Watched Cops

Inspectors general are finding that oversight cuts both ways.

As inspector general of the Transportation Department, Mary Schiavo learned early on that her job would require as much bark as bite.

In 1995, for example, Schiavo was completing an audit of the Big Dig tunnel project in Massachusetts and forecasting massive cost overruns. One afternoon, a high-ranking Transportation official called Schiavo to tell her to "knock it off," a fairly clear warning for the IG to cool her potentially explosive audit.

"I told him that he should reconsider what he was asking of me," recalls Schiavo, an infamously outspoken watchdog who earned the nickname "Scary Mary" for her repeated public warnings about airline safety. "He called back a few hours later and said I should forget that the conversation ever happened."

The terse exchange, between a pugnacious IG and a green political appointee, illustrates the unique and dynamic power wielded by inspectors general. Who wouldn't want a job where you can highlight waste, fraud and mismanagement at the highest levels of government while at the same time telling your bosses to mind their own business?

For decades, inspectors general have played a vital role in holding executive branch agencies accountable. But the Bush administration has de-emphasized the role of oversight and congressional Republicans have done little to press the issue. As a result, the work of IGs failed to attract much publicity. With last year's turnover in Congress, however, the role of the inspector general has been reinvigorated. IGs are being called to testify more often on the Hill and investigative reports that once barely made news now are sparking hearings and front-page headlines.

But in today's highly polarized political climate, influence comes at a price. IGs' reports are scrutinized for political bias. Their budgets are slashed. And an unprecedented number now face serious allegations of ethical lapses and abuse of power. Three inspectors general-NASA's Robert Cobb, the Environmental Protection Agency's Bill Roderick (who is acting) and the Special IG for Iraq Reconstruction, Stuart W. Bowen Jr.- currently are known to be under investigation, facing myriad charges related to contracting abuse, improper use of government funds and discriminatory em- ployment practices. A fourth, the Commerce Department's Johnnie Frazier, quit the post on June 7, as he faced mounting inquiries related to his personal travel, use of government funds and allegations that he retaliated against whistleblowers who filed complaints about his activities. Meanwhile, the work of a fifth inspector general, the General Services Administration's Brian Miller, has so infuriated critics that Rep. John Mica, R-Fla., has called for his resignation and agency Administrator Lurita Doan reportedly described his staff as terrorists.

It's still unclear whether a correlation exists between the renewed spotlight on IGs and their recent spate of ethical hiccups, but it's evident that federal watchdogs will have to be on guard to preserve their neutrality and remain insulated from the politics of Washington.

Straddling Barbed Wire

While inspectors general trace their roots to George Washington's Continental Army, the modern version is less than three decades old, a byproduct of the post-Watergate era of mistrust and skepticism about government. The 1974 midterm election ushered in a new Democratic Congress, packed with hungry young legislators, including Henry Waxman, D-Calif., now chairman of House Committee on Oversight and Government Reform, who were chomping at the bit to transform Washington and regain a measure of access to executive branch information. Enter the 1978 Inspector General Act.

The bill created a dozen presidentially appointed IGs-two already had been established at the Energy and Health, Education and Welfare departments- who would serve as internal agency auditors and investigators. In a virtually unprecedented move, the measure directed that IGs would report both to Congress and the president, a duty that former State Department IG Sherman Funk once compared to "straddling a barbed wire fence."

Early on, Congress had a difficult time defining the role of the would-be watchdogs, according to Monitoring Government, Inspectors General and the Search for Accountability (Brookings Institution Press, 1993).

Eventually, two competing models developed: the IG as a tough-as-nails lone wolf, with substantial oversight responsibilities, and the IG as strong right arm of the agency who uncovers dirt but keeps it within the family.

The models continue to compete as IGs struggle to find the right balance between investigator and departmental cheerleader. Opinions differ on how to best to walk that tightrope, but most agree that either extreme is fraught with peril.

"Auditors should be respected and not feared," says Clay Johnson III, deputy director for management at the Office of Management and Budget and chairman of the President's Council on Integrity and Efficiency, which oversees presidentially appointed inspectors general. "There's no correlation between the quality of an IG's work and whether or not they say hello to an agency head in the hall or if they attend a Christmas party." J. Russell George, the Treasury inspector general for tax administration, says "appearance counts," but needn't prevent good relations with agency leaders. "An IG needs to cover themselves in a way to ensure that they are not too close with the subject of an investigation. But that doesn't mean you can't engage in courteous and social way," he says.

In recent years, however, critics contend that some inspectors general have abandoned their core responsibilities and become too cozy with the political leaders of departments and agencies. In 2003, Janet Rehnquist, daughter of late Supreme Court Justice William Rehnquist, resigned after a controversial tenure as Health and Human Services Department inspector general. A Government Accountability Office report found that Rehnquist delayed the release of an audit of Florida's pension system that could have jeopardized then-Gov. Jeb Bush's reelection chances, inappropriately obtained a firearm that she subsequently kept in her office, and forced the retirement or resignation of many senior management officials.

Then there's the case of Karla Corcoran, who resigned as inspector general of the U.S. Postal Service in 2003 after a congressional investigation found she abused her authority and squandered millions of dollars. Investigators found Corcoran required IG employees to attend retreats where they would dress up as the Village People, wear animal costumes, build gingerbread houses and perform stripteases, all at the expense of taxpayers. More recently, in April, House Democrats launched an investigation of IG Bill Roderick's plan to significantly downsize his staff in advance of proposed cuts to EPA's 2008 budget. Congressional investigators described Roderick's plan as premature, arguing that it will adversely affect employee morale. In an e-mailed statement, Roderick says 10 employees accepted the buyout package, but at the request of the House Energy and Commerce Committee, he has tabled any further layoffs until the fiscal 2008 budget is enacted.

"My overall goal is to make the [office] a model of effectiveness and efficiency," Roderick writes. "By [fiscal] 2008, I plan to have reduced our overhead by 17 percent and increase the number of auditors, evaluators and investigators working directly on fraud, waste and abuse to the number we had in 2005 but with a smaller workforce."

Also under investigation is Bowen, who has documented widespread misuse of reconstruction funds in Iraq. A half-dozen former SIGIR staffers have charged that Bowen inflated the amount of money his investigations have saved taxpayers and failed to come to work for long periods of time. Their complaints came to light a few months after Republicans attempted to pass a military authorization bill that would have defunded Bowen's office. Testifying before the House Foreign Affairs Committee in late May, Bowen said the complaint was "virtually over" and he was not concerned about the matter.

The allegations against Roderick and Bowen, however, paled in comparison to those leveled against Frazier. The former Commerce Department IG, whose retirement was effective June 29, was under investigation by no less than four oversight bodies for wasteful spending, contracting abuse and tampering with evidence. In addition, The Washington Post reported that the Office of Special Counsel recently found that Frazier had violated the 1989 Whistleblower Protection Act by inappropriately demoting two top officials after they questioned his travel expenses. The report suggested that Frazier could be fired for the offense.

Beth Daley, director of investigations for the Project on Government Oversight, a nonprofit watchdog group, says the problems plaguing the IG community can be attributed to a phenomenon she describes as "burrowing into bureaucracy. It's happening throughout the federal government. Political appointees are pushing out people that are critical of them and bringing in friends and cronies."

A government procurement official familiar with the investigations says some IGs have been targeted for political reasons, either because they pressed too hard with a controversial report or because they rattled the cages of high-level administrators. As a result, staff complaints that in the past would have been dismissed as griping are now being investigated with intense vigor.

"It's all part of a broader debate about the role of the IG," the official says. "There are clear fault lines that have developed between those that see [the IG] as an oversight role and those that want to play ball with the agency."

But not everyone sees a larger trend afoot. Johnson, at OMB, says drawing parallels among the ongoing investigations is impossible because the charges include both Bush and Clinton appointees and involve a wide range of complaints. "I don't know what's causing it," Johnson says. "But, in my opinion, it's not about politics and it's not about oversight."

Schiavo, the former Transportation IG, proffers another explanation. She says the system makes it too easy for employees to file baseless complaints, each of which must be investigated. During her tenure as IG, complaints were filed about Schiavo's travel, personnel decisions, even the length of her maternity leave. "There are bad eggs in every batch," she says. "But my personal experience is that these allegations are mostly a smoke screen. Some will be true but a lot will be groundless. But whenever you get tough, you need to expect that."

IG Sovereignty

The relationship between an agency's inspector general and top administrator might be the most complex in all government. While both are political appointees who manage career employees, the similarities end there. Agency heads earn a long life span in public service by keeping their noses clean and staying out of congressional crosshairs. IGs, on the other hand, build their reputations by shining a spotlight on the waste, fraud and mismanagement that by virtue of size and happenstance inhabits virtually all federal agencies. According to the integrity and efficiency council, IG audits resulted in $9.9 billion in potential savings last year while criminal, civil and personnel investigations saved the government another $6.8 billion.

"We are there to help the agency do its job better," explained John Helgerson, inspector general of the CIA at the April Excellence in Government conference in Washington sponsored by Government Executive. "But we don't want to be so intrusive that we prevent them from doing their job."

So, while IG reports that the Coast Guard bungled the Deepwater acquisition program or the Defense Department mismanaged interagency contracts might garner praise on the Hill, behind closed doors, agency leaders stew at the unflattering portraits and scramble to avoid the fallout. Despite sometimes conflicting missions, IGs and agency heads are expected to get along. It's a delicate balance that some have found difficult to manage.

A recent example is NASA, where investigators found that IG Robert Cobb was too friendly with former Administrator Sean O'Keefe and created a hostile work environment for IG staff. Democrats on the House and Senate committees overseeing NASA have called on President Bush to fire Cobb, but the administration has balked, instead backing an agency plan for him to attend leadership and management training courses. NASA Administrator Michael Griffin has said that while Cobb may have been rough on his staff, he never abused the power of his office.

At a June 7 joint House and Senate hearing, Cobb defended his actions as IG and called the investigation of his actions a witch hunt. "This investigation was not about finding the truth. The investigators contented themselves with collecting isolated allegations from disgruntled persons who were invited to offer personal opinions and speculate about irrelevant matters."

Meanwhile, congressional investigators now have turned their attention to an April 18 staff meeting during which witnesses say Griffin defended Cobb's conduct to NASA staffers. NASA General Counsel Michael C. Wholley consequently destroyed all DVD recordings of the meeting. During a May 24 hearing of the House Science and Technology Committee, Wholley defended his actions, testifying that there was no reason to preserve the DVDs because NASA's Public Affairs Office had inappropriately recorded the meeting. Committee members have since asked the Justice Department to determine if Wholley's actions were criminal.

At the opposite end of the spectrum is Miller, GSA's IG, with whom GSA Ad-ministrator Doan has feuded for nearly a year. The dispute began after Doan slashed the IG's 2008 proposed budget increase, recommending that Miller's office perform roughly half of its planned audits. Doan also stopped reimbursing the IG $5 million per year for scrutinizing the prices offered by vendors on the GSA's multiple award schedules contracts, choosing to outsource the work to a small business instead. At the time of the cuts, Miller was investigating Doan's personal intervention in a pair of contracts and her role in hosting a partisan political conference on GSA property.

While there is no evidence that Doan implemented the cuts as retribution, the dispute raises new questions about the propriety of putting the IG's budget under an agency administrator-particularly one under investigation by the IG. When the IG act was passed, the inspector general's budget was a line item. At the time, it was assumed that Congress and OMB would look at the IG's budget, making changes when necessary, but that the agency administrator would play only an advisory role in the budget process. "As it turns out, this did not prove to be the case," says Gene Waszily, a retired former deputy inspector general at GSA. "All the IGs want is to make the case [for their budgets]."

The integrity and efficiency council has kicked around the idea of extricating IGs' budgets from agencies for more than a decade, but the issue never gained much traction, says Gregory H. Friedman, Energy Department IG and vice chairman of the council. "In a perfect world, it's not a bad idea," he says, but critics of the current system can't really make a compelling case for change. "It's my perspective that these sorts of problems are unique situations. . . . "I think administrators know that we don't always deliver happy news. We need to issue objective reports and sometimes it's not always what they want to hear. They don't always like it but they are accepting of it."

Others believe that the only way to ensure inspector general sovereignty is through a legislative fix. In February, Rep. Jim Cooper, D-Tenn., introduced a bill to make the IG a term-limited position of seven years, authorize inspectors generals to submit budget estimates to OMB and relevant congressional committees, and set specific criteria for removing an IG from office. Currently, the president can fire an inspector general at will, as President Ronald Reagan did when he fired all of them when he took office in 1981. "We are taking a two-pronged approach of professionalization and decent job security," Cooper says. "It's tough to be the top cop of an agency when you are trying to be popular."

Cooper's bill, which has been forwarded to Waxman's committee, has the backing of many in the oversight community who argue privately that IGs lack any practical job protection and their office is too vulnerable to political maneuverings. OMB's Johnson disagrees, arguing that IGs do not need any additional safeguards to guarantee their independence.

For now, IGs concerned about their future can do little but ensure that their office is beyond reproach. Schiavo has a bit of good-natured advice for those concerned about increased scrutiny: "I've often kidded that the best IGs are those fully vested in their retirement funds or in a trust fund," she says. "That's because they will threaten you with your job. And, if you have to worry about keeping your job, they have leverage."