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Government waste findings of $67B fall on deaf ears

Federal agencies bracing for sequestration have for years ignored or failed to implement thousands of suggestions from their own internal auditors on ways to cut waste, fraud or abuse, the Dayton Daily News has found.

The number of unimplemented recommendations from federal inspectors general has reached an all-time high, totaling 16,906 in 2012 with a total possible savings of $67 billion.

These findings were laid out in a report this month from the U.S. House Committee on Oversight and Government Reform. Committee members include U.S. Rep. Mike Turner, R-Dayton, and Rep. Jim Jordan, R-Urbana.

“There’s no excuse for not implementing more of the (inspectors general) recommendations to save money,” Jordan told the Daily News. “This needs to be a push from the White House.”

Sequestration meanwhile threatens to cut the resources of these departments, as well as the Government Accountability Office. The GAO is on track to lose $27.3 million in funding, which would leave it with its lowest staffing level since 1935.

The GAO is the federal government’s chief watchdog. In 2012 it identified $55.8 million in savings — a return of $105 for every dollar spent on GAO, according to congressional testimony in February from Gene Dodaro, U.S. Comptroller General.

In addition to the GAO, most federal agencies have their own offices of inspector general, tasked with finding waste, fraud and abuse within each agency. The return on investment for most OIGs over the past three years has averaged $12.63 for every dollar of funding.

Sequestration cut $85 billion from the federal budget this year.

“Congressman Turner voted against sequestration because it cuts indiscriminately,” said Turner spokesman Tom Crosson. “In this case it would directly impact an essential function of our government that works to protect and ensure the wise use of taxpayers’ dollars.”

Jordan, on the other hand, is not as concerned about the impacts of sequestration on these offices: “Because they are agencies that dig into government and find inefficiencies, then, frankly, they should be able to apply that kind of process to their particular offices,” he said. “They can probably find some things they can do better.”

IG posts going unfilled

The return on investment from money spent on government watchdogs is based on the presumption that recommendations from the OIGs will be put into place. But they increasingly are not.

The number of recommendations agencies haven’t acted on has increased by more than 55 percent, from 10,894 in 2009 to 16,906 in 2012. The value of these findings has grown from $29 billion to $67 billion, the House report said.

The report from the Republican-controlled committee laid the brunt of blame on President Obama for not appointing permanent inspectors general in six agencies that collectively represent more than a quarter of the 2013 federal budget and three-quarters of the federal workforce.

The agencies are instead using acting officials who are “undermined by a lack of legitimacy,” the report says.

Jordan said on the subcommittee he chairs he’s gotten the impression that agency directors simply don’t want to implement the changes.

He gave an example: There was a recent report from the special inspector general overseeing the bank bailout that found the number of executives of bailed-out companies receiving pay of more than $500,000 had nearly quadrupled. Inspectors called for more investigation, but Jordan said it seemed to him nothing would be done.

“There’s no real pressure from the White House or the administration to implement (the recommendations),” he said.

The White House press office did not respond to questions by press time about why posts have not been filled.

Rifles, student aid, home loans questioned

OIG recommendations run the gamut. They investigate whistleblower complaints and conduct investigations and audits that often uncover fraud, loopholes, duplication or inefficiencies.

The USDA OIG, for example, identified that federal stimulus-backed rural home loans with a total value of $4.16 billion were made to ineligible borrowers in fiscal year 2011.

Among other things, the Department of Defense Inspector General in recent years has questioned $2.5 billion in potential savings on a cruise missile defense sensor system. It also challenged the need for a $1.8 billion revamp of the Army’s standard issue M-4 rifle, and identified $287.7 million in savings because the Army was buying materials from Boeing that it already had in inventory.

In 2011, more than 14,700 employees at the 73 OIG offices had a total budget of $2.7 billion. Audit recommendations agreed to by the heads of various agencies amounted to more than $24 billion in projected savings. They also found $9.1 billion in investigated receivables and discoveries.

The House report found the most common unresolved audit findings had to do with network security and protection of electronic data.

Inspectors general also commonly ferret out poor oversight of contracts and bidding for federal projects. Every year, for example, the inspector general for the Department of Defense reports that $1 billion is uncollected from contractors in money wrongly paid out, including payments to deceased or retired military members.

Kathleen Thighe, inspector general for the U.S. Department of Education, testified before Congress this month that 90 percent of her agency’s audits went unresolved for more than six months. She said the department lost the opportunity to recover $415 million because of statutes of limitations.

In January 2013, Thighe’s office estimated that more than $187 million in federal student aid funds were lost to fraud rings from 2009 to 2012 — criminals who exploit distance learning programs with identity theft and student aid fraud — and reiterated the need to put controls identified in 2011 in place.

“Unimplemented recommendations are a by-product of ineffective audit resolution and followup processes, which hamper an agency’s ability to increase program and operational efficiency and prevent waste,” Thighe said.

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