I understand what you are doing here, but I just want to urge you to consider there are other aspects of this oversight that we ought to pursue. Chairman GLENN. The Chairman is not familiar with that particular case, but I would be glad to work with the Senator from Alaska on that, anything you want us to look into. Senator STEVENS. All right. Chairman GLENN. Good. Thank you gentlemen. We appreciate it. Our next panel of witnesses is Susan Crawford, Inspector General, Department of Defense; Bill Colvin, Inspector General, National Aeronautics and Space Administration; and Herb Beckington, Inspector General, USAID, Agency for International Development. Welcome all of you. Ms. Crawford, if you would lead off please. TESTIMONY OF SUSAN J. CRAWFORD, INSPECTOR GENERAL, DEPARTMENT OF DEFENSE Ms. CRAWFORD. Thank you, Mr. Chairman and members of the Committee. I am pleased to appear before you today to discuss the additional investigative and audit authorities that are needed to improve the effectiveness of the Office of Inspector General in our efforts to combat fraud, waste, and abuse in the Department of Defense. In the interest of time, Mr. Chairman, I will summarize my written statement, which I request be placed in the record.1 Chairman GLENN. The entire statement, all of you, if you are giving summarized statements, your more lengthy statement without objection will be included in the record in their entirety. Ms. CRAWFORD. Thank you, Mr. Chairman. The need for testimonial subpoena authority and statutory arrest authority has received almost unanimous support from the Inspectors General in a survey conducted earlier this year by the President's Council on Integrity and Efficiency. Let me speak to our experience within the Department of Defense. Under the authority of the Inspector General Act, my office conducts a wide variety of civil and criminal fraud investigations. Many are conducted by the Defense Criminal Investigative Service, or DCIS, the investigative arm of the Office of Inspector General. Pursuant to Section 8 of the Inspector General Act, investigations are also conducted under my authority by the military criminal investigative organizations. These organizations are the Army Criminal Investigation Command, the Naval Investigative Service, and the Air Force Office of Special Investigations. The primary mission of the DCIS is the investigation of procurement fraud. Since the creation of this organization in 1981, it has become the preeminent Federal investigative organization for procurement fraud investigations. Criminal investigators of the DCIS are fully accredited Federal law enforcement agents. They are graduates of recognized Federal law enforcement schools such as the Federal Law Enforcement Training Center, the FBI Academy, and military investigator schools. They have received extensive 1 See p. 57. training in firearms, search and seizure, arrest procedures, as well as contract fraud and Federal criminal law. Working with the military criminal investigative organizations, the Federal Bureau of Investigation, and other Federal and local agencies, the DCIS has been responsible for many of the major procurement fraud investigations conducted by the Department of Defense. On an historical note, between the end of World War II and the creation of my office there had not been a conviction of a Top 100 defense contractor for fraud against the Department of Defense. Since late 1983 there have been 32 convictions of 24 Top 100 contractors, a substantial majority resulting from DCIS investigations. Since the beginning of fiscal year 1989 through March 31 of this year, DCIS investigative efforts have resulted in over 465 indictments, 350 convictions, and over $455 million in criminal fines, civil fraud recoveries, and restitution. The primary focus of our investigative efforts involve investigations in the critical area of product substitution, the number one investigative priority of the Department of Defense. Our efforts in this area have resulted in more than 300 convictions for the knowing delivery- Chairman GLENN. You mean what now, fake parts and things like that that are not authorized? Ms. CRAWFORD. Fake parts, defective parts, that is correct, unsafe parts and false testing. Chairman GLENN. OK. Ms. CRAWFORD. All would fall in the category of product substitution. Another investigative priority is accounting fraud. The criminal fines and recoveries that result from these cases are also impressive. For example, the DCIS investigation of the Sundstrand Corporation led to the recovery of over $178 million in fines, civil damages and administrative recoveries. A third major area of investigative emphasis involved bribery and corruption of the procurement process. Based on over 8 years of Office of Inspector General experience in these areas and the conduct of thousands of procurement fraud investigations, I am convinced that the DCIS investigators are clearly in need of enhanced law enforcement authority. While the Inspector General Act and other statutes and regulations already give the DCIS investigators the authority to conduct criminal investigations and carry weapons, other critical law enforcement powers are needed in order to enhance our effectiveness as premier Federal procurement fraud investigators. Although substantive laws and resources are important in this effort, adequate procedural methods to obtain information are critical to our mission to combat procurement fraud. Because of the difficulty in investigating procurement fraud, where the relevant information is usually in the possession of the contractors and their suppliers, investigative tools are of singular importance. First let me discuss testimonial subpoena authority. Procurement fraud investigations are, in many respects, similar to investigations conducted by the Internal Revenue Service agents or investigators from the Securities and Exchange Commission. Like our investiga tions, IRS and SEC investigations are frequently based on obtaining and analyzing a large mass of financial and technical documents for administrative actions, civil fraud and criminal prosecutions. Unlike our investigations, however, Congress has already recognized the need for those agencies to have the authority to compel oral testimony during the investigation. Congress recognized the need for an administrative summons for documentary evidence for our office when it enacted Section 6(a)(4) of the Inspector General Act, which provides Inspectors General with the authority to compel the production of documents in order to support audits and investigations. To date we have issued over 3,000 Inspector General subpoenas in support of a broad variety of criminal investigations. Our responsible use of that authority has been upheld in over 30 U.S. District Courts and three Federal Circuit Courts of Appeal. Collecting and analyzing file cabinets full of documents, however, by itself isn't adequate to detect and investigate fraud. Fraud is often extremely hard to uncover. Procurement fraud could be committed in a variety of ways. It is exceedingly difficult to prove all of the elements of a crime against the complicated background of defense procurement. Evidence of wrongdoing, which is based primarily on the collection of a mass of documents, is rarely sufficient in itself to sustain the burden, even in an administrative proceeding such as suspension or debarment. It takes witness testimony, for example, to explain how a corporation functions in the area under investigation, how and why documents were created, what the documents mean and how they relate to each other, as well as to interpret contractual provisions and to establish the impact of the fraud on the Department of Defense operations. The requisite proof of intent in many cases is based on conversations a person had with co-workers, friends, or others. Presently we have only two methods of obtaining oral information. First, where witnesses voluntarily talk to our investigators, we can obtain the necessary information without the need for any compulsory process. In many instances, however, for a variety of reasons, potential witnesses will not talk to us. In those cases we must rely on the second method, the issuance of grand jury subpoenas. Because of rule 6(e) of the Federal Rules of Criminal Procedure, information obtained through the use of grand jury subpoenas cannot be used outside of the criminal justice process except preliminary to, or in connection with, a judicial proceeding. Unlike other Federal law enforcement agencies, such as the FBI, which are primarily responsible for investigating criminal activity, Inspector General investigations are conducted for criminal, civil and administrative purposes. If one of our investigations discloses that a product substitution scheme will cause a safety-of-flight problem on a Department of Defense aircraft, we are as concerned that an appropriate safety alert is issued to all affected Department of Defense personnel as we are with convicting the guilty party or parties. In order to accomplish this goal, we must conduct our investigations using methods that will allow us to share investigative information with appropriate Department of Defense officials. For this reason, we have encouraged our agents to use Inspector General subpoenas for doc uments rather than grand jury subpoenas in conducting criminal investigations. Information obtained by Inspector General subpoenas for documents can be used by Department of Defense officials to issue safety alerts as well as to pursue any administrative actions such as suspension and debarment. Furthermore, in those cases where the Department of Justice declines to prosecute criminally, evidence gathered pursuant to Inspector General subpoenas for documents can be used to support civil, administrative and contractual remedies. Oral testimony obtained outside the grand jury would likewise be used to support the various remedies available to us. Two examples of the difficulties that occur in seeking an explanation regarding a mass of documents through the use of the grand jury can be found in cases relating to investigations of Top 100 contractors. In the first case, an Inspector General subpoena was issued to gather contractor records that resulted in the receipt of literally tens of thousands of documents for which interpretative discussions and explanations were necessary. When a request for explanation was made to the company, the contractor produced a newly hired employee who stated that the records were gathered under his direction, but he was not able to provide any meaningful information regarding their creation or purpose. Testimony that was eventually developed regarding the records was done so within the grand jury, which was not available for Department of Defense use in taking administrative action or to further the audits and investigations that led to the grand jury inquiry. Since the case did not result in a criminal conviction but rather in an administrative settlement, none of the grand jury information relating to the creation of the records can be shared with the contract administrators or auditors. The second investigation was initiated after DCAA audits determined a contractor had received excessive profits on three separate contracts with the Government. During the course of the investigation a total of eighty-five boxes of records were received and reviewed. Explanation of the meaning of the records was obtained only through the grand jury testimony and was not available for Department of Defense use in resolving the underlying pricing matter. The use of the grand jury to obtain explanations concerning these records considerably delayed the investigation, which took almost 41⁄2 years. I believe that our prudent use of documentary subpoena, which has been reviewed and upheld by numerous court decisions and fully supported by the Department of Justice, has clearly demonstrated that testimonial subpoena authority would also be used responsibly by my office. We believe there is a clear need for testimonial subpoena authority to fulfill our responsibilities. As previously indicated, DCIS investigators are fully accredited and trained Federal criminal investigators. The DCIS investigators conduct a wide variety of criminal investigations into areas of procurement fraud, theft of stolen Government property, bribery involving Department of Defense contractors and corrupt public officials, and complex criminal antitrust conspiracies, as well as other fraud against the Defense Department. These investigations are similar to and often worked jointly with other investigative agencies such as the FBI, IRS, and the Customs Service. Unlike the FBI, IRS or Customs Service, the DCIS does not have the full law enforcement authority necessary to do its job. Although DCIS agents are authorized by the President and the Secretary of Defense, pursuant to title 10 of the United States Code, to carry weapons and apprehend military personnel, they do not have the authority to arrest civilians. Our authority with regard to civilians is limited to detaining civilians on military bases until the arrival of law enforcement officers who have arrest authority. Statutory arrest authority has already been provided to a broad variety of Federal investigative organizations. Indeed, Congress has given this authority to investigators for three of the statutory Inspectors General: Agriculture, General Services Administration, and the Postal Inspection Service. We believe there are sound and compelling reasons to provide arrest authority to the DCIS. The DCIS has approximately 330 investigators located at ten field offices and thirty resident agencies in the United States, as well as agents assigned to the Inspector General regional offices in Germany and Hawaii. The primary mission of DCIS investigators is procurement fraud. The targets of the investigations principally are civilians. In the investigations conducted in fiscal year 1989, the DCIS served 417 Inspector General subpoenas, 1,000 grand jury subpoenas, conducted 144 consensually monitored interception of communications, and participated in twenty-four undercover operations. In virtually every one of the 319 indictments in fiscal year 1989 resulting from DCIS investigations, a civilian was the subject of the indictment. These investigations often included sensitive undercover operations, surveillance, interviewing potentially dangerous suspects and witnesses, serving Inspector General and grand jury subpoenas on hostile witnesses, and tracking fugitives. I emphasize that those situations are potentially dangerous and may involve confrontations with armed suspects. The DCIS agents are statutorily authorized to be armed and are trained in firearms, and rightly so. They should not be exposed to physical danger without the authority to arrest persons who seek to endanger them and obstruct investigations. In most of the DCIS cases in which an arrest was made, it was necessary for the DCIS investigator to obtain assistance from a Federal, State, or local law enforcement agency with the authority to make the arrest. The DCIS agents are not authorized to rely on personal citizen's arrest authority or state arrest authority in performing their duties. The lack of arrest authority has resulted in numerous unnecessary delays in making arrests. The lack of arrest authority is also an impediment in the execution of search war rants. Under a Department of Justice regulation, all DCIS agents are authorized to apply for a search warrant through a local United States Attorneys Office. By presidential authorization and pursuant to the Federal Rules of Criminal Procedure, DCIS agents are also authorized to execute search warrants. In 1989, pursuant to this authority, the DCIS executed more than 60 search warrants. Because obstruction of the execution of the search warrant is a pos |