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Project on Government Oversight

POGO Questions the Independence of the State Department's Inspector General

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November 18, 2010

President Barack Obama
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Dear Mr. President:

The Project On Government Oversight (POGO) is an independent nonprofit that investigates and exposes corruption and other misconduct in order to achieve a more effective, accountable, open and ethical federal government. As such, we have a strong interest in working to ensure that every federal agency has an independent and aggressive permanent Inspector General (IG).[1] We applaud your administration for recently nominating permanent IGs for a number of key posts, including the Central Intelligence Agency (CIA).[2] However, a POGO investigation has found that the Department of State has been without a permanent IG for nearly three years. In addition, our investigation has identified a number of serious concerns about the independence of State’s de facto IG, Ambassador Harold W. Geisel.[3] These concerns illustrate some of the inherent problems associated with State’s long-standing pattern of utilizing career management officials with Foreign Service experience as IG in an acting capacity—a practice the Government Accountability Office (GAO) has argued “creates at a minimum an appearance of a conflict of interest at the very top.”[4] We urge that you promptly nominate a truly independent and aggressive permanent State IG.   

This request is particularly pressing in light of an October 12, 2010, external peer review of the section of the State Office of Inspector General (OIG) responsible for “oversight and assistance for high-cost, high-risk Department programs located in crisis and post conflict areas and countries,” which is called the Middle East Regional Office (MERO).[5] The review, conducted by the National Aeronautics and Space Administration (NASA) OIG on behalf of the Council of Inspectors General on Integrity and Efficiency (CIGIE), identified numerous troubling deficiencies in MERO’s performance.[6] One of the deficiencies was MERO’s regular issuance of audit report conclusions not fully supported by evidence. That finding caused MERO to reclassify all audits completed from its creation in January 2008 until September 30, 2009, as assessment reports, which means that MERO did not complete a single audit during that timeframe. Another deficiency was that auditors did not consistently sign statements of independence. “Without documented statements of independence,” the peer review notes, “State OIG lacks documented assurance that auditors are free of impairment,”[7] a crucial component of Generally Accepted Government Auditing Standards (GAGAS). 

The NASA OIG’s findings would be troubling in any circumstance, but they are especially concerning now because the State Department’s responsibility in Iraq is expected to increase substantially. The U.S. military plans to pull out entirely from Iraq by December 31, 2011.[8] “After the departure of U.S. Forces [from Iraq], [State] will continue to have a critical need for logistical and life support of a magnitude and scale of complexity that is unprecedented” in State’s history, according to State’s Under Secretary for Management, Patrick F. Kennedy.[9] In order to meet this challenge, State plans to utilize “between 6,000 and 7,000 security contractors,” more than double its current numbers.[10] Yet, Kennedy himself has said State “does not have within its Foreign Service cadre sufficient experience and expertise to perform necessary contract oversight.”[11] The Commission on Wartime Contracting (CWC) has gone even further, noting that, “With such a large increase in contract employees, existing weaknesses in contract management and oversight, not to mention funding and hiring challenges, can only grow more troublesome.”[12

Given these coming challenges, the importance of independent and aggressive oversight of State and its contractors in Iraq will be paramount. POGO is convinced that under its current leadership, State’s OIG will not be up to the task. 

State OIG’s Revolving Management Officials
IGs serve an essential and unique role in the federal government: they investigate waste, fraud, and abuse from within their respective agencies in order to make their agencies operate more effectively.[13] Considering the nature of their role, a determinant of IG success is independence from agency management. 

The necessity of IG independence is made very clear in Quality Standards for Federal Offices of Inspector General, published by the Presidents Council on Integrity and Efficiency (now known as CIGIE). The Quality Standards states that IGs “must be free both in fact and appearance from personal, external, and organizational impairments to independence.”[14] The Quality Standards argues that both real and perceived independence are important “so that opinions, conclusions, judgments, and recommendations will be impartial and will be viewed as impartial by knowledgeable third parties.”[15] Referring specifically to State’s IG, GAO has argued that “Independence is an overarching element critical to the quality and credibility of all the work of the State IG and is at the heart of Government Auditing Standards and the IG Act.”[16] POGO has also written about the importance of IG independence in our report, Inspectors General: Many Lack Essential Tools for Independence.[17]

Despite the critical nature of independence to the effectiveness of an IG, State’s OIG has regularly been led by acting management officials with Foreign Service experience. The GAO has repeatedly highlighted both the real and perceived threat posed to State OIG’s independence by this practice.[18] One of the concerns specific to officials with Foreign Service experience leading the OIG in an acting capacity, according to GAO, is the “personal impairments to independence that could result when reviewing the bureaus and posts of fellow Foreign Service officers and diplomats.”[19] For this reason, career Foreign Service Officers are specifically prohibited in statute from being appointed permanent IG.[20] In a written response to GAO’s findings, former State IG Howard Krongard agreed that State’s practice of using Foreign Service Officers as acting IG raised independence concerns. He also added that an acting Foreign Service Officer “cannot become permanent and is always temporary, and is known by all to be so. This can have a debilitating effect on OIG, particularly over a lengthy period.”[21

State’s OIG has been led by an acting management official with Foreign Service experience for five out of the last seven years. From January 2003 through May 2005, State OIG was led by four Acting IGs, all of whom were long-time Department employees with the rank of Ambassador.[22] Three of these four have followed their service as Acting IGs by going back into the Foreign Service as Ambassadors.[23] Following the departure of Krongard in January 2008, Ambassador Geisel took over as Acting IG and remains in charge of the office.[24] Geisel’s tenure as de facto IG has been extraordinarily long. He has not been vetted by Congress, which is especially important for IGs, who, under the Inspectors General Act of 1978, serve two masters: both the President and the Congress.[25]

Prior to Geisel being named as Acting IG, POGO received a letter from anonymous State employees who were very concerned about the prospect of having another former Ambassador as Acting IG. The employees wrote that “word in the Department and the Office of Inspector General is that Deputy Secretary of State, John Negroponte, and Undersecretary for Management, Patrick Kennedy, are selecting the acting IG. It is said to be Ambassador Harry Geisel or someone they are comfortable with.” The employees referenced the frequency in which Ambassadors serve as IG in an acting capacity and concluded, “Just look at the record. It was a disaster and it’s about to be repeated unless you take action to fix it.” (Attachment 1)

Questions about Geisel’s Personal Ties to Management
POGO’s investigation has also raised questions about Deputy IG Geisel’s personal ties to State’s management. Of particular concern is Geisel’s relationship with State Under Secretary for Management Patrick F. Kennedy. Kennedy “is responsible for the people, resources, facilities, technology, consular affairs, and security of the Department of State,” according to his State Department biography.[26] The matters under his purview are the types of issues routinely investigated and audited by any independent and effective IG. 

Emails obtained by POGO demonstrate in practice why it is important that IGs be independent from Management, both in appearance and fact. One email shows that State officials have raised serious concerns that Kennedy was inappropriately going to bat for a contractor. In the email, a State employee instructs staff to hold off on releasing a Request for Proposal (RFP) for a contract to build a U.S. Embassy facility in Djibouti until Kennedy is able to decide the status of the contractor’s request to be qualified to bid. The company, Aurora, LLC, had not successfully qualified to bid on that project because of its history of poor work performance and was requesting a reconsideration, according to the email. (Attachment 2

In response to news that the RFP would be delayed until Kennedy made up his mind, another State official replied in a subsequent email: “The above statement is a real problem. [Contracting Officer] makes the call—do we really want the [Under Secretary] advocating for a contractor?” (Attachment 2

POGO has since learned from knowledgeable government sources that State OIG is conducting an ongoing criminal investigation involving Aurora, LLC, and Kennedy, who has been accused of influencing the award of contracts in Aurora’s favor. Geisel has recused himself from this investigation because of a perceived conflict of interest. A recusal is a proper measure for officials to make when there is a reasonable belief that relationships could interfere with decision-making. However, in Geisel’s case, the recusal itself is a tacit admission that he has either a real or perceived conflict of interest with management. POGO does not believe Geisel can appropriately act as an independent IG if he has a real or perceived conflict of interest with a senior official in the State Department whose responsibilities are often the target of the IG’s audits and investigations. 

Another email, from Geisel to Kennedy, raises further concerns about Geisel’s relationship with Kennedy. Geisel begins his email by referring to congressional perceptions that his own office is maintaining a weak presence in Iraq—in comparison to the Special Inspector General for Iraq Reconstruction (SIGIR). He then warns Kennedy, “I told you before if we aren’t going to be a strong IG, Congress will give us another.” (Attachment 3

But rather than argue for the importance of IG oversight, Geisel writes that he is “trying to keep a lid on unreasonable expectations and behavior and to keep the numbers down in Iraq. However, the Department committed to have an active State OIG as a quid pro quo for legislation giving us back the lead in Iraq. Please tell Baghdad to stop shooting its friends.” (Attachment 3

This email is profoundly troubling because Geisel appears to be informing management that he is on their side and that his office needs to conduct just enough oversight to placate Congress and prevent a legitimately aggressive and independent IG from taking his place. It is also troubling because the State OIG justified some of MERO’s deficiencies to the NASA OIG by writing that MERO was “still hiring and training staff, opening offices, and developing its internal control policies and procedures.”[27] In other words, the numbers were too low. 

Conclusion
It is absolutely essential that a permanent State IG be appointed. It is important to remember, however, that appointing a permanent IG does not in itself guarantee effective oversight. Howard Krongard is the most recent permanent IG to serve at State. Krongard’s tenure ended following an investigation by the House Committee on Oversight and Government Reform into allegations that he “interfered with on-going investigations to protect the State Department and the White House from political embarrassment.”[28] For that reason, it is of the utmost importance that you nominate someone who is truly independent and aggressive and who will make a serious commitment to effective oversight. 

Such a nomination will have an immediate positive impact on oversight at State. Numerous State whistleblowers have come to POGO due to a perception within the Department that employees with knowledge of wrongdoing cannot go to the OIG because they believe it to be captured by management. An independent IG will restore faith among would-be whistleblowers that their tips will be investigated thoroughly and without bias in favor of management. 

We look forward to working with you on this very important issue. Please contact me or Jake Wiens at (202) 347-1122 if you have any questions or require more information.

Sincerely,

Danielle Brian
Executive Director
 
Attachments: 3 documents 
 
 
cc:  Senator Joseph Lieberman
      Senator Susan Collins
      Senator John Kerry
      Senator Richard Lugar
      Senator Claire McCaskill
      Senator Scott Brown
      Senator Carl Levin
      Senator Tom Coburn
      Representative Edolphus Towns
      Representative Darrell Issa
      Representative Howard Berman
      Representative Ileana Ros-Lehtinen
      Secretary of State Hillary Clinton
      State Department Inspector General Harold W. Geisel
      Commission on Wartime Contracting in Iraq and Afghanistan


[1] There are two categories of statutory IGs: Presidentially appointed IGs and Agency appointed IGs. A permanent IG in the context of the State Department means an IG that has been appointed by the President and confirmed by the Senate.

[2] The State Department is the only agency without a permanent IG in the category of Presidentially appointed IGs that does not have a nominee pending confirmation. The Central Intelligence Agency (CIA) and Department of Labor (DOL) do not currently have permanent IGs, but do have nominees awaiting confirmation. 

[3] Geisel’s official title is “Deputy Inspector General.” He is referred to as de facto IG in this letter because State does not have a Permanent or Acting IG. Geisel’s former title was Acting IG, but has since changed to Deputy IG. The Federal Vacancies Reform Act of 1998 restricts certain employees from being called Acting for longer than 210 days. Department of Justice, “Guidance on Application of Federal Vacancies Reform Act of 1998,” March 22, 1999.  (Downloaded November 17, 2010)

[4] One Hundred Tenth Congress, Hearing Before the Subcommittee on International Organizations, Human Rights, And Oversight of the Committee on Foreign Affairs on Activities of the Department of State’s Office of the Inspector General, October 31, 2007, p. 7.  (Downloaded November 17, 2010)

[5] State Department, Office of Inspector General, “Middle East Regional Office.”  (Downloaded November 17, 2010)

[6] National Aeronautics and Space Administration, Office of Inspector General, Report No. IG-11-002.  (Downloaded November 17, 2010) (hereinafter Report No. IG-11-002)

[7] Report No. IG-11-002, p. 6.

[8] Commission on Wartime Contracting in Iraq and Afghanistan, Special Report on Iraq Transition Planning: Better planning for Defense-to-State transition in Iraq needed to avoid mistakes and waste (CWC Special Report 3), July 12, 2010.  (Downloaded November 17, 2010) (hereinafter CWC Special Report 3)

[9] CWC Special Report 3, p. 3.

[10] CWC Special Report 3, p. 6.

[11] CWC Special Report 3, p. 5.

[12] CWC Special Report 3, p. 6.

[13] Project On Government Oversight, Inspectors General: Many Lack the Essential Tools for Independence, February 28, 2008. 

[14]Presidents Council on Integrity and Efficiency, Executive Council on Integrity and Efficiency, Quality Standards for Federal Offices of Inspector General, October 2003, p.8.  (Downloaded November 17, 2010) (hereinafter Quality Standards for Federal Offices of Inspector General)

[15] Quality Standards for Federal Offices of Inspector General, p. 8.  (Downloaded November 17, 2010)

[16] Government Accountability Office, Activities of the Department of State’s Office of the Inspector General (No. 110–114), March 2007. p. 4.  (Downloaded November 17, 2010) (hereinafter Activities of the Department of State’s Office of the Inspector General (No. 110–114))

[17] Project On Government Oversight, Inspectors General: Many Lack the Essential Tools for Independence, February 28, 2008. 

[18] Activities of the Department of State’s Office of the Inspector General (No. 110–114).

[19] Activities of the Department of State’s Office of the Inspector General (No. 110–114). p. 23.

[20] http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=RETRIEVE&FILE=$$xa$$busc22.wais&start=9571148&SIZE=6030&TYPE=PDF

[21] Activities of the Department of State’s Office of the Inspector General (No. 110–114).

[22] Council of the Inspectors General on Integrity and Efficiency, “Inspector General Historical Data Federal Departments,”  and One Hundred Tenth Congress, Hearing Before the Subcommittee on International Organizations, Human Rights, And Oversight of the Committee on Foreign Affairs on Activities of the Department of State’s Office of the Inspector General, October 31, 2007.  (Downloaded November 17, 2010)

[23] One Hundred Tenth Congress, Hearing Before the Subcommittee on International Organizations, Human Rights, And Oversight of the Committee on Foreign Affairs on Activities of the Department of State’s Office of the Inspector General, October 31, 2007, p. 7.  (Downloaded November 17, 2010)

[24] Department of State, “Biography: Harold W. Geisel.”  (Downloaded November 17, 2010)

[25] Inspector General Act of 1978, as amended, Section 2.  (Downloaded November 18, 2010)

[26] Department of State, “Biography: Patrick F. Kennedy.”  (Downloaded November 17, 2010)

[27] National Aeronautics and Space Administration, Office of Inspector General, Report No. IG-11-002, p.3.  (Downloaded November 17, 2010)

[28] House Committee On Oversight and Government Reform, September 18, 2007, letter to State Department Inspector General Howard Krongard.