GAO-03-685, Department of Health and Human Services: Review of the Management of Inspector General Operations


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Report to Congressional Committees:

United States General Accounting Office:

GAO:

June 2003:

DEPARTMENT OF HEALTH AND HUMAN SERVICES:

Review of the Management of Inspector General Operations:

GAO-03-685:

GAO Highlights:

Highlights of GAO-03-685, a report to the Chairman and Ranking 
Minority Member, Senate Committee on Finance and the Ranking Minority 
Member, Senate Special Committee on Aging 

why GAO Did This Study:

Janet Rehnquist became the Inspector General of the Department of 
Health and Human Services (HHS) in August 2001. GAO was asked to 
conduct a review of the Inspector General’s organization and assess 
her leadership, independence, and judgment in carrying out the mission 
of the Office of Inspector General (OIG). GAO examined indicators of 
the OIG’s productivity and compared them to the organization’s past 
performance. GAO also determined whether employee morale has been 
sustained by surveying all OIG employees and comparing the results to 
those obtained through an identical survey administered in 2002.

On March 4, 2003, the Inspector General resigned her office effective 
June 1, 2003. However, in this report we refer to Ms. Rehnquist as 
the Inspector General.

What GAO Found:

The credibility of inspectors general is largely premised on their 
ability to act objectively and impartially—both in substance and in 
perception. Some of the HHS Inspector General’s actions—including her 
decision to delay a politically sensitive audit—created the perception 
that she lacked appropriate independence in certain situations. The 
Inspector General exhibited serious lapses in judgment that further 
troubled many OIG staff. For example, she inappropriately obtained a 
firearm that she briefly possessed at her workplace and OIG 
credentials that identified her as a law enforcement officer. The 
Inspector General also initiated a variety of personnel changes in a 
manner that resulted in the resignation or retirement of a significant 
portion of senior management, disillusioned a number of higher level 
OIG officials and other employees, and fostered an atmosphere of 
anxiety and distrust. Ultimately, the collective effect of these 
actions compromised her ability to serve as an effective leader of 
HHS’s Office of Inspector General. 

Examining productivity trends is difficult because the work of the OIG 
often involves multiyear efforts and the results recorded for a single 
year are heavily dependent on work initiated in prior years. 
Similarly, savings achieved in any one year can be attributable to the 
culmination of efforts made over several years. Given these 
constraints, GAO noted that productivity at the OIG over the last 3 
years increased in some areas and declined in others. Overall savings 
attributable to the OIG’s efforts—as reported in its semiannual 
reports to the Congress—increased from $15.6 billion in fiscal year 
2000 to $21.8 billion in fiscal year 2002. The number of individuals 
convicted for violating HHS program statutes and regulations—another 
key indicator of the OIG’s performance—also increased. On the other 
hand, declines were noted in the number of settlements with providers 
who submitted false claims to the government and the OIG’s education 
and outreach activities. 

GAO’s survey results showed that employees’ overall views of the 
organization, management, and their personal job satisfaction 
generally remained positive and relatively unchanged between 2002 and 
2003. However, field office staff and those in lower level positions 
were considerably more positive in their views of the organization 
than their counterparts in headquarters and at the highest levels of 
management. Two units in particular—the OIG’s Office of Counsel and 
the Office of Evaluation and Inspections—also had marked declines in 
morale. Both reported significantly lower levels of trust and 
confidence in the organization and less job satisfaction, compared to 
1 year earlier. 

The Inspector General generally disagreed with some of our findings. 
In our response, we address why these findings raise concerns about 
the management of the OIG. We also provided our draft report to the 
Office of the HHS Secretary, but did not receive comments.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Examination of the Inspector General's Actions Regarding Independence 
and Judgment:

Evaluation of OIG Productivity:

Measure of Employee Morale:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Insufficient Internal Controls Over the OIG's Credentialing 
System:

Appendix III: Comments from the Inspector General:

Appendix IV: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Acknowledgments:

Tables:

Table 1: Select OIG Performance Measures--Fiscal Year 1997 through 
Fiscal Year 2002:

Table 2: Medicare Exclusions Imposed--Fiscal Year 1997 through Fiscal 
Year 2002:

Table 3: Number and Amount of False Claims Act Settlements, Fiscal 
Years 2000 through 2002A:

Table 4: Number and Amount of CMPs Imposed, Fiscal Year 1997 through 
Fiscal Year 2002:

Table 5: Number of Active CIAs and Newly Negotiated CIAs for Fiscal 
Year 1997 through Fiscal Year 2002:

Table 6: Testimonies, Speeches, and Other Presentations by Component 
for Fiscal Years 2000, 2001, and 2002:

Table 7: Number and Percentage of OEI Projects That Were Begun in 
Fiscal Years 2000, 2001, and 2002 and Canceled by February 28, 2003:

Abbreviations:

CIA: Corporate Integrity Agreement 
CMP: Civil Monetary Penalty 
CMS: Centers for Medicare & Medicaid Services 
DOJ: Department of Justice 
GSGeneral Schedule 
HHS: U.S. Department of Health and Human Services 
MOU: Memorandum of Understanding 
OAS: Office of Audit Services 
OCIG: Office of Counsel to the Inspector General 
OEI: Office of Evaluation and Inspections 
OI: Office of Investigations 
OIG: Office of Inspector General 
OMP: Office of Management and Policy 
PCIE: President's Council on Integrity and Efficiency:

United States General Accounting Office:

Washington, DC 20548:

June 10, 2003:

The Honorable Charles E. Grassley Chairman The Honorable Max Baucus 
Ranking Minority Member Committee on Finance United States Senate:

The Honorable John Breaux Ranking Minority Member Special Committee on 
Aging United States Senate:

This report responds to your October 21, 2002, letter asking us to 
conduct a review of the Department of Health and Human Services (HHS) 
Office of Inspector General (OIG). As agreed with your office, we 
examined the activities at the OIG under the leadership of Inspector 
General Janet Rehnquist, who took office in August 2001 and resigned 
her office effective June 1, 2003.[Footnote 1] Accordingly, the 
objectives of our review were to (1) assess the Inspector General's 
leadership, independence, and judgment in carrying out the OIG's 
mission, (2) identify changes in the OIG's productivity over the last 3 
years, and (3) determine whether employee morale has been sustained 
over the last few years.

To perform our review, we interviewed more than 200 current and former 
OIG employees. We examined more than 8,000 pages of documents--
including OIG reports, internal studies, personnel records, and 
policies and procedures. We also replicated a Web-based employee survey 
conducted by the OIG in January 2002--administered in January and 
February 2003--to assess any changes in employee views about their work 
environment.[Footnote 2] In addition, to assess the level of 
cooperation between the OIG and some of its law enforcement partners, 
we spoke with officials from the Department of Justice (DOJ), Medicaid 
Fraud Control Units from several states, and the National Association 
of Medicaid Fraud Control Units. We also interviewed three current or 
former inspectors general from other federal agencies to better 
understand their role and the conduct expected of them. We performed 
our review from October 2002 through May 2003 in accordance with 
generally accepted government auditing standards. For a detailed 
description of our scope and methodology, see appendix I.

Results in Brief:

During her tenure, the Inspector General took a number of actions that 
damaged her credibility and ultimately created an atmosphere of anxiety 
and distrust within certain segments of the OIG. Concerns regarding her 
independence--including those arising from her decision to delay a 
politically sensitive audit and her intervention in ongoing cases in 
response to external requests--and personnel changes she initiated 
among senior management, disillusioned members of her senior staff, 
headquarters employees, and employees working in two OIG units. In 
addition, the Inspector General's brief possession of a firearm at the 
workplace and law enforcement credentials represented serious lapses in 
judgment. We also believe that the Inspector General should have 
devoted more attention to some aspects of OIG operations, such as a 
major budgetary shortfall, which limited travel and training and 
required senior managers to reallocate staff positions regardless of 
where those positions were most needed.

Examining the productivity of the OIG in a given time period is 
complex. The OIG engages in a variety of activities so that its 
productivity involves several dimensions. Moreover, comparing success 
from one year to the next is difficult because results are dependent on 
work in the pipeline that was initiated in prior years. Given these 
constraints, measures of the OIG's performance over the last 3 years 
reveal gains in some productivity indicators and declines in others. On 
one hand, overall savings attributable to its work increased from $15.6 
billion in fiscal year 2000 to $21.8 billion in fiscal year 2002. On 
the other hand, we identified some downward changes. For example, there 
was a significant decline in the number of settlements with providers 
who submitted false claims to the government. As a consequence, the 
recoveries associated with these settlements also declined, from about 
$974 million in fiscal year 2000 to about $519 million in fiscal year 
2002. We also found that the OIG's outreach activities that increase 
public and provider awareness of fraud and abuse problems in health 
care, and the OIG's efforts to combat them, have dropped appreciably 
since fiscal year 2001.

Employee views of the organization, management, and their personal job 
satisfaction remained positive and relatively unchanged from 2002 
through 2003, in the aggregate. However, we identified several groups 
of OIG employees whose morale had been adversely affected during this 
time period. In particular, there were considerably more negative views 
expressed by those at headquarters and those in senior management 
positions than their counterparts in the field and in lower level 
positions. These groups were concerned with a range of issues including 
the organization's respect for staff, clarity of goals, and 
communication efforts. In addition, there were distinct declines since 
2002 in the positive views of employees working in the evaluation unit 
and the Office of Counsel. These groups had low levels of trust and 
confidence in the organization and expressed a significantly lower 
level of job satisfaction compared to 1 year earlier.

In written comments on a draft of this report, the Inspector General 
disagreed with some of our findings related to her independence and 
judgment, the agency's productivity, and employee morale. In our 
response, we address why these findings raise concerns about the 
management of the OIG. We also provided our draft report to the Office 
of the HHS Secretary, but did not receive comments.

Background:

In 1978, Congress passed the Inspector General Act, creating Inspector 
General offices in 12 federal agencies.[Footnote 3] This followed 
growing reports of serious and widespread breakdowns in agencies' 
internal controls. These new OIGs were established as independent and 
objective offices within their respective agencies to promote economy, 
efficiency, and effectiveness in government programs and operations and 
to prevent and detect fraud and abuse. In addition, they were created 
to keep agency heads and Congress fully informed about problems and 
deficiencies in program operations, as well as needed corrective 
action. Over the years, the act has been amended to increase the number 
of inspectors general. The President, with the advice and consent of 
the Senate, appoints inspectors general at cabinet-level departments 
and other large agencies, including HHS. The inspectors general at 
smaller, independent agencies and other federal entities are appointed 
by the heads of their organizations and have essentially the same 
authorities and duties as those appointed by the President. Presently, 
there are 28 inspectors general appointed by the President and 29 
appointed by their agency heads.

Inspectors general hold a unique place in the executive branch of 
government. They report to and are subject to the general supervision 
of their agency heads, but carry out their duties independently. In 
addition, they have reporting obligations to both the heads of their 
agencies and Congress.[Footnote 4] Those that are presidentially 
appointed are among the few such appointees that are to be selected 
"without regard to political affiliation and solely on the basis of 
integrity and demonstrated ability."[Footnote 5] To help maintain their 
independence and fulfill their mission--which often involves being 
publicly critical of their own departments--inspectors general must 
familiarize their departmental colleagues with their special role.

Because they are charged with independently protecting the integrity of 
federal programs, inspectors general must be impartial in fact and 
appearance. Government Auditing Standards,[Footnote 6] effective in 
January 2003, call for auditors to "be free, both in fact and 
appearance from personal, external, and organizational impairments to 
independence." These standards also require that auditors "avoid 
situations that could lead reasonable third parties with knowledge of 
the relevant facts and circumstances to conclude that the auditor is 
not capable of exercising objective and impartial judgment . . .." 
Given that their independence and impartiality is so critical, 
inspectors general need to be sensitive to how their actions might be 
perceived and interpreted by their staffs, the administration, 
Congress, and the public.

About 300 of the approximately 1,600 HHS OIG employees are employed in 
its Washington D.C. headquarters. The remainder work in its 8 regional 
offices and 85 field offices in all 50 states. The OIG consists of five 
components, or major units, each headed by a deputy inspector general. 
The office is led by 13 Senior Executive Service level employees, who 
all work in headquarters, and about 60 GS-15 level employees.[Footnote 
7] About two-thirds of the GS-15 employees are spread across the 
various components in headquarters with the remaining third located in 
the OIG's regional offices.

Consistent with the act, the OIG maintains the Office of Audit Services 
(OAS) and the Office of Investigations (OI).[Footnote 8] They each 
represent about 40 percent of the OIG's budget. OAS is responsible for 
auditing a variety of HHS health care programs and generally spends 
about 80 percent of its resources on projects related to the Medicare 
and Medicaid programs.[Footnote 9] Its findings can result in program 
improvements and the return of overpayments to the federal government. 
In addition, OAS provides audit support to OI. OI investigators 
typically pursue allegations of criminal conduct that they receive from 
contractors that process Medicare claims, state Medicaid Fraud Control 
Units, officials involved in administering HHS's many grant programs, 
and others. When investigators find evidence of potential wrongdoing, 
they refer the matter to DOJ for possible prosecution or the OIG may 
opt to impose other sanctions.

The OIG has established three additional components to enable it to 
fulfill its mission. The Office of Evaluation and Inspections (OEI) 
conducts short-term management evaluations of HHS programs that 
generally involve significant expenditures and services to 
beneficiaries or in which important management issues have surfaced. 
Its reports are expected to identify opportunities for improvement in 
departmental programs. While OAS may audit the same federal programs 
examined by OEI, the scope of OEI studies is typically broader and 
would more likely involve the use of surveys, interviews, and other 
qualitative research methods. A relatively small component, OEI 
represents about 10 percent of the office's resources. The Office of 
Counsel to the Inspector General (OCIG) provides legal services to the 
OIG. Among other things, it renders advisory opinions to health care 
providers and develops model industry guidance for compliance with 
relevant laws and regulations. It also has several sanctions at its 
disposal to penalize those who abuse HHS programs. Finally, the Office 
of Management and Policy (OMP) is responsible for the administration of 
the office, which includes overseeing the budget, supporting the 
office's information technology needs, and working with the media. It 
is also responsible for the OIG's human resource management activities, 
but obtains significant personnel support from the department's 
centralized Program Support Center. OCIG and OMP each represent about 5 
percent of the OIG's budget.

The OIG plays an instrumental role in identifying and investigating 
individuals and entities that may have abused HHS programs. It may make 
referrals to DOJ for possible prosecution under applicable criminal 
statutes. In addition, health care providers who violate federal laws 
and regulations may face a variety of civil sanctions. The OIG may make 
use of the False Claims Act[Footnote 10]--the federal government's 
primary civil remedy for false or fraudulent claims--and refer such 
matters to DOJ. The act imposes substantial penalties on those who 
knowingly submit false claims to Medicare and other federal programs.

If a provider has filed a false claim that DOJ opts not to pursue 
through the use of the False Claims Act, the OIG may impose other 
sanctions, such as civil monetary penalties (CMP), against that health 
care provider. CMPs are also imposed for other types of improper 
conduct, such as violations of statutory prohibitions on "kickbacks" in 
connection with patient referrals.[Footnote 11] The OIG also can assess 
CMPs against hospitals for "patient dumping," that is, failing to 
provide appropriate treatment to patients presenting a medical 
emergency.[Footnote 12] The amount of the CMP imposed is related to 
each provider's specific violation. The OIG may also exclude health 
care providers from participating in Medicare, Medicaid, and other 
federal health programs if they have, for example, been convicted of a 
criminal offense related to Medicare--including health care fraud or 
patient abuse and neglect--or had their license suspended or revoked. 
OCIG may also opt to negotiate corporate integrity agreements with 
health care providers.[Footnote 13]

Although the OIG focuses the majority of its attention on health care 
programs, its activities extend to other areas as well. For example, 
the OIG has made the detection, investigation, and prosecution of 
absent parents who fail to pay court-ordered child support a priority. 
The OIG works with other federal, state, and local agencies to expedite 
the collection of these payments. Parents who repeatedly fail to honor 
such obligations are subject to criminal prosecution. The OIG's recent 
activities with respect to parents who have defaulted on their child 
support payments resulted in 152 convictions and more than $7 million 
in court-ordered criminal restitution in fiscal year 2002.

Examination of the Inspector General's Actions Regarding Independence 
and Judgment:

We examined the independence that was reflected in the Inspector 
General's decision-making during her tenure. In addition, we reviewed 
personnel changes that she initiated and evaluated her judgment in 
several instances. We interviewed appropriate staff, including the 
Inspector General herself, and examined relevant documentation.

The Inspector General's Independence:

Current and former OIG headquarters employees frequently expressed 
concerns about the Inspector General's independence. These concerns 
centered on several incidents--some of which were widely reported by 
the media. Employees also identified other audits and investigations 
that they felt may have suffered from inappropriate management 
intervention. We concluded that the following four incidents involved 
actions on the part of the Inspector General that at least contributed 
to the perception of a lack of independence.

Florida Pension Audit:

In the spring of 2002, the OIG was scheduled to begin an audit of the 
Florida Retirement System. The objective was to evaluate whether the 
state appropriately charged the federal government for the pension 
expenses of state agency employees who help administer federal 
programs. The auditors specifically wanted to determine whether funds 
designated as federal contributions to the retirement system were used 
to provide for pension expenses, and whether the federal contribution 
rates were reasonable.

The OIG's first meeting to discuss this audit with Florida pension 
officials was scheduled for April 16, 2002. The day before, the Chief 
of Staff to the Florida governor placed an urgent call to the Office of 
the HHS Secretary, requesting that the audit be delayed to accommodate 
the new pension department director who was going to assume his 
position in a few weeks. This call was ultimately referred to the 
Inspector General, who instructed her Deputy for Audit Services to 
delay the audit for a few days. The Inspector General subsequently 
ordered a second delay until July. Due to subsequent scheduling 
problems affecting both OIG and Florida pension staff, the audit team 
did not begin its work until September 2002. Allegations made by OIG 
employees and the media suggested that the federal government's 
contributions to the Florida retirement system could be excessive and 
that a report on these contributions might affect the outcome of the 
Florida governor's race that November.

When asked about the incident, the Inspector General stated that she 
agreed to temporarily postpone the audit until she could determine the 
appropriate response to the request and did not have any involvement in 
subsequent delays. She also insisted that audits are frequently 
delayed, that her decision to delay the audit was not politically 
motivated, and that, even if the audit had begun in April, it would not 
have been completed before the election. She told us that, in 
hindsight, she could have handled the situation differently by 
referring the request to the Deputy for Audit Services, but she did not 
believe she acted inappropriately in these circumstances.

We believe that the Inspector General did not appropriately investigate 
the implications of her decision before agreeing to delay what 
ultimately resulted in a report containing significant monetary 
findings. First, Florida pension department officials could have known 
that a substantial overpayment existed, and that a delay in the OIG's 
audit could have benefited the state by changing the time frames used 
to calculate the amount it owed. In fact, the draft report on the 
Florida pension audit contains a finding that there were excessive 
federal contributions totaling about $517 million, which the state will 
be required to return or offset against the amount of future federal 
contributions to the retirement fund. Second, given that the team was 
scheduled to begin its work in April 2002 and had estimated that the 
audit report would be drafted in 6 months, it is conceivable that the 
report could have been available by election day, if the audit had 
begun when originally planned. Finally, contrary to the Inspector 
General's recollection, we found that she sent an e-mail message to her 
Deputy for Audit Services in April 2002 instructing him to postpone the 
audit until July 2002. The Inspector General acknowledged that, 
although short delays in commencing audits are common, it was 
admittedly unusual for a request for a delay to be directed to, and 
resolved at, her level.

York Hospital:

In February 2000, the OIG alleged that York Hospital--located in York, 
Pennsylvania--had submitted improper claims for services provided to 
Medicare beneficiaries. The OIG had notified the hospital that it 
planned to impose a CMP and was engaged in negotiations with the 
hospital when the Inspector General assumed office.[Footnote 14] The 
OIG attorneys had estimated that York Hospital's potential liability 
was $726,000.

Soon after taking office, the Inspector General received a letter from 
three members of Congress encouraging her to settle the case quickly. 
According to the former Chief Counsel,[Footnote 15] the Inspector 
General told him, "I hate this case; get rid of it." Feeling as though 
they had to move fast, OIG attorneys lost the benefit of time--which 
they explained is a key factor in resolving a case in the government's 
favor--and quickly settled the matter. The former Chief Counsel also 
noted that the settlement amount of $270,000 was far less than the 
attorneys believed the government could have received had negotiations 
proceeded as they had planned.

The Inspector General indicated that she in no way directed a 
settlement or personally involved herself in the York Hospital 
negotiations. She also stated that if her OCIG staff perceived that 
they were under pressure to settle the case quickly, they 
misinterpreted her instructions. She told us that she simply wanted to 
settle this case in a timely manner.

Although the Inspector General said she did not intend to pressure her 
staff, the former Chief Counsel told us that he and those responsible 
for negotiating with hospital officials clearly perceived a sense of 
urgency. He also told us that her staff perceived that timing, rather 
than maximizing the settlement amount, was her main concern. We believe 
that her staff acted accordingly, possibly against the government's 
financial interest.

Lithotripsy Claims:

Two medical societies representing providers of lithotripsy[Footnote 
16] services threatened to sue the Centers for Medicare & Medicaid 
Services (CMS) over a regulation resulting in the denial of claims 
submitted for payment to the Medicare program. The CMS regulation 
implemented statutory restrictions on physician referrals to providers 
in which the physicians have an ownership interest and included 
lithotripsy services within the scope of these restrictions. The 
medical societies maintained that Congress did not intend to include 
lithotripsy services within the scope of the statute and intended to 
litigate this matter, if a settlement could not be reached quickly.

A partner in the law firm representing the two medical societies, who 
was also a friend of the Inspector General, contacted her for 
assistance in expediting this case. The Inspector General directed her 
former Chief Counsel to contact the law firm and begin negotiating the 
matter, which was under the jurisdiction of CMS and not the OIG. The 
former OIG Chief Counsel was hesitant to intervene until the 
appropriate attorney representing CMS in this matter could be 
consulted. Because CMS's attorney was unavailable for about a week, the 
former Chief Counsel took no action during this time. According to the 
former Chief Counsel, the Inspector General admonished him severely 
when she discovered that he had not followed her instructions to 
immediately contact the law firm.

The Inspector General asserted that her office had a legitimate role in 
this matter. Although the issue was being disputed between the medical 
societies representing the lithotripsy providers and CMS, the Inspector 
General believed that her OCIG staff, which advised Congress on 
physician referral matters, was in a unique position to resolve the 
issue. She pointed out that she did not personally involve herself in 
the matter, nor instruct her staff about how to resolve the issue. 
Instead, she stated that her goal was to help resolve a matter in which 
her attorneys had vast expertise.

Despite the OIG's expertise in this matter, we agree with the former 
Chief Counsel that it would have been inappropriate for the OIG to 
intervene by contacting the law firm to initiate discussions, 
particularly in the absence of CMS's attorney. If the Inspector General 
wanted OCIG's expertise to be offered to CMS, it would have made sense 
for OCIG to contact CMS's attorney before proceeding. CMS's attorney 
responsible for handling this matter told us that she would have been 
troubled if the OIG had commenced discussions without her agency's 
participation. Given the Inspector General's personal relationship with 
the medical societies' attorney and the OIG's lack of jurisdiction in 
the matter, her actions created the impression that she was more 
interested in helping a friend than offering advice to CMS, which 
called her independence into question.

Adjusted Community Rating Audit:

On February 20, 2001, the OIG sent its draft report on adjusted 
community rate proposals for Medicare+Choice organizations[Footnote 
17] to CMS for comment. This report was of potentially significant 
interest to congressional committees, which were then considering the 
adequacy of payments in the Medicare+Choice program. While OIG 
guidelines generally provide up to 45 days for audited entities to 
comment on its draft reports, the publication of this report was 
delayed for 14 months while the OIG waited for comments from CMS. 
Ultimately CMS agreed with the OIG's findings in written comments on 
April 16, 2002.

Some employees alleged that the delay in issuing this report reflected 
a lack of independence on the Inspector General's part. They suggested 
that the Inspector General should have taken a more active role in 
expediting the report's issuance. They pointed out that the CMS 
Administrator initially disagreed with the draft report's findings and 
hired a consultant to validate the OIG's results. According to these 
employees, it took CMS more than a year to replicate the OIG's work and 
determine that it agreed with the report's findings. OIG employees told 
us that the Inspector General tolerated this situation because she was 
unwilling to issue a relatively controversial report without the 
benefit of CMS's agreement. The delay in issuing this report diminished 
its usefulness because congressional committees were focused on other 
concerns by the time the report was finalized.

The Inspector General stated that she was only vaguely familiar with 
this project but was certain that she did not direct her audit team to 
delay the report's issuance. Although she recalled that the CMS 
Administrator initially disagreed with the report's conclusions, she 
told us that she did not remember the specific time frames associated 
with it.

Our evidence shows that the Inspector General's staff tried to enlist 
her assistance in expediting CMS's comments to no avail. By permitting 
CMS to delay the report's publication, the Inspector General created 
the appearance among her staff of being unduly influenced by CMS. In 
our view, a time sensitive report of congressional interest should 
have, at the very least, garnered more of the Inspector General's 
attention.

The Inspector General's Personnel Changes:

During the Inspector General's tenure, staff turnover among the OIG 
senior headquarters staff has been considerable. Between September 2001 
and November 2002, at least 20 OIG senior managers retired, resigned, 
or were reassigned. Ten of these were Senior Executive Service[Footnote 
18] employees, most of whom had over 25 years of government service and 
had played an important leadership role at the OIG for many years. The 
others were GS-15 employees who were instrumental in carrying out 
specific office functions.[Footnote 19] The Inspector General's 
representative characterized these changes as voluntary and beneficial 
to the overall mission of the office. The Inspector General told us 
that these changes were made to provide senior managers with new 
insights into agency operations and to capitalize on the fresh 
perspectives they could bring to their new jobs. However, we found that 
the sudden and unexplained nature of many of the Inspector General's 
actions resulted in a widespread perception of unfairness among her 
staff. In addition, the promotion of a close advisor to the Inspector 
General, to the position of Director of Public and Congressional 
Affairs, raises a legal concern.

We found the circumstances surrounding the departures of eight senior 
OIG managers to be particularly troubling. Four of these eight managers 
who left the OIG or were detailed elsewhere were members of the Senior 
Executive Service. One of the four took an early retirement after the 
Inspector General proposed that the department assign him to a position 
outside of his local commuting area with the assumption that he would 
retire instead. Another retired after most of his responsibilities were 
reassigned to another official or eliminated. A third resigned about 6 
weeks after the Inspector General reassigned his job responsibilities 
and directed that he not report to his office and instead spend his 
time seeking new employment. Finally, one manager was detailed to a 
temporary position within HHS and was also instructed not to return to 
his OIG office. He is currently seeking new employment.

These four individuals told us that the Inspector General had not 
informed them of specific deficiencies in their performance, given them 
any opportunity to improve their performance, worked with them to find 
a mutually satisfactory resolution to her concerns, or provided an 
adequate rationale for her decisions to remove them from their 
positions. Moreover, three of these managers told us that they were 
shocked with the urgency she displayed when asking them to leave the 
OIG, and two perceived that a single event ultimately led to the 
Inspector General's decision to remove them. For example, in one 
instance, a senior manager linked his removal to an incident in which a 
problem had to be resolved in the Inspector General's absence. Although 
he successfully contacted her and proposed a solution, she did not wish 
to address the matter until her return to the office. He delayed taking 
action, as she directed. However, according to this official, when the 
Inspector General returned, she was angry and suggested that he had 
tried to pressure her into accepting his proposed solution, essentially 
excluding her from the decision-making process. Describing their 
departures from the OIG, these four individuals told us that they felt 
they had no alternative but to leave their positions. Other OIG staff 
also told us that these four changes--all of which were initiated by 
the Inspector General--were involuntary.

The other four individuals whose departures were particularly troubling 
were GS-15 level managers from OMP, OCIG, OI, and the Inspector 
General's Immediate Office.[Footnote 20] One manager resigned after 
being reassigned twice within 9 months. According to several OIG 
employees, the purpose of this manager's second reassignment was to 
accommodate the Inspector General's preference that this manager no 
longer work in the OIG headquarters building. The Inspector General 
gave no explanation why she wanted this individual to work in a remote 
location. A second was reassigned to an interagency task force for an 
indefinite period after his position was abolished. The Inspector 
General reportedly no longer wanted him in the OIG headquarters 
building. The third individual was temporarily reassigned to a position 
at another HHS agency and subsequently resigned. He told us that his 
duties were curtailed following a briefing of congressional staff in 
which he voiced an official OIG opinion that conflicted with that of 
CMS. The fourth individual retired after being reassigned from the 
Inspector General's Immediate Office to another component. Some staff 
members perceived that the reassignment of this individual resulted, in 
part, from her requesting--without the Inspector General's knowledge--
a gun safe to properly store a firearm that the Inspector General had 
recently acquired. Like the reassignments at the senior executive 
level, the Inspector General initiated these changes.

Some of the employees we interviewed were skeptical that these changes 
were necessary and asserted that they actually damaged the 
organization's effectiveness. Specifically, they were concerned with 
the sheer number of personnel moves made in a relatively brief period 
of time and that their new component heads lacked experience in the 
areas that they were going to lead. They also expressed concerns about 
the Inspector General's motivations because they felt that the changes 
generally had not been adequately explained to the employees involved. 
The abruptness of these changes and the lack of any overall explanation 
for them heightened employees' mistrust. Although some employees were 
supportive of the Inspector General's organizational changes or felt 
unaffected by her actions, comments made during our interviews and in 
our employee survey highlighted the frustration many employees--
especially at headquarters--felt due to the perception of unfairness 
associated with these personnel changes. We found that the magnitude 
and abruptness of the Inspector General's actions raised fear and 
anxiety among her staff.

We asked the Inspector General about each of the individuals to obtain 
her rationale in making these personnel decisions. The Inspector 
General told us that she was concerned about the individuals' privacy 
and that she was uncomfortable discussing the circumstances involving 
these managers with us.

Finally, we identified one matter giving rise to a legal concern. We 
obtained information suggesting that a member of the OIG's staff may 
have been preselected for a GS-15 position as the Director of Public 
and Congressional Affairs.[Footnote 21] Specifically, as explained 
below, e-mail communication by one of the Inspector General's closest 
advisors implies that a decision had been made to promote this employee 
to the GS-15 level prior to the initiation of a competitive selection 
process. Citing the individual's outstanding performance as a GS-14 in 
the same office,[Footnote 22] the Inspector General had directed the 
employee's supervisor to promote her to a GS-15 at the earliest 
opportunity. Shortly thereafter, an advisor to the Inspector General 
contacted the individual's supervisor and emphasized that the Inspector 
General believed that it was important for the individual to have a GS-
15 in her current position. The advisor urged him to initiate the 
promotion process so that the GS-15 would be effective on the date of 
her eligibility for promotion, or soon thereafter. The advisor further 
explained that the Inspector General had made a commitment when the 
individual agreed to take the GS-14 position that she would be promoted 
to a GS-15 one year later. In addition, the OIG included a "selective 
placement factor" in the GS-15 position description, reportedly to 
favor the employee. OIG staff told us that, although the GS-15 position 
was advertised both inside and outside of the agency, there was a 
widespread perception that the selection had already been made. This 
perception may account for the fact that there was only one applicant 
for the position. While the information we obtained raises concern 
about a possible preselection, we have not conducted the type of 
formal, factual inquiry that would ultimately be necessary to determine 
whether the Inspector General's actions were unlawful.[Footnote 23]

The Inspector General's Judgment:

We identified several matters that raised concerns about the adequacy 
of the Inspector General's leadership. Some employees questioned the 
Inspector General's judgment in regard to her possession of a firearm 
in the office, as well as law enforcement credentials. Others raised 
concerns about the manner in which she conducted her business travel. 
In addition, several employees interpreted some of the Inspector 
General's actions as demonstrating a lack of interest in key office 
operations.

Report by the President's Council on Integrity and Efficiency:

In the fall of 2002, the Integrity Committee of the President's Council 
on Integrity and Efficiency (PCIE)[Footnote 24] received an allegation 
that the Inspector General had improperly requested and obtained a 
firearm from her Deputy Inspector General for Investigations. 
Subsequently, the Integrity Committee received a second allegation that 
the Inspector General had improperly obtained supervisory special agent 
law enforcement credentials. After consulting with DOJ officials, who 
declined to pursue these allegations, the Integrity Committee proceeded 
with its investigation. The PCIE forwarded its report to the Deputy 
Secretary of HHS on April 4, 2003.

The PCIE found that the Inspector General had obtained a firearm from 
an OIG special agent and maintained it in her Washington, D.C. office 
for a short period of time. An OIG Memorandum of Understanding (MOU) 
with DOJ and the Federal Bureau of Investigation set forth a process 
for deputizing OIG special agents to allow them to carry firearms, make 
arrests, and execute warrants when carrying out their law enforcement 
functions.[Footnote 25] However, the PCIE found that the Inspector 
General had not met the job classification and training requirements 
outlined in the MOU and had not been deputized. In an interview with 
PCIE investigators, the Inspector General stated that she believed that 
inspectors general were statutorily authorized to possess firearms and 
that she had not reviewed the MOU for deputation of OIG special agents.

In regard to the second allegation, the PCIE found that the Deputy 
Inspector General for Investigations obtained supervisory special agent 
credentials for the Inspector General because she did not want the 
Inspector General to have any difficulty gaining access to secured 
areas in the event of a terrorist incident.[Footnote 26] The Inspector 
General told PCIE investigators that other inspectors general did not 
seem to know how to handle the issue of access to secured areas in the 
event of a terrorist attack, but she had never asked them if they had 
law enforcement credentials. She also told investigators that she had 
the credentials in her possession for a short time, and returned them 
to her Deputy for Investigations to store in a safe. (Before the PCIE 
investigated this issue, concerns about the ease with which OIG 
credentials could be obtained came to our attention. We examined the 
internal controls for the credentialing system and identified several 
weaknesses, which are described in appendix II. OIG officials have 
since told us that they have taken steps to correct these weaknesses.):

The PCIE report identified several criminal statutes as relevant to the 
allegations, including provisions of federal and District of Columbia 
law concerning the possession of firearms, which are applicable to 
those working in federal buildings. At the conclusion of the 
investigation, DOJ officials advised the PCIE that it declined to 
prosecute the Inspector General for any possible violations of criminal 
statutes regarding the possession of a firearm or law enforcement 
credentials. In addition, in the letter to the Deputy Secretary of HHS 
accompanying its report, the PCIE advised that the Inspector General's 
resignation mooted the need to take any administrative actions against 
her. It also expressed deep concern about the actions of some OIG 
employees who facilitated the Inspector General's acquisition of these 
items.

The Inspector General's Travel:

Another issue that persistently surfaced during our review was 
perceptions of the propriety of the Inspector General's business 
travel. As the head of a large organization with offices nationwide, 
the Inspector General is entitled--and expected--to periodically visit 
these offices to provide oversight, guidance, and support to her staff. 
In addition, the Inspector General may engage in other business-related 
travel, such as attending conferences and meeting with provider 
organizations and other external groups. Inspectors general--like other 
government employees--are not prohibited from planning personal travel 
in conjunction with their business trips. However, we spoke with 
current and former inspectors general from other federal agencies, and 
they told us that they generally refrain from including personal travel 
with their business trips for fear of raising suspicion about their 
motivation or integrity. While no one alleged that the Inspector 
General violated travel regulations, some current and former officials 
questioned her motivation for planning certain trips that included a 
personal element, such as sightseeing activities--sometimes with two 
senior OIG managers.

To better understand the purpose of the Inspector General's travel, we 
examined all of the documentation related to her trips, including 
travel orders, vouchers, and detailed itineraries prepared by her 
office. We found that during the first 4 months of the Inspector 
General's tenure she took four trips outside of the Washington D.C. 
area. None of these trips included a personal element or any 
companions. However, over the next 12 months, the Inspector General 
traveled eight more times and included personal activities on half of 
these trips. In addition, she invited one or two senior managers to 
accompany her on six of these eight trips.

Three of the Inspector General's trips in particular raised concerns, 
arising from a perception that this travel was motivated by other than 
official duties. In some of these cases, large blocks of time could not 
always be accounted for. For example, the Inspector General took one 
trip to San Francisco and Phoenix that spanned 8 days and included 2 
days of personal time on a weekend. In examining the business portion 
of this trip, we were only able to determine that the Inspector General 
made two half-hour speeches and traveled between these cities and 
Washington, D.C. Further, in some cases, personal activities--sometimes 
involving the participation of the two senior managers--were included. 
While we did not validate the managers' activities on these trips 
beyond their own assertions, we believe that it is appropriate for the 
Inspector General to ask managers to accompany her as needed on 
business-related travel. However, including her colleagues in her 
personal activities during travel contributed to a perception that the 
business reasons for these trips were pretexts and that the trips were 
planned solely for nonbusiness purposes.

In responding to our inquiries regarding the Inspector General's 
travel, she indicated that all of her trips were made for legitimate 
business purposes. She also told us that she was not concerned with any 
perceptions OIG employees may have had about her travel. Finally, in a 
written response to our inquiry regarding approximately 3 days of 
unaccounted time during her San Francisco and Phoenix trip, she 
indicated that she spent her time performing office work and preparing 
for one of her two speeches. She offered no other elaboration on her 
business activity.

The Inspector General's Leadership in Resolving Budgetary Problems:

During our study, the Deputy Inspectors General were grappling with a 
major budgetary shortfall due to aggressive hiring in fiscal year 2002, 
lower than expected attrition throughout the OIG, and uncertain funding 
levels for fiscal year 2003 that had yet to be resolved. Senior OIG 
officials told us that they were concerned that, without a quick 
solution, they might ultimately violate the Antideficiency 
Act.[Footnote 27] In February 2003, the Deputy Inspectors General were 
developing various proposals to react to their forecasted budget 
shortfall. The deputies had severely limited travel, training, and 
other human resource activities in their components. In addition, they 
were reallocating staff positions to accommodate the budget--regardless 
of where the positions were actually needed. Positions that became 
vacant through attrition were transferred to the overstaffed 
components. By gaining the vacant positions, the overstaffed components 
were able to reduce the number of staff considered to be in excess in 
their units.

Some of the deputies expressed strong resentment about the chaos this 
situation caused within their components. For example, a relatively 
small component that lost a key member of one of its functional teams 
could not replace that individual, and instead had to continue to meet 
mission goals with one fewer supervisor. Other component heads 
explained that the lack of funds to perform routine duties in the field 
affected morale and could impact long-term productivity.

This situation could have been avoided if OIG leadership had developed 
a human resource hiring and development plan that contained realistic 
budget projections and hiring goals that all deputies would have to 
follow. Historically, the Inspector General's Principal Deputy was 
responsible for ensuring that component heads worked together to carry 
out such a plan, but the Principal Deputy position had been vacant for 
months. As a result, component heads we spoke with felt that they did 
not have the authority to fill the leadership void that developed in 
this instance, and relied on the Inspector General to impose whatever 
fiscal constraints were necessary to establish an equitable budget 
allocation among the components. While the Inspector General expressed 
concern about funding issues, she did not take aggressive steps to 
remedy the situation. Although the deputies ultimately resolved their 
financial situation, at the time of her resignation, the component 
heads were still struggling among themselves with these budgetary 
challenges.

Evaluation of OIG Productivity:

The OIG conducts a variety of activities that aim to improve program 
operations, identify and recover overpayments, and investigate and 
sanction those who violate statutes and regulations governing HHS 
programs. Evaluating the effect of the Inspector General's recent 
actions on productivity is difficult to assess in the short term. For 
example, in addition to the decisions she made and the personnel moves 
she initiated, a variety of other factors contribute to productivity. 
Two factors make it impossible to reach an overall conclusion about OIG 
productivity for any limited period of time. First, fluctuations in 
performance are to be expected in any given year, given the multitude 
of the OIG's activities. Second, it is difficult to compare performance 
from one year to the next because the results in one period are heavily 
dependent on work in the pipeline that was initiated in prior years. 
For example, it could take 2 or 3 years from the time a project is 
initiated until a recommendation is made and subsequently implemented; 
investigating potential criminal activity and prosecuting the 
individuals involved could take even longer. Many of the OIG's 
productivity measures remain comparable to prior years or showed 
increases, but we found that several other key indicators of 
performance have declined since the Inspector General took office.

Savings, OAS Reports, and Convictions:

We analyzed a wide variety of performance measures to evaluate the 
OIG's effectiveness and found that many of these measures indicated 
that the OIG may be performing well, as table 1 shows. For example, in 
its semiannual reports covering fiscal year 2002, the OIG identified 
almost $22 billion in savings attributable to its work.[Footnote 28] 
The OIG consistently reported increases in these savings since fiscal 
year 1997. In addition, the number of OAS reports published has 
increased each year since fiscal year 2000. Also, the number of 
convictions resulting from the OIG's investigative referrals has 
steadily increased over the last 6 years.

Table 1: Select OIG Performance Measures--Fiscal Year 1997 through 
Fiscal Year 2002:

Savings (in billions of dollars); Fiscal year 1997: $7.6; Fiscal year 
1998: $11.6; Fiscal year 1999: $12.6; Fiscal year 2000: $15.6; Fiscal 
year 2001: $18.0; Fiscal year 2002: $21.8.

Number of OAS reports; Fiscal year 1997: 324; Fiscal year 1998: 187; 
Fiscal year 1999: 207; Fiscal year 2000: 300; Fiscal year 2001: 311; 
Fiscal year 2002: 333.

Convictions; Fiscal year 1997: 215; Fiscal year 1998: 261; Fiscal year 
1999: 401; Fiscal year 2000: 414; Fiscal year 2001: 423; Fiscal year 
2002: 517.

Source: HHS OIG.

[End of table]

OI officials, who told us that the number of convictions is an 
important measure of their success, also said that they appear to be on 
target in achieving even more convictions in fiscal year 2003. At the 
midpoint of the current fiscal year--March 31, 2003--the OIG reported 
320 convictions.

Although it is difficult to measure the "sentinel" effect of some of 
the OIG's activities, it has taken steps to encourage lawful and 
ethical conduct by the health care industry, which we believe should be 
acknowledged. For example, in recent years the OIG has actively worked 
with the private sector to develop compliance guidance to prevent the 
submission of improper claims and to discourage inappropriate conduct 
by providers. In March 2003, the OIG issued compliance guidance for 
ambulance suppliers. This was followed by the publication of compliance 
guidance for pharmaceutical manufacturers in April 2003.

Exclusions from Medicare:

Like convictions, the number of providers excluded from the Medicare 
program is a strong indicator of OI effectiveness. Although the number 
of exclusions imposed declined in fiscal year 2002, reversing a trend 
of increases since fiscal year 1999, we were unable to determine 
whether this decline reflects diminishing productivity. The OIG Chief 
Counsel explained that, in 2002, the Department of Education became 
responsible for processing most of the exclusions of health care 
providers who had defaulted on the repayment of their federally funded 
student loans. The Chief Counsel told us that in 2001, when the OIG 
still had this responsibility, it excluded 518 providers who had 
defaulted on these loans. In 2002--the transition year--the number of 
such providers excluded by the OIG dropped to 166. Table 2 shows the 
OIG's exclusions imposed since fiscal year 1997.

Table 2: Medicare Exclusions Imposed--Fiscal Year 1997 through Fiscal 
Year 2002:

Fiscal year 1997: 2,719; Fiscal year 1998: 3,021; Fiscal year 1999: 
2,976; Fiscal year 2000: 3,350; Fiscal year 2001: 3,756; Fiscal year 
2002: 3,448.

Source: HHS OIG.

[End of table]

Settlements, Recoveries, CMPs, and CIAs:

We found declines in the use of sanctions available to the OIG. For 
example, we noted reductions in the number of settlements and recovery 
amounts that result from the OIG's False Claims Act referrals to DOJ. 
Similarly, there were declines in the number of CMPs and CIAs recently 
imposed. Table 3 shows that both the number of settlements and amount 
of recoveries declined significantly in fiscal year 2002, compared to 
fiscal years 2000 and 2001.

Table 3: Number and Amount of False Claims Act Settlements, Fiscal 
Years 2000 through 2002A:

Number of settlements; Fiscal year 2000: 245; Fiscal year 2001: 248; 
Fiscal year 2002: 161.

Amounts recovered (in millions); Fiscal year 2000: $974.0; Fiscal year 
2001: $2,063.0[B]; Fiscal year 2002: $518.7.

Source: HHS OIG.

[A] The OIG was unable to provide comparable data for fiscal years 1997 
through 1999.

[B] A substantial portion of the amount recovered in fiscal year 2001 
is attributable to a single settlement of $875 million.

[End of table]

OIG officials told us that its False Claims Act cases are strongly tied 
to DOJ's efforts to combat health care fraud, which have had to compete 
with investigative resources dedicated to the September 11, 2001, 
terrorist attacks. In addition, DOJ has reduced the number of its 
national health care antifraud initiatives in recent years as well as 
the number of individual cases that it pursues under the auspices of 
each initiative. OIG officials also attribute this decline to its 
increasing emphasis on program compliance, which the OIG believes has 
had a sentinel effect on providers. Although the number of False Claims 
Act settlements and recoveries have declined, DOJ officials and the 
Medicaid Fraud Control Unit representatives we spoke to told us that 
they were pleased with the quality of the support they received from 
the OIG in pursuing abusive or fraudulent providers. However, several 
of these officials were concerned that the OIG could not devote more 
resources to assist them in their investigations.

Another important indicator of OIG productivity is the imposition of 
CMPs. As shown in table 4, the number of these cases had a marked 
decline since fiscal year 2000.

Table 4: Number and Amount of CMPs Imposed, Fiscal Year 1997 through 
Fiscal Year 2002:

Number of CMP cases; Fiscal year 1997: 16; Fiscal year 1998: 58; Fiscal 
year 1999: 67; Fiscal year 2000: 58; Fiscal year 2001: 30; Fiscal year 
2002: 34.

Amount of CMPs (in millions of dollars); Fiscal year 1997: $0.5; Fiscal 
year 1998: $2.2; Fiscal year 1999: $1.9; Fiscal year 2000: $9.7; Fiscal 
year 2001: $1.1; Fiscal year 2002: $2.4.

Source: HHS OIG.

[End of table]

In explaining the declining number of CMPs imposed, OIG officials 
offered two explanations. First, they told us that the increase in 
convictions may account for the decline in CMPs, which are typically 
imposed when more stringent penalties cannot be used. Because 
convictions have recently increased, there would be fewer opportunities 
to impose CMPs. Second, officials suggested that the office's previous 
aggressiveness in pursuing patient dumping cases--which generally made 
up between 65 and 90 percent of all CMPs imposed each year--has been a 
strong deterrent. The officials also emphasized that patient dumping 
cases have proven to be resource intensive. As a result, the OIG can 
only afford to pursue the most egregious cases.

CIAs, typically negotiated in conjunction with False Claims Act 
settlements, are also an indicator of the OIG's productivity. CIAs 
consist of "integrity provisions" that are intended to ensure that a 
provider's future transactions with Medicare and other federal health 
care programs are proper and valid. Such provisions include 
implementing an OIG-approved compliance program, use of an independent 
review organization to annually review provider billings, and other 
periodic monitoring and reporting requirements. Providers accept the 
imposition of the CIAs and, in turn, OCIG agrees not to seek additional 
administrative sanctions. As table 5 shows, the number of active CIAs, 
as well as the number of newly negotiated CIAs, has declined since 
2001.

Table 5: Number of Active CIAs and Newly Negotiated CIAs for Fiscal 
Year 1997 through Fiscal Year 2002:

CIAs active at end of the fiscal year; Fiscal year 1997: 122; Fiscal 
year 1998: 340; Fiscal year 1999: 418; Fiscal year 2000: 470; Fiscal 
year 2001: 498; Fiscal year 2002: 324.

New CIAs negotiated during the fiscal year; Fiscal year 1997: 83; 
Fiscal year 1998: 233; Fiscal year 1999: 138; Fiscal year 2000: 101; 
Fiscal year 2001: 112; Fiscal year 2002: 63.

Source: HHS OIG.


[End of table]

OCIG officials attributed the most recent decline to several factors. 
First, the number of civil False Claims Act settlements declined 
between 2001 and 2002, resulting in fewer providers with whom to 
negotiate CIAs. Second, in fiscal year 2002, OCIG began implementing 
the Inspector General's November 20, 2001, "Open Letter to Health Care 
Providers" regarding CIAs. CIAs had long been a concern of providers 
because of the costs associated with implementing the specified 
integrity provisions--such as retaining an independent review 
organization each year to review a statistically valid sample of 
billings. The November open letter announced that the OIG's policies 
and practices regarding CIAs were being modified in response to those 
concerns.

The letter noted, in part, that the OIG would no longer seek to 
negotiate CIAs with every provider settling a False Claims Act case 
with the government. In some situations, corporate compliance matters 
would be negotiated separately, after settlement of the False Claims 
Act case. The letter also indicated that the OIG would consider 
increasing its reliance on providers' internal audit capabilities. For 
example, some providers may not be required to retain an independent 
review organization. Similarly, not all billing reviews would be 
subject to statistically valid random sampling. Instead, these 
providers would be able to self-certify compliance based on the error 
rate indicated by reviewing an initial sample of their billings. 
Further, the new approach to CIAs could also be applied to previously 
negotiated CIAs. As a result, in fiscal year 2002, OCIG renegotiated 94 
existing CIAs associated with False Claims Act settlements. The revised 
CIAs contained "certification agreements," permitting providers to 
self-certify their compliance with the specific provisions contained in 
their agreements, instead of retaining an external review organization 
for this verification.

Outreach and Education Activities:

We also found that there has been a considerable drop in the 
testimonies and outreach and education activities performed by OIG 
employees. Prior to the current Inspector General's tenure, the OIG 
frequently provided assistance to congressional staff developing 
legislative proposals related to HHS programs, offered informal advice 
about program oversight, and testified at congressional hearings. In 
addition, OIG employees routinely presented the results of their work 
at conferences, meetings, and in other educational forums. However, as 
shown in table 6, the number of testimonies and speeches and other 
presentations by OIG employees revealed a significant decline in the 
assistance provided during the last fiscal year--especially among OCIG 
employees.

Table 6: Testimonies, Speeches, and Other Presentations by Component 
for Fiscal Years 2000, 2001, and 2002:

Inspector General and Principal Deputy; Testimonies: Fiscal year 2000: 
7; Testimonies: Fiscal year 2001: 3; Testimonies: Fiscal year 2002: 6; 
Speeches and other presentations: Fiscal year 2000: 3; 
Speeches and other presentations: Fiscal year 2001: 3; Speeches and 
other presentations: Fiscal year 2002: 7.

OAS; Testimonies: Fiscal year 2000: 0; Testimonies: Fiscal year 2001: 
1; Testimonies: Fiscal year 2002: 0; Speeches and other 
presentations: Fiscal year 2000: 4; Speeches and other presentations: 
Fiscal year 2001: 24; Speeches and other presentations: Fiscal year 
2002: 17.

OI; Testimonies: Fiscal year 2000: 1; Testimonies: Fiscal year 2001: 0; 
Testimonies: Fiscal year 2002: 0; Speeches and other 
presentations: Fiscal year 2000: 25; Speeches and other presentations: 
Fiscal year 2001: 93; Speeches and other presentations: Fiscal year 
2002: 49.

OEI; Testimonies: Fiscal year 2000: 5; Testimonies: Fiscal year 2001: 
4; Testimonies: Fiscal year 2002: 0; Speeches and other 
presentations: Fiscal year 2000: 52; Speeches and other presentations: 
Fiscal year 2001: 45; Speeches and other presentations: Fiscal year 
2002: 32.

OMP; Testimonies: Fiscal year 2000: 0; Testimonies: Fiscal year 2001: 
0; Testimonies: Fiscal year 2002: 0; Speeches and other 
presentations: Fiscal year 2000: 0; Speeches and other presentations: 
Fiscal year 2001: 0; Speeches and other presentations: Fiscal year 
2002: 8.

OCIG; Testimonies: Fiscal year 2000: 1; Testimonies: Fiscal year 2001: 
2; Testimonies: Fiscal year 2002: 0; Speeches and other 
presentations: Fiscal year 2000: 58; Speeches and other presentations: 
Fiscal year 2001: 49; Speeches and other presentations: Fiscal year 
2002: 15.

Total; Testimonies: Fiscal year 2000: 14; Testimonies: Fiscal year 
2001: 10; Testimonies: Fiscal year 2002: 6; Speeches and other 
presentations: Fiscal year 2000: 142; Speeches and other presentations: 
Fiscal year 2001: 214; Speeches and other presentations: Fiscal year 
2002: 128.

Source: GAO analyses of HHS OIG data.

[End of table]

We spoke with several congressional staff working for committees with 
jurisdiction over HHS programs who told us that they were not satisfied 
with the level of support they were currently receiving from the OIG. 
While formal requests for assistance were fulfilled, congressional 
staff indicated that OIG employees no longer discussed issues with them 
informally, as they had in the past. In our interviews, primarily at 
headquarters, several OIG employees recognized that they were no longer 
providing what congressional staff members considered to be a valuable 
service and what they considered to be a meaningful part of their work.

OIG officials emphasized that their responsiveness to Congress is still 
an extremely high priority. They explained that the Inspector General 
instituted a more centralized approach to providing assistance to 
congressional staff and other external groups than had her predecessors 
in an attempt to ensure the quality and appropriateness of the 
assistance provided. In response to the declining number of 
testimonies, OIG senior officials told us that they are very willing to 
appear at congressional hearings when they have relevant material to 
present. However, they explained that the Inspector General does not 
consider the number of testimonies to be a relevant performance 
measure.

In regard to speeches and other presentations, the decline was partly 
due to a policy change in the spring of 2002 that moved approval 
authority for these activities from the individual component heads to 
the Director of Public and Congressional Affairs. A lack of travel 
funds for collateral activities in the first half of the fiscal year 
also limited OIG's staff participation in discretionary events. 
According to this Director, because she could not approve all of the 
requests, she considered the nature and size of the audience, in 
addition to the cost of the trip, in deciding whether approval would be 
granted.

OEI Reports:

A number of employees of OEI told us that they have been frustrated 
with the cancelation of projects since the Inspector General took 
office. According to these individuals, many projects were well under 
way at the time of their termination. Although OEI managers could not 
tell us how many projects have been canceled under the current 
Inspector General's tenure, they could tell us how many of the OEI 
projects begun in fiscal years 2000, 2001, and 2002 were subsequently 
canceled. As table 7 shows, 27 reports, or about 26 percent of reports 
started in 2002, were canceled by the end of February 2003. According 
to OEI management, although some projects have been canceled, the work 
performed on these projects has been used by OEI teams involved in 
related OEI projects.

Table 7: Number and Percentage of OEI Projects That Were Begun in 
Fiscal Years 2000, 2001, and 2002 and Canceled by February 28, 2003:

Reports Started; Fiscal year 2000: 103; Fiscal year 2001: 80; Fiscal 
year 2002: 103.

Number Subsequently Canceled; Fiscal year 2000: 18; Fiscal year 2001: 
14; Fiscal year 2002: 27.

Percent Subsequently Canceled; Fiscal year 2000: 18; Fiscal year 2001: 
18; Fiscal year 2002: 26.

Source: GAO analysis of HHS OIG data.

[End of table]

We followed up on several projects that recently had been canceled to 
better understand management's rationale for doing so. Staff members 
brought these projects to our attention during the course of our 
work.[Footnote 29] In one instance, a project was canceled 7 months 
after the team had conducted the exit conference with the agency. More 
than 4,000 staff hours had been expended on this project, which 
included three full-time and one part-time staff and a paid intern. The 
Deputy Inspector General ultimately told the team that the report 
lacked sufficient evidence and would not be presented to the Inspector 
General for signature. Although the team subsequently prepared two 
memoranda as substitutes for the report, no product was ever issued--
despite interest from the provider community and relevant agency.

We have learned that OEI projects continue to be canceled. For example, 
in March 2003 the Inspector General took the unusual step of recalling 
a draft report, which had been sent to the relevant agency for comment 
in February 2003. Both the Deputy Inspector General for OEI and the 
Inspector General approved this draft. Also in March 2003, a related 
project, which had begun in fiscal year 2002, was canceled as the OEI 
team prepared for an exit conference with the agency it had evaluated. 
OEI management decided to combine the results of both projects into a 
single report. Although the OEI staff involved with these projects 
contend that they briefed management several times over the course of 
these assignments, the Deputy Inspector General for OEI explained that 
he made this decision once he realized there were inconsistencies 
between the two projects that needed to be reconciled. As of late April 
2003, no report had been published.

In conversations with the Inspector General and the Deputy for OEI, we 
learned that they had been particularly concerned with the 
appropriateness of criteria used by OEI staff in evaluations. They told 
us that they were uncomfortable with the policy-oriented work that OEI 
had done and were taking actions in the pipeline of OEI reports to 
address what they viewed as shortcomings in the accuracy and 
sufficiency of evidence in OEI products. The Deputy for OEI also 
explained that they were providing training to all OEI staff on 
evidence standards with the hope of improving the quality of future 
projects. OEI managers and staff that we spoke to expressed surprise 
and frustration at these concerns and pointed out that in the past, OEI 
had been recognized and praised by Congress, the public, and the press 
for its high-quality evaluation work.

Measure of Employee Morale:

Based on our survey and extensive interviews, we found in the aggregate 
that employee views about the organization, management, and their 
personal job satisfaction remained positive and relatively unchanged 
between 2002 and 2003. However, we identified several groups of 
employees whose morale was of concern, namely, employees working at 
headquarters, those at the highest levels of management, and staff 
working in two OIG components. Our analysis of open-ended survey 
comments also revealed areas of dissatisfaction that were not fully 
captured by other items on our survey.

Our survey and interviews found, in the aggregate, a high level of 
satisfaction among OIG employees. Overall, positive responses to survey 
items in both 2002 and 2003 averaged over 80 percent and no item 
responses changed more than 5 percentage points between the 2 years. 
Positive responses were especially prevalent both years for statements 
such as "All things considered, my component is a good place to work" 
(89 percent and 87 percent, respectively) and "I believe that my work 
is important to the success of the component" (94 percent and 93 
percent, respectively). Similarly, our interviews revealed an overall 
high level of job satisfaction, typified by comments such as "I believe 
my work makes a difference." Staff repeatedly cited their close 
relationships with their immediate work groups and their involvement on 
important issues as reasons for their job satisfaction. We also 
identified some examples of improvement. For instance, in both the 
survey and interviews, OI employees indicated there had been an 
increase in communication with upper management in their component over 
the last year.

We found that positive responses to most survey items were lower for 
headquarters employees than for field staff. For example, we found that 
there was a marked difference in positive responses--10 percentage 
points--to the statement that "Everyone is treated with respect." We 
also found a 14 percentage point difference in positive responses to 
the statement, "I have confidence and trust in my organization." This 
pattern of more positive responses from the field was consistent with 
statements made during our interviews. Whereas many headquarters staff 
expressed concern about the Inspector General's actions, most field 
employees told us that they felt insulated from, and largely unaffected 
by, the personnel and other changes that occurred in headquarters.

In addition, our survey indicated that senior management staff--
specifically members of the Senior Executive Service and GS-15 
employees--were considerably more concerned than all other employees 
about OIG leadership. While 88 percent of employees at the GS-14 and 
lower levels agreed with the statement, "As an organization, the OIG 
has clear goals," only 67 percent of the senior management staff--those 
at the GS-15 level and members of the Senior Executive Service--
responded positively to that statement. Further, about 70 percent of 
the employees at the GS-14 level and lower levels indicated that they 
had confidence and trust in the organization. On the other hand, only 
56 percent of senior managers agreed with that statement. In our 
interviews, some senior management staff were extremely clear about, 
and supportive of, the Inspector General's goals, but others expressed 
confusion about the Inspector General's priorities for their 
components. Many in senior management were disquieted by the decisions 
that resulted in some of their colleagues retiring, resigning, or being 
reassigned during 2002. These managers explained that they were 
uncomfortable because they did not fully understand the motivations 
behind the Inspector General's actions.

Our survey revealed a substantial deterioration in OEI employees' views 
of the organization, management, and their personal job satisfaction. 
For example, a statement focusing on whether "upper management clearly 
communicates the goals of my component," elicited an almost 50 
percentage point drop in positive responses between January 2002 and 
February 2003 (compared to a 1 percentage point decrease in the 
aggregate). Similarly, there was a 34 percentage point drop in positive 
responses to the statement about being "fully informed about major 
issues affecting my job" (compared to a 5 percentage point drop 
overall). Finally, about 62 percent of OEI employees indicated a lack 
of trust and confidence in their organization (compared to 30 percent 
overall).

The decline in the overall climate in OEI can be linked to a number of 
changes that profoundly affected the staff in that component. OEI staff 
told us that they were negatively affected by the abrupt departure of 
the Deputy Inspector General, decreased communications from 
headquarters management, changes and delays in the report review 
process, canceled projects, and a narrowing of the scope of their work. 
In addition, OEI staff explained that they have been disappointed by a 
decrease in the number of their assignments that has resulted in what 
are considered to be "high-profile" products--those signed by the 
Inspector General, those issued as standard blue-cover reports, and 
those placed on the OIG's Web site.[Footnote 30]

Our employee survey also identified a distinct decline in positive 
responses to survey items among OCIG employees--almost all of whom work 
in headquarters. Of particular concern were answers to survey 
statements addressing the adequacy of communication and job 
satisfaction. For example, compared with 2002 survey results, there was 
a 22 percentage point drop in positive responses to the statement about 
being kept fully informed about major job issues. OCIG employees also 
reported a 16 percentage point drop in positive responses to the item 
"I am satisfied with my job" and a 12 percentage point drop in their 
opinion that "everyone is treated with respect," compared with last 
year's survey. Our results also showed that 54 percent of OCIG 
employees lack trust and confidence in their organization. The decline 
in the views of OCIG staff can, in part, be attributed to changes 
implemented by the Inspector General, and the atmosphere of anxiety and 
distrust that her actions created. OCIG employees expressed concern 
about the circumstances under which the former Chief Counsel and other 
senior managers left the OIG. In addition, we were told that the 
curtailment of education and outreach activities and contact with 
congressional committee staff had an adverse effect on OCIG employee 
morale.

Finally, we analyzed the written comments that some employees opted to 
write in the comment box provided on our survey. In total, 578 of the 
1,451 survey respondents (40 percent) elected to write comments, which 
allowed them to express opinions about issues that were not covered in 
detail in our other survey items. Our analysis of these comments showed 
that the majority were negative in tone (75 percent). Overall, the most 
frequently mentioned categories were: morale (82 percent negative), 
recent changes in headquarters management (61 percent negative), 
sufficiency of training or equipment (85 percent negative), and quality 
of headquarters management (80 percent negative). The demographic 
characteristics of those who wrote comments were generally similar to 
the overall sample of respondents, although those planning to leave the 
OIG in the next 5 years and OEI staff were more likely to provide 
comments than other survey respondents.

Agency Comments and Our Evaluation:

We met with officials from the OIG and the Office of the HHS Secretary 
and briefed them on our findings. We also provided them with a copy of 
our draft report. In written comments on a draft of this report, the 
Inspector General disagreed with some of our findings and 
characterizations of certain events. The Office of the Secretary did 
not provide comments.

In reference to our discussion about the OIG's productivity, the 
Inspector General stated that the OIG had achieved substantial 
accomplishments under her leadership and direction and cited the 
savings attributable to its work in fiscal year 2002. In addition, she 
highlighted some of the OIG's nonmonetary achievements during her 
tenure. As we noted in our draft report, many of the OIG's productivity 
measures have remained steady or improved, including those cited in the 
Inspector General's letter. However, we also pointed out that making a 
conclusive determination regarding productivity in the short term is 
extremely difficult because current savings are often the result of 
efforts started in prior years. Our draft also identified declines in 
other important areas, such as settlements and recoveries.

In addressing our findings related to employee morale, the Inspector 
General pointed out that our survey of OIG employees showed that 
employee morale remained positive and relatively unchanged during her 
tenure. However, our survey also identified several groups of employees 
whose morale was of concern. For example, senior managers were 
considerably more disturbed than all other employees about OIG 
leadership. Further, headquarters employees expressed less 
satisfaction with the organization and leadership than their 
counterparts in the field. While the majority of OIG staff are located 
in field offices and generally were more satisfied with their work 
environment than headquarters employees, they also felt less affected 
by the changes instituted by the Inspector General than their 
colleagues in headquarters. A striking exception to field office 
employee satisfaction, as discussed in our draft, was staff in OEI, 
whose dissatisfaction increased substantially compared to last year.

The Inspector General also took issue with our discussion of the 
circumstances surrounding the delay in beginning the Florida pension 
audit. We included this example of her decision-making in our draft 
because we believe that it demonstrated a lack of awareness and 
appreciation of the need for the Inspector General to closely safeguard 
her independence. We believe it is imperative that an inspector general 
perform due diligence when responding to external requests--
particularly where independence could be questioned. We continue to 
believe that the Inspector General's decision to intervene at the 
request of senior officials in the Florida governor's office and her 
subsequent instructions to her staff to delay the audit created a 
perception that her independence was compromised. The Inspector General 
did not address the issue of her independence in her comments. Instead, 
she disagreed with our suggestion that the OIG's report could have been 
available prior to the November 2002 election, if the audit had begun 7 
months earlier, in April 2002, as initially planned. While we cannot be 
certain that the final report would have been issued by the election, 
we believe that it is likely that the findings would have been made 
public--particularly since the actual findings of the audit were 
reported by the media in March 2003, 6 months after the work commenced.

Regarding the York Hospital matter, the Inspector General stated that 
she discussed her concerns about the proposed settlement with her staff 
and that she believed that seeking a larger settlement was not fair or 
justifiable. However, during the course of our work, the Inspector 
General told us that she did not direct a settlement or involve herself 
in negotiations with the hospital. In any case, we believe that the 
Inspector General's actions in response to a letter from several 
members of Congress contributed to the perception that she was not 
independent. The Inspector General stated in her comments that she 
discussed this matter with her attorneys and determined the OIG's case 
was weak. However, the former Chief Counsel and other OCIG attorneys 
told us that when she instructed them to "get rid of" the case, she did 
not address the specific facts or sufficiency of the evidence collected 
in this matter. Further, the former OIG Chief Counsel did not share the 
Inspector General's belief that this was a weak case, and told us that 
he believed the government could have obtained a higher settlement, 
absent any pressure to close the case quickly.

Concerning the OIG's delayed report on the adjusted community rate 
proposals, the Inspector General pointed out that the report was 
already delayed 7 months by the time she took office. While we 
acknowledge this fact, in our view, the already lengthy delay should 
have prompted her to take more aggressive action to either obtain CMS's 
comments or publish the OIG's report without them. Although the 
Inspector General stated that she relied on the advice of her senior 
staff in delaying the issuance of this report, our evidence indicates 
that some of her senior managers were very concerned that she took 
little action to expedite CMS's comments. The Inspector General 
indicated that she spoke to the CMS administrator regarding this 
matter, but she did not indicate when this discussion occurred or how 
CMS responded. However, the Inspector General did not indicate--nor did 
we find any evidence to suggest--that she took more rigorous steps to 
obtain CMS's comments, such as imposing a deadline for the publication 
of the report, regardless of the status of the comments. The Inspector 
General also stressed that the delay in publishing the OIG's report had 
nothing to do with her independence. However, the fact that CMS 
strenuously objected to the OIG's findings, and that CMS was allowed to 
delay its comments for over a year, in our view, at least contributed 
to the perception that the Inspector General was not independent. In 
addition, the Inspector General disputed our statement that this report 
was a time sensitive one of congressional interest. We disagree. During 
the summer and fall of 2001, Medicare+Choice legislative proposals were 
developed in both the House and Senate. Also congressional hearings 
were held on the status of the Medicare+Choice progam, which included 
the issue of adjusted community ratings.

Regarding our assessment of personnel changes in the OIG, the Inspector 
General stated that her actions were appropriate and that the nature of 
the Senior Executive Service encourages rotations among staff. While we 
do not dispute the Inspector General's authority to reassign staff to 
meet office needs, the manner in which she made these changes clearly 
created an atmosphere of anxiety in the OIG. The Inspector General 
stated that she explained the rationale for her decisions "over and 
over again." However, our discussions with staff members revealed that 
they did not understand why many of the changes had been made. 
Moreover, most of the eight senior managers whose departures we found 
particularly troubling told us that the Inspector General never 
explained to them why she wanted them to leave their positions. The 
Inspector General also commented that our employee survey suggested 
that there were no widespread negative perceptions among staff 
concerning her personnel decisions. We disagree with this observation 
because our survey did not contain a question related to her personnel 
changes. Instead, our survey focused on employee satisfaction within 
their immediate work groups--most of which are in the field where the 
consequences of the Inspector General's changes were least felt. The 
Inspector General noted that most of the individuals who left the OIG 
following her changes were in new positions that were "at least equal 
to or better than" the ones they occupied at the OIG and that she 
always promoted from within the organization. We do not think that the 
current employment situations of these former staff members are 
relevant to the Inspector General's personnel decisions, nor is her 
practice of promoting other employees from within the organization.

In our draft report, we also discussed the OIG's budgetary 
difficulties. In her comments, the Inspector General described her 
efforts to respond to this situation, which primarily consisted of 
directing one of her senior managers--who was in an acting deputy 
position--to develop strategies for resolving the OIG's financial 
problems and to work with other senior OIG managers to develop a 
spending plan. While we would fully expect that the Inspector General 
would want to call on her management team to confront the agency's 
budgetary problems, our concern was that she personally played only a 
minor role in resolving this matter, particularly in the absence of a 
Principal Deputy. Given the Inspector General's limited personal 
involvement, the OIG's senior management team lacked a leader with 
sufficient authority to mediate any disagreements between them and to 
take aggressive steps to identify appropriate solutions to the 
organization's fiscal challenges.

Finally, the Inspector General's comments pointed out that OI had taken 
steps to correct the deficiencies we noted in its credentialing system. 
We acknowledged that corrective action has been initiated and this was 
reflected in our draft report.

We have reprinted the Inspector General's letter in appendix III.

We are sending copies of this report to the Secretary of HHS, the HHS 
Acting Principal Deputy Inspector General, the former Inspector 
General, and other interested parties. We will also make copies 
available to others upon request. In addition, this report will be 
available at no charge on GAO's Web site at http://www.gao.gov. We will 
also make copies available to others upon request.

If you or your staffs have any questions about this report, please call 
me at (202) 512-7114. Additional GAO contacts and other staff members 
who made key contributions to this report are listed in appendix IV.

William J. Scanlon 

Director, Health Care Issues:

Signed by William J. Scanlon:

[End of section]

Appendix I: Scope and Methodology:

To conduct our review, we focused on three key areas--the leadership 
exhibited by the current Inspector General, Janet Rehnquist, the 
productivity of the Office of Inspector General (OIG) in recent years, 
and employee morale. To do our work, we became familiar with the 
organization and structure of the OIG and many of its policies and 
procedures related to its budgeting, work planning, and report 
processing activities. We also examined its personnel practices and 
controls over certain OIG operations. As part of our efforts, we 
interviewed over 200 current and former OIG employees--including the 
Inspector General--and conducted a Web-based survey of all employees to 
obtain their views about their work environment. We also interviewed 
two current and one former inspectors general from other federal 
agencies to better understand their unique role and the principles they 
embraced to manage their offices.

Our review included the examination of more than 8,000 pages of 
documents, including material related to the OIG's general policies and 
procedures, human resource management, productivity measures, and 
reporting standards. Many of these documents were given to us by OIG 
managers and other employees. In addition, we requested--and were given 
access to--the e-mail accounts of eight senior OIG managers. This 
enabled us to retrieve selected messages that these individuals sent or 
received for approximately a 6-month period on a wide variety of topics 
affecting the management of the office. We also obtained documentation 
from other organizations, including the President's Council on 
Integrity and Efficiency (PCIE), which recently issued a report on some 
of the Inspector General's actions.[Footnote 31]

Interviews with Current and Former Employees:

To obtain the views of OIG employees, we conducted a series of 
semistructured interviews. These interviews relied on open-ended 
questions regarding the Inspector General's leadership, productivity, 
morale, and other OIG operations. We interviewed three categories of 
employees--those who were selected randomly, those who volunteered for 
interviews, and those we selected because of their knowledge or 
position within the OIG.

The randomly selected staff were chosen for interviews from five of the 
OIG's eight regional offices as well as employees in OIG headquarters. 
This provided us with a broad geographic representation of OIG 
employees. Our regional interviews were conducted in Atlanta, Boston, 
Chicago, Dallas, and San Francisco. In order to afford confidentiality 
to interviewees, we conducted our regional interviews in GAO offices in 
those cities or in other non-OIG space. Some regional interviews were 
also conducted by telephone. Headquarters staff were given the option 
of being interviewed in either the OIG headquarters or GAO headquarters 
building.

At each of the five regional offices we visited, we interviewed 
approximately 20 randomly selected employees who ranged from the GS-7 
through the GS-15 levels. One hundred and six randomly selected 
regional staff members were interviewed in total. Interviewees were 
selected using a stratified, random sampling technique. Employees from 
the Office of Audit Services (OAS), the Office of Investigations (OI), 
and the Office of Evaluation and Inspections (OEI) were included in our 
random interviews at each regional location.[Footnote 32] We also 
interviewed 32 randomly selected staff from the OIG's headquarters in 
Washington, D.C. and in nearby field offices, including those in 
Baltimore, Columbia, and Rockville, Maryland.

To supplement our random interviews and to enhance identification of 
issues of concern to all OIG employees, regardless of their location, 
we invited all employees, through an OIG officewide e-mail, to contact 
us if they wished to participate in an interview. We received 28 
requests for interviews and conducted many of these by telephone. We 
generally used the same set of questions that were posed during the 
random interviews.

In both the random interviews and in discussions with those employees 
who requested to be interviewed, we asked individuals to bring to our 
attention any topic that they felt was noteworthy but which our 
questions did not address. Some interviewees provided us with 
supporting documentation that they felt was relevant. In some 
instances, interviewees were reluctant to provide us with documentary 
evidence and were also concerned about confidentiality. In these 
situations, we attempted to corroborate the information they shared 
with us through other means, without jeopardizing their 
confidentiality.

As our work progressed, we identified a number of individuals whom we 
believed would be able to supply us with important information in areas 
we had identified as potential areas of concern, including the 
independence of the Inspector General, turnover among senior OIG 
personnel, and changes in productivity and morale. In total, we 
interviewed 44 such individuals, many of whom were current or former 
OIG employees with first-hand knowledge about issues central to our 
review.

Evaluation of the Inspector General's Independence:

To determine the extent to which policies and procedures were in place 
to ensure that all OIG employees maintained a high degree of 
independence, we reviewed existing OIG policies, procedures, and 
protocols. We also reviewed guidance issued to the Inspector General 
community by the PCIE and the Government Auditing Standards pertaining 
to independence. We also discussed the OIG's protocols for responding 
to requests for information or assistance from external entities with 
selected current and former senior-level OIG officials. In addition, we 
obtained information regarding specific instances concerning the 
Inspector General's independence from interviews with current and 
former OIG officials as well as the Inspector General.

Review of Personnel Information:

To evaluate recent personnel changes among OIG officials, we examined 
detailed personnel information for 24 current or former OIG employees 
who had resigned, retired, been reassigned, or promoted during the 
Inspector General's tenure.[Footnote 33] We reviewed the official 
personnel files for these individuals and collected relevant 
information including their history of government service; time 
employed by the OIG; and any awards, bonuses, and letters of 
commendation that they had received. We also reviewed the performance 
appraisals these individuals had received for the prior 3 years.

Finally, we reviewed documentation specifically concerning the 
promotion of an OIG staff member to the position of Director of Public 
and Congressional Affairs. Among other things, we examined relevant 
position descriptions, job announcements, and e-mail communications. We 
also interviewed OIG officials regarding this and other personnel 
decisions made during the Inspector General's tenure.

Examination of the Inspector General's Travel:

To understand the purpose, frequency, and duration of the Inspector 
General's travel, we examined the itineraries, travel orders, and 
travel vouchers for all of the trips she had taken from August 2001 
through November 2002. For trips for which the itineraries lacked 
sufficient information about the Inspector General's business 
activities, we requested additional information and discussed these 
trips with the Inspector General. We also identified all OIG employees 
that accompanied her when she traveled. We obtained similar travel 
records for two senior staff members who accompanied the Inspector 
General on several occasions and discussed their roles during these 
trips with them.

Analysis of OIG Performance Measures:

To determine whether the OIG has experienced any changes in 
productivity since the current Inspector General took office in August 
2001, we reviewed OIG publications, such as its semi-annual reports, to 
determine how savings, recommendations, and other performance 
indicators changed since fiscal year 2000. From OAS and OEI, we 
collected data about the number of projects initiated, reports 
published, and reports canceled in fiscal year 2002. We compared these 
data to the number of reports that were initiated, published, and 
canceled from fiscal years 2000 and 2001--before the current Inspector 
General's tenure.

To measure productivity in OI and OCIG, we reviewed data on 
investigations, prosecutions, and convictions, and exclusions from 
fiscal year 1997 through fiscal year 2002. We also examined relevant 
monetary accomplishments including the number and amounts of fines and 
penalties assessed, civil settlements and judgments, cost savings 
claimed, and recoveries and court-ordered restitutions. Our review 
included an examination of OCIG files pertaining to eight civil 
monetary penalty cases. We also judgmentally selected 18 corporate 
integrity agreements instituted since fiscal year 2000, to determine 
the extent to which new policies outlined in the Inspector General's 
November 20, 2001, open letter to providers had been implemented.

In addition, we discussed the OIG's productivity with some of its 
partners in the law enforcement community to determine whether there 
have been recent changes in the level of OI's or OCIG's support. 
Specifically, we spoke to officials from the Department of Justice and 
seven of its U.S. Attorneys' Offices. We also discussed this matter 
with officials from Medicaid Fraud Control Units in California, 
Florida, Illinois, and New York and a representative from the National 
Association of Medicaid Fraud Control Units.

Finally, we assessed the OIG's productivity in terms of its outreach 
and education activities. To do this, we collected information 
regarding the number of speeches, presentations, and testimonies given 
by various OIG employees. We also discussed this matter with OIG 
employees and professional staff members at several congressional 
committees with jurisdiction over Medicare and other federal health 
programs.

Analysis of Web-Based Survey Results:

To elicit broad-based views of OIG employees on morale and other 
issues, we conducted a Web-based survey. We solicited OIG employee 
participation by e-mail, using an e-mail list provided by the OIG. We 
first sent a notification e-mail alerting the employees to the upcoming 
survey and to check for inaccurate e-mail addresses. We verified with 
the OIG that the individuals whose e-mails were returned as "not 
deliverable" were no longer active OIG employees. We then sent an 
activation e-mail to each employee, containing a unique user name, 
password, and instructions for accessing the survey on the GAO Web 
site. We sent three follow-up reminder e-mails to nonrespondents. 
Employees were given 1 month to complete the survey. Of the 1,621 
employees on our list, 1,451 completed the survey for a response rate 
of 90 percent.

The survey contained 29 items asking employees for their views on the 
organization, management, and their personal job satisfaction. The four 
possible responses were: strongly agree, somewhat agree, somewhat 
disagree, and strongly disagree. The first 26 items on the survey were 
identical to those from an employee survey conducted by the OIG in 
January 2002, which we used as a basis for comparing our survey 
results. We included three additional items: "Overall, the OIG is 
improving as a place to work and make a difference," "I have confidence 
and trust in my organization," and "In the last 15 months, morale in my 
work group has improved." We also included seven demographic items and 
provided an open-ended comment box. We included a final item for the 
respondent to mark the survey as "Completed," which, if checked, 
indicated that the respondent gave us permission to include his or her 
responses in our analyses.

In total, 578 of the 1,451 survey respondents (40 percent) elected to 
write open-ended comments. We coded 573 of the comments for tone 
(positive, negative, neutral) and content. To code content, we used 36 
categories related to morale, productivity, management, personnel 
issues, independence, propriety, and other topics. The comments of 
three respondents were not coded because they did not fit into any of 
our coding categories. The comments of two additional respondents were 
not coded because they did not mark their surveys as "Completed." The 
unit of analysis was the comment--not the respondent. For example, if 
one respondent made several comments that fell into different 
categories, each comment was coded separately.

[End of section]

Appendix II: Insufficient Internal Controls Over the OIG's Credentialing 
System:

In response to allegations that certain employees, including the 
Inspector General, possessed improper credentials, we evaluated the 
security of the OIG's credentialing system. OIG employees are issued 
credentials that display their photographs, signatures, job titles, 
and, in the case of OI investigators, their status as law enforcement 
officers. Because adequate internal controls are key to preventing 
mismanagement and operational problems, our evaluation centered on the 
controls governing this computer-based system, physically located in 
the OIG headquarters building. In addition, recent advances in 
information technology have heightened the importance of ensuring that 
controls over electronically stored information are frequently reviewed 
and updated to minimize the threat of improper use. Changes in 
information technology led to revisions in Standards for Internal 
Controls in the Federal Government,[Footnote 34] which became effective 
at the beginning of fiscal year 2000, to reflect new guidance for 
modern computer systems. Our work revealed serious weaknesses in the 
internal controls governing the OIG's credentialing system.

The physical security of the computer system used to produce 
credentials was inadequate. The system was housed in a public file room 
with unrestricted access. Because the room also contained a copier 
machine, many individuals routinely entered the area. The system's 
backup tapes were located in an unlocked drawer in the credentialing 
system desk. In addition, we also found the stock paper containing the 
agency's insignia, used in the production of all credentials, stored 
unlocked in a cabinet in the same room.

In addition, we found deficiencies in the system itself, making it even 
more vulnerable to misuse. For example, we found that neither the 
computer's screen saver nor the credentialing software programs on the 
computer were password protected, and the employee photo and signature 
files were not adequately protected. The system also did not have the 
capability to create a history log or audit trail to identify past 
users. Given the system's unsecured location, we determined that the 
system itself was easily susceptible to unauthorized access through the 
use of several techniques, such as a device that could identify recent 
keystrokes to capture the names of recent users and their passwords.

When we visited the credentialing room we found it empty, the computer 
on, and the screensaver active. By touching the computer's mouse we 
were able to cancel the screensaver and observed an open record on 
display. We found that we could access, copy, modify, and delete 
sensitive files including employee photos, digital signatures, and 
personnel information with little likelihood of detection or system 
recovery. It would also have been possible to create a false, 
unauthorized set of credentials. OIG officials have since told us that 
they have taken steps to correct these weaknesses.

[End of section]

Appendix III: Comments from the Inspector General:

DEPARTMENT OF HEALTH & HUMAN SERVICES	Office of Inspector General:

MAY 30 2003:

Leslie G. Aronovitz:

Director, Health Care-Program Administration and Integrity Issues 
United States General Accounting Office 441 G Street, NW -Room 5A14 
Washington, DC 20548:

GAO-03-685:

Dear Ms. Aronovitz:

I appreciate the opportunity to review and comment on the General 
Accounting Office (GAO) assessment of the management functions of the 
Department of Health and Human Services, Office of Inspector General 
(OIG).

As you know, the real measure of management success is in productivity 
and employee satisfaction. The GAO report shows that overall savings 
attributable to OIG work increased from $15.6 Billion in fiscal year 
2000 to $21.8 Billion in fiscal year 2002 - an increase of nearly 50% 
in just two years. Further, the GAO report shows that employee morale 
remains positive and relatively unchanged between 2002 and 2003 - with 
89% and 87% respectively showing a high level of satisfaction with the 
OIG, OIG management, and personal job satisfaction.

This organization has achieved substantial and varied accomplishments 
under my leadership and direction. The accomplishments include: (1) the 
largest ever settlements with major drug manufacturers for defrauding 
the Medicare program; (2) innovative approaches in child support 
enforcement in which 70 of the nation's most wanted deadbeat parents in 
29 states were arrested in a two-day sweep; (3) rapidly assessing and 
helping to strengthen the public health system after the tragic events 
of September 11, 2001; and (4) development of a comprehensive strategy 
to address substantial problems in the administration and oversight of 
grants awarded by the Department.

Throughout my tenure as Inspector General, I have acted in the best 
interest of the Department of Health and Human Services, the Office of 
Inspector General and the American taxpayer, and I am proud of our 
accomplishments. I am honored to have served as Inspector General and 
to have contributed to an organization which has such a far-reaching 
impact on the quality of life of all Americans.

I have attached an Exhibit to this letter, to be included in the record 
and this report, that demonstrates that the GAO report consists largely 
of opinions, speculation, hearsay, and pre-determined conclusions not 
supported by the weight of the evidence.

Sincerely,

Janet Rehnquist 

Inspector General:

Signed by Janet Rehnquist:

Attachment:

EXHIBIT TO GAO-03-685:

Florida Pension Audit, pp. 8-9:

The Inspector General Act of 1978 states that "it shall be the duty and 
responsibility of each Inspector General .... to provide policy 
direction for and to conduct, supervise, and coordinate audits....":

The report states that "... the team was scheduled to begin its work in 
April, 2002 and had estimated that the audit would be drafted in six 
months, it is conceivable that the report could have been available by 
election day, if the audit had begun when originally planned.":

The key words in this statement are "estimated" and "conceivable". The 
following facts speak for themselves. I authorized a delay until July, 
2002. After further delays, which were authorized by career employees 
in the field, the audit started in September, 2002. The draft report 
was released to the State of Florida in March, 2003. The State 
disagrees with the report on the extent of liability. As of May 30, 
2003, fully 8 months after the audit started, the OIG has not issued 
the final report. It is the final report, not the draft, that is 
available to the public.

As demonstrated by historical information on 10 years of pension fund 
audits which this office provided to the GAO, the average time from the 
beginning of an audit to issuance of a final report was 509 days, or 16 
months.

While a staff member in the Office of Audit Services "estimated" a 
draft report might be completed in six months, that estimate was 
optimistic and was an internal management tool used to manage the 
project. In any event, the draft report would not have been issued to 
the public. The facts, therefore, demonstrate that neither the planned 
timing nor the issuance of the report had any bearing on the 
gubernatorial election in Florida in 2002. Engaging in conjecture about 
"conceivable" outcomes is hardly the purview of a typical GAO report.

York Hospital, pp. 9-10:

The report states: "The OIG attorneys had estimated that York 
Hospital's potential liability was $726,000... the settlement amount of 
$270,000 was far less than the attorneys believed the government could 
have received...".

As you know, this matter was brought to my attention by a letter from 
Senators Specter and Santorum and Representative Todd Platts. The 
investigation was prompted by a qui tam relator alleging PATH 
violations. The Department of Justice and OIG investigated the matter 
for two years. The Department of Justice declined the case and the 
relator was paid a $5,000 settlement. OIG decided to pursue the matter 
administratively.

The OIG administrative demand letter states that the OIG alleged that 
York had submitted improper claims seeking $296,469 in Medicare 
reimbursement. This number was based on a projection derived from a 
statistical sample. It is important to understand that the OIG was not 
asserting that this was the amount of reimbursement received by York or 
the amount of damages to the government from these improper claims.

In fact, based on the projection from the sample, the OIG believed that 
the damages resulting fromYork's improper claims was less than 
$200,000. While it is true that additional assessments could have been 
imposed to increase the settlement amount, I discussed this matter with 
my legal staff and determined that, due to the weak posture of the 
case, it was not fair or justifiable to impose such substantial 
additional assessments.

York had many defenses to the OIG's allegations, particularly the fact 
that the allegations were several years old and had been declined by 
the Department of Justice. In a hearing, an Administrative Law Judge 
may have found no liability or found that the amount claimed was less 
than what the OIG asserted. Without even considering York's defenses, 
the York settlement of $270,000 was significantly more than the OIG's 
initial estimate of loss to the government.

Adiusted Communitv Rating Audit, pp. 12-13:

The report states that "... the delay in issuing this report reflected 
a lack of independence on the Inspector General's part.":

This conclusion is similarly not supported by the evidence. As the 
report states, this matter was pending for seven months before I took 
office. Both the Principal Deputy Inspector General and the Deputy 
Inspector General for Audit Services made decisions to delay the 
issuance of this report from February 2001 when it was issued in draft 
through September 2001 when I was confirmed. In other words, the final 
report was delayed a full 7 months before I took office.

The delay in issuing this report has nothing whatsoever to do with my 
independence. Indeed, I relied heavily on the advice of the managers in 
the Office of Audit Services, as well as the Principal Deputy Inspector 
General. I personally contacted the Administrator of the Centers for 
Medicare and Medicaid to discuss the status of CMS comments and the 
need to receive them expeditiously.

The delays in receiving the CMS comments began long before I was 
confirmed as the Inspector General. Soon after the draft was issued in 
February 2001, CMS officials, including the Acting Administrator, 
questioned (1) whether a summary report of the 55 individual audits was 
justified based on the memorandum of understanding that was signed 
between the OIG and CMS outlining how these audits were to be conducted 
among other things, and (2) the validity and accuracy of the OIG 
methodology followed in conducting the 55 audits and developing the 
summary draft report.

Both the audit management staff and I decided it was important to have 
the facts in the summary draft report correct in all respects. OTG 
auditors suggested that it was prudent to wait for the comments from 
CMS (which were going to be based on the results of a peer review of 
the 55 audit audits and the resultant summary draft report contracted 
for by CMS). Several meetings from March 2001 through late winter 2001 
were held between OIG auditors, CMS staff and the consultant group 
hired by CMS to evaluate the OIG audit work.

You also indicate this report was "... time sensitive report of 
congressional interest." There is no basis for this assertion. Neither 
my staff nor I were made aware of any particular congressional interest 
in this topic. In fact, although the OIG attempted to generate 
congressional interest on this issue, these efforts were not 
successful.

Personnel Changes, pp. 13-16:

The report states: "... the sudden and unexplained nature of many of 
the Inspector General's actions resulted in a widespread perception of 
unfairness among her staff.... Some of the employees we interviewed 
were skeptical that these changes were necessary and asserted that they 
actually damaged the organization's effectiveness.":

The facts simply do not support this opinion or conclusion. First, it 
is important to point out that the personnel actions I took were 
appropriate, legal, well thought-out, and designed to match the skill 
sets of individuals with their portfolios. I explained the rationale 
for these actions over and over again. The very nature of the Senior 
Executive Service allows for and encourages different assignments. To 
further enhance the effectiveness of the organization, one SES 
retirement permitted the reassignment of other SES staff to different 
components. Second, the overwhelmingly positive results of the employee 
survey by the GAO show that there was not a widespread negative 
perception of my personnel decisions.

The report indicates that eight of the personnel actions were 
"troubling." To the extent I thought appropriate, I explained to the 
organization and to GAO that the basis for my decisions was to further 
the changes and reforms I thought the organization needed to make. As 
the head of the organization, I needed to have full confidence in my 
top management team.

For the most part, the people who left the organization are in 
positions that are at least equal to or better than those they occupied 
in this office. For example, one of the SES staff is now employed by a 
law firm in Washington, DC; and another is a Deputy Assistant Secretary 
in the Administration of Aging in the Department.

Another key point is that in no instance was a career employee replaced 
by a person outside the organization, much less a non-career employee. 
In fact, I always promoted from within the OIG and took particular care 
to hire and promote career employees who had experience in field 
offices. It is my belief that the high morale in the field was at least 
in part due to these management efforts.

Resolving Budgetary Problems, pp. 20-21:

The report states that the difficult budget situation "... could have 
been avoided if OIG leadership had developed a human resource hiring 
and development plan that contained realistic budget projections and 
hiring goals...":

The Principal Deputy Inspector General and the Deputy Inspector General 
for the Office of Management and Policy did, in fact, develop human 
resource hiring and development plans during the spring of 2002. The 
implementation of those plans created the difficult budget situation we 
found ourselves in during 2003 when, as you note in the report, we 
experienced lower than projected attrition rates, reduced funding from 
the HCFAC account, and a number of Congressional continuing 
resolutions.

In the Fall of 2003, I instructed my Acting Deputy Inspector General 
for Management and Policy to work with the Department to expedite the 
negotiations for the HCFAC funding with the Department of Justice, to 
implement hiring freezes, travel and training restrictions, and work 
with the senior management to develop a spending plan that would allow 
us to continue mission critical functions.

Credentials, p. 18; Appendix 11:

Immediately after the Office of Investigations (01) became aware of the 
noted deficiencies, an action plan was implemented to take corrective 
measures to eliminate the system control weaknesses.

The OI has taken the following actions to improve credentialing system 
security:

01 moved the credentialing system to a secure, physically-monitored and 
locked room. The use of this room is restricted to two employees, both 
of whom have a need for the credentialing system information. The 
individuals responsible for its use continuously monitor this room 
during normal business hours. The office is locked when the employees 
are out of the office for any reason. During non-duty hours the room 
where the system is housed is locked behind two sets of doors.

* The sensitive supplies and backup tapes associated with the 
credentialing system are stored within the same room as the 
credentialing system.

* The system software is now accessed by first entering a user name and 
password. A time-out feature, currently set at two minutes of 
inactivity, further enhances the system software security. Upon the 
activation of the time-out feature, the system user must re-enter an 
authorized user name and password to continue or begin using the 
credentialing system.

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Leslie G. Aronovitz, (312) 220-7600 Geraldine Redican-Bigott, (312) 
220-7678:

Acknowledgments:

Major contributors to this report were Enchelle D. Bolden, Helen 
Desaulniers, Curtis Groves, Shirin Hormozi, Behn Kelly, Terry 
Richardson, Christi Turner, and Anne Welch.



FOOTNOTES

[1] Although Ms. Rehnquist recently resigned, for purposes of this 
report, we will refer to her as the Inspector General.

[2] We included three additional questions regarding employee morale 
and trust, and obtained demographic information about respondents that 
was not captured in the OIG's survey.

[3] Pub. L. No. 95-452, 92 Stat. 1101 (1978) (5 U.S.C. App. (2000)).

[4] The inspector general Act of 1978, as amended, requires that 
Inspectors General report semiannually to the head of the department or 
agency and Congress on the activities of the office during the 6-month 
periods ending March 31 and September 30. The semiannual reports are 
intended to keep the agency heads and Congress fully informed of 
significant findings and recommendations initiated by the inspectors 
general. 

[5] 5 U.S.C. App. § 3(a). 

[6] U.S. General Accounting Office, Government Auditing Standards: 
Amendment No. 3 Independence, GAO-02-338G (Washington, D.C.: Jan. 25, 
2002). Although issued in 2002, this revised standard on independence 
did not become effective until January 1, 2003, to allow audit 
organizations sufficient implementation time. However, the previous 
standard also stressed the importance of independence. For example, it 
required auditors to "be free from personal and external impairments to 
independence" and stated that auditors "should be organizationally 
independent and should maintain an independent attitude and 
appearance." 

[7] The General Schedule (GS) is a personnel classification and pay system 
used by the federal government. It includes a range of levels of 
difficulty and responsibility for positions graded GS-1 through GS-15. 
Senior Executive Service managers are subject to a different system of 
promotion criteria and higher pay.

[8] Section 3(d) of the Inspector General Act requires each inspector 
general to appoint an assistant inspector general for auditing and an 
assistant inspector general for investigations.

[9] Medicare is the federal health insurance program that serves the 
nation's elderly and certain disabled individuals. Medicaid is a 
jointly funded, federal-state health insurance program for certain low-
income people. 

[10] 31 U.S.C. §§ 3729-3733.

[11] The antikickback provisions of the Social Security Act generally 
prohibit persons from paying or soliciting remuneration in order to 
induce another to refer business reimbursed under a federal health care 
program. See 42 U.S.C. § 1320a-7b(b). 

[12] Under the Emergency Medical Treatment and Active Labor Act 
(EMTALA), all hospitals that participate in Medicare are required to 
screen--and if an emergency medical condition is present, stabilize--
any patient who comes to the emergency department, regardless of the 
individual's ability to pay. See 42 U.S.C. § 1395dd(a).

[13] Under corporate integrity agreements, providers agree to take 
affirmative steps to improve compliance and report periodically to the 
OIG. The OIG, in turn, agrees not to seek further administrative 
penalties for the behavior in question.

[14] Prior to imposing a CMP, the OIG typically seeks to resolve the 
matter through negotiations. The negotiation process allows the 
government to obtain a monetary recovery and spares the provider from 
having to admit liability. When a settlement is not pursued or cannot 
be reached, the OIG must give the provider the opportunity for a 
hearing.

[15] On January 8, 2003, the Inspector General waived the attorney-
client privilege pertaining to both her former and current Chief 
Counsels concerning matters that arose during her tenure, except with 
respect to open investigations pending before the grand jury, matters 
under court seal, confidential sources, or other open inquiries. 

[16] Lithotripsy is a procedure typically performed by urologists to 
break up kidney stones without the need for surgery.

[17] Medicare+Choice was designed to expand Medicare beneficiaries' 
health plan choices by encouraging the wider availability of HMOs and 
other types of health plans, such as preferred provider organizations. 
Adjusted community rate proposals detail the revenue that 
Medicare+Choice organizations project is needed to cover contributions 
to profit or reserves and the direct medical and administrative costs 
of delivering services to enrollees.

[18] In several important areas, including reassignments and reductions 
in grade, federal regulations allow greater flexibility for personnel 
decisions regarding Senior Executive Service employees than for general 
schedule employees. Under these regulations, the Inspector General had 
more discretion with respect to Senior Executive Service-level managers 
in the OIG than GS-15-level managers.

[19] The Inspector General made many of these changes by taking 
advantage of opportunities presented to her when two of the Deputy 
Inspectors General decided to retire.

[20] The Immediate Office provides direct support to the Inspector 
General. It is not affiliated with the OIG's five components, and it 
maintains a relatively small staff of about 10 employees.

[21] Preselection is prohibited under federal law. Specifically, under 
5 U.S.C. § 2302(b)(6), an employee with personnel authority may not 
grant any preference or advantage not authorized by law, rule, or 
regulation to any employee or applicant for employment (including 
defining the scope or manner of competition or the requirements for any 
position) for the purpose of improving or injuring the prospects of any 
particular person for employment.

[22] One year before her promotion to a GS-15, this individual had been 
promoted from a GS-13 position in OCIG to a supervisory GS-14 position 
in the OIG's Office of Public and Congressional Affairs, following the 
reassignment of the GS-15 staff person who had previously performed 
similar duties. 

[23] We are referring this matter to the Office of Special Counsel of 
the Merit Systems Protection Board, which is tasked with investigating 
such allegations. 

[24] The PCIE, an organization composed primarily of the presidentially 
appointed inspectors general, was created to address integrity, 
economy, and effectiveness issues that transcend individual government 
agencies, and increase the professionalism and effectiveness of 
inspector general personnel throughout the government. The PCIE's 
Integrity Committee is charged with receiving, reviewing, and 
investigating allegations of administrative misconduct against 
Inspectors General, and, in certain cases, members of their staffs.

[25] The PCIE report stated that under OIG policy employees could not 
possess or carry firearms without being deputized, as set forth in the 
MOU.

[26] The credentials stated that Ms. Rehnquist was a supervisory 
special agent of the Office of Inspector General authorized to carry 
firearms, execute warrants, administer oaths, make arrests, and perform 
other duties as authorized by law and/or departmental regulations.

[27] Among other things, the Antideficiency Act prohibits agencies from 
incurring financial obligations that exceed their available budget 
authority. See 31 U.S.C. § 1341(a).

[28] This amount consisted of almost $20 billion in savings related to 
the implementation of OIG recommendations and other actions, $426 
million saved as a result of OIG audits, and $1.5 billion recovered due 
to OIG investigations.

[29] We could not determine whether these examples were representative 
of the average amount of staff time expended on canceled projects, as 
OEI does not retain these data. 

[30] OEI products can be signed by the Inspector General or a variety 
of individuals within the component. Products may also be issued as a 
standard blue-cover report, a white-cover report, a memorandum, or, on 
rare occasions, an e-mail. Reports signed by the Inspector General 
receive the widest distribution and blue-cover reports are considered 
the most prominent. In contrast, white-cover reports or memoranda 
signed by a regional OIG official are considered to be of less 
importance and may receive only minimal distribution.

[31] The PCIE's review focused on allegations that the Inspector 
General improperly possessed a firearm and law enforcement credentials. 
Before these allegations were brought to the attention of the PCIE, we 
planned to examine these matters. However, once the PCIE commenced its 
investigation, we agreed with our requestors to exclude these matters 
from the scope of our work and report on the PCIE's findings.

[32] The OIG does not employ members of the Senior Executive Service in 
its regional locations. In addition, the Office of Management and 
Policy (OMP) and the Office of Counsel to the Inspector General (OCIG) 
typically maintain only a few staff members in regional offices.

[33] We requested the official personnel files of 25 individuals but 1 
file could not be located. We do not believe that this had a material 
effect on our review.

[34] U.S. General Accounting Office, Standards for Internal Controls in 
the Federal Government, (GAO/AIMD-00-21.3.1, November 1999).

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