. Rept. 108-207). S. 1683 passed the Senate
on November 25, 2003 and passed the House on December 8, 2003.
On December 19, 2003, the President signed the bill into law as
(P.L. 108-196).
MEASURES FAVORABLY REPORTED BY THE SUBCOMMITTEE AND PASSED BY THE
SENATE
S. 101--This bill authorizes salary adjustments for U.S.
justices and judges during fiscal year 2003 concurrently with
the salary adjustment for the General Schedule for Compensation
for Federal employees. S. 101 was introduced by Senator Hatch
on January 7, 2003, and referred to the Governmental Affairs
Committee. The bill was cosponsored by Senators DeWine, Leahy,
Sessions, and Specter. S. 101 was discharged by the
Governmental Affairs Committee on January 30, 2003, and passed
the Senate by unanimous consent. On January 31, 2003, S. 101
was received in the House of Representatives and held at the
desk. The companion bill, H.R. 16, was signed by the President
and became law on February 13, 2003 (P.L. 108-6).
S. 1522--The GAO Human Capital Reform Act of 2003 amends
chapter 7 of title 31, U.S. Code, to reform the employment
authorities provided to the U.S. General Accounting Office (as
it was then known). The bill also changes the name of the
agency from the U.S. General Accounting Office to the U.S.
Government Accountability Office. The bill was introduced by
Senator Voinovich on July 31, 2003 and referred to the
Governmental Affairs Committee. Senator Collins is a cosponsor
of the bill. S. 1522 was referred to the Subcommittee on
Oversight of Government Management, the Federal Workforce, and
the District of Columbia on August 1, 2003 and was favorably
reported by the Subcommittee on October 22, 2003. S. 1522 was
favorably reported by the Governmental Affairs Committee on
November 21, 2003, with amendments (S. Rept. 108-216). On
November 24, 2003, S. 1522 passed the Senate by unanimous
consent. The bill was received in the House of Representatives
on November 25, 2003, and held at the desk. The companion bill,
H.R. 2751, was signed by the President and became law on July
7, 2004 (P.L. 108-271).
MEASURES REFERRED TO THE SUBCOMMITTEE UPON WHICH HEARINGS WERE HELD OR
OTHER LEGISLATIVE ACTION WAS TAKEN
S. 593--The Reservists Pay Security Act of 2003 would amend
chapter 55 of title 5, United States Code, to direct the
Federal Government to pay the salary differential for Federal
employees who are called to active duty in the uniformed
services or the National Guard and lose pay as a result. S. 593
was introduced by Senator Durbin on March 11, 2003, and
referred to the Governmental Affairs Committee. S. 593 was
cosponsored by Senators Allen, Bingaman, Gregg, Kerry,
Landrieu, Lautenberg, Leahy, Mikulski, and Sarbanes. S. 593 was
referred to the Subcommittee on Oversight of Government
Management, the Federal Workforce, and the District of Columbia
on June 20, 2003. S. 593 was reported with an amendment in the
nature of a substitute from the Governmental Affairs Committee
on November 16, 2004 (S. Rept. 108-409).
S. 1267--The District of Columbia Budget Autonomy Act of
2003 would amend the District of Columbia Home Rule Act to
provide that the District of Columbia budget passed by the
Council of the District of Columbia shall be enacted without
referral to the President or approval of Congress, unless it is
the budget for a fiscal year which is a control year. It also
amends the District of Columbia Home Rule Act to revise
requirements of the Office of the Chief Financial Officer. S.
1267 was introduced by Senator Collins on June 16, 2003, and
was referred to the Governmental Affairs Committee. S. 1267 was
cosponsored by Senators DeWine, Durbin, Landrieu, Lieberman,
Stevens, and Voinovich. On June 20, 2003, the bill was referred
to the Subcommittee on Oversight of Government Management, the
Federal Workforce and the District of Columbia and was
favorably reported by the Subcommittee on October 22, 2003. On
November 25, 2003, the Governmental Affairs Committee reported
S. 1267 favorably with an amendment (S. Rept. 108-212). On
December 9, 2003, S. 1267 was passed by the Senate with an
amendment by unanimous consent. On January 20, 2004, S. 1267
was referred to the House Committee on Government Reform, as
well as the House Committees on Rules and Appropriations for
consideration.S. 1668--The Commission on the Accountability and
Review of Federal Agencies Act would establish a commission to
conduct a comprehensive review of Federal agencies and programs
and recommend the elimination or realignment of duplicative,
wasteful, or outdated functions, and for other purposes. S.
1668 was introduced by Senator Brownback on September 26, 2003,
and referred to the Governmental Affairs Committee. The bill
was cosponsored by Senators Alexander, Allard, Allen, Bunning,
Burns, Chambliss, Cornyn, Craig, Crapo, Ensign, Enzi,
Fitzgerald, Graham, Hatch, Hutchison, Inhofe, Kyl, Lott,
McCain, Miller, Murkowski, Nickles, Santorum, Sessions, Sununu,
Talent, Thomas, and Voinovich. S. 1668 was referred to the
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia on September 29, 2003. A
Subcommittee hearing was held regarding S. 1668 on May 6,
2004.S. 2347--A bill to amend the District of Columbia College
Access Act of 1999 to permanently authorize the public school
and private school tuition assistance programs established
under the Act. S. 2347 was introduced by Senator Voinovich on
April 26, 2004, and referred to the Governmental Affairs
Committee. The bill was cosponsored by Senators Durbin,
Jeffords, and Lieberman. On May 6, 2004, the bill was referred
to the Subcommittee on Oversight of Government Management, the
Federal Workforce and the District of Columbia. On May 11,
2004, the Subcommittee favorably reported S. 2347. On July 21,
2004, the Governmental Affairs Committee ordered S. 2347
reported favorably with an amendment that modified the
reauthorization from a permanent reauthorization to a 5-year
extension. On September 20, 2004, the bill was reported by
Senator Collins with an amendment and a written report, S.
Rept. 108-349, and placed on the legislative calendar. A
related bill, H.R. 4012, described in the previous section, was
enacted into law (P.L. 108-457).
MEASURES WHICH DID NOT ADVANCE BEYOND REFERRAL TO SUBCOMMITTEE
S. 46--A bill for the relief of Robert Bancroft of Hayden
Lake, Idaho, to permit the payment of back pay for overtime
incurred in missions flown with the Drug Enforcement Agency. S.
46 was introduced by Senator Craig on January 7, 2003, and
referred to the Governmental Affairs Committee. The bill was
referred to the Subcommittee on Oversight of Government
Management, the Federal Workforce and the District of Columbia
on June 20, 2003.
S. 48--A bill to repeal the provisions of law that provides
automatic pay adjustments for Members of Congress. S. 48 was
introduced by Senator Feingold on January 7, 2003, and referred
to the Governmental Affairs Committee. S. 48 was referred to
the Subcommittee on Oversight of Government Management, the
Federal Workforce and the District of Columbia on June 20,
2003.
S. 617--The No Taxation Without Representation Act of 2003
would provide for full voting representation in Congress for
the citizens of the District of Columbia. S. 617 was introduced
by Senator Lieberman on March 13, 2003, and referred to the
Governmental Affairs Committee. S. 617 was cosponsored by
Senators Clinton, Corzine, Daschle, Dayton, Dodd, Durbin,
Edwards, Feingold, Jeffords, Kennedy, Kerry, Landrieu, Leahy,
Mikulski, Sarbanes, Schumer, and Stabenow. S. 617 was referred
to the Subcommittee on Oversight of Government Management, the
Federal Workforce and the District of Columbia on June 23,
2003.
S. 768--The Senior Executive Service Reform Act of 2003
would provide for reform of the Senior Executive Service and
adjustment in the rates of pay of certain positions. S. 768 was
introduced by Senator Voinovich on April 2, 2003, and referred
to the Governmental Affairs Committee. Senator Stevens is a
cosponsor of the bill. S. 768 was referred to the Subcommittee
on Oversight of Government Management, the Federal Workforce
and the District of Columbia on April 30, 2003.
S. 837--The Commission on the Accountability and Review of
Federal Agencies Act would establish a commission to conduct a
comprehensive review of Federal agencies and programs and
recommend the elimination or realignment of duplicative,
wasteful, or outdated functions. S. 837 was introduced by
Senator Brownback on April 9, 2003, and referred to the
Governmental Affairs Committee. The bill was cosponsored by
Senators Alexander, Allard, Allen, Bunning, Cornyn, Ensign,
Enzi, Fitzgerald, Graham, Hutchison, Inhofe, Kyl, McCain,
Miller, Santorum, Sessions, Sununu, and Thomas. S. 837 was
referred to the Subcommittee on Oversight of Government
Management, the Federal Workforce and the District of Columbia
on June 20, 2003. A revised version of this bill, S. 1668, was
subsequently introduced.
S. 953--A bill to amend chapter 53 of title 5, United
States Code, to provide special pay for board certified Federal
Employees who are employed in health science positions, and for
other purposes. S. 953 was introduced by Senator Landrieu on
April 30, 2003, and referred to the Governmental Affairs
Committee. The bill was cosponsored by Senators Breaux, Inouye,
and Kennedy. S. 953 was referred to the Subcommittee on
Oversight of Government Management, the Federal Workforce and
the District of Columbia on June 20, 2003.
S. 985--A bill to amend the Federal Law Enforcement Pay
Reform Act of 1990 to adjust the percentage differentials
payable to Federal law enforcement officers in certain high-
cost areas, and for other purposes. This bill was introduced by
Senator Dodd on May 1, 2003, and referred to the Governmental
Affairs Committee. The bill was cosponsored by 61 senators. S.
985 was referred to the Subcommittee on Oversight of Government
Management, the Federal Workforce and the District of Columbia
on June 20, 2003.
S. 1339--A bill to amend title 5, United States Code, to
provide for appropriate overtime pay for National Weather
Service employees who perform essential services during severe
weather events. S. 1339 was introduced by Senator Breaux on
June 26, 2003, and referred to the Governmental Affairs
Committee. The bill was cosponsored by Senators Jeffords,
Leahy, and Roberts. S. 1339 was referred to the Subcommittee on
Oversight of Government Management, the Federal Workforce and
the District of Columbia on August 1, 2003.
S. 1414--The District of Columbia Personal Protection Act
would amend the District of Columbia Code to provide that the
D.C. Council's regulatory authority regarding firearms,
explosives, and weapons in the District shall not be construed
to permit the Council, the Mayor, or any governmental or
regulatory authority of the District to prohibit,
constructively prohibit, or unduly burden the ability of
persons otherwise permitted to possess firearms under Federal
law from acquiring, possessing in their homes or businesses, or
using for sporting, self-protection or other lawful purposes,
any firearm neither prohibited by Federal law nor regulated by
the National Firearms Act. The bill would deny the District any
authority to enact laws or regulations that discourage or
eliminate the private ownership or use of firearms. S. 1414 was
introduced by Senator Hatch on July 15, 2003, and referred to
the Governmental Affairs Committee. The bill was cosponsored by
Senators Allard, Allen, Baucus, Bond, Brownback, Bunning,
Burns, Campbell, Chambliss, Cornyn, Craig, Crapo, Domenici,
Ensign, Enzi, Graham, Grassley, Hagel, Hutchison, Inhofe, Kyl,
Lott, Miller, Murkowski, Nelson, Nickles, Reid, Sessions,
Shelby, Stevens, Sununu, Talent, and Thomas. S. 1414 was
referred to the Subcommittee on Oversight of Government
Management, the Federal Workforce and the District of Columbia
on July 24, 2003.
S. 2041--The Fiscal Responsibility Act of 2004 would
provide that pay for Members of Congress be reduced following
any fiscal year in which there is a Federal deficit. S. 2041
was introduced by Senator Miller on February 2, 2004, and
referred to the Governmental Affairs Committee. S. 2041 was
referred to the Subcommittee on Oversight of Government
Management, the Federal Workforce and the District of Columbia
on February 12, 2004.
S. 2064--The Administrative Law Judges Pay Reform Act of
2004 would increase the minimum and maximum rates of basic pay
for administrative law judges by linking those rates to level
III of the Executive Schedule (currently level IV). The bill
would also increase the maximum rate of locality pay for
administrative law judges to level II of the Executive Schedule
(currently level III). S. 2064 was introduced by Senator
Voinovich on February 11, 2004, and referred to the
Governmental Affairs Committee. S. 2064 was referred to the
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia on February 12, 2004.
S. Con. Res. 1--A concurrent resolution expressing the
sense of Congress that there should continue to be parity
between the adjustments in the compensation of members of the
uniformed services and the adjustments in the compensation of
civilian employees of the United States. S. Con. Res. 1 was
introduced by Senator Sarbanes on January 9, 2003, and was
referred to the Governmental Affairs Committee. The resolution
was cosponsored by Senators Akaka, Allen, Bingaman, Cantwell,
Clinton, Corzine, Daschle, Dayton, Dorgan, Durbin, Johnson,
Kennedy, Landrieu, Levin, Lieberman, Mikulski, Murray, Nelson,
Reed, and Warner. The resolution was referred to the
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia on June 20, 2003.
S. Con. Res. 88--A concurrent resolution expressing the
sense of Congress that there should continue to be parity
between the adjustments in the pay of members of the uniformed
services and the adjustments in the pay of civilian employees
of the United States. S. Con. Res. 88 was introduced by Senator
Sarbanes on February 9, 2004, and was referred to the
Governmental Affairs Committee. The resolution was cosponsored
by Senators Akaka, Allen, Cantwell, Collins, Corzine, Dayton,
Dorgan, Durbin, Jeffords, Johnson, Kennedy, Levin, Lieberman,
Mikulski, Murray, Snowe, and Warner. The resolution was
referred to the Subcommittee on Oversight of Government
Management, the Federal Workforce and the District of Columbia
on February 12, 2004.
III. GAO Reports
The following reports were issued by the Government
Accountability Office at the request of the Chairman and/or
Ranking Member of the Subcommittee on Oversight of Government
Management, the Federal Workforce and the District of Columbia:
Performance Management Systems at the Department of
Homeland Security, GAO-03-488 (03/21/2003)
Original Analysis of Motor Vehicle Accident Causation Data,
GAO-03-436 (04/01/2003)
Human Capital: Building on the Current Momentum to Address
High-Risk Issues, GAO-03-637T (04/08/2003)
OPM's Role in Assisting Agencies to Use Their Personnel
Flexibilities, GAO-03-428 (05/09/2003)
Review of the District's 2002 Performance and
Accountability Report, GAO-03-693 (05/15/2003)
Ways to Expedite the Federal Hiring Process, GAO-03-450
(05/30/2003)
Human Capital: DOD's Civilian Personnel Strategic
Management and the Proposed National Security Personnel System,
GAO-03-493T (06/03/2003)
Comparison of Federal Uniformed Police Forces Recruitment
and Retention Rates, Pay, Benefits, Qualifications
Requirements, Duties, and Working Conditions, GAO-03-658 (06/
27/2003)
Merger Integration Practices, GAO-03-669 (07/02/2003)
Great Lakes: A Coordinated Strategic Plan and Monitoring
System Are Needed to Achieve Restoration Goals, GAO-03-999T
(07/31/2003)
Superfund Program: Current Status and Future Fiscal
Challenges, GAO-03-850 (08/08/2003)
Competitive Sourcing: Implementation Will Be Challenging
for Federal Agencies, GAO-03-1022T (08/26/2003)
Assessment of the Federal Emergency Management Agency
Public Assistance for the New York Disaster, GAO-03-926 (09/05/
2003)
Succession Planning in Other Countries, GAO-03-914 (09/15/
2003)
Disaster Assistance: Federal Aid to the New York City Area
Following the Attacks of September 11th and Challenges
Confronting FEMA, GAO-03-1174T (09/24/2003)
DHS Efforts to Design a Personnel System and Involve
Employees and Unions, GAO-03-1099 (09/30/2003)
Competitive Sourcing: Clarification on Implementation
Issues, GAO-04-155R (10/31/2003)
Assessment of Federal Assistance for the 9/11 Disasters,
GAO-04-72 (11/30/2003)
Effective Workforce Planning Practices in Federal Agencies,
GAO-04-39 (12/11/2003)
Human Capital Challenges at Key Trade Agencies, GAO-04-301T
(12/30/2003)
D.C. Family Court: Progress Has Been Made in Implementing
Its Transition, But Action Needed to Improve Performance, GAO-
04-234 (01/06/2004)
Pay for Performance: Lessons Learned From Personnel
Demonstration Projects, GAO-04-83 (01/23/2004)
Managing for Results: Implementation of OMB's Program
Assessment Review Tool (PART) During the FY 2004 Budget, GAO-
04-174 (01/30/2004)
Select Agencies' Efforts to Design Training and Development
Programs, GAO-04-291 (01/30/2004)
DHS Human Capital Regulations, GAO-04-479T (02/25/2004)
A Ten-Year Retrospective of the Government Performance
Results Act, GAO-04-38 (03/10/2004)
SSA Disability: Commissioner Proposes Strategy to Improve
Claims Process, But Faces Challenges, GAO-04-552T (03/29/2004)
Competitive Sourcing Goals and Strategies, GAO-04-367 (04/
09/2004)
Human Capital Considerations Within Continuity of
Operations Planning Efforts, GAO-04-384 (04/20/2004)
Additional Post-Hearing Questions Related to Proposed DHS
Human Capital Regulations, GAO-04-617R (04/30/2004)
Definitional Issues in Unfunded Mandates Reform Act, GAO-
04-637 (05/12/2004)
SES Performance Management Systems, GAO-04-614 (05/26/2004)
Nuclear Regulation: NRC Needs to More Aggressively and
Comprehensively Resolve Issues Related to the Davis-Besse
Nuclear Power Plant's Shutdown, GAO-04-415 (05/31/2004)
Analysis of Proposed DHS Human Capital Regulations, GAO-04-
790 (06/18/2004)
Human Capital: Selected Agencies' Use of ASD Options for
Human Capital Activities, GAO-04-679 (06/25/2004)
DC's Performance Report Dated March 2004, GAO-04-940R (07/
07/2004)
United Nations: Observations on the Oil-for-Food Program
and Areas for Further Investigation, GAO-04-953T (07/08/2004)
Human Capital: Building on the Current Momentum to
Transform the Federal Government, GAO-04-976T (07/20/2004)
Assessing Progress in Human Capital Management--Posthearing
Questions, GAO-04-1072R (09/03/2004)
Intelligence Reform: Human Capital Considerations Critical
to 9/11 Commission's Proposed Reforms, GAO-04-1084T (09/14/
2004)
Great Lakes Environmental Indicators, GAO-04-1024 (09/28/
2004)
Intelligence Reform: Certain Human Capital Issues at the
FBI and Other Intelligence Agencies Related to the 9/11
Commission Proposed Reforms(11/10/2004) No report
Experience of Foreign Countries Consolidating Their Food
Safety Systems (2/22/05) No report
Overlap Within Federal Food Safety Functions (3/30/2005) No
report
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
Chairman: Norm Coleman
Ranking Minority Member: Carl Levin
The following is the Activities Report of the Permanent
Subcommittee on Investigations during the 108th Congress:
I. Historical Background
A. Subcommittee Jurisdiction
The Permanent Subcommittee on Investigations was originally
authorized by Senate Resolution 189 on January 28, 1948. At its
creation in 1948, the Subcommittee was part of the Committee on
Expenditures in the Executive Departments. The Subcommittee's
records and broad investigative jurisdiction over government
operations and national security issues, however, actually
antedate its creation, since it was given custody of the
jurisdiction of the former Special Committee to Investigate the
National Defense Program (the so-called ``War Investigating
Committee'' or ``Truman Committee''), chaired by Senator Harry
S. Truman during the Second World War. Today, the Subcommittee
is part of the Committee on Homeland Security and Governmental
Affairs. 1
---------------------------------------------------------------------------
\1\ In 1952, the parent committee's name was changed to the
Committee on Government Operations. It was changed again in early 1977,
to the Committee on Governmental Affairs, and again in 2005, to the
Committee on Homeland Security and Governmental Affairs, its present
title.
---------------------------------------------------------------------------
The Subcommittee has had nine chairmen: Senators Homer
Ferguson of Michigan (1948), Clyde R. Hoey of North Carolina
(1949-1952), Joseph R. McCarthy of Wisconsin (1953-1954), John
L. McClellan of Arkansas (1955-1972), Henry M. Jackson of
Washington (1973-1978), Sam Nunn of Georgia (1979-1980 and
1987-1994), William V. Roth of Delaware (1981-1986 and 1995-
1996), Susan M. Collins of Maine (1997-2001); Carl Levin of
Michigan (2001-2002); and Norm Coleman of Minnesota (2003-
present).
Until 1957, the Subcommittee's jurisdiction focused
principally on waste, inefficiency, impropriety, and illegality
in government operations. Its jurisdiction has expanded
considerably since then, however, today encompassing
investigations within the broad ambit of the parent committee's
responsibility for matters relating to the efficiency and
economy of operations of all branches of the government,
including matters related to: (a) waste, fraud, abuse,
malfeasance, and unethical practices in government contracting
and operations; (b) criminality or improper practices in labor-
management relations; (c) organized criminal activities
affecting interstate or international commerce; (d) criminal
activity affecting the national health, welfare, or safety,
including investment fraud, commodity and securities fraud,
computer fraud, and use of offshore banking and corporate
facilities to carry out criminal objectives; (e) the
effectiveness of present national security methods, staffing
and procedures, and U.S. relationships with international
organizations concerned with national security; (f) energy
shortages, energy pricing, management of government-owned or
controlled energy supplies; and relationships with oil
producing and consuming countries; and (g) the operations and
management of Federal regulatory policies and programs. While
technically reduced to a subcommittee of a standing committee,
the Subcommittee has long exercised its authority as almost a
separate entity, selecting its own staff, issuing its own
subpoenas, and determining its own investigatory agenda.
The Subcommittee acquired this sweeping jurisdiction in
several successive stages. In 1957--based on information
developed by the Subcommittee--the Senate passed a Resolution
establishing a Select Committee on Improper Activities in the
Labor or Management Field. Chaired by Senator McClellan, who
also chaired the Subcommittee at that time, the Select
Committee was composed of eight Senators--four of whom were
drawn from the Subcommittee on Investigations and four from the
Committee on Labor and Public Welfare. The Select Committee
operated for 3 years, sharing office space, personnel, and
other facilities with the Permanent Subcommittee. Upon its
expiration in early 1960, the Select Committee's jurisdiction
and files were transferred to the Subcommittee on
Investigations, greatly enlarging the latter body's
investigative authority in the labor-management area.
The Subcommittee's jurisdiction expanded further during the
1960s and 1970s. In 1961, for example, it received authority to
make inquiries into matters pertaining to organized crime and,
in 1963, held the famous Valachi hearings described below,
examining the inner workings of the Italian Mafia. In 1967,
following a summer of riots and other civil disturbances, the
Senate approved a Resolution directing the Subcommittee to
investigate the causes of this disorder and to recommend
corrective action. In January 1973, the Subcommittee acquired
its national security mandate when it merged with the National
Security Subcommittee. With this merger, the Subcommittee's
jurisdiction was broadened to include inquiries concerning the
adequacy of national security staffing and procedures,
relations with international organizations, technology transfer
issues, and related matters. In 1974, in reaction to the
gasoline shortages precipitated by the Arab-Israeli war of
October 1973, the Subcommittee acquired jurisdiction to
investigate government operations involving the control and
management of energy resources and supplies.
In 1997, the full Committee on Governmental Affairs was
charged by the Senate to conduct a special examination into
illegal or improper activities in connection with Federal
election campaigns during the 1996 election cycle. The
Permanent Subcommittee provided substantial resources and
assistance to this investigation, contributing to a greater
public understanding of what happened, to subsequent criminal
and civil legal actions taken against wrongdoers, and to
enactment of campaign finance reforms in 2001.
B. Past Investigations
Armed with its broad jurisdictional mandate, the
Subcommittee has in recent years conducted investigations into
a wide variety of topics of public concern, ranging from
corporate misconduct, including the Senate's most in-depth
investigation of the collapse of the Enron Corporation, to
gasoline price gouging, predatory lending, and tax evasion. The
Subcommittee has also conducted investigations into numerous
aspects of criminal wrongdoing, including money laundering, the
narcotics trade, child pornography, labor racketeering, and
organized crime activities. The Subcommittee has also devoted
itself to investigating allegations of waste, fraud, and abuse
in government programs and consumer protection issues,
addressing problems ranging from food safety to Medicare fraud
and mortgage ``flipping.'' Most recently, under the leadership
of Senator Coleman, the Subcommittee has focused on exposing
corruption problems in the United Nations' Oil-for-Food
Program, port and supply-chain security, credit counseling
abuses, and Federal contractors with billions of dollars in
unpaid taxes. At Senator Levin's request, the Subcommittee has
also examined the role of tax professionals in designing and
marketing abusive tax shelters, transparency and pricing
problems in U.S. crude oil markets, and the failure of U.S.
bank regulators to crack down on possible money laundering
practices at financial institutions like Riggs Bank.
In 1998, the Subcommittee marked the fiftieth anniversary
of the Truman Committee's conversion into a permanent
subcommittee of the U.S. Senate. 2 In the half-
century of its existence, the Subcommittee's many successes
have made clear to the Senate the importance of retaining a
standing investigatory body devoted to keeping government not
only efficient and effective, but also honest and accountable.
---------------------------------------------------------------------------
\2\ This anniversary also marks the first date upon which internal
Subcommittee records generally began to become available to the public.
Unlike most standing committees of the Senate whose previously
unpublished records open after a period of 20 years has elapsed, the
Permanent Subcommittee on Investigations, as an investigatory body, may
close its records for 50 years to protect personal privacy and the
integrity of the investigatory process. With this 50th anniversary, the
Subcommittee's earliest records, housed in the Center for Legislative
Archives at the National Archives and Records Administration, began to
open seriatim. The records of the predecessor committee--the Truman
Committee--were opened by Senator Nunn in 1980.
---------------------------------------------------------------------------
(1) Historical Highlights
The Subcommittee's investigatory record as a permanent
Senate body began under the Chairmanship of Republican Senator
Homer Ferguson and his Chief Counsel (and future Attorney
General and Secretary of State) William P. Rogers, as the
Subcommittee inherited the Truman Committee's role in
investigating fraud and waste in U.S. Government operations.
This investigative work became particularly colorful under the
chairmanship of Senator Clyde Hoey, a North Carolina Democrat
who took the chair from Senator Ferguson after the 1948
elections. The last U.S. Senator to wear a long frock coat and
wing-tipped collar, Mr. Hoey was a distinguished southern
gentleman of the old school. Under his leadership, the
Subcommittee won national attention for its investigation of
the so-called ``five percenters,'' notorious Washington
lobbyists who charged their clients five percent of the profits
from any Federal contracts they obtained on the client's
behalf. Given the Subcommittee's jurisdictional inheritance
from the Truman Committee, it is perhaps ironic that the ``five
percenters'' investigation raised allegations of bribery and
influence-peddling that reached right into the White House and
implicated members of President Harry Truman's staff. In any
event, the fledgling Subcommittee was off to a rapid start.
What began colorful soon became contentious. When
Republicans returned to the Majority in the Senate in 1953,
Wisconsin's junior Senator, Joseph R. McCarthy, became the
Subcommittee's Chairman. Two years earlier, as Ranking Minority
Member, Senator McCarthy had arranged for another Republican
Senator, Margaret Chase Smith of Maine, to be removed from the
Subcommittee. Senator Smith's offense, in Senator McCarthy's
eyes, was her issuance of a ``Declaration of Conscience''
repudiating those who made unfounded charges and used character
assassination against their political opponents. Although
Senator Smith had carefully declined to name any specific
offender, her remarks were universally recognized as criticism
of Senator McCarthy's accusations that communists had
infiltrated the State Department and other government agencies.
Senator McCarthy retaliated by engineering Senator Smith's
removal from the Subcommittee, replacing her with the newly
elected Senator from California, Richard M. Nixon.
Upon becoming Subcommittee Chairman, Senator McCarthy
staged a series of highly publicized anti-communist
investigations, culminating in an inquiry into communism within
the U.S. Army, which became known as the Army-McCarthy
hearings. During the latter portion of these hearings, in which
the parent Committee examined the Wisconsin Senator's attacks
on the Army, Senator McCarthy recused himself, leaving South
Dakota Senator Karl Mundt to serve as Acting Chairman of the
Subcommittee. Gavel-to-gavel television coverage of the
hearings helped turn the tide against Senator McCarthy by
raising public concern about his treatment of witnesses and
cavalier use of evidence. In December 1954, in fact, the Senate
censured Senator McCarthy for unbecoming conduct; in the
following year, the Subcommittee adopted new rules of procedure
that better protected the rights of witnesses. The Subcommittee
also strengthened the rules ensuring the right of both parties
on the Subcommittee to appoint staff, initiate and approve
investigations, and review all information in the
Subcommittee's possession.
In 1955, Senator John McClellan of Arkansas began 18 years
of service as Chairman of the Permanent Subcommittee on
Investigations. Senator McClellan appointed the young Robert F.
Kennedy as the Subcommittee's Chief Counsel. That same year,
Members of the Subcommittee were joined by Members of the
Senate Labor and Public Welfare Committee on a special
committee to investigate labor racketeering. Chaired by Senator
McClellan and staffed by Kennedy and other Subcommittee staff
members, this special committee directed much of its attention
to criminal influence over the Teamsters Union, most famously
calling Teamsters' leaders Dave Beck and Jimmy Hoffa to
testify. The televised hearings of the special committee also
introduced Senators Barry Goldwater and John F. Kennedy to the
Nation, as well as leading to passage of the Landrum-Griffin
Labor Act.
After the special committee completed its work, the
Permanent Subcommittee on Investigations continued to
investigate organized crime. In 1962, the Subcommittee held
hearings during which Joseph Valachi outlined the activities of
La Cosa Nostra, or the Mafia. Former Subcommittee staffer
Robert Kennedy--who had by now become Attorney General in his
brother's Administration--used this information to prosecute
prominent mob leaders and their accomplices. The Subcommittee's
investigations also led to passage of major legislation against
organized crime, most notably the Racketeer Influenced and
Corrupt Organizations (RICO) provision of the Crime Control Act
of 1970. Under Chairman McClellan, the Subcommittee also
investigated fraud in the purchase of military uniforms,
corruption in the Department of Agriculture's grain storage
program, securities fraud, and civil disorders and acts of
terrorism. From 1962 to 1970, the Permanent Subcommittee on
Investigations conducted an extensive probe of political
interference in the awarding of government contracts for the
Pentagon's ill-fated TFX (``tactical fighter, experimental'').
In 1968, the Subcommittee also examined charges of corruption
in U.S. servicemen's clubs in Vietnam and elsewhere around the
world.
In 1973, Senator Henry ``Scoop'' Jackson, a Democrat from
Washington, replaced Senator McClellan as the Subcommittee's
Chairman. During these years, recalled Chief Clerk Ruth Young
Watt--who served in this position from the Subcommittee's
founding until her retirement in 1979--Ranking Minority Member
Charles Percy, an Illinois Republican, was more active on the
Committee than Chairman Jackson, who was often distracted by
his Chairmanship of the Interior Committee and his active role
on the Armed Services Committee. 3 Senator Percy
worked closely in this regard with Georgia Democrat Sam Nunn,
who subsequently succeeded Senator Jackson as Chairman in 1979.
As Chairman, Senator Nunn continued the Subcommittee's
investigations into the role of organized crime in labor-
management relations and also investigated pension frauds.
---------------------------------------------------------------------------
\3\ It had not been uncommon in the Subcommittee's history for the
Chairman and Ranking Minority Member to work together closely despite
their partisan differences, but Senator Percy was unusually active in
the Minority--a role that included chairing one investigation of the
hearing aid industry.
---------------------------------------------------------------------------
The regular reversals of political fortunes in the Senate
of the 1980s and 1990s saw Senator Nunn trade Chairmanship
three times with Delaware Republican William Roth. Senator Nunn
served from 1979 to 1980 and again from 1987 to 1995, while
Senator Roth served from 1981 to 1986, and again from 1995 to
1996. These 15 years saw a strengthening of the Subcommittee's
bipartisan tradition in which investigations were initiated by
either the Majority or Minority and fully supported by the
entire Subcommittee. For his part, Senator Roth led a wide
range of investigations into commodity investment fraud, off-
shore banking schemes, money laundering, and child pornography.
Senator Nunn led inquiries into Federal drug policy, the global
spread of chemical and biological weapons, abuses in Federal
student aid programs, computer security, airline safety, and
health care fraud. Senator Nunn also appointed the
Subcommittee's first female counsel, Eleanore Hill, who served
as Chief Counsel to the Minority from 1982 to 1986 and then as
Chief Counsel from 1987 to 1995. Ms. Hill subsequently served
as Inspector General at the Department of Defense.
(2) Recent Investigations
In January 1997, Republican Senator Susan Collins of Maine
became the first woman to Chair the Permanent Subcommittee on
Investigations. Senator John Glenn of Ohio became the Ranking
Minority Member. After Senator Glenn's retirement, Michigan
Democrat Carl Levin succeeded him in January 1999 as the
Ranking Minority Member. During Senator Collins's Chairmanship,
the Subcommittee conducted a number of investigations affecting
Americans in their day-to-day lives, including investigations
into mortgage fraud, phony credentials obtained through the
internet, deceptive mailings and sweepstakes promotions, day
trading of securities, and securities fraud on the internet.
Senator Levin, while Ranking Minority Member, initiated an
investigation into money laundering, and in 1999, the
Subcommittee held a hearing on money laundering issues
affecting private banking. Senator Collins continued to Chair
the Subcommittee until June 2001, when the Senate Majority
party changed hands, and Senator Levin assumed the
Chairmanship. Senator Collins, in turn, became the Ranking
Minority Member.
During the 107th Congress, both Senator Collins and Senator
Levin chaired the Subcommittee. In her 6 months chairing the
Subcommittee at the start of the 107th Congress, Senator
Collins held hearings examining issues related to cross border
fraud, the improper operation of tissue banks, and Federal
programs designed to fight diabetes. During the following 18
months, Senator Levin led a bipartisan Subcommittee
investigation of the Enron Corporation, which had collapsed
into bankruptcy just before Senator Levin became the Chairman.
Senator Levin also advanced the investigation he had initiated
while Ranking Minority Member into issues related to money
laundering and opened new investigations into offshore tax
havens and tax scams, border security, and the pricing of
gasoline and other fuels.
In January 2003, Republican Senator Norm Coleman of
Minnesota became the Chairman of the Permanent Subcommittee on
Investigations. During the 108th Congress, Chairman Coleman
held 15 hearings on disparate topics of national and global
concern, including: Illegal file sharing on peer-to-peer
networks, abusive tax shelters, abusive practices in the credit
counseling industry, the dangers of purchasing pharmaceuticals
and controlled substances over the Internet, money laundering,
foreign corruption, the effectiveness of the Patriot Act,
Federal contractors with billions of dollars in unpaid taxes,
SARS, border security, and how Saddam Hussein abused the United
Nation's Oil-for-Food Program and utilized oil to reward
politicians. The following pages describe the Subcommittee's
work during the 108th Congress.
II. Subcommittee Hearings During the 108th Congress
A. Border Security: How are State and Local Officials Coping with the
New Levels of Threat? (May 12, 2003, Field Hearing held at
Anoka-Hennepin Technical College, Anoka, MN)
The first hearing held by the Subcommittee during the 108th
Congress, under the Chairmanship of Senator Norm Coleman, was a
field hearing in Anoka, MN, on May 12, 2003. Under the
Chairmanship of Senator Coleman, the Subcommittee held a
hearing examining the developing relationship between the
Department of Homeland Security (DHS) and State and locate
government, focusing on DHS grants provided to such
governments. Federal law at the time gave DHS little guidance
concerning the distribution of grant money. The main purpose of
the hearing was to evaluate the implementation of security
measures at a local level, specifically in Minnesota.
While securing our Nation's borders is of paramount
concern, providing an efficient border is also essential to
tourism and international trade. At the Federal level,
strategies and systems have been designed to prevent terrorists
and their weapons from entering the United States. These
concepts, which balance security with the need to facilitate
the flow of trade and travel, include the US-VISIT system that
replaced the preexisting entry and exit system at the U.S.
border. The Department of Homeland Security had also
implemental the Container Security Initiative and the Custom-
Trade Partnership Against Terrorism to identify high-risk cargo
containers and scan them with non-intrusive inspection
technology, such as x-ray and gamma ray systems.
At top priority of DHS at that time was to develop an
effective communications system to coordinate the efforts of
State and local officials with DHS. Improving and integrating
radio networks and making databases available to State and
local officials increase the ability of law enforcement to
respond to specific threats.
Anne Lombardi, Interim Director of Field Operations in the
Chicago Bureau of Customs and Border Protection, gave testimony
relating to the current efforts to integrate Federal, State and
local authorities in responding to simulated attacks under the
TOPOFF program, and as to the implementation of the lessons
learned from those exercises.
The second witness panel included State and local officials
in Minnesota, each speaking to their general level of readiness
to deal with terrorist threats. All four officials testified to
the need for improved communications in the way of radios and
increased communication with Federal authorities.
Rich Stanek, Commissioner of Public Safety and Director of
Homeland Security for the State of Minnesota, testified that
funding was adequate, but that a relaxation of the restrictions
and limitations on spending would allow Minnesota to make
better decisions on providing for the safety of its citizens.
Patrick McGowan, Sheriff of Hennepin County, discussed the
formation of Regional Response Teams, strategically
regionalized to consolidate and allocate resources effectively.
Ardell Brede, Mayor of Rochester, MN, testified that his
city experienced a tremendous negative economic impact that was
caused by the dramatic decrease in international patients at
the Mayo Clinic due to the increase in time that it takes to
process a visa. Furthermore, International Falls is
``desperately in need of funding for homeland security
situations,'' said Paul Nevanen, Director of the Koochiching
Economic Development Authority in International Falls, who
testified that costs associated with emergency preparedness
have doubled in International Falls since September 11, as a
direct result of additional training for emergency personnel.
The consensus among the witnesses on the final panel, which
included industry security officials from seaports, airports,
railways and trucking, was that, while more work and more
funding was necessary, each industry is up to the security
challenges of a post-September 11 world.
Captain Ray Skelton, Environmental and Government Affairs
Director of the Duluth Seaway Port Authority in Duluth, MN,
testified that, although it was impossible to secure the 49
miles of shoreline at the port in Duluth, the implementation of
improved identification and documentation has served to reduce
security threats prior to ships' arrival at port. Steve Leqve,
Airport Manager for Rochester International Airport, desired
the maintenance of a Federal presence at the airport, rather
than see a reduction in TSA agents for airports of his size. He
further noted that he would like to see more local decision-
making within the TSA to allow for the differences between
different airport operations.
Michael Curry, Director of Security for the Canadian
Pacific Railway in Minneapolis, testified that the rail
industry had implemented its own rail security task force to
independently monitor security risks, but noted the importance
of a long-term commitment to rail security and continued
cooperation with Federal authorities. John Hauslauden,
President of the Minnesota Trucking Association in St. Paul,
testified as to the need for an efficient border, applauded the
introduction of non-invasive scanning technology, and stressed
the need for higher concern for stolen cargo.
B. SARS: How Effective is the State and Local Response? (May 21, 2003)
On May 21, 2003, the Subcommittee held a hearing chaired by
Senator Coleman on the Nation's preparedness to deal with
possible outbreaks of severe acute respiratory syndrome (SARS).
SARS emerged as a force to be reckoned with, not only as a
tragedy taking peoples' lives, but delaying others as well.
Since SARS emerged in China, adoptions of Chinese children by
Americans were stopped. Toronto sustained substantial economic
damage because of potential unnecessary reactions to SARS on
the part of organizations responsible for addressing this
disease.
At the national and international levels, agencies had to
develop information quickly about the characteristics of the
disease in order to treat patients and prevent its spread.
Local doctors needed to know how to recognize that something
new was happening and who to turn to for information and
support. Most importantly, information from national and
international health organizations must be transmitted back to
local officials so that doctors, airline attendants,
researchers and average citizens know what to do to protect
themselves.
The May 2003 hearing focused on current levels of readiness
for a future SARS outbreak in the United States, and the need
to continue to develop a national response, predicated on the
understanding that the bulwark of any response will be at the
local level.
The first witness panel consisted of Federal health agency
officials who commented on what they have learned from the
international health crisis, their current level of readiness,
and what more needed to be done to provide protection from a
SARS outbreak. Julie L. Gerberding, M.D., M.P.H., Director of
the Center for Disease Control (CDC) and Prevention in the
Department of Health and Human Services testified that the CDC
is ahead of the curve in terms of current preparedness, but
cautioned that many hospitals and clinics may not yet have the
ability to adequately quarantine suspected SARS cases, and that
the communications infrastructure between the national and
local level was still developing.
Anthony S. Fauci, Director of the National Institute of
Allergy and Infectious Diseases at the National Institutes of
Health in the Department of Health and Human Services testified
as to the research progress being made in identifying and
combating SARS, commenting that the project to create
successful therapies and vaccines was still in its infancy.
Michael T. Osterholm, Ph.D., M.P.H., Director of the Center for
Infectious Disease Research and Policy at the University of
Minnesota testified that luck played a large role in the United
States averting a public health disaster like the one in
Toronto, and noted the significant likelihood of a future SARS
epidemic on U.S. soil.
The second witness panel included State and local health
officials, each speaking to their experiences in dealing with
possible SARS cases and, responding to questions regarding
their readiness, sounded the call for continued and increased
cooperation between national organizations and those battling
SARS on the front lines. Rodney N. Huebbers, President and CEO
of Loudoun Hospital Center of Loudoun Healthcare, Inc. in
Loudon County of Leesburg, VA, commented that the additional
costs associated with training and supplies in dealing with
disease emergencies prevented him from meeting the expectations
of his community.
Thomas R. Frieden, M.D., M.P.H., Commissioner of New York
City Department of Health and Mental Hygiene echoed that
sentiment, testifying that the spread of SARS could rapidly
overwhelm their ability to respond because Federal funding ``is
not nearly enough.'' Mary C. Selecky, Secretary of the
Washington State Department of Health in Olympia, WA, and
President of the Association of State and Territorial Health
Officials discussed the need for increased preparedness, public
health capacity, collaboration between national and local
organizations, and addressed the public health work force
shortage facing the nation.
The final witness panel addressed the practical ability of
health care providers and health care companies to minimize the
concerns and vulnerabilities associated with a possible SARS
outbreak. Lawrence O. Gostin, Director of the Center of Law and
the Public's Health at Georgetown University Law Center
testified to the legal challenges of mass quarantines,
addressing practical and ethical concerns, and introduced model
State legislation that would address those concerns without
running afoul of constitutional limits.
Bruce R. Cords, Ph.D., Vice President of Environment, Food
Safety and Public Health at Ecolab Inc. in St. Paul, MN,
testified to the current potency of disinfectants,
acknowledging the practical problem that even if cleaning
products can combat SARS, people using the products must also
be trained as to what and how to clean. Vicki Grunseth, Chair
of the Metropolitan Airports Commission in Minneapolis, MN,
discussed the current measures being taken by large airports to
anticipate a SARS outbreak, and outlined plans by airline and
airport officials to deal with possible cases.
C. Patient Safety: Instilling Hospitals with a Culture of Continuous
Improvement (June 11, 2003)
On June 11, 2003, under the Chairmanship of Senator
Coleman, the Subcommittee held a hearing on patient safety with
the aim of reducing hospital error, saving lives and reducing
injury. The Centers for Disease Control estimated that, between
1998 and 2003, as many as 15,000 people had foreign objects
left inside their bodies after surgery. In 1999, the Institutes
of Medicine reported that between 44,000 and 98,000 Americans
die each year as a result of preventable medical errors at a
cost to the health system of between $37 billion and $50
billion per year. Doctors and nurses are in the unenviable
position where their mistakes can easily have fatal
consequences. While a complete solution to human fallibility is
impossible, this hearing sought to present witnesses with
experience in systematic solutions to the problem of patient
safety. It found that implementing system-wide solutions would
help to reduce error within the health care industry and
minimize the human cost of those errors that do occur by
learning from past mistakes and collaborating in the production
of a proactive solution.
The first witness, Roxanne J. Goeltz of Burnsville, MN,
related the story of her brother's sudden death while in the
hospital and the dearth of information or explanation by
hospital staff to her relatives regarding the circumstances of
his death. She testified to numerous lapses, such as
misdiagnosis of his condition and allowing her parents to see
their deceased son with no one to support them, and stated that
if a standardized healthcare protocol were initiated these
kinds of mistakes could be minimized or eliminated. She also
discussed her subsequent involvement in the Patient and Family
Advisory Council and shared her thoughts on the current state
of the health care system. Ms. Goeltz emphasized the role of
the consumer in making intelligent healthcare decisions, and
made several suggestions as to what the Federal Government
could do to encourage a more effective health care environment.
The second panel consisted of national health
administrative officials testifying to current national efforts
to decrease physician error and patient injury. James P.
Bagian, M.D. P.E., Director of the National Center for Patient
Safety in the U.S. Department of Veterans Affairs, discussed
the need for real leadership--not just emails and shifting
policies--to direct the patient safety movement. Carolyn M.
Clancy, M.D., Director of the Agency for Healthcare Research
and Quality at the U.S. Department of Health and Human
Services, focused on the need to stop blaming physicians for
problems and truly address the system-wide changes that are
required to improve healthcare across the board. She noted that
AHRQ had been developing programs designed to do just that.
Dennis S. O'Leary, M.D., President of the Joint Commission on
Accreditation of Healthcare Organizations, testified that the
accreditation process at that time incorporated a systems
approach to managing risk that was borrowed from industries in
the manufacturing world. He commented that such adaptations had
been extremely helpful in developing solutions to the patient
safety problem.
The final panel consisted of a variety of local, State, and
private interests each speaking to the urgent need for
systematic healthcare reform and the baby steps that had
already been taken by the industry in that direction. David R.
Page, President and CEO of Fairview Health Services, related an
account of a recent system failure at his own hospital and
echoed the need for a process improvement system of the sort
that 3M, Motorola, Toyota, and other industry leaders had in
place. Dianne Mandernach, Commissioner of the Minnesota
Department of Health, encouraged the development of a national
system that would aid in the identification of trends and
encouraged a more collaborative response to improving patient
safety. Robert E. Krawisz, Executive Director of the National
Patient Safety Foundation, testified to the enormous cost
burden that poor healthcare has on the industry, and encouraged
more active patient involvement in their own care to help fill
the gaps in the healthcare system as it continues to improve.
Suzanne Delbanco, Ph.D., Executive Director of The Leapfrog
Group, discussed her groups' effort to inform and educate the
33 million employees of the 140 employers whom she represented
so that they understand how quality can vary widely between
healthcare institutions, and the need to make informed
healthcare decisions.
D. SARS: Best Practices for Identifying and Caring for New Cases (July
30, 2003)
Under the Chairmanship of Senator Coleman, the Subcommittee
held the second in a series of hearings on the national
response to the international epidemic of severe acute
respiratory syndrome (``SARS''). A GAO report, released in
conjunction with the hearing on July 30, 2003, detailed the
readiness of the Federal Government to deal with a national
SARS outbreak. The GAO concluded that, although preparation
efforts are underway at every level, implementing those plans
during a large-scale outbreak may prove difficult due to
limitations in both hospital and workforce capacity that could
result in overcrowding, as well as potential shortages in
health care workers and equipment.
Experts agree that the possibility of an outbreak of SARS
in the United States remains significant and that just one
confirmed case in an American city would require tracking down
potentially hundreds of possible contacts across the country
who may also be infected. The hearing focused on the need for
further education of the general public, for continued
vigilance by State and local health officials, and the
effective coordination of a national response at the Federal
level.
The first witness, Marjorie E. Kanof, M.D., Director of
Health Care-Clinical and Military Health Care Issues at the
U.S. General Accounting Office, testified to the general
characteristics of SARS transmission and to the general
preparedness of the United States to respond to a widespread
outbreak of SARS, including a checklist prepared by the CDC for
distribution to hospitals across the country. Dr. Kanof
explained that, although the outbreak was believed to be
contained, it was expected to recur during the fall and winter
months. She further stated that, during the first outbreak,
experts maintained that well-established infectious disease
control measures played a pivotal role in containing the
outbreak.
Dr. Kanof also testified that, despite the effective
response, federal, State and local authorities all agreed to
the necessity of preparing for the possibility of a large-scale
SARS resurgence. She noted that, at that time, no definitive
test existed to identify SARS during the early phase of the
illness. Furthermore, Dr. Kanof testified that most hospitals
lack the capacity to respond to large-scale infectious disease
outbreaks; and few had adequate staff, medical resources and
equipment needed to care for the potentially large number of
patients that may need treatment. She warned that patients
placed in isolation or quarantine required additional resources
that could severely strain the resources of local health
authorities.
The second witness, James M. Hughes, M.D., Director of the
National Center for Infectious Diseases at the Centers for
Disease Control and Prevention at the U.S. Department of Health
and Human Services, discussed the national response. Dr. Hughes
testified that, despite a successful initial response involving
intense collaboration among public health officials at the
local, State and national levels, the clinical and academic
communities, members of processional organizations and industry
representatives, much remained to be done. According to Dr.
Hughes, the CDC was developing a research agenda to help build
the scientific base to ensure that the global clinical and
public health communities have the necessary knowledge and
tools to meet the challenges of SARS. Dr. Hughes also testified
that the CDC had also established a SARS preparedness task
force to develop effective response mechanisms to rapidly and
efficiently detect the introduction of SARS into the United
States and adapt easily to meet a range of local needs. In
response to a question posed by Senator Coleman on the impact
of an outbreak on rural America, Dr. Hughes stressed the
importance of public awareness and local preparedness starting
and ending with increased education, preventing unnecessary
panic and dramatically improving the response to an outbreak.
E. Privacy and Piracy: The Paradox of Illegal File Sharing on Peer-To-
Peer Networks and the Impact of Technology on the Entertainment
Industry (September 30, 2003)
On September 30, 2003, the Subcommittee held a hearing,
Privacy and Piracy: The Paradox of Illegal File Sharing on
Peer-To-Peer Networks and the Impact of Technology on the
Entertainment Industry, with the aim of creating future
foundations to accommodate the developing use of technology
distributing music and movies, while maintaining copyright laws
that protect creative work. Sixty to ninety million people use
peer-to-peer (P2P) networks to illegally trade copyrighted
material, presenting a growing problem as advanced technology
makes downloading files free and easy. On September 8, 2003,
the Recording Industry Association of America (RIAA) launched
its first round of copyright infringement lawsuits in an effort
to deter people from illegal downloading. There is no law to
regulate RIAA's use of subpoenas against potential offenders.
The Subcommittee expressed concern over RIAA's broad powers to
issue subpoenas to individual users when perhaps the subpoenas
should target the P2P companies, such as Kazaa.
At the hearing, Mitch Bainwol, Chairman and Chief Executive
Officer, Recording Industry Association of America, testified
that in 2003 domestic revenue in the music industry decreased
from $15 to $11 billion, while international revenues suffered
an even greater decline, due to the sharing of illegal audio
files on the Internet. The RIAA attempted to inform people of
illegal downloading by way of emails, instant messages, and
websites, but later resorted to enforcement activities. Mr.
Bainwol proposed that to alleviate the problems associated with
illegal downloading, society must understand right versus
wrong, and the market for legal downloads must become more
competitive.
Jack Valenti, President and Chief Executive Officer, Motion
Picture Association of America (MPAA), testified that the movie
industry is America's greatest trade export, five percent of
America's economic output, and a big part of economic growth.
MPAA increased law enforcement programs against illegal file
sharing, and embarked upon a public persuasion and education
campaign to teach children what copyright means and how it is a
benefit to the United States. Mike Negra, President of Mike's
Video, Inc., testified that in 2000, the year Napster was
formed, his company's video and music sales decreased by about
23 percent.
On the second witness panel, witnesses agreed that the
general public does not understand file sharing is wrong, let
alone a crime. Jonathan D. Moreno, Director, Center for
Biomedical Ethics at the University of Virginia, explained that
those who illegally download copyrighted material do not have
direct contact with the artists who own it, making the two
groups ``moral strangers.'' Further, because file sharing is
marketed by P2P organizations and is easy to achieve, people
are less likely to view downloading copyrighted files as a
crime.
The Subcommittee also took testimony from L.L. Cool J,
Recording Artist, New York, NY; Alan Morris, Executive Vice
President, Sharman Networks Limited; Derek S. Broes, Executive
Vice President of Worldwide Operations, Altnet; Chris Gladwin,
Founder and Chief Operating Officer, Full Audio, Inc.; Lorraine
Sullivan, New York, NY; Chuck D, Record Artist, Author,
Activist; and James V. DeLong, Senior Fellow and Director,
Center for the Study of Digital Property, The Progress and
Freedom Foundation.
F. SARS: Is Minnesota Prepared? (October 8, 2003, Field Hearing at St.
Louis Park High School, St. Louis Park, MN)
On October 8, 2003, at St. Louis Park High School in St.
Louis Park, MN, the Subcommittee held the third in a series of
hearings designed to assess the readiness of the United States
to respond to a widespread outbreak of severe acute respiratory
syndrome (``SARS'') within our borders. The previous hearings
focused primarily on the need for a national response effort
and, once a response was formulated, what must be done to
successfully implement that response at the national level. The
October 8 hearing focused specifically on the State and local
response within Minnesota, and on the concrete steps that had
to be taken to ensure that the State was prepared for new cases
of SARS.
The first witness panel consisted of State health officials
testifying about their preparations and readiness to handle a
SARS outbreak in Minnesota. Dianne Mandernach, Commissioner of
the Minnesota Department of Health in St. Paul, MN, discussed
efforts at the State level to maintain and strengthen disease
surveillance. She noted that an effective hospital procedure to
contain the spread of SARS and consistent communication with
local health practitioners and the general public was critical
to a successful campaign against communicable disease. Michael
T. Osterholm, Ph.D. M.P.H., Director of the Center of
Infectious Disease Research and Policy and Professor at the
School of Public Health at the University of Minnesota,
testified that, although there is extensive data on the initial
SARS outbreak, the challenge would be to translate that
information into meaningful State and local preparedness plans,
and identify the necessary resources for comprehensive
implementation of those plans, should SARS return.
The second witness panel included local health hospital and
school officials who testified more directly to local response
plans and experiences with implementation. Jeff Spartz,
Administrator of Hennepin County Medical Center, discussed the
Minneapolis-St. Paul Metropolitan Hospital Compact, a group of
27 hospitals that have developed a regional plan for dealing
with infectious disease emergencies, but cautioned that certain
facilities such as laboratories and ICU units would be almost
immediately overwhelmed should a significant outbreak occur.
Mary Quinn, Vice President of Patient Care Services at
Northfield Hospital, and Ann Hoxie, Student Wellness
Administrator for the St. Paul Public Schools, both discussed
their responses to possible SARS cases. Each felt that they had
sufficient information, but both were concerned with the legal
and ethical problems surrounding quarantine and isolation. Ms.
Hoxie also expressed concern with the large percentage of
students who did not have health coverage, relegating the front
lines of the fight against infectious disease to the school
nurse.
Debra Herrmann, R.N., P.H.N., L.S.N., District Lead Nurse
for the Marshall School District, testified that, although
there has been a great deal of information from the CDC and the
Department of Health, it has been mainly medically oriented and
contains little by way of information and procedures applicable
to schools. She also testified that the schools did not have
the funds to develop and implement response protocols. Rob
Benson, Superintendent of the Floodwood School District in
Floodwater, MN, explained their dependence upon the school
nurse in a small, rural town. He expressed dismay over the fact
that his school district could not afford to employ a school
nurse full-time and that the best information that was
available was a newsletter that contained information gleaned
from the CDC website.
G. DOD's Improper Use of First and Business Class Airline Travel
(November 6, 2003)
The Subcommittee working in conjunction with the Government
Accountability Office (GAO) initiated an investigation to
determine if Federal employees were complying with Federal
travel requirements. Between 2001 and 2003, the GAO and
Inspector Generals at several Federal departments and agencies
had reported on abuses related to the use of government-issued
travel cards. The first part of the Subcommittee's
investigation focused on the Department of Defense (DOD).
The Subcommittee's investigation determined that DOD
personnel are generally required to travel at the least expense
to the government. In the case of air travel, the least costly
travel class is generally coach class. First or business class
travel is available to DOD employees when specified exceptional
circumstances warrant the additional cost. Any request for
first or business class travel by a DOD employee must be
justified by the traveler and authorized by an appropriate
official.
Within DOD, travel for military personnel is governed by
the Joint Federal Travel Regulations, and travel for civilian
personnel is governed by the Joint Travel Regulations. These
regulations set forth the specific circumstances that justify
the use of first or business class travel. For example, first
class travel may be justified if other classes of travel are
not reasonably available, or if there are exceptional security
circumstances, or if a medically substantiated handicap or
physical impairment requires the use of a premium class of
travel. Business class travel may be justified for eight
different reasons, such as regularly scheduled flights only
provide premium class accommodations, or coach class is not
available and the travel is so urgent it cannot be postponed,
or travel is outside the United States and exceeds 14 hours.
The traveler is required to cite the appropriate justification
before the travel is authorized. It is usually only approved by
an official who is senior to the employee who is traveling.
During the investigation the Subcommittee also determined
that all Federal agencies annually report their first class
travel to the Office of Management and Budget (OMB) pursuant to
OMB Bulletin 93-11. This report provides the only government-
wide mechanism to monitor the use of first class travel and
deter abuse. Business class travel is not reported in this
manner.
At a Subcommittee hearing on November 6, 2003, Gregory D.
Kutz of GAO testified that during fiscal years 2001 and 2002,
DOD spent almost $124 million on about 68,000 tickets where at
least one leg of a trip was booked in first or business class.
GAO further testified that 72 percent of DOD's premium travel
in these years was not authorized and 73 percent was not
properly justified. About half of the people who abused the
travel regulations were civilian supervisors, managers,
executives, or senior military officers. According to GAO's
testimony, DOD did not have accurate and complete data on the
extent of premium class travel and performed little or no
monitoring of this travel. GAO estimated that DOD could save
tens of millions of dollars per year through better oversight
that assured adherence to DOD's travel policies and
regulations. GAO also testified that 98 percent of the travel
abuse related to the use of business class travel, which can be
as costly as first class travel.
In their testimony, DOD officials Charles S. Abell,
Assistant Secretary of Defense (Force Management Policy) and
Lawrence J. Lanzillotta, Principal Deputy Under Secretary
(Comptroller) agreed that more aggressive action needed to be
taken in this area. DOD began updating its travel regulations
to more clearly state when first or business class travel can
be authorized, and emphasized that it must only be used when
exceptional circumstances warrant the additional cost.
Following the hearing, on November 25, 2003, Chairman
Coleman wrote to the Director of OMB and requested that the
annual Federal travel report be expanded to include business
class travel. Given that 98 percent of DOD's abusive travel
occurred in business class, the annual first class Federal
travel report would potentially only have identified two
percent of DOD's abuse.
H. U.S. Tax Shelter Industry: The Role of Accountants, Lawyers and
Financial Professionals (November 18 and 20, 2003)
On November 18 and 20, 2003, the Subcommittee held 2 days
of hearings examining the role played by accountants, lawyers,
investment advisors, and bankers to develop, market, and
implement abusive tax shelters to reduce and eliminate Federal
and State tax taxes. Abusive tax shelters are complex financial
transactions in which a significant purpose is to reduce and
eliminate Federal, State or local taxes in a manner not
intended by the law.
The hearings were the culmination of a Subcommittee
investigation that was initiated under Senator Levin with the
support and concurrence of Chairman Coleman, and which lasted
for close to 2 years. The Subcommittee determined that, by
2003, the U.S. tax shelter industry was no longer focused
primarily on providing individualized tax advice to persons who
initiate contact with a tax advisor. Instead, the industry
focus had expanded to developing a steady supply of generic
``tax products'' that were aggressively marketed to multiple
clients. In short, the tax shelter industry had moved from
providing one-on-one tax advice in response to tax inquiries to
also initiating, designing, and mass marketing tax shelter
products to hundreds of taxpayers.
The investigation also found that numerous respected
members of the American business community were heavily
involved in the development, marketing, and implementation of
generic tax products whose objective was not to achieve a
specific business or economic purpose, but to reduce or
eliminate a client's U.S. tax liability. By 2003, dubious tax
shelter sales were no longer the province of shady, fly-by-
night companies with limited resources. They had become big
business, assigned to talented professionals at the top of
their fields and able to draw upon the vast resources and
reputations of the country's largest accounting firms, law
firms, investment advisory firms, and banks.
The Subcommittee's investigation and hearings focused on
generic tax products developed and promoted by KPMG,
PricewaterhouseCoopers, and Ernst and Young, three of the top
four accounting firms in the United States. During the 1990s,
in response in part to the stock market boom and the
proliferation of stock options, these firms and others designed
and developed tax products used to shelter gains from taxation.
Tax products examined by the Subcommittee included: KPMG's Bond
Linked Issue Premium Structure (BLIPS), Foreign Leveraged
Investment Program (FLIP), Offshore Portfolio Investment
Strategy (OPIS), and S-Corporation Charitable Contribution
Strategy (SC2); PricewaterhouseCooper's Bond and Option Sales
Strategy (BOSS); and Ernst and Young's Contingent Deferred Swap
(CDS). Each of these products generated hundreds of millions of
dollars in phony tax benefits for taxpayers, using a series of
complex, orchestrated transactions, structured finance, and
investments with little or no profit potential.
The investigation examined a number of professional firms
that assisted in the development, marketing, and implementation
of the tax shelters promoted by the three accounting firms.
Leading banks, including Deutsche Bank, HVB, and UBS, provided
multi-billion dollar credit lines essential to the orchestrated
transactions. Wachovia Bank, acting through First Union
National Bank, made client referrals to KPMG and
PricewaterhouseCoopers, playing a key role in facilitating the
marketing of potentially abusive or illegal tax shelters.
Leading law firms, such as Brown and Wood, which later merged
with another firm to become Sidley Austin Brown and Wood,
provided favorable tax opinions advising that certain abusive
tax shelters were permissible under the law. The evidence also
suggests collaboration between Sidley Austin Brown and Wood and
KPMG on the OPIS and BLIPS tax shelters, including the issuance
of allegedly independent opinion letters on BLIPS by KPMG and
the law firm which contained numerous virtually identical
paragraphs. Two investment advisory firms, Presidio Advisory
Services and Quellos Group (formerly doing business as Quadra
Advisors and QA Investments), also assisted in the design,
marketing, and implementation of tax shelters promoted by KPMG.
Additionally, Quellos served as the investment advisor for
PricewaterhouseCooper's version of FLIP.
At the November 18 hearing, the Subcommittee heard
testimony from three tax experts: Debra Peterson, Tax Counsel,
California Franchise Tax Board; Mark Watson, former Partner,
KPMG LLP; and Calvin Johnson, Professor, The University of
Texas at Austin School of Law. The Subcommittee also heard
testimony from numerous tax professionals from various
accounting firms. Tax professionals from KPMG LLP included:
Philip Wiesner, Partner in Charge, Washington National Tax
Client Services; Jeffrey Eischeid, Partner, Personal Financial
Planning; Lawrence DeLap, retired National Partner in Charge,
Department of Professional Practice-Tax; Lawrence Manth, former
West Area Partner in Charge, Stratecon; and Richard Smith Jr.,
Vice Chair, Tax Services. Accounting firm
PricewaterhouseCoopers was represented by Richard Berry, Jr.,
Senior Tax Partner. Accounting firm Ernst and Young LLP was
represented by Mark Weinberger, Vice Chair, Tax Services.
At the November 20 hearing, the Subcommittee heard
testimony from three lawyers: Raymond Ruble, former Partner,
Sidley Austin Brown and Wood LLP; Thomas Smith, Jr., Partner,
Sidley Austin Brown and Wood LLP; and N. Jerold Cohen, Partner,
Sutherland Asbill and Brennan LLP. The Subcommittee also heard
testimony from William Boyle, former Vice President, Structured
Finance Group, Deutsche Bank AG; Domenick DeGiorgio, former
Vice President, Structured Finance, HVB America, Inc.; John
Larson, Managing Director, Presidio Advisory Services; and
Jeffrey Greenstein, Chief Executive Officer, Quellos Group LLC.
Lastly, the Subcommittee heard testimony from three regulators:
Mark Everson, Commissioner, Internal Revenue Service; William
McDonough, Chairman, Public Company Accounting Oversight Board;
and Richard Spillenkothen, Director, Division of Banking
Supervision and Regulation, The Federal Reserve.
In connection with the November 2003 hearings, the
Subcommittee's Minority staff issued a report detailing the
transactions developed and promoted by KPMG, and involving the
activities of Deutsche Bank, HVB, UBS Bank, Sidley Austin Brown
and Wood, Wachovia Bank, Quellos, and Presidio Advisory
Services. Following the hearings, the Subcommittee issued a
bipartisan Senate Report in April 2005, which included the
findings and text of the earlier Minority staff report and also
detailed transactions involving Ernst and Young and
PricewaterhouseCoopers, activities of Sutherland Asbill and
Brennan, and additional details relating to activities by
Presidio Advisory Services, Quellos, Sidley Austin Brown and
Wood, HVB Bank, and Wachovia Bank.
As a result of the Subcommittee's hearings and
investigation, the three accounting firms committed to
cultural, structural, and institutional reforms and changes to
end the development, promotion, and implementation of mass-
marketed abusive tax shelters. KPMG informed the Subcommittee
that the firm had dismantled its development, marketing, and
sales infrastructure used for offering mass-marketed tax
shelters. In addition, KPMG indicated that it had dismantled
various tax practice groups, made leadership changes, and
strengthened oversight and compliance. KPMG indicated that
these changes reflected a firm-wide commitment to attain the
highest degree of trust from the firm's clients, regulators,
and the public at large. Similarly, Ernst and Young told the
Subcommittee that the firm had instituted new oversight and
leadership changes, IRS compliance and monitoring systems, and
firm-wide policies to ensure the highest standards of
professionalism. PricewaterhouseCoopers told the Subcommittee
that the firm had instituted new leadership positions, and a
centralized product development process to monitor all tax
services to ensure that mass-marketed abusive tax shelters
would not be marketed by the firm in the future.
Following the hearings, the Senate passed resolution S. 274
authorizing production of documents from this investigation to
law enforcement authorities. In August 2005, in a matter
handled by the Tax Division of the U.S. Justice Department,
KPMG admitted to criminal wrongdoing and agreed to pay $456
million in fines, restitution, and penalties. The criminal
information and indictment together stated that, from 1996 to
2003, KPMG and others conspired to defraud the IRS by
designing, marketing, and implementing illegal tax shelters in
relation to the FLIP, OPIS, and BLIPS shelters and another
shelter known as SOS. In addition, the Justice Department
indicted multiple individuals, including former KPMG tax
partners and a former Brown and Wood law partner, for their
roles in these and other tax shelter activities.
To further address the problem of abusive tax shelters
involved with robbing the U.S. Treasury of millions of dollars
at the expense of honest American taxpayers, Senator Levin and
Senator Coleman introduced the Tax Shelter and Tax Haven Reform
Act, S. 2210, to strengthen penalties on tax shelter promoters,
prevent abusive tax shelters, deter uncooperative tax havens,
and codify the economic substance and business purpose
doctrines. This bill was referred to the Senate Finance
Committee which subsequently reported a more comprehensive tax
bill, S. 1637. This bill included some of the tax shelter
provisions in S. 2210. In May 2004, the Senate considered and
adopted S. 1637. During the Senate debate, a Levin-Coleman
amendment was accepted to further strengthen Federal penalties
on promoters, aiders and abettors of abusive tax shelters. In
October 2004, after a House-Senate conference, Congress enacted
into law H.R. 4520, the American Jobs Creation Act. This tax
legislation included a number of tax shelter reforms supported
by the Subcommittee's investigation and the Senate Finance
Committee, including stronger penalties on promoters of abusive
tax shelters.
I. DOD Contractors Who Cheat on Their Taxes and What Should be Done
About It (February 12, 2004)
In 2003, the Subcommittee initiated an investigation into
the problem of Federal contractors who are paid with taxpayer
dollars, while failing to meet their own tax obligations. This
problem is a longstanding one. For example, in 1992, the
Government Accountability Office (GAO) reported that more than
5,700 Federal contractors had failed to pay $773 million in
taxes, penalties, and interest. Another 1,100 contractors were
under investigation at that time for failing to file tax
returns. Based on more recent reports that certain Federal
contractors continue to evade payment of their taxes, the
Subcommittee initiated an investigation to determine the scope
of the problem and the state of Federal programs designed to
cure it, including the Federal tax levy program, which is
supposed to levy a portion of all Federal contractor payments
to ensure the payment of any outstanding tax debt.
In a February 12, 2004 hearing before the Subcommittee, GAO
testified that 27,100 Department of Defense (DOD) contractors
(25,600 businesses and 1,500 individuals) owed about $3 billion
in unpaid taxes. These contractors provided DOD with a wide
variety of goods and services, including building maintenance,
construction, consulting, catering, dentistry, funeral
services, and parts or services related to weapons. GAO also
identified 47 cases involving potential tax fraud which were
subsequently referred to the IRS for enforcement action.
GAO also identified numerous problems with the Federal tax
levy program, including flaws in how the program was being
implemented by DOD with respect to its contractors. For
example, GAO noted that more than a dozen DOD payment systems
did not participate in the automated tax levy program, which
meant that about $85 billion in DOD contract payments were not
being screened for delinquent taxpayers. In addition, many of
DOD's payment documents lacked valid taxpayer identification
numbers, which meant that their contract payments could not be
matched to IRS debt records to identify payments that should be
levied. DOD contractors are required to register in the Central
Contractor Registration--a DOD database--before they can be
awarded a contract. As part of the registration process,
contractors are required to provide a taxpayer identification
number. However, the numbers provided are not validated with
the IRS. GAO testified that it found cases where contractors
did not provide their taxpayer identification numbers and in
some instances provided fraudulent numbers. GAO concluded that,
under the tax levy program, DOD had collected less than $1
million in 2002, when it should have been collecting a minimum
of $100 million.
The Subcommittee also took testimony from Mark Everson,
Commissioner, IRS, Department of the Treasury; Richard L.
Gregg, Commissioner, Financial Management Service, Department
of the Treasury; and Lawrence J. Lanzillotta, Principal Deputy
Under Secretary (Comptroller), DOD.
J. Profiteering in a Non-Profit Industry: Abusive Practices in Credit
Counseling (March 24, 2004)
In 2003, the Subcommittee initiated an investigation into
abusive practices by the credit counseling industry. In 2004,
the Subcommittee held hearings to examine the industry and
issued a bipartisan Subcommittee staff report on this issue.
Since 1996, more than one million consumers have filed for
bankruptcy each year, with a record 1.66 million filings in
2003. The national credit card debt has skyrocketed over the
past several years, and consumer debt has more than doubled in
the past 10 years. To manage that debt, consumers regularly
turned to the non-profit credit counseling industry for advice,
financial education, and debt consolidation. Consumers who
could not afford to make all of their credit card payments
often enrolled in a debt management program, which allowed them
to consolidate their debts from several credit cards, reduce
their monthly payments, and lower their interest rates.
The non-profit credit counseling industry often provided a
last chance for heavily indebted consumers to repair their
finances. Over the past several years, however, the credit
counseling industry has undergone significant changes. The
behavior of many new entrants into the industry resulted in
increased consumer complaints, which led the Subcommittee,
under the Chairmanship of Senator Coleman, to open an
investigation into practices within the industry. The
Subcommittee's initial inquiry lasted from approximately
October 1993 to March 1994.
The Subcommittee investigated the practices of credit
counseling agencies, the for-profit service providers who
performed ``back room'' services for those agencies, and the
creditor banks. The enforcement policies and practices of the
Internal Revenue Service (IRS) and the Federal Trade Commission
(FTC) were also examined. The Subcommittee investigation
revealed that the consumer complaints were often due to the
practices of new entrants into the credit counseling industry
that pressured consumers into debt management plans, charged
excessive fees, provided little or no financial counseling or
education, promised results that never came about, ruined
credit ratings, provided poor service, and in many cases left
consumers in worse debt than before they initiated their debt
management plan.
On March 24, 2004, the Subcommittee held a hearing to
explore its findings. Two consumers who had been victimized by
credit counseling agencies appeared as witnesses and told their
stories to the Subcommittee, and two former credit counseling
employees testified about the operations of credit counseling
agencies from the inside. The Subcommittee also heard from
three major credit counseling ``conglomerates''--the DebtWorks-
AmeriDebt conglomerate, the Cambridge-Brighton conglomerate,
and the Ascend One-Amerix conglomerate. IRS Commissioner Mark
Everson and FTC Commissioner Thomas Leary testified regarding
their respective efforts to regulate the industry and enforce
consumer protection laws. On the same date as the hearing, the
Subcommittee released a bipartisan staff report.
In response to the hearings and report, all three credit
counseling conglomerates examined by the Subcommittee pledged
to improve their operations. In addition, the IRS initiated a
major review of credit counseling agencies claiming to be non-
profit organizations. The FTC also continued its enforcement
actions against several of the conglomerates examined by the
Subcommittee.
K. Buyer Beware: The Danger of Purchasing Pharmaceuticals Over the
Internet (June 17 and 22, 2004)
In 2003, the Subcommittee initiated an investigation into
health and security issues related to purchasing pharmaceutical
products on the Internet and, in 2004, held two hearings on
this issue.
The Subcommittee held the first of the two hearings on June
17, 2004. At that time, Americans were increasingly turning to
the Internet for access to affordable drugs, spending in excess
of $2.3 billion in 2003 alone. Consumers had been turning to
Internet pharmacies due to the exorbitant prices of
pharmaceuticals available at ``brick-and-mortar'' pharmacies,
lured by the promise of cheaper prices and streamlined service.
Unfortunately, rogue Internet pharmacies have proliferated,
making millions of dollars by selling unproven, counterfeit,
defective or otherwise inappropriate medications to
unsuspecting consumers. Even more dangerous, these sites profit
by selling addictive and potentially deadly controlled
substances to consumers without a prescription or any physician
oversight. The Subcommittee conducted a preliminary
investigation at the JFK International Airport International
Mail Branch (IMB) and found that 40,000 parcels containing
drugs are imported through that airport on a daily basis,
11,200 of them being controlled substances like Vicodin,
OxyCodone, and morphine. These parcels entered the United
States from many countries, not just Canada. They contained
counterfeit drugs and drugs with improvised packaging or
instructions in languages other than English. The Subcommittee
also discovered that similar problems existed at Chicago O'Hare
and Miami IMB's.
The first panel consisted of two GAO officials who
conducted an investigation into issues surrounding the
availability and safety of prescription drugs sold over the
Internet, as well as the business practices of certain Internet
pharmacies. Marcia Crosse, Director of Health Care, Public
Health and Military Health Care Issues at the U.S. General
Accounting Office, testified that, at that time, online
pharmacies outside the U.S. and Canada regularly dispensed
pharmaceuticals without prescriptions, that many of the drugs
were either damaged, improperly packaged, or counterfeit, and
that a significant number of the internet pharmacies appeared
to be running scams. Most of the drugs obtained through the
investigation were unapproved by the FDA. These problems, in
certain cases, were severe. She testified that a package of
Accutane, an acne treatment that causes birth defects if
handled by pregnant women, came with instructions written only
in Spanish. Problems like this raise the potential that a
person receiving medications would not have had a physician
consultation and could not read the instructions, placing them
at a high risk for injury.
Robert J. Kramer, Managing Director of the Office of
Special Investigations at the U.S. General Accounting Office,
testified that the GAO investigation revealed that most of the
U.S. online pharmacies in the business of selling hydrocodone
knowingly service and richly profit from individuals who
purchase narcotics for illicit purposes. Mr. Kramer revealed
that the hydrocodone purchased online sold for 3 to 16 times
the prices charged by local retail pharmacies. Further, none of
the websites required a prescription and the narcotics could be
easily obtained by filling out an online questionnaire. He
testified that tech-savvy children, using their parent's credit
cards, could easily obtain dangerous and addictive narcotics.
The second panel consisted of individuals researching the
growing problem of uncontrolled pharmaceutical importation and
the unique threats to American consumers associated with the
rise in Internet pharmacies. Hon. Rudolph W. Giuliani, Chairman
and CEO of Giuliani Partners LLC in New York City, testified to
the market forces that have created this surge in the use of
Internet pharmacies. He explained that the capacity to screen
and inspect packages for imported pharmaceuticals was, at that
time, only 1% of the total packages moving through IMB's. Mr.
Giuliani stressed the need for an effective solution to this
difficult problem. Marvin Shepherd, Ph.D., Director for
Pharmacoeconomic Studies at the College of Pharmacy at The
University of Texas at Austin, testified that, until an
acceptable solution can be implemented that would place
Internet pharmacies under the scrutiny of the FDA or equivalent
body, he is opposed to any legislative effort to allow drug
importation from Canada. He explained that many of the drugs
being sold on the Internet from Canada have their country of
origin elsewhere, due to an insufficient inventory of
pharmaceuticals within Canada. He testified that most of the
drugs imported by Canada from other countries were in violation
of FDA regulations, posing a significant health risk to the
American consumer.
The final panel consisted of two women who had lost loved
ones due to overdoses of prescription drugs obtained in large
quantities without prescriptions, doctors visits or follow-up
of any kind. Elizabeth Carr of Sacramento, CA, related the
story of her husband's death due to an overdose of Darvon, a
controlled substance. He purchased the drug through Internet
pharmacies located all over the world. After his death, Ms.
Carr worked with the California Medical Board to try to hold
someone accountable for the delivery of controlled substances
to her husband. Because her claim did not implicate doctors
licensed in California, there was nothing they could do. She
testified that they said something had to be done on the
Federal level. Francine Hahn Haight of Orange County, CA,
testified to the loss of her son to an overdose of narcotics
that he had easily purchased on the Internet. The drugs were
delivered with no instructions, safety precautions, or
physician consultation. In this case, the operators of the
pharmacy where he had obtained the drugs were arrested by the
DEA and were found guilty of illegally selling drugs on the
Internet.
On July 22, 2004, the Subcommittee held the second of two
hearings on the health and security issues related to
purchasing pharmaceutical products on the Internet. At the time
of the hearing, Federal agencies lacked a uniform approach to
screening and processing imported pharmaceuticals, no reliable
estimate of the quantity or quality of the drugs being
imported, and most disturbingly, more prescription drugs were
being released without ever being inspected. Senator Coleman
noted that the Federal Government had been aware of the problem
since 1999, and that proposals at the hearing were strikingly
similar to the proposals made 5 years earlier. On the other
hand, the private sector had been taking some swift and
proactive steps to curb access to rogue Internet pharmacies in
an attempt to control the illegal importation of controlled
substances and counterfeit or unsafe pharmaceuticals. Even with
these measures in place, however, the resolution to this
problem was far from apparent and the hearing focused on the
actions needed to reduce, and finally eliminate, this difficult
problem.
Richard M. Stana, Director of Homeland Security and Justice
Issues at the U.S. Government Accountability Office, testified
that the volume of drugs coming into the United States due to
Internet purchases had overrun the inspection system in place
at International Mail Branches (IMBs) across the country. He
pointed out that the severity and scope of the problem could
not even be determined, though he estimated that approximately
two million packages containing illegal drugs entered the
country per year. He expressed concern over the already large
and dramatically increasing flow of controlled substances that
go directly to the purchaser, without ever going through
inspection. Mr. Stana explained that, even when large shipments
were identified, the paperwork and processing required to seize
those shipments created a backlog of hundreds of man-hours. He
testified that a reduction in processing requirements for the
seizure of controlled substances coming through IMBs, and a
more concerted risk management approach to inspections might
begin to help reduce the inflow of dangerous drugs into the
American market.
Karen P. Tandy, Administrator of the Drug Enforcement
Administration, testified that the scope of the problem is too
broad for the DEA or any single agency to tackle alone. She
explained that the Federal agencies had enlisted the support of
the private sector to prevent access to rogue Internet
pharmacies, prevent illegal purchases, and stem the flow of
illegal drugs entering the country through the mail. Lee R.
Heath, Chief Inspector of the U.S. Postal Inspection Service,
outlined the law governing the Inspection Service and the
limits of their jurisdiction. He explained that a possible
application of existing statutory authority would allow the
Postal Service, in cooperation with FDA and Customs, to handle
illegally mailed drugs in a similar manner to the way they
handle lottery mailings.
Jayson P. Ahern, Assistant Commissioner at the Office of
Field Operations for the Bureau of Customs and Border
Protection (CBP), discussed the interagency efforts to
determine the type and scope of pharmaceuticals imported
through international mail into the United States. He testified
that the volume discovered was enormous, and that a significant
number of the drugs contained no active ingredient. He further
explained that, during an inspection blitz conducted in June
2004, 46 percent of the packages identified were suspected of
containing controlled substances. John M. Taylor, III,
Associate Commissioner for Regulatory Affairs at the U.S. Food
and Drug Administration in Rockville, MD, testified that the
FDA did not support efforts to legalize the importation of
drugs from Canada and that they could not support the ``buyer
beware'' approach. He explained that, during recent inspection
blitzes, 88 percent of the drug products that were examined at
IMBs were unapproved by the FDA or otherwise illegal. He warned
that until quality control assurances could be made as to
imported drugs, importation should be strictly regulated.
William Hubbard, Associate Commissioner for Policy and
Planning at the U.S. Food and Drug Administration in Rockville,
MD, testified that at that time it was nearly impossible to
determine the actual location of Internet pharmacies purporting
to be located in Canada. He explained that an Internet site
could be located in Canada, the business in Vietnam, and the
pharmaceuticals shipped from Chile and South Africa. He
referenced the Wisconsin State endorsed Internet pharmacy
program and a study that concluded that one-third of the drugs
purchased through that program did not meet the State's
agreement. For example, 237 impermissible drugs have been
dispensed, many of them non-FDA approved drugs, from an
Internet pharmacy that was sanctioned by the State of
Wisconsin.
John Scheibel, Vice President of Public Policy for Yahoo!
Inc., testified that Internet pharmacies must meet strict
standards, including being licensed with Square Trade, an
industry approved third-party trust infrastructure company, in
order to advertise with Yahoo! He discussed their current
cooperation with law enforcement, and testified that Yahoo! had
worked to create a safe environment for the advertisement of
online prescription drugs. Sheryl Sandberg, Vice President of
Global Online Sales and Operations for Google, Inc. in Mountain
View, CA, testified that, in order for online pharmacies to
advertise with Google, they had to be certified by Square
Trade. Ms. Sandburg was careful to point out that such
licensing only applied to advertisements, and not to other
results displayed during a search. She explained that, because
Google and Yahoo! are impartial information gatherers, they
could not remove sites from their database that are not illegal
per se without violating company policy.
Robert A. Bryden, Vice President for Corporate Security at
FedEx Corporation in Memphis, TN, testified to the growing
level of cooperation between FedEx and the law enforcement
community. He also testified that, while many Internet
pharmacies use the FedEx logo, none are authorized to do so.
Daniel J. Silva, Vice President and Director of Security at
United Parcel Service in Atlanta, Georgia, testified that they
have created a computer program called Target Search, which
allows Customs to search manifest records for suspicious
activity. Mr. Silva explained that, like FedEx, UPS tracks
online pharmacies that offer UPS services and display the UPS
trademark. He testified that sites found using the UPS logo are
sent cease and desist letters, and appropriate legal actions
are taken wherever possible.
Joshua L. Peirez, Senior Vice President and Assistant
General Counsel for MasterCard International Incorporated in
Purchase, New York, testified that MasterCard's Merchant
Security Team had shut off the acceptance of MasterCard at over
370 illicit websites. He testified that requiring Internet
pharmacies to be licensed or approved to sell over the Internet
would be helpful in providing a clear understanding of whether
particular pharmacies are engaged in legal or illegal
activities. Steve Ruwe, Executive Vice President of Operations
and Risk Management at VISA U.S.A. Inc. in Foster City, CA,
testified that Visa had engaged in a similar monitoring effort,
which resulted in discussions with some of its member banks
regarding their merchants who appear to be involved in selling
controlled substances. He testified that any merchant found to
be selling illegal substances had their licenses terminated or
restricted. Mr. Ruwe recommended that a list of legal Internet
pharmacies be published so that Visa could more easily comply
with the law.
L. Money Laundering and Foreign Corruption: Enforcement and
Effectiveness of the Patriot Act (July 15, 2004)
From 1999 until 2001, at the request of Senator Levin, the
Subcommittee held a series of hearings on the vulnerability of
U.S. financial institutions to money laundering. After the
September 11 terrorist attack, Congress enacted legislation in
October 2001 to strengthen U.S. anti-money laundering laws.
These new anti-money laundering provisions, which were based in
large part upon the Subcommittee's work, were included
primarily in Title III of the Patriot Act. Among other
provisions, these new Patriot Act provisions obligated U.S.
financial institutions to exercise due diligence when opening
and administering accounts for foreign political figures, and
authorized U.S. money laundering prosecutions of any U.S.
financial institution that opened accounts with funds suspected
to be the product of corrupt financial activities by foreign
officials.
In 2004, at Senator Levin's request, the Subcommittee held
a hearing on July 15, 2004, and oversaw the issuance of a
Minority staff report examining implementation of these and
other anti-money laundering provisions of the Patriot Act,
using Riggs Bank in Washington, D.C. as a case history. The
investigation featured two sets of accounts at Riggs Bank, one
involving Augusto Pinochet, former President of Chile, and the
other involving Equatorial Guinea, an oil-rich country in
Africa.
The Subcommittee investigation determined that, from 1994
until 2002, Riggs Bank opened at least nine accounts for Mr.
Pinochet with aggregate deposits of up to $8 million, without
asking about the source of the funds. In addition, among other
actions, while Mr. Pinochet was under house arrest in the
United Kingdom and his assets were subject to a worldwide asset
freeze, Riggs established two offshore corporations for him,
secretly transferred over $1 million from a Pinochet account in
London to a U.S. account held in the name of one of the
offshore corporations, and later supplied Mr. Pinochet with
nearly $2 million in cashiers checks so that he did not have to
disclose the existence of his U.S. Riggs accounts. Riggs also
concealed its Pinochet-related accounts from Federal bank
examiners for 2 years, finally closing them in 2002, only after
an anti-money laundering examination by its primary regulator,
the Office of the Comptroller of the Currency (OCC), identified
the accounts and questioned the source of the funds.
The Subcommittee's investigation also determined that, from
1995 until 2004, Riggs Bank administered more than 60 accounts
for the Government of Equatorial Guinea (EG), EG officials, or
their family members. By 2003, the EG accounts represented the
largest banking relationship at Riggs Bank, with aggregate
deposits ranging from $400 to $700 million. Among other
actions, Riggs established offshore corporations for the EG
president and his son, accepted cash deposits from the
president and his wife of up to $3 million at a time, and
allowed millions of dollars in oil proceeds to be wire
transferred from EG government accounts to unfamiliar offshore
corporations, all without asking questions about these or other
suspicious transactions. The investigation also discovered bank
records showing substantial payments by U.S. oil companies to
EG officials, their family members, and entities controlled by
them.
The investigation exposed a troubling failure by Federal
banking regulators to require Riggs Bank to comply with
statutory and regulatory anti-money laundering requirements.
From 1997 to 2003, the OCC examiners repeatedly identified
major anti-money laundering deficiencies at Riggs Bank, yet
allowed them to continue year after year without forceful
action to correct them. Testimony by the OCC acknowledged that
there was a failure of supervision and that deficient anti-
money laundering controls were allowed to fester too long
without formal enforcement actions.
During the hearing, the Subcommittee heard testimony from a
variety of witnesses. The Riggs private banker who handled the
EG accounts, Simon Kareri, a former Senior Vice President and
Senior International Banking Manager, asserted the Fifth
Amendment rather than testify. Riggs officials who did testify
were Lawrence Hebert, President and CEO; Raymond Lund, Former
Executive Vice President of the International Banking Group;
and R. Ashley Lee, Riggs Executive Vice President and Chief
Risk Officer, and formerly the OCC Examiner-in-Charge of Riggs
Bank. The OCC officials who testified were Jennifer Kelly,
Deputy Comptroller, Mid-Size and Credit Card Bank Supervision;
John Noonan, former Assistant Deputy Comptroller; Daniel
Stipano, Deputy Chief Counsel; and Lester Miller, the current
Examiner-in-Charge of Riggs Bank. The Subcommittee also heard
from three persons associated with the oil companies that made
payments to EG officials: Andrew Swiger, Executive Vice
President, ExxonMobil Production Company; Albert Marchetti,
Vice President, International and Federal Relations, Amerada
Hess Corporation; and Steven Guidry, Central Africa Business
Unit Leader, Marathon Oil Company.
In connection with the hearing, the Subcommittee's Minority
staff issued a 114-page report which detailed Riggs actions
related to the Pinochet and Equatorial Guinea accounts and the
poor oversight exercised by the OCC and Federal Reserve of
Riggs' anti-money laundering controls. In addition, on March
16, 2005, the Subcommittee issued a supplemental bipartisan
staff report providing further information on U.S. accounts
used by Augusto Pinochet. This report established that Riggs
Bank had opened 28 accounts for Mr. Pinochet (instead of the
nine identified in the original staff report) in a banking
relationship that spanned 25 years. The report also disclosed
that Mr. Pinochet had a total of 125 bank accounts at more than
a half-dozen U.S. banks, including Riggs, Citibank, and Banco
de Chile-United States, many of which had been opened under
deceptive names or in the names of offshore entities or
Pinochet associates. This report showed that banks other than
Riggs had also failed to implement U.S. anti-money laundering
controls.
In January 2005, Riggs Bank entered a guilty plea and paid
a $16 million fine to the U.S. Treasury related to its failure
to report suspicious activity in connection with the Pinochet,
EG, and other accounts. In February 2005, to settle civil and
criminal charges filed by Spanish authorities for violating a
court order directing financial institutions to freeze Pinochet
assets, Riggs Bank paid about $1 million in court costs and
another $8 million to a foundation to assist victims of the
Pinochet regime.
Following the hearing, Senators Levin and Coleman
introduced the Bank Examiner Postemployment Protection Act, S.
2814, which imposed a one-year cooling off period before a
senior Federal bank examiner may be employed by a financial
institution that he or she had overseen. This legislation was a
result of the Subcommittee's finding that the Federal bank
Examiner-in-Charge of Riggs Bank, Ashley Lee, appeared to have
functioned as more of an advocate for the bank than an arm's-
length regulator. In 2002, for example, Mr. Lee ordered that
examination workpapers acknowledging the existence of the
Pinochet accounts at the bank not be retained in the OCC's
electronic database. One month later, he was hired by Riggs
Bank, creating an appearance of a conflict of interest. A
Levin-Coleman amendment imposing the one-year cooling off
provision for Federal bank examiners was included in S. 2845,
the National Intelligence Reform Act of 2004, which was enacted
into law on December 17, 2004, as the Intelligence Reform and
Terrorism Prevention Act (P.L. 108-458).
M. How Saddam Hussein Abused the United Nations Oil-for-Food Program
(November 15, 2004)
In April 2004, Chairman Coleman directed the Permanent
Subcommittee on Investigations to initiate an investigation
into evidence of abuse and misconduct associated with the U.N.
Oil-for-Food Program (the ``Program''). Following 7 months of
investigation, the issuance of 21 document requests--including
numerous subpoenas and Chairman's letters--numerous interviews
with key participants, and the receipt of more than one million
pages of evidence, the Subcommittee held its first hearing to
examine corruption associated with the Program on November 15,
2004. The Subcommittee's hearing assessed the stunning
magnitude of the corruption arising from the Program and
examined how such widespread abuse was perpetrated.
The Subcommittee introduced at the hearing an estimate
conducted by the Majority staff of the total illicit revenue
raised by the Hussein regime in contravention of U.N. sanctions
from 1991 through 2002. The Majority staff estimated that the
Hussein regime gathered more than $21.3 billion in
contravention of U.N. sanctions during that timeframe. This
figure built on previous estimates by the U.S. General
Accounting Office ($10.1 billion) and the figure contained in
the Duelfer Report ($10.9 billion), which will be described
below. The $21.3 billion estimate is based upon evidence
discovered during the Subcommittee's investigation and was
formulated with the assistance of experts from the Joint
Economic Committee, Congressional Budget Office and GAO. The
estimate of $21.3 billion includes:
Loil smuggling facilitated through trade protocols
with Iraq as well as unauthorized smuggling including ``topping
off'' of oil tankers ($13.6 billion);
Lsurcharges on oil purchases ($241 million);
Lkickbacks on humanitarian goods ($4.4 billion);
Lsubstandard goods purchased under the OFF Program
($2.1 billion);
Labuses in the Northern Kurdish Region ($405
million); and
Linvestment of illicit revenues ($403 million).
The first witness at the Subcommittee's hearing was Charles
Duelfer, Special Advisor to the Director of Central
Intelligence for Strategy Regarding Iraqi Weapons of Mass
Destruction Program. Mr. Duelfer testified about the report he
prepared that detailed Iraq's abuse of the Oil-for-Food
Program. The Duelfer Report concluded that Saddam Hussein's
primary goal was to have U.N. sanctions lifted. In addition, he
found that the introduction of the OFF Program was a key
turning point for the regime. The perversion of the Program,
according to the Duelfer Report, provided additional illicit
billions of dollars in revenue streams of kickbacks and
surcharges. More importantly, Duelfer found that the program
rescued Iraq's economy from U.N. sanctions by increasing
economic activity and reducing international support for U.N.
sanctions. Duelfer reported that OFF abuses, particularly
vouchers to well-placed individuals and entities favoring Iraq,
and kickbacks and surcharges, which went unhindered by the U.N.
Security Council despite their knowledge of them, emboldened
Saddam Hussein to finance and procure missile delivery systems,
dual-use items, and military munitions.
On the second panel, investigative counsels from the
Subcommittee presented new evidence to demonstrate three of the
principal ways that the Hussein regime abused the Oil-for-Food
Program. First, Subcommittee Counsel Mark L. Greenblatt
testified about how Saddam converted oil into influence under
the Program. In his testimony, Mr. Greenblatt examined of how
Saddam gave so-called ``oil vouchers'' to foreign officials,
journalists, and possibly even terrorist entities, in order to
peddle influence and reward friends. In doing so, the
Subcommittee revealed previously undisclosed evidence that
illustrated what oil vouchers were and how the voucher process
worked. For instance, a number of documents were introduced to
demonstrate how high-ranking officials in Saddam's regime, such
as Tariq Aziz, were personally involved in handing out these
favors.
Mr. Greenblatt presented a step-by-step review of how
voucher recipients turned those favors into cash. For instance,
Mr. Greenblatt introduced evidence of how Vladimir Zhirinovsky,
a prominent Russian politician, invited an American oil company
to ``negotiate'' the sale of an oil voucher. The Subcommittee
showed how vouchers were then translated into formal oil
contracts that were approved by the U.N. As an example, Mr.
Greenblatt traced a voucher given to a Syrian journalist named
Hamida Na'Na and showed how that voucher ended up as a formal
contract for the sale of oil under the Oil-for-Food Program. In
doing so, the Subcommittee explained how Saddam turned the U.N.
sanctions on their head and actually used the Oil-for-Food
Program to his own advantage.
The Subcommittee also examined a second method that Saddam
used to abuse the OFF Program through the imposition of oil
surcharges. Mr. Greenblatt testified that, while the vouchers
scheme was a ploy to peddle influence, the surcharges were a
simple way to generate under-the-table revenue for Saddam's
cash-strapped regime. Mr. Greenblatt presented evidence of how
Saddam managed to generate roughly $230 million in revenue
through the oil surcharges. Mr. Greenblatt's testimony
introduced new evidence of who made under-the-table payments to
the regime and explored how they made those payments. For
instance, Mr. Greenblatt presented evidence about one
transaction that involved an American oil company in which more
than $1 million in illegal payments were made to the Hussein
regime. Finally, Mr. Greenblatt introduced an excerpt of a
document created by the Government of Iraq that detailed each
and every under-the-table surcharge payment made to the Hussein
regime.
In addition to evidence of the Hussein regime's influence-
peddling through oil vouchers and illicit revenue through
surcharges, the Subcommittee heard testimony about the regime's
scheme to siphon off billions of dollars for itself by
demanding kickbacks on contracts for humanitarian goods.
Subcommittee Counsel Steven A. Groves testified that the regime
cut illegal side-deals that were in their own best interests
and to the detriment of the humanitarian needs of the Iraqi
people.
Mr. Groves described, for example, the kickbacks paid by a
Scottish company called The Weir Group, which conducted more
than $80 million of business under the Oil-for-Food Program.
The story of The Weir Group is particularly disturbing since it
demonstrates that legitimate, reputable corporations were
complicit in enriching the regime of Saddam Hussein. The
Subcommittee's investigation revealed that in June 2000 the
Iraqi regime demanded kickbacks from The Weir Group. Rather
than reject the demand, The Weir Group agreed to enter into an
arrangement to pay a portion of every subsequent contract back
to Saddam. Mr. Groves detailed this arrangement with a step-by-
step description of how Weir inflated its contracts by marking-
up the price of its products and by overstating the quantity of
parts shipped.
According to Mr. Groves' testimony, The Weir Group, at the
direction of the Iraqi regime and over the course of 4 years
and 15 contracts, paid more than $8 million into a secret Swiss
bank account in the name of a non-existent corporation called
``Corsin Financial Limited.'' Mr. Groves testified that Weir
and Iraq were able to transact business in this manner with
impunity, under the nose of the United Nations, and without
regard of the sanctions imposed by the international community.
Mr. Groves stated that the Office of the Iraq Program, the U.N.
entity that oversaw the Oil-for-Food Program, approved Weir's
contracts even though the prices of the contracts were
sometimes inflated by 30 to 40 percent.
The third panel witness was Assistant Secretary of Treasury
Juan Zarate, head of the interagency Iraqi Asset Tracking Task
Force. Mr. Zarate provided valuable information on the efforts
of the U.S. Government and its coalition partners to identify,
locate, and repatriate the assets of the Iraqi people. At the
time of the hearing, the Treasury Department and other U.S.
agencies had identified and frozen almost $6 billion in Iraqi
assets worldwide. The majority of the $6 billion in frozen
assets was from the bank accounts of State Oil Marketing
Organization (SOMO) at the Central Bank of Iraq, the Rafidain
Bank, and the Rasheed Bank. Although the Department of
Treasury's primary mission is the recovery of Iraqi assets, one
tangent to this recovery effort has been the uncovering of
information pertaining to the illegal kickbacks, surcharges and
other fraudulent activities committed by the former Iraqi
regime under the Oil-for-Food Program. Mr. Zarate provided
examples of Treasury's efforts to undermine terrorist actions
through the identification and freezing of assets as well as
the designation of terrorist individuals and organizations.
At the hearing, Senator Levin presented the conclusions of
the Duelfer Report that, despite Saddam Hussein's efforts to
circumvent and undermine the OFF Program and his success in
obtaining significant illicit revenues, U.N. sanctions were
effective in constraining his efforts to re-arm or re-build
Iraq's military forces. The Duelfer Report stated: ``Sanctions
imposed constrains on potential WMD programs through
limitations on resources and restraints on imports. The
sanctions forced Iraq to slash funding that might have been
used to refurbish the military establishment and complicated
the import of military goods.'' Senator Levin also presented
the similar conclusions of the U.S. General Accounting Office
that ``there is no indication that Iraq has purchased large-
scale weapons systems, such as aircraft, ships or armor. Iraq's
conventional rearmament efforts are limited to purchases of
small arms and spare parts to keep weapons and vehicles not
destroyed during the Gulf War operations.--U.N. controls have
limited the amount that Iraq can spend on arms.'' Senator Levin
concluded that, despite Saddam's actions to corrupt the OFF
Program, the evidence established that U.N. sanctions had been
effective in preventing Iraq from re-arming.
III. Legislative Activities During the 108th Congress
The Permanent Subcommittee on Investigations does not have
legislative authority, but because its investigations play an
important role in bringing issues to the attention of Congress
and the public, the Subcommittee's work frequently contributes
to the development of significant legislative initiatives. The
Subcommittee's activities during the 108th Congress were no
exception, with Subcommittee hearings and Members playing
prominent roles in the development of a number of legislative
initiatives.
A. Tax Haven and Tax Shelter Reform Act (S. 2210--by Senators Levin and
Coleman)
Following a year-long investigation and Subcommittee
hearing in 2003, on April 12, 2004, Senators Levin and Coleman
introduced the Tax Haven and Tax Shelter Reform Act, S. 2210,
to correct many of the problems identified by the Subcommittee.
Among other provisions, S. 2210 contained language to
strengthen penalties for promoting, aiding, or abetting abusive
tax shelters by increasing the maximum penalty from $10,000 per
violation under current law to 150 percent of the gross income
derived by the tax shelter promoter, aider, or abettor of
abusive tax shelter activity. The bill also sought to require
transactions to have economic substance apart from tax
avoidance, prohibit accountants from accepting fees contingent
on achieving a specified tax benefit, and impose penalties on
offshore tax haven jurisdictions which the U.S. Treasury
Secretary determined were uncooperative with U.S. tax
enforcement.
In May 2004, the Senate adopted the Jumpstart Our Business
Strength (JOBS) Act, S. 1637, which included a number of tax
shelter reform provisions, including a proposed 50 percent
penalty on a promoter's gross income derived from abusive tax
shelters. During the Senate debate on the bill, a Levin-Coleman
amendment was accepted which increased the penalty to 100
percent of the gross income derived by a promoter, aider, or
abettor of an abusive tax shelter. Unfortunately, the final
bill approved by Congress, H.R. 4520, adopted only the lower 50
percent penalty and confined it to promoters, leaving Federal
tax shelter penalties in need of additional reform.
B. Bank Examiner Postemployment Protection Act (S. 2814--by Senators
Levin and Coleman)
Following a year-long investigation, hearing, and staff
report, Senators Levin and Coleman introduced the Bank Examiner
Postemployment Protection Act, S. 2814. This legislation
addressed a troubling situation uncovered during a Subcommittee
investigation which, in part, examined how the Office of the
Comptroller of the Currency (OCC) oversaw the anti-money
laundering efforts at Riggs Bank. The investigation determined
that the OCC Examiner-in-Charge at Riggs Bank appeared to have
functioned more as an advocate than an arm's-length regulator
during the years he was responsible for overseeing the bank. In
2001, for example, he had advised more senior OCC officials
against taking formal enforcement action against Riggs, because
the bank had promised to correct identified money laundering
deficiencies, even though the bank had repeatedly failed to
correct these deficiencies since they were first identified in
1997. In addition, in 2002, he ordered that examination
workpapers identifying the existence of Pinochet accounts and
deficiencies in Riggs anti-money laundering procedures be
removed from the OCC's electronic database and kept only in
paper boxes, contrary to internal requirements. Because of this
action, the subsequent Examiner-in-Charge was unaware of the
existence of the Pinochet-related examination.
Less than 2 months after ordering the removal of the
Pinochet electronic materials, the Examiner-in-Charge retired
from the OCC and was hired by Riggs Bank. During his employment
at the bank, the former examiner attended a number of meetings
with OCC personnel related to Riggs' poor anti-money laundering
procedures, despite OCC rules barring former Federal employees
from attending meetings with the agency on matters they worked
on while at the OCC. To address these and related conflict of
interest concerns, the bill proposed a one-year cooling off
period for senior examiners from the OCC, Federal Reserve
Banks, Federal Deposit Insurance Corporation, Office of Thrift
Supervision, and National Credit Union Administration before
such an examiner can take a job at a financial institution that
he or she oversaw. To ensure flexibility, the bill allowed each
banking agency head to issue waivers for former employees on a
case-by-case basis. A Levin-Coleman amendment containing these
provisions was included in S. 2845, the National Intelligence
Reform Act of 2004, and enacted into law on December 17, 2004,
as part of the Intelligence Reform and Terrorism Prevention Act
(P.L. 108-458).
C. The Central Contractor Registry Act (S. 2838--by Senators Coleman,
Levin, Collins, Lieberman, Reed, Akaka, and Dayton)
Following the Subcommittee's hearing into Department of
Defense (DOD) contractors who are delinquent on their taxes, on
May 5, 2004, Senators Coleman, Levin, and others introduced The
Central Contractor Registry Act of 2004, S. 2838. The principal
purpose of the bill was to codify a requirement that Federal
contractors provide their Taxpayer Identification Numbers
(TINs) in DOD's Central Contractor Registry database, and
provide DOD with statutory authority to validate each TIN in
the database with the IRS. Validated TINs would then increase
the ability of the Federal tax levy program to identify
contractors with unpaid taxes and capture a portion of their
contract payments to satisfy any outstanding tax debt. The bill
was referred to the Committee on Finance. While the bill was
not enacted into law, DOD and the IRS subsequently agreed to
make the recommended reforms to the lax levy program.
D. Prevention of the Illegal Importation of Controlled Substances Act
of 2004 (``The Todd Rode Act'') (S. 2465--by Senator Coleman)
An investigation by the Permanent Subcommittee on
Investigations has revealed that tens of thousands of dangerous
and addictive controlled substances are streaming into the
United States on a daily basis from overseas Internet
pharmacies. For example, on March 15 and 17, 2004, at JFK
airport, home to the largest International Mail Branch in the
United States, at least 3,000 boxes from a single vendor in the
Netherlands containing hydrocodone and Diazepam (Valium) were
seized by Customs and Border Protection (CBP).
Senior CBP inspectors at JFK estimate that 40,000 parcels
containing drugs are imported on a daily basis. During a 2004
FDA/CBP blitz, 28 percent of the drugs tested were controlled
substances. Extrapolating these figures, 11,200 drug parcels
containing controlled substances are imported through JFK
daily, 78,400 weekly, 313,600 monthly and 3,763,200 annually.
Top countries of origin include Brazil, India, Pakistan,
Netherlands, Mexico, and Romania. Likewise, as of March 2003,
senior CBP officials at the Miami International Airport
indicated that as many as 30,000 packages containing drugs were
being imported on a daily basis. A large percentage of these
are controlled substances. At mail facilities across the United
States, CBP regularly seizes shipments of oxycodone,
hydroquinone, tranquilizers, steroids, codeine laced product,
GHB (date rape drug), and morphine. CBP is simply overwhelmed.
In order to comply with paperwork requirements, CBP is
forced to devote investigators solely to opening, counting, and
analyzing drug packages, filling out duplicative forms, and
logging into a computer all of the seized controlled
substances. It takes CBP at least one hour to process a single
shipment of a controlled substance. This minimizes the
availability of inspectors to screen incoming drug packages.
CBP acknowledges that, because of the sheer volume of products,
bureaucratic regulations, and lack of manpower, the vast
majority of controlled substances that are illegally imported
are simply missed and allowed into the U.S. stream of commerce.
The Todd Rode Act addresses this burgeoning and potentially
lethal problem by enabling CBP to immediately seize and destroy
any package containing a controlled substance that is illegally
imported into the United States without having to fill out
duplicative forms and other unnecessary administrative
paperwork. The Act allows CBP to focus on interdicting and
destroying potentially addictive and deadly controlled
substances.
E. Internet Pharmacy Consumer Protection Act (``The Ryan Haight Act'')
(S. 2464--by Senator Coleman)
The Ryan Haight Internet Pharmacy Consumer Protection Act
addresses the growing problem of prescription drug sales over
the Internet without a valid prescription by (1) providing new
disclosure standards for Internet pharmacies; (2) barring
Internet sites from selling or dispensing prescription drugs to
consumers who are provided a prescription solely on the basis
of an online questionnaire; and (3) allowing State Attorneys
General to go to Federal court to shut down rogue sites.
Purchasing drugs online without a valid prescription can be
simple: A consumer just types the name of the drug into a
search engine, quickly identifies a site selling the
medication, fills in a brief questionnaire, and then clicks to
purchase. The risks of self-medicating, however, can include
potential adverse reactions from inappropriately prescribed
medications, dangerous drug interactions, use of counterfeit or
tainted products, and addiction to habit-forming substances.
Several of these illegitimate sites fail to provide information
about contraindications, potential adverse effects, and
efficacy.
Regulating these Internet pharmacies is difficult for
Federal and State authorities. State medical and pharmacy
boards have expressed the concern that they do not have
adequate enforcement tools to regulate practice over the
Internet. It can be virtually impossible for States to
identify, investigate, and prosecute these illegal pharmacies
because the consumer, prescriber, and seller of a drug may be
located in different States.
S. 2464 amends the Federal Food, Drug, and Cosmetic Act to
address this problem in three steps. First, it requires
Internet pharmacy websites to display information identifying
the business, pharmacist, and physician associated with the
website. Second, the bill bars the selling or dispensing of a
prescription drug via the Internet when the website has
referred the customer to a doctor who then writes a
prescription without ever seeing the patient. Third, the bill
provides States with new enforcement authority modeled on the
Federal Telemarketing Sales Act that will allow a State
attorney general to shut down a rogue site across the country,
rather than only barring sales to consumers in his or her
State.
F. Policies on Filling the Strategic Petroleum Reserve (Amendments to
H.R. 2691 and S. Con. Res. 95--by Senators Levin and Collins)
In response to a year-long Subcommittee investigation and
Minority staff report showing how the Administration's policy
of continuously filling the Strategic Petroleum Reserve (SPR)
without regard to price reduced available U.S. commercial oil
supplies and increased pressure on U.S. oil prices, Senators
Levin and Collins offered two amendments during the 108th
Congress to address some of the identified problems. Both
amendments were adopted by the full Senate, but not enacted
into law during the Congress.
In 2003, a Levin-Collins amendment to the FY2004 Interior
appropriations bill (H.R. 2691) was adopted by the Senate but
dropped from the final conference report. This amendment would
have directed the Department of Energy (DOE) to develop and use
cost-effective procedures for filling the SPR, including
procedures to acquire oil in a manner that would maximize the
overall domestic supply of oil and minimize the cost to
taxpayers, consistent with national security. In 2004, a Levin-
Collins amendment to the FY2005 Senate budget resolution (S.
Con. Res. 95) would have cancelled oil deliveries into the SPR
during FY2005, sold the undelivered oil on the open market, and
used the funds for deficit reduction and homeland security.
This amendment, which had the potential to produce estimated
taxpayer revenues of over $1.7 billion, while reducing gasoline
prices by 10 to 25 cents per gallon, was accepted by the Senate
but never enacted into law, because the Senate and House were
unable to reach agreement on a final FY2005 budget resolution.
IV. Reports and Prints
A. U.S. Strategic Petroleum Reserve: Recent Policy has Increased Costs
to Consumers but not Overall U.S. Energy Security (Report
prepared by the Minority Staff of the Permanent Subcommittee on
Investigation) (S. Prt. 108-18)
On March 5, 2003, the Subcommittee oversaw the release of a
288-page report prepared by the Minority Staff entitled, ``U.S.
Strategic Petroleum Reserve: Recent Policy Has Increased Cost
to Consumers But Not Overall U.S. Energy Security.'' This
report found that the U.S. Department of Energy's recent
program to fill the U.S. Strategic Petroleum Reserve (SPR) had
increased crude oil prices and hurt U.S. consumers and
taxpayers, without actually increasing overall U.S. oil
supplies. It also identified multiple weaknesses in the
functioning of U.S. energy markets, calling for greater
transparency and regulatory oversight to prevent, detect, and
stop price manipulation.
The report, which was released by Senator Levin, was the
result of a year-long investigation that built upon a prior
Subcommittee investigation into the pricing of U.S. retail
gasoline, by examining how crude oil prices affect gasoline and
other fuel prices. The report determined that, in early 2002,
despite warnings from career officials about ``explosive price
swings,'' higher taxpayer costs, and lower overall oil supplies
that would result, the Department of Energy (DOE) began filling
the SPR without regard to the high price of oil. The report
found that DOE's actions removed about 40 million barrels of
crude oil from the marketplace in 2002, became a significant
factor driving up U.S. crude oil prices to a 12-year high of
nearly $40 per barrel, and hurt U.S. consumers by also driving
up the price of gasoline, home heating oil, jet fuel, and
diesel fuel.
The report showed that, at the end of 2001, U.S. oil
supplies totaled about 880 million barrels, with about 560
million barrels in the SPR and 320 million in commercial
inventories in the private sector. At the end of 2002, the
overall crude oil inventory was approximately the same, but
with 600 million barrels under government control in the SPR,
and only 270 million barrels in the private sector, an
unusually low level at which U.S. refineries risk disruptions
due to inadequate supplies of oil. With crude oil prices at a
12-year high in 2002, and U.S. commercial crude oil inventories
at record lows, the report cautioned that DOE plans to add
another 40 million barrels to the SPR in 2003, if carried out,
would drive U.S. oil prices even higher and impose more costs
on U.S. consumers and taxpayers, with no assurance of a net
increase in overall U.S. oil supplies.
The report traced key changes in DOE policy regarding the
filling of the SPR. It showed that, prior to 2002, DOE had
routinely granted oil company requests to defer scheduled oil
deliveries to the SPR when prices were high in return for
deposits of extra oil at a later date, saving taxpayers over
$175 million and adding 7 million barrels to the SPR in 2000-
2001. By denying deferral requests for most of 2002, however,
DOE had missed opportunities for taxpayer savings and extra SPR
oil. Also, by using high-priced royalty oil from off-shore
leases for the SPR instead of selling it on the market, DOE had
reduced revenues used to support taxpayer-funded programs. For
example, at the 2002 SPR fill rate of 100,000 barrels per day,
filling the SPR with $30 per barrel oil rather than $20 per
barrel oil cost taxpayers an additional $1 million per day.
The report also traced the history of regulatory oversight
of commodity markets, and action taken by Congress, in 2000, to
exempt energy commodities from normal market oversight through
enactment of the so-called ``Enron loophole.'' The report
described the resulting rise of unregulated over-the-counter
(OTC) markets and showed that crude oil prices were being
formed by trading, not only on regulated exchanges like the
NYMEX, but also on the unregulated OTC markets which had become
major trading centers for energy contracts and derivatives. The
report found that the lack of OTC pricing information and
oversight made it difficult, if not impossible, for government
regulators and others to determine whether traders were
manipulating crude oil prices.
The report made a number of recommendations to improve the
functioning of U.S. crude oil markets, including increasing
disclosure and oversight of OTC energy markets to prevent,
detect, and deter price manipulation; deferring additional SPR
deposits until U.S. oil supplies increased and energy prices
fell; and restoring DOE procedures that permitted the deferral
of SPR deliveries when crude oil prices were high or commercial
crude oil supplies were tight.
B. Profiteering in a Non-Profit Industry: Abusive Practices in Credit
Counseling (Report prepared by the Majority and Minority Staffs
of the Permanent Subcommittee on Investigations and reprinted
in S. Hrg. 108-545)
On March 24, 2004, in conjunction with its hearing
examining credit counseling practices, the Subcommittee issued
a report prepared by the Majority and Minority staffs
summarizing its investigation. The report indicated that
traditional credit counseling agencies (CCA's) generally relied
upon contributions from creditors or small fees from consumers
to cover their operational costs. Certain new entrants into the
industry, however, developed a completely different business
model, using a for-profit model designed so that their non-
profit credit counseling agencies generate massive revenues for
a for-profit affiliate for advertising, marketing, executive
salaries, and any number of other activities other than actual
credit counseling.
The staff report established that many of the ``new'' non-
profit and for-profit companies were organized and operated to
generate profits from an otherwise non-profit industry.
Evidence of the new entrants' intention to create profits was
indicated in several ways by the new entrants, including (1)
the manner in which the new entrant was organized, (2) the
extent of control exercised by a for-profit entity over its
non-profit CCA affiliate, and (3) the revenue received by the
for-profit entity from the non-profit agency.
The staff report established that the primary effect of the
for-profit model has been to corrupt the original purpose of
the credit counseling industry--to provide advice, counseling,
and education to indebted consumers free of charge or at
minimal charge, and place consumers on debt management programs
only if they are otherwise unable to pay their debts. Many of
the new entrants practiced the reverse--the new entrants
provided no bona fide education or counseling and placed every
consumer onto a debt management program whether the consumer
needed the program or not. The new entrants often charged
unreasonable or exorbitant fees for their services.
Based upon its investigation of the credit counseling
industry, the Subcommittee made a number of findings and
recommendations to end abusive practices, as follows:
1. Abusive Practices. Some credit counseling agencies are
engaged in abusive practices that hurt debtors, including by
charging excessive fees, putting marketing before counseling,
and providing debtors with inadequate educational, counseling,
and debt management services.
2. Profiteering. Some non-profit credit counseling agencies
are funneling millions of dollars each year from cash-strapped
debtors to insiders and affiliated for-profit businesses, in
apparent violation of tax laws prohibiting tax-exempt charities
from benefiting private interests.
3. Creditor Standards. As part of ongoing efforts to halt
abusive practices in the credit counseling industry, major
creditors should review and strengthen their standards for
credit counseling agencies with whom they do business, as well
as their methods for monitoring and enforcing compliance. These
standards should include requiring credit counseling agency to
join an association such as NFCC or AICCCA and to comply with
their membership requirements.
4. Stronger Enforcement. The IRS and FTC should accelerate
their enforcement efforts to review suspect credit counseling
agencies and take appropriate action against agencies and
others who are violating restrictions on tax exempt entities or
engaging in deceptive or unfair trade practices. Federal
enforcement personnel should also consider coordinating their
actions with State enforcement agencies to make efficient use
of government resources.
5. Improved Bankruptcy Bill. The Senate should consider
modifying credit counseling provisions in the pending
bankruptcy legislation to strengthen protections against
abusive practices, including determining whether a single
authority, the U.S. bankruptcy trustee, should issue a central
list of qualifying credit counseling agencies to provide
counseling to bankruptcy petitioners and whether credit
counseling fee limits would be appropriate.
6. New Legislation. The Senate should consider introducing
Federal legislation, either modeled on the Debt Repair
Organizations Act of 1996 or expanding that law's application
to reach non-profit entities, to strengthen protections against
abusive practices in the credit counseling industry.
C. U.S. Tax Shelter Industry: The Role of Accountants, Lawyers and
Financial Professionals (November 18, 2003) (Report prepared by
the Minority Staff and reprinted in S. Hrg. 108-473 as S. Prt.
108-34)
On November 18, 2003, in conjunction with two days of
hearings, the Subcommittee oversaw the release of a Minority
staff report entitled, ``U.S. Tax Shelter Industry: The Role of
Accountants, Lawyers and Financial Professionals,'' describing
the results of a year-long investigation led by Senator Levin
into the role of accountants, lawyers, investment advisors, and
bankers in the development, marketing, and implementation of
abusive tax shelters.
The report presented four case studies of tax products
developed by KPMG, one of the leading accounting firms in the
United States. The report traced how KPMG's Tax Services
Practice underwent a fundamental change in the late 1990s, by
embracing the development of tax products designed to reduce or
eliminate taxes and pressing its tax professionals to sell them
to KPMG clients. It then showed how the tax products were
developed within the firm, mass marketed to prospective
purchasers using such techniques as telemarketing calls and
contacts with KPMG audit clients, and implemented with the
assistance of law firms that provided favorable tax opinions,
banks that provided needed financing, and investment advisors
that provided key securities transactions.
Three of the KPMG tax products examined by the
Subcommittee, known as FLIP, OPIS, and BLIPS, functioned as
``loss generators'' whose purpose was to generate paper losses
that could be used to offset other income and shelter it from
taxation. All three used a series of complex, orchestrated
transactions involving shell companies, structured finance, and
multi-million dollar loans not subject to any economic risk to
accomplish their ends. The fourth tax product, known as SC2,
was described by KPMG as a ``charitable contribution strategy''
and was directed at individuals seeking to shelter income from
Chapter S corporations. SC2 was designed to generate a tax
deductible charitable donation for the corporate owner, while
also allowing for tax deferral and reduced taxation of the
corporation's income by allocating--but not actually
distributing--that income to a tax-exempt charity asked to hold
the corporation's stock for a designated period of time. The
IRS eventually listed all four types of transactions as abusive
tax shelters.
The report made a number of findings and recommendations.
It found, for example, that the sale of potentially abusive and
illegal tax shelters had become a lucrative business in the
United States. It found that KPMG had devoted substantial
resources to developing a steady supply of generic tax products
to sell to multiple clients using aggressive marketing tactics.
The report also found that major banks and investment advisory
firms had provided critical lending and brokerage services in
return for substantial fees, while law firms had provided KPMG
clients with allegedly ``independent'' opinion letters claiming
that a tax product would withstand an IRS challenge, also in
return for substantial fees. To address these problems, the
report recommended that Congress strengthen the penalties on
promoters, aiders, and abettors of abusive tax shelters and
increase IRS enforcement dollars. It also recommended that
Federal regulators and professional organizations undertake
reviews of accounting firms, banks, securities firms, and law
firms to stop their participation in tax shelter activities.
These and other measures were included in the Tax Shelter and
Tax Haven Reform Act, S. 2210, introduced by Senators Levin and
Coleman during the 108th Congress.
D. Money Laundering and Foreign Corruption: Effectiveness and
Enforcement of the Patriot Act--Case Study Involving Riggs Bank
(July 15, 2004) (Report prepared by the Minority Staff and
reprinted in S. Hrg. 108-633)
On July 15, 2004, in conjunction with a hearing, the
Subcommittee oversaw the release of a Minority staff report
entitled, ``Money Laundering and Foreign Corruption:
Effectiveness and Enforcement of the Patriot Act--Case Study
Involving Riggs Bank.'' This report, which is the result of a
year-long investigation initiated by Senator Levin, examined
the enforcement and effectiveness of anti-money laundering
provisions contained in Title III of the Patriot Act, using
Riggs Bank as a case history. With the enactment of the Patriot
Act in October 2001, U.S. financial institutions were obligated
to exercise due diligence with opening and administering
accounts for foreign political figures and to report to law
enforcement suspicious transactions indicating that funds sent
to the bank may have been the product of foreign corruption.
The report found that, since at least 1997, Riggs had
disregarded its anti-money laundering obligations and
maintained a dysfunctional anti-money laundering program
despite frequent warnings from its bank regulator, the Office
of the Comptroller of the Currency (OCC). The report also
showed that Federal regulators, including the OCC and Federal
Reserve, had done a poor job of compelling Riggs Bank to comply
with statutory and regulatory anti-money laundering
requirements.
To explain these findings, the report featured two sets of
accounts at Riggs Bank, one involving Augusto Pinochet, former
President of Chile, and the other involving Equatorial Guinea,
an oil-rich country in Africa. The report detailed a number of
suspicious transactions involving these accounts, including
actions taken by the bank to conceal Pinochet funds from law
enforcement and from its regulators, despite red flags
involving the source of Mr. Pinochet's wealth, pending legal
proceedings to freeze his assets, and public allegations of
serious wrongdoing by this client. The report also detailed
suspicious transactions involving more than 60 accounts opened
at the bank for the Government of Equatorial Guinea (EG), EG
officials, and their family members, including cash deposits of
up to $3 million, accounts opened in the name of offshore
corporations controlled by the president or his son, and
transfers of millions of dollars in oil proceeds to unfamiliar
offshore corporations, all taking place amid public allegations
of EG corruption. The report found that the bank had turned a
blind eye to evidence suggesting that it was handling the
proceeds of foreign corruption, failed to follow its anti-money
laundering policies and procedures, and failed to notify law
enforcement contrary to Federal banking requirements. The
Subcommittee also found that the OCC Examiner-in-Charge had
advised against taking formal enforcement actions against Riggs
Bank despite repeat anti-money laundering deficiencies,
suppressed workpapers attesting to the existence of Pinochet
accounts from the OCC's electronic database, and accepted a job
at Riggs after retiring from the OCC, suggesting that he had
become too close to Riggs during the years he was responsible
for overseeing the bank.
The report offered a number of recommendations to
strengthen anti-money laundering enforcement. It recommended,
for example, that Federal banking regulators make greater use
of formal enforcement tools, including more timely use of civil
fines; that regulators issue final regulations and revised
examination guidelines implementing the due diligence
requirements of the Patriot Act; and that Congress to impose a
one-year cooling off period before Federal bank examiners can
accept a position with the financial institution they oversaw.
Senators Levin and Coleman subsequently introduced the Bank
Examiner Postemployment Protection Act, S. 2814, to establish
the cooling off period for senior Federal bank examiners. This
provision was enacted into law as a Levin-Coleman amendment to
the National Intelligence Reform Act of 2004, S. 2845, on
December 17, 2004.
In March 2005, the Subcommittee issued a supplemental
bipartisan staff report with additional information about U.S.
financial accounts used by Augusto Pinochet, not only at Riggs
Bank but also at more than half a dozen other financial
institutions operating in the United States. The report showed
that Riggs Bank had 28 accounts used by Mr. Pinochet (instead
of the nine identified in the original report) in a banking
relationship spanning 25 years. In addition, Mr. Pinochet had
constructed a secret network of at least 125 U.S. bank and
securities accounts, involving millions of dollars, which he
used to move funds and transact business, including accounts at
Riggs, Citigroup, Banco de Chile-United States, Espirito Santo
Bank, and others. These additional accounts present a
cautionary tale about the ease with which a determined
individual can manipulate the U.S. financial system. The report
recommended that, to strengthen the U.S. financial system
against these types of money laundering vulnerabilities, U.S.
financial institutions should take steps to prevent suspect
funds from being transferred to another U.S. financial
institution, including by warning the institution under Section
314(b) of the Patriot Act that the transfer is the result of an
account closure due to possible money laundering or foreign
corruption concerns. In addition, the report recommended that
the United States work with the European Union to enable
financial institutions with U.S. and E.U. affiliates to
exchange client information across international lines to
safeguard against money laundering and terrorist financing.
V. Requested and Sponsored GAO Reports
In connection with its investigations, the Subcommittee
makes extensive use of the resources and expertise of the U.S.
General Accounting Office (GAO), the Offices of Inspectors
General (OIGs) at various Federal agencies, and other entities.
During the 108th Congress, the Subcommittee requested a number
of reports and studies on issues of importance to Congress and
to U.S. consumers. Among these reports were the following:
(1) Travel Cards: Internal Control Weaknesses at DOD Led to Improper
Use of First and Business Class Travel (GAO-04-88) October 24,
2003
Due to ineffective oversight and management of the DOD's
travel card program, GAO was asked to (1) identify the
magnitude of premium class travel, (2) determine if DOD's key
internal control activities operated effectively and provide
examples of control breakdowns, and (3) assess DOD's monitoring
and key elements of the control environment. Breakdowns in
internal controls and a weak control environment resulted in
improper first and business class travel and increased costs to
taxpayers. Based on extensive analysis of records obtained from
Bank of America, GAO found that DOD spent almost $124 million
on about 68,000 premium class related tickets--primarily
business class--during fiscal years 2001 and 2002.
Each premium class ticket can cost the government thousands
of dollars more than a comparable coach class ticket. GAO's
work also indicated that civilian supervisors, managers, and
executives and senior military officers accounted for almost 50
percent of the premium class transactions. GAO considers travel
by high-ranking officials to be a sensitive payment area
because of its susceptibility to abuse. Breakdowns in key
internal controls resulted in a significant level of improper
premium class travel. GAO estimated that 72 percent of DOD's
fiscal year 2001 and 2002 premium class travel was not properly
authorized. Further, GAO found that 73 percent was not properly
justified by the traveler. Further, DOD did not have accurate
and complete data on the extent of premium class travel and
performed little or no monitoring of this travel. In regard to
the control environment, GAO found that DOD (1) issued policies
that were inconsistent with General Service Administration
government-wide travel regulations, (2) did not require
military services to issue and update premium class policies to
implement DOD's travel regulations consistently, and (3) did
not issue guidance on how to document the authorization and
justification of premium class travel.
As a result of GAO's audit, DOD has begun updating its
travel regulations to more clearly state when premium class
travel can be authorized and to emphasize that it must only be
used when exceptional circumstances warrant the additional
cost. This report was featured in a Subcommittee hearing on
this issue.
(2) Financial Management: Some DOD Contractors Abuse the Federal Tax
System with Little Consequence (GAO-04-95) February 12, 2004
Senators Coleman and Levin requested that GAO determine the
magnitude of unpaid Federal taxes owed by DOD contractors and
whether any indications exist of abuse or criminal activity by
the contractors. GAO was also requested to determine whether
the DOD and the IRS had effective processes and controls in
place to use the Treasury Offset Program to collect unpaid
Federal taxes, and whether DOD contractors with unpaid Federal
taxes are prohibited by law from receiving contracts from the
Federal Government.
The GAO reported that DOD and IRS records showed that over
27,000 contractors owed about $3 billion in unpaid taxes as of
September 2002. In addition, DOD has not fully implemented
provisions of the Debt Collection Improvement Act of 1996,
which was designed to assist the IRS in levying up to 15
percent of each contract payment for the purpose of offsetting
a contractor's Federal tax debt. Had that Act been fully
implemented, GAO estimated that DOD could have collected at
least $100 million in taxes during fiscal year 2002. This
report was featured in a Subcommittee hearing on this issue.
(3) DOD Travel Cards: Control Weaknesses Led to Millions of Dollars
Wasted on Unused Airline Tickets (GAO-04-398) March 31, 2004
In this report, at the request of Senators Coleman and
Levin, GAO was asked to (1) determine whether, and to what
extent, airline tickets purchased through the centrally billed
accounts were unused and not refunded and (2) determine whether
DOD's internal controls provided reasonable assurance that all
unused tickets were identified and submitted for refunds. GAO
found that control breakdowns over the centrally billed
accounts resulted in DOD paying for airline tickets that were
not used and not processed for refund. DOD was not aware of
this problem before our audit and did not maintain data on
unused tickets. We determined, based on airline data, that DOD
had purchased--primarily in fiscal years 2001 and 2002--about
58,000 tickets with a residual (unused) value of more than $21
million that remained unused and not refunded as of October
2003. We also identified more than 81,000 partially unused
airline tickets with a purchase price of about $62 million that
will require additional analysis to determine the residual
value. It is possible that DOD purchased at least $100 million
in airline tickets that it did not use and for which it did not
claim refunds from fiscal years 1997 through 2003. The internal
controls DOD had in place did not detect millions of dollars of
unused airline tickets because DOD did not systematically
implement compensating procedures to identify instances in
which DOD personnel did not report unused tickets, or reconcile
the centrally billed accounts to travel claims to determine
whether airline tickets were used. This report was featured in
a Subcommittee hearing on this issue.
(4) Energy Markets: Effects of Mergers and Market Concentration in the
U.S. Petroleum Industry (GAO-04-96) May 17, 2004
As part of an ongoing Subcommittee investigation into
energy pricing, Senator Levin asked GAO to examine the impact
of recent mergers among oil companies on the availability and
price of gasoline sold in the United States.
GAO examined: (1) mergers in the U.S. petroleum industry
and why they occurred; (2) the extent to which market
concentration (the distribution of market shares among
competing firms) and other aspects of market structure in the
U.S. petroleum industry changed as a result of these mergers;
(3) major changes that have occurred in U.S. gasoline
marketing; and (4) how mergers and market concentration in the
U.S. petroleum industry have affected U.S. gasoline prices at
the wholesale level.
The report identified over 2,600 mergers in the U.S.
petroleum industry since the 1990s, most frequently among firms
involved in exploration and production. Industry officials
cited various reasons for the mergers, particularly the need
for increased efficiency and cost savings. The report found
that market concentration had increased substantially in the
industry, partly because of these mergers and partly due to
consolidation amongst refiners. In highly concentrated markets,
firms can raise prices above competitive levels. Evidence
suggests mergers also have changed other factors that affect
competition, such as the ability of new firms to enter the
market. According to industry officials, two major changes have
occurred in U.S. gasoline marketing related to these mergers.
First, the availability of generic gasoline, which is generally
priced lower than branded gasoline, has decreased
substantially. Second, refiners now prefer to deal with large
distributors and retailers, which has motivated further
consolidation in distributor and retail markets.
GAO's econometric analyses indicated that mergers and
increased market concentration had generally led to higher
wholesale gasoline prices in the United States from the mid-
1990s through 2000. Six of the eight mergers GAO modeled led to
price increases, averaging about 1 cent to 2 cents per gallon.
GAO found that increased market concentration, which reflects
the cumulative effects of mergers and other competitive
factors, had also led to increased prices, particularly in
certain geographic areas. For conventional gasoline, the
predominant type used in the country, the change in wholesale
price due to increased market concentration ranged from a
decrease of about 1 cent per gallon to an increase of about 5
cents per gallon. For boutique fuels sold in the East Coast and
Gulf Coast regions, wholesale prices had increased by about 1
cent per gallon, while prices for boutique fuels sold in
California had increased by over 7 cents per gallon.
(5) DOD Travel Cards: Control Weaknesses Resulted in Millions of
Dollars of Improper Payments (GAO-04-576) June 9, 2004
In this report, at the request of Senator Coleman, GAO was
asked to determine whether (1) DOD improperly reimbursed
travelers for airline tickets DOD paid for using centrally
billed accounts, (2) internal controls were effective in
preventing issuance of unauthorized airline tickets, and (3)
other control weaknesses led to compromised and fraudulently
used centrally billed accounts. A weak control environment and
breakdowns in key controls over centrally billed accounts
resulted in DOD paying travelers for airline tickets they did
not purchase, issuing and paying for unauthorized airline
tickets, and paying for goods and services obtained with
compromised centrally billed accounts. Based on limited fiscal
year 2001 and 2002 data provided by the Army, Navy, and Marine
Corps, GAO identified about 27,000 transactions totaling more
than $8 million in which DOD reimbursed travelers for airline
tickets paid for by DOD--not the travelers. Requesting
reimbursement for items that the traveler knowingly did not pay
for may be a crime that could result in imprisonment or a
monetary fine, or both. GAO's subsequent tests of a selection
of 124 individuals who submitted 204 of these 27,000
transactions confirmed that DOD improperly paid 91 individuals
almost $98,000 for 123 airline tickets DOD purchased with
centrally billed accounts. Only four travelers voluntarily
reimbursed DOD prior to GAO initiating the audit, even though
typically, more than a year had passed since the improper
payments occurred. Several travelers submitted multiple claims
for airline tickets they did not purchase, which could indicate
intent to defraud the government. In 2003, the Air Force Audit
Agency reported that this same problem existed at the Air Force
and estimated that it will cost the Air Force more than $6
million over 6 years. GAO also determined that key internal
controls did not provide DOD reasonable assurance that (1)
airline tickets purchased and paid for with the centrally
billed accounts were based on valid travel orders and (2)
centrally billed account numbers were adequately protected
against unauthorized use. To demonstrate weaknesses in DOD's
system of internal controls, GAO submitted a fictitious travel
order to a commercial travel office to obtain an airline ticket
from Washington, DC, to Atlanta, GA. DOD issued GAO the airline
ticket, established an obligation, and paid for the ticket
without detecting the fictitious nature of the request. GAO
also found instances where a lack of physical safeguards
resulted in the centrally billed account numbers being stolen
and used for personal gain. One DOD traveler stole a centrally
billed account number to purchase over 70 airline tickets
totaling more than $60,000, which he sold at a discounted rate
to coworkers and their family members for personal travel. DOD
disputed those fraudulent charges and did not pay for those
tickets. However, not all DOD units dispute unauthorized
charges and DOD remains vulnerable to paying for fraudulent
charges on compromised centrally billed accounts.
(6) Internet Pharmacies: Some Pose Safety Risks for Consumers (GAO-04-
820) June 17, 2004
In this report, at the request of Senator Coleman, GAO
examined the safety of purchasing pharmaceuticals over the
internet.
As the demand for and the cost of prescription drugs rise,
many consumers have turned to the Internet to purchase drugs.
However, the global nature of the Internet can hinder State and
Federal efforts to identify and regulate Internet pharmacies to
help assure the safety and efficacy of products sold. Recent
reports of unapproved and counterfeit drugs sold over the
Internet have raised further concerns. GAO was asked to examine
(1) the extent to which certain drugs can be purchased over the
Internet without a prescription; (2) whether the drugs are
handled properly, approved by the Food and Drug Administration
(FDA), and authentic; and (3) the extent to which Internet
pharmacies are reliable in their business practices. GAO
attempted to purchase up to 10 samples of 13 different drugs,
each from a different pharmacy Web site, including sites in the
U.S., Canada, and other foreign countries. GAO determined
whether the samples contained a pharmacy label with patient
instructions for use and warnings on the labels or the
packaging and forwarded the samples to their manufacturers to
determine whether they were approved by FDA and authentic. GAO
also confirmed the locations of several Internet pharmacies and
identified those under investigation by regulatory agencies.
GAO obtained most of the prescription drugs it targeted from a
variety of Internet pharmacy Web sites without providing a
prescription. GAO obtained 68 samples of 11 different drugs--
each from a different pharmacy Web site in the U.S., Canada, or
other foreign countries, including Argentina, Costa Rica, Fiji,
India, Mexico, Pakistan, Philippines, Spain, Thailand, and
Turkey. Five U.S. and all 18 Canadian pharmacy sites from which
GAO received samples required a patient-provided prescription,
whereas the remaining 24 U.S. and all 21 foreign pharmacy sites
outside of Canada provided a prescription based on their own
medical questionnaire or had no prescription requirement. Among
the drugs GAO obtained without a prescription were those with
special safety restrictions and highly addictive narcotic
painkillers. GAO identified several problems associated with
the handling, FDA approval status, and authenticity of the 21
samples received from Internet pharmacies located in foreign
countries outside of Canada. Fewer problems were identified
among pharmacies in Canada and the United States. None of the
foreign pharmacies outside of Canada included required
dispensing pharmacy labels that provided instructions for use,
few included warning information, and 13 displayed other
problems associated with the handling of the drugs. For
example, three samples of a drug that should be shipped in a
temperature-controlled environment arrived in envelopes without
insulation. Manufacturer testing revealed that most of these
drug samples were unapproved for the U.S. market; however,
manufacturers found the chemical composition of all but four
was comparable to the product GAO ordered. Four samples were
determined to be counterfeit products or otherwise not
comparable to the product GAO ordered. Similar to the samples
received from other foreign pharmacies, manufacturers found
most of those from Canada to be unapproved for the U.S. market;
however, manufacturers determined that the chemical composition
of all drug samples obtained from Canada were comparable to the
product GAO ordered. Some Internet pharmacies were not reliable
in their business practices. Most instances identified involved
pharmacies outside of the United States and Canada. GAO did not
receive six orders for which it had paid. In addition, GAO
found questionable entities located at the return addresses on
the packaging of several samples, such as private residences.
Finally, 14 of the 68 pharmacy Web sites from which GAO
obtained samples were found to be under investigation by
regulatory agencies for reasons including selling counterfeit
drugs and providing prescription drugs where no valid doctor-
patient relationship exists. Nine of these were U.S. sites, one
a Canadian site, and four were other foreign Internet pharmacy
sites. In commenting on a draft of this report, FDA generally
agreed with its findings and conclusions. This report was
featured in a Subcommittee hearing on this issue.