How Obama’s Auditor Vacancies Waste Billions
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The Fiscal Times
June 25, 2013

Question: What happens when no one is keeping tabs on some of the federal government’s biggest agencies?

Answer: Shocking waste, fraud and abuse, shoddy management and security measures. Then add to that an occasional scandal that can rock an administration, like those that have recently plagued President Obama’s White House.

So says Joseph Schmitz, a former inspector general for the Defense Department and author of the new book, The Inspector General Handbook: Fraud, Waste, Abuse and Other Constitutional Enemies, Foreign and Domestic. Schmitz contends that departments operating without a permanent, Senate-confirmed inspector general are more vulnerable to criticism for waste, inefficiencies or poor management than agencies with independent auditors. 

Indeed, a recent report by the House Committee on Oversight and Government  found that the number of unimplemented IG recommendations cost taxpayers $67 billion and the agencies with the most unimplemented recommendations, State Department, Department of Homeland Security, and USAID, all have IG vacancies. Instead, these departments are audited by interim IG's who often have long-standing ties to the departments they are tasked to oversee, presenting a "huge conflict of interest," Schmitz says.

In a recent Wall Street Journal op-ed, Schmitz said it was problematic that the State Department had a temporary IG, former ambassador, Harold Geisel, at the auditing post during the investigation into the September 2012 terrorist attack on a U.S. consulate in Benghazi, Libya

One of an IG’s duties, Schmitz notes, is to protect whistleblowers, and during the Benghazi investigations, three whistleblowers – including Greg Hicks, the deputy chief of missions in Libya – said they suffered reprisals for telling the truth.

“We are left wondering whether the presence of an independent and effective Senate-confirmed IG at the State Department might have encouraged Mr. Hicks and others who were aware of wrongdoing to speak out even earlier….without fear of reprisal,” Schmitz wrote. “How many other whistleblowers are not being protected as required by law in the other federal agencies without a Senate-confirmed inspector general? The fact that the IG who recently reported on the IRS tea-party targeting scandal is Senate-confirmed speaks for itself.”

According to congressional testimony last year, Geisel said his office had provided “effective oversight,” but added that he would “very, very much like to see a permanent IG.” However, he doesn’t have control over the nomination process. “That has to come from the White House.”

Schmitz, who was appointed by President George W. Bush to DOD’s IG post in 2002 and served for three years, has criticized the president for “neglecting his duty” to fill IG vacancies. There are IG vacancies at nine of the 73 departments and agencies, six of which require Senate confirmation.

The number of agencies operating without a permanent IG has proliferated:
• The DOD, the largest agency with an annual budget of $525.5 billion – roughly 550 days
• Department of Homeland Security, another behemoth with a budget of $39.5 billion – nearly 850 days. Labor Department and National Endowment for the Humanities each has operated without a permanent IG for well over 1,400 days.
• Interior Department – nearly 1,600 days.

The Fiscal Times spoke with Schmitz recently about the shortcomings of the IG system. Here are highlights:

The Fiscal Times (TFT):  How does the IG system work? How are IGs and interim IGs selected? 
Joseph Schmitz (JS):  Congress mandates that every cabinet-level inspector general be appointed by the president and confirmed by the Senate “without regard to political affiliation and solely on the basis of integrity and demonstrated ability in accounting, auditing, financial analysis, law, management analysis, public administration, or investigations." When an IG is fired or resigns, the first assistant to the IG becomes the acting IG. The acting IG can serve for 210 consecutive days under the Vacancies Act. After 210 days, they can no longer be referred to as “acting” so they move down to deputy inspector general.

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TFT:  What are the challenges that come with having an acting IG at the helm of a department’s watchdog agency?
JS:  The biggest problem is that they are almost always a career person who is essentially getting paid by the institution they are tasked with auditing. For example, Geisle, the acting IG at the State Department, is a member of the career foreign service, so he’s still, in effect, getting paid by people he’s supposed to investigate. It’s a huge conflict of interest.

TFT:  Are there any rules in place to restrict that type of conflict?
JS:  It depends on the department. The IG act restricts DOD IGs from being full time employees at the department. I was in the Navy Reserve, so when I was appointed IG, I had to resign my Naval Reserve commission precisely because of the IG act. No member of the armed forces armed reserved could be IG for DOD. I would have been just like the guy [Geisle] over at State. The Department of Homeland Security has a similar prohibition.

TFT:  Are there other ways in which acting IGs could be selected that might prevent conflict of interest? 
JS:  Congress could appoint independent monitors for each vacancy. They could shift the money the agency pays the IG’s special assistant to the political appointees.

TFT:  Conflict of interest aside, what other concerns does an acting IG running the agency’s auditing arm pose?
JS:  When department officials know someone isn’t going to be around long….when they know the acting IG is temporary, they have no reason to listen to them…fewer recommendations get accepted, less work gets done. For example, the last Senate-confirmed IG at State, Howard Krongard, told me that Mr. Geisel’s status as “acting IG” significantly undercuts his authority and effectiveness within the department. It’s like attaching a sign on his back that says 'Ignore Me, I am temporary.”

TFT:  You worked for about six months after you announced your resignation. Did you experience more challenges as far as your ability to do your job once department officials knew you were leaving?
JS:  When some officials at the Pentagon found out that I planned on resigning at the end of the year, they spent the duration of the year trying to get me fired… Once they find out you’re a temporary guy, there’s no more accountability.

TFT:   Why hasn’t the president filled these vacancies?
JS:   It doesn’t matter. The fact that he doesn’t on its face is just a huge problem. Particularly for a president who campaigned on the promise to be the most transparent president in history.

Washington Correspondent Brianna Ehley, based in D.C., covers Congress, government agencies and spending issues, health care, and tax and economic policy for The Fiscal Times.