<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:21824.wais]
S. Hrg. 109-113
NOMINATION OF HON. LINDA M. COMBS
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
ON THE
NOMINATION OF HON. LINDA M. COMBS, TO BE CONTROLLER, OFFICE OF FEDERAL
FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET
__________
MAY 25, 2005
__________
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Committee on Homeland Security and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Michael D. Bopp, Staff Director and Chief Counsel
Jennifer A. Hemingway, Professional Staff Member
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Adam R. Sedgewick, Minority Professional Staff Member
Trina D. Tyrer, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Coburn............................................... 1
Senator Lautenberg........................................... 6
Senator Carper............................................... 7
WITNESS
Wednesday, May 25, 2005
Hon. Linda M. Combs, to be Controller, Office of Federal
Financial Management, Office of Management and Budget:
Testimony.................................................... 3
Prepared statement........................................... 15
Biographical and financial information....................... 17
Responses to pre-hearing questions........................... 28
APPENDIX
Senator Burr, prepared statement................................. 2
Senator Dole, prepared statement................................. 2
NOMINATION OF HON. LINDA M. COMBS
----------
WEDNESDAY, MAY 25, 2005
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:31 p.m., in
room SD-562, Dirksen Senate Office Building, Hon. Tom Coburn,
presiding.
Present: Senators Coburn, Carper, and Lautenberg.
Senator Coburn. The hearing will come to order. Good
afternoon.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. The purpose of today's hearing is to
consider Linda M. Combs to be Controller, Office of Federal
Financial Management, Office of Management and Budget. It is
the responsibility of the Controller to carry out the financial
management policy of the Federal Government. I believe this is
a key position in government because the Controller is one of
the primary Federal officials responsible for ensuring that
taxpayers' dollars are being spent wisely.
It is my hope that under Ms. Combs' leadership government
spending practices will become much more transparent and much
more accountable. Furthermore, I am confident that she will
make every effort to reduce waste, fraud and abuse and
mismanagement throughout the Federal Government.
President Bush nominated Ms. Combs for this position
because she possesses the experience, training and motivation
to oversee the U.S. Government's financial management
practices. Given that Ms. Combs has extensive experience
working in the Federal Government in numerous departments where
she had oversight authority for financial management and the
budget, I believe this makes her a very credible choice to be
the next Controller.
I would like to say that both Senator Dole and Senator Burr
from your home State send their best wishes. Senator Burr
actually came to me and apologized that he could not be here to
introduce you. They both send their best wishes and regrets
that they could not be here today. They both have submitted
written statements for the support of your confirmation that
will be entered into the record, and there is no objection to
that.
[The prepared statements of Senators Dole and Burr follow:]
PREPARED STATEMENT OF SENATOR DOLE
It is with great pleasure that I introduce Dr. Linda M. combs, who
has been appointed by President George W. Bush to be Controller for the
Office of Management and Budget (OMB). I am honored and pleased to give
my support for the appointment of Dr. Combs, who is a fine North
Carolinian. I am very confident that she is well qualified for this
important position, which is responsible for financial management of
the Federal Government.
If confirmed as OMB Controller, Dr. Combs will be responsible for
leading the Office of Federal Financial Management and will provide
government-wide leadership for strengthening financial management in
Federal agencies and programs. The Controller will lead the Improved
Financial Performance Initiative for the President's Management Agenda,
which focuses on bettering the quality and timeliness of Federal
financial information. I am confident that Dr. Combs possesses the
critical leadership skills needed to succeed in this position.
Dr. Linda Combs currently serves as the Assistant Secretary for
Budget and Programs and Chief Financial Officer of the Department of
Transportation (DOT). In this role, she has significant experience with
oversight and management of all budgetary functions for the Department
of Transportation. Dr. Combs was responsible for oversight of the
Department of Transportation's $57 billion appropriation, the
government Performance and Results Act, as well as general monitoring
of programs. During her tenure as Assistant Secretary, the Department
of Transportation was the first Cabinet level Department to achieve
four coveted ``green'' scores on the President's Management Agenda.
Prior to her appointment to the Department of Transportation, Dr.
Combs served as Chief Financial of the Environmental Protection Agency
from 2001 to 2003. She has been successful in various oversight roles
and executive level management positions at the Departments of
Education, Veterans Affairs, and Treasury, where she has garnered years
of experience and management skills, which further qualify her for this
appointment.
Dr. Combs is a well-respected and valued member of the North
Carolina family. She served more than 10 years in the Winston-Salem/
Forsyth County school system. Dr. Combs earned an Associate of the Arts
degree at Gardner-Webb University, Bachelor of Science and Masters
degrees from Appalachian State University, and a Doctorate in Education
Administration from Virginia Polytechnic Institute and State
University. She is also a graduate of the Program for Senior Managers
in Government at Harvard University.
__________
PREPARED STATEMENT OF SENATOR BURR
Mr. Chairman, it is an honor to introduce to you Linda Combs of
North Carolina, nominated to be the next Controller of the Office of
Federal Financial Management at the Office of Management and Budget.
A resident of my hometown of Winston-Salem, N.C., I know that Linda
will continue to serve this President with honor and distinction, in
the same manner that she has loyally served her community.
Linda has been the president of Combs Music International in
Winston-Salem and has served on various boards since 1991. She is also
a former member of the Winston-Salem/Forsyth County Board of Education.
At the U.S. Department of Education, she was the Executive
Secretary from 1982 to 1984 and the Deputy Under Secretary for
Management from 1984 to 1986.
From 1986 to1987, Ms. Combs returned to the great state of North
Carolina to serve Governor James Martin as an advisor.
From 1987 to 1989, she was Associate Administrator for Management
at the Department of Veterans Affairs and from 1989 to 1991 she served
at the U.S. Department of the Treasury, as Assistant Secretary for
Management, and on the President's Council for Management Improvement.
Beginning in 1990, she concurrently held the position of Chief
Financial Officer of the Department of the Treasury.
She previously was CFO at the Environmental Protection Agency and
during President George H.W. Bush's administration was Assistant
Secretary for Management and CFO at the Treasury Department.
Most recently, Ms. Combs served as the CFO and Assistant Secretary
of Transportation for Budget and Programs.
Throughout her career, Linda has won several awards. She was the
recipient of the Department of Education Secretary's Citation and the
Exceptional Service Awards at the Department of the Treasury and the
Department of Veterans Affairs.
Ms. Combs holds a bachelor's and a master's degree from Appalachian
State University and a doctorate degree from Virginia Polytechnic
Institute and State University, and chairs the Board of Directors of
the Appalachian State University Foundation.
I have no doubt that Ms. Combs will prove to be an asset to the
Office of Management and Budget.
Senator Coburn. As I mentioned in my opening remarks, this
nominee has an impressive resume that will prepare her well for
this important position. Linda Morrison Combs has filed
responses to biographical and financial questionnaires,
answered pre-hearing questions submitted by the Committee, and
had her financial statements reviewed by the office of
Government Ethics. Without objection, this information will be
made part of the hearing and, with the exception of the
financial data that are on file and available for public
inspection in the Committee's offices.
Our Committee rules require that all witnesses at
nominations hearings give their testimony under oath. Ms.
Combs, at this time if you would, please stand and raise your
right hand.
Do you swear that the testimony you are about to give is
the truth, the whole truth, so help you, God?
Ms. Combs. I do.
Senator Coburn. Ms. Combs, I understand that you have
family members present that you might want to introduce. Please
feel free to do that.
Ms. Combs. Yes, I do. Senator Coburn, I would like to
introduce my husband, David M. Combs.
Senator Coburn. David, welcome. I bet you are proud. We
welcome you to this hearing today and I would ask that you
proceed with your opening statement at this time.
TESTIMONY OF HON. LINDA M. COMBS,\1\ TO BE CONTROLLER, OFFICE
OF FEDERAL FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND
BUDGET
Ms. Combs. Thank you, Senator Coburn and Members of the
Committee. I really appreciate the opportunity to appear before
you today as you consider my nomination for the position of
Controller of the Office of Management and Budget within the
Executive Office of the President.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Combs appears in the Appendix on
page 15.
---------------------------------------------------------------------------
It is an honor to be here and I am privileged to have been
nominated by President Bush to this post.
As you mentioned, Senator Coburn, given the specific duties
and responsibilities under the Chief Financial Officers Act of
1990, the OMB Controller position is an especially important
one in the Federal Government today.
If confirmed it will indeed be my goal to carry out those
responsibilities and to continue the work and the efforts that
are underway to achieve the most meaningful results in Federal
financial management and performance throughout government.
I look forward to working with you and other Members of the
Committee as we find solutions that may not have been thought
about to date.
In each of my previous positions in the Federal Government,
I have been guided by one singular overriding principle, that
public service is indeed a public trust. So I pledge to you and
to my fellow Americans today my continued commitment to
upholding these high standards of honesty, fairness and
integrity. The American people deserve no less from those of us
who are very fortunate to be able to serve in such honored
positions.
I thank you, Senator Coburn, for the great opportunity to
appear before you today and I look forward to answering any
questions you or any other Members of the Committee may have.
And in deference to your time and the time of this Committee, I
ask that the remainder of my statement that was presented to
the Committee be presented in its entirety and entered into the
record.
Senator Coburn. It will be, without objection.
Ms. Combs, I have some questions, some are boilerplate that
we will go through, and then I have some very specific
questions for you.
Is there anything you are aware of in your background which
might present a conflict of interest with the duties of the
office to which you have been nominated?
Ms. Combs. No, sir.
Senator Coburn. Do you know of anything, personal or
otherwise, that would in any way prevent you from fully and
honorably discharging the responsibilities of the office to
which you have been nominated?
Ms. Combs. No, sir.
Senator Coburn. Do you agree without reservation to respond
to any reasonable summons to appear and testify before any duly
constituted committee of Congress if you are confirmed?
Ms. Combs. Yes, sir.
Senator Coburn. We will start with specific questions and
since I get to have the Chair, as well as be the only person
here at the present time, I have several questions that I would
like to ask you.
Tell me what your top priorities will be if you are
confirmed as Controller of the Federal Financial Management at
OMB?
Ms. Combs. Senator Coburn, my absolute top priority is to
bring first-class financial management to the entire Federal
Government. I think that there are many opportunities where we
have to increase our fiscal accountability and discipline. As
you and I had the opportunity to discuss this morning, I have
been blessed to serve in a number of other departments and
agencies. And I hope to help other departments and agencies
throughout government be able to do some of the things that we
were able to do in some of the other departments, as well.
Senator Coburn. I am very happy to see that the Ranking
Member of the Federal Financial Management, Government
Information, and International Security Subcommittee, Senator
Carper, has joined us. If you would care to make an opening
statement, we would love to have that now.
Senator Carper. I do not have an opening statement at this
time, but what I would welcome is the opportunity to ask some
questions of our witness. I welcome her today. Thank you.
Ms. Combs. Thank you, Senator.
Senator Coburn. I will finish my first round and then we
will go to you, if that is OK.
Tell me your thoughts about the termination of the Joint
Financial Management Improvement Program.
Ms. Combs. The Joint Financial Management Improvement
Program, as I understand it, the principles are still in place
with the JFMIP and will meet and discuss various matters that
need to come before the Committee.
I also understand that I have not had an opportunity to
fully explore that. And if given the honor of confirmation, I
will certainly commit to explore the entire transition that
took place, which I believe was in December 2004.
Senator Coburn. You and I have discussed, as a matter of
fact this morning, on transparency in the Federal Government.
Several people have questioned, with the elimination of the
Joint Financial Management Improvement Program, that
transparency might be less rather than better. And their
concern is how do we, as citizens, know what the government is
doing without transparency and without accountability?
I can tell you in Subcommittee hearings that Senator Carper
and I have both already had, in terms of getting transparency
just from USAID, the last information we can get from them on a
malaria program is 2001. That is unacceptable here. Presently,
I am having difficulty getting the Corps of Engineers to give
us a budget.
The fact is that any good management system has that out
there. It is the public information, it cannot be guarded. And
when it is guarded and it is guarded inappropriately, that
raises red flags in Congress, I assure you.
I just would wonder how you would respond. How are we going
to get to the point where you can get online and you can find
out what every section, every action, other than intelligence
and maybe certain areas of the military, how they are spending
taxpayers money?
Ms. Combs. As you know from our brief conversation this
morning, we both are indeed committed to transparency. It is
quite ironic that in our audience today I was chatting with
some folks who just happened to be here from the State of
California. And I was able to talk with them for just a few
moments about some of the things that we are doing in
results.gov.
We are moving forward in terms of transparency and I
certainly am committed to any transparency that will not only
show the American people, our fellow taxpayers, and us exactly
what the results are of what we are doing in the Federal
Government.
I have that major commitment, along with you, and look
forward to working with you and your staff to answer the
specific problems that you have encountered as well as a more
overall transparency situation.
Senator Coburn. When an improper payment should occur, what
are the steps adopted to attempt recovery of such sums?
Ms. Combs. There are a couple of steps here and I really
look forward to working with you and the Committee on this
because this is really--it was a hot button for me when I first
came back into government in 2001 after being out for 10 years.
One of the things I realize that if we can avoid making
those payments to begin with, that is a good first step. We had
put that out through the offices at EPA. And I am pleased to
report to you that not only are there some individual
circumstances that I could cite to you of how payments were not
made in error because of controls and measures that we put in
place, but because of sensitivities that we engaged the
workforce in.
A lot of consolidation was done relative to where the
payments are made and how they are made. And I have some
wonderful stories that I would love to share with you and your
staff about how these improper payments were avoided to begin
with.
At EPA the actual improper payments rate today is less than
0.5 percent. And I say to you that is one, because of
commitment of a great workforce that we engaged and we engaged
properly, putting wonderful controls in place. Obviously, it
does not happen 100 percent of the time. We have less than 1
percent, but still that is more than we need to have.
So the one thing you can do following that is to engage
companies to come in who will do an assessment of these
improper payments. And they will do it based on how much they
recover. They are called recovery audits. I actually checked up
on some of the recovery audits as I was preparing to come and
talk with you folks today. And I learned from EPA that they had
a recovery audit even on that 0.5 percent. There is no reason
we cannot do that in every department and agency and have that
commitment.
Senator Coburn. Thank you. My time is expired.
I welcome Senator Lautenberg, and if you have an opening
statement, now would be a great time.
OPENING STATEMENT OF SENATOR LAUTENBERG
Senator Lautenberg. I appreciate that, Mr. Chairman and I
am delighted to have a chance to be here to take a few minutes
to talk about Ms. Combs and the position that she is going to
assume. And obviously, we welcome her here.
The position for which you have been nominated, Controller
for the Office of Federal Financial Management, is obviously
very important. And we make that statement based on some of the
experiences that we see, unfortunately, on a continuing basis.
The office is responsible for establishing government-wide
financial management policies of executive agencies government-
wide. Now I have spent a fair amount of time in the business
world before I came here and financial management was a big
part of our business. You try to watch everything that you can.
There are things, no matter how careful one might be, no matter
how intricate or appropriate the system is, the fact of the
matter is that there is a part science in the financial
management. The critical incidents review is when there are
things that you look for that trigger further review or
expansion.
What I see happening and what I have seen happening is that
in some parts the errors or the waste is of major magnitude.
Again, I do not believe that in an organization the size of our
government that we can ever get down to the last nickel and
dime. You forego that.
But the Defense Department gives out contracts and they are
not adequately examined by Congress or the Executive Branch, in
my view, and I am talking particularly about Halliburton's
contract in Iraq. Halliburton was awarded a no-bid contract
worth $2.5 billion and a cost-plus contract worth more than $7
billion.
Now both of these contracts have been riven with waste,
fraud, and abuse, to use the common term. A typical example is
Halliburton, in overcharging the government by $1.09 a gallon
for 57 million gallons of gasoline.
Other incidents, they paid $45 for cases of soda that
supermarkets sell for $7. And we are talking about huge
numbers.
In response to this charge, Army auditors recommended that
Halliburton be punished. They said DOD should withhold 15
percent of future payments to offset these overcharges. But
instead of administering punishment to Halliburton, the
Pentagon rewarded it with $72 million in bonuses.
Now that is giving the fox in the chicken coop some more
hens for a dish. And I find it inexplicable. I think the
policies and procedures that allowed it to happen need severe
scrutiny and review.
And Dr. Combs, I think it is essential that in this new
position that you do that. I would like to explore it more
specifically but it is fair to say that we need to really crack
the whip on DOD here and demand some accountability.
And finally, Mr. Chairman, we know that Senator Voinovich
is doing some excellent work in his Subcommittee to take a
close look at DOD's business practice and I know that he will
continue to work diligently, as we should here. And I commend
you for doing this.
When we get to questions, I have a few questions.
Senator Coburn. I want to assure the Senator that we are
going to look at every nook and cranny on our Subcommittee.
Senator Carper and I, we are going to work joined at the hip to
do that.
I might note for the record that we had testimony from
General Walker that the Pentagon has a 10 percent mispayment
rate, $5 billion that they did not pay for and $35 billion that
they paid for that they should not have. So we have a lot of
work to do at the Pentagon in terms of cleaning up this mess. I
will assure you that we will do that.
I would like to recognize Senator Carper now.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Thanks, Mr. Chairman. I would like to ask
unanimous consent that my statement be submitted for the
record.
Senator Coburn. Without objection.
[The prepared statement of Senator Carper follows:]
PREPARED STATEMENT OF SENATOR CARPER
Thank you, Mr. Chairman. We have before us today a very important
nomination. Financial management has hardly been one of the Federal
Government's strengths, unfortunately. According to the Office of
Management and Budget's latest scorecard, while progress is being made,
most agencies continue to receive failing grades for financial
performance.
This is probably the major reason why we've been unable to get a
clean audit opinion on the Federal Government's combined financial
statement for some time now. Many people probably read about this and
other Federal financial management problems in the paper, Mr. Chairman,
and shrug our shoulders and move on. I think most of our constituents
assume that the Federal Government isn't a good steward of their tax
dollars and believe little can be done about it.
I believe we can do better. We need to do better. Poor financial
management has a real impact on the Federal budget. It also leads to
waste and, a time when the budget deficit is rising and every dollar is
precious, cheats worthy programs of much-needed funding that could be
used to help people.
I was shocked to learn at a recent hearing Senator Coburn and I
held on the President's Management Agenda that the Federal Government
makes about $45 billion in improper payments each year. We just can't
afford to allow management weaknesses to be such a drain on resources.
I believe Linda Combs recognizes this. She has a distinguished
record of service at a number of agencies. This includes her recent
service as Chief Financial Officer at both the Environmental Protection
Agency and the Department of Transportation. I've had the pleasure of
meeting with Ms. Combs one-on-one and look forward to hearing some more
today about her qualifications and her views on how we can continue to
improve financial management across the Federal Government.
Senator Carper. Thank you, sir.
Ms. Combs welcome and thank you for being here.
You look at the size of the audience and we have had more
people in this Committee hearing room in other instances.
Sometimes it is when there is controversy. So when you look
around and you do not see a packed house, it might actually be
a good sign rather than a bad one.
What I would like to do today is, first of all, just ask
you what do you think, what kind of skills, attributes should
we be looking for and should the President be looking for in
filling this position?
Ms. Combs. I think the skills that are necessary to be a
Controller are twofold. One, a commitment to honesty and
integrity, a commitment to instilling in every other CFO the
idea that we truly, as a Federal Government, can be a first-
class financial institution. We do not have to continue to look
at situations that persist in various departments and say I do
not think we can do anything about that.
I think we have to instill and change the culture and
change the attitudes of our fellow legislative people, as well
as our Executive Branch folks, and work together and have a
tremendous commitment to doing something that has not been done
before.
And I think the commitment is the number one priority.
The number two priority, I think, of a controller or a CFO
in any of these other departments and agencies is to garner the
respect for controls and fiduciary responsibilities and make
sure that everyone who works in those departments and agencies
believes that part of their responsibility is financial and
fiduciary, not just programmatic.
I think if we could start there with a great elevation of
thought and ideas and vision, I think we could achieve a whole
lot. And I am really looking forward, assuming I am confirmed,
to being able to do that.
Senator Carper. Given the criteria you have laid out, how
do you measure up to those standards in terms of what we are
looking for? And I admire modesty but this is not a time to be
modest.
Ms. Combs. I think standards are very important. They are
very critical. And one of the things that I have done,
particularly in the last two positions, the two CFO positions I
have held in this Administration, is put a number of metrics
out there that we hold people accountable for in the
departments and agencies in which I have served.
I actually worked as a subcommittee chair on the Chief
Financial Officers Council, as well, to put into play eight
financial metrics across government. We CFOs got together and
we decided there were certain metrics that every departmental
CFO needed to have that would show that they were doing a good
job managing their finances. And they were very rudimentary for
many of us who worked in a banking industry or other industries
like that in the past. Yes, they were rudimentary. Are you
balancing your books on time? And I would love to share those
with you at a later date.
But they do wonders for pulling the organization together
into a way of saying, hey, these are things we can agree upon,
that everybody in this department has responsibility for these
particular areas. So whether your responsibility is in a
program or whether it is in a financial office, you have
responsibility for finances as well.
Senator Carper. In talking with others about you, I heard
from them that you have very good financial skills. They have
also talked about your remarkable skills in mathematics. I was
just wondering what might be the genesis of your interest in
mathematics and your understanding and your facility with
mathematics?
Ms. Combs. Thank you, Senator. Unbeknownst to probably a
couple of other Members on the Committee, when Senator Carper
and I met, we realized that Senator Carper's father-in-law, Dr.
Starr N. Stacy, Jr., taught me math at Appalachian State
University, and specifically probability. And he was a most
inspiring teacher, and a most inspiring leader.
And even though I went into education after that, I have
always come back to many of the things that he taught me. He
was such an inspiring person. And after our visit, I actually
went back and looked him up in the annual. And yes, he was
exactly as I remembered how he looked, and I was able to share
my thoughts with your wife.
Senator Carper. I was pleased to share with my wife the
kind words you had to say about her father. She thinks that she
has grown up to be just like him. And she is my teacher too, in
a lot of ways.
Senator Lautenberg. You inherited this from your father-in-
law.
Senator Carper. I suppose. I do not know.
A more serious question. You mentioned financial officers
and CFOs. You served in government, both before and after the
passage of the 1990 Chief Financial Officers Act. I just
wondered if you could share with us what impact you think those
reforms have had that were included in the bill, and also in
the President's Management Agenda? And how have you seen it
impact on our Federal financial performance?
Ms. Combs. I think the President's Management Agenda has
done an awful lot to pull departments and agencies together and
to focus on four or five discrete elements that we can all
agree are the things we are going to work hard on. And I am
pleased one of these is financial management, of course. That
has done a great deal to bring a focal point to where we all
want to go in this Administration.
The CFO Act itself, since it was passed in 1990, and yes, I
was the first CFO at the Department of Treasury at the time.
And it was a watershed moment. And one of the things that I
have done after coming back into government in 2001 after a 9
or 10 year hiatus between 1991 and when I came back in 2001, is
to look at the differences. What are the things that have
happened? Well, there was other additional legislation also
that was passed in the 1990's.
But, when I came back to EPA and looked at the CFO Act of
1990, I did just what you suggested. What has changed? What has
made a difference?
One of the things that, in reading the CFO Act and
rereading it again, you realize the people who worked on that
at the time really had a great command for what could and
should be done in Federal departments and agencies. And even
now, I have looked at the tenets of the CFO Act and have used
those to formulate some of the things that I put into place,
both at EPA and at the Department of Transportation, in terms
of holding people accountable for their financial duties, and
putting financial people in place. The CFO Act gives CFOs a
tremendous responsibility for seeing that the right people are
in the other subsidiary CFO positions within the departments
and agencies as well.
It is up to a good CFO to decide what kind of people you
need in those specific fiduciary roles; to put the processes in
place that you need to put in place and hold people
accountable; and to put the tools in place, whether it is new
IT tools or whether it is other mechanisms that will help you
manage an organization better.
Each one of the tenets of the CFO Act spells out in great
detail how that can be done. And I think taking it very
seriously and honoring the Act, in and of itself, both in the
spirit as well as the actual concept of the law, gives CFOs and
the Controller a great deal of latitude and responsibility.
Senator Carper. Thank you.
Senator Coburn. Senator Lautenberg.
Senator Lautenberg. Thank you, Mr. Chairman.
If you saw me smiling when you heard Senator Carper ask you
the questions about what qualities you think should be there
for someone in this position, I once asked a nominee for a
District Court judgeship about that. And I said what qualities
do you think we ought to be looking for in someone sitting on
the bench. And he said all the ones I have got.
On the very serious side of things, Sarbanes-Oxley, we will
not argue how it got started and the necessity of it. But to
me, and I came out of the business world and ran a pretty good-
sized company, the one thing that I saw that threaded through
the whole notion of establishing the law was that it was to say
to companies, tell the truth. Tell the truth.
And the chief executive now, I think in most cases, has to
sign off on the financial statement. And I think it should be
that way. And again, I am not defending the law. But what I am
defending is the notion that people have to tell the truth.
In government it is a particularly tortuous proposition
because there are so many people involved, departments
involved, and so forth.
But I assume that you are aware, Dr. Combs, of the fact
that contracting abuses have taken place in Iraq.
Ms. Combs. I have read quite a bit about it, as you have,
in the media.
Senator Lautenberg. Do you think some of that again, and
this may be pointed, but I think as they say if the shoe fits,
that no-bid contracts are appropriate unless it is a dire
emergency? Do you think that you can control things well if you
give a contract out with no bid, no indication some other
company might be able to do it better?
Ms. Combs. I think there are a lot of avenues that we have
to explore in contractual management. You mentioned the skills
a moment ago of people in specific jobs. Obviously people who
have contractual responsibilities need to know what the
vehicles are and to work through them in an appropriate way.
But the one skill that absolutely must be in all of these
roles and responsibilities is the ability to manage large
contracts such as that. So that is something that I would
certainly need to take a look at from a policy perspective.
Senator Lautenberg. I would urge you to do it because if we
know A, where we are going; and B, how we get there, and that
is the best way to find out things is competitively. If there
is no one else to do the work, then the choices are limited.
But if there are other people who can do the same work--and
another question, in terms of financial structuring, the cost-
plus contracts.
There were instances, and we have had whistleblowers
testify and lots of sources of information, about the total
abandonment of care and caution and in spending because it has
been said, according to testimony that we had, that people
would say do not worry about it, throw perfectly good things
away. We are going to get paid for it. There was talk even of
abandonment of vehicles because the truck was stuck with a flat
tire, an $80,000 vehicle. Just forget about it and go.
On these LOGCAP contracts, there has to be some mechanism
to say it is cost-plus but the cost has to first be verifiable
and worry about the plus at a later time.
Will you have a chance to review the policies that led to
Halliburton being paid bonuses despite findings that it
overcharged the government? And again, the findings were
released by the Department of Defense, that said you have
overcharged us $60 million for the gasoline and we are going to
take it back. And then there was apparently other information
that came back and said no, we should not take it back.
I would appreciate it if you could make a commitment here
that you will review the policies that led to Halliburton being
paid bonuses despite findings that it overcharged the
government. Is that something you can commit to?
Ms. Combs. Senator Lautenberg, I think my overriding
responsibility here is certainly to see that the dollars of
every taxpayer are monitored and looked at appropriately. I see
this as an over-encompassing role. I see that every taxpayer's
dollar needs to be spent appropriately. And I am making a
commitment to go into that.
Senator Lautenberg. I would ask you to review the past so
that we, as is said, can look at the future with a little more
experience to throw into our judgment.
Ms. Combs. Thank you.
Senator Lautenberg. Thanks, Mr. Chairman.
Senator Coburn. Thank you, Senator Lautenberg. Let me
follow up on Senator Lautenberg's questions.
Is there a policy within the Federal Government now on
cost-plus bids or no-bid contracts, where they will have post-
purchase review?
Ms. Combs. Senator Coburn, I do not know the answer to
that, but I will commit to finding that out.
Senator Coburn. Would you get the answer to that for this
Committee? And if there is not, there certainly should be,
because just the thought of a post-contract review will change
a lot of behavior.
Ms. Combs. Yes.
Senator Coburn. As I know you are aware, OMB has not
succeeded in implementing the President's Management Agenda
initiative. In fact, OMB has the worst performance of the 24
agencies included in the last scorecard. OMB's Deputy Director
for Management, Clay Johnson, indicated that OMB is having
particular difficulty improving its financial performance
because it is tied to the Executive Office of the President,
which is not required to have an annual financial statement
audit.
I would appreciate it if you would provide the Committee
with an explanation as to why the Executive Office of the
President is not subject to the requirement for an annual
financial statement audit? And is there any way to separate out
the different organizations within the Executive Office of the
President so they can be scrutinized?
Ms. Combs. I will be more than happy to look into that and
work with you and provide what you need on that.
Senator Coburn. And then my final questions really have to
do with credit card purchases. We have seen a lot with that.
How can we best restrain open-ended spending by employees using
government purchasing cards? And what steps can we take to
reduce the purchase card program's vulnerability to wasteful,
improper and questionable purchases?
Ms. Combs. That was something, as well, that I worked very
hard on, both at the EPA as well as the Department of
Transportation, and was able to make a lot of headway in
reducing those numbers that we had presented. We had a number
of problems with those when I went into both of those
organizations. And now I am pleased to say that their numbers
are some of the best in government.
So I have a very strong commitment for that and it is
actually one of the metrics that we look at government-wide.
Senator Coburn. You are talking about re-creating
reimbursement concepts for employees expenditures; is that
correct?
Ms. Combs. Yes.
Senator Coburn. Senator Carper.
Senator Carper. I just want to revisit briefly an area we
have already had some discussion on and it is the Department of
Defense. We were led to believe, I think GAO noted in January
in their high risk update, that tangible evidence of
improvement in DOD's financial management can only be seen in a
few areas.
Given how much money we are spending in defense--in fact, I
understand we spend more on defense now than the rest of the
world combined. That is a lot of money. And in any big
organization there is opportunities to spend money poorly,
wastefully, and so forth. My guess is the same is obviously
true in the Department of Defense.
Any thoughts that you might have beyond what you have
already said, or just to reiterate what you have already said,
in what we might do to help clean up DOD's books? I know you
have served well at EPA and DOT and elsewhere. Just talk about
some of the things again that could be applied from your
previous experience and what we could apply at DOD.
Ms. Combs. I think one of the things that we must do, DOD
is a very complex organization, I do not need to tell you that.
We all understand that.
But any time you have a complex problem, whether it is in
life or whether it is in finances, it has to be broken down
into manageable parts. And broken down in such a way that you
have a committed group of people working on each piece of it,
so that you come together at the end and you have exactly what
you envision, clean audits, no material weaknesses and many of
those things that we have talked about and are committed to.
And I think without us working together and coming up with
those solutions, and working with the Department of Defense,
that probably is not going to happen or going to happen in our
lifetimes or in our tenure.
But what I would like to do is to work with the Committee
and to continue the work that we would normally be doing from
OMB with DOD and work toward a great solution. And maybe it is
not time driven. A lot of times we get hung up on when is it
going to happen? Maybe there is another creative solution that
we have not thought about. Maybe there is some percentages of
work that we could be pleased with if they get to a certain
percentage point.
I do not know what it is, but I am certainly more than
willing to commit to work with the Committee.
Senator Carper. Thanks very much.
Senator Coburn and I bring to these two positions a
commitment to doing what we can to ratchet down the Federal
budget deficit. It is alarming to me and I know it is to him
and I suspect everyone in this room, that our budget deficit is
so high. We know that in some cases we are spending money that
we do not have. In other cases, we are spending money for
things that are inappropriate or may be unlawful. In other
cases, monies that should be collected as revenues are not
being collected.
We are determined to do what we can with this little
Subcommittee of ours to try to make progress in all of those
areas.
We have spoken with the Comptroller General, David Walker,
to enlist his cooperation and to see how we might partner with
GAO. I would not pretend to speak for both of us, but I would
welcome a similar kind of partnership with you and the folks
that you're going to be leading. We wish you well.
Thank you for returning to government service, the service
of our people. And good luck.
Senator Coburn. Thank you, Senator Carper.
My staff advises the IG at VA has recommended pre- and
post-audits for contacting at the VA. So you might want to look
at that.
One other question. I just want to get a commitment for
this Committee from you that as we seek to find out what we
need to know to help you do your job that you will be a conduit
for us for assisting us in finding the numbers. The most
frustrating thing for me is to ask an agency for their numbers
and, first of all, be told you cannot have them. Number two is
we do not have them.
Well, if they do not have them, then we have got much
bigger problems than what we think we do. I would just like a
commitment from you for both Senator Carper and myself. Our
goal is we are after the waste and the inefficiencies. It is
not partisan at all. Money that is wasted hurts everybody in
this country. We are committed to that. And I would like a
commitment from you that when we are stuck, we want to be
coming to you. We want the pressure run down the flagpole so we
get what we need.
Ms. Combs. I hope you will call me. I almost hope you call
me as a first resort, because I would love to know what you are
trying to get and see if we can help you, because what you told
me this morning I find unacceptable.
Senator Coburn. Thank you again for coming. We appreciate
your willingness to serve this country and the hearing is
adjourned.
[Whereupon, at 3:13 p.m., the Committee was adjourned.]
A P P E N D I X
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