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96–127 PDF 2004

IMPROVING IG FUNCTIONALITY AND

INDEPENDENCE: A REVIEW OF LEGISLATIVE IDEAS

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY

AND FINANCIAL MANAGEMENT

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

JULY 14, 2004

Serial No. 108–205

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

TIM MURPHY, Pennsylvania

MICHAEL R. TURNER, Ohio

JOHN R. CARTER, Texas

MARSHA BLACKBURN, Tennessee

PATRICK J. TIBERI, Ohio

KATHERINE HARRIS, Florida

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

BETTY MCCOLLUM, Minnesota

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY AND FINANCIAL MANAGEMENT

TODD RUSSELL PLATTS, Pennsylvania, Chairman

MARSHA BLACKBURN, Tennessee

STEVEN C. LATOURETTE, Ohio

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

KATHERINE HARRIS, Florida

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

CAROLYN B. MALONEY, New York

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

MIKE HETTINGER, Staff Director

LARRY BRADY, Professional Staff Member

MARK STEPHENSON, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on July 14, 2004 ............................................................................... 1

Statement of:

George, J. Russell, Inspector General, Corporation for National and Community Service .............................................................................................. 19

Gianni, Gaston L., Jr., Inspector General, Federal Deposit Insurance

Corporation .................................................................................................... 3

Snyder, Barry R., Inspector General, Federal Reserve Board ...................... 22

Letters, statements, etc., submitted for the record by:

Cooper, Hon. Jim, a Representative in Congress from the State of Tennessee, prepared statement of ..................................................................... 36

Gianni, Gaston L., Jr., Inspector General, Federal Deposit Insurance

Corporation, prepared statement of ............................................................ 6

Platts, Hon. Todd Russell, a Representative in Congress from the State

of Pennsylvania, prepared statement of ...................................................... 2

Towns, Hon. Edolphus, a Representative in Congress from the State

of New York, prepared statement of ........................................................... 42

(1)

IMPROVING IG FUNCTIONALITY AND INDEPENDENCE: A REVIEW OF LEGISLATIVE

IDEAS

WEDNESDAY, JULY 14, 2004

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY AND

FINANCIAL MANAGEMENT,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:35 p.m., in room

2247, Rayburn House Office Building, Hon. Todd R. Platts (chairman of the subcommittee) presiding.

Present: Representatives Platts, Towns, and Blackburn.

Also present: Representative Cooper.

Staff present: Mike Hettinger, staff director; Larry Brady and

Tabetha Mueller, professional staff members; Amy Laudeman, legislative assistant; Mark Stephenson, minority professional staff

member; and Cecelia Morton, minority office manager.

Mr. PLATTS. The Subcommittee on Government Efficiency and Financial Management will come to order.

Because of our delay in getting started with the votes on the

floor, I am going to dispense with the opening statement and others if they would like to submit them for the record, that would be

great.

I appreciate our three witnesses being here today as kind of a

followup to our hearing last October on the 25th anniversary of the

Inspector General Act as we further explore how we can strengthen

that act and better empower each of you and your colleagues in the

57 agencies and the IG offices to well serve the American public.

Thank you for being here and I also want to thank each of you for

your work day in and day out in very important roles in essence

safeguarding American taxpayer dollars and ensuring the efficient

and effective operation of the Federal Government.

The insights that you shared in your written testimony certainly

is appreciated both on the general premise of how we can improve

the Inspector General Act and also our colleague, Congressman

Cooper’s proposed legislation. We look forward to your testimony

here today and a chance for Q&A.

[The prepared statement of Hon. Todd Russell Platts follows:]

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Mr. PLATTS. We are going to go right into your statements, so

will you stand so you can be sworn in.

[Witnesses sworn.]

Mr. PLATTS. We have a general 5 minute guideline. We will run

the clock to give you some guidance but as we discussed before, we

understand you have some substantive knowledge to share and

may run over your time limit and we won’t be cracking the gavel

down on you.

We are honored to have three of our IGs with us. We will go in

order, Mr. Gianni first, then Mr. Snyder and Mr. George in their

opening statements.

We will begin with you, Mr. Gianni.

STATEMENT OF GASTON L. GIANNI, JR., INSPECTOR GENERAL,

FEDERAL DEPOSIT INSURANCE CORPORATION

Mr. GIANNI. Thank you, Mr. Chairman.

Mr. Chairman, members of the subcommittee, on behalf of the

Inspector General community, we thank you for your support of the

Inspectors General over the years. We appreciate your interest in

our work and your leadership in seeking ways to enhance our efforts. My colleagues and I are pleased to be here today to discuss

IG functionality and independence and the importance of the IG

Act.

As you know, last October marked the 25th anniversary of the

IG Act. At that time and many times over the past 25 years, the

IG community has explored opportunities for improvement. In fact,

we are here today to offer our impressions of the bill, ‘‘Improving

Government Accountability Act’’ introduced by Representative Jim

Cooper last fall. Representative Cooper’s bill, H.R. 3457, serves as

an excellent starting point to begin a discussion of improvements

and enhancements to an already effective law. In general, we support the thrust of the bill and have some refinements and additional ideas we would like to share with you today. We sincerely

appreciate the Congressman’s leadership and support in this area

and look forward to continuing this dialog.

At this time, I would like to take this opportunity to briefly introduce myself and my colleagues. I am the IG at the Federal Deposit

Insurance Corporation. I have served in that capacity since April

1996. I am 1 of 29 Presidentially appointed, Senate-confirmed IGs

who are members of the President’s Council on Integrity and Efficiency. Created by an Executive order in 1981, the PCIE provides

a forum for IGs, OMB, and other Federal officials to work together

and coordinate their professional activities. I have also served as

Vice Chair of this Council since May 1999.

At the far end of the table is Russell George, the IG of the Corporation for National and Community Service, and he has served

in that capacity for the past 2 years. He is currently the administration’s nominee for the Treasury IG for Tax Administration. Mr.

George is a member of the PCIE and began serving as the PCIE

Legislative Committee Chair in January of this year. Prior to that

time, Mr. George served as staff director for Representative Steve

Horn who, while he was here, was chairman of this subcommittee.

To my immediate left is Barry Snyder. Since 1998, Mr. Snyder

has served as the IG for the Board of Governors of the Federal ReVerDate 11-MAY-2000 09:46 Dec 03, 2004 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 D:\DOCS\96127.TXT HGOVREF1 PsN: HGOVREF1
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serve System. He is 1 of 28 statutory IGs who are appointed by

their agency head in certain designated Federal entities and are

part of the Executive Council on Integrity and Efficiency. Similar

to the PCIE, the ECIE was created by an Executive order in 1992

and provides the same forum as the PCIE. Mr. Snyder has served

as the ECIE Vice Chair since October 1999.

As we discussed with members of your staff, while we are leaders

within our respective councils, we are here today representing the

views of the majority of the Federal IGs who comprise the two

councils. We are not speaking on behalf of these councils. As such,

each council includes individuals who are not IGs and have not endorsed the positions or views that we have taken today or will be

taking.

Before we get into discussing our immediate business for being

here, I would like to talk about the impact of the IG community.

For the past 25 years, IGs have served as independent voices to

their agency heads and the Congress by identifying opportunities

and promoting solutions. The IG Act is a good law about good Government and has stayed the test of time. Since 1978, the basic tenets of the act have remained constant and strong.

The act creates an inherent tension between the executive and

the legislative branches of government. Specifically, IGs must keep

both the agency head and the Congress fully and currently informed about programs or operational deficiencies. This dual reporting requirement is critical and creates a fine lin—balancing the

needs and requests of two masters—but that is the beauty of the

act and why it has served the Congress, the administration and the

public so well for so long.

The act has had profound impact on our Government by improving operations of Federal agencies, focusing attention on governmentwide initiatives, providing continuity, and ensuring institutional knowledge and expertise. By virtue of our independence and

non-partisan status, 57 IGs currently protect the integrity of the

Government; improve program efficiencies and effectiveness; and

prevent and detect waste, fraud, and abuse in Government agencies.

Each year OIG audits, inspections and evaluations identify billions of dollars in potential savings. Our investigations lead to

thousands of prosecutions or other actions as well as billions of dollars in potential recoveries for violations of Federal criminal law.

As evidenced in our fiscal year 2003 progress report to the President, which we are releasing today, we have continued that mission. We are reporting nearly $18 billion in potential savings, over

6,600 successful prosecutions, 7,600 individuals or businesses suspended or debarred, more than 2,600 civil or personnel actions, and

nearly 200,000 complaints received through our OIG hotlines. In

addition, we have closed about 22,000 investigations and testified

before Congress 80 times. Although impressive, these numbers do

not tell the entire story. Success and impact can be measured in

many different ways. These notable statistics are the successes

which are tangible and easy to quantify.

However, another way to assess how successful the IG Act has

been and will continue to be rests on the fact that IGs are repeatedly asked by their agencies and the Congress to make recVerDate 11-MAY-2000 09:46 Dec 03, 2004 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 D:\DOCS\96127.TXT HGOVREF1 PsN: HGOVREF1
5

ommendations for improving agency performance and uncovering

fraud, waste, and abuse. The impact and added value we bring to

bear on important issues affecting our Government speaks to our

success.

The Congress has seen fit to expand the duties of the IG beyond

its original mission. Through general management laws originated

in this committee, such as the CFO Act, the Reports Consolidation

Act, and more recently the Federal Information Security Management Act, Congress has assigned new responsibilities.

The administration has encouraged us to get involved with assisting the agencies in implementation of the President’s management agenda. We interpret this to mean that our work adds value.

It is improving the efficiency, effectiveness, and integrity of our

Government.

Mr. Chairman, that completes my opening remarks. Mr. George

will go next with your permission and provide the perspectives of

the IG community as to where we want to go legislatively.

[The prepared statement of Mr. Gianni follows:]

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Mr. PLATTS. Thank you for your statement.

Mr. George, before you begin, I just want to recognize our ranking member, Mr. Towns, from New York, as well as our Vice Chair,

Ms. Blackburn, from Tennessee and also we are glad to be joined

by our colleague, Mr. Cooper from Tennessee, the sponsor of the

legislation which we will discuss today.

Welcome back to the committee and we appreciate your great

service with Chairman Horn in the previous sessions of Congress.

I am certainly doing my best to try to fill his shoes as the new

Chair here. Welcome.

STATEMENT OF J. RUSSELL GEORGE, INSPECTOR GENERAL,

CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

Mr. GEORGE. Thank you, Mr. Chairman.

Mr. Chairman, Mr. Towns, Ms. Blackburn, Mr. Cooper, I really

appreciate the opportunity to return to this committee. It was an

honor serving with Chairman Horn for those many years and I am

proud of the accomplishments that he achieved while serving in

that capacity and am pleased to see that under your leadership,

this committee is continuing to hold the Federal Government to account and helping to make it more efficient.

Either because of my prior experience or in spite of it, I was selected as chairman of a committee of IGs that has been considering

what changes, if any, are needed to the Inspector General Act. IGs

from both the President’s Council on Integrity and Efficiency

[PCIE] and the Executive Council on Integrity and Efficiency

[ECIE] were involved in this process. I am here to discuss what the

majority of IGs believe are positive aspects of Representative Cooper’s bill and will also discuss possible modifications to it based on

the consensus of the IG community.

As Mr. Gianni noted, these opinions should not be considered the

official position of the PCIE or the ECIE, rather these are opinions

of the majority of IGs in the IG community.

Representative Cooper’s bill proposes to allow IGs to only be removed for specific reasons. It also creates terms of office for IGs.

The IGs support these protections. Currently, most IGs do not have

terms of office, the only condition on removal of an IG appointed

by the President is that the President must notify Congress of the

reasons for removal. The same holds true for an IG appointed by

an agency head. The agency head simply has to notify the Congress

of a reason for removing that person.

The IGs reached a consensus that adding removal for cause criteria to the IG Act would enhance our independence. Removal protections would shield the IG from reprisal for conducting essential

but potentially unpopular investigations and audits. The IGs generally agree that the five grounds for removal listed in H.R. 3457

strike the appropriate balance between allowing substandard IGs

to be replaced and protecting IGs from undue repercussions.

Representative Cooper also proposes amending the IG Act to establish a term of office of 7 years for IGs. The majority of IGs support a term of office because, like removal for cause protection, it

would enhance our independence. A number of positions with analogous functions in the executive branch have fixed terms of office.

We compared those positions to the role of IGs and determined that

20

a 9 year term of office would be most consistent with other terms

of office across the Government.

As I mentioned, there are currently two councils of IGs, the PCIE

and the ECIE. As Mr. Gianni noted, each council was established

by Executive order. The basic mission, responsibilities and authorities for the two councils are essentially the same. These councils

provide a forum for the IGs, OMB and other Federal officials to

work together to address oversight issues that transcend individual

Government agencies.

Representative Cooper’s bill would create a single, unified council

of IGs it would include the current membership of the PCIE and

ECIE. The proposed council would receive an annual appropriation

to carry out its administrative functions. The IGs support this idea

very strongly. An IG Council that is codified and funded by an annual appropriation would enhance communications among IGs and

their staffs and improve the efficiency and effectiveness of joint activities between IG offices. It would also increase the consistency

of training for IG staffs, centralize initiatives that benefit the entire IG community, and strengthen our relationships with Congress

by providing an official forum for contact for the entire IG community. In addition to Representative Cooper and the IGs, Comptroller General David Walker also expressed support for the codification of the councils, as he so testified before the subcommittee last

year.

While the IG community strongly supports codifying the council,

we would recommend some refinements to H.R. 3457. First, the bill

replaces the Deputy Director for Management of OMB as the chairperson of the proposed council. The IGs believe that the Deputy Director should remain in a leadership role on the proposed council

to preserve the existing links between the IGs and the administration. Second, we suggest the proposed IG council be given responsibility to maintain training academies for IG staff. Representative

Cooper’s bill does not include this responsibility as a council duty.

The training academies provide a vital function for the IG community and should be maintained by the proposed council.

We also recommend a third refinement to H.R. 3457. The majority of IGs agree that the Integrity Committee which is currently a

committee of the PCIE should be codified as part of the proposed

IG council. The Integrity Committee serves as an independent body

that investigates allegations against IGs and senior staff members.

Establishing the Integrity Committee by statute would better formalize its functions to ensure that allegations against IGs and senior staff are handled appropriately.

Finally, H.R. 3457 does not include the Offices of Inspector General for the Central Intelligence Agency, which is part of the PCIE,

and the Government Printing Office, which is part of the ECIE.

These two offices have long participated in IG community activities

and would like to be included in the proposed council. With these

changes, the IGs strongly support a codified IG council.

Representative Cooper’s bill also addresses the issue of personnel

flexibilities for IGs. Like many other agencies, the IGs are keenly

interested in more flexible personnel management authorities. As

our role has expanded in both mission and complexity, it has become clear that additional personnel authority is needed. The bill

21

would create a personnel management system under Title 5 for all

OIGs under the IG Act. While the IG community supports personnel flexibilities, we disagree with this approach. Many of the OIGs

are not covered by Title 5 and already possess certain personnel

authorities that would be relinquished under the current language

of H.R. 3457.

As an alternative, the majority of IGs support a proposal that

would authorize individual OIGs to apply to the Office of Personnel

Management for certain personnel flexibilities. Such flexibilities include pay authorities such as pay banding, merit-based pay and

market-based pay, allowing IGs to more highly compensate individuals for a limited number of critical positions, providing IGs more

flexibility in hiring and performance management by expanding

the use of recruitment and retention bonuses, and permitting IGs

to extend probationary periods beyond 1 year. These flexibilities

would allow IGs to recruit and retain an even more highly skilled

and effective work force.

In addition to these flexibilities, several other personnel issues

exist that should be mentioned. Representative Cooper identified

one of these issues in his bill which permits IGs to deal directly

with OPM on the allocation of Senior Executive Service positions.

We support this provision. Along similar lines, we also suggest that

the proposed IG Council be responsible for recommending Senior

Executives to OPM for the Presidential Rank Award.

Mr. Cooper’s bill proposes allowing IGs to apply directly to OPM

for the authority to enter into voluntary separation agreements.

The IG community supports this proposal. The community also believes that we would benefit from the authority to enter into voluntary early retirement agreements.

Finally in the area of personnel, we have identified an issue of

particular importance to the Designated Federal Entity [DFE] IGs.

The DFE IGs are part of the ECIE, as I stated before. Currently,

the head of the DFE organization can staff the IG position at a

grade inferior to other management officials, causing at least the

perception of unequal status. We suggest that Congress consider a

provision that would require the IGs of these agencies to be staffed

at a grade level comparable to the most senior staff members of the

respective designated Federal entity.

Quickly switching gears from personnel issues, Representative

Cooper’s bill also includes provisions on the submission of budget

requests and the submission of semiannual reports. As for budget

requests, the bill would permit each IG to transmit an appropriation request directly to OMB and the Congress. The IGs agree that

such authority would be beneficial as long as it remains discretionary. On the issue of semiannual reports, the numerous Offices

of Inspectors General submit semiannual reports to Congress twice

each year. The reports provide updates on IG work during the previous 6 months. The bill would change the submission dates of the

semiannual reports from a fiscal year basis to a calendar year

basis. The IGs recommend that submission of semiannual reports

remain on a fiscal year basis since most of our offices—like the rest

of the Federal Government—operate using a fiscal year. If Congress were to require OIGs to submit semiannual reports on a calendar year basis, this would cause us to have to keep two sets of

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records: one based on the fiscal year and the other based on the

calendar year.

On a separate issue related to the semiannual report, the IGs

suggest that the IG Act be amended so that the results of inspections and evaluations are included in the semiannual report. Many

offices of Inspector General now conduct investigations, inspections

and evaluations, and we believe the semiannual report is a useful

way to inform Congress of the results of our inspections and evaluations.

In addition to the ideas put forward by Representative Cooper in

his bill, the IGs have developed a general consensus that two additional legislative changes would strengthen our ability to curb

waste, fraud and abuse. These changes are not currently included

in H.R. 3457, but would be valuable to the IG community. First,

we recommend an amendment to the Program Fraud Civil Remedies Act. Congress enacted this legislation to enable agencies to

recover small dollar amounts resulting from false claims and statements that would not otherwise be recovered. Currently the designated Federal entity agencies, which are typically smaller agencies, cannot use the mechanisms provided in this act. We recommend allowing the DFE agencies to use the Program Fraud

Civil Remedies Act so they can have an additional tool to recover

taxpayer losses resulting from fraud.

Second, the IGs recommend a minor adjustment to the IG Act relating to the scope of our subpoena authority. When Congress

passed the IG Act in 1978, the best evidence of fraud, waste and

abuse was found in documentary evidence such as books and paper

records. Now, however, evidence critical to the IG investigations

can be found in physical evidence such as computer hard drives,

computer disks, videotapes and other recording devices. Under current law, some contend that it could be argued that the scope of

our subpoena authority is limited to paper records of documentary

evidence. To address this issue, we recommend that Congress

amend the IG Act to clarify that IGs are authorized to subpoena

physical evidence in addition to documentary evidence.

In conclusion, Mr. Chairman, these legislative changes will further enable the IGs to be strong, independent voices for integrity,

accountability and transparency in the Federal Government. I

want to thank you for your indulgence and would like now to turn

to my colleague, Barry Snyder, who will emphasize some of the

areas I mentioned that are of particular importance to the Designated Federal Entity IGs.

Thank you, Mr. Chairman.

Mr. PLATTS. Thank you, Mr. George.

Mr. Snyder.

STATEMENT OF BARRY R. SNYDER, INSPECTOR GENERAL,

FEDERAL RESERVE BOARD

Mr. SNYDER. Thank you.

Mr. Chairman, Ranking Member Towns and Congressman Cooper, I too appreciate the opportunity to meet with you today to discuss ways to improve the functionality and independence of the

IGs. As Gaston mentioned earlier, I am the Inspector General of

the Board of Governors of the Federal Reserve System and have

23

served in that position since 1998. I have also served as the Vice

Chair of the ECIE for the past 4 years. My comments today reflect

the consensus of the majority of the IGs on that council; but as

stated earlier, they are not the official position of the ECIE.

The ECIE membership currently includes 28 statutory Inspector

Generals who were appointed by their agency head in certain designated Federal entities [DFEs]. These agencies are somewhat

unique. They are typically regulatory entities, Federal commissions, independent corporations and boards and foundations. They

often have different funding, administrative and personnel authorities and practices, different congressional oversight processes, separate governance and oversight structures, and they often perform

regulatory and other missions that have a significant impact on the

private sector and the public.

In general, the DFE IGs support Congressman Cooper’s bill with

the additions that Russell has talked about and in my brief remarks today, I would like to highlight and amplify, from a DFE IG

perspective, some of the points that have been raised.

With respect to the removal for cause and term limits, as you recall from last October’s hearing, we discussed in some detail GAO’s

report on potentially consolidating many of the DFE IGs with those

of larger Presidentially appointed IGs. I stated then, and the DFEs

continue to believe today, that oversight of their respective agencies would be greatly diminished under that concept. However, we

understand that there continues to be a perception that the DFE

IGs’ independence could be hampered because of the current appointment process. As I indicated last October, the DFE IGs

strongly support adding a removal for cause provision to the IG Act

to overcome this perception. Thus, the majority of the DFE IGs

support the provisions in H.R. 3457 to strengthen IG independence

by specifying the grounds for removal and establishing a term of

office.

Regarding the PCIE/ECIE codification, the majority of the IGs

believe that H.R. 3457’s provisions to statutorily establish a single

Inspector General Council would strengthen the efficiency and effectiveness of current council operations. In addition to suggested

additions that Russell presented, there may be a need, however, to

ensure that the issues that may be unique to DFE IGs that come

up from time to time have a way of being represented in council

deliberations. To ensure both Presidentially appointed and DFE

IGs have a voice, we support adding a provision that if the Chair

of the Council is elected from among the Presidentially appointed

IGs, then the Vice Chair would be appointed by the Chair from

among the DFE IGs and vice versa.

Regarding personnel flexibilities, given that the IG Act currently

requires the DFE IGs to follow the personnel practices of their

agency, many DFE IGs already possess some level of personnel

flexibility such as pay banding, pay for performance, market-based

compensation, and recruiting and retention incentives. As a result,

the DFE IGs support an alternative proposal that authorizes individual IGs to apply to OPM for certain personnel authorities should

their agency not already possess them.

As Russell mentioned, Congress may also want to consider adding another personnel-related change to the IG Act that would inVerDate 11-MAY-2000 09:46 Dec 03, 2004 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 D:\DOCS\96127.TXT HGOVREF1 PsN: HGOVREF1
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crease the stature of some DFE IGs by bringing their positions in

line with other officials who report to the agency head such as the

general counsel or senior program or administrative officials. With

such a provision, many of the DFE IGs believe that their ability to

command the requisite agency attention on findings and recommendations would be enhanced.

Last, with respect to extension of the Program Fraud and Civil

Remedies Act [PFCRA], it is our understanding that Congress intended to provide all IGs with the authority when PFCRA was enacted in 1986. However, since the DFE IGs were created 2 years

later by the 1988 amendments to the IG Act, they are not currently

covered. Many of the DFE IGs would clearly benefit from using

PFCRA to recoup taxpayer dollars because they often are confronted with recovery amounts less than $150,000. This proposal

has virtually unanimous support from the entire IG community

and could be achieved with a very simple adjustment to that act.

In closing, Mr. Chairman, this concludes our statement. On behalf of my colleagues here today and the IG community as a whole,

we would like to thank you and the members of your subcommittee

for holding this hearing and allowing us to share our thoughts on

H.R. 3457. Once again, we appreciate your support for the IG community and our mission, and look forward to continuing this dialog.

We would also like to again acknowledge Congressman Cooper

for his leadership in introducing legislative changes to the IG Act

that would enhance our effectiveness as IGs.

At this time, we would be happy to respond to any questions that

you, Mr. Towns or Mr. Cooper may have.

Mr. PLATTS. Thank you, Mr. Snyder.

My thanks to all three of you for your comprehensive written testimony and your highlighting of that testimony here today.

We will begin with questions and do roughly the 5 minute rule

but I am not going to be real strict on that but just to give a rotation of opportunities here.

The various proposals about strengthening the IG Act and the

independence, one aspect of that, the structure of how IGs are appointed, you all kind of touched on as part of your testimony

whether how they are appointed or the term of office, removal for

cause. What would you suggest be Congress’ guidelines as far as

looking at perhaps some changes with whether an agency IG is a

Presidential appointee with Senate confirmation or an agency head

appointee? What should we specifically look at in the sense of the

type of work involved, the size of the entity? There is consideration

with Amtrak, with the Postal Service, the National Science Foundation that perhaps IGs should be at the Presidential level. What

criteria would you advise we most importantly consider?

Mr. GIANNI. We probably have three different positions here as

to how to approach this. Let me take a crack at it from my perspective. My office at one point in time was a DFE. It was created in

1988 and at the same time the Congress created the Resolution

Trust Corporation and it had a Presidentially appointed IG. When

the Resolution Trust Corporation went into sunset under the RTC

Completion Act, the Congress decided that given the nature of the

issues that were being dealt with by the FDIC and the holdover

25

from the RTC, this position needed to be elevated to a Presidential

appointment.

As I look at this, I think if I were where you are, I would be looking at the risk involved with the agency in question and think

about whether there were conflicts between the IG and the agency.

I would also take into consideration the very things you said, the

size and the responsibility of the agency and the dollars that are

being overseen by the Inspector General. That would be my first

take on that issue.

Mr. SNYDER. I come at it a bit differently. Obviously, we sit at

different points of view here. I think the criteria is not as fixed as

one might say on this. Gaston talked about three that are possibilities. There have been a number of situations where IGs have

moved from being DFEs to Presidentially appointed often because

of Gaston’s specified second criteria, that there has been some conflict associated with the IG and the DFE.

I am not sure that conflict would be there if we had a removal

for cause provision to deal with the independence issue. While GAO

has, for several years, talked about elevating some of the existing

DFE IGs, we are not quite sure whether the problem needs to be

addressed that way or through the provisions that are in Congressman Cooper’s bill related to removal for cause.

As far as duties and responsibilities, all 57 of us have the same

duties and responsibilities, authorities and what have you. There

is a slight change now with the Presidentially appointed IGs having direct law enforcement authority but many of us on the DFE

side obtain that authority on a case-by-case basis as we need it.

The frequency of our need is not necessarily as great as it is on the

Presidentially appointed side. Aside from that difference, we all are

essentially doing the same work focused on our individual agencies.

GAO has talked about size as a criteria. They have used the size

of the IGs’ Office in comparison between DFEs and Presidentially

appointed. One can also look, as Gaston said, at the size of the

agency. I think you would get a different mix potentially on how

many of those you might want to make Presidentially appointed.

I think history shows that the Congress started with the Cabinet

level departments as their first criteria and when the 1988 amendments were passed establishing the DFE IGs, the Congress recognized that given the makeup of the DFE agencies themselves, the

independence of their corporations, boards and what have you,

maybe it would be better for the agency head to make those selections. Nevertheless, having a provision that would also ensure their

independence, like the removal for cause, would be a good thing.

Mr. GEORGE. Mr. Chairman, I want to associate my comments

with those of the other two individuals, but I would just add that

my office also had its status changed from ECIE to PCIE. One

thing I would note is that any decision along these lines implicates

GAO’s position—is too strong a word—but at least conclusion in

the report last year discussing the need to perhaps consider consolidating Offices of Inspectors General, so that would be a factor

that I would suggest Congress look at before rendering any

changes to NSF or Amtrak.

Mr. PLATTS. It seems if we are after independence, if we are not

going to have a fixed term of office, removal for cause, then getting

26

away from agency head appointment is more necessary. If we have

that fixed term, that helps establish that independence because you

know they are there has to be substantive reason.

Mr. SNYDER. I would agree in part. I would also say that oftentimes this comes down to not so much the appointment as the operation. To the extent that agency heads understand, appreciate, and

grasp how the IG concept should work, then the relationships are

usually there and the independence question is not that strong.

They want the objective, third-party opinion about how things are

going. To the extent that DFE heads might get defensive about any

criticism that we might come forward with, then you could potentially run into the problem. So it may not be so much the appointment as it is the operational respects that come into play.

Mr. PLATTS. Thank you.

Mr. Towns.

Mr. TOWNS. You made the point that Mr. Cooper’s bill was a

good starting point. What do you think needs to be done to

strengthen it or make it a much more effective piece of legislation?

Mr. GIANNI. Clearly we support the thrust of the bill and the

areas that are being addressed. I would say we are making suggestions for some refinements rather than changing the nature and

scope in some areas. Clearly, I think terms of office removal for

cause are going to be the most controversial parts of this bill. I am

not here representing the administration but have been informed

by the administration that this is a very sensitive matter and I believe Mr. Johnson indicated that the last time he was here testifying, that any administration, I believe, is going to be leery of giving

up some of their authority over selecting the leaders for our Government. So having said that, I also raise the issue that the only

reason that the IG Act came into existence is because the Congress

thought it was important to have an independent Inspector General and that it is the Congress that took the initiative to create

this kind of an organization. It was not the administration coming

forth saying it wanted an independent Inspector General. I don’t

look for the administration, to come forward, any administration to

come forward to suggest strengthening the powers or authorities of

the Inspectors General.

Personally, having lived in this position for over 8 years and embracing the IG concept and what we can contribute to our Government, anything that the Congress can do to further strengthen the

position of the Inspector General would be appreciated.

Mr. TOWNS. Mr. Snyder, at the hearing we had on the IG last

year, David Walker, the Comptroller General made a comment

about the fact that the DFE IGs were appointed could be removed

by the agency head creating at minimum an appearance of a conflict of interest. I wonder if you would like to respond to that observation?

Mr. SNYDER. Yes. I think in some instances, that perception is

there, but as I said earlier, a lot of these designated Federal entities were boards, corporations, and councils, if you will. The appointment may be made by a single individual, or it may be made

by all the board members. Sometimes that can be up to 25 different

members of the board. Removal, I doubt seriously, would be made

in those situations by one individual; it would probably take a conVerDate 11-MAY-2000 09:46 Dec 03, 2004 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 D:\DOCS\96127.TXT HGOVREF1 PsN: HGOVREF1
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sensus of the board to do that. I think as GAO Comptroller General

Walker said, there may be instances, and I think he mentioned the

Postal Service, where there is a board involved and then the situation may not be as severe as might be on the surface when there

is just a single agency administrator that is appointing the DFE

IG. But as I have stated here today, I think we can overcome some

of this with a removal for cause provision such as the one that has

been proposed.

Mr. TOWNS. Mr. George, you have been on both sides, you have

been up here and over there and I have checked your background

and you have been elsewhere too. Let me ask, what do you think

we need to do on this side to really strengthen this because I think

we all agree there should be some changes. What changes do you

think should happen?

Mr. GEORGE. That is very good question, Mr. Towns, and I may

request an opportunity to further elaborate on this response afterwards. Let me just say to preface my answer, I truly, truly wish

I had this experience before coming to the Hill because there are

really so many areas where I think Congress could make changes

to better enable IGs to do their jobs. A lot of them have to do with

reporting requirements. In many, many instances, the issue is resources. I have an office of approximately 25 individuals which

must oversee an agency that is expanding daily and has offices, or

at least beneficiaries, nationwide. I think, given the opportunity to

respond in writing, I will give a more thorough response if that is

OK.

Mr. TOWNS. I encourage the chairman in getting that in writing

because the fact that he has had experience on both sides, I think

he could really be very helpful to us in making certain that we

really take it to the level that it should go.

I also want to commend my colleague, Congressman Cooper, for

his insight in terms of recognizing the fact there is a problem that

we need to address because many of us have heard stories where

the IG starts to do something and the next thing he knows, he is

fired. There have been situations like that, so I think no IG should

have to work in that atmosphere and climate. He should have flexibility and authority to move, so I would welcome your comments

and suggestions.

On that note, Mr. Chairman, I yield.

Mr. PLATTS. Thank you, Mr. Towns. We would welcome that followup from you, Mr. George or all of you if you have followup items

you want to share with us, we will keep the record open for 2

weeks.

Mr. Cooper. I also would like to recognize Representative Cooper

for his work on this and for participating both last year and again

today as we try to move forward on developing a consensus of what

legislation we can embrace and try to act on.

Mr. COOPER. Thank you, Mr. Chairman. I appreciate your leadership on this issue and on many other issues as well. I appreciate

your kind words and the words of my friend from New York, Mr.

Towns.

First, let me say it shouldn’t be called the Cooper bill. It has always been the Cooper-Shays or Shays-Cooper bill but our friend

from Connecticut has played a very vital role in this process. It was

28

intended from the start to be completely bipartisan and completely

good government. I am grateful for the work that our IG friends

have done over the years in saving the American taxpayer money

and catching the bad guys. This is a part of government that we

should all be proud of and we should be here helping you do your

mission. That has always been my intention and I would like to

offer here and now, let us accept all your amendments wholesale,

without objection and let us move this bill because I am afraid we

are all going to die of old age before anything happens.

The chairman mentioned holding the record open for 2 weeks.

That is almost the legislative time left in this session, so I would

urge us to incorporate these amendments and at the beginning of

the next Congress, let us move the bill.

I think the main caveat I would have is that any executive

branch, Republican or Democrat or whatever other parties may develop, will not necessarily be enthusiastic about this bill. The impetus has to come from Congress. We have to exercise the oversight

and have the push to get this through. Having fixed terms and

having independence should not be objectionable to anybody of any

political persuasion. All we are trying to do here is the right thing.

We haven’t sought co-sponsors on this. So far it has been more

or less a trial balloon as we awaited the maturing of the opinion

of the IGs and let it float out there. I would like to state my intention that early in the next Congress that we move this and move

this rapidly so that we can all be proud of our role in helping the

IGs have an even more successful second 25 years than they did

in their first 25 years because it is a record of terrific accomplishment, a record of terrific excitement, although sometimes that excitement isn’t conveyed in hearings like this. I was thinking I was

grateful there were no cameras here because we have made a great

topic look so boring that I am not sure the average taxpayer would

appreciate the billions of dollars saved and the fraud that has been

caught.

Let us celebrate their accomplishments and the next 25 years

can and should be even better if we go ahead and agree on these

proposed amendments, redraft the bill, let us get it out there and

it will have a lower number next year, it won’t be H.R. 3457. Let

us get the Government Reform Committee to move this thing.

Thank you, Mr. Chairman.

Mr. PLATTS. Thank you, Mr. Cooper.

There is often the sentiment that the work of this subcommittee

is such important work. When we talk about billions of dollars of

our constituents’ funds, it certainly is important. I look forward to

getting the feedback today and both the PCIE and ECIE recommendations and positions and incorporating those in the work

you have already done in your legislation as we kind of hammer

out what that consensus, as you said, bipartisan, good government

piece is and I know Mr. Towns hopes he is in this seat and I am

in his seat come January, and I want to assure you that I will continue to be kind to you when I remain in this seat.

This is about good government and not about one party or the

other, but just doing right by our citizens. I think where Mr. Cooper’s bill has begun and some great feedback here and some followup that I have, some other questions, we can develop very strong

29

bipartisan consensus legislation that I will share your excitement

for moving in the 109th and just get the job done and move forward.

I do want to followup. One of the things we agree on is removal

for cause and the importance of that for the independence. In your

written testimony you talk about the general support for the five

criteria identified in the gentleman’s bill but you say you would

like to further discuss how to clarify those removal conditions.

What do you mean or envision by clarifying? Is that adding some

other specific or how we define those five? If you could expand on

that from your written testimony, that would be great.

Mr. GEORGE. Part of it is most definitely a definition expansion,

Mr. Chairman.

Mr. GIANNI. I think we would like to work with the committee

to bring some further clarity to the terms. We find that when the

terms aren’t as clear or putting it another way, they may be clear

but subject to interpretation and that is where we may get into

some difficulty. To the extent we can work with the subcommittee

staff and put some clarification or parameters as to what the terms

mean, the intent of the Congress in using those terms would be

cleaner.

Mr. PLATTS. For example, inefficiency being one of them, that

there be something concrete so it doesn’t leave kind of a loophole

that removal for cause really could be you used one too many pens

in doing your work, so you are inefficient and you are gone but

something more specific and concrete is what you are envisioning?

Mr. GIANNI. Yes, sir.

Mr. SNYDER. Yes.

Mr. GEORGE. That is exactly right. The other factors are quite

clear but that one, as you noted, does provide ambiguity in terms

of giving assurance to the IGs as to what he or she should or

should not be doing.

Mr. PLATTS. Mr. Cooper, what about what you envisioned and

how that was to be acted upon, the inefficiency part of the definition?

Mr. COOPER. I think the real question here is whether we let the

best be the enemy of the good. We could work for months, maybe

years on the perfect definition but what we did was copy the

grounds for removal for the GAO Comptroller General of the

United States. If it works for him, it will probably work here too.

My sense is that the English language is incapable of achieving the

level of precision that some of our IG friends would like to see.

Sometimes the more you define something, the more loopholes are

created. I don’t think anybody would try to remove an IG without

some good hard evidence, a lot more than using extra ink pens. To

me we have to face a choice here of inventing a new definition or

copying an old one. If someone can find a better one than for the

Comptroller General, let me know and I will consider putting it in

there but in the interest of speed and clarity, and also using precedents that may have been established in other situations, that is

the fastest way to achieve the goal.

Mr. GEORGE. Just to touch on that point, that may be the best

solution, Mr. Cooper, maybe to leave the language but perhaps the

committee report or a statement on the floor could provide examVerDate 11-MAY-2000 09:46 Dec 03, 2004 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 D:\DOCS\96127.TXT HGOVREF1 PsN: HGOVREF1
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ples or maybe even admonitions to people in terms of how that

should or should not be used.

Mr. PLATTS. Mr. George, with you and I both having law degrees,

looking for specifics and you are right, it may be too exact sometimes. They drill that into you to try to cover all bases in that definition.

It would be helpful if there are others that go beyond the Comptroller General definition for removal of cause you believe should

be in there, you are communicating that to us individually or

through the councils would be helpful as we try to work as a team

here in putting together a consensus piece of legislation.

Mr. GIANNI. We will do that, sir.

Mr. PLATTS. One of the proposals about the council and from a

structural standpoint, having one council and I think Mr. Snyder,

you mentioned if the Chair is a Presidential appointee and the Vice

Chair, where does the Deputy Director of Management at OMB fit

in as far as the structure of the one council if they combine the

two?

Mr. SNYDER. I think Russell has the specifics but we were looking at more of an executive chair, if you will, for that position and

having the day-to-day operations being done by the Chair or Vice

Chair.

Mr. GEORGE. The IGs envision the Deputy Director for Management in a leadership position because of the impact or influence

that individual generally has within the executive branch, within

the administration. It is helpful that, if problems arise in the IG

community, the IGs have access to an individual with a direct voice

in the decisionmaking process at OMB at the highest levels. The

basic fact is that if there is a problem, the Deputy Director of Management is somebody who could help resolve it, as opposed to having to run a process that could go on forever and perhaps never actually reach a decisionmaking individual.

Mr. PLATTS. So it is beneficial to keep him in the loop in some

fashion because of his role within the administration?

Mr. GEORGE. Exactly.

Mr. PLATTS. His or her role?

Mr. GEORGE. Yes.

Mr. PLATTS. On the law enforcement, you mentioned the Presidential appointee having the authority case by case on the DFE

and it kind of relates to other issues where you kind of get an optin like with the personnel policies. From the DFE perspective, is

that something you would rather keep as an option or is there a

benefit to having that same up front authority and if you can walk

me through how you seek the authority on that case by case, make

sure I understand that and which you think is most beneficial or

would be best.

Mr. SNYDER. I think because of the nature of the programs that

the DFEs are dealing with, the larger Presidentially appointed

agencies or departments have a lot of grants, entitlements, procurements, if you will, whereas a lot of the other DFE agencies are regulatory in nature and may not have the same volume of those

kinds of activities. So the opportunity or risk, as Gaston talked

about, for potential wrongdoing, may be less in those entities or a

different type of potential wrongdoing could occur there.

31

The frequency with which we often go out and do investigations

related to program activities may be different, so I think what we

have done is when we need to have those authorities, then we

make an application to the Department of Justice to get those and

become Deputy U.S. Marshals in that process.

As the FBI has changed its emphasis since September 11, all the

IGs have been asked more and more to take on more investigative

work than we have in the past. So the need for those authorities

could change over time to be more on a recurring basis than what

they are today.

Mr. PLATTS. I take it there has never been much of a problem

or an inconsistent approach to granting the authority once it is requested from Justice?

Mr. SNYDER. I can only speak from my own position on that. We

have not recently had any issues along those lines given the nature

of the allegations that we are dealing with. Others may have different stories to tell, and if you like, we could attempt to get some

feedback on that and submit it to you later on.

Mr. PLATTS. We would welcome that.

On the proposal, and I would be interested from all three of you

coming from both perspectives, on Postal Service, NSF, Federal Reserve about being elevated, your individual opinions on whether

that is a wise idea and related to that is the fact that CIA and

GPO are not statutorily included in the act and is that something

we should be correcting even though they have their IGs and participate in the councils, is that something we should be looking at

including in the legislation?

Mr. GIANNI. I spoke to my colleague at the Postal Service who

at one point in time served in a number of positions within the

PCIE and had been confirmed a number of times, been in a number of IG offices. He certainly would not be opposed if the Congress

chose to make his position Presidentially appointed. He certainly is

the largest IG office at the Executive level. As it relates to the others, I think Barry can talk to that.

Mr. PLATTS. At the Postal Service, although he is not a Presidential appointee, he has removal for cause and a fixed term?

Mr. GIANNI. Seven year term, right.

Mr. PLATTS. So he has some of that independence through other

means?

Mr. GIANNI. That is correct.

Mr. SNYDER. That is correct. The Postal Service already has

those two provisions and the Postal Service works with a 12 member board.

Mr. PLATTS. And that kind of relates to many of the DFEs, they

are reporting to boards and commissions?

Mr. SNYDER. That is correct. It is not necessarily just one person

that we are dealing with. As far as the position itself, oftentimes

I think this might also come down to the nature of the agency, the

Federal Reserve being one of those that is a very independent

agency because of the nature of its work in trying to keep monetary

policy free from political influence if you will. How they would react

to having another appointment from the administration potentially

related to that independence of the agency could be a concern to

them. I think they have expressed it in the past as these questions

32

have come up. I think that may hold true with other independent

agencies that make up the DFEs. So it is not just a question of elevating to try to resolve a problem or anything like that. I think the

intent here was to recognize these agencies were independent entities and therefore, needed to make sure they sustained that level

of independence and to not look for other areas where that independence might be threatened. This is probably analogous to any

administration not wanting to have a term of office. The administration might feel the same way about losing control or not having

input on who is going to be the Inspector General.

Mr. GEORGE. As it relates to GPO, its status as a legislative

branch entity might be a factor one would want to consider before

changing its status.

Mr. PLATTS. Right. Good point. It kind of relates to another question of relinquishing authority.

Jim, did you have any other questions or anything you wanted

to raise?

Mr. COOPER. I wanted to ask about the term consideration.

Mr. PLATTS. Mr. Cooper.

Mr. COOPER. We had in our bill a 7 year term. I think you are

suggesting 9 year terms. I don’t really care, just so that it is fixed

and there is removal for cause. Depending on the temperature of

our friends on the other side of the aisle, if they felt a little more

comfortable with a slightly shorter period of time, is that going to

cause you to withdraw your support from the bill?

Mr. GIANNI. I don’t believe so, sir.

Mr. SNYDER. I don’t either.

Mr. GIANNI. This was the hardest issue on which to get a consensus among the members of the IG community. We were discussing

this issue several years ago when Senator Collins had a bill and

it has taken us this long to get to a point where people agree that

we should have a term of office and longer was felt to be better

than shorter. A renewal phase always has implications, if you will,

because as an IG I may to have to behave in my last year, not necessarily behave but not issue any controversial reports or sensitive

reports because I could be worried about getting reconfirmed or renominated.

Mr. COOPER. That’s the way U.S. Senators feel.

Mr. GEORGE. I just want to note I was part of those discussions

as to the length and I have to admit I was on the side for a much

shorter term of office. I believe that fresh ideas and new blood

sometimes is healthy for an organization, but with the option of

being reappointed. But again a lot of consideration was taken into

this in terms of looking at other positions as I noted in my written

statement to you. So the consensus has been achieved at the 9 year

level and we could elaborate on that further if need be.

Mr. COOPER. I would be curious about the chairman’s reaction.

Do you think it is easier to sell 7 versus 9 years on your side of

the aisle or is there much difference?

Mr. PLATTS. My gut instinct would be shorter is easier but I do

like the 9 because you are getting through what is two administrations whether it is the same 8 years or two different ones but from

the sense of carrying further, that is something we can look at as

we try to develop a consensus we truly can move. If I am given the

33

privilege of continuing the Chair come January, and moving some

of the things you say you have been working on for years, I know,

Jim, you have been long pursuing this so if we get action on it.

Mr. COOPER. I would like to remind my colleagues that there

have only been two successive Presidential terms since Dwight D.

Eisenhower, so it is an increasingly rare thing in modern American

politics. Regardless of whether it is 7 or 9, just so we get consensus

and move the bill, I will be a happy man.

Mr. PLATTS. On the personnel issue and have that opt-in approach about flexibility, I want to make sure I understood how you

are envisioning that, that each of the individual IG offices would

have the flexibility to have under statute say DOD which has some

additional flexibility today, Homeland Security, that any additional

flexibility beyond what they have, that individual IG office could

petition OPM for that authority? That is how you envision that?

Mr. GIANNI. That is correct. We are going individual IG by IG office as opposed to a collective for the whole community.

Mr. PLATTS. That is why I think there are strong merits in the

proposal. Congressional support is one of the areas because it is

Congress kind of giving up the authority of what will be personnel

procedures to OPM as opposed to saying no, you have to do it

through legislation each time, so that is something we will probably need to weigh. House and Senate in total would be that additional discretion or giving up that authority.

Mr. GIANNI. There are a number of pilots currently ongoing within our Government now where OPM has granted authority to agencies who have come forward, but the issue is unless an agency has

come forward and sought that authority, it doesn’t apply to the Inspector General Office. What we are suggesting is that many of us

would like to have the opportunity to come forward and participate

in those programs with those flexible authorities.

Mr. PLATTS. Where the agency head——

Mr. GIANNI. Exactly. Not relying on our agency head. Quite

frankly, if we are doing our job right, we are supposed to be models. If we can make it work and demonstrate that it has a benefit,

then perhaps our agencies themselves will move in that direction.

Mr. PLATTS. That is one more example of the independence

issue?

Mr. GIANNI. Yes, sir.

Mr. PLATTS. That you can do that on your own.

The final issue I wanted to touch on was the Integrity Committee

created with PCIE. There is not a separate forum for the ECIE?

Mr. GIANNI. No, sir.

Mr. SNYDER. There is an ECIE member on the PCIE Integrity

Committee. In fact, all of the PCIE committees have ECIE members on them, they are interlocking. It sort of argues for the one

council, if you will, because we have interlocking membership today

on our committees.

Mr. PLATTS. How does the Integrity Committee work?

Mr. GIANNI. The Integrity Committee was created by Executive

order, and is headed by an Assistant Director at the Federal Bureau of Investigation, the Assistant Director for Criminal Investigative Division. The head of the Office of Government Ethics, the

head of the Office of Special Counsel, the head of the Office of ProVerDate 11-MAY-2000 09:46 Dec 03, 2004 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 D:\DOCS\96127.TXT HGOVREF1 PsN: HGOVREF1
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fessional Responsibility in the Department of Justice, and three Inspectors General—two from the PCIE, one from the ECIE—comprise the committee.

The Executive order says when allegations are brought against

Inspectors General or senior staff within the Inspector General Office, and the Inspector General feels that he or she can’t adequately

and independently review them, these matters are turned over to

the Integrity Committee. The Integrity Committee does not operate

through the PCIE, it is independent but it is made up, in part, of

members from the PCIE and reports directly to the Deputy Director for Management in OMB. The committee’s findings go directly

to the Deputy Director for Management, and the Deputy Director

for Management then determines whether action is warranted on

the part of an agency official, agency head, or the President.

Mr. PLATTS. And as far as criminal law enforcement?

Mr. GIANNI. If it is determined that criminal wrongdoing has

been done, then the Justice Department takes that over and it is

no longer a part of the Integrity Committee.

Mr. PLATTS. OK. You would rather see that statutory rather than

Executive order be included in the legislation?

Mr. GIANNI. We are not suggesting to change the process. However, we think it gives it more credibility.

Mr. PLATTS. The permanence of it?

Mr. GIANNI. The permanence and visibility of Congress. Again, I

want to keep stressing when it gets into law, there is greater visibility from the Congress. As I said before, we are a creature of the

Congress and we are very grateful for your interest and those who

have gone before who have shown an interest in the IG community.

Mr. PLATTS. I misspoke, I do have one more area that staff wanted me to highlight and that is the importance of the budgeting

process and your ability to go directly to OMB which to me I think

we talked at length in October, and it is so crystal clear how the

independence is eroded when you have to go through your department head, agency head to work with your budget as opposed to

having a direct link. Am I accurate in my statement that is a critical part of your independence?

Mr. SNYDER. I think it can be, particularly in some of the DFEs

where their budgets are within the agency because it is much

smaller in terms of the overall budget of the United States. I think

having the opportunity to make their case separately from their

agencies, particularly when they are under pressure, would be a

wise thing to have.

Mr. GIANNI. I would like to get this on the record. When I was

confirmed for my position, the FDIC budget for the IG office was

submitted to the board of directors for approval and that was the

extent of it. The chairman at the time raised the question and concern that under those circumstances, he was concerned about my

independence and asked me how we could possibly address this

issue. We offered some options and as a Presidentially appointed

IG, we are supposed to have a separate line item for our budget.

It is supposed to come before the Congress. In my case, it wasn’t

coming before the Congress, and we made a provision that it

would, so only my budget within my agency comes before the Congress.

35

In my opinion, that is a strength and a protection to my position

because the Congress gets to see what money I am getting allotted

or asking for and what the results of the investment are, I think

that outside look gives strength to my position.

Mr. PLATTS. Even though it is a line item, the request for the

amount in that item is still by the department head, not by you directly?

Mr. GIANNI. That is right. We reach agreement, it goes to OMB

and then there is a discussion with OMB on that. Then through

the congressional oversight, there are opportunities to talk about

the adequacy of that budget.

Mr. PLATTS. Mr. George.

Mr. GEORGE. In the past, there have been some instances where

agency heads and IGs have butted heads on budget requests and

the like. So I guess my recommendation would be that perhaps giving as an option that the Inspector General could exercise or not

exercise might be a better way to approach it, especially if we are

seeking the support of the administration on some of these changes

because that would be a very big change and would affect OMB in

many, many ways.

Mr. SNYDER. I might add that in dealing with the DFEs, because

of the uniqueness, there are several that are nonappropriated, so

you would have to deal with the differences that might be there.

I think there is even one, the Smithsonian, that is partially appropriated and non-appropriated, so I think we may have to deal with

some nuances.

Mr. PLATTS. Account for some of those exceptions?

Mr. SNYDER. Exactly.

Mr. PLATTS. Again, I appreciate all three of you participating and

the clear leg work that you have put in not just for this hearing

but in strengthening the IG community, the independence and allowing you and your colleagues to even more effectively fill the

charges you have been given. Again, I appreciate Representative

Cooper’s great work on this and do look forward to getting consensus with the IG community and with bipartisan effort here on the

Hill to get legislation in final form to move forward. Hopefully because of time running out with the 108th but to as early as possible move some legislation in the 109th and get this job done not

once and for all but once again because it is always going to be a

work in progress I imagine as new things come up.

We will keep the record open for some of that followup information and thank you in advance for those additional submissions.

Otherwise, this hearing stands adjourned.

[NOTE.—The President’s Council on Integrity and Efficiency and

the Executive Council on Integrity and Efficiency report entitled,

‘‘A Progress Report to the President, Inspector General Act of 1978,

Twenty-fifth Anniversary,’’ may be found in subcommittee files.]

[Whereupon, at 3:50 p.m., the subcommittee was adjourned, to

reconvene at the call of the Chair.]

[The prepared statements of Hon. Jim Cooper and Hon. Edolphus

Towns, and additional information submitted for the hearing record

follows:]

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