[Senate Hearing 110-587] [From the U.S. Government Publishing Office] S. Hrg. 110-587 STRENGTHENING THE UNIQUE ROLE OF THE NATION'S INSPECTORS GENERAL ======================================================================= HEARING before the COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED TENTH CONGRESS FIRST SESSION __________ JULY 11, 2007 __________ Available via http://www.access.gpo.gov/congress/senate Printed for the use of the Committee on Homeland Security and Governmental Affairs ---------- U.S. GOVERNMENT PRINTING OFFICE 37-357 PDF WASHINGTON : 2008 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS JOSEPH I. LIEBERMAN, Connecticut, Chairman CARL LEVIN, Michigan SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio MARK L. PRYOR, Arkansas NORM COLEMAN, Minnesota MARY L. LANDRIEU, Louisiana TOM COBURN, Oklahoma BARACK OBAMA, Illinois PETE V. DOMENICI, New Mexico CLAIRE McCASKILL, Missouri JOHN WARNER, Virginia JON TESTER, Montana JOHN E. SUNUNU, New Hampshire Michael L. Alexander, Staff Director Holly A. Idelson, Counsel Brandon L. Milhorn, Minority Staff Director and Chief Counsel Melvin D. Albritton, Minority Counsel Trina Driessnack Tyrer, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Lieberman............................................ 1 Senator Collins.............................................. 4 Senator Akaka................................................ 7 Senator McCaskill............................................ 8 Senator Coburn............................................... 34 WITNESSES Wednesday, July 11, 2007 Hon. Clay Johnson III, Deputy Director for Management, Office of Management and Budget.......................................... 10 Hon. Glenn A. Fine, Inspector General, U.S. Department of Justice 12 Hon. Earl E. Devaney, Inspector General, U.S. Department of the Interior....................................................... 15 Hon. Eleanor J. Hill, Former Inspector General, U.S. Department of Defense..................................................... 19 Danielle Brian, Executive Director, Project on Government Oversight...................................................... 23 Alphabetical List of Witnesses Brian, Danielle: Testimony.................................................... 23 Prepared statement........................................... 73 Devaney, Hon. Earl E.: Testimony.................................................... 15 Prepared statement........................................... 55 Fine, Hon. Glenn A.: Testimony.................................................... 12 Prepared statement........................................... 39 Hill, Hon. Eleanor J.: Testimony.................................................... 19 Prepared statement........................................... 63 Johnson, Hon. Clay III: Testimony.................................................... 10 Prepared statement........................................... 37 APPENDIX Inspectors General Fact Sheet, June 2007, House Committee on Oversight and Government Reform................................ 76 Prepared statements submitted for the Record from: Hon. David M. Walker, Comptroller General of the United States, GAO................................................ 83 Hon. Phyllis K. Fong, Inspector General, U.S. Department of Agriculture................................................ 106 Jane E. Altenhofen, Inspector General, National Labor Relations Board............................................ 120 Dr. Christine Boesz, Inspector General, National Science Foundation................................................. 123 Susan Khoury, Former Special Agent, Office of the Inspector General, U.S. Nuclear Regulatory Commission................ 129 Responses to Post-hearing Questions for the Record from: Mr. Johnson with an attachment............................... 133 Mr. Fine..................................................... 141 Mr. Devaney.................................................. 144 Ms. Hill..................................................... 145 Ms. Brian.................................................... 147 STRENGTHENING THE UNIQUE ROLE OF THE NATION'S INSPECTORS GENERAL ---------- WEDNESDAY, JULY 11, 2007 U.S. Senate, Committee on Homeland Security and Governmental Affairs, Washington, DC. The Committee met, pursuant to notice, at 10:02 a.m., in room SD-342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, Chairman of the Committee, presiding. Present: Senators Lieberman, Akaka, McCaskill, Collins, and Coburn. OPENING STATEMENT OF CHAIRMAN LIEBERMAN Chairman Lieberman. Good morning. Welcome to the hearing. I am going to begin, unusually, without Senator Collins here because she had a prior commitment and she is going to arrive a little late. But I thank you all for coming. This hearing is on the topic of ``Strengthening the Unique Role of the Nation's Inspectors General.'' This morning we are going to ask two distinct but related questions fundamental to the operation of our Nation's Government watchdogs. One is: Who is watching the watchdogs? And the second is: Who is watching out for the watchdogs? We ask these questions with some intensity because of recent events that raise concerns that some Inspectors General may have been retaliated against by their agency heads because they were, in effect, too independent, while other Inspectors General have acted in a way that has led some to claim that they were not independent enough. In today's hearing, we are going to ask our panelists how we can best maintain, indeed strengthen the independence that is crucial if these offices are to carry on their vitally important jobs of ensuring that taxpayers' money is spent efficiently and that the executive departments of our government carry out their responsibilities fairly. In the United States, the job of Inspector General is actually older than the Republic itself, tracing back to Prussian Baron Friedrich von Steuben's service as Inspector General to General George Washington during the Revolutionary War. The conflict inherent in the Inspector General's office was clear even then. Washington wanted von Steuben and his inspectors reporting only to him. Von Steuben wanted more independence. The Continental Congress, perhaps in a more harmonious and compromising day than our own, split the difference by passing legislation requiring that while Inspector General von Steuben would report directly to General Washington, his reports would go to Congress as well. The system worked so well that many of the ideas and systems that von Steuben began putting into place in 1778 are still used by military Inspectors General today. Building on this model and, interestingly, precisely 200 years later, in 1978 both Houses of Congress unanimously passed the Inspectors General Act that created an office of Inspector General in 12 major departments and agencies that would report both to the heads of the agencies as well as to Congress. These new IGs were empowered with even more independence than their military counterparts to ensure that they would be able to conduct truly robust oversight. The law was amended in 1988 to add an Inspector General to almost all executive agencies and departments. Overall, I would say that these laws and the Inspectors General are working well, as desired, in the public interest to combat waste, fraud, and abuse in the Federal Government. According to the President's Council on Integrity and Efficiency, last year alone IG audits led to $9.9 billion in potential savings and another $6.8 billion in savings when the results of civil and criminal investigations are added in. Two of our witnesses today--Department of Justice Inspector General Glenn Fine and Department of the Interior Inspector General Earl Devaney--are models, in my opinion, of what an Inspector General should be. Mr. Fine, for example, recently detailed the sloppy and sometimes inappropriate use of National Security Letters to conduct wiretaps within our country. Mr. Devaney has uncovered costly errors regarding oil and gas leases, while also challenging lax ethical conduct by Department of the Interior officials. While obviously not all IG activities can or should generate as much attention as those two investigations I have mentioned, this is the kind of independence and credible work that really sets a standard and is appreciated. Unfortunately, there are recent reports about IGs that are more troubling with regard to their relationship to their agency heads, and noteworthy here and recent is the former Smithsonian Inspector General, Debra Ritt, who said she was pressured by the former Director of the Smithsonian, Lawrence Small, to drop her investigation into the business and administrative practices of Mr. Small and other high-ranking officials at the Smithsonian. The investigation continued--first by Ms. Ritt and then by her successor--and ultimately revealed that Mr. Small had been involved in a series of unauthorized expenditures. At the General Services Administration, Administrator Lurita Doan has been highly and publicly critical of Inspector General Brian Miller's audits of the agency's office practices and into prices vendors were charging the government for products or services, at one point, according to Inspector General Miller, actually calling his auditors ``terrorists'' and threatening to cut his budget and responsibilities. At a different end of the spectrum, we have had some IGs step down amid allegations about their misconduct. At NASA, for instance, an Administration investigation of IG Robert Cobb concluded that he had created an appearance of lack of independence by his close relationship with the NASA Administrator and that he had created an ``abusive work environment.'' So today I think this Committee wants to reaffirm its support of the Inspectors General and the critical work that they do on our behalf and on the taxpayers' behalf, and we want to ask how best to balance the need for the IG offices to be independent investigative forces for good government, while still ensuring that those investigations are thorough and fair. I know that both Senator Collins and Senator McCaskill have given much thought to this topic and have made proposals for change that I hope we will have the opportunity to discuss this morning. [The prepared statement of Senator Lieberman follows:] PREPARED STATEMENT OF CHAIRMAN LIEBERMAN Good morning. In today's hearing, ``Strengthening the Unique Role of the Nation's Inspectors General,'' this Committee will examine two distinct but related questions fundamental to the effective operation of our nation's government watchdogs. One: ``Who is watching the watchdogs? And two: ``Who is watching out for the watchdogs?'' We need to ask these questions because recent news stories have said that some Inspectors General may have been retaliated against by their agency heads, while other Inspectors General have created the appearance of not being independent enough, sweeping problems and complaints under the rug. With today's hearing, we are going to ask our panelists for advice on how we can improve the existing Inspectors General legislation to encourage and maintain the independence that is crucial if these offices are to carry on their vitally important jobs of ensuring that taxpayers' money is spent efficiently and that the executive departments of our government carry out their jobs fairly. In the United States, the job of Inspector General is older than the Republic itself, tracing back to Prussian Baron Friedrich von Stueben's service as Inspector General to General George Washington during the Revolutionary War. The conflict inherent in the Inspector General's office became clear even back then. Washington wanted von Steuben and his inspectors reporting only to him. Von Steuben wanted more independence. The Continental Congress split the difference by passing legislation requiring that while Inspector General von Steuben would report directly to General Washington, his reports would go to Congress as well. The system worked so well that many of the ideas and systems von Steuben began putting into place in 1778 are still used by military Inspectors General today. Building on this model, precisely 200 years later, in 1978, both Houses of Congress unanimously passed the Inspectors General Act that created an office of Inspector General in 12 major departments and agencies that would report both to the heads of the agencies as well as Congress. These new IGs were empowered with even more independence than their military counterparts to ensure they would be able to conduct robust oversight. The law was amended in 1988 to add an Inspector General to almost all executive agencies and departments to combat waste, fraud, and abuse. Overall, the law is working as desired. According to the President's Council on Integrity and Efficiency, last year alone IG audits resulted in $9.9 billion in potential savings and another $6.8 billion in savings when the results of civil and criminal investigations are added in. Two of our witnesses today--Department of Justice Inspector General Glenn Fine and Department of the Interior Inspector General Earl Devaney--are in my view models of what an IG should be. Among the many efforts of his office, Mr. Fine recently detailed the sloppy and often inappropriate use of National Security Letters to conduct wiretaps within the United States. Mr. Devaney has uncovered costly blunders regarding oil and gas leases, while challenging lax ethical conduct by department officials. While not all IG activities can or should generate as much attention as those investigations, this is the kind of independent and credible work we want to make the standard for all Inspectors General offices and that means we have to examine where the system has flaws. On the one end, we have heard reports of the independence of Inspectors General threatened, such as former Smithsonian Inspector General Debra S. Ritt, who said she was pressured by former Smithsonian Director Lawrence Small to drop her investigation into the business practices of Small and other high-ranking officials at the Smithsonian. The investigation continued--first by Ritt then by her successor-- and ultimately revealed that Small, among other things, had charged the Smithsonian $90,000 in unauthorized expenditures, including chartered jet travel, his wife's trip to Cambodia, hotel rooms, luxury car service, and expensive gifts. Over at the General Services Administration, Administrator Lurita Doan has been highly and publicly critical of Inspector General Brian Miller's audits of the agency's office practices and into prices vendors were charging the government for products or services, at one point even reportedly calling his auditors ``terrorists,'' and threatening to cut his budget and responsibilities. At the other end of the spectrum, we've had several IGs step down amid allegations about their conduct and some have called for the resignation of the NASA Inspector General Robert Cobb. As many in this room are aware, an Administration investigation of Mr. Cobb concluded that he has created an appearance of lack of independence by his close relationship with the NASA Administrator, and has created an ``abusive work environment.'' With today's hearing, we want to start exploring the question of how best to balance the need of the IG offices to be an independent investigative force for good government practices within their departments and agencies, while still ensuring that those investigations are thorough and fair. I know both Senators Collins and McCaskill have given much thought to this topic and have proposals for change that I hope we'll have the opportunity to discuss this morning. With that, I want to thank today's expert witnesses for agreeing to share their thoughts and experience with this Committee to help guide our legislative efforts. Chairman Lieberman. I am delighted that I was able to offer my opening statement in just the right length so that Senator Collins has arrived. I thank you and I yield to you now. OPENING STATEMENT OF SENATOR COLLINS Senator Collins. Thank you very much, Mr. Chairman. I apologize for not being here to listen to your opening statement, which I am sure was, as always, brilliant and insightful and eloquent, and I look forward to reading it in the record, if not sooner. Chairman Lieberman. Yes, copies are available. [Laughter.] Senator Collins. Thank you, Mr. Chairman. The Inspectors General in the Federal Government perform invaluable services for the people of this country. They serve the taxpayers' interest in making government operations more efficient, effective, and economical. They assist those of us who serve in Congress in performing our oversight duties and in determining whether or not investigations or legislative reforms are in order. They detect and report criminal activity. They alert agency heads to problems within their organizations. In its most recent report, the President's Council on Integrity and Efficiency reported that the work of the Inspectors General has resulted in nearly $10 billion in potential savings from audit recommendations; $6.8 billion in investigative recoveries, and more than 6,500 indictments. The IGs have, in fact, undertaken many major investigations that have benefited the taxpayers of this country. To cite just a few of the many possible examples: The DHS IG investigated waste, fraud, and abuse in the wake of Hurricane Katrina--an effort that ultimately revealed an astonishing loss of taxpayers' funds exceeding a billion dollars. The Special Inspector General for Iraq Reconstruction not only uncovered nearly $2 billion of waste, fraud, and abuse, but also detected criminal activity in contracting that led to four convictions. Just last week, the DHS IG reported that FEMA has not applied minimum security standards to its laptop computers and has not implemented an adequate inventory management system. These findings indicate continuing vulnerability to equipment and data theft, as well as exposure to computer viruses and hackers. And to cite the work of one of our witnesses, IG Glenn Fine has performed vital work in monitoring the Justice Department's implementation of the PATRIOT Act and the FBI's use of National Security Letters. Clearly, the Inspectors General that have been provided by statute for 64 Federal entities perform a vital role. Whether they are working in a Cabinet Department like Justice, Interior, or Defense, at the Export-Import Bank, or at the Postal Service, they are indispensable watchdogs for auditing and improving government performance. It is, therefore, important that we help to ensure that the Inspectors General are selected, compensated, protected, and empowered in ways that will enhance their service to our country. As the Chairman mentioned, I have authored legislation toward this end with the support of the Chairman and Senator McCaskill. Our legislation, S. 680, would take some important steps toward strengthening the role and independence of our Inspectors General. For example, the bill would raise the level of pay for the IGs while prohibiting cash bonuses from agency heads. We have a situation right now where the Deputy IGs in some departments make more money than the Inspectors General themselves because they receive cash bonuses. Now, clearly, it would be inappropriate for an IG to receive a bonus from the agency head because it sets up an obvious conflict of interest. So I think the answer to this is to move the IG up on the pay scale, but prohibit the award of bonuses. Another provision of the bill would provide that IGs who are appointed by agency heads rather than by the President be selected for their job qualifications and not their political affiliations--in other words, the same kind of criteria that are used for the presidential appointments. Another provision of the bill would bolster the independence of IGs appointed by agency heads by requiring a 15-day notice to Congress of intent to terminate. The bill would strengthen the subpoena power of the IGs with respect to electronic documents--really just updating the law. And it would grant all IGs the ability to use the Program Fraud Civil Remedies Act to recover fraudulently spent money. As I mentioned before she arrived, there are other Members of the Senate, including Senator McCaskill, who have proposed further changes in the laws on Inspectors General. All of this activity and the Chairman's holding this hearing demonstrates an encouraging level of appreciation for and interest in the work of the IGs. Today's hearing should provide us with a valuable resource as we study the legislative options, and I join the Chairman in welcoming our distinguished panel, and I look forward to hearing their observations. [The prepared statement of Senator Collins follows:] PREPARED STATEMENT OF SENATOR COLLINS The Inspectors General in the Federal Government perform invaluable services for the people of the United States. They serve the taxpayers' interest in making government operations more efficient, effective, and economical. They assist Congress in performing its oversight duties and in determining when investigations or legislative reforms are in order. They detect and report criminal activity. They alert agency heads to problems within their organizations. In its most recent report, the President's Council on Integrity and Efficiency reported that the work of Inspectors General has resulted in:$9.9 billion in potential savings from audit recommendations; $6.8 billion in investigative recoveries; 6,500 indictments; 8,400 successful prosecutions; 7,300 suspensions or debarments; and 4,200 personnel actions. The IGs have undertaken major investigations. To cite just a few of many possible examples, The DHS IG investigated waste, fraud, and abuse in the wake of Hurricane Katrina--an effort that ultimately revealed a loss of taxpayer funds exceeding a billion dollars. The Special Inspector General for Iraq Reconstruction not only uncovered nearly $2 billion of waste, fraud, and abuse, but also detected criminal activity in contracting that led to four convictions. Just last week, the DHS Inspector General reported that FEMA has not applied minimum security standards to its laptop computers and has not implemented an adequate inventory-management system. These findings indicate continuing vulnerability to equipment and data theft, as well as exposure to computer viruses and hackers. And, to cite the work of one of our witnesses, IG Glenn Fine has performed vital work monitoring the Justice Department's implementation of the Patriot Act and the FBI's use of national security letters, ensuring that the government's response to terrorist threats does not undermine civil liberties. Clearly, the Inspectors General that have been provided by statute for 64 Federal entities perform a vital role. Whether they are working in Cabinet Departments like Justice, Interior, or Defense, at the Export-Import Bank, or at the Postal Service, they are indispensable watchdogs for auditing and improving government performance. It is, therefore, important that we help to ensure that the Inspectors General are selected, compensated, protected, and empowered in ways that will enhance their services to our country. I have authored legislation toward this end with the support of colleagues, including Senator Lieberman and Senator McCaskill. My bill, S. 680, would take some important steps toward strengthening the role and the independence of our Inspectors General. For example, it would: raise the pay of Presidentially appointed IGs to Level III while prohibiting cash bonuses from agency heads; provide that IGs appointed by agency heads be selected for their job qualifications, not their political affiliation; bolster the independence of IGs appointed by agency heads by requiring a 15-day notice to Congress of intent to terminate; strengthen the subpoena power of the IGs with respect to electronic documents; and grant all IGs the ability to use the Program Fraud Civil Remedies Act to recover fraudulently spent money. Other Members of Congress have also proposed changes to the laws on Inspectors General. All of this activity demonstrates an encouraging level of appreciation for and interest in the work of the IGs. Today's hearing should be a valuable resource as we study our legislative options. Our witnesses bring to our hearing deep experience in the IG process as well as views from within and outside of government. I join the Chairman in welcoming the witnesses, and I look forward to hearing their observations. Chairman Lieberman. Thanks very much, Senator Collins. Normally we just have the two of us make opening statements, but since we only have one panel and only four Senators here, I want to give Senator Akaka and Senator McCaskill a chance for an opening statement, if they would like to offer one. Senator Akaka. OPENING STATEMENT OF SENATOR AKAKA Senator Akaka. Thank you very much, Mr. Chairman. I join you and the Ranking Member in welcoming our distinguished panel members. I want to thank you for organizing this important hearing, and as a matter of history, it was 30 years ago, in 1978, that the Inspector General Act was passed. And since then really there has not been a review. So, Mr. Chairman, I am so glad that we are taking the time to review the IGs' responsibilities here at this time. And it is an opportune time to review not only the successes of our Nation's Inspectors General but to consider how their role can be strengthened. Inspectors General serve as watchpersons for the Executive Branch, promoting honesty, integrity, and efficiency throughout the Federal Government. IGs, along with Federal whistleblowers and the Office of Special Counsel, make sure the Federal Government works for the American people. I am deeply troubled by recent allegations of agency attempts to interfere with the independence of Inspectors General. Among the most important duties of the IG is to investigate and report the facts when there is evidence of high-level wrongdoing in an agency. This is also perhaps an IG's most difficult duty, and it is a time when the IG's independence is most likely to be challenged. Recent allegations of agency attempts to interfere with the IGs' investigations remind us that IG independence is not an academic matter but a pressing policy concern. For example, Chairman Lieberman mentioned then-Secretary of the Smithsonian Institution Lawrence Small who reportedly attempted to interfere with the Smithsonian IG's audit of his expenses before allegations of top-level wrongdoing were revealed. I am particularly interested in learning more about ensuring that IG offices have adequate resources. Perhaps they should be required to submit their budget requests directly to Congress. Inspectors General save taxpayers billions of dollars by promoting efficiency and rooting out waste, fraud, and abuse. So, ensuring that IG offices are adequately funded is a wise investment of taxpayer money. Again, Mr. Chairman, I want to thank you for holding this hearing, and I look forward to the testimony of our witnesses. [The prepared statement of Senator Akaka follows: PREPARED STATEMENT OF SENATOR AKAKA Thank you Mr. Chairman. I join you in welcoming our distinguished panel members. I want to thank you for organizing this important hearing. As the thirty-year anniversary of the Inspector General Act of 1978 nears, it is an opportune time to review the many successes of our nation's Inspectors General (IG) and to consider how their role can be strengthened. Inspectors General serve as watchdogs for the Executive Branch, promoting honesty, integrity, and efficiency throughout the federal government. IGs--along with federal whistleblowers and the Office of Special Counsel--make sure the federal government works for the American people. I am deeply troubled by recent allegations of agency attempts to interfere with the independence of Inspectors General. Among the most important duties of an IG is to investigate and report the facts when there is evidence of high-level wrongdoing in an agency. This is also perhaps an IG's most difficult duty, and it is the time when the IG's independence is most likely to be challenged. Recent allegations of agency attempts to interfere with IGs' investigations remind us that IG independence is not an academic matter, but a pressing policy concern. For example, then-Secretary of the Smithsonian Institution, Lawrence Small, reportedly attempted to interfere with the Smithsonian IG's audit of his expenses before allegations of top-level wrongdoing broke. I am particularly interested in learning more about ensuring that IG offices have adequate resources. Perhaps they should be required to submit their budget requests directly to Congress. Inspectors General save taxpayers billions of dollars by promoting efficiency and rooting out waste, fraud, and abuse, so ensuring that IG offices are adequately funded is a wise investment of taxpayer money. Again, Mr. Chairman, I thank you for holding this hearing today, and I look forward to learning more about these important issues. Chairman Lieberman. Thanks very much, Senator Akaka. Senator McCaskill, as I assume many know, if not everyone, comes to the Senate with the unique experience of having been the auditor for the State of Missouri, and she has submitted legislation regarding the Inspectors General. So I am glad to call on her now for a statement, if she would like. OPENING STATEMENT OF SENATOR McCASKILL Senator McCaskill. Thank you so much, Mr. Chairman. First, I want to say that my experience as an auditor defines my interest in this area, but I certainly acknowledge that I am merely adding to the great work of this Committee and hopefully can be a contributor to legislation that would hopefully move forward that I know that the Ranking Member and the Chairman have been engaged in long before I got here. And I am anxious to be a bit player and contribute as we try to make something that is very good better. It is interesting how audits are perceived by the people that are being audited, and really how that perception is reflected in the public tells the public how effective that work is going to be. If an investigation is received by the agency with good, constructive criticism--``We are going to fix these things''-- then that is the kind of dynamic that the public should celebrate. On the other hand, when someone takes the attitude that ``We are as good as we are, and we don't need to be any better, and you are meddling or you are trying to improve something that doesn't need to be improved,'' that is a bad sign. And, really, what we are trying to do here today is embrace the attitude that we can make something that is good better; that we can foster the independence; that we can promote the aggressive stance that IGs must take on behalf of the public and make sure that their work is, in fact, consumed by the public. One of the provisions in the law that I have introduced deals with that public consumption of the product. The way an audit gets juice and heat behind it is for the public to understand what has happened. I was surprised to learn how many agencies did not have the IG's link on their home page. It is a big problem that you have to search for Inspector General reports on the Internet, that they are not immediately available to anyone who wants to see what the Inspector General has found. And, frankly, they ought to also put on the home page what the response to that finding was and whether or not the findings have been addressed. I notice in some of the testimony that we are going to hear today that there is talk about potential savings that have occurred. Well, ``potential'' is not a good word for an auditor. We want to be much more exact than ``potential.'' I think we need to begin to turn the page on accountability on the Inspector General corps and say to the agencies in a public way, ``You must tell us if you have, in fact, implemented the findings of your Inspector General. And if not, why not?'' That is an important part of this public accountability piece that the Inspectors General represent. I have had the opportunity to read hundreds of pages of IG reports and GAO reports since I have been here. My staff accuses me of being a little weird because I like to read IG reports and GAO reports. I would rather read that work than any other work that they bring to me. As I read them, I am struck by the level of professionalism that we have in the Federal Government in this area. There are some bad apples, and I think the legislation that the Ranking Member has proposed and the legislation that I have proposed try to get at a system where the bad apples are easily discovered and easily removed from the orchard so that we can celebrate the professionalism of the Inspectors General within the Federal Government and the very important work they do. I thank you all for being here today and for your testimony, and I look forward to an opportunity to ask questions. Thank you, Mr. Chairman. Chairman Lieberman. Thanks, Senator McCaskill. I want to certify for the record that in the time I have known you, I have never thought of you as ``weird.'' [Laughter.] Senator McCaskill. Thank you. Chairman Lieberman. Incidentally, I do want to say that Senator Collins and I and this Committee like to legislate. We feel we have a responsibility to legislate when there is a need to do so. So I want the witnesses to know that your testimony is important to us because both in the proposal of Senator Collins that I am privileged to cosponsor and Senator McCaskill's legislation, there are recommendations for legislative changes that relate to the IGs. And we are going to move ahead this year and try to mark those up, so your testimony will have direct relevance to that. Our first witness is Clay Johnson III, Deputy Director for Management of the Office of Management and Budget. This position--I believe in Administrations before this one as well--has been the one--certainly in this one--that has tended to be the coordinator and overseer and including some Committee responsibility for the Inspectors General. So, Mr. Johnson, I thank you for being here, and we welcome your testimony now. TESTIMONY OF HON. CLAY JOHNSON III,\1\ DEPUTY DIRECTOR FOR MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET Mr. Johnson. Mr. Chairman, Senator Collins, Senator Akaka, Senator McCaskill, thank you for having me up here. I am, by Executive Order, the Chair of the President's Council on Integrity and Efficiency (PCIE) and the Executive Council on Integrity and Efficiency (ECIE). Also, by statute or Executive Order, I am the Chair of the CFO Council, and the CIO Council. I am the Vice Chairman of the Chief Human Capital Officer Council. I am the Chair of the Chief Acquisition Officer Council. I am involved in a lot of different entities in the Federal Government whose job it is to make sure that the money is well spent, that we get what we pay for. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Johnson appears in the appendix on page 37. --------------------------------------------------------------------------- Chairman Lieberman. Tell us just for a moment about PCIE and ECIE, what they are, for the record. Mr. Johnson. They were created by Executive Order, I think in 1996, by President Clinton. The PCIE is a council or association of the Senate-confirmed, presidentially appointed IGs for the larger agencies. I think there are 26 of them. Then the ECIE is the same thing for the not-presidentially appointed but the head-of-agency appointed IGs, the smaller agencies. And it is the entity by which they come together and look at common opportunities, common problems, training, orientation, legislation, that sort of thing. And my involvement is I am the Chair and the person that really runs each of those is the vice chair of each of them--who is an IG--and I used to think that my involvement was largely non-substantive until the last year or year and a half, and it has become a significant part of what I do because of all these issues that you are talking about here in this hearing. My association with the IGs is something I enjoy as much as anything I do. There has been reference here to the quality and quantity of the work of the IG community, and it is superb. And I really enjoy being associated with it. I like fixing things. I like bringing order to chaos and method to madness, and that is what IGs do. And we want the money to be better spent. We want to achieve desired goals. You talk about liking to legislate. What we like doing in the ``M'' world at OMB is we like to take the policies that have been agreed to and the money that has been appropriated and make sure that the money is well-spent to implement the policies to achieve the desired outcomes. And the CFOs, CIOs, etc., and the IGs help do that. You talked about how important the IGs are to the Legislative Branch. They are equally important to the Executive Branch. They are the means by which the heads of agencies understand what is not working as well as it should or as well as desired in their agencies, and so energies can be focused on fixing those things. I look forward to working with you on all the different legislation that has been proposed to see if there are opportunities to make the IG community create the potential for it to be even more effective. Some parts of the legislation I disagree with. Some I agree with. Some I agree with the goal but think there might be a different way of doing it. My general statement is: I agree with the findings of the report by the General Accountability Office when they had their open forum, I think last fall or some time, that report, I agree with the findings there. One of the things I would like to comment on here at the beginning is about trying to guarantee certain things for the IG community, guaranteeing certain levels of independence, guaranteeing a certain relationship between the agency head and the IG. And I do not think we can legislate a level of independence or we can legislate a relationship between an agency head and an IG. It is just impossible. I think the key is that we are very clear about what we expect IGs to do, that there are high levels of accountability, there is a lot of clarity, that we want lots of--the numbers that were quoted here earlier, $9 billion and $8 billion. We want lots of identification of waste, fraud, and abuse, lots of recommendations about how to fix it, lots of follow-through on whether agencies, in fact, did what they said they were going to do and so forth. We need lots and lots of that. We need lots of transparency, lots of assurance that is happening. I think we need a very clear definition of--not prescriptively, but in general--what we think an effective working relationship is between an IG and an agency and what is the desired relationship, what is too much dependence, too much independence. And then I think we need to hold IGs and agency heads accountable for accomplishing those goals. That is the way we achieve desired outcomes as opposed to trying to guarantee in legislation that a level of independence will be this and not this. There are mechanisms in place--the Integrity Committee, hearings, notification of Congress, and so forth--that guarantee that if an agency head or an IG gets off base, there are mechanisms that bring that to everybody's attention to get it back on track. If we are not having those hearings, if we are not finding that people are challenging the nature of an IG and agency head relationship, something is wrong, our IGs are not being aggressive enough, our agency heads are being too compliant, and so forth. So let's not be surprised if we waver off track here on occasion. That happens when people are involved, and the key is are there mechanisms in place to bring it to everybody's attention very quickly so we can get it back on track. In general, I believe that it is important that IGs not be feared by their agency heads. As David Walker said, their goal at GAO is to be respected, not feared. I do not like the idea, as Mr. Devaney points out in his written testimony, of the dog metaphors, but it is important that IGs not be lapdogs or junkyard dogs. And I think it is very important that independence be primarily a focus of what the findings of an IG are, not what kind of personal relationship they have with the agency head. I know two really well-respected IGs, and one would not be troubled by going to the agency head's Christmas party. The other one would not think of going to the agency head's Christmas party. And yet they are both exceptional IGs. That says to me that how they manifest their dependence or independence of the agency head has little to do with the quality of their work. Anyway, those are my comments. Sorry I ran long, but it is with great honor that I am here to talk to you about these IGs and to work with you subsequent to this hearing on the legislation that we will be considering. Chairman Lieberman. Thank you, Mr. Johnson. That is a good beginning, and I know we will have questions for you. Next is the Hon. Glenn Fine, Inspector General of the Department of Justice. Thanks for your good work, and welcome. TESTIMONY OF HON. GLENN A. FINE,\1\ INSPECTOR GENERAL, U.S. DEPARTMENT OF JUSTICE Mr. Fine. Thank you. Mr. Chairman, Senator Collins, Members of the Committee, thank you for inviting me to testify at this hearing as the Committee considers how to strengthen the independence and accountability of Inspectors General. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Fine appears in the appendix on page 39. --------------------------------------------------------------------------- IGs are given broad authorities to perform a challenging job, and I believe that, overall, most IGs have performed their responsibilities independently and effectively. But I believe that it is useful to regularly assess IG authorities, performance, and accountability, particularly because of the importance of their work and the impact they can have throughout the government. In my testimony today, I will discuss my personal views on the proper role of an effective Office of Inspector General. Next I will comment on various proposals to strengthen the role of IGs, including proposed amendments to the IG Act. Finally, I will briefly discuss a limitation on the jurisdiction of the Justice Department OIG that I believe is inappropriate and should be changed. First, with regard to the role and attributes of an effective IG, the IG Act notably describes our offices as ``independent and objective'' units within Federal agencies. This is a critical requirement for an Inspector General. We must be and we must be perceived as both independent and objective. While OIGs are part of their agencies, we are different from other components within the agency. For example, while we listen to the views of the agency and its leadership, we make our own decisions about what to review, how to review it, and how to issue our reports. At the DOJ OIG, we independently handle contacts outside the agency, such as communicating with Congress and the press separately from the Department's Offices of Legislative and Public Affairs. An important role for an Inspector General is to provide transparency on how government operates. At the DOJ OIG, we believe it is important to release publicly as much information about our activities as possible, without compromising legitimate operational or privacy concerns, so that Congress and the public can assess the operations of government. An Inspector General also must be tenacious. It is not enough to uncover a problem, issue a report with recommendations, and move on to the next topic. We must continue to examine critical issues again and again in order to gauge the agency's corrective actions and improvements over time. In carrying out our responsibilities, we also must recognize that the job of an IG is not designed to make us popular. I am sure that I am not the most popular person in the Justice Department. However, I hope our work is respected and that we are viewed as being tough but fair. By the nature of the role, IGs cannot please everyone, nor should we try. We regularly are accused of being either too harsh or too soft, of acting like junkyard dogs or lapdogs, of being out to ``get'' someone or out to ``cover up'' a problem, of engaging in a witch hunt or a whitewash. Sometimes we are described in each of these ways by different sides in the same matter. Ultimately, our goal should not be focused on whether our work makes our agency look good or bad, but whether we help improve its operations. Our role is to be independent, to objectively identify problems, and to provide effective solutions to correct deficiencies. To be an effective IG, it is important to develop a professional working relationship with agency leadership. I have been fortunate to have professional relationships with all of the Department leaders during my tenure. Since I have been the IG, the Justice Department has had three Attorneys General and four Deputy Attorneys General--all of whom have appreciated the importance and difficulty of the OIG's work. I met with them on a regular basis, but none of them ever attempted to direct or interfere with our work. They recognized that, to be effective and credible, the OIG had to be scrupulously independent in how we conducted our work and reported our findings. In general, I believe the IG Act has worked well and provides IGs with the tools and independence necessary for us to perform our mission. Nevertheless, I believe it is useful to examine proposals to strengthen the role of Inspectors General, and I appreciate this Committee's willingness to consider that topic. I will now turn to various proposals that have been advanced to amend the IG Act and will offer my personal view on additional changes I believe the Committee should consider. One proposed change to the IG Act would provide Inspectors General a fixed term of office, subject to possible reappointment, and removal during that term only for cause. In my mind, the need for and benefits of this change is a close question. The change seeks to strengthen the independence of IGs by giving them more job security. However, I do not believe that the threat of removal currently undermines the independence of IGs or the willingness of IGs to address the hard issues or to confront their agencies when necessary. In addition, the proposal could create a different problem. If an IG seeks reappointment near the end of his or her term of office, he or she would be dependent on the recommendation of the agency head, which could create both a conflict and an appearance of a conflict. While I agree that ensuring the independence of IGs is critical, I am not convinced that this proposed change would accomplish that important goal without creating additional problems. I believe that the most important issue that can directly undermine the effectiveness of IGs relates to the adequacy of resources. On the whole, I believe that OIGs have been underfunded, particularly when compared with the growth of our agencies and the increased demands placed on us. While the size of OIGs have remained flat, our agencies and our responsibilities have grown dramatically. I believe that with the added responsibilities and the growth of the agencies, OIGs should receive a commensurate increase in resources, which has not happened. I am proud of the work of OIG employees and their dedication in handling their many important assignments. But our resources are significantly constrained, and I am concerned that inadequate resources can affect both the thoroughness and timeliness of projects that are by necessity staffed more thinly than warranted. While I recognize that this Committee cannot solve the resource issue on its own, I agree with the proposal to allow OIGs to submit their budget requests directly to OMB and Congress and to independently make the case for resources. As discussed in my written statement in more detail, I also support other proposed changes to the IG Act, such as providing a dedicated source of funding for the IG training academies, addressing the issue of IG pay, which has lagged significantly behind the salaries of other Federal employees, and amending the IG Act to allow ECIE IGs to petition the Attorney General for statutory law enforcement powers. Finally, in line with the intent of this hearing to consider ways to strengthen the role of Inspectors General, I want to raise an issue that affects the Justice Department OIG only, but which I believe is a critical issue that contravenes the principles and spirit of the IG Act. Unlike all other OIGs throughout the Federal Government who can investigate misconduct within their entire agencies, the Justice Department OIG does not have complete jurisdiction within the Department. We do not have the authority to investigate allegations against DOJ attorneys acting in their capacity as lawyers, including such allegations against the Attorney General, Deputy Attorney General, or other senior Department lawyers. Instead, the DOJ Office of Professional Responsibility (OPR) has been assigned jurisdiction to investigate such allegations. As I discuss in my written statement, the limitation on the Justice Department OIG's jurisdiction arose from the history of the creation of OPR and the OIG, and now only Congress can change it. For several reasons, I believe Congress should remove the limitation of the Justice Department OIG's jurisdiction. First, the current law treats DOJ attorneys differently from all other DOJ employees and from all other Federal employees, all of whom are subject to the jurisdiction of their agency's OIG. No other agency has a group of its employees carved out from the oversight of the OIG. The limitation on the Justice Department IG can create a conflict of interest and contravenes the rationale for establishing independent Inspectors General throughout the government. This concern is not merely hypothetical. Recently, the Attorney General directed OPR to investigate aspects of the removal of U.S. Attorneys. In essence, the Attorney General assigned OPR--an entity that does not have statutory independence and reports directly to the Attorney General and Deputy Attorney General--to investigate a matter involving the Attorney General's and the Deputy Attorney General's conduct. The IG Act created OIGs to avoid this type of conflict of interest. In addition, while the OIG operates transparently, OPR does not. The OIG publicly releases its reports on matters of public interest, but OPR does not release its reports publicly. Finally, dividing oversight jurisdiction within the Justice Department between the OIG and OPR is inefficient and duplicative. In sum, I believe that the current limitation on the Justice Department OIG's jurisdiction is inappropriate, violates the spirit of the IG Act, and should be changed. Like every other OIG, the Justice Department OIG should have unlimited jurisdiction within the Department. I believe Congress should amend the IG Act to give the Justice Department OIG that authority. In conclusion, I appreciate the Committee's willingness to hold this hearing. Inspectors General perform a valuable and challenging service, but we, like our agencies, should always consider ways to improve. Thank you for examining these issues, and thank you for your support of our work. That concludes my statement, and I would be happy to answer any questions. Chairman Lieberman. Thanks, Mr. Fine. Very interesting statement. Again, we look forward to some questioning. Next is Hon. Earl Devaney, Inspector General of the U.S. Department of the Interior. Welcome, and please proceed. TESTIMONY OF HON. EARL E. DEVANEY,\1\ INSPECTOR GENERAL, U.S. DEPARTMENT OF THE INTERIOR Mr. Devaney. Mr. Chairman and Members of the Committee, I want to thank you for the opportunity to address the Committee this morning about several emerging issues that affect the unique role played by Inspectors General. My hope is that we will have ample time for a long overdue dialogue this morning about these important issues. I also want to make it clear that my testimony today reflects my own views, which may or may not be shared by my colleagues. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Devaney appears in the appendix on page 55. --------------------------------------------------------------------------- Mr. Chairman, I believe that the original IG Act and its subsequent amendments have effectively stood the test of time and have served the American public well. I do not think that a wholesale change of the Act is necessary. That having been said, however, I believe that there are a number of improvements that could be made to enhance the effectiveness and the independence of IGs. In particular, I would like to offer my thoughts about IG independence, IG pay, and IG budget submissions. Committee staff has informed me that you would also like to hear my views on the appropriate relationship between the IGs and their agency heads and the role that the Integrity Committee, established in 1995 by a Presidential Executive Order, plays in ensuring that ``someone is watching the watchers.'' Since I have experienced both difficult and excellent relationships with the Secretaries I have served with during my 8-year tenure at the Interior Department and since I have been a member of that Integrity Committee for over 5 years, I am in a position to informatively discuss these issues, and would be pleased to do so. I believe that an independent IG is someone who possesses both integrity and courage. I personally define integrity as not only being truthful and honest but consistently doing the right thing for the right reasons. Courage is easier to define, but in this context I am talking about the ability to ``speak truth to power.'' Given the dual reporting obligation that IGs have to both the Congress and the agency head, making somebody unhappy is not difficult to do. In fact, trying to make everybody happy is the fastest way I know of for an IG to get into trouble. Of course, it goes without saying that IGs should be selected without any regard to political affiliation and solely on the basis of demonstrated integrity and professional abilities related to the roles and responsibilities of this position. For instance, when I was appointed as an Inspector General, I had nearly 30 years of Federal law enforcement experience, and no one involved in my nomination process ever inquired about my political affiliation. Far too often, IGs are characterized as either being lapdogs or some type of attack dog. And as Mr. Johnson stated earlier, I reject that premise that either is a desirable trait of an independent IG, and I do not like the indignity of being compared to a dog on a regular basis. My own view is that an independent IG needs to strike a balance between being tough on the Department, when called for, and being equally willing to stand up and say that a particular program is running well or that allegations against a senior official are unfounded, when the facts warrant such conclusions. At the end of the day, an IG who consistently proffers professional, fact-based audits and/or investigations, without regard to whom they might offend, will end up meeting the standards of independence that the IG Act envisioned and that the American public deserves. Mr. Chairman, several pieces of pending legislation in both the Senate and the House would attempt to enhance IG independence by adding a specified term of office for an IG and a removal-for-cause provision. Personally, while I have no objection to these proposals, I do not think that they would either enhance or detract from my own ability to act independently. I am, however, attracted to the idea that the President should have to provide Congress with prior written notification together with an explanation of the reasons behind the removal of any IG. A reasonable time frame of 30 days would give Congress the opportunity to enter into a discussion with the Executive Branch concerning the circumstances of any removal. Of greater concern than removal, perhaps, is the recruitment and retention of highly qualified IGs. There is a huge pay disparity affecting the presidentially appointed and Senate-confirmed (PAS) IGs that needs to be corrected as soon as possible. I cannot overstate the effect this is having on IG morale, the long-term ability to attract the best candidates for IG positions, and the near-term potential for losing some of our best IGs. PAS IG salaries are currently capped by statute at Level IV of the Executive Schedule, currently $145,400, and are appropriately excluded from the bonus benefits of the performance-based pay system Congress established with the passage of the 2004 Defense Authorization Act for career SES. Of course, PAS IGs have, as a matter of practice, chosen not to accept bonuses from agency heads since the early 1990s to further preserve their independence. As a result, virtually all PAS IGs are paid at a level significantly below the average annual compensation of the SES personnel they supervise--currently capped at $168,000, excluding bonuses. Retirement annuities are equally affected. Considering that the average salary of a SES in fiscal year 2005 was $150,000, and the average SES bonus was $13,814, IGs frozen at the ES-IV level stand to make, on average, over $19,000 less than the average career SES member. Practically speaking, this results in both present and future IGs drawing lesser salaries than many of their SES subordinates. In my case, three of my seven SES subordinates earned more compensation than I did in fiscal year 2006. Obviously, this disparity is a significant concern for current PAS IGs and could soon have an adverse effect on the government's ability to retain its best and most experienced IGs. Perhaps more importantly, however, is the impact this pay disparity has on the willingness of qualified and talented Federal career executives to serve as IGs in the larger and more challenging Federal departments and agencies. My understanding is that the Administration expressed a willingness to support a pay raise for all PAS IGs to Level III of the Executive Schedule, which currently stands at $154,600. While this would appear generous, and something for which I and many other PAS IGs would be most grateful, I would strongly urge that PAS IG pay be adjusted to mirror the current SES cap and match any future increases of the SES cap. Of course, all PAS IGs should, in my opinion, continue to forego any bonus opportunities and thus would still be left with lesser compensation than their highest-level, highest- achieving subordinates. Bridging the significant salary gap to which PAS IGs are presently subject would enhance the attraction of IG appointments for the most qualified candidates and help prevent the most talented sitting IGs from leaving government service for more lucrative private sector positions. While I personally have never experienced any problems with the Secretary regarding my annual budget submission, I can certainly understand the interest by some of my IG colleagues in legislation that would have annual IG budgets submitted directly to OMB and/or Congress. This would have the obvious benefit of insulating IGs from the potential for many agency heads to retaliate with personnel or other resource cuts. Ironically, despite my propensity for upsetting Secretaries, I have routinely received decent support of my budget at the Department and OMB level with most cuts coming at the congressional level. In fact, I have often felt that the Secretaries I have served with have gone out of their way to avoid even the appearance of retaliation, regardless of our working relationship. This leads me to that relationship. A good working relationship between an IG and an agency head is essential. The relationship with the Secretary ought to be built on mutual respect and trust. An IG must be independent, but should never blindside or surprise the Secretary. I have always pledged not to surprise any of the three Secretaries with whom I have served and, to my knowledge, none has ever been caught unaware by the findings of our audits or investigations. While more than one Secretary has occasionally requested that I tone down my rhetoric, none has ever tried to tell me what to say. IGs are also responsible to do more than simply identify problems, but rather achieve that balance between criticism and commendation, which I spoke of earlier. Audits, to the extent possible, should highlight Department successes and be as solution-based as auditing standards allow. For example, because most problems we encounter are not unique to the Department of the Interior, my audit teams routinely include best practices from other Departments or the private sector in their audit recommendations. Our investigations often present an opportunity to inform the Department of how to prevent the reoccurrence of a problem. My view is that IGs have an equal duty to prevent fraud, waste, or abuse as they do in detecting it. My office's role in the 4-year task force investigation of the Abramoff scandal profoundly tested my relationships with two Secretaries. Quite understandably, my relationship with former Secretary Norton was negatively affected by the two separate investigations of Deputy Secretary Griles conducted by my office and our FBI partners, although I will allow his recent conviction and pending prison term to speak to the efficacy of those endeavors. While Secretary Norton and I disagreed about virtually everything concerning Mr. Griles, my relationship with Secretary Norton remained professional. On the other hand, Secretary Kempthorne has used this unfortunate scandal as an opportunity to foster an increased awareness and emphasis on ethics and integrity at the Department. I am impressed with his leadership in this area, and I believe that he and I have achieved the desired level of respect and trust for each other. Secretary Kempthorne has also come to understand that he can count on me to provide him with the facts, whether good or bad, which in turn helps him avoid the risks inherent in the tendency of well-meaning subordinates to overemphasize the positive. He and I both understand that it is not an IG's job to tell an agency head what he or she wants to hear but, rather, what he or she needs to hear. As I mentioned earlier, I have served on the PCIE/ECIE Integrity Committee for over 5 years. Although I have dropped several hints that my time on this Committee has been served, I have not found any of my colleagues eager or willing to take my place. The truth is that no one could possibly enjoy sitting in judgment of one's peers; it can be a very difficult role to play. That having been said, I can, without reservation, commend to you each individual that I have served with on this Committee. To a person, they have been highly professional, impartial, and interested only in arriving at the truth of each matter that has come before us. I would remind you that the Committee is always chaired by the FBI Assistant Director of Investigations, staffed by career FBI agents, and its members consist of three IGs and the Directors of the Office of Government Ethics and the Office of Special Counsel, and a staff member of the Public Integrity Unit attends each meeting in an advisory role. As I noted earlier, an Executive Order created this Committee in 1995, with a principal mandate of adjudicating allegations of wrongdoing against IGs. It is important to understand that every allegation is first screened by the Public Integrity Unit for criminal consideration. If that allegation does not rise to the level of a potential crime, it is then forwarded to the Integrity Committee for administrative review. From 1997 through June 30, 2007, the Integrity Committee has received 387 complaints against IGs. Of those 387 complaints, only 17 have resulted in the Committee ordering a full administrative investigation, usually conducted by another IG's office. Mr. Chairman, I have had a long and rewarding career in the Federal Government. My years as IG of the Interior Department, however, have been at once the most challenging, the most frustrating, and the most gratifying. I sincerely believe in the critical importance of the work IGs do, and I appreciate the interest that you and other committees in both the Senate and the House have shown in the work of my office and that of my colleagues. This concludes my written statement. I would be glad to answer any questions. Chairman Lieberman. Thanks very much, Mr. Devaney. Very helpful statement. Thanks for your public service. I couldn't help but comment to Senator Collins when you made the understandable statement that an IG should not be considered as either a lapdog or an attack dog that if we compared public opinion of the Federal Government with public opinion of dogs in general, I would say that the canines are ahead. [Laughter.] So I will thank you and Mr. Fine here for your doggedness, in the best sense of that term. The next witness is Eleanor Hill, a very familiar and respected person here. It is great to welcome you back here today in your capacity as a former Inspector General of the Department of Defense, a distinguished record of public service, which in the contemplation of this Committee reached its height when you were a Staff Director of the Permanent Subcommittee on Investigations of this Committee under the chairmanship of our distinguished former colleague and dear friend, Sam Nunn. So, Ms. Hill, it is good to see you, and we welcome your testimony. TESTIMONY OF HON. ELEANOR J. HILL,\1\ FORMER INSPECTOR GENERAL, U.S. DEPARTMENT OF DEFENSE Ms. Hill. Thank you, Mr. Chairman. It is especially great to be here this morning. Senator Collins, Senator McCaskill, Members of the Committee, good morning. Thank you for the opportunity to discuss the role of IGs in promoting good government. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Hill appears in the appendix on page 63. --------------------------------------------------------------------------- As you mentioned, I have had a long career in public service. It was a great privilege for me to be in public service for all those years, including my tenure as IG of the Department of Defense and also as the Vice Chair of the PCIE. But as the Chairman mentioned, I have to say I am especially pleased to be here today. This room holds many fond memories for me because of my long years of service with the Permanent Subcommittee on Investigations. I have great respect and appreciation for the work not only of that Subcommittee but also of this Committee. And so thank you again for the chance to return here this morning. My experience in government has convinced me that the statutory IGs play an absolutely critical--and unique--role in our Federal system. In creating IGs, Congress was driven by a need to provide objective, independent, and professional oversight on a sustained basis throughout the incredibly vast and complex operations of the Federal Government. In today's world, where new issues and new technologies further complicate those operations, the IGs, with their focused, professional expertise regarding Federal programs, are perhaps more important than ever before. Although the IG concept originated in the military context in 17th Century Europe and, as the Chairman mentioned, was brought to this country in the form of Baron von Steuben, the idea of a truly ``independent'' Inspector General, as we know them today, is a relatively recent modern phenomenon. Congress, and the IG Act of 1978, went far beyond the traditional military concept in creating IGs within Federal agencies and departments. The biggest and most critical difference is that military IGs continue to work within their chain of command. They do not have the statutory independence that set the Federal IGs completely apart, in my view, from other military and departmental oversight mechanisms. My work at the Pentagon when I was the IG with the military IGs brought home to me the importance of independence. Military IGs often requested that our office conduct top-level, particularly sensitive investigations since they did not believe that they had the independence needed to conduct an investigation that would both be and appear to be objective. I had similar conversations with some Defense agency IGs, who also are appointed and serve at the pleasure of their directors, without statutory independence. Those IGs recognized that in investigations of very senior officials or in audits of programs dear to the agency head, the statutory independence of a departmental IG is key to both the integrity of the inquiry and to the credibility of the findings in the Department, on Capitol Hill, and with the American public. I could not help but recall those conversations when I read reports last year that oversight of what has been termed the National Security Agency's ``terrorist surveillance program'' had been handled by the NSA IG, who has limited resources and no statutory independence, and not by the Department of Defense IG. In my view, that is exactly the kind of program where the oversight should have been conducted, from the very beginning, by the independent departmental IG. All of this underscores the fact that, more than anything else, independence goes to the heart of the IG mission. It is what makes IGs a critical and a unique link in ensuring effective oversight by both the Executive and the Legislative Branches. The IG Act provisions make the IG the most independent and the most unfiltered voice below the Secretary in any Federal department. As one example, IG testimony to Congress, unlike that of other Executive Branch officials, was not--at least in my experience--edited or approved by non-IG departmental or OMB officials before being delivered to Congress. Unfortunately, while the statutory protections for independence are excellent, they are not foolproof. Not all IGs felt as secure in their independence as I did. Operating under the same statute, some IGs are extremely independent while others have been less so. Other factors do impact independence. The department or agency head's view of the IG role and the relationship that develops between the IG and senior management is especially important. I was fortunate to work under two Secretaries of Defense who understood, appreciated, and accepted the role of the IG--Bill Perry and Bill Cohen. Secretary Cohen, of course, knew well about the IGs from his service on this Committee as a Senator. The IG's own experience and background can also be a factor. I had the benefit of becoming an IG only after being schooled for years in jobs where independent, fact-driven investigation was the norm. I was a Federal prosecutor, and I was a congressional investigative counsel on many inquiries that followed the strong bipartisan tradition of this Committee. IGs must be comfortable with their independence. They must fully understand its importance. They must be willing to exercise it, and they must be prepared to defend it, if necessary. IGs should be agents of positive change, but they must insist on doing so in an environment where independence is understood and respected. Congress must ensure, during the confirmation process, that those who would serve as the department or agency head and as IGs understand the IG mission and the statutory independence on which it rests. The success of the statute, the process, and the mission depends to a large degree on the quality and the judgment of the people entrusted with those positions. Congress itself also plays an important role in assuring independence, excellence, and effectiveness for the IGs. During my term as Defense IG, various congressional committees were extremely interested in what our OIG was doing in terms of oversight. Congress needs to maintain focus on what IGs are doing and what it is that they are--or are not--finding. Both our OIG and the senior management of the Department of Defense were very aware of the congressional interest in our work. In those circumstances, it would have been very difficult for management to undercut our independence without incurring the wrath of those committees--something which most departments clearly want to avoid. At its core, the IG Act relies on the tension that usually exists between Congress and the Executive Branch to reinforce and protect IG independence. For the concept to work, Congress has to be an active player, remaining alert to IG findings and fully engaged in exercising its own oversight authority. In my mind, that is perhaps the single biggest non-statutory factor that impacts IG independence. Congress has to be willing to insist on objective oversight from the IG, separate and apart from the views of any department and any Administration. When that happens, the IG must walk a fine line between what may be the very different views of Congress and the Department. The overwhelming incentive in those circumstances is for IGs to resist attempts at politicization from either side. The best way to succeed when answering to these two masters is to conduct independent, professional, and fact-based inquiries--which is, of course, what we want IGs to do. Some have suggested additional ways to strengthen the IGs, and both Senator Collins and Senator McCaskill have mentioned their proposals. Generally, I support all reforms that are designed to bolster IG independence, and I have mentioned some of those in my statement. One example, for instance, is that I very strongly support the idea of the direct transmittal of IG budget appropriation estimates and requests to both OMB and Congress because, obviously, it supports and bolsters IG independence. I just want to briefly mention accountability. Independence unquestionably gives IGs a great amount of power, and with that power comes the responsibility to use it wisely and in keeping with the highest ethical and legal standards. While we hope that all IGs take the high road, the system has to be capable of addressing allegations of abuse of power within the IG community. The public must be assured that those who enforce high ethical standards on others are themselves held to those same standards. This was a focus of PCIE discussion in the mid- to late- 1990s. In 1995, the PCIE created an Integrity Committee to review allegations of misconduct by IGs and Deputy IGs. While well intended, the Committee initiative lacked clear investigative authority, was limited by insufficient resources, and encountered recordkeeping problems. Those problems and increasing public concerns about accountability prompted an effort to formally address accountability in the Executive Order that Mr. Devaney mentioned. Some have now proposed consolidation of the PCIE and the ECIE into a single statutory council. My experience with the PCIE was, frankly, mixed. The Federal IG community is large and clearly not homogeneous. There are huge differences in size, in capabilities, and in focus among the various IG offices. The issues that were of paramount importance in some large offices had little relevance to the smaller ones. Some IGs were very accustomed to dealing with Congress. Others had relatively minimal contact. While the PCIE and ECIE do facilitate communication across the community and consensus on internal IG issues, it was difficult in my memory to develop a community position on important governmentwide issues of effectiveness and efficiency. Statutory authorization of an IG Council would be a step in the right direction. Working together, IGs have tremendous potential for the identification of common governmentwide problems and the search for common governmentwide solutions. A statutory mission for the council, coupled with appropriate funding and resources, could help the IG community realize that potential. Any statutory IG Council should also have statutorily mandated reporting responsibilities, not just to the President, but also to the Congress. The independence that has been so crucial to the work of individual IGs should be available to support independent and professional governmentwide assessments by an IG Council. In closing, let me just note that I have been genuinely dismayed by reports in recent years of less congressional oversight and less independence and professionalism in the IG community. As an investigator, I know better than to prejudge the accuracy of reports without access to all the facts, and so I do not know to what degree all those reports are true. I can only say that for the good of the country, I hope they are not. My own experience over the years has convinced me that the rigorous but always objective and fair exercise of the congressional oversight power, bolstered by the work of an independent and professional IG community, is clearly the surest way to promote integrity, credibility, and effectiveness in government. The American people deserve and, quite rightly, expect no less. Thank you and I welcome any questions you may have. Chairman Lieberman. Thank you for a very thoughtful statement. Our last witness this morning is Danielle Brian from the Project on Government Oversight. Tell us what--of course, it is hard not to notice that it spells POGO. Ms. Brian. Yes, it does. [Laughter.] Chairman Lieberman. Which, for those of us of an earlier generation, brings back happy memories of a particularly astute cartoon strip. Ms. Brian. That is not unintentional, the acronym. Chairman Lieberman. Thanks, Ms. Brian. Welcome. TESTIMONY OF DANIELLE BRIAN,\1\ EXECUTIVE DIRECTOR, PROJECT ON GOVERNMENT OVERSIGHT Ms. Brian. Thank you, Chairman Lieberman and Senator Collins, for inviting me to testify. We are an independent nonprofit organization that has for 25 years investigated and exposed corruption and misconduct in order to achieve a more accountable Federal Government. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Brian appears in the appendix on page 73. --------------------------------------------------------------------------- The subject of this hearing raises a number of timely issues. IG offices play a tremendously important role in advancing good government practices, but only if they are led by independent and qualified IGs and those IGs are allowed to do their job. Next year will be the 30th anniversary of the 1978 Inspector General Act, and this is the perfect time to determine the strengths and weaknesses of the IG system. The intent of Congress in creating these watchdogs--with my apologies to Mr. Devaney--was to have an office within the agencies that would balance the natural inclinations of agency or department heads to minimize bad news and instead give Congress a more complete picture of agency operations. That intention is clearly shown by Congress' decision to break with tradition and create a dual-reporting structure where IGs would report not only to the agency head, but also directly to Congress itself. It is this independence from the agency the IG is overseeing that gives the office its credibility. Not only the actual independence, but also the appearance of independence allows the IG's stakeholders, including the Congress, the agency head, the IG's auditors and investigators themselves, and potential whistleblowers to have faith in the office. Over the past year, POGO has held monthly bipartisan Congressional Oversight Training Seminars for Capitol Hill staff, and we regularly tell participants that the IGs at agencies within their jurisdiction can be important allies and sources of honest assessments. Unfortunately, we also have to point out that not all IGs are well qualified or appropriately independent. I have the honor today of sitting on this panel with model Inspectors General. However, in the past few years, the ranks of the Nation's IG community have not always been filled with such stars. Investigations of the current NASA IG and former Commerce, Postal Service, and HHS IGs have substantiated allegations of improper conduct by those offices. Some of the types of improper conduct included illegal retaliation against IG employees, not maintaining the appearance of independence required of an IG, and interfering with IG investigations. At the same time, several IGs have suffered retaliation for doing their jobs too well. In addition to the formerly mentioned Smithsonian IG, the Special Inspector General for Iraq Reconstruction, the GSA and Legal Services Corporation IGs, as well as the former Homeland Security IG, have all suffered some form of retaliation--ranging from budget cuts by their agencies to personal attacks and even threats to eliminate their office entirely. The House Committee on Oversight and Government Reform has created a Fact Sheet outlining these instances, and I request that it be submitted for the record.\1\ --------------------------------------------------------------------------- \1\ The Fact Sheet appears in the Appendix on page 76. --------------------------------------------------------------------------- Chairman Lieberman. Without objection. Ms. Brian. While POGO believes improvements can and should be made to the IG system and we applaud the Committee for holding this hearing, any changes to that system need to be very careful and deliberate. The balance between independence and accountability is a difficult one to maintain. On the one hand, an IG must be afforded the opportunity to pursue audits and investigations without fear of reprisal. On the other, there needs to be enough accountability that an IG does not pursue a partisan agenda or become otherwise ineffective. Every legislative change needs to be considered through both prisms to ensure it does not have unintended consequences. POGO is in the beginning stages of a major investigation into the IG system to determine best practices as well as weaknesses. There are significant unanswered questions, one of which is the question of who is watching the watchdogs, and we look forward to presenting you with our findings in the future. There are, however, a few improvements to the system that we have already determined make good sense. The first is to better ensure that people chosen to be IGs are of the caliber of those sitting on this panel. The recent improper conduct to which I referred above has made it clear the process of selecting IGs, unique people who can thrive in the unpopular job of being an Inspector General, perhaps needs to be improved. During the Reagan Administration, a small group of IGs from the PCIE used to recruit and screen IG nominees. They then supplied lists of candidates from which the White House could select. This peer review helped ensure that unqualified or partisan people were not placed in the role of IG. Congress should consider recreating and formalizing that model. The second improvement is that presidentially appointed IGs should have their own General Counsel's office. While most do, we know of at least one that does not--the Department of Defense IG. As a result, the DOD Office of Inspector General has relied on lawyers assigned to it by the Pentagon's General Counsel for legal advice. You can see how this could significantly undermine the independence of an IG: A General Counsel's role is to protect the agency, whereas an IG's role is to investigate it if need be. Furthermore, General Counsels have the power to undermine IG investigations because they affect such decisions as criminal referrals and what to redact from documents released through FOIA. I realize that for many of the smaller ECIE IGs, having their own General Counsel might double the size of their office and could unnecessarily create a new bureaucracy. One solution to this dilemma might be to allow small ECIE IGs to use the General Counsel's office of a PCIE IG for necessary legal resources, or perhaps to create a General Counsel's office to be shared by the smaller ECIE IGs, rather than turning to the counsels of their own agency. Another improvement, and a way to mitigate any possible bias caused by being appointed by the President or agency head, is to create a term of office longer than 4 years and to stipulate that an IG can only be removed for specific cause. I respect and understand the point that Mr. Fine made on this that it does raise important questions, but our concern and our support of this idea is focused more on the IGs that enjoy less--that have a weaker stature within their agency or in the public eye or in the Congress than those IGs that are here. There are many IGs that do not enjoy the kind of strength that the IGs here have, and we are concerned about those IGs in particular with this provision. A further improvement is to allow IGs to submit their budgets directly to both OMB and Congress, and we absolutely support that, especially because it will ensure for Congress that the IG's budget is commensurate with the size of the agency they are overseeing. Finally, it is clear that IGs need to be paid in accordance with their position of responsibility. There are a number of problems with the pay system for both PCIE and ECIE IGs, which have been discussed, but it appears fixing the pay problems would be more akin to housekeeping than significantly changing policy and should be addressed quickly by the Congress so that these issues do not dissuade good and qualified people from becoming IGs. Legislation introduced by Senator Collins, Senator McCaskill, and Representative Jim Cooper are all important steps toward making the IG system stronger. Even with the perfect legislation, however, the IGs will only thrive when the relevant congressional committees are actively engaged with their offices and regularly ask them to report on their findings. I look forward to presenting you with POGO's investigative findings once they are complete and to working toward implementing these recommendations. Thank you. Chairman Lieberman. Thanks, Ms. Brian. There is a vote that apparently will go off around 11:30 a.m., so I would like to limit our questioning to 5 minutes each so each of us can get a chance before we have to go. Ms. Brian, let me briefly start with you. You cited an interesting earlier practice in your testimony under which the PCIE would prepare a list of qualified candidates for IG openings, and then the selection would be made from that list. Is your suggestion of that based on a concern that in recent times the IGs have either been less qualified or less partisan than you would like them to be? Ms. Brian. Or perhaps more partisan I think is the concern. There have been a couple---- Chairman Lieberman. Excuse me. I do mean ``more partisan.'' Ms. Brian. There have been a few instances where there really are questions about the qualifications of the IGs that were appointed and whether their appointment was more because of relationships they had with the White House or people in the Administration than their real qualifications for the job. Chairman Lieberman. Yes. So, in fairness, it may not, as your answer suggests, be partisanship so much as lack of independence. Ms. Brian. Yes, absolutely right. Chairman Lieberman. Right. Three of the witnesses--Mr. Fine, Mr. Devaney, and Ms. Brian--have commented on the idea of a fixed term for the IGs as a guarantee of independence. Ms. Hill and Mr. Johnson, I wanted to ask you if you have an opinion on that. Ms. Hill. Mr. Chairman, I have said that I would support a fixed term. I agree with Mr. Fine that there are pluses and minuses to it. The obvious minus is if you get someone in there that is not very good, you are going to have that person in there for a while. But I believe that a fixed term, coupled with termination for-cause in the statute so that there is some guidance as to what grounds you would have to have to terminate somebody, would bolster independence. I would support that. Chairman Lieberman. Right. Mr. Johnson. Mr. Johnson. I am opposed to the idea of a fixed term and the idea of dismissal for cause only. The reasons, the causes that have been suggested would not have applied to any of the IGs that people have been suggesting be replaced. The GAO assembled that group of people several months ago. It was the opinion of the vast majority of these very informed people in this forum that a term accomplished nothing, in fact, it might even be dysfunctional. The key is that there be accountability for performance. We talk about the potential for this and the potential for that. I do not think anybody is suggesting that, in fact, there is not independence of findings in what the IGs are doing. We talk about there have been allegations of dependence or not enough independence, but there has never, to my knowledge, been a finding by the Integrity Committee or any other entity that, in fact, we haven't had fully independent investigations by the existing IG community. And I do not think that there is a problem that warrants a term, and I think it is the opinion of the vast majority of the people that have looked at it that a term and a listing of causes buys you anything. Chairman Lieberman. Thanks. Mr. Fine, let me---- Ms. Hill. Mr. Chairman, can I just add to that point? I think independence does not just go to findings. It also goes to the willingness to initiate the investigation and cover all the issues. Chairman Lieberman. Right. Ms. Hill. And as I mentioned, the NSA case is an example of where there was apparently not sufficient independence to conduct that kind of oversight. Chairman Lieberman. That is an important point. Mr. Fine, you cite in your testimony this anomaly in the law that prohibits you from investigating lawyers at the Department of Justice, and you recommend that we eliminate that exception, which makes them the only group so protected in any agency. From my point of view, you make a very strong argument. I am interested to ask you the kind of question my law professors used to ask me. What is the argument on the other side? Mr. Fine. I think the argument on the other side is that lawyers are different. They have specialized duties, and you need a special office to look at the conduct of lawyers. And you do not want to chill the conduct of lawyers by being too aggressive about your oversight of them. In addition, it has to do with the historical practice, and OPR has existed for a while and has experience in this realm. I think those arguments are not persuasive. They remind me of the arguments that had to do with our jurisdiction over the FBI. We originally did not have jurisdiction over the FBI, and they said that they were too special, that they were somehow different, that they had to look at their own misconduct, and that the IG should not come in and look at FBI actions. I think that was wrong, and I think that has been proved wrong by the experience since we did get jurisdiction over the FBI in 2001. I think the same principles should apply to lawyers in the Department of Justice. There should not be this carve-out of a special class that is not subject to the jurisdiction of the Office of the Inspector General. Chairman Lieberman. I agree with you. And just finally, am I correct that, notwithstanding that, in response to your request you are now involved in the investigation of the supervisors in DOJ who were involved in the firing of the U.S. Attorneys? Mr. Fine. Yes. When we learned about the assignment to OPR, we objected and said that we thought it was our jurisdiction. We discussed it. There was a dispute. Eventually, because of the unique circumstances of this, we agreed to do a joint investigation with OPR. So we are jointly investigating this matter. It is moving forward. But in my view, it is an example and an instance, an illustration of why the OIG, the IG, should have unlimited jurisdiction throughout the Justice Department, just like every other agency. Chairman Lieberman. Thank you. Senator Collins. Senator Collins. Thank you. Mr. Johnson, recently there was a dispute between the head of GSA and the IG concerning the budget for the IG. That became public only because the IG went public to complain about the budget cuts. Some of the witnesses here today have recommended that the IGs' submission of the budget requests go not only to OMB but to Congress. That way we would always know if the budget has been cut by the agency head before it is presented to us. What is your judgment, what is your opinion on having the IG do a direct budget submission not only to OMB but to Congress? Mr. Johnson. I believe that an IG office is part of an agency, and you have to look at the total budget for each agency, and that includes the IG operation. Just like at Social Security, there are disability claims, investments that can be made or not. In the disability claims, people at Social Security do not submit a separate budget to Congress or separate budget to OMB, separate from the Social Security Administration, or the IRS does not submit a separate budget to Congress for auditing of people's tax returns and so forth. It is done in the context of the overall Treasury budget. So I believe that it should not be a separate submission. I think it ought to be part of the agency's submission. I think there should be lots of transparency about what budget is being recommended this year versus prior years so that the Congress has that information before it. But I do not believe it should be an independent submission. Senator Collins. Ms. Brian, I want to follow up with you on the issue of the effectiveness of IG offices. There are some IG offices in smaller agencies that are extremely small. They have maybe one person, literally, or two people. Several years ago, I proposed legislation to consolidate some of those smaller IG offices. For example, I remember there was one for the National Endowment for the Arts and a separate one for the National Endowment for the Humanities. So I proposed combining those into a larger office that would have more critical mass. My proposal went nowhere on that. It turned out every agency had a stake in having its own IG. So we still have this problem where we have very small offices, literally in some cases one- or two-people offices, that really cannot accomplish much because they do not have a critical mass. What is your judgment on whether we should take a look at some of the smaller IG offices and try to consolidate them? Ms. Brian. Senator, I think that is an excellent question. I do not have an answer to it yet. It is the kind of thing that we would enjoy looking at and coming back to you with a recommendation. But I think the points you are making are very well taken. Senator Collins. I really hope you will come back to us on that. It would help us if an outside group found that it was a good idea to overcome the bureaucratic turf battles that always occur whenever you try to do consolidation. Ms. Hill, I want to follow up with you on the issue that has been raised about whether the IG offices need separate General Counsels so that they are not borrowing from the agency because DOD does not have a separate counsel for the IG's office. Ms. Hill. Right. Senator Collins. You served very effectively as the DOD IG. Did you feel hampered by the lack of your own General Counsel, or did it work fine for you? Ms. Hill. Senator, in our particular circumstance, it worked. And I will tell you, when I became IG, my knee-jerk reaction was: This is not going to work; I need to have my own counsel. However, I had a 1,500-person shop at the time, and I wanted to take a few months to make sure I knew what was working in the organization and what was not before I made major changes. So I gave everything a few months to watch. The General Counsel issue was one of them. There was strong sentiment in the IG office senior leadership, the professional long-term people, that it was a good thing to have a lawyer that was a Deputy General Counsel of the Department of Defense. That lawyer is housed in the IG's building right down the hall from the IG, serves daily under the IG, and has a team of lawyers serving under him. So there are about seven or eight lawyers there. I watched it for several months, and it worked in our circumstances. They argued that it was good to have someone who could get the input from the other much larger General Counsel's office at the Pentagon on procurement issues, contracting issues, and other very technical issues. You have the benefit of getting their expertise because you are part of that office. It worked for us because, one, we had a very good lawyer there who had been with the IG for a long time and really was loyal to the IG. I never sensed there was any division of loyalty. Second, the General Counsel at the time for the Department of Defense was a very good General Counsel who understood and appreciated IG independence. I had a very good relationship with her. She never tried to tread on our territory. And, third--and this probably made me feel the most comfortable--I was a lawyer, and I was a fairly experienced lawyer. I had been a prosecutor for 6 years. I had been in congressional oversight for 15 years. I knew the IG issues. So I was not reluctant to question my lawyers and probe and push them back a little and do the kind of things that you would want to do to make sure you are getting solid, independent advice. Had I not been a lawyer, I might have felt differently. So in our unique situation, it worked. On the other hand, as a rule institutionally, I will tell you that I would probably say my recommendation would be that IGs should have their own counsel. I think our situation was unique at the time. I do not know if that situation still exists today because it was dependent on the IG's background, on the Department's attitude, on the person that was in the job--all of which can change very easily. Senator Collins. Thank you. Chairman Lieberman. Thanks, Senator Collins. Senator Akaka. Senator Akaka. Thank you very much, Mr. Chairman. Mr. Johnson, good to see you again. Over the past year and a half, Mr. Johnson, the OPM IG, at your request as head of the PCIE, has been investigating Special Counsel Scott Bloch, who is a member of the PCIE but not an IG. To my knowledge, this is the first investigation of this kind. Do you believe any change should be made to the PCIE or Integrity Committee structure to address this type of investigation? Mr. Johnson. Well, there is a particular issue with investigation of a Special Counsel because there is no mechanism for inspecting complaints against a Special Counsel, and they could not inspect themselves. And so we thought the best thing to do was to help the Office of Special Counsel create an Economy Act agreement with an IG's office to come in and do the inspection of the Office of Special Counsel. So one issue is how do we deal with future complaints against the Office of Special Counsel, or the Office of Government Ethics is another one that we have to deal with. That is one issue. Another issue is does the Integrity Committee apparatus need to be modified or enhanced or something, and I think the second issue there is a bigger issue, potential issue, than the first one. We probably need to do something to make sure there is a formal mechanism for dealing with complaints against the Special Counsel and the Office of Government Ethics in the future to clarify that. On the question of does the Integrity Committee need to be revised, I think I would defer and engage in conversation with Mr. Devaney and the other members of the Integrity Committee to see what they think the strengths and weaknesses of it are. I know a lot of the people that have been the target of investigation by the Integrity Committee would like to see it change, more open notification to them of what the charges are and more opportunity to respond to the charges against them and so forth. So I think the Integrity Committee process does need to be looked at. I don't have any specific recommendation for changing it now. But I think a thorough review of that is in order, and maybe we decide to leave it the way it is, but it ought to be looked at. Senator Akaka. What is the status of that OPM investigation? Mr. Johnson. Well, it has gone on for a very long time. In my mind, too long a time. But we do not say you should only take so many months to conduct this investigation. It is not clear to me all the reasons why it has taken this long, but it is what it is. I am not satisfied, nor are you, with the fact that we do not have findings yet on that, but it would be totally improper for me or anybody to step in and say you only have this much time to conduct this investigation. Senator Akaka. Thank you. My next question is to any of the current and former IGs-- Mr. Fine, Mr. Devaney, and Ms. Hill. I am concerned that the PCIE and ECIE, particularly the Integrity Committee, may not be strong enough. Earlier this year, the Integrity Committee concluded that the NASA IG, Robert Cobb, had abused his authority and had not maintained an appearance of independence from NASA officials. The Committee took the unusual step of recommending disciplinary action, which they normally do not, up to and including removal. Mr. Cobb rejected the Committee's findings, and he remains in office. What should be done if the Integrity Committee's recommendations are ignored? Can the Committee's role be strengthened? Mr. Fine. Mr. Fine. I think that is an important question dealing with accountability, and I do think the PCIE and the Integrity Committee are a fundamentally important concept to ensure accountability over IGs. I do think it can be strengthened. I think one of the things that can be done to strengthen the PCIE is to make it statutory, make it a statutory council and provide designated funding for it. The people who work on the PCIE--either the Vice Chair or the people on the Integrity Committee--are IGs who have enormous other responsibilities, and this is a collateral duty piled on top of all their other responsibilities. So to the extent it can be made more concrete, codified, and provided funding, I think it would be a positive thing. Mr. Devaney is on the Integrity Committee, and I am sure he has ideas as well. Senator Akaka. Mr. Devaney. Mr. Devaney. Senator, without commenting specifically on that case that you mentioned, the Committee looks at these allegations. They are first screened by the Public Integrity Unit of the Department of Justice, which eliminates any possibility of criminal wrongdoing, and then we look for administrative review, if necessary. And as I mentioned earlier, in the some 300-odd cases that have come down in the last decade or so, only 17 have been forwarded for a full administrative investigation. My observation, having been on the Committee, is that each of those investigations that I was on the Committee while those investigations took place were all done very professionally and in keeping with Federal investigative standards. And then the Committee forwards, sometimes with and sometimes without recommendation, to the person who sits in Mr. Johnson's position for whatever action they deem appropriate, particularly with a presidentially appointed IG. I would never advocate that the Committee that does the investigation also act as the judge and set the sentence. It is not appropriate for both duties and roles to be in the same place. So I think in the case you mentioned and in other cases that I have observed while I have been there, it has worked right. There is always a cry that it is not as transparent as people would like it to be. There are obvious due process considerations that we have of the people that are being investigated. We have changed some of the internal guidelines of the Committee recently to allow the people being investigated to understand the extent of the allegations being made against them, to provide an opportunity for them to provide the other side of the story. But I would never advocate that the Committee take on the role of final adjudicator of what happens to an IG if, in fact, the facts substantiate the allegations. Senator Akaka. Ms. Hill. Ms. Hill. Well, Senator, obviously I am not a member of the PCIE now, so I do not have facts on current cases and I really cannot speak to that. But I clearly would, based on my own experience, echo what Mr. Fine said in terms of strengthening the Committee. My recollection from my years with PCIE was that, as Mr. Fine said, everything connected with PCIE, including the Integrity Committee, is an additional burden on various IG offices. And in my experience, when it came time to get manpower to conduct investigations, for instance, for the Integrity Committee back in the 1990s, there was always an issue of trying to find an IG who was willing to give enough resources to do that because usually the answer was: I have other things going on; I cannot do this, etc. The PCIE was kind of out there as sort of this amorphous thing that was a council, but it really was not a statutorily authorized function or a statutory requirement. So I think codifying it, making it statutory, giving it resources, and giving it funding would certainly give it a lot more authority and make it a more serious effort. Senator Akaka. Thank you very much for your---- Mr. Johnson. Senator Akaka, could I clarify one thing? The recommendations of the Integrity Committee were not ignored by Administrator Griffin. There was a range of opinion on the Committee. Some felt up to a dismissal. But there was not a consensus recommendation. It was recommended that some action be taken and some action was taken. Senator Akaka. Thank you. Chairman Lieberman. Thanks, Senator Akaka. A vote has just gone off, but that should give us time to have questioning by our two remaining Senators. Senator McCaskill. Senator McCaskill. I do not want to dwell on Inspector General Cobb, but I had the opportunity to sit on that hearing in Commerce, and I was shocked at the level of denial that this Inspector General had about the findings against him, understanding that the Committee on Integrity is made up of cautious, conservative people. I know this. These are cautious, conservative people that are fact-driven. It was a unanimous decision that disciplinary action be taken. I think a lot of Americans would quarrel with the idea that a management course is disciplinary action. And to add insult to injury, this Inspector General came in front of a Committee of the Senate and basically called out the Committee of Integrity as being bogus, basically said their findings were not valid, that they were not fair. I think it is breathtaking that an Inspector General would be so dismissive of a body of his peers that had made that kind of unanimous determination for disciplinary action. And I will tell you, I am disappointed that you would see that as an appropriate outcome based on that investigation because it seems to me if the Committee on Integrity says unanimously that disciplinary--and, by the way, after that management course was--after a ``de novo investigation'' by the counsel at NASA, and after the Committee learned of that, they wrote another letter to that agency saying, Hello, we said in this letter that this was serious and this was a real problem. So from my chair, listening to Inspector General Cobb, he believes that he has been wronged, that he has done nothing wrong, that somehow this Committee has dealt him dirty. And so I am frustrated that we have a system--and I realize this is an exception to the rule. I realize in most instances the Committee does their investigation and issues findings, and I have got many examples in my preparation for today's hearing where the work of the Committee on Integrity has had that validity and had the kind of oversight it should have. But in this instance, it failed, and we have to figure out how we fix that. I would ask you, either Ms. Hill or Mr. Devaney, as to what we can do in Congress to make sure that we do not have an Inspector General that gives the back of his hand to the Committee on Integrity. Mr. Devaney. Well, I certainly did not enjoy being on the receiving end of those comments. Senator McCaskill. I am sure you did not. It was very insulting to you. Mr. Devaney. I was not there. I did read them later. Of course, I disagree with them. I have thought about this a lot, and I will go back to what I said earlier. The Committee cannot itself be the body that exercises the final decision on what happens to an IG. We proffered a long, I might add, professional investigation with some recommendations to the appropriate official. Now, we do that every day at our departments. We do professional, fact-based investigations. We ultimately give them to a Secretary or an agency head for whatever action they deem appropriate. And I would like to think that when that happens, people who have done wrong are held accountable. That does not always happen. I have been disappointed at the Department of the Interior on many occasions on that issue, but that is part of the process. And from my perspective, I just keep coming back and doing the right thing and hoping that sooner or later people get the idea that accountability is important. Senator McCaskill. If those of you who are currently in-- and I am certainly aware of your work, Mr. Fine, and it is extraordinary, and your background. I read a long article about you. Along with reading all the reports, I also read about you guys. I would appreciate all three of you, if you could give input as to what we could do to make sure a situation like this does not become more commonplace. I was shocked at the testimony of the Inspector General after the kind of peer review that he had undergone to be as dismissive as he was. Briefly, let me ask one question, Ms. Hill. I have learned that the Inspectors General in the branches of the military are not really Inspectors General. The Inspectors General within the branches do not have any independence or requirement to report to the Congress or to the public. They are really apples and oranges. Now, the Department of Defense Inspector General is an Inspector General and has that independence and has that obligation. But we are calling them Inspectors General within the branches, and they have no obligation to anyone other than their commander. I would like your idea as to whether we should rename those Inspectors General because they are not doing the work that the other Inspectors General in the Federal Government are doing. Ms. Hill. Well, you are absolutely right, Senator, that they have a very different role than the statutory IGs. But I would venture to guess--as DOD IG, I worked very closely with the military IGs. I oversaw what they did. I met with them regularly. And I will tell you, if you told them that they are misusing the name, they would probably say, ``Well, it was our name first.'' Senator McCaskill. That is exactly what they told me. [Laughter.] Ms. Hill. Because they are very proud of the military Inspector General concept, which goes back, as the Chairman said, in this country to Baron von Steuben, and even before that into the 17th Century European military. So it has been around for a long time. But it is a very different concept than what Congress did in 1978. The military concept is much more focused on inspections, on assisting military members. They do investigations, but the big difference, as I mentioned in my statement, is their investigations go up that chain of command, and in the military, the chain of command is not about independence. It is within the chain of command in the very traditional military sense. That is why the role of any DOD IG, because you do have the statutory independence, is to oversee all the military Inspectors General in the Department and in certain cases to actually take investigations from them. We used to take the very senior military officer investigations because they did not have the independence to do that. I would also just mention--and you may be interested in this--the military also has Auditor Generals. Senator McCaskill. Oh, I am aware. Ms. Hill. Each branch of the service has an Auditor General, and it is a very similar thing. They also do audits within that military branch, but they do it up the chain of command and do not have the statutory independence the departmental IG does. So part of the role of the Defense IG, the statutory IG, is to oversee and routinely meet with all the service IGs and the service Auditor Generals and make sure they are doing good work, oversee what they do, and if they are not doing solid work, to take that work up a level and do it at the statutory level. Senator McCaskill. The problem is we have thousands of auditors within the Department of Defense. Ms. Hill. Correct. Senator McCaskill. But a huge chunk of those auditors, their work the public never sees, and I think that is a problem because ultimately, as I said in my opening statement, the strength of an audit product lies with the public being aware of it and holding government accountable as a result of those audits. So I would welcome your input on how we can work within DOD to change some of those things. Ms. Hill. Right, because you do have--I mean, DCAA, when I was there, had 5,000 auditors, and I am sure they probably have more now. Senator McCaskill. I counted. I think there are 20,000 auditors within the Department of Defense. I think most Americans would be shocked to know that we have 20,000 auditors within the Department of Defense. Ms. Hill. Right. Senator McCaskill. Especially in light of the fact they have been on the high-risk list now for an awful long time. Ms. Hill. Forever, right. Chairman Lieberman. Thanks, Senator McCaskill. Senator Coburn. OPENING STATEMENT OF SENATOR COBURN Senator Coburn. Well, first of all, let me thank each of you for your contribution and your service. In the last 2 years prior to this Congress, we used what you did a lot in the Federal Financial Management Subcommittee, and I value your work a great deal. My criticism is not really of the IG program. It is of Congress because we do not use what you give us, and that is the biggest problem. That has to be the most frustrating thing for you because you develop it and then we do not highlight it to the American people and then make changes. If there ought to be anything coming out of this Committee, it is the great work that the IGs most normally do and the fact that it is not acted on by Congress to make a difference for the American taxpayer. I am impressed by the bill that Senator McCaskill has. I think it needs to be fine-tuned a little bit. I also would like to spend some time in trying to figure out, if any of you all can tell us--the Defense Department is broken in terms of its procurement, in terms of its auditing, in terms of its oversight. We need to have a skull session on how we get better value. I am convinced, of the $640 billion that we are going to spend this year, we are going to waste $60 billion of it. And we do not have $60 billion to waste. So I would offer an open invitation to any of you that would want to come into our office to talk about how do we fix--even though we have Inspectors General and we have a statutory Inspector General in the Defense Department, how do we fix that system to where it works and there is accountability? Because I am convinced that there is not any transparency, and without transparency, you are not going to have any accountability. Other than that, I do not have any additional questions, Mr. Chairman. I thank you for holding this hearing. This is one of the most critical aspects for restoring confidence to the American people in this government, what you all do every day. And I want you to know I, as a Senator, and I think most of us really appreciate what you do. Thank you Chairman Lieberman. Thanks, Senator Coburn. I agree with you. We will bring forth legislation in this session on the IGs. I think Senator Coburn makes a good point. Part of the problem is that Congress does not respond comprehensively enough to what the IGs tell us. This has been a very helpful hearing. I thank each of you for your testimony and for the considerable experience that you brought to the table. We are going to leave the record of the hearing open for 15 days, either for additional testimony that you or others might want to submit or we may want to ask you another question. In the meantime, I thank you very much. The hearing is adjourned. [Whereupon, at 11:50 a.m., the Committee was adjourned.] A P P E N D I X ---------- [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]