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[House Report 113-268]
[From the U.S. Government Publishing Office]

113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    113-268

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                               OPM IG ACT

                                _______
                                

 November 15, 2013.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

   Mr. Issa, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2860]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 2860) to amend title 5, United 
States Code, to provide that the Inspector General of the 
Office of Personnel Management may use amounts in the revolving 
fund of the Office to fund audits, investigations, and 
oversight activities, and for other purposes, having considered 
the same, report favorably thereon without amendment and 
recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     2
Section-by-Section...............................................     4
Explanation of Amendments........................................     4
Committee Consideration..........................................     4
Application of Law to the Legislative Branch.....................     4
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     4
Statement of General Performance Goals and Objectives............     4
Duplication of Federal Programs..................................     4
Disclosure of Directed Rule Makings..............................     5
Federal Advisory Committee Act...................................     5
Unfunded Mandate Statement.......................................     5
Earmark Identification...........................................     5
Committee Estimate...............................................     5
Budget Authority and Congressional Budget Office Cost Estimate...     5
Changes in Existing Law Made by the Bill as Reported.............     6

                     Committee Statement and Views

                          PURPOSE AND SUMMARY

    The Office of Personnel Management (OPM) provides various 
services to federal agencies on a reimbursable basis, including 
background investigations for individuals with access to 
classified information, leadership training, and human resource 
management. For these services, OPM enters into interagency 
agreements with customer agencies, deposits customer agency 
funds into its revolving fund, and accesses the fund to pay for 
delivery of such services as well as OPM's related 
administrative expenses. OPM serves as the regulator for rules 
affecting the management of federal workers, but through its 
revolving fund has also evolved into a fee-based service 
provider that provides approximately $2 billion each year in 
services to the very same agencies governed by OPM's management 
rules.
    H.R. 2860 will improve the OPM Inspector General's (IG) 
oversight of OPM's revolving fund activities by allowing the 
OPM IG to use a portion of revolving fund monies to pay for 
related audit and investigative work. H.R. 2860 limits the 
amount available to the OPM IG to one-third of one percent of 
the revolving fund budget, and requires the OPM IG to submit an 
annual budget request and report detailing its revolving fund 
oversight work.

                  BACKGROUND AND NEED FOR LEGISLATION

    OPM's revolving fund was established in 1952 to enable the 
agency to finance reimbursable background investigations for 
federal agencies.\1\ In 1969, Congress authorized use of the 
revolving fund to finance reimbursable training courses for 
federal agencies.\2\ In 1996, Congress expanded revolving fund 
activities to cover personnel management services performed at 
the request of federal agencies.\3\
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    \1\P.L. 82-375.
    \2\P.L. 91-189.
    \3\P.L. 104-208.
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    The two largest revolving fund programs are Federal 
Investigative Services (FIS) and Human Resources Systems (HRS). 
FIS conducts background investigations for more than 100 
federal agencies to determine employees' or potential 
employees' suitability for federal civilian, military, and 
contract employment, as well as their eligibility to access 
certain classified national security information. Currently, 
FIS conducts more than 90 percent of the background 
investigations for government employees and contractors, 
including for the Department of Defense.\4\ HRS provides an 
array of human resources products, including human resource 
strategy and evaluation solutions, a federal staffing group and 
a vendor management branch.
---------------------------------------------------------------------------
    \4\http:// www.opm.gov/ investigations/ background - 
investigations.
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    Since its 1996 expansion to cover personnel management 
services, OPM has experienced significant growth in the scale 
of its revolving fund programs--from $186 million in fiscal 
year 1996 to slightly more than $2 billion today. The estimated 
revolving fund obligations for fiscal year 2014 will exceed $2 
billion, approximately 90 percent of OPM's total funding 
request for the year.\5\ Under current law, OPM is required to 
set the price for revolving fund programs at a level that 
allows the agency to recover the actual cost of administering 
the program.\6\ However, the OPM IG's oversight costs are not a 
permissible expenditure from the fund.
---------------------------------------------------------------------------
    \5\U.S. House, Subcommittee on Federal Workforce, U.S. Postal 
Service and the Census. OPM's Revolving Fund: A Cycle of Government 
Waste, Hearing, June 5, 2013 (Serial No. 113-29), Washington: 
Government Printing Office, 2013.
    \6\5 U.S.C. Sec. 1304(e).
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    For more than 30 years, both GAO and the OPM IG have been 
concerned about the management of resources in the revolving 
fund. Each has issued a number of reports and audits examining 
various, and often recurring, problems.
    In 2012, OPM IG Patrick McFarland informed the Committee of 
what he described as a ``serious problem'' inhibiting his 
ability to perform the duties and responsibilities of his 
office. McFarland explained his office was at a point where it 
could not meet its statutory obligation to effectively oversee 
revolving fund activities. McFarland noted that his office had 
been ``inundated with requests from OPM to audit and/or 
investigate different parts of Revolving Fund programs,'' from 
technical audit work to the continuing flow of allegations 
involving falsification of background investigations and abuse 
of authority.\7\
---------------------------------------------------------------------------
    \7\Letter from Patrick E. McFarland, Inspector General, Office of 
Personnel Management, to Chairman Darrell Issa, and Ranking Member 
Elijah E. Cummings (10 September 2012).
---------------------------------------------------------------------------
    The President's FY2014 budget request includes a 
legislative proposal to allow the OPM IG up to .33 percent of 
revolving fund budget authority ``. . . . for the cost of 
audits, investigations, and oversight activities of the fund 
and the functions financed by the fund, conducted by the 
Office's Office of Inspector General.''\8\
---------------------------------------------------------------------------
    \8\U.S. Office of Management and Budget, The Budget for Fiscal Year 
2014, pp. 1162-1163, available at http://www.whitehouse.gov/sites/ 
default/ files/omb/budget/ fy2014/assets/opm.pdf.
---------------------------------------------------------------------------
    In 2013, OPM IG McFarland testified before the Federal 
Workforce, U.S. Postal Service, and Census Subcommittee, 
stating that OPM's revolving fund programs ``have been 
operating in the shadows for far too long,'' adding that 
``sunshine is the best disinfectant''.\9\
---------------------------------------------------------------------------
    \9\U.S. House, Subcommittee on Federal Workforce, U.S. Postal 
Service and the Census. OPM's Revolving Fund: A Cycle of Government 
Waste, Hearing, June 5, 2013 (Serial No. 113-29), Washington: 
Government Printing Office, 2013.
---------------------------------------------------------------------------
    H.R. 2860 provides resources for critical oversight that 
can be accomplished at relatively low cost, using existing 
funds.

                          LEGISLATIVE HISTORY

    H.R. 2860 was introduced by Representative Blake Farenthold 
and Stephen F. Lynch on July 30, 2013.
    Similar legislation, S. 1276, was introduced on July 10, 
2013, by Senator John Tester, with Senators Claire McCaskill, 
Rob Portman, Tom Coburn, and Ron Johnson as cosponsors. On July 
13, 2013, the bill was ordered favorably reported, as amended, 
by the Senate Committee on Homeland Security and Governmental 
Affairs. S. 1276 passed by the Senate by unanimous consent on 
October 10, 2013.

                           Section-by-Section

Section 1. Short title

    The short title of the bill is the ``OPM IG Act''.

Section 2. Use of Office of Personnel Management revolving fund for 
        audits, investigations, and oversight activities

    The Office of Personnel Management (OPM) Inspector General 
(IG) audits, investigations, and oversight activities relating 
to the revolving fund and the functions financed by the fund 
may be charged against the fund. The amount available to the 
OPM IG for revolving fund-related work would be limited to one-
third of one percent (.33 percent) of the revolving fund 
budgetary authority. The OPM IG would be required to submit an 
annual budget request and report detailing its planned 
revolving fund work.

                       Explanation of Amendments

    No amendments were offered to H.R. 2860.

                        Committee Consideration

    On October 29, 2013, the Committee met in open session and 
ordered reported favorably the bill, H.R. 2860, by voice vote, 
a quorum being present.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill allows the OPM IG to use a portion of revolving fund 
monies to pay for related audit and investigative work. As such 
this bill does not relate to employment or access to public 
services and accommodations.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

                    Duplication of Federal Programs

    No provision of H.R. 2860 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 2860 does not 
direct the completion of any specific rule makings within the 
meaning of 5 U.S.C. 551.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the reported include unfunded 
mandates. In compliance with this requirement the Committee has 
received a letter from the Congressional Budget Office included 
herein.

                         Earmark Identification

    H.R. 2860 does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of Rule XXI.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 2860. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 2860 from the Director of 
Congressional Budget Office:

                                                  November 4, 2013.
Hon. Darrell Issa,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2860, the OPM IG 
Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 2860--OPM IG Act

    H.R. 2860 would permit the Office of Personnel Management's 
(OPM's) Office of the Inspector General (IG) to receive funding 
through the OPM Revolving Fund. The bill also would set a limit 
on the funds available. Under current law, the OPM Revolving 
Fund provides about $2 billion a year for a variety of 
functions, including background investigations to determine an 
individual's suitability for a security clearance, but the IG 
is not permitted to use those funds to audit and provide 
oversight of the fund's finances.
    Based on information from the OPM IG, CBO estimates that 
implementing this legislation would enable the IG to begin 
auditing the OPM Revolving Fund at a cost of $13 million over 
the 2014-2018 period, assuming appropriation of the necessary 
funds. Enacting the bill would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    H.R. 2860 would impose no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
and would not affect the budgets of state, local, or tribal 
governments.
    On August 23, 2013, CBO transmitted a cost estimate for S. 
1276, the Security Clearance Oversight and Reform Enhancement 
Act, as ordered reported by the Senate Committee on Homeland 
Security and Governmental Affairs on July 31, 2013. Both bills 
contain similar provisions, and their estimated costs are the 
same.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *

PART II--CIVIL SERVICE FUNCTIONS AND RESPONSIBILITIES

           *       *       *       *       *       *       *

CHAPTER 13--SPECIAL AUTHORITY

           *       *       *       *       *       *       *

Sec. 1304. Loyalty investigations; reports; revolving fund

  (a) * * *

           *       *       *       *       *       *       *

  (e)(1) A revolving fund is available, to the Office without 
fiscal year limitation, for financing investigations, training, 
and such other functions as the Office is authorized or 
required to perform on a reimbursable basis, including 
personnel management services performed at the request of 
individual agencies (which would otherwise be the 
responsibility of such agencies), or at the request of 
nonappropriated fund instrumentalities, and for the cost of 
audits, investigations, and oversight activities, conducted by 
the Inspector General of the Office, of the fund and the 
activities financed by the fund. However, the functions which 
may be financed in any fiscal year by the fund are restricted 
to those functions which are covered by the budget estimates 
submitted to the Congress for that fiscal year. To the maximum 
extent feasible, each individual activity shall be conducted 
generally on an actual cost basis over a reasonable period of 
time.

           *       *       *       *       *       *       *

  (5) [The Office] (A) The Office shall prepare a business-type 
budget providing full disclosure of the results of operations 
for each of the functions performed by the Office and financed 
by the fund, and such budget shall be transmitted to the 
Congress and considered, in the manner prescribed by law for 
wholly owned Government corporations.
                  (B) Such budget shall include an estimate 
                from the Inspector General of the Office of the 
                amount required to pay the expenses to audit, 
                investigate, and provide other oversight 
                activities with respect to the fund and the 
                activities financed by the fund.
                  (C) The amount requested by the Inspector 
                General under subparagraph (B) shall not exceed 
                .33 percent of the total budgetary authority 
                requested by the Office under subparagraph (A).

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