Fiscal Year 1998

 A PROGRESS REPORT TO THE PRESIDENT

President’s Council on Integrity and Efficiency

 Executive Council on Integrity and Efficiency
Cover Design by the National Archives and Records Administration

This report was produced in 1999 by the Environmental Protection Agency,

 Office of Inspector General, Nikki L. Tinsley, Inspector General
Foreword

 he President’s Council on Integrity and Efficiency (PCIE) and the TExecutive Council on Integrity and Efficiency (ECIE) are proud to

present our joint annual report highlighting results of the Office of

Inspector General (OIG) community during fiscal year (FY) 1998. This report

attests to the excellent progress that the community has made in its efforts to

promote more efficient, economical, and effective programs and operations

throughout the Federal Government. Our progress is evident in three major

areas, serving agency management and the American people; safeguarding

taxpayer funds; and working as a community and with other partners to

maximize our collective effectiveness.

Our report contains countless examples where OIG auditors and evaluators

have helped agency officials accomplish goals and successfully address the

challenges they confront. We have worked to strengthen agency financial

management, help agencies conform to legislative mandates such as the

Government Performance and Results Act (GPRA), see that managers use

technology and information systems to their fullest potential, and make

efficient use of funds budgeted. During FY 1998 alone, reports issued by PCIE

and ECIE members identified nearly $16 billion of Federal funds that could be

put to better use by government managers. But the Inspector General (IG)

community’s impact goes far beyond the walls of the agencies where OIG staff

conduct their work. Results of OIG work ultimately affect every facet of daily

American life, health care, education, aging, insurance, banking, airline safety,

taxes, childcare, and the environment. The American public is clearly a

beneficiary of the IG community’s work and we are proud of our

accomplishments on its behalf.

The goal of safeguarding taxpayer dollars by preventing and detecting fraud in

Federal programs and activities also drives the work of the IG community. 

During FY 1998, the PCIE and ECIE IGs and their investigative staffs have

met that challenge. Nearly 15,000 wrongdoers were successfully prosecuted. 

Almost $1.4 billion in restitution and investigative recoveries has been realized

and more than 7,000 unscrupulous individuals or firms were disqualified from

receiving government contracts or otherwise participating in government

programs. 

While the individual PCIE/ECIE member agencies conduct work to address

issues of principal concern to our respective agencies, we do not do so in

isolation. Rather we rely on cooperative efforts with one another, committee

work and joint projects, sharing of best practices, and partnerships with law

enforcement agencies, other government bodies, and private sector groups, all

in the interest of maximizing our effectiveness and better serving the 
government. We are constantly using new tools, products, services, and

approaches in conducting our work, many of which are described in this

report.

While this report is intended to capture the value and impact of our work in FY

1998, it is important to note that the progress of the past fiscal year has laid a

solid foundation for our present and the future. For example, as we approach

the Year 2000, our efforts to ensure governmentwide readiness and compliance

over the past year and a half will serve us well. As we rely increasingly on

information and technology resources and address concerns related to data

integrity and security, our work in those areas will help ensure that our new

tools function efficiently and that information and data generated by

government systems are reliable and safe. Together we have made strides in

identifying and resolving these types of cross-cutting challenges that all

Federal agencies face.

Because progress, by definition, suggests moving forward, it is appropriate in

this report to share the PCIE/ECIE vision for the future. Our priorities as we

move ahead are to prepare a comprehensive strategic plan to guide us, address

emerging issues connected with systems security, enhance financial

management practices with an eye toward obtaining clean opinions on audited

agency financial statements, continue to foster GPRA principles, and bring to

successful completion our intensive Year 2000 activities. As for investigative

issues, we will continue our work in such areas as benefits fraud and contractor

wrongdoing. 

We could not accomplish our goals without the valuable input of each member

of every Office of Inspector General. On behalf of the PCIE/ECIE, we thank

them for their contributions, dedication, and service. The PCIE/ECIE

community appreciates the continued support of the Administration, Members

of Congress, and the agency management with whom we work. As we celebrate

over 20 years of IG history and approach the millennium, we feel privileged to

serve the American people. We are committed to making continuous progress

in pursuit of our mission to ensure the highest degree of integrity and success

in Federal programs.

 Gaston L. Gianni, Jr. Thomas D. Blair

 Vice Chair Vice Chair

 President’s Council on Executive Council on

 Integrity and Efficiency Integrity and Efficiency
PROFILE OF PERFORMANCE–FISCAL YEAR 1998

Summary of Combined Statistical Accomplishments by PCIE and ECIE Members

 TOTAL

‘ Recommendations That Funds Be Put To Better Use ................................ $15.8 Billion

‘ Management Decisions On Recommendations 

 That Funds Put To Better Use................................................................ $ 6.4 Billion

on

‘ Questioned Costs............................................................................................. $ 3.5 Billion

‘ Management Decisions On Questioned Costs.............................................. $ 1.9 Billion

‘ Successful Criminal Prosecutions.................................................................. 14,885

‘ Civil Actions.................................................................................................... 1,918 

‘ Personnel Actions .......................................................................................... 1,273 

‘ Suspensions/Debarments................................................................................ 7,104 

‘ Investigative Recoveries.................................................................................. $ 1.4 Billion

Detailed information by agency begins on page 38

Table of Contents

Foreword

The Inspector General Community ................................ . 1

Inspectors General Address Management Challenges, Innovative 

Solutions, and Areas of Agency Vulnerability........................ . 4

 Top Management Challenges Reported By Agency IGs . . . . . . . . . . . . . . . . . . . . 5

 Helping Federal Agencies Resolve Management Challenges............... . 6

Best and Innovative Practices In Federal Agencies .................... . 10

Improving Federal Program Management and Performance.............. . 15

Improving Financial Management................................. . 18

Improving Procurement and Grant Management...................... . 21

Preventing Fraud and Vulnerability to Waste and Abuse................ . 24

Recoveries and Results From Fraud Investigations .................... . 26

Civil Actions From Fraud Investigations............................... . 32

PCIE/ECIE Committees and Projects .............................. . 34

Summaries of Statistical Accomplishments.......................... . 38

PCIE Membership Addresses and Hotline Numbers .................. . 52

ECIE Membership Addresses and Hotline Numbers .................. . 53

Glossary of Common Acronyms and Abbreviations................... . 54

PAGE 1 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

THE INSPECTOR GENERAL COMMUNITY

ongress passed the Inspector General Act of 1978, which created independent Caudit and investigative offices within 12 Federal agencies. Before that time,

most Federal audit and investigative resources were under the management of

specific Federal program offices–meaning that Federal auditors and investigators were

frequently under the direction of the programs they were reviewing. This splintered

system also made it hard for these small audit and investigative offices to see a pattern

of abuse against their agency’s programs.

In the last 21 years, the Inspector General (IG) concept has proven to be of significant

benefit to the government–each year billions of dollars are returned to the Federal

Government or better spent based on the recommendations from IG reports. Because of

this success, the IG concept has been gradually expanded to most of the Federal

Government. In FY 1998, there were 57 Offices of Inspector General (OIGs) providing

oversight to 59 Federal agencies.

“Inspector General” may seem an unusual name for a civilian auditor/investigator. The

modern civilian IG was derived from the military custom of having an independent

“Inspector General.” IGs were first used in the American military during the

Revolutionary War, when General Washington charged General von Steuben with

providing an independent review of the combat readiness of the Continental Army’s

troops. Today’s civilian IGs are charged with a similar mission: detecting and

preventing fraud, waste, and abuse and promoting economy, effectiveness, and

efficiency so that their agencies can best serve the public.

IG Independence The major way IGs are different from other Federal officials is their independence. The

Inspector General Act authorizes IGs to:

‘ conduct such investigations and issue such reports as they believe appropriate (with

limited national security and law enforcement exceptions);

‘ issue subpoenas for information and documents outside the agency (with same

limited exceptions);

‘ have direct access to all records and information of the agency;

‘ have ready access to agency heads;

‘ administer oaths for taking testimony;

‘ hire and control their own staff and contract resources; and

‘ request assistance from any Federal, State, or local government.

This statutory independence is meant to ensure the impartiality of IG audits and

investigations. The IGs articulated their view of how this independent, yet cooperative,

relationship with management should work in their 1994 Inspectors General Vision and

Statement and Strategies to Apply Our Reinvention Principles. IGs are interested in

input on what projects they should pursue. Except in special circumstances, IGs share

drafts of their reports with their agencies and respond to agency comments in final

reports. IGs also frequently provide “technical advice” on a particular issue or piece of

legislation to the Administration and to Members of Congress. Many IGs participate in

their agencies’ senior councils, and frequently OIG staff provide advice to agency

“reinvention councils” as management policies are developed.
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 2 

IG Mission In simple terms, the IGs have two basic roles: to find and report on current problems 

and to foster good program management to prevent future problems. This report

describes many examples of how the OIGs meet their specific statutory mission to:

‘ conduct and supervise audits and investigations relating to the programs and

operations of their agencies;

‘ review existing and proposed legislation and regulations relating to the programs

and operations of their agencies;

‘ provide leadership for activities designed to promote economy, effectiveness, and

efficiency and fight fraud, waste, and abuse in their agencies’ programs; and

‘ inform their agency heads and the Congress of problems in their agencies’

programs.

In performing this mission, the IGs prepare a variety of reports, including:

Audit Reports. Most OIG resources are spent on audits. OIG audits evaluate the

performance of agency programs and supporting administrative and financial systems;

compliance with relevant laws and regulations; whether there are ways that funds could

be put to better use; whether contractors and/or grantees have met their responsibilities

to the government; and whether people or firms doing business or receiving benefits

from the government have received funds to which they are not entitled and should make

restitution. By law, OIG audits are performed under auditing standards set by the

General Accounting Office (GAO). In FY 1998 alone, OIG audits (and the related

discipline of OIG inspections) led to managers making decisions to better spend more

than $6.4 billion and to seek the return to the government of almost $2 billion.

Inspection Reports. Inspections are similar to policy and program evaluations. 

Several of the OIGs have adopted inspections as a quick way to spot test the

effectiveness of their agency programs or to do a broad review on issues affecting

agency programs. The PCIE and ECIE have adopted professional standards to ensure

the validity and independence of IG inspections.

Investigation Reports. In accordance with professional standards and guidelines

established by the Department of Justice (DOJ), OIGs perform investigations of both

criminal and administrative wrongdoing against agency programs. When they deem

necessary, IGs investigate outside beneficiaries, contractors or grantees, or Federal

officials–indeed, IGs are empowered to investigate anyone who may have defrauded

their agencies’s programs. IGs are required to report suspected violations of criminal

law directly to the Attorney General and frequently work cooperatively with DOJ on

criminal investigations. In FY 1998 alone, OIG investigations led to the recovery of

almost $1.4 billion, nearly 14,900 successful prosecutions, the suspension or debarment

of over 7,000 people or businesses doing business with the government, and almost

2,000 civil actions.

Semiannual Reports to Congress. These reports are specifically required by the

Inspector General Act. IGs must summarize their most significant recent reports and

management’s action on significant IG recommendations. These reports provide a

useful overview of OIG activity and demonstrate the value each IG contributes.
PAGE 3 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

IG Appointments IGs are appointed on the basis of their personal integrity and their expertise in:

‘ accounting, auditing, financial analysis;

‘ law, management analysis, public administration; and

‘ investigations.

The IGs serving at the cabinet-level departments and major sub-cabinet agencies are

nominated by the President and confirmed by the Senate. These IGs can be removed

only by the President. IGs at smaller independent agencies and corporations are

appointed by their agency heads, who can also remove them from office. In either case,

both houses of Congress must be notified of the reasons for removal.

The President’s

Council on

Integrity and

Efficiency (PCIE)

The Presidentially-appointed Inspectors General work together and coordinate their

professional activities through the PCIE, which was created by an Executive Order

dated March 26, 1981, and updated in 1986 and 1992. The PCIE works to promote

collaboration on integrity, economy, and efficiency issues that transcend individual

governmental agencies and to increase the professionalism and effectiveness of IG

personnel throughout the government. The PCIE is chaired by the Deputy Director for

Management of the Office of Management and Budget (OMB), who is responsible for

reporting to the President on its activities. In addition to the Presidentially- appointed

IGs, members include the Controller of the Office of Federal Financial Management at

OMB, the Special Counsel of the Office of Special Counsel (OSC), the Director of the

Office of Government Ethics, the Deputy Director of the Office of Personnel

Management (OPM), and a representative of the Director of the Federal Bureau of

Investigation (FBI).

Most of the work of the PCIE is done by its committees. That work is summarized later

in this report. The PCIE also maintains two training centers for OIG staff: the

Inspectors General Auditor Training Institute at Fort Belvoir, VA and the Inspector

General Criminal Investigator Academy at the Federal Law Enforcement Training

Center, Glynco, GA. PCIE members also join together in a number of substantive

working groups, including the Government Performance and Results Act Roundtable

and the Information Technology Roundtable. Updated information on PCIE and

individual OIG work can be found at the IG community webpage, known as IGNet,

located at http://www.ignet.gov.

The Executive

Council on

Integrity and

Efficiency (ECIE)

The ECIE, comprised primarily of the IGs appointed by agency heads, was created by

Executive Order on May 11, 1992. The ECIE has the same mission as the PCIE:

address integrity and efficiency issues that transcend individual government agencies

and increase the professionalism and effectiveness of IG personnel throughout the

government. The ECIE is also chaired by the Deputy Director for Management of

OMB. In addition to the agency head-appointed IGs, members include the Controller of

the Office of Federal Financial Management at OMB, the Special Counsel of OSC,

Director of the Office of Government Ethics, the Deputy Director of OPM, and the

Assistant Director, Criminal Investigative Division of the FBI.
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 4 

INSPECTORS GENERAL ADDRESS MANAGEMENT CHALLENGES,

INNOVATIVE SOLUTIONS, AND AREAS OF AGENCY VULNERABILITY

he following narratives highlight how OIGs use audits, investigations, and Tinspection reviews to identify material management challenges and weaknesses,

opportunities and solutions for improvements, innovative practices, and areas

vulnerable to fraud, waste or abuse.

OIGs devote the bulk of their resources to audits and related services. This work is

performed by OIG audit staff, other Federal auditors under cost-reimbursable

agreements, or non-federal auditors under various contracting or partnering

arrangements.

Inspections are similar to policy and program evaluations and are designed to support

the overall missions of the OIGs and their respective agencies by promoting economy,

efficiency, and effectiveness in program administration. Inspections differ from audits

in their comparatively short time-frames, flexibility, and use of multi-discipline teams.

The IG Act requires IGs to provide policy direction for, and to conduct, supervise, and

coordinate investigations relating to their entities’ programs and operations. The OIG

investigations cover a full range of criminal, civil, and administrative issues.

This report summarizes some of the more significant results of OIG audits, inspections,

and investigations during FY 1998. The examples provided are grouped into the

following subject areas:

 ‘ Top Management Challenges Reported By Agency IGs; 

 

 ‘ Helping Federal Agencies Resolve Management Challenges;

‘ Best and Innovative Practices In Federal Agencies;

‘ Improving Federal Program Management and Performance;

‘ Improving Financial Management;

‘ Improving Procurement and Grant Management;

‘ Preventing Fraud and Vulnerability to Waste and Abuse;

‘ Recoveries and Results From Fraud Investigations; and

‘ Civil Actions From Fraud Investigations.
PAGE 5 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

TOP MANAGEMENT CHALLENGES REPORTED BY AGENCY IGs

Below is a schedule of the Top Management Challenges most frequently identified by PCIE members within their

respective departments and agencies for FY 1998. Because of their commonality among Federal agencies, these Top

Management Challenges are considered cross-cutting, government-wide issues. Other Top Management Challenges

which are common to certain groups of agencies are listed on the bottom of this page. 

The narratives on the following pages highlight several of these Top Management Challenges, and how the OIGs are

helping their respective agencies to recognize and resolve them.

Agency Statements & Accountability

Financial Year 2000 Information GPRA Security Procurement

Management Complianc &Technology Compliance, & Data & Grant

& CFO e Resources Implementation Integrity Management

DOC U U U U U

DOD U U U U

DOE U U U U U

DOI U U

DOJ U U U U

DOL U U U U U

DOS U U U U

DOT U U U

ED U U U U

EPA U U U U

FEMA U U U U U U

GSA U U U U

HHS U U

HUD U U

NASA U U U U

NRC U U U

OPM U U

SBA U U U U U

SSA U U U

Treas U U U U

USAID U U U U U

USDA U U

VA U U U U

TOTAL 18 17 15 13 12 11

Other Top Management Challenges Common Among Several Agencies Include:

‘ Loan, Assistance, & Debt Management ‘ Infrastructure & Asset Management

‘ Environmental & Waste Management ‘ Safety: Food, Transportation, Energy

‘ Health Care, Insurance, & Pension Mgmt. ‘ Resource Allocation & Org. Change
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 6 

HELPING FEDERAL AGENCIES RESOLVE MANAGEMENT

CHALLENGES

FDIC OIG

Addresses Y2K in

the Banking

Industry

Potential computer glitches in Year 2000 (Y2K) are “the number one safety and

soundness priority” facing FDIC and the banking industry. To effectively manage the

FDIC’s roles of supervising institutions, maintaining public confidence in the financial

system, and resolving institutions that fail, the Corporation established a five-phased

approach to ready its internal systems and monitor the efforts it oversees. The OIG is

proactively monitoring these five phases to assist the Corporation in ensuring effective

assessment, remediation, testing, and implementation of its mission-critical systems. 

FDIC management has taken prompt action in response to OIG suggestions for

improving its internal and external Y2K activities. In overseeing the FDIC’s

supervisory efforts, the OIG advocated consistency in Y2K examination ratings by

suggesting that the Corporation establish working groups nationwide and

recommended that ratings be based solely on the examination results, rather than on

commitments by the institution to correct weaknesses. Finally, the OIG alerted the

FDIC to a potential problem that many small banks may not have the expertise to

interpret and apply test results conducted by outside servicers. (FDIC)

Collaboration

Improves

Financial

Reporting

In auditing the Treasury consolidated financial statements of 15 bureaus such as

Internal Revenue Service, Customs, and ATF, the OIG implemented a strategic

partnership agreement with GAO. This collaborative effort helped maximize overall

audit efficiency, while meeting mutual audit objectives for the Treasury Department by

the OIG, and government-wide reporting by GAO. The agreement allows both parties

to leverage resources and serves as a model for close and effective working

relationships in the Federal audit community. The OIG also continued working with

Department and bureau financial management to uncover problems, develop solutions,

and identify corrective actions to address deficiencies in financial systems and

management controls. These efforts resulted in significantly improved financial

reporting. OIG managers and staff serve as resources for Department and bureau

officials striving to correct material weaknesses and other reportable conditions. 

(Treas)

PCIE Members

Address Eligibility

Verification

During 1998, an ad hoc committee of the PCIE issued a report entitled "Eligibility

Verification Needed to Deter and Detect Fraud in Federal Government Benefit and

Credit Programs." Many departments and agencies administer benefit and credit

programs where eligibility depends, at least in part, on the amount of an applicant's

income or other financial resources and on other criteria such as marital status or

number of dependents. When applicants misrepresent qualifying criteria, they may be

awarded benefits to which they would not otherwise be eligible at the expense of the

taxpayers and eligible applicants who may be denied assistance. The report represents

the concerns and recommendations of the OIGs from USDA, ED, HHS, HUD, DOL,

VA, FEMA, and SBA based on audit and investigative work involving benefit and

credit programs within their departments and agencies. The report also proposed

solutions for executive action and elements that would be desirable in legislation to

more efficiently and effectively address the cross-cutting problem of deterring and

detecting fraud in all Federal benefit and credit programs. (SBA)
PAGE 7 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

HUD OIG

Recommends

Immediate Action

On January 1, 2000, some of the Department of Housing and Urban Development

computer systems could malfunction or produce incorrect information. HUD

recognized this problem and established a Year 2000 Project in the Office of

Information Technology. Both the awareness and assessment phases of the project

have been completed. However, as recommended by the OIG, HUD needs to use

several industry-recognized best practices to minimize the risk and impact of system

failures. While some progress has been made, immediate action needs to be taken to

assure that systems function properly in the Year 2000. First, HUD should establish

an agency-level program office to manage and coordinate Year 2000 activities.

Second, HUD must control changes made to systems software and associated

documentation throughout the development and operational life of the system. Finally,

HUD must develop contingency plans to handle system failures in the Year 2000.

(HUD)

Moving Towards a

Results-Oriented

Organization

Department of Education OIG reported that the Department has prepared a strategic

plan, an annual performance plan, and designated a framework for the verification and

validation of its performance indicators. Education’s strategic plan and annual

performance plan can provide the Department with the foundation to meet the many

challenges in moving towards a results-oriented culture, the importance of senior

leadership involvement, the challenging nature of measuring the Federal contribution,

and the importance of the information used by Congress and the Department in

decision making. Because of the importance of valid and reliable data, the

Department, following recommendations of the OIG, adopted the following assertion

requirement in its Strategic Plan: “By 2000, all ED (Department) managers will assert

that the data used for their program’s performance measurements are reliable and valid

or will have plans for improvement.”. (ED)

OIG

Recommendations

Improve USPS

Productivity Model

The U.S. Postal Service uses several measures to track productivity, including the

Total Factor Productivity measurement system which measures the changes between

outputs and related resource inputs. It provides a means of measuring productivity

over time. An OIG audit of the total productivity model disclosed that unit

measurements were calculated consistently with the model equation using USPS data. 

However, the model did not always match resource inputs with related outputs. As a

result, productivity measurements may be skewed and Total Factor Productivity

measurements may not accurately portray USPS productivity. OIG recommended that

management develop a plan to introduce timeliness and quality of service-related

measurements to the Total Factor Productivity model. Management officials

concurred with the findings and recommendations, and stated that a longer time series

of service quality data was needed to find a statistical relationship between service

quality and Total Factor Productivity. In the meantime, management will identify

service issues that impact productivity performance when Total Factor Productivity

results are reported. (USPS)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 8 

New Tools for

Information

Security

NASA is a significant investor in information technology (IT) and spent $1.6 billion on

IT in FY 1997. To streamline operations, NASA is further consolidating and

outsourcing various IT operations, including local area networks and desktop

computers, mid-range computing, administrative mainframe computer operations, and

supercomputing. But all of this presents a high risk for security of vital information

and systems. The OIG has established a Computer Crimes Unit that investigates

felonious intrusions into NASA’s systems. An OIG Inspections Unit also is proactive

in selected security issue reviews. NASA is committed to implementing a wide range

of improvements in the IT program. The agency faces the challenges of ensuring data

security, integrity, and application controls; protecting operations and communications

with spacecraft; and monitoring and evaluating the streamlining of operations through

outsourcing IT operations for cost efficiencies, dependency on the vendor and its

viability for technological direction, and vulnerability of strategic information to

outsiders. (NASA)

DOD OIG Assists

in Y2K Conversion

The DOD depends on about 28,000 information systems and hundreds of thousands of

equipment items with millions of embedded chips. To help meet the formidable Year

2000 conversion challenge, informal partnerships were established between the Chief

Information Officers and DOD audit organizations, resulting in intensive monitoring of

all commands and agencies as they executed the DOD Year 2000 Management Plan. 

Over 200 DOD OIG audit reports with several hundred findings covered all aspects of

the conversion effort, including the accuracy of system status reporting, contingency

planning, system assessment, testing, identification of interfaces, contracting, resource

allocation and outreach to allies, supplies, and other agencies. Managers consistently

took prompt action in reaction to audit advice, including additional Secretary of

Defense guidance and major revisions to the Management Plan. IG staff actively

participated in the DOD Year 2000 Steering Group and many workshops and task

forces the DOD used to coordinate the effort. (DOD)

OIG Assists FTC

With Financial

Statements

The OIG collaborated with management in preparing for its first financial statement

audit by supplying statement preparation expertise and advice. Both agency

management and the OIG recognize the value that audited financial statements provide

to the agency’s many external customers and stakeholders, and the substantial benefits

that flow from major system improvements resulting from such an effort. The FY

1997 statement package included a custodial activity statement that distinguishes the

Federal Trade Commission from many other Federal entities as it provides information

on judgments totaling approximately $150 million and a snapshot of how the agency

enforcement activities affect the everyday lives of American customers. This audit

effort resulted in an unqualified opinion by the OIG and a firm foundation to begin to

evaluate agency performance under GPRA in later years. (FTC)
PAGE 9 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Audit Guide

Improves Health

Insurance

Accountability

The OPM OIG and the agency’s Retirement and Insurance Service (RIS) combined

their efforts through the Experience-Rated Health Insurance Carrier Quality

Improvement Team (ERCQIT). One of the most significant results of the ERCQIT

has been the development of an audit guide for better financial accountability and

increased oversight of the Federal Employees Health Benefits Program (FEHBP). The

majority of benefits paid through the FEHBP are provided by experience-rated

carriers. The audit guide describes expanded reporting requirements for carriers and

audit procedures to be conducted on carriers’ FEHBP operations by their independent

public accountants (IPA) beginning in FY 1998. By combining the work of the IPAs

with OIG other work, the OIG will be able to significantly expand oversight of FEHBP

carrier operations. These additional audit procedures were critical steps in eliminating

the disclaimer of opinion on the FEHBP financial statements. (OPM)

Better Protection

of Private Pension

Plans

Through audits and semiannual reports, over several years, the DOL OIG has raised a

concern regarding the way pension plans, controlling over $3.5 trillion in assets, are

audited under the Employee Retirement Income Security Act (ERISA). Specifically,

ERISA exempts from audit coverage all pension plan assets that have been invested in

institutions, such as savings and loans, banks, and insurance companies, already

regulated by Federal or State governments. Because of this scope limitation, IPAs

conducting audits of pension plans cannot render an opinion on the plans’ financial

statements, and nearly half of pension plan audits receive a disclaimer of opinion. The

OIG recommended that this restriction be repealed and that IPAs and plan

administrators be required to report serious ERISA violations directly to the

Department to enhance oversight of plan assets. As a result, the Department submitted

a legislative proposal to the 105 Congress that would amend ERISA by repealing the th

limited scope exemption and require direct reporting of certain violations. (DOL)

Meeting the Y2K

Challenge

The Department of State OIG has issued many short, narrowly focused interim

memorandum reports directly to the DOS Chief Information Officer, Y2K Project

Management Office, and other senior DOS and USIA officials responsible for

implementing Y2K remediation. The first memorandum resulted in the reduction in the

number of DOS systems that were initially reported to OMB as compliant from 26 to

none; greater focus on DOS-wide project management tracking; the addition of seven

new applications to the DOS’ system-tracking database; and development of a new

rating system to track and evaluate system interfaces. In addition, greater attention in

now being paid to Y2K vulnerabilities of both the classified and unclassified local area

networks. The second memorandum highlighted improvements in the DOS’ Y2K

efforts. (DOS)

Performance

Measures Revised

The Legal Services Corporation OIG initiated audits of the caseload data submitted by

grantees, which are the basis for key GPRA performance measures. The first audits

disclosed significant over-counting by some grantees, and identified the root causes and

many variations of error types. The audit information permitted Corporation

management to revise its guidance for caseload reporting to improve the accuracy and

reliability of the information supporting its strategic planning and performance

measurement. (LSC)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 10 

BEST AND INNOVATIVE PRACTICES IN FEDERAL AGENCIES

Team Problem

Solving

DOD began process reengineering efforts in essentially all of its activities, but

previous management reform efforts often were unsuccessful because they did not

include all involved organizations and functional specialties. To ensure a more

integrated approach, it has become routine practice to use task forces and teams to

define problems, identify opportunities for improvement, design new processes, and

establish performance metrics. Simultaneously, the DOD audit community has

become more involved in the development of new systems and processes

supplementing the audit program with large-scale participation by individual auditors

and evaluators as advisors to management-led problem-solving teams. During FY

1998, DOD OIG provided advice to 38 teams on topics ranging from valuation of

inventory to recycling initiatives. This process allows managers real time access to

IG expertise, helps integrate the IG audit plan with ongoing departmental initiatives,

and contributes significantly to the successes of these diverse projects. (DOD)

OIG Gangs Up On 

Energy Computer

Crime

The DOE OIG has determined that leading-edge research and nationally- recognized

programs involving energy development, nuclear weapons stockpile stewardship,

environmental clean-up, and waste management are vulnerable to individuals and

groups with an aim to disrupt DOE operations using computer systems and common

networks. In response to the need for an active and substantial cyber criminal

investigative presence within DOE, the OIG has developed a Technology Crimes

Section. The Technology Crimes Section will operate as an integral component of

DOE and FBI efforts to combat cyber attacks and intrusions throughout the DOE

complex. (DOE)

Credit Bureaus

Can Locate

Backwage

Recipients

The OIG conducted an audit to determine whether the Department of Labor’s Wage

and Hour Division (WHD) could more successfully distribute back wages by using

credit bureau information to find workers and identify problems in WHD’s

accounting and administrative controls that should be addressed in the Backwage

Collection and Disbursement System’s (BCDS) redesign. The OIG found that credit

bureaus are an effective tool for locating workers owed money. OIG projected that,

by using credit bureau data, WHD could distribute $5 million to over 17,000

workers. However, success in this area is also dependent on improving WHD’s data

systems and the procedures used to track enforcement activities. The OIG

recommended that WHD increase its efforts to locate and distribute back wages and,

if additional funding is needed, that the Secretary’s support be solicited in asking the

Congress to allow use of a portion of unclaimed back wages to fund worker search

activities. (DOL)
PAGE 11 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

ED Audits

Resolved

Cooperatively

The Department of Education OIG is working with State and local agencies in a

collaborative effort known as the Cooperative Audit Resolution and Oversight

Initiative (CAROI). The concept of CAROI began when ED officials took a look at

audit resolution practices and found that audits with questioned costs were subject to

lengthy legal battles that often produced insignificant monetary recoveries, developed

significant ill will, and did not result in permanent corrective action. With these

recurring conditions, students suffered, and ED determined to seek a new approach to

audit resolution. From this determination came the concept of CAROI. In FY 1998

the CAROI team and ED program officers completed the most ambitious CAROI

project to date, with the resolution of over 100 single audit findings affecting

numerous agencies in the Commonwealth of Pennsylvania. The resulting agreement

not only resolved the numerous existing findings, but should also improve future audit

resolution and program performance. (ED) 

Farm Credit

Regulation

Development

Process

The Farm Credit Administration OIG audited the regulation development process to

identify ways it could be streamlined and made more “user friendly.” As a result,

management adopted an initiative to incorporate “clear and plain” language into its

regulations and other documents, and increase the use of technology for considering

public comments about proposed regulations, including a website to receive online

comments from the public, and a database which makes public comments available to

Agency staff during the consideration period. (FCA)

Child Support

Enforcement

Teams

In 1998, OIG joined with the Office of Child Support Enforcement to create a multiagency task force to operate in Ohio, Michigan, and Illinois. Partnered together are

criminal justice and social service agencies whose goals are to identify, investigate,

and prosecute the most egregious child support offenders at the Federal and State

levels and to create a streamlined system of case referral and adjudication for use

nationwide. The success of this task force and its promise for institutionalizing a new

approach to child support enforcement in the criminal justice arena led to the concept

gaining rapid and far-reaching support and expansion to additional geographic areas. 

As of the end of FY 1998, OIG had investigated 378 child support cases nationwide,

resulting in 75 convictions and court-ordered restitution of over $6.6 million. (HHS)

Joint Review With

State Agency

During FY 1998, the Appalachian Regional Commission OIG conducted a joint

review with the Alabama State Agency responsible for ensuring that foreign

physicians granted waivers to remain in the United States after completion of training

were conducting primary care practices at the approved locations. This initiative,

which will be expanded to other states in FY 1999, offered the opportunity to

maximize use of limited OIG resources, increase state agency attention to monitoring

activities, increase the number of verification visits, and establish an improved line of

communication between Federal and State officials. (ARC)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 12 

New HUD Tools

Verify Benefit

Eligibility

HUD spent $18 billion in FY 1997 for rent and operating subsidies to benefit 4

million lower-income households through its Public Housing and Section 8 Programs. 

HUD’s controls did not provide assurances that these funds were expended by public

housing agencies (PHAs) and project owners in compliance with authorizing laws and

regulations. The Congress provided HUD with access to Federal income tax data to

ensure that subsidies are based on correct tenant income. Computer matching pilot

projects are currently underway in both the Offices of Housing and Public and Indian

Housing. HUD estimates housing subsidy overpayments of $939 million based on

computer income matching with Federal income tax data. However, HUD 2020

Management Reform plans did not identify how the Department plans to permanently

staff an ongoing income matching program. Legislation does not allow HUD to

disclose Federal income tax data to PHAs, contract administrators, or project owners. 

In light of plans to contract out the subsidy payment process to contract

administrators, HUD must decide how it will use these matching tools in the future

and whether additional legislative authorities are needed. (HUD)

NRC Procurement

Streamlining 

Implemented

In 1993, as a result of Vice President Gore’s National Performance Review, the NRC

was designated as a procurement reinvention laboratory. NRC used this NPR

laboratory status to streamline its procurement process in an effort to reduce

procurement lead times and remove some of the burdensome aspects of the

contracting process. The OIG found that streamlining had a positive effect on NRC’s

procurement process as the NRC Contract Tracking System showed a reduction in

procurement lead times when NRC applied streamlining measures. The OIG also

found that the agency could improve the streamlining data it tracks by updating its

assessment criteria and reassessing its estimated savings to ensure that the reported

benefits are accurate and that tracking them remains worthwhile. (NRC)

Auditors Expedite

an Evaluation

An important part of the National Archives and Records Administration mission is to

make our nations’s documentary history available for public viewing throughout the

country. Finding ways of safely transporting priceless documents and artifacts as

they travel around the country as well as maintaining absolute control during the

process is a critical but vulnerable management function. Senior management

requested that OIG auditors quickly evaluate existing controls and make

recommendations for improvements. To expedite the process, management

immediately provided OIG auditors with narrative summaries of their transportation

methods; instructed their staff to have pertinent records ready and waiting for OIG

auditors; instructed staff members to cooperate fully with OIG auditors; and made

themselves available for an OIG briefing/exit conference. Because of this support,

OIG auditors were able to quickly respond and communicate recommendations on

management’s concerns. (NARA)
PAGE 13 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Single Audit

Enhances User

Fee Revenue

The government collects user fees to pay the cost of the inspection of arriving air and

sea passengers by Customs, the Department of Agriculture, and the Immigration and

Naturalization Service. These fees generated over $650 million a year for the 3 years

ending in FY 1996. Because air and sea carriers are not required to provide support

for the remittance of the fees collected, agencies must rely heavily on their audit

functions to ensure industry compliance. The OIG recommended that a coordinated

single audit approach amongst the Departments of the Treasury, Agriculture, and

Justice offered many benefits to the government and private industry. The OIG

estimated that the government could have realized nearly $49 million in additional

revenue had one agency audited on behalf of the other two during the 31⁄2 years

reviewed. Customs’ management has formally endorsed the single audit concept; an

interagency memorandum of understanding has been executed; and Customs and

USDA are working to standardize their audit approach, expand their audit coverage,

leverage their resources, and streamline their billings and collections. (Treas).

Workers’

Compensation

Costs Reduced

During FY 1998, the USPS paid injury-related cash outlays of approximately $589

million. OIG and Postal Inspection Service audits and investigations identified best

medical cost-containment practices to reduce program costs. An audit concluded that

the USPS could realize financial benefits by using medical error-detection software to

reduce unwarranted charges and by taking advantage of lower medical costs provided

through preferred provider organizations. In a limited review at one of the 10 postal

areas, the OIG identified USPS overpayments to the Department of Labor of

$124,000. Additionally, as a result of workers’ compensation investigations, the

Inspection Service arrested 59 individuals after workers' compensation investigations

resulting in a cost-avoidance totaling over $100 million. (USPS)

Statistics Improve

VA Health Care

The OIG assisted the Department of Veterans Affairs, Veterans Health

Administration (VHA) in developing a strong statistical capability to facilitate early

detection of adverse changes in selected clinical monitors that may signal the onset of

unwanted clinical behaviors or practices adversely affecting patient care. The VA

OIG offered VHA a methodology that the OIG has successfully used to identify

subtle changes in health care quality monitors long before other commonly used

methods can. This statistical method is based on an analysis of time-series data,

which the OIG has found to effectively identify changes in monitors, particularly

those that track mortality, very early after they first occur. If properly applied to

existing VHA automated databases, this method may enhance VHA’s ability to have

an early warning system of unwanted changes in selected health care monitors. (VA)

Alternative Dispute

Mediation

Federal Labor Relations Board management encourages the use of alternative dispute

mediation and resolution between dissenting parties with the intent of having the

parties solve the problem, thus avoiding costly litigation. The FLRA IG is also a

certified mediator and incorporates the mediation process in the OIG process, when

feasible, to avoid costly and time consuming investigations. Alternative dispute

mediation is especially effective with abuse and mismanagement allegations. (FLRA)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 14 

OIG, CIO, CFO

Address Financial

Controls

To proactively support NASA in developing its integrated financial management

system, the OIG entered into a memorandum of understanding (MOU) with NASA’s

Chief Financial Officer (CFO) and Chief Information Officer (CIO). Under the

MOU, the OIG participates in the Security and Internal Control Working Group

(SICWG) to address security and internal control issues related to the configuration

and implementation of the Integrated Financial Management Project (IFMP) and to

help resolve any security and internal control issues identified during the independent

verification and validation process. This working group is an unique opportunity for

the CFO, CIO, OIG, and the independent contractor who is performing verification

and validation of the IFMP to assist NASA in meeting user requirements. The

SICWG is monitoring Center data conversion activities to ensure they are effectively

controlled, contractors use correct procedures for implementation of the IFMP, and

evaluate the adequacy of testing procedures for the new system. (NASA)

NSF Audit

Coordination

In conjunction with the National Science Foundation CFO, the OIG established an

Audit Coordination Committee, composed of senior representatives from NSF

management and the OIG, that meets regularly to share information and address

issues of mutual concern. This Committee facilitates open dialogue between the OIG

and the CFO on all audit and audit resolution issues, provides advice and guidance to

the OIG as well as the CFO and, when appropriate, involves other NSF managers. 

The partnership with the CFO led to the development of an innovative framework for

cooperation between the OIG and NSF management during the audit of the agency’s

financial statements, which is required by the Chief Financial Officers Act. (NSF)

OIG Examines

Performance

Measurement

In an early effort to define a role for IGs in implementing the Government

Performance and Results Act (GPRA), the SBA OIG conducted an inspection that

assessed performance measurement efforts in the Small Business Development Center

(SBDC) program. The OIG's review of methods used by SBDCs for reporting on

economic impact and customer satisfaction revealed significant inconsistencies not

only among the 57 SBDCs, but also within their individual networks of sub-centers. 

These differences created data integrity problems, and aggregating the impact data for

national reporting was virtually impossible. The inspection report suggested "best

practices" that would promote consistency and ensure that the SBDCs adhered to

sound data collection principles, and provided guidance to SBA and the SBDCs on

ways to improve current performance measurement to fulfill internal management

needs and GPRA requirements. SBA is currently in the process of implementing the

OIG's recommendations. (SBA)
PAGE 15 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

IMPROVING FEDERAL PROGRAM MANAGEMENT AND

PERFORMANCE

Privatize NOAA’s

Light Aircraft

Operations

The Commerce Department’s National Oceanic and Atmospheric Administration

operates a fleet of 14 aircraft, composed of 2 heavy craft, 1 mid-size jet, 8 light fixedwing aircraft, and 3 helicopters. The OIG conducted an audit to determine whether

outsourcing is a more cost-effective alternative to in-house operation in meeting

NOAA’s aircraft requirements. The audit concluded that the full in-house cost of

operating NOAA’s fleet of light fixed-wing aircraft and helicopters averaged 42

percent more than the cost to operate similar aircraft in the private sector. The OIG

recommended that NOAA privatize its light aircraft operations. NOAA can save up to

$11.8 million over 2 years through the procurement of light aircraft services from the

most cost-effective sources and through the sale of its light aircraft and helicopters.

(DOC)

Improvements 

Needed for 2000

Decennial Census

The Department of Commerce OIG devoted considerable resources to evaluating the

Census Bureau’s preparations for the 2000 Decennial Census— an enormous, complex

task that is one of the most difficult that the Federal Government has to undertake. To

examine the bureau’s decennial efforts, the OIG called upon staff from its Offices of

Audits, Inspections and Program Evaluations, and Systems Evaluation to review a

broad range of activities— from major programs designed to capture data from census

forms and develop improved address lists, to administrative activities, such as payroll

processing and the delivery of supplies. Much of the OIG effort focused on the 1998

Dress Rehearsal, which was designed to be the major test of many of the bureau’s

operations to be used in the decennial. Six OIG reports covering operations at the

three dress rehearsal sites identified a number of areas needing management attention

before the 2000 decennial is conducted. (DOC)

Overseas Security

Enhancements

In FY1998 the State Department OIG’s Office of Security and Intelligence Oversight

(SIO) included in its overseas reviews medium and low threat posts, many of which

had never been inspected. At these missions, SIO identified many vulnerabilities,

including the absence of setback, and recommended measures to mitigate the threat of

terrorist attacks. SIO’s analysis of the bomb attacks on the embassies in Nairobi and

Dar es Salaam in August 1998 and in the 1997 Khobar Towers bombing concluded

that the majority of casualties came from flying glass. Furthermore, since there were

only seconds between the recognition of an imminent attack and the subsequent blast,

current alarms and bomb procedures could not provide timely warning. In September

1998, the OIG recommended that the Department create a new alarm for imminent

bombing and require “duck and cover” drills at every mission. Embassy Nairobi and

Embassy Dar es Salaam Accountability Review Boards strongly endorsed this as the

Board’s first recommendation. (DOS)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 16 

$1.5 Billion

Wasted on Air

Traffic Control

System

Late in 1997, the Senate Appropriations Committee's Subcommittee on Transportation

asked OIG to examine the costs of FAA's Advanced Automation System (AAS), the

centerpiece of FAA's air traffic control modernization efforts in the 1980s and early

1990s. Because of serious cost growth and schedule delays, AAS was restructured

into more manageable pieces in 1994. OIG reported that, of $2.6 billion spent on

AAS, about $1.5 billion, or 57 percent, represented losses to the Federal Government. 

OIG also looked into issues of liability and culpability. Though the contract was

restructured and most liability issues were waived, the government reserved the right to

act against contractor fraud or waste. (DOT)

Energy Waste

Disposal Program

Needs

Improvements

An OIG audit of the DOE’s FY 1993-1996 disposals of low-level and mixed waste

found that the DOE generally did not dispose of such waste as cost effectively as

possible. Most facilities stored large quantities of waste on-site, and disposal of lowlevel waste was often not cost effective. Also, DOE built disposal facilities at

Savannah River and Oak Ridge, at a cost of $27.1 million, even though off-site

disposal would have been more cost effective. The OIG recommended that the DOE:

revise its disposal strategy; require justification and a cost-benefit analysis before

constructing any additional on-site disposal facilities; and periodically evaluate sites’

implementation of the DOE’s strategy to ensure disposal is made in a cost effective

manner. DOE management concurred, stating that the report will be used as part of

the structure being developed to support the low-level and mixed waste management

program. (DOE)

Joint Vulnerability

Review

SSA personnel, OIG’s Offices of Investigations and Audit, and State Disability

Determination Service staff members formed a team to evaluate allegations that four

generations of a family of Supplemental Security Income (SSI) recipients may have

been coached to malinger during initial consultative examinations and continuing

disability reviews (CDR). The Office of Audit analyzed 66 case files from the suspect

CDRs, which resulted in the cessation of SSI benefits. The 66 recipients received

$1.06 million in SSI disability benefits through June 1995, including over $431,000 in

benefits to 24 individuals who malingered on current examinations. Since the OIG

completed its analysis, SSA has identified and ceased paying benefits to an additional

90 members of the family. The Office of the Chief Actuary estimates the savings to

the SSI program of $1.7 million to $2.5 million. (SSA)

Inaccuracy of Rent

Billings 

General Services Administration receives rent revenue from agencies for occupying

space. Quarterly rent bills are generated from a 20-year old computer system, which

was widely believed to contain inaccurate data. The OIG partnered with GSA in a

review to determine the degree of inaccuracy in the system and assisted GSA in

reaching decisions in installing a new information system. Rent rates, set to be

commercially comparable, were reasonably accurate and only minor problems with

tenant identification existed. Space discrepancies, however, arose in approximately

half of the tenants reviewed through errors in measurement, classification, or

application of standards. Inaccuracies totaled about $3 million in net underbillings. 

GSA’s arrangement with some client agencies to bill differently from the way it was

occupied resulted in another underbilling of about $1 million. GSA agreed to correct

revenue-related data giving consideration to cost effectiveness, and adopt a process

minimizing errors or outdated information. (GSA)
PAGE 17 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Security

Enhancements in

Federal Buildings 

Immediately after the 1995 Federal building bombing in Oklahoma City, GSA

established a Committee to address security concerns at each of its facilities. Congress

authorized $240 million for security enhancements, and GSA allocated the funds for

over 5,000 countermeasures affecting thousands of Federally-controlled facilities

nationwide. The OIG reviewed security upgrading activities, and issued alert reports

notifying management that: controls to ensure program implementation were

ineffective; the database information contained numerous inaccurate data entries; and

most importantly, actual implementation of enhanced security countermeasures was

overstated. The OIG concluded that a reportable control weakness existed concerning

the installation and reported status of security countermeasures. Management

concurred with reported findings and promptly initiated corrective actions. (GSA)

Inconsistent

Beneficiary

Entitlement Period

 

The OIG assessed the financial impact of two inconsistencies in the entitlement periods

for retirement and survivors’ benefits. The first inconsistency results from legislation

that produced differences in the first month of entitlement for different categories of

retirees. For example, workers must be age 62 for a full month to be entitled to

reduced benefits. However, surviving spouses are entitled to reduced benefits in the

month they turn 60. Thus, surviving spouses receive an extra month of benefits when

compared to workers who apply for early retirement. The second inconsistency results

from the common law definition of age attainment, which holds that individuals attain

a given age on the day before their birthdays. Collectively, the cost of these

inconsistencies is expected to be about $1.47 billion over the next 5 years. The OIG

recommended that SSA propose legislation to define the first month of entitlement as

the month after the individual’s birthday, and age attainment as occurring on a

person’s birthday. (SSA)

Labor

Management

Relations

Improving labor management relations is one of the most critical issues facing USPS. 

At the close of FY 1998, USPS had a backlog of 112,000 employee grievances

pending arbitration. During FY 1998, OIG focused on the grievance-arbitration

process, individual allegations, and workplace violence. The OIG grievancearbitration work identified several opportunities for improvement, including enhancing

supervisor knowledge of union contracts and the need to develop and distribute

national contract guidance to supervisors. OIG work in reviewing individual

allegations of abusive management included harassment, discrimination, sexual

harassment, retaliation, mismanagement, and verbal and physical abuse. Over half of

OIG reports to management addressed violence in the workplace issues, including

violence prevention policies and USPS identification of potential area hot spots. In

support of USPS initiatives, OIG staff has monitored and participated, where

appropriate, in all violence in the workplace task forces. (USPS)

Improving

Administrative

Proceedings

An audit of the Securities and Exchange Commission’s processing of administrative

proceedings made significant recommendations to improve timeliness and management

while maintaining fairness. The OIG’s recommendations covered improved reporting,

better selection procedures for Administrative Law Judges and use of settlement judges

to help resolve issues, and steps to reduce delays in appeals of decisions to the

Commission. (SEC)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 18 

IMPROVING FINANCIAL MANAGEMENT

Divesting Elk Hills

Naval Petroleum

Reserve

The OIG assisted the DOD in the largest divestiture of Federal property in the history

of the U.S. Government. The DOD and Occidental Petroleum Corporation concluded

the divestiture of Federal property in February 1998. Occidental paid $3.65 billion for

the government’s interest in the Elk Hills Reserve. This valuable oil field property had

been owned by the Federal Government since President Taft created the Reserve in

1912. This transfer completed a privatization process that began in 1995 when the

Administration proposed selling the Elk Hills Reserve, which is near Bakersfield,

California. At the request of the DOD’s investment banker, the OIG audited the

DOD’s financial statements and concluded that management’s representation of the

financial position of the Reserve was presented fairly, in all material respects,

including cash flows for the period preceding and in conformity with the applicable

accounting policies. The OIG was informed that its report was an integral part of the

documentation supporting the sale. (DOD)

Black Lung Trust

Fund Deficit

DOL administers a trust fund to provide disability benefits and medical services to

eligible workers in the coal mining industry, when a mine operator cannot be

determined liable for providing such benefits. The OIG is concerned with the

escalating indebtedness of the Black Lung Disability Trust Fund. The Department’s

consolidated financial statements for FY 1996 reflected that the trust fund was in debt

$5.1 billion to the U.S. Treasury, which had risen to $5.9 billion for FY 1998. The

debt results from advances, which have become an annual necessity for the trust fund. 

The advances were originally obtained to fund benefit payments that could not be met

by coal excise tax collections (the principal source of revenue to the fund). Although

the current excise taxes are sufficient to pay benefits and administrative costs, the trust

fund must continue to borrow from the Treasury to pay the interest due on past

advances. Of the $5 billion of cumulative advances in FY 1996, only $2 billion were

spent for benefit payments-$3 billion were spent on interest. The Department has

acknowledged that if current operating conditions continue, a change in the trust fund’s

statutory operating structure will be necessary. (DOL)

EPA’s Working

Capital Fund

(WCF) Financial

Statements

The OIG could not determine if FY 1997 Working Capital Fund (WCF) financial

statements reporting over $41 million were fairly presented. EPA did not have policies

and procedures in place to accumulate and report timely all WCF revenue and

expenses, and related receivables and payables. The OIG was also unable to determine

whether WCF financial information was properly presented because EPA had not

adequately identified or computed the value of its WCF property. Internal control

weaknesses were material since they impacted the overall management of the WCF

operations. The WCF billing rates were inconsistent with EPA’s FY 1997

Appropriation Act requiring WCF rates to be established that would return in full all

expenses of operations. The WCF Board decided to exclude certain costs in

developing the FY 1997 billing rates. Further, EPA did not have policies and

procedures in place to timely identify and return overbillings. This resulted in any oneyear appropriations expiring before the overbillings could be returned to EPA’s

program offices. (EPA)
PAGE 19 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Poor Cash

Management

Practices Cost

Millions

The OIG reviewed California’s payments process for public assistance grants. The

subgrantees, primarily local governments and other governmental entities, received

Federal grants to repair infrastructure damaged by the Northridge Earthquake in

January 1994. Because of deficiencies in California’s cash management procedures,

subgrantees were holding approximately $177 million of funds that should have been

returned to the Federal Government. While the State advanced $201 million to the

subgrantees for emergency needs, $135 million of the advances were not needed and

never used. The OIG calculated that the subgrantees may have earned $31 million in

interest on the unused funds. The State also erroneously overpaid subgrantees $11

million because the State did not verify that work was done before making the

payments, nor did the State’s cash management system track payments by approved

projects. The OIG recommended that FEMA recover the $135 million of outstanding

advances and the $11 million of overpayments, and that the State return the interest

earned by subgrantees on FEMA funds. (FEMA)

HHS Financial

Statement Audit

In its audit of HHS’ FY 1997 financial statements, OIG reported that the six primary

accounting systems were not electronically linked; depended on external sources, such

as Medicare contractors, for essential information; and could not automatically

generate timely, complete, and reliable financial statements. The OIG considered this

to be a material weakness in internal controls and noncompliance with the Federal

Financial Management Improvement Act of 1996. Additionally, HHS needed to

ensure that complete and auditable documentation to support financial statement

amounts is retained and that general ledger account balances are periodically

reconciled with supporting records; systemic problems in these areas contributed to the

Department's receiving a qualified opinion on its financial statements. Further, OIG

noted significant improper Medicare fee-for-service payments. Through detailed

medical and audit review of a statistical selection of 600 beneficiaries nationwide with

8,048 claims processed for payment during FY1997, OIG found that 1,907 claims did

not comply with Medicare laws and regulations. Projecting these sample results, OIG

estimated that FY 1997 net overpayments totaled about $20.3 billion nationwide, about

11 percent of total Medicare fee-for-service benefit payments. The improper payments

primarily resulted from provider billings for services that were insufficiently

documented, medically unnecessary, incorrectly coded or noncovered. (HHS)

Inappropriate

Charges to Health

Program 

One of the primary responsibilities of OPM’s OIG is to conduct audits of the health

insurance plans participating in the $17 billion Federal Employees Health Benefits

Program (FEHBP). During FY 1998, the OIG issued final reports on 44 plans. 

Thirty-one of the reports contained recommendations for the plans to return a total of

$123.1 million, including lost investment income, to the FEHBP for inappropriate

charges. For example, the auditors reported that from 1991 through 1995 the 

premium rates that TakeCare Health Plan of Ohio, Inc. charged the FEHBP exceeded

those allowed by contract. Total overpayments were more that $6.5 million, with lost

investment income amounting to $1.7 million. Based on OIG recommendations, 

program officials have initiated many changes in carrier contracts to clarify the

requirements. (OPM)

The Smithsonian Institution OIG reviewed the accounts payable module in its financial

management system and found that, although the module was operating as designed,
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 20 

Improving

Payments Process

unit personnel did not always ensure that payments were valid, properly supported, and

processed timely. The OIG made recommendations for the Comptroller to strengthen

these deficiencies. (SI)

Problems With

Investment

Committee

The Railroad Retirement Board’s OIG continued monitoring the agency’s Investment

Committee and its activities. An evaluation of the investment activity identified three

major weaknesses: a conflict of interest, the lack of a long-term strategy, and the lack

of a formal procedure for documenting and supporting investment decisions. The OIG

expressed concern that Committee members lacked formal experience and expertise to

manage trust fund investments exceeding $17 billion. The Committee continued to

actively trade and provided no justification for its actions. Further, the RRB planned

to expand its investments in securities issued by Federal Government agencies. The

RRB OIG contacted officials of the U. S. Treasury to discuss the RRB’s investment

activities. (RRB)

Medical Care Cost

Recovery

The OIG conducted an audit to determine whether Veterans Integrated Service

Networks had successfully implemented cost recovery programs, which had identified

opportunities to increase recoveries by $83 million. In FY 1997, VA established a

minimum Veterans Health Administration (VHA) collection goal of $544.1 million. 

The OIG concluded that VHA could enhance Medical Care Cost Recovery by

requiring program officials to manage more actively by establishing performance

standards, monitoring performance results, taking action to improve performance gaps,

and incorporating other billing and collection improvements. The Department 

concurred. (VA)

Unliquidated

Obligations

U.S. Agency for International Development’s guidelines for estimating amounts to be

obligated and its procedures for reviewing unliquidated obligation balances were

inadequate to ensure that all excessive obligation balances were detected and

deobligated. Based on a sample of obligations tested at 19 locations around the world,

OIG projected that $495 million (5 percent) of USAID's $9.7 billion in unliquidated

obligations was in excess of current requirements or no longer needed. (USAID)
PAGE 21 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

IMPROVING PROCUREMENT AND GRANT MANAGEMENT

Savings on Spare

Parts

A series of DOD audits indicated that new, commercial-type contracts for military

aviation spare parts were not being used effectively. Because of uncoordinated

purchasing, failure to challenge excessive sole-source prices, and lack of reliable

demand forecasting, many parts cost up to several hundred times more than previously

paid prices. DOD paid higher prices even when it was simply doing routine buying for

its warehouse inventory. In response to the audits, the Department took aggressive

actions, including contract renegotiations and more training for procurement personnel

on commercial catalog pricing. In addition, the Congress held a hearing and passed

legislation to help address the problem. Long term savings will be very significant. 

On just one of over a dozen major contracts where catalog pricing for spares was an

issue, about $86 million will be saved annually. (DOD)

Prime Contract

Fee Policy Issues

In FY 1996, the Department of Energy’s major contractors awarded $5.3 billion in

subcontracts. The DOE’s Acquisition Regulations allow payment of a fee to major

operating contractors based on factors such as difficulty of work and level of required

skills. Subcontractor costs, under the regulations, should be excluded from the fee

base to the extent that such costs do not accurately reflect a major operating

contractor’s technical and management effort. An OIG audit of 12 major contractors

found that the DOE did not adjust the fee bases of the major contractors to reflect

actual managerial and technical effort associated with the oversight of subcontractors. 

In effect, both prime contractors and their subcontractors received fees for the same

effort. For the entities audited, the 12 major contractors were paid $34 million in fees

for work performed by subcontractors. The OIG recommended that the DOE issue

specific guidance to its procurement offices identifying the types of subcontractor costs

and the extent to which these subcontractor costs may be included in prime contractor

fee bases. DOE management did not take exception to the audit finding and

recommendations, but suggested that a new fee policy, which limits the subcontracted

costs that can be included in prime contractors’ fee bases to 80 percent, was

appropriate. (DOE)

New Prison

Construction

Due to the importance of the prison construction program to the Bureau of Prisons

(BOP) and the Department of Justice, the OIG conducted an audit of the BOP’s

management of new prison construction. The audit, while revealing some

improvements in the BOP's management of construction contracts, found more

progress was needed in construction planning and contract administration. The OIG

determined that BOP: had incurred about $3 million in costs for contract

modifications that could have been avoided; could have saved from $7 million to $8

million in construction costs at one Federal correctional complex had it not compressed

the construction schedule; did not follow established controls for ensuring timely and

accurate contract payments and, as a result, made nearly $1.5 million in questionable

payments and did not withhold funds for non-conforming work valued at $1.2 million;

and did not evaluate potential architectural and engineering firm errors or omissions

worth $6.6 million. (DOJ)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 22 

Contract

Management and

Personal Services

While EPA has taken positive steps to address contract management deficiencies since

1992, management needs to focus on personal services and contractor access to

confidential or sensitive data. Instances of personal services, or the appearance of

such, occurred in 13 of 23 (56 percent) contracts, and among nearly all of the major

program offices reviewed. Some EPA program office employees exercised excessive

supervision of contractor and subcontractor staff. Also, contract language and Agency

oversight need improvement. EPA improperly treated contractor staff as government

employees. Obtaining personal services by contract rather than by direct hire

circumvents civil service laws and Office of Management and Budget personnel

ceilings. The OIG recommended that a new Agency-level weakness entitled Agency’s

Relationship with Contractors be declared, focusing on the issue of personal services

contracts. (EPA)

Closing Out High

Risk Contracts 

In FY 1998, the OIG completed a 2-year joint effort with FDIC management to

closeout 414 high-risk asset management contracts that transitioned to the FDIC from

the Resolution Trust Corporation at RTC’s sunset on December 31, 1995. The OIG

completed 91 comprehensive reviews of contractors and 323 limited evaluations to

facilitate management’s proper and timely closeout of these high-risk RTC contracts. 

Problems were found with accountability over assets and the failure to return funds

held by contractors in bank accounts to the RTC or FDIC. The OIG also facilitated

the resolution of more than 1,000 open recommendations from 254 management

reports issued by a RTC oversight group before RTC’s sunset. As a result of this

project, FDIC disallowed or sought to recover a total of $123 million, including $94

million in improper contractor fees and expenses and $29 million in unclosed bank

accounts held by contractors. Of equal importance, the OIG reviews provided

management with an important level of assurance, prior to contract closeout, on the

accuracy of more than $322 million in fees paid to contractors and on the accuracy of

inventory records for assets with a book value exceeding $33 billion. The project

demonstrated a cooperative OIG/management partnership to protect corporate interest.

(FDIC)

Grantees Not

Complying with

Requirements

FEMA grantees (the States) were not fully complying with FEMA guidelines and

Federal grant regulations. Specifically, FEMA failed to enforce grantee compliance

with requirements for providing cost-share funds, managing cash, and accounting for

and reporting on grant funds. The OIG reviewed the grant management practices of

nine grantees who had received $6.5 billion in FEMA funds between 1985 and 1997. 

Eight of nine grantees included in the sample did not properly record, report, collect, or

return $28.5 million in overpayments that were either not collected from subgrantees or

collected and not returned to FEMA. The same grantees also drew down almost $10

million in Federal funds in excess of immediate needs and retained them for extended

periods. These problems occurred and went undetected because FEMA did not have

an effective grants management system. Subsequent to audit completion, FEMA’s

Office of Financial Management formed a grants management team to develop policies

and procedures to assist FEMA’s regional offices improve their grants management

practices. (FEMA)
PAGE 23 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Public Housing

Drug Elimination

Program 

HUD OIG conducted a multi-district audit of the Public Housing Drug Elimination

Program (PHDEP) for FYs 1994 through 1997, encompassing 21 external audits of

PHDEP grantees nationwide. The goal of the PHDEP is to eliminate drug-related

crimes and the problems associated with drugs in and around public housing. Between

FYs 1989 and 1997, HUD awarded 3,344 PHDEP grants totaling in excess of $1.3

billion. The OIG audits revealed over $4 million in ineligible and unsupported costs. 

One review of grants for three housing authorities found that grant recipients could not

or did not document the basic level of law enforcement services provided prior to the

awarding of grants, and therefore could not determine the amount of additional security

and protective services beyond the basic level which would be funded by the grants. 

Another housing authority overpaid a police department more than $372,000 for police

services under two separate contracts. These funds came from PHDEP grants and a

HUD comprehensive rehabilitation grant. The audits made many recommendations for

increased monitoring of grant recipients, repayment of ineligible costs, and justification

of unsupported costs. (HUD)

Costs Not

Recovered for

Commercial

Payloads on

Shuttle

NASA contracts with SPACEHAB, Inc., for the lease of pressurized modules for

NASA payloads to be flown on the Space Shuttle. As part of this $43 million

contract, NASA agreed to allow non-NASA customers (secured by SPACEHAB) to

share payload capacity on Space Shuttle missions covered by the contract. An OIG

audit showed that NASA sought consideration for the associated transportation costs

allocable to non-NASA payloads through a reduced price for the contract. However,

because clear guidance on how to determine the appropriate amount of consideration

did not exist, NASA had no assurance that sufficient consideration was received.

Based on a method used for previous contracts involving non-NASA payloads, the

OIG calculated that transportation costs should have been $19.12 million more than

NASA received. The OIG recommended that NASA develop guidance for calculating

transportation fees for non-NASA payloads flown on the Space Shuttle’s SPACEHAB

module. NASA concurred with the recommendation and initiated corrective actions.

(NASA)

Federal Supply

Schedule

Proposals

The VA OIG completed 39 pre-award reviews of Federal Supply Schedule (FSS)

proposals from pharmaceutical, dental, and X-ray suppliers, and equipment

manufacturers and recommended better use of funds totaling $230 million on

contracts with estimated sales value of $3.3 billion. Better use of funds represent the

difference between FSS-offered prices compared to prices offered to most favored

customers with terms, conditions, and volume similar to the FSS. The success of the

pre-award review efforts was the result of VA auditors, contracting officers,

acquisition resources personnel, and attorneys working as a team. (VA)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 24 

PREVENTING FRAUD AND VULNERABILITY TO WASTE AND ABUSE 

Trucking Safety One of OIG's investigative priorities is truck driver "log fraud," in which drivers of

large commercial trucks often at the instigation of company owners or managers falsify

their daily trip logs to misstate their hours behind the wheel. Federal regulations limit

the number of hours truckers can drive without rest because fatigue is a significant

factor in human errors that cause accidents and fatalities. Current standards call for

no more than 10 hours of driving followed by 8 hours of rest. OIG investigations have

found truckers behind the wheel after as much as 34 hours without a break for rest. 

The OIG has made it a priority to educate State and Federal truck inspectors to better

prepare them for their work. During the first half of FY 1998, OIG auditors and

investigators gave presentations in 24 courses across the nation, reaching about 600

officials of State governments and the Federal Office of Motor Carriers. Areas

covered included log fraud, illegal transportation of hazardous materials by truck, and

OIG audits of trucking-related activities. (DOT)

E-Mail Security An OIG review of the Federal Trade Commission’s E-mail security has led to system

enhancements aimed at eliminating access vulnerabilities. The review identified

weaknesses allowing current and former employees including consultants, contractors

and students to access private and group E-mail accounts of other current employees. 

Management worked with the OIG to address these vulnerabilities as they were

discovered, including disabling 200 former employee accounts, changing remote access

procedures to enhance security, and working directly with staff to establish universal

password protection on agency E-mail accounts. Management also agreed to hire a

security officer to guard against a recurrence of these and other information systems

security vulnerabilities. (FTC)

Industry Guidance Industry outreach and education are critical components of the HHS OIG's fraud

prevention efforts. During FY 1998, HHS OIG, in consultation with the Department

of Justice, published final regulations implementing a process for issuing written

advisory opinions to the public on the sanction authorities enforced by OIG, including

the anti-kickback statute and the Civil Monetary Penalties Law. In accordance with

these rules, OIG issued 15 formal advisory opinions on a wide range of concerns. 

Moreover, requests to the OIG for opinions in the last quarter of the year reflected a

growing industry recognition of the value of the advisory opinion process. The OIG

also successfully completed the first negotiated rulemaking with industry on an

exception to the anti-kickback statute or “safe harbor” for managed care organizations,

the first such negotiated rule establishing an exception to a criminal statute. (HHS)

Fraud Prevention

Guidance in

Health Care 

A cornerstone of HHS OIG's fraud prevention efforts has been the development of

“compliance program guidance” to encourage and assist the private health care

industry to fight fraud and abuse. The guidance, developed in conjunction with the

provider community, identifies steps that health care providers may voluntarily take to

ensure adherence to Medicare and Medicaid rules. Each guidance sets forth seven

elements that OIG views as necessary for an effective compliance program for that

particular industry sector, and also identifies risk areas for the specific industry sector. 

In 1998, OIG issued compliance program guidance for use by hospitals and home

health agencies, and issued a revised guidance for clinical laboratories. The OIG also

solicited input from the durable medical equipment industry on issues that should be

addressed in guidance for that health care sector. (HHS)
PAGE 25 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

New Debarment

Authority

During the 1998 session, Congress passed H.R. 1836, the “Federal Employees Health

Care Protection Act of 1998,” which was signed by the President on October 19, 1998,

as Public Law 105-226. Section 2 of the new law is a revision to the Federal

Employees Health Benefits Program (FEHBP) administrative sanctions authority. 

Passage of this bill had been a high priority over several years for both OPM and the

OIG, because earlier legislation required the agency to allow full due process hearings

in all cases and prevented debarment prior to exhaustion of appeals. This encouraged

the prolonged litigation that the debarment process was intended to avoid. Public Law

105-226 gives OPM an effective enforcement device against health care provider

fraud, as well as an efficient means of protecting the integrity of the FEHBP and the

financial interests of the taxpayers. (OPM)

Operation Talon

Apprehending

Fugitives 

Operation Talon, a nationwide Presidential law enforcement initiative led by the OIG,

was designed to locate and apprehend fugitive felons, many of them dangerous and

violent offenders, who are current or former food stamp recipients. This ongoing

initiative matches felony fugitive files with food stamp recipient records, enabling OIG

agents and other law enforcement officers to apprehend the fugitives. More than 3,650

fugitive felons have been arrested. A White House press announcement in which the

Vice President announced the results of Operation Talon to the nation prompted further

interest in the initiative. A number of Governors and law enforcement officials

throughout the country have extolled the operation. Two deputy sheriffs said that

Operation Talon was the "best thing that has happened" in their efforts to locate

fugitives and that they were impressed that the information now available through the

OIG enabled them to locate the fugitives sought at 90 percent of the addresses

provided. (USDA)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 26 

RECOVERIES AND RESULTS FROM FRAUD INVESTIGATIONS

Environmental

Laboratory Fined

$5.5 Million

Hess Environmental Laboratories, Inc. (Hess), of East Stroudsburg, PA , was

sentenced to pay over $5.5 million in restitution and a $3,600 assessment and was

placed on 5 years probation after pleading guilty to charges of conspiracy, false

statements, false claims, mail fraud, and violations of the Clean Water Act,

acknowledging that it repeatedly provided false water, sewage, and soil test results

for an estimated 415 customers from January 1988 to February 1997. Hess did not

have the proper equipment to perform certain environmental tests and was not

performing the tests according to EPA methods. Hess customers relied on the test

results to comply with Federal and State environmental laws and to determine where

and when remedies were needed to control hazardous, toxic, or contaminated

substances. The conspiracy affected schools, hospitals, local governments, and

businesses, including the Tobyhanna Army Depot in Pennsylvania. As a result of

this investigation, Hess closed in May 1997, and Michael Klusaritz, the former

laboratory director, and Judith McCoy, the former laboratory technical director,

were convicted of Federal charges. Klusaritz is serving a one-year prison sentence. 

William L. Hopkins, Jr., the former president of Hess, was convicted conspiracy,

making false statements, violating the Clean Water Act, and mail fraud. This

investigation was conducted jointly by the EPA and the U.S. Army Criminal

Investigation Command. (EPA)

Airplane Parts

Provider Fined $5

Million

Arrow Air of Miami, FL was fined $5 million by a U.S. District Court judge after

pleading guilty of making false statements to the FAA. Arrow Air, an all-cargo air

carrier, removed some 3,000 aircraft parts from planes not registered or operated in

the United States, then represented the parts as FAA-sanctioned for installation in

this country. In a precedent-setting ruling, $2 million of the levy against the firm

was categorized as restitution, designated for the use of the Center for Aerospace

Safety Education at Embry-Riddle Aeronautical University in Daytona Beach, FL. 

The school will use the funds to educate and perform research related to problems

caused by unapproved parts in civil aviation. (DOT)

Concealment Nets 

$2.9 Million

Restitution

Resulting from a joint investigation with the FBI and the IRS, an FDIC debtor was

convicted on charges of conspiracy, wire fraud, and IRS fraud, sentenced to serve 37

months in prison, and ordered to pay $2.9 million in restitution. The debtor was the

president and owner of a mail-order computer corporation. The corporation declared

bankruptcy after defaulting on a $4.9 million loan from the former Seaman’s Bank

for Savings, in New York, which closed in 1990. During bankruptcy proceedings

the debtor conspired with others to conceal his financial interests in two corporations

by supplying creditors, including the FDIC, with false documents concerning his

assets and liabilities. The debtor also defrauded the IRS through unreported cash

receipts from his mail-order business, using the funds to pay employees and

purchase inventory. (FDIC)
PAGE 27 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

HUD Grantee

Embezzles Funds 

The director of a nonprofit HUD grantee in Brooklyn, NY, pled guilty to charges of

making payoffs to a public official and embezzling grant funds received from HUD

and other Federal and State agencies. The former director of the grantee was also

convicted on charges of mail fraud and embezzling grant funds received from HUD

and other Federal and State agencies. The individuals were previously indicted with

others in a $660,000 diversion of grant funds. The grantee and a related

organization have received $7.1 million in special purpose grants from HUD since

1993, which were authorized by special Congressional appropriations to create and

administer business outreach centers in targeted neighborhoods, and serve elderly

Holocaust survivors and immigrants. Some of the diverted funds were used to pay a

New York State Assemblyman’s personal and political expenses, including tuition

expenses and fund-raising dinners. The organizations received their funds by

telephoning into HUD’s Line of Credit Control System, which then transferred the

money directly into their bank accounts. The individuals diverted the funds to a

bogus company, which spent them for other than their intended purpose. This was a

joint investigation by the HUD OIG, IRS, U.S. Attorney’s Office, Postal Inspection

Service, and the New York City Department of Investigation. (HUD)

Government

Exonerated by

Investigation

The DOJ OIG, in coordination with the CIA OIG, investigated allegations contained

in a series of San Jose Mercury News articles that individuals associated with the

Nicaraguan Contras were responsible for flooding Los Angeles with crack cocaine in

the 1980s, and that U.S. Government officials were aware of these activities and

either protected or ignored the individuals involved. The investigation did not

substantiate the implication that any of the individuals cited in the articles received

special consideration or leniency by the Department because of their Contra

connections. While the Department’s investigative efforts suffered to some degree

from a lack of coordination and insufficient resources, they were not affected by

anyone’s suspected ties to the Contras. The DOJ OIG did not find that the drug

trafficking by individuals discussed in the articles was connected to the CIA or that

their drug trafficking was the cause of the crack cocaine explosion in Los Angeles or

across the country. (DOJ)

Former Tribal

Officials

Sentenced

A joint investigation with the FBI into allegations of embezzlement by former

officials of a California Indian tribe resulted in the indictment and conviction of the

former tribal chairman and the former secretary-treasurer. The two individuals were

charged with converting to their personal use a $176,469 Bureau of Indian Affairs

check payable to the tribe, plus 19 other checks made payable to the tribe. The

former tribal chairman was also charged with using a tribal credit card to purchase

personal items, worth more than $7,800. They were found guilty of conspiracy and

embezzlement and each sentenced to 27 months in Federal prison, to be followed by

3 years of supervised probation. The former secretary-treasurer was ordered to pay

restitution of $180,303 to the tribe and a special assessment of $1,050. The former

tribal chairman was ordered to pay a special assessment of $1,400. (DOI)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 28 

Operation "Kiddie

Care" Continues

To Detect Fraud

Operation "Kiddie Care," OIG's national Presidential initiative in the Child and

Adult Care Food Program (CACFP), continues to detect fraud committed by

CACFP sponsors around the country. A total of 53 sponsors in 23 States have been

audited or investigated. The investigations have thus far led to criminal convictions

of 16 individuals, resulting in court-ordered fines and restitution of more than $3.8

million. In an ongoing investigation in Ohio, 7 people so far have been charged with

conspiring to set up more than 40 false providers, resulting in the submission of false

claims for reimbursements totaling approximately $1.1 million. Four of them have

been sentenced to prison terms ranging from 6 to 33 months, and ordered to pay

restitution between $68,000 and $800,000 each. Two others have been sentenced to

probation and ordered to pay restitution. Sentencing for a seventh defendant is

pending. As part of Operation "Kiddie Care," 15 sponsors have been terminated

from CACFP. These 15 had been receiving $27 million in program funds annually

to administer the program and to reimburse the food costs of the homes and centers

under their sponsorship. These funds may now go to legitimate sponsors to feed

needy children. (USDA)

“Steal Me Blue”

Task Force

To investigate the loss of over 240 Interim Assistance Reimbursement (IAR) checks

that were sent to the New York City Department of Social Services, an ad hoc task

force named “Steal Me Blue” was formed consisting of individuals from the OIG,

U.S. Attorney’s Office, U.S. Postal Inspection Service, U.S. Secret Service, and

New York City Department of Inspection. During the investigation, an additional

110 IAR checks totaling about $900,000 were identified as stolen. “Stop Notices”

were placed on over $1.4 million in IAR checks, and the Office of the Comptroller of

the Currency issued an alert to all domestic banks and several major overseas banks

concerning the schemes used to negotiate the stolen IAR checks. As a result, a

number individuals were arrested; five for negotiating the stolen IAR checks, one for

firearms possession, two for robbery, and an Internal Revenue Service employee and

three co-conspirators who obtained fraudulent tax refunds for unemployed

individuals. (SSA)

Conspiracy to

Overcharge DOD

A number of companies and individuals pled guilty to conspiracy and/or related

charges after participating in a scheme to overcharge the Defense Fuel Supply

Center more than $21 million by overstating prices, falsifying competitive quotes,

concealing overcharges in payments to shell corporations, and dividing the proceeds

among co-conspirators. The president of a petroleum company was sentenced to 27

months in prison, and 3 years probation. Restitution of $15,000 and a judgment of

$56 million were ordered against him and the company. Another petroleum

company president was sentenced to 12 months and 1 day in prison and 3 years

probation and is personally liable for $1 million restitution if the company fails to

pay restitution of $2.1 million. Both the company and its president have been

suspended from government contracting. Additionally, a former corporate attorney

for one of the companies who established off-shore corporate accounts used to

transfer monies between conspirators pled guilty to income tax issues and was

sentenced to 4 months home confinement, and 2 years probation, and was fined

$2,000. (DOD)
PAGE 29 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Fraud Involving

Foreign Nurses

In a case involving DOL, State Department, IRS, and Immigration and

Naturalization Service, Billy Jewell, the owner of a chain of nursing homes in Texas

and Oklahoma, and several others were sentenced after pleading guilty to conspiracy,

wire fraud, visa fraud, and aiding and abetting charges. The OIG investigation

revealed that Clara Kim, Veronica Hewitt, and Holly Arthur Estreller entered into

agreements with Billy Jewell to obtain H1-A non-immigrant work visas for nurses

employed at nursing homes in Lubbock, TX. Once there, the nurses were underpaid,

assigned other places to work and, in some instances, money was extorted from them

with the threat of reporting them to the INS for working out of status. Jewell was

fined $100,000 sentenced to serve 37 months in prison followed by 36 months’

supervised release, and ordered to pay restitution of over $1.5 million to DOL as

back wages to 402 nurses. Kim was fined $5,000 sentenced to 4 months’

imprisonment and 2 years’ probation. Estreller was fined $5,000, and received 5

months’ imprisonment and 2 years’ probation. Hewitt received 3 years’ probation

and was ordered to perform 200 hours of community service. (DOL)

Teamsters

Pension Fund

Fraud

Over $9 million was embezzled by service providers of Teamsters Local 875 Pension

Fund of New York in what began as a kickback scheme from investors to officials of

the pension fund. Albert DeAngelis, former official and trustee of the pension fund,

was sentenced and ordered to pay $53,000 in restitution in a scheme to receive

kickbacks from Edward Wright, an investment broker for Prudential Securities, in

exchange for $37 million of the fund monies for investment. Approximately $10

million of this fund money was transferred to an account at Bear Stearns on the

advice of Sanford Pollack, former counsel of the pension fund, for investing in prime

bank debentures. Pollack was sentenced for receiving kickbacks and was ordered to

serve 71 months’ incarceration and to pay restitution of more than $9 million. Mulk

Raj Dass and Chloe Peterson of the Infinity International Investments Group were

charged with fraudulently inducing pension fund representatives into transferring

$9.3 million of pension fund assets to purchase prime bank debentures. The money

was never used to purchase the prime bank debentures, but subsequently transferred

to various accounts held by the defendants and others. Glenn Pellegrin, a Louisiana

securities dealer, was sentenced for his part in the “prime bank debentures” scheme

and was ordered to serve 60 months in prison. (DOL)

TVA and the DOJ

Fight Fraud

The Tennessee Valley Authority OIG, with assistance from the FBI and a state

police agency, conducted an investigation resulting in an indictment of a former

executive of a non-profit agency partially funded by TVA for money laundering,

bank fraud, and criminal forfeiture. In a similar case, the TVA OIG found a nonprofit agency's treasurer had embezzled agency funds. The treasurer pled guilty to

theft of government property and was sentenced to probation and ordered to make

restitution. TVA OIG investigations of Federal Employees' Compensation Act fraud

led to recoveries and potential long-term savings of over $2.3 million. One such

investigation led to the convictions of a former steam fitter and his wife, after the

steam fitter collected $140,000 in Federal disability compensation without reporting

his active participation in a trucking company his wife owned. (TVA)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 30 

Operation Safe

Home

As the HUD OIG continued its Operation Safe Home initiatives in combating violent

crime in public and assisted housing, fraud in public housing administration, and

equity skimming in multi-family insured housing, its efforts resulted in an improved

quality of life for residents. OIG continued working with law enforcement agencies

on all levels and participated in task forces to identify and pursue cases involving

drugs and crime, embezzlement, bribery, conspiracy, false claims, and illegal use of

any assets/income of HUD properties. OIG also continued providing witness

relocation services, enabling witnesses to crime in public and assisted housing to

testify against the criminal element while at the same time remaining safe. During

FY 1998, over 4,000 arrests were made for violent crime and drug activities, and

over $1.6 million in cash was seized. As an example, in New York City, law

enforcement officers from the FBI, HUD OIG, and New York City Police

Department executed over 100 arrest warrants on indicted members of the Almighty

Latin King and Queen Nation gang. The drug- related violence of this gang has

victimized residents of numerous New York City Housing Authority properties. In

the fraud area, an individual was arrested for presenting a counterfeit performance

bond in response to contractual requirements for about $2.2 million in construction

work contracted by the Michigan City Housing Authority. In the multi-family equity

skimming area, the former owner/management agent of two HUD-insured projects in

Fort Myers, FL, was sentenced to prison and ordered to pay over $755,000 in

restitution to HUD. He created false vendors to take more than $798,000 out of the

defaulted projects. (HUD)

Financial Aid

Consultants

Match With IRS

During FY 1998, the Department of Education OIG experienced an increase in the

number of investigations involving financial aid consultants who assist students and

their parents in obtaining student financial aid (SFA) funds fraudulently. The

consultants provided assistance in applying for SFA typically by completing Free

Applications for Federal Student Aid (FAFSAs) with false information such as the

understatement of parental income, incorrect parental marital status,

independent/dependent student status and/or the number of family members enrolled

in college. Many of the consultants also prepare false tax returns to submit to

colleges and universities in support of the fraudulent FAFSAs. ED OIG

investigative efforts have resulted in the criminal prosecution of five consultants with

court-ordered fines and restitution in excess of $1.87 million, as well as about 500

criminal prosecutions and/or civil settlements with students and/or their parents with

total recoveries exceeding $3.6 million. Congress recently enacted a provision in the

Higher Education Act amendments, which authorized verification of income data

submitted on the FAFSA with the IRS. The comparison of data will ensure that

SFA recipients accurately report income to qualify for financial aid. (ED) 

Education

Certification

Fraud

The Corporation for National Service OIG investigations identified "novel"

approaches used by AmeriCorps members to account for and accrue service hours. 

Included were the "team concept" where everyone on a team earns the total

accumulated hours of the team for the day and the "inherited service hours" where

new AmeriCorps members "inherit" the service hours of a departing member. An

OIG investigation resulted in a guilty plea for reporting and certifying service for

someone who never performed any service hours, but was enrolled merely on paper.

(CNS)
PAGE 31 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Printing

Contractor Fraud

The Government Printing Office OIG investigated fraud, waste, and abuse

concerning the procurement of printing services with private contractors. The most

frequent violations investigated were the submission of false claims, false statements,

and violations of the Small and Disadvantaged Business Program. However, cases

involving allegations of bribes, gratuities, and kickbacks have also been investigated. 

In FY 1998, the OIG noticed an increase in the number of allegations of fraud in the

Federal Employees’ Compensation Act (FECA) program. The OIG, working with

Department of Labor and the GPO Labor and Employee Relations Division,

investigates allegations of employee misconduct to include thefts, embezzlement of

government funds, narcotics, and travel voucher and time and attendance fraud in the

prosecution of criminal and civil cases, settlements, and recovery/restitution of funds

to the agency. The OIG investigations also result in contractor suspension,

debarments, and employee terminations. (GPO)

Joint OIG/U.S.

Attorney

Investigation

In a matter jointly investigated by the FCC OIG and the FBI, a former FCC

subcontractor and accomplice pled guilty to Federal offenses. OIG auditors

developed information to assist the court in establishing restitution requirements for

sentencing. As a result of the investigation, an FCC subcontractor was sentenced to

20 months’ imprisonment, ordered to pay $40,000 in restitution, and assume a tax

liability to the IRS of approximately $168,000. A co-conspirator was sentenced to 5

years’ probation and ordered to make restitution to the IRS of $21,348. Both were

suspended from performing work for the Federal Government pending permanent

debarment. (FCC)

Contractor Fraud

Yields $8.7

Million Recovery

During FY 1998, a contractor investigation culminated in the largest monetary

recovery in the FDIC OIG’s history. After pleading guilty of corruptly interfering

with the functions of the Resolution Trust Corporation (RTC), an Ohio mortgage

company was ordered to pay over $4.2 million in fines, more than $3.5 million in

restitution to the FDIC, and over $1 million in interest. The mortgage company was

one of many contractors the then-RTC used to service loans that had been acquired

from failed savings and loans. Acting on information provided by a former employee

of the contractor, the OIG investigated and uncovered a complex scheme where the

contractor misrepresented the amount of funds it collected in servicing loans. (FDIC)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 32 

CIVIL ACTIONS FROM FRAUD INVESTIGATIONS

Health Care Fraud A $15 million civil settlement was reached with Quest Diagnostics, Incorporated,

successor to Damon Clinical Laboratories, Incorporated. Damon was suspected of

submitting false claims to the CHAMPUS and Medicare. Damon allegedly

conspired with other medical facilities to manipulate the normal blood tests of

patients suffering from end stage renal disease solely to increase billings. Instead of

conducting the normal 19 blood tests a month, the blood tests were allegedly split

into two tests on two separate days, resulting in unnecessary blood draws for each

patient and inflated profits. Medically unnecessary tests were also allegedly added to

the patients' bills to obtain additional revenue. This investigation was conducted

jointly by the Defense Criminal Investigative Service, Health and Human Services

OIG, and the Federal Bureau of Investigation. (DOD)

$45 Million Settlement

in Underpayment of

Royalties

In 1998, the Department of Justice announced that a major oil company, under an

agreement with the DOI and two Indian tribes, had paid $45 million to resolve

claims that it underpaid the government royalties for oil produced on Federal and

Indian land. The settlement resolved allegations that the oil company under- reported

the value of oil it produced on Federal and Indian land from 1980 to 1997, resulting

in the company paying less royalties than it owed. (DOI)

Due Diligence Fraud

Investigation Brings

Criminal Conviction,

Civil Settlement 

Cybernetics and Systems, Inc. (CSI), a subsidiary of CSX Corporation, after

pleading guilty to charges of possessing false papers with intent to defraud the

United States, was ordered to pay a $2 million criminal fine and agreed to pay a $28

million civil settlement. Both the criminal and civil settlements have been paid in full

in resolution of this 7-year joint ED OIG and U.S. Postal Inspection Service

investigation. During the 1980's, CSI, operated a business in Jacksonville, FL,

which serviced Federally-insured student loans under the Federal Family Education

Loan Program. The criminal information charged that a CSI employee intentionally

falsified a record concerning due diligence requirements for loan servicing to support

a claim against the Department for reinsurance under the program. Although CSI

was charged with only one incident, CSI agreed that numerous instances of similar

conduct occurred during the period, resulting in the payment of numerous fraudulent

claims by the Federal Government. (ED)

Joint Investigation As the result of a joint investigation by VA OIG and U.S. Postal Inspection Service,

five individuals were charged with a scheme where student veterans received VA

educational benefits without attending regularly scheduled classes. According to the

indictment, the individuals implemented a special program for retired student

veterans where they attended certain group meetings in lieu of regular classes,

received high grades without class attendance required, and paid kickbacks of up to

$200 per student per semester. At least 300 student veterans participated in the

program over a 7-year period and obtained educational assistance benefits in excess

of $3.8 million. The U.S. Attorney's Office negotiated civil settlement agreements

with 241 students for total restitution of $2.8 million. (VA)
PAGE 33 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Civil Settlement of 

$1.8 Million

Ashland Chemical Company, Drew Industrial Division, a supplier of water treatment

chemicals for heating and cooling systems and boiler fuel oil additives to Federal

customers under an ongoing Multiple Award Schedule contract, agreed to pay $1.8

million to resolve its potential civil False Claims Act liability. The government

alleged that the company failed to accurately disclose its commercial discounting

policies to GSA negotiators. As a result, Federal customers paid too much for the

company’s products since the contract began. The OIG audit found that despite

disclosures claiming no regular discounts were offered to any of its commercial

customers, except to its most favored customer, the company actually offered

numerous high regular discounts to many of its customers. The audit also found

numerous examples of price reduction violations it failed to pass along to the

government, as required by the contract, reductions in prices granted to customers

during the contract period, as well as minor over billings. (GSA)

Patient Dumping Some of the OIG’s most significant work during 1998 focused on the extent and

quality of care furnished to beneficiaries of HHS programs. As an example, OIG

greatly increased enforcement actions under the patient anti-dumping statute. 

Federal law requires that an emergency medical screening examination and

stabilizing treatment be provided by the emergency department of a Medicareparticipating hospital. The OIG is investigating over 150 instances, referred by the

Health Care Financing Administration (HCFA), where individuals allegedly were

refused medical screening or treatment. In 1998, OIG entered into 53 settlement

agreements with hospitals and physicians in such cases, and collected civil monetary

penalties of $1.8 million. This is a marked increase from the previous high of 18

settlements in 1996, and reflects the commitment of both HCFA and OIG to ensure

patient access to appropriate emergency medical services. (HHS)

Retroactive Refund

Recovered

A NASA OIG investigation with the Defense Contract Management Command

(DCMC) resulted in the government’s recovery of $43 million from a contractor.

The investigation stemmed from a recent State court ruling making defense

contractors eligible to receive retroactive refunds from the State for sales and use

taxes paid on Federal Government contracts. The contractor had received a refund

of approximately $52 million. The DCMC negotiated with the contractor to settle

the sales and tax refund issues. (NASA)

Corporation Repays

$4.3 Million, Forgoes 

$9.6 Million

IT-Davy Joint Venture, International Technology Corporation, and Davy-McKee

Corporation (collectively IT-Davy) entered into a civil settlement to resolve fraud

allegations involving an environmental cleanup project at the Helen Kramer Landfill

in Mantua, NJ. In 1989, the Army Corps of Engineers (COE), on behalf of the

EPA, contracted with IT-Davy to perform the site cleanup. Project specifications

and site condition changes delayed the project and IT-Davy incurred additional costs

over the original contract price. A joint investigation by EPA’s OIG, DCIS, DCAA,

and the Army Criminal Investigation Command found that IT-Davy had submitted

false claims in connection with the additional costs by double charging for labor and

equipment costs using a complex accounting scheme. As a result of the

investigation, IT-Davy has agreed to pay $4.3 million in restitution of all claims

under the cleanup contract. Of over $24 million in submitted but unpaid claims, the

COE has agreed that only $14.5 million in additional costs were legitimate. 

Therefore, the United States has realized an additional $9.6 million in savings from

the repudiated claims. (EPA)
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 34 

PCIE/ECIE COMMITTEES AND PROJECTS

he PCIE, in conjunction with the ECIE, maintains committees to examine Timportant issues and to assist them in their ongoing efforts to improve the

effectiveness of their members in fighting fraud, waste, and abuse throughout

the Federal Government.

Audit Committee During FY 1998, the PCIE Audit Committee undertook several projects directed at

its primary mission: taking a leadership role within the Inspector General

community to improve audit quality. Many of these projects will require continued

involvement and oversight on the part of the Audit Committee. Over the year, the

Committee also worked to maintain and, if necessary, re-energize relationships with

various councils, committees, and groups throughout government that have an

interest in enhancing audit professionalism.

IGATI

Over the past year, the Audit Committee continued to oversee the Inspectors General

Audit Training Institute (IGATI) operations with an emphasis toward improved

business processes. In August 1998, the Audit Committee, which is IGATI’s Board

of Directors, successfully arranged to transfer IGATI to the Treasury Franchise

Fund to become its own business entity. The Committee worked with the IGATI

Director to establish performance expectations and goals for 1999 with a focus

toward marketing and course development.

Financial Audit

Within the financial audit arena, the Audit Committee focused its attention on two

projects. In conjunction with OMB, the Audit Committee hosted two financial audit

forums to discuss recently-issued OMB bulletins and other financial audit issues. 

These sessions were conducted in December 1997 and September 1998 before

audiences of about 200 participants. In addition, an Audit Committee task force

issued a draft memorandum recommending that the PCIE adopt, with modifications,

GAO’s Financial Audit Manual (FAM) as its guidance for performing financial

audits. At the close of FY 1998, the task force was consolidating its comments to

begin meaningful discussions with GAO to resolve conceptual differences, improve

flexibility, and eliminate prescriptive language within the current Manual.

Single Audit

In January 1998, the Audit Committee initiated its efforts related to Single Audit. 

The Committee linked with the Federal Audit Executive Council (FAEC) to update

the Uniform Quality Control Review Guide for A-133 Audits and Uniform Initial

Review Guide for A-133 Audits. These guides were in the review and comment

phase at the end of FY 1998. Also, at the end of FY 1998, the Committee began

working with OMB to develop a survey of Inspectors General of grant-making

agencies to determine the nature and extent of their involvement in Single Audit

activities. The Committee plans to use these results to guide its 1999 Single Audit

efforts.
PAGE 35 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Inspection and

Evaluation Committee

The PCIE Inspection and Evaluation Committee issued two reports during FY 1998. 

One was on pre-screening of Federal grants and loans, and the other was on the

working relationships of inspection and evaluation units 

Prescreening Grants

The Committee issued a report on pre-screening of Federal grants and loans by

Offices of Inspector General and their agencies’ grant and loan offices, and surveyed

the procedures used by OIGs and their respective agencies to review Federal

assistance projects. The purpose of the report was to assist OIGs in establishing

more effective methods for preventing as well as detecting waste, fraud, and abuse

by Federal grant and loan recipients. The survey also found strong support among

OIGs for greater coordination in identifying problem recipients of Federal financial

assistance. It recommended that the PCIE consider developing a community-wide

clearinghouse to facilitate the exchange of information on problem grantees and loan

recipients.

Inspection and Evaluation Units

The Committee also issued a report on working relationships of OIG inspection and

evaluation units. It surveyed the working relationships of 15 inspection and

evaluation units with components inside and outside their OIGs. Its aim was to

identify practices for developing successful working relations between the units and

the groups with which they work.

Integrity Committee The PCIE Integrity Committee receives, reviews, and forwards for further

investigation any allegations of wrongdoing by an Inspector General, or under

certain circumstances, OIG staff members.

Complaints

FY 1998 was another busy and productive year for the Integrity Committee (IC). 

The IC met five times and reviewed 38 new complaints. Forty separate complaint

matters were processed and brought to closure. These included 21 matters which

were outside the IC’s purview and referred to other agencies for their consideration. 

Sixteen complaints were determined by the Committee to be unsubstantiated,

frivolous, and/or lacked sufficient details to warrant further action. Two matters

were closed at the request of the complainant. Also, the IC supervised one

investigation into allegations of misconduct against an Inspector General (IG) and

forwarded the findings to the PCIE Chairman for appropriate action. The IC

currently has 21 pending cases. Since 1990, the IC has processed and brought to

closure 234 cases.

FBI Support

The FBI has shown its support to the IC by increasing the Committee's working

group staff. Formerly, the working group consisted of one Special Agent supervisor,

one attorney from the FBI's Office of General Counsel, and one analyst. The IC has

now enhanced its working group by adding an additional Special Agent supervisor,

enabling the working group to conduct more in-depth analysis of IC matters, enhance

the presentation of cases, expedite the processing of cases, and carry out IC

decisions more efficiently and effectively.
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 36 

Processing Cases Efficiently

The IC now meets bimonthly rather than quarterly, a change necessitated by the

increase of IC matters since the signing of the Executive Order. This change has

markedly improved the IC's operations by speeding up the Committee's case

processing time and making the Committee's actions more timely. In addition, the IC

has established a 30-day limit when soliciting IGs or complainants for information,

which has further enhanced the case processing time. These improvements have led

to a significant improvement in the efficiency with which cases are processed. While

the number of new cases the IC has opened has steadily increased, the time to

process these cases has steadily gone down. In 1990, when the IC opened 24 new

cases, the average case processing time was 28.7 months. Whereas, in 1997, when

the IC opened 46 new cases, the average case processing time had gone down to 4.8

months.

Investigations

Committee

The Investigations Committee worked to implement recommendations on the

operations at Glynco, GA established a subcommittee of select Assistant Inspectors

General for Investigations (AIGIs,) and distributed an electronic pamphlet on

investigations.

Glynco Operations

During FY 1998, the PCIE Investigations Committee placed special emphasis on

implementing the recommendations of a study group that reviewed the operations of

the Inspector General Criminal Investigator Academy (Academy) located at Glynco. 

Among the issues the Committee worked on were staffing, funding, improved

delivery of services, better planning, and improved communications links with the

Inspector General community. A transition coordinator was detailed to the Academy

to begin implementation of the recommendations during FY 1998. There was

increased urgency in improving the delivery of training since the number of training

requests for FY 1999 has increased by 50 percent over 1998.

AIGI Participation

The Committee also recognized the need to increase the participation of the AIGIs in

improving investigative activities within the Inspector General community. With this

in mind, they established an Investigations Advisory Subcommittee comprised of

select AIGIs from the PCIE and ECIE who recommend to the full Committee issues

involving investigative practices, policies, training, and Academy oversight.

Electronic Information Pamphlet

Using input from several AIGIs and legal counsels in the PCIE, the Investigations

Committee in FY 1998 released a generic information pamphlet on OIG criminal

investigations entitled “OIG Investigations and You.” This electronic pamphlet

explains the basic rights and obligations of civilian employees who participate in an

OIG investigation. The pamphlet was distributed to all PCIE members for their use

or reference.
PAGE 37 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Legislative Committee The Legislative Committee serves the community by ensuring that its members are

kept abreast of matters in the Congressional arena that may affect Inspectors

General or their statutory duties. The Committee is also responsible for developing

and coordinating official PCIE positions with regard to particular legislation. 

Finally, the Committee acts as a resource-base for the community on Congressional

operations, information, and procedure.

20 Anniversary Commemoration th

To honor the 20 anniversary of the Inspector General Act of 1978, the Legislative th

Committee worked with key Congressional Members and staff, especially on

oversight committees, to pass Senate Joint Resolution 58 (Public Law 105-349). 

The Resolution, introduced by Senator Glenn and cosponsored by Senators

Thompson, Collins, Levin, Lieberman, Durbin, and Cleland, was unanimously

passed by the Senate on October 1, 1998. With the support of several House

Members, including Representatives Burton, Waxman, Horn, and Kucinich, and

Delegate Norton, and the assistance of House Majority Leader Armey, the full

House approved the Resolution on October 10, 1998, without dissent. The Joint

Resolution recognizes the accomplishments of Inspectors General in combating

Federal waste, fraud, and abuse. It also acknowledges the role Inspectors General

play in promoting the economy, efficiency, and effectiveness in the administration of

government programs and operations. Finally, the Resolution commends Inspectors

General and their employees on their dedication and professionalism. On November

2, 1998, President Clinton signed the Joint Resolution into law.

Survey of Inspector General Act Amendments

In response to a request from Senator Collins, Chair of the Senate Governmental

Affairs Committee Permanent Subcommittee on Investigations, the Legislative

Committee undertook a survey on S. 2167, the Inspector General Act Amendments

of 1998. This measure, sponsored by Senator Collins, would make several changes

to the Inspector General Act. All 27 PCIE Inspectors General and 25 of 30 ECIE

Inspectors General responded to the survey, which was officially presented for the

record at the Committee on Governmental Affairs September 9, 1998, hearing on the

“State of the Inspector General Community.” Besides summarizing the viewpoints

of the community on the main provisions of the bill, the survey also included

suggested modifications and technical amendments recommended to further clarify

and enhance the bill.

Professional

Development

Committee

During 1998, the Professional Development Committee hosted a number of

symposia and courses allowing PCIE and ECIE members along with others in the

government to exchange information and expertise on emerging issues impacting

OIG work. For example, EPA, in conjunction with the Committee, hosted an a daylong “Seminar on Paperless Auditing”, featuring 21 speakers on topics such as the

behavioral obstacles, Electronic Freedom of Information Act, encryption technology,

application software, electronic publishing, who is doing what, and lessons they have

learned. Additionally, a PCIE-CFO Workgroup on GPRA issues was created and

presented four half-day Dialogue Seminars.
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 38 

SUMMARIES OF STATISTICAL ACCOMPLISHMENTS

Audits and Inspections he tables on the following pages demonstrate the impact of OIG audits and Tinspections. The tables summarize key statistical accomplishments reported

by IGs to the Congress for FY 1998. The statistical accomplishments relate

to recommendations that funds be put to better use, management decisions on

recommendations that funds be put to better use, questioned costs, and management

decisions on questioned costs.

Recommendations That Funds Be Put To Better Use

The IG Act defines a recommendation that funds be put to better use as “ a

recommendation by the Office that funds could be used more efficiently if

management of an establishment took actions to implement and complete the

recommendation, including (A) reductions in outlays; (B) deobligations of funds

from programs or operations; (C) withdrawal of interest subsidy costs on loans or

loan guarantees, insurance, or bonds; (D) costs not incurred by implementing

recommended improvements related to the operations of the establishment, a

contractor, or grantee; (E) avoidance of unnecessary expenditures noted in pre-award

reviews of contract or grant agreements; or (F) any other savings which are

specifically identified.”

Tables I-P&E summarize statistical accomplishments of the OIGs for FY 1998. 

PCIE member audits recommended that about $15.7 billion be put to better use;

ECIE member audits recommended that about $168 million be put to better use.

Management Decisions on Recommendations That Funds Be Put To Better Use

Tables II-P&E report on the status of FY 1998 management decisions on OIG audit

recommendations that funds be put to better use. PCIE agency managers agreed

with about $6.3 billion in recommendations that funds be put to better use; ECIE

entity managers agreed with about $147 million in recommendations that funds be

put to better use. 

Questioned Costs

The IG Act defines questioned costs as “a cost that is questioned by the Office

because of (a) an alleged violation or provision of law, regulation, contract, grant, or

cooperative agreement, or other agreement or document governing the expenditure of

funds; (b) a finding that at the time of the audit, such cost is not supported by

adequate documentation; or (c) a finding that the expenditure of funds for the

intended purpose is unnecessary or unreasonable.”

Tables III-P&E, and Tables IV-P&E present, respectively, the total costs questioned

by OIGs in FY 1998 and the total amount of management decisions to disallow costs

questioned by OIGs. During FY 1998, PCIE OIG audits resulted in about $3.3

billion in questioned costs and ECIE audits resulted in about $184 million in

questioned costs. Tables IV-P&E show, respectively, the status of FY1998

management decisions to disallow costs questioned by the OIGs. PCIE/ECIE agency

managers agreed with about $1.9 billion in questioned costs.
PAGE 39 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Table I-P

PCIE - Recommendations That Funds Be Put To Better Use 1

Entity OIG DCAA* Total

CNS 1,618,000 0 1,618,000

DOC 23,904,451 0 23,904,451

DOD 2,563,328,000 4,729,696,400 7,293,024,400

DOE 595,119,557 0 595,119,557

DOI 152,921,704 2,670,956 155,592,660 2

DOJ 82,911,990 0 82,911,990

DOL 4,100,000 0 4,100,000

DOS 4,520,000 0 4,520,000

DOT 1,059,120,000 0 1,059,120,000

ED 2,900,000 0 2,900,000

EPA 1,977,860 3,212,370 5,190,230

FDIC 1,007,000 0 1,007,000

FEMA 192,713,024 1,399,785 194,112,809

GSA 290,677,904 0 290,677,904

HHS 2,089,204,000 0 2,089,204,000

HUD 456,000 0 456,000

NASA 99,690,000 0 99,690,000 3

NRC 0 359,682 359,682

OPM 11,920 0 11,920

RRB 2,407,600 0 2,407,600

SBA 12,546,236 0 12,546,236

SSA 2,340,207,842 0 2,340,207,842

Treasury 73,275,000 5,280,000 78,555,000

USAID 499,563,115 0 499,563,115

USDA 116,474,628 1,215,861 117,690,489 4

USIA 504,000 0 504,000

VA 699,284,000 2,264,000 701,548,000

TOTALS $10,910,443,831 $4,746,099,054 $15,656,542,885

Includes results from inspections, where applicable. 1

Includes $6,775,620 for OIG-negotiated indirect cost proposals. 2

Includes investigations, inspections, and other reports. 3

Reflects adjustment made after FY 1998. 4

*DCAA - Defense Contract Audit Agency performs audits of government contracts by agreement with the respective OIGs
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 40 

Table I-E

ECIE - Recommendations That Funds

Be Put To Better Use

Entity Total

Amtrak $892,073

Appalachian Regional Commission (ARC) $994,000

Federal Housing Finance Board (FHFB) 26,211

Federal Labor Relations Authority (FLRA) 46,440

Federal Reserve Board (FRB) 267,000

Federal Trade Commission (FTC) 2,054,383

Government Printing Office (GPO) 1,341

National Archives and Records Administration (NARA) 625,000

National Science Foundation (NSF) 31,409,082

Smithsonian Institution (SI) 413,712

Tennessee Valley Authority (TVA) 2,578,703

U.S. Postal Service (USPS) 128,669,699 1

TOTAL $167,977,644

Figures reflect work done directly by both the U.S. Postal Service Office of Inspector General and by U.S. Postal Service 1 

audit and investigation units under the oversight of the OIG.
PAGE 41 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Table II-P

PCIE - Management Decisions On Recommendations

That Funds Be Put To Better Use 1

Entity No Mgmt. Recommenda- Recommenda- Recommenda- No Mgmt. Decision

Decision Start tions Issued in tions Agreed to tions Not End FY 1998

FY 1998 FY 1998 by Mgmt. Agreed to by

Mgmt.

CNS 0 1,618,000 9,000 0 1,609,000

DOC 47,760,278 23,904,451 2,653,251 46,461,831 22,031,128 2

DOD 8,996,189,000 7,293,024,400 3,643,563,000 1,828,254,000 10,817,396,400

DOE 191,326,237 595,119,557 306,735,988 36,333,920 443,375,886

DOI 369,612,554 155,592,660 182,144,203 3,021,454 340,039,557

DOJ 7,503,301 82,911,990 58,415,049 0 32,000,242

DOL 73,200,000 4,100,000 69,400,000 500,000 7,400,000

DOS 4,526,000 4,520,000 1,100,000 600,000 7,346,000

DOT 77,836,000 1,059,120,000 728,700,000 260,000 407,996,000

ED 23,106,552 2,900,000 7,000,000 815,000 18,191,552

EPA 5,391,970 5,190,230 5,266,230 5,315,970 0

FDIC 0 1,007,000 1,007,000 0 0

FEMA 231,069,440 194,112,809 10,353,073 222,837,591 191,991,585

GSA 18,361,543 289,974,204 55,802,775 2,088,409 250,444,563 3

HHS 56,476,000 2,089,204,000 162,458,000 738,704,000 1,244,518,000

HUD 4,013,000 456,000 102,000 0 4,367,000

NASA 85,072,033 54,356,000 62,081,136 9,795,000 67,551,897 4

NRC 0 359,682 359,682 0 0

OPM 0 11,920 11,920 0 0

RRB 0 2,407,600 2,407,600 0 0

SBA 9,437,477 12,546,236 3,036,296 0 18,947,417

SSA 20,400,000 2,340,207,842 289,128,680 2,071,479,162 0

Treasury 70,026,000 78,555,000 52,860,000 22,116,000 73,605,000

USAID 78,097,000 503,773,314 17,325,033 79,626,189 484,919,092 5

USDA 1,212,295,693 117,690,489 127,866,222 1,095,181,206 107,758,037 6

USIA 701,000 504,000 1,205,000 0 0

VA 77,400,000 701,548,000 501,800,000 31,700,000 245,448,000

TOTALS $11,659,801,078 $15,614,715,384 $6,292,791,138 $6,195,089,732 $14,786,936,356

 Includes results from inspections, where applicable. 1

 Management agreed to funds to be put to better use which exceeded recommended amounts by $518,519. 2

$703,700 was removed from resolution process pending litigation. 3 

 Not included is $45,334,000 of recommendations in inspection, DCAA, and other reports agreed to by management. 4

 Reflects an increase in recommendations of $4,210,199 made after FY 1998. 5

 Reflects a variance of $819,283 between beginning and ending balance because of adjustments in management decisions. 6
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 42 

Table II-E

ECIE - Management Decisions On Recommendations

That Funds Be Put To Better Use

Entity

No Mgmt. Recommend- Recommenda- Recommenda- No Mgmt.

Decision ations Issued tions Agreed tions Not Decision

Start FY 1998 In FY 1998 to by Mgmt. Agreed to by End FY 1998

Mgmt.

Amtrak $8,961,171 $892,073 $8,961,171 $0 $892,073

ARC 0 994,000 646,000 48,000 300,000

CPB 70,000 0 0 0 70,000

FHFB 0 26,211 22,711 3,500 0

FLRA 0 46,440 0 0 46,440

FRB 0 267,000 267,000 0 0

FTC 0 2,054,383 2,054,383 0 0

GPO 0 1,341 780 0 561

NARA 0 625,000 625,000 0 0

NSF 104,441,221 31,409,082 92,819,326 36,490,566 6,540,411

PC 30,000 0 0 0 30,000

SI 0 413,712 69,382 71,012 273,318

TVA 4,737,549 2,578,703 5,864,432 1,451,820 0

USPS 79,748,787 128,669,699 35,671,648 0 172,746,838 1

TOTALS $197,988,728 $167,977,644 $147,001,833 $38,064,898 $180,899,641

Figures reflect work done directly by both the U.S. Postal Service Office of Inspector General and by U.S. Postal Service audit 1

and investigation units under the oversight of the OIG.
PAGE 43 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Table III-P

PCIE - Questioned Costs

Entity OIG DCAA Total

CNS 1,776,000 0 1,776,000

DOC 5,012,142 0 5,012,142

DOD 0 2,176,142,699 2,176,142,699

DOE 1,180,375 0 1,180,375

DOI 139,355,201 10,946,258 150,301,459

DOJ 67,694,334 0 67,694,334

DOL 23,600,000 0 23,600,000

DOS 781,000 592,000 1,373,000

DOT 13,484,000 0 13,484,000

ED 17,011,401 0 17,011,401

EPA 15,133,511 901,834 16,035,345

FDIC 21,644,658 0 21,644,658

FEMA 54,936,735 0 54,936,735

GSA 29,062,918 0 29,062,918

HHS 197,241,559 2,441 197,244,000

HUD 61,431,000 792,000 62,223,000 1

NASA 27,465,448 4,537,128 32,002,576 2

NRC 0 357,068 357,068

OPM 126,317,911 0 126,317,911 3

RRB 0 0 0

SBA 1,854,132 0 1,854,132

SSA 14,661,078 0 14,661,078

Treasury 2,218,000 2,673,000 4,891,000

USAID 9,295,325 10,263,682 19,559,007

USDA 220,317,087 91,602 220,408,689

USIA 0 0 0

VA 20,400,000 0 20,400,000

TOTALS $1,071,873,815 $2,207,299,712 $3,279,173,527

Includes $9,216,000 in settlements from 10 reviews not issued as audit reports. 1

Includes $2,900,000 of questioned costs from inspection and other reports. 2

Includes $3,500,000 of questioned costs in a joint audit and investigation effort with U.S. Attorney’s Office, and the figure 3

is also included in Table IX- Investigative Recoveries.
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 44 

Table III-E

ECIE - Questioned Costs

Entity Total

Amtrak $9,826,345

ARC 1,093,000

CPB 158,450

FCA 31,892

FCC 12,420

FHFB 350

GPO 641,080

LSC 607,735

NARA 7,572

NEA 239,862

NSF 7,024,157

PBGC 21,192

PC 11,041

PCC 496,884

TVA 2,959,679

USITC 941

USPS 160,393,022 1

TOTAL $183,525,622

Figures reflect work done directly by both the U.S. Postal Service Office of Inspector General and by U.S. Postal Service audit 1

and investigation units under the oversight of the OIG.
PAGE 45 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Table IV-P

PCIE - Management Decisions On Audits With Questioned Costs

Entity No Mgmt. Recommenda- Recommenda- Recommenda-tions No Mgmt.

Decision Start tions Issued in tions Agreed to Not Agreed to by Decision End FY

FY 1998 FY 1998 by Mgmt. Mgmt. 1998

CNS 3,085,000 1,776,000 1,050,000 2,008,000 1,803,000

DOC 10,002,583 5,012,142 3,090,755 3,518,491 8,426,122 1

DOD 7,391,300,000 2,176,142,699 1,113,700,000 590,400,000 7,863,342,699

DOE 6,717,811 1,180,375 98,000 41,000 7,759,186

DOI 39,417,786 150,301,459 6,713,551 4,799,125 178,206,569

DOJ 24,194,664 67,694,334 43,660,814 0 48,228,184

DOL 37,100,000 23,600,000 11,100,000 2,600,000 47,000,000

DOS 0 781,000 636,000 0 145,000 2

DOT 62,656,000 13,484,000 13,380,000 30,877,000 31,883,000

ED 199,338,889 17,011,401 16,601,814 92,321,731 107,426,745

EPA 283,471,850 16,035,345 77,225,700 111,379,342 110,902,153

FDIC 0 21,644,658 11,917,754 9,127,542 727,945 3

FEMA 9,449,796 54,936,735 12,800,757 16,057,915 35,527,859

GSA 5,892,985 29,062,918 27,531,756 1,904,590 7,382,625 4

HHS 438,230,000 197,244,000 146,523,000 141,220,000 347,731,000

HUD 22,835,000 62,223,000 48,485,000 4,267,000 22,306,000 5

NASA 60,471,584 24,565,448 74,034,600 1,369,400 9,633,032 6

NRC 118,010 357,068 475,078 0 0

OPM 9,810,850 126,317,911 74,563,505 33,312,366 28,252,890 7

RRB 0 0 0 0 0

SBA 2,961,619 1,854,132 1,449,206 368,883 2,997,662

SSA 398,011 14,661,078 14,668,902 0 390,187

Treasury 11,429,000 4,891,000 832,000 2,078,000 13,410,000

USAID 12,387,473 19,434,886 2,810,171 9,284,430 19,727,758 8

USDA 485,518,160 220,408,689 112,456,119 151,956,720 413,931,298 9

USIA 3,913,000 0 178,000 570,000 3,165,000

VA 5,700,000 20,400,000 26,100,000 0 0

TOTALS $9,126,400,071 $3,271,020,278 $1,842,082,482 $1,209,461,535 $9,310,305,914

Management agreed to questioned costs which exceeded recommended amounts by $20,643. 1

Does not include costs questioned by DCAA. 2

Management disallowed $128,583 more than the amounts questioned. 3

Includes $1,863,068 above recommended amounts that management decided to seek. 4

Includes $9,216,000 in settlements from 10 reviews not issued as audit reports, and $784,000 agreed to by management. 5

Does not include $32,200,000 of recommendations in inspection, DCAA, and other reports agreed to by management. 6

Includes $3,500,000 in questioned costs in a joint effort with U.S. Attorney’s Office. 7

8 Reflects an increase of $87,154 in Start FY 1998, but not a decrease of $124,121 in Recommendations Issued in FY 1998, from

adjustments from prior period, made after FY 1998.

Reflects a variance of $27,582,712 between beginning and ending balances because of adjustments in management decisions. 9
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 46 

Table IV-E

ECIE - Management Decisions On Audits With Questioned Costs

Entity Decision tions Issued tions Agreed Not Agreed End FY 1998

No Mgmt. Recommenda- Recommenda- Recommendations No Mgmt. Decision

Start FY 1998 In FY 1998 to by Mgmt. to by Mgmt.

Amtrak $16,898,661 $9,826,345 $21,177,355 $509,811 $5,037,840

ARC 15,000 1,093,000 14,000 85,000 1,009,000

CPB 0 158,450 0 0 158,450

FCA 0 31,892 0 0 31,892

FCC 265,180 12,420 12,420 0 265,180

FHFB 0 350 0 350 0

GPO 1,153,717 641,080 937,034 211,771 645,992

LSC 0 607,735 0 607,735 0

NARA 0 7,572 7,572 0 0

NEA 14,630 239,862 239,862 14,630 0

NEH 20,000 0 20,000 0 0

NSF 8,532,906 7,024,157 1,628,647 3,289,794 10,638,622

PBGC 0 21,192 21,192 0 0

PC 17,957 11,041 1,321 19,060 8,617

PCC 917,462 496,884 385,986 289,695 738,665

SI 1,100,878 0 0 0 1,100,878

TVA 55,543 2,959,679 2,292,357 678,197 44,668

USITC 0 941 941 0 0

USPS 5,749,457 160,393,022 3,012,318 1,140,505 161,989,656 1

TOTALS $34,741,391 $183,525,622 $29,751,005 $6,846,548 $181,669,460

Figures reflect work done directly by both the U.S. Postal Service Office of Inspector General and by U.S. Postal Service audit 1

 and investigation units under the oversight of the OIG.
PAGE 47 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Investigations The following Tables V-IX, illustrate the results obtained through OIG investigations

during FY1998. They summarize the statistical accomplishments reported to the

Congress as of March 31 and September 30, 1998. The accomplishments: successful

criminal prosecutions, administrative sanctions, and investigative and civil recoveries

include results of joint investigations.

During FY 1998, PCIE OIG investigations resulted in 5,187 successful criminal

prosecutions; ECIE OIG investigations resulted in 9,698 successful criminal

prosecutions, of which, 9,642 were accomplished by the U.S. Postal Service. During

FY 1998, PCIE OIG investigations resulted in 887 personnel actions; ECIE OIG 

investigations resulted in 386 personnel actions.

PCIE OIG investigations resulted in more than 7,000 suspensions or debarments during

FY 1998, and ECIE OIG investigations resulted in 17 suspensions or debarments. 

During FY 1998 PCIE OIG investigations resulted in about $1.3 billion in recoveries;

ECIE OIG investigations resulted in about $34.7 million in recoveries.

Table V

PCIE and ECIE – Successful Criminal Prosecutions

PCIE ECIE

Entity Total Entity Total

CNS 1 Amtrak 7

DOC 3 CPB 1

DOD 241 FCC 3

DOE 11 FTC 1

DOI 23 GPO 1

DOJ 111 LSC 2

DOL 274 NLRB 2

DOS 7 NSF 2

DOT 120 PBGC 1

ED 86 PCC 19

EPA 9 TVA 17

FDIC 22 USPS 9,642

FEMA 17

GSA 19

HHS 261

HUD 281

NASA 39

NRC 0

OPM 20

RRB 100

SBA 58

SSA 2,761

Treasury 8

USAID 1

USDA 601

USIA 2

VA 111

TOTALS 5,187 9,698
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 48 

Table VI 

PCIE and ECIE- Civil Actions

PCIE ECIE

Entity Total Entity Total

CNS 0 GPO 1

DOC 1 NSF 2

DOD 188 PCC 9

DOE 8 TVA 6

DOI 5

DOJ 1

DOL 25

DOS 0

DOT 22

ED 200

EPA 7

FDIC 19

FEMA 0

GSA 8

HHS 927

HUD 24

NASA 5

NRC 0

OPM 2

RRB 73

SBA 21

SSA 3

Treasury 10

USAID 3

USDA 123

USIA 2

VA 223

TOTALS 1,900 18

Civil Actions: include the total number of matters arising from OIG investigations, audits, and other reviews, other than

criminal prosecutions, that are successfully resolved during the year. The term includes civil judgments and settlements,

and administratively-imposed penalties and assessments (such as under the Program Fraud Civil Remedies Act or Civil

Monetary Penalties Law). Note that resolutions of personnel actions and debarments/exclusions are covered in other

tables and are not reported as Civil Actions.
PAGE 49 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Table VII

PCIE and ECIE – Personnel Actions

PCIE ECIE

Entity Total Entity Total

CNS 2 Amtrak 23

DOC 30 EEOC 2

DOD 192 FCC 12

DOE 20 FRB 1

DOI 25 FTC 1

DOJ 102 GPO 20

DOL 35 NARA 3

DOS 34 NEH 1

DOT 52 NLRB 7

ED 11 NSF 2

EPA 13 PBGC 2

FDIC 9 PC 2

FEMA 8 PCC 10

GSA 13 SEC 53

HHS 4 SI 7

HUD 4 TVA 20

NASA 51 USITC 2

NRC 25 USPS 218 1

OPM 1

RRB 9

SBA 4

SSA 32

Treasury 24

USAID 8

USDA 75

USIA 9

VA 95

TOTALS 887 386

Personnel Actions: the total number reprimands, suspensions, demotions, or terminations of Federal, State, and local

(including Federal contractor/grantee) employees resulting from OIG work or subsequent actions. 

Figures reflect work done directly by both the U.S. Postal Service Office of Inspector General and by U.S. Postal Service 1

 audit and investigation units under the oversight of the OIG.
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 50 

Table VIII

PCIE and ECIE – Suspensions/Debarments

PCIE ECIE

Entity Total Entity Total

CNS 0 FCC 1

DOC 0 GPO 12

DOD 335 NSF 2

DOE 25 PCC 1

DOI 0 USPS 1

1

DOJ 0

DOL 18

DOS 2

DOT 12

ED 20

EPA 9

FDIC 3

FEMA 0

GSA 86

HHS 3,021

HUD 102

NASA 30

NRC 0

OPM 2,929

RRB 0

SBA 0

SSA 0

Treasury 5

USAID 1

USDA 464

USIA 0

VA 25

TOTALS 7,087 17

Suspensions/Debarments: the total number of individuals and entities, including contractors, grantees, and assistance

recipients, restricted from doing business with the Federal Government.

Figures reflect work done directly by both the U.S. Postal Service Office of Inspector General and by U.S. Postal Service 1

 audit and investigation units under the oversight of the OIG.
PAGE 51 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

Table IX

PCIE and ECIE – Investigative Recoveries

PCIE ECIE

Entity Total Entity Total

CNS 9,450 Amtrak $169,600

DOC 3,243,592 EEOC 1,900

DOD 389,436,035 FCC 60,000

DOE 3,254,932 GPO 16,200

DOI 55,898,116 LSC 27,068

DOJ 899,707 NARA 8,831

DOL 52,143,870 NEH 1,100,000

DOS 367,553 NLRB 21,459

DOT 16,853,420 NSF 2,055,180

ED 50,474,913 PBGC 334,861

EPA 15,000,000 PCC 40,574

FDIC 29,081,368 SI 3,397

FEMA 2,983,000 TVA 1,227,199

GSA 11,940,058 USPS 29,585,714 1

HHS 515,901,674

HUD 7,445,603

NASA 52,700,000

NRC 2,844

OPM 5,477,507

RRB 1,975,859

SBA 7,707,167

SSA 23,320,449

Treasury 342,117

USAID 196,185

USDA 74,391,488

USIA 124,962

VA 16,570,550

TOTALS $1,337,742,419 $34,651,983

Figures reflect work done directly by both the U.S. Postal Service Office of Inspector General and by U.S. Postal 1 

Service audit and investigation units under the oversight of the OIG.
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 52 

The President’s Council on Integrity and Efficiency

Membership Addresses and Hotline FNumbers

Sylvia Mathews, Acting Chair, PCIE

Deputy Director

OFFICE OF MANAGEMENT AND BUDGET

17 and Pennsylvania Ave., NW, Room 260 th

Washington, DC 20503

Norwood J. Jackson, Jr., Acting Controller*

OFFICE OF MANAGEMENT AND BUDGET

725 17 Street, NW, Room 6025 th

Washington, DC 20503

Gaston L. Gianni, Jr., Vice Chair, PCIE*

Inspector General

FEDERAL DEPOSIT INSURANCE CORP

801 17 Street, NW, Room 1096 TH

Washington, DC 20434-0001

F800.964.334

Thomas D. Blair, Vice Chair, ECIE*

Inspector General

SMITHSONIAN INSTITUTION

955 L’Enfant Plaza, SW, Room 7600

Washington, DC 20560-0905

F202.287.3676

Jeffrey Rush, Jr., Inspector General

AGENCY FOR INTERNATIONAL DEVELOPMENT

Ronald Reagan Building, Room 6.6D

1300 Pennsylvania Avenue, NW

Washington, DC 20523

F800.230.6539 or 202.712.1023

Roger C. Viadero, Inspector General

DEPARTMENT OF AGRICULTURE

1400 Independence Ave., SW, 

Room 117 Whitten Building

Washington, DC 20250-2301 

F800.424.9121 or 202.690.1622

L. Britt Snider, Inspector General

CENTRAL INTELLIGENCE AGENCY

Room 2X30, New Headquarters

Washington, DC 20505

Johnnie Frazier, Acting Inspector General

DEPARTMENT OF COMMERCE

14 & Constitution Ave., NW, Room 7898C th

Washington, DC 20230

F800.424.5197 or 202.482.2495

Luise S. Jordan, Inspector General

CORPORATION FOR NATIONAL SERVICE

1201 New York Ave., NW, Suite 8100

Washington, DC 20525

F800.452.8210

Donald Mancuso, Acting Inspector General

DEPARTMENT OF DEFENSE

400 Army Navy Drive, Room 1000

Arlington, VA 22202-2884

F800.424.9098 or 703.604.8546

TREASURY INSPECTOR GENERAL FOR

Lorraine Lewis, Inspector General

DEPARTMENT OF EDUCATION

400 Maryland Ave., SW, Room 4006

Washington, DC 20202-1510

F800.647.8733 or 202.205.5770

Gregory H. Friedman, Inspector General

DEPARTMENT OF ENERGY

1000 Independence Ave., SW, Room 5D-039

Washington, DC 20585

F800.541.1625 or 202.586.4073

Nikki L. Tinsley, Inspector General John U. Sepulveda, Deputy Director*

ENVIRONMENTAL PROTECTION AGENCY

401 M Street, SW, Room NE3309 (2410)

Washington, DC 20460

F202.260.4977

Thomas J. Pickard, Assistant Director*

Criminal Investigative Division

FEDERAL BUREAU OF INVESTIGATION

935 Pennsylvania Ave., NW, Room 7116

Washington, DC 20535

George J. Opfer, Inspector General

FEDERAL EMERGENCY MANAGEMENT AGENCY

500 C Street, SW, Suite 505

Washington, DC 20472

F800.323.8603

William R. Barton, Inspector General

GENERAL SERVICES ADMINISTRATION

18 & F Streets, NW, Room 5340 th

Washington, DC 20405

F800.424.5210 or 202.501.1780

Stephen D. Potts, Director*

OFFICE OF GOVERNMENT ETHICS

1201 New York Avenue, NW, Suite 500

Washington, DC 20005-3917

June Gibbs Brown, Inspector General

DEPARTMENT OF HEALTH & HUMAN SERVICES

330 Independence Ave., SW, Room 5250

Washington, DC 20201

F800.447.8477

Susan Gaffney, Inspector General

DEPARTMENT OF HOUSING & URBAN DEV

451 7 Street, SW, Room 8256 th

Washington, DC 20410-4500

F800.347.3735 or 202.708.4200

Robert Williams, Acting Inspector General

DEPARTMENT OF THE INTERIOR

1849 C Street, NW, Mail Stop 5341

Washington, DC 20240

F800.424.5081 or 202.208.5300

Michael R. Bromwich, Inspector General

DEPARTMENT OF JUSTICE

950 Pennsylvania Ave., NW, Room 4706

Washington. DC 20530

F800.869.4499

Charles C. Masten, Inspector General

DEPARTMENT OF LABOR

200 Constitution Ave., NW, Room S-1301

Washington, DC 20210

F800.347.3756 or 202.219.5227

Roberta L. Gross, Inspector General

NATIONAL AERONAUTICS & SPACE ADMIN

300 E Street, SW, Code W, Room 8T79

Washington, DC 20546

F800.424.9183

Hubert T. Bell, Inspector General

NUCLEAR REGULATORY COMMISSION

Mail Stop T5 D28

Washington, DC 20555

F800.233.3497

* Also Members of the ECIE

OFFICE OF PERSONNEL MANAGEMENT 

1900 E Street, NW,

Washington, DC 20415-0001

Patrick E. McFarland, Inspector General

OFFICE OF PERSONNEL MANAGEMENT 

1900 E Street, NW, Room 6400 

Washington, DC 20415-1100

FFRAUD, WASTE, AND ABUSE: 202.606.2423

FHEALTHCARE FRAUD: 202.418.3300

Martin J. Dickman, Inspector General

RAILROAD RETIREMENT BOARD

844 North Rush Street, Room 450

Chicago. IL 60611-2092

F800.772.4258

Elaine Kaplan, Special Counsel*

OFFICE OF SPECIAL COUNSEL

1730 M Street, NW, Suite 300

Washington, DC 20036

FDisclosure: 800.572..2249

FHatch Act Information: 800.854.2824

FWhistleblower Protection: 800.572.2249

Phyllis Fong, Inspector General

SMALL BUSINESS ADMINISTRATION

409 Third Street SW, 7 Floor th

Washington, DC 20416

F 800.767.0385 or 202.205.7151

James G. Huse, Jr, Acting Inspector General

SOCIAL SECURITY ADMINISTRATION

Altmeyer Building, Suite 300

6401 Security Boulevard

Baltimore, MD 21235

F800.269.0271

Jacquelyn L. Williams-Bridgers

Inspector General

DEPARTMENT OF STATE

ARMS CONTROL & DISARMAMENT AGENCY

 AND U.S. INFORMATION AGENCY 

2201 C Street, NW, Room 6817

Washington, DC 20520-6817

F202.647.3320 (Collect Calls Accepted)

Kenneth M. Mead, Inspector General

DEPARTMENT OF TRANSPORTATION

400 Seventh Street, SW, Room 9210

Washington, DC 20590

F800.424.9071 or 202.366.1461

Lawrence Rogers, Acting Inspector General

DEPARTMENT OF THE TREASURY

740 15 Street, NW, th

Washington, DC 20220

F800.359.3898 

David C. Williams, Inspector General

TAX ADMINISTRATION

1111 Constitution Ave, NW, Room 3031

Washington , DC 20220

F800 .366. 4484

Richard J. Griffin, Inspector General

DEPARTMENT OF VETERANS AFFAIRS

810 Vermont Avenue NW, Rm 1114MT

Washington, DC 20420

F800.488.8244 or 202.565.8644
PAGE 53 - PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998

The Executive Council on Integrity and Efficiency

Membership Addresses and Hotline FNumbers

Norwood J. Jackson, Jr., Acting Chair, ECIE H. Walker Feaster, III, Inspector General Edward Johns, Inspector General

Acting Controller FEDERAL COMMUNICATIONS COMMISSION NATIONAL ENDOWMENT FOR THE ARTS

OFFICE OF MANAGEMENT AND BUDGET 445 12 Street, SW, Room 2-C762 1100 Pennsylvania Ave., NW, Room 528 th

725 17 Street, NW, Room 6025 Washington, DC 20554 Washington, DC 20506 th

Washington, DC 20503 F202.418.0473 F202.682.5402

Thomas D. Blair, Vice Chair, ECIE Lynne A. McFarland, Inspector General Sheldon L. Bernstein, Inspector General

Inspector General FEDERAL ELECTION COMMISSION NATIONAL ENDOWMENT FOR THE HUMANITIES

SMITHSONIAN INSTITUTION 999 E Street, NW, Room 940 1100 Pennsylvania Ave., NW, Room 419

955 L’Enfant Plaza, SW, Room 7600 Washington, DC 20463 Washington, DC 20506

Washington, DC 20560-0905 F202.694.1015 F202.606.8423

F202.287.3676

Edward Kelley, Inspector General Jane E. Altenhofen, Inspector General

Gaston L. Gianni, Jr., Vice Chair, PCIE FEDERAL HOUSING FINANCE BOARD NATIONAL LABOR RELATIONS BOARD

Inspector General 1777 F Street, NW 1099 14 Street, NW, Room 9820 th

FEDERAL DEPOSIT INSURANCE CORP Washington, DC 20006 Washington, DC 20570

801 17 Street, NW, Room 1096 F800.276.8329 or 202.408.2900 F800.736.2983 th

Washington, DC 20434-0001

F800.964.3342 Francine C. Eichler, Inspector General Philip Sunshine, Acting Inspector General

FEDERAL LABOR RELATIONS AUTHORITY NATIONAL SCIENCE FOUNDATION

Fred E. Wiederhold, Jr. 607 14 Street, NW, 2 Floor 4201 Wilson Boulevard, Room 1135 th nd

Inspector General Washington, DC 20424-0001 Arlington, VA 22230

AMTRAK F800.331.3572 F703.306.2004

10 G Street, NE, Suite 3W-300

Washington, DC 20002-4285 Tony P. Kominoth, Inspector General Victor Diamond, Inspector General

F800.468.5469 FEDERAL MARITIME COMMISSION PANAMA CANAL COMMISSION

800 N. Capitol St., Rm. 1054 Unit 2300

Hubert N. Sparks, Inspector General Washington, DC 20573 APO AA 34011-2300

APPALACHIAN REGIONAL COMMISSION F202.523.5865 F800.622.2625 ext. 272.7801

1666 Connecticut Ave., NW, Suite 215

Washington, DC 20235 Barry R. Snyder, Inspector General Charles D. Smith, Inspector General

F800.532.4611 FEDERAL RESERVE BOARD PEACE CORPS

Mail Stop 300 1111 20th Street, NW

A. Roy Lavik, Inspector General 20 St. and Constitution Ave., NW Washington, DC 20526 th

COMMODITY FUTURES TRADING COMMISSION Washington, DC 20551 F 800.233.5874

Three Lafayette Centre F800.827.3340 or 202.452.6400

1155 21 Street, NW Wayne Robert Poll, Inspector General st

Washington, DC 20581 Frederick J. Zirkel, Inspector General PENSION BENEFIT GUARANTY CORPORATION

F202.418.5510 FEDERAL TRADE COMMISSION 1200 K Street, NW, Suite 470

600 Pennsylvania Ave., NW Washington, DC 20005-4026

Mary B. Wyles, Inspector General Washington, DC 20580 F800.303.9737

CONSUMER PRODUCT SAFETY COMMISSION F202.326.2800

4330 East West Highway Walter Stachnik, Inspector General

Bethesda, MD 20814-4408 Robert G. Andary, Inspector General SECURITIES AND EXCHANGE COMMISSION

F301.504.0573 GOVERNMENT PRINTING OFFICE 450 Fifth Street, NW, Stop 1107

N. Capitol and H Streets, NW (Stop: IG) Washington, DC 20549

Kenneth Konz, Inspector General Washington, DC 20401 F202.942.4460

CORPORATION FOR PUBLIC BROADCASTING F800.743.7574

901 E Street, NW George T. Prosser, Inspector General

Washington, DC 20004-2006 Edouard R. Quatrevaux, Inspector General TENNESSEE VALLEY AUTHORITY

F800.599.2170 or 202.783.5408 LEGAL SERVICES CORPORATION 400 W. Summit Hill Drive, Room ET4C-K

750 First Street, NE, 10 Floor Knoxville, TN 37902-1499 th

Aletha L. Brown, Inspector General Washington, DC 20002-4250 F800.323.3835

EQUAL EMPLOYMENT OPPORTUNITY F800.678.8868 OR 202.336.8936

 COMMISSION Dev Jagadefan, Acting Inspector General

1801 L Street, NW, Suite 3001 Ralph E. McNamara, Acting Inspector General U.S. INTERNATIONAL TRADE COMMISSION

Washington, DC 20507 NATIONAL ARCHIVES AND RECORDS 500 E Street, SW, Room 515

F800.849.4230 or 202.663.7020 ADMINISTRATION Washington, DC 20436

8601 Adelphi Road, Room 1300 F800.500.0333

Eldon W. Stoehr, Inspector General College Park, MD 20740

FARM CREDIT ADMINISTRATION F800.786.2551 OR 301.713.7305 Karla W. Corcoran, Inspector General

1501 Farm Credit Drive, Suite 4100 UNITED STATES POSTAL SERVICE

McLean, VA 22102-5090 H. Frank Thomas, Inspector General 1735 N. Lynn Street

F800.437.7322 or 703.883.4316 NATIONAL CREDIT UNION ADMINISTRATION Arlington, VA 22209-2020

1775 Duke Street F888.USPS.OIG (888.877.7644)

Alexandria, VA 22314-3428

F800.778.4806 or 703.518.6357 John U. Sepulveda, Deputy Director

OFFICE OF PERSONNEL MANAGEMENT 

1900 E Street, NW,

Washington, DC 20415-0001
PCIE/ECIE: A PROGRESS REPORT TO THE PRESIDENT, FISCAL YEAR 1998 – PAGE 54 

GLOSSARY OF COMMON ACRONYMS AND ABBREVIATIONS

ACDA Arms Control and Disarmament Agency

ARC Appalachian Regional Commission

ATF Bureau of Alcohol, Tobacco and Firearms

CNS Corporation for National Service

CPB Corporation for Public Broadcasting

DCAA Defense Contract Audit Agency

DCIS Defense Criminal Investigative Service

DOC Department of Commerce

DOD Department of Defense

DOE Department of Energy

DOI Department of the Interior

DOJ Department of Justice

DOL Department of Labor

DOS Department of State

DOT Department of Transportation

ECIE Executive Council on Integrity and 

 Efficiency 

ED Department of Education 

EEOC Equal Employment Opportunity 

EPA Environmental Protection Agency 

FBI Federal Bureau of Investigation

FCA Farm Credit Administration

FCC Federal Communications Commission 

FDIC Federal Deposit Insurance Corporation

FEMA Federal Emergency Management Agency

FHFB Federal Housing Finance Board

FLRA Federal Labor Relations Authority

FRB Federal Reserve Board

FTC Federal Trade Commission

GAO General Accounting Office

GPO Government Printing Office

GPRA Government Performance and Results Act

GSA Government Services Administration

HHS Department of Health and Human 

 Services

HUD Department of Housing and Urban 

 Development

IG Inspector General

IGATI Inspectors General Audit Training 

 Institute

INS Immigration and Naturalization Service

IRS Internal Revenue Service

LSC Legal Services Corporation

NARA National Archives and Records 

 Administration

NASA National Aeronautics and Space 

 Administration

NEA National Endowment for the Arts

NEH National Endowment for the Humanities

NOAA National Oceanic and Atmospheric 

 Administration

NRC Nuclear Regulatory Commission

NSF National Science Foundation

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

PBGC Pension Benefit Guaranty Corporation

PC Peace Corps

PCC Panama Canal Commission

PCIE President’s Council on Integrity and 

 Efficiency

RRB Railroad Retirement Board

RTC Resolution Trust Corporation

SBA Small Business Administration

SEC Securities and Exchange Commission

SI Smithsonian Institution

SSA Social Security Administration

Treas Department of the Treasury

TVA Tennessee Valley Authority

USAID U.S. Agency for International 

 Development

USDA Department of Agriculture

USIA U.S. Information Agency

USITC U.S. International Trade Commission

USPS U.S. Postal Service

VA Department of Veterans Affairs

Y2K Year 2000