Also, you want to be cooperative with your agency heads and get along, and it has worked out fine with Ms. Brown at HHS, apparently, but you also, as Mr. DeSeve, I think, said in his testimony, he says it is natural to have a certain amount of creative tension. Perhaps it is a good thing, the question being if you are so close to the person that is heading the agency that you are dealing with, are you going to be just as likely to say the tough things in terms of audits and analysis as you would if you did not have such good cooperation?

So it is really a remarkable balancing act that you all have to deal with, and I guess so much depends on the personalities that you are dealing with and what their attitudes are.

I know, Ms. Brown, you have been through this before in several other agencies. I believe one of the things you point to is the importance of the attitude of the agency head coming into this process. Some people are new and maybe come from business, and they maybe run their own companies or something of that nature and they are used to doing things their way. They look at the IGs as adversaries, and therein lies the heart of the problem.

I know at one time we had some training for heads of agencies and heads of departments, I think, as they came in. Have we gotten away from that? Could we do a better job on the front end in terms of the administration sitting these people down and explaining to them that the IGs are going to be there and they are going to have to work with them, and it would be a lot better if they would be cooperative instead of being adversarial?

Ms. BROWN. It is my opinion that would be very helpful. I have seen that kind of training offered in the past, and although some people were rather surprised by this unknown entity up until that time, it seemed to give them a much better orientation.

I had the opportunity to talk to Mr. DeSeve about this who will be testifying later, and he mentioned that they do have an orientation training that they give every 18 months. And he would also like to see this incorporated, and could probably arrange for that, to have an IG come in and to also explain the IG Act and the role of the IG.

Chairman THOMPSON. But would you agree that a large part of the problem has to do with the attitude of the heads of departments.

Ms. BROWN. Absolutely.

Chairman THOMPSON. When there are problems, that is perhaps No. 1 and key to the problem?

Ms. BROWN. I believe it is No. 1, yes.

Chairman THOMPSON. I just described-if you generally agree with the balancing act that I laid out here, where are we erring? How can we improve in terms of the IGs carrying out the responsibilities?

I know Senator Collins will talk to you about some specifics of legislation and so forth but in carrying out these responsibilities and carrying out your obligations to the Department and to Congress and carrying out your obligations to be preventive rather than reactive and carrying out your obligations to work with, but not be co-opted by your Department head, is all that in your esti

areas perhaps could we use some improvement from a structural standpoint?

I am not talking about the personalities involved necessarily, but from a structural or legal standpoint.

Ms. BROWN. Well, I believe the IG Act was very carefully crafted, and it has been amazingly effective over a period of 20 years. I do not think it needs major revisions.

There are anomalies, such as Ms. Gaffney has experienced, where it has not worked, but I think basically the Act is sound.

Senator Collins has introduced a bill that has some improvements, and I agree with the things that she has suggested. There may be some fine-tuning and so on in a few areas, which we would be happy to work with staff on, but basically I think those are very good improvements.

For example, the IG reports which are sent to the Congress semiannually are probably less useful than they could be, and she has had suggestions for substantial revision, for instance, eliminating the listing of all audit reports.

Chairman THOMPSON. IGs have been accused of writing like auditors. Have you noticed that?

Ms. BROWN. We have attachments which are computer printouts of report listings. At both DoD, when I was IG there, and at HHS there are many work products being produced. I am sure there is nobody on the Hill who wants to go through such a bulky listing of issued audits.

So there have been some substantial realizations of what is effective, along with some improvements that Senator Collins has suggested.

Chairman THOMPSON. Mr. DeSeve has pointed out that we are calling on you less and less, really, for these things, and that is probably the reason. It really would be helpful if we could get it in a more usable form.

Ms. Gaffney, let's get back to some of the things that you laid out. The problems there that you have with HUD-in the first place, HUD is a high-risk department.

First of all, for those who are not familiar with that, what does that mean?

Ms. GAFFNEY. The General Accounting Office keeps a tally of programs within the Federal Government that they consider to be particularly vulnerable to fraud, waste, and abuse. HUD is the only Department, Cabinet agency, that is on the list. The other entries on the list are components, IRS, for instance, and parts of DoD. HUD is the only entire Cabinet agency on that list.

Chairman THOMPSON. Right.

Does this affect your approach to their situation and their problems in terms of how much time you devote to internal matters, for example, or in any other way?

Ms. GAFFNEY. The GAO high-risk designation is based on something that is factual, and that is the infrastructure at HUD is sorely deficient.

HUD is an agency that went through at least 8 years of being destroyed. The infrastructure was destroyed. So all of the normal systems you would expect to find, like data systems and budget systems and personnel systems and accounting systems, those sys

tems are grossly deficient in HUD. That has a number of ramifications. It means that everything that builds on those systems, then, is suspect.

It means that the Secretary who has made it his goal, his centerpiece, to reform HUD and to get HUD off the high-risk list in a very short period of time, 2 years, I think has not recognized the depth of these problems.

Chairman THOMPSON. Backing up just a second, when you say destroyed over a period of 8 years, what are you referring to?

Ms. GAFFNEY. Well, I am particularly talking about the tenure of Sam Pierce when for 8 years there was no attention to the viability of the organization.

The Department was racked by scandal, by fraud at the highest levels. The professional cadre of HUD, a very large part of it left in disgust. The systems were not attended to, were not kept up to date. It was a period of—I do not find a word to describe it.

Chairman THOMPSON. So, when you tried to effect policies, we have a phrase here, "paving the cow path."

Ms. GAFFNEY. What was that?

Chairman THOMPSON. "Paving the cow path."

Ms. GAFFNEY. Yes, right.

Chairman THOMPSON. When you try to apply a brand-new, sparking new system onto something that is basically deficient structurally

Ms. GAFFNEY. It keeps collapsing from under you, correct.
Chairman THOMPSON [continuing]. It keeps having problems.

The problems that you have there now have covered a few areas. I know that the Year 2020 Management Reform Plan, which is HUD's effort to downsize HUD's work force by 25 percent, seems to have been a source of problems.

Some would say that because HUD is a high-risk department, something radical needs to be done, but you have been very specific in your criticism of that particular plan. That is one of the sources of tension between you and the Secretary. Is that correct?

Ms. GAFFNEY. I think that is true.

Chairman THOMPSON. Without getting into too much of the detail of that, what is your concern there?

Ms. GAFFNEY. I think the goals of his reform plan are very good. I support them. He is trying to address problems we have pointed out for years.

I think he has gone about it in a way without doing enough analysis up front, but that is behind us now. We got rid of staff. We downsized before we had ever analyzed how we were going to do business after the downsizing.

He has now set up a time table that I think cannot possibly be met, and so my message consistently to the Secretary is, "You are trying to do good, but, please, let's try to be a little more careful about how we go about it, so that HUD makes it through this radical change and survives for the long term." That is not a message that he wants to hear.

Chairman THOMPSON. This will be the subject, I am sure, of more detailed hearings with regard to the committees with particular jurisdiction in these areas. I am sure that has already started,

report suggesting political manipulation of the Department's billion-dollar empowerment zone grant program for urban areas.

Ms. GAFFNEY. We have not yet issued that audit report.
Chairman THOMPSON. That was 2 years ago.

Ms. GAFFNEY. We are doing another audit right now.
Chairman THOMPSON. Yes, that is 2 years ago.

Ms. GAFFNEY. When Secretary Cuomo was the Assistant Secretary for Community Planning and Development, and the empowerment zone/enterprise community program was under his jurisdiction, we looked at that program at the request of, I think it was, Senators Bond and Mack, and we found evidence of political manipulation. That is correct.

Chairman THOMPSON. That was an area that Secretary Cuomo was in charge of at that time.

Ms. GAFFNEY. Correct.

Chairman THOMPSON. And that created some tension between

him

Ms. GAFFNEY. Indeed.

Chairman THOMPSON [continuing]. And the IG at that time.

What has been the results of that tension with regard to you? Your role and your independence, of course, is at the heart of the IG Act. I know that there, on one occasion, was a complaint filed against you from someone on his staff that was later withdrawn. There had been leaks, selective leaks against you. Can you describe what the relationship has become, and what has happened to indicate the problems that you have there in that regard?

Ms. GAFFNEY. First, I would like to say to you that it may seem unbelievable to you, but I think the HUD OIG is having tremendous success in HUD, and to a large extent, the people of HUD are supporting the OIG and are working with the OIG. And we are seeing some tremendous results.

This struggle with the Secretary has had some clear effects. It eats up almost all my time and all my energy and all the time and energy of my deputy and the counsel to the OIG. It is very debilitating. One never knows where the next attack is coming from or what it will be.

The people of the OIG keep moving forward. I would say one other thing: There was a hearing that Senator Mack held, I think, in March. And it was about HUD 2020. The Secretary had warned me to be careful about what I said about HUD 2020 in our semiannual report because he was hiring a number of very well-known consultants to do reviews for him. He said those reviews were going to be very positive.

So, if I was not positive, I would be humiliated because obviously I did not know what I was doing, and these experts knew very well what they were doing.

Chairman THOMPSON. Do not lose your train of thought, but at what stage were these experts in, in terms of their analysis? Had they just started? Were they about to finish, or do you know?

Ms. GAFFNEY. The deadline we were looking at was the semiannual report as of March 30, and that conversation with the Secretary, I think, took place in February, maybe mid-February. And their reports were then issued about the end of March.

Chairman THOMPSON. End of March? But he knew at that time, according to him, that they were going to be positive.

Ms. GAFFNEY. Yes, but, you know, Mr. Chairman, and this relates to one of the suggestions that I am making to Senator Collins about these external reviews, there is a truth in this world and that is, money corrupts. If I enter into a contract with someone to do a review of me and I am in control of paying them, there really is a temptation for that person working for me, being paid by me, to do what that person thinks I want them to do.

Chairman THOMPSON. Well, the point is that a Secretary can go out and hire whoever he wants to, and they went out and hired the biggest and someone said one of the best, Booz Allen, for example, and others.

Ms. GAFFNEY. Yes, correct.

Chairman THOMPSON. But that does not have anything to do with your job, does it?

Ms. GAFFNEY. No, precisely.

Chairman THOMPSON. All right. So he told you to be careful in your testimony because they were going to be positive, and if you were negative, it looked like you did not know what you were doing.

Ms. GAFFNEY. Right.

Chairman THOMPSON. Go ahead and elaborate on this. Are there any further points you want to make on that?

Ms. GAFFNEY. He said I would be humiliated.
Chairman THOMPSON. So what happened?

Ms. GAFFNEY. Well, Mr. Chairman, we do our job straight. We call it as we see it based on the facts, and so in our semiannual report and at Senator Mack's hearing, we voiced reservations.

Up to that point, the Secretary and I had spoken very frequently, on an individual basis. We had a good relationship. After that, the communications ceased, absolutely.

The other thing I would say to you is that, typically, the attacks and the dirty tricks do not come from the Secretary himself. They come from the three key aides who surround him.

Chairman THOMPSON. And what has come from them with regard to you?

Ms. GAFFNEY. Well, for instance, they are in the habit of distributing misinformation about the OIG to the press. They have tried to undermine a major investigation, a major investigative effort by the OIG. It involves millions and millions and millions of dollars, more than 40 cases, more than 6 years in the making.

The Secretary has personally gone to the Congress now without consulting with me and tried to get the Congress to abolish a major activity in the OIG, a whole series of things like that.

Chairman THOMPSON. In what way have they attempted to undermine these investigations?

Ms. GAFFNEY. An aide to the Secretary wrote to the Department of Justice proposing an amnesty program for the persons who were engaging in this behavior that had been the subject of our 6-year investigation. That behavior is now being litigated by the U.S. At