MANAGEMENTS RESPONSE TO THE INSPECTOR
GENERALS STATEMENT ON THE MOST SERIOUS MANAGEMENT AND PERFORMANCE
CHALLENGES FACING THE DEPARTMENT OF LABOR
The Department recognizes that the ten challenges posed by the Inspector
General represent issues of major potential impact on the effectiveness and
efficiency of the Department's programs and operations. The Department's
responses identify extensive actions, which have been completed or are
currently in progress to address these challenges.
Several of the challenges reference specific concerns reported in detail
in Office of the Inspector General (OIG) audits issued over the past several
years, and the management response summarizes the corrective actions plans
taken or planned by the Department. The majority of these findings, if not
already closed, should be corrected within the next year. Other challenges
require legislative action or otherwise fall outside of the Departments
jurisdiction, as explained in management's response. The Departments
responses to other challenges offer systemic performance data to provide
readers comprehensive information about the overall effectiveness of a program
or area of responsibility.
Where a sustained effort is required over several years to address an
OIG management challenge that impacts a core program or management priority,
performance goals and strategies are targeted in either the Departmental or
agency annual performance plans. For example, plans at the Departmental and
agency level are in place to comprehensively address the human capital
management challenges faced by the Department. Goals to continuously improve
the results of each DOL job training program identified in the challenges are
included in the Departments Annual Performance Plan. Finally, other
issues raised in the management challenges, such as plans to improve data
quality and achieve further integration of budget and performance, are
discussed in detail in the Departments Annual Performance Plan.
Each management challenge and the actions taken or planned by the
Department to address the conditions cited are discussed below.
Effectiveness of Employment and Training Programs
The Department has administered a considerable variety of employment and
training programs over more than thirty years to respond to a number of
different challenges to the U.S. economy and labor markets. Over this time, the
Department has responded with programs to address structural, cyclical and
other discrete problems for the economy with a combination of Federally, State
and locally administered programs. The administrative structures and mechanisms
as well as the fundamental program designs and approaches have changed markedly
over these years from categorical programs, through programs under the
Comprehensive Employment and Training Act, the Job Training Partnership Act and
now, the Workforce Investment Act. At the same time, substantial gains have
been made, especially in the mechanisms for accountability to the public. The
Department recognizes, however, that challenges related to public
accountability remain and that there is always room for improvement in this
area. The Department will continue to improve the ways in which the success of
its key employment and training programs is measured, seeking better ways to
provide comprehensive, consistent, and timely outcome data.
Finally, as demonstrated in several parts of the Department of Labor FY
2001 Annual Performance Report, the Department was able to respond rapidly and
effectively to the extraordinary September 11 catastrophe and to related
economic dislocations with emergency unemployment insurance claims services and
with National Emergency Grants under the WIA to States, including New York, New
Jersey, Virginia, Florida, Illinois and Texas.
Welfare-to-Work Competitive Grant Program: The Department
is committed to ensuring that the Welfare-to-Work program places participants
in unsubsidized jobs that offer the opportunity for long-term economic
self-sufficiency and career advancement, as well as to the accurate reporting
of the programs results. For perspective on the scope of OIGs
findings, it is important to recognize that the audit addressed only
competitive grants which account for 25 percent of the nearly $3 billion
investment in the Welfare-to-Work program. The remaining 75 percent of the
program are Formula Grants, operated and overseen by experienced Workforce
Investment Boards. These grants have not been similarly assessed, and they form
the bulk of the public investment.
The OIG audit report on Competitive Grants and the auditors
subsequent discussions of their findings questioned the accuracy and
reliability of the reported data, not the failure of the program to keep
individuals in unsubsidized employment. The OIG report states that, Our
analysis was based upon documentation available at the grantees
We did
not confirm the participants work histories with the employers or any
other outside sources. For this reason, it is not clear that the reported
shortfalls are performance shortfalls, or instead are issues of
grantee documentation and reporting errors on the part of grantees
inexperienced with Federal reporting systems. The Department appreciates,
however, that accountability challenges within the Welfare-to-Work program
prevented the OIG from fully verifying the performance levels reported by the
Department. The Departments current data validation activities for
Welfare-to-Work, including the distribution of data validation tools to
grantees, should help to resolve questions about the significance of errors.
Trade Programs: To strengthen performance-based management
in Trade Programs, ensure that States have suitable employment goals, and
provide outcomes for each participant, the Department is preparing guidance on
performance-based management for State Trade Act coordinators, planning
training and technical assistance events, and developing a directive on
performance-based management. This will be completed in FY 2002, with initial
guidance issued in early 2002. These efforts to focus attention on program
performance will address the issue of improving the replacement wage for each
individual and improving rates of suitable employment for
trade-impacted workers.
The Employment and Training Administration (ETA) is also taking steps to
assure that Trade Adjustment Assistance reporting is accurate and complete. ETA
has revised the Trade Act Performance Report, and is developing a method to
evaluate State data submissions and provide immediate feedback to States on
errors. In addition, the program is part of an agency wide data
validation project to improve the reliability and validity of not only
Trade program data, but also WIA program data.
Dislocated Worker Program:ETA agreed that participant
files should contain adequate information to support a participants
eligibility as a dislocated worker. ETA also indicated that it would work with
States and localities to develop guidance in this regard under the Workforce
Investment Act (WIA). This collaboration was begun as part of the review of WIA
implementation to identify implementation issues and options to achieve their
resolution, including a review of eligibility determination policies and
procedures. ETA is also exploring a method to include eligibility as part of
the data validation process by drawing validation samples on program entry.
The Department of Labor has initiated a review of the funding formula
and fund distribution process for the dislocated worker program. In addition,
the Department will seek to identify effective practices for States to consider
in determining within-State allocations of dislocated worker funds. As stated
earlier, the Department was able to respond effectively to the immediate events
of September 11 and layoffs that occurred thereafter under current legislative
authority and through National Emergency Grants.
Assistance to Trade-Affected Dislocated Workers in El Paso, Texas:
ETA arrived at a different cost-per-participant figure for providing
assistance under their program. If the $45 million in dislocated worker
discretionary funds were used to serve 4,370 workers as of June 30, 2001, the
costs would be $10,297 per participant, not $25,000 as estimated in the OIG
report. With the average layoff wage at $7.13 per hour and the reported average
wage at placement of $6.77 per hour, a 95 percent wage replacement rate was
achieved, well within the goal established for wage replacement.
ETA believes that the challenges facing El Paso need to be weighed
before making a final judgment on the project. The GAO noted that El Paso is a
community with significant economic development challenges, compounded by
retraining issues when jobs for which workers might qualify are limited. The
year-end program reports suggest that the program achieved credible results. In
addition, the lessons learned, such as ensuring better assessment, periodic
evaluation of training providers, and focus on employers needs, will be
used to improve future WIA formula and discretionary grant programs.
Financial Performance
The Office of the Chief Financial Officer (OCFO) works closely with
program agencies on financial management and compliance issues. A significant
example during the past year was OCFO's leadership role in closing the last of
the Department's Federal Financial Management Improvement Act issues, bringing
DOL into full compliance with that legislation. OCFO is also working with the
Departments program agencies to produce timely financial information that
can be used in their day-to-day management.
The Single Audit Compliance Supplement requires that the Single Audit
Act auditors evaluate the results of the Benefits Accuracy Management (BAM)
overpayment calculations. However, the OIG has discovered that auditors under
the Single Audit Act are not familiar with BAM and were not evaluating BAM
results. It is understandable that Single Audit Act auditors would have
difficulty determining the accuracy of a BAM overpayment calculation because
the process is highly technical and complex. The Department appreciates
OIGs assistance in fulfilling the oversight responsibility to ensure that
audits prepared under the Single Audit Act provide adequate and reliable audit
coverage of DOLs programs.
Accountability: Budget and Performance Integration
The Department has implemented the Government Performance and Results
Act and performance-based management using a systematic, staged approach based
on sound business practices. Our first priority has been the establishment of
enduring outcome goals which target continual improvement in the achievement of
the core results the Department is committed to delivering on behalf of working
men and women. A majority of DOLs programs have stabilized their goals,
and the Departments focus has progressively shifted toward ensuring the
reliability of our performance measures, effectively using performance data to
enhance our program results, and meeting the additional challenges identified
in the Presidents Management Agenda in the arena of budget and
performance integration. In the FY 2002 Annual Performance Plan, the Department
for the first time linked budget authority and outlays to its 3 strategic and
10 outcome goals. Net costs by outcome goal have been reflected in the
Departments financial statements since FY 1999, and have been presented
this year in the Annual Performance Report as well. To further the
Presidents Management Agenda, the Department will initiate pilots in
selected programs during this fiscal year to develop integrated budget and
performance plan presentations and to establish performance goals targeting
improved program cost-effectiveness.
Quality of Program Data: The challenges to performance
measurement vary significantly among DOLs programs, with the data sources
and the agencies level of control over the reporting systems being the
primary factors influencing the reliability and usefulness of the
Departments performance information. DOL agencies collect critical
program data from third parties, including State and local government agencies,
community based organizations, private sector employers, and international
organizations.
The Departments ability to increase the frequency of reporting,
establish data standards, or verify the accuracy of the information reported by
third parties is limited in some cases. Guidance provided in OMBs
Circular A-11 acknowledges the limitations on Federal agencies capacity
to assure the quality of data received from non-Federal sources. The Circular
does not require an independent capacity for verifying or validating
performance data received from third-party sources, and instructs agencies to
be mindful of the costs and anticipated benefits of improving the quality of
program information which meets decision-makers needs. The Circular does,
however, provide that information from external sources regarding data validity
should be collected and may be included in program plans whenever possible.
However, recognizing the importance of reliable performance data to
sound program decisions, the Department has developed approaches for ensuring
the validity of key data submitted by third parties. For example, both the Mine
Safety and Health Administration and the Occupational Safety and Health
Administration conduct audits of a selected number of mine operations and other
businesses respectively, to verify the accuracy of the employers data
pertaining to injuries, illnesses, and lost productive time. The Bureau of
International Labor Affairs relies on program evaluations to confirm the
performance results reported by local project administrators who receive DOL
grant funding through the International Labor Organization, and the
Departments OIG conducts selective audits to verify performance data from
internal Departmental systems as well as third parties.
The Employment and Training Administrations data validation
project cited as an example in OIGs challenges is not limited to report
validation, as indicated by OIG, but also includes data element validation.
Report validation involves a system review to determine whether the reporting
software works according to specifications. Data element validation checks the
integrity of data against the source case files. At the State level, a sample
of records in the State database will be checked against local case files to
compute error rates. Thus, the project enables the accuracy of data in State
databases to be validated. A handbook is in preparation that will serve as a
reference guide for conducting data validation.
Access to Data: Important progress was made in 2001 in
developing access to Unemployment Insurance wage record information for program
management purposes, especially connected to the implementation of the
Workforce Investment Act. In addition to the use of wage records for
calculating performance on employment, employment retention, and earnings gain
and wage replacement, the Wage Record Interchange System was established to
permit partner States to query wage record information throughout the country.
The Department expects to begin work shortly with the Social Security
Administration to develop State access to information in the New Hire Directory
as a method to reduce improper Unemployment Insurance payments.
Managerial Cost Accounting: The Office of the Chief
Financial Officer is expanding its managerial cost accounting efforts from
agency specific-pilots to a department wide approach. Initially these efforts
will focus on the development of a high level departmental cost accounting
model. This model will provide improved cost information and support better
accountability and resource allocation. Later updates will provide more
detailed cost information and better reporting capabilities in support of
performance budgeting. These cost accounting efforts will significantly enhance
management decision-making in the Department by providing accurate, relevant
and timely information on the cost of DOL programs.
The cost accounting pilots in the individual agencies introduced
managerial cost accounting to the Department and presented an opportunity for
the agencies to gain experience in using managerial cost accounting methods.
The new top down approach will comprise a cost model for each agency that will
roll up to a common Department-wide structure.
The success factor of this strategy is a Department-wide managerial cost
accounting process that is cost effective, flexible, and auditable. The process
output will provide the full cost of DOL programs and will further support
management decision-making by providing accurate, relevant, and timely
information.
Security of Pension Assets
Pension Plan Audits: Between 1991 and 1997, the Department
submitted legislative proposals either calling for the repeal of the
limited-scope audit provision or calling for reforms to strengthen plan audits.
Despite the Departments continued efforts, Congress has not enacted
legislation. Absent Congressional action which is required to correct this
management challenge, PWBA continues to take steps to improve the ERISA audit
process. Program initiatives of the agency include cooperative efforts with the
accounting profession, such as referral of deficient accountant work to the
American Institute of Certified Public Accountants (AICPA) for appropriate
remedial action. In addition to its on-going program efforts with the AICPA,
PWBA continues its active involvement with the Financial Accounting Standards
Board (FASB) to develop accounting guidance for employee benefit plans. PWBA
recognizes that the problem of deficient audits remains in spite of our
compliance initiatives and will be considering approaches to address these
issues.
Pension Plan Security: PWBA agrees that pension funds
represent a target for individuals with criminal intent and have responded to
that challenge with a strong enforcement program. PWBAs enforcement
mission is to deter and correct violations of Title I of ERISA and related
criminal statutes. This is accomplished through a program of civil and criminal
investigations of plans, plan sponsors, fiduciaries, and service providers.
During the past few years, there has been a significant increase in PWBAs
time and investigative resources committed to criminal enforcement activity.
During FY 2001, there were 87 indictments issued as a result of PWBAs
criminal investigations, and convictions or pleas were entered in 49 different
PWBA cases. PWBA criminal enforcement investigations resulted in the recovery
of over $3.7 million on behalf of employee benefit plans or their participants
and beneficiaries in FY 2001.
PWBA will continue to target criminal cases in various ways that have
demonstrated successful results in the past such as analyzing computer data,
gathering information through civil investigations, leads from plan
participants, plan officials, informants, and media sources, and information
gained from other government agencies. The Department also maintains close
working relationships with other law enforcement agencies such as the local
U.S. Attorneys, the FBI, the Postal Inspectors, and the OIG. Finally, while not
all fraud can be prevented, PWBA is proactive in the early detection and
prevention of criminal behavior by, among other things, aggressive outreach and
education campaigns. Education campaigns create knowledgeable consumers who can
assist in policing their own benefit plans. An informed public is a
good source of early detection and prevention of criminal activity, and PWBA
continues to leverage the knowledge of the public who may be in the best
position to identify potential fraudulent behavior.
Protection of Worker Benefit Funds
The Department is dedicated to the highest standards of financial
stewardship and program integrity in administering funds that provide critical
benefits to the Nations workers. The funding concerns identified by OIG
are matters largely outside the Departments control. With respect to
program integrity, we recognize that all Government benefit programs are
vulnerable to abuse. However, the minimal rates of fraud and overpayments
identified in systemic studies of both the Unemployment Insurance and Federal
Employees Compensation Act programs and the aggressive corrective actions
taken in response to OIG recommendations attest to the Departments
vigilance in protecting these funds. The Department is aware, however, that
further protection of these funds is required and will continue to seek out
additional ways to combat fraud.
Funding Concerns
Unemployment Trust Fund: The OIG raises concerns that DOL
reported that 19 States were minimally solvent in their
Unemployment Trust Funds (UTF) which could result in a need to borrow funds to
pay unemployment benefits. While DOL does not officially rate States as
minimally solvent, DOL does recommend that States keep about one
years worth of benefits at recessionary levels in reserve in their Trust
Funds (i.e., Average High Cost Multiple). The Employment and Training
Administration tracks and publishes State balances, calculates the reserves,
and urges States to keep a healthy balance in reserve. States that borrow from
the Federal Trust Fund must repay the loan with interest.
The OIG recommended that the Department of Labor and Treasury negotiate
an alternative method for charging administrative costs. DOL agreed with the
OIGs audit recommendation that a negotiating team be established to
explore alternative methods for charging administrative costs to the UTF, and
the recommendation was closed on March 26, 2001. The Department of Labor has
established a working relationship with the Department of the Treasury to
reevaluate the methods of making administrative charges to the UTF and to
develop a method that avoids or minimizes UTF overcharges.
Black Lung Trust Fund Deficit: This issue can only be
resolved by legislative action, and the Department has been actively seeking
such a solution. On October 4, 2000, the Department sent proposed legislation,
developed in cooperation with the Treasury and OMB, to both Houses of Congress.
The proposed legislation addressed the Black Lung Disease Trust Fund
indebtedness issue by proposing to restructure the debt at lower interest
rates, extend current excise tax levels beyond the current expiration date,
December 31, 2013, and provide for a one-time appropriation to cover Treasury
losses of interest income resulting from restructuring.
No action was taken on the proposed legislation. The new Administration
reviewed that proposal and considered other possible options for addressing the
Trust Fund solvency issue. On August 22 the Departments Policy and
Planning Board directed the Office of Workers Compensation Programs to
resume consultations with the Department of the Treasury on this matter. Those
consultations, to determine whether the legislation submitted to the last
Congress in October 2000 should be resubmitted or if some other more effective
legislative solvency options may be available, occurred most recently on
December 18, 2001. On January 9, 2002, the Departments Planning and
Policy Board approved a decision to resubmit the original legislative proposal.
The Secretary approved this decision on January 14, 2002, and it is being
resubmitted with the FY 2003 Presidents budget request.
Employees Occupational Illness Compensation Programs:
Working with the OIG, the Department is presently determining the model
requirements for the Energy Employees Illness Occupational Compensation
Program Act actuarial liability.
Program Integrity
Unemployment Insurance: The first priority of all States
is to make prompt payments to eligible UI claimants, and States do a
commendable job in both payment accuracy and promptness. However, recognizing
the importance of increasing efforts to reduce fraud against the UI system, ETA
has made efforts to direct States limited resources to the most
productive and cost-effective methods to minimize overpayments.
OIG recommends increased training for State employees. The following
initiatives have been achieved since 1998, with further enhancements proposed.
Training
- Fraud Detection and Investigation. ETA sponsored development
of training packages that were distributed to all States, consisting of
CD-ROMs for recently hired investigators and a set of videos for advanced
investigators.
- Overpayment Recovery. ETA sponsored in-person training on
overpayment recovery that provided States with train-the-trainer packages and
technical assistance guides.
- Integrity Conference. ETA, in partnership with the National
Association of State Workforce Agencies, hosted a professional development
conference directed towards key staff in the integrity areas (benefit payment
control, internal security, and tax).
Funding
DOL requested and obtained additional funding from Congress for
integrity activities, including screening initial claims and continued claims
for issues, overpayments, tax field audits, activities that are vital to the UI
program in terms of benefit payment accuracy, detection of overpayments,
collection of overpayments, and collection of under-reported taxes:
- 1999 $20 million
- 2000 $35 million
- 2001 $35 million
These investments have helped the States to realize measurable results
in these areas.
Federal Employees' Compensation Act (FECA): While OIG is
correct in pointing out the FECA programs vulnerability to fraud, it
should also be noted that FECA has instituted several measures to address that
vulnerability and reduce overpayments. These measures are already yielding
significant results.
For example, in FY 1999, a 100 percent review of FECA medical bills
identified $187,095 in actual duplicate medical billings. Adding $10,671,691 in
benefit overpayments recorded in the FECA accounting system for that year
results in a total erroneous payment figure for both medical and cash benefits
of $10,858,786, which is only one half of one percent of the $1.98 billion in
total cash benefit and medical care disbursements. The Department, in
compliance with the requirements of the Debt Collection Improvement Act, refers
all such erroneous FECA payments, once a receivable has been established and
the debt has aged over 180 days, to Treasury for collection or other action.
In addition, the program has already acted on the above-cited audit
findings. In January 2000, FECA instituted code manipulation software to screen
for improper payments. Automated cross-matches with SSA, as recommended,
require a legislative solution, but FECA has changed the procedures for
obtaining earnings information by requiring submission of the authorization to
obtain earnings data from SSA annually instead of every three years. The new
procedures emphasize the requirement to follow-up with a second request within
30 days, and then refer the case to the OIG for investigation if the form is
not signed and returned. As a result, the OIG has resolved the recommendation
and noted improvements in the error rates in their FY 2000 findings.
FECA has also taken numerous concrete steps to address its
vulnerability:
- Review of long-term disability cases for continuing entitlement to
benefits under Periodic Roll Management has been in place since 1992 and has
saved over $500 million. (Note: The programdevotes more than 120 full-time
staff to this function each year.)
- The Quality Case Management initiative ensures that new disability
cases are carefully reviewed, including by rehabilitation nurses, to ensure
appropriate care, early return to work, and avoidance of inappropriate
payments.
- The Corrective Coding Initiative reviews of medical bills
(implemented in response to OIG findings regarding improper medical provider
bill coding practices).
- Automated system relational edits to bills, in addition to Correct
Coding and fee schedule edits, deny or suspend bills for services unrelated to
the diagnosis accepted in the case.
- In FY 2001 FECA began a limited utilization review of high-cost and
high-incidence medical services, such as Physical Therapy and Psychiatric
services, to ensure that proper treatment regimens are followed for those
medical services. The Department is seeking additional funding in FY 2003 to
expand utilization review.
- A new position of Fiscal Operations Specialist with monitoring and
auditing responsibilities was created in each of FECAs twelve district
offices. Part of the monitoring responsibility entails identifying potential
duplicate medical and compensation payments and guarding against any potential
compensation or medical fraud, including internal fraud.
- FECA continues to refine existing improper payments controls
wherever necessary and plan new systems designs so as to minimize
vulnerability. For example, the initiative to receive some new claims and
medical bills electronically has been carefully designed to maintain and
enhance existing controls.
Information Technology and Electronic Government
Challenges
Security of IT Assets: The Department has made information
security a top priority in recent years. This emphasis has integrated
information security into the Departments enterprise architecture,
systems development life-cycle management, and the Departments
information technology (IT) planning, management, and capital investment
processes. Information technology management policies that deal with computer
security risks, and the prevention and detection of unauthorized users were
updated. A Computer Security Handbook was issued to provide implementation
guidance of Departmental policy in the areas of incident response and
reporting, computer security awareness and training, vulnerability assessments,
and security planning requirements.
The Department continues its cyber security program implementation
activities detailed within its Plan of Actions and Milestones (POA&Ms)
submitted to the Office of Management and Budget in October 2001. Additionally,
in FY2002 the Department will focus on 3 specific areas that were identified
through the Departments self-assessment and the Office of Inspector
Generals audits performed under the requirements of the Government
Information Security Reform Act (GISRA). The 3 areas of emphasis are
contingency planning, certification and accreditation, and security training
and awareness.
The Departments progress to strengthen its cyber security posture
has been measurably improved. As reported to the Office of Management and
Budget in October 2001, the Department identified 1,203 weaknesses within its
security program. As of January 2002, corrective action was completed on 31% or
370 of the 1,203 weaknesses. The Department will continue to work aggressively
to complete corrective actions for the remaining weaknesses in accordance with
the details contained within its Plans of Actions and Milestones (POA&Ms).
Under the leadership of the Departments Assistant Secretary for
Administration and Management (ASAM), the Department has established a
comprehensive Cyber Security Program that is being implemented in a phased
approach. During Phase I, the Department accomplished the following:
- Developed Security and Privacy IT Budget Cross-cut. Applied rigorous
IT investment analysis to proposed IT security initiatives
- Issued revised DOL policy for computer security
- Developed computer security guidance and issued the Computer
Security Handbook
- Established an Emergency Incident Response Team
- Installed an intrusion detection system on the Departments
core network backbone
- Upgraded the Firewall on the core Department network
- Implemented an automated tool to perform log analyses functions
- Developed Change Management Control Procedures for OASAM
- Conducted risk assessments of DOL IT systems
- Developed System Security Plans for major systems
- Developed an Enhanced Computer Security Awareness Training Plan
- Conducted annual security refresher training for DOL employees
- Demonstrated compliance with Level II of the Federal Security
Assessment Framework and provided
- lessons learned to the Federal CIO Council
- Issued the Systems Development Life Cycle Methodology that
integrates IT security into each phase of the projects life cycle
- Conducted penetration tests on all major networks.
During Phase II the Department will continue implementation of the
Computer Security Awareness Program, establish a Certification and
Accreditation Process, and develop plans for moving to higher maturity levels
in the Federal Security Assessment Framework. This Framework is the Federal CIO
Councils sponsored mechanism for measuring security progress.
It is important to note that the Department has developed the following
for all of the 67 Major Applications and General Support Systems: System
Security Plans, Risk Assessments, and Federal Security Assessment Framework
Assessments. Plans of Actions and Milestones have been prepared to close gaps
identified through the assessment processes and audit activities. This
comprehensive approach to IT security has been conducted even though none of
the Departments major applications or general support systems are
classified as critical assets based on the national Critical Infrastructure
Assurance Office Project Matrix assessment. Therefore, none of the
Departments 67 major applications and general support systems are subject
to the requirements of Presidential Decision Directive 63. Finally, the
Department has fulfilled the requirements established in OMB Circular No.
A-130, Management of Federal Information Resources, Appendix III on Security of
Federal Automated Information Resources, and will continue to strengthen its
security posture through the implementation of the Plans of Actions and
Milestones. The OIG conducted audits on 18 of the 67 mission critical systems
this reflects a review of 27 percent of the Departments mission
critical systems. The remaining 73 percent of the systems have not been
reviewed.
The integration of CIO responsibilities within the Assistant Secretary
for Administration and Management (ASAM) position has resulted in distinctive
advantages in the implementation of the Clinger Cohen Act. Effective management
of information technologies requires linking proposed IT investments to
Departmental missions, priorities, and strategies. It also requires a close
partnership with the Departments Budget Office to control IT investments.
The ASAM is responsible for Departmental strategic planning, Government
Performance and Results Act implementation, and Departmental budget development
and management. As a result, the ASAM is best positioned to ensure the
integration of IT polices and plans into other major departmental management
processes. This integrated approach is also practiced by other agencies,
including the Department of Treasury and the Department of Justice. It is worth
noting that only 3 of the 67 mission critical systems (less than 5 percent)
fall within the Office of the Assistant Secretary for Administration and
Management and come directly under the ASAMs area of responsibility.
Under the current organizational arrangement, the Department has
established a significant record of achievement. As a result, the Department is
recognized as a leader in Clinger Cohen Act implementation throughout the
Federal government. For example, the Director of the Office of Management and
Budget (OMB) recognized the Department for its leadership as the only
department with centralized funding for some of its IT systems. The OMBs
scorecard for the implementation of the Presidents Management Agenda
cites effective enterprise architecture and capital planning processes, two of
the primary objectives of the Clinger Cohen Act. The FY 2003 Budget Passback
highlighted the efforts of the CIO in the development of an E-government
strategy and cited our customer value network process as best practice
material. Finally, the Subcommittee on Technology and Procurement Policy,
House Committee on Government Reform, recognized an OCIO staff member as having
an excellent reputation and being able to share information on the
subject of E-government. Consequently, the Department was invited to testify on
its E-government activities by the House Committee on Governmental Reform,
Subcommittee on Technology and Procurement. Finally, the OMB has designated the
Department as a managing partner to lead a large-scale E-government
initiative.
This recognition by key oversight entities and peers is an indicator of
the progress the Department has made in the management of information
technologies. Given this record of success, the alignment of the Chief
Information Officer with the ASAM has positioned the Department to continue to
meet its statutory and regulatory requirements and to implement effectively the
E-Government vision articulated in the Presidents Management Agenda.
Program Integrity in an Electronic Environment:The
Department acknowledges that any significant revision of benefit payment
processes including those utilizing automation must be designed
and implemented such that vulnerability to fraud and abuse is assessed, and
appropriate controls are developed to minimize or curtail that vulnerability.
Since the realm of information technology entails its own complex security
issues, this requires that techniques used to safeguard benefit adjudication
and payment systems must interface with and be carried out within the framework
of a comprehensive computer security plan.
State Workforce Agencies (SWAs) operate a number of integrity programs
to prevent and detect fraud in the Unemployment Insurance (UI) program. All
States are required to operate a Benefit Payment Control program as well as a
Benefit Accuracy Measurement program whereby weekly samples of all claims are
reviewed for accuracy and detection of systemic problems. These activities have
been a part of ongoing UI program operations for many years. Employment and
Training Administration (ETA) Regional Offices conduct formal on-site reviews
of these programs in the SWAs to identify problems or weak areas and recommend
solutions. Regardless of whether a particular SWA takes claims in-person or by
a remote method(s), attention is placed on the integrity of the system.
The UI system pays out approximately $20 billion in benefits annually.
Historically, overpayments have been a small percentage of benefit payments,
and employer schemes or multi-claimant schemes have been but a small percentage
of these overpayments. ETA has advised SWAs of methods for detecting schemes of
these types and provided guidelines for referral of certain such schemes to the
OIG for assistance or prosecution. There is no evidence that such schemes have
increased in SWAs that have implemented remote claims taking.
Program integrity continues to be a management priority for ETA and for
SWAs as they transition to an electronic environment. Most SWAs are currently
using telephone initial claims taking systems as the primary means of accepting
UI claims, and many SWAs are beginning to implement Internet-based systems to
accept UI claims from unemployed workers. ETA expects the trend towards
increased use of telephone and Internet claims systems to continue.
Finally, ETA funded a joint study by the Information Technology Support
Center (ITSC) and Mathematica Policy Research to evaluate the impact of
telephone initial claims (TIC) filing. This study included an examination of
the impact of TIC on UI benefit overpayments, including overpayments due to
fraud. While a statistical analysis was conducted, data limitations did not
permit definitive conclusions. However, the study indicated that telephone
initial claim filing does not generally have negative impacts on program
integrity, and that it may improve program integrity in some instances. This
improvement is likely due to stringent procedures used by SWAs to verify
claimant information, e.g., on-line checks with the States motor vehicle
administration to verify identity, and the continued use of computer cross
matches to detect overpayments. The results of the joint ITSC/Mathematica
Policy Research study have been further corroborated by ETA data analysis of
approximately 150,000 UI claims from 1995 through 2000, which found no
statistically significant differences in the incidence of fraud in claims filed
by traditional procedures versus those filed by telephone.
Integrity of Foreign Labor Certification Programs
In administering the H-1B Labor Condition Application (LCA) program, the
Employment and Training Administration (ETA) is prevented by statute, as
OIGs Major Management Challenges recognizes, from conducting a meaningful
review of LCAs submitted by employers. Unless the application is incomplete or
obviously inaccurate on its face, the LCA must be certified within seven days
of the date it is filed. The Department is not permitted to look behind an
application to verify the accuracy of the information provided by employers.
Only if a complaint is filed can DOL review the employers documentation
and payment of wages.
The OIG also indicates that many H-1B nonimmigrants working in the U.S.
are not qualified for the positions for which they were admitted, or that such
positions are relatively entry-level and do not require specialized skills. The
Department of Justices Immigration and Naturalization Service is
responsible, as part of its review of employer petitions, for determining
whether the occupation named in the petition is in fact a specialty
occupation as defined by law, and whether the qualifications of the
nonimmigrant meet the statutory requirements for H-1B visa classification.
Effectiveness of Mine Safety and Health Programs
The Mine Safety and Health Administration (MSHA) is responsible for
ensuring the safety and health of miners. Performance for FY 2001 is noteworthy
considering the mining industry experienced the lowest number of fatalities
recorded in its history. As discussed in the Annual Performance section of this
report, compliance assistance initiatives contributed significantly to this
achievement, especially in the metal and nonmetal mining sector. However, there
were three OIG audits/evaluations of MSHAs Metal and Nonmetal Mine Safety
and Health programs that were completed in FY 2001. They were: 1) Study of
Metal and Nonmetal Mining Enforcement and Compliance Assistance Activities
1983-2000, 2) Evaluation of MSHAs Handling of Inspections at the W.R.
Grace Mine in Libby, Montana, and 3) Evaluation of Hazard Complaint Handling in
MSHAs Office of Metal and Nonmetal Mine Safety and Health.
MSHA is taking action to further integrate enforcement and compliance
assistance activities by improving direction and guidance to district
management on operation of program activities, and is studying the allocation
and distribution of enforcement and compliance assistance resources to
determine the combination of activities that will produce the greatest effects
on mine safety. MSHA has developed new performance goals with more meaningful
outcomes regarding prevention of fatalities, injuries and illnesses. The agency
is also identifying trends in injuries and fatalities, studying features of
current programs to identify elements that are most successful in reducing
injuries and fatalities, and will utilize these elements to revise other
enforcement and compliance assistance activities.
MSHA plans to provide specific training on asbestos-related matters to
safety and health compliance specialists who visit mines known to contain
asbestos, and will provide training on procedures for air and bulk sampling
when asbestos may be present. Several of the OIG recommendations would require
rulemaking, including lowering the permissible exposure limit for asbestos, use
of Transmission Electron Microscopy in initial analysis of fiber samples and
addressing take-home contamination. MSHA is currently considering these
recommendations and is using the Mine Acts enforcement, education,
training and technical support authorities to ensure miners are appropriately
protected from harmful contaminants, including asbestos.
MSHA has formed a Hazard Complaint Committee to review, standardize, and
develop hazard complaint intake, inspection and reporting forms which will be
integrated into a Hazard Complaint Procedures (HCP) handbook. The committee is
reconciling inconsistent language in various MSHA policies, procedures, and
memoranda regarding the processing of hazard complaints by field office
supervisors and inspectors, is developing guidelines for districts on
appropriate processing of hazard complaints deemed trivial and/or outside of
MSHAs jurisdiction, and is also developing policy regarding when hazard
complaints should be incorporated into a regular mine inspection. Additionally,
MSHA has gathered and is currently reviewing best practices from within the
agency relating to processing and responding to hazard complaints. MSHA is
developing a nationwide hazard complaint analysis system similar to the system
used by Metal and Nonmetal headquarters staff in tracking complaints.
MSHA is reviewing all Personal Protective Equipment (PPE) related
violations for special assessment, developing cognitive behavior approaches
that will target risk taking and PPE use by management and labor, and is
tracking fatalities involving adequacy, availability, and use of PPE.
Rapid Expansion of the Bureau of International Labor
Affairs
The Bureau of International Labor Affairs (ILAB) carries out the
Department of Labors international responsibilities and assists in
formulating international economic, trade, and immigration policies affecting
American workers. ILAB is also responsible for supporting international efforts
to eliminate exploitative Child Labor, promote core labor standards and protect
the basic rights of workers, improve economic opportunity and income security
for workers, and provide workplace based education to help reduce the spread of
HIV/AIDS. To combat child labor abuses and make a difference in the lives of
workers in FY 2001, ILAB invested over $100 million in technical assistance.
Recognizing the significant expansion of funding for its technical cooperation
programs in recent years, implementation oversight continues to be a management
priority for ILAB. A number of initiatives to improve oversight and performance
measurement are in progress and efforts are being made to standardize
approaches and procedures. In FY2001, ILAB implemented remedies to all the
identified management issues and continued to refine the agencys
processes and procedures. Developing and implementing comprehensive management
systems that accommodate ILABs current program demands and needs will
take time. However, the agency continues to perfect its procedures and
management systems to make sure that the necessary controls are in place to
support current program levels and ensure fiscal accountability.
Reinforcement of ILABs Grant/Contract Management Systems
- Additional staff in grants/contract management, program oversight,
and program management have been hired and trained.
- The DOL-International Labor Organization (ILO) set of management
procedures and guidelines for the development and implementation of
USDOL-funded technical assistance programs has been updated and refined.
- A system for tracking the finances of ILAB projects has been
installed and staff have been trained in its use.
- Financial management has been converted to an electronic transfer
and draw down system (the Payment Management System, operated by HHS), enabling
ILAB staff to directly monitor grantee drawdowns.
- Assessment and streamlining of program information needs, reporting,
and monitoring are underway. These efforts will contribute to effective and
efficient management systems.
Program Evaluation and Accountability
- ILAB has executed cooperative agreements with the ILO and a number
of other organizations, which require increased reporting in the financial and
performance areas.
- ILAB, through an exchange program with the Department of State, has
placed staff in embassies overseas to help monitor the implementation of ILAB
funded projects.
- Project staff in all program areas have been provided training in
program monitoring and evaluation.
- Responsibilities within the respective program offices have been
defined and delineated to strengthen accountability.
- ILAB has instituted a performance monitoring system to track and
report semiannually on progress in achieving program objectives.
- ILAB has instituted a policy to ensure that every project undergoes
a mid-term evaluation (internal) and a final evaluation (external &
independent).
- Plans are under way to conduct financial audits, ex-post and impact
evaluations of selected child labor projects.
Human Capital Management
The human capital challenges outlined by the Office of the Inspector
General (OIG) are in line with the Departments views and, as such, are
perceived to be fair and balanced. The OIG statement deals predominately with
Government wide flexibilities outside of our control but we agree with the OIG
that there are a number of specific legislative, regulatory, and policy changes
that would be helpful to Federal agencies like DOL to more effectively compete
with private industry for highly-skilled personnel.
Notwithstanding the Government wide limitations, there are a number of
initiatives currently underway within the Department that directly address
strategic human capital management challenges within the context of current
law, rule and regulation. In addition to the numerous Departmental initiatives
outlined by the OIG in their statement, we have aggressively moved forward
toward a cross-cutting Departmental approach to improving human capital
management within DOL. In August 2001, the Secretary of Labor created the
Management Review Board (MRB) to ensure a coordinated, department wide approach
to promoting management reforms. For example, the MRB oversaw implementation of
an overhaul of the Departments performance appraisal system for managers
and executives, to ensure that personnel are evaluated against progress on
management agenda items. In addition, the Board has initiated an evaluation of
DOLs regional office structure to identify opportunities for
reorganization and consolidation.
As part of the Departments 5 Year Restructuring Plan submitted to
OMB in September 2001, DOL identified human capital management tools and
flexibilities needed for the successful implementation of restructuring
initiatives. The Departments cross-cutting approach to strategic
management of human capital supports the Presidents Management Agenda by
enhancing our ability to forecast human capital trends and needs; assess and
address the growing core competency skill gap of the current and future
workforce, and provide for retooling of the skill sets of employees displaced
by contracting out initiatives or technological innovations; improve the
quality of our current workforce by using aggressive recruitment strategies to
identify highly qualified, diverse candidates; and provide for recruitment and
retention bonus flexibilities that are directly linked to the Departments
workforce and restructuring plans.
The Department of Labor, through its Human Resource Center, will
continue to provide leadership and direction to achieving the President's and
Secretary's strategic human capital management agenda for the Department and
its individual Agencies. Ongoing leadership initiatives include negotiating new
collective bargaining agreements in support of the Department's human capital
program and positive labor-management relations; implementing enhancements to
the Departmental human resource information system to promote e-government
principals in providing services to DOL employees; and overseeing the conduct
of internal, and OPM sponsored, oversight reviews of human resource operations
within DOL to ensure a positive human resource program that adheres to merit
systems principles.
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