U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing 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

94–537 PDF 2015

GAO’S HIGH–RISK REPORT: 25 YEARS OF 

PROBLEMATIC PRACTICES 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 11, 2015 

Serial No. 114–12 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 
(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

JASON CHAFFETZ, Utah, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

JIM JORDAN, Ohio 

TIM WALBERG, Michigan 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

CYNTHIA M. LUMMIS, Wyoming 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

RON DESANTIS, Florida 

MICK MULVANEY, South Carolina 

KEN BUCK, Colorado 

MARK WALKER, North Carolina 

ROD BLUM, Iowa 

JODY B. HICE, Georgia 

STEVE RUSSELL, Oklahoma 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GLENN GROTHMAN, Wisconsin 

WILL HURD, Texas 

GARY J. PALMER, Alabama 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MATT CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

BRENDA L. LAWRENCE, Michigan 

TED LIEU, California 

BONNIE WATSON COLEMAN, New Jersey 

STACEY E. PLASKETT, Virgin Islands 

MARK DeSAULNIER, California 

BRENDAN F. BOYLE, Pennsylvania 

PETER WELCH, Vermont 

MICHELLE LUJAN GRISHAM, New Mexico 

SEAN MCLAUGHLIN, Staff Director 

DAVID RAPALLO, Minority Staff Director 

KATY ROTHER, Counsel 

CHRISTOPHER D’ANGELO, Professional Staff Member 

SARAH VANCE, Clerk 
(III) 

C O N T E N T S 

Page 

Hearing held on February 11, 2015 ....................................................................... 1 

WITNESSES 

The Hon. Gene L. Dodaro, Comptroller General, US. Government Accountability Office 

Oral Statement ................................................................................................. 2 

Written Statement ............................................................................................ 5 

The Hon. John Koskinen, Commissioner, Internal Revenue Service 

Oral Statement ................................................................................................. 61 

Written Statement ............................................................................................ 63 

The Hon. Alan F. Estevez, Principal Deputy Under Secretary of Defense 

for Acquisition, Technology and Logistics, U.S. Department of Defense 

Oral Statement ................................................................................................. 71 

Written Statement ............................................................................................ 73 

Mr. John J. MacWilliams, Senior Advisor to the Secretary, U.S. Department 

of Energy 

Oral Statement ................................................................................................. 81 

Written Statement ............................................................................................ 83 

Shantanu Agrawal, M.D. Deputy Administrator and Director, Center for Program Integrity, Centers for Medicare and Medicaid Services 

Oral Statement ................................................................................................. 89 

Written Statement ............................................................................................ 91 

Mr. Robert M. Lightfoot, Jr., Associate Administrator, National Aeronautics 

and Space Administration 

Oral Statement ................................................................................................. 106 

Written Statement ............................................................................................ 108 

APPENDIX 

QFR’s to Hon. Gene L. Dodaro from Chairman Jason Chaffetz .......................... 140 

Additional QFR’s to Dr. Agrawal from Chairman Jason Chaffetz and Rep. 

Duckworth ............................................................................................................ 144 

(1) 

GAO’S HIGH-RISK REPORT: 25 YEARS OF 

PROBLEMATIC PRACTICES 

Wednesday, February 11, 2015 

HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, WASHINGTON, DC. 

The committee met, pursuant to notice, at 3:25 p.m., in room 

2154, Rayburn House Office Building, Hon. Jason Chaffetz (chairman of the committee) presiding. 

Present: Representatives Chaffetz, Mica, Duncan, Jordan, 

Walberg, Amash, Gowdy, Massie, Meadows, DeSantis, Mulvaney, 

Cooper, Blum, Hice, Carter, Hurd, Palmer, Cummings, Maloney, 

Norton, Connolly, Lieu, Watson Coleman, Plaskett, and Lujan Grisham. 

Chairman CHAFFETZ. Committee on Oversight and Government 

Reform will come to order. 

Without objection, the chair is authorized to declare a recess at 

any time. 

We have an important hearing today. We appreciate the many 

people that are here to participate in that. We also appreciate the 

patience with votes on the floor that got called a little bit later. 

That always serves as the primary thing that we do in the afternoon around here. So we appreciate your patience. But, nevertheless, we do have a very important hearing highlighting the ‘‘General Accountability Office’s High-Risk Report: 25 Years of Problematic Practices.’’ This year marks the 25th anniversary of the GAO’s 

high-risk list. 

I have a full Statement, but in the essence of time, I am going 

to insert those comments into the record and would invite other 

Members to do the same. 

But I would now like to recognize the ranking member, Mr. 

Cummings, if he has any opening Statements. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

I Am going to do the same. I want to thank all our witnesses. 

And I will submit my Statement for the record. 

And I want to always as usual thank you, Mr. Dodaro, and all 

of the GAO employees, who do a great job and help us so much. 

With that, I yield back. 

Chairman CHAFFETZ. Thank you. 

Chairman CHAFFETZ. I will hold the record open for 5 legislative 

days for any Member who would like to submit a written Statement. 

And we would now like to recognize our first witness. I am 

pleased to welcome the Honorable Gene Dodaro, Comptroller of the 
2 

U.S. Government Accountability Office. He is accompanied by a 

panel of experts from the GAO. 

And, on behalf of both of us and this whole body, we thank the 

thousands of men and women who serve in the GAO who really 

work hard to create a work product and present it here today. 

So welcome to all. 

Pursuant to committee rules, the witness will be sworn in before 

he testifies. 

We will also swear in the panel behind him should their input 

be needed during their questioning. 

So if you could all rise, please. 

Thank you. If you will rise and please raise your right hands. Do 

you solemnly swear or affirm that the testimony you are about to 

give will be the truth, the whole truth, and nothing but the truth? 

Thank you. Let the record reflect that all the witnesses answered 

in the affirmative. 

Mr. Dodaro, you have testified before our committee several 

times. We will give you great latitude here, but we would appreciate your summarizing your comments, and then your entire written Statement will obviously be made part of the record. You are 

now recognized. 

WITNESS STATEMENTS 

STATEMENT OF HON. GENE L. DODARO 

Mr. DODARO. Thank you very much, Mr. Chairman. Good afternoon to you, Ranking Member Cummings, all the members of the 

committee. I’m very pleased to be here today to discuss GAO’s latest high-risk update. We do this with the beginning of each new 

Congress to identify areas we believe are at highest risk of fraud, 

waste, abuse, and mismanagement in the Federal Government or 

in need of broad-based transformation. 

Our report today discusses solid, steady progress in most of the 

30 high-risk areas that we’ve had on the list since our last update 

in 2013. Of the—all the areas we rate according to five criteria to 

get off the high-risk list. You have to have leadership commitment; 

top level attention; you have to have the capacity, the resources 

and the people with the right skills to be able to fix the problem; 

you have to have a good corrective action plan that addresses root 

cause; a good monitoring effort with interim milestones and metrics 

that gauge progress; and you have to demonstrate that you’re actually fixing the problem. You don’t have to be 100 percent fixed, but 

we have to be convinced that we’re on the right path to rectifying 

the problem and reducing the risk and eliminating waste and improving government services. 

Of the 30 areas, 18 have at least partially met all five criteria, 

and 11 of those 18 have at least fully met one or more of the criteria and partially met the others. In two areas, we’re recognizing 

progress so that we’re narrowing the scope of the high-risk area. 

First is on FDA’s oversight of medical devices. We are pleased with 

their efforts to get the recall process under better control and discipline, and also to have a good process to review the applications 

for new devices in a more risk-based approach. We’re still concerned about their need to oversee the global marketplace for med-
3 

ical products and drugs. 80 percent of the ingredients of active 

drugs come from other countries, about 40 percent of finished 

drugs, about half of medical devices, so they need to do more there 

and also to address drug shortage issues. 

Second area is contract management. We believe the Department 

of Defense has focused more attention at top leadership on contracting tools and techniques and reducing the risk associated with 

undefinitized contracts where they start contract work without 

having a clear agreement with the contractor or they’re using time 

and materials, which is a risky contract approach, rather than having deliverables. They still have to improve their areas in their acquisition work force, service acquisitions, and improve their use of 

contracting in the operational environments to support military operations in theater. 

We are adding two new areas to the high-risk list this year: First 

is VA’s provision of healthcare service for veterans. We’re very concerned about this area. There are five fundamental problems that 

we’ve identified: ambiguous policies, inconsistent processes, inadequate oversight and monitoring of the activities, IT challenges, inadequate training of staff, and unclear resource needs and allocations. Congress has passed legislation recently to give them additional $15 billion to help address this problem. That legislation has 

to be implemented properly. We have over 100 recommendations 

that we’ve made to VA that have yet to have been fully implemented, so this is an area that needs congressional oversight and 

continued attention. 

Second are IT acquisitions and operations across the Federal 

Government. Too often the Federal Government, and we enumerate 

this in our report, there’s a litany of efforts that have failed after 

spending hundreds of millions of dollars or in cases of billions of 

dollars and many years. They’re terminated. There’s a longer list 

of problems where there are cost overruns, schedule slippages, or 

they fail to deliver the promised functionality and make improvements in the programs that they’re supposed to in delivery of services. Here again, the Congress has passed legislation late last year. 

This committee was instrumental in passing the legislation of 

the Federal Information Technology Reform Act to give CIO’s additional authority, put in place better practices to have more disciplined approaches to IT management. Here again, just in the last 

5 years alone, we’ve made 737 recommendations. Only 23 percent 

have been fully implemented. So we believe this is a critical area. 

We’re also expanding two areas. In the administration of tax 

area, we have been focused on a tax gap, which at last count was 

$385 billion. We’re expanding that to include identity theft. And 

the IRS was able last year to stop about $24 billion in fraudulent 

returns potentially, but they missed, by their own estimates, about 

$5.8 billion. We’ve got some fixes to this we can talk about in the 

Q&A. 

We’re also expanding cybersecurity and critical infrastructure 

protection to include privacy issues. Initially we designated computer security across the entire Federal Government, the first time 

we ever did that, in 1997. We added critical infrastructure protection, because most of the computer assets were in the private sector hands in 2003. Now there’s a lot more incidents involving per-
4 

sonally identifiable information. The number of incidents have doubled over the last 5 years. A privacy law was passed in 1994. It’s 

sorely in need of updating. And we have a number of other recommendations to protect this sensitive information. The American 

people deserve for their information to be protected properly while 

we’re addressing the cybersecurity issues. 

I thank you for the opportunity to be here today and look forward to answering your questions. 

Chairman CHAFFETZ. Thank you. I appreciate that. 

[Prepared Statement of Mr. Dodaro follows:] 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 
44 

Chairman CHAFFETZ. We’ll now recognize the gentleman from 

Georgia, Mr. Hice, for 5 minutes. 

Mr. HICE. Thank you, Chairman. 

Just one quick question for you, and thank you for joining us this 

afternoon. Since the enactment of the Veteran’s Access, Choice and 

Accountability Act, I have a number of veterans in my district who, 

because of their location where they live, they’ve not been able to 

utilize the VA Medical Centers, and so they have opted to use nonVA doctors and so forth. And one of the issues they’re facing are 

significant delays from the VA in paying those medical providers. 

Is there anything that you—that the GAO plans to do in the future to evaluate this issue and to report on it in the future? 

Mr. DODARO. Actually, we’ve already addressed that issue, and 

the issue to report, talking about the problems they were having 

in paying providers in a timely manner. We’re also concerned about 

the fact that the VA doesn’t always have information enough to 

make sure that they’re making the right decisions in terms of 

whether they should be providing the care or going on nonhealthcare provider, both for access purposes and for making sure 

that it’s a cost-effective approach. 

Debbie Draper’s our expert in this area. I’ll have her talk about 

the recommendations we’ve made, but we’ve already addressed this 

issue and we plan to followup, sir. 

Mr. HICE. OK. 

Ms. DRAPER. Yes. We actually conducted work about a year or so 

ago, and we made a number of recommendations around the infrastructure surrounding the non-VA care. And a lot of the issues 

were not paying claims promptly, and so we do have concerns 

about non-VA care and, you know, we have concerns that it may 

not be the panacea that people envision it could be, because there 

is not really the infrastructure in place, or it wasn’t in place, you 

know, when we took a look at the work. So, you know, you’re talking about putting people—the VA system is a very difficult system 

to navigate, so now you’re also asking them to navigate another 

system that’s outside of the VA. So there’s just a lot of issues 

around non-VA care. And the other issue is that wait times for 

non-VA care is not really tracked, so no one really knows how long 

people are waiting to get care in the community. So there’s just a 

lot of issues, and it is something we’ll be looking at. And the Choice 

Act does have several mandates for GAO to look at the non-VA 

care. 

Mr. HICE. Well, thank you. Obviously the concern is if these payments are slow in being received, at some point I’m fearful that our 

veterans will receive diminished health care across the board, and 

that is the concern. I thank you. 

And I yield my time. 

Mr. DODARO. Yes, I’m concerned too, Congressman. We’ll stay on 

top of it. 

Mr. HICE. Thank you, sir. 

Chairman CHAFFETZ. The gentleman yields back. We’ll now recognize the ranking member, Mr. Cummings from Maryland, for 5 

minutes. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 
45 

Mr. Dodaro, one of my major concerns have been drug shortage. 

Whether the Members of Congress know it, but 99 percent of all 

hospitals in this country have drug shortages. And there are people, Mr. Dodaro, as you know, who are, unbeknownst to them, getting second-, third-rate drugs. And even in my own district, with 

one of the No. 1 hospitals in the world, Johns Hopkins, they have 

told us that they have those problems. 

Can you comment briefly on that, where we are on that and what 

can we do about that? 

Mr. DODARO. Yes. This is a very important issue, Congressman. 

One of the things that we’ve already suggested to the Congress and 

they’ve acted on, before drug manufacturers didn’t have to notify 

FDA if they were going to have potential shortages, and now they 

have to provide adequate notice ahead of time. So that was one 

step in the right direction. 

Marcia Crosse, our expert in that area, will talk about other 

work we’ve done and recommendations we’ve made to address this 

issue. It’s one of the reasons FDA’s on the high-risk list. 

Ms. CROSSE. Yes. Congressman, we agree that it’s a big concern, 

and drug shortages is one of the areas that’s keeping FDA on the 

high-risk list. As the Comptroller General mentioned, Congress did 

take action to require advance notification to FDA if a manufacturer was going to cease producing a drug. Congress, just over a 

year ago, also enacted the Drug Quality and Security Act that we 

believe can help particularly with this issue of substandard drugs, 

because it’s enacted requirements for tracking of drugs through the 

system that can help reduce the possibility of the gray market 

drugs that I know you had been concerned about, and also counterfeit drugs getting into the system, because there’ll be a system of 

tracking. It’s still not implemented. It will take a number of years 

for that to go into effect, but that Act, we think, also has potential 

to address that. 

We are continuing to track drug shortages and we have ongoing 

work looking at it. We know the number of shortages is coming 

down, but there are still some that are persisting for long periods 

of time for multiple years for certain drugs. 

Mr. CUMMINGS. I am glad, because our committee a few minutes 

ago, the greatest part of our plan to look at generic drugs. Again, 

every single Member of Congress has this problem, and they 

don’t—probably many of them don’t even know it, that generic 

drugs are going up sometimes as much as 800 times in a matter 

of a day, which is ridiculous. And it’s about greed. A lot of it is 

about greed. 

But let me go into another thing—issue, the whole issue of cyber. 

You know, I just want to read from your report, Mr. Dodaro, and 

you—you all say this, ‘‘The increasing sophistication of hackers and 

others with malicious intent and the extent to which both Federal 

agencies and private companies collect sensitive information about 

individuals have increased the risk of personally identifiable information being exposed and compromised.’’ 

That’s an accurate Statement. Is that right? 

Mr. DODARO. Yes. 

Mr. CUMMINGS. Your report goes on to say, ‘‘The number of reported security incidents involving PII at Federal agencies has in-
46 

creased significantly in recent years and a number of high profile 

breaches of PII have occurred at commercial entities. For these reasons, we added protecting the privacy of PII to the high-risk area.’’ 

So your report highlights attacks against both public and private 

sector entities. And one thing these attacks seem to have in common is the hackers want to access—want access to personal information of as many Americans as possible. That’s a major problem. 

Is that right? 

Mr. DODARO. That’s exactly right, and that’s why we’re adding 

it to the list. And, Congressman, there’s projections by informed 

parties that the amount of information that’s collected, stored and 

disseminated is going to double and triple every 2 or 3 years, so 

this problem is on a trajectory to get a lot worse before it gets 

under control. 

Mr. CUMMINGS. So the sources of these hackers could be anywhere in the world. Is that right? 

Mr. DODARO. Yes. 

Mr. CUMMINGS. And they could be State-sponsored, they could be 

international criminals, they could be domestic hackers, or any of 

the above. Is that right? 

Mr. DODARO. Yes. 

Mr. CUMMINGS. And so I see you have your fellow—— 

Mr. DODARO. My cyber expert—— 

Mr. CUMMINGS. OK. 

Mr. DODARO [continuing]. Right hand here. 

Mr. CUMMINGS. And what can we do about that? If you can identify yourself, please, sir. 

Mr. WILSHUSEN. Sure. My name is Greg Wilshusen. And I think 

there’s a number of actions that both the Congress can do as well 

as Federal agencies who collect this type of information. First, with 

the Federal agencies, agencies need to implement effective information security programs that adequately protect the confidentiality 

and integrity of their information to include not only personally 

identifiable information, but other sensitive information. We have 

found over the years that agencies have not done a very good job 

of this. For example, in Fiscal Year 2014, 17 out of the 24 agencies 

that are covered by the Chief Financial Officers Act reported either 

a material weakness or significant deficiency in their information 

security controls for financial reporting purposes. IG’s at 22 of the 

24 agencies identified cybersecurity or information security as a 

major management challenge for their agency. 

Mr. CUMMINGS. All right. Thank you very much, Chairman. 

Chairman CHAFFETZ. Thank you. The gentleman yields back. 

We’ll now recognize the gentleman from Texas, Mr. Hurd, for 5 

minutes. 

Mr. HURD. Thank you, Mr. Chairman. 

And thank you, sir, for being here today. I enjoyed reading your 

report for the outrageousness of some of the things that are listed 

in there. And one of the questions that I have, about 80 percent 

of the administration’s IT spending goes to maintain legacy systems. Many of those systems most Americans would think would 

be incredibly out of date. What’s a more appropriate, you know, investment-to-maintenance ratio? 
47 

Mr. DODARO. Well, we’ve said—and I’ll—this is Dave Powner, our 

expert in the IT area. What we’ve said is that this should be under 

operational re-evaluation every year. There are ways to drive down 

technology costs, and a lot of areas the costs are decreasing if 

you’re making the proper investments and reinvestments. We find 

a lot of duplication where the systems are being duplicated because 

of a lack of oversight and a portfolio assessment. The Congress has 

underscored the need to be able to do this in the agencies, but unfortunately, the trends are going in the wrong direction, or there’s 

additional spending in the O&M area, operations and maintenance 

area, rather than coming down as it should be in that area. And 

Dave can talk about more specific recommendations that we’ve 

made. 

Mr. POWNER. Yes. Congressman Hurd, to highlight the trends, 

we are spending—$80 billion spent right now. We’re only spending 

about $15 billion on new development. The remainder is going toward operation and maintenance. That’s why in our high-risk report, there’s many areas where we have inefficiencies. Data center 

consolidation, there’s about $7 to $10 billion on the table if we consolidate data centers appropriately. There’s also—— 

Mr. HURD. On that question, the report highlights shy of 10,000 

data centers. What should be—where should that number be? 

Mr. POWNER. Well, I think the plan is to close about 4,000 of 

those 10,000, roughly. That’s the game plan for all the major Federal agencies right now. And the game plan is to save at least 

seven and a half billion dollars through 2017. So that’s right 

around the corner. 

You know, in addition to data centers, we have a lot of duplication that this committee has focused on over the past couple of 

years. There’s probably another, you know, $5 billion in savings 

looking at duplicative systems too. So you can easily get to over 

$10 billion in savings. Move that inefficient spending out of the 

O&M spend and into the development where we’re modernizing the 

government more appropriately. 

Mr. HURD. Thank you. And my question, along the same lines, 

CIOs play an important role in oversight and governance of these 

projects. Are Federal agencies, CIO’s effective, and what tools do 

they need to become more effective? 

Mr. POWNER. I think with the Federal CIO, it’s a mixed bag. We 

see some CIOs that are quite successful and others that aren’t, and 

that’s why I think the legislation that this committee was instrumental in passing, FITARA, which strengthened the CIO authorities, is going to be really instrumental going forward so that we 

can manage this $80 billion more appropriately. 

Mr. DODARO. The CIOs need to be more involved and they need 

to be held accountable for these efforts and it needs to be more uniform across the government, and if this legislation’s successfully 

implemented, we should achieve those goals. 

Mr. HURD. On the area of accountability, Mr. Dodaro, how long 

have you been with GAO? 

Mr. DODARO. This June, it’ll be 42 years. 

Mr. HURD. Have you seen anybody in the Federal Government 

fired for cost or time overruns? 
48 

Mr. DODARO. I’m trying to think. I’m sure there have been people 

have been in big trouble as a result of it. I could tell you that. I 

know about that. I can’t think of any specific personnel actions offhand, but there have been people who have been under a lot of 

scrutiny and have—and have, you know, suddenly retired in that 

process. So, yes, there have been people that have been moved out. 

Mr. HURD. Good copy. Thank you. 

I yield back my time. 

Mr. CONNOLLY. Would my colleague yield just for a second? 

Mr. HURD. Yes. 

Mr. CONNOLLY. I thank my colleague. You brought up two very 

important points on CIOs and on legacy systems and—and data 

center consolidation. The FITARA bill, also known as IssaConnolly, our preferred name, does address all three things and 

mandates status and a consolidation, also requires—there are 250 

people with the title CIO spread out over 24 Federal agencies. 

Imagine that. So our bill says there ought to be one primary CIO 

for every agency who’s accountable and has authority. 

So that’s what Mr. Dodaro’s talking about, about hopefully with 

the implementation of that bill, we’re going to see some real 

progress. And it’s something I hope we will monitor. I know Mr. 

Meadows and I intend to do that in the subcommittee. Thank you. 

Chairman CHAFFETZ. Thank you. The gentleman yields back. I 

now recognize the gentlewoman from the District of Columbia, Ms. 

Norton, for 5 minutes. 

Ms. NORTON. Thank you very much, Mr. Chairman. 

My colleague asked about cost overruns. If people get fired for 

cost overruns, half the Defense Department would be gone, because 

that’s where you have most of the cost overruns in our country. I’m 

very interested in this high-risk list, because I’ve been obediently 

listening to this list for a long time, and I never knew much about 

how you get on it and how you get off it, so I’d like to drill down 

a little bit about it, particularly considering that GAO must look 

at what must be hundreds, thousands of agencies in order to draw 

its list. 

And I must say, whenever there’s good news, it seems to me this 

committee ought to be the first to note it, but I did note that highlighted, I think almost in your first page, it says solid, steady 

progress has been made in the vast majority of high-risk areas. I 

don’t believe I’ve seen that kind of language before in your reports. 

You say that more than one-third of the areas previously designated as high-risk have been removed. So I’d like to know, you 

know, how do you get on it and how do you get removed? 

Mr. DODARO. Sure. First of all, we have published criteria that 

we vetted with the executive branch years ago about how you get 

on and how you come off. 

How you get on is we look at the significance of the risk, both 

in quantitative terms, in other words, there has to be at least a billion dollars in risk; there has to be issues, it’s either a public safety 

issue, like oversight of medical products and food safety, we have 

on the list; has to be important to national security, economic security for the country; it has risk of program failures, programs actually not achieving their objectives because they’re on the high-risk 

list. And there—so there’s a long list of factors that we consider. 
49 

And we also look as to whether or not the agencies have corrective 

action plans in place. If they do have a plan and it looks like it’s 

going to be a good plan and they may be successful, we may hold 

off on putting them on the list, and give them an opportunity to 

fix it. 

Now, you come off by five criteria: Top leadership commitment. 

There has to be a commitment by the top leaders in the agencies 

sustained; they have to have the capacity, the people and the—and 

the number of people and the right skills and the right numbers 

and resources to be able to fix the problem; they have to have a 

good plan, a corrective action plan that addresses the root causes 

of the problems; you have to have a monitoring effort to—with interim milestones and metrics; and you have to actually then demonstrate that you are fixing the problem. If you meet those five criteria, you come off the list. If you do that in part of the high-risk 

area, we narrow the high-risk area to those areas that you haven’t, 

like we mentioned this year we did in two areas. So that’s—that’s 

how you do that. Now, the—— 

Ms. NORTON. Now, I noticed the second, I think the second criteria you mentioned the word ‘‘resources.’’ Wouldn’t it would be fair 

to say that a significant challenge for getting off the list would be 

the scarcity of funding these days—— 

Mr. DODARO. Well—— 

Ms. NORTON [continuing]. Since it’s one of your criteria. 

Mr. DODARO. Yes. Well, by ‘‘resources,’’ we mean the skills necessary, the right people. 

Ms. NORTON. So it doesn’t mean funding at all. Let me ask—— 

Mr. DODARO. No. Well, it can mean—— 

Ms. NORTON [continuing]. Is funding a significant challenge for 

agents implementing your recommendations and getting off the 

list? 

Mr. DODARO. It could be, but it could be that they’re not using 

the funding that they have very well. It’s not necessarily mean 

they need more funding. 

Ms. NORTON. Accepted. Could I ask you what Congress can do, 

you know, assuming that Congress is not going to do much about 

resources? I’ll take an area of specific interest to me, real eState. 

That is the area, the Federal Government’s handling of its real eState portfolio has been under constant criticism from the GAO. 

Could you tell me how, considering the billions of dollars involved 

in leasing and construction, how real eState portfolio is doing? 

Mr. DODARO. Yes. First I would say, on the high-risk list, we 

have asterisk areas where the Congress needs to take action in 

order to help address the area. So there’s a substantial number of 

the 32 areas that we’ve already designated for Congress. Postal 

Service reform’s one, cybersecurity’s another, and the need to finance the Nation’s transportation infrastructure system’s another 

one. So we’ve designated major areas where Congress needs to be 

part of the solution to the problem. 

In the real property area, what Congress can do, one of the areas 

that we—that’s on the list is the overreliance on leasing. And we’ve 

tried to convince the agencies, particularly GSA, to put forward a 

case to the Congress that says, look, we would be—it would be 

cheaper to own this particular property rather than lease these 
50 

properties, but they’ve been reluctant to do so. So we think the 

Congress ought to mandate that they do that in that area. There 

are also, you know, underutilized properties, that the Congress 

could give additional authority in pilot areas to try to provide these 

things. There’s a lot of barriers that we’ve identified that the Congress could help alleviate for the agencies to do this, but they need 

a good strategic plan. They have not yet presented the Congress 

with a good strategic plan on how to address this area. We’ve recommended it, they’re working on the plan right now for the first 

time, and so we’re hopeful to see it this year, and hopefully it will 

provide a good roadmap for them and for the Congress. 

Ms. NORTON. Thank you. Very useful. 

Chairman CHAFFETZ. Thank you. I thank the gentlewoman. Now 

recognize the gentleman from Texas, Mr. Mica, for 5 minutes. 

Mr. MICA. Texas. The State—— 

Chairman CHAFFETZ. Sorry. How about the State of Florida? 

Mr. MICA. Texas, Texas. 

Chairman CHAFFETZ. Florida. Florida. 

Mr. MICA. Where it’s warm. 

Mr.—— 

Unidentified SPEAKER. Don’t mess with Texas. 

Mr. MICA. Mr.—— 

It’s a great State, but I’d rather be from Florida right now. Mr. 

Dodaro, have you ever seen the movie ‘‘Groundhog Day?’’ 

Mr. DODARO. Yes. Over and over. 

Mr. MICA. Yes. Well, I’m sitting here, and I swear a lot of the 

recommendations are the same recommendations you’ve brought us 

before. I segue from Ms. Norton’s and your comments. In fact, I 

just read—the chairman, myself, Mr. Denham, we have been interested in excess property, and you can’t get people to move on dealing with excess property. I think we’ve found 14,000 at GSA. And 

we did the first hearing at the Old Post Office, and I put an X 

through and I put 13,999. We’ve done about six more in vacant 

properties, some of them moving, but, you know, I’m only going to 

be here so long. Even this guy’s young. He can’t—we can’t do a 

hearing on every property. 

What concerns me, and you just said it in your report, is OMB, 

in conjunction with landholding agencies, could improve its capacity and action by implementing, this is dealing with excess—or underutilized properties, to develop a strategic plan. They have not 

done that. OMB has not done that. 

Mr. DODARO. That’s correct. 

Mr. MICA. One of the things too, and I’ve discussed this, Mr. 

Chairman, briefly with Mr. Denham, in the bill that—there were 

two bills offered, Mr. Chaffetz offered one, I worked with Mr. 

Denham, and he authored another, but we need a requirement that 

they have a plan and then there be some annual action on the plan 

and the recommendation, some triggering mechanism. Wouldn’t 

you agree? 

Mr. DODARO. Yes. 

Mr. MICA. And none of them will make a decision. The stuff just 

sits there. It sits there, it sits there. So I come back again and 

we’re having a Groundhog Day on excess property. 
51 

Finally, on the administration, this is on—the administration released the results of a freeze on footprint policy, which they indicated a freeze reduced the government’s office and warehouse 

space. They gave you that report, you analyzed that report, and 

they claim they reduced the Federal warehouse space by 1.—I’m 

sorry—10.2 million square feet, but then you said they didn’t. 

Mr. DODARO. That’s correct. 

Mr. MICA. Can you elaborate? 

Mr. DODARO. Yes, Phil Herr is our leader on that report. 

Mr. HERR. Hi, Mr. Mica. Yes. One of the things we like to do is 

go behind some of those kind of estimates, take them apart, try to 

see where some of the flaws are, and in looking at the freeze and 

footprint data, we saw some things that were miscounted, also 

things that were vacant, but then they were counted separately in 

GSA’s data base. 

One of the things that really underscores and is something that 

we have testified before your subcommittees previously is the real 

problem with the data on the property. 

Mr. MICA. That is right. We found in fact, one, they didn’t know 

what property they had. 

Mr. HERR. Right. 

Mr. MICA. They didn’t know the condition of the property that 

they had. 

Mr. HERR. Correct. 

Mr. MICA. They didn’t know the status of it for being eligible for 

either future utilization or current or keep an inventory. I mean, 

right down the line they did not know. They—in fact, they gave us 

lists that we checked and you checked that showed that—that what 

they were giving us was totally incorrect. Is that not correct? 

Mr. HERR. That is correct. 

Mr. MICA. OK. Well, this is something else we have got to get 

is some requirement for these agencies, and if OMB won’t do it, we 

can do it statutorily. I know Mr. Chaffetz is committed to get a bill 

through the House and the Senate that will get a handle on this, 

but we have to have triggers. We have to have milestones. We have 

to have some measure of them achieving a goal or performance. Am 

I wrong? 

Mr. DODARO. I agree, and any major management reform that 

has been successful over time has a statutory underpinning, and 

that will transcend in administrations and Congress—— 

Mr. MICA. Coming soon. Thank you. 

Chairman CHAFFETZ. The gentleman now yields back. 

Now recognize the gentleman from Virginia, Mr. Connolly, for 5 

minutes. 

Mr. CONNOLLY. Thank you, Mr. Chairman, and thank you, Mr. 

Dodaro, for being here. This is—maybe it says what a wonk I am, 

but I actually really look forward to this hearing every year, and 

I congratulate you for the intellectual underpinning of identifying 

these risk categories. I think it is an incredible, helpful public policy document, and I hope a useful management tool. It also guides 

us, and especially this committee. So much of what you are talking 

about is all about our agenda. So hopefully we will also take it to 

heart and respond accordingly. 
52 

Mr. Dodaro, you actually endorsed our bill, FITARA, also known 

preferably as Issa-Connolly. How important is it to you that that 

get implemented? 

Mr. DODARO. It is very important. I mean, that is a critical—that 

is one of the reasons, actually, that we put IT acquisitions and operations on the list, is in order to elevate attention to make sure 

that FITARA, Issa-Connolly, bill is implemented effectively. 

Mr. CONNOLLY. I am sorry. What was that last part? 

Mr. DODARO. But if it doesn’t have attention, and I am also concerned, because, you know, we are coming to the last 2 years of 

this administration, it has got to be sustained in the next administration, having a statutory underpinning is critically important, 

and it gives us and the Congress means to hold people accountable 

over time. So it is absolutely critical to rectifying this problem that 

we have identified. 

Mr. CONNOLLY. And there are real potential savings if we can 

make this work. Is that not correct? 

Mr. DODARO. Oh, yes. Absolutely. Absolutely. In the billions. 

Mr. CONNOLLY. In the billions, Mr. Chairman. 

So I know we are going to work on a bipartisan basis to actually 

have oversight hearings on implementation to go and exhort and 

encourage, and I think that is really good. 

Mr. Dodaro, with respect to this whole subject, you are familiar 

with the 25-Point Implementation Plan to Reform Federal Technology Management that was issued December 9, 2010 by Vivek 

Kundra. 

Mr. DODARO. Yes. Yes. I am familiar with it, and I am joined by 

Dave Powner, who is our IT expert. 

Mr. CONNOLLY. And I assume that you both—well, let me not assume. Was that a helpful document in terms of laying out goals 

and objectives? 

Mr. DODARO. Yes. 

Mr. CONNOR. Yes, it was extremely helpful. It set the foundation—— 

Mr. CONNOLLY. Sets the foundation. 

Mr. CONNOR [continuing]. For a lot of the key initiatives going 

forward. 

Mr. CONNOLLY. And, for example, when it talks about we ought 

to approve funding of major IT programs only when it meets three 

basic criteria, right: Have a dedicated program manager and a fully 

staffed integrated program team; use a modular approach with useable functionality delivered every 6 months, I think they mean by 

that break up huge multi-year complex systems integration contracts so that they are easier to manage; and, third, use specialized 

IT acquisition professionals. Are those—do you think those are 

three helpful criteria when we are looking at issuing a major procurement? 

Mr. CONNOR. Absolutely. 

Mr. CONNOLLY. And did we follow that advice from the White 

House itself when the Website for the healthcare rollout was occurring? 

Mr. CONNOR. No. We did not. 

Mr. CONNOLLY. We did not. So, hopefully, our bill, but also even 

the guidance that Vivek Kundra issued from the White House 
53 

going 4 years ago-plus might have spared us some of the grief and 

embarrassment that, in fact, occurred. 

Mr. DODARO. Yes, they have—we have issued nine factors that 

are critical to successful efforts that have been put in place. There 

is Vivek’s guidance. There is GAO guidance. There is best practice. 

The basic problem that I have seen over the years is there is a lack 

of discipline to follow good practices. 

Mr. CONNOLLY. Yes. 

Mr. DODARO. We get off the rails and nobody is held accountable 

during that period of time. Modular development, incremental development, CIOs, was one of the basic tenants in the 1996 legislation that I helped Congress work on passing. It just hasn’t been implemented. So I commend this committee for your recent legislation. I look forward to working with you to make sure it is successfully implemented, but it will require congressional oversight, and 

I look forward to that. 

Mr. CONNOLLY. And I will point out, as the chairman knows and 

the ranking member knows, when we put together this bill, it was 

a bipartisan bill, and we—a lot of what we did was codify recommendations that came out of the White House itself. It was not 

a hostile bill, and so hopefully it will be seen that way, as a useful 

management tool, and we look forward to working with you as we 

follow and monitor, and, as I said, exhort the implementation, because there are enormous savings to be had and some very significant efficiencies. So—— 

Mr. DODARO. Yes, and better services to the public. 

Mr. CONNOLLY. Yep. Thank you, Mr. Chairman. 

Chairman CHAFFETZ. Gentleman yields back. 

Now recognize the gentleman from Tennessee, Mr. Duncan, for 

5 minutes. 

Mr. DUNCAN. Well, thank you, Mr. Chairman, and I don’t—I will 

take just a moment. I just want to say, Mr. Dodaro, I think you 

do a very good job, and I appreciate the work the GAO does. You 

have been very helpful to me on this committee. I have been here 

26 years. When I tell these newer members this, they look at me 

like I am from outer space. May main committee has always been 

the Transportation and Infrastructure Committee, and I have 

heard Dr. Dillingham testify more probably than any other witness, and he seems like a good man. 

Mr. DODARO. He is. 

Mr. DUNCAN. But I just want to say that I think the GAO does 

a great job, and I appreciate what you all do, and that is all I wanted. Thank you, Mr. Chairman. 

Mr. DODARO. Thank you very much, Mr. Duncan. 

Chairman CHAFFETZ. Gentleman yields back. 

We will now recognize the gentlewoman—— 

Mr. CONNOLLY. Mr. Chairman, I know that there are other witnesses who want to know Mr. Dodaro’s magic is that he got that 

kind of—— 

Chairman CHAFFETZ. We will now recognize the gentlewoman 

from the Virgin Islands, Ms. Plaskett, for 5 minutes. 

Ms. PLASKETT. Yes. Thank you, Mr. Chairman. Good afternoon, 

sir. 

Mr. DODARO. Good afternoon. 
54 

Ms. PLASKETT. I really wanted to thank you for all of the work 

that your agency does and to talk to you about one of the primary 

things that you all do is uncovering waste and fraud and abuse and 

identification of the risk of integrity of the Federal programs. We 

know, however, that there is also best practices that your agency 

tries to identify, not only for the private—for the public sector, but 

for the private as well, and we understand now that the cyber attacks are not just on the Federal agencies, but also on private. We 

know—we have heard about Home Depot and the compromise of 

about 56 million companies and the credit card and debit card information, as well as Anthem, the Nation’s second largest health 

insurance company with more than 80 million records that may 

have been compromised. I see that your—one of your colleagues are 

coming over to assist you. 

Mr. DODARO. This is our cyber expert, Greg Wilshusen. 

Ms. PLASKETT. Great. 

Mr. DODARO. We sense a cyber question. 

Ms. PLASKETT. You sense very well. One of the things I wanted 

to talk with you about is this notion of segregating duties. If you 

could briefly explain for us what that concept is and how that 

works. 

Mr. DODARO. Yes. Now, that has been one of the major problems 

that we have identified over the years. Greg can explain the importance of it. 

Mr. WILSHUSEN. It is vitally important to assure that systems 

and information are adequately protected from unauthorized modification alteration. And it basically relates that the activities of one 

individual or group are countered by the activities or overseen, if 

you will, by the activities of another group. So one group does not 

have full control of a transaction or of a process in which it can 

then perform unauthorized activities without detection. Within the 

cyber realm, that often relates to having, for example, software developers being able to operate in the production environment where 

real live actual data is being processed because they could potentially make undetected changes to the software process and that 

data, and you don’t want that to happen. So software developers, 

in this case, should be confined to a development and PRO-ART environment. 

Ms. PLASKETT. OK. So my understanding, and, you know, I am 

not—my children will tell you I have no—I am a Luddite. I have 

to technological knowledge, but kind of like a submarine where 

when there is a leak in one area you can close off that section and 

then another area where the leak occurs doesn’t infect the other 

areas with the segregation of duties. Is that occurring now in the 

Federal agencies with the IT? 

Mr. WILSHUSEN. Yes. In several agencies there are instances 

where they have weaknesses, and I think it is about 14 agencies 

that have weaknesses and segregation of duty controls, and the example you highlighted actually also speaks to defense in depth, and 

that is another security defense principle that agencies should put 

layer upon layer of security controls so in the event that one layer 

may be circumvented or penetrated, that other controls help to protect the data and systems at hand. 
55 

Ms. PLASKETT. So now one of the reasons that I mentioned Home 

Depot and Anthem, we know that this has occurred in other private sector areas, is what is the relationship that you all have with 

trying to assist those private sector individuals in best practices, 

because at the end of the day, all of these systems connect with one 

another. 

Mr. WILSHUSEN. Yes. Actually, it is the Department of Homeland 

Security that has an overriding role within the Federal Government for helping in assisting with critical infrastructure industries 

in protecting their information and their systems. In addition, for 

certain retail companies like this, it may also be the Federal Trade 

Commission that would also provide assistance and guidance to 

those entities. 

Mr. DODARO. We have been encouraging and exhorting for years 

more dialog and information sharing between the public sector and 

the private sector. Both have been reticent for different reasons to 

share information, but that is really the only way that this problem 

is eventually going to be solved. Congress has made some overtures 

in this area and legislation. We believe more legislation could be 

helpful in this regard. 

Ms. PLASKETT. Well, I am hopeful that this body will continue to 

assist you in making sure that that happens, and I yield the balance of my time. 

Chairman CHAFFETZ. Thank the gentlewoman. 

We will now recognize the gentleman from Massachusetts, Mr. 

Lynch, for 5 minutes. 

Mr. LYNCH. Thank you, Mr. Chairman, and ranking member, 

and, Mr. Dodaro, good to see you again, and all your cohorts. I 

agree with Mr. Connolly’s remarks that this may not be the most 

sexy hearing of the year, but—— 

Chairman CHAFFETZ. Objection. 

Mr. LYNCH. Well, I think it may reflect best the core mission of 

this committee, however. I do notice in your list of areas of concern, 

you have got a list of—that 2015 high-risk list, that the VA Health 

is on that list for the first time, and I know it is one of the two 

new areas, and this designation comes in light of the longstanding 

and systemic weaknesses in accessibility and quality of care. We 

saw the problems that we had down at the Phoenix VA, a terrible 

situation there. And we also have, quite frankly, a huge increase 

in the number of veterans that are now, for the first time in their 

lives, relying on the VA for their healthcare. We went from 6.8 million veterans in 2002 to 9.4 million enrollees in 2015. So it has put 

a huge amount of pressure on the system, including 1.4 veterans 

form Operation Iraqi Freedom and Enduring Freedom in Afghanistan, and mindful that most of those folks did multiple tours. 

And I was in Kandahar Province not long ago, and I asked how 

many folks were on their first tour, their second tour. I got all the 

way up to seven tours of duty before I ran out of Marines. Most 

of them had been there three or four tours of duty. So that repeated cycle of deployments does a lot of damage, I think, to the, 

you know, the psychiatry of serving among our young men and 

women, and I think that we are going to see reverberations in the 

healthcare system as a result of those multiple deployments, but I 

am looking forward. 
56 

That is—I am actually the ranking Democrat on the National Security Subcommittee that is going to address those, and I look forward to your good work continuing in that area, especially with 

some of the new implementations that we have had allowing veterans to be treated at non-VA facilities if we do have a backup in 

appointment time, and that has been a constant problem for us not 

just in the Northeast but all across America, and I know Florida 

is all backed up because of the number of retirees down there. They 

have had a very long backlog there. Some of the areas in Texas as 

well. Virginia, my friend, Mr. Connolly, a huge number of veterans 

in his district as well, and also we have got another provision that 

allows them to go to non-VA facilities where their travel to a VA 

facility is more than 40 miles. So it all builds up to a greater reliance on our ability to conduct oversight on the VA healthcare system. I look forward to working with you. You have got a great staff. 

You have got a good cohort of people behind you that have worked 

tirelessly over the years. I am looking forward—we have got no 

shortage of issues to work on, and I just appreciate the work that 

you do every single day. Thank you. 

Now I yield back. 

Mr. CONNOLLY. I would ask my friend to yield. 

Mr. LYNCH. Oh, yes. Sure. 

Mr. CONNOLLY. For a question. Mr. Lynch, how many times have 

you been to Afghanistan or Iraq? 

Mr. LYNCH. I would say Iraq about 14 times, and I would say Afghanistan about 12 times, oftentimes with folks from—that Mr. 

Dodaro works with, a special inspector of—Special Inspector Generals of Iraq Construction or Afghanistan Reconstruction as well. 

Mr. CONNOLLY. Well, I just want to say, for me, you have been 

a model of oversight commitment to the work in both countries at 

personal risk and peril to yourself, and I honor you for that. Thank 

you. 

Mr. LYNCH. Well, thank you. 

Mr. DODARO. I would just say in terms of the picture that you 

paint, not only have we had more veterans coming back with multiple tours, but they are going to be living longer thanks to modern 

medicine, but this problem will occur over decades, and we need to 

get a handle on it right now. There will be more veterans even 

coming back. So this is really a very significant long-term issue, 

and that is one of the reasons that we put it on the high-risk list. 

Mr. LYNCH. Thank you. 

Chairman CHAFFETZ. Thank you. The gentleman yields back. I 

now recognize the gentlewoman from New York, Ms. Maloney, for 

5 minutes. 

Mrs. MALONEY. I want to thank you for your work, and I apologize to my colleagues. I am late to the committee because I was at 

a meeting on a cyber security, which is really one of the biggest 

challenges we face as a Nation, and I believe it is an area that we 

will in a bipartisan way work together to address. So I want to 

mention the assessments that you have found for dealing well 

cyber attacks. And your report found that many agencies had ‘‘Inconsistently implemented policies and procedures for responding to 

a data breach involving PII.’’ 
57 

Can you explain for the committee those areas in which GAO 

found that agencies were inconsistent in their implementation of 

policies for responding to data breaches, and what do we do about 

it? 

Mr. DODARO. Yes. Greg Wilshusen will address that. He is our 

expert in the area. 

Ms. MALONEY. OK. Great. 

Mr. WILSHUSEN. Yes. We conducted a review at several Federal 

agencies over their procedures and policies for responding to security incidents involving personally identifiable information, and one 

of the things we identified is that agencies did not consistently 

identify the risk to the affected individuals and the harm that 

could occur or the impact that it could occur to those individuals. 

In addition, they were inconsistent at what point do they provide 

additional services to those individuals. For example, whether or 

not to provide credit monitoring services or other types of services 

in order to help those that have been—whose information has been 

compromised. 

Mrs. MALONEY. OK. And to the point, what can Congress do to 

assist you, GAO, in advocating that Federal agencies are being consistent in carrying out policies that respond to these breaches? 

Mr. DODARO. We believe that the Privacy Act which was originally passed in 1974 needs to be updated, and Congress should 

take that upon their responsibilities. The agencies are collecting 

more information than was contemplated in the Privacy Act because the Privacy Act deals with records of information but not 

through social media and other means. More information is being 

collected that wasn’t contemplated when the Act was passed. The 

definitions in the Act are very broad, which leads to inconsistent 

applications that can be done. There is not enough notice that is 

made to the public. Typically in those days, it was through the Federal Register, but there are more available tools now to notify the 

public and make things available. So the Congress needs to update 

the Privacy Act, and we would be happy to work with this committee or other committees to do so. 

Mrs. MALONEY. OK. And, finally, you State, and I quote GAO’s 

report. ‘‘Agencies may not be consistently taking action to limit the 

risk to individuals from PII-related data breaches.’’ So in GAO’s assessment, what are specific actions agencies can take right now to 

improve their ability to respond to data breaches on top of rewriting the Privacy Act? 

Mr. WILSHUSEN. Sure. Yes, one of the actions that they can take 

is making sure that they have appropriate policies and procedures 

in place before incidents occur so they know how to act once an incident will occur. And, indeed, our work has shown that the number of incidents involving PII at Federal agencies is climbing, and 

every agency is affected by that, and that could include having a 

dedicated team available that has the roles and responsibilities 

previously identified and trained in those roles and responsibilities 

in order to act appropriately and timely when incidents occur. 

Mrs. MALONEY. And, finally, how can Congress be most useful in 

ensuring that this is fulfilled, that agencies consistently take all 

the necessary actions needed? 
58 

Mr. WILSHUSEN. Well, one is, as the comptroller general mentioned, is to update the Federal laws protecting personal—the privacy of personally identifiable information. Another is holding oversight hearings and holding agencies to account for their incidents 

that occur and assuring that they appropriately implement proper 

protections of the personally identifiable information that may be 

compromised. 

Mrs. MALONEY. Thank you so very much. 

Chairman CHAFFETZ. Thank you. If no other member has a question for this first panel, we would like to again thank the GAO, 

specifically Mr. Dodaro, and the great work that so many of you 

and your staff do. I would ask that the clerk change the table, and 

I would actually like to mention something as we do in this in the 

essence of time. So again, Mr. Dodaro, thank you. You are excused, 

and go ahead and make the change. I want to talk about the artwork that you see in here, and I would like to make a bit of a 

Statement, and, again, there will be a little commotion here as we 

change out the names, and please, if you are on the second panel, 

please come take a seat. 

When I became the chairman, we made some alterations to the 

artwork here, and part of what I was trying to do was I felt it 

would be best to highlight the people that we serve rather than the 

past committee chairmen. I feel strongly that we should be inspired 

by those who—by the American people, and that is who we serve. 

They have done great things over generations of time, and those 

are the types of people that we should be inspired by. 

So I would like to introduce these pieces of art as, again, we get 

this next panel ready, and I will tell you that they are all real photography and real photos. I would like to start here with this one. 

It is of the Ben Franklin Bridge and the Philadelphia skyline. It 

was taken by a photographer by the name of Charlie Lansche. It 

is the Ben Franklin Bridge. It spans the Delaware River connecting 

Philadelphia with Camden, New Jersey. 

Contrasting the urban setting, we have this new photo that was 

taken, actually, in my congressional district in Utah. It does look 

like a painting, but it is actual photograph that was taken in January. It was taken along the Provo River with the Mount 

Timpanogos there in the distance, and we live in a very beautiful 

setting, and I think the contrast between the urban setting and a 

more rural setting is part of what I wanted to highlight. 

Going here on this side, this is a photo that was taken—it was 

first published in March 1966. Warren Leffler was a photographer 

for U.S. News and World Report, and the image is of postal workers loading mail bags into trucks for delivery, and a good number 

of people for decades, generations, have been doing good work in 

the postal service, and one of our couriers of responsibility. 

This next photo back over here is of Utah copper miners. We 

have had people who have been in the mining industry across this 

Nation, whether it is coal or copper or whatnot. This was first published back in 1942. They are using a rock-drill machine at the 

Bingham Mine in the Bingham Canyon in Utah. 

This next photo was taken in Afghanistan. The American flag 

capturing the morning’s first rays of sunlight as it is hoisted from 

one of the peaks of the Kowtal-e Paymor Mountain on the outskirts 
59 

of Kabul, Afghanistan, in honor of Veterans Day. It was shot on 

November 11, 2010. Not a professional photographer, but that is 

one of the most beautiful patriotic shots I have ever seen, and really appreciate the service that Paul Bingham offered this country 

and the photo that he took that day honoring Veterans Day above 

the hills there in the mountains outside Kabul. We have had thousands and thousands of Americans serve overseas and in Afghanistan, and we honor them and should be thinking of them regularly. 

This next photo at the back of the room is actually civil rights 

protesters on one of three marches from Selma to Montgomery, 

Alabama. This photo was first published in 1965, they tell me, and 

is a good reminder that people have gone through a lot of hardship, 

but also made a lot of progress. And I love the patriotic nature of 

the carrying of the flags in that photo and appreciate the Library 

of Congress for providing that to us as well. 

The next one is of the Golden Spike. The Golden Spike actually 

happened in Utah. It was taken on May 10, 1869. By joining the 

Central Pacific and Union Pacific lines at Promontory Point in 

Utah on May 10, 1860. The Golden Spike was the ceremonial last 

spike driven in by Lelant Stanford to join these rails to form the 

first Transcontinental Railroad across the United States bridging 

the east and the west together. 

The next photo is really the only portrait that I would consider 

here, but interestingly enough, this was first published in 2006. It 

was from the Library of Congress. The Lincoln Memorial is obviously one of the best sites we have in this country and certainly 

in the United States, but when he was Congressman Lincoln, he 

served on the Post Office and Post Roads Committee, and the Expenditures and the Department of War Committee, two committees 

that preceded the modern day Oversight and Government Reform 

Committee. So interesting to me that Abraham Lincoln, when he 

served in the House of Representatives, served on what is now 

known as the Oversight and Government Reform Committee, an 

inspiration to a lot of people. 

Moving over here, we have got two more. This photo was taken— 

it comes from the Library of Congress. We are not sure who the 

photographer was. It was published sometime between 1914 and 

1918. It is of women making and crimping fiber powder containers 

for 3-inch Stokes guns during World War I. It was taken at the 

W.C. Ritchie & Company facility in Chicago, Illinois. And, again, 

a great deal of sacrifice that was going on in this country, and I 

actually like—I love the patriotic nature that one as well. 

And, finally, I want you to look closely at this photo if you have 

a chance. This is a steel worker on the framework of the Empire 

State Building high above the city with the Chrysler Building 

prominently displayed in the back. 

Mr. LYNCH. Ironworker. 

Chairman CHAFFETZ. Ironworker. Ironworker. My apologies. The 

photographer was Lewis Hine, and it was first published in 1930, 

and comes to us from the National Archives. Not exactly OSHA 

compliant back then. That gentleman is sitting on the precipice of 

death, working hard to build this country without a safety harness, 

without the types of things that our workers have now, but a good 
60 

deal of people have made these kind of dedications and sacrifices, 

and I am glad that they captured a photo of it. 

These are the types of people I think should be inspired in this 

committee rather than just the committee chairmen of past, and so 

we made those changes. I hope the committee appreciates that, and 

I am honored to have these photos in here, and I thank the members for my indulgence. 

We would now like to recognize our second panel of witnesses. 

Oh, pardon me. I would like to yield to our ranking member, Mr. 

Cummings, for 5 minutes. 

Mr. CUMMINGS. Mr. Chairman, when you told me that you were 

going to select some photographs, I was—I didn’t know what you 

were going to do, but I must tell you and all of those who had anything to do with selecting these photographs, that they are absolutely beautiful. 

You know, I used to say that my father who only had a second 

grade education, but who educated all seven of his kids, I used to 

say that I was inspired by his aspirations, and when we look at 

these pictures, the ones of hard-working Americans in the pursuit 

of happiness and building our country, I believe that their stories, 

I mean, just looking at them, should inspire all of us to be the very 

best that we can and to lift up their lives and people—the people 

like them, their lives, and then, you know, you look at the other 

ones that show our environment. I think it should be a reminder 

that we do have a sacred duty to pass on to our children an environment which is just as good as or better than the one that we 

inherited. 

You know, it is said that we do not inherit our environment from 

our ancestors, but we borrow it from our children, and I would say 

the same thing about our democracy, and so—and last but not 

least, Mr. Chairman, you, you know, you really did a hell of a job 

when you put the Selma one right there because it just reminds me 

every time I look at it, 4 years before that in Baltimore, it reminded me of us marching, little kids, we were marching trying to 

integrate a pool called Riverside Pool, and it was all-white pool. We 

were beaten, but yet still we marched in the pursuit of happiness, 

and so I am—I still like to say that I am hoping that this will be— 

these photos will be an aspiration—will be an inspiration because 

of the aspirations of these folks who made America what it is. 

Thank you very much. 

Chairman CHAFFETZ. Thank you. I appreciate those comments. 

And now back to the business before us. I thank the five gentleman who have joined us, and I would like to recognize this panel 

of witnesses. I am pleased to recognize the Honorable John 

Koskinen, who is the Commissioner of the Internal Revenue Service; the Honorable Alan F. Estevez, Principal Deputy Under Secretary of Defense for Acquisition, Technology and Logistics at the 

United States Department of Defense; Mr. John MacWilliams, Senior Advisor at the United States Department of Energy; and then 

Shantanu Agrawal. Did I pronounce that properly? I know you 

have testified previously. 

Mr. AGRAWAL. You nailed it. 

Chairman CHAFFETZ. Yes. He is the Deputy Administrator and 

Director of the Center of Program Integrity at the Centers for 
61 

Medicare and Medicaid Services; and Mr. Robert M. Lightfoot Jr., 

Associate Administrator at the National Aeronautics and Space Administration. 

We thank you for your patience. It has been a while to get to this 

panel, but we do appreciate you here. 

Pursuant to committee rules, all witness be sworn before they 

testify. So if you could rise please and raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

Thank you. Let the record reflect that all witnesses answered in 

the affirmative. You may be seated. 

Mr. Koskinen, we will start with you. Your full Statement will 

be introduced into the record, but we would ask that you please 

limit your testimony to 5 minutes, and we will go from there, Mr. 

Koskinen. 

STATEMENT OF HON. JOHN KOSKINEN 

Mr. KOSKINEN. Thank you. Thank you, Chairman Chaffetz, 

Ranking Member Cummings, and members of the committee. 

Thank you for the opportunity to discuss the Government Accountability Office’s high-risk list as it pertains to IRS operations. I am 

delighted to note that one of our programs, Business Systems Modernization, was removed from the list in 2013 after being on the 

list since 1995. Its removal came about because of the advances the 

IRS has made over many years in addressing weaknesses in information technology and financial management capabilities. Turning 

now to tax enforcement, the GAO has identified this as a high-risk 

area because of the size of the tax gap and the difficulty over time 

in narrowing that gap. The most recent IRS study of the tax gap 

released in 2012 found that the tax gap was $385 billion for tax 

year 2006. The IRS is preparing a new study of the tax gap that 

covers tax year 2010, and will be based on audits done between 

2008 and 2010. We expect this report to be released in the first 

quarter of 2016. 

One of the key findings from our ongoing research on the tax gap 

has been that the compliance rate is very high for income that is 

subject to information reporting. Income subject to third party reporting is underreported only about 8 percent of the time. That 

number jumps to 56 percent for income that is not subject to any 

third party reporting or withholding. 

Another thing we’ve learned from our research is that the biggest 

portion of the tax gap involves the underreporting of business income by individual taxpayers which totaled $122 billion in 2006. 

The evidence is clear that the lack of reliable and comprehensive 

reporting and withholding on this type of income is the main reason for such a high level of underreporting. A good example of our 

recent efforts to improve compliance in this area involves the legislative requirement for electronic payment processors, credit card 

companies, to send us information from business credit card receipts on a new form 1099-K. The first 1099-Ks were filed in 2012 

for transactions in 2011, and I am pleased to report we are beginning to see positive impacts on compliance from this new program 

provided by the Congress. 
62 

Programs such as 1099-K reporting are useful not only because 

they help the IRS to collect the correct amount of tax, but also because they encourage voluntary compliance, and the importance of 

voluntary compliance cannot be overStated. A 1-percent increase in 

the level of voluntary compliance brings in about $30 billion annually in tax receipts. 

Even with these and other efforts, I would note that it is not possible to eliminate the tax gap completely. Getting to 100 percent 

tax compliance would require a huge increase in audits and significantly greater third party reporting and withholding than we have 

now. Realistically, that wouldn’t work because the burden on taxpayers and the strain on IRS resources would be far too great. Our 

budget situation represents a very serious challenge to our ability 

to keep making progress on this front. In order to absorb required 

reductions this year, the IRS has taken a number of difficult steps, 

including the loss through attrition of about 1,800 key enforcement 

personnel. That translates into fewer audits and collection cases, 

and we estimate the government will lose at least $2 billion in revenue that otherwise would have been collected. Additionally, the 

reductions in our funding have forced us to make cuts in taxpayer 

service. This is also troublesome because if we can’t provide the 

services taxpayers need to fulfill their tax obligations, voluntary 

compliance will suffer. 

This concludes my Statements, and I would be happy to take 

your questions. 

Chairman CHAFFETZ. Thank you. 

[Prepared Statement of Mr. Koskinen follows:] 
63 
64 
65 
66 
67 
68 
69 
70 
71 

Chairman CHAFFETZ. Mr. Estevez. 

STATEMENT OF HON. ALAN F. ESTEVEZ 

Mr. ESTEVEZ. Thank you, Chairman Chaffetz, Ranking Member 

Cummings, members of the committee. Appreciate the opportunity 

to appear before you to discuss a couple of the areas of high risk 

identified by GAO, specifically supply chain management and 

weapons acquisition. 

The Department of Defense has made measurable progress in addressing these areas as well as in the areas of contract management, as Mr. Dodaro mentioned, and infrastructure. The Department is dedicated toward improving our supply chain and acquisition processes to ensure effective support for our warfighters and 

value to the American taxpayer. 

Supply chain management and weapon system acquisition are 

complex areas that, by their nature, entail some level of risk. We 

develop and field the best weapon systems in the world, and our 

logistics capability is unparalleled, as demonstrated in the last 13 

years of war. However, due to the scale and complexity of these 

functions inside the Department of Defense, even at six Sigma levels of tolerance, there will be some deficiencies. Therefore, we must 

continually strive to improve. 

Today the DOD supply chain is simultaneously sustaining forces 

in Afghanistan, supporting the war on ISIL, and completing the 

mission to control Ebola. At the height of operations in Afghanistan, we provided 1.1 million gallons of fuel and 435,000 meals a 

day, delivered medical supplies, construction materials, and spare 

parts to sustain our combat power at record levels of readiness. 

DOD manages over 5 million items valued at over $90 billion. Our 

actions to improve inventory performance while maintaining overarching focus of reducing risks to our warfighters have produced 

substantial results that have been acknowledged by GAO. For example, since 2010, DOD has been implementing our comprehensive 

inventory management improvement plan. Since 2012, we’ve reduced government-managed inventory by $14.4 billion, the first reduction in government inventory since the 1990’s. DOD is implementing a new forecasting methodology, which is producing improved material availability, decreased back orders, and reduced 

procurements. With that said, there is more work to be done on improving our supply chain performance and we remain focused on 

doing so. 

Second area of high risk that I want to address is weapon system 

acquisition. It is important to recognize that the weapon system acquisition process has provided the United States with dominant 

military capabilities. The rise of foreign capability, coupled with 

our ongoing combat operations, global commitments and our reduced budgets is jeopardizing our technological superiority. Our 

weapon system acquisition process must deliver needed combat capability to our warfighters as effectively as possible. Our program 

for continuous process improvement in this area that we call better 

buying power, or BBP, is focused on that goal. 

GAO’s and our own main concern in the acquisition area is cost 

and schedule of growth. Under BBP, the Department sets and enforces affordability caps on all major weapon systems. We are 
72 

tracking performance against established caps to ensure compliance. Affordability caps tied to requirements. BBP drives active engagement between the acquisition and requirements leadership, 

that would be the operator who uses the weapon system, during 

weapon system development to ensure that requirements associated with the program address the warfighter needs in a cost effective, affordable way. 

We revised our principal acquisition policy, DOD Instruction 

5002, which formally institutionalizes BBP and the improvements 

resulting from the Weapon System Acquisition Reform Act, including emphasis on systems engineering, cost analysis, and testing. In 

addition to the actions already mentioned, we are formally measuring our own performance. The first two annual reports on the 

performance of the defense acquisition issue—acquisition system 

have provided data that the Department is using to increase the 

performance of the acquisition process, and GAO is also using those 

reports. 

In summary, DOD will continue to work with the GAO to address the underlying root causes that have resulted in our highrisk designation. We are and continue to be focused on removing 

ourselves from this list by correcting our deficiencies for the benefit 

of our warfighters and the taxpayer. 

Thank you for the opportunity, and I look forward to your questions. 

Chairman CHAFFETZ. Thank you. 

[Prepared Statement of Mr. Estevez follows:] 
73 
74 
75 
76 
77 
78 
79 
80 
81 

Chairman CHAFFETZ. Mr. MacWilliams. 

STATEMENT OF JOHN MACWILLIAMS 

Mr. MACWILLIAMS. Thank you, Chairman Chaffetz, and Ranking 

Member Cummings, members of the committee. I appreciate the 

opportunity to appear before you today to discuss the Department 

of Energy’s efforts at improving our management of our capital 

asset projects. This is a topic of great importance to Secretary 

Moniz and our Deputy Secretary Sherwood-Randall. 

DOE manages some of the largest most complex and technically 

challenging projects in either the public or the private sector due 

to its diverse mission. The portfolio of large projects undertaken by 

DOE is unique not only from other projects in the public and private sectors but also each DOE project is unique from other DOE 

projects. These projects are truly one of a kind with uncommon 

challenges, such as handling radioactive conditions or producing 

extremely bright X-rays for nano science. In light of these challenges, DOE has historically struggled with project and contract 

management, and we have been on the GAO’s high-risk list since 

the list’s inception in 1990. 

We have made some important progress, however, that has been 

recognized by GAO and others. In 2009, we were removed—the 

GAO removed the Office of Science from the high-risk list, and in 

2013, GAO again narrowed its DOE focus to projects over $750 million in the Department’s Office of Environmental Management and 

the National Nuclear Security Administration. The Department remains very focused on getting off this list entirely. To meet this 

challenge, the secretary is instituting changes to improve departmental performance on major projects, and one of the first actions 

he took when he became Secretary was to create an Under Secretary for management and performance to focus specifically on improving project management and providing direct supervision of 

many of DOE’s most challenging projects. 

In August 2013, the Secretary also established a working group 

which he asked me to lead to conduct an in-depth analysis of 

project management. This working group was comprised of DOE’s 

senior-most project management experts, and we took a very comprehensive look at the challenges that DOE faces, and the group 

provided opinions as to why projects either fail or succeed in the 

DOE environment. The working group’s findings were issued in a 

report which was released in December, and that report you can 

find on our Website at the Department of Energy. 

The report led to several recent—implementation of several efforts to improve project management. First, we strengthened the 

Energy Systems Acquisition Advisory Board. We will now review 

all projects with an estimated cost of $100 million and up. Used to 

be we only looked at 750 million and up, and the board, which is 

chaired by the Deputy Secretary and comprised of the senior-most 

departmental officials, will now meet at least quarterly and will 

focus on projects that are deemed to be at risk of not meeting their 

performance baselines. 

Second, we have established a new committee, the Project Management Risk Committee. This is comprised of the senior project 

managers who are the same folks that wrote the report that I just 
82 

referenced, and that is providing risk assessment and advice to the 

Department’s senior leadership, reviewing and analyzing projects 

before all critical decisions and baseline change proposals, and providing peer reviews and in-house consulting to projects across the 

Department. 

Finally, the Secretary has taken a series of actions aimed at improving lines of responsibility and improving our peer review process. The Department is improving accountability by ensuring that 

for each project, the appropriate Under Secretary must now designate a clear owner who has budgetary and programmatic responsibility. There must also be a clear line of responsibility that extends from the Under Secretary to the project owner to the Federal 

project director. In addition, where it doesn’t exist already, each 

Under Secretary is now establishing a project assessment office. 

The reforms and processes that we are instituting at DOE with 

respect to project management are critical steps to meet our solemn 

responsibility to be responsible stewards of taxpayer dollars. We 

are encouraged by the work that has been done over the last year 

which has been focused on effecting permanent, structural and cultural change in the way that the Department manages its projects. 

Thank you. I would be pleased to answer your questions. 

Chairman CHAFFETZ. Thank you. 

[Prepared Statement of Mr. MacWilliams follows:] 
83 
84 
85 
86 
87 
88 
89 

Chairman CHAFFETZ. Members should be advised that there is a 

vote on the floor. We have three votes. The intention is to have the 

next two gentlemen give their opening Statements, but we will not 

get to questions until after votes. So we anticipate that that will 

happen no sooner than 5:15. Each of you two gentlemen have up 

to 5 minutes, but please be swift, and your full Statements will be 

entered into the record. Doctor. 

STATEMENT OF SHANTANU AGRAWAL, M.D. 

Dr. AGRAWAL. Thank you. Chairman Chaffetz, Ranking Member 

Cummings, and members of the committee, thank you for the invitation to discuss the Centers for Medicare and Medicaid Services’ 

operation of these programs. 

We share this committee’s commitment to protecting beneficiaries’ and taxpayers’ dollars and to preserving these program for 

generations to come. CMS appreciates the work of the GAO. Medicare is a large and complex program serving 54 million beneficiaries and working with over 1.5 million providers. We pay over 

one $billion claims per year from these providers. While the GAO 

continues to classify Medicare as a high-risk program, there is good 

news to report. The last 2 years saw the slowest growth in real per 

capita national healthcare expenditures on record. The 2014 Medicare trustee’s report projects that the trust fund which finances 

Medicare’s hospital insurance coverage will remain solvent until 

2030, 4 years beyond what was projected just last year. They are 

also promising improvements in the quality of care furnished the 

beneficiaries. CMS initiatives have contributed to an estimated 

50,000 fewer patient deaths in hospitals, and 1.3 million fewer hospital-acquired conditions, saving $12 billion over 3 years. Medical 

review strategies have resulted in over $5 billion of savings in just 

last fiscal year. 

CMS is working to transform Medicare into a high-value payer 

with payment policies based on quality not just volume, and we remain focused on preventing waste, abuse, and fraud before it occurs. These issues are not merely about cost. They threaten beneficiary health through unnecessary services, substandard care, dangerous prescribing, and a host of other problems. Since 2011, CMS 

has been using its fraud prevention system to apply advanced analytics on all Medicare fee-for-service claims. The system also incorporates beneficiary complaints made through 1–800-MEDICARE, 

and works with numerous other inputs to generate and prioritize 

leads for further review and investigation. CMS then swiftly takes 

administrative action to stop problematic behaviors through the 

suspension of payments, medical review of claims, and removal 

from the program. As we recently reported to Congress, our advanced analytic system has already generated a 5 to 1 return on 

investment. 

Another component of our efforts is to strengthen provider enrollment by verifying the legitimacy of new or existing Medicare providers through a risk-based approach. We are screening those that 

pose the highest risk to the program using routine data checks over 

licensure and criminal records, scheduled and unscheduled site visits, and fingerprinting. As a result, we have removed over 450,000 

Medicare enrollments since 2010, and importantly denied thou-
90 

sands of enrollment applications, which means that these providers 

never gained the ability or lose the ability to build a Medicare program. These unprecedented examples of success have been positively acknowledged by GAO. 

Additionally, we are engaging with the private sector in new 

ways to better share information and transform insights into action. The Healthcare Fraud Prevention Partnership is currently 

made up of 38 private, Federal, and State members, and continues 

to gain membership. The partnership has completed studies that 

led partners to take substantive actions, and is developing additional studies based on these results. The President’s FY–16 budget 

includes a proposal to allow both public and private partners to 

support this partnership by providing funds. Beyond the partnership, CMS has made important progress in integrating proven private sector tools in our operations, including advanced predictive 

analytics, prior authorization, and the use of automated prepayment claims edits. These initiatives net million—hundreds of millions of dollars in savings every year. 

Finally, CMS is focused on moving the Medicare program away 

from the misaligned incentives of fee-for-service reimbursement, 

like paying the number of tests performed instead of paying for 

quality and outcomes. CMS is testing different payment models 

where providers are held accountable for the quality and cost of 

their care, and providers have a financial incentive to coordinate 

care for their patients. For the first time, HHS has also set explicit 

goals for this work. CMS has a goal of tying 30 percent of traditional fee-for-service Medicare payments to quality through alternative payment models by the end of 2016, and tying 50 percent 

by the end of 2018. As a physician myself, I ultimately care most 

about the health of patients, which I am reminded of daily as I 

work with CMS colleagues to improve the delivery of healthcare 

services. Our healthcare system should offer the highest quality 

and most appropriate care possible to ensure the wellbeing of individuals and populations. 

I look forward to answering this committee’s questions, and I 

thank for the time. 

Chairman CHAFFETZ. Thank you. 

[Prepared Statement of Dr. Agrawal follows:] 
91 
92 
93 
94 
95 
96 
97 
98 
99 
100 
101 
102 
103 
104 
105 
106 

Chairman CHAFFETZ. Mr. Lightfoot, you are recognized for 5 

minutes. 

STATEMENT OF ROBERT LIGHTFOOT 

Mr. LIGHTFOOT. Thank you, Chairman Chaffetz, Ranking Member Cummings, other members of the committee. Appreciate the 

opportunity to appear today to discuss NASA’s efforts to improve 

acquisition management. NASA develops missions and capabilities 

to expand the frontiers of knowledge, capability and opportunities 

in space and here on Earth. By the very nature of our mission, 

NASA’s activities are inherently high risk. At the same time, we 

recognize the critical importance of managing our projects as effective stewards of taxpayers’ dollars. This means managing our 

projects to deliver them on cost, on schedule, and identifying risks 

as quickly as possible so we can implement appropriate corrective 

action. 

We’ve made significant improvements both in managing our 

projects and preparing our managers. These improvements are already yielding results, particularly with our small and medium 

class missions. We have seen a significant reduction in the number 

of projects that exceed their baselines, and, in fact, several projects 

have recently launched within their baselines, including Juno, 

Landsat 8, the Mars Atmosphere and Volatile Evolution, and just 

2 weeks ago, the Soil Moisture Active Passive Mission, or SMAP. 

Our larger, more complex projects typically involve technical— 

typically involve the development of significant number of new 

technologies, which present greater technical risk, but even the 

James Webb Space Telescope, the next great observatory in space, 

which was originally confirmed on an old cost policy that we used 

and had exceeded its original baseline, has benefited from our improved process. The James Webb Space Telescope has remained on 

track to meet the new cost and schedule baseline we established 

in accordance with the new policy 3 years ago. 

NASA cost policies have evolved over time toward a probabilistic 

joint cost and schedule confidence level analysis. This joint confidence level analysis enables NASA to estimate the probability of 

completing a project within a certain life cycle cost and schedule 

based on the individual project’s unique technical and programmatic characteristics. A key benefit to the joint confidence 

level policy is the added rigor it brings to the analysis process, 

driving an integrated analysis of the cost schedule and technical 

risk. 

NASA has also taken steps to enhance the agency’s earned value 

management capabilities. Earned value management guidance is 

provided to the NASA community through the recently released 

project management handbook, as well as through the EBM handbook. NASA routinely reviews earned value management data at 

formal regular recurring meetings at the projects at the center, at 

the mission, and at the agency level, as well as in ad hoc meetings 

should issues arrive. NASA relies on the knowledge we gain with 

each new project in order to improve our project management practices, and introduces new tools to assess whether our projects are 

on track to meet their cost and schedule commitments. 
107 

I would like to thank the GAO for their hard work and their valuable insights. We appreciate the open dialog we’ve had with them 

over the last few years, as we’ve both improved—as we’ve worked 

to improve and refine our project management capabilities. As a result, I think what—and while I think there’s still a lot of work to 

be done, I am confident that we are on the right track to improving 

project management at NASA. 

Thank you for the opportunity to be here, and I look forward to 

your questions. 

[Prepared Statement of Robert Lightfoot follows:] 
108 
109 
110 
111 
112 
113 
114 

Chairman CHAFFETZ. I thank the gentlemen. With the vote on 

the floor, the committee will stand in recess. When votes conclude, 

we will continue, and we thank you again all for your patience. 

[Recess.] 

Chairman CHAFFETZ. Committee will come to order. I thank you 

all for your patience with votes on the floor. We obviously got delayed. 

I’d actually like to start by recognizing the gentleman from North 

Carolina, who’s the chairman of one of our subcommittees on government—the Subcommittee on Government Operations. The gentleman from North Carolina, Mr. Meadows, for 5 minutes. 

Mr. MEADOWS. Thank you, Mr. Chairman. And thank each of you 

for being incredibly flexible today. 

Really, I guess the underlying concern that I have is as we 

have—are celebrating the 25th anniversary, is we’ve got to figure 

out a way to get off of the high-risk list. It’s not a very high benchmark. You know, really if you look at the components of that, it 

is just making a real concerted effort. And so I’m looking forward 

to each one of you putting together a plan to make sure that we 

can do that. 

Doctor, let me come to you. I sent you a text, and I want to compliment you—I actually sent you an email. I want to compliment 

you on the fact that on a weekend, you responded via email, which 

was shockingly surprisingly—surprising, and I want to just say 

thank you. 

Do you have the automatic re-enrollment numbers that I’ve been 

requesting from CMS? Have they given those to you? 

Dr. AGRAWAL. Yes. Mr. Meadows, thanks for the question and 

I’m happy to be accessible whenever you need. So the answer is I 

think we’re still working on it. You know, that is part of the agency 

obviously that I don’t have direct oversight over. My understanding 

is that you’ve had numerous conversations with the CEO of the 

marketplace, Kevin Counihan, and that they are working on assembling those numbers. I think obviously, as you know, our focus 

is certainly on getting the numbers out to you and the public, but 

making sure that they are accurate when we do. 

Mr. MEADOWS. All right. So what you are saying is that you have 

not seen the numbers for the automatic re-enrollment. You’ve 

never seen any totals? 

Dr. AGRAWAL. I have not, correct. 

Mr. MEADOWS. OK. It’s my understanding that we have those 

numbers, and we’ve been trying for 60 days to get it. Any reason 

why it would take that long to verify numbers? 

Dr. AGRAWAL. I think it’s just confirming that the numbers are 

numbers we can stand behind, making sure that they’re good numbers that ought to be released. Again, I believe staff at CMS are 

in touch with your staff, and obviously, you’ve been in touch 

with—— 

Mr. MEADOWS. Well, they—we’ve been in touch. They have not 

really been in touch—— 

Dr. AGRAWAL. Gotcha. 

Mr. MEADOWS [continuing]. From a followup. It’s amazing to me 

that we can have the response time for those that get recorded 

messages or wait times for Spanish-speaking operators, and we 
115 

know that down to the second, or actually tenth of a second, and 

yet we can’t get automatic re-enrollment numbers from CMS. 

When can we expect those? 

Dr. AGRAWAL. I don’t have a particular timeline. 

Mr. MEADOWS. All right. Well, let me go on further, because I’ve 

got limited time. Let’s look at Medicare. You’re going from 14,000 

lines of code to 68,000 codes in terms of Medicare reimbursement. 

Is that correct? 

Dr. AGRAWAL. Are you talking about ICD–10? 

Mr. MEADOWS. Yes. ICD–9, 10. ICD–10. 

Dr. AGRAWAL. Sure. 

Mr. MEADOWS. So we’re going to different codes. 

Dr. AGRAWAL. Yes. 

Mr. MEADOWS. And so doctors and hospitals putting in the wrong 

code will come out as an improper payment or fraud. Is that correct? 

Dr. AGRAWAL. Not necessarily. So it really—— 

Mr. MEADOWS. Or improper payment? 

Dr. AGRAWAL. It may. You know, obviously the importance of—— 

Mr. MEADOWS. Why would we go from 14,000 codes to 68,000 

codes? How could that make it more efficient? 

Dr. AGRAWAL. Well, first let me say the agency is adopting these 

codes that are actually established outside of agency processes and 

with the input of the provider community. In fact, it was really the 

provider community searching for specificity and the ability to really define exactly what they were seeing in the—— 

Mr. MEADOWS. So they were getting the payments they wanted? 

Dr. AGRAWAL. So they could get appropriately reimbursed. 

Mr. MEADOWS. Let me ask you. I mean, I went through and 

looked at your codes. We’ve got codes now that one in particular 

says if you unexpectedly are missing your big toe. Unexpectedly 

missing a big toe gets a code. There are six different codes for 

squirrels, I mean, so if a squirrel bites you, if it’s the first time or 

second time, if it scratches you. Do you not see that we’ve got unbelievable lines of code, that more codes will not make it more efficient? There’s one code in here for spending too much time in a 

freezer. I mean, it’s incredibly ridiculous. And let me tell you, the 

physicians that I talk to and the hospitals I talk to are spending 

millions of dollars in compliance trying to figure out your codes, 

and yet we’re going to increase those by four-fold? Why would you 

do that? 

Dr. AGRAWAL. Well, again, I’d be just careful. And let me just 

say, I believe there’s a code for an Orca attack as well. 

Mr. MEADOWS. There—there is. 

Dr. AGRAWAL. There are numerous different kinds of codes. I 

don’t imagine in my own practice to be using that one or many of 

the others. However—— 

Mr. MEADOWS. Well, let me ask you—— 

Dr. AGRAWAL [continuing]. I would like to say—— 

Mr. MEADOWS [continuing]. Is a mouse a rodent? 

Dr. AGRAWAL. Pardon me? 

Mr. MEADOWS. Is a mouse a rodent? 

Dr. AGRAWAL. I assume it is. 
116 

Mr. MEADOWS. Well, but you’ve got a different code for a rodent 

than a mouse, and, I mean—what I’m saying is it’s so complicated, 

you make it so complicated, that nobody can comply. 

Dr. AGRAWAL. I think to be clear, though, the agency is a recipient of ICD–10, just as other agencies are. We did not intend—— 

Mr. MEADOWS. But you’re in control of that, are you not, on implementing that, your Program Integrity? 

Dr. AGRAWAL. No. There are actually numerous parts of the 

agency. I mean, we are actually required to implement ICD–10. I 

realize that Congress has delayed implementation of that requirement, but at some point we are required to implement ICD–10, and 

that’s meant to—you know, the code design itself is not something 

that CMS is engaged in. It is really designed to improve both epidemiologic understanding of administrative data to make sure administrative data really reflects what’s going on in the real world 

clinically, and that providers have had extensive input into these 

code sets. 

I don’t necessarily disagree with your point, but I think we are 

as much a recipient of ICD–10 as other agencies that are implementing it across the world. 

Mr. MEADOWS. Well, my time’s expired. I’ll yield back, Mr. Chairman. 

Chairman CHAFFETZ. Thank the gentleman. Recognize the ranking member, Mr. Cummings, for 5 minutes. 

Mr. CUMMINGS. Yes. Dr. Agrawal, I want to thank you for appearing before our committee today. CMS has undertaken a number of initiatives to reduce fraud and improper payments in the 

Medicare program. I just—I’m just concerned about how they work 

and how effective they are and what you see for the future. I’d like 

to ask you about these today. The ACA requires increased scrutiny 

of providers and suppliers who have historically posed a higher risk 

of fraud or abuse. This heightened screening process applies to providers and suppliers that are attempting to either newly enroll in 

the Medicare program or re-validate their participation. 

Can you describe the different risk-based screening level designations and the various requirements that providers and suppliers in 

each category are subject to? 

Dr. AGRAWAL. Sure. So provider categories by provider type essentially are subdivided among three risk categories: Limited, medium and high. And as you go up the chain of risk, more screening 

strategies and approaches are implemented to screen those types 

of providers, again, whether they’re newly enrolling or revalidating. 

At the highest level of risk, say, a newly enrolling DME company 

or home health agency, there are automated background checks 

that would be performed that really are performed for all provider 

types to ensure adequate licensure, lack of a criminal—relevant 

criminal background or felony record that would keep a provider 

out of the program. But in addition, high risk—the highest risk 

providers face site visits, they face fingerprint-based background 

checks. So a multitude of different screening approaches for the 

highest risk providers, and that also includes providers who are attempting to re-enroll after having a Program Integrity action taken 

against them in the past. 
117 

The result of all of this work, and to—you know, to date, we have 

revalidated over a million of the million and a half providers and 

suppliers enrolled in Medicare, and the totality of all this work on 

both newly enrolling and revalidation is that we have removed the 

billing privileges of over 450,000 enrollments in Medicare to date. 

And I can tell you that these new enrollment requirements are also 

allowing us to deny more applications at the front end, so providers 

actually never make it into the program because they do not qualify. 

Mr. CUMMINGS. Well, that’s what I was about to ask you. So as 

opposed to chasing money, you do some preventive things. Is that 

right? 

Dr. AGRAWAL. I think a lot of our provider enrollment work really solidly lands in the preventive category, because it really is designed to keep folks out of the program that don’t—that don’t belong. So if we conduct a site visit and determine that you are a 

non-operational provider, then you never make it into the program, 

or if we check your criminal background record or check your licensure and determine that you’re not appropriately licensed or you 

have a relevant felony conviction that would keep you out of the 

program, then indeed we deny your enrollment application. 

Mr. CUMMINGS. OK. Let me ask you about the agency’s demonstration program on power mobility devices. How does the agency’s prior authorization demonstration for power mobility devices 

complement CMS’s Program Integrity efforts? 

Dr. AGRAWAL. Sure. Thank you for the question. So one of the 

central challenges in the improper payment rate is that there is a 

disconnect between the medical record documentation that 

underlies a medical service or, you know, indicates what happened 

over the course of that medical interaction, and then the claim that 

comes in to CMS, essentially the bill for that interaction. What 

prior authorization does is allows us to ensure that medical necessity requirements and documentation requirements are being met 

on the front end before the service is even offered to the beneficiary. The demonstration, and generally the way we’ve approached prior authorization is, again, to take a very risk-based approach. The demonstration was implemented around power mobility devices first. We are actually—we put out a proposed rule that 

would look to expand that to other high-cost DME supplies, and 

then there are elements in the President’s budget that look to expand it to things like hyperbaric oxygen and scheduled ambulance 

transportations. But all of it is the same principle which the private sector uses every day of evaluating the service before it’s even 

provided, determining that it’s OK, and then the beneficiary gets 

the service and the provider gets paid. 

Mr. CUMMINGS. Now, is the beneficiary adversely affected? 

Dr. AGRAWAL. I think that’s a really important aspect of this. So 

by checking on the front end before the service is even provided 

that the documentation’s appropriate and that medical appropriateness and necessity are there, it prevents the beneficiary from unnecessarily or potentially being on the hook for a denied claim. So 

the service was never provided, right? That way neither the provider is on the hook for a service that they provided but then are 

not getting paid for, and the beneficiary is not on the hook for hav-
118 

ing received a service that the provider’s not going to then get paid 

for. 

Mr. CUMMINGS. Thank you, Mr. Chairman. 

Chairman CHAFFETZ. Thank you. The gentleman yields back. I 

now recognize the gentleman from Tennessee, Mr. Duncan, for 5 

minutes. 

Mr. DUNCAN. Well, thank you, Mr. Chairman. 

Mr. Estevez, just today, The Hill newspaper says in an article, 

before signing on to increased Pentagon spending to its highest 

level ever, Congress should insist on a serious effort to identify and 

address wasteful spending by the Pentagon. Among major Federal 

agencies, the Pentagon is the only one never to submit, let alone 

pass, a full audit. 

Another article said, Pentagon leaders have requested the stepup production of the F–35, the beleaguered jet fighter that has 

proven to be a massive drain on resources with no end in sight, 

$7.5 billion sunk into the F–35 in Fiscal Year 2014 alone, with 

massive cost overruns and egregious acquisition failures. 

Over the years, I’ve read so many articles about waste at the 

Pentagon, and I sometimes wonder if there are any fiscal conservatives at the Pentagon. 

What do you say—how much—do you have any estimate as to 

how much we’ve spent on the F–35 so far, and are you—are you 

concerned about this article that’s in The Hill today that talks 

about the wasteful spending by the Pentagon? 

Mr. ESTEVEZ. Thank you for the question, Congressman. First, 

we’re always concerned about any wasteful spending at the Pentagon. And we have a number of processes in place to address 

spending in general, including looking at our overhead and functions and looking at our acquisition processes. 

Let me address the F–35. I don’t have the number total spent to 

date. F–35 costs per plane have gone down below our estimation 

since it was re-baselined in 2010. It’s actually producing a pretty 

good airplane. And I think—— 

Mr. DUNCAN. You have—— 

Mr. ESTEVEZ [continuing]. The F–35 is stuck on old news. 

Mr. DUNCAN. You’re the principal deputy for acquisition. And do 

you have any rough guess as to how much we’ve spent on the F– 

35 thus far, a wild rough guess? 

Mr. ESTEVEZ. I’m going to have to get you that for the record. 

Mr. DUNCAN. You don’t know. 

Mr. ESTEVEZ. It goes back to 2004, Congressman. 

Mr. DUNCAN. Right. All right. 

Dr. Agrawal, I met last week with hospitals from east Tennessee, 

and they told me that many hospitals in Tennessee are either going 

to have to close or are about to go under or probably end up being 

sold to some big out-of-State corporations because of the unfairness 

in their Medicare wage index. And they said that the system that 

CMS has now rewards very expensive, inefficient hospitals and penalizes hospitals that have held their costs down or that have continually lowered their costs. Have you looked into this? I mean, 

it’s—the difference between what hospitals are being paid, say, in 

San Francisco or—in comparison to Tennessee or Mississippi or 

places like that, it’s just almost unbelievable. These hospitals are 
119 

being paid twice as much for some of—mostly the same type of 

work. What can you tell me about that? Are you—is CMS looking 

into this or concerned about these huge discrepancies at all? 

Dr. AGRAWAL. Yes. I appreciate the question. We do have processes for hospitals and other providers to engage us in terms of 

wage discrepancies like that. I can tell you that we have a very 

proactive approach to, say, the misvalued codes that we know exist 

and reevaluating those codes, ensuring that our coding approach 

and reimbursement approach is really paying for valuable services 

that, you know, taxpayers expect that we all want the program to 

provide. 

So there is a—I think the core message is there is a process for 

doing that, and we’re happy to engage with hospitals and other 

providers on these kinds of questions. 

Mr. DUNCAN. Well, I’ll tell you this: I don’t have much time left, 

but years ago a hospital administrator in a small town in Tennessee, he told me, he said—he said if you don’t have hospitals, you 

don’t get doctors, and if you don’t get doctors, you don’t get people. 

And there are many rural hospitals that are really struggling in 

this country today because of these discrepancies between what 

they’re getting in comparison to some of the very wasteful, very inefficient big city hospitals. And I think that’s something that you 

really need to take a look at, because it’s very unfair. And I could 

give you all kinds of statistics about that that I won’t bother you 

with today, but it’s getting to be a very serious problem in my 

State. 

Thank you very much, Mr. Chairman. 

Chairman CHAFFETZ. Thank the gentleman. We’re recognizing 

members based on seniority when we gaveled in, so the gentleman 

that’s up next is actually from South Carolina, Mr. Mulvaney. The 

gentleman’s recognized for 5 minutes. 

Mr. MULVANEY. Thanks, Mr. Chairman. 

Mr. Koskinen, when I sat down—this is my first hearing, and 

when I sat down to do the research on the GAO report, which is 

the subject of today’s hearing, I sort of got sidetracked. And I want 

to talk to you about some other things, because one of the things 

I found in doing the research was a report that I think just came 

out today, in fact, it’s being reported today, that your agency is reporting that the tax refund fraud will be $21 billion this year. 

That’s up about 300 percent from just a couple years ago. And that 

number stunned me. 

Just out of curiosity, I think it’s more than we spent on the entire Department of Agriculture. You could run the Treasury, the judiciary, the SEC, the SBA, and your IRS with that money and still 

have a couple billion dollars left over. Mr. Estevez, just out of curiosity, for your interest, I could buy you 140 F–35s on just on what 

we’re going to lose this year in tax refund fraud. You could run my 

State, South Carolina, for 3 years on that money. And that’s not 

all the fraud occurring in the IRS, it’s just the tax refund fraud. 

Anyway, that research led to the research that I wanted to ask 

you about, which is your testimony last week before the Senate 

where Mr. Grassley, Senator Grassley asked you some questions 

about the impact within the Internal Revenue Code and within 

your department of what the President has done on executive am-
120 

nesty. And I think you went back and forth with Senator Grassley, 

and he asked you about people who are benefiting from the amnesty claiming the Earned Income Tax Credit in arrears for up to 

3 years. Are you familiar—you remember that testimony with Senator Grassley? 

Mr. KOSKINEN. I do. 

Mr. MULVANEY. And I don’t know if we established what that 

would cost. Have you had a chance to figure out what the total cost 

of that program would be? 

Mr. KOSKINEN. I have not, but before I get there, I don’t know 

where the $31 billion in refund fraud came from. 

Mr. MULVANEY. $21 billion. 

Mr. KOSKINEN. $21 billion came from. As GAO testified, we 

stopped last year about $16 billion worth of refund fraud and only 

$5 billion is our estimate. What went through, which is still a big 

number and we’re worried about, but it isn’t $21 or $31 billion 

that’s going out the door. 

Now, with regard to the question you asked earlier—— 

Mr. MULVANEY. Yes. 

Mr. KOSKINEN [continuing]. To be eligible for the Earned Income 

Tax Credit, you have to work. It’s in the Earned Income Tax Credit. 

Mr. MULVANEY. Correct. 

Mr. KOSKINEN. To be able to apply for it, you have to have a Social Security number. 

Mr. MULVANEY. OK. 

Mr. KOSKINEN. So if you are—there are—we have about 700,000 

ITINs out there by illegal immigrants who are paying taxes—— 

Mr. MULVANEY. Correct. 

Mr. KOSKINEN [continuing]. But they’re not eligible to apply, because they don’t have a Social Security number. 

Mr. MULVANEY. But several million of them well get Social Security numbers under the new program, right? 

Mr. KOSKINEN. And under the new program, if you get a Social 

Security number and you work, you’ll be eligible to apply for the 

Earned Income Tax Credit. You will get an amount depending on 

your situation. If you’re an individual working and applying for the 

individual tax, the maximum you can get will depend—it’s been in 

the range of about $500 or $600. 

Mr. MULVANEY. Right. Let’s slow down a little bit, Mr. Koskinen, 

because there was some apparent lack of clarity in the interpretation of what you said in the Senate. I want to clear this up. 

Is the Earned Income Tax Credit only going to be available to illegal immigrants who filed taxes previously or is it going to be 

available to all of them who receive Social Security numbers under 

the new program? 

Mr. KOSKINEN. It turns out there was a lack of clarity about 

that. If you get a Social Security number, you can then file for this 

year if you’re working; and if you earned income in the 3 years before that and filed, you’ll be eligible; if you did not file, you’ll have 

to file a return and you’ll have to file to demonstrate with the same 

information you would—anybody else would that you actually 

earned income and therefore were eligible. 

Mr. MULVANEY. So if you—— 
121 

Mr. Koskinen. There’s some assumption that you would get the 

Earned Income Tax Credit automatically whether you were working or not. 

Mr. MULVANEY. So it will be available to everyone who was 

working, even if they didn’t file the previous 3 years? 

Mr. KOSKINEN. That is my understanding, yes. 

Mr. MULVANEY. And you have no idea how much this is going to 

cost? 

Mr. KOSKINEN. I don’t now how many people are going to be— 

get Social Security numbers, how many will be single—— 

Mr. MULVANEY. Sure. But we do this all the time. Did the White 

House not ask you to estimate that? 

Mr. KOSKINEN. I haven’t talked to the White House about this 

at all. 

Mr. MULVANEY. Did anyone at the White House ever consult 

with your office before they issued the executive orders that gave 

rise to the executive amnesty? 

Mr. KOSKINEN. They didn’t consult with me and, to my knowledge, they didn’t consult with anyone else. I’m not aware of any 

consultation. 

Mr. MULVANEY. Are you aware that if we were to do what the 

President did by legislation that he did by executive order, that we 

would have to go and get an estimate of exactly what you and I 

are talking about here today? 

Mr. KOSKINEN. From the Joint Committee on Taxation? 

Mr. MULVANEY. Or CBO, yes. 

Mr. Koskinen. Or CBO. Yes, sir. 

Mr. MULVANEY. So if we did the same thing the President did, 

by law, we would have to know the answer to that question, but 

the President doesn’t have to know the answer to that question before he did what he did. 

Mr. KOSKINEN. The President may know the answer to that we. 

He wouldn’t come to us necessarily to get the answer; he would go 

to OMB. 

Mr. MULVANEY. But by the same token, he didn’t ask you for any 

input. Did he ask you, for example, about any increase in the risk 

of fraud? 

Mr. KOSKINEN. No. We had no conversations with the White 

House that I’m aware of. I certainly personally have not talked— 

I’ve never talked to the White House about any of this. 

Mr. MULVANEY. All right. Thank you, Mr. Koskinen. I appreciate 

that. 

Chairman CHAFFETZ. Thank the gentleman. Now recognize the 

gentleman from Ohio, Mr. Jordan—— 

Mr. JORDAN. I thank the—— 

Chairman CHAFFETZ [continuing]. For 5 minutes. 

Mr. JORDAN. I thank the chairman. And I wanted to talk about 

the IRS targeting of conservative groups and, frankly, the pattern 

of deception and delay that we’ve seen from this administration. 

And I would just remind you, you don’t take my word for it. Just 

yesterday in The Hill, front page, Feds won’t release IRS targeting 

documents. So don’t take my word, take Bob Cusak, editor of The 

Hill, respected mainstream journalist, talking about the deception 

and delay from this administration. 
122 

I think it’s important we remember the whole saga here. February 2012, Lois Lerner told this committee staff that there was no 

targeting going on. Turned out to be a lie, of course. March 23d, 

2012, Doug Shulman, then-Commissioner, told the Ways and 

Means Committee he could give assurances that there’s no targeting going on; also, a false Statement. May 2013, that day when 

Lois Lerner went in front of a bar association here in D.C. with a 

planted question, again, unprecedented, to get in front of the story; 

went before the inspector general released a report and talked 

about the targeting by the IRS of conservative groups. And I quote 

from—remember, she talked to Treasury and the White House 

about this. From Mr. Cusak’s article yesterday, and I quote, Thenchief of staff Mark Patterson at Treasury informed the White 

House about the plan to disclose the targeting, ’so that the White 

House wouldn’t be surprised by the news.’ 

So think about this: planted question before the inspector general’s report comes out, she discloses that, and the White House 

and the Treasury already knew it was going on. And then, of 

course, we have Ms. Lerner talking about Cincinnati was the problem and not Washington. That was false. And the White House 

says it’s a phony scandal, no corruption, not even a smidgeon, 

which brings me to Mr. Koskinen, the current Commissioner. 

February 14th of last year, we subpoenaed you for all of Lois 

Lerner’s emails. Put up slide No. 1. Just a few weeks later, March 

26 in this committee room, the chairman of the committee, Mr. 

Chaffetz, asked you a question: Are you going to provide all of Lois 

Lerner’s emails? And your response was, yes, we will do that. 

Do you remember that conversation, Mr. Koskinen? 

Mr. KOSKINEN. I remember that conversation. You’ve reminded 

me of it a couple of times. 

Mr. JORDAN. Yes. And I’m going to keep doing that, because the 

American people are frustrated and mad about what the IRS did 

to them regarding their First Amendment free speech rights. 

June 13, you sent a letter to Senate Finance saying, we lost Lois 

Lerner’s emails and destroyed—the hard drive’s been destroyed 

and the tapes are destroyed. You remember that letter you sent to 

Senate Finance, Mr. Koskinen? 

Mr. KOSKINEN. I do remember. 

Mr. JORDAN. 10 days after that letter was sent, you came back 

to this committee room and we asked you some questions. Put up 

the second slide. I asked you specifically, what date did you learn 

you couldn’t get all her emails? Remember that conversation, Mr. 

Koskinen? 

Mr. KOSKINEN. I remember that conversation. 

Mr. JORDAN. And your response was, I learned in April. 

So my question to you is, today will you admit that you misled 

this committee, the U.S. Congress, and more importantly, the 

American people just like Ms. Lerner was doing, just like Mr. 

Shulman was doing? Will you admit that you misled the Congress 

and the American people? 

Mr. KOSKINEN. No. Absolutely not. 

Mr. JORDAN. You don’t think you misled them? 

Mr. KOSKINEN. No. 
123 

Mr. JORDAN. So you told Mr. Chaffetz, yes, we’ll give us all—give 

you all her emails. A few days later, you learned in April—that was 

March. In April, you learned you can’t, and you wait 2 months to 

tell us, and you don’t think that’s misleading the American people? 

Mr. KOSKINEN. I do not. And we waited 6 weeks to tell you, and 

we waited those times to find as many of the emails as we could. 

And as we reported—— 

Mr. JORDAN. Have you sent—— 

Mr. KOSKINEN. Let me complete. 

Mr. JORDAN. Let me ask you this. 

Mr. KOSKINEN. I—— 

Mr. JORDAN. Have you sent the chairman a letter saying what 

you told him on March 26, yes, we will get you all of Lois Lerner’s 

emails, have you sent Chairman Chaffetz a letter saying, you know 

what, what you told you on March 26 isn’t true? 

Mr. KOSKINEN. As I noted in the hearing, we’ve had several hearings, I—and I still tell you, we said we would give you all the Lois 

Lerner emails. We gave all the Lois Lerner emails we had. As I 

told you once before, we couldn’t make up Lois Lerner emails. We 

didn’t have them to produce them. We gave you all the emails that 

we had and we continue—— 

Mr. JORDAN. What you said, you said I’ll give them—— 

Mr. KOSKINEN [continuing]. To give you those. 

Mr. JORDAN [continuing]. All to you, and then you—then you 

write a letter to the Senate Finance saying you lost them, you destroyed them. Have you done anything to correct the record? 

Mr. KOSKINEN. Actually, we didn’t lose them and destroy them. 

They were lost in that period of time in 2012. And then when we 

testified, testified in June, I testified that we waited the 6 weeks 

while we tried to provide you as much emails as we could, and 

there were 24,000. 

Mr. JORDAN. Let’s put up—put up—put up slide 4. Put up slide 

4. 

This is the letter you sent, and you said, you can confirm that 

no backup tapes existed. So you confirmed that you couldn’t get us 

all her emails, and you’ve done nothing to correct the record when 

you told Mr. Chaffetz you were going to give all them to us. And 

you waited 2 months before you ever told us that you lost them. 

Mr. KOSKINEN. I waited 6 weeks so we could provide you all the 

emails we could find. We’ve provided you 24,000 emails from the 

time of her hard drive crash, and we said and the backup tapes did 

not exist because they had been re-recorded over. 

Mr. JORDAN. Mr. Chairman, I—— 

Mr. KOSKINEN. So we at that time gave you all the emails we 

had. 

Mr. JORDAN. I got one more question, Mr. Chairman, just in the 

last 10 seconds, if I could. 

Have you withdrawn the letter—understanding that now TIGTA 

has told us that her emails are recoverable on the backup tapes, 

have you withdrawn the letter that you sent to Senate Finance 

where you confirmed that those tapes weren’t there? 

And I bring this up, Mr. Chairman, because this committee has 

some experience with letters being withdrawn. In 2011, the Justice 

Department, after making inaccurate Statements regarding Fast 
124 

and Furious, sent a letter to then-Chairman Issa and they said 

this: Facts have come to light during the course of this investigation that indicate the letter, the February 4 letter, contains inaccuracies. Because of this, the department now formally withdraws 

the February 4 letter. 

So what I want to know, Mr. Koskinen, is when are you going 

to be square with the American people and withdraw false and 

misleading Statements you’ve sent this committee, and more importantly, the letter you sent to Senate Finance? Are you going to 

withdraw that letter? 

Mr. KOSKINEN. Absolutely not. We can have that argument for 

a long time. TIGTA, by the way, has spent 6 months and untold 

amounts of money trying to extract those emails from those backup 

tapes. So the idea that we could somehow—— 

Mr. JORDAN. You said you could confirm they didn’t even exist. 

Chairman CHAFFETZ. The gentleman—— 

Mr. KOSKINEN. I said the backup tapes—if you go through my 

records, you will find I’ve said the backup tapes—— 

Mr. JORDAN. Will you withdraw the letter that had falsehoods in 

it? That’s what I’m asking. 

Mr. KOSKINEN. There is no reason. There are no falsehoods and 

there’s no reason to withdraw that letter. I stand by that letter. 

Chairman CHAFFETZ. The gentleman’s time has expired. I now 

recognize the gentleman from Michigan, Mr. Walberg, for 5 minutes. 

Mr. WALBERG. Thank you, Mr. Chairman. 

Mr. Koskinen, Monday and Tuesday of this week, I did two live 

town halls back in my district and one tele town hall, and at two 

of those events, the issue that was brought up, the same story that 

came out in The Washington Post with the headlines, IRS Rehired 

Hundreds of Ex-Employees With Troubled Records, came up. And 

it basically came up from my constituents saying, you know, why 

can we not get away with the same things that were recorded 

there? 

In the article, it indicated that between 2010 January and September 2013, the IRS rehired 7,000 employees. A great jobs program, and we’re always delighted when people are employed, but 

the question comes from my people as to why over 800 of those 

7,000 rehired IRS employees were rehired with prior substantial 

employment issues, including 11 individuals who engaged in unauthorized access to taxpayer information. And that really discourages and frustrates my citizens that these people, 11 of them who 

engaged in unauthorized access to taxpayer information, which is 

a crime, as we understand it, were rehired. Why? 

Mr. KOSKINEN. Those are—the bulk of those employees are temporaries or seasonals who are hired for 4 to 6, 8 months a year depending on the time. They should not be rehired. 

Mr. WALBERG. Even though they committed a crime, you’re saying they should not—why were they rehired? 

Mr. KOSKINEN. They shouldn’t. Because the process at that point 

in time in 2009 or 2011 into 2012 followed, as the IG said, the 

OPM rules and regulations, which, in fact, would have allowed 

those people to be applied. 
125 

We consolidated in 2012 all of those hiring issues into our personal security division, and I have made sure that if you have violated the alls under a section called 1203(b), if you have worked for 

the IRS and violated Section 1203(b), you will not be rehired. 

Mr. WALBERG. Well, according to TIGTA, they said, it still remains a concern, because in 2012 and 2013, IRS hired individuals 

with prior significant IRS substantiated conduct and performance 

issues. 

What are you doing—I mean, this was subsequent to that. 

Mr. KOSKINEN. Yes. And what the IG recommended, the IG, 

again, in that report said that was all pursuant and we followed— 

pursuant to when we followed the OPM rules. What the IG said is 

we should make sure that we make sure before we hire someone, 

we’ve actually reviewed all of this. And as I said, we now do that. 

We took the IG’s recommendation. And I have talked with our personnel people since the IG started raising this issue, which I think 

is an important issue, in December, and to make sure that—and 

this consolidation with our personal security people, if you have 

violated 1203(b), which is willful violations of taxes or access to 

taxpayer information, you won’t be hired. 

Mr. WALBERG. Let me proceed further, then. And I hope this is 

a general trend. The audit identified 141 individuals that were rehired that had a prior tax issue, with five of them having been 

found by IRS management to have willfully not filed their taxes. 

How many of these employees are still working? 

Mr. KOSKINEN. They’re all seasonal employees, so I don’t know. 

A lot of them don’t come back the next year, so I don’t know how 

many of those there were. I would note that the 141—we take the 

requirement of IRS employees to be tax compliant very seriously. 

Our compliance rate is over 99 percent. We hold people accountable. Even if their mistakes are inadvertent, even if they make 

modest mistakes, we count that as not-compliant. The—what we 

are concerned about is the five employees you mentioned that have 

willfully—have been found to willfully not pay their taxes and violate the tax laws, and those people are subject to termination. 

Mr. WALBERG. Could you get us information for this committee 

of people we’re referring to here that are still employed? 

Mr. KOSKINEN. I can find the information. The 141, if you had 

a minor attempt—minor mistake, those you would get cited for, but 

those aren’t basis for termination. The five you mentioned that had 

a willful violation finding, I will find out the information and get 

it back to you. 

Mr. WALBERG. I appreciate that. What about—what about those, 

not the tax issue, but had substantial prior employment issues, attendance issues, misrepresentation of what they were doing if they 

were on the job? 

Mr. KOSKINEN. There’s again—again, as I say, the consolidation 

now, we have a personal security department that reviews every 

offer before it is made to make sure that we’ve gone over all of 

that. Some—again, some personal activities are you didn’t show up 

to work, you know, for 2 days, others are you had a significant 

problem. And we distinguish between those. And the OPM rules 

are very clear about that, that if you’ve—just because you’ve had 

a performance issue in your file doesn’t mean you can never work 
126 

again for the IRS. It depends on the nature and the duration of the 

affair. But it is important for people to be confident even though 

80 percent—as the TIGTA report said, 80 percent of these people 

are temporaries and seasonals who don’t necessarily work even for 

half the year, it is important for us to make sure—— 

Mr. WALBERG. Very important. 

Mr. KOSKINEN [continuing]. That we have the appropriate people 

working, and so I take the TIGTA report—I’m a big supporter of 

IGs, because they continue to review these issues. And we take it 

seriously. We have implemented their recommendations. We are— 

we have a personal security group now that ensures before an offer 

goes out, if you have violated 1203(b), which is the two most serious issues, you don’t get hired. And if there are other conduct 

issues, not only are we going to follow the OPM rules, we’re going 

to review those for appropriateness for work at the IRS. And I 

think it’s important for people to be comfortable that we do take 

it seriously and that people working for the IRS ought to be tax 

compliant. If we’re collecting your taxes, we ought to be paying 

ours. 

Mr. WALBERG. Well, I appreciate that. And I would like the information on those that are still employed that came under these 824. 

Mr. KOSKINEN. Well, the 824 covers a large range—— 

Mr. WALBERG. A lot of lot. 

Chairman CHAFFETZ. I thank the gentleman. 

Mr. WALBERG. Thank you. 

Chairman CHAFFETZ. The gentleman’s time has expired. We now 

recognize the gentleman from Alabama, Mr. Palmer, for 5 minutes. 

Mr. PALMER. Thank you, Mr. Chairman. Thank you, Mr. Chairman. 

I want to give Mr. Koskinen a break here for a minute and talk 

with Mr. Lightfoot, if that’s OK. 

Mr. KOSKINEN. I don’t want you to think that’s not appreciated. 

Mr. PALMER. Well, that doesn’t mean I won’t come back to you. 

Mr. Lightfoot, NASA’s done a good job in making progress on getting off the high-risk list, but there are still some issues. I’m obviously from Alabama. NASA’s a major presence in our State, but 

there have been some issues with re-baselining costs and schedule 

on—in light of management and technical issues, can you address 

that, on some of your projects? 

Mr. LIGHTFOOT. Yes, sir. We have—the process we go through 

where we review these projects on a routine basis. We have some— 

while we’ve had some that have done really well, we continue to 

make good progress on those, eight out of the last nine that have 

a launched that came in under the baseline. Once we issue—once 

we go through confirmation, what we call confirmation of a project, 

which moves it from formulation to development, that’s when we 

make a commitment for a certain cost and schedule that we’re 

going to try to live to. 

The process we have where we review those all monthly. Occasionally we have one that pops up and is—it gives us an issue. 

We’ve had two of those. The space ground sustainment system that 

we have, and then the ICESat–2 project, which are two—two issues 

we have going where we were required to then go back and baseline. When you re-baseline, you go through a process of analysis of 
127 

alternatives, is there another way you can get that particular mission accomplished, can you de-scope the existing mission so that 

you can still stay within that cap. So that’s the process we go 

through. Each one of those has lessons. Those lessons—one of the 

things that we’ve been really working on is the—factoring those 

back in and continuing to improve our process as we go forward for 

the rest of those projects. 

Mr. PALMER. At a prior time in my life, I worked for a couple of 

major engineering companies, and one of the things that drives a 

client crazy, particularly one paying the bill, is change orders. 

You’ve got some projects that I don’t know if it’s a result of design 

changes or poor design to begin with that are running some substantial overruns on change orders. Could you address that? 

Mr. LIGHTFOOT. Yes, sir. I think the one you’re talking about in 

particular is the ground systems project that we had. This was the 

first time that we’ve actually applied the same project management 

methodology that we had for the spacecraft that we’ve been flying 

to a ground system. And one of the things—that’s an upgrade to 

our ground networks that actually communicate with all the satellites we have on orbit. That system is basically becoming obsolete. So what we did is we went out and we tried—we knew we had 

a pretty large job in front of us, and we tried those program project 

techniques that we’ve been—that we’ve been doing for spacecraft, 

one of a kind things, to a ground system. 

We’ve learned a few lessons in that process. The No. 1 one is 

that—or the first one is that we have to be very clear on our requirements, much to what—much to what you’re talking about, 

and understand what the—and make sure we understand that the 

contractor that’s doing that work understands those requirements 

as well. So we’ve gone back and forth with this in terms of trying 

to define better the—what the expectations we have for the contractor and then managing that contractor. 

In this particular case, we’ve—we’ve changed out the entire contract management team and the team that we have in terms of 

our—our managing it. And since we’ve done that, we’ve—it’s—we 

have managed to stay—from an earned value perspective, we 

stayed at the levels that we expected. 

Mr. PALMER. So this is—would you say this is the result of a design that—that a—of a project that the schedule dictated the design, or is this something where you’re entering a new area and— 

and you’re—and you’re designing as you go? 

Mr. LIGHTFOOT. No. I think this is a case where we underestimated the type of work we needed to do to deal with the obsolescence issues that we had in front of us in terms of designing the 

software system that we were putting in place with the new equipment. 

Mr. PALMER. All right. I believe that’s all I have. I’ll yield the 

balance of my time. 

Chairman CHAFFETZ. The gentleman yields. I now recognize the 

gentleman from Georgia, Mr. Hice, for 5 minutes. 

Mr. HICE. Thank you, Chairman. 

And Mr. Koskinen, since you had a break, I thought it only appropriate to come back to you and ask you a couple questions that 

were on my mind in particular. 
128 

Based on the previous testimony, you’ve made it clear that the 

ability of the IRS to make progress in the areas that have been 

outlined by the GAO have been largely hindered due to reductions 

in funding. And I—this is kind of a personal question to me because of my involvement with non-profit organizations. And the 

IRS has spent millions of dollars to basically rewrite the governing 

rules for 501(c)(4)’s or what—what have you, different non-profit 

organizations, specifically potentially removing tax-exempt status if 

those organizations are involved in political activity. 

My question is multiple. It’s rather amazing personally that 

there would be an issue of trying to hinder speech of Americans. 

My specific question really comes down to, how much money—can 

you tell me how much money the IRS has spent on writing and the 

attempt to rewrite that specific section of the 501(c)(4) ruling? I 

know it was withdrawn, but my understanding is that there is an 

attempt now to rewrite that. I’m curious how much money has 

been spent to that end. 

Mr. KOSKINEN. I don’t know. The only money that’s being spent 

is the lawyers that have been working on the drafting of that, and 

that’s not—they haven’t been spending full-time, so it is not a large 

amount, but I could try to get an estimate of how many people 

worked on it. Some of it—the work on the first version was done 

before I got there, but if you’d like, we can try to figure out on a 

rough estimate as the man-hours, but the only time spent was, as 

I say, a relatively small number of lawyers who were working on 

it. 

But I would note that the goal here is not to hinder. As said 

when I started and kind of inherited all of this, the goal is, in fact, 

to try to make clear what the rules are in a way that is fair to everybody, all of the organizations, it’s clear and easy to administer. 

Right now, the rule that’s been there a long time is you judge both 

the determination as to whether you’re eligible to be a 501(c)(4) 

and then whether you’re performing under the statute by facts and 

circumstances. So that means anybody running an organization is 

running the risk, looking over their shoulder saying, is somebody 

going to have a different view of the facts and circumstances. So 

my sense is we ought not to be hindering political speech, we ought 

not to be changing the way people act, but what we ought to have 

is a much—and the IG, in his recommendation, said the Treasury 

Department and the IRS should clear up what the standard is for 

what amount, how much, and what the definition is of the political 

activity you can engage in. And my sense is that it ought to be possible to have a rule that would be clearer, easier for people in those 

organizations running them to understand, and fair to everyone, 

and that would not be hindering political speech. So it’s not my intention, anyway, in looking at that to do that. 

My sense and concern is that the present system has, over the 

last several years, by the IG’s analysis, turned out to be unworkable, and I think it would be in everybody’s interest if, again, it 

could be clearer what the rules are without hindering people, and 

they would be able to run organizations confident that somebody 

isn’t going to come in and second-guess them on the facts and circumstances that they’ve been operating under. 
129 

Mr. HICE. Well, I would agree we certainly need clarification in 

that, but I would also strongly urge a very clear understanding of 

the freedoms of Americans, that just because someone is a part of 

a non-profit organization, they have not waived their First Amendment rights. And that is a tremendous threat that the IRS has, in 

my opinion, no business interfering with, and that is a deep concern. 

Mr. KOSKINEN. I agree with you. And, in fact, my sense is that 

the rules if they’re fair and clear to everyone will, in fact, create 

less of a constraint on people’s right to free speech than the present 

rules, which are muddy and hard to interpret. 

Mr. HICE. OK. One other question, and I will yield my time. 

Again, going back to the issue that the main problem has been lack 

of funding. The issues from the GAO have come up with the IRS 

for some 25 years or close to it. It’s been a long time that we’ve 

had issues, and yet a few years ago, in 2010, the IRS had more 

funding than they’ve ever had, and these problems, these issues 

have still not been addressed. 

Mr. KOSKINEN. Well, that’s not quite true, because we did have 

more money in 2010 by a long shot. And as I noted in my testimony, in 2013, as a result of some of that spending on information 

technology, the information technology business system modernization problem for the IRS was taken off the high-risk list after having been there for 14 years. So it has been true and proven that 

in—certainly in the IT area, that if we have the funding, we can 

make significant progress. 

Mr. HICE. And that’s great for the IT area, but there’s many 

other areas that need to addressed, and 25 years is far too long. 

It’s time to put some teeth to it, sir. Thank you. 

Chairman CHAFFETZ. Thank the gentleman. I now recognize the 

gentleman from Florida, Mr. DeSantis, for 5 minutes. 

Mr. DESANTIS. Commissioner Koskinen, it was a year ago where 

the senior IRS leadership learned that Lois Lerner’s hard drive had 

crashed, there was an issue about getting her emails off backup 

tapes. You wrote a letter to Senate Finance in June 2014 saying 

that there were problems with Lerner’s emails and that the backup 

tapes have been—had been destroyed. And then on June 20, you 

testified before the Ways and Means Committee that the IRS went 

to ‘‘great lengths’’ and made ‘‘extraordinary efforts’’ to recover 

Lerner’s emails. 

So let me ask you this: After the IRS became aware that Lerner’s 

hard drives had crashed, what specific steps did the IRS take to 

locate any backup tapes or disaster recovery tapes? 

Mr. KOSKINEN. The disaster recovery tapes that the IRS are recorded over when they’re used until they’re no longer useable, so 

there is no technique or capacity in the IRS to actually retrieve 

emails off of those tapes. What we did do was go to everybody in 

the what so-called custodial list at that point of about 80 different 

people that Ms. Lerner would have been communicating with, because we were looking for all emails. We’d already produced all the 

emails that were relevant to the determination process. We were 

then trying to respond to ‘‘all.’’ So we looked at all of those 82 and 

took every email that was to or from Lois Lerner, compared them 

against emails already produced—— 
130 

Mr. DESANTIS. But that would not have been backup tapes. That 

was from their hard drives or their account. 

Mr. KOSKINEN. That was their hard drives we produced—— 

Mr. DESANTIS. So the hard—so the backup tapes, you had made 

the judgment that they simply were not going to be recoverable, or 

did you actually have somebody investigate whether you could have 

backup tapes or you could find some backup tapes? 

Mr. KOSKINEN. Our expert said we had no way, that they were 

not recoverable. It’s taken the IG 6 months, the last 2 or 3 months 

working, he tells us, around the clock, and he still hasn’t gotten 

them produced and we still don’t know how many there are. But 

my position all along has been with the IG, because we helped him 

find what the backup tapes were that had been recorded over from 

that time, is if we could find more emails, that would be terrific. 

And I actually mean that seriously, because it would lend even 

more light than the 24,000 we already produced into what were in 

those emails in that timeframe. So we—— 

Mr. DESANTIS. Why would the IG be able to find it if you guys 

couldn’t find it? You said you went through extraordinary lengths. 

Mr. KOSKINEN. Well, because the IG—when we discovered this in 

the spring and then we reported it in June 6 weeks later, within 

a couple weeks thereafter, the IG started his investigation, so we 

had no more time. And I will tell you today, if we started today, 

it’s taken the IG—and I don’t know how much money they’re 

spending. It’s taken them over 6 months to, in fact, recover whatever they’re going to report, and that was—— 

Mr. DESANTIS. So let me ask you this: Did the IRS—— 

Mr. KOSKINEN. We don’t have that capacity. 

Mr. DESANTIS. Did the IRS ever collect any tapes or send any 

backup tapes to any forensic lab in your investigation, the people 

you detailed to do this? Was that—any tapes recovered, any tapes 

ever sent to a lab by the IRS? 

Mr. KOSKINEN. No. 

Mr. DESANTIS. OK. Now, who told you that the backup tapes 

would not yield any emails from Lois Lerner’s crashed hard drive? 

Mr. KOSKINEN. I was told that by our information technology department. 

Mr. DESANTIS. And what was—do you know the basis for that 

Statement? Did you inquire as to how they could be sure of that? 

Mr. KOSKINEN. Basically what they described to me was they 

have these disaster recovery tapes, they are actual tapes, and then 

when the 6 months—they keep them for 6 months, and when the 

6 months is done, they simply reuse them and record over them. 

And as you know if you ever had tapes, when you record over 

them, then in the normal process, they’re—data underneath them 

is gone. And, in fact, I was told that we had no capacity and no 

way that you could actually recover those. And, in fact, they were 

not sure that there was any way you could recover them. 

Mr. DESANTIS. Has the IRS communicated with Lois Lerner, her 

attorneys about recovering the emails from any of her crashed hard 

drives? 

Mr. KOSKINEN. No. I’ve had no communication with Lois Lerner 

about this at all. I’ve never met her. 
131 

Mr. DESANTIS. Let me ask you this: In the course of the IRS’s 

response to this committee’s investigation, has the IRS withheld 

any information or documents from Congress on any other basis 

other than 6103? 

Mr. KOSKINEN. No. We’ve had some that we’ve asked the staff to 

review in camera because there are basically personal matters that 

have nothing to do with the investigation, but we’ve exercised no 

privilege, we aren’t trying to keep anything from you. In fact, we’ve 

continued to respond to requests and continue to provide any information we can find. 

Mr. DESANTIS. And you would say that your responses to the requests from this committee have been above and beyond what is 

required in this situation? 

Mr. KOSKINEN. No, I don’t think they were above and beyond. We 

have—when you want information in escrow, we’ve have an obligation to do our best to provide it, and we’ve done that. I don’t think 

that’s above and beyond. Any time you want—— 

Mr. DESANTIS. Extraordinary efforts aren’t above and beyond? 

Mr. KOSKINEN. Extraordinary efforts were, in fact, when we discovered the crash, then it was my decision and thought that we 

needed to do whatever we could to fill in that gap, and we did find 

24,000 emails we provided. My understanding from news reports, 

because the IG doesn’t tell us a lot of stuff about this, is that the 

IG may be able to find another 9-or 10,000 Lois Lerner emails. 

Mr. DESANTIS. So you’ve just—final question is, you’ve made the 

effort. You were not cavalier about this. You made the effort to find 

what the committee wanted. Is that your testimony? 

Mr. KOSKINEN. That’s my testimony. 

Mr. DESANTIS. Thanks. I yield back. 

Chairman CHAFFETZ. Thank the gentleman. We’ll now recognize 

the distinguished gentleman from South Carolina, Mr. Gowdy, for 

5 minutes. 

Mr. GOWDY. Thank you, Mr. Chairman. The book of Ecclesiastes 

teaches us there’s a time and a season for everything, and you convinced me earlier this evening that this is not the time to question 

Mr. Koskinen. He was here for GAO-related testimony and not 

IRS. And I don’t know whether he’s prepared for the questions or 

not, but we’ll not find out, because I believe that you have agreed 

at some point he’s going to come back before the committee. And 

I was wondering if the chairman might engage in a colloquy with 

me to make sure that my chronology is correct. 

I thought the last time that Commissioner Koskinen was in front 

of us, there was a robust discussion about the time period within 

which he was going to produce emails, and he had asked us to narrow the scope so that he could prioritize and get us those emails 

that we had asked for. And, of course, as the chairman will recall, 

we need those emails, because the emails we do have from Lois 

Lerner contain such jewels as lamenting GOP wins, celebrating 

Democrat wins, forecasting gloom and doom if the GOP, God forbid, 

ever controlled the Senate, saying that we needed a plan to overcome Citizens United. 

Those were just some of the emails that I recall, Mr. Chairman. 

And if my chronology holds, after Commissioner Koskinen told us 

that he would prioritize the production of those emails, of course, 
132 

they—they magically disappeared. And then the IRS, of course, Mr. 

Chairman, employed Herculean efforts to recover those emails. 

They were not successful, but then talismanically after the election, 

or just talismanically, they did appear at some point, and now we 

are reading that 500 of those emails will not be made available due 

to the invocation of a privilege. 

Does the chairman know what privilege the White House is relying upon to not produce those documents to Congress? 

Chairman CHAFFETZ. I do not. 

Mr. GOWDY. Do you think—do you know whether the President 

has had an opportunity to review those 500 documents? 

Chairman CHAFFETZ. That’s a good question. 

Mr. GOWDY. Do you think there is a chance that his conclusion 

that not a smidgeon of corruption exists in this investigation might 

be altered if he did have an opportunity to review what’s in those 

documents? 

Chairman CHAFFETZ. Certainly. 

Mr. GOWDY. Will you consider inviting Mr. Koskinen back to update us on this—on this chronology? 

Chairman CHAFFETZ. Yes, indeed. 

Mr. GOWDY. All right. Well, Mr. Koskinen, Commissioner, I’m not 

going to question you today, because I think the hearing title was 

something else, but I hope at some point we can go back to where 

we left off, which was an assurance from you that you were going 

to prioritize email productions. 

And I hope at some point, Mr. Chairman, we can evaluate the 

refusal to turn over certain documents to Congress, the invocation 

of privilege. And I hasten to add, as the chairman remembers because of his service on Judiciary and Oversight, this administration 

has invoked executive privilege before only for us to then learn that 

that privilege was invoked to protect an email that the Attorney 

General sent to his wife. Under what theory of executive privilege 

is that email protected? 

So I hope that I live long enough to see the production of those 

emails, and I’ll certainly hope I live long enough to see the Commissioner come back before us. And with that—— 

Mr. CUMMINGS. Would the gentleman yield? 

Mr. KOSKINEN. Could I just make one clarification? During the 

course of all of the document production, Treasury Department 

turned over all of its Lois Lerner emails and the White House 

made a representation that they had no Lois Lerner emails. So in 

terms of that process, and, in fact, this committee issued a report 

in December noting that, in fact, there was no evidence that anyone outside of the IRS, whether at the White House or Treasury, 

had any impact or influence over the, as the IG said, improper use 

of criteria for the determination process for (c)(4)’s. So I don’t know 

what the documents over there are. There’s been litigation around 

the inspector general investigating communications, but that’s not 

a case between us and—the IRS is not a party to that—— 

Mr. GOWDY. No. 

Mr. KOSKINEN [continuing]. And I don’t—— 

Mr. GOWDY. No, it’s not, which is in part why I directed my questions to the chairman and not to you—— 

Mr. KOSKINEN. Good. 
133 

Mr. GOWDY [continuing]. But if you would like us to have this 

conversation, I will ask you, do you understand why Congress 

wants those emails? Can you understand, as a trained attorney, 

why we might want access to all the documents? 

Mr. KOSKINEN. I can understand that. My understanding was 

that the White House some time ago certified there were no Lois 

Lerner emails and Treasury gave you all of their Lois Lerner 

emails. 

Mr. GOWDY. Well, then what are they claiming—— 

Mr. KOSKINEN. But I look forward to coming back and we’ll— 

we’ll have more occasions. I think this is my sixth appearance before this committee. I look forward to the seventh, and we’ll talk 

about—and we’ll be delighted to give you an update. And I will be 

delighted if the inspector general can ever complete his work, it’s 

now going after 6 months, to produce those emails, because then 

all of us will learn what was in them. And I am—have been totally 

supportive of the IG. And my view really is, if there are emails that 

can be done, and the IG apparently—in the public press it’s been 

said has been able to find them, I think that will be a major step 

forward, and I look forward to discussing that with you. 

Mr. GOWDY. Well, I know I’m out of time, but you can appreciate 

our cynicism and our skepticism, because it appears as if sometimes the strategy is just to delay and obfuscate and wait and wait 

and wait until either the public loses interest or until there’s a new 

administration. So I know you can appreciate our desire to have 

those documents sooner rather than later. 

Mr. KOSKINEN. I can. I thoroughly understand that. 

Chairman CHAFFETZ. I thank the gentleman. 

Mr. GOWDY. Thank you. 

Chairman CHAFFETZ. Gentleman’s time is expired. 

I will now recognize myself for 5 minutes. I haven’t had a chance 

to ask questions, and I would like to remind my colleagues why we 

are here. The five of you are very presentable. You put a happy 

face on the difficult situation, but here is the reality. Twenty-five 

years in a row your agencies, these problems, have come before 

Congress, 25 years in a row. This is the all-star team of problems. 

That’s the reality. You can try to put lipstick on this pig, but the 

reality is it is ugly. To get on this list, you have to be engaged in 

waste, fraud, and abuse in excess of $1 billion a year. 

Now, to get off the list, granted it is not easy, but here are the 

criteria for getting off the list: Leadership commitment, agency capacity; you have to have an action plan; you have got to be monitoring efforts and show progress. That seems like a reasonable five 

sets of criteria that you can accomplish. I have the scorecard according to GAO. Twenty-five years in a row you failed to meet 

those—hit the criteria on those five, and consequently that is why 

we are highlighting this. I think you are all well-intentioned. I 

think you are all very talented individuals, but the massive bureaucracy within the organizations that you represent here today, 

it is failing to meet these modest goals, and that’s what’s so frustrating. Things are going to pop up, challenges are going to rise, 

but 25 years in a row is just not good enough. 

I heard you were making measurable progress. You know, six 

Sigma levels. Good news to report. I’m sorry. You don’t have good 
134 

news to report. The bad news is you’re back again. We don’t want 

to keep having these hearings. We want to show the progress, and 

I really do appreciate the good men and women who spend untold 

hours and literally years going through the details of what’s happening within these departments and agencies. As a followup, I 

don’t expect you to do this off the top of the your head, one of my 

concerns is who’s held accountable? Like, who actually is held accountable? We asked, I think at the very beginning, one of our 

members asked a good question: Has anybody ever been fired? I 

think it was Mr. Hurd who asked. Has anybody been fired? Anybody dismissed? Anybody transferred by not meeting these goals? 

We have thousands of good quality people who work for the Federal Government. These are employees that wake up, they’re patriotic, they work hard, they’re trying to do their best, but somehow, 

someway in these five areas, it’s totally fallen down. We’re not 

achieving the goals. 

Again, the criteria put forward by the GAO doesn’t say that you 

have solve this. It seems to say that you’re on the trajectory to actually getting it solved. So part of the followup that we would appreciate is who’s held accountable? What happens if you don’t meet 

these goals? Because some of these are astronomically large. I 

mean, we’re talking hundreds of billions of dollars. If you just 

take—you want to wipe out the Federal deficit? You just look at 

the uncollected taxes and the problems that we have in waste, 

fraud, and abuse going out the door through HHS. That more than 

wipes out all the deficit right just there. Just those two things. It’s 

not very easily done, but the waste, the fraud, the abuse, and you 

look at the people who work hard and pay their taxes and they’re 

doing everything that they can and then they hear hundreds of billions of dollars going out that’s either not collected or going out erroneously, and the waste, and the fraud, and the abuse, they throw 

up their hands. You know, their 2,500 bucks means something in 

their lives, and yet the numbers here are so big. 

I do not understand why the five that are highlighted here, 

there’s six programs, two at the Department of Defense, why you 

can’t hit those five goals. And according to the GAO, like the Medicare program, they’ve only met one of the five goals, four partially. 

On the two DOD’s—DOD programs, met one of the five criteria. 

Four are partially met. At the Department of Energy, one partially 

met, one fully met, three not met at all. So 25 years in a row. I 

don’t want to come back and have this same hearing at the beginning of the next Congress. I want you all to solve it. 

The committee would like to know and hear from you how are 

you going to do that? How are you going to do that? And, again, 

difficult for you to answer, but I’m telling you, you all are giving 

a—painted a pretty picture. It ain’t so pretty, but we want to see 

what it is you’re actually doing. What is the action plan to create 

an action plan? That’s the hope and goal, and that’s—that’s my 

concern, and with that I want to yield back. I think—are there any 

members who wish to ask a second round of questions? 

Gentlemen from Ohio. 

Mr. JORDAN. I appreciate the chair’s indulgence. If we could put 

up these two slides again, Mr. Koskinen, I just want to—— 
135 

Mr. KOSKINEN. I think it was noted by—agreed by Congressman 

Gowdy and the chairman that I’ll come back and we’ll have a full 

hearing about this, that we would not—— 

Mr. JORDAN. No, we—I fully expect that. 

Mr. KOSKINEN. But I’m happy to answer more questions. That’s 

fine. 

Mr. JORDAN. Yes. That’s the way it works. We call you here and 

we’re allowed to ask questions because the American people want 

to know why the Internal Revenue Service violated their fundamental rights. So we appreciate your willingness to answer our 

questions on behalf of the American people. That’s awful big of you, 

Mr. Koskinen. 

Mr. KOSKINEN. Well, I’m just noting that we’re going to have another hearing on this, and I’ve had five hearings on it already, but 

I’m happy to answer the questions. 

Mr. JORDAN. And we still haven’t got the truth, as evidenced by 

the headline yesterday, Mr. Koskinen. The press, the mainstream 

press can’t even get the documents they’re requesting. 

Mr. KOSKINEN. Those aren’t documents that they’re requesting 

from us. 

Mr. JORDAN. But they derive from your unlawful activity. That’s 

the point, and that’s something you’ve got to understand. As the 

guy who heads the agency with as much power as you do, to have 

that kind of attitude, that’s what frustrates not just members of 

this committee, but all kinds of Americans. That, Mr. Chairman, 

that is the problem. 

Let’s go back to this, because I want to know something. This is 

what you told me when I asked you: When did you learn you could 

not get all of her emails, you learned in April. All right? Then you 

learned in April, and then let’s put up the next slide. This is the 

letter you sent to Senate Finance telling them—in June, you sent 

this letter telling them—and you used the word ‘‘confirmed’’ that 

no backup tapes—that backup tapes no longer exist. So I want to 

know between April, when you learned, and June when you told 

the Congress and the American people what you did to confirm 

that those tapes didn’t exist, which we now know do exist. So what 

did you do to confirm that the tapes didn’t exist, Mr. Koskinen? 

Mr. KOSKINEN. What I did was talk to our IT people who told 

me that when the tapes were finished with their 6 months, they 

were reused and then destroyed, and that as far as they were concerned, there was no way—we had no capacity even if we knew 

where they were to extract emails from them, and it’s taken the IG 

6 months and they still haven’t completed the process. 

Mr. JORDAN. That’s all you did? You asked your IT people? 

Mr. KOSKINEN. Right. 

Mr. JORDAN. Was it a long conversation? Did you ask them one 

question? How did—— 

Mr. KOSKINEN. I asked them questions about how the backup 

disaster recovery process worked. What happened to the tapes. 

Mr. JORDAN. So the word ‘‘confirmed’’ is based on one conversation you had with IT people. Is that what you’re saying? 

Mr. KOSKINEN. Yes. Those are the experts. They told me that 

there was no way that those tapes could be found or would be used 

because if they—they were reused—— 
136 

Mr. JORDAN. That’s all you did? 

Mr. KOSKINEN. That’s all I did. 

Mr. JORDAN. Really? An issue where repeated lies from Lois 

Lerner, false Statements given by Doug Shulman, the unprecedented fashion in where you released the data ahead of the inspector general’s report with the plan in question that you’ve already 

tipped off the Treasury and the White House about, and all you do 

to confirm you lost the most important documents from the most 

important person at the center of the scandal, all you do is ask a 

question of the IT people? 

Mr. KOSKINEN. We spent—— 

Mr. JORDAN. That’s it? 

Mr. KOSKINEN. We spent 6 weeks looking at the hard drives and 

the documents for 82 people that—— 

Mr. JORDAN. No, no, no, no. 

Mr. KOSKINEN [continuing]. To produce for you 24,000 more Lois 

Lerner emails. That was what we did was—— 

Mr. JORDAN. Who was this person? This one conversation you 

had to confirm you lost valuable documents from the central figure 

in this entire scandal, who was this one person you asked that 

question to? Can you give us a name? 

Mr. KOSKINEN. That would have been Steve Manning, who’s the 

senior IT guy, and I asked him could we find—were those tapes 

available, and he said no, and then we decided what we could do 

is what we did do was we looked at all of the emails to and from 

Lois Lerner from 80 people and produced for you 24,000 emails. 

Mr. JORDAN. No, I’m focusing on the words you used. ‘‘Confirmed.’’ 

Mr. KOSKINEN. ‘‘Confirmed.’’ I told you, yes—— 

Mr. JORDAN. ‘‘Confirmed’’ was one conversation with one IT guy 

that turned out not to be true, and here’s the big picture, your chief 

counselor, Kate Duvall, knew in February you had problems with 

Lois Lerner’s emails. You learned in April, and you didn’t tell us 

until June. So from February to June, you learned there’s big problems, and the only thing you do to confirm that there are big problems is one question to your IT guy. 

Mr. KOSKINEN. I knew in April we—— 

Mr. JORDAN. About something where people’s fundamental rights 

were violated. 

Mr. KOSKINEN. Lot of time to get 24,000 emails for you, which 

was, at that time, we thought the most we could do, the best we 

could do, we thought. In fact, it was an extraordinary effort to go 

back through all of that to get you the additional 24,000 emails, 

which, by the way, you apparently don’t have much interest in 

them because they’ve been—— 

Mr. JORDAN. One conversation, Mr. Chairman. One conversation 

with an IT guy, and he writes the U.S. Congress and tells the 

American people: We’ve lost Lois Lerner’s emails, and then one last 

question if I could, Mr. Koskinen. When did you learn from TIGTA 

that they had actually found these tapes and could recover her 

emails? 

Mr. KOSKINEN. I haven’t learned yet that they could recover. I 

learned that we helped them find—they went through the system 

and our people helped them find by the early part—late July, early 
137 

August they said they thought they had found the tapes from that 

time—— 

Mr. JORDAN. Wait, wait, let me—this is an important point, Mr. 

Chairman. 

So literally a month after you—in July and early August, a 

month after you said ‘‘we confirmed that backup tapes no longer 

exist,’’ TIGTA had the backup tapes? 

Mr. KOSKINEN. TIGTA with our people—— 

Mr. JORDAN. Within a month they got the tapes that you confirmed didn’t exist? 

Mr. KOSKINEN. That’s exactly right. 

Mr. JORDAN. Oh, my goodness. 

Chairman CHAFFETZ. Thank the gentleman. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I yield. 

Chairman CHAFFETZ. Recognize the ranking member. 

Mr. CUMMINGS. You know, we can—you know sitting here and 

listening to all of this, I’m just trying to figure out how do we move 

forward. You know, you all been on the list for 25 years. It’s a long 

time. Administration after administration, and at some point, we 

need to get off this merry-go-round, and, you know, one of the 

things that I’ve noticed after being here for 18 years now is that 

there’s a tendency for—I think it was Mr. Gowdy who said it, or 

somebody up there, that folks wait for another administration or 

another Congress, and then we just recycle the same problems. 

And I guess my question is very simple to each of you: If you 

were—if you had a magic wand and you could get this done, what 

would you do to get yourselves off the list? I mean, I’m serious. I 

mean, what does it take, and what—if you were us, what would 

you do to get you off the list, or to have a kind of accountability 

that the chairman talked about? Because I got to agree with him. 

We’re better than this. And we’re just going round and round and 

round. We’re losing hundreds of billions of dollars. We’re wasting 

a lot of time, and it’s very frustrating, and I just believe—I mean, 

is it that we are too big to have accountability? Is it that we are 

too big to be able to say, OK. This is how it’s supposed to be done 

and we’re going to do it this way and we’re going to do it an effective and efficient manner? 

I mean, you all may feel that the questions are—been unfair and 

tough. So I’m going to turn the table, and why don’t you all tell 

us what you would—what we—if you were us, what would we have 

you do so that you can get off the list so that we can hold you accountable. We’re going to start with you, Mr. MacWilliams, since 

you have such a wonderful smile. 

Mr. MACWILLIAMS. Thank you for your question. First of all, the 

point that I would make with respect to the Department of Energy 

and to the chairman’s comments, is we have made progress, but 

the GAO is essentially focusing on half a dozen large capital 

projects where we have had repeated problems, and we still do 

have problems, and so there’s no effort on our part to claim success 

on that, and we welcome your oversight and the oversight of GAO. 

What success we have had is in projects below the 750. I won’t 

dwell on those, but I will point out that in the Department—in 

NSA, for example, the last 3 years, we’re 7 percent below budget 
138 

and on time. We’ve had other large projects recently such as the 

national Synchrotron project come in on budget. 

The problems that we have, which are systemic, are in our large 

capital projects which tend to be the nuclear projects which are 

among the most complex projects in the world. Therefore, what 

we’re trying to focus on are structural changes so that they last 

past someone like me. I’ve been testifying before you for a couple 

of years, and that’s why we’ve tried to create a much improved 

ISEB, a new project risk management committee, because that 

committee is meant to create enterprise-wide dialog and challenge 

by all the project members from across the programs so that we 

can avoid future problems like this and hopefully get to the bottom 

of the problems that we have. 

The last thing I would just mention, sir, is both of you talked accountability. That has been a significant issue at the Department 

of Energy. When everybody’s in charge of a project, nobody’s in 

charge. And so that’s why, as I mentioned earlier, we—the Secretary has mandated that for every project, we have to have a defined owner, to the chairman’s question, so that that is the person 

that is accountable when things don’t go correctly. 

Mr. CUMMINGS. Mr. Chairman, I’m going to yield to you. I think 

we have a solution to this issue, and I—and I yield—— 

Chairman CHAFFETZ. Thank you. The ranking member and I— 

Mr. Cummings and I have chatted, and I think what we would like 

to do is to send each of you a letter. We would request that you 

would respond within a 30-day period what is your plan? Show us 

your game plan and what you need to do to accomplish that plan. 

Is that—does anybody have an objection to that? Is that fair? 

Mr. MACWILLIAMS. No, sir. 

Chairman CHAFFETZ. Does anybody have an objection to that? 

Mr. KOSKINEN. No. 

Chairman CHAFFETZ. Will you meet that 30-day timeline if we 

send you a letter this week? Fair enough. This is—this has been 

a long hearing. You’ve been very patient taking your time here, but 

that’s what we’ll do. We will send a bipartisan letter. We would ask 

you to respond within 30 days, show us your game plan, and then 

that way I think we can go from here. We do appreciate your commitment. We appreciate your agencies. Again, most of the people 

there, they’re good hard-working patriotic people, but we’re failing 

them, and if we don’t address it and put a plan in place, we will 

be back here again, and we don’t ever want to do that. So with 

that, this committee will stand adjourned. Thank you. 

[Whereupon, at 6:40 p.m., the committee was adjourned.] 
(139) 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD
140 
141 
142 
143 
144 
145 
146 
147 
148 
149 
150 
151 
152 
153 

Æ