Sequestration Weakens Inspectors General, Making It Harder To Detect Waste And Fraud

Sequestration Weakens Government Watchdogs, Making It Harder To Detect Waste And Fraud

WASHINGTON -- The government's inspectors general aren't well-known among the public, but they are essential in rooting out waste, fraud and abuse in the federal bureaucracy -- one of the few goals that both Democrats and Republicans agree on. The recent findings by the Treasury Department's IG that the Internal Revenue Service had been scrutinizing conservative organizations applying for nonprofit status highlighted the importance of these independent watchdogs.

But sequestration is tying the hands of the IGs, who are facing a $100 million cut overall. There's now less money to pursue investigations and fewer qualified staff members to investigate claims, and the disbursement of funds, such as stimulus dollars and Hurricane Sandy relief, will receive less scrutiny and oversight.

It will also likely become harder to recover wasted taxpayer money. As the Federal Times reported, IGs uncovered more than $93 billion in potential savings in FY 2011 -- a $35 return for every $1 of investment.

Multiple agency IGs say that lawmakers should get used to hearing the word "no" when they ask them to investigate their latest pet cause; there just won't be any money to pursue those new cases.

The findings come in response to a letter Sen. Jeanne Shaheen (D-N.H.) sent to all the IGs in early April, inquiring about the effect sequestration will have on their work. Shaheen has been working to empower IGs and make sure that the government is being held accountable for the taxpayer dollars it spends. The replies her office has so far received from seven IGs were shared with The Huffington Post.

"The inspectors general response to my inquiry overwhelmingly confirms that the sequester is doing more harm than good," said Shaheen, saying she wants a comprehensive replacement to the across-the-board budget cuts.

"We need to replace the sequester with a long-term budget plan like the Senate passed in March because at a time of serious budget constraints, the need for inspectors generals is greater than ever," she added.

A summary of the responses from the agency IGs, which laid out the changes they are implementing:

  • Department Of Education: Limit Criminal Investigations To Locations That Are Cheaper To Travel To -- The IG's office had 33 fewer employees at the start of FY 2013 than it did in FY 2005. It has also implemented a hiring freeze and is filling only essential positions. The FY 2013 training budget has been reduced by 61 percent, meaning training for employees -- which includes firearms training -- will be slashed to the bare minimum. "We expect that we will also need to limit the number of criminal investigations we open and focus our investigative resources in geographic areas that can be serviced more effectively and without incurring high travel costs," Education Department IG Kathleen Tighe wrote in her letter to Shaheen.
  • Small Business Administration: Less Oversight Of Programs With 'High Risk Of Fraud, Waste And Abuse' -- The IG has implemented a temporary hiring freeze. The loss of $868,000 due to sequestration is the equivalent of about 10 positions for seven months. IG Peggy Gustafson wrote that the limitations will result in "reduced oversight of SBA programs and operations with a high risk of fraud, waste and abuse."
  • Department Of Interior: Less Money To Look Into Whistle Blower Complaints -- The IG's office is experiencing a 10 percent shortage in staff. Because of sequestration, wrote IG Mary Kendall, the office has had to respond "by limiting the number of cases we accept for investigation, reduce or eliminate the coverage we provide in Indian Country or the Insular Areas, and limit proactive efforts we make to oversee high-risk funding areas, such as the monies appropriated in response to Hurricane Sandy." It will also be able to focus less on prevention of waste, fraud and abuse and will have limited ability to "respond fully to whistleblower complaints."
  • General Services Administration: Less Oversight Of The Stimulus -- The GSA IG's office has 36 vacancies in its 316 available full-time slots, which amounts to a 14 percent reduction of its workforce. According to IG Brian Miller, the audit staff has been "particularly hard hit." One area that will feel the cuts is the oversight of the Recovery Act, which has been heavily criticized by Republicans. "[A]s GSA moves towards completion of its Recovery Act construction projects, the OIG workload in the construction claim arena is expected to skyrocket. GSA relies on the OIG's assistance to effective defend, negotiate, and settle the contractor disputes and claims that are bound to arise after construction projects finish. ... With sequestration, however, our resources will be severely decreased thereby limiting our ability to perform these crucial audits," wrote Miller.
  • Environmental Protection Agency: Less Hurricane Sandy Oversight -- Like the Interior Department IG, the EPA IG expects sequestration to cut into his office's oversight of the funds for Hurricane Sandy relief. "For example," wrote IG Arthur Elkins in his letter to Shaheen, "the EPA received funds for responding to the consequences of Hurricane Sandy, but we received no funds to audit the use of these funds." Like other agencies, he said he is worried about the effect on staff, noting that they are no longer able to offer periodic law enforcement refresher trainings or monetary awards for outstanding performance.
  • Department Of Transportation: Decline In Opening New Investigations, Recovering Wasted Taxpayer Money -- IG Calvin Scovel III said his office currently has over 400 criminal investigations underway. But now, they "are making difficult choices and opening only those investigations with the greatest potential financial and safety impacts." From October 2011 through March 2013, they have seen a 47 percent drop in new investigations opened. They have delayed several planned audits, including into major transit projects in New York City and on the West Coast, major highway projects and the effectiveness of the Transportation Department's ability to protect citizens' private information.
  • Broadcasting Board Of Governors: Fewer Inspections Overseas -- The BBG is responsible for all U.S. government international broadcasting by entities like Voice of America. "[T]he sequestration cuts will affect our ability to travel to high-threat overseas posts to address physical security issues and to perform cyber-security audits," said Deputy IG Harold Geisel. He said his office is also in "dire need of information technology auditors" and without them, the agency's IT systems are "at heightened risk for an external attack."

"Sequester is expected to lead to furloughs in several of these IG offices and hurt critical audit, investigation and training abilities, in turn, making it harder to exercise oversight and identify opportunities for cutting government waste," added Shaheen. "As one of the IGs put it, 'Sequestration will undermine the ability of the office to carry out its oversight mission.' Empowering our watchdogs is absolutely critical to putting our fiscal house in order, and I will continue to seek a long-term deficit deal to replace sequestration that keeps our IGs strong.”

The harm caused by weak IGs was perhaps best summed up by Scovel, the Transportation Department IG, who predicted that the real winners will be law breakers intent on taking taxpayer money.

"[A] reduction in investigations increases the risk that individuals and companies that have defrauded the Government will continue to receive federally funded contracts," he wrote. "Further, those intent on defrauding the Government will not be deterred from committing crimes without the threat of investigation and prosecution."

CORRECTION: A previous version of this article incorrectly paraphrased Scovel's statement to say that "lawmakers" rather than "law breakers" would profit from weak IGs.

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