Inspectors General: Independence of Legal Services Provided to IGs
(Letter Report, 03/01/95, GAO/OGC-95-15).

Inspectors General (IG), which audit and investigate their agencies'
programs and operations, are authorized to hire employees, including
attorneys, to help them carry out their duties.  Most presidentially
appointed IGs initially obtained legal services from their agencies'
Office of General Counsel, and five IGs continue to do so.  These
arrangements have raised questions about whether attorneys from an
agency's Office of General Counsel can provide the independent legal
services needed by officials who must independently review that agency's
programs and operations.  This report compares the independence of legal
services provided by IGs by attorneys in agencies' Office of General
Counsel with those provided by attorneys in Offices of Inspector
General.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  OGC-95-15
     TITLE:  Inspectors General: Independence of Legal Services Provided 
             to IGs
      DATE:  03/01/95
   SUBJECT:  Legal opinions
             Legal research
             Federal employees
             Inspectors General
             Conflict of interest
             Lawyers
             Personnel management
             Investigations into federal agencies

             
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Cover
================================================================ COVER


Report to the Congress

March 1995

INSPECTORS GENERAL - INDEPENDENCE
OF
LEGAL SERVICES PROVIDED
TO IGS

GAO/OGC-95-15

Inspector General Legal Services

(996210)


Abbreviations
=============================================================== ABBREV

  AID - Agency for International Development
  CIA - Central Intelligence Agency
  CNCS - Corporation for National and Community Service
  DOD - Department of Defense
  EPA - Environmental Protection Agency
  FEMA - Federal Emergency Management Agency
  FDIC - Federal Deposit Insurance Corporation
  FTE - full-time equivalent
  GAO - General Accounting Office
  GSA - General Services Administration
  HHS - Department of Health and Human Services
  HUD - Department of Housing and Urban Development
  IG - Inspector General
  MOU - memorandum of understanding
  NASA - National Aeronautics and Space Administration
  NRC - Nuclear Regulatory Commission
  OGC - Office of General Counsel
  OIG - Office of Inspector General
  OPM - Office of Personnel Management
  RTC - Resolution Trust Corporation
  SBA - Small Business Administration
  SES - senior executive service
  USIA - United States Information Agency

Letter
=============================================================== LETTER


B-258857

March 1, 1995

To the President of the Senate and the
Speaker of the House of Representatives

This report presents the results of our review of the independence of
legal services provided to Inspectors General (IGs) appointed by the
President under the Inspector General Act of 1978, as amended.  The
IG Act requires IGs to audit and investigate their agencies' programs
and operations and authorizes them to select, appoint, and employ
such officers and employees, including attorneys, as are necessary to
carry out these duties.  Most presidentially appointed IGs initially
obtained legal services to support their work from their agencies'
Offices of General Counsel (OGCs), and five IGs continue to do so. 

These arrangements have raised questions about whether attorneys
located in an agency's OGC can provide the independent legal services
necessary for an official who is statutorily required to
independently review that agency's programs and operations.  As a
result, the Congress required us to review the independence of legal
services provided to presidentially appointed IGs in section 6007 of
Public Law 103-355, the Federal Acquisition Streamlining Act of 1994. 
Specifically, our review compared the independence of legal services
provided to IGs by attorneys located in agencies' OGCs with those
provided by attorneys located in Offices of Inspector General (OIGs). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The IG Act of 1978, as amended, established OIGs in departments and
agencies to consolidate the audit and investigative functions of
those departments and agencies in an independent office under the
leadership of a senior official, the IG.  The IG Act contains a
number of provisions designed to ensure that IGs carry out their
responsibilities independently.  For example, under the act, IGs are
not to report to those directly responsible for carrying out the
programs and activities subject to audit and investigation, but
rather to the agency head or, in the case of presidentially appointed
IGs, the official next in rank.  In addition, with few exceptions,
neither the agency heads nor subordinates are to prevent or prohibit
IGs from initiating, carrying out, or completing any audit or
investigation.  Thus, IGs are to be insulated from the interference
of senior officials, such as General Counsels. 

Some IGs and attorneys in the IG community believe that IGs whose
attorneys are organizationally located in OGCs face the potential of
receiving legal advice based on the positions of General Counsels or
senior OGC officials and compromising their own independence on
audits and investigations with significant legal content or
implications.  Twenty-two of the 27 IGs we surveyed have eliminated
the issue of the independence of the legal advice they receive and,
by extension, their own independence by placing attorneys in their
own offices.  In addition, the IGs have done so with increasing
frequency over the last 5 years.  Some IGs changed the location of
their attorneys because they were not able to resolve to their
satisfaction specific problems with their arrangements with OGCs. 
Others did so because of a policy or personal preference for having
their primary source of legal services located in the OIG rather than
in their agencies' OGC. 

Five of the 27 IGs in our survey obtain legal services from attorneys
located in their agencies' OGC.  Three of the five--those at the
Environmental Protection Agency (EPA) and the Departments of Defense
(DOD) and Health and Human Services (HHS)--have implemented memoranda
of understanding (MOUs) with their agencies' General Counsels and are
satisfied with their current arrangements.  To alleviate the
potential that their attorneys' organizational location will
adversely affect the independence of the advice the IGs receive and
erode their independence, the MOUs recognize the IGs' independence
and their attorneys' responsibilities and include requirements such
as IGs' concurring in the selection and appraisal of their principal
legal advisors.  The IGs at the Federal Emergency Management Agency
(FEMA) and the Department of the Treasury do not receive legal
services from OGC attorneys under the conditions that exist at the
other three agencies.  The FEMA IG is concerned about some aspects of
the arrangement under which legal services are provided and plans to
review the matter.  The Treasury IG is not satisfied with her current
arrangement and is discussing the matter with Treasury officials. 

Finally, we found that the number and grade levels of the attorneys
providing legal services and the nature and scope of services
provided vary from office to office and are not necessarily related
to the organizational location of the attorneys.  We also found that
IGs' attorneys, whether located in OGCs or OIGs, obtain services from
other agency attorneys.  Accordingly, our comparison of these
characteristics for OGC attorneys currently providing legal services
to IGs with OIG attorneys providing such services does not indicate
that attorneys located in OGCs are less able to provide independent
legal services than those located in OIGs. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Under the IG Act, OIGs are to provide agency heads and the Congress
with independent assessments of the management and operation of
agencies and their programs.\1 Specifically, the IGs' mission is to
audit and investigate agency programs and operations with an eye
toward (1) promoting economy, efficiency, and effectiveness and (2)
detecting fraud, waste, and abuse. 

The IG Act provides IGs with broad authority to hire employees with
the knowledge and skills needed to make the requisite assessments. 
The act also grants IGs significant discretion regarding matters of
OIG structure and composition.  The IGs initially obtained necessary
audit and investigative expertise from the internal auditors and
investigators transferred to the newly established OIGs and legal
services from their agencies' OGCs.  Over the years, presidentially
appointed IGs have increasingly placed their primary source of legal
services in their own offices, and only five still have principal
legal advisors organizationally located in their agencies' OGCs. 

During consideration of the bill that became the Federal Acquisition
Streamlining Act of 1994, the Senate considered amending the IG Act
to require presidentially appointed IGs to place their attorneys in
their own offices.  Proponents raised concerns about the independence
of legal advice provided to IGs by OGC attorneys and argued that
reliance on such attorneys compromises IGs' independence.  Others
argued that IGs are best able to determine how to obtain legal
services and, thus, opposed requiring IGs to place attorneys in their
offices.  A compromise measure, which ultimately became section 6007
of the Federal Acquisition Streamlining Act of 1994, requires us to
review the independence of legal services provided to IGs appointed
by the President under the IG Act. 


--------------------
\1 The Congress had established an OIG at the Department of Health,
Education, and Welfare in 1976 following disclosures of inadequacies
in its internal audit and investigative procedures.  The Congress
also established an OIG in the Department of Energy when it was
created in 1977. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :3

Consistent with section 6007 of the Federal Acquisition Streamlining
Act of 1994, the objectives of our work were to (1) review the
independence of legal services being provided by OGC attorneys to IGs
appointed by the President under the IG Act and (2) compare the
independence of these legal services to those provided in agencies
where the IG's principal source of legal advice is located in the
OIG.  Appendix I identifies the 27 OIGs included in our review.\2

We interviewed the five IGs whose principal legal advisors are
located in their agencies' OGCs--those at DOD, EPA, FEMA, HHS, and
Treasury--and seven of the IGs whose principal legal advisors are
located in OIGs--those at the United States Information Agency (USIA)
and the Departments of Education, Housing and Urban Development
(HUD), Interior, Labor, Transportation, and Veterans Affairs.\3 Our
interviews focused on the role of the IGs' attorneys and their
working relationships with the agencies' OGCs, the extent of the IGs'
control over the activities of their attorneys, and the framework in
which legal services are provided. 

In addition, to determine whether there are differences between the
OGC and OIG attorneys currently providing legal services to IGs that
might suggest that those located in OGCs are less able than those
located in OIGs to provide independent legal services, we used a
questionnaire to gather information from all 27 IGs on how IGs obtain
legal services as well as on the composition, supervision, and
budgetary independence of the legal staffs providing services to IGs;
interviewed selected OIG staff and IGs' principal legal advisors; and
compared the mechanisms through which OGC and OIG attorneys provide
legal services.  Finally, we obtained information on the volume and
nature of legal services provided to the IGs over the last 2 fiscal
years and on the frequency and resolution of disagreements between
the IGs' attorneys and other agency attorneys during this period.  We
did not attempt to evaluate the quality of the legal services
provided by either OGC or OIG attorneys and therefore did not review
legal products prepared for IGs by either OGC or OIG attorneys. 

Our work was performed in accordance with generally accepted
government auditing standards from November 1994 through January
1995. 

We discussed our findings and recommendations with the IGs at
Treasury and FEMA and have incorporated their comments where
appropriate. 


--------------------
\2 This review did not include IGs appointed by agency heads under
the IG Act or the IG at the Central Intelligence Agency (CIA), who is
appointed by the President under the CIA's authorizing legislation. 

\3 At the time of our review, the IG positions at the Departments of
Defense and Interior were vacant, and the IG at the Department of
Transportation was on extended leave.  At those departments, we
interviewed the Deputy IGs. 


   ORGANIZATIONAL LOCATION OF OGC
   ATTORNEYS GIVES RISE TO
   INDEPENDENCE CONCERNS
------------------------------------------------------------ Letter :4

The General Counsel serves as an agency's chief legal official and,
as such, advises the agency head and articulates the agency's
positions on legal matters.  The IG serves as an independent
evaluator of the agency's programs and operations and reports on the
evaluations to the agency head and the Congress.  Occasionally,
attorneys advising the agency head and those advising the IG may view
legal issues differently.  As a result, the IG's attorneys may be
placed in the position of offering legal advice or preparing opinions
that differ from those of senior OGC officials, including the General
Counsel.  When the differences cannot be resolved by the staffs, or
by the General Counsel and IG themselves, the IG may elevate them to
the agency head during the audit resolution process and require
further legal assistance. 

Most of the officials we interviewed acknowledged the potential for
IGs whose attorneys are located in agencies' OGCs to receive legal
advice based on the views of General Counsels or senior OGC officials
and to compromise their own independence on audits and investigations
for which legal services are significant.\4 These officials believe
that actions taken by senior OGC officials or the attorneys' own
concerns about such matters as professional relationships or career
advancement could make it difficult for OGC attorneys to provide
independent legal advice to the IG.  Further, we were told by some
attorneys now located in OIGs that when they were located in OGCs,
they had felt pressure to conform their views to positions favored by
senior OGC officials.  At one of the agencies in our survey, we were
told that OGC had once directed the IG's attorney in writing not to
provide legal advice to the IG on a particular issue.  At this
agency, the IG's legal advisors are now located in the OIG. 

Most IGs have eliminated concerns associated with their attorney's
organizational location by placing their attorneys in the OIGs. 
Three of the five IGs with OGC attorneys have implemented MOUs with
their agencies' General Counsels to alleviate the concerns associated
with their attorneys' organizational location.  The remaining two IGs
do not receive legal services from OGC attorneys under the conditions
existing at the other three agencies and are not satisfied with their
arrangements. 


--------------------
\4 Federal attorneys are subject to rules of professional
responsibility adopted by the states in which they are admitted to
practice.  Some attorneys we interviewed specifically referred to
such rules in explaining that, wherever located, they would base
their advice to the IG on their independent professional judgment
rather than on the position favored by the organizational unit in
which they were located. 


   IGS HAVE INCREASINGLY USED
   AUTHORITY UNDER THE IG ACT TO
   PLACE THEIR ATTORNEYS IN OIGS
------------------------------------------------------------ Letter :5

The IG Act specifically authorizes IGs to select, appoint, and employ
such officers and employees as may be necessary for carrying out
their functions, powers, and duties.  According to the legislative
history, the act provides such explicit authority because of the
possibility that agencies might deny IGs the authority to hire needed
staff in order to hamper their operations.  The legislative history
also clearly indicates that this broad hiring authority applies to
attorneys.  Accordingly, IGs may obtain legal services from OGC
attorneys or from attorneys located in their own offices at their
discretion. 

Our survey reveals a steady trend over the past decade toward IGs
obtaining legal services from attorneys located in their own offices. 
As illustrated in appendix II, 33 percent of established OIGs
obtained legal services from attorneys located within the OIG in
1985, 58 percent in 1990, and 81 percent--or 22 of 27--in 1994. 

As illustrated in appendix III, the trend results from existing IGs
changing the location of their attorneys as well as from new IGs
placing their attorneys in their own offices.  Of the nine IGs whose
attorneys were located in OGCs in 1980, six have changed the location
of their attorneys since 1990.  In addition, of the five IGs whose
offices were established between 1990 and 1994, all but FEMA placed
attorneys in their offices within their first year of operation. 

We interviewed the IGs at Education, HUD, Interior, Labor,
Transportation, USIA, and Veterans Affairs.  At four of these seven
agencies--Education, Labor, Transportation, and USIA--the IGs changed
the organizational location of their primary source of legal services
from OGC to the OIG because of specific unsatisfactory experiences
with their OGC arrangements.  The IGs were not confident that OGC
attorneys could provide independent advice consistent with their
needs.  At Interior, the attorneys providing legal services to the IG
were relocated to the OIG at the request of the Solicitor who
believed for management reasons that attorneys providing legal
services exclusively to the OIG should be located in that office. 
Finally, newly appointed IGs at HUD and Veterans Affairs placed their
attorneys in the OIG in order to satisfy policy objectives or
personal preferences.  These IGs are satisfied with the arrangements
under which they obtain legal services. 


   THREE OF THE FIVE IGS WITH OGC
   ATTORNEYS HAVE TAKEN STEPS TO
   ALLEVIATE CONCERNS ASSOCIATED
   WITH THEIR ATTORNEYS' LOCATION
------------------------------------------------------------ Letter :6

Three IGs who obtain legal services from OGC attorneys--those at DOD,
EPA, and HHS--have implemented MOUs to alleviate the potential that
their attorneys' location will limit the independence of the advice
they receive and affect their own independence.  The three IGs are
satisfied with their current arrangements.  These MOUs assert the
independence of the OIG and address the specific conditions from
which the potential effects on independence arise.  They address
personnel management responsibilities including the selection and
appraisal of attorneys, the protection of sensitive information, and
the provision of legal advice. 

With respect to personnel, the three MOUs require the General Counsel
to establish a separate division within OGC so that attorneys
providing legal services to the IG do not also provide legal services
to other agency components.  Several officials emphasized the
importance of placing the IG Division physically in or near the OIG
rather than in OGC.\5 To varying degrees, they also require IG
concurrence in the selection of the legal staff and prohibit the
transfer, reassignment, assignment of additional duties to, or
termination of such staff without IG concurrence.  The three MOUs
also provide for IG involvement in performance appraisals.  Under the
HHS MOU, the General Counsel is to seek the IG's views on the
principal legal advisor's annual performance evaluation and bonus. 
The DOD and EPA MOUs provide that the principal legal advisor is to
be evaluated by the General Counsel with the concurrence of the IG. 

The IGs at DOD, EPA, and HHS and their attorneys explained how the
MOUs have been implemented.  Each agency's OGC has a separate
division comprised of attorneys who provide legal services
exclusively to the IG as reflected, to varying degrees, in the
position descriptions of the IGs' principal legal advisors.  The IGs
at the three agencies also participate in the selection and appraisal
of their attorneys, consistent with the provisions of their
respective MOUs.  For example, the DOD IG and General Counsel jointly
selected the IG's current principal legal advisor, and the HHS IG
provides the General Counsel with an annual written appraisal of the
principal legal advisor's performance.\6

With respect to sensitive information, the MOUs in effect at the
three agencies authorize the IGs to limit their communication about
particular matters to their OGC attorneys where broader communication
would undermine or impair their function.  The OGC attorneys
providing legal services to the IG are not to communicate any
information received from the OIG about such matters without specific
authorization from the IG. 

Finally, the MOUs in effect at DOD, EPA, and HHS contain provisions
addressing the relationship between the IGs and their attorneys and
the General Counsels and their staffs.  The three MOUs provide for
the IGs' attorneys to seek the expertise of other attorneys who may
be knowledgeable about particular agency programs and activities. 
The MOUs also contemplate that the IGs may disagree with opinions of
the General Counsels and that, if requested, the IGs' attorneys will
provide assistance to the IGs under such circumstances.  While the
MOUs specify procedures for the resolution of certain differences
between the IGs' attorneys and other attorneys, they do not bind
either the IGs or their attorneys to OGC's views. 

For example, the MOU in effect at HHS provides that the IG is free to
disregard the General Counsel's advice and that legal opinions
provided by the IG's attorneys that conflict with the legal positions
of the Department are to state that they are solely the positions of
the IG Division.  The DOD MOU states that if the IG disagrees with
the General Counsel's legal opinion and requires assistance from the
IG's attorney, the attorney may provide whatever legal assistance the
IG requires to carry out IG responsibilities.\7 Echoing the MOU, the
position description for the DOD IG's principal legal advisor states
that the attorney is to provide legal advice through the IG to the
most senior DOD officials on any aspect of the IG's authority or
activities and on DOD's programs and operations.  While high-level
disagreements are infrequent, the OGC attorneys for the three IGs
explained that they have disagreed with their OGC colleagues and
advised the IGs accordingly. 

Like the IGs whose principal legal advisors are in their own offices,
the IGs at DOD, EPA, and HHS are satisfied with their current
arrangements.  They believe that these arrangements facilitate
necessary communication with OGC as well as the resolution of audit
findings and do not believe that the advice they receive is affected
by their advisors' organizational location.  They also emphasized
that they would exercise their authority under the IG Act to place
their attorneys within the OIG if the independence of the legal
services they receive became suspect or if they otherwise became
dissatisfied. 


--------------------
\5 The OGC attorneys providing legal services to the IGs at DOD and
HHS are located with the OIG rather than with OGC.  Due to space
constraints, the EPA attorneys who provide legal services to the IG
are located neither with the OIG nor with most of their OGC
colleagues. 

\6 The OIGs' principal legal advisors are generally responsible for
appraising the performance of their staff attorneys and have done so
without any interference by senior officials in OGC. 

\7 The HHS and EPA MOUs contain nearly identical provisions. 


   TWO IGS ARE CONCERNED ABOUT OGC
   ARRANGEMENTS
------------------------------------------------------------ Letter :7

The IGs at FEMA and Treasury do not obtain legal services from OGC
attorneys under the conditions that exist at DOD, EPA, and HHS.  In
1984, the then nonstatutory IG and General Counsel of FEMA signed an
MOU similar to those currently in effect at DOD, EPA, and HHS. 
However, this MOU was not implemented.  The position description for
the IG's current principal legal advisor, a GS-14 attorney, includes
providing assistance to the IG as only one of a myriad of duties to
be performed in support of FEMA's activities.  Moreover, the
attorney's performance plan characterizes the duties in support of
the IG--serving as OGC's liaison and central clearing point for OIG
matters--as "noncritical." Consistent with the position description,
the attorney provides limited services to the IG.  Accordingly, OIG
staff regularly obtain legal services from program attorneys.  The
current IG told us that he is dissatisfied with this arrangement.  He
told us that he would consider hiring an OIG attorney, particularly
to provide experienced legal support to OIG investigators, if a GS-15
level position were vacant.  In addition, he plans to discuss with
the General Counsel an MOU that would ensure that dedicated attorneys
are available to meet his needs and that appropriate safeguards to
independence are in place. 

While the OGC attorneys from whom the Treasury IG obtains legal
services are dedicated exclusively to the IG and are physically
located near the OIG, there is no MOU in effect to address concerns
associated with the attorneys' organizational location.  Further, the
position description for the IG's principal legal advisor, which
predates the establishment of a statutory IG at Treasury, contains
language suggesting that the independence of the legal services
provided to the IG could be limited.  The IG believes that her
selection and appraisal of a principal legal advisor are essential
elements of a satisfactory arrangement.  She is dissatisfied with the
current arrangement.  The Treasury IG told us that she and the
General Counsel have agreed on the outlines of an MOU and will
continue to discuss the matter. 


   GOVERNMENT AUDITING STANDARDS
   ALLOW DIFFERENT APPROACHES FOR
   OBTAINING LEGAL SERVICES
------------------------------------------------------------ Letter :8

The professional standards applicable to IGs do not require them to
select one method of obtaining legal services over another and do not
preclude different arrangements that reflect IGs' preferences. 
Government Auditing Standards\8

require auditors and audit organizations to be independent and to
maintain an independent attitude and appearance so that opinions,
conclusions, judgments, and recommendations will be impartial and
will be viewed as such by third parties.  To this end, they also
require auditors to evaluate whether evidence is sufficient,
competent, and relevant to afford a reasonable basis for findings and
conclusions.  An auditor's approach to determining the sufficiency,
competence, and relevance of evidence depends on the source of that
evidence.  In considering whether to rely on an attorney's work, an
auditor considers the attorney's qualifications and independence,
both personal and organizational. 

Twenty-five of the 27 IGs in our survey currently obtain legal
services in the manner they prefer.  Having their primary source of
legal services in the OIG helps to provide 22 IGs with confidence
that their reliance on the legal advice they receive will not
compromise their independence.  The requirements and conditions
contained in the MOUs at DOD, EPA, and HHS help to provide those IGs
with similar confidence.  In the final analysis, the IGs, under
governing standards, must determine whether to rely on the legal
advice they receive. 


--------------------
\8 The IG Act requires IGs to comply with Government Auditing
Standards in carrying out their duties and responsibilities. 


   COMPOSITION AND DUTIES OF LEGAL
   STAFFS VARY FROM OFFICE TO
   OFFICE
------------------------------------------------------------ Letter :9

During our review, we gathered information on the composition and
duties of the legal staffs currently providing services to IGs to
determine whether those located in OGCs differ as a group from those
located in OIGs.  As shown in appendix IV, the size of legal staffs
supporting IGs, both in isolation and in comparison to total OIG
staff, bears no relation to the location of the attorneys.  The size
of legal staffs varies from 1 to 19 attorneys.  The median number of
attorneys providing services to IGs is three.  The ratio of attorneys
to total OIG staff also varies widely, with no widespread correlation
between the ratio and the location of the IG's attorneys.  Likewise,
we found that there is no distinguishable difference between the
grade levels of principal legal advisors located in OGCs and those in
the OIGs.  In the five agencies at which OGC attorneys provide legal
services to the OIG, three (60 percent) of the principal legal
advisors are in the Senior Executive Service, one is a GS-15, and one
is a GS-14.  In the 22 agencies where OIG attorneys provide such
services, 15 of the principal legal advisors (68 percent) are in the
Senior Executive Service and 7 are GS-15s.  The grade levels of the
OGC and OIG staff attorneys are also mixed.  Appendix V contains data
on the grades of the legal staffs providing services to IGs. 

We also found that the nature and scope of the legal services
provided to the IGs vary from office to office and are not
necessarily related to the location of the attorneys.  We found that
IGs routinely ask their attorneys to interpret federal laws and
regulations and to advise OIG staff on issues arising during audits
and investigations.  In agencies with programs that are particularly
susceptible to fraud, the IGs are more likely to also ask their
attorneys to prepare subpoenas, assist Assistant United States
Attorneys with criminal litigation, and help negotiate settlements. 
Regardless of attorney location, IGs and their attorneys recognize
that they may benefit from the assistance of other agency attorneys
with expertise in particular programs.  In fact, some IGs with OIG
attorneys have formal agreements with their agencies' General
Counsels that provide for such assistance.  While IGs' attorneys and
other agency attorneys generally enjoy cooperative relationships,
differences of opinion occasionally arise.  However, IGs reported few
differences between IGs' attorneys, wherever located, and senior
agency attorneys during the past 2 fiscal years.  Differences between
attorneys were usually resolved at the staff level.  Further, several
IGs told us that compliance issues often arose during the audit
resolution process not as differences between lawyers but as disputes
between the IGs and program officials over particular facts or the
application of such facts to governing law. 

The way in which IGs use attorneys, wherever located, appears largely
to reflect the personalities and preferences of the individual IGs. 
For example, several IGs use their principal legal advisors as
counselors on policy and management issues.  Although most of the IGs
who emphasized this role during our interviews obtain legal services
from OIG attorneys, some IGs' OGC attorneys also serve in this role
to some degree.  Further, two IGs explained circumstances in which
OIG staff who were attorneys, but not part of the legal staff,
provided some legal services.  Another IG whose principal legal
advisor is in the OIG even suggested that as long as an IG has
someone in the OIG qualified to provide legal advice and counsel,
particularly on sensitive matters, the organizational location of the
attorneys who provide routine legal services to OIG staff is itself
of little consequence. 


   CONCLUSIONS
----------------------------------------------------------- Letter :10

There is concern that IGs whose attorneys are organizationally
located in agencies' OGCs will not always receive independent legal
advice and that their own independence will be compromised as a
result.  Twenty-two of the 27 IGs in our survey have eliminated the
issues associated with their attorneys' organizational location by
placing attorneys in their own offices under the authority of the IG
Act.  Three of the five IGs who obtain legal services from OGC
attorneys have implemented MOUs, which include requirements for IG
concurrence in the selection and appraisal of their principal legal
advisors, to alleviate the potential that their attorneys' location
will adversely affect the independence of the advice the IGs receive
and erode their independence.  The IGs at FEMA and Treasury do not
obtain legal services from OGC attorneys under the conditions that
exist at DOD, EPA, and HHS. 

In addition, we found no evidence from which to conclude that the
composition and duties of the legal staffs providing services to the
27 IGs are significantly different based on their organizational
location.  We also found that the composition and duties of the IGs'
legal staffs largely reflect the preferences of individual IGs. 
Accordingly, our comparison of the composition and duties of OGC
attorneys advising IGs and OIG attorneys does not indicate that
attorneys located in OGCs are less able than those located in OIGs to
provide independent legal services to IGs. 


   RECOMMENDATIONS
----------------------------------------------------------- Letter :11

To help ensure that the IGs at FEMA and Treasury receive independent
legal services, we recommend that they either locate their principal
legal advisors within their offices or implement MOUs with their
agencies' General Counsels containing, at a minimum, the requirements
and conditions, including participation in the selection and
appraisal of the principal legal advisor, in the MOUs in effect at
DOD, EPA, and HHS. 


--------------------------------------------------------- Letter :11.1

We are sending copies of this report to the Chairmen and Ranking
Minority Members of the Senate Committee on Governmental Affairs and
the House Committee on Government Reform and Oversight.  Copies are
also being provided to Senator Charles Grassley, the Director of the
Office of Management and Budget, the Inspectors General of the
agencies included in our review, and other interested parties. 

This report was prepared under the direction of Jeffrey A.  Jacobson,
Assistant General Counsel, who may be reached on (202)512-8261. 
Major contributors to this report are listed in appendix VI.






Charles A.  Bowsher
Comptroller General
of the United States


OIGS INCLUDED IN GAO'S REVIEW
=========================================================== Appendix I

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 Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Department of Veterans Affairs
Environmental Protection Agency
Federal Deposit Insurance Corporation
Federal Emergency Management Agency
General Services Administration
National Space and Aeronautics Administration
Nuclear Regulatory Commission
Office of Personnel Management
Railroad Retirement Board
Resolution Trust Corporation
Small Business Administration
United States Information Agency


PERCENTAGE OF IGS WITH OIG
ATTORNEYS
========================================================== Appendix II



   (See figure in printed
   edition.)


CALENDAR YEARS IN WHICH IGS WERE
FIRST APPOINTED AND OIGS FIRST
EMPLOYED ATTORNEYS
========================================================= Appendix III



   (See figure in printed
   edition.)

Note:  The Foreign Service Act of 1980 established an Inspector
General of the Department of State and the Foreign Service.  The
Foreign Relations Authorization Act for Fiscal Years 1986 and 1987
amended the IG Act to bring the Department under the act.  One year
later, the position of Inspector General of the Department of State
and the Foreign Service was abolished. 


COMPARISON OF ATTORNEY AND TOTAL
OIG STAFF AS OF SEPTEMBER 30, 1994
========================================================== Appendix IV

                                                      Number
                                                          of     Total
                                          Attorney  attorney       OIG
Agency                                    location         s   staff\a
----------------------------------------  --------  --------  ========
Agency for International Development      OIG              3       245
Corporation for National and Community    OIG              1        11
 Service
Department of Agriculture                 OIG              2       821
Department of Commerce                    OIG              7       189
Department of Defense                     OGC              7      1569
Department of Education                   OIG              3       344
Department of Energy                      OIG              2       358
Department of Health and Human Services   OGC           19\b      1252
Department of Housing and Urban           OIG              2       484
 Development
Department of the Interior                OIG              2       303
Department of Justice                     OIG              3       331
Department of Labor                       OIG            5\c       475
Department of State                       OIG              5       261
Department of Transportation              OIG            1\d       461
Department of the Treasury                OGC            4\e       292
Department of Veterans Affairs            OIG              3       397
Environmental Protection Agency           OGC              4       435
Federal Deposit Insurance Corporation     OIG              3       190
Federal Emergency Management Agency       OGC              1        53
General Services Administration           OIG              7       387
National Aeronautics and Space            OIG              2       192
 Administration
Nuclear Regulatory Commission             OIG              2        46
Office of Personnel Management            OIG              2       113
Railroad Retirement Board                 OIG              1        92
Resolution Trust Corporation              OIG              5       285
Small Business Administration             OIG            2\c        96
United States Information Agency          OIG              1        53
----------------------------------------------------------------------
\a Total OIG Staff size is in actual full-time equivalents (FTEs). 
One FTE is equal to 1 work year, or 2,080 hours.  Total attorney
staff size is in actual number of attorneys. 

\b Four additional attorneys are located in the OIG and assist the
OIG's Office of Civil Fraud and Administrative Adjudications in
negotiating settlements in administrative sanctions cases.  Three of
the 19 attorneys are part-time and one was on extended maternity
leave. 

\c In addition to providing legal services to the OIGs at the
Department of Labor and the Small Business Administration, the SES
positions included in these numbers also have OIG management
responsibilities. 

\d This attorney was hired on October 17, 1994. 

\e This total includes two full-time GS-15s, one part-time GS-14, and
one part-time GS-13.  The OGC attorneys that provide legal services
to the IG at the Department of the Treasury fill FTEs allocated to
the OIG. 


GRADE LEVELS OF ATTORNEYS
PROVIDING LEGAL SERVICES TO IGS AS
OF SEPTEMBER 30, 1994
=========================================================== Appendix V


                                         Attorn
                                         ey                      GS-14
                                         locati           GS-      and
Agency                                   on       SES     15s    below
---------------------------------------  ------  ----  ------  -------
Agency for International Development     OIG        1       1        1
Corporation for National and Community   OIG                1
 Service
Department of Agriculture                OIG                1        1
Department of Commerce                   OIG        1       1        5
Department of Defense                    OGC        1       6
Department of Education                  OIG                1        2
Department of Energy                     OIG        1                1
Department of Health and Human Services  OGC\a      2       5     12\b
Department of Housing and Urban          OIG        1       1
 Development
Department of Interior                   OIG        1       1
Department of Justice                    OIG        1       1        1
Department of Labor                      OIG      1\c       2        2
Department of State                      OIG        1       2        2
Department of Transportation\d           OIG        1
Department of the Treasury               OGC                2      2\e
Department of Veterans Affairs           OIG        1       1        1
Environmental Protection Agency          OGC        1       1        2
Federal Deposit Insurance Corporation    OIG        1       1        1
Federal Emergency Management Agency      OGC                         1
General Services Administration          OIG        1       2        4
National Aeronautics and Space           OIG                1        1
 Administration
Nuclear Regulatory Commission            OIG      1\f                1
Office of Personnel Management           OIG                1        1
Railroad Retirement Board                OIG                1
Resolution Trust Corporation             OIG        1       1        3
Small Business Administration            OIG      1\c                1
United States Information Agency         OIG                1
======================================================================
Totals                                             19      35       45
----------------------------------------------------------------------
\a One additional GS-15 and three additional GS-14 attorneys are
employed in OIG's Office of Civil Fraud and Administrative
Adjudication. 

\b Three attorneys are part time and one was on extended maternity
leave. 

\c In addition to providing legal services to the IGs at the
Department of Labor and the Small Business Administration, these
SES-level attorneys have OIG management responsibilities. 

\d The IG at the Department of Transportation hired an attorney on
October 17, 1994. 

\e Both of these attorneys are part time. 

\f This position is equivalent to an SES position and is classified
as a "Senior Level System" position within the Nuclear Regulatory
Commission. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix VI

OFFICE OF THE GENERAL COUNSEL

Helen T.  Desaulniers, Senior Attorney

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Sharon O.  Byrd, Senior Auditor
Jackson W.  Hufnagle, Assistant Director
Clarence A.  Whitt, Senior Accountant
Charles W.  Woodward, Senior Evaluator


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