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    PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Government Reform. Additional material pertinent to this transcript may be found on the web site of the committee at [http://www.house.gov/reform]. Complete hearing records are available for review at the committee offices and also may be purchased at the U.S. Government Printing Office.

56–027 CC


before the





FEBRUARY 10, 1999
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Serial No. 106–3

Printed for the use of the Committee on Government Reform

Available via the World Wide Web: http://www.house.gov/reform

DAN BURTON, Indiana, Chairman
STEPHEN HORN, California
JOHN L. MICA, Florida
BOB BARR, Georgia
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LEE TERRY, Nebraska
DOUG OSE, California
PAUL RYAN, Wisconsin
HENRY A. WAXMAN, California
TOM LANTOS, California
ROBERT E. WISE, Jr., West Virginia
PAUL E. KANJORSKI, Pennsylvania
GARY A. CONDIT, California
CHAKA FATTAH, Pennsylvania
DANNY K. DAVIS, Illinois
JOHN F. TIERNEY, Massachusetts
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HAROLD E. FORD, Jr., Tennessee
BERNARD SANDERS, Vermont (Independent)

KEVIN BINGER, Staff Director
DANIEL R. MOLL, Deputy Staff Director
DAVID A. KASS, Deputy Counsel and Parliamentarian
CARLA J. MARTIN, Chief Clerk
PHIL SCHILIRO, Minority Staff Director


    Hearing held on February 10, 1999
Statement of:
Viadero, Roger C., Inspector General, Department of Agriculture; Susan Gaffney, Inspector General, Department of Housing and Urban Development; and June Gibbs Brown, Inspector General, Department of Health and Human Services
Walker, David M., Comptroller General, U.S. General Accounting Office
Letters, statements, etc., submitted for the record by:
Army, Hon. Dick, a Representative in Congress from the State of Texas, prepared statement of
Brown, June Gibbs, Inspector General, Department of Health and Human Services, prepared statement of
Burton, Hon. Dan, a Representative in Congress from the State of Indiana:
Followup questions and responses
L 101, 247
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Prepared statement of
Text of videotape shown
DeLauro, Hon. Rosa, a Representative in Congress from the State of Connecticut, and Hon. Nita Lowey, a Representative in Congress from the State of New York, prepared statement of
Gaffney, Susan, Inspector General, Department of Housing and Urban Development, prepared statement of
Gilman, Hon. Benjamin, a Representative in Congress from the State of New York, prepared statement of
Kucinich, Hon. Dennis J., a Representative in Congress from the State of Ohio, prepared statement of
Sanders, Hon. Bernard, a Representative in Congress from the State of Vermont, prepared statement of
Viadero, Roger C., Inspector General, Department of Agriculture:
Information concerning loan approval process
Prepared statement of
Walker, David M., Comptroller General, U.S. General Accounting Office:
Chart No. 1
Chart No. 2
Chart No. 3
Chart No. 4
Chart No. 5
Information concerning suggestions
Prepared statement of

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House of Representatives,
Committee on Government Reform,
Washington, DC.
    The committee met, pursuant to notice, at 10 a.m., in room 2154, Rayburn House Office Building, Hon. Dan Burton (chairman of the committee) presiding.
    Present: Representatives Burton, Morella, Shays, Ros-Lehtinen, Horn, Mica, Davis (VA), Sanford, Barr, Hutchinson, Biggert, Ose, Ryan, Waxman, Owens, Mink, Sanders, Norton, Cummings, Kucinich, Davis (IL), Tierney, Turner, Allen, and Ford.
    Staff present: Kevin Binger, staff director; Daniel R. Moll, deputy staff director; Jane Cobb, professional staff member; Will Dwyer, director of communications; David Kass, deputy counsel and parliamentarian; Carla J. Martin, chief clerk; Jacqueline Moran, legislative aide; John Williams, deputy communications director; Corinne Zaccagnini, systems administrator; Phil Barnett, minority chief counsel; Jon Bouker and Faith Weiss, minority counsels; Mark Stephenson and Tania Shand, minority professional staff members; Ellen Rayner, minority chief clerk; and Jean Gosa and Earley Green, minority staff assistants.
    Mr. BURTON. The committee will come to order. First of all, I want to tell our guests and everybody in the audience that we have just finished a conference. I presume the Democrat party has been doing the same thing. So we anticipate additional Members will be here. Because we don't want to impose upon your time unnecessarily, we will go ahead and get started.
    The focus of our first full committee hearing is waste and fraud in the Federal Government. It goes right to the heart of what this committee is all about. House rules dictate that we look at the overall economy, efficiency, and management of government operations.
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    Every American has a right to expect that the Federal Government will work honestly and efficiently. Every American has a right to demand that the government be accountable for delivering concrete results in return for their hard-earned tax dollars.
    Today we will hear reports that paint an alarming picture of the state of affairs of our Federal Government. The bottom line is this. We have a long way to go before the American people get their money's worth from the Federal Government. These reports document billions, that is, thousands of millions of dollars lost to fraud, waste, and mismanagement plaguing the Federal Government.
    I would like to show for the audience and our colleagues two very short network news clips that touch on a few of these problems. I think one is Peter Jennings and the other is Tom Brokaw. It points out just how important and how far-reaching these problems are.
    [The text of the videotape follows:]

Bob Faw
NBC Correspondent

    One thin slice of pizza—that's the only example you need to understand the massive new report issued by the United States General Accounting Office.
    One Federal agency inspects frozen meat pizza; another agency inspects frozen cheese pizza. In all, 12 different government agencies enforce 35 different food-safety laws and the GAO says the responsibilities are so fragmented taxpayers are being fleeced—even hurt.
    Every year, up to 80 million cases of illness come from bad food at a cost of up to $37 billion.
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    Thus the pizza situation, says the GAO report, is no laughing matter.
    ''It costs money,'' says Dave Walker, GAO Comptroller, ''And it can have an adverse affect on public safety.''
    The Report says programs in Washington are so badly coordinated that the Department of Defense can't even account for $22 billion of the checks it's written—that's right, $22 billion.
    And we're not just talking paper losses. The report says management at the Department of Energy is so disjointed that radioactive tritium has leaked into ground water and that the clean-up of radioactive waste at the site where the leakage is occurring is running 26 months behind schedule—and $200 million over budget.


    So many cooks, says the GAO, are spoiling so much broth. That the State Department, whose anti-terrorism efforts the GAO says are sputtering largely because $7 billion has been spent on no less than 40—that's right, 40—different agencies.
    And while everyone complains about the weather, the GAO complains there's so much overlap and waste in the National Weather Service's $4.5 billion modernization program, that the result will be ''. . . higher costs and protracted delays.''
    None of this surprises government watchdogs like Ralph DeGennaro, of Taxpayers for Common Sense.
    ''There's something for everybody of every political persuasion to be mad about in this report,'' says DeGennaro.
    It's a report, in 21 volumes, which confirms that the left hand in Washington often doesn't have the vaguest idea what the right hand is doing, and one more reminder that taxpayers are being fleeced even when they bite into a pizza.
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    Mr. BURTON. Thank you. The American people see these problems in the news and they wonder what in the world we are doing up here. They are not too enchanted with us, as you know, because of a number of things. And when they see that billions of dollars of their taxpayer dollars are being wasted and unaccounted for, it really concerns them.
    I have asked the Inspectors General from three problem-plagued agencies and the U.S. Comptroller General to come and educate our Members and the public about some of these problems. Let me give you just a few examples.
    For fiscal year 1997, the IG at the Department of Health and Human Services found over $20 billion in improper payments in Medicare's Fee-for-Service Program. And that represents 11 percent of the entire Fee-for-Service Program.
    Now, there was an announcement yesterday that that has dropped to $12.6 billion for fiscal year 1998. And I know that they may be applauding this and it is a step in the right direction, but this is still an outrageous amount of waste.
    At about $1,500 apiece, we could buy 8 million personal computers for school children with that wasted money. That is one computer for each and every child in the third and fourth grade in America. This problem has been on GAO's high risk list since 1990, almost 10 years. The downward trend is encouraging but $12.6 billion is still totally unacceptable. We have got to do better.
    I want to thank the Inspector General, June Gibbs Brown, for coming today to help us understand this problem better. And we anticipate hearing from her in a few moments.
    It has been estimated that more than $1 billion a year is lost because of improper food stamp payments. And I will bet the average American would be outraged to know that his or her tax dollars are paying for food stamps for prisoners, fugitive felons, and people who are dead. I welcome Inspector General Roger Viadero to the committee to testify about this and other problems in the Department of Agriculture.
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    The Inspector General at the Department of Housing and Urban Development, Susan Gaffney, is also here today, and I welcome her to the committee. Her office estimates that management waste in disposing of HUD single family housing inventory is costing taxpayers over $1 million every day. HUD is so replete with problems that GAO has listed the entire agency on its high risk list.
    The Comptroller General of the United States, David Walker, will be on our second panel to talk about HUD and other problems on GAO's high risk list. Let me mention just a few of the examples of enormous amounts of waste. In 1995, GAO put IRS filing fraud on its high risk list. In particular, tax credit programs seemed to be a seed bed for fraud. Let us look at one of the largest: the Earned Income Tax Credit Program.
    The IRS found that in 1995, this program alone sustained $4.4 billion in overclaims. This figure represents over 25 percent of the total claims of this program, 25 percent.
    Since then, Congress has given the IRS increased authority to address the problem. But even adjusting for the possible effect of that increased authority, the IRS said noncompliance would still be over 20 percent for this program.
    The Social Security Administration Supplemental Security Income [SSI] Program is supposed to provide cash benefits to the blind and the disabled children and adults. This program suffers from longstanding abuses, mismanagement, and increasing overpayments to those who don't deserve them—$1 billion for fiscal year 1998 and about $3.3 billion cumulatively.
    GAO says technology investments are a high risk in several major agencies, including the Federal Aviation Administration, the IRS, the National Weather Service, and the Department of Defense. The FAA has spent billions of dollars trying to modernize its air traffic control technology. The IG at the Transportation Department estimates that the FAA has wasted $1 1/2 billion in its 17-year effort to modernize the air traffic control system.
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    In just these few examples, we are talking about over $30 billion wasted. Add the dozens of other problem programs to these few, and this figure merely scratches the surface.
    The most telling message of GAO's high risk list seems to be that the agencies are unable or unwilling to solve these problems. The number of problems on GAO's list has nearly doubled, from 14 in 1990 to 26 in 1999. Over that time period, 18 programs were added, but only 6 have been removed. Ten of these problems have been on the list since its inception in 1990, almost a decade ago.
    All of this makes me wonder, and my colleagues wonder, when, if ever, we are going to get some meaningful results here. It is hard to overstate the toll these problems take on taxpayers and the urgency of resolving them.
    While it is important to publicize the dimensions of these problems, we must move beyond simply rehashing them. We must begin to develop solutions. One important tool to help resolve these problems is the Government Performance and Results Act. And a lot of the agencies have been resisting following that law.
    Thanks in large part to tough congressional oversight, the Results Act is gaining traction. This law requires agencies to establish specific commitments to resolve their major management problems and for Congress to hold agencies accountable for living up to their commitments. But we need to put some teeth in the law, and there has been a great deal of resistance, as I said, in this administration to Congress' use of this important law. We must have a stronger commitment by the executive branch agencies, especially agency heads, because without it, we will never cut this wasteful spending, we will never solve the problems, and success will be very hard to come by.
    This is something I want my staff to remind me to do. I want to recommend that we discuss with our appropriators here in Congress to make use of the Results Act and this high risk information to really hold the agency's feet to the fire. And the way I would like to suggest that our appropriators handle this is to withhold money from the programs that waste billions of dollars each year, year after year.
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    Money talks, and bologna walks. That is a Hoosierism. It is the bottom line in business, and it is the bottom line between Congress and the agencies. That is why we need to have our appropriators involved in the process.
    And since we haven't been getting the results we want from the Results Act, we need to have the appropriators start putting teeth in it by cutting appropriations to those agencies that will not comply and are continuing to waste money. And we are going to do our best to get that done, and I believe we will get their ear on this.
    I think these agencies that are not complying with the Results Act and not doing their best to cut wasteful spending need to know that we are going to start cutting appropriations to their agencies. And I think we will get that job done. That is why our appropriators have to be a part of this solution.
    But penalties cannot be the only answer. I believe in the carrot and stick approach. And this is something that they do in business but is not being done in the Federal Government. We need to penalize where the gross mismanagement takes place or the waste takes place, but we need to reward when there is good performance and good solutions to problems. It works in the private sector, as I said.
    What we have done in the private sector—and I was in the private sector for a long time—is we have suggestion boxes in corporations where people put in their ideas. If it helps save the company money or cut the overhead of the company, then those people get a bonus or a reward for figuring out how to save money.
    Instead of asking for more money at the end of a fiscal year or spending more money at the end of a fiscal year so you can ask for a higher appropriation, as is done in State and the Federal Government, we need to have incentives for people to cut spending and to figure out ways to streamline government. That is why we need to have a reward system for people who work in those agencies, who figure out ways to solve problems and improve performance.
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    For instance, if somebody comes up with a way to save $500 million in an agency, I would not be adverse to giving them a million-dollar bonus. They have saved $500 million. And if you start giving generous bonuses to people who figure out ways to save money in government, you will be surprised at how many solutions they find. I am very confident of that.
    In his State of the Union Address and the budget that followed, President Clinton proposed spending over $200 billion over the next 5 years on 77 new programs. Now, we just saw where there is a huge amount of duplication in just a few agencies. We don't need 77 new programs. We need to find out how to combine and streamline.
    HUD, a management basket case, would run at least 15 of these new programs. Close to 20 new programs would be run by HHS, where we haven't stopped the bleeding of more than $20 billion, or now $12.7 billion, in Medicare mispayments. With this kind of track record, the American people should wonder whether they are ever going to get their money's worth with these new programs. Wouldn't we be better off trying to fix the problems in existing programs before we start creating dozens of new ones? I know politically it is popular to offer new things, but we need to streamline and become more efficient first.
    Eliminating waste, enhancing the effectiveness of important government services, and ensuring the best use of every tax dollar are high priorities of the 106th Congress. Accomplishing these objectives will be a key to providing meaningful tax relief for every American citizen. It is also key to providing all American citizens with the effective and efficient Federal services that they deserve.
    [The prepared statement of Hon. Dan Burton follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. I would like to turn to our committee members now to see if any of them have any comments they would like to make before we have our panel members. Mr. Cummings, did you want to say something? Mr. Cummings.
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    Mr. CUMMINGS. Thank you very much, Mr. Chairman. I was listening to your statement just a moment ago. And when you talked about accountability, I don't think that there is anyone up here who did not believe very strongly that our government must be effective and cost-efficient. But I want us to be very, very careful as we proceed here because I think we; as a matter of fact, I know, we have many government employees who are doing an outstanding job and using the taxpayers' dollars very efficiently and effectively.
    And so I think we need to be very, very careful that we don't take this broad brush and forget those people who day in and day out give their blood, sweat, and tears to making the government the best that it can be.
    The other thing that I think we need to be very clear on as we go through this process is to make sure that when we go and do our investigations of various agencies or whatever, that it be done with fairness. And I think that that is so, so important.
    As one who practiced law, I often said that I don't mind what the form is. It does not matter to me what the case is as long as I am treated fairly, as long as there is a set of rules that everybody has to play by and they are not different for other people. And I think that is very important also.
    As I watched the television monitor just a few moments ago, I must say, Mr. Chairman, I saw both of these broadcasts when they came on television a week or so ago. And I remember when I looked at them I said to myself that government is very big. And I think what has happened perhaps over the years is that government has become so big that quite often what happens is that maybe the left hand may very well not know what the right hand is doing.
    And so it does not necessarily mean that the people who are carrying out the process are at fault. It may very well be our fault, we who sit up here. And I do think that there are some things that need to be done to do exactly what I said a few moments ago: have effectiveness and efficiency.
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    And so I think that perhaps this hearing will yield some good things, but, again, I go back to the word that I said a little bit earlier, that I think we need to be fair. I think we need to make sure that we do not forget, as in the case of Social Security in my district, people who are my constituents who are working very hard every day, doing a good job, that we don't use this broad brush to place a negative light on those folks.
    And so, with that, Mr. Chairman, I yield back the balance of my time.
    Mr. BURTON. Thank you, Mr. Cummings.
    Mr. Shays.
    Mr. SHAYS. Thank you, Mr. Chairman.
    I think this hearing and ones to follow provide an excellent opportunity for Republicans and Democrats to join hands in dealing with the major problem that this presents. And it is an opportunity lost if we waste money and spend it incorrectly. We can't do all of the things that we need to do for health care, for education, and in some cases returning money back to taxpayers who are providing and paying the bill.
    And so I do think this is a wonderful way for this committee to begin the process in this new Congress. Find common ground. Get at the waste that all of us want to get to.
    And I just want to say Congressman Cummings from Baltimore is dead right about this issue that it is not the workers who are in government that have the responsibility. It is up to those of us in Congress and in the administration to deal with the duplications that exist.
    I oversaw, with my colleagues on both sides of the aisle, HHS and all of the different departments. And it never ceased to amaze me that FDA did this and Agriculture did this. And one of the reasons why Agriculture may have done it was it was a different committee. And even within our own ranks, we can't agree that maybe one committee has to give up oversight or responsibility so that we can make it uniform and not have the duplication. So a lot of it will rest on our shoulders.
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    But to both you, Mr. Chairman and Mr. Waxman, I think this is a wonderful area where we can join hands and eliminate some waste, and I look forward to that.
    Mr. BURTON. Mr. Waxman.
    Mr. WAXMAN. Thank you very much, Mr. Chairman.
    I want to welcome our distinguished witnesses today, and I want to commend you for holding this hearing. The oversight issues which we will discuss today are more properly the focus of our committee's work than the partisan investigations which consumed so much of our time in the last Congress. So I thank the chairman and hope this hearing is a harbinger of things to come.
    I want to particularly welcome Mr. Walker, our new Comptroller General, to the hearing. I believe this is his first appearance before a House committee. And it is quite appropriate that he will be testifying on GAO's high risk series.
    This series of reports issued at the beginning of each new Congress for the past 9 years has been a valuable tool in focusing the oversight efforts of Congress. While the reports haven't always been perfect, they have been tremendously useful in highlighting and publicizing some of the most serious problems facing the Federal Government.
    And while these reports have been helpful, there is a depressing consistency to the appearance of certain programs or agencies of the Federal Government. As is noted, many of them have been on the list since its inception in 1990.
    We are also honored today to have with us the Inspectors General from the Departments of Agriculture, Health and Human Services, and Housing and Urban Development. The Government Reform Committee has a long history of working in a bipartisan matter with the Inspectors General to eliminate waste, fraud, and abuse in Federal programs. Indeed, the original authorizing statute establishing Inspectors General in the executive branch was drafted by our committee over 20 years ago. And I was even on the committee when we did that 20 years ago.
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    I am particularly heartened by some of the news we will hear today that shows the government is making progress in dealing with some of the more significant issues, such as the results that the HHS IG has found with regard to the rate of errors in payments by the Medicare Program. This is truly remarkable, and I think we should all be encouraged by these findings.
    The General Accounting Office and the Inspector General community are Congress' principal watchdogs of the executive branch. There is much we can learn from each other as we work to ensure all Americans a government that operates in the most effective and efficient manner possible.
    Thank you very much, Mr. Chairman. I yield back my time.
    Mr. BURTON. Mr. Sanders.
    Mr. SANDERS. Thank you, Mr. Chairman. I am going to simply concur with a lot of what you have said, as well as Mr. Cummings, Mr. Shays and Mr. Waxman.
    I think this is an important hearing, and I would agree with Mr. Waxman that this is exactly what we should be focusing on. No matter what our political views may be on this or that issue, I would hope that all of us believe that the government, and every program in the government, must be run efficiently and cost-effectively.
    I would also hope that some of our Republican friends would be prepared to take a look at areas like defense spending, like the intelligence agency. It is not true that just because some folks like to spend more money on defense that we should assume that those agencies are run cost-effectively. They are in many ways a disaster. And it would be wrong to simply point out areas in health or education and say, ''Look at the bureaucracy. Look at the waste'' and forget that in the National Reconnaissance Office, one of our major intelligence organizations, they lost $4 billion. They lost it. Maybe some of our friends here can help us find that $4 billion.
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    There is no secret that within the military, huge amounts of money are misplaced, misappropriated, and are used in a very wasteful manner. So as we go forward, let us take a look at those agencies as well.
    In terms of government spending, my own view is I don't know if we need 77 new programs or 100 new programs or 20 new programs. There are areas where we are under-funding. Mr. Chairman, we have the highest rate of childhood poverty in the industrialized world. Are we proud of that? I don't think so. Some of us think we should put more money into feeding children and less money into B–2 bombers. That is a good discussion.
    In terms of education, I am sure you are aware, Mr. Chairman, that throughout Europe, higher education is virtually free in Scandinavia or in England and many other countries. In this country, we put all of $7.5 billion into Pell grants. Is that enough? I don't think so. I would double Pell grant money, take the money from other institutions.
    In terms of health care, 43 million Americans have no health care at all. And, yet, when you talk about waste, we spend far more per capita on health care than any other country because we have enormous bureaucracies, we have profit-taking from insurance companies, et cetera. Let us look at that as well.
    I did want to focus, though, Mr. Chairman, on one area. And I understand that June Gibbs Brown is here from the HHS. One area that I know that many of my colleagues and I are concerned about is the very high cost of prescription drugs. There are a lot of reasons why prescription drugs are so high.
    We did a study, Mr. Chairman, that showed that for senior citizens, many of the prescription drugs that are used, most commonly used prescription drugs, the costs in this country is far higher than they are in Mexico or in Canada or virtually any other country on Earth. We might want to find out why that is so.
    But in terms of HHS' relationship to the pharmaceutical industry, it is important to note that in 1996, the most recent year for which data is available, the National Institutes of Health spent $1 billion on drug research and development. The NIH has been very successful in developing a whole host of important drugs, and we are proud of that.
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    The problem, Mr. Chairman, is: What happens when the taxpayers, through the NIH, develop the drug? And how does it get to the private pharmaceutical companies? What kind of strings are attached?
    I believe that if the taxpayers fund the development of a drug, when we give that drug over to the private sector we have got to demand reasonable pricing. We have got to go out for a competitive bidding process, rather than simply give the drug over to a company who will then charge consumers off-the-wall prices for that product and at the same time make huge profits.
    So if the taxpayers pay for the production and development of that drug, I don't want to see the same taxpayer have to pay $15,000 for that product. And right now, Mr. Chairman, to the best of my knowledge, the relationship between the NIH and the private pharmaceutical companies needs a lot of exploration. And I would think that we can save substantial sums of money, not only for the government, by the government getting fair payments from the pharmaceutical industry but, even more importantly, from consumers as well.
    So I would hope, Mr. Chairman, that that is an area that we would take a look at and where we can save taxpayers money and save consumers money as well. Thank you.
    [The prepared statement of Hon. Bernard Sanders follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Thank you, Mr. Sanders.
    Mr. Kucinich.
    Mr. KUCINICH. Thank you very much, Mr. Chairman. I would also like to echo those who celebrate this committee's jurisdiction over making sure that the taxpayers' money is not misspent.
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    I had the honor of serving with Mr. Horn in the last Congress as the ranking member of the Government Management, Information, and Technology Subcommittee. And one of the areas that we looked at was the area of the Department of Defense.
    I have to tell you, people in my district became very excited when they found out our committee had brought information forward about missing aircraft, missing boats, a missile system that somehow couldn't be located. Those are the kinds of things that excite the American public. And I can tell you that the work of the Inspectors General is taken very seriously by this committee and by me personally. And I appreciate your efforts to assist us in making sure that the taxpayers' money is not misspent.
    So I want to thank the Chair for having these hearings. I know there will be a series on this throughout the year in this Congress. I am also concerned that money that we should be spending for a particular purpose is, in fact, spent for that purpose.
    And in welcoming the panel today, I also want to particularly welcome the Inspector General of the Department of Housing and Urban Development [HUD]. I have an increasing interest in the activities of HUD. I served on the Cleveland City Council. And I saw where some of the grant money may not have been spent correctly years ago. We straightened that out. In Cleveland, we had a program called Model Cities, which came out of HUD. Some of you who go back a few years will remember those scary days.
    And I want to say, Mr. Chairman—and I am sure that part of your testimony reflects this concern, too—I find dealing with HUD as a Member of Congress a very frustrating experience. And I can imagine the frustration which was felt by our constituents who do not occupy a seat in Congress.
    HUD is a disappointment. It represents why many Americans have lost confidence in the Federal Government. I have a lengthy statement here, which documents a situation in Cleveland, OH, where some homeless people have basically been denied a chance to get continuing opportunity for shelter. Because when the Cleveland people responsible for the homeless program submitted money to have the program continually funded by HUD, they inadvertently submitted the wrong form. And HUD said they couldn't even tell them. This is what the rules provide, that they cannot even tell the people if they submit a wrong form. They were just denied and a whole program was ruined on account of it.
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    So there are some things about government that just don't make sense. And the Inspectors General can always help us sort those things out.
    I have the particular story in Cleveland you will find quite fascinating, Mr. Chairman. I want to tell you I appreciate your help in trying to straighten it out. So welcome to the committee. And I am sure we are going to have a lot of fun in this Congress and in the next one as well. Thank you.
    [The prepared statement of Hon. Dennis J. Kucinich follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Mr. Ford.
    Mr. FORD. I will be very brief, Mr. Chairman. I want to apologize from the outset. Some of us will go back and forth from the committee, certainly to our witnesses, those of us who have markups going on right around the corner. I just want to apologize for that.
    I want to just echo what everyone has said and really pick just one part of my chairman's statement, where it talks about the waste at $12.6 billion at the Department of Health and Human Services. And I am glad the Inspector General is here to discuss that.
    But I was particularly interested when the chairman talked about purchasing 8 million personal computers for school children, that it would provide a computer for every third and fourth grader. Provided that we can recover this money, Mr. Chairman, I am going to hold you to this when we get to the floor and the President's budget comes with technology in the classroom.
    With that, I look forward to hearing the witnesses testify today.
    Mr. BURTON. Any others? The Chair has to be very careful about what it says, I guess. [Laughter.]
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    Let me just say that we did have a fairly contentious last couple of years. And I am sure we will have some contentious moments this Congress, but I have talked to a number of Members of both the majority and the minority. We want to have a fairly conciliatory attitude toward working with you to try to streamline government and cut out waste, while at the same time being sensitive to the needs of the American people.
    So if any of you on either side have any ideas—and I talked to Representatives Sanders and Kucinich yesterday about alternative therapies and hearings we are going to be holding very quickly. You will want to be at the first hearing because we are going to have a movie star here. And all of you are going to want to see her when she testifies. She is going to be testifying about alternative care in a couple of weeks. Who is it that is testifying?
    Ms. COBB. Jane Seymour.
    Mr. BURTON. Jane Seymour, a very beautiful lady who is going to be very helpful to us, I am sure. But, in any event, we are going to try to work with the minority and the majority wherever possible to make sure we can get some results in this Congress.
    One other thing I want to add before we have our witnesses testify, I understand that agencies now have the authority to give incentives and rewards. But the reward systems are not targeted. And they should be targeted on these incredibly wasteful, high risk problems and generously reward individuals who turn them around.
    So while the authority is there to give rewards, we haven't been doing it. And we really need to because if people know they are going to get something for finding ways to save money, they are going to do it. I am just sure of it.
    Now, we have a statement that was submitted by the majority leader, Dick Armey, who was going to testify this morning, but, unfortunately, he has other responsibilities he has to deal with. So I ask unanimous consent that his statement be inserted into the record. Without objection, so ordered.
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    [The prepared statement of Hon. Dick Armey follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. I would now like to bring up the three Inspectors General for our first panel of witnesses. And I would like to welcome Roger Viadero. Mr. Viadero. I am pronouncing that correctly, am I not?
    Mr. VIADERO. Yes, sir.
    Mr. BURTON. Mr. Viadero is the Inspector General of the United States Department of Agriculture.
    Susan Gaffney. Ms. Gaffney is the Inspector General at the Department of Housing and Urban Development.
    And June Gibbs Brown. Ms. Brown is the Inspector General at the Department of Health and Human Services. And I want to thank you for taking the time to come here today.
    We have a standing tradition that we ask our witnesses to be sworn in. Sometimes it is necessary. Sometimes it isn't, but this is just standard. So I would like you to stand, raise your right hands.
    [Witnesses sworn.]
    Mr. BURTON. Thank you very much.
    And now we will start with Mr. Viadero.

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    Mr. VIADERO. Thank you, Mr. Chairman and members of the committee. I am Roger Viadero, Inspector General, U.S. Department of Agriculture. Thank you for inviting me to this hearing on government programs at serious risk for waste, fraud, and abuse.
    The USDA Office of Inspector General is authorized to audit and investigate the administration and enforcement of all USDA programs and related laws and regulations. We have identified a number of management and performance issues facing USDA. I know that you are personally interested today in discussing problems we have found in the area of food safety and the Food Stamp Program.
    Food safety and quality issues have received considerable attention over the past few years. USDA's Food Safety and Inspection Service [FSIS], has begun to implement Hazard Analysis and Critical Control Points [HACCP]. HACCP is intended to improve the inspection process, and its first two phases have recently gone into effect.
    In December, Office of Inspector General auditors began to assess FSIS controls to ensure that meat and poultry plants have implemented and maintained sanitation standard operating procedures, which represent the initial phase of FSIS' pre-HACCP implementation. We are now beginning a nationwide review of HACCP. We also plan to assess the meat and poultry industry's compliance with HACCP requirements.
    OIG is the investigative arm for all of USDA. In certain cases, rapid response is critical. Cases involving food safety take precedence. If need be, we stop absolutely everything else. Emergency response teams of auditors and investigators recently deployed to several cities in the United States to investigate real or threatened adulteration of meat with everything from E. coli to disinfecting compounds, possibly bleach or ammonia, to HIV-infected human blood. Some adulterated products—rancid meat, for example—were destined for children in the National School Lunch Program or soldiers on military bases around the world and in certain cases did end up there.
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    We are currently monitoring the FSIS response to listeria outbreaks at several locations across the Nation. In December, a threat of biological contamination using HIV-infected blood in a Milwaukee, WI, meat plant activated the immediate deployment of 30 OIG special agents and 4 auditors to the scene.
    Our investigative efforts to resolve this bioterrorism threat continue. I am pleased to be able to report that extensive testing of samples taken from the plant has not indicated the presence of human HIV-infected blood.
    In another case in late 1997, 15 individuals in Colorado consumed ground beef products and became ill because of E. coli bacteria. This prompted the largest meat recall in history. Approximately 25 million pounds of product was recalled.
    OIG immediately sent an emergency response team of investigators and auditors to the plant of origin in Nebraska to investigate. A meat plant and two company officials were criminally indicted in December 1998, the officials for their part in misleading investigators during our attempt to determine the source of the E. coli outbreak.
    In addition to adulteration of meat products, food safety concerns also encompass other types of food. In March 1997, an outbreak of hepatitis A virus in Michigan sickened approximately 190 school children. The hepatitis A outbreak was associated with frozen strawberries served to school children as part of the U.S. Department of Agriculture's School Lunch Program.
    The strawberries came from a San Diego-based company. The company and its owner pled guilty to charges of submitting false claims to USDA for substitution of Mexican strawberries for United States domestic product.
    Recent governmental assessments of the threat of biological terrorism omitted—I will say it again—omitted agriculture as a potential target. American agriculture is a major part of the critical infrastructure of the United States, and it is highly susceptible to biological threats. This is of major concern when you consider that American agriculture, that includes agribusiness, makes up nearly 15 percent of our gross domestic product and generates $1 trillion in economic activity each year.
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    Given these concerns, we are taking the necessary steps to address this issue through the creation of critical incident response teams, which respond decisively to such threats.
    We also need to be mindful of the economic impact caused by closing a major food-processing plant, which we can help minimize with a rapid response.
    Moving to our second main topic of discussion, the Food Stamp Program has been a continuing priority for us for a number of years. This very important program helps to put food on the table for some 9 million households and more than 20 million individuals each day. Because of the size, importance, and vulnerability of the Food Stamp Program, we devote a significant portion of our audit and investigative resources to this area.
    We are also maintaining a keen focus on the development of electronic benefits transfer [EBT]. These systems deliver Food Stamp Program benefits. Under EBT, a recipient uses a debit card at the grocery store, rather than food stamps. When the sale is complete, the computer system automatically deducts the amount of the sale and keeps track of the food stamp benefits remaining. We want to be sure EBT systems are implemented and are working properly because EBT has more built-in safeguards than paper food stamps.
    In addition, I will touch on household and retailer eligibility, but first I want to discuss a major benefit resulting from welfare reform, which this committee and Members helped pass. Operation Talon—and I have included an Operation Talon handout for everybody on the committee—is an ongoing law enforcement effort led by my office and carried out in conjunction with State and local law enforcement agencies and social service agencies across the country.
    [NOTE.—The report entitled, ''Operation Talon,'' was supplied for the record and is retained in the files of the committee.]
    Mr. VIADERO. Operation Talon was made possible by welfare reform, which, as you know, allows law enforcement fugitive records to be matched with social service agencies' food stamp records. The information is used by law enforcement officers to locate and apprehend potentially dangerous, violent fugitive felons who may also be illegally receiving food stamps.
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    Operation Talon has been the most successful initiative we have yet undertaken. Thus far, Operation Talon has resulted in the arrest of in excess of 3,650 fugitive felons. In addition to numerous individuals wanted for murder or other violent crimes, Operation Talon has brought into custody 18 fugitive felons wanted for child molestation. Noteworthy is that 2 of these 18 have also been charged with violation of State Megan's law statutes, which require sex offenders to register at their place of residence.
    We continue to combat food stamp trafficking, whether it be through the traditional coupons or EBT. Last year, for example, investigations of large-scale fraud operations in New York, Philadelphia, and Detroit have thus far identified 55 store owners and employees involved in the unlawful acquisition of some $99 million of food stamp benefits. This has resulted in the arrest and conviction of many of these individuals, some of whom have been sentenced to prison terms and ordered to pay millions of dollars in restitution.
    As noted earlier, one improvement we are delighted to see is the advent of EBT. USDA has been at the forefront of EBT development over the years. Today with the use of EBT debit cards, over 50 percent of food stamp benefits are disbursed via EBT versus paper food stamps. Thirty-six States and the District of Columbia have operational EBT systems with 29 States operating statewide. All States must be EBT-operational by the year 2002.
    While trafficking of benefits has not been eliminated by EBT, we believe the number of individuals involved in street trafficking has been reduced. We can use the information available under EBT to identify and prosecute those who engage in illegal transactions.
    While paper coupons are generally not traceable to individual recipients, the EBT system records the date, time, amount, recipient identification, and store involved in the illegal trafficking.
    The Food and Nutrition Service [FNS], is also using EBT data to disqualify violating retailers. And State authorities are using information obtained from EBT records to disqualify large numbers of recipients who have sold or trafficked their benefits.
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    Not only has OIG been supportive of EBT from an investigative perspective, we have taken an active role in monitoring and reviewing currently operating EBT systems. By being in on the front end of the implementation of these systems, we can readily identify and report on problems that need to be addressed early. We believe that participation as an FNS-authorized retailer should be regarded as a privilege and not a right.
    In February 1995 during my testimony to the Committee on Agriculture concerning enforcement of the Food Stamp Act, I proposed a 10-point package of legislative and regulatory changes to enhance the integrity of the Food Stamp Program.
    Since that time, we have seen many of our proposals come to fruition. A few of them, however, have not been enacted. And these include requiring stores to be in the retail food business for a minimum of 1 year prior to authorization or requiring them to obtain a surety bond, and charging stores a licensing fee to participate in the program. Implementation of these recommendations would have a significant positive impact and enhance the integrity of the program.
    This concludes my statement, Mr. Chairman. I thank you again for the opportunity to address the committee. I would be pleased to answer any questions you or committee members have. And if time permits later in the hearing, we brought along some visuals for you, too. We could go through what food safety issues we have been working on.
    [NOTE.—A report entitled, ''Report to the Secretary on Federal Crop Insurance, March 1999, No. 05801–2–At,'' was supplied for the record and is retained in the files of the committee.]
    [The prepared statement of Mr. Viadero follows:]
    [The official committee record contains additional material here.]

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    Mr. BURTON. Thank you, Mr. Viadero.
    Mr. VIADERO. Thank you, sir.
    Mr. BURTON. Let me just say that I anticipate we will be asking you a number of questions about some of the issues you raised.
    Ms. Gaffney.
    Ms. GAFFNEY. Mr. Chairman, members of the committee, I would like to talk to you just briefly about why reinvention and reform are excruciatingly difficult or can be excruciatingly difficult in the Federal Government.
    By way of background, HUD administers many diverse programs. We count some 350 such programs. The number grows year by year. These are programs that are extremely difficult to administer. They tend to be competitive. They tend not to have market incentives built into them. So they require oversight scrutiny on a continuing basis.
    A second factor is that we have well-established and growing interest groups surrounding each one of these programs. They tend to be powerful. And that may, in part, be the reason that attempts at legislative reform, program streamlining and consolidation, have met with no success. Secretary Cisneros tried such an approach and got absolutely nowhere.
    Another factor about HUD is, as we all know, that the General Accounting Office and the OIG have been saying for years that HUD suffers from serious internal control weaknesses. These go back, these weaknesses, to a period of neglect, worse than neglect in the 1980's. And these are not trivial weaknesses.
    When we say, for instance, material weaknesses in information systems in HUD, I mean we have information systems that don't have the correct addresses of buildings that we are responsible for. That is really basic stuff.
    Also, another factor about HUD is that it is an organization that is strongly geared to meeting the agenda of the political leadership. This is not a Social Security Administration that goes on meeting its basic mission, no matter what the political leadership is. This is an organization that changes its agenda, its focus, as the political leadership changes. And that tends to happen, the last time I saw the numbers, about every 18 months.
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    And, finally, as you all know, the other big factor, background factor, about HUD is that the number of staff has constantly been dwindling since the 1980's. And everybody has seemed to like that a whole lot.
    Against this troubled kind of background, Secretary Cuomo has launched a reinvention reform plan called HUD 2020. Legislative reform and program consolidation are not a part of HUD 2020 as it is being implemented. I think the reasons for that are clear. Secretary Cuomo saw what happened when Secretary Cisneros tried that approach.
    The second thing that has happened is major continuing staff cuts without any rational basis. There was a political decision before Secretary Cuomo to cut staff. There was no basis for that staffing cut, no analysis, but we have held to that commitment. That is the first thing that happened in HUD reform. The staff was cut by more than 1,000 people.
    Then what happened is HUD 2020 introduced sweeping organizational and management process changes. The organizational changes, which affected the whole agency, have been implemented. The management process changes are very complicated. And they are still in process.
    The Secretary believes the staffing cuts can be accommodated when this entire reinvention plan is in place. Multi-family staffing was cut based on a series of reform assumptions. Those assumptions have not yet been realized. Single family staffing was cut based on a series of assumptions, and those assumptions have not been realized.
    It is very difficult to disagree with the goals of this reform effort, but you should be aware that there are great uncertainties surrounding what is to come and whether it is going to be successful.
    Part of the problem is the Secretary is trying to address these internal control deficiencies at the same time that he is making sweeping organizational and program process changes. The trouble is that these internal control deficiencies are difficult, difficult and presumably are going to take years to overcome, making any change at HUD tremendously difficult. They compound the difficulty by 100 percent at least.
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    The second thing is that the centerpieces of this reform effort are not in place. And so other parts of the reform effort are virtually on hold.
    There is tension. This reinvention effort is heavily dependent on a particular style of management, which is the Secretary's. It is centralized largely. It is causing tension between the new units and the old units. The interest groups surrounding HUD are not necessarily in favor of parts of the reinvention plan. And so there is the prospect of litigation.
    In the meantime, while all of this is going on, HUD is in a more unbalanced state than it has been. And its ability to monitor its programs is less than it has been. And I would just like to say one thing about what that means.
    In the case of HUD, it is not disembodied. When there isn't HUD oversight, when there isn't program accountability, the victims are not just the taxpayers. The victims are people to whom we have promised decent, safe, and sanitary housing. And, instead, they are living with snakes and rats and no heat.
    So this is a serious matter. My concern is that the Congress collaborate with HUD in making this happen.
    [NOTE.—A report entitled, ''U.S. Department of Housing and Urban Development, Audit of Fiscal Year 1998 Financial Statements, March 19, 1999, 99–FO–177–0003,'' was supplied for the record and is retained in the files of the committee.]
    [The prepared statement of Ms. Gaffney follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Thank you, Ms. Gaffney.
    Ms. Brown.
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    Ms. BROWN. Good morning, Mr. Chairman. I am June Gibbs Brown, Inspector General of the Department of Health and Human Services. And I am here to talk about the most significant issues confronting our department.
    HHS programs are critical to the well-being of all Americans. However, I am sorry to say these same programs, especially Medicare, are extraordinarily vulnerable to fraud, waste, and abuse.
    The most challenging problem confronting Medicare has been its weak payment control systems. The first time we made this analysis, in 1996, improper Medicare fee-for-service payments totaled $23.2 billion, or 14 percent, of all payments made. In 1997, the improper payment projections showed a slight improvement at $20 billion, or 11 percent, of the payments.
    I am happy to report, and, as mentioned by you and others on the committee this morning, we are beginning to see some real progress in reducing these improper payments. Yesterday I announced that the improper payment rate in fiscal year 1998 dropped to $12.6 billion, or 7.1 percent, of payments. This is a 40 percent decrease over the 1996 error rate. The department can be very proud of this accomplishment. Nevertheless, we still have a long way to go and must strive for continuing improvement.
    The HIPPA legislation set the stage for a great deal of progress, particularly some of that that I was just speaking of. And it reflects the all-out effort of the department to improve and increase its payment review procedures. It also reflects our own more frequent and intensive audits and investigations that were made possible by our HCFA-derived funding increases.
    Equally important are the funding reforms included in the Balanced Budget Act of 1997. This law addressed structural weaknesses in nursing home, home health, and other programs, and made it easier to reduce excessive payments and more difficult for unqualified providers to participate in Medicare.
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    The Congressional Budget Office estimated that just in those reforms that had been recommended in reports of the HHS OIG, we would save Medicare almost $70 billion over 5 years. But those savings can be realized only if the BBA provisions are fully implemented.
    While HCFA reports that it has already made progress and implemented many sections of the BBA, it will be unable to implement certain payment reforms by the mandated dates because of the need to address the year 2000 computer problems.
    We are also studying and are becoming sharply aware of serious shortcomings in the Nation's mental health service system. A good illustration of this can be seen in the so-called partial hospitalization benefit. This has been an intensive level of service that is provided by hospitals and community mental health centers to patients living in the community who have serious mental illness. In the absence of these intensive services, the individuals would need to be institutionalized.
    In a five-State review of community mental health centers, we found that of the $250 million in Medicare payments for this benefit, over 90 percent of the payments were inappropriate or highly questionable. Many of the patients did not have severe or disabling psychiatric conditions, which were required for eligibility to the program.
    We also found that the services being provided were not the intensive type covered by the statute. They were merely socialization or recreational programs provided in a group setting.
    Prior to our reviews of partial hospitalization services, we had uncovered improper payments for mental health services for Medicare patients living in nursing homes. We are also concerned about quality-of-care deficiencies in psychiatric hospitals, including improper use of restraints, especially for children. We intend to followup on these programs with appropriate studies and appropriate investigations.
    Other problems that I mentioned will illustrate only a few of the risks we face in Medicare. My written testimony highlights similar Medicare risks in the categories of managed care, home health, durable medical equipment, prescription drug prices, and quality-of-care problems in nursing homes.
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    However, the department's problems are not limited to Medicare. For example, in 1995, the OIG was authorized by the Department of Justice to investigate violations of the Child Support Recovery Act. This act passed in 1992 and makes it a Federal offense for a noncustodial parent residing in a different State than the child to willfully avoid paying his or her court-ordered child support obligations.
    Since 1995, the OIG has opened over 420 cases, arrested 130 subjects. And as a result of these efforts, 90 individuals have been sentenced and over $7.3 million ordered in restitution.
    In addition and more recently, in conjunction with Office of Child Support Enforcement, the OIG has created and established a multi-agency, multi-jurisdictional task force, the purpose of which is to identify, investigate, and prosecute the most egregious criminals that will be at both of the State and Federal levels. To date, this task force has opened up over 250 additional investigations and arrested approximately 185 individuals.
    In confronting threats to our programs, we have not limited ourselves to traditional audits and investigations. We have initiated new approaches, such as providing health care industry advice in the form of compliance guidelines, fraud alerts, and advisory opinions. We are reaching out now to beneficiaries through educational campaigns to help them participate in preventing, identifying, and reporting improper Medicare billing practices. We have also expanded our toll-free hotline for beneficiaries and providers to report suspected fraud.
    In 1998, our multi-dimensional approach resulted in 261 convictions, 927 civil settlements, and 3,021 exclusions of both individuals and organizations from the Medicare program. Our office was pleased to report record savings of $11.6 billion associated with our work last year. This included almost $11 billion in funds put to better use, $147 million in disallowances for questioned costs, and $516 million in investigative receivables.
    You can see that the problems we confront in HHS are significant and their impact is tangible and alarming. However, our programs and beneficiaries can be protected if we continue to work together.
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    I welcome your questions.
    [NOTE.—A report entitled, ''Department of Health and Human Services, Office of the Inspector General, Improper Fiscal Year 1998 Medical Fee-for-Service Payments, February 1999, No. A–17–99–00099,'' was supplied for the record and is retained in the files of the committee.]
    [The prepared statement of Ms. Brown follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Thank you, Ms. Brown.
    It appears to me and it seems pretty realistic, I guess, that each one of these agencies wants to streamline, wants to make their agency more cost-effective, but they haven't been able to do it for one reason or another. It may be pressure from outside groups. It may be that you need legislative solutions. It may be the administration has programs that are pet projects.
    I would just like to say that this committee would invite you to carry back to your heads of the agencies our desire for them to give us suggestions on what can be done to streamline and make agencies more cost-effective and efficient. I work with Mr. Cuomo a little bit. I think he is a pretty good guy and trying to do the right thing over there. But what I would like to suggest is that if they have legislative proposals or initiatives that they think should be put forward by the Congress and passed by the Congress to assist them in cutting out duplication of streamlining government and streamline our agencies, we want to help them. We want to work with them to do that in a bipartisan effort.
    So please convey that message to every one of the agency heads. And we are going to be talking with them as well as doing what we can do to be helpful in reaching our goals of making government as cost-effective as possible.
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    Now I have a few questions I would like to ask. Regarding the Food Stamp Program, you said that they are going to this EBT system?
    Mr. VIADERO. Yes, sir.
    Mr. BURTON. And instead of giving them stamps, they are going to be using some kind of a computer card?
    Mr. VIADERO. Yes, sir, a debit card.
    Mr. BURTON. A debit card. Does that identify what they are buying?
    Mr. VIADERO. No, it does not.
    Mr. BURTON. Well, that is something that I think is extremely important. I go to a Giant supermarket here in Alexandria, and I go to a Marsh supermarket back in Indiana. When I go through the line, inevitably I will see somebody who is using food stamps to purchase products. And they are purchasing nonessential products. I see them buying beer and cigarettes and other things.
    And the stores, inadvertently maybe, are accepting these food stamps for those purposes. And I don't think that is what we have intended. We have intended for the people to get food and necessary things for those food stamps.
    It seems to me if you are going to an electronic card system, it ought to be very easy to have it itemize what is being sold. Every supermarket does this now to keep track of their inventory.
    So it seems the government could very easily find out if people are buying beer or wine or cigarettes with food stamps. And if that could be incorporated into it, we could find people who are wasting taxpayers' money by buying these nonessential things. It doesn't seem to me like it would be that hard to add to the equation.
    Can you respond to that?
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    Mr. VIADERO. Yes, sir. Mr. Chairman, we will take the Commonwealth of Virginia as an example. You mentioned the Giant stores that are there. When a person goes up and identifies themselves as using either an EBT card—when Virginia goes online statewide—or coupons, the cashier has to enter a special code because purchases made with food stamp benefits are not subject to the State tax.
    So, therefore, it will, as the product gets scanned at the register identify those products to be paid for with food stamps that are authorized under the program, but it will not automatically block nonfood items from being paid for with the EBT card. So there will be a food stamp total and then another total for cash. And we depend on the integrity of the store and the cashier to enforce the rules on purchasing only food products.
    Mr. BURTON. Well, there has got to be a problem there, sir, because I have seen people go in with no money and get food stamps in front of me in the line and buy beer and wine. So I don't know how they are doing that, but it has got to be——
    Mr. VIADERO. This is on the computer system of the individual vendor that this happens.
    Mr. BURTON. All I can say is that it seems to me that there ought to be a very active way of policing that, especially if you are going to——
    Mr. VIADERO. And I am certain that there is. The problem is: How much money do we want to put into it? How much money is there to put into it? And most of the trafficking that we found, about 15 percent of the stores do about 80 percent of the business. And the 15 percent are the large food chains, such as Giant, Kroger, Meier, et cetera. We don't really have a trafficking issue with those people. Where the trafficking goes on is the ma and pa store.
    And the ma and pa store, when we proposed the licensing fee and a surety bond, the industry went bonkers with that 3 years ago because they are saying it is costing too much.
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    Let me explain how good this EBT really is. EBT went online in April 1994 in the State of New Jersey. We recently completed a 2-year investigation of five New Jersey counties involving approximately $9.5 million worth of EBT fraud. And we are only scratching the surface in a lot of these cases. It gets down to resources and manpower.
    The thing is, which brings in something that you mentioned, this individual had such nerve he was reporting about $150,000 worth of food sales. He redeemed in excess of $1.6 million worth of food stamp benefits on EBT. And his tax return, which we got, even gave him an earned income credit of $1,440.
    Mr. BURTON. Well, I am sure that you are catching some of them, but I would like to maybe have a report from the agency or from you——
    Mr. VIADERO. Sure.
    Mr. BURTON [continuing]. Maybe you already have that—that explains the procedures that are being followed because it seems to me that if you spot-check and you catch people and you publicize that the people are being prosecuted for that, it would be a strong deterrent for further waste.
    I think we have a vote on right now, and I see several Members have left to go vote. So we will recess the committee. And if you would bear with us, we will be back shortly.
    Mr. BURTON. We can reconvene. Other Members I presume will be back shortly. I appreciate your patience while we were gone.
    Mr. Viadero, you said something about HIV blood. I had not heard about that. Can you real briefly give us an update on that?
    Mr. VIADERO. Yes, sir. In December, a meat company, a full-service meat company—that is from slaughter right through deboning; it is a HACCP plant and right-out-the-door processed product—received an extortion threat. The threat was received at the Milwaukee Police Department, which talked to their health people. The extortion was that somewhere in the plant—we did not know whether it was in the slaughter facility or in the processing facility or the storage facility—there were containers of HIV, AIDS-contaminated human blood, and unless the plant did what the extortionist wanted, it would be put on the food.
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    Mr. BURTON. They checked it out, and it wasn't true?
    Mr. VIADERO. Well, we are still checking it out. As a matter of fact, there are 1,600 plant employees. We are in the process and we have been in the process since of interviewing every employee. About 90 percent of the plant employees are immigrants. So the——
    Mr. BURTON. How do the Department of Agriculture and I presume FDA police something like that? Because, as you said, the food supply of this country is subject to biological terrorism.
    Mr. VIADERO. Well, we respond to every threat and every referral from the Food Safety Inspection Service, as we did with the Nebraska plant with the 25 million pounds. In this case, we responded. The FBI had already opened the case up as an extortion and under the category of weapons of mass destruction.
    Mr. BURTON. So you are working with other agencies, like the FBI?
    Mr. VIADERO. Yes. The FBI opened its command post up. And I had 30 agents respond immediately and 4 auditors to go out there.
    We are looking at it, and we prioritize our work into three priorities, Mr. Chairman. No. 1 is the public safety. That is A, No. 1. The second priority would be the safety of the employees, both the plant employees and the government employees. That would be the FSIS inspectors and the compliance officers as well as my employees that are present; and, third, looking at the response time and the decisionmaking that has to be done to remember that you can't definitely say one way or the other whether the extortion is real or it is simple, just a ''No.'' The continued financial viability of the firm is a concern because if we didn't act promptly, we would have put 1,600 employees on the street 2 weeks before Christmas.
    Mr. BURTON. OK. Thank you.
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    One of the things that was in those two reports—I want to bring your attention back to the report by Peter Jennings and Tom Brokaw—was the duplication. For instance, they showed cans of soup or soup products; whereas, one was chicken, one was beef, one was handled by the Department of Agriculture, one was handled by the Food and Drug Administration. How do we make sure that that overlap or that duplication is eliminated? And are there any attempts being made to do that right now?
    Mr. VIADERO. I think this committee would be the ideal forum for any review on that, sir. And I offer you one that is even better, that the cattle that are out in feeder pens are under the care and custody, if you will, of FDA in terms of therapeutic and antibiotic drugs. And it is not until they get on the slaughter line and the chains are put around the hocks of that cow that that cow then comes under——
    Mr. BURTON. The Department of Agriculture.
    Mr. VIADERO. Right. And we get into a separate issue. We have had a criminal case on this with the introduction of Clenbuterol, which is a very powerful beta-agonist, into the animals prior to arriving in these feeder pens. It is unknown how long it takes to get beta-agonist out of the system. And, of course, the eye being a membrane, FSIS inspectors will occasionally extract an eye and send it off for analysis.
    Mr. BURTON. I think I understand where you are going, but let me just say this. It seems to me that each agency knows where that overlap takes place, when it takes place, and how it takes place. I wonder if we could—and I would ask our staff to do this, too—contact each agency and we will write letters to them to find out where this overlap does take place and see if legislatively we can streamline it from the Congress to assist these agencies.
    And, once again, as I said, I would like to extend an invitation to every department head to tell us where these overlaps take place, where they think we can streamline, and where they need legislative assistance. And our committee and hopefully the Democrats and Republicans working together can get legislation on the floor and passed, which can help economize and thereby come up with money for other programs.
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    Ms. Gaffney, you said that Mr. Cisneros got nowhere when he was talking about trying to come up with some cost-saving proposals because of political pressure and other things from organizations outside the department. What kind of problems did he have? Can you tell me real quickly? And what can be done legislatively to assist Mr. Cuomo now?
    Ms. GAFFNEY. Well, to be very blunt, what HUD has been unable to get is legislation. What HUD needs to consolidate and streamline its programs is legislation.
    Mr. BURTON. OK. Well——
    Ms. GAFFNEY. And we have had a hard time.
    Mr. BURTON. Well, what we want, then, is for you and Mr. Cuomo—and, like I said, I worked with Mr. Cuomo a little bit, and I think he is a good man, wrong party but a good man. But, anyhow, if we could get you and Mr. Cuomo and others in that agency to let us know legislatively what you want, I will try to get Mr. Cummings and people on the other side to work with us and cosponsor bills, which will help you streamline and get the job done over there.
    Ms. GAFFNEY. Thank you.
    Mr. BURTON. And, with that, I think my time has expired. Mr. Cummings, do you have some questions?
    Mr. CUMMINGS. Thank you very much, Mr. Chairman.
    First of all, Mr. Chairman, I have a statement from the Honorable Rosa DeLauro and Nita Lowey with regard to their Food Reform Act of 1999. I ask unanimous consent that that be a part of the record.
    Mr. BURTON. Without objection, so ordered.
    [The prepared statement of Hon. Rosa DeLauro and Hon. Nita Lowey follows:]
    [The official committee record contains additional material here.]
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    Mr. CUMMINGS. Thank you very much.
    First of all, again I want to thank all of you for being here. I have several things that I am just concerned about. To the Inspector General, Department of Agriculture, the GAO report released on January 29, 1999 found that the Office of Civil Rights continues to suffer major problems that continue to hamper the timely processing of discrimination complaints.
    Your office has examined the Office of Civil Rights for over 2 years and has identified many problems with the operation and structure of the office. Recently the department has agreed to settle longstanding discrimination complaints brought by black farmers.
    In some cases, farmers had waited over 20 years—that is phenomenal to me as a lawyer who has practiced 20 years—to get the department to act on their cases. Now the farmers and the department have entered a proposed consent decree, which would provide a remedy for many farmers.
    Will your future activity involve any monitoring and review of any settlement efforts which might occur outside the consent decree? And will your future activity involve monitoring and review of the settlement efforts which occur within the consent decree?
    Mr. VIADERO. In answer to all questions, yes, sir. As you know, of course, every Member of Congress has received all five copies of all of the civil rights work that we have done. And, in fact, sir, when you review the suits from the black farmers, virtually every paragraph cites our audit report in sustaining these allegations that these folks made. Presently we have Phase 6 ongoing.
    All of these were directed by the Secretary of Agriculture, Dan Glickman. He called me personally and said: I want this done. And as we found new issues, we rolled those into the next phase. We are presently doing the settlement agreements. As we speak, it is ongoing. We plan to have those done sometime the latter part of April or May.
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    Mr. CUMMINGS. You know, a number of us worked really hard on that. And I am glad that we were able to come and help those farmers because they were suffering and I think they were treated very unfairly. Your report seems to indicate such.
    Mr. VIADERO. Yes, sir.
    Mr. CUMMINGS. I am trying to figure out, I mean, you all have pretty much defined—you, Ms. Gaffney, talked about the various problems in bringing about change. You talked about streamlining inadequate information systems, political leadership, staff dwindling. And I listened to the chairman talk about how we need to talk to the Secretary, and I definitely agree.
    But with this ever-changing wave of administrations and new Secretaries every 4 years, sometimes 3 years, how do we really get a handle on change? I mean, it just seems to me that we have got this monster that we have created over the years. And I think every administration—and when I say ''administration,'' I am talking about Secretaries, not just the President, Vice President, but they add a little piece here, little piece there.
    And then you get people who are entrenched. And so sometimes I get the feeling that the Secretaries sort of come along, they make some policies to do the best that they can while they are there. Everybody who is entrenched knows that they are leaving. And so they figure: Well, we will just bide our time and he or she will be gone. And then we are doing the same things we have been doing.
    I think one of the things that concerns me in my 14 years in the Maryland Legislature is that people would come before us and we would ask secretaries of State departments. We would ask them: Well, why do you do what you do? And they would say: Because we have been doing it. Although times have changed, circumstances have changed, they continue to do what they do.
    It reminds me. I get similar thoughts here. And I am just wondering: How do we move? You said something about you couldn't get legislation. Does that mean the legislation was presented to us as a Congress and we didn't help or does that mean it never came out from the administration? I mean, tell me more specifically what you meant by that.
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    Ms. GAFFNEY. There have been legislative proposals made to streamline and consolidate HUD programs. I think some, not all of them, made it to the Congress, but certainly some of them did. And they were not acted on. But when I was talking to the chairman about the interest groups that surround HUD programs, those powerful interest groups don't necessarily have an interest in consolidating and streamlining HUD programs and they influence the Congress.
    Mr. CUMMINGS. Ms. Gaffney, I also am ranking member of the Civil Service Subcommittee of this committee. It came to our attention that Deputy Assistant Inspector General for Investigation Philip Newsome had filed a complaint. And there are reports that your office tried to audit the civil rights investigation of Mr. Newsome's complaint. There are also reports that you investigated Mr. Newsome for sending a letter to Congress.
    We are very concerned about those kinds of things. And I have—may I just finish my question? Thank you very much, Mr. Chairman—raised these issues in other agencies because we had a situation not long ago where someone came to our subcommittee with regard to a complaint, a discrimination complaint, from Commerce. And they had witnesses that were supposed to come with them, but because they felt threatened, they did not come forward. And we were very discommitting. And to the credit of the entire committee, I was very upset and concerned about that.
    And I just was wondering with regard to the Newsome situation. Do you think it was unfair for him to present an issue to the Congress of the United States of America? I am just curious.
    Ms. GAFFNEY. No. That was never investigated.
    Ms. GAFFNEY. That simply is not true. And I think it is not that it is just a matter of fairness. I think there is a statutory right to do that.
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    Mr. CUMMINGS. I just wanted to make sure. I was just concerned. And I appreciate you. Again, you have made that clear. The report got into us. In the Civil Service Subcommittee, I just was concerned about that.
    Ms. GAFFNEY. It is not correct, sir.
    Mr. CUMMINGS. I just had one more question, if I might, just one more.
    Mr. BURTON. Go ahead, Mr. Cummings.
    Mr. CUMMINGS. You know, Mr.—how do you pronounce your name? I am sorry.
    Mr. VIADERO. Viadero, sir.
    Mr. CUMMINGS. Viadero. One of the things that you were talking about, AIDS and blood, and I don't know whether this comes under your jurisdiction or not, but I remember not long ago having a conversation with some people in the funeral industry. Do you all regulate? You don't have anything to do with that, do you?
    Mr. VIADERO. Not that I am aware of, sir.
    Mr. CUMMINGS. OK. Would you?
    Ms. BROWN. Of what industry, sir?
    Mr. CUMMINGS. Funeral industry.
    Ms. GAFFNEY. No.
    Mr. CUMMINGS. No?
    Ms. GAFFNEY. I am not aware of——
    Mr. CUMMINGS. So what happened, there was a question of what happens to the blood that is drawn from bodies. I was just curious. And it is a real issue.
    Ms. GAFFNEY. I don't know. It is a good question.
    Mr. CUMMINGS. Yes. I mean, I was just curious because they were saying that it finds its way perhaps in places where we would least expect. And I was just curious.
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    Mr. VIADERO. That would be a good Jeopardy question, sir.
    Mr. CUMMINGS. Well, we have to find out the answer.
    But thank you for your indulgence, Mr. Chairman.
    Mr. BURTON. Thank you, Mr. Cummings.
    Mr. CUMMINGS. Thank you all.
    Mr. BURTON. We might double-check that, ask our staffs to double-check that. I think that is regulated by the States, but it may have some Federal implications.
    Mrs. Morella.
    Mrs. MORELLA. Thank you, Mr. Chairman. I am glad that you held this meeting because I have always felt that Inspectors General are imperative to the operation of every agency. And I like to recommend that Inspectors General work closely with the agency heads and with Members of Congress because we learn a great deal about what is happening within the agencies of our jurisdiction.
    I know we have seen this happen with FAA. The Inspector General has been exceedingly helpful in working with FAA. And I am a strong advocate of the Inspector General Program.
    I want to ask you. You submit your recommendations. We look at your reports. What happens when they don't abide by them? For instance, you mentioned agriculture not being included. And we have a number of problems in housing. And, of course, I want to get to HHS in a minute. What happens if they don't look at your recommendations with any great depth or credibility or desire to move ahead? Do you then repeat them or what do you do, anybody who wants to answer it or all of you may have a very brief answer?
    Ms. GAFFNEY. Well, I can tell you our approach. I think that unless we are really willing to fight for our recommendations if we think we are right, we shouldn't engage in the audits. And so if we have an auditee who ignores our recommendations, we aggressively push the issue up to the Deputy Secretary. And generally the Deputy Secretary will address it.
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    If for some reason the Deputy Secretary doesn't address it and we continue to believe it is significant, then we will put it in our report to the Congress, we will come to the Congress, and we will keep pursuing it.
    Mrs. MORELLA. I hope you all have the strength and the stamina to do that.
    Ms. GAFFNEY. It takes a lot of stamina, yes.
    Mrs. MORELLA. I am sure it does. Does anybody else want to comment on that?
    Ms. GAFFNEY. It is something that we can also do to help you.
    Ms. BROWN. Of course, our reports cover a broad spectrum of things. Some are policy changes, and we try to show what the benefit would be, not to us making policy, but to show why we are proposing what we are. So there are times when it isn't right.
    We, of course, report recommendations, such as audit recommendations over 6 months old, in our semiannual report to the Congress. But, in addition, we have produced two books that have an ongoing maintenance of all of these recommendations. They are called the Orange Book and the Red Book.
    The Red Book has monetary recommendations. And, in fact, the Balanced Budget Act picked up most of those recommendations that have been outstanding for some time and made legislative fixes that had very significant dollar impact on the programs.
    The Orange Book has those recommendations with a nonmonetary significance. Both the Congress and the agency go over these on a regular basis and look at these for ideas on what changes might be considered by those who do establish policy and statute.
    Mr. BURTON. Would the gentle lady yield?
    Mrs. MORELLA. Yes, indeed.
    Mr. BURTON. I was just asking staff about this. These IG reports which we get—and we get all of them—they are very voluminous. And we really don't have the manpower to go through and read every one of them. So what we need to do is contact each one of the agencies and ask them to give us their top 10 requests for legislative action and in synopsis form, I might add, because we don't need another 20,000 pages. And then we will try our best to inform the members of the committee and try to act on them.
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    Thank you.
    Mrs. MORELLA. That is splendid, but I also think that maybe even those top 10 should also go to those other committees'——
    Mr. BURTON. Oh, sure.
    Mrs. MORELLA [continuing]. Jurisdiction, too, so they can also look at it in terms of what they can do.
    Mr. BURTON. Sure.
    Mrs. MORELLA. Speaking of that, I mean, I realize what you said about agriculture not being included in that high risk area and how you set up a critical information response team. It is kind of too bad you had to do that, and I hope that you will push to get agriculture as part of it.
    I was disappointed to hear about the cutbacks that were based on assumptions of Federal employees in HUD. And, of course, I have had some concern about the desire to transfer people and whether or not that was important. Maybe we can talk about that at another time because I want to get to you, Ms. Brown, with regard to the Y2K problem.
    Ms. BROWN. Yes.
    Mrs. MORELLA. Somebody on one of the late shows said that he asked a political figure about what he thought about Y2K, and he said: I haven't had a chance to try that new cereal yet. I think that one of the problems that we are confronting is that people still are not cognizant of how it will affect them. And I know there have been a lot of articles in the paper about HCFA and HHS and being behind, and I read your report.
    You have mentioned also that you are watching very closely, and you are auditing. And you know in March that all agencies are supposed to be totally compliant so they can then have a period to test.
    What I want to ask you is: Do you truly feel that the department is doing the best with regard to end-to-end compliance? By ''end-to-end,'' I mean from the beginning, where you connect with a State, where you connect with localities, where you connect with subcontractors.
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    This is a very, very difficult concept. And I am wondering: Are there special things you are doing that you have some confidence about?
    Ms. BROWN. You have certainly hit on the area that is of greatest concern in testing, and we are working very closely with the agency. We actually go out to all of the contractors. HCFA has 76 contractors.
    The internal systems appear to be on schedule. And we are not as concerned about those. They should be ready. However, all of these systems where HCFA does not have direct control and that interface not only with the other parts of the agency but with other subcontractors and, in some cases, the provider community, those are of greatest concern.
    We actually go out with those people from HCFA who are monitoring. We give them very timely reports. We give them almost on a daily basis any feedback in writing so that they know problem areas that we have identified.
    The deputy at HHS has meetings every 2 weeks for the progress on Y2K issues. And I believe they are on top of it. I don't mean to simplify this at all because even those who have said that they are compliant will have exceptions in the report. And so those exceptions all have to be followed up on.
    It is a very complex and very comprehensive type of job. I would be glad to give you feedback and more detail on that, and we are working very closely. I have people assigned on a full-time basis just to monitor the progress in the Y2K area to be sure that the department has benefit of the expertise that they are providing and also the expertise that the IG office can provide on this issue.
    Mrs. MORELLA. Yours is one of the biggest agencies——
    Ms. BROWN. Yes.
    Mrs. MORELLA [continuing]. And the one that touches so many, many people it is important you not take for granted what people say——
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    Ms. BROWN. Yes.
    Mrs. MORELLA [continuing]. But kind of see evidence of it. And I know Mr. Horn has been working now with me in our joint committees on this very problem.
    Thank you.
    Mr. BURTON. Thank you, Mrs. Morella.
    Mr. Owens.
    Mr. OWENS. Mr. Chairman, I have one basic question. I hope I am not off base because I had a markup before and couldn't get here earlier. Mr. Viadero, I don't see it addressed here at all. So let me ask the question first, whether or not you have jurisdiction over the Farmers Home Loan mortgages.
    Mr. VIADERO. Yes, sir.
    Mr. OWENS. Well, you would have jurisdiction over that?
    Mr. VIADERO. Yes, sir.
    Mr. OWENS. I remember years ago when the Bush administration was still in power. We had a report of a tremendous amount of debts that went unpaid in the Farmers Home Loan mortgages. Later on, after the Clinton administration came in, there were other reports. My colleague from New York, Carolyn Maloney, has followed these huge outstanding debts in various areas for quite a while.
    Where are we now with the Farmers Home Loan mortgages? At one point it was $14 billion outstanding. And I think that went down about $10 billion. Where are we now in terms of the outstanding uncollected debts for the Farmers Home Loan mortgages?
    Mr. VIADERO. Well, sir, as you know, Farmers Home Administration is no longer in existence. With the restructure, it became the Farm Service Agency. They consolidated it all. And, as we stand at this moment, overall management of the $16 billion farm loan portfolio still is an ongoing issue with us. And the figure is about the same as we speak.
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    Mr. OWENS. The figure is what, $14 billion or $16 billion?
    Mr. VIADERO. It is about $16 billion in the farm loan portfolio.
    Mr. OWENS. $16 billion in outstanding debt?
    Mr. VIADERO. Yes, sir.
    Mr. OWENS. And it is not even being discussed here. You know, we are talking about food stamps and a number of other things which need to be discussed, but it is not even on the agenda.
    Mr. VIADERO. But, sir, these are long-term loans. Some of these loans are 30-year loans.
    Mr. OWENS. Some of them have been due for how long?
    Mr. VIADERO. Well, some of them have been due on the aging report, as I recall—and I would be happy to get back to you with the exact detail.
    Mr. OWENS. What does it mean to have an outstanding debt? To be classified as outstanding——
    Mr. VIADERO. Outstanding debt includes both current and delinquent loans. Now, how long it is delinquent——
    Mr. OWENS. $16 billion are delinquent. There are other portions of it, but it could not be——
    Mr. VIADERO. A farm loan is considered delinquent if it is 90 days past due. About $1.9 billion is currently delinquent.
    Mr. OWENS. I was shocked at that time to find there was a set of interlocking decisionmaking groups that were rife with conflict of interest. Many of the people who sat on the creditworthiness or various committees at the local level were also people who had tremendous debts.
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    Was anything done to change that structure so you wouldn't have those conflicts of interest where people would be approving additional loans and various ways feathering their nests and scratching each other's backs on these loans?
    Mr. VIADERO. As I recall, sir, the Farm Service Agency in conjunction with the Risk Management Agency is putting forth a legislative package on this.
    Mr. OWENS. The old system is still in existence, though, at this point?
    Mr. VIADERO. At this time, yes, sir.
    Mr. OWENS. You have a series of committees out there of prominent persons who also receive loans; correct?
    Mr. VIADERO. I will have to go back and refamiliarize myself with that, sir.
    [The information referred to follows:]

    The Farm Service Agency has recently restructured the loan approval process, removing the county committee from the process.

    Mr. OWENS. How much of your agency's attention and resources and staff is devoted to a big debt like this?
    Mr. VIADERO. The Farm Service Agency, we devote about 20 percent of our time.
    Mr. OWENS. Your oversight office devotes about 20 percent of its time overseeing——
    Mr. VIADERO. Most of it is audit time. Yes, sir.
    Mr. OWENS. What kind of collection rate have you accumulated over the——
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    Mr. VIADERO. We don't do collection, sir. Collections are done by the agency.
    Mr. OWENS. Well, as a result of your activities, how much money has been recovered?
    Mr. VIADERO. Again, sir, I don't have those figures available with me now. I will get them to you as soon as I can.
    Mr. OWENS. You have figures available on food stamp collections, though; right?
    Mr. VIADERO. On collections, sir? No, sir, we don't do collections on that either.
    Mr. OWENS. On funds recovered as a result of your activities? Do you have figures on that?
    Mr. VIADERO. Those that are under criminal investigation, yes, sir.
    Mr. OWENS. Legislation is now being prepared which would restructure the way the loan decisionmaking process takes place——
    Mr. VIADERO. I understand——
    Major OWENS [continuing]. In the new agency.
    Mr. VIADERO. I understand, sir, that the Farm Services Agency, which is part of the Farm Agriculture Service and Farm Services Agency that is under one mission area of the department, and one of its subagencies, the Risk Management Agency, are putting forth the legislative initiative on this.
    Mr. OWENS. Is there any other area in your department, the Department of Agriculture, which has a greater amount of outstanding debt uncollected?
    Mr. VIADERO. More than, probably not, sir. We still are the largest outstanding receivable on the consolidated financial statement of the U.S. Government. Our outstanding receivables in all programs are in excess of $102 billion.
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    Mr. OWENS. So this Nation does not have a problem of welfare mothers stealing the government blind. We have a problem of farmers stealing the government blind or somebody out there who is speaking in the name of farmers. Farm businesses are stealing the government blind.
    Mr. VIADERO. Again, sir, the only thing I mention there is that some of this debt, they are very long-term loans, low-interest loans. Some of these loans are outstanding 30 years. They are 30-year term loans.
    Mr. OWENS. How long would you give a welfare mother who is guilty of abusing food stamps? How long would you give them to correct it before you put them in prison?
    Mr. VIADERO. That is not up to me, sir. That is a State requirement who qualifies recipients and recipient enforcement. I only look at people trafficking them and using them illegally.
    Mr. OWENS. We can expect some legislative initiatives from your department soon to correct this monumental set of outstanding debts?
    Mr. VIADERO. Yes, sir.
    Mr. OWENS. Can you give us an estimate about how long we have to wait for that?
    Mr. VIADERO. No, sir. I would contact the administrator of the Farm Service Agency and the Risk Management Agency for their responses.
    Mr. OWENS. Thank you very much.
    Mr. VIADERO. Yes, sir.
    Mr. BURTON. Let me just say that if there is a legislative package that is going to be helpful in recovering these debts that Representative Owens just talked about, I would like to have a copy of that legislative package. And I think Major Owens would as well.
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    I agree with him that if there is outstanding debt, I am sure they are not all 50 years old. I am sure that a lot of them are very recent and overdue. If we could find out what the agency recommends to collect that money and make sure that those who are not paying their debts are held accountable. We would like to move on that. I would like to work with Major Owens on that.
    Mr. VIADERO. Just one thing, sir. They are not overdue 30 years. The term of the loan is 30.
    Mr. BURTON. I understand. But if they are delinquent, we would like to know why and get them online in paying their debts. And if they are not, then they should be held accountable some other way.
    So I will work with you, Major Owens, on that.
    Mr. OWENS. Thank you very much, Mr. Chairman.
    Mr. BURTON. Representative Horn.
    Mr. HORN. Thank you, Mr. Chairman.
    I would just like to ask a few questions and get it in one place in the record. So if we can start with the Inspector General of Agriculture? In the last full year to which you have been able to audit what has happened, how much is your office responsible for bringing into the Treasury, either based on arrests, convictions, and all the rest of it? How much could you contribute to your office?
    Mr. VIADERO. On investigations, sir, our total monetary results were $81 million.
    Mr. HORN. $81 million in recoveries.
    Mr. VIADERO. That is on the investigations side.
    Mr. HORN. For what year? That is for which year?
    Mr. VIADERO. Fiscal year 1998.
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    Mr. HORN. How about 1997? What was it?
    Mr. VIADERO. In 1997, it was a bit more. It was about $82 million.
    Mr. HORN. OK. How about the Inspector General of HUD? How much has been collected by your office based on either mal management, abuse, whatever you want to call it?
    Ms. GAFFNEY. I have the data for the 6 months from April 1 through September 30, 1998.
    Mr. HORN. Well, how about 1997? Take one where you have got a——
    Ms. GAFFNEY. I don't know that I have 1997 in front of me. Would you accept 6 months for 1998?
    Mr. HORN. Fine. And we will multiply it, give you the benefit of the doubt.
    Ms. GAFFNEY. OK. OK. We are at about $32 million.
    Mr. HORN. Thirty-two. Inspector General Brown, how about it? I think once you told me about 2 years ago, your office was responsible for about at least $6 billion, as I recall.
    Ms. BROWN. Yes, that is true. In fiscal year 1998, it was $11.6 billion. And, to break that out a little bit, $11 billion was funds put to better use, $147 million in disallowances from questioned costs, and $516 million in investigative receivables.
    Mr. HORN. Well, I share Mrs. Morella's admiration for what Inspectors General are doing, but when you come up here, just to toot your own horn, so to speak, you ought to have those figures readily at hand as to the good deeds you have done for the taxpayer because you have done a lot of good deeds. And I knew about Mrs. Brown's. I just didn't know the figures for the other two agencies: HUD and Agriculture.
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    Let me move from that to another thing. It rather bemuses me that I see HUD and HHS putting out press releases on the wonderful things that the Inspectors General have told them. And what particularly intrigued me was in the HUD release for today, it says, ''HUD views a General Accounting Office report issued in January of this year as a strong endorsement of HUD's management reforms that are currently underway.'' Do you, Inspector General Gaffney, feel that real management reforms are underway or is this just another downtown spin?
    Ms. GAFFNEY. Well, Mr. Horn, I think there is a lot of spin at HUD, but I think, apart from the spin, what the General Accounting Office said and I agree with is that there are serious efforts to make reforms at HUD that are underway. My real message, though, is that those efforts are in process. No one knows whether they are going to work. The HUD spin is that the reform is over and done with.
    Mr. HORN. How about HHS? I don't know if you have seen it, Inspector General. This is ''Audit shows dramatic decline in Medicare overpayments.'' And it is partly pegged here as to the glories that have happened. And words are put in the Secretary's mouth. We still have a big job to do in eliminating improper Medicare payments. And we all agree with that.
    Do they ever check any of these releases with the Inspector General's office for accuracy?
    Ms. BROWN. Yes. These were figures that we provided to the department. And they decided because it did show such significant progress, although, as the Secretary stated and I have stated, too, there is a long way to go.
    $12.6 billion in improper payments is still very significant. But it was a 46 percent decrease from what it was 2 years ago, when we did the first study of how many improper payments there were in the fee-for-service area. And they chose to do a press release on it to show that the programs in place are working.
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    I think they very rightfully gave credit, too, to the Congress, who passed the Balanced Budget Act, who also passed the HIPPA legislation, which provided funding for more internal controls on the part of HCFA, funding from my office to allow for more vigorous enforcement efforts, the Department of Justice, who has worked closely——
    Mr. HORN. Well, let me move on because I see my time is running out here.
    Ms. BROWN. Right.
    Mr. HORN. Just out of each of you, has your office in your role as Inspector General looked at the public affairs programs in, say, agriculture? Have you ever done a study of what goes on there, how money is used, one way or the other?
    Mr. VIADERO. No, sir, not to the best of my knowledge.
    Mr. HORN. All right. You haven't done a study. Mrs. Gaffney, how about you?
    Ms. GAFFNEY. No, we have not.
    Mr. HORN. Ms. Brown, how about you?
    Ms. BROWN. No.
    Mr. HORN. So you have all three just ignored the public affairs office?
    Ms. BROWN. Those things, though, that I have been aware of have been accurate.
    Mr. HORN. OK. One last question. And this is to Inspector General Gaffney. The House Budget Committee states that there are 18 new initiatives at HUD, which will cost $890 million. I guess I would ask the question: Does it make any sense for HUD to begin $890 million worth of new programs when both your office and the General Accounting Office have identified so many mismanagement problems at HUD?
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    Ms. GAFFNEY. No, it doesn't make any sense to me, but keep in mind that I am an Inspector General. I am conservative. I care more about safeguarding what we have than generating new and making the job more difficult overall. HUD is struggling. I don't understand why we want to make that struggle worse until we get the situation under control.
    Could I just say one thing in response to your public affairs question?
    Mr. HORN. Sure.
    Ms. GAFFNEY. While we haven't done an audit of the public affairs function at HUD, it would be very difficult for me to have ignored that function because, on at least two occasions, that function has issued very negative, very inaccurate reports about Inspector General activities that have caused me tremendous anguish. So, I am acutely aware of their operations.
    Mr. HORN. Well, perhaps you would like to take a look at the operation to see what is happening there.
    Yes. It is a little tough to do your job when you are being undercut by the top part of that department.
    Thank you, Mr. Chairman.
    Mr. BURTON. Thank you, Mr. Horn.
    Mr. Ford.
    Mr. FORD. Mr. Chairman, I know that I arrived late. If my colleague—I don't know her name, but if she was here before me, I defer—I know we go back and forth, but she was here before me—if she was waiting to speak or I can go now, whatever you choose, Mr. Chairman.
    Mr. BURTON. Well, since you are a gentleman, we will ask Mrs. Biggert if she wants to go next. OK. Well, Mr. Ford, she is being very generous. And you are next because we go from side to side.
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    Mr. FORD. Yes, I know. I know she was here before me. I just wanted to give her that opportunity.
    Mr. BURTON. Thank you. You are a real gentleman, and I appreciate it. I am sure she does as well.
    Mr. FORD. Only when Indiana is not playing Michigan in basketball am I a gentleman, Mr. Chairman.
    Mr. BURTON. Well, after watching IU last night, I think they are going to have a tough time with Michigan.
    Mr. FORD. Let me thank the panelists for being here. And I apologize for coming so late and running in and out with some of the other hearings going on. But I wanted to focus for a moment on some of the comments and testimony provided by Ms. Gaffney, whom I have great respect for. Ms. Gaffney's assessment of the semiannual report that many of the major structural elements of the 2020 reform plan are not on track.
    Ms. Gaffney, you note in some of the written statements that many of the management process reforms associated with this plan are still not operational. And it may not be for a year or more. If I characterize in any way that it is contrary, Ms. Gaffney, I am certain you will correct me. And I will be happy to yield.
    Are you going to conclude that the HUD 2020 plan is not a sure thing and that it ignores HUD's mission and programs that concentrate on organization and management process? It builds on systems and internal controls that are still seriously deficient, was driven by staff reductions that had no rational basis.
    I value the opinion of certainly all of the Inspectors General who are present today and certainly Ms. Gaffney's, but I would just like you to respond to some of the differences. And some of them are marked differences and conclusions that other agencies reach.
    I know the GAO issued a report last month which indicates that, ''HUD is making significant changes and has made credible progress since 1997 in laying the framework for improving the way the department is managed.'' It goes on to say that ''HUD continues to make credible progress in overhauling its operations to correct its management deficiencies.'' A major contributor to this process is HUD's 2020 management reform plan.
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    Another one of these highly respected management consulting firms, Booz, Allen and Hamilton, in their report regarding the 2020 reform plan indicates that the reform should present a significant improvement in HUD's performance, lower the risk of waste and abuse in its programs, and position the department to better serve America's communities.
    Finally, I think in perhaps marked contrast, I apologize to the folks on this side of the room who might not be able to see the placard, but it reads, ''In our opinion, if HUD continues going down the road it is going today, the agency that was assembled for government scandal in the 1980's could very well be a model for reinvention in the 1990's.'' In the process, it could write one of the great reinvention stories of recent history.
    Now, I don't profess to know all that is going on at HUD. I am certainly not there day to day, like you are and some of the folks that make HUD work each and every day. And I would be the first to admit I have only been here 2 years. But what little I know about HUD's history, they have certainly struggled or been beset with issues and problems that you have tried to correct, Ms. Gaffney.
    I am just curious. In light of some of the different conclusions that have been reached about this 2020 plan, as we move forward in this committee to ensure that we are providing adequate resources in support for not only HUD but for USDA and some of the other important agencies to do their business and to do it well by the people, I am just curious as to how you might have reached some of these conclusions.
    I know you can't get in their minds and determine why they reached these conclusions but I think it certainly warrants some questioning. And to the extent that I have time left, Mr. Chairman, I would love to allow Ms. Gaffney to respond to that.
    Ms. GAFFNEY. I don't disagree with that statement, and I don't disagree with the statements that you read by GAO. My purpose here is not to be negative. My purpose is full disclosure. What that statement is talking about is goals, a road that we are on.
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    GAO talked in the quotation you read about a framework. I said the same thing. These are good goals. If they work, it is wonderful. I think there is agreement about that.
    What I am trying to disclose to you is the complexity in government of doing the kinds of things that HUD 2020 calls for. This is not like the private sector, where the CEO simply decrees ''Do this,'' ''Do that,'' ''Change the program.''
    The Secretary cannot control everything that happens. He has to deal with the Congress. He has to deal with the interest groups. He has to deal with HUD employees. It is a torturous road. These are complicated reforms. They are going to take time. You can't make them overnight.
    My message to you is somebody had better recognize that outside of HUD and help.
    Mr. FORD. I would totally agree. I am glad that you elaborated on that. I know that if HUD continues down the path that it has gone and continues to generate deserved criticism and create a whole new course of attractors, the Secretary would be forced to shoulder that burden of dealing with that criticism.
    My only question and point in raising this is—and you have elaborated on it somewhat, and perhaps I don't understand all that is going on, but I believe the Secretary ought to be given some latitude, whomever the Secretary might be, Democrat or Republican, to implement some of these reforms. It might make everyone's job easier.
    And I would agree there is no doubt there are different rules as they relate to CEOs and Secretaries, but I think this administration and I know with the help of this committee, we have done some things that a lot of folks on this committee don't agree with. But I do applaud the chairman today for allowing us this opportunity.
    I do think that this administration has made some pretty commendable efforts to try to bring that business public-private partnership mind-set approach back or return it to government or create that atmosphere in the government.
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    I would just hope that as you continue to raise your concerns working closely with the Secretary and working closely with those who want to implement these plans because I certainly didn't mean to question your vigor in seeing the type of changes that all of us desire with HUD and all of the other agencies, for that matter.
    Ms. GAFFNEY. Mr. Ford, let me tell you one of my biggest concerns is when I talked about the change in political leadership in HUD and what happens, like a new agenda every time there is a change, these are a lot of loopholes. I think it is a good road that HUD is on.
    What happens if Secretary Cuomo leaves? What happens? Are you going to be standing there ready to say to the next Secretary ''Stay on the road, even though big parts of this plan are administrative creations and they could be done away with overnight''? That is my concern.
    Mr. FORD. Right, but we have a President who is only allowed to serve two terms. And if he or she—hopefully we will have a she one day. If she decides to present a budget that is 12–14 years down the road, we have to be concerned that the next guy or next woman who would come along—we hope it is a woman because a guy would mess the whole doggoned thing up—the next one would actually continue what he or she might have been doing.
    So I would agree with you, but I would hope that that would not compromise the support that you and others might offer out of a concern that——
    Ms. GAFFNEY. No, no, no. I am just——
    Mr. FORD. No. I hear you.
    Ms. GAFFNEY. I am just here for disclosure——
    Mr. FORD. Right.
    Ms. GAFFNEY [continuing]. Just to say to you ''You need to help.''
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    Mr. FORD. I hear you. And I thank the chairman for allowing me a few extra minutes.
    Mr. BURTON. Thank you, Mr. Ford.
    Mr. FORD. Thank you, panelists, for coming.
    Mr. BURTON. Ms. Biggert.
    Ms. BIGGERT. Thank you, Mr. Chairman.
    I would like to address a question to Ms. Brown on home health care. You stated that you found the home health care benefit to be particularly vulnerable to fraud and abuse. I know that in my area, we have had not-for-profit home health care agencies who have gone out of business because, well, for one, they couldn't compete probably with some of the private agencies because they skimmed off the paying clients but also because of the limits placed by Medicare on the length of service and so ended up really subsidizing because the visiting nurses, for example, wanted to ensure that they could see a patient for longer than the time that was set out.
    And certainly in this day and age with the time of acute care that really is going home out of the hospital at an early time, I really wonder what kind of fraud and abuse that that has found that home health care agencies are taking advantage of.
    Ms. BROWN. One of the problems with the home health care benefit that made it more prone to fraud was that there were no limits on it. There wasn't a set number of days that a person was entitled to for a given type of ailment.
    One of the new proposals is a prospective payment system which will pay a certain amount for home health depending on the type of condition that exists. And this was some incentive, then, for some controls over the benefit.
    Before that, we found that there were astronomical increases for certain ailments, a heart attack or something, that home health could go up from a few days to many months of care. And there was no limit on it.
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    Some of the people that were going out of the business were those who complained to us that people were coming in and offering so much in this benefit, which includes, when appropriate, housekeeping and other types of services besides skilled nursing care, that they were no longer able to stay in business and compete because others were offering very elaborate benefits and it was growing at a very unreasonable rate. And this was why we drew attention to it. That has cut back significantly since we have made a couple of very prominent, well-publicized arrests in this case, with some people being sent to jail.
    Ms. BIGGERT. Thank you.
    I would go on, but we have a vote. So I will just ask one question of Ms. Gaffney. And that is that the Maxwell School of Citizenship and Public Affairs at the University of Syracuse recently conducted a study of 15 Federal agencies that were published in the Government Executive Magazine and found that in areas of financial management and human resources and information technology gave the FAA an overall grade of B-. Would you agree with that assessment?
    Ms. GAFFNEY. No. And we were not consulted by the Maxwell School in the process of their doing that study.
    Ms. BIGGERT. Thank you.
    Thank you, Mr. Chairman.
    Mr. BURTON. Thank you, Mrs. Biggert.
    Ms. BIGGERT. I yield back my time.
    Mr. BURTON. Because I don't want you to have to wait around while we go vote again, let me ask just a couple of quick questions. And I will release you. And then we will go on with our next panel when we return.
    In his budget, the President identified a lot of new programs that he wanted to have enacted. I think there were 77 total. And I think we talked about a few of those. But HHS was supposed to have 20, Ag 2, and HUD 18.
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    I would like to ask each one of you: With the problems that exist, particularly at HUD, do you think they are in a position to handle those new programs? And should they be pursued by the Congress? I will ask each one of you.
    Ms. GAFFNEY. No, I don't think that HUD at this point is in a position to handle new programs. Let me give you an example.
    Mr. BURTON. Shouldn't be saddled with additional programs?
    Ms. GAFFNEY. No, but let me give you an example of what goes on. We just did a major audit of the Empowerment Zone Program that will be issued shortly. What we found is a whole lot of problems with what is being reported as results of the empowerment zones, no HUD oversight, no HUD involvement. And now we are having designated another 15 empowerment zones with no articulation of how we are going to overcome the current problems, much less address 15 new zones.
    Mr. BURTON. I think I get your point at HUD. Let me ask Mr. Viadero and Ms. Brown.
    Mr. VIADERO. We don't see any major impediments to the addition of the two programs, sir. We see them perhaps as being able to umbrella or streamline the existing ones.
    Mr. BURTON. Ms. Brown.
    Ms. BROWN. I would have to say the same thing as Roger has said, that I think the agency could absorb the programs. We are certainly available to look at things ahead of time should the Congress choose to have us do that to see if there are things that should be included that could clarify the way it is——
    Mr. BURTON. What I would like to do is I would like to have you, if you would, in writing maybe take a look at the programs the President is talking about adding and see if any of those initiatives could be included in current programs, rather than starting new ones that are going to create additional administrative staff and so forth.
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    Let me ask just one more question. And then I will thank you very much for your time. In your prepared statement, Ms. Gaffney, you quoted a 1994 National Academy of Public Administration report that said that Congress and the President should seriously consider dismantling HUD and moving its core programs to other agencies. And it has been 5 years since that report. You said that in 5 years, it should be done. This is 1999. Should HUD be dismantled? I just want to know what your opinion is because of all the problems.
    Ms. GAFFNEY. People in the OIG, including me, believe in HUD, want it to work. I think Secretary Cuomo has undertaken a reform program that makes sense. It is not over by far. I think it is worth sticking with this reform effort and trying to make it work. It is going to need your help.
    Mr. BURTON. OK. Well, what I would like for you to do—I don't want to interrupt you, but I do have to go vote—I would like for each one of you—and we are going to contact the other agency Inspectors General and their department heads—to give us recommendations to streamline and legislative actions that need to be taken to assist you and the agency heads in getting that accomplished. And I pledge to you that if you will get that information to us, we will do our dead level best to put it in legislative form and get it passed.
    Ms. GAFFNEY. Wonderful.
    Mr. BURTON. Thank you very much for your time. And we will come back to the next panel in just a moment. I am sorry to keep you waiting. We stand in recess.
    [Followup questions and responses follow:]
    INSERT OFFSET FOLIOS 59 TO 81, 176 TO 186, 83 TO 101, 187 TO 199, 103 TO 111, AND 200 TO 211 HERE
    [The official committee record contains additional material here.]
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    Mr. BURTON. The committee will reconvene. And I want to apologize to you, Mr. Walker, for having to wait around for so long. Before we get to you, I would like to recognize Mr. Ryan, who I believe has a statement.
    Mr. RYAN. Great. Thank you, Mr. Chairman.
    One point I would like to note is that we have so many repeat offenders on the GAO high risk series. You know, I have constituents who ask me why the government is so wasteful and inefficient. And it seems like it is so far out of touch with them, and their concerns. But when you see this repeat offenders' list all the time coming out with no changes, you begin to wonder and you agree with that.
    But I would like to take us down a different path and ask you a couple of questions about the census.
    Mr. BURTON. Mr. Ryan, before we get to questions, let me swear in the witnesses. I thought you were going to make an opening statement.
    Mr. RYAN. I will make an opening statement. And then you want me to go to questions?
    Mr. BURTON. Yes. What we will do is we will go to questions. I will let you ask questions then.
    Mr. RYAN. One of the issues that is one of my highest priorities is the census. The importance of the census to our system of government cannot be stressed enough. It was specifically provided for in the Constitution.
    The founders of our country clearly felt that it was vital to ensure fair representation for the citizens of this country. Getting an accurate count in the year 2000 will be of the utmost importance to the country and to the citizens of my own State, Wisconsin.
    Mr. Chairman, I was disappointed to find the GAO has identified the census as a high risk program. The 1990 census has the dubious distinction of being the most costly census in history. Yet, for all of the money spent, it was less accurate than its predecessors.
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    The 2000 census has been identified as high risk because of factors that indicate that it is currently on the road to being more costly and less accurate than the 1990 census. According to the GAO, the state of the plan for the 2000 census is at risk for a number of reasons, not the least of which is a desire by the Census Bureau to pursue two methods of data collection or focus on obtaining two sets of numbers.
    A sampling is not an option according to the Supreme Court. Our Constitution requires actual enumeration. It is time to turn our attention to a method that will help us achieve just that. It is well within the ability of the Census Bureau to obtain more accurate numbers through a program focused on actual enumeration. A program focused on outreach and local government review will give us the accuracy we are looking for.
    I believe local governments know how important an accurate census is to their representation. Therefore, the incentive is in place. The local governments do not need incentive programs to increase the desire to have everyone counted. They just need tools to make sure that it happens. The Census Bureau can do that by working with them to focus on areas that are typically undercounted. No one in this room wants a failed census. We must do everything possible to ensure that the census plan is on the right track.
    I would like to thank all of the witnesses for coming before us today to the committee. I look forward to your testimony, and I look forward to exploring this issue specifically with you when questioning occurs.
    Thank you, Mr. Chairman.
    Mr. BURTON. Thank you, Mr. Ryan.
    If you would rise, Mr. Walker, we have a standard practice of swearing in.
    Mr. WALKER. Right.
    [Witness sworn.]
    Mr. BURTON. Do you have an opening statement?
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    Mr. WALKER. Yes, I do, Mr. Chairman. I would respectfully request that my entire written statement be included into the record.
    Mr. BURTON. Sure.
    Mr. WALKER. Thank you.

    Mr. WALKER. Mr. Chairman, members of the committee, it is a pleasure to be here. This is my first appearance before a full House committee after being sworn in as Comptroller General of the United States.
    I am pleased to speak about the many high risk problems that we have identified and efforts that can be taken to improve performance and accountability across government. It is particularly gratifying to be before this committee because this committee has had a longstanding commitment to supporting our high risk series.
    In addition, you, Mr. Chairman, this committee, and several others were among the persons who commissioned the new performance and accountability series. I would like to commend you and others for doing that; second, also to commend you, the committee, as well as the ranking member for agreeing to do this on a bipartisan and bicameral basis because basically it is all about good government. And I know this committee is trying to achieve that.
    We have a set of 21 reports and 1 summary that were issued on January 25th of this year. These summarize the high risk agencies as well as performance and accountability issues, major management challenges and program risks in 20 different departments and agencies.
    Mr. Chairman, in order to try to be responsive to our client, the Congress and in order to try to help facilitate more member and media attention to this very important topic, I am announcing today and distributing to each Member of Congress a 30-page summary of all the performance and accountability issues as well as the high risk series.
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    This document condenses over 1,000 pages of information and 22 reports. Literally every person at the GAO has had something to do with this work. And I think hopefully this will help you, the other Members, as well as the media to pay much more attention to this very important topic.
    I would like to focus the balance of my remarks, Mr. Chairman, on three major challenges facing government, which are highlighted in the new executive summary that I referred to: first, the importance of addressing high risk areas; second, the urgency of moving toward full implementation of a management framework, which has already been passed by the Congress to instill a results-oriented government, improve financial management, and revamp information technology practices in government; and last, but not least, Mr. Chairman—I understand you mentioned something about this earlier—the need to move further and to place additional attention on critical human capital issues necessary to fully achieve the goals of a performance-based government.
    [Chart No. 1 follows:]
    [The official committee record contains additional material here.]

    Mr. WALKER. While agencies are making progress in trying to correct high risk areas, as you can see from this chart to my left and your right, Mr. Chairman, there are 26 areas that continue to be on the high risk list because of their greater vulnerability to fraud, waste, abuse, and mismanagement.
    Our high risk initiative has been invaluable in helping the Congress to focus on emerging issues and oversee agencies' efforts to resolve longstanding problems that are costing the government and the American taxpayers billions of dollars.
    In 1997, for example, we identified an emerging issue for this committee and for the Congress the Y2K challenge. I would like to commend Congressman Horn, Congresswoman Morella, Congressman Kucinich, and Congressman Barcia for the leadership that they have shown here in the House in trying to take this very complex, critical, but difficult-to-understand issue and give it the type of prominence that it needs given the importance to our Government and our Nation.
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    If you can, Mr. Chairman, I would now like to change to chart No. 2, where we are talking about some of the areas with regard to OMB's assessment of progress with regard to Y2K.
    [Chart No. 2 follows:]
    [The official committee record contains additional material here.]

    Mr. WALKER. And you will see that they have arranged it into three tiers. Tier 3 represents agencies that are making satisfactory progress, which is the bottom; Tier 2 agencies are showing some progress but about which OMB has concerns; and Tier 1 are the ones of most concern where in the opinion of OMB, there is insufficient evidence of progress. We are trying to work in a constructive manner with the executive branch but also recognize our responsibilities as a congressional oversight agency to stay on top of this issue to try to minimize any possibility of disruption in this area.
    If we can go back, Mr. Chairman, to the first chart on my left and your right, you can see that there are several government programs that have been high risk since the beginning in 1990. For example, the Medicare Program was designated as high risk back in 1990.
    There were $181 billion in expenditures at that point in time. There were a number of areas that were causing fraud, waste, abuse, and mismanagement. While progress has been made in reducing the estimated amount of errors in that regard and problems, much remains to be done.
    I know that HHS is about ready to issue and HCFA is about ready to issue the latest results of their statistical analysis, which will show that some progress has been made. But much remains to be done in that area; the SSI program, about $3.3 billion initially, including $1.2 billion in newly detected overpayments for this year.
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    Defense infrastructure. There is no question, Mr. Chairman, that our military is the best on Earth, that from the standpoint of achieving its mission, it is outstanding. However, that deals with effectiveness.
    What is important to focus on—and I would ask this committee and other committees of appropriate jurisdiction to do so—is the issue of economy and efficiency.
    There are tremendous redundancies in the Defense Department. There is a tremendous need for improvement and to take actions to improve the economy and efficiency of the Defense Department. We are talking about billions of dollars every year that are at stake that could be better utilized for readiness and for critical weapons systems.
    Implementing management change. To help address this area, we have provided our new performance and accountability series. And we believe that this framework, the framework that Congress has implemented through the Results Act, the CFO Act, Clinger-Cohen, et cetera, is an important element to move government from historically being process and output-oriented to being results and outcome-oriented. It is imperative for agencies to effectively implement the statutory framework.
    At the same point in time, I think we have to recognize that in many cases, the challenges associated with these agencies have built up over decades and that it is important that they are taking the right steps. But it is going to take time for many of these agencies to achieve all of the changes that they need in order to achieve the desires of the Congress and the needs of the Nation.
    If I can, I will go to this next chart, where one of the things that was mentioned in the videoclips I think that you showed earlier, before I came here this morning, is the duplication, the overlap, and the fragmentation that exists in many cases in the Federal Government.
    [Chart No. 3 follows:]
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    [The official committee record contains additional material here.]

    Mr. WALKER. You know, a few examples would be food safety, counter-terrorism, drug control, and Federal land management. These represent situations where you have numerous laws in many departments and agencies that have overlapping responsibilities or conflicting responsibilities, obviously leading to the possibility of waste, fraud, abuse, mismanagement, and ineffectiveness. This is an area that the country needs to focus on, the Congress needs to focus on, as well as the executive branch.
    With regard to the CFO Act, which is another main element of basic management reform, you can see that based on 1997 financial statements a number of agencies have received unqualified audit opinions. That is the top list. There are a number of agencies and departments that have received qualified audit opinions, but there are still a few, some of the largest departments and agencies, that have received disclaimers of opinion, the Department of Defense being an example and the Agriculture Department being an example.
    [Chart No. 4 follows:]
    [The official committee record contains additional material here.]

    Mr. WALKER. The other thing, Mr. Chairman, it is important to note that a clean audit opinion is not an end in and of itself. An audit is a means to an end. What is important is that these agencies have the financial management systems, the management information systems, the information technology support in order to make sure that we can run this government economically efficiently, and effectively. And I am concerned that too many agencies see a clean opinion as being the end game. It is not. It is a means to an end, not an end in and of itself.
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    Mr. Chairman, if I can refer back to chart No. 1, you can see that there were several multi-billion-dollar information technology modernization programs that are on the list, which include FAA's air traffic control modernization, IRS' tax systems modernization, the National Weather Service modernization, and DOD's system modernization efforts. In fact, if you add up all of our outstanding recommendations that have yet to be implemented, there are 300 recommendations alone that relate to DOD from a number of different areas, clearly major opportunities for improving economy and efficiency. But, again, we are No. 1 as it relates to military effectiveness, but we are not doing it economically or efficiently.
    Last, Mr. Chairman, of the major issues, human capital, simply stated, people. No organization, whether it be for-profit, not-for-profit, or government, can ever maximize its efficiency and effectiveness unless it has effective human capital strategies. The Congress has already taken a number of steps to deal with government performance, too, the Results Act, to the CFO Act, to Clinger-Cohen.
    However, in order to deal with the strategic planning with financial management, with information technology, more must be done in the area of human capital. We need more reforms in that area. It will be impossible to fully achieve the objectives of the Congress and the needs and wants of the American people unless we have meaningful human capital reform whereby one can link performance measurement reward systems with a strategic plan and where people's resources, whether it be the departments or agencies or whether it be individual compensation, are linked to results that are part of an integrated strategic plan. We look forward to working with the Congress in that area and other areas.
    [Chart No. 5 follows:]
    [The official committee record contains additional material here.]

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    Mr. WALKER. In summary, Mr. Chairman, the two primary goals that I have for GAO are to help continuously improve the efficiency, effectiveness, and economy of, and the accountability over Federal operations and to help enhance the public's respect for and confidence in their government.
    In addition to our ongoing support of the Congress through these reports and testimony and consultations, we plan to update and issue every 2 years a consolidated summary of the performance and accountability series and the high risk series.
    We believe that it is critical to continue our high risk series. We also believe that the performance and accountability series has considerable merit. We are looking to update that, to expand it, to continue to provide meaningful information to the Congress, and to do so in a format that is useful to Members and the media such that, hopefully, we will get more attention to this issue and more broader participation in the years ahead.
    Thank you, Mr. Chairman. I would be happy to answer any questions you might have.
    [NOTE.—The following reports were supplied for the record and retained in the committee files: ''United States General Accounting Office, Performance and Accountability and High-Risk Series, Major Management Challenges and Risks, An Executive Summary, February 1999, GAO/OCG–99–ES''; ''United States General Accounting Office, U.S. Department of Agriculture, Similarities Between the Activities of the Department and Other Federal Agencies, December 1998, GAO/RCED–99–35''; and, ''United States General Accounting Office, Food Safety, Federal Efforts to Ensure the Safety of Imported Foods Are Inconsistent and Unreliable, April 1998, GAO/RCED–98–103.''
    [The prepared statement of Mr. Walker follows:]
    [The official committee record contains additional material here.]
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    Mr. BURTON. Thank you, Mr. Walker.
    I think we will go to Mr. Ryan since he had some questions earlier. I will get to my questions in a moment. Mr. Ryan.
    Mr. RYAN. Thank you, Mr. Chairman.
    Mr. Walker, I would like to ask you about rumors coming out of the Census Bureau, that they will pursue a production of two sets of census numbers: one for House reapportionment, another set of numbers based on statistical sampling for State legislative redistricting.
    Now, the Supreme Court has recently ruled what the census should look like. Since we haven't even seen the new plans from the Census Department, the census is just a little over a year away, do you believe that this further places our ability to conduct a correct census in jeopardy? And do you support two census data, two sets of numbers?
    Mr. WALKER. Well, I don't believe it is appropriate for me to say whether I personally support two sets of numbers. I think that is something for the Congress to decide.
    What I will tell you is this. We are very concerned about the status of the census and the ability to be able to perform on a timely basis in a reasonable, economical manner with reasonable accuracy. The Supreme Court has now ruled. The Supreme Court ruling has evidently left the possibility of being able to come up with two sets of numbers. We are already concerned about the Census Bureau's ability to be able to come up with the exact enumeration count.
    There are things that are beyond their control. For example, we have extremely low unemployment in this country. It is going to require being able to accumulate a mass of human capital to be able to do this. And there is a lot of work that needs to be done to accomplish that.
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    In that regard, I would suggest to you and to the Congress that one of the things that the Congress ought to be looking at is what can be done in order to make sure that there are adequate resources, what can be done to eliminate any barriers that might exist for them to be able to attract an adequate number of people; for example, pensioners. Make sure that they might be able to come back and work without losing part of their benefits. There are things that can be done to eliminate some barriers.
    We are going back now that the Supreme Court ruling has come down to take another look at what their state of readiness is. We will continue to monitor that. We will continue to report back to the Congress on a periodic basis.
    Mr. RYAN. Going down the human capital path, have you looked at some of the efforts to give waivers for welfare recipients who would not lose benefits should they participate in census-taking? There is an idea floating around to have Americorps participants work on the census. Has the GAO looked at areas where we can find that human capital that may be difficult given the current unemployment situation?
    Mr. WALKER. Some but not all, but I think that is something we ought to take a look at. I mean, I think what we have to do is recognize there is a limited amount of time left. We need to do everything that we can to try to make sure that the plan is in place, that it is feasible, and that we eliminate whatever barriers might otherwise exist to being able to get an adequate number of people to get the job done now that you have got to do an actual enumeration.
    What I will do is talk with our people and see if we have any further thoughts in that regard.
    Mr. RYAN. One more quick, quick question. Have you guys looked at—now that the Supreme Court has ruled, now that we are engaging in enumeration—whether or not we can do two tracks of census on time? We may even be too late with the proper enumeration effort, let alone coming up with a new sampling effort. Do you believe that it would be wise for us to just focus on enumeration and not engage in a new statistical sampling operation that we haven't even seen the plans for yet?
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    Mr. WALKER. Well, first, clearly the most complex and the most time-consuming and the one that involves the most resources is the enumeration. That has got to be priority one. We are going to go back in and take a look and find out where things stand on that now that the Supreme Court has ruled.
    I think one has to try to get a feel for how much incremental effort is necessary to deal with statistical sampling because by definition, you are interpolating data based upon sample results. I have not personally taken a look at that to try to get a feel, but that is an area that we can take a look at when we are getting our update.
    Mr. RYAN. Thank you very much.
    Mr. WALKER. Thank you.
    Mr. RYAN. Thank you, Mr. Chairman.
    Mr. BURTON. Thank you, Mr. Ryan.
    Mr. Ose.
    Mr. OSE. Thank you, Mr. Chairman. Just an observation.
    I would like to just reiterate my colleague Mr. Ryan's comments about the census. As a business person, I don't know how to run my affairs if I have two sets of numbers. I just don't get that. I would rather have the certainty of a single set of numbers and the finality that that brings to whatever deliberations the Congress undertakes in the ensuring 10-year period. I don't know how to run my businesses otherwise, if you will.
    So I will be advocating one set of numbers, and I will look to the chairman for leadership on that accordingly. But I just wanted to repeat that and reinforce that. We need some finality to this, instead of having ongoing battles over two sets of numbers on into the future.
    Thank you, Mr. Chairman.
    Mr. WALKER. Can I comment quickly?
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    Mr. BURTON. Sure.
    Mr. WALKER. From the standpoint of efficiency, effectiveness, and economy, it makes sense to have one set of numbers. In addition, from the standpoint of confusion, to eliminate confusion, frankly, that is part of the problem that we have already because the government, frankly, has more than one set of numbers for a lot of things; for example, Social Security, the general budget, the unified budget. But I think to the extent that you have multiple sets of numbers, it creates confusion, it costs money. But that is ultimately a political decision.
    Mr. BURTON. Thank you, Mr. Ose. Did you have any questions?
    Mr. OSE. Mr. Chairman, if you will, I know that we can get to a single set of numbers because I can tell you every April 15th, the service comes around and gives me one set of numbers. So I know it is possible. I am looking forward to working with you.
    Mr. WALKER. And it is always too high, too, I might add.
    Mr. BURTON. Right. Thank you, Mr. Ose.
    I think in response to Mr. Ose's comments that there are steps being taken right now to go back through the course as quickly as possible to find out on redistricting whether or not sampling is going to be allowed.
    I know that they decided the reapportionment part, but redistricting part is still in limbo. And I think they are going to try to resolve it as quickly as possible in the courts. I don't know if they will get an expedited procedure so they can get it to the Supreme Court quickly or not, but I think they are working on that.
    Let me, first of all, compliment you on this synopsis, if you will. One of the problems that we have is that we get huge volumes of reports. And my staff is just inundated. They can't possibly read everything. And so there are recommendations that are made by the various agencies to streamline and to deal with the problems, but we can't get to them.
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    We can't implement them as far as legislation is concerned because there is just so much to read. And so what we did is we wrote to all of the agencies and asked for their top 10 problem areas. And we have gotten those. And we are going to be asking them along with the other agencies, GAO and so forth, to give us their recommendations on legislation that would help streamline and make government more efficient and cut out duplication.
    I mean, the things that we saw on television with Tom Brokaw and Peter Jennings are just the tip of the iceberg as far as duplication is concerned, as you have alluded to. And we have got to deal with that.
    I would like to ask you a question about your high risk designations. I understood that there was some talk about doing away with the high risk designations at GAO. I want to commend you for keeping the high risk designations because I think it is important that Congress know what the high risk areas are.
    I also heard that HUD put pressure on GAO not to put them on the high risk list. Is that correct?
    Mr. WALKER. First, we will maintain the high risk designation in the future.
    Mr. BURTON. Good.
    Mr. WALKER. I agree with you on that.
    Second, HUD did send a letter stating their position as to whether they thought the department had made substantial progress. They pointed to some of the issues that were raised earlier about the fact that they had hired these outside consultants to do these reviews, that Syracuse University's Maxwell School, was doing the review, felt that they had made a lot of progress. HUD wanted to make sure that we considered all of the information that we had in reaching our judgment. We did. The bottom line is they are still on the high risk list. They are making progress, but they have got a long way to go.
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    I think our report speaks for itself. We said what we meant, and we meant what we said.
    Mr. BURTON. That is good.
    Mr. WALKER. I can assure you that I was personally involved in the judgment and I am comfortable with the judgment.
    Mr. BURTON. Well, I commend you for that. The IG from HUD, as you heard a few minutes ago, had some severe criticisms of the agency and said that they weren't in a position to take on new responsibilities.
    And I think there were about 18 new requests for new programs that the President made in the State of the Union Address. And they can't deal with what they have right now. So I think it is important that the message be sent to them and all agencies that we are going to be watching very closely whether or not they can deal with the problems. And, if not, maybe we should try to have other agencies take over some of those other responsibilities.
    In the area of duplication, does your performance and accountability manual talk about ways to eliminate those duplications? Do you have suggestions in here? I have not yet read it.
    Mr. WALKER. We don't have lengthy suggestions in there. I will be happy to provide something for the record.
    [The information referred to follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Well, I would like for you to do that because I will be writing a letter to the agency heads and the Inspectors General to send to us their recommendations that we can put into legislative format that will help them streamline and make their agencies more cost-effective and as far as human resources are concerned more human resource-effective as well.
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    So if you have suggestions in that area or your department does, I really would like for you to send those to us because I am serious. I just talked on the House floor to the chairman of the Appropriations Committee. And he is in concert with me and our committee that the Results Act we passed should be not only implemented but followed by the agency heads and department heads.
    Right now the department heads kind of read what we suggest in our law, the Results Act, and then they don't do anything about it or do minimal things. What we are going to be doing is telling them that if they don't adhere to the law, that the Appropriations Committee may very well take a hard look at their request for funds when we start giving funds out in the next biennium, in the next year. So we are going to try to put some teeth in it.
    Right now the law is there, but they are not following it. If we start saying there will be some penalties—and I hope if anybody is here from those agencies, they are getting this message because I have already talked to Bill Young about it—that that will be something they will take into consideration when they start the appropriations process.
    Mr. WALKER. Mr. Chairman, I think there are several things that could be helpful that Congress could do. And we can help facilitate this by gathering information: First, to make sure that agencies and departments' missions are clear, look for overlaps to the extent that they exist between those missions. We will obviously help to identify and further expand on overlapping missions and agency activities.
    When the Senate is involved in the confirmation process to make sure that this is a priority issue that they talk about, you are exactly right on the appropriations process.
    Mr. BURTON. The only problem you have with the Senate, I am going to tell you——
    Mr. WALKER. I understand, but you have friends there.
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    Mr. BURTON [continuing]. To get them to change the confirmation process is going to be almost impossible.
    Mr. WALKER. We could help you.
    Mr. BURTON. We will work with that side of the Hill.
    Mr. WALKER. All right. Second, the appropriations process, you are right on on that. I am meeting with Chairman Young this afternoon. And one of the issues I plan to mention to him is——
    Mr. BURTON. Bring up our conversation, too.
    Mr. WALKER. I will do that.
    Third, oversight hearings, not only here but also the authorizing committees. Fourth, human capital reform. And linking those issues to strategic planning is critical.
    Mr. BURTON. Well, the Speaker of the House has suggested and leadership has suggested that every committee designate part of their time to oversight. But that has been requested for the past 16–17 years that I have been in Congress. And the various committees don't really have a great desire to get into oversight.
    That is why our committee was called the Government Reform and Oversight Committee. They changed that, but we still have oversight responsibilities. So to make sure that that doesn't fall by the wayside, we will continue to have our oversight hearings.
    But if you have ideas that can help us to implement the Results Act as well as possible, I would like for you to give those to us. I mean, you indicated in your speech that more reforms were necessary, especially in the area of human capital. I would like to have those recommendations. And this lady right here will bring those to my attention. And we will try to see if we can't put that in legislative form.
    Besides talking to the appropriations chairman about cutting the spending—what other things would motivate agencies to comply with the Results Act and other laws that we pass to make them more efficient?
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    Mr. WALKER. I have mentioned some of the things I think Congress can do. If you look at it from the agency standpoint—and then I will talk about OMB—the key is leadership. Leadership has to be focused on high risk issues. They have to be committed to it. They have to have appropriate oversight and accountability for it.
    You know, as was mentioned earlier, a lot of people have good plans. But there is a difference between plans and results and action. And in many cases, it is going to take sustained effort and sustained attention and focus by the top agency management in order to get that done.
    Now, one of the challenges, frankly, we face, Mr. Chairman, is that a lot of the people that are focusing on this, whether it be at the Secretary level or the Deputy Secretary level or Under Secretary level don't stay very long. And we are talking about making some systemic changes in the way the government does business. And leadership is key.
    So one of the things we are going to have to look at is what can be done to provide some additional continuity in order to make sure there is the right focus on high risk problems over the period of time to get it done.
    Mr. BURTON. That is going to be an ongoing problem because every administration changes department heads. They want to have people that are going to work on their programs and what they think should be done. And in between you have people who get great offers from the outside after they have been here 6 months to double or triple their income. And so, you know, the continuity problem is going to be difficult.
    It seems to me that what ought to be suggested—and maybe we can put this in legislative form—is that regardless of who the chief administrative officer is of an agency, that there are specific guidelines that are set out by the Congress that at least must be followed for them to make their agencies more efficient.
    I know that there are going to be changes taking place with every new administration on what ought to be done. But at the same time, there ought to be some guidelines that can be followed to every degree possible to make sure that there is efficiency.
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    Mr. WALKER. Two other comments quickly on that. First, the way I look at government, Mr. Chairman, is you have the policy side of it because I have run two Federal agencies before I was appointed to this job. And you have the operations side. On the operations side, which is what we are talking about, we need focus. We need continuity. And we can give you some further thoughts on that.
    Second, with regard to OMB, just as the Congress should end up looking at trying to link this to the appropriations process, OMB needs to link high risk problems to their budget process, if you will, because there have to be incentives.
    Mr. BURTON. Sure. And I wish you would talk to the President and the people in the administration about that because they have a little more authority over OMB than we do.
    Let me just ask you one more question. There are provisions in the law for there to be rewards for people to come up with ways to economize in government. To my knowledge, there really hasn't been much done in that area. Do you have any suggestions on how we can make that work better? I mean, I feel very strongly.
    You probably heard my comments earlier. Somebody figures out a way to save $500 million or $50 million in an agency of government. In the private sector, we give them a great big bonus. If you can figure out a way to economize in our business, we are going to give you some incentive to do that. We will give you a bonus.
    I would like to figure out some way to give monetary rewards for people in government to come up with ways to streamline and create economies. If we could do that, we have flipped this whole thing on the head.
    I want to tell you a real quick story. I know there are not a lot of people here and the media has probably all gone home, but maybe this will help us with this dialog. When I was a State senator, I went into an office over at the highway department in Indiana and I was sitting, waiting on the fellow I was supposed to talk to. And I heard a guy around the corner say: ''We have only got, what, 2 months left in the fiscal year. And if we don't spend the money we have got, we are not going to be able to ask for an increase in the next appropriation.''
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    I sat there, and I thought: ''My God. Who is that?'' And I looked around the corner. And I said: ''What did you say?''
    And he said: ''Well, who are you?''
    I said: ''Well, I am Senator Burton.'' Of course, his face got gray because he knew I had heard him. I said: ''What is your name?'' He was the head of that agency. I said: ''I just want your name because I am going to the Governor as soon as I leave here and tell him exactly what you said.''
    This guy did receive some concern from the Governor about that statement, but the fact is, that is the mind-set for people in all levels of government. They want to spend that money so they can get more in the next biennium or the next fiscal year.
    And what we have to do is we have to turn that around. And it seems to me the only way to turn that around is to really have financial incentives for people to cut wasteful spending out of government. And if we do that, I think we can turn that whole thing on its head. But we have to have some mechanism to do it other than merely saying we are going to do it.
    And it can't be something nebulous out there where we say there is going to be a reward. We have got to say: ''Yes. You are going to get X percentage if you figure out a way to really save money.''
    Mr. WALKER. Two things on that, Mr. Chairman. First, I believe that to the extent that you provide those incentives, they have to be balanced incentives. In other words, they should be department-wide and agency-wide team/group incentives and individual incentives.
    Second point. We are going to try to lead by example in this area at GAO. And we are looking at this area ourselves within GAO. Furthermore, we are going to be spending more time working with the Congress and elsewhere in trying to look at this area of human capital as to what can be done in order to address some of these issues and create better incentives along this line.
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    Mr. BURTON. OK. Well, if you could give me your recommendations in all of these areas we talked about, I would really appreciate it.
    Any other questions I should have asked? OK. Well, I just ask unanimous consent that Congressman Gilman's statement be entered into the record. And, without objection, so ordered.
    [The prepared statement of Hon. Benjamin Gilman follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. And what else do we have here? Oh, yes. And, if you would, we would like to ask unanimous consent that the Members have the opportunity to submit to any of the panelists questions for the record.
    And I ask unanimous consent that Congressman Dan Miller be appointed to the vacancy on the Postal Service Subcommittee. And, without objection, so ordered.
    And, with that, Mr. Walker, thank you for your patience. I know you have been here for a long time. I really appreciate you coming to my office and us having a chance to get to know each other and talk about some of the issues. And if you can give us your recommendations, maybe on other issues that we have not yet talked about, I would really, really appreciate it.
    Mr. WALKER. I look forward to working with you, Mr. Chairman. I have only got 14 years and 9 months left.
    Mr. BURTON. OK. She just gave me two more things I would like to ask you real quickly.
    Mr. WALKER. Sure.
    Mr. BURTON. How much money has been saved due to agencies implementing your recommendations? And if you don't have that, you can give it to me in writing.
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    Mr. WALKER. Well, we track savings. $19.7 billion last year.
    Mr. BURTON. $19.7 billion last year?
    Mr. WALKER. Billions.
    Mr. BURTON. Billion, right.
    Mr. WALKER. Right, a little bit higher than some of the numbers you heard earlier.
    Mr. BURTON. Yes. Well, we like to hear the savings. We have heard an awful lot about the nonsavings.
    How much is being wasted because of open recommendations?
    Mr. WALKER. It is difficult to say. We have over 700 open recommendations attributable to the high risk series. We have many more that aren't, some of which have statistically valid numbers associated or methodologies to come up with numbers. Others don't. So I couldn't give you a number, Mr. Chairman, but it is billions of dollars. There is no question.
    Mr. BURTON. OK. Well, I hope we can work together with you and the department heads and the Inspectors General to get this government on the right track. And we are going to work very hard these 2 years to get it done.
    Thank you, Mr. Walker, very much.
    Mr. WALKER. Thank you, Mr. Chairman.
    [Followup questions and responses follow:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Thank you, gentlemen, for being here with us. We stand adjourned.
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    [Whereupon, at 1:46 p.m., the committee was adjourned.]