Highlights of the Comptroller General's Panel on Federal
Oversight and the Inspectors General (11-SEP-06, GAO-06-931SP).
The Inspector General Act of 1978, as amended, (IG Act) created
independent offices headed by inspectors general (IG) responsible
for conducting and supervising audits and investigations;
promoting economy, efficiency, and effectiveness; and preventing
and detecting fraud and abuse in their agencies' programs and
operations. To carry out the purposes of the act, the IGs have
been granted authorities and responsibilities to provide for
their independence and effectiveness. These include the authority
to have direct access to all records and information of the
agency, to hire staff and manage their own resources, to receive
and respond to complaints from agency employees, to request
assistance from other government agencies, to issue subpoenas to
obtain information and documents, and to administer oaths when
taking testimony. The Senate Committee on Homeland Security and
Governmental Affairs asked us to review whether additional IG
authorities and responsibilities such as those provided in H.R.
2489, as well as other changes, could further enhance the
independence and effectiveness of the IGs. Introduced in 2005,
H.R. 2489 includes provisions for (1) a defined term of office
for the IGs and conditions for removal, (2) IGs to submit their
budgets directly to OMB and the Congress without agency review or
approval, (3) the statutory establishment of a combined PCIE and
ECIE Council, (4) changes in IG investigative and law enforcement
authorities, and (5) reporting the results of IG inspections in
their semiannual reports. The committee staff also asked us to
review IG pay structure issues and qualifications. We also agreed
to review recommendations made in our prior report to convert
certain DFE IGs to presidential appointment and to consolidate IG
offices to increase overall IG independence and effectiveness.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-931SP
ACCNO: A60844
TITLE: Highlights of the Comptroller General's Panel on Federal
Oversight and the Inspectors General
DATE: 09/11/2006
SUBJECT: Audit authority
Federal legislation
Inspectors general
Government agency oversight
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GAO-06-931SP
te
n
September 11, 2006
Subject: Highlights of the Comptroller General's Panel on Federal
Oversight
and the Inspectors General
The Inspector General Act of 1978, as amended, (IG Act) created
independent offices headed by inspectors general (IG) responsible for
conducting and supervising audits and investigations; promoting economy,
efficiency, and effectiveness; and preventing and detecting fraud and
abuse in their agencies' programs and operations. To carry out the
purposes of the act, the IGs have been granted authorities and
responsibilities to provide for their independence and effectiveness.
These include the authority to have direct access to all records and
information of the agency, to hire staff and manage their own resources,
to receive and respond to complaints from agency employees, to request
assistance from other government agencies, to issue subpoenas to obtain
information and documents, and to administer oaths when taking testimony.
The IGs established by the IG Act are either appointed by the President
with Senate confirmation (presidential IGs), or appointed by their agency
heads in designated federal entities (DFE IGs). There are currently 58 IG
offices established under the IG Act with 29 presidential IGs and 29 DFE
IGs.1 The presidential IGs established under the IG Act are part of the
President's Council on Integrity and Efficiency (PCIE) and the DFE IGs are
part of the Executive Council on Integrity and Efficiency (ECIE). Both
councils are chaired by the Deputy Director for Management in the Office
of Management and Budget (OMB), and were established by Executive Order to
coordinate IG activities across the government. (See app. II for a list of
the presidential and DFE IGs established by the IG Act.)
The IGs receive general supervision from the heads of their agencies, but
for presidential IGs this may be provided by the officer next in rank
below the agency head if the authority is delegated. Also, in accordance
with the IG Act, the agency head may not prevent or prohibit the IG from
initiating, carrying out, or completing any audit or investigation except
under certain conditions specified by the act, or from issuing any
subpoena during the course of any
audit or investigation.
1For the purposes of this report, the presidentially appointed IGs are
referred to as presidential IGs and the IGs in the designated federal
entities are referred to as DFE IGs. While the scope of this report covers
the presidential IG and DFE IG offices established under the IG Act, there
are other IG offices that have also been established under separate
legislation and administratively.
The Senate Committee on Homeland Security and Governmental Affairs asked
us to review whether additional IG authorities and responsibilities such
as those provided in H.R. 2489, as well as other changes, could further
enhance the independence and effectiveness of the IGs. Introduced in 2005,
H.R. 2489 includes provisions for (1) a defined term of office for the IGs
and conditions for removal, (2) IGs to submit their budgets directly to
OMB and the Congress without agency review or approval, (3) the statutory
establishment of a combined PCIE and ECIE Council, (4) changes in IG
investigative and law enforcement authorities, and (5) reporting the
results of IG inspections in their semiannual reports. The committee staff
also asked us to review IG pay structure issues and qualifications. We
also agreed to review recommendations made in our prior report2 to convert
certain DFE IGs to presidential appointment and to consolidate IG offices
to increase overall IG independence and effectiveness.
To provide us with a foundation of views and information on these issues,
on May 11, 2006, we convened a panel of knowledgeable and recognized
experts to discuss IG issues regarding (1) terms of office and removal,
(2) qualifications, (3) budgets, (4) a joint statutory IG council, (5) IG
pay, (6) investigative and law enforcement authorities, and (7) additional
issues including IG inspections, IG conversion to presidential
appointment, and IG consolidation. Panel participants included current and
past administration officials, current PCIE and ECIE leadership, former
IGs, participants from research organizations and academia, and
congressional staff from both the House and the Senate. See appendix III
for a list of participants.
Due to time constraints during the panel discussion, the participants'
views about the IGs' budget process were obtained through subsequent
follow-up and are included in this summary of the panel's highlights. The
panel discussion and subsequent follow-up resulted in a range of views on
these specific issues, which do not necessarily represent GAO's views.
While no comments are attributed to specific panel participants, the
following summary and highlights of the discussion are intended to convey
both their general observations and selected, specific points of view:
The majority of the panel participants did not favor statutorily
establishing a fixed term of office for IGs, but did support a
statutory requirement to notify the Congress in writing in advance
of removing an IG, with an explanation of the reason for removal.
The participants cautioned that this procedure should consist only
of notification, without building in additional steps or actions
in the removal process. The panel participants also generally
agreed that a focus on the reasons for removal is important, but
there are many legitimate reasons for removal that go beyond those
listed in the pending House bill.
The majority of panel participants believed that the current
statutory qualifications for presidential IGs are sufficient and
emphasized that the correct application of the selection and
nomination processes is key for appointing qualified IGs. DFE IGs
should have at least the same specific qualifications as specified
for the presidential IGs in the IG Act.
The panel participants had mixed views about whether the IGs
should submit their budgets directly to OMB and to the Congress.
However, their comments did support additional transparency of the
IG budget process through separate line items and other means.
The panel participants supported the roles and functions of the
current PCIE and ECIE, but had mixed views about statutorily
establishing a joint IG council. The panel participants did favor
establishing a funding mechanism for an IG council, but recognized
the current overall lack of federal funds for this project. Also,
the panel participants overwhelmingly supported expanding the
language of the IG councils' mission beyond that provided by H.R.
2489. The panel participants discussed the role and functioning of
the integrity committee, which is the committee of the PCIE and
ECIE that reviews alleged misconduct by the IGs and their senior
staff, and identified a need to explore additional communications
to the Congress about the committee's activities. In addition,
there was broad-based support among panel members for a
governmentwide accountability council to address broad
accountability issues among GAO, OMB, PCIE, ECIE, and additional
oversight organizations.
The majority of panel participants stated that the pay structure
for IGs needs to be addressed. The discussion included the
importance of providing reasonable and competitive compensation,
maintaining the IGs' independence in reporting the results of
their work, and possibly providing IGs with performance
evaluations that could be used to justify higher pay. The panel
participants felt that base pay for IGs should be higher; however,
they had mixed views about IGs receiving performance bonuses,
primarily because of the uncertainty about the overall framework
that would be used to evaluate performance and make the related
decisions about bonuses.
The panel participants overwhelmingly supported the ability of the
DFE IGs to apply to the Attorney General for full law enforcement
authority instead of having to renew their authority on a
case-by-case basis or through a blanket authority that must be
renewed after an established period of time. They also
overwhelmingly supported providing the designated federal entities
that have DFE IGs the authority under the Program Fraud Civil
Remedies Act to investigate and report false claims and recoup
losses resulting from fraud. In addition, the panel participants
were unanimous in their support of defining IG subpoena power to
include any medium of information and data.
In the discussion of additional issues, the panel participants
recognized the benefits of IG inspections and evaluations, and
supported including the results of this work in the IGs'
semiannual reports. Regarding the additional issue of converting
DFE IGs to presidential appointment and consolidating IG offices,
the panel participants had mixed responses. The panel participants
did, however, overwhelmingly support close coordination among the
IGs and between the IGs and GAO.
2 GAO, Inspectors General: Office Consolidation and Related Issues,
GAO-02-575 (Washington, D.C.: Aug. 15, 2002).
Appendix I includes further highlights of the matters discussed by the
panel's participants; appendix II lists the departments, agencies,
offices, and designated federal entities with IGs established by the IG
Act; appendix III lists the panel participants; and appendix IV lists the
questions we asked the panel participants.
I wish to thank each of the panel participants for providing their
insights on the important matters this document discusses related to the
role played by the federal inspectors general in government oversight. I
appreciate the panel participants' willingness to spend their time and to
provide their views in connection with these important matters.
David M. Walker
Comptroller General
of the United States
Appendix I
The Comptroller General's Panel on Federal Oversight and the Inspectors General
Highlights of the Panel Discussion
The overall objective of the panel was to have a full discussion on
whether additional inspector general (IG) authorities and
responsibilities, such as those included in H.R. 2489 (House bill), as
well as other changes, could further enhance the independence and
effectiveness of federal IGs.
Terms of Office and Removal from Office
Presidential IGs may be removed from office by the President, who is
required to communicate the reasons for removal to the Congress. DFE IGs
may be removed or transferred from office by their agency heads, who are
also required to promptly communicate the reasons in writing to the
Congress.
Unlike other presidential appointees, IGs are to be appointed by the
President without regard to political affiliation. The removal authority
of the President is intended to permit the President to make changes when
the performance of an IG is unsatisfactory or when it appears that
appointment of another individual might result in more effective
performance. Removal of IGs without cause could give the appearance of
political maneuvering to control these important offices.
H.R. 2489 provides for a renewable 7-year term of office for IGs with
removal only for specific causes. The grounds for removal specified in the
bill are permanent incapacity, inefficiency, neglect of duty, malfeasance,
conviction of a felony, or conduct involving moral turpitude. The
following is a summary of the panel's major discussion points.
A statutory provision for a specific term of office for the IGs
without also considering changes to the conditions for removal
would not necessarily protect IGs from removal or enhance IG
independence. However, specific terms of office could provide an
additional safeguard to provide continuity between
administrations.
Even with a specified term, the IG could still be removed during
the term of office under the current process in the IG Act. Terms
of office need to be considered along with causes for removal.
Removal of IGs with a term of office and with removal for cause as
specified by the House bill could be a problem if the
administration had to replace an IG for reasons other than those
specified in the bill, most notably poor quality work or
incompetence.
The question really is how to best achieve IG independence while
maintaining the ability of the administration to remove a
poor-performing IG. This may require broader conditions for
removal than those in the House bill.
IGs need to be accountable for doing a good job. In the best
environment, the IG should focus on fraud, waste, and abuse and
not be in a situation that pits the IG against the head of the
agency. The IGs need to be independent, but removal for cause, as
provided in H.R. 2489, limits the agency head and is not based on
the quality of the IG's work on audits and investigations.
A term of office with removal for cause could help relieve
immediate pressures of removal, but such independence could also
lead to an IG who is isolated from the agency head and the rest of
the agency. A successful relationship between the IG and the head
of the agency is key for the IG concept to work, and it is the
responsibility of the administration to see that all new agency
heads know about the independence requirements of their IGs. Also,
even with a term of office and removal for cause, a President and
an agency head could take steps to neutralize the effectiveness of
an IG, whether justified or not.
A term of office with removal for cause does provide needed
protection to an IG where the relationship with the agency head is
under stress, such as when the IG is investigating the agency
head. In this situation, removal for cause would provide the IG
with protection against being fired by the agency head. The
question would become whether the IG had justification for the
issues identified during an investigation of the head of the
agency. Currently, the IGs look to the Congress to support them
during such times.
The IG Act provides for notification to the Congress of an IG's
removal after the fact (along with the reasons for removal). This
provides an after-the-fact notification of the cause for removal
rather than removal for a cause that is established prior to
removal. With no real protection from removal currently in the IG
Act, the congressional notification of an IG's impending removal
should be made in advance of the actual removal. Notifying the
Congress that an IG is about to be removed would allow for a
dialogue between the administration and the Congress about an IG's
removal before the action is taken.
While the majority of the panel participants did not favor statutorily
establishing fixed IG terms of office, most did support a statutory
requirement to notify the Congress in writing in advance of removing an
IG, with an explanation of the reason for removal. The participants
cautioned that this procedure should consist only of notification of the
impending removal and the related cause, without building in additional
steps or actions in the removal process. The panel participants also
generally agreed that a focus on the reasons for removal is important, but
there are many legitimate reasons for removal that go beyond those listed
in the House bill.
Qualifications
To further ensure their independence, the IG Act requires that IGs
appointed by the President be selected without regard to political
affiliation and solely on the basis of integrity and demonstrated ability
in accounting, auditing, financial analysis, law, management analysis,
public administration, or investigations. There are no such requirements
specified in the IG Act for the DFE IGs, and H.R. 2489 does not have
proposed changes in this area, but this was an issue the Committee asked
us to discuss. The following is a summary of the panel's major discussion
points.
Key IG qualifications are integrity, a lack of political
affiliation, and demonstrated management ability. Many IGs
continue in their position from one administration to another
because they are professional and nonpartisan in carrying out
their responsibilities.
Prospective IGs should have demonstrated management skills as a
requirement for being considered for large IG offices.
Nevertheless, a natural leader can do well no matter what his or
her background. With management skills, the IG can hire good
auditors and investigators and manage them effectively; but it is
better if the IG also has the technical background as well.
While auditors are the largest group in most IG offices, there is
no requirement that the IG be knowledgeable about audits or
investigations. When IGs were first created, more of them had
backgrounds in auditing. Now just a few IGs have technical
backgrounds in auditing. The current situation reflects a shift to
investigation as the preferred IG background. There needs to be
some way to look for a balance between auditors and investigators
in the IG community.
The President can select for appointment whomever he likes;
however, the Senate should thoroughly investigate the nominee
during confirmation hearings. The Congress should thoroughly check
the demonstrated ability, integrity, and qualifications of IG
nominees to provide the required oversight.
The majority of panel participants believed that the current statutory
qualifications for presidential IGs are sufficient and emphasized that the
correct application of the selection and nomination processes is key for
appointing qualified IGs. Panel participants also indicated that DFE IGs
should have at least the same specific qualifications in the IG Act as
those specified for the presidential IGs.
IG Budgets
IG budget requests are a part of each agency's budget process and are
submitted to OMB and the Congress as a part of each agency's overall
budget. Generally, the presidential IGs have their own separate
appropriation in their agencies' budgets while most DFE IGs do not have a
separate line item. H.R. 2489 proposes that IGs submit their budget
requests directly to OMB and the Congress without going through their
agencies' processes.
Due to time limitations during the panel discussion, the issue of IG
budgets was not covered. However, the following major points were
submitted by the panel in response to our electronic mail request for
views and comments shortly after the panel discussion.
The current system of separate budget line items for presidential
IGs works well. Justifying an IG budget amount makes the IG more
accountable by being on the record for how taxpayers' money would
be used. The more light that is focused on this process, the
better the use of taxpayer money.
All IGs should have their own line item in their agencies'
budgets. While the presidential IGs have this now, the DFE IGs
generally do not. Having their own budget line item would show
whether or not an IG's budget is being changed through
disproportionate budget cuts. However, whether IGs have a separate
appropriation process is another matter and perhaps a more
difficult issue for agencies with small budgets.
IGs should continue to submit their budgets through their
agencies, which then submit them to OMB. An independent budget
request from the IG to OMB or the Congress could impact the role
of the agency in balancing competing budget requests from the
management team.
By reporting the variance between the IG's proposed budget and the
agency-approved IG budget, as advanced by H.R. 2489, a
congressional committee could force an increase in IG funding,
which would likely be compensated through cuts in other agency
programs and activities. In this regard, the bill presents a
trade-off of authority over IG budgets between the Congress and
the agency.
Conversely, to promote more accountability and transparency, the
IGs should be able to submit their budgets directly to OMB and to
the Congress. This would give the IGs an opportunity to justify
their requests and give the administration the opportunity to
support the IG or explain why support is not provided.
The panel participants had mixed views about whether the IGs should submit
their budgets directly to OMB and the Congress. However, their comments
did support additional transparency of the IG budget process through
separate line items and other means.
Statutory IG Council
In accordance with an executive order, the IGs meet and coordinate as two
groups. The IGs appointed by the President are members of the President's
Council on Integrity and Efficiency (PCIE), and the IGs appointed by their
agency heads are members of the Executive Council on Integrity and
Efficiency (ECIE). The PCIE and ECIE integrity committee is staffed by
three IGs, representing both PCIE and ECIE, and personnel from the Federal
Bureau of Investigation (FBI), the Office of Ethics, the Office of Special
Counsel, and the Office of Public Integrity from the Department of Justice
to provide reviews of alleged misconduct by the IGs and their senior
staff. H.R. 2489 provides for a combined IG council with the stated
mission of increasing the professionalism and effectiveness of IG
personnel by developing policies, standards, and approaches to aid in the
establishment of a well-trained and skilled IG workforce. H.R. 2489 also
calls for an integrity committee within the IG council with functions
similar to the current integrity committee. The following is a summary of
the panel's major discussion points.
There are some benefits that could result from having one IG
council rather than two councils, especially with regard to
improved communications.
By contrast, the large size of one council for all IGs would be
more difficult to manage. Also, the difference between
presidential IGs and DFE IGs is recognized by having a separate
PCIE and ECIE.
Conversely, other panel members stated that establishing a
statutory IG council could greatly enhance accountability to the
Congress. This would also help with funding for the IG council
staff and for the IG training academies by making the resources
available through a specific line item appropriation. Establishing
the IG council by statute could further promote ownership and
commitment to its mission.
There is no need to change the mission of the PCIE and ECIE, and
the Congress has not indicated a need for a different mission.
Things are working well now under executive order with the IGs
using their own staff for PCIE and ECIE activities. In addition,
establishing the IG council in statute does not assure funding
during difficult federal budget times.
Conversely, the language of the mission is too narrow and should
be enhanced with a better mission statement. Also, there is a need
for a way to fund these councils.
The mission of the IG council should be to assess both the
strengths and weaknesses of government programs and operations.
While it does help management to learn about best practices when
IGs report strengths, currently, weaknesses are usually what get
reported. For example, the IGs report the major management
challenges each year at the request of the Congress.
In addition to an IG council, there is a critical need for a
governmentwide accountability council to address broad
accountability issues among GAO, OMB, PCIE, ECIE, and additional
oversight organizations. This council could be structured so that
it is similar in concept to the Joint Financial Management
Improvement Program (JFMIP), whereby the JFMIP Principals
(composed of the Comptroller General of the United States, the
Secretary of the Treasury, the Director of OMB, and the Director
of the Office of Personnel Management (OPM)) meet at their
discretion to discuss issues of mutual concern to promote better
governmentwide financial management. An accountability council
could share knowledge and coordinate oversight activities to
enhance the overall effectiveness of government oversight and to
preclude duplicate actions. There was broad-based support among
panel members for such a council.
The process of the integrity committee is not transparent to the
Congress, and there is no report to the Congress on the
committee's activities. The integrity committee should provide
additional information to the Congress, including procedures
followed, the cases investigated, and what the committee found in
each case regarding allegations of misconduct by IGs or their
staff. However, the panel participants generally agreed that the
specific deliberations of the integrity committee leading to the
outcomes of each case should not be reported.
Currently only IGs and their senior staff are subject to review
for misconduct by the integrity committee. If the committee were
to be responsible for reviewing the misconduct of all IG staff,
there could be too many cases to cover and the integrity committee
could be overwhelmed with hundreds of cases. In addition, the IGs
address employee misconduct within their own offices.
The panel participants supported the roles and functions of the current IG
councils and there were mixed views about establishing a joint IG council
by statute. Participants did favor establishing a funding mechanism for
the IG councils but recognized the current overall lack of federal funds
for such a project. The panel participants overwhelmingly supported
expanding the language of the IG councils' mission beyond that provided by
H.R. 2489. The discussion of the role and functioning of the integrity
committee identified a need to explore additional communications to the
Congress about the committee's activities. In addition, there was
broad-based support among panel members for a governmentwide
accountability council to address wide-ranging accountability issues among
GAO, OMB, PCIE, ECIE, and additional oversight organizations.
IG Pay
The National Defense Authorization Act for Fiscal Year 20043 established a
range of rates of pay for the federal Senior Executive Service (SES) based
on performance evaluations as part of a certified performance management
system. However, an evaluation of an IG's performance by an agency
official subject to oversight by the IG creates the appearance of a
conflict of interest and could possibly bring the IG's objectivity into
question. Also, for presidential IGs who do not have SES status and are on
the Executive Schedule, their pay is established by statute at Executive
Schedule, Level IV, without the possibility of promotion. Meanwhile, SES
employees who are not IGs can receive pay increases up to the equivalent
of Executive Schedule, Level II. In addition, SES employees who are not
IGs and who are in certified performance management systems can receive
cash awards or bonuses, in addition to their pay, for a combined total up
to the total compensation payable to the Vice President ($212,000 in
2006). Therefore, there are instances where SES employees who report
directly to the presidential IGs may be promoted to pay grades that exceed
Executive Schedule, Level IV, and receive higher pay than the IGs (see
fig. 1).
IGs do not compete for annual bonuses in order to eliminate any appearance
of a conflict of interest. Consequently, presidential IGs can receive
significantly less pay than those employees who report directly to them.
H.R. 2489 does not address presidential IG pay, but does provide for DFE
IG pay to be at a grade level or rank comparable to that of a majority of
the senior staff members of the designated federal entity that report
directly to the head of the entity. The following is a summary of the
panel's major discussion points.
3 Pub. L. No. 108-136, 117 Stat. 1392, 1638 (Nov. 24, 2003).
Figure 1: Maximum Basic Pay Rates for Selected Pay Plans for Fiscal Year
2006
Executive-level positions 2006 maximum pay rates
(in dollars)
Executive Schedule-level I $183,500
(e.g., cabinet secretaries)
Executive Schedule-level II 165,200
(e.g., deputy secretaries, Senators, and
Members of the House of Representatives)
Executive Schedule-level III 152,000
(e.g., undersecretaries and deputies of
most agencies)
Executive Schedule-level IV 143,000
(e.g., selected presidential inspectors general,
chief financial and information officers)
Executive Schedule-level V 133,900
(e.g., commissioners, associate directors)
Senior Executive Service 152,000a
(where performance evaluations are not provided
through a certified performance management system)
Senior Executive Service 165,200a
(where performance evaluations are provided through
a certified performance management system)
Source: GAO, Human Capital: Trends in Executive and Judicial Pay,
GAO-06-708
(Washington, D.C.: June 21, 2006).
a We provided the maximum basic pay rates for 2006; however, SES
positions, other than IG positions, are eligible for additional cash
awards/bonuses. In addition, SES employees who are not IGs and who are in
certified performance management systems can receive cash awards or
bonuses, in addition to their pay, for a combined total up to the total
compensation payable to the Vice President ($212,000 in 2006).
OPM is currently analyzing the presidential IG pay situation and
is working with the PCIE on proposed changes.
Several questions must be answered to address IG pay. What pay
grade is needed to have the IGs on a level playing field with
their agencies' management? Do the DFE IGs need to have SES
grades? At what grade level can an IG be most effective? Should
IGs be evaluated and how should they be evaluated? Can the right
personnel be attracted and retained for IG positions from career
service applicants and from outside the federal government
Under the current pay system, many assistant IGs have little or no
interest in becoming presidential IGs because of the resulting pay
cut they would receive if they were selected as a presidential IG.
Independence is key for the IGs' success. There should be no
pressure on IGs for their work to result in a particular outcome.
Therefore, bonuses and higher pay for IGs cannot be applied in the
same structure as SES compensation.
The IGs should be evaluated on their performance within an
independent framework. There should be some measure of IG success
that is outcome based. The IGs should receive input on their
performance from a number of sources, including their agencies'
management and employees, congressional staff, results based on
performance measures, how they work with the PCIE, client
feedback, surveys, and how well they do their jobs based on their
job performance. However, the evaluation of an IG must be
practical and doable.
A different pay schedule for the IGs should be considered along
with bonus possibilities based on performance that acknowledge the
need for IG independence. Right now there are instances where the
IGs' pay is frozen.
The majority of the panel participants stated that the pay structure for
IGs needs to be addressed. The discussion included the importance of
providing reasonable and competitive compensation, maintaining the IGs'
independence in reporting the results of their work, and possibly
providing IGs with performance evaluations that could be used to justify
higher pay. The panel participants felt that base pay for IGs should be
higher; however, they had mixed views about IGs receiving performance
bonuses, primarily because of the uncertainty about the overall framework
that would be used to evaluate performance and make the related decisions
about bonuses.
IG Investigative and Law Enforcement Authorities
The Homeland Security Act of 2002 (Public Law 107-296) amended the IG Act
to provide presidential IGs with law enforcement powers to make arrests,
obtain and execute search warrants, and carry firearms. DFE IGs are not
included under this act, but may obtain law enforcement authority by
applying to the Attorney General for deputation on a case-by-case basis.
In addition, the Program Fraud Civil Remedies Act4 provides agencies with
presidential IGs the authority to investigate and report false claims and
recoup losses resulting from fraud below $150,000. The agencies with DFE
IGs do not have this authority. Also, the IG Act provides IGs the
authority to subpoena all information, documents, reports, answers,
records, accounts, papers, and other data and documentary evidence
necessary to perform the functions assigned by the IG Act.
H.R. 2489 would allow DFE IGs to apply to the Attorney General for full
law enforcement authority instead of having to renew their authority on a
case-by-case basis or through a blanket authority that must be renewed
after an established period of time. H.R. 2489 also provides designated
federal entities with DFE IGs the authority under the Program Fraud Civil
Remedies Act to investigate and report false claims and recoup losses
resulting from fraud. In addition, H.R. 2489 specifies the authority of
IGs to require, by subpoena, information and data in any medium including
electronically stored information as well as any tangible item. The
following is a summary of the panel's major discussion points.
4 31 U.S.C. S:S: 3801-3812.
Since the terrorist strikes on September 11, 2001, IGs have taken
on an increasing number of fraud investigations that other law
enforcement agencies have abandoned due to their focus on
terrorism. Law enforcement authority for DFE IGs would be
beneficial if the Attorney General grants the authority as
provided for in H.R. 2489.
Full law enforcement authority has been useful for the
presidential IGs, and only those DFE IGs who require this
authority would need to apply to the Attorney General.
Requirements for special training and peer review of the IGs' use
of law enforcement authority came with the authority provided by
the Homeland Security Act of 2002 for presidential IGs. Likewise,
if the DFE IGs obtained the same law enforcement authority, they
should be subject to these same requirements.
Many fraud investigations do not reach the large-dollar threshold
for prosecution. However, the Program Fraud Civil Remedies Act can
put some teeth into civil remedies that are not currently sought.
The Program Fraud Civil Remedies Act is not available to the DFE
IGs because the act was passed in 1986 and the designated federal
entities with DFE IGs were not established until 1988.
The ability of IGs to issue subpoenas for mixed sources of data
and information, including electronic sources and data from any
"tangible thing," would be useful.
The panel participants overwhelmingly supported the ability of the DFE IGs
to apply to the Attorney General for full law enforcement authority
instead of having to renew their authority on a case-by-case basis or
through a blanket authority that must be renewed after an established
period of time. They also overwhelmingly supported providing the
designated federal entities with DFE IGs the authority under the Program
Fraud Civil Remedies Act to investigate and report false claims and recoup
losses resulting from fraud. In addition, the panel participants were
unanimous in their support of defining IG subpoena power to include any
medium of information and data.
Additional Issues
H.R. 2489 requires that the results of IG inspections and evaluations be
included in IG semiannual reports along with the results already required
by the IG Act for audits and investigations. Additionally, the panel
participants considered the benefits of converting DFE IGs to presidential
appointment for some of the largest DFE IG offices, and consolidating the
smallest IG offices with those of presidential IGs. In a prior report5 we
concluded that if properly implemented, conversion or consolidation of IG
offices could increase the overall independence, economy, efficiency, and
effectiveness of IG oversight. The following is a summary of the panel's
major discussion points.
5GAO-02-575.
IG inspections and evaluations are beneficial, and their results
should be included in the IGs' semiannual reports. The panel
participants also observed, however, that most IG inspection and
evaluation results are already included in the IGs' semiannual
reports.
When considering the benefits to independence of converting DFE
IGs from agency appointment to presidential appointment, there is
a distinction between the independence of IGs appointed by their
agency heads and those appointed by the President with Senate
confirmation. Typically, the further removed the appointment
source is from the entity to be audited, the greater the level of
independence. Consequently, the change from agency appointment to
appointment by the President has been recognized by the Congress
since the advent of the IG concept as a strengthening of this
critical element of IG effectiveness.
The DFE IGs at the Corporation for Public Broadcasting, Legal
Services Corporation, National Science Foundation, and the U.S.
Postal Service are appointed by their independent boards of
directors, while other DFE IGs are appointed by their individual
agency heads. To convert those IGs who are now appointed by their
boards of directors to appointment by the President could actually
politicize the process and affect the scope of their boards'
oversight.
The additional confirmations that would result from converting
agency-appointed DFE IGs to presidential appointment would burden
the Senate.
Consolidation of some small IG offices should be considered based
on whether the size and risk of an agency is significant enough to
justify an IG office of its own. Based on this criterion there are
probably too many IG offices.
Oversight may suffer if small IG offices are consolidated with
larger IG offices. The large agency IG could apply resources to
the large agency issues and ignore the small agency. Also, an IG
should be at the small agency site to be effective. Regarding the
increase in additional skills available through consolidation, the
small IG offices can obtain these skills now by sharing staff with
other IGs.
When considering IG office consolidations, an analytical approach
could be used to determine whether there is a need for IG
oversight at a DFE agency. Needed oversight could be attained by
maintaining the current DFE IG as the agency expert and using
resources from the larger IG office. Overhead would be less if IGs
consolidated as a result of economies of scale and sharing
resources.
Irrespective of what happens to the number of IGs, there should be
overall coordination among the IGs and close coordination between
the IGs and GAO to conserve and leverage resources.
The panel participants recognized the benefits of IG inspections and
evaluations, and supported having these results included in the IGs'
semiannual reports. The panel participants had mixed views on conversion
of DFE IGs to presidential appointment and consolidation of IG offices.
The panel participants did, however, overwhelmingly support close
coordination among the IGs and between the IGs and GAO.
Appendix II
Federal Departments, Agencies, and Offices with Inspectors General
Established by the IG Act and Appointed by the President
(Presidential IGs)
Agency for International Development
Corporation for National and Community Service
Department of Agriculture
Department of Commerce
Department of Defense
Department of Education
Department of Energy
Department of Health and Human Services
Department of Homeland Security
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Treasury Inspector General for Tax Administration
Department of Veterans Affairs
Environmental Protection Agency
Export-Import Bank
Federal Deposit Insurance Corporation
General Services Administration
National Aeronautics and Space Administration
Nuclear Regulatory Commission
Office of Personnel Management
Railroad Retirement Board
Small Business Administration
Social Security Administration
Tennessee Valley Authority
Appendix II Appendix II
Designated Federal Entities with Inspectors General
Established by the IG Act and Appointed by the Entity Head
(DFE IGs)
Amtrak
Appalachian Regional Commission
Commodity Futures Trading Commission
Consumer Product Safety Commission
Corporation for Public Broadcasting
Denali Commission
Election Assistance Commission
Equal Employment Opportunity Commission
Farm Credit Administration
Federal Communications Commission
Federal Election Commission
Federal Housing Finance Board
Federal Labor Relations Authority
Federal Maritime Commission
Federal Reserve Board
Federal Trade Commission
Legal Services Corporation
National Archives and Records Administration
National Credit Union Administration
National Endowment for the Arts
National Endowment for the Humanities
National Labor Relations Board
National Science Foundation
Peace Corps
Pension Benefit Guaranty Corporation
Securities and Exchange Commission
Smithsonian Institution
U.S. International Trade Commission
U.S. Postal Service
Appendix III
Comptroller General's Panel on Federal Oversight and the Inspectors
General
Participants
David Berick Majority Professional Staff Member
Senate Committee on Homeland Security and Governmental Affairs
The Honorable Dan G. Blair Deputy Director
Office of Personnel Management
Dr. Christine C. Boesz Inspector General
National Science Foundation
William L. Bransford General Counsel
Senior Executive Association,
Partner
Shaw, Bransford, Veilleux & Roth, P.C.
The Honorable William F. Clinger, Jr. Senior Fellow
Johns Hopkins University
The Honorable Linda M. Combs Controller
Office of Federal Financial Management
The Honorable Earl E. Devaney Inspector General
Department of the Interior
Emilia DiSanto Special Counsel to the Chairman,
Chief Investigative Counsel
Senate Committee on Finance
Thomas Eldridge Majority Senior Counsel
Senate Committee on Homeland Security and Governmental Affairs
The Honorable Gregory H. Friedman Inspector General
Department of Energy,
Vice Chair
President's Council on Integrity and Efficiency
The Honorable J. Russell George Treasury Inspector General for Tax
Administration
Department of the Treasury
Dr. Robert Greenstein Founder and Executive Director
Center on Budget and Policy Priorities,
former Administrator
Food and Nutrition Service
U.S. Department of Agriculture
Linda Gustitus Lecturer
Government Affairs Institute
Georgetown University
Jennifer Hemingway Professional Staff Member
Senate Committee on Homeland Security and Governmental Affairs
The Honorable John P. Higgins, Jr. Inspector General
Department of Education
The Honorable Frank Hodsoll Senior Consultant
Logistics Management Institute,
former Deputy Director for Management
Office of Management and Budget
Bill Hogan Senior Fellow
Center for Public Integrity
The Honorable Clay Johnson III Deputy Director for Management
Office of Management and Budget,
Chair
President's Council on Integrity and Efficiency, Executive Council on
Integrity and Efficiency
Frederick M. Kaiser Specialist
Government and Finance Division Congressional Research Service
C. Morgan Kinghorn President
National Academy of Public Administration
The Honorable John A. Koskinen President
U.S. Soccer Foundation,
former Deputy Director for Management
Office of Management and Budget
The Honorable Richard P. Kusserow President
National Hotline Services,
former Inspector General
Department of Health and Human Services
James R. Naughton Attorney/CPA,
former Counsel
Intergovernmental Relations and Human Resources Subcommittee
House Committee on Government Operations
[conducted hearings throughout 1977 and 1978 to establish offices of
inspectors general in a number of federal departments]
Nancy Nelson Section Chief
Integrity in Government
Civil Rights Section
Criminal Division
Federal Bureau of Investigation
Brian Newkirk Legislative Assistant
Office of Representative Jim Cooper
The Honorable Patrick P. O'Carroll Inspector General
Social Security Administration
David Rapallo Minority Chief Investigative Council
House Committee on Government Reform
The Honorable Charles O. Rossotti Senior Advisor
The Carlyle Group,
former Commissioner
Internal Revenue Service
Barry R. Snyder Inspector General
Federal Reserve Board,
Vice Chair
Executive Council on Integrity and Efficiency
The Honorable Linda M. Springer Director
Office of Personnel Management
Mark Stephenson Minority Professional Staff Member
House Committee on Government Reform
The Honorable James B. Thomas, Jr. Consultant,
former Inspector General
Department of Education
Virginia L. Thomas Director
Executive Branch Relations
The Heritage Foundation
Fred Thompson Vice President for Management and Technology
Council for Excellence in Government
Dr. Cornelius E. Tierney Professor Emeritus of Accountancy
School of Business
George Washington University
The Honorable Nikki L. Tinsley Senior Manager/Consultant
EAM, Inc./Mosley & Associates,
former Inspector General
Environmental Protection Agency
Howard Weizmann President
Private Sector Council
Partnership for Public Service
GAO Participants
The Honorable David M. Walker Comptroller General of the United States
Gene L. Dodaro Chief Operating Officer
Jeffrey C. Steinhoff Managing Director
Financial Management and Assurance
Jeanette M. Franzel Director
Financial Management and Assurance
Jackson W. Hufnagle Assistant Director
Financial Management and Assurance
Margaret A. Mills Analyst-in-Charge
Financial Management and Assurance
Appendix IV
The Comptroller General's Panel on
Federal Oversight and the Inspectors General
Questions for Discussion
Terms of Office, Removal, Qualifications, Budgets
What are your views on terms of office for IGs?
Should there be limitations on removal of an IG?
Are changes needed to the current budget submission process to
better safeguard IG independence and to ensure that IGs obtain
adequate budgets and resources?
Are the IG appointment process and the required IG qualifications
in the IG Act sufficient?
Should IGs submit their budget requests directly to OMB and the
Congress instead of through the budget requests of their agency
heads?
Are there any other independence issues that need to be addressed?
Statutory IG Council
Should there be an IG council established by statute?
Should there be a federal accountability council in addition to
the IG council that would provide for coordination between GAO and
the IG community?
What should the mission and duties of the IG council be and how
should it be funded?
Are the current provisions in H.R. 2489 for mission, functions,
and responsibilities sufficient?
Are there other functions that should be added to the IG council?
What type of transparency, accountability, and reporting
requirements should be placed on the council?
Should the integrity committee have any additional functions or
transparency requirements?
Are there any other IG council issues that need to be addressed?
IG Pay
At what grade level does the IG need to be for protocol purposes
and to function effectively in the oversight role?
Should the pay structures be changed for the presidential IGs and
the DFE IGs? If so, how?
Is it appropriate for IGs to receive performance ratings and, if
so, who should be responsible for preparing the ratings?
Is the determination of awards and bonuses for IGs an appropriate
role for the IG council?
Are there any other pay and personnel issues that need to be
addressed?
Appendix IV
IG Investigative and Law Enforcement Authorities
Should the IG Act be amended to include IG subpoenas for any
information medium?
Should the DFE IGs have statutory law enforcement authority?
How well has statutory law enforcement worked for the presidential
IGs?
Is there a need for the Program Fraud Civil Remedies Act to apply
to the DFE IGs?
Are there any other law enforcement and investigative issues that
need to be addressed?
Additional Issues
Should the results of inspection and evaluation reports be
included in the IGs' semiannual reports? Are inspection reports
useful, and if not, how could the reports be made more useful?
Should any other changes be made to the requirements for IGs'
semiannual reports?
Are there DFE IG offices where it would be more appropriate to
have a presidential IG?
Are there instances where consolidation of IG offices would
provide more effective oversight?
Are there any other issues that should be discussed?
(194609)
United States Government Accountability Office
September 2006
GAO
By the Comptroller General of the
United States
GAO-06-931SP
HIGHLIGHTS OF THE COMPTROLLER GENERAL'S PANEL ON FEDERAL OVERSIGHT AND THE
INSPECTORS GENERAL
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