Hearing Of The Ad Hoc, Subcommittee On Contracting Oversight Of The Senate Homeland Security And Government Affairs Committee - Improving The Ability Of Inspectors General To Detect, Prevent And Prosecute Contracting Fraud
Statement
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SEN. MCCASKILL: Good afternoon. I want to welcome everyone to today's hearing. It is the first hearing of the Subcommittee on Contracting Oversight of the Homeland Security and Government Affairs Committee.
I am extremely honored to have the opportunity to conduct this hearing and many others that will follow.
This is going to be about our concerted effort to identify the waste and fraud and abuse that has occurred in government contracting.
Last year the federal government awarded $518 billion in contracts. This year, that number will grow even higher because of, obviously, the hundreds of billions of dollars in stimulus money that will be awarded through contracting.
Even a very small percentage of fraud costs taxpayers dearly. That's why we have chosen this first hearing to look at the issue of fraud. It is talked about a lot, but frankly, I think if all of us are really honest, we probably don't get at a lot of it.
I think the witnesses today are, all four, individuals who understand that, who understand the challenges that we have in government in terms of rooting out fraud. And they are numerous and, hopefully, we'll have a chance today to go over them in some detail.
After this hearing, then the important work then must begin, and that is continuing to put pressure on all parts of the system to make sure that fraud is found and that people are held accountable for that fraud.
It does no good to find it if nothing happens. Because if you find it and nothing happens, that sends a big green light to the next bad actor that they can take advantage of taxpayer money in a way that is criminal.
And so we are happy to start with contracting fraud. Obviously there're going to be many hearings of this Committee that will deal on many different aspects of the challenges we face in government contracting. But today, it is about fraud.
Let me introduce our witnesses and ask for their testimony, and then we will -- I will have a number of questions.
I want to welcome all four of you and I appreciate all of your work.
Brian Miller is the inspector general for the General Services Administration. He is also the vice chair of the National Procurement Fraud Task Force and the co-chair, with Mr. Skinner, of the National Procurement Fraud Task Force Legislation Committee.
Richard Skinner is the inspector general for the Department of Homeland Security. He serves with Mr. Miller, as I said, as the co- chair of that Procurement Fraud Task Force.
Charles Beardall is the deputy inspector general for investigations at the Department of Defense. As the agency with the lion's share of government contracting, you're going to get a lot of attention in this Committee, Mr. Beardall. The Department of Defense also has the lion's share of contracting fraud. I welcome your perspective on these issues.
Tony Ogden is the inspector general of the Government Printing Office. He is the chair of the Legislation Committee -- of the Council of Inspectors General -- on Integrity and Efficiency.
It is the custom of this Committee to swear in all witnesses that appear before us. So if you don't mind, I'd like you all to stand. (Pause.) Raise your hands, please.
Do you swear that the testimony you will give before this Subcommittee will be the truth, the whole truth, and nothing but the truth, so help you God?
WITNESSES: I do.
SEN. MCCASKILL: Thank you all.
We will ask you all to try to hold your testimony to five minutes. Obviously we will include any of your written testimony in the record.
And Mr. Miller, let's begin with your testimony.
MR. MILLER: Good afternoon, Madame Chair. Thank you for inviting me here today and the opportunity to testify on these important matters.
I and my distinguished colleagues here today would like to thank you for your strong support of inspectors general. We are especially honored to be part of the first hearing of this Subcommittee.
The American Recovery and Reinvestment Act brings with it a sharp mandate to move quickly in addressing our nation's economic problems. Doing so means that traditional oversight may need to be modified.
This afternoon I would like to highlight four new ideas that I believe will help expedite OIG reviews and control fraud and criminal activity.
I call the first proposal "Don't Tip Off the Target." Basic investigative techniques include not tipping off a subject about an investigation. Premature disclosure can lead to destruction of evidence, intimidation of witnesses, or flight. It can also preclude undercover work and provide an opportunity for the subject to manipulate his finances to frustrate the government's interests.
As an illustration, telling someone like Bernie Madoff that he is under investigation would only give him an opportunity to hide or transfer ill-gotten gains before the government had an opportunity to understand the full extent and scope of his crimes.
Therefore, I ask that you treat inspector general subpoenas the same as grand jury subpoenas, which are exempt from giving the subject notice when financial records are sought.
Second, I propose that you require a simple report from OMB regarding how many debarred companies and individuals are currently receiving federal grants and contracts.
This can be done by a crosscheck of the excluded parties' list system, EPLS, and USAspending.gov, which contains all of the federal grants and contracts. Generally, one would not expect to find the same companies or individuals on both USAspending.gov and EPLS.
These reports would highlight the critical need to fully check on the status of contractors and grantees before the government does business with them.
My third proposal is in response to the decision by the U.S. Court of Appeals for the D.C. Circuit in the case of United States versus (Zahabian ?). The D.C. Circuit held that federal employees have no legal duty to disclose all material facts when they provide information in response to a direct question from an OIG special agent.
In the absence of such a legal duty, (Zahabian ?) could not be convicted criminally of concealing information when he provided half- truths to a special agent, intending to mislead the special agents.
To correct this, we propose legislation that would clarify that federal employees have a duty to tell the whole truth, not half- truths, to special agents.
My fourth proposal is to restore the contract clause that allowed GSA Office of Inspector General to do defective pricing reviews when they conduct post-award audits.
Essentially, the regulations current provide that we cannot look at pricing after the contract is signed, under GSA contract terms. So if no pre-award review is done of pricing, the contractor gets a free pass, audit-wise, from any look at whether their pricing information was defective.
Two -- (inaudible) -- lawsuits show that we need to have post- award audit rights. One case settled for $98.5 million, and the other case settled for $128 million, both for defecting pricing.
The irony is that my office does not have audit authority under GSA contracts to audit for these very issues, these defective pricing issues, when we conduct a post-award audit. And we ask the Committee to consider correcting this.
Thank you for your attention. I ask that my statement and material records be made part of the record. I would be pleased to respond to any questions that you may have.
Thank you.
SEN. MCCASKILL: Thank you very much.
Mr. Skinner.
MR. SKINNER: Thank you, Madame Chair, and good afternoon. I appreciate the opportunity to be here today.
I want to begin by thanking you for your leadership, ensuring that American taxpayers are receiving the biggest bang for their dollar in government contracts and for the support you have shown the inspector general community.
I also applaud the creation of this Subcommittee. The American taxpayer is demanding and deserves to know how its tax dollars are being spent and that they are being spent wisely.
The work of this Subcommittee can go a long way to bringing accountability to the management of federal contracts. We in the inspector general community look forward to working with you in this endeavor.
Finally, I wish to commend the Department of Justice and the IG community for their hard work on the National Procurement Task Force. As my colleague, Brian Miller, already pointed out in his testimony, much was accomplished as a result of their hard work.
But our work is not done. We're in the first mile of a marathon. There's still an array of legislative proposals that are -- were considered by the Task Force but did not make it into legislation or regulation.
Two proposals in particular I believe could go a long way in improving the ability of inspector generals to detect, prevent, and prosecute contract fraud.
The first proposal deals with IG access to contractor and subcontractor records and employees. One can argue that access rights are implicit in the IG Act; yet, in reality, this is not the case.
We are continually being challenged by contractors causing undue and prolonged delays in our ability to carry out our audits and inspections.
This problem was recognized by Congress, I believe, when it enacted the Recovery Act of 2009. The act gave IGs explicit access rights to contractor employees and records and access rights to subcontractor records.
Unfortunately, for some unexplained reason, the legislation did not give IGs access rights to subcontractor employees. In my opinion, this simply does not make sense, especially when you consider that many government contractors rely heavily on subcontractors to meet their contractual obligations. For example, after Hurricane Katrina, FEMA ordered four major contracts valued at over $2 billion to help with response efforts. These four contractors then subcontracted 63 percent of their work to subcontractors.
Under the Recovery Act, we would not have legislative authority to interview subcontractor employees during the course of our audits or inspections. To do our jobs effectively, IGs should be authorized to interview subcontractor employees regarding all transactions involving taxpayer money.
The second proposal deals with the IGs' ability to match computer data being maintained by federal, state and local government agencies. The Computer Matching and Privacy Protection Act set forth procedural requirements that agencies must follow when matching electronic data bases for the purpose of establishing federal benefit eligibility, verifying compliance with benefit program requirements or recovering improper payments under a benefit program.
The procedural requirements include formal matching arrangements between the agencies, notice in the Federal Register of the agreements before any matching could occur, and review of the agreements by data integrity boards at both agencies.
While the Computer Matching Act provides certain exemptions for statistical matches, matches for research purposes and law enforcement if a specific target of an investigation has been identified, agency decision-makers and data owners rarely consider OIG oversight -- its work to fall under any of the exemptions.
Interagency sharing of information about individuals can be an important tool in improving the integrity and efficiency of government programs. By sharing data, agencies can often reduce errors, improve program efficiency, identify and prevent fraud, evaluate program performance, and reduce the information collection burden of the public by using information already within government data bases.
The work of the IG community in identifying management control weaknesses, which is our primary objective here, within agency program activities would be facilitated by permitting IGs, as part of their regular audits and inspections, to match computer data bases being maintained by federal, state and local government agencies. Because IGs rarely control the data bases to be matched, valuable time and resources are lost persuading agency system managers that matching is appropriate and necessary for us to do our job.
Finally, I'd like to comment briefly on the issue of federal acquisition workforce shortcomings. Madame Chairman, as you stated in your March 19th open letter to the acquisition community, the contracting workforce is no longer adequate to handle the volume and complexity of the workload.
In response to these concerns, acquisition shops throughout the government have begun to implement two statutory hiring flexibilities to assist in recruiting acquisition-related positions, direct hire authority and re-employed annuitant authority. These authorities expedite the hiring process and make it easier to hire qualified candidates.
Overall, according to a recent GAO report, these initiatives are beginning to show some preliminary results. Just as agency procurement offices across government face a shortage of experienced staff, so do we in the IG community. To be effective, we need a mix of auditors, inspectors and investigators with acquisition experience. It would be extremely helpful, as we continue to add experienced acquisition professionals to our staffs, if those same statutory hiring authorities were expanded to the IG.
Madame Chair, that concludes my statement. And again, thank you for this opportunity to share my thoughts with you today.
SEN. MCCASKILL: (Off mike.)
MR. BEARDALL: Good afternoon, Chairman McCaskill. Thank you for inviting me to appear before you to discuss the important issue of procurement fraud. I am here representing acting Inspector General Gordon Heddell and the women and men of the Office of Inspector General, Department of Defense, including the special agents of the Defense Criminal Investigative Service, the law enforcement arm of the DOD inspector general.
DCIS was established in 1981 in response to the defense contracting scandals of the 1970s and 1980s. From its start as an office of seven special agents, DCIS has grown to 366 agents. Initially DCIS special agents focused almost exclusively on combating fraud and corruption. However, as the organization matured, its priorities expanded. DCIS's current top priorities include investigations of contract fraud, corruption, terrorism, illegal diversion and theft of sensitive technologies and weapons, and the protection of the global information grid.
Although its mission has expanded significantly, DCIS has remained true to its roots. Today, 61 percent of over 1,800 DCIS active investigations involve DOD contracting. Cases in which DCIS has led or participated in have recouped $14.67 billion to the United States government. Clearly relevant to today's discussion, $9.9 billion of those recoveries have occurred within the last 10 years.
DCIS has an ever-increasing workload. Implementation of critical initiatives related to the Global War on Terrorism and technology protection has reduced our ability to devote additional resources to fraud and corruption. Further, since September 11th and the beginning of Operations Enduring Freedom and Iraqi Freedom, DCIS's law enforcement partners in combating procurement fraud have had to divert significant resources to competing priorities, such as terrorism, force protection and counterintelligence.
During the past eight fiscal years, DOD contracting increased more than 250 percent, while the numbers of DCIS special agents has grown 13 percent. During the past five fiscal years, investigations involving financial crimes increased 35 percent, kickbacks increased 66 percent, and bribery an astounding 209 percent.
Recent increases in contract fraud and corruption investigations are largely the result of overseas contingency operations. To date, DCIS has initiated 173 Global War on Terrorism contract-related investigations. Of these, 41 percent involve procurement fraud and 42 percent involve corruption.
DCIS is a key participant in various procurement fraud task forces and working groups, which have proven to be effective alliances to combat contract fraud. The multidisciplinary, multi-agency National Procurement Fraud Task Force has been extremely effective in fostering communication and better coordination to combat procurement fraud.
Worthy of special management, its offshoot, the International Contract Corruption Task Force, was formed to target contract fraud and corruption in Southwest Asia. Consisting of nine agencies, the task force is the model of law enforcement cooperation. The recommendations in the legislation and regulatory reform proposal, the white paper, will significantly enhance the government's ability to combat procurement fraud.
The DOD inspector general strongly supports improving contractors' internal oversight and ethics program to enhance the government's ability to prevent and detect fraud. Requiring contractors to implement (in turn ?) compliance programs before a contract is awarded will help prevent fraud.
The DOD IG also supports recommendations to expand the authority of inspectors general to include enhanced subpoena authority. We also support establishing a national data base to determine contractor suspension or debarment history, and (further ?) extending criminal conflict-of-interest provisions to contractors.
In response to a recent amendment to the federal acquisition regulation imposing mandatory self-reporting, the DOD IG has established the DOD contractor disclosure program to process the disclosures. We believe this requirement will improve the department's oversight capabilities.
While the white paper identifies significant improvements, we hope to work with the Legislation Committee on more proposals. Two examples (derive ?) from the need -- (inaudible) -- cases related to the American Recovery and Reinvestment Act of 2009. One would expand whistleblower protections to subcontractors, and the other would enhance contractor reporting requirements.
As Congress considers the recommendation of the Legislative Committee, it is critical that IG resource requirements be considered. Adequate numbers of investigators and auditors are indispensable, particularly in an era of massive broken contracting and diversification into other national priorities.
I hope my testimony today has been helpful, and I look forward to your questions.
SEN. MCCASKILL: (Off mike.)
MR. OGDEN: Good afternoon, Madame Chair. Thank you for inviting me to testify on the role of the inspectors general in detecting, preventing and helping prosecute contracting fraud. While I am the inspector general at the U.S. Government Printing Office, I'm here today representing the Council of the Inspectors General on Integrity and Efficiency in my capacity as the chairman of the Legislation Committee.
On behalf of the Council, I would like to echo our appreciation to you for your unwavering support of the IG community and congratulate you on being the first senator to lead this new Subcommittee on Contracting Oversight. We look forward to working with you. (Scattered applause.)
SEN. MCCASKILL: Thank you.
MR. OGDEN: My testimony today will focus on the general views of the IG community regarding the major recommendations proposed by the Legislative Committee of the National Procurement Fraud Task Force and their white paper.
We are happy to report that some significant recommendations proposed by the task force have already been enacted. For example, in November 2008, the Federal Acquisition Regulation Council issued a final rule that imposes, among other things, a mandatory requirement on federal contractors to disclose credible evidence of certain criminal violations and civil False Claims Act violations, and to establish an ethics and internal control program.
The IG Reform Act of 2008 also included several changes recommended by the task force. For example, the IG subpoena authority language was amended to clarify that its reach includes information and data in any medium.
In addition, the Reform Act granted to IGs from designated federal entities the authority to use the Program Fraud Civil Remedies Act; however, IGs from legislative branch entities are still excluded.
Although these changes are encouraging, many other task force recommendations have not been acted upon. To gauge the support of the IG community for some of the remaining recommendations, the council -- through the legislation committee -- conducted an online survey of its members.
Our survey covered three general task force recommendation areas: One, the inspector general subpoenas for compelled interviews; two, reform of the Program Fraud Civil Remedies Act; and three, other general recommendations, including establishing a national procurement fraud database and allowing the use of Social Security numbers to identify individuals in the excluded parties list system or EPLS.
The task force proposed that IG subpoena authority include the authority to compel witnesses to appear at interviews in connection with OIG investigations, audits and other reviews. You've heard some of that testimony already.
This proposal is similar to recent limited authority provided to some IGs under the American Recovery and Reinvestment Act. The supposed subpoena authority would not include the power to compel witness testimony. The survey results show overwhelming support for this enhanced IG subpoena authority for all IGs.
The issue is about access. Supporters cite the need to have access to contractor employees, former employees, third parties, subcontractors to discuss aspects of civil or criminal investigation still in development. In addition, this authority is necessarily to be able to ask questions regarding voluminous records the companies serve in response to a subpoena.
In 1986, Congress enacted the Program Fraud Civil Remedies Act to enable agencies to recover losses resulting from false claims and statements where the claims were $150,000 or less. Our survey focused on the major task force recommendations regarding the use of PFCRA authority: the increase of jurisdictional and civil liability amounts, agency retention of recoveries and the revamping of procedural requirements. There was overwhelming support for these recommendations and in the interest of time, I will defer discussion to questions.
The task force also recommended specific areas to generally prevent and detect procurement fraud. The task force recommended the creation of a national procurement fraud background check system: The Procurement Inquiry Check System or PICS, which would be used by federal, state and local procurement officials prior to authorization of contract actions involving federal funds.
The PICS database would include information on debarred or suspended contractors from all participating federal, state and local government entities engages in procurement and non-procurement activities where federal funds are at use.
Again, more than 90 percent of the responding IGs supported the idea of a national procurement fraud database; however, many respondents suggested it would be more efficient and cost efficient for PICS to be an expanded version of the EPLS, given that the EPLS is a mandatory database and could be upgraded to include links to state and local government online database on suspended and debarred contractors.
The task force also recommended the use of Social Security numbers to enable agencies to properly identify individuals who have been debarred or suspended in the EPLS. While there was support for this proposal, there was substantial opposition generally focused on the privacy concerns with the use of Social Security numbers -- which is also bolsters by the requirements of OMB memo 716, which requires that agencies reduce the use of Social Security numbers and explore alternatives.
Finally, some survey respondents suggested other recommendations to combat procurement fraud. Let me identify briefly two of those: First, some recommended that a federal contractor be required to certify that he or she has no knowledge of any convictions of civil or criminal fraud for owners, officers or managers involved in the contract with no time limit on the convictions or civil fraud judgments.
And second, survey respondents noted that the (PFCRA ?) does not apply to legislative branch agencies. Because legislative branch agencies operate under different acquisition regulations, considerations should be given to require legislative branch agencies to adopt in their acquisition regulation the (PFCRA ?) provisions related to the prevention and detection of procurement fraud.
This concludes my testimony and I've submitted written comments for the record. I would be pleased to address any questions you may have and thank you again for the opportunity to testify before the subcommittee.
SEN. MCCASKILL: Thank you, Mr. Ogden.
We've been joined by the ranking member of the Homeland Security and Government Affairs Community.
And would you like an opportunity to speak or do you -- you've just agree to furnish testimony.
SEN. COLLINS: Thank you, Madame Chairman. That sounds good to you, doesn't it?
SEN. MCCASKILL: It does!
SEN. COLLINS: I would welcome the opportunity to make just a few comments and I'll put my full statement into the record.
First, let me commend you for taking over the charge of this subcommittee. There's no one in the Congress who has a better understanding of federal contracting, of auditing issues, than you do. And I'm certain that we'll be able to accomplish a great deal.
In fact, we were talking -- a group of our colleagues were talking just the other night that your auditing background is so useful to this committee. So I thank you for your leadership.
The inspectors general are vital partners in our effort to identify inefficient, ineffective and improper government programs. By leveraging the expertise and the independence of the IGs, Congress has been able to better identify and in some cases take action to stop wasteful spending. It also helps us by giving us recommendations which shape legislation and oversight activities. As General Skinner notes, we've worked very closely together on some of the FEMA reforms and the anti-waste, fraud and abuse for the Department of Homeland Security.
The last -- in the last Congress -- working with the chairman, as well as Senators Lieberman and Levin -- our committee was able to pass important reforms to the federal contractor process, as well as to strengthen our nation's IGs.
And I mentioned those two separate bills together, because the contracting reforms we successfully enacted were based in part on the recommendations of the IGs. The most recent report of the President's Council on Integrity and Efficiency provides some insight into the effectiveness of the IG community. And I'll put the list of statistics into the record, but suffice it to say that the IGs have identified $11.4 billion in potential savings from their audit recommendations.
We do need to make sure, however, that we're constantly updating the laws to ensure that the IGs have the tools that they need. It was more than 30 years ago when the IG act was first passed in 1978. I believe the legislation, which we offered last year and which Chairman McCaskill was the chief proponent of, improves the independence and the effectiveness of the IGs.
But I recognize that the white paper produced by the National Procurement Fraud Task Force provides additional proposals for us to consider.
Finally, I want to note that two of our witnesses have proposed an additional effort that I believe is desperately needed to improve our government's acquisition programs. And that is a well-trained, properly resourced acquisition work force. No matter how good the reforms, no matter how strong the law, if you don't have well qualified in a sufficient number of acquisition personnel to administer the laws, we're not going to make a difference.
So again, I thank the chairman for convening this hearing. And I apologize for being late. I was giving a speech -- unfortunately.
SEN. MCCASKILL: Thank you, Senator Collins.
And speaking of champions, no one has been a more aggressive on acquisition work force issues than Senator Collins. And I have had the pleasure of working with her on some of those issues, but she's been at it for many years before I got here. And clearly, not only IG personnel but acquisition work force is the one-two punch that is going to be needed to do the kind of job that we all know we need to do in this area of fraud.
Let me start by asking each one of you to try to prioritize. And what I would like to do with this committee is to keep a running -- as a former auditor performance auditing, I'd like to begin with a challenge to the committee to try to keep track of our metrics. And that is at each hearing try to walk away with a list of things that we need to try to get done, either through the Homeland Security and Government Affairs Committee or other places as it relates to what we learn in these hearings.
And I'm going to try to keep track of this list so we can be publicly accountable for it. And the list I'd like to come out of at this hearing is each of you to name the one thing that you think could make a meaningful difference in how many bad guys we could catch -- the one tool that you don't have now. If you could only pick one, what would that one tool be that you would add to your tool chest to do a better job in finding people who are ripping off our government.
Mr. Miller.
MR. MILLER: Thank you, Madame Chair.
That's a difficult question because there are so many tools that could help us in our jobs. I think of -- of all the proposals -- and there are many very good proposals here -- I think the one tool that could help us immediately is what I call the don't-tip-off-the-target proposal; that is, getting financial records without tipping off the -- the owner of the financial records. That puts IG subpoenas on parity with grand jury subpoenas in that respect.
It will allow us to quickly investigate without having to go around, without -- we can plan our investigations better. We don't have to plan to go around contacting the -- (inaudible) -- and avert so to speak, and we can better plan and move quickly and have the rapid response to investigating fraud. So that is the one proposal I would choose. Thank you.
SEN. MCCASKILL: Let me -- and I'll come back and follow up on that. Okay. So you want to make sure that you don't have to tell them ahead of time you're coming after them?
MR. MILLER: That's right.
SEN. MCCASKILL: Okay.
MR. MILLER: Thank you.
SEN. MCCASKILL: That makes perfect sense to me. Mr. Skinner?
MR. SKINNER: As I stated in my testimony, I think the one thing that would really help us and other IGs is the ability to do computer -- electronic computer matching.
SEN. MCCASKILL: Computer matching for you -- okay. Mr. Beardall -- am I saying your name right?
MR. BEARDALL: (Off mike.)
SEN. MCCASKILL: Good. Okay. I want to make sure.
MR. BEARDALL: I answer to most things. (Laughter.) Well, as is probably evident from my written and my oral testimony, more agents. I would also probably say more auditors and more agents, but certainly with the challenges we face in the Department of Defense 366 agents spreads very thin. I am heartened by certain pronouncements by the secretary of defense including the fact that he's going to up DCAA by 600 auditors. Of course, 600 auditors would probably bring us a whole lot more business I would hope, and so I think mainly the challenge for us is enough resources to do the job in today's massive spending.
SEN. MCCASKILL: Yeah. I heard Secretary Gates in his -- I heard him say the magic words of DCAA auditors and I heard him say acquisition personnel. I don't remember him saying anything about DCIS.
MR. BEARDALL: No, he didn't -- (laughter) -- but -- and that's -- and that's one of the points. But -- and again, the point is -- is accurate. Not only the auditors but contracting officials as well and -- and as you know, we -- we face that problem a lot in southwest Asia, seeing folks who are not prepared to undertake the duties of -- of contracting officers.
SEN. MCCASKILL: Okay. Mr. Ogden?
MR. OGDEN: I think that based on the survey results -- and again, my responses here today are limited to the survey results -- clearly, it was the subpoena, the expansion of the subpoena authority, to be able to compel access to contractors and subcontractors. It's to compel -- to summarize one of the comments, it's perhaps the single most important change that we see. It's very important for those of us who do a significant amount of oversight work that involves third parties. But it really is about access. There was some confusion in the National Procurement Fraud Task Force white paper about the issue about compelling interviews or compelling testimony, but it's about compelling attendance at an interview, and I think that Mr. Skinner identified that issue very poignantly as well.
SEN. MCCASKILL: Well, and that brings me to one of the things that I think we're struggling with here is that what are you? I think that some people in government see you as someone who is causing trouble for the head of the agency and I'm not sure enough people in government see you as someone who should have the same authority as any other law enforcement entity. You are tasked with finding crime. It's part of your job.
And can anyone, you know, help me figure out where is this -- where are we getting this pushback? Why is it that they're asking you to tip off subjects of an investigation with that much notice at it relates to their financial documents? Where -- where do we need to drill down to find people in government that are pushing back in terms of giving you all the subpoena authority and the basic law enforcement protocols that are going to allow you to catch criminals?
MR. MILLER: Madame Chair, if I could try and respond -- I think it's a historical quirk. I think that the Right to Financial Privacy Act was enacted over 30 years ago, at the same time as the Inspector General Act --1978 -- and I don't think that there was a whole lot of thought in -- that went into the requirement of requiring IGs to give notice but not IG subpoenas -- IGs wanted to issue IG subpoenas but not -- prosecutors wanted to issue grand jury subpoenas.
I think at that time what they -- what the Congress knew and was familiar with was the grand jury subpoena so they naturally exempted grand jury subpoenas. I think it just didn't occur. I think there's a historical quirk that they didn't also exempt IG subpoenas. That's my -- my speculation as to what the problem is.
SEN. MCCASKILL: Anyone else want to speculate on why we're -- we have difficulty with this? How about compelling interviews? Mr. Ogden, do you want to take a shot at that? Why is it that people are so unnerved about the idea that an IG ought to be able to compel an interview?
MR. OGDEN: Well, and again, I might defer to Mr. Skinner to address this more specifically since he's had -- he and Mr. Miller have had more experience in the area of where this issue has arisen. They can share some more specific examples with you. But I think that under the circumstances it's too -- it's how far do we want to let the IGs go and, you know, the ability -- you know, the -- some would perceive giving that much authority to IGs would be overstepping the bounds of the IGs. But I wouldn't -- I believe that the community would agree with you wholeheartedly, Senator McCaskill, that under the circumstances we need to have the same tools.
We need to have the ability to be able to go and -- and reach out to those subcontractors. One of the issues that I know that has occurred within my agency and other agencies as well is when you have contractors and subcontractors, if we don't have the same access as we would with our own -- own employees within our agency it does prevent us from being able to do our jobs effectively. The contracting workforce has expanded, you know, significantly since, you know, many of these laws and rules were put in place. So in order to kind of catch up (with the time ?) we have to look at the entire scope of the issue and realize that, you know, the reach now for IGs has to be to contractors and subcontractors.
SEN. MCCASKILL: Thank you very much. Senator Collins?
SEN. SUSAN COLLINS (R-ME): Thank you, Madame Chairman. Mr. Skinner, I want to follow up on your answer to the chairman about the need to do more computer matching. As I understand it, under the Computer Matching and Privacy Protection Act of 1988, federal agencies must follow a number of procedures prior to matching electronic databases, and those include entering into a formal matching agreement, noticing that agreement in the Federal Register, obtaining a review of the agreement by the data integrity boards at both agencies.
Now, a lot of these steps are intended to be safeguards to prevent misuse of electronic records. But according to the Task Force Legislation Committee, those computer matching requirements limit the IGs' ability to detect contracting fraud in a expeditious manner because of all the steps that are required. Is there also an issue where the IGs have to persuade multiple agency managers that the process should proceed? Are there delays involved that impede your ability to detect fraud?
MR. SKINNER: There -- absolutely, and therein lies the problem. The -- I -- we agree with the safeguards that are in the Computer Matching and Privacy Protection Act. Those -- that is not the issue. There are exemptions to that act. For example, to do research -- to do -- to garner statistics -- to -- and for law enforcement if you have a target. With the IG, it would enhance our ability if we were included in one of those exemptions as part of our oversight role so that we could do computer matching so that then in turn demonstrate to the departments and the respective departments that you have weak internal controls, and you can demonstrate to -- you can improve your internal control, be more efficient, and prevent fraud up front before it occurs.
At the same time, when we do this computer matching, of course, some of the collateral fallout is we will identify cases of fraud. For example, when you did -- GAO did computer matching with -- after Katrina with VA and small businesses, we identified people were self- certifying that they were disabled vets when in fact they were not. As a result, they got over $10 million in contracts and excluded qualified small businesses in that process. There were other areas as well with -- with the HUD, matching the benefits there.
We demonstrated that you need to have these types of computer matching agreements in place ahead of -- at all times if you're operating a benefit program, and DHS operates many benefit programs, so that you can protect yourself. When we asked for this authority, yes, there were delays. For example, to -- to be able to match HUD housing data with FEMA housing data took us almost a year. By then, millions and millions of dollars were already out the door and it's very difficult to get that money once it leaves. Had those controls been in place beforehand we could have stopped that.
SEN. COLLINS: I think that's an excellent point. Mr. Ogden, do you have anything to add to that?
MR. OGDEN: Senator Collins, not with respect to the Computer Matching Act specifically. I think that Mr. Skinner has really summed up the issue directly. We -- the -- I can add on behalf of the IG community we have submitted comments and certainly support. I mean, I can represent on behalf of the IG community that we support the proposal.
SEN. COLLINS: At a hearing that our full committee had to look at the stimulus legislation and procedures to prevent waste, fraud and abuse, there was discussion about the hiring needs of those entities that have gotten sufficient increases in their budgets such as the IGs and the GAO and the Special Oversight Board. And the acting comptroller general told us that GAO is currently permitted to compensate a returning annuitant without offsetting the annuity; in other words, you could hire a retired GAO auditor to come back and work for the next year on stimulus oversight without there being a financial penalty paid. And GAO has this authority, I believe, DOD has this authority, but most departments and agencies in the federal government do not.
I have introduced a bipartisan bill with Senator Herb Kohl and Senator Voinovich that would seek to provide that authority across government, particularly to help out with a situation like this where we need trained people quickly and you've got this retired workforce that would be willing to come back and help if there was not a financial penalty.
Starting with you, Mr. Miller, and going across, do you support legislation to give that authority?
MR. MILLER: I strongly support that legislation that would help us respond rapidly and provide the oversight we need. So thank you for introducing it.
SEN. COLLINS: Thank you. Mr. Skinner?
MR. SKINNER: Yes, I would. And as I said in my opening remarks, this is one of the things that we were asking for. Some of the departments -- right now, in the field of acquisition management, there are authorities out there, they just need to be invoked. And I believe that OPM did, in fact, say acquisition -- those associated with acquisition management can use these authorities, and they defined what these people are. What they excluded were the auditors and investigators that need the support because we are support as well. And that's something, I think that -- legislation would be very helpful to give us that authority as well, especially now in this time and age.
SEN. COLLINS: Exactly. It doesn't make sense to carve out investigators and auditors.
Mr. Beardall, am I correct that DOD has this authority?
MR. BEARDALL: Yes, we do and we have used it very effectively as you point out. When you have an agent with 25 years of experience and who retires and you can bring back, you know, a lot of cases just as a special agent rather than -- and I have senior managers who go out and still have years left before they hit the mandatory retirement age of 57, they can come back and help us. And we've actually recently had the head of our operations in Southwest Asia as a rehired annuitant who was one of our assistant special agents in charge and did a fabulous job.
SEN. COLLINS: Thank you for that example. Mr. Ogden?
MR. OGDEN: Senator Collins, your bill -- Senate 629, I believe, is what it is -- I give -- today, we actually lo and behold, had a meeting of all the inspectors general and I raised the issue of Senate 629. And I can say here today, I've been given authorization to say there was wholesale support for Senate 629 and there was absolutely no objection in the room. And there's tremendous support from the community for --
SEN. COLLINS: Excellent. I'm really happy to hear that. Believe it or not, I did not know that in advance of asking the question today. And if you would be willing to send a letter to the committee of that effect to follow up, that would be wonderful as well.
MR. OGDEN: Be happy to do so.
SEN. COLLINS: Thank you.
SEN. MCCASKILL: Thank you. Thank you, Senator Collins.
Let's talk a little bit about the Department of Justice. It's my understanding that Justice has expressed concerns about expanding the IG authority as it relates to compelling interviews. And I want to make clear I understand that GAO now has that authority, correct? GAO can now -- has the authority to interview both contractor and subcontractor employees in terms of interviews?
MR. SKINNER: The GAO has the authority to, under -- to have access to records and employees at the contractor and subcontractor level. I am not clear -- you may want to talk to GAO -- I'm not clear whether they have subpoena authority.
SEN. MCCASKILL: Okay. But they have the ability to, in fact, interview at the contractor and subcontractor level?
MR. SKINNER: That's correct.
SEN. MCCASKILL: Okay. And it's my understanding that in the stimulus bill; we also gave limited power to compel interviews for audits and investigations concerning the stimulus funds, correct?
MR. SKINNER: Under the stimulus bill, the IGs have access rights to contractor records and employees and subcontractor records.
SEN. MCCASKILL: But not subcontractor employees?
MR. SKINNER: For whatever reason, I don't know why that was left out and. And the -- (inaudible) -- emphasized that that authority does not go to sub-grantees, recently published part.
MR. OGDEN: Senator McCaskill, if I might just dovetail on that response as well. Under Section 1515A of the American Recovery and Reinvestment Act, it provides to interview any officer and employee of the contractor grantee, sub-grantee or agency. It does not go as Mr. Skinner has pointed out to subcontractors.
The other issue -- it only applies to the IGs that are affected by the stimulus package. So if --
SEN. MCCASKILL: Right.
MR. OGDEN: -- there's 28 IGs and there's 68 of us in the community, so there is a significant exclusion of IGs that do not have that particular --
SEN. MCCASKILL: And that's what I'm trying to figure out. I mean, if it makes sense -- I mean, it's almost like we're saying it's more important to catch crooks in the stimulus money than it is to catch crooks anywhere else?
MR. OGDEN: Exactly.
SEN. MCCASKILL: I mean that -- to me, common sense is on a vacation and we had a chance to fix it in that stimulus bill, we should have made it government-wide. Okay, well that -- that doesn't -- you know, obviously, it's not an objection to catching -- to using these tools in the stimulus funds for some IGs. I don't understand why there should be objection by Justice or anywhere else or using it --
MR. SKINNER: I don't believe anyone is objecting to the rights of access. I'd like to believe it was just an oversight in the stimulus bill and then GAO obtained an access right authority through the Defense Authorization bill, which is somewhat different than the issue of compelled testimony or issuing subpoenas. IGs have the authority to issue subpoenas for documents, but we cannot issue subpoenas for testimonial evidence. That's one of the things we were asking for as well. If we can issue subpoenas for documents, we should have the authority to issue administrative --
SEN. MCCASKILL: You can't make anybody talk to you?
MR. SKINNER: With pressure. It takes time. (Laughter.)
SEN. MCCASKILL: So it's like if somebody just said, I'm not going to talk to you, if you've got a contractor and you want to talk to them about a contract in FEMA and they just said, I don't want to talk to you, you're done unless you go to Justice and get them to issue a subpoena?
MR. SKINNER: That's correct. It's very difficult.
SEN. MCCASKILL: And how often do you get those refusals?
MR. SKINNER: It's happened to me since I've been an IG, in our audit of the Coast Guard Deepwater program, for example.
SEN. MCCASKILL: Right.
MR. SKINNER: We asked for records. It took us months to get those records because our authority was challenged, the contractor challenged our authority to ask for those records. And then we asked to talk to employees to help explain what was in those records and the contractor would not give us access. We had to delay the audit for over a year while we negotiated access to the employees. Then when they did give us access, they said the supervisor must be present, the attorneys must be present and others, and we said that sends a chilling effect on our relationship with that employee, so therefore, we did not interview the employees.
SEN. MCCASKILL: Yeah. Go ahead.
MR. BEARDALL: Taken a step farther, we also would like to have subcontractors have whistleblower protection.
SEN. MCCASKILL: Right.
MR. BEARDALL: The Recovery Act provides for that, but otherwise, it's not available to subcontractors, investigations. And again, a recent example -- we had a subcontractor who was willing to talk to us, so we didn't have to compel anything. But when she found out that as a subcontractor, rather than a prime contractor, she was not afforded whistleblower protections, she refused to talk to us. Fortunately, we were able to convince her to do her duty and got the information, but that's a no-brainer.
SEN. MCCASKILL: It makes no sense.
MR. BEARDALL: No, ma'am.
SEN. MCCASKILL: Absolutely no sense whatsoever. On the Deepwater contract that you struggled with, I'm familiar that the National Reconnaissance Office, NRO, has included some contract language now and I don't know how familiar all of you are with this that the contract clause there including in all of their contracts states, the IG shall have access to any individual charging directly or indirectly under this contract whose testimony is needed for the performance of the IG's duties. In addition, the IG shall have direct access to all records, reports, audits, reviews, recommendations, documents, e-mails, papers or other materials relating to this contract.
Failure on the part of any contractor to cooperate with the IG shall be grounds for administrative action by the director, office of contract, including contractual remedies.
Would that have helped?
MR. MILLER: I'm familiar with that language. I took that language and I brought it to the Coast Guard who referred me to the chief procurement officer who did not act on it. That language would help. I've asked that it be included in all contracts.
SEN. MCCASKILL: And can I get any input from the rest of the panel as to whether or not you're seeing this language in any government contracts right now? Because we can do this by contract and not by legislation. If the individual agencies decide they want cooperation from people they do business with, they can demand it.
MR. SKINNER: Madame Chair, that would help.
That would give us access to the employees, contractors, and subcontractors. And we need that access to do audits, as well as investigations.
Because, as you know as an auditor, if you just get documents, you need to have people explain the system and that sort of --
SEN. MCCASKILL: Right. (Only/Oh, and ?) you need a lot more people.
MR. MILLER: You need a lot more people. (Scattered laughter.)
The -- I would point out there's a distinction between that and a subpoena authority for people in an investigation.
SEN. MCCASKILL: Right.
MR. MILLER: The Recovery and Accountability Transparency Board, I understand, has subpoena authority to actually gain access. And in investigations, that may also be helpful too.
Because if you have an investigation and you have an employee, for example, of GSA who may be conspiring with an employee of a contractor, we can talk to the GSA employee. But if we talk to the employee of a contractor, as you pointed out before, they could just say go away, and we have no real authority to go back.
We can try and get a prosecutor interested enough to issue a grand jury subpoena, but at that point we have very little information to attract the attention of the prosecutor. So that may be a very difficult thing for us.
So I guess my point is that there are two different things. There's the contract clause that would allow us to gain access, and then there is subpoena authority that would actually give us the power to have the attendant at the interview.
SEN. MCCASKILL: So the -- but the contract language could maybe get you enough information that you could get the attention of a prosecutor that could get you the subpoena, short of us getting Congress to do what I think we should do, which is give you all the same, identical powers that others have in terms of rooting out this kind of fraud.
MR. MILLER: It certainly would help.
SEN. MCCASKILL: Speaking of Justice, according to a Washington Post article, there are over 900 cases of alleged fraud in Iraq, Afghanistan, and at home that are stalled at the Department of Justice.
Some whistleblowers have evidently been waiting as long as seven and a half years, while they have waited for the Justice Department to decide whether to take on their case.
Maybe Justice is worried about your subpoena power because they don't want any more business. Is that accurate, Mr. Beardall? Are there that many cases backed up at Justice?
MR. BEARDALL: I am not aware of that number. And in fact, as I stated earlier, the ICCTF, the International Contract Corruption Task Force, has been a boon to us because we have, right in country, access not only to other federal law enforcement agencies, but also Department of Justice.
If there are delays in cases, I can't say this because of our support from attorneys. Not only that, cases that we get to a certain point in Southwest Asia we then transport back to the States so that we can have prosecution by AUSAs.
I am not aware of that type of backup. There -- it takes time, of course. The trouble with a lot of the cases from Southwest Asia are the fact that they end up being (pendulous ?).
It's a real spider web of one main actor and then the others. And of course, as you know, you wait to bring to prosecution until you've got everybody that you want and use your -- those that come first to help you with others.
So that, at times, delays it. Otherwise, we've had great cooperation. And I'm not aware of that kind of a backlog.
SEN. MCCASKILL: Well, I would -- if you would follow up for the Committee and find out what is the backlog --
MR. BEARDALL: (Inaudible.) Right.
SEN. MCCASKILL: -- at Justice as it relates to these fraud cases.
I am aware of the spider web you've been dealing with in Iraq, on several different levels, and have had the opportunity to be briefed on that. But clearly, if -- I'm not saying it's not possible that the Washington Post is not accurate, but clearly if you don't think there's a serious issue of backup --
MR. BEARDALL: Yeah.
SEN. MCCASKILL: -- and the article says there's 900 cases, we've got to figure out what the problem is there and if there is one.
MR. BEARDALL: Well, as I said, my current inventory is 1,800 cases, so I don't have 900 of those backed up, and we're the main actors. But there's very few things going on in Southwest Asia right now that DCIS is not involved in.
SEN. MCCASKILL: Okay.
MR. BEARDALL: And I would certainly know that.
SEN. MCCASKILL: Okay.
The next area that I'd like to ask questions about are whistleblower protections. The Project on Government Oversight recently released a report on whistleblower protections, and they found that in some instance the offices of inspectors general had not done as much as they should do in terms of whistleblower protection.
Are you all familiar with the POGO report that I'm referring to?
WITNESSES: Yes.
SEN. MCCASKILL: One of the places they cited particular problems, Mr. Skinner, was in fact with the DHSIG, in terms of the hotline. They found really long waits, operators who didn't know anything about the agency, an inadequate system for dealing with anonymous calls.
Could you tell the Committee what your office has done to deal with what the POGO report laid out?
MR. SKINNER: Yes, and I'll be happy to talk about that. And I think the POGO report was somewhat incomplete.
Before I became IG, we didn't have a hotline. We -- what you called, between --
SEN. MCCASKILL: We call those coldlines. (Laughter.)
MR. SKINNER: Between 9:00 and 5:00 you got a recording, and that's all you'd get.
SEN. MCCASKILL: Right. Not very hot.
MR. SKINNER: So what I've done is we tried to create a 24/7 hotline where someone would answer the phone 24/7. And we analyzed the cost of that; it was cost-prohibitive because of our budget at that point in time. That was back in -- early 2005, calendar year.
And the only thing -- my only options were to take agents off the ground, off the line, and put them on the hotline. And our workload was so heavy, and still is so heavy, that I could not afford to take those agents off the line to operate a hotline.
So what I chose to do -- I had the phones, but not staff. So I chose to do -- is to hire a contractor that was doing this for other federal agencies. I believe HUD was one of them who actually made the referral to me. And we looked at two or three, and hired this company as an interim measure until we could build up the resources to operate our own hotline.
I now have a proposal in to -- as a matter of fact, I submitted proposals to the full Committee as well as our appropriators, as well as to the new secretary, Secretary Napolitano, proposing that we integrate the two hotlines within the Department.
The Department operates one and the OIG operates one. I proposed that we merge those, at a cost savings of about $375,000 a year, and that we use our people to manage that.
But as it stands right now, I just do not have the FTE that I could take off the line to answer those phones. So until I can get those FTE, we'll have to use a contractor.
What's transparent to POGO when they made those phone calls is that that hotline was also a direct link to the Gulf Coast. And we have a disaster -- nationwide disaster hotline. And depending on your queries --
For example, if you say, I have allegations of public corruption along the border, that will go to a particular operator. Or if you say, I have a question of corruption dealing with the Katrina, Hurricane Katrina, the fraud -- there's fraud associated with that program.
Well, that is automatically routed, and it's transparent to the caller, down to Baton Rouge where we have a hotline set up there that's run by -- we set it up in conjunction with the FBI and the Department of Justice. And it is operated by LSU students on campus, on site, at our site. There's --
I agree that it can be improved. We want to improve it. It's a resource issue.
SEN. MCCASKILL: Well, now we have a reason for you to come to another hearing, because one of our issues that we've got to deal with in contracting is what government agencies have done while we've been trying to boast -- well, while -- some folks have been trying to boast that we haven't grown government.
What government agencies have done when they don't have FTEs is they've hired contractors. And I will tell you, it's not reassuring to me at a hearing on contracting oversight that I find out that maybe the reason that we weren't doing as well as we needed to with the hotline is because we were hiring contractors to do it.
And so obviously there's an irony there, that I'm sure doesn't escape anybody in the room, that we need to look at. And a lot of it is prioritization in deciding whether or not the hotline and the information that comes from a hotline is --
And I don't doubt, Mr. Skinner -- I know that you work hard as an IG and you've got a great record. I don't doubt that you don't realize the value of whistleblowers. But if all of --
I know how long you all have been doing this kind of work. I know you understand that the lifeblood of many, many investigations that you do is in fact a whistleblower. And their ability to get information to you in a timely way with protection is just about as important as it gets.
And so I hope that as we move forward in looking at these issues, usually it's someone who's -- especially in the area of contracting. Because there's a lot of good Americans.
And I know at DOD it happens all the time, people in theater that were calling and saying this is unbelievable what's happening over here. And frankly, I don't think Department of Defense believed it at first, because the calls were so -- almost -- it sounded like something, some kind of bad movie plot.
MR. SKINNER: Yes, ma'am. But let me compliment our current IG. He has made this a top priority, both his hotline and reprisal investigations.
I -- part of my hat as the deputy inspector general for investigations is I handle reprisal investigations, and he has plussed-up my staff significantly in the last couple of weeks, and he's also working hard to make the hotline as effective as it is. It's a focus of his, and he's doing a great job.
SEN. MCCASKILL: Generally speaking, do most IG shops have a formalized reprisal investigation protocol?
Mr. Ogden, could you speak to that, or if not, can you get back to us and let us know?
MR. OGDEN: Certainly get back to you on that. I think the other panelists can probably directly address the question. I do --
Senator McCaskill, I do want to come back on the hotline issue -- (inaudible) -- too.
SEN. MCCASKILL: Okay.
MR. OGDEN: Madame Chair, I can speak for our office. We do conduct retaliation investigations from time to time, in conjunction with the Office of Special Counsel.
And we will conduct those investigations. Ultimately we can make findings, but ultimately we cannot make the agency do anything. We can find that there's a whistleblower and the whistleblower was subject to retaliation, but we don't have the authority to have the agency correct it.
And then, even with our findings, then the Office of Special Counsel would have to go through and either adopt our findings or adopt separate findings. So that is one of the weak points. But we do, from time to time, conduct these investigations. As you said, they're very important. We need to protect our whistleblowers, and we do the investigations.
SEN. MCCASKILL: Okay. Anything else, Mr. Ogden, on the hotline?
MR. OGDEN: Yeah. Thank you, Senator McCaskill.
As part of the charge of the Council of Inspectors General on Integrity and Efficiency, the executive council has adopted some goals and objectives as part of the strategic plan. And one of the goals that has been identified -- we do these cross-cutting issues, and one of the first two goals we identified is a hotline operations and whistleblower protection project, which was actually announced today.
The objective there is to develop best practices for OIGs in hotline operations and whistleblower protection for effective management in handling whistleblower allegations. And so the purpose there is to really take a look at what the IG community is doing, help develop best practices, and then communicate that information broadly throughout the community so that we can fine-tune the operations in all agencies. So that'll be one of the cross-cutting that we have identified, and it is launched currently.
SEN. MCCASKILL: That's great, because I think that's one of the things that should be embraced. If we could get consistency and uniformity as much as possible on whistleblower protection and protocols for retaliation investigations, because, you know, that's what's scary to a whistleblower. And a lot of these contractors are working in many different agencies, as you all know.
In fact, you know -- which is another hearing, the shopping around of contracts among agencies and buying off other people's contracts and all of that that's going on. I think the more we have uniformity and the more that it is embraced system-wide in the IG community, that whistleblowers are sacrosanct and need to be protected at all costs, I think it's really important.
I want to talk about the post-award audit. And I'm trying to figure out -- most people don't understand what that means, a post- award audit. It's a little bit like some of the other jargon. I've got to be careful on this committee, because I speak it and you all speak it, and many of the people who will testify in this committee speak it, but it's like a lot of things in the auditing world. Most people out in America don't know the language. And so when we talk about a post-award audit, you know, I want to clarify what we're talking about is checking to make sure that we got the deal that we thought we got when we signed the contract.
MR. MILLER: That's right, Madame Chair. Thank you for bringing this up too.
SEN. MCCASKILL: It is -- I'm trying to figure out, what is the rationale for you not being allowed -- because didn't you used to be able to do -- check the price after we signed the contract to make sure we aren't getting ripped off?
MR. MILLER: We did, up until 1997. And the Veterans' Affairs Office of Inspector General also conducts these audits. But for some reason, in 1997, I guess OMB decided that we would focus more on pre- award audits and catch the pricing problems up front, and we would reduce -- we would eliminate the post-award audit so that, after the contract was formed, we can look at a number of issues, but we can't look at price issues.
Theoretically we're supposed to look at those up front. But, of course, (MAS ?) contracting has grown exponentially, and we only get to look at a few pre-award contracts. And over the last couple of years, even those were -- there were attempts to cut those, so that in 1997 it was GSA that actually cut the clause out of the contract that allowed us to look at prices, by the way. But in 1997, that was the rationale.
There was a hearing in 2005, just as I was appointed, I was confirmed, but I didn't have my commissions. I was having a Marbury moment. And there was a hearing on this very issue before this committee, a subcommittee of this committee, and the issue came up again. I think Senator Coburn was the chair at the time. And they again looked at those issues, and we testified and OMB testified again to the same rationale, that we'll increase pre-award audits so there's no need to bring back the authority to look at prices post-award. So that's the only rationale that I have heard.
SEN. MCCASKILL: And have the pre-award audits, in fact, flourished?
MR. MILLER: No. No, they have not.
SEN. MCCASKILL: I had a feeling.
MR. MILLER: In fact, there is an attempt to reduce those as well over the last couple of years.
SEN. MCCASKILL: But this is a unilateral decision just made by GSA?
MR. MILLER: GSA was the one making the decision. I'm sure that OMB supported it. I think the other rationale that they would probably give would be somehow it was a burden on small companies, which I believe is a total red herring, because we look at companies that have -- we look at large companies that have a lot of federal contracts. Typically we don't even get to look at companies that have fewer than 50 million contracts, in government contracts.
SEN. MCCASKILL: Well, first of all, that notion is insulting to risk assessment done by you as professionals. I mean, clearly you're going to look where you think it's most likely that you're going to find problems. That doesn't mean you start with little bitty contracts. You start with the big ones --
MR. MILLER: Indeed.
SEN. MCCASKILL: -- where you have the most likely chance of making a real difference, a real dent. And -- well, I think this is something that -- now is the moment to work on this issue --
MR. MILLER: Yes.
SEN. MCCASKILL: -- because we have a new administration. And I believe we have a head of GSA that has not yet been confirmed.
MR. MILLER: That's correct.
SEN. MCCASKILL: Timing is everything.
MR. MILLER: Indeed.
SEN. MCCASKILL: So I think this is a very good issue for us to look at as we talk to the new -- now, let's talk a little bit about the Safavian fix. Am I saying that guy's name right?
MR. MILLER: Yes, you are, Madame Chair.
SEN. MCCASKILL: What is the fix for this? Is this a law that we have to do?
MR. MILLER: Unfortunately, it is. I propose --
SEN. MCCASKILL: You have to go in and say that when somebody from the government comes and asks you questions, a material omission or twisting is somehow okay?
MR. MILLER: Well --
SEN. MCCASKILL: It's not okay now, but courts have said --
MR. MILLER: But it is not okay.
SEN. MCCASKILL: -- courts have said that we have to statutorily inform people of this?
MR. MILLER: The D.C. court -- the D.C. Circuit held in the Safavian case that, under the false statement statute, 18 USC 1001, that there was no duty on the part of the federal employee, David Safavian, to tell the special agents the whole truth.
SEN. MCCASKILL: So if you go to someone and ask them if they used a government contract to, instead of do reconnaissance work somewhere, they were doing a charter service of the boat for deep-sea fishing, and they said no, they would not be in trouble even if they used it for a party cruise where there were no fishing poles?
MR. MILLER: Well, if they say an actual lie, then the D.C. Circuit would say that would count. The problem was that Mr. Safavian failed to state a very important fact. When he talked to our special agent, he failed to mention that he was actively giving assistance to Jack Abramoff in obtaining GSA business at the time. And so when he told our special agent that --
SEN. MCCASKILL: And your special agent was investigating Jack Abramoff.
MR. MILLER: My special agent was investigating claims about David Safavian. The issue that came in, the allegation was that Mr. Safavian went on a golfing trip to St. Andrew's golf course in Scotland at the expense of Jack Abramoff, along with a number of other individuals, and that Mr. Safavian did not pay for the trip entirely and that Mr. Abramoff was doing business with the GSA.
What Mr. Safavian told our special agent was that he had paid for the trip himself, and he produced a check. And he did not specifically -- what he concealed and what the Department of Justice charged him with concealing was the fact that he was actively giving assistance to Jack Abramoff in GSA-related business.
SEN. MCCASKILL: I see.
MR. MILLER: And the other part that he didn't tell the full truth about was he only partially paid -- he paid about $3,100 for a week in Scotland and a weekend in London with Mr. Abramoff, so it was only a partial payment that he had paid. He didn't state that Mr. Abramoff did pay for the rest.
So what we propose are two potential fixes, one to the definitional section for 18 USC 1001, where we specify that for a federal employee they have a duty to tell all material facts when asked. The other potential fix is to a Sarbanes-Oxley statute, 18 USC 1519. It's a newer statute. And we would put a subsection B that would clarify this particular point. So those would be the two legislative ideas to clarify that federal employees have to tell the whole truth. They can't hide the truth with the deliberate intention of misleading the agent.
SEN. MCCASKILL: I think that's why the phrase is "the truth, the whole truth and nothing but the truth."
MR. MILLER: I think so.
SEN. MCCASKILL: Finally, an area that I would like to talk about is the Excluded Parties List System, the EPLS; the issue of Social Security numbers or taxpayer identification, and also the idea that we could maybe expand it to include state and local.
What is your -- I know what -- that you all surveyed on this, Mr. Ogden, and that there was -- while you said there was significant opposition, I think 76 percent of your inspector generals -- inspectors general still agreed that we needed to do some kind of identifying information on the Excluded Parties List System --
MR. OGDEN: Correct.
SEN. MCCASKILL: -- so, that's still -- I mean, for -- believe me, for somebody in my line of work, 76 percent is a huge majority. (Laughter.)
MR. OGDEN: Let me clarify the opposition. (Laughter.) Let me -- (chuckles) -- exactly. Let me clarify the opposition point, Senator McCaskill. The opposition was the use of the Social Security numbers, not the EPLS, okay.
SEN. MCCASKILL: Right.
MR. OGDEN: To the extent that there are problems with the EPLS, in its administration, that was another issue. But, the opposition that I referred to is specific to the use of a Social Security number because of identity theft issues.
SEN. MCCASKILL: But, don't we have an issue of not being able to identify people as to all the companies that have the same or similar names? Isn't that a real problem?
MR. OGDEN: That is. That is a problem. I know we encounter it at my agency. I know that's a universal problem throughout the government.
Again, the concern I think arises in the context of specifically the Social Security numbers -- whether or not there's another unique identifying number, whether or not there's an employee identification number, another methodology; or a means by which you can protect the data; specifically, the SSN if you have to use the SSN --
SEN. MCCASKILL: Right.
MR. OGDEN: -- as (our ?) way to protect that data and ensure that it's not going to be publicly available.
SEN. MCCASKILL: Right.
MR. OGDEN: And that is in keeping with -- Senator Feinstein has introduced, I believe, two bills at this point that are dealing with, you know, breaches regarding SSNs; and the OMB memorandum, that I referred to earlier, addresses this point. And I know it's an issue within my agency right now, the whole protection of PII, sensitive -- Personally Identifiable Information.
So, that is the only opposition that we really -- otherwise, there was support for the proposition.
SEN. MCCASKILL: Well, someone -- one of you earlier mentioned the self-certification issue, as something we could certify that they had not -- none of the officers of the company had been convicted of any fraud. Could we expand that to include debarment -- that no one had ever been subject to an act of debarment?
MR. OGDEN: Yes. Yes, clearly, that could be done. And I'm not certain that it doesn't call for that right now. I know there's a time limitation of only three years currently for that certification. And the proposal, at least I believe -- and I'll set Mr. Skinner to address this, and Mr. Miller address this more specifically since they worked on the task force on this issue. But, it would be, to expand the -- to take away the time frames, to take away the time limit to ensure that the certification was, you know, without limitation.
SEN. MCCASKILL: Mr. Skinner?
MR. SKINNER: What I was referring to earlier, it was not necessarily people that had a criminal record, per se, but is using -- when we were doing computer matching, or GAO was actually doing the computer matching for us, to validate small businesses and disabled vet-owned businesses to qualify for small business contracts after Katrina, without that information, without some type of identifier, and in this case we did have a VA identifier that we could match against their VA, which they put on the form, but there's oftentimes where there are no other identifiers --
SEN. MCCASKILL: Right.
MR. SKINNER: -- and until we can come up with some type of consistent identifier, across government, that we can use -- and, right now, the only thing we have available to us is a Social Security number. And a lot of the procurement fraud that we're encountering -- or benefit fraud that we're encountering can be detected by just doing simple computer matches against, with Social Security Administration.
SEN. MCCASKILL: Right.
And if that's taken away from us, it's going to make our jobs even a lot harder.
SEN. MCCASKILL: We did it all the time in the state auditor's office. I mean, matches were like the sun coming in the morning -- computer matches. We couldn't have done our work without the computer matches.
MR. SKINNER: I think we have an obligation to ensure that that information is protected. And as long as we can demonstrate that, we are good stewards of that information, in that we can protect and safeguard that information. I think that we that we should use it. These are resources -- tools that are available to us that are just not being used right now.
SEN. MCCASKILL: Well, I want to say to all of you, there are other questions I have that I will -- we will direct to you. And any information -- further information you want to add to the record, please feel free to do so.
I've got our four performance measures, now that I know. We've got to work on 'don't tip off the bad guy before we have to;' we've got to do a better job on the computer matching; we've got to get more agents for DCIS; and we've got to deal with the subpoena authority.
MR. MILLER: That's for everyone, Madame Chair.
MR. BEARDALL: That's for everyone --
SEN. MCCASKILL: No, I know. I apply all four of these to all of you, and to the entire IG community. But, those are four things that could make a meaningful difference for taxpayers, in terms of how easy it is for you to catch people who are ripping us off.
I think you -- please tell all the people who work with you how much their work is appreciated. They're the kind of people that, frankly, never get much attention. There is no brass band for them. If their cases go to court, they generally plea. They're not even ever on the stand, like "Law and Order, Criminal Intent," or anything like that.
There is no stardom in their work, but it is incredibly important. I know you all feel that, as leading the agencies you lead. But, please convey to them, on behalf of this committee, how much we appreciate their work.
And if there's anything else that this committee can do in helping you catch people who are stealing from our government, let us know and we'll get to work on our four -- on our list of four that we've come out of this hearing with.
Thank you very much.
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