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This document provides examples of the work performed by the inspection and
evaluation units of the Federal Government's Offices of Inspector General (OIGs).
By statute, the OIGs are responsible for independent oversight of the management
and operations of Federal agencies. This responsibility includes objective
assessments of the performance and efficiency of Federal programs, as well as
analyses of related problems and issues.
These abstracts show the varied nature of OIG inspections and evaluations and the
impact they have had--ranging from correcting employee ethics problems to
saving millions of taxpayer dollars. The units that conduct the inspections and
evaluations are tailored to meet the individual needs and priorities of the
respective OIGs. Copies of the reports are available through IGnet on the Internet
(http://www.sbaonline.sba.gov/ignet) or from the responsible OIG.
This listing will be kept current by periodic updates prepared by the participating OIGs. Any questions concerning these materials should be addressed to the Chair, Inspection and Evaluation Committee, President's Council on Integrity and Efficiency, Executive Office of the President, Washington, D.C. 20503.
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Introduction i
Department of Commerce
Employee Compensation Program 1
Assistance to Minority Owned Businesses 1
Export Controls for Biological Agents 2
NOAA Fleet Modernization 3
Next Generation Weather Radar System 3
Advanced Weather Interactive Processing System 4
Census Bureau--Data Capture 5
Department of Energy
Human Subject Research Internal Controls 6
Accident Investigation Board Concerns at Brookhaven 6
Savannah River Site Review 7
Equal Employment Opportunity Commission
Employee Misuse of Charge Cards 8
Buffalo Office Inspection 8
Federal Deposit Insurance Corporation
RTC Compliance with IRS Provisions 10
RTC Financial Center Reorganization 11
Employee Relocations 11
Controls Over Unclaimed Deposits 12
Reducing Federal Express Costs 12
Overcharges by Accounting Firms 13
Allegations Regarding FDIC Supervision of Bestbank 13
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Federal Emergency Management Agency
Disaster Declaration Decisions 15
Reducing Public Assistance Program Costs 15
Department of Health and Human Services
Investigational Devices Case Studies 16
Questionable Payments for Incontinence Supplies 16
Medicare Payments for Orthotic Body Jackets 17
Child Welfare and Native American Children 17
Medicare Beneficiary Satisfaction 17
Payments for Home Health Services 18
Department of Justice
Influx of New Personnel in the INS 19
Fugitive Apprehensions by the US Marshals Service 19
Deportation of Aliens 20
Drug-Free Workplace Program 20
Safeguarding Grand Jury Material 21
Fraudulent INS Records 21
Department of Labor
Mine Safety and Health Administration Contract Award 23
Office of Personnel Management
Financial Management Reports and Improvement Project 24
Mobility Program Review 24
Office of Merit Systems Oversight 25
Small Business Administration
Prime Contracts and Subcontracting 26
Preferred Lenders Program 26
Surety Bond Guarantee Program 27
Best Practices Studies 28
Critical Issue Analyses 28
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Department of State
Inspections of Overseas Posts 29
Department of Transportation
Commercial Space Transportation Licensing and Safety 30
Interagency Review of NOAA Charting and Cartography 30
DOT Offices of Civil Rights 30
Department of the Treasury
Community Development Financial Institutions Fund 32
United States Information Agency
Binational Centers and Overseas Programs 33
US Information Agency in Japan 34
Department of Veterans Affairs
Managing Violent Psychiatric Patients 35
Health Care for Women Veterans 36
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DEPARTMENT OF COMMERCE
Department's Employee Compensation Program Could Be Improved
(IRM-4589 -- September 1992)
The OIG has long been concerned about the Department's management of its Federal Employees'
Compensation Act program, which provides compensation and medical benefits to Federal
employees for disability due to personal injury or disease sustained in the performance of duty.
In a 1992 inspection, the OIG concluded that the program was not effectively administered,
resulting in unnecessary costs and allowing indications of potential fraud and abuse to go
undetected. Specifically, the OIG found that (1) Commerce Department bureaus were neither
routinely challenging questionable claims nor effectively following up on claims soon after
awards were made, (2) Labor Department billings were not consistently verified, (3) potential
fraud cases were not being referred to the OIG, and (4) the Department did not have an effective
automated system for tracking compensation claims.
The Commerce Department has significantly improved its processing of workers' compensation
claims by setting operational guidelines, developing and implementing an automated tracking and
monitoring system, using aggressive case management techniques, and conducting customer
service surveys.
The case management and return-to-work strategies resulted in cost reductions of more than $1
million during the charge-back year of 1995, an 8.3 percent decrease from the previous year's
costs. This was the largest percentage decrease in a program's cost among Federal agencies for
the second consecutive year.
Improved Efforts Needed to Assist the Nation's Minority-Owned Businesses
(IRM-5443 -- September 1994)
The OIG conducted a program evaluation to assess the efficiency and effectiveness of the
Commerce Department's efforts to assist the Nation's minority-owned businesses. The OIG
concluded that Federal intervention is still needed to address the historical and continuing
problems confronting such businesses. In addition, the evaluation identified obstacles and
opportunities with respect to Federal minority business development programs. It showed that
(1) Federal efforts to promote minority businesses are not focused, (2) no one Federal
organization has the sole responsibility for the pursuit of small and disadvantaged business
procurement goals, (3) the Commerce Department lacks the authority and resources to effectively
lead Federal efforts, and (4) the Minority Business Development Agency's priorities for providing
assistance to minority business are not clear. In addition, the Agency needs to resolve difficult
managerial and operational issues, including better oversight of its programs. The evaluation also
found that coupling innovation with proven approaches can result in a more effective program,
such as with demonstration projects.
As a result of the evaluation, Agency officials agreed to form a strong professional executive
management team, begin a customer-based strategic policy and program planning process,
distribute a human resources assets survey to evaluate their human resource capabilities and needs
objectively, and increase its outreach to other Government agencies that have small and
disadvantaged business program responsibilities. The OIG has planned a follow-up to this
evaluation to determine what achievements have been made and where further efforts are
necessary.
Obstacles to Enforcing Export Controls for Biological Agents
IRM-6686 -- September 1995
Because of worldwide availability and ease of shipment, biological agents such as pathogenic
microorganisms and toxins represent one of the more challenging categories of controlled items.
The United States, as well as most other countries, wants to monitor the movement of biological
agents to prevent them from falling into the wrong hands, especially where they might be used
to make biological weapons. The Commerce Department's Bureau of Export Administration
(BXA) is responsible for maintaining export controls on various items that have national security
and foreign policy implications.
The OIG found that increased outreach is needed to identify potential exporters of controlled
biological agents. Preventing controlled microorganisms from leaving the country is complicated
because many research projects use these items and researchers are not always aware that they
need to obtain a license to ship an agent to a foreign lab. Furthermore, export requirements for
microorganisms of different countries are not uniform. The OIG determined that better
international communication is needed in the area of shipping biological agents.
The OIG supports the concept of using export controls to reduce the threat from weapons of mass
destruction, but the wide availability of dangerous microorganisms highlights the need for
alternative approaches to assist with U.S. nonproliferation efforts. In the report, the OIG
recommended that the administration strengthen the U.S. Government's export control system for
microorganisms and provide data for evaluating the feasibility of other approaches for improving
worldwide nonproliferation efforts.
Since the issuance of the OIG's report, as part of comprehensive preparations underway to address
the potential threats of biological terrorism, the President designated the Department of Health
and Human Services to be the lead Federal agency for developing a framework for controlling
the acquisition and transfer of infectious and/or toxic agents into the United States. The BXA has
provided advice on rules designed to collect and provide information on biological facilities
where agents are transferred, track the domestic transfer of these specific agents, and establish
a process for alerting appropriate authorities if an unauthorized attempt is made to acquire these
agents. The administration has agreed to maintain an open dialogue among Federal agencies
involved in biological warfare issues.
NOAA Should Decommission Its Fleet and Terminate the Recent Billion-Dollar Fleet Modernization Plan
(IPE-7794 -- March 1996)
The National Oceanic and Atmospheric Administration (NOAA) supports its natural resource and
weather-related activities with its own fleet of research and survey vessels, 18 of which were in
use during FY 1994. For more than a decade, congressional committees, public- and private-sector advisory groups, the General Accounting Office, and the OIG have asked NOAA managers
to study alternatives to using Agency-owned and operated ships for acquiring marine data. The
NOAA has consistently taken the position that the Agency's ships provide unique services and
are cost-competitive with other vessels.
Since 1992, NOAA has been authorized to implement a 15-year fleet replacement and
modernization plan to address the problem of its aging ships, most of which have reached the 30-year life expectancy. The 1995 version of the plan proposes a reduction in the number of NOAA-owned or leased vessels, places more emphasis on outsourcing, and reduces the projected 15-year
modernization cost from $1.9 to $1 billion. The OIG's review of the 1995 plan, however, raised
continuing concerns about NOAA's assessment of available alternatives, the plan's decision
model, and the in-house cost data. Because of these concerns, the OIG reviewed outsourcing
options to determine the private sector's interest, capability, and cost effectiveness in replacing
the Agency's fleet, while also analyzing the full cost of NOAA's in-house marine services.
The review found that NOAA's fleet is more expensive than available alternatives; the problems
associated with aging, inefficient ships cannot be easily or inexpensively eliminated; and the
billion-dollar modernization plan should be terminated. Moreover, adequate checks and balances
to safeguard the development of the plan had never been established by NOAA; the Agency's
actions impeded attempts to form external partnerships; and no increase in appropriated funds is
required to dispose of the fleet.
Subsequently, the Congress requested that NOAA submit plans before purchasing new equipment
or ship upgrades and called on NOAA to expand use of university ships and private contractors
as NOAA vessels are taken out of service.
Next Generation Weather Radar System
(SED-4559, SED-5979 -- February 1993, December 1993)
Under a tri-agency program, the Departments of Commerce, Defense, and Transportation are
acquiring the Next Generation Weather Radar System (NEXRAD), which will greatly improve
the accuracy of weather forecasting and provide for the automated exchange of weather radar data
among federal agencies. NOAA's National Weather Service is Commerce's principal user of the
NEXRAD system.
The OIG's ongoing involvement in NEXRAD over several years led to numerous improvements in the program's management, technical approach, and contracting. At the invitation of the Department and NOAA, the OIG provided advice and counsel during the renegotiation of the NEXRAD prime contract. The OIG's independent advice was solicited in the areas of systems and software engineering, program management, contracts, and legal
issues.
The OIG also conducted several inspections over the past several years, which led to
improvements in the prime contractor's management of its software development process and in
the government's plans and approaches to maintaining the NEXRAD software. In addition, the
OIG concluded that NOAA was being substantially overcharged for certain NEXRAD spare
parts. The OIG's work was the basis for an improved NOAA spare parts procurement program,
which has already resulted in savings of $39 million. The program is now nearing completion,
and the new radars are providing substantially improved weather information.
Advanced Weather Interactive Processing System
(SED-4585, SED-6623, OSE-7355--May 1992, September 1994, February 1996)
The Advanced Weather Interactive Processing System (AWIPS) is the key integrating element
of the National Weather Service's $4.5 billion modernization program. AWIPS is intended to
provide forecasters with modern interactive processing and display capabilities, as well as the
capability to acquire data from advanced observing systems coming on line.
Over the past several years, the OIG has identified and analyzed the serious management,
engineering, contractual, and organizational problems with AWIPS, providing NOAA and
Department management, as well as the Congress, with early warnings of system development
and acquisition risks and with recommendations for resolving them.
In early October, NOAA requested the Secretary's approval to begin the nationwide deployment
of AWIPS--a decision milestone termed "Key Decision Point IV." At the time NOAA planned
for nationwide deployment to begin, the system would have been only minimally developed and
would not be proven to be able to do the job for which it was built, risking additional cost growth
and technical problems. As a result, the OIG recommended that this decision be delayed.
AWIPS' performance during the recent operational test and evaluation reinforced the OIG
position. AWIPS exhibited both functional and performance defects that indicate the software
lacks stability, maturity, and usability. Several forecasters stated that in its current condition,
AWIPS will have limited use during severe weather.
The Secretary agreed that nationwide deployment should be delayed and did not approve Key
Decision Point IV. The result is that AWIPS will not be fielded nationwide until the National
Weather Service has demonstrated that the system has the capability and maturity to adequately
support its operations and until NOAA and the Department have developed a sound, achievable
plan for completing it.
Census Bureau--Data Capture
(OSE-7329--July 1996)
In previous decennial censuses, the Census Bureau used internally designed and developed
technology for data capture--the process through which people or machines read and translate
data from forms. Because the system used in 1990 is expensive, obsolete, and insupportable,
Census will acquire a modern system, called Data Capture System 2000 (DCS 2000), which uses
electronic imaging. Census's decision to acquire a data capture system, rather than develop one,
is an appropriate course of action that the OIG recommended in the past.
In an inspection to assess whether Census was using an efficient, effective approach to acquiring
and managing DCS 2000, the OIG concluded that:
A design fly-off would add risk. Census had been planning to use fly-off--that is, select two
contractors to design and test prototype DCS 2000 systems. Although this approach could
help control production costs, there are not enough technical risks involved to make it
appropriate, and it would be resource intensive, could extend the schedule, and would
severely limit communications with contractors.
Census needs a plan, an organization, and staff for managing DCS 2000. Before contract award,
planned for early 1997, Census should develop a project plan and establish a project
management organization.
The solicitation did not ensure selection of the best contractor. Census planned to rely heavily
on (1) oral proposals so as to minimize the written information required and (2) offerors' past
performance rather than in-depth information on their technical approaches. However, the
information elicited might not be adequate to ensure that the best contractor is chosen.
Census agreed to implement all of the OIG's recommendations. Not having a fly-off for the
design phase will result in at least $3 million in funds to be put to better use. Moreover, the
changes to the acquisition strategy for DCS 2000 will help ensure its completion in time for the
decennial census and will result in improvements to the solicitation ultimately leading to better
proposals and contracts.
Department Internal Controls for Intelligence and Intelligence-Related Human Subject Research Projects Need to Comply with Regulations
(IG-0383)
The OIG conducted an inspection of internal control procedures used by the Office of
Nonproliferation and National Security (ONNS) to manage selected intelligence and intelligence-related projects that involve human subject research. The inspection did not find evidence that
Department officials and contractors knowingly violated Federal regulations and departmental
directives. It did find, however, that they did not comply with such directives, either because they
failed to recognize that they were required to conduct this research pursuant to Federal regulations
or because they were unfamiliar with departmental procedures developed to conduct human
subject research.
This inspection found that officials at the Idaho Operations Office and the Idaho National
Engineering Laboratory did not recognize that three intelligence-related "Work for Others"
projects that they were conducting involved human subjects. As a result, the Office of Health and
Environmental Research issued a "stop work order" until the projects were brought into
compliance with Federal regulations. The inspection also found that the Sandia National
Laboratories obtained approval of six projects involving human subject research but initiated two
of these before obtaining required approvals. Moreover, the ONNS did not fully implement the
procedures they had developed to identify these projects. The inspection further determined that
the Office of Energy Intelligence had not ensured that management and operating contractors in
these areas received appropriate training on the applicable Federal regulations on intelligence
activities and procedures.
ONNS management concurred with all OIG recommendations and completed or identified
corrective actions. An Institutional Review Board was established at the Idaho Operations Office
to comply with Title 10 Code of Federal Regulations Part 745, AProtection of Human Subjects.@
A descriptive text on non-medical human subject research activities is also being prepared for use
by the Department's National Laboratories.
An Accident Investigation Board at Brookhaven Did Not Adequately Address Specific Management Systems and Organizations as a Root Cause
(IG-0386)
A complainant alleged that an investigation of a fire by an Accident Investigation Board at the
Brookhaven National Laboratory violated Department regulations. The OIG inspection
concluded that the investigation did not adequately address specific management systems and
organizations as a root cause of the accident. As a result, deficiencies in the exercise of oversight
responsibilities by higher-level management may not be identified and corrected.
The inspection found evidence indicating that the lack of management oversight may not have
been an isolated case, i.e., it may be a widely occurring problem in Department accident
investigations, particularly those conducted by field components. Management agreed with the
OIG's recommendations to modify permanent oversight and training procedures and regulations,
reexamine the Department's program on employee concerns, review specific management
systems and procedures that may have caused or contributed to an accident, conduct a root cause
analysis of the Brookhaven accident, and ensure that future investigative boards understand their
responsibilities in investigating and reporting any specific management system deficiencies
identified in the root cause analysis of an accident.
Fees Paid by the Department for Managing and Operating the Savannah River Site Needed Review
(IG-0377)
During the first five years of its contract with the Department, Westinghouse Savannah River
Company was paid over $130 million in fees to manage and operate the Savannah River Site.
An OIG inspection found that fees paid to Westinghouse steadily increased over the period, with
fees paid over the last six months registering more than three times as large as fees paid for the
first six months of the contract. The inspection noted that the Department had significantly
increased the percentage of the dollar value of subcontracts being placed in Westinghouse's fee
bases for fee calculation purposes. In FY 1989, 50 percent of the value of Westinghouse's
subcontracts was included in the fee bases. By FY 1993, 100 percent of the value of a portion
of work performed under one subcontract was included in the fee bases. Because the
subcontractor was also receiving a fee for this portion of work, the Department was paying two
full fees for the same work.
The Department also effectively increased Westinghouse's fixed-fee-equivalents by about $3
million in both FY 1993 and FY 1994 to, in large part, fund an "unallowable" employee incentive
compensation program. Had the Department maintained the terms from the original competitive
negotiations, Westinghouse would have received about $70.9 million in total fees, or some $59.7
million less than the $130.6 million actually received during the five-year period.
Department management officials concurred with the OIG's report recommendations and
identified corrective actions. The Department prepared a Contract Reform Draft Rule that requires
documentation of all fee negotiations and significant changes in fee levels.
MANAGEMENT ALERT: Employees' Use of the American Express Charge Card
(95-10-MIS -- September 21, 1995)
An analysis of charge card records confirmed that problems identified during an earlier OIG
evaluation of the Diners Club Program had continued. Specifically, Equal Employment
Opportunity Commission (EEOC) employees used American Express travel charge cards for
personal purchases, as reported in February 1994. Analysis of purchases by selected employees
in six field offices identified 56 percent of the charges were unrelated to official travel. In this
instance, the OIG issued memoranda and charge card activity reports to Agency office directors,
alerting them to employee card use and recommending the need for their proactive involvement
as an effective method in reducing the misuse of Government credit cards.
The OIG received positive feedback from office directors, who requested continued oversight of
this area. As a result, OIG provides charge card activity reports to office directors each quarter
to assist them in monitoring unofficial charges made by employees. Consequently, there has been
a noticeable decline in purchases by employees at their permanent duty stations. The Agency also
agreed to establish disciplinary action for continued misuse of the charge card.
Limited Field Office Inspections: Buffalo Local Office
(94-09-INSP -- July 22, 1994)
This inspection of time and attendance practices and personal property management uncovered
several internal control weaknesses in the Buffalo, New York, local office. The OIG found that
the office director certified his own timecard, subordinates also certified the director's card, and
the timekeeper and alternate maintained their supervisor's as well as each other's time and
attendance records. Procedures for control over property removed from the office were also non-existent. The OIG identified appropriate personnel within the local and district office to certify
and maintain timecards and recommended a tracking and property identification system for the
management and control of personal property. All recommendations were accepted by field
office management.
As a result of conducting more than 25 field office inspections over a three-year period, the OIG developed a new self-assessment inspection checklist which was issued to selected offices in the first quarter of FY 1996. The checklist allows field offices to assess administrative operations and their compliance with Agency and Federal regulations governing GSA vehicles, computer security, time and attendance, travel, financial management, personal property, procurement, and imprest fund and travelers' checks. Also, having field offices assess their own compliance allows
the OIG to use its resources on higher priority work. The OIG plans a customer service survey
to assess the usefulness of this self-assessment mechanism at the end of the year.
FEDERAL DEPOSIT INSURANCE CORPORATION
Note: On December 31, 1995, the Resolution Trust Corporation (RTC) was merged with the
Federal Deposit Insurance Corporation and their respective inspector general offices
were combined. As part of the merger, the FDIC OIG added an Inspections Branch to
supplement and complement audit and investigative activities. The Branch was formed
by transferring the staff from RTC's Office of Inspections into the new FDIC function.
As a result, the following summaries include reviews completed at both the FDIC and
the RTC.
RTC Compliance with Internal Revenue Service Provisions Governing the Filing of
Form 1099
(INS95-003 -- September 1995)
The OIG conducted a review of the Resolution Trust Corporation's (RTC) compliance with
Internal Revenue Service (IRS) provisions governing the filing of Forms 1099 to determine
whether RTC ensured that 1099s for foreclosures and discharges of indebtedness were filed in
accordance with the requirements of the Internal Revenue Code and RTC procedures.
For 75 of 83 foreclosure transactions that were reviewed, 1099s were properly filed. In those
instances where 1099s were not filed when required, about $38 million in foreclosures were not
reported to IRS and the taxpayers. The 1099s not filed were the result of either an oversight or
interpretation of the filing requirements, not a systemic weakness in procedures or internal
control. Our tests of 64 RTC debt discharge transactions showed that 1099s could have been, but
were not, filed for 35 transactions involving about $80 million in discharged debt. In 23 of these
35 cases, RTC and its contractors had not filed a 1099 because they were waiting for the final
payment on a debt discharge agreement.
RTC staff told us that the earliest date they believed a 1099 should be filed for discharge of
indebtedness was the date a final payment was received for an agreed-upon debt discharge
agreement. Although this practice complied with IRS regulations, it effectively postponed the
reporting of these transactions and delayed collection of potential tax revenues because the
regulations allow the reporting to occur at an earlier identifiable event effectuating agreement
between a financial entity and debtor to discharge an indebtedness.
As a result of the review, the RTC's chief financial officer agreed to review the transactions we
identified involving foreclosed properties and debt discharge and prepare 1099s for those
transactions meeting IRS requirements.
RTC's FSC Reorganization and Contract Consolidation
(INS94-005 -- July 1994)
The OIG's review of RTC's Financial Service Center (FSC) reorganization and contract
consolidation found that RTC had gone a long way toward standardizing the FSC contracting
environment and eliminating costly contracts that were executed as RTC was beginning its
operations. The OIG found that (1) FSC operation were not entirely standardized at each site; (2)
the overall budget for operating FSCs was increasing despite declining asset balances and asset
reductions, mostly due to increases in existing contracts that were not consolidated; and (3)
significant variances existed between the FSCs in the cost and personnel required to carry out
FSC functions.
At the time the draft briefing report was issued, RTC's preliminary budget showed an increase
of $28 million ($232 million to $260 million) for FSC operating costs from 1993 to 1994. Our
results prompted management to further evaluate several areas during its evaluation of the FSCs
and our concerns were considered during the budget and planning process. The final FY 1994
FSC budget--$237 million--reflected a reduction of $23 million from the preliminary budget and
was $5 million more than the FY 1993 budget.
Review of Employee Relocations
(INS94-001 -- November 1993)
In March 1992, RTC announced plans to eliminate its four regional offices and combine its 15
consolidated field offices into six super sites. One effect of this downsizing effort was the
relocation of over 1,000 RTC employees with associated costs of approximately $7.4 million as
of December 31, 1992. The OIG conducted a review of employee relocations because of their
significant cost to RTC and because of the likely need for continued relocations as part of RTC's
eventual merger with FDIC.
Our review showed that RTC could have significantly reduced its relocation costs if relocation
decisions had been more closely scrutinized and controls over the relocation process had been
more effective. Some RTC employees were relocated when it may not have been necessary or
cost-effective, and RTC procedures and guidelines were not always followed when employees
were relocated. We found that (1) of the 101 relocations reviewed, RTC incurred costs of
$250,026 to relocate 44 temporary employees who were on appointments of one year or less; and
(2) RTC incurred costs of $119, 516 to relocate 25 support staff and lower-graded paralegal
employees without considering whether suitable candidates were available locally.
Due to the impending closing of the RTC, management had to make increasingly difficult
decisions about relocating its work force and give careful consideration to the benefits of
continuing to relocate temporary employees. The OIG made a number of recommendations to
management about how to strengthen the procedures and controls over employee relocations,
including the need to clarify guidance and procedures regarding who, when, and how employees
should be relocated. RTC agreed with our recommendations and described a number of actions
already taken or planned to implement better controls over employee relocations.
Controls Over Unclaimed Deposits
(INS95-001 -- December 1994)
The OIG conducted this review to determine whether (1) RTC procedures were adequate for
monitoring unclaimed deposits, (2) the procedures were being properly implemented, and (3)
assuming institutions (AIs) were managing unclaimed deposits in accordance with RTC
procedures and Federal and State laws. The review determined that RTC had been generally
successful in uniting depositors with their deposits. Less than one percent of the 23.3 million
deposits from failed savings and loans remained unclaimed.
RTC, however, entered into early purchase and assumption agreements, covering about $42
billion in deposits, without a provision for returning unclaimed deposits to the Corporation. The
lack of this provision hampered RTC's initial efforts to recover what it estimated could be as
much as $19.7 million in unclaimed deposits. Also, RTC had not reviewed AIs' books and
records to verify that the institutions were determining whether deposits were claimed and
returning unclaimed deposits according to Corporation standards. The AIs reviewed were not
consistently following RTC standards in determining whether deposits were claimed. Two of the
three assuming institutions visited and one-half of the assuming institutions polled--accounting
for more than $4.8 billion in assumed deposits--used an unacceptable standard in concluding
deposits were claimed. The combination of these factors led the OIG to believe that RTC could
not be fully assured that AIs properly determined whether deposits were claimed and returned all
unclaimed deposits to RTC.
As a result of the OIG review, RTC agreed to revise procedures for pursuing the AIs under
agreements without unclaimed deposit provisions. RTC officials also agreed to modify reporting
formats to supplement monthly reports with unclaimed deposit information for individual AIs,
and they agreed to evaluate strategies used by field offices for researching unclaimed deposits and
to require field offices to more closely monitor AIs.
Opportunities Exist to Reduce Federal Express Costs
(INS93-006 -- July 1993)
The OIG reviewed RTC's use of Federal Express (FedEx) mail services as a result of allegations
received about the waste and high cost of RTC offices and employees using those mail services.
FedEx accounted for about half of RTC's mail budget. During 1992, RTC spent over $4.2 million
for FedEx services, or roughly $16,000 per day. RTC mailed over 500,000 letters and packages
by FedEx in one year alone.
RTC had limited guidelines and criteria for when it was appropriate to use FedEx, and there were
no requirements to obtain prior supervisory approval. RTC employees routinely used FedEx
when other cheaper forms of mail service would have been adequate. For example, the OIG
estimated that RTC could have saved over $500,000 during the 2-year period we reviewed by
eliminating FedEx's priority overnight service and using Government overnight base service
instead. Also, security over FedEx air bills and drop-boxes was insufficient. There was
unlimited access to FedEx air bills, which were generally available on request and not
prenumbered or inventoried. Moreover, RTC had limited controls over creating and terminating
FedEx accounts, and the OIG review identified 586 active accounts nationwide for RTC offices,
conservatorship, and receiverships. As a result of the review, RTC improved its guidelines on
FedEx use and began implementing supervisory procedures to ensure that FedEx services were
properly controlled.
Accounting Firms' Billings to the Valley Forge Office for Subcontracted Temporary Personnel
(INS93-002 -- March 1993)
The OIG conducted this review in response to a Hotline complaint alleging that accounting firms
were overcharging the RTC's Valley Forge Office (VFO) for services provided by temporary
agency personnel. As alleged, the team found that the accounting firms billed RTC at contract
rates established for their own employees, instead of passing through the lesser actual cost of the
subcontracted temporary personnel. The three firms whose billings were reviewed marked up
their costs for subcontracted temporary personnel by $507,289. These mark-ups were as high as
244 percent. In the OIG's opinion, the amounts paid to temporary agencies for support personnel
were expenses to the accounting firms that should have been billed to RTC at cost. RTC's
contracts with the accounting firms did not, however, clearly differentiate between contractor and
subcontractor personnel, nor did they state that subcontracted labor should be considered an
expense and billed at cost.
As a result of the review, RTC agreed to pursue recovery of the $424,685 in overcharges from
two of the firms and researched whether there was a legal basis to pursue recovery of the $82,604
from the third firm. RTC also revised its standard contracting documents to adequately set forth
RTC policy with respect to contractor personnel and subcontractors, discontinued using two of
three basic ordering agreements utilized for the engagements reviewed in this report, and began
a major review to identify similar subcontracting mark-up issues in other major accounting
contracts.
Review of Allegations Regarding the Federal Deposit Insurance Corporation's Supervision of Bestbank in Boulder, Colorado
(INS96-008 July 1996)
This review was conducted at the request of the FDIC Chairman, who had received a letter from
the Chief Executive Officer (CEO) of Bestbank presenting issues that he believed reflected a
pattern of "unprofessional, unethical, and unlawful conduct" by the FDIC towards Bestbank. He
also asserted that this conduct was in clear violation of FDIC policies and regulations. The
CEO's allegations concerned the manner in which the FDIC's Englewood Field Office and Dallas
Regional Office had carried out various examination activities, handled other significant matters
relating to Bestbank, and reported the results of the examinations.
Our review did not fully substantiate any of the allegations made by the CEO. We found that the
examiners generally followed applicable FDIC policies and procedures in conducting the
examinations to which the CEO referred. Because the scope of the review was limited, no formal
recommendations were made. It did identify, however, deficiencies that may have warranted
corrective action in the following areas:
preparing a written record of an exit interview,
contacting parties to bank contracts and other business relationships,
exercising professional standards of conduct when performing examinations at banking locations,
updating guidance related to disclosure of composite ratings in the Division of Supervision's Manual of Examination Procedures,
participating in taped meetings, and
re-establishing an effective dialogue with Bestbank.
The Corporation indicated that the Division of Supervision would develop guidance to resolve
some of the issues we identified and determine whether additional guidance is needed to address
the others. The Chairman used the results of the OIG review to respond to the allegations of the
CEO at Bestbank.
Disaster Declaration Decisions: Staff Support by FEMA
(I-02-94 -- May 1994)
This inspection report discusses the Federal Emergency Management Agency's (FEMA) role in
evaluating State governors' requests for Federal disaster assistance and recommending appropriate
action to the President. The inspection was conducted as part of the Agency's response to
congressional concerns and recommendations by the National Academy of Public Administration
regarding the possible "federalization" of disaster response.
The inspection found that the declaration decision making process has significant financial
consequences, and it should be based on an analysis of the State and local governments' capability
to respond to the disaster. At present, however, FEMA has no systematic method of evaluating
those capabilities nor for comparing those capabilities with costs that would be incurred by State
and local governments if a disaster declaration is denied.
FEMA management is well aware of these problems and has made unsuccessful attempts to
improve the process. Recognizing the inherent difficulty of developing the information needed
for a timely analysis and recommendation, the OIG worked with FEMA management in
evaluating alternatives. FEMA management is discussing a proposal with State emergency
managers that embodies the major recommendations of this joint report.
Options for Reducing Public Assistance Program Costs
(I-02-95 -- July 1995)
This inspection report was prepared in response to a Senator's request that the OIG look for ways
to cut Federal spending on disaster assistance by eliminating or restricting eligibility. The OIG
report discussed options in four primary areas: interpreting building codes and standards;
repairing, rather than replacing, disaster-damaged facilities; giving grants to private nonprofit
organizations rather than loans; and paying for alternate projects when disaster damaged facilities
are no longer needed. Because most of the options would require legislative amendment or rule
change, they are under review by FEMA management and the Congress.
Investigational Devices: Four Case Studies
(OEI-05-94-00100 -- April 1995)
In some instances, medical device manufacturers must establish the safety and efficacy of new
medical devices through clinical trials before the Food and Drug Administration (FDA) will clear
them for marketing. To further guard patient safety, institutional review boards approve and
monitor clinical research within local hospitals. This inspection, requested by the FDA,
uncovered problems with the distribution and accountability of investigational medical devices
outside of approved clinical trials. Four case studies identified potential weaknesses in the
oversight of clinical trials at local sites, including problems with the role played by institutional
review boards and with the informed consent process. Of particular concern, the inspection found
instances of investigational devices being used in surgical procedures outside of approved trials.
The FDA agreed to take whatever actions are needed to ensure that the investigational device
studies are conducted in compliance with all applicable Federal laws and rules.
Marketing and Questionable Medicare Payments for Incontinence Supplies
(OEI-03-94-00770, OEI-03-94-00772 -- December 1994)
This inspection found that questionable billing practices by medical equipment suppliers may
account for almost half of the Medicare allowances for incontinence supplies, costing the
Medicare program as much as $100 million per year, and that suppliers engage in questionable
marketing practices. For example, suppliers may give beneficiaries unnecessary or noncovered
supplies and present nursing homes with false or misleading information about Medicare
coverage for these items. As a result of this inspection, the Health Care Financing Administration
(HCFA), which oversees Medicare, agreed to intensify its review of these claims. The Inspector
General testified before a congressional subcommittee regarding this issue. Further, the OIG has
stepped up its oversight in this issue area: an audit has been initiated to determine if any
overpayments have been involved, and the OIG has undertaken a national investigation of
questionable practices conducted by specific suppliers. A follow-up inspection that examined
incontinence supplies and Medicaid payments also found questionable practices, and HCFA
agreed to take corrective actions, resulting in additional cost savings.
Medicare Payments for Orthotic Body Jackets
(OEI-04-92-01080 -- June 1994)
Medicare claims for orthotic body jackets increased more than 6,400 percent from 1990 to 1992,
and Medicare allowed charges likewise increased more than 8,200 percent. In an inspection of
this medical equipment, the OIG found that 95 percent of the claims were for non-legitimate
equipment and should not have been paid. Instead of receiving customized supports valued at
$1,000 to treat serious spinal problems, nursing home residents and others were being provided
cheap foam rubber cushions of no medical value and worth only a few dollars. This inspection
estimated that incorrect payments amounted to as much as $13.7 million in 1992. The report
recommended that HCFA closely monitor claims for body jackets and implement more stringent
controls. The HCFA was asked to inform medical suppliers and physicians about the abuse of
body jacket reimbursement and to stress its intent to prevent such abuse. The HCFA agreed with
the recommendations. Medicare payments for orthotic body jackets dropped to $9.7 million in
1994.
Opportunities for ACF to Improve Child Welfare Services and Protections for Native American Children
(OEI-01-93-00110 -- August 1994)
This study identified opportunities for the Administration for Children and Families (ACF),
which oversees Federal child welfare services, to strengthen the provision of child welfare
services and protections to American Indian and Alaska Native children. The inspection showed
that most tribes have received little funding for child welfare services from the ACF.
Furthermore, neither ACF nor any other Federal agency has ensured State compliance with the
child welfare protections required by the Indian Child Welfare Act. The report identified options
that ACF could pursue to facilitate tribes' access to child welfare funds and to better ensure the
provision of Federally mandated child welfare protections to Native American children.
The ACF agreed to more closely monitor the protections. This report also provided the Senate
Committee on Indian Affairs a focal point for a hearing on tribal access to Federal funding.
Medicare Beneficiary Satisfaction
(OEI-04-93-00140 -- June 1995)
The OIG has conducted annual Medicare beneficiary satisfaction surveys over the past five years to help the Health Care Financing Administration in its service delivery and performance measurement. In the latest survey, beneficiaries reported positive experiences overall. More than 75 percent thought the Medicare program was understandable, and more than 80 percent were satisfied with the services which the Medicare carriers provided. Compared to prior years, this
inspection showed several positive changes. For example, the percent of beneficiaries expressing
a problem with claims processing decreased by 50 percent in the last three years.
The survey revealed, however, the following areas of concern: (1) some beneficiaries have
problems understanding Medicare payments for home health and hospital services, (2) 30 percent
of the beneficiaries who tried to call their carriers were unable to reach their carriers within two
tries, (3) almost a third were not aware of their appeal rights, (4) one-fourth did not know that
Medicare limits what physicians can charge for a specific service, and (5) almost two-thirds did
not know Medicare paid for second surgical opinions. The HCFA agreed to develop a plan for
improving beneficiary satisfaction and understanding in these areas.
Variation Among Home Health Agencies in Medicare Payments for Home Health Services
(OEI-04-93-00260 -- July 1995)
This inspection examined the variation in the average reimbursement per Medicare beneficiary
for nearly 7,000 home health agencies (HHAs) in 1993. The OIG found that the highest
reimbursement group of HHAs received, on average, five times the amount of Medicare
reimbursement per beneficiary as the lower group. The average reimbursement per visit was
similar among HHAs, but the number of visits varied widely. Higher reimbursement HHAs
tended to be proprietary for-profit, non-affiliated organizations, and these provided seven times
more aide visits than the lower reimbursement group. The inspection also found that differences
in quality of service and beneficiary characteristics did not appear to explain the variation.
The OIG recommended that HCFA intensify its efforts to scrutinize reimbursement claims from high-cost agencies and explore ways to prevent the abusive practices of unscrupulous agencies. The inspection determined that controlling the number of home health care visits would save billions of Medicare dollars. For instance, if all home health agencies averaged 33 visits per beneficiary in 1995, as in the case of two-thirds of the HHAs in this analysis, Medicare would save nearly $5 billion a year, based on estimated total expenditures of $14.4 billion. The HCFA agreed with the recommendations and is exploring ways to restructure the benefit and payment policy to address the problems identified by the OIG in this inspection.
Influx of New Personnel in the Immigration and Naturalization Service
(I-96-01 -- October 1995)
This inspection focused on the Immigration and Naturalization Service's (INS) capability to
manage the 1,500 new Border Patrol agents that Congress authorized INS to hire in FY 1996, as
part of the Southwest Border initiative. The study anticipated problems INS would face in
training and equipping the new Border Patrol agents, even though INS had developed a credible
plan for identifying promising recruits. The report identified concerns that INS would not meet
its Border Patrol training goal for FY 1996 due to delays in opening the new adjunct training
facility at Charleston, South Carolina. Other concerns identified were the source of training
instructors and the resulting impact on the mix of experienced and inexperienced agents
remaining in the field. The delay of formal training for new supervisors and other Immigration
Officers, due to the influx of new Border Patrol agents requiring training, was a major concern.
Such training was deemed critical to ensure that the new Border Patrol agents and supervisors
discharge their jobs properly.
Inspectors assigned to this review were invited to participate in the INS' Growth Management
Working Group to provide technical advice to INS personnel based on insights developed during
the inspection. Members of Congress, officials of the INS, and the Attorney General have
worked together to redress the training issues highlighted in this report to enable the INS to train
approximately 1,500 new Border Patrol Agents this year.
Fugitive Apprehensions by the US Marshals Service
(I-94-04 -- September 1995)
The U.S. Marshals Service (USMS) receives significant appropriations for the purpose of
apprehending fugitives. This inspection found that fugitive apprehension activities have a line
item of 600 positions in the USMS budget, but less than half of those positions are dedicated to
the full-time pursuit of fugitives. The balance of the charges to this appropriation are for deputy
U.S. marshals working part-time fugitive assignments. The USMS has been hard-pressed to
show that part-time and occasional fugitive assignments have been an effective use of those
resources. Overall, the USMS' record on fugitive apprehension is mediocre--if a fugitive is not
caught within a year of the issuance of a warrant, the odds are that the fugitive will never be
apprehended.
As a result of this inspection, the USMS established national goals, priorities, and performance measures for the Fugitive Apprehension Program. The USMS also formed a new unit to provide support to district offices and to review warrant cases over a year old for investigative leads.
Deportation of Aliens After Final Orders Have Been Issued
(I-96-03 -- March 1996)
Illegal aliens unwilling or unable to leave voluntarily are issued final deportation orders. In FY
1994, the INS was issued 99,779 final orders to deport illegal aliens and INS deported 47,434
aliens; 45,000 of the removal orders were for detained aliens and 54,779 were for nondetained
aliens. This inspection found that INS was effectively removing detained aliens but not those
who were not detained. In a sample of FY 1994 case files, the OIG found INS removed about
94 percent of the detained aliens within an average of 16 days. Detained aliens who were not
deported included nationalities affected by political or humanitarian concerns and those aliens
for whom INS was unable to obtain travel documents. In contrast, only about 11 percent of the
nondetained aliens left the country.
Contributing to this low percentage were delays by district counsel in transmitting final orders
received from the Executive Office of Immigration and Review (EOIR) to Detention and
Deportation, delays in taking action, failure to send surrender notices to aliens, failure of aliens
to surrender in response to the notices, and limited efforts by INS to pursue aliens who failed to
surrender. Special conditions affecting certain nationalities also impaired INS' ability to remove
aliens.
The INS has taken action to improve its performance in removing nondetained aliens
expeditiously after the issuance of final orders for deportation. This includes establishing a data
interface that will notify the INS of the issuance of final orders to deportation. In addition, INS
has commissioned a project to design, implement, and assess a demonstration program that will
increase the efficiency and effectiveness of adjudication, release, reporting, and removal of
nondetained illegal aliens. As a result of these actions, the effectiveness of the INS deportation
programs should improve significantly.
Department of Justice's Drug-Free Workplace Program
(I-96-07 -- March 1996)
Executive Order 12546 requires each executive agency to establish drug-testing programs in
support of a drug-free Federal workplace (DFW). The Department of Justice has a decentralized
program consisting of separate units administered by the Bureau of Prisons, Drug Enforcement
Administration, Federal Bureau of Investigation, the Immigration and Nationalization Service,
the United States Marshall Service, and the Justice Management Division, which manages the
DFW program for all the DOJ Offices, Boards, and Divisions.
The inspection found that the Justice Department issued a DFW plan in 1987, but it had not
established any oversight mechanism for monitoring the components' compliance with the policy
guidance or for encouraging the sharing of program costs and information. The components
varied in their compliance with the Department's and their own testing policies and procedures.
The findings included failure to (1) test all non-career appointees designated for testing, (2)
adhere to random testing policies, (3) implement a Federal court ruling allowing inclusion in the
random testing pool certain categories of Federal prosecutors and other employees, (4) conduct
applicant testing, (5) test applicants receiving appointments of 90 days or less, (6) conduct
follow-up tests of employees who underwent counseling or rehabilitation for illegal drug use, and
(7) reschedule within 60 days employees who did not take random drug tests. In addition,
applicants who had not been offered employment were unnecessarily tested.
As a result of this inspection, the Department established an advisory committee composed of
component DFW coordinators. The committee will provide a valuable forum to exchange
information and ideas to effect DFW program improvements and efficiencies. Inspectors have
worked with individual components to address non-compliance issues and all components have
responded positively. For example, the majority of the non-career appointees have been tested
or scheduled for drug testing, and a position paper is being prepared that will require policy
decisions on the part of the senior management to address the issue of testing certain employees
who the Department, at the time of the OIG inspection, had exempted from random testing. In
addition, all components are conducting applicant testing.
Safeguarding Grand Jury Material at U.S. Attorneys' (USA) Offices
(I-96-11 -- August 1996)
This inspection found problems related to grand jury court reporting. The OIG determined that
some court reporter personnel (including court reporters, office support staff, officer couriers, and
translators) who have access to grand jury material did not have security clearances at 60 percent
of the U.S. Attorney Offices (USAOs). These USAOs used court reporter personnel who never
had background investigations, had expired clearances, or both. In addition, several USAOs had
incomplete or no records regarding court reporter personnel clearances.
The inspection identified several USAO deficiencies related to the physical security of grand jury
material in closed cases and determined that there were no guidelines to address disposal of this
material. The OIG is working with Department officials to identify solutions that will ensure
better oversight of grand jury reporter personnel security clearances and clarify Department
regulations for securing grand jury material and obtain clearances for private grand jury court
reporter personnel.
INS Document Fraud Records Corrections
(I-96-9 -- September 1996)
This review focused on INS' actions against aliens identified as customers in fraud schemes
involving the purchase of INS documents from corrupt INS employees and the payment of bribes
to INS employees in return for obtaining an immigration benefit.
The inspection found that (1) INS investigators usually did not attempt to locate aliens identified
as customers in fraud schemes because of higher investigative priorities, such as criminal aliens
and employer sanctions; (2) INS investigators and other INS officers did not initiate deportation
proceedings against these aliens; and (3) INS personnel did not delete or correct entries to its
Central Index System (CIS) to reflect aliens known to have fraudulently obtained documents, nor
did the Agency have provisions for placing codes or flags on CIS records to alert its officers
should they encounter these same aliens in the future.
As a result of this inspection, INS management agreed to establish a working group that will
recommend all necessary policy and procedural changes, technological modifications, and
identify solutions to correct fraudulent database entries and implement a flagging system that will
alert INS personnel to alien participation in fraud schemes.
Mine Safety and Health Administration Proposed Contract
(08-OEI-97-MSHA -- November 1996)
The Assistant Secretary for Mine Safety and Health requested an OIG review of a congressional
inquiry alleging that a proposed Mine Safety and Health Administration (MSHA) contract with
the United Mine Workers of America and the Bituminous Coal Operators Association constituted
an improper sole source procurement action. The proposed contract resulted from an unsolicited
proposal by the Union requesting a total of $344,274 to fund a course of health and safety training
for Union members serving on Mine Safety and Health Committees. The specific purpose of the
funds was to pay all travel related costs, including mileage, lodging, food, and equipment for the
700 Committeemen and 195 company representatives expected to attend the training.
The OIG review identified significant concerns regarding the propriety of the proposed contract
and related policy issues which led to a recommendation that the Assistant Secretary not authorize
the funding for the training program. In particular, a clause in the collective bargaining
agreements between the Union and the coal operators established an obligation between the
parties to fund the training program and some of the parties acknowledged their responsibility and
readiness to finance the program during interviews. In addition to the issues raised about a valid
need for MSHA's financial assistance, the review highlighted the absence of Agency policy
addressing the payment of travel for non-Government personnel, the limited relationship between
some training program sessions and MSHA's mission, and questions relative to technical
procurement matters.
The review, completed within the three week time frame required to meet the Agency's deadline
for a determination on the program, provided new information and perspectives which influenced
the final decision. The Assistant Secretary concurred with the recommendation that funding
should not be made available in view of the existing contractual arrangements between the parties
and canceled MSHA's plan to execute the training contract.
Financial Management Reports and Improvement Project
(OEI-95-1 -- June 1995)
At the request of the Office of Personnel Management's (OPM) chief financial officer (CFO),
the OIG's evaluation and inspections staff conducted a study of the reports generated by the
Agency's financial information systems. At the completion of the study, several
recommendations were made to improve the formats of existing reports to facilitate
comprehension and to enable more productive use of time; other recommendations called for the
development of entirely new reports. Many of those improvements have already been
implemented.
A significant recommendation was that the CFO institute a set of reports accessible on Agency
local area networks. While financial reports were already available for direct access on the
Agency's mainframe computer, they provided only current period and year-to-date financial
information. They did not depict trends or forecast future financial position. Many OPM
managers interviewed or surveyed during the conduct of the study had indicated a relative sense
of comfort when dealing with applications on their personal computers but were still intimidated
by a mainframe environment. These managers wanted to have the information presented in ways
that would better help them manage their programs. A variation of this OIG recommendation is
currently being implemented by the CFO.
Management Review of IPA Mobility Program
(OEI-96-1 -- April 1996)
The newly created OPM Office of Merit System Oversight and Effectiveness (O&E) asked the
OIG inspections staff to conduct a complete review of the Intergovernmental Personnel Act
mobility program. This particular aspect of the Act provides a mechanism for the Federal
Government to exchange personnel with various non-Federal entities. The OPM has had the
authority to regulate this program since 1970. In view of the changing functional mandates and
fiscal priorities within the Federal Government, O&E management requested assistance in
examining the program's operations, OPM's future role, and viable alternatives for the program's
administration that would be better suited to meet the agencies' needs.
Study recommendations called for development of new regulations, increased oversight, and
delegation of daily operations of the mobility program to the affected agencies. Regulations now
under development will establish the first major program policy changes since the inception of
the program and are critical to filling a vacuum of official guidance that occurred with the
elimination of the Federal Personnel Manual in 1994. The proposed rule changes were published
for comment in the Federal Register on December 11, 1996.
Delegation of daily operational authority for the mobility program to the agencies is significant
in that it facilitates program compliance with the Clinton Administration's directives, while
relieving demands on diminishing OPM resources. Concurrently, OPM's oversight of the
program will have to ensure that the independently operating agencies comply with both statutory
and regulatory requirements.
Office of Merit Systems Oversight and Effectiveness Information Resources Management
(OEI-96-2 -- February 1996)
The OIG conducted an additional evaluation at the request of the Office of Merit Systems
Oversight and Effectiveness (O&E) to assess its information resources management practices.
The study was initiated to assist that newly established OPM organization in assessing its
information processing environment and to recommend methods to optimize equipment and
services necessary for the support program delivery. Because O&E consolidated functions
previously performed in other OPM field and headquarters organizations, the two primary
concerns were to assure effective management of existing computer hardware and software and
identify means to share information electronically among the various locations.
Along with several recommendations for achieving compatibility of software and hardware
among all agency sites, the study produced a methodology for the operation of an On-line Report
Repository that would allow staff access from any office nationwide. The repository, now fully
implemented, employs an automated document search and retrieval routine to replace the
previous method of finding, collecting, and reading unindexed paper documents from various
locations. It also serves as a prototype for identifying other areas where increased efficiency can
be obtained by sharing information electronically. The concept could be adapted to accommodate
electronic sharing of documents whenever comments and review are needed from individuals
residing in different geographic locations.
SBA's Prime Contracts and Subcontracting Programs
(95-10-001 -- October 1995)
During an OIG inspection of the Small Business Administration's (SBA) Government contracting
programs for small business, SBA began to streamline those functions and significantly reduce
field staff. In its effort to decentralize Agency activities, SBA proposed to remove its field
personnel assigned to other Federal agencies' procurement facilities from the direct control of the
central Government Contracting Office and place them under the supervision of SBA district
directors, who had a local orientation and little or no procurement background. The inspection
demonstrated that dramatic changes resulting from declining Federal procurements, reductions
in Federal contracting staff, and new acquisition legislation required SBA's Government
contracting functions to maintain a national scope. These changes made the transfer of direct
field supervision inadvisable without undertaking unusual measures to maintain the program's
national focus. Based in part on the report, SBA officials decided to abandon the effort to change
the control structure. The Agency also modified the performance appraisals of supervisory
personnel to include additional elements relating to the challenges of the rapidly changing
procurement world. Finally, the implementation of subcontracting program recommendations
has increased the number of contract reviews with a reduced staff.
Preferred Lenders Program
(94-11-001 -- November 1993)
In an inspection of SBA's Preferred Lenders Program (PLP), which is designed to reduce SBA's
workload by shifting greater loanmaking responsibility to selected private lenders, the OIG found
that the PLP lenders in most SBA districts were making very little use of the program. Only 12.5
percent of the Agency's guaranteed loans were PLP loans, and nearly 40 percent of those occurred
in one region. The inspection also found that the main reason the lenders were not using the PLP
was that the guaranty rate for PLP loans was much lower than the guaranty rate for loans
submitted under the other SBA business loan programs. Unfortunately, these other loans require
substantially more work on the part of SBA staff. To provide incentives for lenders to make
greater use of the PLP, the inspection report recommended that SBA develop a legislative
proposal to eliminate the disparity between PLP and other loan guaranty rates. The OIG also
found deficiencies in the recertification of PLP lenders, some of which had serious performance
problems that had been clearly documented over several years. To reduce Government losses
from PLP loan defaults, the OIG recommended recertification criteria that included specific
standards for acceptable performance, as well as improvements in the way SBA identified and
corrected PLP loan problems.
The SBA, with the help of congressional action, has met all the OIG's recommendations. The
guaranty rate for the PLP program was made the same as that of the Agency's other business load
programs, leading to a nearly 50 percent increase in PLP loans by the end of 1995. This has
enabled the SBA, which has gone through significant downsizing at the same time the volume
of loans has grown rapidly, to shift substantially more loanmaking responsibility to the private
industry. The strengthening of PLP recertification procedures--the head of the program now
reviews all requests--and the creation of a formal process to ensure the regular monitoring of all
PLP lenders will enable SBA to identify PLP problems in a timely manner, take prompt
corrective action, and monitor the results.
The Surety Bond Guarantee Program
(95-07-002 - September 1995)
This inspection found that SBA's objective of assisting small and emerging contractors to
become bondable on their own by providing bond guarantees for construction contracts was not
being met in many cases. To correct this problem, the OIG recommended that the Agency
establish target graduation rates, require participating surety companies to keep records on
contractors' graduation from the program, and disseminate information to contractors
emphasizing that becoming bondable on their own is a program objective and identifying the
types and sources of technical assistance that are available to help them do so.
The inspection also found that the program's loss rates were more than twice those of the surety
industry when calculated using the industry's method. The OIG recommended that SBA take
steps to reduce loss rates and produce performance data that would be comparable to the surety
industry's data. To enable SBA to evaluate whether participating surety companies were
pursuing recoveries prudently, the OIG also recommended that the Agency require the companies
to produce reliable recovery data on their SBA-guaranteed bonds.
As a result of the inspection, SBA has taken a number of steps to promote graduation of contractors from the program. It prepared and distributed a fact sheet that clearly identifies graduation as a program goal and describes the technical assistance available to participating contractors. The Agency now requires all surety companies and their agents to provide the fact sheet to all contractors when they enter the program. SBA also initiated a study to identify the contractors who had been in the program at least five years, assess their needs, and determine the services the Agency can make available to help them become bondable on their own. With OIG assistance, SBA has also developed an instrument for gathering data annually from the participating surety companies to determine their graduation rates, the level of assistance each provided to contractors, and the benefits that the contractors believe they had acquired by the time they leave the program. SBA also agreed to take specific steps to obtain reliable data on program losses and recoveries; the OIG has assisted the Agency in developing the initial survey of the availability of loss and recovery data from the surety companies.
Best Practices Studies
As an alternative approach for inspections, the OIG also conducts "best practices" studies. The
purpose is to identify program activities that appear to be working well, document what makes
them effective, and determine how their success might be replicated in similar activities that are
not performing as well. Two recent reports illustrate this approach:
Inspection of SBIC Best Practices (94-08-002 August 1994). This study examined a cross-section of profitable small business investment companies (SBICs) to document the policies,
practices, and other factors that contributed to their success. The Agency used the findings to
develop new licensing procedures and guidelines to correct problems in SBICs that were not as
successful.
Best Practices of Section 7(a) Lenders (96-11-001 November 1996). This report focused on
the credit management practices identified in case studies of nine successful lenders as the most
effective means for controlling risk. The report has been distributed to all SBA field offices and
to a significant number of lenders who provide SBA-guaranteed loans to small businesses. The
Agency may incorporate the best practices into its guidance for new lenders and its monitoring
criteria for existing lenders.
Critical Issue Analyses
The OIG has also performed special analyses of issues that have significant bearing on SBA
programs. Two recent reports focused on the Agency's guaranteed business loan program:
Job Creation and the 7(a) Guaranteed Loan Program (95-11-001 November 1994). This
inspection identified major obstacles to the SBA's effort to focus its loans on companies that
appeared to have the highest potential for creating new jobs. We found that the initiative faced
substantial problems both in its approach and in its ability to produce credible results. The report
helped SBA put job creation into perspective as a means for focusing program efforts and
measuring outcomes.
The 7(a) General Business Loan Program Loss Rate (96-06-002 June 1996). This inspection was requested by the SBA Administrator. We found that the method for calculating the loss rate for the Agency's largest program was technically valid, but we also concluded that the way in which SBA officials used the rate was misleading. SBA's rate was intended for comparing 7(a) loan losses to those of the banking industry, but we found that the two were not comparable due to significant differences in their portfolios and objectives. Because there was no practical way to adjust the 7(a) rates to make them comparable, the OIG recommended that SBA discontinue using them. While the Agency was reluctant to abandon the rates altogether, it has to date avoided using them for comparing 7(a) loan performance to that of the private banking industry.
Inspections of Overseas Posts
(1996)
Combating illegal immigration and alien smuggling was identified as a major policy concern in
several Caribbean, Central and South American countries visited by OIG inspectors. Despite the
importance of the high visibility policy issue, numerous posts gave it low priority and failed to
allocate sufficient resources to deal with the border security problem effectively. Honduras, for
example, is a crucial link in the region for illegal migration activities, including alien smuggling.
The OIG recommended that the mission in Honduras establish an interagency alien smuggling
and document fraud working group to be chaired by the deputy chief of mission. The objectives
of this group are to share information on illegal immigration trends, seek guidance from the
Department, and devise strategies to combat the problem.
Although stemming illegal immigration ranked as a major priority goal for the Bureau of Inter-American Affairs' program plan and is a matter of considerable domestic-concern, it had not
been given adequate attention by bureau managers. The lack of guidance on how to deal with
illegal immigration adversely affected operations at some posts.
Follow-up reviews recently conducted by inspectors indicate that while embassies have generally
done well in complying with recommendations relating to illegal migration, recommendations
directed to the Department have proved to be more difficult to resolve. In some cases, the
Department has been slow in responding to the embassies. Embassy San Salvador, for example,
has amended its mission program plan to include as a key objective a stronger approach to the
Government of El Salvador on cooperation in curbing illegal migration. The Department has also
agreed to provide requested materials and guidance in this area. While the problem persists,
Department managers have accorded it a significantly higher priority in their thinking and actions.
With three consulates general--Karachi, Lahore, and Peshawar--OIG inspectors concluded that
Embassy Islamabad has a more extensive consular structure than is justified in Pakistan,
particularly in this period of budgetary constraint. Considering its close proximity to the embassy
and the unnecessary duplication of activities, the OIG recommended that Consulate General
Lahore should be closed or severely reduced in size. This and parallel recommendations to
abolish positions and dispose of property in Lahore should generate savings of several million
dollars for American taxpayers.
Evaluation of the Office of Commercial Space Transportation Licensing and Safety Division
(E1-0S-4-003 -- July 6, 1994)
The Office of Commercial Space Transportation (OCST) Licensing and Safety Division's
procedures, processes, and organizational structure were evaluated, at their request, to determine
where improvements were warranted. The OIG review identified several issues affecting the
efficiency of the licensing process, including outdated licensing regulations, poor communication
with licensees and other agencies, outdated position descriptions and performance standards, and
workload. To address these issues, the OIG recommended that OCST (1) revise licensing
regulations, (2) establish effective communication mechanisms with licensees and other
agencies, (3) update position descriptions, and (4) request additional positions. OCST used the
OIG report to justify a request to Congress for additional funding and to assist OCST in providing
a better service to its constituents.
Special Interagency Review Conducted by the Offices of Inspector General, U.S. Department of Commerce and Transportation
(E1-FA-6-014 -- September 19, 1996)
At the request of the Office of Management and Budget (OMB), a review was conducted jointly
by the Departments of Commerce and Transportation to determine if the National Oceanic and
Atmospheric Administration's Office of Aeronautical Charting and Cartography (AC&C) might
operate more effectively and efficiently if transferred to another agency. The options reviewed
were the Federal Aviation Administration (FAA), Defense Mapping Agency, U.S. Geological
Survey (USGS), and the private sector.
The review concluded that AC&C fits best into the mission and organization of FAA and should
be transferred to FAA where it is clearly more associated through funding, aviation safety, and
program responsibility. The review also identified potential annual savings of up to $3 million
by consolidating the existing AC&C printing operation with that of USGS. The OIG's final
report was issued to OMB prior to the preparation of the FY 1998 budget request and should
allow OMB to make an informed decision as to the disposition of the AC&C function.
Evaluation of the Department of Transportation's Offices of Civil Rights
(E1-0S-6-004 -- February 29, 1996)
The OIG evaluated the Department of Transportation (DOT) Offices of Civil Rights' functions,
policies, procedures, administrative and operational systems, staffing and training. The purpose
of the review was to improve the overall effectiveness of the DOT civil rights (CR) programs and
determine the changes needed to accommodate the consolidation of DOT's Offices of Civil
Rights. The evaluation found that DOT CR programs were not operated or monitored in an
effective or efficient manner. Specifically, CR programs were not fully implemented; CR
policies, procedures, and guidance were deficient; reporting and tracking systems were
insufficient; information was insufficient to determine staffing needs; and adequate training was
not provided.
Among 19 OIG recommendations to improve the effectiveness and efficiency of DOT CR
programs, it was suggested that the Departmental Office of Civil Rights (1) establish a clear
mission and priorities for all CR offices, (2) provide policy guidance to CR offices, (3) establish
a mechanism to centralize all CR policy development, (4) monitor CR offices' ability to meet
goals and objectives, (5) eliminate case backlogs, and (6) develop and implement a plan to ensure
consistent training. As a result of this review, the Departmental Office of Civil Rights issued new
policy on processing complaints, initiated development of an investigative procedures manual,
conducted recruitment efforts, centralized the acceptance/rejection of complaints in one location,
and helped design the training for Departmental EEO counseling.
Community Development Financial Institutions Fund
(OIG-96-06 -- February 1996)
The Community Development Financial Institutions (CDFI) Fund, authorized by the Community
Development Banking and Financial Institutions Act of 1994, is a new Treasury Department
program. The Fund's programs have a total funding level of about $50 million and are designed
to facilitate the flow of lending and investment capital to create and expand community
development financial institutions and to provide incentives to traditional banks and thrifts. At
the request of Department management, the OIG has provided technical assistance in
implementing the fund's programs and ensuring the integrity of award administration. The OIG
issued two reports entitled "Award Application Procedures" and "Community Development and
Financial Institutions Fund Award Monitoring Procedures" to provide examples and models of
grant award procedures used in other public and private sector programs.
The Department adopted many of the OIG's suggestions for the CDFI program's operating
policies and procedures that are used in other public and private sector programs. As a result, the
program staff, whose size was limited by statute until June 1996, was able to implement policies
and procedures quickly to process approximately 300 applications and to monitor awards.
Review of the USIA's Relations to Binational Centers
(94-S-15/SRR-95-11 -- June 23, 1995)
Alternatives for Conducting Programs Overseas
(95-S-16/SRR-95-12 -- June 23, 1995)
These two companion reports dealt with the conduct of public diplomacy functions by the United
States Information Agency (USIA) overseas. Binational centers are locally chartered, non-profit
organizations that derive their revenues principally from the teaching of the English language to
foreign nationals. Information, cultural, and educational activities at these centers can further
long- and short-range agency goals intended to promote a greater understanding of the United
States, its people, values, culture, and institutions. USIA and its field posts provide about $3.2
million annually in support of various centers worldwide (Latin America, Europe, Far East,
Middle East). The OIG inspection found that no apparent consensus exists among headquarters
offices and overseas posts regarding appropriate types, levels, and focus of support to be
provided. The lack of consensus reflects, among other things, an absence of clear policy guidance
from the agency. The attention accorded binational centers thus varies greatly from post to post
and from one public affairs officer to another. As budget pressure results in more downsizing of
the Agency's presence overseas, the OIG recommended that the USIA seek to develop
alternatives to maintaining expensive, U.S. Government-controlled facilities for conducting
programs. These alternatives may include binational centers, regional posts, small-scale resource
centers, surrogate posts, and cost-shared centers. The OIG recommended that the Director
analyze alternatives for reducing reliance on USIA-controlled facilities.
The inspection also uncovered deficiencies in the management of grants made by USIA staff to
binational centers. The OIG concluded that improper grants management was a systemic problem
requiring Agency efforts to shore up managerial and administrative skills of field officers. The
USIA concurred with each of the recommendations in the two reports and submitted a proposal
to redraft its Manual of Operations and Administration. The Manual will address the
requirements for control of the binational centers and for improving training for the grants
management process in posts throughout the world. This approach is expected to be implemented
with a minimal expenditure of resources. It should also minimize the potential for legal risk in
Agency acquisition and assistance activities. The USIA Director also agreed to issue a definitive
policy statement with regard to USIA relations with binational centers worldwide.
Inspection Report on United States Information Service Japan
(95-S-02/SRR-96-01 -- February 1, 1996)
The USIA post in Japan was an important element in the Embassy's Country Team, according to
this inspection. With six branches throughout Japan, it contributed importantly to defining
United States-Japan cooperation in security and global concerns through active diplomacy. In
light of dollar devaluations and budgetary reductions, the OIG made several recommendations
to reduce the post's operating costs. It was recommended that at least one branch be closed, that
staff levels be decreased, and State Department facilities consolidated wherever possible. Further,
the report recommended that the post build a modern information delivery system, using state of
the art technology. The system would centralize information technology in the Tokyo hub,
making it the distribution center for Agency information throughout Japan. The application of
such centralized information delivery systems would enable the post to downsize its centers by
eliminating some reference and library services. The Agency concurred with most of the report's
recommendations. Moreover, the post in Kyoto has been closed at an annual operating cost
savings of $900,000; several staff positions were also eliminated, saving $1.28 million annually.
The possibility of consolidating the Tokyo facility within Embassy operations is being discussed
with the State Department.
Evaluation of the Department of Veteran Affairs' Policies and Practices for Managing Violent and Potentially Violent Psychiatric Patients
(6HI-A28-038 -- March 28, 1996
Patient assaults and other forms of violent acts that are committed by psychiatric patients pose
a significant concern for employees who provide care to high risk veterans in the approximately
150 Department of Veterans Affairs Medical Centers (VAMCs). Limited numbers of nursing
staff are often challenged to address each individual patient's needs. Medical center managers
are thereby required to develop innovative strategies to protect patients and employees from
patient assaults. The focus of this inspection was to determine what actions the Veteran Health
Administration (VHA) officials have taken to ensure patient, employee, and public safety, and
to determine if VHA managers are using patient assault data in program development and
strategic planning. The review also was designed to determine the frequency with which
inpatients were immediately discharged after a violent incident and the completeness of their
assessment.
The OIG inspection found that clinicians at VAMCs had not discharged psychiatric patients
because they had committed or threatened to commit a violent act. Instead, treatment
interventions were initiated and inpatient care was continued. Potentially violent patients who
were regularly discharged or left against medical advice were appropriately assessed and
processed. VAMCs had developed a number of initiatives for managing potentially violent
psychiatric patients. These included regional intensive behavioral modification units for the large
numbers of violent chronic schizophrenic patients, intensive psychiatric community case
management programs, violence prevention training programs, violent patient identification
programs, and assaulted employee counseling programs.
The OIG concluded that strengthening the following areas may reduce the incidence of injury
associated with violence in inpatient psychiatric units: (1) providing uniform reporting and trend
analyses of assault data in local and national VA Patient Incident Report (PIR) data bases, (2)
including all medical center employees who work in high risk areas in the medical center's
violence prevention and management program, (3) ensuring that psychiatric units with patients
at high risk for violent acts have sufficient staff to manage and treat them, and (4) supporting
employees who press charges against competent patients who assault them.
The VA Under Secretary for Health and officials of the VHA Office of Mental Health and
Behavioral Sciences endorsed and implemented the OIG's recommendations. Policies pertaining
to the PIR system are presently being revised and officials have been continuously monitoring
the implementation and quality of violence prevention education programs, counseling programs,
and violent patient identification programs. As a result of the actions, the effectiveness of the
VA's violence prevention and management programs should continue to significantly improve.
Review of the Veterans Health Administrations Health Care Program For Women Veterans
(3HI-A99-129 -- June 30, 1993)
In response to interest by the House Veterans' Affairs Committee, a nationwide inspection of the
availability of treatment facilities and programs for women veterans was conducted. It addressed
the issue of how effectively VA medical centers (VAMCs) met the needs of women veterans by
visiting VAMCs and evaluating the scope of gender-specific services provided. In additional
Veterans Health Administration (VHA) completed a questionnaire survey of all 166 VAMCs to
determine the status of women veterans' health programs throughout the system. This survey
was done concurrently with this inspection. The results of the VHA survey closely paralleled the
findings in the OIG study.
The results of the inspection showed that VAMCs did not provide a consistent level of service
for women veterans and that there was a need for stronger leadership in providing treatment for
these patients from the highest levels of VHA management. The OIG study included the
following findings: (1) Women Veterans Coordinators (WVCs) were not adequately trained to
function in their positions, and VHA had not established a formal training program to address this
issue; (2) WVCs were not always clearly available in VAMCs, and patients and some employees
did not know who was able to assist female veterans with their needs; (3) VAMC employees did
not consistently inform women patients about the services that were available to them, or the
range of services to which they were entitled; (4) VAMCs managers did not always ensured
adequate privacy for women patients, and WVCs did not have input to construction committees
in order to identify and seek resolution of these problems; (5) specialized medical equipment
required for female examination and treatment was not always readily available for use when
clinicians needed it, and some gynecological equipment was not always available in the type that
ensured patient comfort; and (6) none of the eight VAMCs that were included in the study had
established systematic procedures to monitor and evaluate the quality and appropriateness of
women's health care.
In addition, VAMCs frequently did not provide in-house services that were needed by their
women veterans patients. Rather, the services were provided by the private sector, raising
concern as to whether women veterans were being accorded the focus of medical surgical
treatment services that they were entitled to at, or through, the VHA system.
As a result of this OIG inspection VHA now provides GYN (Primary Care/Preventive Care) in 159 of the 166 medical centers, Women Veterans Clinics in 124 of the 166 medical centers, (an increase of 49 clinics above 1993), Mammograms (either in-house, fee-based or contract) in 165 medical centers, and Breast Health Care Services (General) at all 166 medical centers. VHA has written Protocols/Clinical Practice Guidelines/Standards in many areas. VHA has also written and implemented Quality Improvement/Quality Assurance Monitors or Plans of Care in most areas of concern.