[Senate Hearing 114-573]
[From the U.S. Government Publishing Office]
S. Hrg. 114-573
NOMINATION OF HON. PEGGY E. GUSTAFSON,
TO BE INSPECTOR GENERAL FOR THE
DEPARTMENT OF COMMERCE
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
MAY 10, 2016
__________
Printed for the use of the Committee on Commerce, Science, and Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri MARIA CANTWELL, Washington
MARCO RUBIO, Florida CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin TOM UDALL, New Mexico
DEAN HELLER, Nevada JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado GARY PETERS, Michigan
STEVE DAINES, Montana
Nick Rossi, Staff Director
Adrian Arnakis Deputy Staff Director
Rebecca Seidel, General Counsel
Jason Van Beek, Deputy General Counsel
Kim Lipsky, Democratic Staff Director
Chris Day, Democratic Deputy Staff Director
Clint Odom, Democratic General Counsel and Policy Director
C O N T E N T S
----------
Page
Hearing held on May 10, 2016..................................... 1
Statement of Senator Blunt....................................... 1
Prepared statement........................................... 2
Prepared statement of Hon. John Thune, U.S. Senator from
South Dakota............................................... 15
Statement of Senator McCaskill................................... 3
Prepared statement of Hon. Bill Nelson, U.S. Senator from
Florida.................................................... 18
Statement of Senator Klobuchar................................... 20
Statement of Senator Blumenthal.................................. 22
Witnesses
Hon. Peggy E. Gustafson, to be Inspector General for the
Department of Commerce......................................... 5
Prepared statement........................................... 7
Biographical information..................................... 9
Appendix
Response to written questions submitted to Hon. Peggy E.
Gustafson by:
Hon. John Thune.............................................. 27
Hon. Roy Blunt............................................... 34
NOMINATION OF HON. PEGGY E. GUSTAFSON,
TO BE INSPECTOR GENERAL FOR THE
DEPARTMENT OF COMMERCE
----------
TUESDAY, MAY 10, 2016
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 10:03 a.m. in
room SR-253, Russell Senate Office Building, Hon. Roy Blunt,
presiding.
Present: Senators Blunt [presiding], McCaskill, Klobuchar,
and Blumenthal.
OPENING STATEMENT OF HON. ROY BLUNT,
U.S. SENATOR FROM MISSOURI
Senator Blunt. So let me call the hearing to order. And
we're certainly pleased to have Peg Gustafson here today to
testify before the Committee to be the next Inspector General
of the Department of Commerce. For 6 years, she served as the
Senate-confirmed Inspector General for the Small Business
Administration. During her time there as Inspector General of
the SBA, Ms. Gustafson worked to address challenges at the SBA,
like fraudulent schemes affecting several SBA programs,
significant losses from defaulted loans, procurement flaws that
allow large firms to obtain small business awards, and
excessive improper payments.
The U.S. Department of Commerce, of course, with 12 bureaus
and nearly 47,000 employees located in 50 states and
territories, and in more than 86 countries worldwide, has a
broad, wide-ranging stewardship, from the oceans to satellites
to the census to telecommunications, and it's important that
the new Inspector General be able to hit the ground running. I
believe that Ms. Gustafson will be well positioned to have an
immediate impact at the Department of Commerce.
Prior to her role at SBA, she served as the General Counsel
to Senator McCaskill, a member of this committee. She advised
the Senate on Government oversight issues and helped write the
Inspector General Reform Act of 2008, among other things she
has done.
Senator McCaskill will be introducing Ms. Gustafson in just
a minute, but I want to say a couple more things about the
challenge at the Department of Commerce. First of all, it has
been without an Inspector General since June of last year. Last
August, Chairman Thune and Homeland Security Committee Chairman
Johnson called on the President to nominate a suitable
candidate to be the permanent Inspector General of the
Department of Commerce. Both committees were concerned that a
lengthy absence of a permanent Senate-confirmed Inspector
General at the Department of Commerce would diminish
independent oversight and destabilize the Office of Inspector
General.
The mission of the office, of course, is to improve the
efficiency and effectiveness of the Department. This mission
has been impacted by an unwillingness of the Department in a
number of areas to cooperate with the Inspector General. Those
are--those issues are covered in my prepared statement, which
I'm going to put in the record.
[The prepared statement of Senator Blunt follows:]
Prepared Statement of Hon. Roy Blunt, U.S. Senator from Missouri
Today we are very happy to welcome Peg Gustafson to testify before
the Committee as we consider her nomination to be the next Inspector
General at the Department of Commerce. For the past six years, Ms.
Gustafson has served as the Senate-confirmed Inspector General of the
Small Business Administration (SBA).
During her tenure as the Inspector General of the SBA, Ms.
Gustafson worked to address challenges at SBA, such as fraudulent
schemes affecting all SBA programs, significant losses from defaulted
loans, procurement flaws that allow large firms to obtain small
business awards, and excessive improper payments.
With 12 bureaus and nearly 47,000 employees located in all 50
states and territories, and in more than 86 countries worldwide, the
Department's mission is broad, ranging from stewardship of the oceans
and satellites, to the census and telecommunications.
It is important for the new Inspector General to be able to hit the
ground running, and I believe Ms. Gustafson will be well positioned to
make an immediate impact at the Department of Commerce.
Prior to her role at SBA, Ms. Gustafson served as General Counsel
to Senator Claire McCaskill, a member of this committee. She advised
the Senator on government oversight issues and helped write the
Inspector General Reform Act of 2008, among other things.
Senator McCaskill will be introducing Ms. Gustafson shortly.
From 1997 to 2007, Ms. Gustafson served as General Counsel in the
Missouri State Auditor's Office, and before that, she served as an
assistant prosecuting attorney for Jackson County, Missouri.
The Department of Commerce has been without a permanent Inspector
General since June of last year.
Last August, Chairman Thune and Homeland Security Committee
Chairman Johnson called on the President to nominate a suitable
candidate to be the permanent inspector general of the Department of
Commerce.
Both committees were concerned that a lengthy absence of a
permanent, Senate-confirmed inspector general at the Department of
Commerce would diminish independent oversight and destabilize the
Office of Inspector General.
The mission of the Office of Inspector General (OIG) is to improve
the efficiency and effectiveness of the Department's programs and
operation, as well as to detect and deter waste, fraud, and abuse.
This mission to protect taxpayer dollars is best served when a
permanent Inspector General is in place.
I strongly support the mission of inspectors general at the
departments and agencies within the Committee's jurisdiction. Indeed,
their independence is absolutely critical to their success.
I am particularly concerned about information access issues the
Commerce Department's Office of Inspector General recently faced.
A bedrock principle of the Inspector General Act of 1978, which
established an Office of Inspector General within 72 agencies across
the Federal Government, is that inspectors general must have access to
``all'' agency records and information necessary to conduct oversight.
Unfortunately, since the early days of the Obama Administration,
many agencies have systematically thwarted access to ``all records''
agency inspectors general need to do their job. Even the New York Times
Editorial Board, in a March 9, 2016, editorial entitled ``Let
Inspectors General Do Their Job,'' has underscored this concern.
Sadly, this pattern of obstruction of inspectors general audits and
investigations by the Obama Administration has even involved the
Department of Commerce.
The Department of Commerce Office of Inspector General has twice
been forced to terminate an audit of the International Trade
Administration's Enforcement and Compliance unit after Commerce
Department officials refused to grant access to requested information,
based on a highly dubious interpretation of a 68-page legal opinion
issued by the Obama Justice Department that essentially argued
inspectors general were not entitled to ``all'' agency information.
This opinion from the Obama administration is in direct
contradiction of the Inspector General Act of 1978.
The second time the Department of Commerce Inspector General was
forced to terminate an audit of the International Trade Administration
occurred as recently as last month.
As the New York Times editorial states, ``for nearly three decades
no one questioned the authority of inspectors general to obtain
sensitive or protected information.'' No one, that is, except the self-
described ``most transparent administration in history.''
Last month, the Office of Inspector General advised that the
Commerce Department's latest refusal to provide access has now been
reversed, allowing the planned audit to proceed.
This is welcome news, but we need to ensure that future presidents
will not seek to obstruct the mission of inspectors general as the
Obama Administration has done.
Department officials must not hinder the Inspector General's work
by denying access to records necessary to complete audits and
investigations.
Furthermore, significant delays in granting access to key
information are often tantamount to denial, and prevent both the
Department and the public from understanding challenges within the
Department and the steps it is taking to address them.
In conclusion, although it has been nearly a year since the last
Inspector General resigned, we are pleased to have the President's
nominee before the Committee.
Once the Senate received Ms. Gustafson's nomination on April 25--
only two weeks ago--this Committee acted swiftly to schedule this
hearing.
I turn now to Ranking Member Nelson for any remarks he would like
to make.
Senator Blunt. But I want to move now to Senator McCaskill
to introduce the nominee.
STATEMENT OF HON. CLAIRE McCASKILL,
U.S. SENATOR FROM MISSOURI
Senator McCaskill. Thank you, Mr. Chairman. It is a
pleasure for me to get to introduce Peg Gustafson to the
Committee. There are two things that you need to be an
Inspector General: one is fearlessness and the other is focus.
Rarely do I know a nominee for these jobs, and never have I
known a nominee as well as I know Peg. Her background is one of
public service. She was raised in Chicago by a father who was a
police officer. In fact, two of her sisters went on to work in
law enforcement. Peg chose to go to law school. But because of
that influence in her childhood, she was drawn to the
prosecutor's job.
And I was the elected prosecutor in Kansas City when Peg
interviewed for a job. And this story tells you really all you
need to know about Peg in terms of her fearlessness. She had
come and asked for a job, and I said, ``Listen, I think you're
a great candidate. I just don't have room right now to hire
you.''
So she was hired by the county legal counsel and was
working for the county in a capacity as their lawyer. There was
a lawsuit that I care deeply about, as the elected prosecutor
of the county, and I'm sure it will be a shock to Senator Blunt
and Senator Gardner that I had very strong opinions about it
and that I was not shy about letting those opinions be known to
everyone.
So I went to this meeting with the legal counsel for the
county. And keep in mind, now, Peg is in this meeting and she
has applied for a job with me. Now, we all know there are two
kinds of staff, lots of bright staff, but there's the kind of
staff that shades what they tell you based on what they know
you want to hear, and there's the kind of staff that stands up
to you and makes you better and stronger and more capable.
So at this meeting, I kind of expected Peg, based on her
demeanor in our interview, to kind of take a low-key approach
and shade what she said in order not to offend me because it
was very clear to everybody in the room how strongly I felt
about this. So imagine my surprise when Peg Gustafson squared
her shoulders and stood up to me and told me exactly why I was
wrong on the law and exactly why the county should proceed in a
different way.
I went back to my office and I called my Chief of Staff in,
and I said, ``We better hire Peg Gustafson.'' And we did. And
she was a great assistant prosecutor, widely respected by
judges and defense counsel and police department because of the
work she did.
I took her with me to the State Auditor's Office, where she
was the point person on access issues, which is very important
for her job as Inspector General because a lot of your job as
Inspector General is getting access, and she was the one when a
part of government decided they didn't really want to talk to
us or didn't want to cooperate with us, she was the one who
went toe-to-toe with them on those legal issues.
Once again, she uprooted her family and moved. They're here
today, Patrick and Amy and Doug, her two children and her
husband, made them come along, came to Washington, and worked
in my office, where she did the work in the IG community and
was instrumental in passing the IG Empowerment law, which gives
more independence to Inspector Generals than they've ever had
in our Government.
I think the job she has done at SBA is remarkable. I think
she has shown that fearlessness and focus, and I know that she
will be that same kind of Inspector General at Commerce, and I
only hope that our inability to get our work done here does not
impact her swift confirmation because if there was ever a
department of Government that needs an Inspector General and
needs it now, it's Commerce. There have been a string of
failures in that position and the stability and the continuity
that Peg would provide to that office are essential at this
moment.
So I urge her swift confirmation, and I sit here with a
great deal of pride at her success, which she has everything to
do with. I have been a big player in watching her rise through
the level of public service to obtain this honor to serve in
this capacity, and I know she'll do well.
Thank you, Mr. Chairman.
Senator Blunt. Thank you, Senator McCaskill.
And, Ms. Gustafson, we're pleased you're here. And if you
want to say more about your family, we're pleased they're here
as well. But we appreciate your opening statement.
STATEMENT OF HON. PEGGY E. GUSTAFSON, TO BE INSPECTOR GENERAL
FOR THE DEPARTMENT OF COMMERCE
Ms. Gustafson. Senator Blunt, Senator McCaskill, Senator
Fischer, hello. It's an honor to be here today and to be under
consideration to serve as Inspector General for the Department
of Commerce. I have prepared a written statement and request to
have it submitted for the record.
It's been an incredible honor to serve as the IG for the
Small Business Administration since October 2009. I'm extremely
excited about this new opportunity and possibility to serve at
the Department of Commerce, which performs vital functions and
provides services to propel America's economy forward.
I want to take just a couple minutes to introduce myself to
you and explain why I believe my career in public service and
tenure as SBA Inspector General has prepared me to take on the
role of Inspector General at Commerce.
I do want to thank my husband, Doug, and my kids, Patrick
and Amy, for their love and their support. I want to thank my
family for their continued support, my siblings, especially
Kelly, my sister, and her husband, John, who flew out on pretty
short notice from Chicago to be here. I'm so excited to have
their support.
I was born and raised in Chicago. Our father was a sergeant
for the Chicago Police Department. I attended public schools in
Chicago from kindergarten through high school, had the
privilege of attending Grinnell College in Iowa, where I
received my bachelor's in political science in 1989 and
subsequently received my law degree from Northwestern in
Chicago.
After law school, I moved to Missouri and began my legal
career as a judicial clerk for the Honorable Don Kennedy at the
Missouri Court of Appeals in Kansas City. And from there, I
spent 6 years in government serving the people of Jackson
County, Missouri. I was an assistant county counselor
representing the county in civil litigation. I can't believe
you remember that story, but I remember very well, what Senator
McCaskill just referred to. I worked as an assistant county
prosecutor handling all stages of criminal prosecution for a
wide variety of cases, from drug cases to arson to murder to
white collar crime.
In 1999, I was asked to serve as the General Counsel for
the Missouri State Auditor and handled many oversight
responsibilities for the state level auditing activities. I was
an integral part of the management team. It was there when I
first became familiar with the ``yellow book,'' which are, of
course, the government auditing standards promulgated by GAO,
and did indeed have a lot of experience and became pretty
skilled at ensuring that auditors had access to the records
necessary to perform their oversight responsibilities and
report on the issues that the taxpayers needed to know about.
After 8 years in the Auditor's Office, I served as General
Counsel to Senator McCaskill and assisted the Senator in areas
related to government oversight and financial management. And,
again, that is indeed where I became very familiar with the IG
community, through that work, especially the work on the IG
Reform Act of 2008.
In March 2009, I was nominated to serve as Inspector
General of the Small Business Administration, and I was sworn
in on October 2, 2009. I am humbled to have been nominated a
second time by the President.
As Inspector General, I seized the opportunity to promote
integrity and efficiency within the SBA and have strived to
make a positive impact within the Federal Inspector General
community. Since 2009, I've led an investigative and audit
staff numbered at approximately 100 people, and we've provided,
I believe, effective oversight over SBA's programs, which
encompass more than $100 billion in guaranteed loans and $100
billion in Federal Government contracting dollars. In that
time, our office has averaged over an eightfold return on
investments to the taxpayer relative to our budget.
As Inspector General, I have actively participated as a
member and leader in the Council of Inspectors General of
Integrity and Efficiency, CIGIE for short. After becoming
Inspector General, I accepted the position of Vice Chair of the
Legislation Committee, and then took over as Chair of the
Legislation Committee for CIGIE, where I served 5 years, both
as the Chair of the Legislation Committee and a member of
CIGIE's Executive Council. In that role, I testified several
times on behalf of the IG community and telling Congress the
tools that we would like to help us perform our function.
I'm very proud of the reputation I've earned in the course
of my career in public service, particularly as Inspector
General. I bring to these positions a strong commitment to
earning and keeping the public trust and to using taxpayer
dollars wisely. I always push those who work for and with me to
go the extra mile when I feel it's important to press harder
and get to the root of a problem. And, additionally, I believe
that those of us in positions of oversight must demand of
themselves the highest level of ethical activity and serve as a
role model for those with whom we interact.
While the Department of Commerce is clearly a larger agency
with a more diverse mission, in the realm of the Office of
Inspector General, the mission and focus will be the same, to
promote economy, efficiency, and effectiveness in the
administration of and prevent and detect fraud and abuse in the
programs of the agency.
If confirmed, I will focus resources on the areas of
highest risk to the Department and against areas identified as
top management challenges. I'll also make it a priority, as I
have in this position, to maintain a good working relationship
with Congress, with this committee certainly, Congress, as a
whole, the Secretary, and all the stakeholders, but I also
intend to exercise complete independence in regards to choosing
and pursuing audits and investigations.
I believe I have the skills, knowledge, the judgment,
demeanor, and track record to serve as the Inspector General
for the Department of Commerce, and I cannot thank you enough
for your consideration, and look forward very much to your
questions.
Thank you.
[The prepared statement and biographical information of Ms.
Gustafson follow:]
Prepared Statement of Hon. Peggy E. Gustafson of Maryland,
to be Inspector General, Department of Commerce
Chairman Thune, Ranking Member Nelson, and Members of the
Committee. It is an honor to be here today and to be under
consideration to serve as Inspector General of the Department of
Commerce.
I believe public service is a noble profession and it has been a
privilege to serve as the Inspector General of the U.S. Small Business
Administration (SBA) since October 2009. I am very excited about this
new opportunity to serve at the Department of Commerce, which works to
promote job creation, economic growth, sustainable development, and
improved standards of living for Americans. I would like to take the
next few minutes to introduce myself to you, and to explain why I
believe my career in public service and tenure as SBA Inspector General
has prepared me to take on the role of Inspector General at the
Department of Commerce. But first, I would like to express my
appreciation to this Committee for considering my nomination
expeditiously. I also want to thank my husband, Doug Micheel, and my
children, Patrick and Amy, for their love and their support, especially
at this time as I seek the Committee's approval for becoming Inspector
General at the Department of Commerce. If I may, I also want to thank
my family for their continued support, especially those who are here
with me today: my sister, Kelly, and her husband, John.
I was born and raised in Chicago, on the near north side. My family
has a long history in law enforcement. My father was a sergeant in the
Chicago Police Department and my sisters both continue to serve in law
enforcement, with my older sister as a sergeant with the Chicago Police
Department and my younger sister Jennifer as a Lieutenant in the Cook
County Sheriff's Department. I attended Chicago public schools from
kindergarten through high school and then had the privilege of
attending Grinnell College in Iowa, receiving my bachelor's in
political science in 1989, and Northwestern University in Chicago,
where I earned my law degree. After law school I moved to Missouri and
began my legal career as a judicial clerk for the Honorable Don Kennedy
at the Missouri Court of Appeals in Kansas City.
From there, I spent six years in government serving the people of
Jackson County, Missouri. First, I was an Assistant County Counselor,
representing the county in civil litigation, including the defense of
Federal lawsuits filed by jail inmates, personal injury suits filed by
persons alleging they were injured on county property, and representing
the county in personnel actions. I then worked as an assistant county
prosecutor, handling all stages of criminal prosecution for a wide
variety of cases, from drug cases to arson to white collar crime to
murder. I also represented the county in cases when we sought to remove
public officials from office for violations of conflict-of-interest and
nepotism laws.
In 1999, I was asked to serve as General Counsel for the Missouri
State Auditor. In this capacity, I handled many oversight
responsibilities for state-level auditing activities. In addition to
the traditional duties of a general counsel, such as advising the
auditor and her staff on legal questions arising in the course of
audits, I was an integral part of the management team of the office. I
became very familiar with the ``yellow book,'' the government auditing
standards promulgated by the Government Accountability Office, as well
as the appropriate scope of the Auditor's constitutional and statutory
duties. I also became skilled at ensuring the auditors were provided
access to the records necessary for them to perform their audits and
report on any issues of waste, fraud or abuse of the taxpayers' money.
After eight years in the auditor's office, I was provided with the
opportunity to serve as General Counsel in the office of Senator Claire
McCaskill. In this capacity, I assisted the Senator in areas related to
government oversight and Federal financial management as well as on
issues related to the Judiciary, Rules and Ethics Committees. It is in
this role that I had an opportunity to become very familiar with the
Federal Inspector General community, most notably through my work as
one of the key staffers who worked on the Inspector General Reform Act
of 2008. I also worked extensively on the legislation which gave
expanded authority and powers to the Special Inspector General for the
Troubled Asset Relief Program. I would be remiss if I did not express
my appreciation to my former boss, Senator McCaskill, for these
opportunities.
In March 2009, the President nominated me to serve as the SBA
Inspector General, and, following confirmation of my nomination by the
U.S. Senate, I was sworn in on October 2, 2009. I am humbled to have
been nominated a second time by the President. As Inspector General, I
seized this opportunity to promote integrity and efficiency within the
SBA, and I also have strived to make a positive impact within the
Inspector General Community.
SBA was created in 1953 as an independent agency of the Federal
Government to aid, counsel, assist and protect the interests of small
business concerns, to preserve free competitive enterprise and to
maintain and strengthen the overall economy of our Nation. The
President elevated SBA to his Cabinet in 2012. Though the Department of
Commerce is much more expansive in size and mission, SBA parallels some
of its activities focusing on building America's future and helping the
United States compete in today's global marketplace by providing
assistance to small businesses across the Nation through credit,
contracting, and counseling programs. The SBA helps Americans start,
build, and grow businesses. Through an extensive network of field
offices and partnerships with public and private organizations, SBA
delivers its services to people throughout the United States, Puerto
Rico, the U.S. Virgin Islands, and Guam.
With 12 bureaus and nearly 47,000 employees located in all 50
states and territories and more than 86 countries worldwide, the
Department of Commerce is substantially more diverse in its critical
programs that touch the lives of every American. However, in the realm
of the Office of Inspector General, the mission and focus is the same--
to promote economy, efficiency, and effectiveness in the administration
of, and to prevent and detect fraud and abuse in, such programs and
operations of the establishment.
Since 2009, I have led an investigative and audit staff of
approximately 100, and my office has provided effective oversight of
SBA's programs, encompassing more than $100 billion in guaranteed loans
and nearly $100 billion in Federal contracting dollars. In this time,
we have averaged over an eight-fold return-on-investment to the
taxpayer relative to our office budget and have issued 136 reports
containing 747 recommendations for corrective action. We have promoted
the suspension and debarment process within the SBA and have balanced
the focus of our investigative resources to combat fraud in both the
credit and the contracting programs.
Early in my tenure, I recognized the importance of an Office of
Inspector General's Hotline operation. Not only does the Hotline
provide a means for the public to report fraud, waste, and abuse, but
it is also a lifeline to whistleblowers. At SBA Office of Inspector
General, I've made the Hotline the heart of operations, serving as a
principal tool in promoting the integrity, efficiency, and
effectiveness of SBA programs. The Hotline receives and processes
reports of fraud, waste, abuse, mismanagement, or misconduct involving
SBA programs or employees--approximately 700 annually involving
millions of dollars of Federal funds. I have worked with the Congress
to direct additional resources toward our Hotline, and I have taken a
number of actions to enhance its functionality. We elevated the Hotline
to be under the purview of the Chief of Staff and implemented a
comprehensive Hotline policy, which balanced the information needs of
complainants with the operational needs of the office. Importantly,
this policy has enhanced privacy protections for complainants and other
interested persons. I also integrated our Hotline across multiple
platforms, including the public website, a complaint tracking system,
and an Integrated Voice Response system for telephone callers. If
confirmed, I will ensure an effective and secure Hotline operation is
available to those wanting to report fraud, waste, or abuse to the
Department of Commerce Office of Inspector General. I also will ensure
these complaints are processed in an efficient manner.
As noted, I have worked with the Congress to secure necessary
resources to provide effective oversight over SBA programs and
operations. I strive to keep the Congress and the Administrator fully
and currently informed, dedicating a member of my immediate staff to
communicate with the Congress. In these communications, my office has
demonstrated fiscal responsibility and long term savings, which has
resulted in an approximate 22 percent increase in budget authority from
the beginning of my tenure to the present. We've increased
investigative capacity while simultaneously pursuing reduced cost for
full time equivalent positions. Specifically, we are utilizing unsworn
law enforcement personnel to support the investigative efforts of our
criminal investigators. Such personnel have significantly reduced costs
to that of criminal investigators and have increased the investigative
capacity of our traditional law enforcement resources.
I recognize technology acquisition and development pose significant
challenges to Federal agencies. At SBA, I focused resources against
such challenges, and one technology initiative is particularly
noteworthy for being over budget and delayed in its delivery. I fully
understand the critical role that Offices of Inspectors General have in
overseeing such projects and the positive results that recommendations
for corrective action can achieve. I am proud of my office's part in
ensuring taxpayer money was not squandered as SBA upgraded its Loan
Management and Accounting System (LMAS), a project that was subject to
significant Congressional scrutiny and vital to SBA operations. If
confirmed, I am poised to provide leadership to ensure similar projects
at the Department of Commerce receive scrutiny by the Office of
Inspector General.
As SBA Inspector General, I have actively participated as a member
and a leader on the Council of the Inspectors General on Integrity and
Efficiency, otherwise known as CIGIE. I was elected by my peers to
serve two consecutive terms as the Chair of CIGIE's Legislation
Committee, and as such, served as a member of CIGIE's Executive Council
for five years. In this leadership capacity, I endeavored to keep the
Congress informed of the matters of most pressing interest to the
Inspector General Community. I testified on several occasions on behalf
of CIGIE, whereby legislative priorities to promote independence and to
facilitate effective oversight were championed. I've also led several
cross-cutting projects within CIGIE resulting in products, including
CIGIE's Congressional Relations Handbook and a Program Fraud Civil
Remedies Act Practitioners Guide.
I am proud of the reputation I have earned in the course of my
career in public service, particularly as an Inspector General. I bring
to each new position a strong commitment to earning and keeping the
public trust, and to using taxpayer dollars wisely. At the same time,
my teams have consistently been cited for being reasonable, fair, and
honest with our stakeholders. I have always pushed those who work for,
and with, me to go the extra mile when I feel that it is important to
press harder and get to the root of a problem. Additionally, I believe
that those of us in positions of oversight must demand of themselves
the highest level of ethical activity, serving as a role model for all
of those with whom we interact.
I believe my leadership abilities and style have had a positive
impact at the SBA, and if confirmed, I believe I can create a culture
of ownership and pride for those who work in the Office of Inspector
General. With my executive team, I will ensure workplace policies are
up-to-date and implement new policies where gaps may exist. Ensuring
effective policies and procedures are in place and holding personnel
accountable to the same standard is the foundation to a workplace that
is considered fair and equitable. Though policies and procedures can be
reviewed and implemented in reasonable time frames, the ensuing culture
change begins to take root when the trust of staff is earned. I have
led through changes of leadership at the SBA and also through changes
of my own executive staff. If confirmed, I intend to be a steady hand
during the change in Administration and also commit to providing
steady, independent leadership within the Office of Inspector General.
Finally, if confirmed, I will focus resources on the areas of
highest risk to the Department and also against areas identified as top
management challenges. I also will make it a priority to maintain a
good working relationship with this Committee, Congress as a whole, the
Secretary, and others--but I also intend to exercise complete
independence in regards to choosing and pursuing audits and
investigations. I believe that I have the skills, knowledge, judgment,
demeanor, and overall track record to serve as the Inspector General of
the Department of Commerce.
Thank you for your consideration, and I look forward to your
questions.
______
a. biographical information
1. Name (Include any former names or nicknames used):
Peggy Elizabeth Gustafson.
2. Position to which nominated: Inspector General, Department of
Commerce.
3. Date of Nomination: April 25, 2016.
4. Address (List current place of residence and office addresses):
Residence: Information not released to the public.
Office: Small Business Administration, Washington, DC 20416.
5. Date and Place of Birth: September 21, 1967; Chicago, IL.
6. Provide the name, position, and place of employment for your
spouse (if married) and the names and ages of your children (including
stepchildren and children by a previous marriage).
Douglas Micheel, Assistant General Counsel, PEPCO, Washington,
DC.
7. List all college and graduate degrees. Provide year and school
attended.
Grinnell College, Grinnell, IA, BA Political Science 1989.
Northwestern University School of Law, Chicago, IL JD, 1992.
8. List all post-undergraduate employment, and highlight all
management-level jobs held and any non-managerial jobs that relate to
the position for which you are nominated.
Inspector General, Small Business Administration, October 2009
to present.
General Counsel, Sen. Claire McCaskill, 2007-October 2009.
General Counsel, Missouri State Auditor 1999-2007.
Assistant Prosecuting Attorney, Jackson County, MO 1995-1999.
Assistant County Counselor, Jackson County, Missouri 1993-1995.
Judicial Law Clerk, Missouri Court of Appeals 1992-1993.
9. Attach a copy of your resume. See Attachment A.
10. List any advisory, consultative, honorary, or other part-time
service or positions with Federal, State, or local governments, other
than those listed above, within the last ten years: None.
11. List all positions held as an officer, director, trustee,
partner, proprietor, agent, representative, or consultant of any
corporation, company, firm, partnership, or other business, enterprise,
educational, or other institution within the last ten years.
Board member, Senate Employees Child Care Center, 2007-2009
12.Please list each membership you have had during the past ten
years or currently hold with any civic, social, charitable,
educational, political, professional, fraternal, benevolent or
religious organization, private club, or other membership organization.
Include dates of membership and any positions you have held with any
organization. Please note whether any such club or organization
restricts membership on the basis of sex, race, color, religion,
national origin, age, or handicap.
Member, Missouri Bar, 1992 to present (currently inactive)
13. Have you ever been a candidate for and/or held a public office
(elected, non-elected, or appointed)? If so, indicate whether any
campaign has any outstanding debt, the amount, and whether you are
personally liable for that debt. No.
14. Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $500 or more for the past ten years. Also list all offices
you have held with, and services rendered to, a state or national
political party or election committee during the same period. None.
15. List all scholarships, fellowships, honorary degrees, honorary
society memberships, military medals, and any other special recognition
for outstanding service or achievements. None.
16. Please list each book, article, column, or publication you have
authored, individually or with others. Also list any speeches that you
have given on topics relevant to the position for which you have been
nominated. Do not attach copies of these publications unless otherwise
instructed. None.
17. Please identify each instance in which you have testified
orally or in writing before Congress in a governmental or non-
governmental capacity and specify the date and subject matter of each
testimony.
Congressional testimony in my capacity as Inspector General of SBA
and Chair of the Legislation Committee of Council of Inspectors general
for Integrity and Efficiency. (a position I held from 2010-2015).
Testimony is available at https://www.sba.gov/oig/category/oig-
navigation-structure/reading-room/congressional-testimony. See also,
Attachment B.
18. Given the current mission, major programs, and major
operational objectives of the department/agency to which you have been
nominated, what in your background or employment experience do you
believe affirmatively qualifies you for appointment to the position for
which you have been nominated, and why do you wish to serve in that
position?
In my current role as Inspector General of the Small Business
Administration, I believe I have developed a skill set which will
enable me to meet the responsibilities as Inspector General of the
Department of Commerce if I am confirmed. In my previous roles in
public service, I have demonstrated an ability to identify challenges,
formulate recommended solutions and work constructively with senior
leaders of an agency to resolve problems and overcome challenges. If
confirmed, I would welcome the opportunity to apply the skills and
lessons I've learned in my previous roles to promote integrity and
efficiency within the Department of Commerce to help the agency achieve
its mission.
19. What do you believe are your responsibilities, if confirmed, to
ensure that the department/agency has proper management and accounting
controls, and what experience do you have in managing a large
organization?
Having served as an Inspector General for a cabinet-level Federal
agency since 2009, I am well versed in the office's responsibilities
under the Inspector General Act of 1978 as amended. IG offices are
tasked with performing reviews and investigations of their agency with
the goal of improving the economy, efficiency and effectiveness of the
agency's programs. I have been the Inspector General for the SBA, which
office has an annual budget of approximately $20 million and 103 FTE
for over six years. The Department of Commerce Office of Inspector
General is slightly larger but I believe I have the experience
necessary to manage the organization successfully.
20. What do you believe to be the top three challenges facing the
department/agency, and why?
As Inspector General of the Small Business Administration, I find
that one of our most useful reports is our annual report on the Top
Management Challenges facing the SBA. This report is used not only by
Congress, but by the agency to inform their decisions on where to focus
their attention when it comes to making the agency more efficient.
Should I be confirmed as Inspector General of the Department of
Commerce, I would refer to the office's Management Challenges report to
determine what I believe the top management challenges for the agency
are. I would also confer with my staff, as well as agency stakeholders
and Congress when considering that question.
b. potential conflicts of interest
1. Describe all financial arrangements, deferred compensation
agreements, and other continuing dealings with business associates,
clients, or customers. Please include information related to retirement
accounts.
I have been a public servant my entire career, and possess one
defined compensation plan from the State of Missouri to which I no
longer contribute. I also have two defined benefit plan accounts, from
Missouri and from Jackson County, Missouri, which will pay me a monthly
amount upon retirement at age 62 or 65. Details are available on my OGE
Form 278e, filed with the Office of Government Ethics.
2. Do you have any commitments or agreements, formal or informal,
to maintain employment, affiliation, or practice with any business,
association or other organization during your appointment? If so,
please explain. No.
3. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated. None.
4. Describe any business relationship, dealing, or financial
transaction which you have had during the last ten years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated. None.
5. Describe any activity during the past ten years in which you
have been engaged for the purpose of directly or indirectly influencing
the passage, defeat, or modification of any legislation or affecting
the administration and execution of law or public policy.
None, save for the Congressional testimony in my capacity as SBA
IG, noted above.
6. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items.
In connection with the nomination process, I have consulted with
the Office of Government Ethics and Department of Commerce ethics
officials to identify potential conflicts of interest. Any potential
conflicts of interest will be resolved in accordance with the terms of
an ethics agreement that I have entered into with the Department of
Commerce and that has been provided to this committee. I am not aware
of any other potential conflicts of interest.
c. legal matters
1. Have you ever been disciplined or cited for a breach of ethics,
professional misconduct, or retaliation by, or been the subject of a
complaint to, any court, administrative agency, the Office of Special
Counsel, professional association, disciplinary committee, or other
professional group? If yes:
a. Provide the name of agency, association, committee, or group;
b. Provide the date the citation, disciplinary action, complaint,
or personnel action was issued or initiated;
c. Describe the citation, disciplinary action, complaint, or
personnel action;
d. Provide the results of the citation, disciplinary action,
complaint, or personnel action.
No.
2. Have you ever been investigated, arrested, charged, or held by
any Federal, State, or other law enforcement authority of any Federal,
State, county, or municipal entity, other than for a minor traffic
offense? If so, please explain. No.
3. Have you or any business or nonprofit of which you are or were
an officer ever been involved as a party in an administrative agency
proceeding, criminal proceeding, or civil litigation? If so, please
explain. No.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? If so, please explain. No.
5. Have you ever been accused, formally or informally, of sexual
harassment or discrimination on the basis of sex, race, religion, or
any other basis? If so, please explain. No.
6. Please advise the Committee of any additional information,
favorable or unfavorable, which you feel should be disclosed in
connection with your nomination. None.
d. relationship with committee
1. Will you ensure that your department/agency complies with
deadlines for information set by congressional committees? Yes.
2. Will you ensure that your department/agency does whatever it can
to protect congressional witnesses and whistle blowers from reprisal
for their testimony and disclosures? Yes.
3. Will you cooperate in providing the Committee with requested
witnesses, including technical experts and career employees, with
firsthand knowledge of matters of interest to the Committee? Yes.
4. Are you willing to appear and testify before any duly
constituted committee of the Congress on such occasions as you may be
reasonably requested to do so? Yes.
Attachment A
Resume of Peggy E. Gustafson
Professional Experience
October 2009-Present
Inspector General, Small Business Administration
Head of office responsible for conducting audits,
investigations and other reviews of the programs of the Small
Business Administration.
From 2009-2015 also served as Vice Chair, then Chair of the
Legislation Committee of Council of Inspectors General on
Integrity and Efficiency (CIGIE) and member of CIGIE's
executive council.
January 2007-October 2009
General Counsel, Senator Claire McCaskill
Served as aide to United States Senator in areas of homeland
security, government oversight, judiciary issues, and ethics.
Staffed Senator at hearings of Homeland Security and
Government Affairs Committee, and hearings in other committees
involving legal issues, such SASC hearing on interrogation
methods used at Guantanamo Bay.
Granted TOP SECRET clearance, December 2008
February 1999-January 2007
General Counsel, Missouri State Auditor's Office
Represented State Auditor's Office in litigation relating to
fiscal notes prepared for statewide ballot initiatives, up to
and including briefs before Missouri Supreme Court.
Served as legal counsel for Auditor's office in personnel
matters.
Advised audit staff on legal questions arising in course of
audits.
Counseled State Auditor on legal issues regarding official
duties and powers of State Auditor, such as access to records
and permissible scope of audits.
Involved in management of auditor's office as member of
executive staff.
1995-February 1999
Assistant Prosecuting Attorney, Jackson County, Missouri
Tried felony criminal cases of every type, including first
degree murder cases
Had sole responsibility for charging and trying of
arsons.
Team leader of white collar crime trial team.
Worked with U.S. Attorneys' Office as Special Assistant U.S.
Attorney, in areas of white collar crime and public corruption.
Attended ATF Arson School for Prosecutors at FLETC in
Georgia.
Attended two week arson investigator school at National Fire
Academy, Emmitsburg, Maryland.
Had sole responsibility for appellate practice (misdemeanor
appeals and appeals of rulings in limine to exclude evidence.)
for prosecutor's office.
Had primary responsibility for drafting motions for writs of
prohibition and mandamus and handled appeals in those cases.
Assisted Prosecutor with cases involving removal of
officials for misconduct through writ of quo warranto.
October 1993-1995
Assistant County Counselor, Jackson County Counselor's Office
Represented Jackson County in litigation, including defense
of county and corrections officers in cases arising out of 42
U.S.C. Sec. 1983.
Tried Federal jury trial in which county prevailed in
case brought by prisoner alleging abuse.
Represented county in Federal case defending county's
adult business zoning ordinance.
Represented county hospital and doctors in hearings
seeking involuntary commitment of mentally ill individuals.
Prosecuted county ordinance violations in Jackson
County Associate Circuit Court.
May 1992-October1993
Law Clerk, the Honorable Don Kennedy, Missouri Court of Appeals
Researched and drafted appellate opinions in all issue
areas.
May-August 1991
Summer Associate, Williams and Montgomery, Chicago, Illinois
Drafted legal memoranda and general legal research for law
firm in area of insurance defense litigation.
May-August 1990
Research Assistant, Professor Richard Speidel, Northwestern University
School of Law, Chicago Illinois
Assisted professor with revision of casebook on contract
law.
1985-1989
Worked at Grinnell College Library, Grinnell, Iowa for work-study
program.
Attachment B
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Blunt. Well, thank you. We are glad you're here.
Let me ask unanimous consent that Chairman Thune's
statement be included in the record without objection.
[The prepared statement of Senator Thune follows:]
Prepared Statement of Hon. John Thune, U.S. Senator from South Dakota
Today we are very happy to welcome Peg Gustafson to testify before
the Committee as we consider her nomination to be the next Inspector
General at the Department of Commerce. For the past six years, Ms.
Gustafson has served as the Senate-confirmed Inspector General of the
Small Business Administration (SBA), an agency I'm very familiar with,
having once worked as the Chief of Staff for then-Administrator Jim
Abdnor.
During her tenure as the Inspector General of the SBA, Ms.
Gustafson has worked to address challenges at the SBA such as
fraudulent schemes affecting all SBA programs, significant losses from
defaulted loans, procurement flaws that allow large firms to obtain
small business awards, and excessive improper payments.
I believe Ms. Gustafson's experience at SBA will serve her well in
her new role as the Inspector General at the Department of Commerce,
should she be confirmed. With 12 bureaus and nearly 47,000 employees
located in all 50 states and territories and more than 86 countries
worldwide, the Department's mission is broad, ranging from stewardship
of the oceans and satellites, to the census and telecommunications. It
is important for the new Inspector General to be able to hit the ground
running, and I believe Ms. Gustafson will be well positioned to make an
immediate impact at the Department of Commerce.
Prior to her role at SBA, Ms. Gustafson served as General Counsel
to Senator Claire McCaskill, a member of this committee. She advised
the Senator on government oversight issues and helped write the
Inspector General Reform Act of 2008, among other things and Senator
McCaskill will be introducing Ms. Gustafson shortly. From 1997 to 2007,
Ms. Gustafson served as General Counsel in the Missouri State Auditor's
Office, and before that, she served as an assistant prosecuting
attorney for Jackson County, Missouri.
The Department of Commerce has been without a permanent Inspector
General since June of last year. Last August, along with Homeland
Security Committee Chairman Johnson, I called on the President to
nominate a suitable candidate to be the permanent Inspector General of
the Department of Commerce. Senator Johnson and I did this because we
were concerned that a lengthy absence of a permanent, Senate-confirmed
Inspector General at the Department of Commerce would diminish
independent oversight and destabilize the Office of Inspector General.
The mission of the Office of Inspector General (OIG), which is to
improve the efficiency and effectiveness of the Department's programs
and operation as well as to detect and deter waste, fraud, and abuse,
in order to protect taxpayer dollars, is best served when a permanent
Inspector General is in place.
I strongly support the mission of inspectors general at the
departments and agencies within the Committee's jurisdiction. Indeed,
their independence is absolutely critical to their success. That is why
I have directed my staff to work closely with these IGs to ensure that
they have the tools they need to carry out their important work and
that departments and agencies heed and implement OIG recommendations in
a timely manner.
I am particularly concerned about information access issues the
Commerce Department's Office of Inspector General has faced recently. A
bedrock principle of the Inspector General Act of 1978, which
established an Office of Inspector General within 72 agencies across
the Federal Government, is that inspectors general must have access to
``all'' agency records and information necessary to conduct oversight.
Unfortunately, since the early days of the Obama Administration, many
agencies have systematically thwarted access to ``all records'' agency
inspectors general need to do their job. Even the New York Times
Editorial Board, in a March 9, 2016, editorial entitled ``Let
Inspectors General Do Their Job,'' has underscored this concern.
Sadly, this pattern of obstruction of inspectors general audits and
investigations by the Obama Administration has even involved the
Department of Commerce--something Chairman Johnson and I wrote to
Secretary Pritzker about last year, making the case for OIG access. The
Department of Commerce Office of Inspector General has twice been
forced to terminate an audit of the International Trade
Administration's Enforcement and Compliance unit after Commerce
Department officials refused to grant access to requested information,
based on a highly dubious interpretation of a 68-page legal opinion
issued by the Obama Justice Department that essentially argued that
inspectors general were not entitled to ``all'' agency information, in
direct contradiction of the Inspector General Act of 1978.
The second time the Department of Commerce OIG was forced to
terminate an audit of the International Trade Administration occurred
as recently as last month.
As the New York Times editorial states, ``for nearly three decades
no one questioned the authority of inspectors general to obtain
sensitive or protected information.'' No one, that is, except the self-
described ``most transparent administration in history.''
Last month, the OIG advised that the Commerce Department's latest
refusal to provide access has now been reversed, allowing the planned
audit to proceed. This is welcome news, but we need to ensure that
future presidents will not seek to obstruct the mission of inspectors
general as the Obama Administration has done. Department officials must
not hinder the Inspector General's work by denying the OIG access to
records necessary to complete audits and investigations.
Furthermore, significant delays in granting access to key
information are often tantamount to denial, and prevent both the
Department and the public from understanding challenges within the
Department and the steps it is taking to address them.
In conclusion, although it has been nearly a year since the last
Inspector General resigned, and more than eight months have passed
since Senator Johnson and I called on President Obama to nominate a
permanent Inspector General at the Department of Commerce, we are
pleased to have the President's nominee before the Committee. Once the
Senate received Ms. Gustafson's nomination on April 25--only two weeks
ago--I acted swiftly to schedule this hearing. I promised a prompt and
thorough vetting of the President's nominee, and today's hearing is a
fulfillment of that promise. I turn now to Ranking Member Nelson for
any remarks he would like to make.
Senator Blunt. My first question would be to talk a little
bit about the fact that the Inspector General's Office two
times now has been forced to terminate Commerce audits,
specifically an audit of the International Trade
Administration's Enforcement and Compliance Unit, after
Commerce Department officials refused to grant access to
requested information based on I think it's a highly dubious
interpretation of a 68-page legal opinion issued by the Justice
Department that essentially argued that the Inspector General
was not entitled to all--``all'' being the operative word--
agency information. This appears to me to be in direct
contradiction to the Inspector General law. The second time,
the Inspector General was forced to terminate an audit of the
International Trade Administration just last month. The New
York Times editorial, a group I don't quote very often----
[Laughter.]
Senator Blunt.--said that, ``For nearly three decades, no
one has questioned the authority of inspectors general to
obtain sensitive or protected information, no one, that is,
according to them, except, according to them, the most
transparent administration in history.''
Last month, the Office of Inspector General advised that
the Commerce Department's latest refusal to provide access has
now been reversed, allowing an audit to proceed, but what I'm
wondering is, What do you think you've learned in the work
you've done at SBA that particularly prepares you to meet with
that kind of resistance that has now terminated two different
audits at the Commerce Department?
Ms. Gustafson. Thank you, Senator Blunt. I think that not
only my tenure as SBA Inspector General, which I certainly will
talk about, but also my 8 years in that Auditor's Office, if
it's taught me one thing, and it's taught me a great deal, it's
that first and foremost the oversight entity, be it the auditor
or the Inspector General, has to be completely independent and
be able to make the decisions on where they need to go, what
they need to look at, and what they need to be able to see in
order to do those reviews. And what I've learned is if there
are issues with that, and if there's interference, that really
is a direct threat upon the independence of that entity and has
to be dealt with swiftly and quite strongly such that, you
know, be it a delay of access to materials, which happens very
often, you know, I think those even need to be managed in such
a way that we are certain, as the oversight entity, that we're
getting what we need when we need it, that we're clear what we
need and why we need it and when we need it. And if those--if
there are issues with that and if there are problems with that,
that is a situation that needs to elevated and dealt with.
I certainly don't know anything outside of what the process
reported as far as the issues that have been facing certain
inspectors general, but my thoughts on when that happens is
that simply needs to be elevated and brought to the
stakeholders, brought to Congress' attention, and being given
attention, and people's feet need to be held to the fire to
make sure that we get the access.
I agree with you, Senator, 6A, the access provisions in the
Inspector General Act, are extraordinarily clear, and as you
noted, it says ``all'' and it says the IG shall have access to
all records that they need. And when we don't get access, that
has to be something that immediately is discussed and figured
out and resolved.
Senator Blunt. And so you would be willing to challenge a
Justice Department legal opinion that--basically the opinion
we're talking about.
Ms. Gustafson. So I don't profess to be a legal expert on
what that legal opinion says, but I do commit to fighting for
that access that we need under the IG Act, no matter what the
agency is saying, bringing that to attention and not giving up
on our insistence when we need that information when it's
information in the hands of the agency, that we are to get it.
So what that means as far as what steps I would take, I
certainly think it takes an elevation, and it needs to be
brought to people's attention and not--and dealt with, whatever
the----
Senator Blunt. Did you have any similar situations as the
Inspector General? Have you had any similar situations at SBA
where information was not provided?
Ms. Gustafson. We have not had any denial of access to
information that we have asked for. What my message to my
auditors was, and is, even when I first came into the office
is, what I wanted to know, immediately upon taking that job,
is, Are we having issues getting information timely? Not even
just access in general, but are we having issues getting it
timely? Because, again, I think that that interferes with our
ability to do our job.
And so I wanted to know, Are there times when we're not
getting it when we need it? And if so, let's stop that from
happening. Let's work on that and make sure that the agency is
getting us what we need and work through it. Because the timing
of an audit can be--is crucial as well, too. If an audit is
taking longer than it needs to take, because you're not getting
the information you need to, even if you eventually get it,
that's a problem, and that's something that I think needs to be
faced with. It happened in the Auditor's Office, as Senator
McCaskill noted, and it had to be managed, and I think
sometimes it happens in IG offices.
So none of that is--all of that has to be managed and we
have to be serious and sincere and intent on getting what we
need.
Senator Blunt. Thank you.
Senator McCaskill. I would just like to place in the record
the statement that Senator Nelson wanted to add.
[The prepared statement of Senator Nelson follows:]
Prepared Statement of Hon. Bill Nelson, U.S. Senator from Florida
Good morning.
Let me start off by welcoming Ms. Gustafson, and extending my
congratulations on your nomination to be the Inspector General at the
U.S. Department of Commerce.
I thank you for your many years of public service at the Small
Business Administration.
And I also want to thank Chairman Thune for quickly scheduling this
hearing--and to get the process moving to fill this critical position.
Inspectors General have the important task of combating waste,
fraud, and abuse within Federal agencies.
Their work plays a key role in government oversight and helps
improve the efficiency and effectiveness of our Federal agencies.
IGs keep the agency and Congress informed of serious problems at
the agency, and they also play the important role of receiving
whistleblower complaints.
The independent nature of IGs contributes to the success of their
work, which ultimately increases the trust that the American people
have in our government.
The Commerce Office of Inspector General oversees the expansive
portfolio of the Department, including the National Oceanic and
Atmospheric Administration, the National Institute of Standards and
Technology, and the National Telecommunications and Information
Administration.
The important programs and operations of these bureaus contribute
to a wide variety of sectors including telecommunications, science, and
weather--and we need strong, effective oversight of those programs.
I look forward to hearing about your plans to bring long-overdue,
stable leadership to the Commerce IG.
Again, thank you for appearing before us today, Ms. Gustafson.
Senator McCaskill. And the only question I have for Ms.
Gustafson is a question about testimonial subpoena. Just so
everybody understands, IGs can get documents, but they can't
get information from witnesses if the witness has no longer--
has left Government, and we are trying very hard to get this
changed. It is very difficult for investigations to be thorough
and complete if you are thwarted from getting information
because of your inability to have a testimonial subpoena.
And I know that you have been Chairman of CIGIE, which is
the Council of Inspector Generals. You have worked with the
Inspector General community now for a number of years. You also
are familiar with the Department of Justice and having worked
with the Department of Justice, certainly when you were a
prosecutor, in a cooperative fashion and worked with them on
various cases.
Based on your experience in the IG community, Ms.
Gustafson, do you think testimonial subpoena power is any more
susceptible to abuse within the IG community than it is within
the Department of Justice?
Ms. Gustafson. Senator McCaskill, as you noted, I am keenly
aware of this issue. We personally, at SBA IG, did have an
instance when we were trying to look at somebody who has been--
who had bid for a contract, and we wanted to talk to them, and
so, again, we didn't--they weren't Federal employees, and they
basically told us to go pound sand, they didn't want to talk to
us. And so I know that that's a real problem.
In all candor, I think it's offensive to think that for
some reason the Inspector General community can't handle
testimonial subpoena authority. I think it's something--I think
it's a tool that we have personally, speaking as the former
Chair of the CIGIE Legislation Committee and having worked on
that bill, your bill, quite frankly, in 2008, where at one
point it was a part of the bill, and this new bill, that's a
Senator Johnson, Grassley, McCaskill bill, I think is an
important tool, and I guess I never really understood why there
seems to be some feeling out there that inspectors general
would want to run amok if being given that authority. And,
again, I think given the track record that inspectors general
have, as the broad authority that we have now, and how I think
we do a pretty good job in Government and are good stewards for
the taxpayers, I don't understand that argument.
Senator McCaskill. I don't either, and it's being blocked,
and I think it's something that everyone needs to understand,
that the oversight function performed by the Inspector General
community will never be thorough and never be complete as long
as there is information that is not available to the Inspector
General community. And sometimes arm wrestling ``Mother
Justice'' over their cooperation, and keep in mind that it's
not uncommon for an investigation at DOJ--and I know both
Senator Klobuchar and Senator Ayotte will back me up on this
because they have worked with Department of Justice--they have
a different timetable than State and local law enforcement, and
that's putting it politely. I mean, their investigations can
literally take years and years. And the notion that we cannot
do important policy work through oversight, waiting for them to
complete what they're doing or not doing, I think is really
shortsighted. So I hope that we can continue to work on that
and get you all testimonial subpoena.
Thank you, Mr. Chairman.
Senator Blunt. Senator Klobuchar.
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you very much, Mr. Chairman. And
congratulations, Ms. Gustafson, on your nomination, and it's
good to be here with Senator McCaskill after all the work she
has done in this area, and I'm sure she'll make sure everything
goes smoothly, if you get confirmed here and everything gets
done.
But I did want to ask you one question somewhat along the
lines of what Senator McCaskill was talking about. One reason
that we have inspectors general, of course, is to make sure
that Government is more accountable, but you can only fulfill
this goal if you have access to the information and if the
public then has information to your reports. And there are
concerns that some IGs have not released their findings or have
taken too long to release them. What are the legal and policy
guidelines? Do you think this needs clarification? And do you
commit to releasing your reports as soon as possible?
Ms. Gustafson. I think that one of the really great, quite
frankly, protections for inspectors general built into not only
the IG Act of 1978, that created the IGs, but the 2008 Act
which mandated publishing on the website the reports of the
Inspector General. The wonderful thing about that is it ensures
that the agency understands that we need to tell the public
what is going on. Our biggest job and our biggest stakeholders,
Congress is a huge stakeholder, the agency is a huge
stakeholder, but the American taxpayer is really our biggest
stakeholder. We are there to try to ensure that the agency is
being a good steward for the money and running these programs
the way that they need to be run. And by having that, by having
a law that envisions that our work is public really helps that
happen, really helps the agency understand that our role is,
you know, although we are inside the agency, we have a dual
reporting requirement to Congress and, again, the public gets
to know what we're doing.
So to your point, I think that the law has gotten better,
even in 2008, and that it did kind of acknowledge that now it's
easier to get the reports published faster and get the public
access to them because now every IG has a website, as every
agency has a website.
So it's certainly--I can certainly commit to you that
that's always been a priority for me, that our work get
published that way and be made public, and I would continue
that practice at the Department of Commerce. I see no reason--
quite frankly, I think it only benefits an Inspector General
because our work gets noticed.
Senator Klobuchar. Right. And so you have this dual role
where you, of course, are an independent voice----
Ms. Gustafson. Right.
Senator Klobuchar.--to uncover whatever ways fraud, abuse,
is going on. At the same time, you work closely with the agency
that you're tasked to monitor. And so what's your view of the
appropriate working relationship between the Office of the
Inspector General and the Secretary of Commerce? And how would
you balance consulting with senior Commerce leadership and
maintaining independence?
Ms. Gustafson. Again, my experience, both having gotten to
know the IG community when I was on the Hill, and then being
the IG for six and a half years, it's really--it's such a
unique position in Government and really was designed by
Congress since, of course, it was created by an Act of
Congress, in this amazing way where, yes, we're within the
agency, but we have such strong independence.
We have so many tools and protections for our independence
built into the way that we are designed, such as the dual
reporting role, where we have to keep Congress fully informed
in addition to the agency head, such as the removal provisions
where any IG, who, should they be removed, first Congress gets
to know that first, you know, and 30 days with a reason why,
such as very specific language that says the agency shall not
direct us and tell us what to do or what not to do.
And I think that the way I balance that role is I go--I
strive to have a collaborative relationship and a collegial
relationship with the agency because a good working
relationship makes things run smoother, and you want--I want to
have a good relationship with the agency because I want them to
pay attention to the work of the IGs, to the work of the IG
employees.
So it's important that we have that understanding that
we're there to help make the agency better, but, on the other
hand, nobody can tell us what to do, you know. And so with that
understanding, I think that really fashions the relationship.
And my experience so far, and there have been two
administrators at the SBA since I've been there, it has helped
to have a very professional yet independent relationship with
them, and that's something that I would bring to Commerce, just
kind of my knowledge of that's what you need to do to be a
strong and independent IG, and approach my relationship with
the stakeholders and the agency in that manner.
Senator Klobuchar. All right. Thank you very much.
Ms. Gustafson. Thank you, Senator.
Senator Blunt. So while Senator Blumenthal settles in, you
mentioned in March in your testimony before the House Small
Business Committee, you talked about the serious shortcomings
at SBA in securing information. You know, cybersecurity is
obviously something that the Government has not been nearly as
good at as we would have hoped the Government would have been.
What do you think, taking from SBA to this bigger agency, that
you can bring to that important discussion there?
Ms. Gustafson. One of the things that's patently clear to
me both through my work as the IG at the Small Business
Administration, of course, being within the IG community and
being part of the community where we discuss issues, as to your
point, Senator, cybersecurity is an issue in every single
agency for several reasons. One, because it's such an important
issue because vulnerabilities in IT systems can wreak such
havoc both with the public's information and just with the
systems in general. Also the fact that cybersecurity, the
understanding that that's always going to be a moving target
because there's always going to be people out there figuring
out different ways to try to take advantage of vulnerabilities
within systems.
So one of the things that I noted in reviewing, for
example, the top management challenges at Commerce and
comparing them to our top management challenges at SBA is
cybersecurity is on both of those lists for clear reasons. I
think it's one of those issues that has to--I kind of think of
it as something that will probably always be there, and it
doesn't mean that it doesn't deserve attention, what it means
is it kind of deserves constant attention, not overwhelming,
but constant attention, and both on behalf of the agencies and
on behalf of the overseers. You know, it would not be
surprising for that to be a longstanding management challenge
just because of the very nature of the technology, which is
changing as I speak.
Senator Blunt. Senator Blumenthal.
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator Blumenthal. Thank you, Mr. Chairman. Welcome to our
Committee, and thank you for your service and to your family,
for their service.
Ms. Gustafson. Thank you.
Senator Blumenthal. I want to focus on a perhaps very
specific and limited issue--NOAA recognizes the importance of
promoting aquaculture. And as you know, aquaculture is an
industry of growing significance to many states, including
Connecticut because it has the potential to greatly increase
marine-related jobs in the United States, meet consumer demand
for domestically grown shellfish, and other products. Beyond
its economic benefits, it has the potential to increase water
quality through filtration, and aquaculture research has
produced a great many techniques and best practices for
strengthening marine environmental conditions.
The reports reaching me through a number of sources in my
state, shellfish producers and others, are that one of the
Nation's key contributors to the United States aquaculture
industry, the Northeast Fisheries Science Center in Milford,
Connecticut, has been asked to work on stock assessment and
other NOAA priorities, but they have not been provided
essentially with the resources or the support to do so.
If confirmed, what do you see as your role in ensuring that
the work occurring at the Milford Lab and other facilities and
institutions promoting aquaculture is in synch with NOAA's own
stated priorities of increasing domestic aquaculture production
and shellfish consumption? And in the course of your
preparation to come here, have you heard anything about these
issues?
Ms. Gustafson. Senator Blumenthal, I want to thank you very
much for a question that I absolutely cannot give you a really
good answer to because it's a fascinating question. One of the
things that has been so interesting to me as I'm going through
this confirmation process, that clearly, I mean, it comes as no
surprise to me, was that the intense--the incredible breadth of
what Commerce is and all the bureaus.
And I will tell you actually, and it has been very
heartening and it has been really wonderful, I've met with a
lot of staffs, including your staff, even though this was on
very short notice, which is nice because it's great to already
begin to hear what issues are of interest to Members and are
important.
And so while I cannot speak about aquaculture, I will tell
you that I have heard it many times. I mean, I can tell that
this is an area of great interest to Members. I actually had a
staffer come up to me right before the hearing and said,
``Fish.'' I wish--I know it's more complex than that, but it's
already apparent to me that this is something of interest. And
I look forward to, should this process go forward and should I
be confirmed, to listening----
Senator Blumenthal. I will give you, happily give you, a
pass----
[Laughter.]
Ms. Gustafson. OK.
Senator Blumenthal.--as long as you commit to doing a
report, giving me some response on this question.
Ms. Gustafson. I'm very happy and absolutely commit to
meeting with you because what I would want to do is hear from
you on if anything has been done before by the IG's Office, and
what type of review is wanted.
My general attitude toward Congress--``attitude'' is a
terrible word--but I think it's important to know what Congress
is interested in for several reasons. Congress is a stakeholder
much as the agency. Again, we have a dual reporting requirement
to Congress. But also it's been my experience that if Congress
isn't paying attention to the work of the IG Office, then
nobody is paying that much attention.
So I definitely want to hear from the Members and to hear
further, should I be confirmed, on what issues are--would be of
interest and would be--what you would be interested in.
Senator Blumenthal. I want to ask you another question that
also relates to fishing, and this one is equally, if not more,
a priority and has broader reach. As you know, quotas for
specific amounts of fish that can be taken in all varieties and
species of fish are set by an elaborate structure under the
Federal law that provides authority to the Department of
Commerce to oversee that structure. There have been claims
about unfairness and inefficiency, and both environmental and
economic detrimental impacts from the current structure, as it
is now implemented. To give you one example, Connecticut
fishermen are limited as to the numbers of flounder and sea
bass they can take, and yet the warming of waters has driven
more of those fish to Connecticut offshore and Rhode Island
fisheries as opposed to the middle Atlantic states, Virginia
and North Carolina, where just a short time ago they were in
much greater abundance.
So, in effect, the fish population has moved; the quotas
have not kept pace. It's a matter of basic science. It seems to
me that's an issue that ought to be within your purview,
particularly if those quotas or the misapplication of those
quotas are the result of potential improper influence on those
councils. Would you agree?
Ms. Gustafson. You are speaking about a lot of stuff that I
don't know about, but what I would agree with is it sounds like
that at some--first off, I would note that somewhere sitting
behind me is somebody from the Commerce Inspector General
Office, and I certainly know and hope that they are listening
because if it's a concern to you today, it needs to be a
concern to them whether or not, you know, I'm IG. So hopefully
those are conversations that----
Senator Blumenthal. I see somebody may be taking notes----
Ms. Gustafson. Taking notes.
[Laughter.]
Ms. Gustafson. So, and if you have concerns about the
efficiency of a program or whether a program is serving the
people that it should serve, you know, whether the right--
which, quite frankly, we do deal with a lot at SBA because we
have, for example, the set-aside contracting programs that are
meant to provide economic development opportunities to certain
groups of people.
And so if there are similarities there, that's something
that I would be happy to sit down and talk to you about, and,
again, in the context of wanting to know where, should I be
confirmed as IG, where we should be devoting our resources, the
reviews that we should be doing. And I'm happy to commit to you
to have--talk to you.
Senator Blumenthal. Well, I would like you to give me a
commitment that you will look into this issue and report back.
Ms. Gustafson. Into the issue of? The quota issue.
Senator Blumenthal. Exactly.
Ms. Gustafson. So----
Senator Blumenthal. Well, the structure of the
implementation process, the question of what kinds of
influences may have been brought to bear, and other questions
relating to implementation of this process.
Ms. Gustafson. I will commit to you to making that a
priority as far as bringing that to, were I to be confirmed to
Commerce IG, bringing that to the IG staff and the audit staff
and saying this is something that is important to a Senator,
and it is very important to Senator Blumenthal that that be
looked at, and having that discussion early on. And I certainly
would commit that to you, you know, as I would to----
Senator Blumenthal. Well, I appreciate your doing that.
Ms. Gustafson. Yes.
Senator Blumenthal. I would also like a commitment that you
will respond to the question that I've raised----
Ms. Gustafson. Right.
Senator Blumenthal.--as to whether it is a proper topic for
inquiry.
Ms. Gustafson. Right.
Senator Blumenthal. If it's outside your jurisdiction for
some reason, I don't believe it's outside your jurisdiction----
Ms. Gustafson. Right.
Senator Blumenthal.--but if for some reason it is, it is a
Department of Commerce program----
Ms. Gustafson. Right.
Senator Blumenthal.--it's a Department of Commerce
responsibility----
Ms. Gustafson. Right.
Senator Blumenthal.--which has been delegated, but still
remains legally within your jurisdiction, and the Department of
Commerce ought to be held accountable. Your job is to hold the
Department of Commerce accountable for its legal
responsibilities, so I want to know why there should be no
further inquiry or report if that's the decision by the Office
of the Inspector General.
Ms. Gustafson. I will definitely commit to you to getting
an answer to that. Again, you are talking about a fact
situation about which I will not even say I have limited, I
have no knowledge, but to your point, if you're saying, ``I
want to know if you're saying it's not within the purview,'' or
something, absolutely, I think you would be owed an answer to
that, and I would commit to giving you an answer to that.
Senator Blumenthal. I appreciate it.
Ms. Gustafson. OK.
Senator Blumenthal. Thank you.
Ms. Gustafson. Sure.
Senator Blunt. Senator McCaskill, do you have any
additional?
Senator McCaskill. I do not.
Senator Blunt. Well, following up on that discussion, just
sort of give me a sense of having done this for six and a half
years, what do you see as your relationship with the Congress
when Members reach out or when committees reach out?
Ms. Gustafson. So, as I've noted before, I am keenly aware,
and I think it's a tremendous protection actually for
inspectors general that we have a dual reporting requirement,
and we have a legal duty to keep Congress fully and currently
informed of any issues going on in the agency, you know, almost
concurrently, or concurrently, with the agency. The sentence in
the IG Act actually says agency and Congress fully and
currently informed.
So I'll tell you that my practice has always been even in
the context of developing our audit work plan, when our
auditors sit down to decide, ``Where is it within our limited
resources at SBA IG that we should be looking?'' before that
plan is finalized, we have meetings.
I make sure that we have meetings with our stakeholders,
and that's not only the program heads at SBA, but it's the
congressional stakeholders. Where is it that they think,
because they often have a lot of knowledge that would be
helpful for us, not only where do they think the IG should be
focusing, but where do they know that there are problems?
And I think it's important to do that because, again, as
I've noted before, the agency pays a lot more attention to the
work of an IG when Congress is paying attention to the work of
an IG, so I think it's important to have that very open dialog
and to have an understanding of what the priorities are for the
authorizers in the chambers for the appropriate--for anybody,
for any of the stakeholders in Congress, and that's something
that we do at SBA when we are devising our work plan, which,
you know, is constantly changing.
And I think that that's something that I would certainly
envision doing, as I was hoping I was making clear to Senator
Blumenthal, you know, that that's something that I would bring
to Commerce IG, sitting down with anybody who wants to sit
down, ``Where do you think we should be? Here's where we are. I
do think we're on the right track.''
And I will tell you just anecdotally when we have those
meetings, we often get a lot of good insight from Congress on
areas of concern. We don't get it so much from the agency,
shockingly enough, you know, they don't tend to say, ``I want
you to look at this,'' but the meetings with Congress I think
are extraordinarily helpful and important when we're fashioning
and deciding where to use those, you know, limited resources to
look at any agency that we're looking at.
Senator Blunt. Well, the flounder count and how it relates
to the middle Atlantic states would only be something that a
Member of Congress would be likely to bring to attention----
[Laughter.]
Senator Blunt.--and there may be more of that.
Well, thank you for your work so far, both in Missouri and
in Senator McCaskill's office here and in the job you're doing
now. And we appreciate your responsiveness today.
The hearing record will remain open for 2 weeks. A number
of conflicts this morning, including Senator Bennett's funeral.
And so I think there will be Members that may have some
questions to submit, and they are asked to do that upon
receipt. You're asked to submit your written answers to the
Committee as soon as possible.
Senator Blunt. And with that, the hearing is concluded with
our great thanks to you and your family for being here.
Ms. Gustafson. Thank you.
[Whereupon, at 10:45 a.m., the hearing was adjourned.]
A P P E N D I X
Response to Written Questions Submitted by Hon. John Thune to
Hon. Peggy E. Gustafson
Question 1. The Department of Commerce (DOC) Office of Inspector
General (OIG) reduced the audit scope for Federal Information Security
Management Act (FISMA) compliance for the Fiscal Year 2014. As a
result, the Office of Management and Budget (OMB) was unable to compute
a compliance score for DOC as compared to the other Chief Financial
Officers Act agencies in OMB's Annual Report to Congress on FISMA.
Question 1a. During your tenure at the U.S. Small Business
Administration (SBA), how did the SBA OIG work with the agency to
improve information security protection? What have you learned in
performing those audits that will inform how you will conduct FISMA
reviews at the DOC?
Answer. As SBA Inspector General, I ensured that the OIG met its
statutory obligation to conduct an annual audit in compliance with the
FISMA and publish its findings. Given the complexity and resources
necessary to perform this review, we contracted with an independent
public accountant to perform this audit; we oversaw their work. Through
our FISMA reviews, the OIG has identified systemic problems with the
SBA's IT systems, and this remains one of the most serious management
challenges facing the Agency.
FISMA requires that the OIG review the SBA's Information Technology
Security Program. This review found that the SBA continues to progress
in certain FISMA evaluation categories. However, the SBA still needs to
implement 32 longstanding open recommendations and related unresolved
vulnerabilities in the SBA's FISMA areas. Until the SBA takes steps to
address these longstanding weaknesses in its IT systems and control
structures, the Agency will be at risk of data loss or system
penetration.
Question 1b. If confirmed as the Inspector General, will you commit
to performing a comprehensive annual independent evaluation of the
Department's information security programs and practices, as required
under FISMA?
Answer. If confirmed, I will provide leadership to ensure mandated
reviews are completed in a timely manner, and if necessary, work with
the Congress to ensure the OIG has the necessary resources to fulfill
these mandates.
Question 2. The DOC OIG has issued a number of recommendations that
remain open and unimplemented.
Question 2a. In your role at SBA, what specific actions do you take
to ensure that agency officials implement the OIG's recommendations in
a timely manner?
Answer. As Inspector General, I ensured that there is an
established standard operating procedure (SOP) to conduct follow up on
open recommendations in compliance with OMB Circular A-50 Revised. When
the SBA rescinded its SOP in 2012 that set forth review follow up
procedures, I immediately directed my staff to engage Agency
stakeholders. As a result, a new SOP was implemented that achieves
timely responses from the Agency on draft reports in compliance with
the Government Auditing Standards (the ``Yellow Book''), as well as a
recommendation dispute resolution process that parallels OMB's
circular. In addition, I have directed our Assistant Inspector General
for Audit to seek a status update on open recommendations not more than
every 90 days until corrective action is implemented.
Question 2b. In your role at SBA, have you ever escalated an open
and unimplemented OIG recommendation to a higher level of agency
management? If so, please describe.
Answer. Yes, as part of the review follow up process, unresolved
recommendations (i.e., recommendations that the SBA either disagreed
with or did not provide a sufficient plan for corrective action) are
elevated to the Audit Followup Official (AFO) in accordance with OMB
Circular A-50.
If management disagrees with an audit recommendation or finding, or
if OIG disagrees with the management decision, then management and OIG
has 60 days after the date of the final audit report to attempt to
reach agreement or notify the Audit Follow-up Official (AFO) of the
disputed issue. At SBA, the Deputy Administrator is designated the
Agency AFO. This process has occurred on several occasions during my
tenure.
In May 2015, my office published a report titled Improvements
Needed In SBA's Management Of The Women-Owned Small Business Federal
Contracting Program. Aside from the resolved recommendations of this
report, the report pointed out that the Women-Owned Small Business
Federal Contracting Program (WOSBP) would undergo some major
programmatic changes based on the National Defense Authorization Acts
for FY 2013 and 2015. Specifically, the changes in law permitted
contracting officers to award sole-source, unlimited value contracts
and mandated SBA to implement a certification program. When SBA
increased programmatic risk and implemented the contracting provisions
without the certification program, I directed that our office provide
public comments during the rulemaking process and notified
Congressional overseers of the risk to promote corrective action. The
SBA subsequently initiated a rulemaking process to comply with the
statutory mandate.
Question 2c. If confirmed, what steps will you take at DOC to
ensure that any open and unimplemented recommendations are closed and
implemented?
Answer. If confirmed, I commit to reviewing the audit follow up
process in place at the Department of Commerce. If necessary, I will
provide leadership to ensure a process is implemented that complies
with OMB Circular A-50 Revised. I also will endeavor to keep the Agency
Head and the Congress fully and currently informed, to include
statutory processes to alert the Agency Head and the Congress of any
particularly serious or flagrant problems, abuses, or deficiencies
relating to the administration of programs and operations of the
Department of Commerce.
Question 3. A bedrock principle of the Inspector General Act of
1978, as amended, is that inspectors general must have access to all
agency records and information necessary to conduct oversight and
investigations. On August 5, 2014, 47 inspectors general wrote to the
then-chairmen and ranking members of the House Committee on Oversight
and Government Reform (OGR) and the Senate Committee on Homeland
Security and Government Affairs (HSGAC) about access to records issues
impeding the work of the inspectors general at the Peace Corps, the
Environmental Protection Agency, and the Department of Justice (DOJ).
You were not among the signatories. At the time, you also served as
Chair of the Legislation Committee for the Council of the Inspectors
General for Integrity and Efficiency (CIGIE). Why did you choose not to
sign this letter? Do you concur with the letter?
Answer. I believe Inspectors General have a duty to keep the Agency
and Congress fully and currently informed, and the letter signed by 47
Inspectors General is a means to do so. As Inspector General of SBA, I
had not experienced access denials. Nonetheless, I testified on several
occasions on behalf of CIGIE that I believe ``all means all'' relative
to Section 6(a)(1) of the Inspector General Act, as amended, and my
perspective is consistent with those who independently decided to sign
this letter.
As Chair of the Legislation Committee, I also served on CIGIE's
Executive Council. The Executive Council had previously expressed a
strong opinion to the Department of Justice's Office of Legal Counsel
(OLC) that ``all means all.'' Given this dialogue was open between the
Executive Council and the OLC, it was prudent as an Executive Council
member representing CIGIE to receive OLC's response on the matter prior
to transmitting a letter to the Congress. After a great deal of
discussion of this matter at Executive Council, and in light of the
dialogue being undertaken at that time, all but one member of Executive
Council decided to refrain from signing the letter. After OLC issued
its opinion, I believe CIGIE was best-positioned to inform the Congress
and seek redress on behalf of the Inspector General community, to
include any legislative remedies. As such, I was a signatory to the
letter responding to the OLC opinion, which was consistent with the
decision of the Executive Council.
Question 4. On July 20, 2015, the Justice Department's Office of
Legal Counsel (OLC) issued a 68-page opinion arguing that the IG Act's
general instruction that inspectors general have access to ``all
records'' in an agency's possession necessary to complete their work
cannot be read to override more narrow prohibitions on the disclosure
of certain types of information. Using this opinion as justification,
the DOC has twice declined to grant the DOC OIG information necessary
for an audit of the International Trade Administration (ITA), leading
to cancellation or suspension of the audit.
Question 4a. On August 3, 2015, CIGIE wrote to the chairmen and
ranking members of House OGR and Senate HSGAC expressing serious
concerns with this July 20, 2015, OLC opinion, stating ``[t]he OLC
opinion's restrictive reading of the IG Act represents a potentially
serious challenge to the authority of every Inspector General and our
collective ability to conduct our work thoroughly, independently, and
in a timely manner.'' You signed this letter, along with 67 of your
inspector general colleagues. Why did you sign this letter and not the
prior August 5, 2014, letter?
Answer. Please see my response to question #3.
Question 4b. At your confirmation hearing, in response to a
question from Senator Blunt, you stated that you were not an expert on
this OLC opinion. Yet, you had signed the August 2015 letter referenced
above. Please elaborate further on your response to Senator Blunt and
provide your analysis of the opinion. Do you agree with its conclusions
regarding restrictions on OIG access to agency records?
Answer. I believe Congress intended Inspectors General to have
access to all records, reports, audits, reviews, documents, papers,
recommendations, or other material available to the applicable
establishment which relate to programs and operations with respect to
which that Inspector General has responsibilities under the Inspector
General Act of 1978, as amended. The only exceptions to this access are
those principally found in Section 8 of the Act such as Section 8(e).
My testimony was meant to indicate that I do not have first-hand
knowledge of the specific records to which the Inspector General of the
Department of Justice is being denied access relative to their bearing
on Section 8(e), Special Provisions Concerning the Department of
Justice. I am unaware of any such special provisions that apply to the
Department of Commerce, and as such, my position is that as far as
access to records as provided in Section 6(a), ``all means all.''
Question 4c. Do you still agree with CIGIE's warning in the letter
you signed that the OLC opinion ``represents a serious threat to the
independent authority of not only the DOJ-IG but to all Inspectors
General?'' Please answer yes or no.
Answer. Yes.
Question 4d. In your view, does the plain language of the Inspector
General Act entitle you to obtain all necessary information and
materials to complete the audits and investigations you undertake?
Please answer yes or no.
Answer. Yes.
Question 5. A second OLC opinion, issued on April 27, 2016, revised
the first opinion in the context of a rider in the FY 2016 omnibus
appropriations bill that clarified that DOJ may not use appropriated
funds ``to deny [its] Inspector General . . . timely access to any
records . . . or prevent or impede that Inspector General's access to
such records . . . under any provision of law, except a provision of
law that expressly refers to the Inspector General and expressly limits
the Inspector General's right of access.'' Only then did DOC officials
reverse course, finally granting DOC OIG access to the required records
for its ITA audit. Given that the appropriations rider only applies to
FY 2016 and may not be permanent, DOC may in future years resume using
the July 20, 2015, OLC opinion as justification for denying the OIG
access to requested information. If confirmed, how will you overcome
such an obstacle to information access if this situation arises? Please
describe the specific steps you will take if Commerce Department
officials deny you access to information you require.
Answer. Any denial of access by the Department of Commerce or its
components would represent a serious threat to the independent
authority of my office. It is my position that no one can prevent or
prohibit the Inspector General from initiating, carrying out, or
completing any audit or investigation, or from issuing any subpoena
during the course of any audit or investigation. Denying or delaying
access to records strikes at the core of my independent authority to
conduct such reviews.
The Inspector General Act of 1978, as amended provides several
powerful tools to Inspectors General to resolve any access questions.
First, in accordance with Section 6(b)(2), I would independently make a
determination whether or not access has been unreasonably refused or
not provided. I would then report the circumstances to the head of the
establishment involved without delay. If the head of the establishment
makes a decision that in any way prohibits a review or investigation
from proceeding independently, I would deem this as being significant
and flagrant and invoke Section 5(d) of the Inspector General Act of
1978, as amended, whereby the Agency Head would be compelled to provide
my report and their comments to the Committees of jurisdiction.
Notwithstanding these tools, I see no limitations to engage the
Congress directly to seek assistance as part of my duty to keep the
Congress fully and currently informed.
Question 6. Following Superstorm Sandy, which struck the
northeastern United States in October 2012, the SBA OIG received $5
million in appropriated funds to conduct investigations and audits of
SBA disaster loans made as a result of Superstorm Sandy to identify
potential waste, fraud, and abuse.
Question 6a. What was your approach to handling this increased
responsibility and funding?
Answer. I directed that an Audit Work Plan specific to oversight of
Superstorm Sandy be developed and implemented. We utilized term
auditors and full time staff to perform this oversight fully
appreciating the value of this oversight to the Congress. As planned,
we recently increased our investigative capacity by hiring a criminal
investigator and contracting for analytical support to combat fraud
that begins to evidence itself as the loans mature and potentially
default. We anticipate these supplemental funds will be fully expended
as oversight is ongoing.
Question 6b. What were the results of this oversight? Please
describe in detail any reports issued, hearing testimony, referrals for
criminal prosecution, or any other related activity.
Answer. To date, we have issued 6 audit reports containing 18
recommendations for corrective action. The monetary impact of these
recommendations is $520,264 in Questioned Costs and $9,141,309 in Funds
for Better Use. A list of these reports is as follows:
Report 14-14: Improving Accuracy of Performance Reporting to
Better Manage Disaster Loan Processing Time Expectations
Report 14-16: Effectiveness and Timeliness of the Hurricane
Sandy Disaster Loan Closing and Disbursement Processes
Report 15-05: SBA's Evaluation of Principal's Repayment
Ability for Hurricane Sandy Business Loans
Report 15-13: Hurricane Sandy Expedited Loan Processes
Report 15-14: SBA's Controls to Prevent Duplication of
Benefits with Community Development Block Grants.
Report 15-15: SBA Needs to Improve Its Management of
Disaster Technical Assistance Grants
Due to the nature of SBA disaster loans, fraudulent loans are not
immediately identified, as they have a deferment period for repayment
and take years to default. Based on past experience, fraud
investigations normally do not begin to materialize until two to three
years after the disaster. There is a five-year statute of limitations
(from the date of the last false statement) to prove a false statement
to the SBA. With the passage of the RISE Act, the potential for
Superstorm Sandy-related criminal and civil investigations will
continue until at least 2022. As of May 25, 2016, we have opened 54
criminal investigations involving SBA disaster assistance loans related
to Superstorm Sandy. Our investigative efforts have resulted in 30
indictments/informations/complaints/summons, 9 arrests, 22 convictions,
and $912,414 in criminal monetary recoveries. We also have participated
in approximately 19 training and outreach opportunities.
Question 6c. What lessons from performing this oversight will you
apply at DOC OIG if confirmed?
Answer. The work we have performed related to Superstorm Sandy, as
well as the other work we have performed using appropriated funds given
to us for a specific purpose (such as Hurricanes Ike and Gustav, and
the Recovery Act) has taught me how to manage situations where new and
pressing needs occur and resources need to be allocated to perform
oversight work not originally included on a work plan. Many of the same
rules apply such as seeking input from stakeholders on what reviews
should be undertaken and formulating a work plan which spells out the
anticipated time the reviews will take. However, there also are
decisions that need to be made as far as how to staff up to meet the
new needs, and in what manner (e.g., term employees vs. permanent FTEs,
how many auditors are needed, how many investigators). And all this
must be done while making every effort to ensure that these new
responsibilities do not impede our ability to continue to perform the
already-planned work in a timely, efficient manner.
Question 7. I believe that strong leadership of the DOC OIG is
critical to the successful performance of its mission. Having served as
the Inspector General for the SBA for many years, I ask that you
provide an assessment of your own leadership.
Question 7a. How would you describe your management and leadership
style?
Answer. I think my management style can be described as involved
and collaborative. I strive to learn from my senior managers and make
sure they know they are an invaluable part of the process. I want
people to know they should not be afraid to give me unvarnished advice,
and that the last thing I want or need are ``yes men'' (or women). I
care very deeply about my employees and know how hard it can be to be a
public servant, and I strive to make sure that the SBA OIG employees
know that their contributions are valued. Additionally, I establish
reasonable expectations and create a culture of ownership and pride for
those who work in the Office of Inspector General.
Question 7b. How do you think your subordinates would describe your
management and leadership style?
Answer. As noted in my statement for the record, I believe I
provide steady and consistent leadership, ensuring our workforce can
independently conduct reviews and investigations. I believe
subordinates would describe me as approachable and fair, having a high
degree of integrity. I have promoted work life balance within the
office, and I believe there is a positive morale in the office, which
is high functioning.
Question 7c. How often do you meet with senior division heads
within the SBA OIG?
Answer. As SBA Inspector General, I have an open door policy to not
only my senior leaders but all OIG employees. Early in my tenure, I met
weekly with my senior leaders at an executive staff meeting. These
weekly meetings were in addition to my daily interaction on matters of
interest. Currently, I have recurring executive staff meetings every
three weeks, though I meet one on one as-needed, and on a regular
basis.
Question 7d. How often do you receive updates on pending OIG
matters and from whom?
Answer. I receive updates from my senior leaders in real time on
matters of interest to me and as determined by those senior leaders.
Question 7e. How would you characterize the frequency and quality
of your engagement with your subordinates at the OIG?
Answer. I would characterize the frequency of engagement with my
subordinates relative to the daily operations of my office as more than
adequate. I strive to achieve a shared understanding in all these
engagements.
Question 7f. What has been your mission guidance to OIG staff and
how has it been conveyed and reinforced?
Answer. The SBA OIG operates under a five-year strategic plan that
I implemented in Fiscal Year 2012. Our mission is clear: Provide
independent, objective oversight to improve the integrity,
accountability, and performance of the SBA and its programs for the
benefit of the American people. My vision for the SBA OIG also is
clear: To be the most effective OIG in the Federal Government.
Question 7g. During your tenure at the SBA OIG, have you used
climate surveys or other formal or informal tools to assess your
performance or the performance of other agency managers and the morale
of employees? If so, what has been the result of these efforts?
Answer. A ``climate survey'' was conducted during development of
SBA OIG Strategic Plan for Fiscal Years 2012-2017. The results of the
survey were the basis for establishing the three strategic goals set
forth in the strategic plan.
Question 7h. What steps have you taken to build, maintain, or
improve employee morale or esprit de corps within the SBA OIG?
Answer. In context of SBA OIG's strategic goal #3, to create a work
environment that attracts, develops, and retains quality staff and
promotes innovation, we have taken a variety of actions to achieve
three objectives:
1. Improve internal communications and collaborations.
2. Ensure that the OIG has a professional, technically proficient
and satisfied workforce.
3. Leverage technology and people to improve OIG methods in carrying
out our mission.
Question 8. I believe a strong relationship with Congress and key
stakeholders is also critical to the success of an inspector general.
Question 8a. As SBA Inspector General, how would you characterize
your relationship with Congress?
Answer. As SBA Inspector General, I have strived to build an open
and collaborative relationship with the Congress. I established a goal
in our strategic plan to ``enhance relationships with Congress, the
SBA, and other entities.'' To achieve the objectives of this goal, I
established a new position on my leadership team to serve as a single
point-of-contact for congressional and external affairs. As a result,
the office is positioned to keep the Congress fully and currently
informed of the work of our office and to provide timely responses to
congressional inquiries and correspondence.
Question 8b. How would you characterize your responsiveness to
congressional inquiries?
Answer. I would characterize my responsiveness to congressional
inquiries as timely, thorough, and complete.
Question 8c. Please describe your relationship and level of
interaction with other key stakeholders in your current position.
Answer. As with the Congress and SBA leadership, I have strived to
build open and collaborative relationship with other key stakeholders.
I am an active and contributing member of the Council of the Inspectors
General for Integrity and Efficiency (CIGIE), having served five years
in leadership on the Legislation Committee and four years on the
Executive Council. I also have accepted invitations or made my staff
available to provide briefings or presentations to external
stakeholders to promote the mission and work of the OIG. I view this as
a regular and recurring part of my duties as SBA Inspector General.
Quesiton 8d. Will you commit to meeting with and updating Commerce
Committee staff on a periodic basis, and upon request, if confirmed?
Answer. If confirmed, I commit to meeting with and updating
Commerce Committee staff on a periodic basis, and upon request.
Question 9. What is your relationship with the SBA Administrator?
Do you have regular meetings with the SBA Administrator and with senior
agency officials?
Answer. I believe I have a respectful, working relationship with
the SBA Administrator. As prescribed by the Inspector General Act of
1978, as amended, I have ensured I have an open and direct line of
communication to the Administrator. I have met with the SBA
Administrator on matters of interest to her, such as achieving a shared
understanding of the role of the semi-annual Report to Congress. More
routinely, I interact not less than monthly with the Deputy
Administrator or the Chief of Staff to keep all parties apprised of
current initiatives within the office or to resolve any concerns that
may be brought to my attention by my staff.
Question 10. If confirmed, what would your approach be to building
a relationship with the Secretary of Commerce and other senior DOC
officials?
Answer. If confirmed, I would envision having a similar
relationship with the Secretary and the Deputy Secretary as I do with
the Administrator and the Deputy Administrator of SBA. I would expect
open lines of communication and to be afforded access to them whenever
I might need it. I would approach them as stakeholders and would seek
to engage them regularly on the work of my office. My expectation will
be that the Secretary, Deputy Secretary and other senior leaders of the
Department will work constructively with me and my office to make the
Department of Commerce the most efficient and effective department
possible, including using OIG reports as a valuable tool in identifying
areas that can be improved.
Question 11. In your current role, how do you identify areas of
inquiry for the SBA OIG? Do you take a proactive role in creating the
office's work plan? How is the office work plan created and how are
priorities determined?
Answer. The Audit Work Plan is developed by the Assistant Inspector
General for Audit. The Work Plan is risk-based, and uses criteria with
which I agree. It is developed by the AIGA in consultation with the
Audit Directors and their respective teams. Legislative mandates,
congressional interest, and Hotline and investigative activity are key
factors in prioritizing work. To ensure the Work Plan reflects the most
current priorities of the office, I have directed that the Work Plan be
updated quarterly, with Congressional outreach occurring prior to each
publication.
Question 12. Based on your tenure at the SBA OIG, what is your view
as to the biggest challenge the SBA faces in carrying out its mission?
What is your view as to the biggest challenge the DOC faces in carrying
out its mission?
Answer. SBA's programs encompass more than $100 billion in
guaranteed loans and nearly $100 billion in Federal contracting
dollars. Currently, SBA OIG has identified ten top management concerns
facing the SBA--Report On The Most Serious Management And Performance
Challenges In Fiscal Year 2016. The overall goal is to focus attention
on significant issues with the objective of working with Agency
managers to enhance the effectiveness of SBA's programs and operations.
The Challenges are not presented in order of priority, as we believe
that all are critical management or performance issues. That said, I
believe information technology transcends many of these challenges, and
I anticipate the Department of Commerce faces this challenge as well.
Question 13. You have described one of your notable successes
during your tenure as IG at SBA as the completion of ``Operation Five
Aces,'' which resulted in Federal criminal convictions stemming from a
bribery scheme in which a defendant in the case paid millions of
dollars in bribes to corrupt public officials from the U.S. Army Corps
of Engineers in return for lucrative government contracts. Please
describe in detail your involvement and leadership in ``Operation Five
Aces.''
Answer. Operation FIVE ACES was a bribery scheme in which the
defendant paid millions of dollars in bribes to public officials from
the U.S. Army Corps of Engineers in return for lucrative government
contracts. Twenty individuals and one corporation have pled guilty to
Federal charges. The investigation uncovered the largest domestic
bribery and bid-rigging scheme in the history of Federal contracting
cases, according to the U.S. Attorney's Office. Overall, participants
in the scheme stole over $30 million in government money through
fictitious invoices and conspired to steer a nearly $1 billion
government contract to a favored government contractor. To date,
through forfeiture, restitution, and civil settlements, the U.S.
Attorney's Office has been able to recover over $30 million of the
stolen money.
My role in this investigation was to provide leadership to the
Assistant Inspector General for Investigations and the criminal
investigators assigned to this investigation. I ensured necessary
resources were authorized and provided to support their investigative
efforts. Once the initial arrests were made public, I provided
briefings to Congressional authorizers and appropriators and
participated in an interagency press conference with the U.S. Attorney.
I made myself available to the media, as well as the criminal
investigator who conducted the investigation. I believe my efforts to
champion the outcome of this investigation provides for a longstanding
deterrent effect across the Federal contracting community for those who
may contemplate wrongdoing. I also believe raising awareness of the
impact of our office informs the Congress relative to ensuring the OIG
is provided the resources it needs to achieve its mission.
Question 14. If confirmed, what steps will you take to engage with
DOC OIG employees in an office that is significantly larger than your
current office? Will you commit to making an effort to meet with senior
agency officials on a frequent and regular basis, as well as senior
division heads within the OIG?
Answer. Clear communication is key to managing. I think a manager
should always strive to ensure that their employees have a clear
understanding of the processes in place and the decisions being made.
Employees want to know that they are part of the process and that their
work and input is valued. Further, I am committed to meeting with
senior agency officials on a frequent and regular basis to promote the
work of the OIG and understand program concerns to inform our oversight
plan. DOC OIG managers should expect to be active members of my
management team and not be afraid of change (when change is necessary).
I will engage OIG managers frequently and regularly to break down
communication barriers to avoid the ``stovepiping'' and tunnel vision
that sometimes gets in the way of collaboration, particularly in larger
organizations. I think it's important that all divisions within an OIG
strive to work together as a cohesive, high functioning office.
Question 15. If confirmed, how would you plan to direct the DOC
OIG? Are there issues that you have already identified that the office
could tackle to improve the efficiency and effectiveness of DOC
programs? How would you develop the list of OIG priorities?
Answer. If confirmed, I would hope to forge strong relationships
with stakeholders to help ensure that the work of the OIG is respected
and promotes corrective action, which helps ensure that the OIG's work
leads to positive change. I anticipate that I would spend most of my
time initially with two goals in mind: introducing myself to the
employees of the OIG and learning about the current state of the office
and what changes and improvements may need to be made. Secondly, I will
focus on becoming familiar with the audit work plan and the risk
assessment used to develop the work plan, to become familiar with what
the DOC OIG believes are the priorities as far as where to direct the
resources of the office in conducting oversight of the Department of
Commerce. Once I have established that foundation of knowledge, I would
then be prepared to more thoroughly consider the short and longer term
priorities of the DOC OIG and what changes and improvements may be
warranted to ensure those priorities are addressed.
Question 16. Political and institutional independence is critical
for an inspector general to be able to be effective in rooting out
waste, fraud, and abuse to protect taxpayer dollars. Should you be
confirmed, how will you maintain the independence of the OIG?
Answer. The Inspector General Act as amended has provided IGs with
tremendous protections and tools to maintain their independence, such
as the dual reporting requirement to Congress, transparency of IG
budget requests, and the seven day letter provision. If confirmed, I
will leverage and exercise every authority available to me to maintain
my independence and the independence of the office. Having already
served as an IG for over six years, I am proud of the reputation I have
earned as a fair, but steadfastly independent Inspector General.
Question 17. Unfortunately, the previous three DOC inspectors
general resigned in the midst of controversy. This is a troubling track
record. Should you be confirmed, what do you intend to do to restore
confidence in the DOC OIG?
Answer. I believe strongly in personal accountability. If
confirmed, I intend to meet with senior leaders and OIG staff to gain
an understanding of the culture that exists at the office. I will take
decisive action to resolve any structural inefficiencies or other
causes that may contribute to negative perceptions within the office. I
intend to hold myself to the highest standard and will demand the same
of the management team, and expect them to carry forth this ethos to
the front line staff.
I believe my leadership abilities and style have had a positive
impact at the SBA, and if confirmed, I believe I can create a culture
of ownership and pride for those who work in the Office of Inspector
General at the Department of Commerce. With my executive team, I will
ensure policies are up-to-date and implement new policies where gaps
may exist. I will ensure effective policies and procedures are in place
and hold personnel accountable to the same standards. I have led
through changes of leadership at the SBA and also through changes of my
own executive staff. If confirmed, I intend to be a steady hand during
the change in Administration and also commit to providing steady,
independent leadership within the Office of Inspector General.
Question 18. The Middle Class Tax Relief and Job Creation Act of
2012 created an independent authority within the Commerce Department's
National Telecommunications and Information Administration (NTIA) to
develop an interoperable nationwide broadband network for first
responders known as the First Responder Network Authority, or FirstNet.
A high priority of mine is to maintain robust oversight of FirstNet,
both here by the Committee and at the DOC OIG. Will you commit to me
that you will ensure there is robust, objective oversight of the
FirstNet program by the OIG, should you be confirmed?
Answer. FirstNet is subject to oversight by the Inspector General
of the Commerce Department. I am aware the DOC OIG has already
conducted audits which have examined various aspects of the FirstNet
organization and operations. Also, the DOC OIG included FirstNet in its
most recent Top Management Challenges report for FY 2016 which
indicates FirstNet faces challenges ahead in fulfilling its mission.
Considering the scope and magnitude of the program together with
its early stage of organizational development, I believe FirstNet will
continue to benefit from OIG engagement and oversight in the future. If
confirmed, I will want to learn more details about the audit work which
has already been completed and what work is currently planned before
making any specific decisions regarding future DOC OIG oversight. I
will also seek input from Members of Congress who have an interest in
FirstNet in determining how best to allocate OIG resources.
______
Response to Written Questions Submitted by Hon. Roy Blunt to
Hon. Peggy E. Gustafson
Question 1. I understand you began your career in public service in
Missouri, as assistant prosecuting attorney for Jackson County, and
then as General Counsel in the Missouri State Auditor's office. What
are some of the skills you learned working in, and for, Missouri that
prepared you for your current role at SBA, and that you will take to
the Department of Commerce?
Answer. I spent six years in government serving the people of
Jackson County, Missouri. First, I was an assistant county counselor,
representing the county in civil litigation, including the defense of
Federal lawsuits filed by jail inmates, personal injury suits filed by
persons alleging they were injured on county property, and personnel
actions. I then worked as an assistant county prosecutor, handling all
stages of criminal prosecution for a wide variety of cases, from drug
cases to arson to white collar crime to murder. I also represented the
county in cases when we sought to remove public officials from office
for violations of conflict-of-interest or nepotism laws.
In 1999, I was asked to serve as General Counsel for the Missouri
State Auditor. In this capacity, I handled many oversight
responsibilities for state-level auditing activities. In addition to
the traditional duties of a general counsel, such as advising the
Auditor and her staff on legal questions arising in the course of
audits, I was an integral part of the management team of the office.
Perhaps most importantly, I helped make strategic decisions about which
audits and investigations deserved highest priority. I became very
familiar with the ``yellow book,'' the government auditing standards
promulgated by the Government Accountability Office, as well as the
appropriate scope of the Auditor`s constitutional and statutory duties.
I also became skilled at identifying and gaining access to the records
necessary to ensure that state taxpayer money was being spent
responsibly and transparently.
I believe all these skills have been extremely useful to me in my
time as an Inspector General. These jobs also solidified my love of
public service and my belief that a career in public service is one of
the most rewarding things one can do.
Question 2. I understand that you when you were in the Senate, you
worked on the Inspector General Reform Act of 2008 (P.L. 110-409). As a
sitting Inspector General, and now nominated to serve in the same
capacity at a much larger Department, what are your thoughts on further
legislation to strengthen or empower Inspectors General?
Answer. In my capacity as SBA Inspector General and Chair of the
Legislation Committee for the Council of the Inspectors General for
Integrity and Efficiency (CIGIE), I have strongly advocated for
additional tools to enhance independence of Inspectors General and to
increase the efficiency and effectiveness of their oversight. The
following are among the legislative proposals I have championed:
Relief from the Computer Matching and Privacy Protection Act
Relief from the Paperwork Reduction Act
5 USC Sec. 552(b)(3) Exemption to Protect Sensitive
Information Security Data
Testimonial Subpoena Authority
Appropriate Use of Paid or Unpaid, Non-duty Status in Cases
Involving Inspectors General
Program Fraud Civil Remedies Act Enhancements
Question 2a. Do you have any feedback on Senator Grassley's
Inspector General Empowerment Act (S. 579)?
Answer. S. 579 contains many of the legislative proposals and
perspectives noted above that I have championed as an Inspector General
and on behalf of CIGIE. CIGIE has expressed its position at various
stages of the legislative process for S. 579 on behalf of the Inspector
General community. I am supportive of CIGIE's views and am grateful for
the work of Senators Johnson and Grassley, as well as their co-
sponsors, on this important piece of legislation.
Question 3. Political and institutional independence is critical
for the IG to be able to be effective in rooting out waste, fraud, and
abuse and to protect taxpayer dollars. Should you be confirmed, how
will you maintain the independence of the Office of the Inspector
General?
Answer. The Inspector General Act as amended has provided IGs with
tremendous protections and tools to maintain their independence, such
as the dual reporting requirement to Congress, transparency of IG
budget requests, and the seven day letter provision. If confirmed, I
will leverage and exercise every authority available to me to maintain
my independence and the independence of the office. Having already
served as an IG for over six years, I am proud of the reputation I have
earned as a fair, but steadfastly independent, Inspector General.
Question 4. As an Inspector General, how do you view your
relationship with Congress?
Answer. As SBA Inspector General, I have strived to build an open
and collaborative relationship with the Congress. I established a goal
in our strategic plan to ``enhance relationships with Congress, the
SBA, and other entities.'' To achieve the objectives of this goal, I
established a new position on my leadership team to serve as a single
point-of-contact for congressional and external affairs. As a result,
the office is positioned to keep the Congress fully and currently
informed of the work of our office and provide timely responses to
congressional inquiries and correspondence.
Question 5. Ms. Gustafson, you have served for over six years as
the Inspector General at the Small Business Administration. If
confirmed, you would be moving from a position as the IG of a
relatively small agency to become the IG of a large department with 12
bureaus and nearly 47,000 employees. Should you be confirmed, how will
you apply your experience as SBA IG to the greater scope of programs at
the Department of Commerce?
Answer. Working as SBA Inspector General has allowed me to take the
knowledge I possess about the importance of the role of the Inspector
General and the importance of the independence of the role and put it
into practice. I have gained experience in ensuring that the agency and
Congress are fully informed about challenges affecting the agency's
programs while steadfastly maintaining the independence of the office.
While the Department of Commerce is a larger organization than SBA
with more diversity in its programs, I view the essential role of the
Inspector General as the same--to promote economy, efficiency and
effectiveness, and prevent and detect fraud and abuse in the
administration of the agency's programs and operations.
Question 5a. What challenges do you anticipate in making the
transition from SBA to the Department of Commerce?
Answer. I am aware that the Department of Commerce OIG has operated
without a Senate confirmed IG for almost a year. If confirmed, I intend
to meet with senior leaders and OIG staff to gain an understanding of
the culture that exists within the office. I believe my leadership
abilities and style have had a positive impact at the SBA, and if
confirmed, I believe I can create a culture of ownership and pride for
those who work in the Office of Inspector General at the Department of
Commerce. With my executive team, I will ensure policies are up-to-date
and implement new policies where gaps may exist. I will ensure
effective policies and procedures are in place and hold personnel
accountable to the same standards. I have led through changes of
leadership at the SBA and also through changes of my own executive
staff. If confirmed, I intend to be a steady hand during the change in
Administration. I will provide steady, independent leadership within
the Office of Inspector General.
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