U.S. GOVERNMENT PUBLISHING OFFICE

31–119 PDF WASHINGTON : 2018

TOP MANAGEMENT AND PERFORMANCE CHALLENGES IDENTIFIED GOVERNMENT–WIDE BY 

THE INSPECTOR GENERAL COMMUNITY 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

APRIL 18, 2018 

Serial No. 115–80 

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

( 

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

http://oversight.house.gov 


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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

Trey Gowdy, South Carolina, Chairman 

John J. Duncan, Jr., Tennessee 

Darrell E. Issa, California 

Jim Jordan, Ohio 

Mark Sanford, South Carolina 

Justin Amash, Michigan 

Paul A. Gosar, Arizona 

Scott DesJarlais, Tennessee 

Virginia Foxx, North Carolina 

Thomas Massie, Kentucky 

Mark Meadows, North Carolina 

Ron DeSantis, Florida 

Dennis A. Ross, Florida 

Mark Walker, North Carolina 

Rod Blum, Iowa 

Jody B. Hice, Georgia 

Steve Russell, Oklahoma 

Glenn Grothman, Wisconsin 

Will Hurd, Texas 

Gary J. Palmer, Alabama 

James Comer, Kentucky 

Paul Mitchell, Michigan 

Greg Gianforte, Montana 

Elijah E. Cummings, Maryland, Ranking 

Minority Member 

Carolyn B. Maloney, New York 

Eleanor Holmes Norton, District of Columbia 

Wm. Lacy Clay, Missouri 

Stephen F. Lynch, Massachusetts 

Jim Cooper, Tennessee 

Gerald E. Connolly, Virginia 

Robin L. Kelly, Illinois 

Brenda L. Lawrence, Michigan 

Bonnie Watson Coleman, New Jersey 

Raja Krishnamoorthi, Illinois 

Jamie Raskin, Maryland 

Jimmy Gomez, Maryland 

Peter Welch, Vermont 

Matt Cartwright, Pennsylvania 

Mark DeSaulnier, California 

Stacey E. Plaskett, Virgin Islands 

John P. Sarbanes, Maryland 

SHERIA CLARKE, Staff Director 

ROBERT BORDEN, Deputy Staff Director 

WILLIAM MCKENNA, General Counsel 

DREW BANEY, Professional Staff Member 

KILEY BIDELMAN, Clerk 

DAVID RAPALLO, Minority Staff Director 


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C O N T E N T S 

Page 

Hearing held on April 18, 2018 .............................................................................. 1 

WITNESSES 

The Honorable Michael E. Horowitz, Chair, Council of the Inspectors General 

on Integrity and Efficiency, Inspector General, U.S. Department of Justice 

Oral Statement ................................................................................................. 4 

The Honorable Allison Lerner, Vice Chair, Council of the Inspectors General 

on Integrity and Efficiency, Inspector General, National Science Foundation 

Oral Statement ................................................................................................. 5 

Joint Written Statement of Mr. Horowitz and Ms. Lerner ........................... 8 

The Honorable Glenn Fine, Principal Deputy Inspector General, U.S. Department of Defense 

Oral Statement ................................................................................................. 14 

Written Statement ............................................................................................ 16 

APPENDIX 

DoD IG report titled, ‘‘The DoD Did Not Comply With the Improper Payment 

Elimination and Recovery Act in FY 2016,’’ submitted by Mr. Palmer ........... 58 


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TOP MANAGEMENT AND PERFORMANCE 

CHALLENGES IDENTIFIED GOVERNMENT– 

WIDE BY THE INSPECTOR GENERAL COMMUNITY 

Wednesday, April 18, 2018 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The committee met, pursuant to call, at 10:02 a.m., in Room 

2154, Rayburn House Office Building, Hon. Trey Gowdy [chairman 

of the committee] presiding. 

Present: Representatives Gowdy, Duncan, Jordan, Sanford, 

Amash, Massie, Meadows, DeSantis, Ross, Walker, Blum, Russell, 

Grothman, Hurd, Palmer, Cummings, Maloney, Norton, Lynch, 

Connolly, Kelly, Krishnamoorthi, Welch, DeSaulnier, and Sarbanes. 

Chairman GOWDY. The Committee on Oversight and Government 

Reform will come to order. 

Without objection, the presiding member is authorized to declare 

a recess at any time. 

I will now yield to the gentleman from Florida, my friend Mr. 

Ross, for an opening statement. 

Mr. ROSS. Thank you, Mr. Chairman. And I thank you for today’s 

hearing. 

The inspectors general conduct investigations and audits to prevent and detect waste, fraud, and mismanagement in their agencies’ programs. They help Congress shape legislation and to target 

our oversight and investigative activities. 

Since their creation 40 years ago, the IGs have proven to be one 

of Congress’ best investments. In the last fiscal year, the IG community used its $2.7 billion budget to identify potential cost savings to taxpayers totaling over $45 billion. That means that for 

every $1 in the total IG budget they identified approximately $17 

in savings. 

We have an opportunity today to hear from leaders in the IG 

community about the inefficiencies throughout the Federal Government—which inefficiencies cost taxpayers money. Specifically, we 

will discuss findings from a landmark report issued by the Council 

of the Inspectors General on Integrity and Efficiency, also known 

as CIGIE. The report is called ‘‘Top Management and Performance 

Challenges Facing Multiple Federal Agencies.’’ 

CIGIE compiled the Federal Government’s top performance and 

management challenges and distilled them down to seven categories. When they did that, some interesting trends emerged. For 


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instance, CIGIE found misallocation of resources and an inability 

to hire and retain top talent undermined the effectiveness of programs throughout the executive branch. CIGIE also found that a 

lack of performance-based metrics makes it difficult to assess the 

effectiveness of government programs. 

But the CIGIE report is just a downpayment on what will be a 

larger project to identify the root causes of the challenges we will 

be discussing today. The burden will then fall to us at the committee level to explore whether there exists any systemic issues 

that might best be addressed through government-wide policies. 

That is an issue that is squarely within our committee’s jurisdiction, and, as we will hear today, we have our work cut out for us. 

Today’s witnesses and the larger IG community they represent 

are the people on the front lines of the effort to rout out waste, 

fraud, and abuse throughout the Federal Government. These three 

widely respected inspector generals have spent years examining 

the programs at the Justice Department, the Defense Department, 

and the National Science Foundation. 

They also play key roles at the Council for the Inspectors General on Integrity and Efficiency. CIGIE serves a vital role in fostering a relationship between this committee, Congress, and the IG 

community. CIGIE is uniquely positioned to consolidate findings 

generated by the individual IGs and communicate that information 

to us, the policymakers. 

I commend Mr. Horowitz and his colleagues at CIGIE for taking 

the initiative to release this compendium of analysis for the first 

time. This report is extremely valuable, and I encourage you to continue to be proactive with respect to identifying government-wide 

trends. 

I thank the witnesses for appearing today, and I look forward to 

your testimony. 

I yield back. 

Chairman GOWDY. The gentleman from Florida yields back. 

The chair now recognizes the gentleman from Maryland, the 

ranking member, Mr. Cummings. 

Mr. CUMMINGS. Good morning. 

I want to start by congratulating the inspector general community on the 40th anniversary of the Inspector General Act and the 

10-year anniversary of establishing the Council on the Inspectors 

General for Integrity and Efficiency. 

In 2008, we here on the Oversight Committee passed the Inspector General Reform Act, which was sponsored by Oversight Committee member Jim Cooper, to establish CIGIE. One of our witnesses today, Michael Horowitz, serves as the Chair of CIGIE and 

has overseen significant changes aimed at making CIGIE and the 

Federal Government more accountable and more transparent. 

One example of the report CIGIE released this morning is very 

important. For the first time, this report provides a comprehensive 

review of the top challenges currently being faced by Federal agencies. Their report exemplifies CIGIE’s critical mission of examining 

systemic issues across the Federal Government. 

I know my Republican colleagues want to talk about former FBI 

Deputy Director Andrew McCabe, and that is all well and good. 

But we are now into year 2 of the Trump administration, and, at 


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some point, this committee will have to start conducting serious, 

credible oversight of the Trump administration. 

For example, CIGIE released a report today finding that one of 

the most serious issues facing CIGIE is a culture at agencies that 

negatively impacts their mission. I’ve often said that we must always be about the business of effectiveness and efficiency. 

The CIGIE report includes information from 61 different reports 

issued by IGs in 2017, the first year of the Trump administration. 

CIGIE reported, and I quote, ‘‘Many OIGs report that their agencies face challenges related to their agency’s culture, including ethical lapses, lack of accountability, lack of fiscal responsibility, lack 

of transparency and communication, resistance to change, and low 

morale,’’ end of quote. 

The IG for the Department of the Interior reported, and I quote, 

‘‘DOI continues to face challenges holding its employees, including 

senior officials, to the highest standards of ethical conduct, ensuring the consequences of wrongdoing are clearly understood, taking 

decisive actions to address unacceptable behavior, and providing 

relevant ethics training to all employees,’’ end of quote. 

It is Dr. King who said that, so often, silence becomes betrayal. 

Silence becomes betrayal. And apparently there are a number of 

people who do not want to be silent, and so they want to come to 

us as whistleblowers, in many instances, and come to CIGIE. And 

so you do play a very important role. 

These findings are deeply troubling, and they warrant rigorous 

and sustained oversight from our committee. Unfortunately, our 

Republican colleagues have blocked every single request we’ve 

made to issue subpoenas during the Trump administration, more 

than 30 in all. 

For example, Republicans blocked us from considering a subpoena to the Agriculture Department for documents relating to a 

senior adviser to the Secretary’s communications with the corporate lobbyists. They blocked us from debating and voting on a 

subpoena for documents relating to allegations of sexual assault 

and harassment by Customs and Border Patrol employees. They 

blocked us from considering subpoenas for documents and testimony related to Senior Adviser to the President Jared Kushner’s 

alleged conflicts of interest and security clearance issues. 

So, during the entire Trump administration, this committee has 

not issued a single subpoena, not one, to any Federal agency or any 

Federal official. And that’s not because we have suddenly had a 

massive increase in transparency and cooperation. Just the opposite. The Trump administration has withheld documents on dozens 

of topics, from the hurricanes in Puerto Rico and the United States 

Virgin Islands, to the first-class travel of the President’s top aides 

at taxpayers’ expense, to the lease of President Trump’s hotel in 

Washington, D.C., just a few blocks from where we sit this morning. 

The IGs testifying today and staff that support them do great 

work. And let me repeat that. We on this committee believe and 

know that you all do great work. And we really appreciate it. And 

if there were a time that we need you, we need you now. 

But they cannot do this work in a vacuum. Congress must fulfill 

its own constitutional duty to conduct oversight of the executive 


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branch. The entire system of oversight must work in order for the 

Federal Government to operate effectively and efficiently all the 

time. And so I hope that today’s hearing can be productive and will 

be a step in the right direction. 

And, Mr. Chairman, I failed to say it, but I want to thank you 

for holding this hearing. I also want to thank you for your courtesy 

to me, because, as I went through my ailments, you were constantly there for me. You switched the schedule so that you could 

accommodate me. You kept me informed of everything. You made 

sure that I was involved in everything that you did. And for that, 

I am truly grateful. 

With that, I yield back. 

Chairman GOWDY. The gentleman from Maryland yields back. 

I want to welcome all of our witnesses. I will introduce you as 

a group and then recognize you individually for your opening statements. 

First, we are pleased to have the Honorable Michael Horowitz, 

Chair of the Council of the Inspectors General on Integrity and Efficiency and Inspector General of the United States Department of 

Justice; the Honorable Allison Lerner, Vice Chair of the Council of 

the Inspectors General on Integrity and Efficiency and Inspector 

General of the National Science Foundation; and the Honorable 

Glenn Fine, Principal Deputy Inspector General at the United 

States Department of Defense. 

Welcome to each of you. 

Pursuit to committee rules, I’m going to administer an oath. So, 

if you would, please rise and lift your right hand. 

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

give shall be the truth, the whole truth, and nothing but the truth, 

so help you God? 

May the record reflect all witnesses answered in the affirmative. 

And they may take their seats. 

I know each of you is an old pro—or, I should say, a pro—at this, 

so you know what the time lights mean: green, fire away; yellow, 

get under the light as quick as you can; red, hope you don’t see 

blue lights. 

So, against that backdrop, we will recognize you, Inspector General Horowitz. 

WITNESS STATEMENTS 

STATEMENT OF THE HON. MICHAEL E. HOROWITZ 

Mr. HOROWITZ. Thank you, Mr. Chairman, Ranking Member 

Cummings, members of the committee. Thank you for inviting me 

to testify at today’s important hearing. 

This year marks the 40th anniversary of Congress’ passage of the 

Inspector General Act. Over those 40 years, the IG community has 

conducted independent oversight of government programs to rout 

out waste, fraud, and abuse and to ensure that the organizations 

we oversee spend tax dollars more effectively and efficiently. 

In fiscal year 2016 alone, as Congressman Ross indicated, IGs 

identified about $45 billion in potential savings, or roughly a $17 

return for every dollar Congress invested in IG budgets. 


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This year also marks the 10-year anniversary since Congress, 

under this committee’s leadership, as Congressman Cummings 

pointed out, created the Council of the Inspectors General on Integrity and Efficiency, which brought together all 73 Federal IGs into 

one organization. 

One of the Council’s mandates is to address integrity, economy, 

and effectiveness issues that transcend individual government 

agencies. The Council is actively pursuing this mandate. At the 

start of the fiscal year, we launched oversight.gov, a website where 

the public can find in one place all publically issued IG reports in 

fully searchable formats. 

And, this morning, the Council issued its first-ever report on the 

most frequently cited management and performance challenges facing the Federal Government, as determined by the IG community 

in their individual top management and performance challenges reports in 2017. 

The report, which can be found at oversight.gov, identifies seven 

challenges, which IG Lerner will discuss in more detail during her 

testimony. Those seven challenges are: information technology security and management, performance management and accountability, human capital management, financial management, procurement management, facilities management, and grant management. 

A number of other extremely important challenges, such as national security, public safety, and public health, are not included in 

the list, primarily because only a limited number of IGs have oversight responsibility in those areas. Their absence certainly does not 

reflect a qualitative judgment about the impact or importance of 

those challenges. 

Rather, we believe the Council’s effort to identify the most common government-wide challenges will inform the public and policymakers in the executive and legislative branches by identifying 

broad categories of challenges shared by the majority of Federal 

agencies, notwithstanding vast differences in their sizes and missions. They will also help the IG community as we plan our oversight work going forward. 

The Council and the IG community looks forward to undertaking 

additional important initiatives on behalf of the public we serve. As 

the public’s watchdogs, we will not waiver from our 40-year commitment to strong and independent oversight that helps promote 

effective and efficient government. 

Thank you again for this committee’s strong bipartisan support 

for our community, and I look forward to answering any questions 

the committee may have. 

Chairman GOWDY. Thank you, Mr. Inspector General. 

Inspector General Lerner? 

STATEMENT OF THE HON. ALLISON LERNER 

Ms. LERNER. Chairman Gowdy, Ranking Member Cummings, 

and members of the committee, thank you for inviting me today to 

discuss the top government-wide management and performance 

challenges identified by the IG community. Our report focuses on 

the top 7 challenges most frequently reported by 61 statutory IGs 

in 2017. I’ll briefly discuss each challenge. 


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First, information technology security and management is a serious, longstanding challenge. Agencies need reliable and secure IT 

systems to perform their mission-critical functions, yet across government we identified problems in key areas, including the protection of sensitive data and information systems from cyber attacks, 

modernizing and managing IT systems, ensuring continuity of operations, and recruiting and retaining a highly skilled 

cybersecurity workforce. Resource constraints and a shortage of 

cybersecurity professionals contribute to these challenges. 

The second most reported challenge was performance management and accountability. Although Federal agencies vary greatly in 

size and mission, they face common challenges in improving performance in agency programs and operations. The key areas of concern we identified included collecting and using performance-based 

metrics; overseeing private-sector products or services that could 

affect human health, safety, or the economy; and aligning agency 

operations to agency-wide goals. 

Third, human capital management is a significant challenge that 

affects the ability of Federal agencies to meet their performance 

goals and efficiently carry out their missions. We identified key 

challenges including inadequate funding and staffing; problems recruiting, training, and retaining qualified staff; agency cultures 

that negatively affect the agency’s mission; and a lack of succession 

planning. 

The fourth most reported challenge was financial management, 

which covers a broad range of functions such as program planning, 

budgeting, accounting, audit, and evaluation. Weaknesses in any of 

these issues limit an agency’s ability to ensure that taxpayer funds 

are being used efficiently and effectively. To mitigate risks to Federal programs and operations, agencies need to improve their financial reporting and systems and to prevent and reduce improper 

payments. Estimates of improper payments totaled about $141 billion in fiscal year 2017. 

The fifth challenge, procurement management, encompasses the 

entire procurement process, from pre-award planning to post-award 

contract administration. In fiscal year 2017, the Federal Government awarded more than $500 billion in contracts. Many Federal 

agencies rely heavily on contractors to perform their missions; as 

a result, weaknesses in procurement planning, oversight of contractors’ performance, and staff training placed potentially billions of 

taxpayer dollars at risk. 

The sixth most reported challenge was facilities maintenance. 

Agencies face challenges ensuring that their facilities stay in proper condition and remain capable of fulfilling the government’s 

needs. IGs have identified insufficient funding as the primary reason why agencies fail to maintain and improve their equipment 

and infrastructure. The key areas of concern we identified included 

the increased likelihood of mission failure and the higher overall 

cost of deferred maintenance. 

The seventh and final challenge, grant management, involves the 

process used by Federal agencies to award, monitor, and measure 

the success of grants. Deficiencies in any of these areas can lead 

to misspent funds and ineffective programs. In fiscal year 2018, 

Federal agencies are expected to spend more than $700 billion 


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through grants to State and local governments, colleges and universities, and community organizations, among others. The key 

areas of concerns we identified include ensuring grant investments 

achieve intended results, overseeing the use of grant funds, and obtaining timely and accurate financial and performance information 

from grantees. 

While we couldn’t make conclusive determinations with respect 

to the underlying causes of these challenges, the report notes that 

many were affected by resource issues, both human and budgetary, 

and by Federal agencies’ failure to use to use performance-based 

metrics to assess the success of their programs and operations. By 

consolidating these challenges, we hope to help policymakers determine how best to address them in the future. 

This concludes my prepared statement. Thank you again for the 

strong support of our community’s work. And I’d be pleased to answer any questions you have. 

[Prepared joint statement of Mr. Horowitz and Ms. Lerner follows:] 


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Statement of Michael E. Horowitz 

Chair, Council of the Inspectors General on Integrity and Efficiency 

Inspector General, U.S. Department of Justice 

and 

Allison C. Lerner 

Vice Chair, Council of the Inspectors General on Integrity and Efficiency 

Inspector General, National Science Foundation 

before the 

U.S. House of Representatives 

Committee on Oversight and Government Reform 

concerning 

"Top Management and Performance Challenges Identified Government-wide by the 

Inspector General Community" 

April 18, 2018 
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Mr. Chairman, Ranking Member Cummings, and Members of the Committee: 

Thank you for inviting us today to discuss management and performance 

challenges facing many agencies in the federal government. Hundreds of billions of 

taxpayer dollars are spent annually on federal programs to enforce the nation's 

laws, protect national security, promote public health and safety, and protect the 

nation's critical infrastructure. Federal agencies and organizations that receive 

federal funds must use tax dollars efficiently and effectively to accomplish their 

missions. To assist agencies in this effort, the 73 independent federal Inspectors 

General (IG) across the federal government root out waste, fraud, abuse, and 

mismanagement in government programs. 

This is a landmark year for the Inspector General community as we celebrate 

40 years since Congress passed the Inspector General Act of 1978. Since 1978, 

the IG community has conducted independent oversight of government programs 

and provided recommendations to ensure that the organizations we oversee spend 

taxpayer dollars more efficiently and effectively. In fiscal year (FY) 2016 alone, IGs 

identified approximately $45.1 billion in potential savings of tax dollars. The OIG 

community's aggregate FY 2016 budget is approximately $2.7 billion. Accordingly, 

the potential savings identified by IGs represent about a $17 return on investment 

for every dollar invested in the IGs by the taxpayers. 

In 2018, the IG community is also celebrating 10 years since Congress, 

under this Committee's leadership, created the Council of the Inspectors General on 

Integrity and Efficiency (CIGIE). In creating CIGIE, Congress mandated that we 

address integrity, economy, and effectiveness issues that transcend individual 

government agencies. We are proud to report that CIGIE is actively pursuing this 

mandate. Today, CIGIE issued its first-ever, IG community-wide report to identify 

and analyze the top management and performance challenges facing the federal 

government. Before turning to the report's content, we want to highlight other 

recent CIGIE initiatives to enhance the government-wide impact of our work by 

working together as a community. 

Recent CIGIE Initiatives 

First, we recognize that the oversight work of CIGIE and individual IGs is 

more impactful when the public and all of our stakeholders, including Congress, can 

easily access our reports. To that end, CIGIE partnered with its member IGs to 

develop and launch in October 2017 a new website, Oversight.gov. The website 

provides a searchable public database for IG reports from across the federal 

government. The launch of Oversight.gov marked a significant step toward greater 

transparency and accessibility for IG reports and information. The site provides 

easy on-line access to the IG community's efforts to address the most serious 

challenges facing the country. For example, users can search for terms such as 

"cyber security," "disaster recovery spending," "terrorism," or "whistleblowers" and 

find the community's collective work on these and other subjects, without having to 

visit each IG's website individually. We encourage readers who are interested in 

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the work of the federal IG community to go to that website and follow CIGIE on 

twitter (@OversightGov). 

The IG community developed Oversight.gov with no direct funding, and 

CIGIE continues to operate it without the benefit of an annual appropriation. For 

CIGIE to ensure the long-term viability of the website, limited additional resources 

via a modest direct appropriation to CIGIE would be necessary. With such support, 

CIGIE could not only maintain this site, but also build additional features that could 

result in further cost savings for agencies, and greater transparency into the IG 

community's collective work. For example, Members of Congress and outside 

stakeholders have proposed expanding Oversight.gov by adding a dynamic 

database that consolidates in one place all open IG recommendations and creating, 

in conjunction with the Office of Special Counsel, a single, cross-agency reporting 

mechanism for whistleblower disclosures and complaints. We believe these ideas 

are worthy of serious consideration and could be accomplished with a modest 

appropriation for CIGIE. 

Second, CIGIE is identifying solutions for critical issues that require multiagency solutions. In December, CIGIE issued a statutorily-required report that 

identified critical issues involving the jurisdiction of more than one individual federal 

agency, and which could be better resolved through greater coordination and 

cooperation between individual OIGs. This report can be found at the following 

link: https: //www. ignet.gov /sites/default/files/files/Critical Issues ReportDecember-2017.pdf. Other examples of CIGIE reports on specific issues that touch 

multiple jurisdictions, and which are available at www.ignet.gov, include reviews of 

services and funding for Native Americans and Alaskan Natives, security of publicly 

facing web applications, and cloud computing. 

Finally, many cross-cutting and exciting CIGIE projects are still in progress. 

For example, CIGIE reactivated its Disaster Assistance Working Group after 

Congress appropriated $26.1 billion to the Disaster Relief Fund following the 

damage caused by Hurricanes Harvey, Irma, and Maria. This Working Group 

coordinates the federal IG community's oversight efforts of these and any other 

disaster-related funds. Additionally, the Working Group meets with the 

Government Accountability Office's (GAO) leadership to coordinate GAO's and the 

IG community's disaster oversight efforts. And, on Oversight.gov, we have created 

a webpage with a list of ongoing OIG oversight work. We hope to expand this 

resource to provide taxpayers with immediate access to IG reports and information 

about the tens of billions of dollars being spent, and to better ensure that the funds 

are being spent on projects to rebuild the communities and not subject to waste or 

abuse. 

Top Management and Performance Challenges Identified 

Government-wide by the Inspector General Community 

Today, CIGIE issued a report, which can be found on Oversight.gov, 

representing yet another effort to identify issues that transcend federal agencies 

and make the work of the federal IG community more accessible to the public. In 

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this report, CIGIE identified the most frequently cited management and 

performance challenges in IGs' Top Management and Performance Challenges 

(TMPC) reports. For nearly 20 years, many IGs have used these reports to identify 

the most critical, systemic problems in the agency they oversee. 

All of the IG's testifying today can speak in great detail about the specific 

challenges facing their individual agencies. To no one's surprise, many of the 

issues facing our individual agencies, large or small, are present throughout the 

government. Recognizing this, we decided to create an IG community report to 

identify the most common management challenges. For the first time, Congress 

and the public will be able to review information about, analyses of, and links to the 

61 publicly available TMPC reports issued by the federal IGs in 2017. 

To identify the most frequently reported challenges, we reviewed the 61 

publicly available TMPC reports that were issued by federal, statutory IGs in 2017. 

Based on our review, we identified seven challenges that were most frequently 

reported across OIGs: 

• Information Technology Security and Management; 

• Performance Management and Accountability; 

• Human Capital Management; 

• Financial Management; 

Procurement Management; 

• Facilities Maintenance; and 

• Grant Management. 

A number of extremely important challenges, such as national security, 

public safety, and public health did not rank among the challenges most frequently 

reported by the 61 OIGs, primarily because only a limited number of OIGs have 

oversight responsibilities in these areas. Their absence in this report does not 

reflect a qualitative judgment about the impact or importance of these challenges. 

But, the exercise in identifying the most common challenges helps us to better 

understand the issues that have a true and cross-cutting government-wide impact. 

We hope that this report will inform policymakers and the public by 

identifying broad categories of challenges shared by the majority of federal 

agencies, notwithstanding vast differences in the agencies' size and mission. 

Information Technology Security and Management 

The information technology (IT) security and management challenge includes 

TMPC challenges related to (1) the protection of federal IT systems from intrusion 

or compromise by external or internal entities and (2) the planning and acquisition 

for replacing or upgrading IT infrastructure. This is a long-standing, serious, and 

ubiquitous challenge for federal agencies across the government, because agencies 

depend on reliable and secure IT systems to perform their mission-critical 

functions. The security and management of government IT systems remain 

challenges due to significant impediments faced by federal agencies, including 

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resource constraints and a shortage of cybersecurity professionals. The key areas 

of concern we identified included safeguarding sensitive data and information 

systems, networks, and assets against cyber-attacks and insider threats; 

modernizing and managing federal IT systems; ensuring continuity of operations; 

and recruiting and retaining a highly skilled cybersecurity workforce. 

Performance Management and Accountability 

The performance management and accountability challenge includes 

challenges related to managing agency programs and operations efficiently and 

effectively to accomplish mission-related goals. Although federal agencies vary 

greatly in size and mission, they face some common challenges in improving 

performance in agency programs and operations. The key areas of concern we 

identified included collecting and using performance-based metrics; overseeing 

private-sector corporations' impact on human health, safety, and the economy; and 

aligning agency component operations to agency-wide goals. 

Human Capital Management 

The human capital management challenge includes TMPC challenges related 

to recruiting, managing, developing, and optimizing agency human resources. 

Human capital management is a significant challenge that impacts the ability of 

federal agencies to meet their performance goals and to execute their missions 

efficiently. The key areas of concern we identified included inadequate funding and 

staffing; recruiting, training, and retaining qualified staff; agency cultures that 

negatively impact the agency's mission; and the impact of the lack of succession 

planning and high employee turnover. 

Financial Management 

The financial management challenge includes challenges related to a broad 

range of functions, from program planning, budgeting, and execution to accounting, 

audit, and evaluation. Weaknesses in any of these functional areas limit an 

agency's ability to ensure that taxpayer funds are being used efficiently and 

effectively and constitute a significant risk to federal programs and operations. The 

key areas of concern we identified included both the need for agencies to improve 

their financial reporting and systems, and the significant amount of dollars federal 

agencies lose through improper payments. 

Procurement Management 

The procurement management challenge encompasses the entire 

procurement process, including pre-award planning, contract award, and postaward contract administration. Given that the federal government awarded over 

$500 billion in contracts in FY 2017, the fact that many federal agencies face 

challenges in procurement management indicates that billions of taxpayer dollars 

may be at increased risk for fraud, waste, abuse and mismanagement. Further, 

many federal agencies rely heavily on contractors to perform their missions and, as 

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a result, the failure of a federal agency to efficiently and effectively manage its 

procurement function could also impede the agency's ability to execute its mission. 

The key areas of concern we identified included weaknesses with procurement 

planning, managing and overseeing contractor performance, and the training of 

personnel involved in the procurement function. 

Facilities Maintenance 

Federal agencies face challenges ensuring that their facilities stay in proper 

condition and remain capable of fulfilling the government's needs. Throughout the 

federal government, DIGs have identified insufficient funding as the primary reason 

why agencies fail to maintain and improve their equipment and infrastructure. 

Without additional funding for required maintenance and modernization, it is 

unclear how agencies will manage the challenges of equipment and infrastructure 

that are simultaneously becoming costlier and less effective. The key areas of 

concern we identified included the increased likelihood of mission failure and the 

higher overall cost of deferred maintenance. 

Grant Management 

The grant management challenge includes challenges related to the process 

used by federal agencies to award, monitor, and assess the success of grants. 

Deficiencies in any of these areas can lead to misspent funds and ineffective 

programs. As proposed in the President's budget for FY 2018, federal agencies will 

spend more than $700 billion through grants to state and local governments, nonprofits, and community organizations to accomplish mission-related goals. 

However, the increasing number and size of grants has created complexity for 

grantees and made it difficult for federal agencies to assess program performance 

and conduct oversight. The key areas of concern we identified were similar to 

challenges already described above, but OIGs reported grant management as a 

TMPC with sufficient frequency that it ranked as a separate, freestanding challenge. 

These concerns included ensuring grant investments achieve intended results, 

overseeing the use of grant funds, and obtaining timely and accurate financial and 

performance information from grantees. 

Thank you again for your strong bipartisan support for our work, and we look 

forward to working with the Congress and the Administration as the IG community 

continues its crucial oversight mission on behalf of the public. This concludes our 

prepared statement, and we would be pleased to answer any questions that you 

may have. 

6 
14 

Chairman GOWDY. Thank you, Madam Inspector General. 

Inspector General Fine? 

STATEMENT OF THE HON. GLENN FINE 

Mr. FINE. Chairman Gowdy, Ranking Member Cummings, and 

members of the committee, thank you for inviting me to appear before you today, along with my IG colleagues, to discuss our top 

management challenges. We all appreciate the committee’s longstanding support for and interest in the important work of IGs. 

The DOD OIG’s annual report on the DOD’s top management 

challenges is a critical tool that we use to perform our important 

oversight mission, which is to detect and deter waste, fraud, and 

abuse in DOD programs and operations; to promote the economy, 

efficiency, and effectiveness of the DOD; and to help ensure ethical 

conduct throughout the DOD. That is a significant challenge given 

the size, complexity, and importance of DOD operations. 

Our annual ‘‘Top Management Challenges’’ reports help us to 

perform our mission. Preparing our report is a team effort that 

draws upon the expertise and judgment of many individuals 

throughout our organization, some of whom are here today. 

We identify the challenges based on a variety of factors, including OIG oversight work, oversight conducted by other DOD components, GAO and other IG reports, congressional testimony, and 

other important documents. We also seek input from DOD leaders 

on what they consider to be the top challenges they face. But we 

identify our top challenges independently, based on our own judgment. 

We do not simply draft this document as a paper or compliance 

exercise. Rather, we use our report to identify key areas of risk in 

the DOD and to decide where to allocate our oversight resources. 

We also try to ensure that each DOD top challenge receives some 

oversight coverage, and we therefore link our annual oversight plan 

to the top DOD challenges. 

In addition, we provide our report to new leaders when they arrive at the DOD. We believe it provides them a useful summary on 

risk areas, and we have received many positive responses from 

them on the report’s value. 

I want to now turn to the top DOD challenges that we identified 

for fiscal year 2018: one, countering strategic challenges from 

North Korea, Russia, China, Iran, and transnational terrorism; 

two, addressing challenges in overseas contingency operations in 

Iraq, Syria, and Afghanistan; three, enabling effective acquisition 

and contract management; four, increasing cybersecurity and cyber 

capabilities; five, improving DOD financial management; six, maintaining the nuclear enterprise; seven, optimally balancing readiness, modernization, and force structure; eight, ensuring ethical 

conduct; nine, providing effective, comprehensive, and cost-effective 

healthcare; ten, identifying and implementing efficiencies in the 

DOD. 

Some on our list of top DOD challenges overlap with CIGIE’s list. 

For example, the CIGIE report identifies financial management as 

a challenge, as do we. The DOD is undergoing a full financial statement audit for the first time, this year. Inaccurate or incomplete 

DOD financial statements impairs the DOD’s ability to provide reliVerDate Nov 24 2008 09:49 Sep 11, 2018 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 H:\31119.TXT APRIL

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able, timely, and useful financial information to support operating, 

budgeting, and policy decisions. 

The CIGIE report also identifies procurement management as a 

crosscutting challenge facing Federal agencies. We do also. For the 

DOD, delivering weapons and technology systems on time and 

within budget continues to pose major management challenges. 

Some DOD challenges do not overlap with CIGIE’s list. For example, addressing challenges in overseas contingency operations is 

a key challenge for the DOD. The DOD IG is currently designated 

as the lead IG for three overseas contingency operations: Operation 

Inherent Resolve, the effort to degrade and defeat ISIS in Iraq and 

Syria; Operation Freedom Sentinel, the effort to build partner capacity within the Afghan National Defense and Security Forces and 

to counter terrorism in Afghanistan; and Operation Pacific Eagle, 

the effort to support the Philippines’ fight against ISIS and other 

extreme groups. 

Another DOD challenge, which is not unique to the DOD, is ensuring ethical conduct. Any ethical failures by DOD officials can 

undermine public confidence in the DOD. At its core, ethical misconduct violates DOD core values and high standards of integrity 

expected of DOD personnel. Therefore, DOD leaders continually 

strive to deter and prevent ethical lapses in misconduct and hold 

accountable those individuals who violate the law or other ethical 

requirements. 

Finally, we are now in the process of reassessing the DOD’s top 

management challenges for fiscal year 2019. We fully expect that 

certain challenges will remain, and we will continue to assess 

emerging challenges to make our report forward-looking. 

In closing, I want to thank the committee again for your support, 

for holding this hearing, and for asking me to discuss the DOD’s 

top management challenges. That concludes my statement, and I 

would be glad to answer any questions. 

[Prepared statement of Mr. Fine follows:] 


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INSPECTOR GENERAL 

U.S. Department of Defense 

Statement of Glenn A. Fine 

Department of Defense 

Principal Deputy Inspector General, 

Performing the Duties of the Inspector General 

for a bearing on 

Before the 

Committee on Oversight and Government Reform 

U.S. House of Representatives 

April18, 2018 
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Chairman Gowdy, Ranking Member Cummings, and members of the committee. Thank 

you for inviting me to appear before you today, along with my Inspector General (!G) colleagues 

who lead the Council oflnspectors General on Integrity and Efficiency (CIGIE). We are all 

appreciative of the committee's longstanding interest in, and support for, the important work of 

!Gs. 

In this statement, I will discuss the Department of Defense Office of Inspector General's 

(DoD 010) report on the "Top DoD Management Challenges- Fiscal Year 2018" I defer to my 

colleagues' joint statement to provide an overview and key information on the C!GIE report 

being released today, entitled "ClGIE Report on Top Management and Performance Challenges 

Facing Multiple Federal Agencies." I will focus my testimony this morning on the DoD OIG's 

Top Management Challenges Report. I will provide the committee a brief description of how we 

create the report, what we use it for, what the challenges are, as well as a brief description of a 

few of these challenges. 

Creation of the DoD OIG's Top Management Challenges Report 

The Reports Consolidation Act of 2000 requires each federal!G to prepare an annual 

statement that summarizes what the IG considers the "most serious management and 

performance challenges facing the agency." According to that Act, our summary of the Top 

DoD Management Challenges is required to be included in the DoD's Annual Financial Report. 

We believe this is an important requirement. The preparation of our report helps the DoD 

OIG to more effectively fulfill our critical mission, which is to detect and deter waste fraud and 

abuse in DoD programs and operations; to promote the economy, efficiency, and effectiveness of 

DoD programs; and to help ensure ethical conduct throughout the DoD. 

That mission is a challenging task for the DoD OIG, given the size, breadth and 

importance of DoD operations. The budget of the DoD is now approximately $700 billion 

annually. The DoD has $2.4 trillion in assets. Including active duty and reserve military 

members, and civilian personnel, the DoD has more than 3 million individuals in it. The DoD is 

now engaging in several overseas contingency operations, including the effort to defeat the 

Islamic State of Iraq and the Levant (ISIS) and other extremist groups in Iraq, Syria, 

Afghanistan, and elsewhere. 

The DoD OIG provides oversight throughout the DoD. To perform our mission, the DoD 

OIG employs approximately 1700 employees and contractors. That may sound like a lot of staff, 

but it is not, given the size, scope, and complexity of the DoD. 

In addition to performing this oversight, we also have the responsibility to provide 

guidance, oversight, and policy for more than 15,000 Military Service and Defense Agency 

oversight employees, including Service lOs and Auditors General, Defense Agency IGs, DoD 

Military Criminal Investigative Organizations, Defense Intelligence Agency IGs, and other 

auditors, evaluators, and investigators throughout the DoD. 

I have been in the !G community for almost 20 years. For eleven years I was the 

Department of Justice Inspector General (from 2000 to 2011), and now, for more than two years 

performing the duties of the Acting Inspector General of the DoD. I believe that lOs provide 

important oversight throughout the federal government, and I am proud of the accomplishments 
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of many !Gs. It is not a job designed to make us popular. But we can provide tremendous value 

and play an important role in improving government operations. 1 

The annual statement describing the top management challenges facing our agencies is a 

critical tool in performing our missions. Preparing our annual summary of the Top DoD 

Management Challenges is a DoD OIG team effort that draws upon the expertise, judgment, and 

talent of many individuals throughout our organization. They have vast experience in providing 

oversight of DoD operations, and they usc that knowledge in identifying and describing the top 

challenges each year. 

They identify the top DoD management and performance challenges based on a variety 

of factors, including DoD OIG oversight work and research; oversight work conducted by other 

DoD components; oversight work conducted by the Governmental Accountability Office (GAO); 

congressional testimony; and other important documents, such as the National Security Strategy 

and the DoD National Defense Strategy. 

We also seek input from DoD leaders on what they consider to be the top challenges they 

face. While we consider their input, we identify the top management challenges independently, 

based on our own judgment. 

DoD OIG's Use of Top Management Challenges Report 

We do not simply draft this document as a paper or compliance exercise for inclusion in 

the DoD's Annual Financial Report. Rather, in recent years we have used our Top DoD 

Management Challenges report as an important research and planning tool to identify areas of 

risk in DoD operations and to decide where to allocate our limited oversight resources. We 

consider whether each proposed planned audit or evaluation would examine an aspect of one of 

the top challenges. We also ensure that each Top DoD challenge receives some oversight 

coverage. When we compile our annual Oversight Plan, we link the plan to the Top DoD 

Management Challenges. For that reason, in our annual oversight plan, we include our 

description of the top challenges facing the Department, and then we list each audit or evaluation 

that we intend to conduct under the challenge to which it pertains. 2 

Because our summary oftop management challenges is forward looking and outlines the 

most significant management and performance challenges facing the DoD now and in the future, 

we recently changed the title of the report. In the past, we titled our document with the fiscal 

year for the financial statements when the top challenges were published. Now, we title the 

1 To describe the principles that I believe are important for the DoD OIG- as well as for other OIGs ~~to fulfill our 

mission effectively, I recently wrote two articles entitled "The Seven Principles of Highly Effective Inspectors 

General/' and a second article entitled "Seven Additional Principles of Highly Effective Inspectors General." I 

believe these principles apply to the work of tGs throughout government. The articles are available at: 

http:/!www.!aw.columbia.edu/sites/default/files/microsites/public-integrtty/348650509-seven-principles-ofhighly-effective-inspectors-general.pdf and http://www.law.columbia.edu/sltes/default/files/microsites/publicintegrity/seven additional principles of highly effective inspectors general.pdf 

2 The !ink to our latest oversight plan, which incorporates the Top DoD Management Challenges Is at: 

http:/Jwww .dodig. mil/reports.html/Article/1377277/fiscal-year-2018-oversight-plan/ 
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document with the fiscal year to which the challenges pertain. As a result, our 2018 summary of 

Top DoD Management Challenges was included in the FY 2017 DoD Agency Financial Report 

that was published in the fall of2017. 

In addition, we now routinely provide our Top DoD Management Challenges report to 

new leaders when they arrive at the DoD. We believe this report provides them insight and a 

useful summary on what we see as risk areas within the DoD that they will be responsible for 

addressing. We have received many positive responses from the new leaders on the report's 

value. 

FY 2018 Top DoD Management Challenges 

I want to now turn to a brief description of the top management and performance 

challenges facing the DoD that we identified for FY 20183 They are: 

1. Countering Strategic Challenges: North Korea. Russia, China, Iran, and Transnational 

Terrorism 

2. Addressing Challenges in Overseas Contingency Operations in Iraq, Syria, and 

Afghanistan 

3. Enabling Effective Acquisition and Contract Management 

4. Increasing Cyber Security and Cyber Capabilities 

5. Improving Financial Management 

6. Maintaining the Nuclear Enterprise 

7. Optimally Balancing Readiness, Modernization, and Force Structure 

8. Ensuring Ethical Conduct 

9. Providing Effective, Comprehensive, and Cost Effective Health Care 

I 0. Identifying and Implementing Efficiencies in the DoD 

First, it is important to note that these challenges are not necessarily in order of 

importance- they are all critical challenges that impact the DoD. 

Second, by including these challenges on the list, we are not saying that the DoD is not 

taking steps to address them. In each challenge, we provide a description of the challenge, 

progress the DoD has made in meeting the challenge, areas where more progress is needed, and 

descriptions of DoD OIG and other oversight work relating to the challenge. 

Third, many of the challenges are long-standing, difficult challenges that will endure. 

Each year, however, we eliminate or consolidate some challenges, and add new ones. 

In my testimony this morning, I will not describe all ten of the Top DoD Management 

Challenges identified above. Rather, I will discuss challenges that are included in the CIG!E 

report, a challenge that is not in the CTGIE report but affects other CTGIE members, and some of 

the DoD specific challenges. While I will only highlight a few challenges in my testimony, I 

would be glad to answer Committee questions on any of them. 

3 The link to our latest Top DoD Management Challenges report is at: 

http://www.dodig.ml!lreports,htmi/Article/1377306/top-dod-management-challenges-fiscal-year-2018/ 
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Many of the DoD's top challenges overlap with, and are reflected in, CIGIE's list. For 

example, the CIGIE report identifies financial management as a challenge, as does the DoD OIG. 

The DoD is the only Federal agency that has never undergone a full financial statement audits. 

The lack of a clean audit opinion on DoD financial statements is the major impediment to a 

successful audit of the U.S. Government. Long-standing DoD financial management challenges 

also continue to impair the DoD's ability to provide reliable, timely, and useful financial and 

managerial information to support reported financial statement balances. Additionally, the lack 

of reliable financial information prevents its full use in operating, budgeting, and policy 

decisions. 

The DoD's financial management challenges involve a complex array of issues, including 

maintaining documentation that supports recorded transactions; recording timely and proper 

accounting entries; maintaining a valid universe of transactions; operating with many 

decentralized and noncompliant information technology systems; accurately documenting 

business processes; implementing strong internal controls over accounting data and business 

operations; and eliminating the need for journal vouchers to force agreement of budgetary, 

financial, and accounting transactions and balances. 

Earlier this year, the DoD certified that is was ready to initiate its first full financial 

statement audits and currently those audits are underway, but it is not likely that the DoD will 

receive a clean opinion this first year. The key for the DoD is to take timely corrective action on 

the deficiencies that will be identified in the audits, and to use the audits to improve financial 

management throughout the DoD. That is important for several reasons: 

to ensure that the Congress and the taxpayer know how the DoD is spending 

appropriated money; 

to provide the DoD more accurate financial information, which can help deter 

waste, fraud, and abuse; 

to provide greater visibility to DoD management on the location and amount of its 

property, equipment, munitions, and spare parts, which can avoid waste and 

inefficiencies; 

to ensure that DoD infonnation technology systems, including financial systems, 

have adequate cybersecurity; and 

to help the DoD more efficiently and effectively manage DoD operations. 

Several other DoD top challenges also overlap with some of the challenges on CIGIE's 

list. For example, the CIGIE report includes "Information Technology Security and 

Management" as a challenge identified by other !Gs. Our report also identifies cyber security 

and cyber capabilities challenges that face the DoD. Both the CIGlE report and our Top DoD 

Management Challenges specifically note a shortage of qualified cybersecurity professionals 

within the federal government, and the competition with private industry to recruit and retain 

these professionals is acute. For the DoD, the shortage of cybersecurity staff can directly impact 

national security and the DoD's capacity to protect its networks from malicious cyber attacks. 

Although our report states that the DoD has made gains in growing the DoD's cybersecurity 

workforce, attracting and retaining a skilled cyber workforce remains a significant challenge. 

The CIGIE report also identifies Procurement Management and Grant Management as a 

cross cutting challenge facing federal agencies. The DoD is the largest employer and purchaser 

4 
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of goods and services in the federal government through contracts each year. For the DoD, 

acquisition and contract management have been identified high-risk areas for many years. 

Delivering weapons and technology systems on time and within budget continues to pose major 

management challenges for the DoD. Although Congress and the DoD have initiated reforms 

designed to improve the acquisition of major weapon systems, our report notes that many DoD 

programs fall short of cost, schedule, and performance expectations. As a result, the DoD often 

pays more than anticipated, buys less than expected, and in some cases delivers less capability 

than the DoD requires. 

Compounding the acquisition and contracting challenges is the external threats targeting 

U.S. technologies-specifically, foreign attempts to obtain sensitive or classified information 

and technologies. The DoD must prevent the illegal transfer of operational and defense 

technologies. 

Some top challenges we have identified in the DoD do not overlap with CIGIE's list 

because of the nature of DoD's operations. For example "Addressing Challenges in Overseas 

Contingency Operations in Iraq, Syria, and Afghanistan" is a key challenge for the DoD. 

To provide comprehensive, coordinated, and whole-of-govcmment oversight for OCOs, 

Congress enacted Section 8L of the Inspector General Act, as amended in 2013. Under this 

provision, CIG!E must designate a Lead IG from among the DoD IG, the Department of State 

IG, or the U.S. Agency for International Development IG to serve as the Lead JG to coordinate 

oversight and report on named OCOs. 

The DoD IG is currently designated as the Lead IG for three OCOs: Operation Inherent 

Resolve (the effort to degrade and defeat ISIS in Iraq and Syria); Operation Freedom's Sentinel 

(to counter terrorism in Afghanistan and to build partner capacity within the Afghan National 

Defense and Security Forces under NATO's Resolute Support mission); and Operation Pacific 

Eagle (the effort to support the Philippine government's fight against ISIS and other extremist 

groups). 

Our O!Gs conduct audits, evaluations, and inspections of projects and programs 

implemented in each area of the operation, formulate joint oversight plans, and issue quarterly 

reports to the United States Congress on the status of each OCO. This interagency structure is 

intended to take full advantage of the resources of existing IGs to coordinate oversight, without 

the need to incur the costs and delays of setting up and then disbanding new oversight 

organizations for each OCO. To fulfill our Lead IG responsibilities, we also coordinate closely 

with the GAO, the Special Inspector General for Afghanistan Reconstruction, other OIGs with 

OCO-related responsibilities, and other DoD oversight entities. 

Another top management challenge facing the DoD that is not on CIGIE's list is 

"Countering Strategic Challenges: North Korea, Russia, China, Iran, and Transnational 

Terrorism." This is a longstanding but evolving challenge facing the DoD. As reflected in our 

most recent report, state and non-state actors present security challenges that have destabilized 

the post-Cold War intemational order, and the DoD must confront these challenges in close 

coordination with U.S. Allies and DoD interagency partners. 

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Finally, another challenge that I want to specifically highlight that is not unique to the 

DoD but is critically important is "Ensuring Ethical Conduct." Ensuring ethical actions by 

DoD's many employees poses a significant challenge. As a result, for the past several years we 

have identified this as one of the top management and performance challengers facing the DoD. 

For example, ethical failures by DoD officials, public corruption investigations, and 

misconduct by a few DoD employees can undermine public confidence in the DoD, as well as 

foster an unwarranted perception about the overall character, ethics, dedication, and sacrifice of 

all DoD employees. At its core, ethical misconduct violates DoD core values and tarnishes the 

high standards of integrity expected of DoD personnel. Therefore, DoD leaders must continually 

strive to deter and prevent ethical lapses and misconduct, and hold accountable those individuals 

who violate the law, the standards of conduct, or other ethical requirements. 

Emerging DoD Challenges 

The DoD 010 is currently in the process of reassessing the DoD's top management and 

performance challenges facing the DoD, as we begin to prepare our summary of Top DoD 

Management Challenges for FY 2019. We fully expect that certain challenges will remain 

prominently listed, such as addressing financial management, the need to counter strategic 

challenges from abroad, OCOs, and ensuring ethical conduct. 

However, as we examine the DoD we need to recognize the new challenges that will arise 

next year and the years to come. For instance, increased budgets and troop level end strengths 

will challenge the DoD's ability to effectively and efficiently recruit, train and retain both the 

military and civilian personnel necessary to achieve the DoD's mission. 

Other challenges arc likely to rise in prominence or evolve. For example, with regard to 

nuclear deterrence, in the past, this challenge focused on DoD maintaining its current capacity. 

Now the challenge is focused on modernization and potentially increasing capacity. Other 

revolving issues that we are considering for the FY 2019 report include the need to implement 

efficiencies from DoD refonu initiatives and challenges in health care. We will continue to 

assess rising and emerging challenges to make our top management challenges report useful and 

forward looking. 

In closing, I want to thank the committee for your interest in, and support for the 

important work of lOs, CIGIE, and the DoD 0!0. Also, thank you also for giving me the 

oppmtunity to participate in this hearing and to describe what we consider the top management 

challenges facing the DoD. 

This concludes my statement and I would be glad to answer questions. 

6 
23 

Chairman GOWDY. I want to thank all of you. And thank you for 

meeting one of the Congress’ benchmarks. You got all of your openings in within the 5-minute time period. 

With that, the gentleman from Oklahoma is recognized, Mr. Russell. 

Mr. RUSSELL. Thank you, Mr. Chairman. 

And thank all of you just for the great work that you do. I guess 

I’ll have questions that any of you can answer, but I know some 

of it will be specific to your particular areas. 

One of the big things that you’ve identified in your reports is the $141 billion over nine agencies in improper payments. I mean, this 

seems like low-hanging fruit, and yet that is an enormous dollar 

amount when we think about it. Ofttimes, as we’re looking to, you 

know, not balance the budget each year, this is something that 

would make a significant headway in that. 

And so how do we get at? I mean, we identify it, we know it. 

We’ve identified the dollar amounts. We know the nine agency offenders. How do we stop it? 

Mr. HOROWITZ. Let me tell you some of the challenges we have 

faced at DOJ OIG and I think my colleagues have faced as well, 

which is, in an era of big data, what we’re learning as many of us 

are doing data analytics work to try and get at those issues is our 

agencies don’t keep good data or no data at all. 

As an example, we went to see about healthcare fraud questions 

at the Justice Department. The Justice Department spends over a 

billion dollars a year on inmate healthcare. We went to the 121 or 

so institutions to get their electronic medical records to look for 

anomalies in payment patterns, and we learned that about 100 of 

those 121 actually still have paper records. 

And so we issued a report to the Department—it is public—expressing our concern about that. And they have issued now a request to seek to turn all of those into electronic records. 

But those are challenges we’re seeing over and over again. And 

the government needs good data. The committee is to be recognized 

for passing the DATA Act, which hopefully moves us towards better data. 

Mr. RUSSELL. Hopefully they can pay for it with the recoup of 

who they’re not improperly paying, rather than asking for additional appropriation. 

Mr. FINE. If I could add, I agree with that. I agree with Michael 

Horowitz’s comments. 

I think there are three things that need to be done. 

One, there have to be adequate internal controls so that the 

money doesn’t go out the door inappropriately. We’ve seen that in 

healthcare in DOD, compounding pharmacy money, billions of dollars going out because there’s not good internal controls. 

Two, when we find that, people ought to be held accountable for 

this, or there needs to be some deterrent. It just doesn’t move on. 

And the third thing is data analytics. We need to do a better job 

and have more capacity to analyze the massive amounts of data 

within the DOD and the entire Federal Government to rout out indicators of fraud to provide the leads that we can go after. 

Mr. RUSSELL. Yeah. 

Ms. Lerner? 


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Ms. LERNER. I would just make one final point. A lot of the improper payment work that OIGs is driven by risk assessments that 

agencies are supposed to perform. And I think sometimes you need 

a culture change within the agency for it to be acceptable for them 

to acknowledge that risk exists. Because without that, the quality 

of the risk assessment isn’t going to be strong, and without a 

strong risk assessment, your ability to identify and fight those improper payments is undermined. 

Mr. RUSSELL. Thank you for that. 

And with my remaining time, I’ll just hit the last three areas, 

and whoever wants to comment on it. 

Payment to grantee verification. This is another big thing I know all of you are concerned about. With $700 billion of grants issued 

each year, this is an enormous amount of the American people’s 

working capital that is sent to Washington, and yet ofttimes we 

have problems of knowing who’s identifying the grants. 

And then you stood up the Disaster Assistance Working Group 

on your own initiative, which I applaud you for, because we appropriated $26.1 billion that went out in disaster assistance. Obviously, all the hurricanes, fires, and floods. Only the United States 

could weather something so enormous. But I’m glad that you’ve 

stood that up for that oversight. 

And then the last item is the overseas contingencies in Afghanistan, Syria, and Asia. You know, ofttimes we joke that Afghanistan 

is the biggest black hole of waste in the Department of Defense. 

And so those are the three other areas, if any of you care to comment. 

Ms. LERNER. In terms of grant expenditures, again, I’ll repeat 

what Mr. Fine said: analytics, analytics, analytics. It helps us— 

when grant funds are expended, it would be wonderful to be able 

to, in situations where there are disasters to happen, set up so that 

we can catch things even earlier. 

Mr. HOROWITZ. Let me just touch on the Disaster Assistance 

Working Group issue. It is something that’s very important to us. 

One of the things that we’re trying to do—and DHS OIG is the 

lead on that—work closely with GAO so that we’re coordinated 

with each other, as well as State and local oversight entities. There 

are State auditors, there are State IGs involved in some of the hurricane relief locations. We want to make sure we’re well-coordinated with each other, and we want to share information. We don’t 

want to duplicate effort. And that’s one of the things we’ve all been 

doing—CIGIE, IGs with GAO—to make sure we’re coordinated on 

our oversight. 

But one of the things we’ve also done, I just want to mention, 

in connection with oversight.gov, is try to replicate what the IG 

community did with the Recovery Act funds in 2009, which is create a page on the oversight.gov website so the public can see what 

we’re finding and what we’re seeing. 

One of the issues we’ve come to Congress for in fiscal year 2018 

and we didn’t get funding but we are looking for in fiscal year 2019 

is a very modest amount of money, $1 million to $2 million, to 

build out oversight.gov. And that’s one of the things we’d like to 

build out further, is that web page. And so, while Congress appropriated the $26-billion-plus, what we’re looking for is some addiVerDate Nov 24 2008 09:49 Sep 11, 2018 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 H:\31119.TXT APRIL

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tional funds to allow the transparency to occur around that spending. 

Mr. FINE. If I could address the overseas contingency operation 

issue, yes, Afghanistan is a source of a lot of money and a lot of 

waste. And both we and the Special IG for Afghanistan Reconstruction have issued reports on that. There needs to be better internal 

controls. There needs to consequences for the waste when it’s exposed. There are bilateral financial commitment letters that are 

signed, but they often don’t have any consequences and are often 

waived. 

I was there recently, and I met with the commanders, the diplomatic personnel, as well as Afghan officials, including President 

Ghani. They seem committed to internal controls, but it’s too early 

to say whether it will have any impact. There is a massive amount 

of money that goes there, and a lot of it is wasted. 

Mr. RUSSELL. Thank you. 

Thank you, Mr. Chairman. 

Chairman GOWDY. The gentleman from Oklahoma yields back. 

The gentleman from Maryland is recognized. 

Mr. CUMMINGS. Thank you, Mr. Chairman. 

Just following up on Mr. Russell’s questions, I noticed that you 

all keep saying waste, waste, waste. I mean, do you think any of 

it is fraud, Mr. Fine? I didn’t know whether you were limiting it 

to waste. 

Mr. FINE. No, I’m not. Absolutely. Waste, fraud, and abuse. 

Mr. CUMMINGS. Okay. 

Mr. FINE. It’s all of that. And there are a lot of cases that we 

make, criminal cases, to hold people accountable for fraud. 

Mr. CUMMINGS. Mr. Horowitz, the Whistleblower Protection Enhancement Act of 2012 requires all Federal agency nondisclosure 

policies, forms, and agreements to include specific language making 

clear that the policy or the agreement does not impact statutory 

protections that allow Federal employees to communicate with 

Congress and IGs. 

Are you familiar with the requirement? 

Mr. HOROWITZ. I am. 

Mr. CUMMINGS. On January 29, 2018, Attorney General Sessions 

issued a memorandum to the heads all Department of Justice components and all U.S. attorneys, titled ‘‘Communications with Congress.’’ 

Are you familiar with that memo? 

Mr. HOROWITZ. I am. 

Mr. CUMMINGS. The memo directed department employees that 

communications between the Department and Congress must be 

managed through the Office of Legislative Affairs. 

The memo said, and I quote, ‘‘Attorneys, officers, boards, divisions, and components should not communicate with Senators, 

Representatives, congressional committees, or congressional staff 

without advance coordination and consultation with OLA,’’ end of 

quote. 

Attorney General Sessions did not include in his memo the language required by the Whistleblower Protection Enhancement Act 

that says these words: ‘‘These provisions are consistent with and do 

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tions, rights, or liabilities created by existing statute or executive 

order relating to: classified information, communications to Congress, the reporting to an inspector general of a violation of any 

law or rule, regulation, or mismanagement, a gross waste of funds, 

an abuse of authority, or a substantial and specific danger to public 

health or safety, or any other whistleblower protection,’’ end of 

quote. 

Do you believe that the language was required to be included, 

that language, in the Attorney General’s memo? 

Mr. HOROWITZ. Congressman, I think it’s very important that all 

employees understand their rights under the whistleblower laws 

for the reasons you indicated. We’ve been in touch with the Department about the issue, and it’s certainly my hope that that will be 

clarified and made clear. 

Mr. CUMMINGS. What was the response so far? 

Mr. HOROWITZ. Well, I’d rather not get into the back-and-forth 

that we might have that—that we’ve had internally. But it’s certainly my hope that there will be a clarification of that. 

Mr. CUMMINGS. Because what happens, as you can imagine, if 

people feel reluctant to communicate with their Representatives, 

we can’t do our job. You can’t either, right? 

Mr. HOROWITZ. That’s—you know, whistleblowers play a very important role. This committee has seen it over and over again. We 

could go through many of the examples of that. So it’s very important that employees know, if they see something going wrong, they 

have avenues to go to the IGs and, in appropriate circumstances, 

Congress. 

Mr. CUMMINGS. Now, Senator Grassley wrote to the Attorney 

General on February 5, 2018, raising concerns with the memo’s 

failure to comply with the law. 

To your knowledge, has DOJ taken any actions to correct this 

violation and ensure all employees know their rights to communicate with the Congress and IGs? I know what you just said, but 

has anything been done? 

Mr. HOROWITZ. I haven’t seen anything further at this point. But 

we’re certainly aware of the issue, and, like I said, we’ve been in 

communication with—— 

Mr. CUMMINGS. Now, DOJ is not the only agency that has issued 

a policy on communications with Congress that violates the Whistleblower Protection Enhancement Act. The IG for the General 

Services Administration issued a report March 8, 2018, and found, 

and I quote, ‘‘GSA policies regarding communications with Congress operate as nondisclosure policies under the WPEA but do not 

include the WPEA’s whistleblower protection language.’’ 

Are you concerned that this could be a wider problem? 

Mr. HOROWITZ. I’m not, as I sit here, familiar with, sort of, what 

the other agencies are doing. But, as I said earlier, I think it’s very 

important for IGs to be able to get information from whistleblowers. And I completely understand, as well, from the WPEA 

how important it is—and from just experience, how important it is 

for Congress to be an avenue of reporting for individuals who want 

to come forward and report waste, fraud, and abuse. 

Mr. CUMMINGS. As I close, do you consider this a top priority? 

Mr. HOROWITZ. For me, it’s a top priority. 


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Mr. CUMMINGS. I mean for your organization. You’re the top man 

now, right? You’re still—— 

Mr. HOROWITZ. I don’t know if I’m the top man, but—— 

Mr. CUMMINGS. I mean for your organization. 

I mean, I think this goes to the essence of—the chairman talked 

about it, I’ve talked about it, you’ve talked about it—being effective 

and efficient. I just want to know—I don’t want any Member of 

Congress to be cut off from information, or you—— 

Mr. HOROWITZ. Yeah. 

Mr. CUMMINGS. —that you need to do your job. I mean, why are 

we going to waste money, spend money on an agency that can’t 

even get the information that they need to do their job? 

So I just want—all I’m asking is—I’m not asking, I’m begging 

you to make this a top priority for your organization. I think we 

need to look and see whether other agencies are doing this kind of 

thing, and we need to address that. 

Mr. HOROWITZ. Look, it’s absolutely—whistleblower protection is 

a top priority for me, for my office. The work we’ve done in that 

area is very significant. 

In fact, one of the reasons we’ve asked for an additional six positions this year in our budget request to Congress and wrote a letter 

to the Congress about our concern on this issue is we’re seeing a 

very significant increase in the FBI whistleblower retaliation cases 

that are coming to us that, as you know, by regulation, go to our 

office, not the Special Counsel’s Office. 

And that very substantial increase, over the last 7, 8 years—it’s 

not in the last year; we’re talking about a growth over time, 6, 7 

years—requires us to meet certain timelines that are in the law. 

And if we don’t get those additional positions, it’s going to crowd 

out some of the other work we’re doing. 

So we think it’s a very important area. We think whistleblowers 

are the lifeblood of IGs, of the work we do. We’ve got to take steps 

to ensure that they understand they can come forward, report to 

the IGs, to Congress, and not be retaliated against, not be subject 

to threats. Because it takes extraordinary courage to step forward 

and report out on waste, fraud, and abuse in your organization. 

Mr. CUMMINGS. Thank you, Mr. Chairman. I yield back. 

Chairman GOWDY. The gentleman from Maryland yields back. 

The gentleman from Alabama is recognized. 

Mr. PALMER. I thank the chairman. 

On the improper payments, they’ve been identified as a key concern, as the gentleman from Oklahoma brought up. 

Mr. Fine, your recent Department of Defense IPERA compliance 

report noted that the Department did not comply with five of the 

six recommendations. When was the last time DOD was in full 

compliance? 

Mr. FINE. I don’t think it has been in full compliance. 

Mr. PALMER. That’s what I thought. 

Due to noncompliance with IPERA, DOD is required to issue a 

report describing actions the agency will take to come into compliance. Have they issued that report? 

Mr. FINE. I’m not aware of that report. We have issued the recommendation so far. 

Mr. PALMER. In the fiscal year 2016 report, your office—— 


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VOICE. Mr. Fine, could you turn your microphone on? 

Mr. FINE. Sorry. 

VOICE. Thank you. 

Mr. PALMER. I think he answered ‘‘no’’ to both questions, for the 

record, that they have not complied and they have not issued a report explaining actions that they will take to comply. 

In the fiscal year 2016 report, your office made a number of recommendations that DOD agreed with. Have any of those recommendations been fully implemented and enforced? 

Mr. FINE. I would have to go back and look and see whether 

that’s the case. I wouldn’t doubt it. But we are—we are in the process, and we currently do that. We look to make sure that the recommendations that we make and they agree to are actually implemented. 

And we have actually issued a report recently, a compendium of 

open recommendations. There’s more than 1,200 open recommendations. 

Mr. PALMER. Is this the report? 

Mr. FINE. I think so, yeah. 

Mr. PALMER. Mr. Chairman, I’d like to enter this into the record. 

Chairman GOWDY. Without objection. 

Mr. PALMER. Okay. The Department of Defense is initiating an 

audit, which is obviously long overdue. Would you agree that that 

will help in identifying improper payments? 

Mr. FINE. Financial statement audit? 

Mr. PALMER. Yes. 

Mr. FINE. Yes, absolutely. It’s a very important audit. It’s critical. 

Mr. PALMER. Okay. 

Let me transition here quickly to Mr. Horowitz. 

In your statement, you said, 2016, the IGs identified approximately $45.1 million in savings. How much of that has been realized, or do you know? 

Mr. HOROWITZ. I don’t know, as I sit here today, how much has 

been realized. I think one of the things that we’d like to see—I 

know we’re doing this within our own organization—is try and figure out how we can follow up on those numbers within the Justice 

Department. 

Mr. PALMER. That was what I was going to ask you. Is there any 

way to determine whether or not—I mean, we identify them; that 

makes them potential. If they’re actually realized, then that makes 

them, obviously, real savings. And I just wonder if there’s a way 

to make sure that, when we identify it, that someone follows up on 

it and we are able to realize those savings. 

Mr. HOROWITZ. And we follow up on all our recommendations, 

and they don’t get closed until we decide to close them. What we 

need to do more work on with the agency is to get reports on what 

kind of recoveries there are. We’re starting to do that. And we’ve 

been putting out announcements, releases, to the public to let them 

know when we have had recoveries. 

Mr. PALMER. I want to also stay with you just for a moment— 

and, Ms. Lerner, you can respond as well, if you’d like. But when 

we’re talking about the disaster relief funds, I believe there’s several billion in unspent totals from Sandy. There’s unaccounted-for 


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funds from Hurricane Matthew. We know that, prior to the disaster relief funds being approved for Puerto Rico, they paid out 

$100 million in bonuses. 

You identified $26.1 billion in disaster relief funds. Those were 

Community Development Block Grants. And my concern about this 

is there’s no way to really manage these funds to determine that 

the money is actually getting to where it needs to go. 

If this were a private contract, you would award money on the 

front end to meet the immediate need, and then everything else 

would be paid to invoice. Does that make sense? 

Mr. HOROWITZ. It’s been a significant concern of, I think, all of 

the IGs that are looking at their agencies which put out money 

through grants, contracts, and others, is the lack of performance 

management and accountability that’s going on there and understanding at the end of the project what the successes were, what 

the failures were, after-action plans. I mean, you do all of that 

after spending a substantial amount of money. 

And one of the things we’ve also seen at DOJ OIG and we just 

issued a report on, and we’ve done in the past, is on unspent grant 

funds and closing out grants in a timely fashion, because that 

money is just sitting there and can be misused. And so that’s very 

important. 

Mr. PALMER. Mr. Chairman, I want to further explore the grant 

issue. So I think what I’d like to do is let everyone else ask their 

questions and then come back to this afterwards, if that’s okay. 

Chairman GOWDY. Sure. I’ll consult with my ranking member, or 

else one of your colleagues, including me, may actually yield you 

some time so you can finish that line. 

Mr. PALMER. Right now or afterwards? 

Chairman GOWDY. Well, it’s not my turn right now, but when it 

is my turn, I will give you some of my time, assuming Inspector 

General Horowitz answers my questions as quickly as he normally 

does. 

Mr. PALMER. You’re a very generous chairman, and I—— 

Chairman GOWDY. And you’re a very diligent member, and I appreciate your interest. 

Mr. PALMER. I yield back. 

Chairman GOWDY. With that, the gentleman from Alabama 

yields back, and the chair will recognize the gentlelady from the 

District of Columbia. 

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

Ms. Lerner, I have a question about the report that CIGIE issued 

this morning. 

This notion of draining the swamp seems to be turned on its 

head, because we have had more—a virtual explosion of scandals 

and ethical lapses during this administration, young as it is. In 

fact, it’s the most I can remember. So, in recent memory, they seem 

to outnumber the explosions that come from year to year in prior 

administrations of both parties. 

So I’d like to ask about the culture of agencies that is mentioned 

in the report. And here I’m quoting the report issued today, that 

the ‘‘OIGs reported their agencies faced challenges related to their 

agency’s culture.’’ I’m trying to find out whether the Congress or 

the IGs can do something about this culture. 


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And cited were ethical lapses, lack of accountability, lack of fiscal 

responsibility, lack of transparency and communication, resistance 

to change, and low morale. That is as comprehensive an indictment 

of agencies as I can remember hearing as a member of this committee. 

So I take it we’re talking about a systemic problem covering, 

what is it, two or three agencies? More? Across the board? What 

do we mean by ‘‘the culture that has set in’’? 

Ms. LERNER. It’s unclear to me the precise number of agencies 

that are experiencing those problems, but it’s clear that this is— 

it’s not a handful. And it is incumbent, then, on us as IGs to have 

our eyes open, to catch these issues, to audit and investigate when 

necessary—— 

Ms. NORTON. But one wonders—you know, these are agency 

heads who ultimately have to be held accountable. And so one wonders whether anyone is advising them, whether IGs ahead of time, 

whether they ask for information. 

I can tell you that staff members in their 20s, if I ask them to 

do something, they’ll say to me, Congresswoman, is this—do you 

want me to check? I mean, they are sensitive to this, to try to keep 

me from—you know, catch me before I kill—from getting in trouble. 

Who catches the agency head before the agency head kills? Or is 

this just willful determination, as with Administrator Pruitt, who 

may be in the worst trouble and have had the most lapses? The notion of installing a classified phone booth for $43,000. Somebody 

should have tapped him on the shoulders. 

Is there any way, before that phone booth goes up, to catch him 

before he spends $43,000, not to mention all of his other lapses, for 

which he has yet to be held accountable? Or is this all after the 

fact, and taxpayers have to say, well, nobody’s in charge, nobody’s 

going to jail, and nobody’s suggesting jail, so what can we do? 

Ms. LERNER. I think we hope that the general counsel’s office and 

the ethics officials provide the right advise to folks—— 

Ms. NORTON. Well, who is it—do the agency heads know that 

there is somebody they should ask? Did Mr. Pruitt understand— 

who did he ask before installing a soundproof phone booth? 

Ms. LERNER. I can tell you who they should ask. They should ask 

their designated agency ethics official and their attorneys—— 

Ms. NORTON. Have any of you, Mr. Horowitz, Ms. Lerner, have 

any of you issued—seeing how systemic this is, have you issued 

anything to the agency saying, ‘‘We advise that, before you undertake any action which has not been taken before in your agency, 

that you inquire of,’’ and you name who to inquire? 

Ms. LERNER. I would imagine—and I’ll let my colleagues answer 

too. But that’s one of the first topics of conversation with new agency leadership that come on board. 

Ms. NORTON. Have you done it with agency heads of this administration? 

Ms. LERNER. We do not have an agency head from this administration at my agency. 

Ms. NORTON. No, for the—agency heads for this administration. 

Mr. Horowitz? 


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Mr. HOROWITZ. We have not had some of those kinds of issues 

in my agency with regard to, you know, the phone booths and that 

sort of thing, so I can’t speak to what has gone on there. 

But one of the first things we do is meet with the Attorney General. I have now served under three Attorneys General as IG and 

done that in each instance. Sit with them, tell them—remind them 

of what we do. In each case, all three Attorneys General grew up 

in the Justice Department, so they understood what my office was. 

But they still needed to hear what we do, what kind of reports we 

expect. 

And I agree with what IG Lerner said. The understanding is that 

they need to go to the agency ethics official; they need to go to their 

counsel. And we need to be, as IGs, diligent in overseeing any 

wrongdoing that occurs and making sure that people not only understand the rules but, if there are violations of the rules, as my 

fellow IGs indicated, hold people accountable, make sure the public 

understands and the people in the agency understand that even 

the most senior officials are held accountable for misconduct. We 

do that through posting the summaries of our work. And that, I 

think, is very critical to the deterrent message as well. 

Ms. NORTON. My—— 

Mr. FINE. I—— 

Ms. NORTON. —time has expired. 

Would you agree to let Mr. Fine respond? He seems to want to 

respond. 

Mr. FINE. I agree with that. That’s what we try and do too. I, 

for example, meet with each—with Capstone classes, which are 

new admirals and generals, to talk about what will get them in 

trouble, what they should avoid, what they need to do to consult 

with their lawyer. 

I’ve met with the heads of the agency as soon as they come in 

to talk about that. The tone gets set at the top, and it’s very important for us to have that communication with them. I’ve been very 

fortunate, myself. The Secretary of Defense has made clear about 

the need for ethics and has made clear the need for cooperation 

with the OIG and made clear the need for people to be held accountable when they have ethical lapses. So that is very important. 

And we need to be out on the front end in terms of education, 

as well as also on the back end when there are lapses. And there 

will be lapses. We need to hold people accountable. 

Mr. HOROWITZ. Mr. Chairman, can I mention just one other thing 

that we do as IGs? 

We also issue advisory memos. We each call them something different, but if we see a problem along the way, we issue a management advisory memo to alert leadership to a problem we’re seeing 

so they can fix it systemically and avoid—and address those kind 

of issues. 

As an example, within the last year, we identified substantial 

issues in a variety of ways through our work about sexual harassment policies at the Department. We issued a management advisory memo that got some publicity in the press about that. But 

that was an important thing to identify early on to leadership what 

we were seeing so they could take action. 

Ms. NORTON. I thank you, Mr. Chairman. 


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Could I just ask that, in light of the systemic issues that have 

been identified, that the committee look for ways to be more 

proactive. Even with all that has been testified here, we still have 

this plethora of scandals arising, and perhaps more proactive action than has been testified would be called for at this time. 

So thank you, Mr. Chairman. 

Chairman GOWDY. The gentlelady from the District of Columbia 

yields back. 

The chair will now recognize the gentleman from Tennessee, 

Judge Duncan. 

Mr. DUNCAN. Well, thank you very much, Mr. Chairman. 

And, first of all, I want to say how much I appreciate the work 

of the various inspectors general throughout our government. I’m 

now completing my 30th year in the Congress, and not all of that 

time has been on this committee, but probably two-thirds of it has. 

And this committee over those years has become really the main 

investigatory committee in the Congress. And we couldn’t have 

done our—we couldn’t have been nearly as effective in our work on 

this committee had it not been for the information provided to us 

by the various inspectors general. 

Over the years, I’ve passed four bills—or introduced four bills 

that have gone through this committee and through the Congress. 

Probably the easiest or the less controversial was a bill to create 

an inspector general for the Tennessee Valley Authority, which 

I’m—while I say it was easy, that doesn’t denigrate—or doesn’t 

mean it wasn’t important. 

But I think back over the years about all the different investigations that have been brought to light. I remember my shock at 

finding that the FBI had kept a man in Federal prison for 30 years 

for a murder that they knew he did not commit because he was 

going to disclose some vital information about the Whitey Bulger 

case, which is one of the biggest cases in the country at one time. 

And I remember thinking, I still think, it’s one of the worst things 

I’ve ever heard about. 

And I think back about the findings of the EPA where they had 

a man who didn’t go to work for a couple years but drew a high 

salary. And all these different things. 

And I looked—I was given here this morning an article from a 

few days ago about the waste in the Pentagon, or that the Pentagon could not justify the spending in Afghanistan. I heard Mr. 

Russell say that it’s sort of a joke about how much waste there’s 

been on the spending over there. And I don’t think—I really don’t 

think it’s much of a joke. And I’m glad that the inspectors general 

have taken it to heart and have brought forth a lot of this information. 

And I was also given an article about this University of Pittsburgh professor that got $50 million in the last 20 years from the 

National Science Foundation in 24 different grants and how the inspectors—Ms. Lerner’s office is starting to uncover some scandalous information about some of these grants. 

So I commend you in that regard. 

And, Mr. Fine, I wasn’t really clear, do you think—this article 

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tor General cannot account for $3.1 billion of spending that’s been 

done over in Afghanistan in the latest investigation. 

Do you think that we’re going to continue to see things like that, 

or are we getting closer to getting things a little bit under control? 

We’re spending, this article says, $45 billion a year over there, and 

that’s an awful lot of money. 

Mr. FINE. It is a lot of money. 

The article you’re referring to refers to one of our summary reports which talks about all the reports we’ve had over the years to 

talk about how they could not account for fuel and ammunition or 

payment for soldiers, and they did not have adequate internal controls, and they did not enforce commitment letters when the Afghans could not account for the money. 

So I do think it is a significant amount of money. I think, in a 

deployed environment, it is more difficult than here in the United 

States, but that doesn’t mean that we should not provide oversight 

and internal controls and ensure that the money is being used for 

its proper purposes. 

I know the Department of Defense is concerned about it and is 

committed to this. As I mentioned, I was over in Afghanistan, and 

there are, sort of, roadmaps and commitments. But commitments 

are easy to do. It’s important to make sure that they actually happen. And so I believe that we will continue to see problems, but we 

need to continue to stay on top of that. 

Mr. DUNCAN. Ms. Lerner, you know, there’s too many things in 

the Federal Government that are sweetheart insider deals. And I 

do hope that you’re looking more closely at people who are getting 

repeated grants, like this University of Pittsburgh professor that 

got $50 million from 24 different grants. Well, he apparently had 

some really good connection there at the National Science Foundation. 

So do you look a little closer at some of those who are getting 

the most grants or the most money? 

Ms. LERNER. We have a risk matrix that we’re constantly updating as we learn and are exposed to new and different ways that 

people try to misuse NSF funding. So I think we have gotten pretty 

darn good at targeting areas of risk, but we know we can always 

get better. And so we take and we add to that risk matrix on an 

ongoing basis. 

Mr. DUNCAN. Well, we have got so many good scientists in this 

country. 

Ms. LERNER. Exactly. 

Mr. DUNCAN. That these grants should be spread out. They just 

shouldn’t be given to a small, tiny group of favored individuals. 

My time is up, but I really do appreciate all the work that the 

inspectors general have done for this committee over the years. 

Thank you. 

Chairman GOWDY. I thank the gentleman from Tennessee yields 

back. 

The gentleman from Massachusetts is recognized. 

Mr. LYNCH. Thank you, Mr. Chairman. 

I want to thank the panelists, Mr. Horowitz, Ms. Lerner, Mr. 

Fine, for your wonderful work. I’ll just associate myself with the 

glowing remarks of the gentleman from Tennessee with regards to 


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our appreciation for the work that you do and the work that your 

people do. It is extremely important, and as important now as it 

has ever been, I think, on behalf of our country. 

I do want to acknowledge the return of our ranking member. I 

appreciate it. He has maintained constant contact with the committee, so he never has really been out of the seat. But good to seeing him physically back in the chair this morning. 

I want to follow up on Mr. Russell’s line of questioning, especially 

regarding the situation in Afghanistan. So Special Inspector General John Sopkohas been concerned about the new practice in the 

Trump administration of classifying information that has been publicly available, let’s see, going back to 2003 at least. He has raised 

it in his report. 

He has said, among other things, that data that was originally 

reported publicly with regard to the Afghan National Defense Force 

capability assessments, their attrition rates, how many people we 

got within the units that are being paid within Afghanistan, casualty counts, operational readiness, actual and authorized figures 

on the number of personnel, he talks here about for the first time 

the reports are now classified with respect to information about the 

specific security goals of Afghanistan outlining the Trump administration’s new South Asia strategy, information about the increase 

in U.S. and coalition air strikes in Afghanistan since mid-2017. He 

goes on and on. 

That’s the data, those are the data that we rely on in making our 

decisions, and I know that that’s very important to you, as well. 

On top of that, on top of classifying information—and I can still 

get it, I can go down to the SCIF and I can request access to the 

information. It just makes it more difficult for me to get it. And a 

lot of Members, because they’re so busy, they don’t get to do all 

that. 

But what troubles me additionally is that now the Department 

of Defense is denying—they have got blackout dates. So Members 

of Congress cannot go—so, for instance, beginning in June and lastly until September, we cannot go into Iraq. This is the Oversight 

Committee, we can’t go to Iraq. Beginning in June and continuing 

indefinitely we cannot go to Afghanistan. So what the administration is doing is pulling down the curtain. 

And this committee has a natural affinity with our inspector general community. On my codels it was not unusual for me to take 

Stuart Bowen or his staff, Mr. Fitzgerald, the first couple of codels 

into Sadr City, where we’re spending billions of dollars on a sewage 

treatment facility and no one is looking to see whether they’re actually building it. We had some satellite stuff, but you really 

couldn’t see what was going on. 

But it wasn’t until I actually got the commanding general to that 

battle space to take us all in in an MRAP and we were able to look 

at that to see that the work was actually being done. 

So we’re spending all this money in Afghanistan and in Iraq, but 

especially Afghanistan, and if there’s no oversight going on. I know 

Sopko is being denied—well, it is tough to operate in Afghanistan 

anyway. You have to rely on, you know, locals for some of the oversight. 


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So I mean this is a shutdown of a lot of information that the 

American public used to have. The totality of what the Trump administration is doing here is denying information to the American 

people, denying it to Congress, putting obstructions in the way of 

our special inspector general in Afghanistan, on giving that information to the public. 

I just ask you to speak out about this trend. I’m very, very concerned about it. And we’re relying on each other to make sure that 

the best interests of the American people are protected, and especially our military who are in harm’s way in Afghanistan and Iraq. 

I just ask you to keep doing your jobs and let us know if there 

are additional ways that we can put the pressure on to make sure 

that your folks are protected and are able to perform the jobs that 

we have asked them to do. 

Thank you. 

Chairman GOWDY. The gentleman from Massachusetts yields 

back. 

The gentleman from North Carolina, Mr. Meadows, you’re recognized. 

Mr. MEADOWS. Thank you, Mr. Chairman, and thank you for 

your leadership in holding this hearing. 

Thank you all for your work. As most of you know, I’m a big fan 

of the IG and of all of your work. And yet I guess this is, what, 

the 40th anniversary of your authorization, but also the 40th anniversary of civil service initiatives that, quite frankly, sometimes 

hamper and hurt your ability to get jobs done and get things done. 

So I guess what I would love to hear from each one of you very 

briefly is how do we fix this? I mean, the ability to hire, fire, and 

retain continues to be in the headlines each and every day. 

And sometimes even when we terminate, as Mr. Horowitz probably knows better than most, it creates unbelievable headlines 

when honestly dealing with the whole retention and proper—I 

guess proper remedial actions on behalf of government employees 

would be better if it is done in a different fashion. 

How do we fix this? And I know that’s a 1-hour question that you 

have 1 minute to respond to. 

Mr. Horowitz, if you could start. 

Mr. HOROWITZ. It is a very challenging issue for IGs. It is a challenging issue for us ourselves to get our people on board. Security 

clearances, you add in an organization like DOJ. If there are misconduct findings, getting people to take them seriously, move them 

forward in a prompt way like we think they should so that people 

are held accountable. 

I think there needs to be a bringing together of the stakeholders 

because I think everybody recognizes there’s this problem on the 

front end and the back end and in between, frankly, the ratings, 

the reviews. The strongest performers, we need to find a better way 

of acknowledging strong performance and rewarding strong performance. 

I think it largely requires Congress coming together with the executive branch in doing that. 

Mr. MEADOWS. So, Ms. Lerner, let me ask you maybe a different 

version of that. Mr. Horowitz is saying we need to talk and we 

need to get together. 


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You know, one thing that we’re not short of here in D.C. and the 

Beltway is talk without action. And I guess my question to you is, 

who would be the key players to make sure that we don’t just talk 

about it? Because I think all of you, all three of you want to actually do something about that. 

So how do we make sure that Congress actually is hand in glove 

with the executive branch on how actually do this? 

Ms. LERNER. I think back on something Earl Devaney said when 

the Recovery Act was going on, when you want to see things happen, you know, give people responsibilities and deadlines in a statute. You need to give people enough time for good thoughts to percolate and be shared and shaped and formed, but they can’t have 

forever in which to do that. So a hard and fast deadline is vital. 

But I do think making sure that we remember all the things that 

drove the creation of these protections in the first place and we 

don’t throw the baby out with the bathwater. 

Because when I hear that we need to protect whistleblowers, we 

want to make sure that career employees have protections so that 

they’re able to perform in the nonpartisan fashion that they’re supposed to do without fearing that they could lose their jobs because 

agency leadership doesn’t agree with what they’re saying. 

Mr. MEADOWS. All right. Well, you’re the one group that actually 

protects whistleblowers and actually supports the IG, so maybe 

this is the key component. 

Inspector General Fine, I’ll let you close it out. 

Mr. FINE. If I could add one thing, I do think it is very important 

for people to be held accountable when they have committed misconduct and to be cleared when they haven’t and for that to be 

done in a timely way. That’s what IGs strive to do. 

One of the key things for us is to ensure that we have adequate 

budgets and staff to do that because that does affect timeliness. 

And there are some IGs who have not received the sufficient budget to deal with the burgeoning caseload so that things get elongated and things stagnate, and that is not good for anybody. It is 

not good for the person who has not committed the misconduct, and 

it is not good for the agency if someone has committed misconduct. 

So we need to strive for timeliness, but in order to do that there 

need to be sort of significant budgets. It is a small amount. The return on investment is huge both in terms of recoveries to the 

Treasury and also in terms of importance of holding people accountable. So I ask would that there be focus and consistent adequate budgets for the oversight. 

Mr. MEADOWS. Well, if you could do that then as part of your 

group, if you could actually get to this committee. And I would ask 

you maybe in the next 45 days to get to this committee those areas 

that you feel like are most underappropriated as it relates to IGs. 

Some of those are in better shape than others. 

And I thank you all for your testimony. 

And I yield back. 

Chairman GOWDY. The gentleman from North Carolina yields 

back. 

The gentleman from California is recognized. 

Mr. DESAULNIER. Thank you, Mr. Chairman, and thank you to 

the ranking member for this meeting. I always wanted to be on ‘‘60 


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Minutes,’’ I wanted to be asking questions. So since the CBS camera is here let’s act like we’re on ‘‘60 Minutes.’’ 

So I really wanted first of all to tell you how important, in my 

view, your jobs are, three of the most important positions in the 

U.S. Government. 

And the integrity part, Mr. Fine, I think is important. So I wanted to focus on you. 

In the last year or so ago we had the Defense Business Board 

here who sat where you’re sitting. One of the members who was 

a longtime member sat and answered questions where he said, he 

was quite demonstrative about you really can’t give the Department more money until you get this fixed. 

And this was when they had a report, an audit from McKinsey that estimated there was $125 billion worth of waste. And it appeared that that report was attempted to be held back from somebody in the Department, and then someone gave it to The Washington Post. 

So I wanted to ask you about that report. Also, this concern I 

have about President Eisenhower’s warning in his farewell address 

about the military-industrial complex, given the importance and 

the size of your jurisdiction and the audit. 

If you could respond to the Defense Business Board, and I have 

had multiple conversations with their members, their former chair, 

Bobby Stein, and their concern about—this is the business community that’s been looking at the Department of Defense since, I believe, the Nixon administration. So if you could talk about their report, their role. 

And then, secondarily, the audit. And you’ve mentioned the importance of the audit. And give us a timeline as to the expectation, 

understanding the challenges because the Department’s never had 

a full audit, and your role in making sure that audit is done in a 

timely fashion. And I would imagine this financial audit will set up 

hopefully a more extensive look at management audits and outcomes. 

And lastly, you mentioned, fifth on your list, financial management, eighth, ethical conduct, tenth, efficiencies, and then you 

mentioned weapons development to be on time and on budget and 

the performance management of that. 

So if you could address those sort of three areas. 

Mr. FINE. So I’m familiar with the report there. It is clear that 

there is areas of waste and areas for greater efficiencies in the Department of Defense with the enormous budget that it has. It has 

a $700 billion budget. It has $2.4 trillion in assets. That’s a huge 

amount. And there is areas for efficiencies. 

The Department is looking to do that. One of the areas they need 

to do is to have a look at the duplicative efforts they have in the 

various services to do the same thing and whether there can be efficiencies garnered from that, and they are in the process of doing 

that, and it is important that they do. Do we need all those separate entities doing the same thing? 

A key thing is the financial statement audit that you referred to. 

It is very important. It is important for a variety of reasons. It is 

going to take a lot. It is probably the largest financial statement 

audit in history. There are probably over a thousand auditors that 


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are going to do over 25 separate audits of various parts of the Department of Defense. 

It is the first time the Department of Defense is under full audit. 

It is highly unlikely they are going to get a clean or unmodified 

opinion. The opinion is really not the most important thing right 

now, in my view and also in the comptroller’s view and also the 

leaders of the Department. The most important thing to identify 

the deficiencies, have us give notices of findings and recommendations, and ensure that there is corrective action taken. 

The Department is on board with that. They have visibility over 

all the findings that are coming in. There are different independent 

public accounting firms who have been hired to conduct the audit 

along with us. We provide oversight over those independent public 

accounting firms, and we are the group auditor and will roll up the 

opinions in a separate report into an overall opinion. And the opinion will be issued November 15. 

Now it may be a disclaimer of opinion. I would be surprised if 

it was an unmodified opinion. They’ll get what they deserve. 

But it is very important that they keep doing this and that there 

is sustained effort. Because why is it important? Because it helps 

the Department manage its money, number one. It gives Congress 

and the American taxpayer more accurate information about how 

their money is spent. It benchmarks things so you can look and see 

whether there are cost overruns. And it is useful in determining 

where there is waste, fraud, and abuse. 

It is useful in determining where the financial systems are insecure and there are IT issues with them. 

It is very important in determining where the property is of the 

Department—by property I mean, for example, equipment, spare 

parts, munitions—so they don’t order too much and just have it 

wasting in a warehouse or they don’t have enough of what they 

really need somewhere else. 

So they need to know what they have and where they have it, 

and the financial statement audit will help with that. 

Mr. DESAULNIER. I’m going to interrupt you because I only have 

20 seconds, and I hoped to give time back to my friend from Alabama, but that’s not going to happen. 

Just on the procurement, your quote about the procurement, 

making sure that all these very sophisticated investments and new 

technology is done in a way that’s above board and ethical and gets 

the best cost-benefit for the American taxpayer. 

Mr. FINE. It is important. Procurement is a challenge. There are 

numerous weapon systems. It is important that the Department 

modernize and ensure that they are doing it in an effective way to 

get the systems on board in a timely way so they can be used, but 

not to do it in a wasteful way. It is an enormous challenge. I think 

the Department is focused on that, and it needs to continue to do 

so. 

Mr. DESAULNIER. Thank you. I yield back, Mr. Chairman. 

Chairman GOWDY. The gentleman from California yields back. 

The gentleman from North Carolina is recognized, Mr. Walker. 

Mr. WALKER. Thank you, Mr. Chairman. 

I appreciate the inspector general community and all the different work that you do. You recommended the savings of potenVerDate Nov 24 2008 09:49 Sep 11, 2018 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 H:\31119.TXT APRIL

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tially up to $98 billion, almost $99 billion. And we join your community in calling for accountable and effective government. 

Recently, I introduced the Good Accounting Obligation in Government Act. Now, this legislation would save taxpayer money and 

bring needed accountability to the Federal agencies by requiring 

them to report on the status of the GAO and IG recommendations 

in their annual budget justification. The GAO–IG is a House companion to Senator Young of Indiana and Senator Warren of Massachusetts’ efforts in the Senate. We want to continue to move that. 

To Ms. Lerner, does your office currently work with agencies to 

ensure recommendations are implemented and closed within a reasonable timeframe? 

Ms. LERNER. Yes, we do. 

Mr. WALKER. Thank you. 

What is the average time period it takes an agency to close new 

recommendations once they are issued? 

Ms. LERNER. I don’t know that we have that information. It probably varies from agency to agency fairly substantially. 

Mr. WALKER. Okay. Can you unpack that a little bit for us? Why 

it would it vary from agency to agency? 

Ms. LERNER. Because of the complexity of the cases, the complexity of the agency, the type of audit that you’re talking about. 

All of those contributes to it. 

Mr. HOROWITZ. One of the things we have been doing for about 

3 or 4 years now is posting every 6 months the status of the open 

recommendations chronologically so the taxpayers, the public can 

see, and Congress can see the oldest recommendations, the newer 

recommendations. 

From our standpoint we would expect an agency to, depending on 

complexity, close the recommendation within certainly 2 to 3 years. 

Mr. WALKER. And last question on this, do you think the GAO– 

IG Act possibly, I don’t know how familiar you are with it, could 

help ensure timely implementation of new and old unimplemented 

recommendations? 

Mr. FINE. Congressman, I believe it is important to focus attention on open recommendations. We do the same thing, issue a compendium of open recommendations. There’s 1,200 of them in the 

last 10 years. Some of them are very old. 

I think anything that provides transparency and sunshine is important. I believe in what Justice Brandeis said, ‘‘Sunshine is the 

best disinfectant.’’ And that is important in terms of follow-up of 

recommendations, as well. 

Mr. WALKER. Thank you very much. 

Mr. Chairman, I would like to yield the balance of my time to 

the gentleman from Alabama. 

Mr. PALMER. I thank the gentleman. 

Going back to the contract issue, Ms. Lerner, in your testimony 

you cite $500 billion in fiscal year 2017 and $700 billion in fiscal 

year 2018. Is that the sum of contract values or does that include 

change orders? 

Ms. LERNER. I think the $700 billion—— 

Mr. PALMER. Would you turn on your microphone? 

Ms. LERNER. I’ll get this eventually. 


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I think the $700 billion figure in my testimony was on grants. The $500 billion figure was on contracts. 

Mr. PALMER. Contracts. 

Ms. LERNER. So they’re usually relatively close to each other with 

grants, you know, tipping a bit on an annual basis. 

Mr. PALMER. What I’m trying to get to is this committee has 

looked into issues where we have had substantial overruns in contracts, particularly with embassies. And one of the problems I 

think we’re having through the Department of Defense is how we 

appropriate money for certain projects. And there’s pressure felt by 

the various agencies, including the Department of Defense, to start 

something before the contract design is ready and consequently we 

run into major overruns. It’s something that I’m trying to develop 

a remedy for that I would like to talk to you later. 

In the final minute or 20 seconds that the gentleman has yielded 

to me, you have all testified that there are agencies that do not 

comply with directives or recommendations, nor do they produce 

the requested progress or action reports. And this is for all three 

of you. What needs to be done to motivate agencies to comply? 

Mr. Horowitz. 

Mr. HOROWITZ. From my standpoint, I think being transparent, 

letting the Congress, the public know. 

One of the things, as I mentioned I implemented, was posting 

them publicly. The first time we did that drill we had 800-plus 

open recommendations. I told the Attorney General, the Deputy Attorney General, I was going to do that. They immediately sent out 

all the open recommendations to all the components, and our 

phones were ringing off the hook from the component heads who 

wanted to close their recommendations before they went public. 

I agree completely with IG Fine, the sunlight here is the key to 

that and holding people accountable to make sure these get done. 

We have to do that. That’s one of the tools in our toolkit. 

Mr. FINE. I agree with that, and when we issued our compendium it got the attention of the Department leaders. They have 

taken it very seriously. The Secretary of Defense has asked people, 

where are you on these recommendations? The tone gets set at the 

shop. 

Sunshine is, I believe, the best disinfectant. One thing you could 

consider is having a hearing on open recommendations. These 

hearings matter, and people focus attention on it when they have 

to. 

Mr. PALMER. My concern is, is that some of the stuff is carried 

over so long, particularly on improper payments, the amount keeps 

going up. And my staff and I are looking for ways to motivate, encourage, figure out some way to reduce those payments and encourage more compliance, particularly with the IGs’ recommendations. 

Mr. HOROWITZ. And if I could add on your point on contracts, I 

think one of the things that struck us as we did this report, and 

we talk about this in the report, is on contract management and 

oversight within the agencies. 

Our staffs, we get—our budgets generally are 0.3 percent of the 

agency’s budget. They’re a very small number. The real effective 

day-to-day oversight has to happen by management. It has to happen in the agency. 


KING-6430 with DISTILLER
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And what I think we have talked about that surprised many of 

us is the same problem we were seeing over and over again in contract management, which is not enough people to do it. It is viewed 

as a collateral duty often. We have had examples, we have put out 

reports where the Department’s components are buying fuel and 

they’re paying the invoice before knowing whether the fuel is there. 

Now, we have checked, and actually the goods were there. But 

that’s so basic you would expect that to be understood. And the 

problem that we hear is, and we’re not really in a position to know 

if it is true or not, is: Well, I’m managing dozens and dozens of contracts, I can’t get out to look at the contract prison regularly or the 

other facility that we’re using. 

And that’s something I think we all need to think about, whether 

we’re doing all these contracts and contracting and grants without 

getting the infrastructure to manage the additional moneys that 

are going out the door, to your point. 

Ms. LERNER. The same thing happens at my agency with grants. 

You know, there are far too many grants and one person has to 

see, and they just can’t add the value that the American taxpaying 

public needs. 

Mr. PALMER. I thank the gentleman from North Carolina and the 

chairman for their indulgence. I yield back. 

Chairman GOWDY. The gentleman yields back. 

The gentleman from Maryland is recognized. 

Mr. SARBANES. Thank you, Mr. Chairman. 

I know you were asked some questions about the ethics, compliance, and integrity within the agencies before. I wanted to just 

come back to that a little bit because we’re really putting a focus 

on what kind of reforms might be appropriate, what kinds of things 

that may be operated as guidelines or norms, but not actually put 

into statute or regulation where it might be appropriate to take 

that next step. 

So maybe you could speak a little bit more, I’m interested—I 

know there’s been some attention drawn to some of the ethical 

lapses of senior officials within some of these agencies. And, obviously, that’s a major concern for us here because that kind of—the 

culture of integrity and adherence to ethical norms and standards, 

obviously, begins at the top. 

But I was curious if you could speak a little bit more to how you 

see the ethical blindness or some of these issues, how that actually 

does flow down through an agency, and, also, how that information 

comes to you. 

Are there surveys that surface the employees’ concerns about 

this? Is it more anecdotal? Is it your perception that when there’s 

ethical lapses it forces employees into a very difficult position because they are having to in a sense defend or protect supervisors 

or officials up the chain even though they don’t necessarily agree 

with that and it puts them in a kind of untenable position? 

What are some of the elements by which the culture is damaged 

in an agency based on ethical lapses and morale suffers? I’m interested in getting a little more granular on that. And I invite anybody on the panel to respond. 

Mr. FINE. So I’ll try and unpack that question because there’s a 

lot in there. But I do agree that the tone gets sets from the top, 


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and it is very important for the ethical culture to be set from the 

top and to make clear what is acceptable and what is not, and 

then, when it is not, to hold people accountable in a timely way. 

I’m fortunate that in the Department of Defense the Secretary of 

Defense takes that very seriously and has done that regularly and 

publicly, and that’s important to the conduct. 

We also look at trends, and the trends are actually pretty good 

in the Department of Defense in terms of substantiated misconduct. It has gone down. That doesn’t mean any misconduct is 

acceptable, but it is going in the right direction. 

There does need to be education, and we need to have a role in 

providing proactive education to people about what they can’t do, 

what they shouldn’t do, how they should deal with things, and 

what’s going to happen if they do it. So that’s very important. 

It is also very important to operate effective hotlines. We have 

hotlines where we get anonymous complaints that people can take, 

get exposed to us in an anonymous way or saying their names. And 

either way we need to take it seriously. 

We get a lot of them. We get about 13,000 a year. Many of them 

are just frivolous or just can be dismissed immediately, they are 

the wrong agency. But some of them are serious, and that is an important way. 

And ultimately it is important that people be clear that there 

will be consequences for misconduct, and we play an important role 

in that, as does the agency taking action on our reports in a timely 

way. 

Mr. HOROWITZ. I think one of the things that has changed and 

has been an important change is the IGs posting public summaries 

of misconduct findings by employees at the GS–15 and above level. 

Some of us were doing that were before Congress passed the IG 

Empowerment Act, but we’re now all required to do that. 

I can tell you from our standpoint, when we started posting those 

summaries, back to the point of sunlight being the best disinfectant, we started seeing much quicker action, much quicker responses by the Department in responding to those findings, whereas before it could take months or years. 

The Department quickly understood that they would be getting 

inquiries, whether it was from Members of Congress, whether it 

was from the public, whether it was from the press, about our findings and whether they had taken action. And so that has been important. 

But I think that is one of the consistent frustrations among the 

IG community, what IG Fine said, is there needs to be timely response to misconduct, certainly at the highest levels, but, frankly, 

at all levels. 

If you talk to folks about culture, a lot of people will say midlevel 

management is equally important if not more important at some 

level, because those are the people who touch everybody. Very important for tone to be set at the top, but midlevel managers need 

to walk the walk on those issues. 

And we are seeing improvement in the timeliness of taking action, but that’s something that I think the committee could consider, how we make sure that people are held accountable in a 


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prompt and timely way. Justice delayed is justice denied at all levels. 

Mr. SARBANES. Thanks very much. I yield back. 

Chairman GOWDY. The gentleman from Maryland yields back. 

The gentleman from South Carolina is recognized. 

Mr. SANFORD. Thank you, Mr. Chairman. 

I want to follow up on the question that’s just being asked, because if you cut to the chase fairly uniformly and fairly consistently 

your recommendations are ignored. 

What can be done to change that? I mean, part of it is what you 

were just getting at. Are there other things that can be done so 

that your findings are not ignored as they are? I mean, I think it is amazing to think there are in essence $100 

billion worth of savings that are floating around out there and that 

there are indeed 39,000 recommendations on your site, and yet, you 

don’t see all that much action relative to the amount of data that 

you have out there suggesting change is needed. 

Mr. HOROWITZ. A couple things I’ll pick up on that have been 

mentioned that I think are important and others I think it is important that we as IGs make known to the public and they’re 

transparent. 

I think it is very important for Congress to do follow-up as well 

as the IG. We consistently do follow-up, but we’re not management. 

And we can’t, other than continuing to issue reports, continuing to 

make public what we’re finding, we’re not management, we’re not 

ultimately the ones who are going to implement it. 

The other thing we did, and I met with Director Mulvaney when 

he first came on board, he asked us to put together a list of some 

of the bigger outstanding recommendations. We have done that. 

And I think OMB can also play a role through the budget process. 

Mr. SANFORD. If you were to pick the single, each one of you 

were to pick the single most glaring example of waste in your view, 

it would be what? Waste or inefficiency or something that should 

be changed. 

Mr. HOROWITZ. I can speak to the DOJ recommendations. Give 

you an example, a couple years ago we issued a report where we 

found that—— 

Mr. SANFORD. Just shorter because I have only got 3 minutes. 

Mr. HOROWITZ. The Bureau of Prisons was making multiples of 

the Medicare rate for healthcare, and it is not capped like the Department of Defense and others. 

Mr. SANFORD. So you would say Bureau of Prisons. 

Mr. HOROWITZ. Hundred million dollars. 

Mr. SANFORD. Okay. 

Ms. Lerner, you would say what? Just one. 

Ms. LERNER. We have issued many recommendations related to 

large facility construction at NSF, and they have actually finally 

taken significant action to put policies and procedures in place to 

make that better as a result of our work. 

Mr. SANFORD. Something more concrete. 

And while you’re thinking on it, Mr. Fine. 

Mr. FINE. There’s so much in the Department of Defense, but 

you’re asking for one, and I would just say duplicative lines of effort. They’re all doing similar things. 


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Mr. SANFORD. I know, but that’s nebulous. 

Mr. FINE. Healthcare. Why do we have separate healthcare systems? Why do we have separate PXs for different services? Why do 

we have separate, I don’t even know, suspension and debarment offers? Why can’t we have more centralized services in the Department of Defense, rather than have each one of them have their own 

PX, MX, healthcare clinic, things like that. 

Mr. SANFORD. Ms. Lerner, you were about to say? 

Ms. LERNER. We have made so much progress with the agency, 

I don’t really have a glaring problem right now. I have some minor 

issues, but we are in a pretty decent place. 

Mr. SANFORD. So the National Science Foundation is government 

nirvana when it comes to waste, fraud, or abuse? 

Ms. LERNER. I would not say that. But if you had asked me this 

question 2 years ago I would have had an entirely different answer 

for you. 

Mr. SANFORD. Okay. Quick question. Given the charges of Russians, given Facebook, it just seems that the internet, social media 

and data, is in the news. In reading through some of your stuff 

there have been any number of different threats in terms of data. 

You look at some of the big breaches over the years. 

Is there anything that jumps out at you from the standpoint of 

making the data systems that we have at the government level 

within your respective areas tighter and more secure? 

Mr. FINE. Absolutely. We have issued reports on that. For example, in the NSA, which has had data breaches, particularly from insiders, that they do not have adequate controls on that in terms 

of the privileged users, in terms of enclaves, in terms of all sorts 

of things, that they need to tighten up their systems. 

Mr. SANFORD. Do you think culture is right there? It’s a systems 

question or a culture question? 

Mr. FINE. I think it’s both. I think it’s a combination of both. 

Mr. SANFORD. Okay. I have got one more question I just wanted 

to get to, which was I noticed deferred maintenance as showing up, 

something in a couple of different reports. You know, borrowing 

from Peter to pay for Paul seems to be the way of government. Is 

there something that you think systematically might address that, 

whether that is a capital account versus an operating account? Is 

there something that could be more concrete so that you don’t see 

the level of deferred maintenance that you all’s reports seem to 

suggest exist? 

Mr. HOROWITZ. Let me say I think from our standpoint we have 

seen it in the prison system, aging prisons. And what happens is 

there’s such a focus on finding either new bed space or other places 

and thinking new as opposed to fixing what’s old. 

I think it’s a priority and a management issue at a certain level, 

a culture issue, that people aren’t focused on maintaining what 

they have. They’re getting funding and they’re thinking about 

building new. 

Mr. SANFORD. Mr. Chairman, I see I’ve burned through my time. 

Thank you, sir. 

Chairman GOWDY. The gentleman from South Carolina yields 

back. 

The chair will now recognize the gentlelady from New York. 


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Mrs. MALONEY. I thank Chairman Gowdy for yielding. 

And it is such a great pleasure to see our ranking member 

strongly here fighting for the people. We welcome you back to your 

good post and office for the people. 

And I want to really thank very much the IGs for the role that 

you are not only playing today, but that you play every day in trying to maintain the trust of the public and the integrity of our government. 

And if our government doesn’t have trust, and that’s a big part 

of your job, then the people won’t follow it. So I think your role is 

one of the most important in government and I want to thank you 

for it. 

And I think working together, if we work together, we’re going 

to be stronger in our oversight. And I welcome the opportunity 

when more comes out from your reports to try to implement them 

into positive action for change to make government work better for 

the taxpayers and for everybody. 

I want to compliment the chairman for having a hearing on the 

Census. I believe it is May 6 coming up, right, May 6, and I’m looking forward to it. 

But I would like to place in the record several letters that I’ve 

written to Secretary Ross requesting information about controversial items in it for which I have received no response. And I’m hoping that at the May 6 hearing—excuse me, May 8 hearing—that 

the information will be provided so we can discuss it. 

At issue is something that is critical. The Census is the only document that is required of the executive branch in the Constitution. 

It is the largest peacetime undertaking that this country does, and 

it becomes the focus of all of the research for what we do as a country. It is critical. 

The private sector cares just as much about it as the public sector for our planning, and it is the basis of the distribution of over 

700 billion yearly in Federal funding for healthcare, transportation, 

everything else. 

And also the basis of representation. Our representation numbers on the city, State, and Federal level are based on Census, and 

they ask for everyone to be counted. 

And at issue is this question that they added at the last minute 

asking about citizenship when the studies of the Census had 

showed, and by outside groups, that it decreases participation, so 

therefore, it would lead to an inaccurate Census and possibly more 

moneys that have to be spent on it. 

So I just wanted to ask if the questions could be answered for 

the hearing. 

And also, along with the ranking member, I have put in a bill 

called the IDEA Act, that you wouldn’t do last minute changes 

without studying what the impact would be on public policy. 

So I just wanted to put that in as a request for the May 8 hearing coming up that our oversight will be stronger. 

I am interested, a lot of you have talked about inefficiencies, and 

we need to get IT into all of our agencies, and we need to coordinate it, and we need to make it work, and it is not working. And 

if we can put a man on the moon, we can figure out how to get 

good IT into all of our agencies. 


KING-6430 with DISTILLER
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That’s one of the areas that you called and talked about as being 

an important area we need to look at. And I think one of your reports said, and I quote, that our IT is outdated, obsolete. You’re 

pretty damning about our IT. 

In your testimony, Mr. Fine, you stated that DOD is, quote, operating with many decentralized and noncompliant information technology systems. 

Why are we putting money into things that are decentralized? 

We should try to centralize for our procurement, for our sharing of 

information, and everything else. And yet, I read that we have a 

big budget for this. We have a bigger budget than most countries 

in the world. 

So why can’t we get there? Why can’t we get our act together, 

basically? And what can we do to conduct more rigorous oversight, 

working together? 

Congress would like to be a partner with you on seeing if we can 

get our IT systems working in a better way. I mean, I think we 

have an example of where technology has far outpaced our ability 

to keep up with it. 

Mr. Fine. 

Mr. FINE. Yes, that comment had to do with the multitude of financial feeder systems that feed into the main system, and many 

of them are obsolete, they are old. It is part of the problem, is each 

entity, each defense agency, each service wants its own system, 

wants to customize its system, is wedded to that system, and resists going to a centralized system. 

The Department is moving towards that, to their credit. It’s 

going to take a while. IT systems are very difficult, very challenging. You need adequate staff to do that. And even hiring and 

retaining and growing adequate IT staff within the agency, certainly in the Department of Defense and others, is a challenge, particularly given the salaries the government pays versus what they 

can get elsewhere. 

So that is tremendous challenge. And if you’re not moving forward every day you’re going to move backward. You’re going to be 

way behind. IT changes so quickly that this does have to be a 

focus. I know the Department of Defense is focused on that, but 

they need to move forward with it, and they are trying to do that. 

Mrs. MALONEY. I wish you would—my time has expired—but if 

you can get to the chairman some ideas in writing of how we could 

maybe work. 

It seems silly to build an IT system that’s not centralized in payment and everything else and information sharing. You know, we 

have all these lists about bad contractors, don’t hire this contractor, 

but how do people access them? 

Any ideas that you have to make that system work better, I 

think that’s something that we in a bipartisan way would welcome. 

My time has expired, way, way over. Thank you. 

Mr. CONNOLLY. Mr. Chairman, if I could just add one thing. 

Chairman GOWDY. Sure. 

Mr. CONNOLLY. I would say to my friend from New York, Mr. 

Fine’s testimony notwithstanding, it is important to note this committee has the scorecard on FITARA and the Pentagon got an F. 


KING-6430 with DISTILLER
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So in terms of progress this committee has yet to see it as measured by metrics set by the GAO and this committee in terms of implementation of the information technology modernization. 

Thank you. 

Chairman GOWDY. The gentlelady yields back. 

I prefer to go last. We have got a great issue today, which is we 

have had wonderful member participation on both sides. So I’m 

going get the gentleman from Alabama to close out the hearing, but 

I’m going ask my questions now, with apologies to my friend from 

Wisconsin and Iowa. 

Mr. CONNOLLY. Mr. Chairman? 

Chairman GOWDY. Yes? 

Mr. CONNOLLY. I have not yet had a chance to ask questions. 

Chairman GOWDY. I was not going to exclude you either. You’ll 

go right in between the two R’s. 

Mr. CONNOLLY. I’ll try to be brief. Thank you. 

Chairman GOWDY. Inspector General Horowitz, the 2008 reform, 

why was it necessary? And what progress has been made as a result of the 2008 reforms? 

Mr. HOROWITZ. Well, the importance of the 2008 reforms was creating the Council of the Inspectors General to bring together the 

73 IGs, to look at issues that transcend the Federal Government, 

so that we’re not just only running in our own lanes but we’re 

thinking across IGs. 

And it in the 10 years we have been in existence has helped, I 

think, immeasurably IGs think broader than just our own agencies 

and our own oversight, whether it is the cross-cutting reviews we 

have done about IT issues, we’re working now on a Native American review, a lot of agencies touched that. 

And we have put together oversight.gov to put in one place all 

the reports so that the public, Members of Congress, the executive 

branch can see our work across the 73 IGs. 

Chairman GOWDY. I want to ask you a two-part question. Assuming no additional funding, what reform could be implemented with 

respect to your jurisdiction that would show progress? 

So I’m not going to give you any money, but I’m going to give 

you free rein to make any reform that you want with respect to 

your oversight of the Department. 

Mr. HOROWITZ. Well, I think the biggest ask we have had for several years now during the IG Empowerment Act was the ability to 

issue testimonial subpoenas, which obviously is a no-cost issue, an 

important issue we have identified, we have worked with this committee on. You have reported out a bill. I would note that Mr. Fine 

and DOD IG has that authority, and that’s what we’re looking for. 

Chairman GOWDY. All right. Now I’m going to give you whatever 

amount of money you want. What reform would you implement 

that would help you provide oversight if costs were not a consideration? 

Mr. HOROWITZ. I think there are a couple of things we have 

looked for on the IT side. We have looked to modernize our own 

systems and create more systems that will demonstrate transparency and give us and the public and the Congress greater oversight on disaster assistance. Multibillion dollars being sent out. 


KING-6430 with DISTILLER
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We want to build a web page that shows the oversight work we 

have done, as we have talked about today in this hearing. Putting 

forward our findings, particularly where there are failures, is much 

more likely to trigger reform than just keeping them in-house and 

the public not seeing them. 

So what we would like to do is improve, build upon oversight.gov, 

and build a platform that would show open recommendations and 

allow those kind of issues to be seen more by the public and Congress. 

Chairman GOWDY. From time to time I’m a slow learner, and I 

know you have explained this to me before, but I want to give you 

a chance to do it again: The interplay between your agency and the 

Office of Professional Responsibility within the Department of Justice. 

Mr. HOROWITZ. So we are the only IG office of the 73 Federal inspectors general that does not have the authority to investigate 

misconduct by all employees in our agency. The exclusion that Congress put in place in the IG Act is for misconduct by lawyers in the 

Department, including prosecutors when they engage in misconduct, ethical violations in the courtroom. 

We have asked for that authority for the 30 years since we were 

created in 1988. Mr. Fine, when he was IG, spent 11 years arguing 

for that authority. His predecessors did, as well. 

We think independent oversight matters, having a statutorily 

independent IG do that rather than having an organization that’s 

overseen by the Department’s leadership. It’s long overdue. It’s 

something that should be done. 

Chairman GOWDY. Well, in my remaining time I am just going 

to make an observation. 

It seems like a tough political environment we find ourselves in. 

It has, frankly, been that way the whole time I have been in Congress. So increasingly folks are looking to you as kind of that neutral, detached arbiter to kind of separate out what facts are relevant, what’s not, and what conclusions we should draw from those 

facts. 

But you’re only as good as your access to information and witnesses. Your experience with the Department the whole time, 

crossing three AGs and two administrations. 

Are you getting access to the physical evidence, the documents, 

and the witnesses that you think you need to be able to do your 

job in a way that is confidence inspiring for the public? 

Mr. HOROWITZ. Thanks to the help of the committee in passing 

the IG Empowerment Act and all the hearings you held we are getting access to records, the records that we need, the documents we 

need, and we have the ability to subpoena third parties if we need 

records. 

On testimony, if an employee is in the Department of Justice, we 

have the ability to compel their testimony under the IG Act. That’s 

fine. 

The issue remains third parties. And we often get voluntary cooperation with us. But if individuals don’t speak to us voluntarily, 

if there isn’t the ability to work with a prosecutor to issue a grand 

jury subpoena, we have no ability to reach those individuals, even 

if they have highly relevant evidence. In a whistleblower case, they 


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might have retired, in other misconduct cases, we can’t get that 

evidence. 

Chairman GOWDY. Well, I appreciate the work of all three of you 

and all the inspectors general. I think the public really does view 

you all as the neutral, detached umpires that you would want 

doing this work. 

With that, the gentleman from Virginia is recognized. 

Mr. CONNOLLY. I thank the chair. 

And building a little bit on what the chair was just asking, Mr. 

Horowitz, you know, you want transparency, you want cooperation. 

Surely that would also apply to the IGs themselves, would it not? 

Mr. HOROWITZ. Yes. 

Mr. CONNOLLY. Because in order to have faith in your work, and 

this committee certainly puts great faith in your work collectively, 

you have to be unassailable, you collectively. 

Mr. HOROWITZ. Correct. 

Mr. CONNOLLY. If there’s a taint or a tarnish or questions of ethics or methodology, that could damage the entire credibility of a report or an investigation undertaken by any and all IGs. Is that a 

fair statement? 

Mr. HOROWITZ. It is. 

Mr. CONNOLLY. So what is the process for looking at yourselves 

to make sure that those standards are adhered to and complaints 

are judiciously and transparently adjudicated? 

Mr. HOROWITZ. So one of the reforms that occurred in 2008 with 

the amendment to the IG Act was the creating of an Integrity Committee. That was at the time chaired by the FBI. That had seven 

members at the time, four of whom were IGs appointed by the 

chair of CIGIE and the FBI appointee chairing it, a representative 

from the Office of Government Ethics and the Office of Special 

Counsel, the special counsel. 

That process was changed with the IG Empowerment Act a year 

and a half ago because of concerns over how it was being run and 

operated and handled. And so Congress changed the process, so 

now there is an IG chair of the committee. 

Mr. CONNOLLY. Instead of the FBI? 

Mr. HOROWITZ. Instead of the FBI. The FBI is still a member, 

but it is now a six-member committee. The special counsel is no 

longer a member of the committee because of potential conflicts 

that arose when there were whistleblower issues that were within 

the special counsel’s jurisdiction. They wanted to make sure that 

that didn’t occur. 

And over the last year we have been transitioning control over 

records from the FBI to the Council of IGs, the challenge being because CIGIE has no appropriation and had no systems or systems 

of records in place to control, collect those records. We had to go 

forward and follow for public comments, regulations, we have to 

create a data system. 

So we have been doing that over the last year. It has taken us 

some time. But, frankly, we have asked for funding to help do that. 

We still don’t have funding, so we’re doing it through the volunteer 

contributions of the membership. 

Mr. CONNOLLY. Something Congress obviously has to look at. 


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Ms. Lerner, you have the title of vice chair of CIGIE. Is that correct? 

Ms. LERNER. Yes, sir. 

Mr. CONNOLLY. And let me see, in fiscal year 2017 your committee, the Integrity Committee, received 59 allegations of IG misconduct. Is that correct? Take it on faith. 

Ms. LERNER. If you have read that from reporting from CIGIE, 

I’m assuming that’s correct. 

Mr. CONNOLLY. All right. Of those 59, 50 closed with no referral 

for investigation. Sound familiar? 

Ms. LERNER. It does. 

Mr. CONNOLLY. Six were referred to another agency. And 2, only 

2, were referred to the Integrity Committee for further investigation, 2 out of 59. 

Now, without knowing the particulars, and maybe some of them 

are frivolous and maybe some of them are just, you know, payback, 

anyone can file a complaint, but just the raw numbers and my own 

experience, frankly, with CIGIE would suggest that the robustness 

of the willingness to investigate one’s own is lacking. 

Ms. LERNER. I’m sorry that it appears that way. I can say as 

someone who served on the Integrity Committee that we looked at 

the allegations that came in really seriously. I was on it several 

years ago. But we took our responsibilities very seriously. 

Mr. CONNOLLY. Well, Ms. Lerner, I happen to be somebody who 

filed a complaint along with a colleague on this committee. Two of 

us from this committee filed a complaint against a specific IG. 

And I can tell you the process was most unsatisfying. It wasn’t 

rigorous. There wasn’t accountability. There was no explanation for 

the decision taken. There was no point-by-point response to a fairly 

carefully worded complaint that was rather lengthy. That’s a pretty 

unsatisfying process for somebody concerned about integrity. 

Ms. LERNER. And I believe that that’s one of the reasons that we 

have seen some of the changes that we are seeing now, that the 

frustrations that you felt and that some of us as members on the 

committee felt at that time led to the shift from the committee 

from the FBI’s responsibility to CIGIE. 

And I know that there are other changes that have been made 

to try to respond to the type of frustration that you felt and that 

some of us that served on the committee felt to make it better. 

Mr. CONNOLLY. Well, I invite you and your colleagues, and Mr. 

Horowitz and I have talked about this, but I am determined that 

we’re going to codify the process. 

This committee on a bipartisan basis has to be assured as to the 

integrity of IGs as they do their work. They can’t be compromised 

on partisan politics, they can’t be compromised on any grounds. Because we want you to work. We want you to be successful. We want 

people automatically to assume that what you are saying is a 

truthful rendition, unbiased, of where the truth took you. 

So look for legislation, and we could do it cooperatively or not. 

But we are not satisfied with the process based on our own experience. And I believe we are going to have to engage in some codification. 


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I know my time is up, Mr. Chairman, but if you would allow Mr. 

Horowitz to comment, he seems eager to comment on this matter, 

and I will then yield back. I thank the chair. 

Mr. HOROWITZ. Can I just briefly? 

I certainly appreciate your concerns. We met shortly after you 

became chair in 2015. And I think we have seen—we worked with 

Congress on reforms that were needed and put in place in the IG 

Empowerment Act. 

I’m certainly happy to work with you and other members of this 

committee on further reforms because we agree completely that 

you, the public, in particular, at large needs to understand, and 

people in our own agencies, that we’re being watched as well if 

there’s something we did that was improper or incorrect. 

And, in fact, one of the things we did, and the report is up here 

with the Congress as required by statute, we have put in place 

twice revisions to the procedures and policies of the Integrity Committee to address some of the concerns that we spoke about. 

And so I certainly take them seriously. I know IG Lerner takes 

them seriously from her service on the committee. I have never 

been on the committee. And I think it is very important that we 

do the right thing by that and look forward to working with you 

on it. 

Mr. PALMER. [Presiding.] The gentleman yields back. 

The chair recognizes the gentleman from Wisconsin, Mr. 

Grothman, for 5 minutes. 

Mr. GROTHMAN. Sure, I have a couple of questions. 

First of all, the report in general identifies procurement planning 

as a challenge. Give us an example about how the lack of enterprise-level procurement planning has impacted your agencies. 

Mr. FINE. I think, for example, in the Department of Defense 

there are many issues with procurement, including moving forward 

without having a requirement set. Often we have requirements 

from different parts of the Department of Defense, and it is hard 

to adjustment to them. 

The F–35 fighters are, for example, a big one, and that has created challenges and cost overruns because of the differing requirements. So there’s a massive amount of money in it, and we need 

to make sure it’s effectively moved forward. 

Mr. GROTHMAN. Okay. 

General QUESTION. We talked before about waste, fraud, and 

abuse. You know, that’s a famous saying that’s been around here 

probably when I was a child. I guess I’ll deal with each one separately. 

With regard to fraud, if there is genuine fraud, do you see a follow-up or consequences for the employees involved in that fraud? 

Mr. HOROWITZ. I would say it depends, frankly. It varies among 

the components in the Department. And one of the things we have 

worked hard to do in our OIG is not only alert management of the 

components, law enforcement going into other components when we 

have had other concerns, but, frankly, report to the Deputy Attorney General and the Attorney General so that action is taken to 

reform the process. 

Mr. GROTHMAN. Now, I’m just going to say reform the process. 

Fraud means criminal, right? 


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Mr. HOROWITZ. Oh, I’m sorry. I thought you were talking about 

the misconduct side of it. 

I agree. We bring it to prosecutors because we don’t have the authority to prosecute. And I will say from my standpoint one of our 

frustrations has been some of what I’ll call the smaller dollar 

frauds that may not meet threshold levels in U.S. Attorney’s Offices because they’re busy with so many other matters, making 

sure those get attention. 

That can be a challenge because I don’t have, frankly, like at 

DOD perhaps, frauds that involve tens of millions of dollars. Nevertheless these are government officials engaging in wrongdoing, 

theft, fraud. Those people need to be held accountable criminally if 

they have engaged in a crime. 

Mr. GROTHMAN. Okay. And kind of a follow-up. Accountable 

could be two things. Accountable could be at a minimum fired and 

then appropriately criminal. What do you think usually happens, 

criminally, fired, or nothing at all? 

Mr. HOROWITZ. Again, I would say it depends. It is a challenge 

for us to get the kind of cases we want taken criminally at times. 

If there’s outright fraud and criminal conduct we do see the 

agencies taking action ultimately. Our concern is timeliness, particularly for someone who is engaged in criminal activity, we think. 

Mr. GROTHMAN. Okay. Oh, I’m sorry, Ms. Lerner. You were going 

to say something. 

Ms. LERNER. If I might add on that point, we’ve had some success. We have some of the same situations that Mr. Horowitz does 

with some of our cases being—the dollar amounts being not sufficient to interest Federal prosecutors, but we’ve had great luck with 

some State and local prosecutions. And the agency, you know, has 

usually removed the person, you know, even before those move forward. 

But we try, if we can’t get it at the State—you know, we’ll talk 

to any prosecutor that has an appropriate violation that can work 

with us. 

Mr. GROTHMAN. And, Mr. Fine, obviously, we have—I mean, we 

are again and again told we have to spend more money on defense. 

And this budget, I think, contains a 10.5 percent spending increase. 

Maybe a little more than I would have preferred. But you read 

about stories about waste in the Department of Defense, and some 

of that’s not criminal, but some is just amazing. 

Are there any consequences for people who come up with these 

amazing stories you talk about in the Department of Defense, or 

do they just keep on with their same position or rank or whatever? 

Mr. FINE. It depends. It varies. Sometimes there are consequences both in terms of not getting promoted, moved out, not 

being viewed as effective. Sometimes there are not consequences 

and people continue on. It really does depend on the circumstances 

and often depends on the leader. 

Any time there is that amount of money, there is going to be inefficiencies, waste and fraud, and it varies across the board. And 

there ought to be consequences for that. 

Mr. GROTHMAN. Right. I guess the question is, you know, when 

you hear about massive cost overruns or things that shouldn’t hapVerDate Nov 24 2008 09:49 Sep 11, 2018 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 H:\31119.TXT APRIL

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pen, does anybody pay a price for that or they just hang around 

with, perhaps, the ability to do it again and again? 

Mr. FINE. Like I say, it depends on the circumstances. It depends 

at what level it is. It depends who was responsible for it and why 

it happened. And sometimes it’s judgments, you know, where mistakes were made, but sometimes things that are avoidable. 

And so I can’t say there are never any consequences. But are 

there always consequences? No. 

Mr. GROTHMAN. Okay. Well, I’d like to thank you all for being 

here today. It always makes a great day when I look at my committee schedule and I get to see the IGs here. So thanks. 

Mr. PALMER. The gentleman yields. 

The chair now recognizes the gentleman from Iowa, Mr. Blum, 

for 5 minutes. 

Mr. BLUM. Thank you, Chairman Palmer. 

And thank you to the panelists for being here today. And thank 

for what you do in the IG community. It’s very much appreciated. 

I think I’m the last questioner, so that’s good news. 

I’m from the private sector, and seldom does a day go by in the 

Federal Government that I don’t shake my head. I view Congress 

as the board of directors of a very large enterprise doing trillions 

of dollars of business, and I see the IG community as our auditors. 

So I want your opinions on some of these questions. I want to 

go to the 60,000-foot level, if we could. 

First of all, is there accountability, in your opinion, in our agencies in the Federal Government? 

Mr. HOROWITZ. From my perspective, in our agency, sometimes. 

It varies. 

Mr. BLUM. Thank you for your honesty. 

Is there accountability? 

Ms. LERNER. I think I would have to agree with my colleague, 

Mr. Horowitz. Sometimes. 

Mr. BLUM. Department of Defense, accountability? 

Mr. FINE. That’s the exact words I wrote down here. It varies. 

Sometimes there is and sometimes there’s not. 

Mr. BLUM. And the second part, coming from the private sector, 

of that question, I always would say, in my companies, as evidenced by what? So if there is accountability, as evidenced by 

what? 

Where I’m heading here is what percentage of Federal employees 

are terminated every year? What percentage of management is terminated every year? 

Because I have sat here and asked witnesses about $370 million 

of an IT project that was scrapped after 4 years, $370 million of 

taxpayers’ money. And I asked, did anyone lose their job? And the 

answer was no. 

You got to be kidding me. 

So, I mean, what percent of our workforce in the Federal Government is terminated? 

Mr. HOROWITZ. I wouldn’t know what percent of the Federal 

workforce. Again, we could speak anecdotally to what we’ve seen as 

IGs in our own agencies. 

Mr. BLUM. Okay, give me that answer. Is it enough? 


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Mr. HOROWITZ. People are not held accountable in a timely fashion sufficiently, from my standpoint. And, again, it varies. I’ve been 

here a few times for hearings about some of the issues with DEA, 

other parts of the Department, giving bonuses to people who engaged in wrongdoing. As you recall, a couple of years ago—— 

Mr. BLUM. Or the IRS rehiring people that on their job thing 

says, ‘‘Do not rehire.’’ 

Mr. HOROWITZ. What message does that send, where you not 

only not take action against people, but you give them a reward, 

a bonus, an acknowledgment for the work they’ve done? 

Mr. BLUM. Only here. Only here in the Federal Government. 

Ms. Lerner, Mr. Fine, anything as far as termination percentages? If you don’t know the exact number, I mean, should it be 

more? How do you hold people accountable? 

Mr. FINE. I don’t know the exact number. 

In the Department of Defense what often happens, though, is if 

you’re not promoted, you’re out. And so sometimes this does have 

consequences, bad evaluation reports, and they do have to leave. 

But it does vary. It depends on the circumstances. So I think you 

can’t just have one general comment about that. 

Mr. BLUM. Because I only have 2 minutes left, let’s look at the 

positive side of this. And I often talk about incentives. And there’s 

incentives in the private sector to save money, for example, in a 

corporation. 

Are there incentives in the Federal Government to save taxpayer 

money? Are there incentives to report—what’s the incentive to report fraud? What’s the incentive to report abuse, waste, fraud, and 

abuse? What are the incentives, though? 

I think they’re upside down in the Federal Government compared 

to the private sector. Maybe we need more incentives. Maybe there 

need to be monetary incentives for people to save the taxpayers’ 

money. I’d like to have your thoughts on that. 

Mr. FINE. Here’s one incentive that is different in the Federal 

Government that I’d ask you to consider. If an agency does its work 

and doesn’t spend all its money, then the next year the money gets 

taken away and their budget is cut and they’re not praised for performing their mission effectively with a lower budget. It is, oh, you 

really didn’t need the money. 

And so there’s an incentive to spend it all at the end of the year. 

That’s a disincentive. That’s a perverse incentive, in my view. 

And that’s an issue I think is important, that does differ a little 

bit from the private sector where, if you do the job without spending all the money, there’s more praise than in the Federal Government. 

Mr. BLUM. Can you imagine if our Federal employees got a small 

percentage as a bonus of the money they saved the American taxpayer? Can you imagine unleashing that across our Federal agencies, how much waste we could reduce? Does that have merit? Does 

that idea have merit in the Federal Government, in your opinion? 

Anyone. 

Mr. HOROWITZ. Look, I think one of the challenges we face is an 

inability to reward our strongest performers, other than we, obviously, have honor awards. We give other recognition out. We are 

able to give some recognition each year in terms of bonuses. 


KING-6430 with DISTILLER
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But our bonus pools, just as an example, are about 1.5 percent 

or less of salaries, and compared to from my time in the law firm 

world, that’s a pretty small comparable number in terms of bonus. 

Mr. BLUM. My time is up. But I think we need to do a better job 

of holding people accountable and/or terminating them. And we 

also need to do a better job of rewarding performers with incentives. 

My time is up. But thank you so much for what the IG community does. 

I yield back. 

Mr. PALMER. I thank the gentleman for that excellent line of 

questions. 

I thank the witnesses for appearing before us today. I think this 

has been a constructive hearing. I think I can speak for my colleagues that this is an area and these are issues that you will have 

bipartisan support in trying to address. It’s a very important effort 

that needs to be undertaken. 

The hearing record will remain open for 2 weeks for any member 

to submit an opening statement or for questions for the record. 

If there’s no further business, without objection, the committee 

stands adjourned. 

[Whereupon, at 12:09 p.m., the committee was adjourned.] 


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APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD


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Æ 


KING-6430 with DISTILLERInsert offset folio 14 here 31119.014

The DoD IG report titled, 'The DoD Did Not Comply With the Improper Payment Elimination 

and Recovery Act in FY 2016" can be found at: 

https://media.defcnse.gov/2017/Jun/06/200 1757913/-1/-1/1/DODIG-20 17-078.PDF.