"THE INSPECTOR GENERAL ACT: 20 YEARS

LATER"

WEDNESDAY, SEPTEMBER 9, 1998

U.S. SENATE,

COMMITTEE ON GOVERNMENTAL AFFAIRS,

Washington, DC.

The Committee met, pursuant to notice, at 10:15 a.m., in room SD-342, Dirksen Senate Office Building, Hon. Fred Thompson, Chairman of the Committee, presiding.

Present: Senators Thompson, Collins, and Glenn.

OPENING STATEMENT OF CHAIRMAN THOMPSON

Chairman THOMPSON. Let's come to order.

It looks like the subject of Inspector General is more popular than I realized, or has everybody brought their family today? But I am glad to see it.

We will be joined by other Members, shortly. I know that Senator Glenn, who has worked in this area so much, will be here, and Senator Collins, also, but we might go ahead and get started. We had a vote this morning.

Twenty years ago, this Committee's leadership and efforts to establish better oversight in the government led Congress to pass the Inspector General Act. In the intervening 2 decades, the Governmental Affairs Committee has been a supporter and a friend to the IG community.

The Committee, Congress, and, most importantly, the American people have been amply rewarded by their investment in the IGs. The accomplishments of the IGs are there for all to see. All one has to do is pick up the latest agency semiannual IG report and browse through it to see that waste, fraud, abuse, and mismanagement continue to be exposed.

For example, the audit of HCFA's 1997 financial statement audit estimated that $20.3 billion was paid out in improper Medicare payments. The HHS IG was able to get back over $1 billion through their efforts. In the battle against DoD health care and procurement fraud, defense investigations led to 117 indictments and 93 convictions in the last 6 months. These are two examples among hundreds that illustrate the dedication of the IGs to ensure the taxpayers get a better deal. For that, I salute you and say keep up the good work.

I wish I could say that everything is going smoothly with the IG community, but the current situation is not perfect. Senator Collins has introduced a bill, S. 2167, designed to address some of the

problems that we will discuss today. I also have some concerns that I would like to address in today's hearing.

The overarching question we need to explore is whether the Executive Branch is providing IGs with support and attention adequate to ensure their independence and effectiveness.

The job of the IG is not easy. I would expect that most agency heads are not exactly overjoyed to see the IG walk through the door with offers of, "I am here to help." No one likes to hear that their pet policy proposal is going to cost more money than has been advertised. No one likes to hear that a favored program is not working and is a waste of money. This is more of an observation on human nature than dependent upon who controls the White House or Congress.

The concern I have is that when agencies hear bad news, the first thing they want to do is shoot the messenger rather than address the problem. The IGs and GAO are paid to give us an independent and objective version on events. It is a wise manager who gets a second opinion.

If Federal managers truly want to improve government operations, they will listen to the IGs. If, however, one is more interested in polls and public relations, then I could see that the IG would be perceived as simply getting in the way.

We will talk today to two IGs who are well respected and have served many different political masters and administrations with distinction and honor: Susan Gaffney from HUD and June Gibbs Brown from HHS. We will explore what it takes to make a successful IG. How much does success rely on relationship, access, independence, personality, and the congressional and White House support?

We also need to look at the number of IG vacancies. Currently, there are nine IG vacancies at major agencies, a 32-percent vacancy rate. Congress has only just recently received nominations from the White House for three of these positions. Time is running out, and Congress has been given very little time to adequately vet these nominations. I am concerned that without proper leadership, IG offices are left in a weakened state and are not strong enough to take on agency leadership when necessary.

Another concern I have has to do with how we remove IGs. Our recent experience with the Treasury IG, which Senator Collins' hearings clearly highlighted, has to be countered by what appears to be a rather hasty removal of the IG from the Corporation for Public Broadcasting. We need to be especially careful to protect an IG's independence, but we also need to make sure that we have an adequate mechanism to investigate and remove an IG for wrongdoing.

To explore these and other issues, Ed DeSeve, the acting director for Management at OMB and chairman of both the President's Council on Integrity and Efficiency and the Executive Council on Integrity and Efficiency, will testify on behalf of the administration.

I look forward to today's testimony and hope that it will serve as a first step in deciding whether there is a need for statutory changes to the IG Act and identifying issues that will be helpful

to the IG community as it embarks on its next 20 years of operations.

So let's proceed with our witnesses. Ms. Brown and Ms. Gaffney, if you would, proceed to the table, please.

Thank you for being here with us this morning. Ms. Brown, would you care to make a statement?

TESTIMONY OF JUNE GIBBS BROWN,1 INSPECTOR GENERAL, DEPARTMENT OF HEALTH AND HUMAN SERVICES

Ms. BROWN. Thank you. I am June Gibbs Brown, Inspector General of the Department of Health and Human Services, and I want to thank you for the opportunity to testify at today's oversight hearing.

As the longest-serving member of the IG community, I personally enjoy the opportunity to pause and reflect on the evolution and effectiveness of the IGs. It gives me special pleasure to be asked to discuss the successful working relationship that has been forged between Secretary Shalala and myself.

First, I would like to thank you, Mr. Chairman, and the Committee for its unwavering support of the IG community. I particularly would like to express my appreciation for the work of Senator Glenn, a longtime friend to IGs, and Senator Collins, who has been very active in promoting our integrity and independence.

Agency heads and IGs are asked to perform a difficult balancing act. An IG is a senior advisor to the Secretary on fraud issues, but must also maintain the independence and objectivity necessary to investigate, audit, and critique those programs. I believe that Secretary Shalala would agree with me that we have successfully struck the balance.

Since my first day at HHS, Secretary Shalala has made it clear that when policy is formulated at HHS, the IG will have a seat at the table. This has not always been my experience.

While working as the first IG for the Interior Department in 1979, some senior agency managers demonstrated their displeasure with my office in very concrete ways.

As a somewhat comical example, when OIG audits found fault with program administration, agency management would simply neglect to provide a chair for me at senior staff meetings. I soon learned literally to bring my own chair to the room.

Secretary Shalala has never relented in her support of the OIG, and has consistently welcomed OIG input. Perhaps her comfort with the IG roles is attributed to her prior positive experience as an Assistant Secretary at HUD, interfacing with IG Charles Dempsey.

When she arrived at HHS, Secretary Shalala, from past experience, already knew the responsibilities and authorities of a Federal IG and viewed me not as an adversary, but as a resource. Indeed, Secretary Shalala actively solicits the data generated by OIG reviews and incorporates it into her program management.

Likewise, we in the OIG regularly refer to the Secretary's priorities in developing our work plans. Where possible, we schedule fact-finding reviews that will assist in these priority areas.

This philosophy from the top sets the tone for managers throughout HHS. Often managers approach me or my staff and request evaluation of their program areas. Although our findings may be somewhat unflattering, in the long run, the programs benefit.

An IG bears equal responsibility for maintaining a successful partnership. In effect, an IG must earn the seat at the table. Above all, the qualities of the OIG audits, evaluations, and investigations must be unassailable. A Secretary would quite rightly lose faith in an IG whose work was unreliable.

I am fortunate to have a highly able staff whose work consistently makes me proud, but I regularly caution them that the IG must remain vigilant. One irresponsible work product can do substantial damage to the credibility of the entire office.

I believe that a successful IG must also be willing to go beyond just the traditional after-the-fact investigations and audits. Instead, the IG should honor both the requirements of the IG Act that they not just detect, but also prevent fraud and abuse.

When IGs do this, I believe that cooperative and productive relationships with agency managers usually follow.

At the same time, and perhaps most critically, both the IG and the Secretary must guard against the IG becoming co-opted by management, and the IG's effectiveness be undermined.

As a Secretary and an IG can successfully avoid this outcome by keeping sight of their organizational roles, in this regard Secretary Shalala has never, not even once, sought to encroach on my independence. She has made it clear that she wants to hear the plain truth of what the IG finds. She would rather deal with the facts as they are and does not want us to shade our findings to avoid criticism.

Even in those uncomfortable instances when I have informed the Secretary that we were investigating a member of HHS management, she has been unwavering.

The IG should do what they need to do, she has said, whatever the outcome. Although I am consulted on agency programs and management issues, both the Secretary and I are careful that I not assume program operating responsibilities. That would endanger my ability to independently audit or investigate those programs.

Similarly, my direct communications with the Congress are never impeded. I also have full organizational independence to structure my office as I deem appropriate.

As I have discussed here today, one key to our success at HHS has been our mutual understanding of the appropriate role of the IG. Accordingly, it might be useful for new political appointees throughout the Executive Branch to be briefed at the beginning of their tenure concerning the responsibilities and independence of the IG.

IGs, too, could benefit from early orientation on matters such as their dual responsibilities for enforcement and prevention, their independence and how to safeguard it, and the role they can play in support of agency policy-making, without compromising their independence. Possibly, the PCIE could provide such IG orienta

tion.

Before concluding my remarks, I would like to say a word about statutory law enforcement authorities for HHS OIĞ investigators.

Senator Collins has expressly requested comments on this subject, and I greatly appreciate her efforts to raise and resolve this issue. Law enforcement authorities are fundamental to the effective investigation of fraud against HHS programs and operations. More importantly, they are critical to the safety of OIG personnel. Our need for law enforcement powers is amply illustrated by the fact that over 95 percent of our 276 criminal investigators are currently deputized as Special Deputy U.S. Marshals under various blanket authorities and deputizations.

Statutory authority would not enlarge the authorities we are already exercising, but would remove the administrative burden and uncertainty of temporary limited deputizations.

It is time, even past time, to eliminate the piecemeal approach of our several blanket deputizations and confer upon HHS criminal investigators the statutory law enforcement authorities they have already been long and properly exercising.

We continue to pursue this legislative proposal with the Executive Branch in accordance with the administration policy statement concerning statutory law enforcement.

This concludes my prepared remarks, and I welcome your questions.

Chairman THOMPSON. Thank you very much.

Ms. Gaffney.

TESTIMONY OF SUSAN GAFFNEY,1 INSPECTOR GENERAL, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Ms. GAFFNEY. Mr. Chairman, Senator Glenn, Senator Collins, thank you for having me here today.

I agree with you, Mr. Chairman, that the IG Act has been a remarkable success over these 20 years, but as we look back, it is clear that the first decade was not easy. It was a period of struggle when the IGs had to define in practice their authorities and their responsibilities. They had to develop relationships that worked with agency heads for the first time. They had to develop professional standards for their operations, and it was a period of controversy and struggle.

I think by the start of the Clinton administration, though, most of that struggle was behind the IG community. The IGs had become institutionalized. Things had settled down, and the IGs, with the prodding of the National Performance Review, started looking to recast themselves somewhat.

Instead of just being issuers of audit reports and reports of investigation, they said they wanted to look at being agents of positive change, using audits and investigations to bring about positive change.

At the HUD OIG, we are very proud of being agents of positive change. We have done a number of things that I think get us in that direction.

First of all, we are very firm believers in HUD's mission. It is easy to be believers in HUD's mission because when the taxpayer funds are not spent well by HUD or by housing authorities or the private sector, you see the results in the quality of people's lives.