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OFFICE OF INSPECTOR GENERAL
INSPECTION AND EVALUATION UNITS
EXAMPLES OF IMPACT
Inspection and Evaluation Committee
President's Council on Integrity and Efficiency
This document provides examples of the work performed by the inspection and evaluation units of the Federal Government's Offices of Inspector General (OIGs). By statute, the OIGs are responsible for independent oversight of the management and operations of Federal agencies. This responsibility includes objective assessments of the performance and efficiency of Federal programs, as well as analyses of related problems and issues.
These abstracts show the varied nature of OIG inspections and evaluations and the impact they have had--ranging from correcting employee ethics problems to saving millions of taxpayer dollars. The units that conduct the inspections and evaluations are tailored to meet the individual needs and priorities of the respective OIGs. Copies of the reports are available through IGnet or from the responsible OIG.
This listing will be kept current by periodic updates prepared by the participating OIGs. Any questions concerning these materials should be addressed to the Chair, Inspection and Evaluation Committee, President's Council on Integrity and Efficiency, Executive Office of the President, Washington, D.C. 20503.
TABLE OF CONTENTS
Department of Commerce
Employee Compensation Program 1
Assistance to Minority Owned Businesses 1
Export Controls for Biological Agents 2
NOAA Fleet Modernization 3
Next Generation Weather Radar System 3
Advanced Weather Interactive Processing System 4
Census Bureau--Data Capture 5
Department of Energy
Human Subject Research Internal Controls 6
Accident Investigation Board Concerns at Brookhaven 6
Savannah River Site Review 7
Equal Employment Opportunity Commission
Employee Misuse of Charge Cards 8
Buffalo Office Inspection 8
Federal Deposit Insurance Corporation
RTC Compliance with IRS Provisions 10
RTC Financial Center Reorganization 11
Employee Relocations 11
Controls Over Unclaimed Deposits 12
Reducing Federal Express Costs 12
Overcharges by Accounting Firms 13
Allegations Regarding FDIC Supervision of Bestbank 13
Federal Emergency Management Agency
Disaster Declaration Decisions 15
Reducing Public Assistance Program Costs 15
Department of Health and Human Services
Investigational Devices Case Studies 16
Questionable Payments for Incontinence Supplies 16
Medicare Payments for Orthotic Body Jackets 17
Child Welfare and Native American Children 17
Medicare Beneficiary Satisfaction 17
Payments for Home Health Services 18
Department of Justice
Influx of New Personnel in the INS 19
Fugitive Apprehensions by the US Marshals Service 19
Deportation of Aliens 20
Drug-Free Workplace Program 20
Safeguarding Grand Jury Material 21
Fraudulent INS Records 21
Department of Labor
Mine Safety and Health Administration Contract Award 23
Office of Personnel Management
Financial Management Reports and Improvement Project 24
Mobility Program Review 24
Office of Merit Systems Oversight 25
Small Business Administration
Prime Contracts and Subcontracting 26
Preferred Lenders Program 26
Surety Bond Guarantee Program 27
Best Practices Studies 28
Critical Issue Analyses 28
Department of State
Inspections of Overseas Posts 29
Department of Transportation
Commercial Space Transportation Licensing and Safety 30
Interagency Review of NOAA Charting and Cartography 30
DOT Offices of Civil Rights 30
Department of the Treasury
Community Development Financial Institutions Fund 32
United States Information Agency
Binational Centers and Overseas Programs 33
US Information Agency in Japan 34
Department of Veterans Affairs
Managing Violent Psychiatric Patients 35
Health Care for Women Veterans 36
DEPARTMENT OF COMMERCE
Department's Employee Compensation Program Could Be Improved
(IRM-4589 -- September 1992)
The OIG has long been concerned about the Department's management of its Federal Employees' Compensation Act program, which provides compensation and medical benefits to Federal employees for disability due to personal injury or disease sustained in the performance of duty. In a 1992 inspection, the OIG concluded that the program was not effectively administered, resulting in unnecessary costs and allowing indications of potential fraud and abuse to go undetected. Specifically, the OIG found that (1) Commerce Department bureaus were neither routinely challenging questionable claims nor effectively following up on claims soon after awards were made, (2) Labor Department billings were not consistently verified, (3) potential fraud cases were not being referred to the OIG, and (4) the Department did not have an effective automated system for tracking compensation claims.
The Commerce Department has significantly improved its processing of workers' compensation claims by setting operational guidelines, developing and implementing an automated tracking and monitoring system, using aggressive case management techniques, and conducting customer service surveys.
The case management and return-to-work strategies resulted in cost reductions of more than $1 million during the charge-back year of 1995, an 8.3 percent decrease from the previous year's costs. This was the largest percentage decrease in a program's cost among Federal agencies for the second consecutive year.
Improved Efforts Needed to Assist the Nation's Minority-Owned Businesses
(IRM-5443 -- September 1994)
The OIG conducted a program evaluation to assess the efficiency and effectiveness of the Commerce Department's efforts to assist the Nation's minority-owned businesses. The OIG concluded that Federal intervention is still needed to address the historical and continuing problems confronting such businesses. In addition, the evaluation identified obstacles and opportunities with respect to Federal minority business development programs. It showed that (1) Federal efforts to promote minority businesses are not focused, (2) no one Federal organization has the sole responsibility for the pursuit of small and disadvantaged business procurement goals, (3) the Commerce Department lacks the authority and resources to effectively lead Federal efforts, and (4) the Minority Business Development Agency's priorities for providing assistance to minority business are not clear. In addition, the Agency needs to resolve difficult managerial and operational issues, including better oversight of its programs. The evaluation also found that coupling innovation with proven approaches can result in a more effective program, such as with demonstration projects.
As a result of the evaluation, Agency officials agreed to form a strong professional executive management team, begin a customer-based strategic policy and program planning process, distribute a human resources assets survey to evaluate their human resource capabilities and needs objectively, and increase its outreach to other Government agencies that have small and disadvantaged business program responsibilities. The OIG has planned a follow-up to this evaluation to determine what achievements have been made and where further efforts are necessary.
Obstacles to Enforcing Export Controls for Biological Agents
IRM-6686 -- September 1995
Because of worldwide availability and ease of shipment, biological agents such as pathogenic microorganisms and toxins represent one of the more challenging categories of controlled items. The United States, as well as most other countries, wants to monitor the movement of biological agents to prevent them from falling into the wrong hands, especially where they might be used to make biological weapons. The Commerce Department's Bureau of Export Administration (BXA) is responsible for maintaining export controls on various items that have national security and foreign policy implications.
The OIG found that increased outreach is needed to identify potential exporters of controlled biological agents. Preventing controlled microorganisms from leaving the country is complicated because many research projects use these items and researchers are not always aware that they need to obtain a license to ship an agent to a foreign lab. Furthermore, export requirements for microorganisms of different countries are not uniform. The OIG determined that better international communication is needed in the area of shipping biological agents.
The OIG supports the concept of using export controls to reduce the threat from weapons of mass destruction, but the wide availability of dangerous microorganisms highlights the need for alternative approaches to assist with U.S. nonproliferation efforts. In the report, the OIG recommended that the administration strengthen the U.S. Government's export control system for microorganisms and provide data for evaluating the feasibility of other approaches for improving worldwide nonproliferation efforts.
Since the issuance of the OIG's report, as part of comprehensive preparations underway to address the potential threats of biological terrorism, the President designated the Department of Health and Human Services to be the lead Federal agency for developing a framework for controlling the acquisition and transfer of infectious and/or toxic agents into the United States. The BXA has provided advice on rules designed to collect and provide information on biological facilities where agents are transferred, track the domestic transfer of these specific agents, and establish a process for alerting appropriate authorities if an unauthorized attempt is made to acquire these agents. The administration has agreed to maintain an open dialogue among Federal agencies involved in biological warfare issues.
NOAA Should Decommission Its Fleet and Terminate the Recent Billion-Dollar Fleet Modernization Plan
(IPE-7794 -- March 1996)
The National Oceanic and Atmospheric Administration (NOAA) supports its natural resource and weather-related activities with its own fleet of research and survey vessels, 18 of which were in use during FY 1994. For more than a decade, congressional committees, public- and private-sector advisory groups, the General Accounting Office, and the OIG have asked NOAA managers to study alternatives to using Agency-owned and operated ships for acquiring marine data. The NOAA has consistently taken the position that the Agency's ships provide unique services and are cost-competitive with other vessels.
Since 1992, NOAA has been authorized to implement a 15-year fleet replacement and modernization plan to address the problem of its aging ships, most of which have reached the 30-year life expectancy. The 1995 version of the plan proposes a reduction in the number of NOAA-owned or leased vessels, places more emphasis on outsourcing, and reduces the projected 15-year modernization cost from $1.9 to $1 billion. The OIG's review of the 1995 plan, however, raised continuing concerns about NOAA's assessment of available alternatives, the plan's decision model, and the in-house cost data. Because of these concerns, the OIG reviewed outsourcing options to determine the private sector's interest, capability, and cost effectiveness in replacing the Agency's fleet, while also analyzing the full cost of NOAA's in-house marine services.
The review found that NOAA's fleet is more expensive than available alternatives; the problems associated with aging, inefficient ships cannot be easily or inexpensively eliminated; and the billion-dollar modernization plan should be terminated. Moreover, adequate checks and balances to safeguard the development of the plan had never been established by NOAA; the Agency's actions impeded attempts to form external partnerships; and no increase in appropriated funds is required to dispose of the fleet.
Subsequently, the Congress requested that NOAA submit plans before purchasing new equipment or ship upgrades and called on NOAA to expand use of university ships and private contractors as NOAA vessels are taken out of service.
Next Generation Weather Radar System
(SED-4559, SED-5979 -- February 1993, December 1993)
Under a tri-agency program, the Departments of Commerce, Defense, and Transportation are acquiring the Next Generation Weather Radar System (NEXRAD), which will greatly improve the accuracy of weather forecasting and provide for the automated exchange of weather radar data among federal agencies. NOAA's National Weather Service is Commerce's principal user of the NEXRAD system.
The OIG's ongoing involvement in NEXRAD over several years led to numerous improvements in the program's management, technical approach, and contracting. At the invitation of the Department and NOAA, the OIG provided advice and counsel during the renegotiation of the NEXRAD prime contract. The OIG's independent advice was solicited in the areas of systems and software engineering, program management, contracts, and legal
The OIG also conducted several inspections over the past several years, which led to improvements in the prime contractor's management of its software development process and in the government's plans and approaches to maintaining the NEXRAD software. In addition, the OIG concluded that NOAA was being substantially overcharged for certain NEXRAD spare parts. The OIG's work was the basis for an improved NOAA spare parts procurement program, which has already resulted in savings of $39 million. The program is now nearing completion, and the new radars are providing substantially improved weather information.
Advanced Weather Interactive Processing System
(SED-4585, SED-6623, OSE-7355--May 1992, September 1994, February 1996)
The Advanced Weather Interactive Processing System (AWIPS) is the key integrating element of the National Weather Service's $4.5 billion modernization program. AWIPS is intended to provide forecasters with modern interactive processing and display capabilities, as well as the capability to acquire data from advanced observing systems coming on line.
Over the past several years, the OIG has identified and analyzed the serious management, engineering, contractual, and organizational problems with AWIPS, providing NOAA and Department management, as well as the Congress, with early warnings of system development and acquisition risks and with recommendations for resolving them.
In early October, NOAA requested the Secretary's approval to begin the nationwide deployment of AWIPS--a decision milestone termed "Key Decision Point IV." At the time NOAA planned for nationwide deployment to begin, the system would have been only minimally developed and would not be proven to be able to do the job for which it was built, risking additional cost growth and technical problems. As a result, the OIG recommended that this decision be delayed. AWIPS' performance during the recent operational test and evaluation reinforced the OIG position. AWIPS exhibited both functional and performance defects that indicate the software lacks stability, maturity, and usability. Several forecasters stated that in its current condition, AWIPS will have limited use during severe weather.
The Secretary agreed that nationwide deployment should be delayed and did not approve Key Decision Point IV. The result is that AWIPS will not be fielded nationwide until the National Weather Service has demonstrated that the system has the capability and maturity to adequately support its operations and until NOAA and the Department have developed a sound, achievable plan for completing it.
Census Bureau--Data Capture
In previous decennial censuses, the Census Bureau used internally designed and developed technology for data capture--the process through which people or machines read and translate data from forms. Because the system used in 1990 is expensive, obsolete, and insupportable, Census will acquire a modern system, called Data Capture System 2000 (DCS 2000), which uses electronic imaging. Census's decision to acquire a data capture system, rather than develop one, is an appropriate course of action that the OIG recommended in the past.
In an inspection to assess whether Census was using an efficient, effective approach to acquiring and managing DCS 2000, the OIG concluded that:
A design fly-off would add risk. Census had been planning to use fly-off--that is, select two contractors to design and test prototype DCS 2000 systems. Although this approach could help control production costs, there are not enough technical risks involved to make it appropriate, and it would be resource intensive, could extend the schedule, and would severely limit communications with contractors.
Census needs a plan, an organization, and staff for managing DCS 2000. Before contract award, planned for early 1997, Census should develop a project plan and establish a project management organization.
The solicitation did not ensure selection of the best contractor. Census planned to rely heavily on (1) oral proposals so as to minimize the written information required and (2) offerors' past performance rather than in-depth information on their technical approaches. However, the information elicited might not be adequate to ensure that the best contractor is chosen.
Census agreed to implement all of the OIG's recommendations. Not having a fly-off for the design phase will result in at least $3 million in funds to be put to better use. Moreover, the changes to the acquisition strategy for DCS 2000 will help ensure its completion in time for the decennial census and will result in improvements to the solicitation ultimately leading to better proposals and contracts.
DEPARTMENT OF ENERGY
Department Internal Controls for Intelligence and Intelligence-Related Human Subject Research Projects Need to Comply with Regulations
The OIG conducted an inspection of internal control procedures used by the Office of Nonproliferation and National Security (ONNS) to manage selected intelligence and intelligence-related projects that involve human subject research. The inspection did not find evidence that Department officials and contractors knowingly violated Federal regulations and departmental directives. It did find, however, that they did not comply with such directives, either because they failed to recognize that they were required to conduct this research pursuant to Federal regulations or because they were unfamiliar with departmental procedures developed to conduct human subject research.
This inspection found that officials at the Idaho Operations Office and the Idaho National Engineering Laboratory did not recognize that three intelligence-related "Work for Others" projects that they were conducting involved human subjects. As a result, the Office of Health and Environmental Research issued a "stop work order" until the projects were brought into compliance with Federal regulations. The inspection also found that the Sandia National Laboratories obtained approval of six projects involving human subject research but initiated two of these before obtaining required approvals. Moreover, the ONNS did not fully implement the procedures they had developed to identify these projects. The inspection further determined that the Office of Energy Intelligence had not ensured that management and operating contractors in these areas received appropriate training on the applicable Federal regulations on intelligence activities and procedures.
ONNS management concurred with all OIG recommendations and completed or identified corrective actions. An Institutional Review Board was established at the Idaho Operations Office to comply with Title 10 Code of Federal Regulations Part 745, AProtection of Human Subjects.@ A descriptive text on non-medical human subject research activities is also being prepared for use by the Department's National Laboratories.
An Accident Investigation Board at Brookhaven Did Not Adequately Address Specific Management Systems and Organizations as a Root Cause
A complainant alleged that an investigation of a fire by an Accident Investigation Board at the Brookhaven National Laboratory violated Department regulations. The OIG inspection concluded that the investigation did not adequately address specific management systems and organizations as a root cause of the accident. As a result, deficiencies in the exercise of oversight responsibilities by higher-level management may not be identified and corrected.
The inspection found evidence indicating that the lack of management oversight may not have been an isolated case, i.e., it may be a widely occurring problem in Department accident investigations, particularly those conducted by field components. Management agreed with the OIG's recommendations to modify permanent oversight and training procedures and regulations, reexamine the Department's program on employee concerns, review specific management systems and procedures that may have caused or contributed to an accident, conduct a root cause analysis of the Brookhaven accident, and ensure that future investigative boards understand their responsibilities in investigating and reporting any specific management system deficiencies identified in the root cause analysis of an accident.
Fees Paid by the Department for Managing and Operating the Savannah River Site Needed Review
During the first five years of its contract with the Department, Westinghouse Savannah River Company was paid over $130 million in fees to manage and operate the Savannah River Site. An OIG inspection found that fees paid to Westinghouse steadily increased over the period, with fees paid over the last six months registering more than three times as large as fees paid for the first six months of the contract. The inspection noted that the Department had significantly increased the percentage of the dollar value of subcontracts being placed in Westinghouse's fee bases for fee calculation purposes. In FY 1989, 50 percent of the value of Westinghouse's subcontracts was included in the fee bases. By FY 1993, 100 percent of the value of a portion of work performed under one subcontract was included in the fee bases. Because the subcontractor was also receiving a fee for this portion of work, the Department was paying two full fees for the same work.
The Department also effectively increased Westinghouse's fixed-fee-equivalents by about $3 million in both FY 1993 and FY 1994 to, in large part, fund an "unallowable" employee incentive compensation program. Had the Department maintained the terms from the original competitive negotiations, Westinghouse would have received about $70.9 million in total fees, or some $59.7 million less than the $130.6 million actually received during the five-year period.
Department management officials concurred with the OIG's report recommendations and identified corrective actions. The Department prepared a Contract Reform Draft Rule that requires documentation of all fee negotiations and significant changes in fee levels.
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
MANAGEMENT ALERT: Employees' Use of the American Express Charge Card
(95-10-MIS -- September 21, 1995)
An analysis of charge card records confirmed that problems identified during an earlier OIG evaluation of the Diners Club Program had continued. Specifically, Equal Employment Opportunity Commission (EEOC) employees used American Express travel charge cards for personal purchases, as reported in February 1994. Analysis of purchases by selected employees in six field offices identified 56 percent of the charges were unrelated to official travel. In this instance, the OIG issued memoranda and charge card activity reports to Agency office directors, alerting them to employee card use and recommending the need for their proactive involvement as an effective method in reducing the misuse of Government credit cards.
The OIG received positive feedback from office directors, who requested continued oversight of this area. As a result, OIG provides charge card activity reports to office directors each quarter to assist them in monitoring unofficial charges made by employees. Consequently, there has been a noticeable decline in purchases by employees at their permanent duty stations. The Agency also agreed to establish disciplinary action for continued misuse of the charge card.
Limited Field Office Inspections: Buffalo Local Office
(94-09-INSP -- July 22, 1994)
This inspection of time and attendance practices and personal property management uncovered several internal control weaknesses in the Buffalo, New York, local office. The OIG found that the office director certified his own timecard, subordinates also certified the director's card, and the timekeeper and alternate maintained their supervisor's as well as each other's time and attendance records. Procedures for control over property removed from the office were also non-existent. The OIG identified appropriate personnel within the local and district office to certify and maintain timecards and recommended a tracking and property identification system for the management and control of personal property. All recommendations were accepted by field office management.
As a result of conducting more than 25 field office inspections over a three-year period, the OIG developed a new self-assessment inspection checklist which was issued to selected offices in the first quarter of FY 1996. The checklist allows field offices to assess administrative operations and their compliance with Agency and Federal regulations governing GSA vehicles, computer security, time and attendance, travel, financial management, personal property, procurement, and imprest fund and travelers' checks. Also, having field offices assess their own compliance allows
the OIG to use its resources on higher priority work. The OIG plans a customer service survey to assess the usefulness of this self-assessment mechanism at the end of the year.
FEDERAL DEPOSIT INSURANCE CORPORATION
Note: On December 31, 1995, the Resolution Trust Corporation (RTC) was merged with the Federal Deposit Insurance Corporation and their respective inspector general offices were combined. As part of the merger, the FDIC OIG added an Inspections Branch to supplement and complement audit and investigative activities. The Branch was formed by transferring the staff from RTC's Office of Inspections into the new FDIC function. As a result, the following summaries include reviews completed at both the FDIC and the RTC.
RTC Compliance with Internal Revenue Service Provisions Governing the Filing of
(INS95-003 -- September 1995)
The OIG conducted a review of the Resolution Trust Corporation's (RTC) compliance with Internal Revenue Service (IRS) provisions governing the filing of Forms 1099 to determine whether RTC ensured that 1099s for foreclosures and discharges of indebtedness were filed in accordance with the requirements of the Internal Revenue Code and RTC procedures.
For 75 of 83 foreclosure transactions that were reviewed, 1099s were properly filed. In those instances where 1099s were not filed when required, about $38 million in foreclosures were not reported to IRS and the taxpayers. The 1099s not filed were the result of either an oversight or interpretation of the filing requirements, not a systemic weakness in procedures or internal control. Our tests of 64 RTC debt discharge transactions showed that 1099s could have been, but were not, filed for 35 transactions involving about $80 million in discharged debt. In 23 of these 35 cases, RTC and its contractors had not filed a 1099 because they were waiting for the final payment on a debt discharge agreement.
RTC staff told us that the earliest date they believed a 1099 should be filed for discharge of indebtedness was the date a final payment was received for an agreed-upon debt discharge agreement. Although this practice complied with IRS regulations, it effectively postponed the reporting of these transactions and delayed collection of potential tax revenues because the regulations allow the reporting to occur at an earlier identifiable event effectuating agreement between a financial entity and debtor to discharge an indebtedness.
As a result of the review, the RTC's chief financial officer agreed to review the transactions we identified involving foreclosed properties and debt discharge and prepare 1099s for those transactions meeting IRS requirements.
RTC's FSC Reorganization and Contract Consolidation
(INS94-005 -- July 1994)
The OIG's review of RTC's Financial Service Center (FSC) reorganization and contract consolidation found that RTC had gone a long way toward standardizing the FSC contracting environment and eliminating costly contracts that were executed as RTC was beginning its operations. The OIG found that (1) FSC operation were not entirely standardized at each site; (2) the overall budget for operating FSCs was increasing despite declining asset balances and asset reductions, mostly due to increases in existing contracts that were not consolidated; and (3) significant variances existed between the FSCs in the cost and personnel required to carry out FSC functions.
At the time the draft briefing report was issued, RTC's preliminary budget showed an increase of $28 million ($232 million to $260 million) for FSC operating costs from 1993 to 1994. Our results prompted management to further evaluate several areas during its evaluation of the FSCs and our concerns were considered during the budget and planning process. The final FY 1994 FSC budget--$237 million--reflected a reduction of $23 million from the preliminary budget and was $5 million more than the FY 1993 budget.
Review of Employee Relocations
(INS94-001 -- November 1993)
In March 1992, RTC announced plans to eliminate its four regional offices and combine its 15 consolidated field offices into six super sites. One effect of this downsizing effort was the relocation of over 1,000 RTC employees with associated costs of approximately $7.4 million as of December 31, 1992. The OIG conducted a review of employee relocations because of their significant cost to RTC and because of the likely need for continued relocations as part of RTC's eventual merger with FDIC.
Our review showed that RTC could have significantly reduced its relocation costs if relocation decisions had been more closely scrutinized and controls over the relocation process had been more effective. Some RTC employees were relocated when it may not have been necessary or cost-effective, and RTC procedures and guidelines were not always followed when employees were relocated. We found that (1) of the 101 relocations reviewed, RTC incurred costs of $250,026 to relocate 44 temporary employees who were on appointments of one year or less; and (2) RTC incurred costs of $119, 516 to relocate 25 support staff and lower-graded paralegal employees without considering whether suitable candidates were available locally.
Due to the impending closing of the RTC, management had to make increasingly difficult decisions about relocating its work force and give careful consideration to the benefits of continuing to relocate temporary employees. The OIG made a number of recommendations to management about how to strengthen the procedures and controls over employee relocations, including the need to clarify guidance and procedures regarding who, when, and how employees should be relocated. RTC agreed with our recommendations and described a number of actions already taken or planned to implement better controls over employee relocations.
Controls Over Unclaimed Deposits
(INS95-001 -- December 1994)
The OIG conducted this review to determine whether (1) RTC procedures were adequate for monitoring unclaimed deposits, (2) the procedures were being properly implemented, and (3) assuming institutions (AIs) were managing unclaimed deposits in accordance with RTC procedures and Federal and State laws. The review determined that RTC had been generally successful in uniting depositors with their deposits. Less than one percent of the 23.3 million deposits from failed savings and loans remained unclaimed.
RTC, however, entered into early purchase and assumption agreements, covering about $42 billion in deposits, without a provision for returning unclaimed deposits to the Corporation. The lack of this provision hampered RTC's initial efforts to recover what it estimated could be as much as $19.7 million in unclaimed deposits. Also, RTC had not reviewed AIs' books and records to verify that the institutions were determining whether deposits were claimed and returning unclaimed deposits according to Corporation standards. The AIs reviewed were not consistently following RTC standards in determining whether deposits were claimed. Two of the three assuming institutions visited and one-half of the assuming institutions polled--accounting for more than $4.8 billion in assumed deposits--used an unacceptable standard in concluding deposits were claimed. The combination of these factors led the OIG to believe that RTC could not be fully assured that AIs properly determined whether deposits were claimed and returned all unclaimed deposits to RTC.
As a result of the OIG review, RTC agreed to revise procedures for pursuing the AIs under agreements without unclaimed deposit provisions. RTC officials also agreed to modify reporting formats to supplement monthly reports with unclaimed deposit information for individual AIs, and they agreed to evaluate strategies used by field offices for researching unclaimed deposits and to require field offices to more closely monitor AIs.
Opportunities Exist to Reduce Federal Express Costs
(INS93-006 -- July 1993)
The OIG reviewed RTC's use of Federal Express (FedEx) mail services as a result of allegations received about the waste and high cost of RTC offices and employees using those mail services. FedEx accounted for about half of RTC's mail budget. During 1992, RTC spent over $4.2 million for FedEx services, or roughly $16,000 per day. RTC mailed over 500,000 letters and packages by FedEx in one year alone.
RTC had limited guidelines and criteria for when it was appropriate to use FedEx, and there were no requirements to obtain prior supervisory approval. RTC employees routinely used FedEx when other cheaper forms of mail service would have been adequate. For example, the OIG estimated that RTC could have saved over $500,000 during the 2-year period we reviewed by eliminating FedEx's priority overnight service and using Government overnight base service instead. Also, security over FedEx air bills and drop-boxes was insufficient. There was unlimited access to FedEx air bills, which were generally available on request and not prenumbered or inventoried. Moreover, RTC had limited controls over creating and terminating FedEx accounts, and the OIG review identified 586 active accounts nationwide for RTC offices, conservatorship, and receiverships. As a result of the review, RTC improved its guidelines on FedEx use and began implementing supervisory procedures to ensure that FedEx services were properly controlled.
Accounting Firms' Billings to the Valley Forge Office for Subcontracted Temporary Personnel
(INS93-002 -- March 1993)
The OIG conducted this review in response to a Hotline complaint alleging that accounting firms were overcharging the RTC's Valley Forge Office (VFO) for services provided by temporary agency personnel. As alleged, the team found that the accounting firms billed RTC at contract rates established for their own employees, instead of passing through the lesser actual cost of the subcontracted temporary personnel. The three firms whose billings were reviewed marked up their costs for subcontracted temporary personnel by $507,289. These mark-ups were as high as 244 percent. In the OIG's opinion, the amounts paid to temporary agencies for support personnel were expenses to the accounting firms that should have been billed to RTC at cost. RTC's contracts with the accounting firms did not, however, clearly differentiate between contractor and subcontractor personnel, nor did they state that subcontracted labor should be considered an expense and billed at cost.
As a result of the review, RTC agreed to pursue recovery of the $424,685 in overcharges from two of the firms and researched whether there was a legal basis to pursue recovery of the $82,604 from the third firm. RTC also revised its standard contracting documents to adequately set forth RTC policy with respect to contractor personnel and subcontractors, discontinued using two of three basic ordering agreements utilized for the engagements reviewed in this report, and began a major review to identify similar subcontracting mark-up issues in other major accounting contracts.
Review of Allegations Regarding the Federal Deposit Insurance Corporation's Supervision of Bestbank in Boulder, Colorado
(INS96-008 July 1996)
This review was conducted at the request of the FDIC Chairman, who had received a letter from the Chief Executive Officer (CEO) of Bestbank presenting issues that he believed reflected a pattern of "unprofessional, unethical, and unlawful conduct" by the FDIC towards Bestbank. He also asserted that this conduct was in clear violation of FDIC policies and regulations. The CEO's allegations concerned the manner in which the FDIC's Englewood Field Office and Dallas Regional Office had carried out various examination activities, handled other significant matters relating to Bestbank, and reported the results of the examinations.
Our review did not fully substantiate any of the allegations made by the CEO. We found that the examiners generally followed applicable FDIC policies and procedures in conducting the examinations to which the CEO referred. Because the scope of the review was limited, no formal recommendations were made. It did identify, however, deficiencies that may have warranted corrective action in the following areas:
preparing a written record of an exit interview,
contacting parties to bank contracts and other business relationships,
exercising professional standards of conduct when performing examinations at banking locations,
updating guidance related to disclosure of composite ratings in the Division of Supervision's Manual of Examination Procedures,
participating in taped meetings, and
re-establishing an effective dialogue with Bestbank.
The Corporation indicated that the Division of Supervision would develop guidance to resolve some of the issues we identified and determine whether additional guidance is needed to address the others. The Chairman used the results of the OIG review to respond to the allegations of the CEO at Bestbank.
FEDERAL EMERGENCY MANAGEMENT AGENCY
Disaster Declaration Decisions: Staff Support by FEMA
(I-02-94 -- May 1994)
This inspection report discusses the Federal Emergency Management Agency's (FEMA) role in evaluating State governors' requests for Federal disaster assistance and recommending appropriate action to the President. The inspection was conducted as part of the Agency's response to congressional concerns and recommendations by the National Academy of Public Administration regarding the possible "federalization" of disaster response.
The inspection found that the declaration decision making process has significant financial consequences, and it should be based on an analysis of the State and local governments' capability to respond to the disaster. At present, however, FEMA has no systematic method of evaluating those capabilities nor for comparing those capabilities with costs that would be incurred by State and local governments if a disaster declaration is denied.
FEMA management is well aware of these problems and has made unsuccessful attempts to improve the process. Recognizing the inherent difficulty of developing the information needed for a timely analysis and recommendation, the OIG worked with FEMA management in evaluating alternatives. FEMA management is discussing a proposal with State emergency managers that embodies the major recommendations of this joint report.
Options for Reducing Public Assistance Program Costs
(I-02-95 -- July 1995)
This inspection report was prepared in response to a Senator's request that the OIG look for ways to cut Federal spending on disaster assistance by eliminating or restricting eligibility. The OIG report discussed options in four primary areas: interpreting building codes and standards; repairing, rather than replacing, disaster-damaged facilities; giving grants to private nonprofit organizations rather than loans; and paying for alternate projects when disaster damaged facilities are no longer needed. Because most of the options would require legislative amendment or rule change, they are under review by FEMA management and the Congress.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Investigational Devices: Four Case Studies
(OEI-05-94-00100 -- April 1995)
In some instances, medical device manufacturers must establish the safety and efficacy of new medical devices through clinical trials before the Food and Drug Administration (FDA) will clear them for marketing. To further guard patient safety, institutional review boards approve and monitor clinical research within local hospitals. This inspection, requested by the FDA, uncovered problems with the distribution and accountability of investigational medical devices outside of approved clinical trials. Four case studies identified potential weaknesses in the oversight of clinical trials at local sites, including problems with the role played by institutional review boards and with the informed consent process. Of particular concern, the inspection found instances of investigational devices being used in surgical procedures outside of approved trials. The FDA agreed to take whatever actions are needed to ensure that the investigational device studies are conducted in compliance with all applicable Federal laws and rules.
Marketing and Questionable Medicare Payments for Incontinence Supplies
(OEI-03-94-00770, OEI-03-94-00772 -- December 1994)
This inspection found that questionable billing practices by medical equipment suppliers may account for almost half of the Medicare allowances for incontinence supplies, costing the Medicare program as much as $100 million per year, and that suppliers engage in questionable marketing practices. For example, suppliers may give beneficiaries unnecessary or noncovered supplies and present nursing homes with false or misleading information about Medicare coverage for these items. As a result of this inspection, the Health Care Financing Administration (HCFA), which oversees Medicare, agreed to intensify its review of these claims. The Inspector General testified before a congressional subcommittee regarding this issue. Further, the OIG has stepped up its oversight in this issue area: an audit has been initiated to determine if any overpayments have been involved, and the OIG has undertaken a national investigation of questionable practices conducted by specific suppliers. A follow-up inspection that examined incontinence supplies and Medicaid payments also found questionable practices, and HCFA agreed to take corrective actions, resulting in additional cost savings.
Medicare Payments for Orthotic Body Jackets
(OEI-04-92-01080 -- June 1994)
Medicare claims for orthotic body jackets increased more than 6,400 percent from 1990 to 1992, and Medicare allowed charges likewise increased more than 8,200 percent. In an inspection of this medical equipment, the OIG found that 95 percent of the claims were for non-legitimate equipment and should not have been paid. Instead of receiving customized supports valued at $1,000 to treat serious spinal problems, nursing home residents and others were being provided cheap foam rubber cushions of no medical value and worth only a few dollars. This inspection estimated that incorrect payments amounted to as much as $13.7 million in 1992. The report recommended that HCFA closely monitor claims for body jackets and implement more stringent controls. The HCFA was asked to inform medical suppliers and physicians about the abuse of body jacket reimbursement and to stress its intent to prevent such abuse. The HCFA agreed with the recommendations. Medicare payments for orthotic body jackets dropped to $9.7 million in 1994.
Opportunities for ACF to Improve Child Welfare Services and Protections for Native American Children
(OEI-01-93-00110 -- August 1994)
This study identified opportunities for the Administration for Children and Families (ACF), which oversees Federal child welfare services, to strengthen the provision of child welfare services and protections to American Indian and Alaska Native children. The inspection showed that most tribes have received little funding for child welfare services from the ACF. Furthermore, neither ACF nor any other Federal agency has ensured State compliance with the child welfare protections required by the Indian Child Welfare Act. The report identified options that ACF could pursue to facilitate tribes' access to child welfare funds and to better ensure the provision of Federally mandated child welfare protections to Native American children.
The ACF agreed to more closely monitor the protections. This report also provided the Senate Committee on Indian Affairs a focal point for a hearing on tribal access to Federal funding.
Medicare Beneficiary Satisfaction
(OEI-04-93-00140 -- June 1995)
The OIG has conducted annual Medicare beneficiary satisfaction surveys over the past five years to help the Health Care Financing Administration in its service delivery and performance measurement. In the latest survey, beneficiaries reported positive experiences overall. More than 75 percent thought the Medicare program was understandable, and more than 80 percent were satisfied with the services which the Medicare carriers provided. Compared to prior years, this
inspection showed several positive changes. For example, the percent of beneficiaries expressing a problem with claims processing decreased by 50 percent in the last three years.
The survey revealed, however, the following areas of concern: (1) some beneficiaries have problems understanding Medicare payments for home health and hospital services, (2) 30 percent of the beneficiaries who tried to call their carriers were unable to reach their carriers within two tries, (3) almost a third were not aware of their appeal rights, (4) one-fourth did not know that Medicare limits what physicians can charge for a specific service, and (5) almost two-thirds did not know Medicare paid for second surgical opinions. The HCFA agreed to develop a plan for improving beneficiary satisfaction and understanding in these areas.
Variation Among Home Health Agencies in Medicare Payments for Home Health Services
(OEI-04-93-00260 -- July 1995)
This inspection examined the variation in the average reimbursement per Medicare beneficiary for nearly 7,000 home health agencies (HHAs) in 1993. The OIG found that the highest reimbursement group of HHAs received, on average, five times the amount of Medicare reimbursement per beneficiary as the lower group. The average reimbursement per visit was similar among HHAs, but the number of visits varied widely. Higher reimbursement HHAs tended to be proprietary for-profit, non-affiliated organizations, and these provided seven times more aide visits than the lower reimbursement group. The inspection also found that differences in quality of service and beneficiary characteristics did not appear to explain the variation.
The OIG recommended that HCFA intensify its efforts to scrutinize reimbursement claims from high-cost agencies and explore ways to prevent the abusive practices of unscrupulous agencies. The inspection determined that controlling the number of home health care visits would save billions of Medicare dollars. For instance, if all home health agencies averaged 33 visits per beneficiary in 1995, as in the case of two-thirds of the HHAs in this analysis, Medicare would save nearly $5 billion a year, based on estimated total expenditures of $14.4 billion. The HCFA agreed with the recommendations and is exploring ways to restructure the benefit and payment policy to address the problems identified by the OIG in this inspection.
DEPARTMENT OF JUSTICE
Influx of New Personnel in the Immigration and Naturalization Service
(I-96-01 -- October 1995)
This inspection focused on the Immigration and Naturalization Service's (INS) capability to manage the 1,500 new Border Patrol agents that Congress authorized INS to hire in FY 1996, as part of the Southwest Border initiative. The study anticipated problems INS would face in training and equipping the new Border Patrol agents, even though INS had developed a credible plan for identifying promising recruits. The report identified concerns that INS would not meet its Border Patrol training goal for FY 1996 due to delays in opening the new adjunct training facility at Charleston, South Carolina. Other concerns identified were the source of training instructors and the resulting impact on the mix of experienced and inexperienced agents remaining in the field. The delay of formal training for new supervisors and other Immigration Officers, due to the influx of new Border Patrol agents requiring training, was a major concern. Such training was deemed critical to ensure that the new Border Patrol agents and supervisors discharge their jobs properly.
Inspectors assigned to this review were invited to participate in the INS' Growth Management Working Group to provide technical advice to INS personnel based on insights developed during the inspection. Members of Congress, officials of the INS, and the Attorney General have worked together to redress the training issues highlighted in this report to enable the INS to train approximately 1,500 new Border Patrol Agents this year.
Fugitive Apprehensions by the US Marshals Service
(I-94-04 -- September 1995)
The U.S. Marshals Service (USMS) receives significant appropriations for the purpose of apprehending fugitives. This inspection found that fugitive apprehension activities have a line item of 600 positions in the USMS budget, but less than half of those positions are dedicated to the full-time pursuit of fugitives. The balance of the charges to this appropriation are for deputy U.S. marshals working part-time fugitive assignments. The USMS has been hard-pressed to show that part-time and occasional fugitive assignments have been an effective use of those resources. Overall, the USMS' record on fugitive apprehension is mediocre--if a fugitive is not caught within a year of the issuance of a warrant, the odds are that the fugitive will never be apprehended.
As a result of this inspection, the USMS established national goals, priorities, and performance measures for the Fugitive Apprehension Program. The USMS also formed a new unit to provide support to district offices and to review warrant cases over a year old for investigative leads.
Deportation of Aliens After Final Orders Have Been Issued
(I-96-03 -- March 1996)
Illegal aliens unwilling or unable to leave voluntarily are issued final deportation orders. In FY 1994, the INS was issued 99,779 final orders to deport illegal aliens and INS deported 47,434 aliens; 45,000 of the removal orders were for detained aliens and 54,779 were for nondetained aliens. This inspection found that INS was effectively removing detained aliens but not those who were not detained. In a sample of FY 1994 case files, the OIG found INS removed about 94 percent of the detained aliens within an average of 16 days. Detained aliens who were not deported included nationalities affected by political or humanitarian concerns and those aliens for whom INS was unable to obtain travel documents. In contrast, only about 11 percent of the nondetained aliens left the country.
Contributing to this low percentage were delays by district counsel in transmitting final orders received from the Executive Office of Immigration and Review (EOIR) to Detention and Deportation, delays in taking action, failure to send surrender notices to aliens, failure of aliens to surrender in response to the notices, and limited efforts by INS to pursue aliens who failed to surrender. Special conditions affecting certain nationalities also impaired INS' ability to remove aliens.
The INS has taken action to improve its performance in removing nondetained aliens expeditiously after the issuance of final orders for deportation. This includes establishing a data interface that will notify the INS of the issuance of final orders to deportation. In addition, INS has commissioned a project to design, implement, and assess a demonstration program that will increase the efficiency and effectiveness of adjudication, release, reporting, and removal of nondetained illegal aliens. As a result of these actions, the effectiveness of the INS deportation programs should improve significantly.
Department of Justice's Drug-Free Workplace Program
(I-96-07 -- March 1996)
Executive Order 12546 requires each executive agency to establish drug-testing programs in support of a drug-free Federal workplace (DFW). The Department of Justice has a decentralized program consisting of separate units administered by the Bureau of Prisons, Drug Enforcement Administration, Federal Bureau of Investigation, the Immigration and Nationalization Service, the United States Marshall Service, and the Justice Management Division, which manages the DFW program for all the DOJ Offices, Boards, and Divisions.
The inspection found that the Justice Department issued a DFW plan in 1987, but it had not established any oversight mechanism for monitoring the components' compliance with the policy guidance or for encouraging the sharing of program costs and information. The components varied in their compliance with the Department's and their own testing policies and procedures. The findings included failure to (1) test all non-career appointees designated for testing, (2) adhere to random testing policies, (3) implement a Federal court ruling allowing inclusion in the random testing pool certain categories of Federal prosecutors and other employees, (4) conduct applicant testing, (5) test applicants receiving appointments of 90 days or less, (6) conduct follow-up tests of employees who underwent counseling or rehabilitation for illegal drug use, and (7) reschedule within 60 days employees who did not take random drug tests. In addition, applicants who had not been offered employment were unnecessarily tested.
As a result of this inspection, the Department established an advisory committee composed of component DFW coordinators. The committee will provide a valuable forum to exchange information and ideas to effect DFW program improvements and efficiencies. Inspectors have worked with individual components to address non-compliance issues and all components have responded positively. For example, the majority of the non-career appointees have been tested or scheduled for drug testing, and a position paper is being prepared that will require policy decisions on the part of the senior management to address the issue of testing certain employees who the Department, at the time of the OIG inspection, had exempted from random testing. In addition, all components are conducting applicant testing.
Safeguarding Grand Jury Material at U.S. Attorneys' (USA) Offices
(I-96-11 -- August 1996)
This inspection found problems related to grand jury court reporting. The OIG determined that some court reporter personnel (including court reporters, office support staff, officer couriers, and translators) who have access to grand jury material did not have security clearances at 60 percent of the U.S. Attorney Offices (USAOs). These USAOs used court reporter personnel who never had background investigations, had expired clearances, or both. In addition, several USAOs had incomplete or no records regarding court reporter personnel clearances.
The inspection identified several USAO deficiencies related to the physical security of grand jury material in closed cases and determined that there were no guidelines to address disposal of this material. The OIG is working with Department officials to identify solutions that will ensure better oversight of grand jury reporter personnel security clearances and clarify Department regulations for securing grand jury material and obtain clearances for private grand jury court reporter personnel.
INS Document Fraud Records Corrections
(I-96-9 -- September 1996)
This review focused on INS' actions against aliens identified as customers in fraud schemes involving the purchase of INS documents from corrupt INS employees and the payment of bribes to INS employees in return for obtaining an immigration benefit.
The inspection found that (1) INS investigators usually did not attempt to locate aliens identified as customers in fraud schemes because of higher investigative priorities, such as criminal aliens and employer sanctions; (2) INS investigators and other INS officers did not initiate deportation proceedings against these aliens; and (3) INS personnel did not delete or correct entries to its Central Index System (CIS) to reflect aliens known to have fraudulently obtained documents, nor did the Agency have provisions for placing codes or flags on CIS records to alert its officers should they encounter these same aliens in the future.
As a result of this inspection, INS management agreed to establish a working group that will recommend all necessary policy and procedural changes, technological modifications, and identify solutions to correct fraudulent database entries and implement a flagging system that will alert INS personnel to alien participation in fraud schemes.
DEPARTMENT OF LABOR
Mine Safety and Health Administration Proposed Contract
(08-OEI-97-MSHA -- November 1996)
The Assistant Secretary for Mine Safety and Health requested an OIG review of a congressional inquiry alleging that a proposed Mine Safety and Health Administration (MSHA) contract with the United Mine Workers of America and the Bituminous Coal Operators Association constituted an improper sole source procurement action. The proposed contract resulted from an unsolicited proposal by the Union requesting a total of $344,274 to fund a course of health and safety training for Union members serving on Mine Safety and Health Committees. The specific purpose of the funds was to pay all travel related costs, including mileage, lodging, food, and equipment for the 700 Committeemen and 195 company representatives expected to attend the training.
The OIG review identified significant concerns regarding the propriety of the proposed contract and related policy issues which led to a recommendation that the Assistant Secretary not authorize the funding for the training program. In particular, a clause in the collective bargaining agreements between the Union and the coal operators established an obligation between the parties to fund the training program and some of the parties acknowledged their responsibility and readiness to finance the program during interviews. In addition to the issues raised about a valid need for MSHA's financial assistance, the review highlighted the absence of Agency policy addressing the payment of travel for non-Government personnel, the limited relationship between some training program sessions and MSHA's mission, and questions relative to technical procurement matters.
The review, completed within the three week time frame required to meet the Agency's deadline for a determination on the program, provided new information and perspectives which influenced the final decision. The Assistant Secretary concurred with the recommendation that funding should not be made available in view of the existing contractual arrangements between the parties and canceled MSHA's plan to execute the training contract.
OFFICE OF PERSONNEL MANAGEMENT
Financial Management Reports and Improvement Project
(OEI-95-1 -- June 1995)
At the request of the Office of Personnel Management's (OPM) chief financial officer (CFO), the OIG's evaluation and inspections staff conducted a study of the reports generated by the Agency's financial information systems. At the completion of the study, several recommendations were made to improve the formats of existing reports to facilitate comprehension and to enable more productive use of time; other recommendations called for the development of entirely new reports. Many of those improvements have already been implemented.
A significant recommendation was that the CFO institute a set of reports accessible on Agency local area networks. While financial reports were already available for direct access on the Agency's mainframe computer, they provided only current period and year-to-date financial information. They did not depict trends or forecast future financial position. Many OPM managers interviewed or surveyed during the conduct of the study had indicated a relative sense of comfort when dealing with applications on their personal computers but were still intimidated by a mainframe environment. These managers wanted to have the information presented in ways that would better help them manage their programs. A variation of this OIG recommendation is currently being implemented by the CFO.
Management Review of IPA Mobility Program
(OEI-96-1 -- April 1996)
The newly created OPM Office of Merit System Oversight and Effectiveness (O&E) asked the OIG inspections staff to conduct a complete review of the Intergovernmental Personnel Act mobility program. This particular aspect of the Act provides a mechanism for the Federal Government to exchange personnel with various non-Federal entities. The OPM has had the authority to regulate this program since 1970. In view of the changing functional mandates and fiscal priorities within the Federal Government, O&E management requested assistance in examining the program's operations, OPM's future role, and viable alternatives for the program's administration that would be better suited to meet the agencies' needs.
Study recommendations called for development of new regulations, increased oversight, and delegation of daily operations of the mobility program to the affected agencies. Regulations now under development will establish the first major program policy changes since the inception of the program and are critical to filling a vacuum of official guidance that occurred with the elimination of the Federal Personnel Manual in 1994. The proposed rule changes were published for comment in the Federal Register on December 11, 1996.
Delegation of daily operational authority for the mobility program to the agencies is significant in that it facilitates program compliance with the Clinton Administration's directives, while relieving demands on diminishing OPM resources. Concurrently, OPM's oversight of the program will have to ensure that the independently operating agencies comply with both statutory and regulatory requirements.
Office of Merit Systems Oversight and Effectiveness Information Resources Management
(OEI-96-2 -- February 1996)
The OIG conducted an additional evaluation at the request of the Office of Merit Systems Oversight and Effectiveness (O&E) to assess its information resources management practices. The study was initiated to assist that newly established OPM organization in assessing its information processing environment and to recommend methods to optimize equipment and services necessary for the support program delivery. Because O&E consolidated functions previously performed in other OPM field and headquarters organizations, the two primary concerns were to assure effective management of existing computer hardware and software and identify means to share information electronically among the various locations.
Along with several recommendations for achieving compatibility of software and hardware among all agency sites, the study produced a methodology for the operation of an On-line Report Repository that would allow staff access from any office nationwide. The repository, now fully implemented, employs an automated document search and retrieval routine to replace the previous method of finding, collecting, and reading unindexed paper documents from various locations. It also serves as a prototype for identifying other areas where increased efficiency can be obtained by sharing information electronically. The concept could be adapted to accommodate electronic sharing of documents whenever comments and review are needed from individuals residing in different geographic locations.
SMALL BUSINESS ADMINISTRATION
SBA's Prime Contracts and Subcontracting Programs
(95-10-001 -- October 1995)
During an OIG inspection of the Small Business Administration's (SBA) Government contracting programs for small business, SBA began to streamline those functions and significantly reduce field staff. In its effort to decentralize Agency activities, SBA proposed to remove its field personnel assigned to other Federal agencies' procurement facilities from the direct control of the central Government Contracting Office and place them under the supervision of SBA district directors, who had a local orientation and little or no procurement background. The inspection demonstrated that dramatic changes resulting from declining Federal procurements, reductions in Federal contracting staff, and new acquisition legislation required SBA's Government contracting functions to maintain a national scope. These changes made the transfer of direct field supervision inadvisable without undertaking unusual measures to maintain the program's national focus. Based in part on the report, SBA officials decided to abandon the effort to change the control structure. The Agency also modified the performance appraisals of supervisory personnel to include additional elements relating to the challenges of the rapidly changing procurement world. Finally, the implementation of subcontracting program recommendations has increased the number of contract reviews with a reduced staff.
Preferred Lenders Program
(94-11-001 -- November 1993)
In an inspection of SBA's Preferred Lenders Program (PLP), which is designed to reduce SBA's workload by shifting greater loanmaking responsibility to selected private lenders, the OIG found that the PLP lenders in most SBA districts were making very little use of the program. Only 12.5 percent of the Agency's guaranteed loans were PLP loans, and nearly 40 percent of those occurred in one region. The inspection also found that the main reason the lenders were not using the PLP was that the guaranty rate for PLP loans was much lower than the guaranty rate for loans submitted under the other SBA business loan programs. Unfortunately, these other loans require substantially more work on the part of SBA staff. To provide incentives for lenders to make greater use of the PLP, the inspection report recommended that SBA develop a legislative proposal to eliminate the disparity between PLP and other loan guaranty rates. The OIG also found deficiencies in the recertification of PLP lenders, some of which had serious performance problems that had been clearly documented over several years. To reduce Government losses from PLP loan defaults, the OIG recommended recertification criteria that included specific standards for acceptable performance, as well as improvements in the way SBA identified and corrected PLP loan problems.
The SBA, with the help of congressional action, has met all the OIG's recommendations. The guaranty rate for the PLP program was made the same as that of the Agency's other business load programs, leading to a nearly 50 percent increase in PLP loans by the end of 1995. This has enabled the SBA, which has gone through significant downsizing at the same time the volume of loans has grown rapidly, to shift substantially more loanmaking responsibility to the private industry. The strengthening of PLP recertification procedures--the head of the program now reviews all requests--and the creation of a formal process to ensure the regular monitoring of all PLP lenders will enable SBA to identify PLP problems in a timely manner, take prompt corrective action, and monitor the results.
The Surety Bond Guarantee Program
(95-07-002 - September 1995)
This inspection found that SBA's objective of assisting small and emerging contractors to become bondable on their own by providing bond guarantees for construction contracts was not being met in many cases. To correct this problem, the OIG recommended that the Agency establish target graduation rates, require participating surety companies to keep records on contractors' graduation from the program, and disseminate information to contractors emphasizing that becoming bondable on their own is a program objective and identifying the types and sources of technical assistance that are available to help them do so.
The inspection also found that the program's loss rates were more than twice those of the surety industry when calculated using the industry's method. The OIG recommended that SBA take steps to reduce loss rates and produce performance data that would be comparable to the surety industry's data. To enable SBA to evaluate whether participating surety companies were pursuing recoveries prudently, the OIG also recommended that the Agency require the companies to produce reliable recovery data on their SBA-guaranteed bonds.
As a result of the inspection, SBA has taken a number of steps to promote graduation of contractors from the program. It prepared and distributed a fact sheet that clearly identifies graduation as a program goal and describes the technical assistance available to participating contractors. The Agency now requires all surety companies and their agents to provide the fact sheet to all contractors when they enter the program. SBA also initiated a study to identify the contractors who had been in the program at least five years, assess their needs, and determine the services the Agency can make available to help them become bondable on their own. With OIG assistance, SBA has also developed an instrument for gathering data annually from the participating surety companies to determine their graduation rates, the level of assistance each provided to contractors, and the benefits that the contractors believe they had acquired by the time they leave the program. SBA also agreed to take specific steps to obtain reliable data on program losses and recoveries; the OIG has assisted the Agency in developing the initial survey of the availability of loss and recovery data from the surety companies.
Best Practices Studies
As an alternative approach for inspections, the OIG also conducts "best practices" studies. The purpose is to identify program activities that appear to be working well, document what makes them effective, and determine how their success might be replicated in similar activities that are not performing as well. Two recent reports illustrate this approach:
Inspection of SBIC Best Practices (94-08-002 August 1994). This study examined a cross-section of profitable small business investment companies (SBICs) to document the policies, practices, and other factors that contributed to their success. The Agency used the findings to develop new licensing procedures and guidelines to correct problems in SBICs that were not as successful.
Best Practices of Section 7(a) Lenders (96-11-001 November 1996). This report focused on the credit management practices identified in case studies of nine successful lenders as the most effective means for controlling risk. The report has been distributed to all SBA field offices and to a significant number of lenders who provide SBA-guaranteed loans to small businesses. The Agency may incorporate the best practices into its guidance for new lenders and its monitoring criteria for existing lenders.
Critical Issue Analyses
The OIG has also performed special analyses of issues that have significant bearing on SBA programs. Two recent reports focused on the Agency's guaranteed business loan program:
Job Creation and the 7(a) Guaranteed Loan Program (95-11-001 November 1994). This inspection identified major obstacles to the SBA's effort to focus its loans on companies that appeared to have the highest potential for creating new jobs. We found that the initiative faced substantial problems both in its approach and in its ability to produce credible results. The report helped SBA put job creation into perspective as a means for focusing program efforts and measuring outcomes.
The 7(a) General Business Loan Program Loss Rate (96-06-002 June 1996). This inspection was requested by the SBA Administrator. We found that the method for calculating the loss rate for the Agency's largest program was technically valid, but we also concluded that the way in which SBA officials used the rate was misleading. SBA's rate was intended for comparing 7(a) loan losses to those of the banking industry, but we found that the two were not comparable due to significant differences in their portfolios and objectives. Because there was no practical way to adjust the 7(a) rates to make them comparable, the OIG recommended that SBA discontinue using them. While the Agency was reluctant to abandon the rates altogether, it has to date avoided using them for comparing 7(a) loan performance to that of the private banking industry.
DEPARTMENT OF STATE
Inspections of Overseas Posts
Combating illegal immigration and alien smuggling was identified as a major policy concern in several Caribbean, Central and South American countries visited by OIG inspectors. Despite the importance of the high visibility policy issue, numerous posts gave it low priority and failed to allocate sufficient resources to deal with the border security problem effectively. Honduras, for example, is a crucial link in the region for illegal migration activities, including alien smuggling. The OIG recommended that the mission in Honduras establish an interagency alien smuggling and document fraud working group to be chaired by the deputy chief of mission. The objectives of this group are to share information on illegal immigration trends, seek guidance from the Department, and devise strategies to combat the problem.
Although stemming illegal immigration ranked as a major priority goal for the Bureau of Inter-American Affairs' program plan and is a matter of considerable domestic-concern, it had not been given adequate attention by bureau managers. The lack of guidance on how to deal with illegal immigration adversely affected operations at some posts.
Follow-up reviews recently conducted by inspectors indicate that while embassies have generally done well in complying with recommendations relating to illegal migration, recommendations directed to the Department have proved to be more difficult to resolve. In some cases, the Department has been slow in responding to the embassies. Embassy San Salvador, for example, has amended its mission program plan to include as a key objective a stronger approach to the Government of El Salvador on cooperation in curbing illegal migration. The Department has also agreed to provide requested materials and guidance in this area. While the problem persists, Department managers have accorded it a significantly higher priority in their thinking and actions.
With three consulates general--Karachi, Lahore, and Peshawar--OIG inspectors concluded that Embassy Islamabad has a more extensive consular structure than is justified in Pakistan, particularly in this period of budgetary constraint. Considering its close proximity to the embassy and the unnecessary duplication of activities, the OIG recommended that Consulate General Lahore should be closed or severely reduced in size. This and parallel recommendations to abolish positions and dispose of property in Lahore should generate savings of several million dollars for American taxpayers.
DEPARTMENT OF TRANSPORTATION
Evaluation of the Office of Commercial Space Transportation Licensing and Safety Division
(E1-0S-4-003 -- July 6, 1994)
The Office of Commercial Space Transportation (OCST) Licensing and Safety Division's procedures, processes, and organizational structure were evaluated, at their request, to determine where improvements were warranted. The OIG review identified several issues affecting the efficiency of the licensing process, including outdated licensing regulations, poor communication with licensees and other agencies, outdated position descriptions and performance standards, and workload. To address these issues, the OIG recommended that OCST (1) revise licensing regulations, (2) establish effective communication mechanisms with licensees and other agencies, (3) update position descriptions, and (4) request additional positions. OCST used the OIG report to justify a request to Congress for additional funding and to assist OCST in providing a better service to its constituents.
Special Interagency Review Conducted by the Offices of Inspector General, U.S. Department of Commerce and Transportation
(E1-FA-6-014 -- September 19, 1996)
At the request of the Office of Management and Budget (OMB), a review was conducted jointly by the Departments of Commerce and Transportation to determine if the National Oceanic and Atmospheric Administration's Office of Aeronautical Charting and Cartography (AC&C) might operate more effectively and efficiently if transferred to another agency. The options reviewed were the Federal Aviation Administration (FAA), Defense Mapping Agency, U.S. Geological Survey (USGS), and the private sector.
The review concluded that AC&C fits best into the mission and organization of FAA and should be transferred to FAA where it is clearly more associated through funding, aviation safety, and program responsibility. The review also identified potential annual savings of up to $3 million by consolidating the existing AC&C printing operation with that of USGS. The OIG's final report was issued to OMB prior to the preparation of the FY 1998 budget request and should allow OMB to make an informed decision as to the disposition of the AC&C function.
Evaluation of the Department of Transportation's Offices of Civil Rights
(E1-0S-6-004 -- February 29, 1996)
The OIG evaluated the Department of Transportation (DOT) Offices of Civil Rights' functions, policies, procedures, administrative and operational systems, staffing and training. The purpose of the review was to improve the overall effectiveness of the DOT civil rights (CR) programs and determine the changes needed to accommodate the consolidation of DOT's Offices of Civil Rights. The evaluation found that DOT CR programs were not operated or monitored in an effective or efficient manner. Specifically, CR programs were not fully implemented; CR policies, procedures, and guidance were deficient; reporting and tracking systems were insufficient; information was insufficient to determine staffing needs; and adequate training was not provided.
Among 19 OIG recommendations to improve the effectiveness and efficiency of DOT CR programs, it was suggested that the Departmental Office of Civil Rights (1) establish a clear mission and priorities for all CR offices, (2) provide policy guidance to CR offices, (3) establish a mechanism to centralize all CR policy development, (4) monitor CR offices' ability to meet goals and objectives, (5) eliminate case backlogs, and (6) develop and implement a plan to ensure consistent training. As a result of this review, the Departmental Office of Civil Rights issued new policy on processing complaints, initiated development of an investigative procedures manual, conducted recruitment efforts, centralized the acceptance/rejection of complaints in one location, and helped design the training for Departmental EEO counseling.
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
(OIG-96-06 -- February 1996)
The Community Development Financial Institutions (CDFI) Fund, authorized by the Community Development Banking and Financial Institutions Act of 1994, is a new Treasury Department program. The Fund's programs have a total funding level of about $50 million and are designed to facilitate the flow of lending and investment capital to create and expand community development financial institutions and to provide incentives to traditional banks and thrifts. At the request of Department management, the OIG has provided technical assistance in implementing the fund's programs and ensuring the integrity of award administration. The OIG issued two reports entitled "Award Application Procedures" and "Community Development and Financial Institutions Fund Award Monitoring Procedures" to provide examples and models of grant award procedures used in other public and private sector programs.
The Department adopted many of the OIG's suggestions for the CDFI program's operating policies and procedures that are used in other public and private sector programs. As a result, the program staff, whose size was limited by statute until June 1996, was able to implement policies and procedures quickly to process approximately 300 applications and to monitor awards.
UNITED STATES INFORMATION AGENCY
Review of the USIA's Relations to Binational Centers
(94-S-15/SRR-95-11 -- June 23, 1995)
Alternatives for Conducting Programs Overseas
(95-S-16/SRR-95-12 -- June 23, 1995)
These two companion reports dealt with the conduct of public diplomacy functions by the United States Information Agency (USIA) overseas. Binational centers are locally chartered, non-profit organizations that derive their revenues principally from the teaching of the English language to foreign nationals. Information, cultural, and educational activities at these centers can further long- and short-range agency goals intended to promote a greater understanding of the United States, its people, values, culture, and institutions. USIA and its field posts provide about $3.2 million annually in support of various centers worldwide (Latin America, Europe, Far East, Middle East). The OIG inspection found that no apparent consensus exists among headquarters offices and overseas posts regarding appropriate types, levels, and focus of support to be provided. The lack of consensus reflects, among other things, an absence of clear policy guidance from the agency. The attention accorded binational centers thus varies greatly from post to post and from one public affairs officer to another. As budget pressure results in more downsizing of the Agency's presence overseas, the OIG recommended that the USIA seek to develop alternatives to maintaining expensive, U.S. Government-controlled facilities for conducting programs. These alternatives may include binational centers, regional posts, small-scale resource centers, surrogate posts, and cost-shared centers. The OIG recommended that the Director analyze alternatives for reducing reliance on USIA-controlled facilities.
The inspection also uncovered deficiencies in the management of grants made by USIA staff to binational centers. The OIG concluded that improper grants management was a systemic problem requiring Agency efforts to shore up managerial and administrative skills of field officers. The USIA concurred with each of the recommendations in the two reports and submitted a proposal to redraft its Manual of Operations and Administration. The Manual will address the requirements for control of the binational centers and for improving training for the grants management process in posts throughout the world. This approach is expected to be implemented with a minimal expenditure of resources. It should also minimize the potential for legal risk in Agency acquisition and assistance activities. The USIA Director also agreed to issue a definitive policy statement with regard to USIA relations with binational centers worldwide.
Inspection Report on United States Information Service Japan
(95-S-02/SRR-96-01 -- February 1, 1996)
The USIA post in Japan was an important element in the Embassy's Country Team, according to this inspection. With six branches throughout Japan, it contributed importantly to defining United States-Japan cooperation in security and global concerns through active diplomacy. In light of dollar devaluations and budgetary reductions, the OIG made several recommendations to reduce the post's operating costs. It was recommended that at least one branch be closed, that staff levels be decreased, and State Department facilities consolidated wherever possible. Further, the report recommended that the post build a modern information delivery system, using state of the art technology. The system would centralize information technology in the Tokyo hub, making it the distribution center for Agency information throughout Japan. The application of such centralized information delivery systems would enable the post to downsize its centers by eliminating some reference and library services. The Agency concurred with most of the report's recommendations. Moreover, the post in Kyoto has been closed at an annual operating cost savings of $900,000; several staff positions were also eliminated, saving $1.28 million annually. The possibility of consolidating the Tokyo facility within Embassy operations is being discussed with the State Department.
DEPARTMENT OF VETERANS AFFAIRS
Evaluation of the Department of Veteran Affairs' Policies and Practices for Managing Violent and Potentially Violent Psychiatric Patients
(6HI-A28-038 -- March 28, 1996
Patient assaults and other forms of violent acts that are committed by psychiatric patients pose a significant concern for employees who provide care to high risk veterans in the approximately 150 Department of Veterans Affairs Medical Centers (VAMCs). Limited numbers of nursing staff are often challenged to address each individual patient's needs. Medical center managers are thereby required to develop innovative strategies to protect patients and employees from patient assaults. The focus of this inspection was to determine what actions the Veteran Health Administration (VHA) officials have taken to ensure patient, employee, and public safety, and to determine if VHA managers are using patient assault data in program development and strategic planning. The review also was designed to determine the frequency with which inpatients were immediately discharged after a violent incident and the completeness of their assessment.
The OIG inspection found that clinicians at VAMCs had not discharged psychiatric patients because they had committed or threatened to commit a violent act. Instead, treatment interventions were initiated and inpatient care was continued. Potentially violent patients who were regularly discharged or left against medical advice were appropriately assessed and processed. VAMCs had developed a number of initiatives for managing potentially violent psychiatric patients. These included regional intensive behavioral modification units for the large numbers of violent chronic schizophrenic patients, intensive psychiatric community case management programs, violence prevention training programs, violent patient identification programs, and assaulted employee counseling programs.
The OIG concluded that strengthening the following areas may reduce the incidence of injury associated with violence in inpatient psychiatric units: (1) providing uniform reporting and trend analyses of assault data in local and national VA Patient Incident Report (PIR) data bases, (2) including all medical center employees who work in high risk areas in the medical center's violence prevention and management program, (3) ensuring that psychiatric units with patients at high risk for violent acts have sufficient staff to manage and treat them, and (4) supporting employees who press charges against competent patients who assault them.
The VA Under Secretary for Health and officials of the VHA Office of Mental Health and Behavioral Sciences endorsed and implemented the OIG's recommendations. Policies pertaining to the PIR system are presently being revised and officials have been continuously monitoring the implementation and quality of violence prevention education programs, counseling programs, and violent patient identification programs. As a result of the actions, the effectiveness of the VA's violence prevention and management programs should continue to significantly improve.
Review of the Veterans Health Administrations Health Care Program For Women Veterans
(3HI-A99-129 -- June 30, 1993)
In response to interest by the House Veterans' Affairs Committee, a nationwide inspection of the availability of treatment facilities and programs for women veterans was conducted. It addressed the issue of how effectively VA medical centers (VAMCs) met the needs of women veterans by visiting VAMCs and evaluating the scope of gender-specific services provided. In additional Veterans Health Administration (VHA) completed a questionnaire survey of all 166 VAMCs to determine the status of women veterans' health programs throughout the system. This survey was done concurrently with this inspection. The results of the VHA survey closely paralleled the findings in the OIG study.
The results of the inspection showed that VAMCs did not provide a consistent level of service for women veterans and that there was a need for stronger leadership in providing treatment for these patients from the highest levels of VHA management. The OIG study included the following findings: (1) Women Veterans Coordinators (WVCs) were not adequately trained to function in their positions, and VHA had not established a formal training program to address this issue; (2) WVCs were not always clearly available in VAMCs, and patients and some employees did not know who was able to assist female veterans with their needs; (3) VAMC employees did not consistently inform women patients about the services that were available to them, or the range of services to which they were entitled; (4) VAMCs managers did not always ensured adequate privacy for women patients, and WVCs did not have input to construction committees in order to identify and seek resolution of these problems; (5) specialized medical equipment required for female examination and treatment was not always readily available for use when clinicians needed it, and some gynecological equipment was not always available in the type that ensured patient comfort; and (6) none of the eight VAMCs that were included in the study had established systematic procedures to monitor and evaluate the quality and appropriateness of women's health care.
In addition, VAMCs frequently did not provide in-house services that were needed by their women veterans patients. Rather, the services were provided by the private sector, raising concern as to whether women veterans were being accorded the focus of medical surgical treatment services that they were entitled to at, or through, the VHA system.
As a result of this OIG inspection VHA now provides GYN (Primary Care/Preventive Care) in 159 of the 166 medical centers, Women Veterans Clinics in 124 of the 166 medical centers, (an increase of 49 clinics above 1993), Mammograms (either in-house, fee-based or contract) in 165 medical centers, and Breast Health Care Services (General) at all 166 medical centers. VHA has written Protocols/Clinical Practice Guidelines/Standards in many areas. VHA has also written and implemented Quality Improvement/Quality Assurance Monitors or Plans of Care in most areas of concern.