answering your questions. >> thank you ms. page. we appreciate all three of you being with us to share your insights and experiences you have had in helping to protect the american taxpayer dollars as well as ensure citizens like mr. west get the care they need and deserve. we will now begin questions and would yield to the subcommittee chairman mr. gowdy for questions. >> thank you mr. chairman. mr. west on behalf of all of us i want to thank you or your service to our country both on this and -- we are indebted to to you. it strikes me mr. west that you brought this to the attention of every single person that you could reasonably have known to bring it to and nobody did anything. you had to go get a private lawyer to do what either the state of new jersey or some

social worker should have done. is that correct? >> yes. the social worker asked if they backed up my paperwork. they said yes so she had some power to audit, so i took it to the state and the state had been monitoring in august, 2003. i told them i was not getting --

[inaudible] they did nothing. the person running the program retired. the other person sitting at my dining room table and everybody just goes on. people are not held accountable. both maxim and state and federal workers, so there was nowhere for me to go. >> that is exactly what i want to ask ms. west. do you have any criminal practice at all to go along with your civil practice? have you ever done criminal defense work? for those of us who are not smart enough to do civil work and had to do criminal work it has always struck me that nothing gets people's attention quite like the fear of going to prison, and poor folks who steel

company to prison. rich folk who steel have the corporation pay a fine and then they continue to participate in the medicaid program. how in the world does that happen? >> it's much more difficult to prove a criminal case. the standard is guilty beyond a reasonable doubt. it takes a lot of resources to investigate these cases. >> well let me stop you right there. you have a vietnam war veteran witness who says that this work was not done on me and you have a document that says that they were billed for it. i think even i could win that case. i mean, i guess their cities different standard of proof that there, if there is a different standard of proof bunol from the cases. >> someone in the government is making this decision. >> do you know who that is?

>> the u.s. attorney's office. >> in new jersey? >> yes. >> do they want their civil division to reach an agreement, pay a fine, the shareholders pay. none of the corporate executives go to jail and then they continue as part of the settlement to be able to reinstate the medicaid program. that is just outrageous as anything i've heard in 11 months i have been here and i have heard some outrageous things. let me ask you, there have been civilizations that have been formed at less than seven years. what took seven years for this case to be resolved? >> the investigation started locally and then it expanded to the state of new jersey and then it expanded to the states be on new jersey eventually expanding nationwide. during that time there were numerous audits going on of the documents. there was an independent audit company that was hired to determine what type of document

qualified as a proper claim and what was in the improper claim. maxim's attorneys were involved every step of the way. they were allowed to have input into this process and then at the end, because fraud is difficult to quantify, the settlement had to be reached and it is often likened to making sausage because there are so many elements that have to be brought together that so many people have to agree on and that is what also took a lot of the time is the agreement on the various aspects of the settlement and there was a criminal component to it as well. >> and the criminal component went away as part of the civil settlement or did anyone go to jail as a result of this? >> my understanding is that there were nine indictments, eight of which were maxim employees, not executives but managers. >> did they go to jail? >> i don't know. >> i thank the gentleman. i yield to the gentleman from

illinois, ranking member -- >> thank you mr. chairman. mr. west let me again thank you for taking time to calm to capitol hill to testify. i also think -- thank you for your services to this country during the vietnam war. the coalition against insurance fraud estimates that 80% of health care fraud is committed by advisers. 10% by consumers and 10% by others such as insurance companies or their employees. i applaud you for your diligence and maintaining records and keeping such a close eye on the actual number of ours you were receiving home health services and the number of hours medicaid what i want to ask you is when

you receive notice that your services had reached or gone beyond your monthly cap and your medicaid services were being temporarily reduced or suspended, how did you feel when you read that letter or got that information? >> i was in -- and this program allowed me to live in my own home and in three months, i knew what they were doing. i had always been an advocate for people with disabilities, and so when i got that notice, i

knew that it wasn't me. it was all the other people. they were going to take my service and i am going to fight them. other people can't do that. i am just too stubborn and arrogant to give up but if you are the average person, you can't fight. you are helpless.

you are being abused, so how i felt? i was being abused and i will stand up for everybody. >> and you knew that you weren't going to take it sitting down. >> i started this as an advocate and through the seven years it he came more -- 's. >> thank you very much. ms. west let me ask you, you indicated you have handled any number of cases. what is the typical climate of a person who comes to you with a situation and asks for your assistance? >> more often it is a person who works in the company that is

committing the fraud. someone who sees something that seems on this and they will go to their supervisor and say hey why are we doing this and the supervisor will try to brush it off and oftentimes they will escalate it to another superior and eventually oftentimes they get fired for being nosy, at which point they will come to me. close to the end of that process. >> so they will calm, i mean the whistleblowers who themselves have been abused in terms of losing their jobs. >> exactly and also in terms of being asked to do things in the job that they know are not right and as mr. west pointed out, many of their co-workers know the same thing but they won't come forward because they are afraid of losing their jobs and their health care. >> thank you very much mr. chairman.

my time has expired. >> thank the gentleman and i yield myself five minutes for questions and again, the case that you share with us mr. west and your attorney should not happen and our focus here is to make sure doesn't happen again in the future. if i understood your red testimony and your responses here today, when you reached out to the state of new jersey, medicaid, social worker, that other than if i understood with a social worker it looks like they looked at maxim's records and said they have got paper to back up saying they provided you service and they basically took the company's word over your words. is that a fair statement? >> right. >> and the social worker, did the state of new jersey or medicaid itself even get to that point or did they just pretty much do nothing? >> they did nothing.

governor corzine, senator menendez, they sent the paperwork to the same people. >> so in addition to your own contacts to the state and medicaid, contacting your elected officials, the governor and u.s. senator. they contacted those entities and still nothing happened? >> correct. >> it is just as mr. gowdy said somewhat unbelievable that here you have a citizen trying to do the right thing and protect taxpayers and he receives his services and the government collectively failed you terribly. when they were denying your claim of fraud and failure to act on at what was their

response as far as how that related to your care because of that being denied dental, where they saying, we don't believe you that there is broad but we are going to provide you care? >> they don't come out and say, we don't believe you. they just -- >> they didn't do anything. >> they will not answer the letters and don't respond to e-mails. you are a burden to them, creating paperwork for them. it's easier for them to do nothing. >> push you to this site. >> correct. >> how about on the fact that fraud was denying your services?

did they correct that and ensure that you got the dental care or continue to -- >> eventually i got the dental care. died but at that time i had nothing, seven hours a day, seven days a week. three nights a week, totaling 18 hours, i lost those 18 hours for seven years. so, if you turn off my ventilator, i have a hard time breathing but if you let me sit there and slowly deteriorate because i am not getting the care i need, --

>> i want to make sure i heard you correctly. while the investigation was going on for seven years, they were denying you the services, saying q. were not entitled to it because of the fraud? >> right. >> outrageous. thank you for persevering and weathering the terrible care and treatment that you receive. ms. west, a question and i am not sure, as a lawmaker, how our federal whistleblowers were seeking to strengthen the whistleblower protections provided to federal employees because we want as you reference more often than not as an employee comes forward with a no is going on in their company and their office. we are trying to strengthen outlaw. we pass legislation out of this

committee, out either the full oversight committee and now working for a flow vote -- floor vote to get whistled blowers more protection. if a federal employee came to you, i assume they are impacted differently going to you for this type of case and because they are a federal employee. is that correct? >> historically in my experience the government has been less receptive to intervening in whistleblower cases brought i federal employees. >> do they keep it more internal? >> is hard for me to understand the reasoning that goes behind how an intervention decision is made. i don't know why that is. >> but your experience over 20 years is less common for them? >> it's more difficult for them to be accepted as an intervening case.

>> so, unlikely given that for a federal employee to pursue this type of case because they are less likely to perceive? >> yes, more difficult, yes. >> my time has expired and i yield to the gentleman from new york. >> thank you very much mr. chairman. let me again thank you mr. west for coming and sharing your story with us and of course i regret that you had to go through so much in order to make the point but we appreciate your time here today. let me begin by, can you tell me about the process you went through and trying to contact various agencies? can you talk just a moment about the process that you went through, trying to reach the agencies? i know you said you sent out letters and e-mails and phonecalls. can you just talk about the process processes just briefly?

>> the social workers would come to the house once a month so once a month i am telling her i am not getting my services and telling her in between those visits, saying the nurses aren't showing up and i'm having to depend on family and friends. estate workers, the county workers -- to the state workers. they didn't follow through and the state program was telling me i had to have a caregiver in my

home but the nurse didn't show of. my son was in high school getting ready to graduate and i wasn't about to put that burden on him because the nurses were not doing their jobs. sows the state, they wanted to have a meeting in my home. they all came down, sat at my table and said tell me what your services are? i am not getting the nursing you are telling me i am getting. and the state workers said, you

need a -- and you don't have one so maybe you don't qualify for the program. and i said, i am not going to have a caregiver. she said you are not compliant. so i said, arrest me. she did not appreciate that. and the county social worker told me, there is an uncertainty. [inaudible]

when the county and the state wouldn't do anything, i went to the hotline and called them. they said, we will look into it. never heard a word. so i figured, i have to get out of the state of new jersey because i have no idea who is involved, whether they are involved with maxim or their own program. so i went on the web, and that is where i found out there is a whistleblowers lawsuit. i had no idea. and i read a portion of

recovery. i said hey, maybe i will get $5000 the first person i called was from alabama, a whistleblower. she said if it's not $10 million i don't even want to talk to you. i said i am a whistleblower who lives in california. she said, send me the documentation you have. she called me back and she said i think you have a pretty good case but you need an attorney closer to where you are. then i found robin on the

internet and that is how we proceeded. >> so you found someone with the same last name? >> when i called, her secretary said, who is calling? i said richard west end west end there was a silence. [laughter] >> thank you very much. mr. chairman i asked for 30 seconds. i want to ask ms. page to submit something to us. in your written testimony you indicated that false claim act is both unusually effective in covering fraud in the health care system. if you would be kind enough in writing to summarize your top three arguments for why this law is effective, and so i'm interested in that because we would like to strengthen or to improve its so if you would be

kind enough to submit that to us in writing, seeing my time is our. >> three reasons why it is effective? >> yes, and i thank you. >> thank the gentleman. the gentleman mr. desjarlais isñ recognized for five minutes for questions. >> thank you mr. chairman. mr. west admiral bowens this past year was quoted as saying the biggest threat to our national security is our national debt, so not only did you fight for our country in vietnam, you are fighting for our country again against a big threat which is spending and debt so i applaud you for your courage and taking the time to come here and speak with us today. i just wanted to ask you a few questions about your relationship with the people that spend a lot of time caring for you because with your condition, with the trach ventilator, i'm assuming you had a respiratory therapist?

you have home health nurses? >> i had nurses. >> i'm assuming you had nurses aids aides to help with activity with daily living to help you address. they have to help you eat and help you maintain your residence so it is to it is safe so they have spent quite a bit of time in your home. >> correct. >> did you ever feel like you got close to any of these people? where they caring people? did you talk to them on a first name basis? did anyone, say an aide, stay with you for several months at a time or what was it different aides on different days? >> i have a nurse now for four years. over the course of the seven years, there have been different nurses, different agencies but many have been there for an

extended time. >> so you knew them very well and they knew you very well and it was generally friendly and cordial? did you like them and they like to? >> yes. >> when you first started noticing the fraud were you able to talk to them about this and share your concerns? >> they were part. >> i'm sorry? >> they were part of the fraud. >> did you talk to them and asked them? did they try to make excuses or did they say they would talk to their managers? >> no. they were telling me they were being paid and they were putting in, in my home, putting in four

additional hours and the company, the nurses told me on several occasions that the maxim office managers work on bonuses so the more profitable they are -- >> okay so these people despite having a relationship they like to any like them, and they felt that they were aware of the fraud going on? >> they new. >> did you feel like they -- you are returning them in a sense when you had to go over their heads to try to fix this situation? >> no, you can't betray somebody who is abusing you. >> i guess i just wonder how

mrs. west how many other beneficiaries have come to you such as mr. west? >> very unusual. a handful of people have even inquired and if memory serves mr. west is the only beneficiary case that i have taken. >> okay so given the success by whistleblowers why do agencies and officials typically ignore people like mr. west? what would be your opinion on that? >> i don't think it's so much that the false claims act is in serving them and the government isn't picking up the cases. i think it is that there are not that many beneficiaries who are coming to the false claims acts attorney's. >> why then when someone like mr. west to obviously have jena claims and were proven legitimate why do you think

medicare avoided it. i will ask you you that and asked mr. west that. >> mr. west is an extremely unusual person. very tenacious, very intelligent, very persistent and quite often medicare and medicaid beneficiaries who are sick cannot ring all those qualities and have the stamina to figure it all out and bring it to a lawyer, and i think that is basically the issue. they are not aware of it. they are not aware of the incentives and they don't necessarily have the skill set to put it all together and follow through on that. >> i will just say and i know i am about out of time and if you will and those me for a few seconds. as a primary care physician for 18 years working in the congress i have dealt closely with home health. there are a lot of issues of fraud and abuse in the '90s were people who did not have near your level of disability who had aids and whatnot, that was kind of reined in a little bit in the '90s but i see that

it tends to be alive and well as we have moved into the next decade as well. so again i applaud you mr. west for your efforts and clearly i think that cms and medicare we have on the next panel will have an opportunity to see why people like yourself are being adored and thank you so much for stepping forward and fighting against it. >> may i add that people in my position don't have to be -- the support once they turn people in. if i was a government informant for a case, you would take care of me. but, when i went to the special people in charge and asked to

have nurses so i could continue through this case, there was nothing he could do to help me. so, why would most people turned somebody in, knowing that they would die. you have to give support to the patient or whatever you want to call me, so he can bring the lawsuit. what is the incentive?

there isn't. >> i thanked the gentleman and along the lines of what you just expressed it sounds as if, whether a need for legislature change or regulatory change that if you have a beneficiary and in this case the government makes the determination they are going to take on the case, and go forward, that that decision should maybe include a provision that a lot of the cases being pursued one year or seven years in your case, you are given the services you want on a individual basis. again otherwise you have a disincentive from reporting it for being risk of further losing care. >> that's correct. >> i thanked the gentleman and yield to the distinguished ranking member of the full committee. >> mr. west i thank you also for being here and i agree with you. these folks needed to go to jail

and it's interesting that i have now done a little research to see what happen i want to follow up on some of mr. gowdy's concerns. they did go to jail. one went to jail from maxim and he got, this was the highest sentence of eight or nine people. five months in prison and five months of home confinement. most of them got a fine and home in prison and. that is what they got. now, 40 miles away from here represent baltimore, and in about six months ago i had literally thousands, thousands of young african-american boys, many of whom may have done something wrong or whatever and they have a record mr. west. they have a record. do you know what? they can't get a job. if they lived to be 99 years old they will not be able to get a

job but here we have maxim come a company that has basically stolen, stolen from the american people, maxim, a company that has taken away the services not only from you but so many others but get still they are in a position to continue to make millions. something is absolutely wrong with that picture and i agree with you. in his people from cms and ig, they have to explain to us and every member of this panel, every member of this congress should be saying maxim should be put out of business with regard to doing business with the federal government. it is ridiculous how a young man in baltimore can steal a 300-dollar bike and not be able to get a job for a lifetime but maxim can steal millions and continue to do the same thing over and over again. yeah they got sentenced that this sentence is simply a slap on the wrist.

if you can pay 150 million-dollar fine, this is just the cost of business and so you know i am very concerned about this and i want to intrude entered into the record mr. chairman begin i attorney's office district of new jersey basically their summary of the sentencing dated november 21, 2011 and i would ask that be made part of the record. >> without objection. >> and the reuters article dated and i asked this be made part of the record too, dated monday september 12, 2011 and it says in part maxim settled with the united states department of justice and in 41 states. the prosecution agreement with the justice department under which it will pay a 20 million-dollar fine. of maxim meets the agreements and requirements it will avoid charges and the government said it was willing to enter into an agreement with maxim in part, in part to cousin of its

cooperation and significant personnel changes it has made since 2009. that is all well and good. thank you very much. that's all india but if you are paying people bonuses to screw people and miss them over you are right, there are people who are sitting in wheelchairs right now looking at this right now who feel helpless and many of them are going to die. that is why i cannot understand for the life of me, how every member of this congress should not want to put maxim out of business at least with regard to its business with the federal government. now to you ms. west, midwest he stated in your written testimony that you have over 20 years of experience in bringing cases such as mr. west's to the government's attention. can you explain how the false claims act helps government work better and save taxpayers millions of dollars? i'm sorry, did not mean to get

so upset but this made me want to. go ahead. >> the false claims act gives the government a birdseye view into the fraud. without the whistleblowers that government really has no way of knowing how the fraud is being committed. every time there is a fraud protected the government learns about it and comes in and shuts it down but then there's a new fraud that pops up and it's a constant never-ending thing. there is more creativity behind fraud because there is so much money to be made by it and that is why the false claims act is so effective because it reaches out to the people seeing the fraud and understand the part in giving them an incentive to tell about it and explain to the government you know how to stop it. >> ms. west you think there are too many laws claim act lawsuits and what disincentives are there for bringing a frivolous false claims lawsuit? >> well the disincentive for bringing a frivolous false claims lawsuit is there is a provision in the statute that allows the defendant to recover

his attorney's fees from the relator if it are shown that the suit was brought for purposes of harassment. in addition it's difficult to bring a frivolous lawsuit because the lawyers work on contingency and if we don't think a case is really good we are not going to bring it. only about 20% of the false claims act cases of fraud or intervened in by the government so we are looking at a very tiny window and we are looking for the very best cases to bring to the government's attention. >> i see my time has expired and again mr. west i want to thank you very much, you and all others who will benefit from what you are doing. >> thank you. >> i take the gentleman. yielding to the government -- senator from virginia. ms. west the example of having a birdseye view the beneficiary goes on the front line for false claims act and in the second panel we are going going to hear a lot of expenditure money for

new technology and analytical programs and things. is it is fair statement to characterize your experience here that rather than the investment of all this money new programs if we had simply better listened to the beneficiary we would have prevented the fraud? >> yes, i think so and malcolm sparrow who has analyzed this and feels the money should not be paid out first. it should be paid out properly, not paid out and followed after. >> right so being more upfront is supposed to recovery type audits to focus up front? i yield to the gentleman from virginia mr. conley for questions. >> cannonmack mr. chairman i want to thank mr. west particularly for his courage both serving his country and serving a second time in and trying to make sure taxpayers investments are protected and made secured and for the courage of persisting when many others might have been daunted and discourage. i also want to say to our

colleagues, i guess mr. gowdy said here but mr. gowdy is serious about criminal prindle -- penalties he will find allies on the side of the aisle. parts of the committee have pointed out that there are every year $125 billion in improper payments. sometimes it is innocent, mistaken bill when somebody gets paid to should have forgets double paid, somebody was not qualified and gets a benefit but a lot of it is pride. i know you as attorney's offices are consumed with medicare and medicaid fraud. the u.s. attorney's office in boston is now a 3 billion-dollar recovery. that is one out of 99 u.s. attorneys offices so we know it's out there. if we eliminate in improper payments by the way, we could give a christmas gift to the supercommittee of $1.25 trillion

over the next few years without breaking a sweat, without affecting anyone's benefits without having political drama, without having any unnecessary investments. i yield to the chair. >> thank to the gentleman for yielding. as you well stayed the fraud of improper payments and again we don't know how much is fraud at the improper payments of medicaid we are discussing it and as you know from our previous hearing on medicare these two programs alone account for about $70 billion a year of that 125 so over 10 years you are talking $700 billion i yield back. >> thank you mr. chairman and of course as you know some of that money was cited in the financing of the affordable health care act. some criticized us for that is if we were gutting the program but in fact we were simply trying to recover either

improperly made payments for illicit payments. i want to make sure we get the narrative on the record mr. west if you don't mind. i have heard mr. west. when did mr. west first discover something was wrong and how? >> he testified -- to speak if you could speak into the microphone. >> three months after he came out of the nursing home he realized something was wrong. >> what made him realize something was wrong? >> that he was not getting the care that he was entitled to get under the program. he was getting fewer hours of nursing care. >> okay and maybe initially he thought that was a mistake. >> actually, i thought they were having a hard time servicing my case but then it became apparent

they were -- who they wanted when they wanted. >> the testimony submitted on your behalf by her attorney says you attempted to bring the matter to the government's attention to contacting this day. what stayed with that? >> new jersey. >> new jersey. the medicaid prague and the celts he went to a local office and your social worker. >> correct. >> the testimony says all to no avail. meaning what? they ignored it? >> yes. >> okay. so you then decided this isn't right. i'm not getting anywhere and i'm ever going to turn to a private attorney and you used actually something congress did well, the false claims act. which gave you a vehicle for redress, as you put it, --

ms. west if you could describe for us what was the reaction of the medicaid official when faced with this potential fraud, at least on your initial contact? >> are you asking me? bsi ps i'm asking you miss wes. >> i filed a lawsuit under the false claims act so my first contact was with the u.s. attorney's office. district of new jersey. >> gotcha. did medicated any point react to the filing of a lawsuit or the claims contained therein? >> again come i didn't have any contact with anyone from medicaid. i was coming in through the department just as. >> did your client have any contact with medicaid in terms of reaction to the filing of a lawsuit or the claims there therein? >> once we filed a lawsuit it was under seal and we aren't allowed to talk about a. >> even with medicaid?

>> if they would set up a meeting and medicaid officials would be there but there was nothing like that. >> and presumably you made repeated attempts with the medicaid office mr. west, and i know my time is running out, to try to alert them to this and get them to act? ps. >> and they were indifferent? >> correct. >> we look forward to their testimony. thank you. my time is right now. i thank the gentleman. >> before we conclude i yield myself the final minute and mr. west my understanding is you were in giving an interview, you shared an example of the lack of cooperation you had in you try to correct this. you were in front of a judge or an adjudicative setting where you were told that well, there is evidence that they did provide these services and they were not agreeing with you are

believing you and you made the statement that you would bet that while you were in front of this individual that maxim was probably falsely revealing services to you. could you share that? >> we went to scranton to the federal courthouse. i picked up robin at the train station and i believe -- and a special agent. i said, i'll bet maxim bills for a nurse and my home while i am sitting here with you. i left my home at 7:00 in the

morning. i went to scranton, met with the prosecutors. i said, i'll bet they bill for this time. fay said how could they possibly do that? in january i sent them an e-mail, and i said, i told you so. they build 47:00 to 3:00 for an r.n. in my home and i didn't get home until 5:00 that night. they also build christmas day when we were in pennsylvania, the next state over, and this

particular nurse was reading my mail, and i had to tell my attorney. do not send anything to my home. sent updates through e-mails and don't mention who they are from or what they are about. i had people spying on me while they were stealing from you. >> one more example of how you were being victimized by a very unscrupulous company and its employees and the fact that while you were sitting in the

investigators, they are falsely billing service to you epitomizes the outrageousness of this case and again you reference having westerholm at a quarter to seven in the morning and not getting back until 5:00, another example of your persistence and willingness to do whatever it took to bring justice on behalf of the american people, the taxpayers and to ensure that you are properly provided the services you have earned and deserved especially as a veteran of our nation's armed forces. i thank each of you again for your testimony here today but more so than just your testimony here today, your reference over almost a decade of trying to bring justice on behalf of your fellow citizens. adam i think it goes without me saying but i imagine you are a very proud son to be richard wes's son and know that he is a true servant of this nation. god bless each and everyone of

you and we will recess for five minutes while we reset for the second panel. >> may i have one minute? >> yes, you may. >> today is pearl harbor day, and i would like to say my dad served in the pacific. my mom worked in a -- during that war. they worked together for the country. we need that now. we need people like me and people like you to sit down and fix the government.

>> well stated mr. wes. >> thank you. i am honored to be here. >> god bless you. thank you. we stand in recess.erican taxpat

have been defrauded through the medicaid program. we are delighted to have forwardness is with us, and angela brice-smith director of the medicaid integrity group and the centers for medicare and medicaid services. mr. gary cantrell inspector general for investigations of the office of inspector general for health and human services, ms. carolyn yocom director of health care and government accountability office and ms. valerie melvin director of information management and

technology resource issues at government accountability office. we thank each of you for being with us and again as pursuant to the committee rules if i could ask you to standard raise your right hand, we will swear you in before your testimony. ..

deutsch is fraud we stand abuse in the medicaid program. medicaid is the primary source of medical assistance for 56 million low-income and disabled americans. federal government establishes requirements for the program, states design, implement, administer and oversee their own medicaid program. the federal government shares in the cost of the program. state governments have a great deal of flexibility within which to tailor their medicaid programs. as a result, there is a variation on the states and eligibility, services, reimbursement rates and integrity. prior to 2005, states were solely responsible for the oversight of the medicaid program. however, in 2005 with the passage of the deficit reduction act, congress recognized the need for the greater focus on the health care fraud and gave

up cms new authority to establish the medicaid program. i am the director of the medicaid integrity group which implements the medicaid integrity program. the medicaid integrity program is a salles effort to prevent, identify recover inappropriate medicaid payment. it also supports the integrity office of the state medicaid agencies through a combination of oversight and technical assistance. the medicaid integrity program began a new era of combating we stand for all the medicaid program which is once again proved by the creation of the center for program integrity. the center for integrity brings a coordinated approach to program integrity across all federal health care programs. this new focus on the integrity and anti-fraud efforts continue with the affordable care act which is the most comprehensive legislative step forward to fight health care fraud over decades. the administration has made it unprecedented investment to the improper payments, invest in the

strategies and rain in waste fraud and abuse in the federal health care programs. our effort focuses on protecting medicaid resources at the beneficiary level, the state level and the national level. the involvement is a key component to all of the cns anti-fraud efforts. we believe the beneficiaries are one of the most valuable tools in our efforts to stop fraudulent activities. we are committed to investing beneficiaries in the fight against fraud in several ways for example with our education medicaid integrity contractor or mic hot spot and report medicaid fraud through social networks sites through electronic letters, public-service announcements and other materials we encourage them to report fraud, waste and abuse to the states. medicaid fraud unit for medicaid

agencies or what if rot tips hot line as examples. cms is also committed to supporting our seat partners and program integrity efforts to reduce improper payments. our medicaid integrity provides what training and support to the state. we've trained more than 2600 programs integrity staff from all 50 states, d.c. and puerto rico. providing boots on the ground that can assist states with special investigative audits and threats. october of 2007 cms has participated in ten projects in three stages has resulted in $33.2 million in savings through cost. in addition cms review and audit mix were medicate contractors complement and support program integrity efforts under way in the state. between 2009 and november 1st of this year the audit makes has

initiated 1663 audits in 44 states. in addition to the federal audit states report that they have recovered $2.3 billion as a result of all medicare program activity. the affordable care act has also strengthened federal oversight for the medicaid program by providing new tools to cms and law enforcement's officials to protect federal health care programs from fraud, waste and abuse. these tools include the new screening and enrollment requirements, strengthen the authority to suspend the fraudulent payment and increase coordination of anti-fraud action and policies between medicare and medicaid. the affordable care act is the recovery audit contractors for medicaid which will help states identify and recover improper medicaid payments. over the next five years we project the effort will save the medicaid program to $2.1 billion of which $910 million would be

returned to the states. cms is committed to working with and sharing with our law enforcement partners with giglio and the investigative returning prosecuting alleged fraud we also continue to work to address the concerns raised by the gao to reduce improper payments and potential vulnerability in the medicaid program. i am happy to announce the fiscal year 2011 medicate's national and proper payment rate is 8.1%, a drop from the 9.4% in fiscal year 2010. despite the decrease we remain focused on improving maintaining the integrity and medicaid and confident the actions outlined today and in the written testimony as well as the continued efforts of our federal, state and public partners will continue to reduce improper payments. i look forward to working with the subcommittee to ensure that they carry out this important work. >> thank you. mr. cantrell?

>> good morning, german, ranking members and other members of the committee. i am gary seat, assistant inspector general for investigations with the u.s. the board of health and human services also inspector general. i appreciate the opportunity to testify today about our efforts to combat medicaid fraud. first and foremost, i would like to thank mr. west for coming forward with allegations of billing fraud on the part of maxxam health care services. the oic recognizes our success is dependent upon collaboration with courageous individuals like mr. west. the recommendations he provided was critical to us in helping us unravel a broad scheme within the health care that span across the nation. our investigation resulted in maxim agreeing to pay more than $150 million to resolve similar to the kosovo and criminal allegations of fraud, the largest ever settlement related to home health services. nine individuals, including three senior managers, also pled guilty to felony charges.

this example highlights the potential for citizens and government to collaborate and curtail schemes and are harming the nation's most vulnerable citizens. we encourage citizens to report suspected fraud so we can investigate and bring to justice those responsible. medicaid fraud trains vital federal and state program dollars. that harms both recipients relying on the services as well as the american taxpayers to oig as a team of over 480 highly skilled criminal investigators located throughout the country. in fiscal year 2011, our enforcement efforts resulted in record numbers the linwood over 720 criminal convictions and $4.6 billion of inspector recovery. nearly 400 of these actions under steams related to medicaid fraud. and over $1.1 billion is expected to be returned to the program. the tide of schemes in the medicaid program in many ways mirror medicare fraud schemes.

for example, we see billing for services not rendered, medical identity theft, false statements, bribery and kickbacks. these have been especially, in relation to health and prescription drugs, medical equipment and transportation services. the data access is critical to our enforcement efforts in both medicare and medicaid. oig has worked closely with cms to expand access to the medicare claims data. this improved access has enabled oig to identify medicare fraud trends and that allows the agents to more efficiently investigate allegations of fraud. unfortunately this is not the case on the medicaid side. our inability to access timely, comprehensive data impedes effective oversight of the program. cms's medicaid statistical information system is the only source of nationwide mckyer claims data and weaknesses in the system limit its usefulness for effective oversight and monitoring of the program.

for example the system does not capture the elements necessary for us to detect fraud, waste and abuse. as in the maxim case medicaid provides unique data challenges. why? is because the data does not exist in a single location. rather it exists in independent systems across 50 states and the district of columbia. we understand cms is taking steps to collect more timely comprehensive data from the states and we hope they move quickly to accomplish this goal. state and medicaid fraud control units have been valuable partners in our investigative efforts. our number of joint investigations has doubled over the last five years. to improve on the success we believe that medicaid fraud control units could also benefit from enhanced and ogle capabilities with regard to the state medicaid data. this will lead to improved oversight and enforcement. in closing a we need to make a lasting impact on medicaid

fraud. the need has never been more important. the congressional budget office estimates that in 2014, 16 million new recipients will be added to the medicaid program. therefore it is especially critical that we have access to timely comprehensive data in order to protect the federal and state dollars to read together we must work to eliminate vulnerabilities and ensure we are positioned to effectively oversee this program for years to come. thank you for your support of our mission and i would be happy to answer any questions you have. >> thank you, mr. cantrell. ms. yocom? >> mr. chairman, ranking members and members of the subcommittee, i am pleased to be here to discuss the improper payments and fraud in the medicaid program. moly remarks today will focus on an important challenge as well as opportunities of cms given its expanded role in medicaid program integrity. in 2005, gao testified that cms needed to increase its commitment to help the state's

fight medicaid fraud, waste and abuse. that year congress passed the deficit reduction act, which provided the creation of the medicaid integrity program and other provisions. the patient protection and affordable care act gave cms and states added responsibilities and new oversight tools. both cms's spending for and attention to medicaid program integrity activities has ground primarily through the creation of the medicaid integrity group. the mig heiberg stuff and contractors to implement its core activities such as reviewing and auditing medicaid provider claims and providing education to the state officials and medicaid providers. in 2005, cms had approximately eight staffers focused on program integrity. today, it has over 80 at the 100 statutorily required positions offered. however, more is not necessarily

better. the key challenge faced by mig is the need to avoid duplication of state and federal program activity efforts, particularly on auditing provider claims, which has been primarily a state function. the amount of overpayments the mig identifies is not commensurate with its cost or amounts identified by some states. for mexicana in a similar number of audits new york reported identifying more than 372 million overpayments compared with 15 million identified through the national provider audits. in 2011 the mig reported plans to redesign a national provider audit program to allow greater coordination with seats on data, policy and audit measures while that remains to be seen whether these changes would help identify additional overpayment, the proposed redesign appears promising in particular the collaborative projects currently underway in 13 states with first allow states to augment their

own resources, second address the targets the states have too few resources to handle and third, assist states with less analytical capability. these projects could help avoid duplication as well as strengthen federal and state efforts. cms expanded role also offers the opportunity to enhance state program integrity efforts but more consistent data are needed. for example, the two core activities at mig the comprehensive review is an annual assessment collect similar information such as state prevented a planning, prevention activities and recovery. however some of the data the state's report showed impossible and or inconsistent state responses to the improved data will allow cms to further target assistance state to state for the mig's primary training initiative, the medicaid integrity institute. not only is the training offered at no cost to the states but such venues provide

opportunities for state program integrity officials to develop relationships with their counterparts in other states. such relationships are critical in a program like medicaid where providers and beneficiaries can cross state lines and repeat in proper or even fraudulent. since fiscal year 2008, the institute has to hand over 2,200 state employees, institute expenditures are a small part of extending gist 1.3 million of its 75 million-dollar budget yet they could greatly increase networks across the state's and disseminate those practices for ensuring appropriate payments and medicaid. for many years medicaid has been a critical part of the health care safety net providing health care services to some of the nation's most vulnerable populations. this heightened cms's responsibility to ensure billions of program dollars are appropriately spent. in these difficult economic

times it creates an even greater imperative. the challenges of coordination are significant for states and for cms. no less significant is the need for improved data to present over payment. there's also an opportunity for the mig to work with states to disseminate and improve oversight of program spending and hopefully decrease still level of improper payments. this concludes my prepared remarks. i'd be happy to answer any questions you or members of the subcommittee may have. >> thank you, ms. yocom. ms. melvin? >> chairman platts, ranking members towns and adidas and members of the subcommittee, think you for inviting me to testify to the ceiling on fraud and improper payments in the medicaid program. fi request fisa testimony will find summaries from the report be issued earlier this year on cms's efforts to protect the integrity of the medicare and medicaid program through the use of information technology.

specifically on june, 2011 we've reported on to programs that cms initiated in 2006 to help improve the ability to detect fraud, waste and abuse. the integrated data repository which is intended to provide a single solicit because of data on medicare and medicaid claims and the one per integrity one fpi system the web based portal that is to provide cns said contractors with a single source of access to the data contained in idr as well as tools for analyzing the data. our work examine the extent to which idr had been implemented as well as the cms efforts to identify common measure and track benefits from resulting from these programs. we also provided recommendations on actions cms should take to achieve its goals of reduced fraud and waste. regarding idr, we noted the state and repository had been in use since 2006.

however, it did not include all of the data that was planned to be in the system by 2010. for a simple, idr included most types of medicare claims data but no medicaid data. idr also did not include data from other systems that can help analysts prevent improper payment. moreover, idr had not finalized plans were developed reliable schedules for efforts to incorporate the data. further, while one had been developed and deployed, we found that few analysts were trained in using the system. program officials had planned for 639 analysts to be using the system by the end of fiscal year 2010. however, as of october, 2010, only 41 were actively using the portal and the tools. none of these users included medicaid program integrity analysts. we pointed out that until program officials finalized plans and schedules for training and expanding the use of one pla

the agency may continue to experience delays. cms anticipated that it would achieve financial benefits of about $21 billion. as we've previously reported, agencies should forecast expected benefits and then measure the actual results accrued through the implementation of the programs. however, cms is not positioned to do this. as a result, it was unknown whether the program had provided any financial benefits. cms officials told us that it was too early to determine whether the program had provided benefits since it had not met its goals for the widespread use. to help ensure that the development and implementation of idr are successful in helping cms meet the goals of the >> and integrity initiatives and possibly save tens of billions of dollars, we made several recommendations to cms. among our recommendations was that the agency finalize plans and schedules for incorporating

additional data into idr, finalists plans and schedules for training all program integrity analysts intended to use 1pi and to track outcome based performance measures to gauge progress for meeting program goals. in commenting on the draft of our report, cnn's agreed with our recommendations. the agency's timely implementation of these recommendations could lead to reduced fraud and waste and overall savings in medicare and medicaid program. this concludes my oral statement. i look forward to addressing your questions. >> thank you, ms. melvin. i will yield myself five minutes to begin a round of questions and certainly we appreciate all four of your testimony and your efforts in regard to protecting american taxpayer funds and ensuring we are properly caring for and providing services.

i'm going to begin with you and i certainly appreciate the breadth and depth of your testimony, we are trying to do. i have to be honest with you that i am surprised after hearing the testimony of mr. west that as a representative of cms you did not acknowledge how badly we failed him and how i believe cms specifically our government in total owes him an apology, and i worry that that's a sign of trouble for us in trying to address this issue because we can have great programs in place, but if we are not listening to the beneficiaries -- having a hot line is great, teaching beneficiaries how to detect fraud is a great. he did and we didn't do anything in response. so why do have to express that i was disappointed that you did not acknowledge what he went through to make sure we as a

government did right by the taxpayers and by him because if he was denied services, how many other citizens are out there being denied services because of fraudulent conduct? samore of a statement there than a question i guess but specific to his case to the best of your knowledge has cms conducted any investigation of why we did not heed mr. west's claims of fraud that it resorted to him hiring a private attorney to have to investigate? >> when i heard mr. west's story i was very much touched by what he said and i was trying to figure out was to root cause and how did that happen. but when he said that he communicated with state officials, i felt like the was appropriate. medicaid is run by the state. and he indicated he spoke with

local people. that was in 2004. and as ms. melvin indicated, we had less than six full-time equivalents that even -- there was no medicaid integrity group back in 2004. the pra didn't have until 2005. we started the building of that infrastructure for the staff in 2006. so there was no existence of the federal level contact if you will. we had prior to 2005 those that no funding that supported the state's one questions came. so there was really no structural vehicle at the federal level. >> i think the point is well made and that is your testimony, how we are trying to do better today at the federal level, but i guess while we didn't have in 2004 and placed new jersey as

the operator of the provider of medicare services that were helping to fund did and was responsible, and i guess what i'm saying is have we even gone back to new jersey and say listen, this is a case you blatantly failed to somebody that we are paying a huge share to provide this service and because of your failure, you know, tens of millions of dollars was being lost and private citizens efforts would have been forever lost. so what has new jersey done in other words what did new jersey due to better ensure that it's not repeated and even though that may be at the state level in addition to what we are doing cms has the responsibility to make sure they are doing it. have we made this type of increase to new jersey to make sure they are doing much better? >> yes, we have. we did contact new jersey and request information about what

happened and what was their information in terms of how the communications took place. we are still looking at that information to understand what actions the plan to take to mitigate that in the future. in the meantime, cms has taken a number of actions related to report fraud with contacting the state even through the 1-800-kidcare line there is a vehicle for people to be able to reach us at any time. >> i think that is critically important because of the efforts of trying to encourage beneficiaries who as we talk to or on the front lines. they are the ones who see the inaccurate information if they are diligent as mr. west was, and those are those who were suffering the consequences if they are fraudulently taken advantage of some of because of the systems. having the system is in place but making sure we respond to the information that comes into that system has got to be key.

final question and then my time will be out. regarding maxim itself, i don't know if you have it with him today or can estimate for this year, fiscal year 2011 just ended, roughly how much money did maxim receive under the medicaid program nationally? >> i would have to research that question. >> if you could provide that, my guess is it's hundreds of millions if not billions of dollars as a provider in 41 states they are probably receiving, and as mr. cummings in the previous round specified it just is to me incredible that someone who knowingly and intentionally defrauded the american people to the tune of tens of millions of not more, this is what we know of, and would never have known of but for the heroic efforts of a private citizen that that company is still receiving

hundreds of millions of not billions of dollars from american taxpayers to provide a service, and it just to me sends a terrible message as mr. cummings said the companies are just going to look at this as a cost of doing business. if we get caught we just pay the fine and factor that in but we keep getting the business. in the real world the private sector if you fraud somebody 130, 150 million i guarantee you are not going to be doing business with that company anymore and they shouldn't be doing business with american taxpayers so we need to do much better and i know there's also a criminal side that we may get into. my time as well expired. i yield to the ranking member mr. davis. >> thank you very much mr. chairman. the affordable care act put in place various provisions. of course it was just passed last year to help fight fraud and abuse in medicare and

medicaid. the congressional budget office estimates that these provisions when fully implemented will save american taxpayers $7 billion over the next ten years. this brice-smith, can you provide the tools and technical changes to the anti-fraud laws that are included in the affordable care act that will directly benefit your office? >> sure. in the affordable care act it offered several things related to provide our enrollment and screening, and we believe that is the best tool for making sure the we keep people who are more fraudulent out of the program and also be in a place to leave verify and validate them over time to make sure that we can

keep them out of the program or of just our scrutiny of them through risk assessment if you will overtime. so that's part of that. then there is the payment suspension activity with respect to changing the level of proof if you will from a reliable evidence based obligation to a credible allegation that will also give additional flexibility then there's also the opportunity for a temporary moratorium that can be affecting weeded through that vehicle as well. and also congress recognized the shortcomings of the data as we've recognized the shortcomings of the data in the medicaid program and offered up section 6504 that will allow us to strengthen the data elements that we desire and need for

integrity purposes. .. for repeal of the affordable care act. if that was to happen, do you see your organizations being affected in any way,

certainly negatively affected if we were to repeal the affordable care act? >> i was waiting for you, gary. before the affordable care act we had improper payments. one would argue we would still have the concerns around improper payments. i think we're working very diligently to address them. i think many of the concerns i think about the repeal seem to be around the growth or the expansion of the programs and what i've seen from congress is a recognition that you've provided commensurate administrative tools and authorities to expand our efforts commensurate with that growth.

>> mr. cantrell? >> we did receive additional funding for our organization through the affordable care act and we were able to hire almost 100 new investigators so that was certainly welcome. >> could i suggest that the affordable care act strengthens your ability to weed out fraud and abuse in medicare? medicaid? >> i would agree with that, yes. >> mr. cantrell? >> some of the tools and certainly the additional agents on the ground will definitely assist us in weeding out additional fraud. >> thank you very much. and thank you, mr. chairman. >> thank you. excuse me, gentleman yielding back. i recognize the subcommittee chairman, mr. gowdy. >> thank you, mr. chairman. miss brice-smith, which states have the highest rate of improper payments? >> that's a very good question. we are aware what states

they are. they do, what we refer to as a payment error rate measurement that ban spans 17 states on a three-year cycle. we engage those states and expect corrective actions from those states but do not release is publicly. >> i was looking for the name of the state but it strikes me you want to put your law enforcemen enforcement/prosecutorial resources where there is the highest level of graft or fraud or waste or abuse. so which five states would have the highest improper payment? ratios. >> we would gladly share any of those data with our law enforcement partners but we usually do not disclose them. >> why? i mean, there are four states being sued right now by the department of justice for having the unmitigated temerity to want to enforce immigration laws. why the reluctance to say

which states can't get their act together with respect to medicaid payments? what is the reluctance? >> i think it could be perceived as somewhat punitive. i think there is a desire by cms to work with our state partners to address the improper payments in a meaningful way. we are continuing to do that. the states know who they are. we work with them on a corrective action plan. we follow up on -- >> do this for me then. tell me, are there any states that, that on an annual basis just don't seem to get their act together? i can understand not wanting to dime out an episodic state that just hat one bad year but then later engaged in corrective actions. are there any states that just have a history of medicaid overpayment? >> i can not for certain

give you the repeated findings because it is early in the per measurement cycles. we have now completed the fourth year of measuring the states. so we passed the cycle of the first 17 states now being examined for the second time. >> all right. so you know who the states are. agreed? >> i do not personally know who the states are but my colleagues. >> someone does? and they have made the decision to not publicized the states that are doing the worst job? >> i think our desire is to work with our state partners and we are continuing to do that in a meaningful way and we will continue to do that. >> mr. cantrell, i was under the mistaken impression apparently that the amount of loss impacted the amount of time you went to jail. apparently that is not the case because in the maxim case, other than watching

television at home for three months, i only saw one person go to a federal bureau of prison. and that was for what, five months? so has that changed since i left the u.s. attorney's office? is the amount of loss or the amount of the fraud no longer a factor in the length of a prison sentence? >> the amount of fraud is a factor in the prison sentence and it would depend though on the individual who is were convicted, the amount of fraud that was actually attributed to them the. >> they still don't have relevant conduct? >> there is relevant conduct that is taken into consideration. >> well they do it in drug cases. boy, they take the lowest mule in a cocaine conspiracy and they dump all the drugs they can possibly dump on them but it doesn't happen when it is rich folk committing the crime? >> i don't think that is the case, sir. i think a recent example, we are seeing increased sentences throughout the country. >> let me ask you about

that. let me ask you about that. how many motions for upward departure are you aware of being filed? >> i don't have that information, sir. that would be the department of justice? can you get that for me? can you find out? that is a really good indicator how someone is about criminal activity. whether or not they're going to move that the sentence be higher than what the guidelines was. >> sure. we'll research that the. >> if you can tell me where to find that i will be happy to do it myself. >> gentleman yield? >> yes. >> mr. crenshaw, if you could submit that to the committee for the record, that would be great. >> i think we've have to get the information from the department of justice and we'll work to get that. >> thank you, mr. chairman. my final question is, do you believe there is presumption in favor of criminal prosecution over civil enforcement? when you prosecute somebody criminally, not only can you recoup the losses but you also get to punish people. so is there a presumption in the favor of criminal over civil? >> that is our presumption

in the office of inspector general, office of investigations. >> what about the u.s. attorney's office, the department of justice. >> that is also the case of the u.s. attorney office when there is evidence to support criminal indictment. >> you heard the facts in mr. west's case. that wouldn't be a hard case for you and i to win, would it? >> i can't comment on the specifics of that. >> sure you can. he just, he just announced it to the whole world. even you and i could win a case where you're billing someone while they're at the u.s. attorney's office for a meeting? you and i could win that, couldn't we? >> that case, it sound obvious. i'm sure there were several factors that went into decisions at the u.s. attorney's's office to determine who to prosecute and who not to prosecute. >> i yield back. >> thank the gentleman for yielding back. the ranking member of the full committee, mr. cummings recognized for five minutes. >> to miss brice-smith and

to mr. cantrell, as you heard i was very upset that a kid from baltimore, thousands of them by the way, thousands, can face lifetime of economic punishment over few hundred dollars stolen yet a company like maxim can be found guilty of stealing from taxpayers, pay a fine, and continue to build bill the federal government for million of dollars of services each year. miss brice-smith, do you share that sentiment? something is wrong with that picture. >> i'm equally concerned about the equity that you've pointed out. >> yeah. who has the power by the way, do y'all have the power, who has the power to disbar these companies? >> we do have the power to exclude providers. >> you got, have you ever done it? >> certainly we do. >> why not this company? >> the decision on who to exclude is based on several factors. including access to care as

well as the specific conduct and the expectation of whether they will continue the bad behavior or not. we utilize, in cases where we do not exclude corporations we utilize corporate integrity agreements. in this case there was a defered prosecution agreement where we will monitor this corporation in hopes to bring them -- >> to hell with monitoring. they have already done it. if you had somebody working in your house, clear your house and you came home and your wife's bracelet that was worth $50 is missing you don't hire him again. duh? what do you mean, defered prosecution? this company needs to go. how many other companies are like this? in other words have defrauded the people of the united states of america, have taken away services from people like our witness, our earlier witness and are still doing business with

medicaid? how many? you're the ig. youed sat up here around doing all these wonderful things. we're doing this, we're doing that that's real nice. what i'm trying to tell you your normal is not good enough, you know? if you're going to come in here with a badge on your chess and talk about what you've done and a company that has taken millions of dollars away from taxpayers is still doing business and they come in 41 states, all right, we're ready to do business again. yeah we've stolen from you, but yeah, we're ready to go. we say okay, all right, we'll do it. something is wrong with that picture and you're the ig. so is that the normal, that we should expect? here we are slashing budgets. people talking about slashing medicare, slashing medicaid, slashing social security and we've got some greedy folks who are out there stealing money

from people and you're going to tell me that we have the power to debar and we're not using it? in what case will we use it? >> we use it, we use it on average, nearly 3,000 times every year. >> well why not this company? >> as i had said the factors that play into the decision, depending whether they're criminally convicted or whether there is going to be impact to access to care going forward and their expectation whether or not they will continue to commit the fraud or whether we believe that through compliance monitoring we can bring them into the fold and allow them to continue to provide services to the population that they're serving. >> oh. oh. the like the lady that steal's your wife's broach or cleaning person, you say to her, oh, miss jane, mr. johnson, yeah you stole a broach but, we want you to come back in because we think you can be rehabilitated? we think the next time you have a cleaning assignment you

won't take the diamond ring. something is wrong with that picture. i guess what i'm trying to get through to you that is not the normal. our country is better than that. and there are people in my district that are suffering because they can't get the services they need but yet and still we're letting these companies do this and by the way, there are other situations in government where people did much less than this think would be out. again i go back to the young boys and girls in my district, some of whom live in my block. and if they stole a $300 bike they would be punished for a lifetime, not a day. not an hour. and they damn sure wouldn't get a multimillion-dollar contract and multimillion-dollar contracts in 41 states. i mean i would be embarrassed to even come in here and stick out my chest talking about what i've accomplished when the company still -- they have got to be looking at us like we're fools.

so i'm hoping that we'll be able to work on a bipartisan way to get rid of maxim because, see, all of this stuff you're talking about, it does not matter if the end result, mr. gotti said part of it, i'm almost finished mr. chairman, part of it is making sure somebody goes to jail. but there is another part. the other part is saying we're not going to allow to you do business and screw over the american people anymore. that's the second part. you can do all these things you're talking about, bring in all the technology you want, talk about all the wonderful things you're doing, if there is not that end result, you know what they do? they come right back and pay the price but they come right back. thank you, mr. chairman. >> thank the gentleman. gentleman from arizona, dr. gosar. >> i can tell you this is great playing the closer on these two gentlemen right here. i couldn't agree more who being a health care provider who did medicaid for seven years and left it for all the reasons they talked about it. i did not stop.

i just provided it for free. this system when we're starting to talk about access to care and only provider is those that are thiefing in one of the most densely populated part of the country is absurd to me, folks. absolutely absurd to me. so i want to ask you something real quickly. i want to give you, i want to give you the opportunity to give yourself a grade in front of the american people on how you think you've done this job in regards to policing yourself. miss brice-smith, give yourself a grade? >> in light of youngness of our program -- >> i don't really care. >> c. >> mr. cantrell? >> i would give us a "b." we know there is much more fraud we're able we need to attack but we're improving every year. this last year was a record year with 720 plus criminal convictions is over 50 more than the previous record year and $4.6 billion in recoveries through these criminal and civil fraud investigations. but -- >> i'm going to interrupt

you there. i think what you have to do is, you are working on behalf of the american people and i doubt they would give you above a d. don't you agree with me? i think so. i have been out there main street walking this. so i understand it very, very well because there is missing component. the process, the whole process is broken here because the problem for this gentleman, mr. west here, would have been a lot less if he was empowered to help make those decisions on the ground. and we fail to do that. let me ask you a question miss brice-smith, when we were looking at innovative ideas making some change did you contact visa, mastercard, some ideas they may have to reduce some of fraud, waste and abuse? >> cms has engaged credit card companies in using the analytics and tools that they have available to try to apply to the medicare claims. >> how would you look at that as far as the i-t systems? i know a lot of the states in the i-t system,

lowest bid buys. that is not usually a good investment as far as i'm concerned. i mean, dentists love their toys okay? the better the i-t, the better. so sometimes it is not the most frugal decision that is always better, would you agree? >> yes. >> do we work with the states in allowing them to have that flexibility to working with that? >> yes, we do. in fact we've incentivized the states to upgrade and enhance their i-t systems for the future. we've done that through setting what we refer to as a matching, 90-10 match where they get additional funding but we apply criteria or expectations to that funding so we can have a better system at the state level to, for the medicaid claims. >> so, you know, when you start looking at, i mean, many hands, i look at these two gentlemen looking at criminal prosecution and you know very few people or fewer people i should say in the criminal division really want to renege on their rules of parole. the reason i look at that

and i bring that to point it is called bounty hunters. we have a lot more eyes on the prize, okay? there is some incentives. seem to me when we look at fmaps on reimbursement rates we ought to be engaging the states for activity, okay? as well as -- [inaudible] the first person who is going to know is the patient. and giving them some oversight on that bill. that's why it needs to be enhanced. and i think that what we're trying to do is we're putting a bandaid here. i will tell you i'm one of these people speaking, i'm tired of bandaids here. i came to congress to recorrect things. i think trying to reconstruct, doing the same things over and over and expecting a different result is insanity, absolutely insanity. but we need to start empowering patients and that's not what you've done. there is no part of this that does not empower these patients. i can tell you i have first-hand knowledge of

that. i served our dental patients who couldn't even be seen by a federally qualified health center. i can repeat stories not as bad as this because they're dental but i can repeat this all day long. it's sad. because i think what we ought to be doing is, is sharing that information all across the sandbox. not playing and not explaining who is a bad player here and allowing them to be still participating to the rules is criminal and it's criminal on our part for not changing it. that's what's wrong here. so let me ask you a question. i want to see, thinking outside the box, how could you envision something that could empower patients like mr. west to have some skin in the game, to be one of those whistle-blowers and uphold their bt ability and

rank? give me some ideas, miss brice-smith? >> we have already observed there are a handful of states that have developed sort of reward programs if you will are short of the false claims act but will give cash for tips if you will related to health care fraud. so there are already a handful of innovative states that have recognized that that's an additional insight an benefit to fighting fraud. >> do you have an insight or newsletter says, hey, listen these states are on the cutting-edge, days to crime, days to time? >> we are using our education net to be able to communicate and outreach that information. we also use best practices, summaries for the states, so that we can infirm other states of what states that are being innovative are doing. so we use our websites. we use forums and meetings and our medicate institute to communicate that

information. >> thank you. i'm out of time. >> thank the gentleman. going to go to a second round here while we have the opportunity for a few more questions. yielding myself five minutes. first, a follow-up on the questions of mr. gowdy about the states that are most egregious as far as improper payments. it sound like your contention that information is not subject to the freedom of information act, to foia? >> i am not sure on foia but we could certainly, i can certainly look into that. >> because i share his, i guess, statements regarding the fact that, you know, american taxpayers are sending $275 billion to states to handle properly and i think the american taxpayers have a right to know which states are doing it well and which states are not. and i'm not sure, i would be interested in any additional feedback from cms as to why we don't want to share, you

know, often in cases of deadbeat dads one of the ways we get them to pay we publicize you know, that they're not paying. we shame them into paying. maybe we need to shame the states doing a better job protecting american people's money. i look forward to further interaction with you and cms on that. mr. cantrell, on specific case of mr. west, appreciate the various factors. i find it somewhat, you know, unbelievable that we are still doing business with this entity. can you tell me when the 41 states as part of the agreement in addition to mr. west's case in new jersey, was there evidence of other similar misconduct in other states regarding this company? >> yes, there was. the, $150 million was not related to specifically to mr. west's scenario. it was broader issue. >> and how many states would, if you know or estimate that

we found misconduct? >> i don't know specifically the answer to that but we could get back to you. >> that to me would go to if it was just new jersey and we had some bad apples in one subdivision of this large company, that's one thing to say, we're not going to punish the whole company. but if we found similar misconduct in half, 20 of the 41 states, that's a very different story. so if you could provide to the subcommittee how many states and how many different states did we find similar misconduct by maxim? >> i don't believe our evidence suggested that they were committing 100% fraud across the country but i don't know how many states but we'll get back to you on that. >> we would welcome that information. also, looking at, analogy of private, individuals, in a criminal sense where we have a victim, most of our focus has been about the money which is very important but

it's also about the care provided. as we heard from the testimony of mr. west, because of the fraud maxim committed it wasn't just money being lost, it was care to an individual. that's, an even more serious crime in my opinion because of their intentional fraudulent conduct, they denied medical care. given that he was a victim directly, taxpayers in total were a victim but he was a victim directly of their misconduct. was he consulted or any other similar victims consulted as to whether they thought the settlement with maxim was acceptable punishment for their wrongdoing? >> i believe as in most of these cases the attorneys for mr. west, miss pain would be probably -- page. participating in those discussions yes. i don't know specifically in this case but yes, that is the routine. >> and they're given an opportunity to say yes, i sign off on this or they're just aware? >> i think they're aware of

it. i don't know that they have the ability to stop, stop it from happening. >> is there, you know, in a sentencing in a court there's a formal process where the victims can offer testimony to the final decider. do you know if there was any formal process of that nature where a victim can make a presentation to the, you know, the u.s. attorney directly that's going to make that decision? >> certainly there is the opportunity. i don't think there was a sentencing hearing in this case. so there was no, may not have been the opportunity to do it in a courtroom but i believe there would have been conversations between the u.s. attorney's office and the assistant united states attorney, mr. west. >> my hope is, that we make sure that's a formal process, a routine part of any settlement because i do acknowledge that you could have somebody who had some bad apples in a small way, you know. that has to be factored in more than a deliberate across the board fraudulent case.

we have to remember there are victims here that just aren't about money. it is about care being denied. and that is a very serious crime in my opinion. i want to quickly get to two other issues. in your testimony, mr. cantrell, you are talking about the medicaid statistical information service and you reference in your testimony about some of the data is 12 years old? how common is that? >> sir, let me correct the record. that is one 1/2 years old. >> okay. yeah, 12 years -- >> right. >> so outrage just but even 1 1/2, when you talk about then trying to do correct it, i mean it goes to the point of i guess what you talked about and miss brice-smith of trying too much more quickly identify, respond to and prevent, you know, because 1 1/2 years even is, the money's long gone. >> we agree.

the more timely the data as close as we can get to real time the better we are. on the medicare side as i said we have a lot more success to talk about. we use that data which is much more timely to mine for fraud. identify areas where we have hot spots of fraud. we have the strike force model which we utilized and we deploy those to areas of the country where there is high instances of fraud such as south florida, bronx, new york, detroit, los angeles, dallas, houston. >> seeking to replicate where you've had success with medicare to medicaid? >> absolutely. >> that is one of the things that came through to me in preparing for this that it seems there is almost a conscious decision within cms to devote much more attention and resources to medicare fraud than to medicaid fraud. is that a fair -- until the last, say, five years? is that a fair statement? >> i would have to defer to

my colleague on that question. >> miss brice-smith, is that, that we're kind of late to the game on the medicaid side? >> i think you're recognizing certainly the support that congress gave us through dra in that five-year period. >> right. >> but i think one could take that a step further, the medicaid program was structured to be administered day-to-day by the states. so, those claims are going to the states, or their fiscal agent. and we're engaged at the post-pay with a subset of data to try to oversee them. >> i think very valid point. i think in the deficit reduction act and as mr. davis well reflected in the affordable care act there is greater, greater understanding here in washington in the last five years that maybe it is state administered but bottom line we're paying the majority of the bill. so we need to be more proactive protecting taxpayer funds. that's why i say i think

we're late to the game but we're finally getting there and being more hands on in trying to protect those dollars. . . system a more useful tool to

be more timely but also more comprehensive. >> we can't speak to why we don't require a but we can speak to the effect of not having that information available. as you say it is impossible to do some of the data mining techniques and things that are done on the medicare program. gao does have work underway right now that is looking at the state could devotees, and their activities in this regard to >> this before. >> may i speak to that? i just want you to be aware that we are taking active action to actually enhance that data. we are referring to it as transform office data which is largely expanded we are testing it now to test drive if you will but the data will give a better route term in terms of the activity among the volunteer states, so we are very excited about that.

>> my hope is that that is successful and i will say more successful than idr and the program integrity which many years and doesn't seem we are getting the results intended and certainly not in the timeframe in volume we over my time. i don't know if you have other questions? i will yield to the ranking member mr. davis. >> thank you very much mr. chairman. the services and denial were a major red flag that something was wrong, something was not right with the benefits. one ms. brice-smith, to those patients, are they less likely to ensure that their services or properly being rendered in the delta medicare correctly?

>> i think what we've learned about fraud, many frogs terse kim, submit a very clean looking claim and you have to examine other factors such as complaints from the beneficiaries, such as our own data analytics in terms of the patterns does this really makes sense is this even feasible that they could use that many services for example. >> the 1-800-health and human services tips potline is publicized as an avenue that individuals can use to provide a nation that is, vetting fraud, waste, abuse and federal health care programs. while the extent of health care fraud is estimated to be in the billions of dollars each year they emphasize medicare and medicaid beneficiaries or the front line of the defense

detecting medicare and medicaid fraud because they have firsthand knowledge of the health care services they have received. mr. west contends that there was no follow-up to his hot line calls and so mr. cantrell, can you provide information on the 800 tips hotline what procedures have followed and any time frame there might be for the complaints? >> we of the 1-800-hhs tips hot line which in this case mr. west we don't believe he contacted that. we believe that he contacted state and local offices but we have the phone number. we also have a website where we collect complaints via web form, and between the two mechanisms, we've received thousands of complaints every year and we have a process for evaluating

those complaints, determining whether there's enough information to proceed with an investigation or whether there is enough information. in some cases we refer the result of the regional offices for the investigators to look at further and in other cases to refer them directly to the administrative review. >> the focus today has been on medicaid fraud i will just point out that there's also fraud in the private sector and private health care. united health paid $350 million in the lawsuit related to the intention of the manipulation of the reasonable and customary rate and also fisa to 82 billion-dollar civil and criminal penalty on the

medications while conditioned the have not been approved for by the food and drug administration. ms. cantrell melvin mr. yocom, can you contact on looking seriously to the private sector? >> one of the challenge is looking to the private sector and particularly on medicaid might be the federal-state partnership. that is an unusual circumstance to begin with. the data is also a challenge in combating fraud and dust of the cms is taking right now or in the lot deily coverage direction the there's a lot of work to be done. >> from a technical perspective, looking at moving the data from

the states into the integrated data repository a lot of the key challenges surrounds having to make sure that the data is of the format that the data elements file format consistent with idr requirements so there are technical challenges in being able to do that one of the concerns we've raised in the report was a cms's plan as we understand it to try to bring all of the 50 states or 50 plus programs data into idr by september, 2014i believe. the concern we have is what type of planning they will have in place to make sure they can in fact bring that data consolidated, identify the data elements that are different. we talked previously about disparate systems at the different state programs and does have to be addressed.

the differences in the data have to be addressed and brought into the system and the common format. we have not seen the plans yet. we haven't done the work that would allow us to see how effectively cms is handling that particular challenge. >> went thank the witnesses and the chairman for the hearing and i yield back. >> with me ask a question. about fraud, is it just limited to the private sector or also the public health? >> i believe there are equal concerns in the public sector in terms of fraud, waste and abuse and i think evidence of that is the american medical association annual report card on health insurance which shows the rate was doubled to more than doubled the medicaid rate when you think about extrapolating that out you

are talking about a savings in the private sector of $70 billion right there so that is an example with medicaid and medicare to big high-pressure programs we certainly recognize we tend to record and disclose and more transparent as we should be but many private companies don't have to be transparent about the fraudulent activity that may be occurring. >> i want to highlight like the federal qualified health centers -- would you say that when we broke a rule flexibly child the whole quadrant and we only do one tooth at a time it gives a reimbursement rate; would you call that fraud? >> it sounds like there are a lot of things going on we would have to take into consideration in terms of how the billing is occurring. it sounds like that might be an effort to unbundle services possibly punitive might drop the

suspicion depending on how -- >> we have the same scrutiny on the cultic health centers as we do with everyone else? >> certainly they are inclusive, the waiting our efforts tend to be focused on where we believe the greater the medicaid expenditures and the greater fool notabilities and the categories of services that tend to drive the rate as we know today. >> gotcha. ms. yocom, you believe that the medicaid systems are maybe two big and on wielding the way they are to oversee properly? >> we are finding a big problem here and it just seems like it is on wielding. >> i think the actions taken by the congress and the deficit reduction act and other under the patient protection and affordable care act as a lot of activity which can help oversee these programs in the better

fashion. to speak to the states on that this is a partnership but cms also needs to be able and willing. >> it seems to me like we are talking about a broken system and from rural arizona. we don't get paid. i can tell you right now in dentistry you might get paid in six months. i don't know many people that can make a business work that way but somehow we do. in the government takeover of health care that is the only way the law can talk about it. we are going to dump another 20 million people into this and a broken system. i don't see a lot of urgency into fixing this situation and looking outside the box for solutions. do you agree with me? >> it's not my position to agree or disagree. >> would you agree it's broken

right now? >> the facts are we need to do better on the program integrity. >> and it's going to be problematic when we don't dump another 20 million people in here. >> the best approaches are frankly to keep the payment from happening at the beginning of the gao. >> i don't like where you're going with this because in medicare most of the medicare patients are older, right? very responsible and they've been in power to look at bills which to get back to write about in powering people being a part of that. i want to go back to that the credit card industry fought in real time and the hot wire business practice before the payment goes out the door? >> we just started work to look at that so i don't see the position to see the states are doing. we do know there are analytical tools being used in some capacity by them at this point but i couldn't speak to how much or to what extent.

>> is there any reward to utilize the analytics toole? >> there's the analytics toole inslee understand to be used in particular to health in the proper payment so that it allows them to analyze if you will mine the data and make calls on the data that would help them prevent fraud and improper payments for the integrated data repository tools that we are currently assessed which are focused on the back and in terms of identifying the proper payment after they've been made. >> couldn't we -- just for a second it seems to me there is another common tool that i want to get to. in the front end in powering the patient to make the system a lot faster. when you d from a patient on a

building process directly and when they are paying for it is also a standard of care issue so therefore there's a better penalty that we are talking about, so i think that there should be some aspect the we look at the front end morceau the backhand and in powering patience and if you have something that works very well i come from a state that the then awarded extremely active arizona isn't one, two or three in the country for activity for population. the patients are in power and that is what they're feeling to do is empowering people, and i see constantly when i am approached by the program saying dr. goasr we need you to sign a contract. why is it taking a wic mother six or seven visits to see the doctor? something is wrong there but there's also something right because women are speaking out about that process, and i think

the more eyes on the prize, the stricter the penalty the better off the opportunity that that happens and in power in the states to make those to restrictions really helps and i think the standard of care is a remarkable tool. thank you. >> thank you, gentlemen. as we heard in mr. west's testimony not only not in helvering -- in power in but in this case we heard we discouraged and prevented them from taking hold. so we certainly need to do much better and i think as we wrap up here a final comment and that is that we need to remember there are two issues at hand. first it's protecting tax dollars and while certainly we are glad to have the improper payments rate for medicare to be down we are still talking about $22 billion of the government payment this last year that we

know what, and again, using mr. west's case, for his individual here like efforts to uncover the fraud, we would not have known about maxim, so how many other maxim's routt there? the 22 billion is what we do know about of improper payments. so, you know, when we talk about the number of 125 billion, there's some estimates that's probably at least 200 billion but we know of only 125 billion. so we certainly have a lot of work to do. i want to thank each of the witnesses for the testimony today both written testimony which is helpful in preparing and your oral testimony today. and most importantly for your efforts day in and day out. i know we are on the same page to seek a result, and i think that with the deficit reduction act of 2005, the affordable care act we are all collectively

bitter acknowledging and starting to develop the resources necessary to protect the dollars, ensure the care that is irma and deserved is provided and not denied inappropriately. so commend you for your efforts and on the committee we look forward to continue to work with you both, you in your respective agencies on this important issue. we will keep the record open for two weeks for additional information as was requested to be submitted and we stand adjourned.

the presiding officer: the senator from hawaii is

recognized. mr. inouye: mr. president, today is december 7, 2011. 70 years ago something happened in pearl harbor. i shall never forget that day because it was a sunday. and like many americans, i was prepared to go to church and was putting on my necktie and having a good time listening to delightful hawaiian music. suddenly at about this time -- 7:5 -- the disc jockey in charge of that program began screaming, yelling into the mike. and he was saying "the japanese are bombing pearl harbor." he kept on repeating that. and for a moment i thought it was a repeat or replay of orson

wells, that program that was at mighty hit in the united states. well, he kept on doing this for about five minutes. no music, just screaming. and so i decided to take my father out on the street and look towards pearl harbor. and you could see these black puffs. and then you knew what was happening. but suddenly we're watching these black puffs of explosions, you could hear a rumble just overhead, and there were three aircraft. they were pearl gray in color and red dots on the wings.

i knew what was happening, and i thought the world had just come to an end. just about 2,400 american sailors and soldiers and noncombatants died that morning. i was a young man of 17 at that time, but i was also a volunteer medical aid man. we had a little aid station, a temporary one, set up at the elementary school called luna lilo. and so i rushed there to call -- respond to the call of duty. and i stayed there for about a week, taking care of the wounded and the dead, because we also maintained a morgue in our

school premise. i became familiar with the cost of war -- not the full cost. but i knew what was happening. the war was much more than just blood and guts. mr. president, we have an extraordinary constitution. we have an extraordinary set of laws. but throughout the history of mankind, not just the history of the united states, but the history of mankind, war has always provided some justification to lead us, to set aside these laws. for example, on just about christmas eve of 1941, or three

weeks after december 7, the united states government made a decision, and that decision was to provide a new designation for japanese residing in the united states. citizens and noncitizens like my father and the designation was 4-c. mr. president, i do know 1-a means you're physically fit, mentally alert and you can put on a uniform. 4-f, something's wrong with you. 4-c is the designation of an enemy agent. just imagine that. enemy alien. this was used as one of the justifications to round up over 120,000 japanese, most of them

americans of japanese ancestry, and place them into these internment camps -- damps. there were ten of them throughout the united states in very desolate areas -- arkansas, arizona, utah, out in the deserts. and their crime was that they were enemy alien. none of them had committed any crime. investigation after investigation disclosed that. no sabotage, no espionage, no assault, nothing, but they were rounded up and placed into these camps which were described by our government as concentration camps. yes, it was unconstitutional but our leaders felt that the war was a justification to set aside

the constitution and set aside the laws. well, many of us, especially the young ones, were very eager to demonstrate to our neighbors and to our government that we were loyal, that we wanted to do our part in this war, and if necessary, put our lives on the line, and we petitioned the government. finally, after about a year of petitioning, president roosevelt issued a statement saying americanism is not a matter of blood or color. americanism is a matter of heart and soul. and he says okay, form a volunteer group, and that was done. we trained in mississippi and we

did our best. the 100th battalion, the 442nd regimental combat team were assigned to do our battles in europe. we fought in italy and france. we started off the war with about 6,000 men. at the end, over 12,000 had gone through the ranks. so you can imagine the casualty rates. we had about 10,000 purple hearts for all the wounds that they received. and we were told that these two units became the most decorated in the history of the united states.

it is the bombing of pearl harbor several years ago began a period of my life where i became an adult and i hope a good american. it is something that i will never forget that changed my life forever. something of interest at this moment. 20 years ago when we decided to make it a national event, the 50th anniversary of the bombing of pearl harbor, on that morning, the president was there, the secretaries of defense, secretary of war, the secretary of the interior department, state department, all of the important people of the united states were in attendance, and in preparation

of this, we took a poll about six months before december 7, and the poll was among high school seniors, well-educated young boys and girls, and the question was a very simple one -- what is the significance of december 7, 1941? mr. president, i'm sad to report to you that less than half could respond. most of them thought it was a birthday of some president or some historic date of some nature, but they couldn't recall what it was. on the 70th anniversary, i just wonder if that poll were taken again, what would be the outcome. well, i hope that we will

remember december 7. i hope we will remember 9/11. that was just a few years ago, but people are beginning to forget 9/11 just as well as forgetting december 7. if december 7 is going to teach us anything, it should be that we must remain vigilant at all times, not just to avoid war, but vigilant among ourselves so that we would not use this as a justification to set aside our most honored document, the constitution. i hope it will never happen again. so, mr. president, i thank you very much for

very much for >> good morning. the committee will come to order. and a little bit early, but we are well represented. i would like to begin a hearing preceding the mission statement. we exist to secure to fundamental principles first americans have the right to know that money washington takes from them as well spent and second, americans deserve an efficient and effective government that works for them. or duty on the oversight reform committee is to protect these rights to read our solemn responsibilities to hold a government accountable to taxpayers the cost taxpayers have a right to know they get from their government. worked tirelessly in partnership with citizen watchdogs to deliver the facts to the american people and bring genuine reform to the federal bureaucracy. this is the mission of the oversight government reform kennedy. good morning and welcome to today's hearing. oversight in iraq and afghanistan challenges and solutions. i would like to welcome randy never tierney, members of the subcommittee and members of the audience and certainly the panel for being here today. this is the sixth hearing

addressing the accountability of taxpayers' dollars in the war zone. during the session this committee examined a number of issues including whether the state park that is prepared to oversee the surge and private contracting in iraq, whether this department will be able to protect government employees and contractors in iraq after the military with straw, with the usaid and the state department can accurately track reconstruction projects and account for their expenditures, whether those products can and will be sustained by the host nations, whether the bill intended to the government of the systems -- direct assist program can and will be properly overseen, with a defense to prove that is working to ensure tax payers' money isn't exported along afghanistan's supply chain. in october, the full committee heard testimony from the commission on wartime contract and about its final report. the commissioners alleged between 30 to $60 billion had been lost in iraq and afghanistan due to waste, fraud and abuse in the contract in process. according to the commission,

this is due to ill conceived projects, poor planning and oversight, performance by the contractors, criminal behavior and blatant corruption. this is unacceptable and while some may agree or disagree with our engagement in iraq and afghanistan and is universally unacceptable to waste taxpayers' money. in each of the hearings witnesses have described the successive challenges of the oversight has a complicated environment. without a doubt, the task is difficult to refer it is critical that we get it right. today the inspectors general community will share its prospective together on one panel. the community plays a pivotal with the oversight of the federal programs. the mission is to promote economy efficiency and effectiveness in the administration of the federal programs and to prevent and detect fraud and abuse. it also includes informing the congress of any corrective action that it needs to be taken. in addition to the defense steve and usaid the special inspectors general were established to focus specifically on efforts in iraq and afghanistan. each of these offices is present

here today. the have produced noteworthy results, significant challenges remain. we will hear about a steady. we will also examine potential solutions, ranking member tierney has introduced h.r. 2880 which seeks to disband sigr for the overseas contingency operations. on the understand that mr. bowen supports this idea. i would like to hear the penalty when that legislation and how such office with interface understanding ayachi. ranking member of legislation is a good beginning. i look forward to working with them cut the agencies and the oig community to structure an effective solution. before recognizing the remember tierney, i would like to note that the defense department and the state's department, usaid and sigar will not have all agees in january. in may of this year i read the president asking him to move without delay to the appointed replacement. that was signed by senator lieberman, collins, mccaskill

as the western allies, ranking member cummings and ranking member tierney. i would like to place a copy of the record into the record. without objection. so ordered. to my knowledge, the president has yet to nominate any of the replacement, nor has he responded to this letter. i find that totally unacceptable. this is a massive, massive effort. it's going to take some leadership and help from the white house. these jobs cannot and will not be one of the president fails to make these appointments. upon taking office, president obama promised that his administration would be, quote, the most open and transparent in history. you cannot achieve transparency without inspectors general. again i urge president obama the senate to nominate and come from inspectors general to fill the vacancies and without the way. i'd now like to recognize the distinguished ranking member, the gentleman from massachusetts, mr. timoney for his opening statement. >> thank you, mr. chaffetz and all of you for being witnesses today helping us with our job. this hearing also is a combination of a series of

hearings of the subcommittee and the full committee with regard to iraq and afghanistan. we've heard from the department of defense, the department of state on the transition to the civilian led mission in iraq and we've heard from the commission of the wartime contract income suggested reforms to reduce waste, fraud and abuse on the contingency operations and we follow the part of the defense to find delete to discuss the investigation earlier on the production of the afghan trucking industry. these hearings continue to highlight the challenge of the taxpayer funds from waste and fraud in the operations in iraq and afghanistan. the commission of a more time conducting fund billions of dollars had been wasted by agencies that have little capacity to manage the contractors or to hold them accountable. even worse, billions of dollars more have been dedicated to projects the were poorly conceived and our unsustainably host governments. the findings are consistent with this committee is to a oversight in afghanistan. last year the subcommittee investigation had over $2 billion in the the part of

defense contracting in iraq and afghanistan. this investigation found the trucking contract found the vast production in which the war lords, criminals and insurgents extort the contractors for the protection payments to obtain safe passage. a follow-up hearing held by the subcommittee in september showed that the department has made little progress ruling out bad actors who undermine the efforts in afghanistan. we know now many of these actors continue to serve as u.s. government contractors. in response to the findings of the billions of dollars of waste, fraud and abuse the commissioner of the wartime contract and made a number of input recommendations for congress to consider. one key recommendation of the report was the creation of the permanent inspector general for the contingency operations. as the commission stated, no entity exists with sufficient resources, experience and audit and investigative capabilities to transcend the department of functional stovepipes. taking up the recommendation of introduced legislation the chairman mentioned that would establish the special inspector

general for overseas contingency operations. these efforts of the commission along with the special the inspector general for iraq reconstruction and special inspector general for afghanistan reconstruction have shown the critical importance of the real time oversight in our overseas operations. we need to preserve the unique abilities of these entities in a single permanent inspector general with a flexible deployable caught three of oversight specialists. i urge my colleagues to join me in this legislation to require all the legislation is designed to address future contingency operations this hearing is about oversight in iraq and afghanistan now. to that and i would like to address recent findings by the department of defense inspector general that shed light on some of the problems with one of four largest contractors and afghanistan. the report revealed that the supreme group, the prime contractor on the multibillion-dollar defense department of the system of contract in afghanistan is under investigation for hundreds of millions of dollars and overbilling. ayaan understand that there is now a criminal inquiry on the supreme groups overbilling. these obligations raise

significant concerns about the defense logistics agency and their ability to properly manage the live skill contracts and protect taxpayer dollars from waste and fraud. they also raise concerns about the use of the noted plus contracts that is common in the contingency operations. as we speak, the defense logistics agency is preparing to award tenderly and 30 billion-dollar contract to provide food and supplies for the troops in afghanistan for five years. so i'd like to hear from our inspectors general today about what more can be done to ensure that our federal agencies are doing their job to properly manage the billions of dollars being spent in those two countries. i also like to hear from you regarding what tools you have to ensure the company's mark overbilling the federal government for the hundreds of millions of dollars do not have the opportunity to take even more taxpayer funds in the future. so i want to thank you again for being witnesses and thank you mr. chairman for having this hearing. >> thank you. members will have an additional seven days to submit steegmans for the record.

the honorable gordon as the department of defense inspector general. ambassador is the department of state deputy inspector general. mr. michael carroll is the usaid acting and inspector general. the honorable stuart bolin is the special lens victor general for the iraqi reconstruction and mr. stephen trent is the acting special inspector general for the afghan reconstruction. pursuant to the committee will call witnesses will be sworn in before they testify. please rise and raise your right hand. >> do you solemnly swear or affirm the testimony you're about to give will be the truth >> thank you pivotal the record reflect the witness is answered in the affirmative. in order to allow proper time for discussion, we are going to ask that each member of the panel limit their verbal comments to five minutes. you're entire statement will be inserted into the record. i will now recognize the honorable mr. hadel for five minutes.

>> thank you, mr. chairman, good morning. good morning, ranking member tierney and distinguished members of the subcommittee. thank you for the opportunity to appear before you to discuss oversight efforts and help with asia. as many of you may be where this will likely be my final testimony before congress as the inspector general to be effective december 24th, i will step down as the dod ing. in my first month alone at the dod ig i testified three times before congress. two of the three hearings dealt with critically important issues of oversight contingency operations and selfless asia. noting that the nation was engaged in the war and that we had a pressing need to strengthen oversight to protect the war fighters and the american taxpayers. i immediately and determined to make oversight the contingency operations in south west asia a

number one priority. as a result, i instituted a number of organizational changes to the structure and focus of the dod efforts and to increase hour in theater presents which is regularly augmented by our expeditionary teams. i believe strongly that the in the theater presents is absolutely essential to conducting oversight of operation and in beijing with military and civilian leadership in a theater to ensure that our oversight is meaningful and effective. in our audit division i created the joint and southwest asia operations tractor that and the afghan security forces funding. our audits and theater provide timely and relevant oversight and the auditors now have extensive experience in conducting complex joint audit with other federal agencies. in our investigations division, the defense criminal

investigative service, vcis expanded its presence in southwest asia, and today, dcis plays a major role in southwest asia by participating in the key task forces that tackle complex fraud cases. the dcis is already deployed worldwide and has the capability to immediately provide investigative resources to contingency operations anywhere in the world. another division of the dod ig, the office of special plans and operations has been a key contributor to providing oversight. spo has enhance our capability to provide expeditionary changed a southwest asia to conduct timely evaluations and assessments and to provide

thorough out briefs to the field commanders enabling them to take immediate corrective action. i also appointed a special deputy inspector general for south west asia to coordinate and the conflict oversight efforts. my special deputy has worked extensively with all of the ig offices represented with me this morning. today we are an actual, flexible, no-nonsense and aggressive organization oversight organization with a capacity to deploy rapidly anywhere in the world or on short notice, and the dod ig is prepared to respond effectively and aggressively in coordination with other federal agencies and internal dod oversight offices to address any future overseas contingency operations that a rise. i would like to thank the subcommittee for the opportunity to discuss the work of the dod

ig, and i look forward to answering any questions that you may have. thank you para >> thank you periera thank you again for your service in your long career and the secret service and the work of the defense department. we appreciate your service and wish you nothing but the best and we will now recognize the honorable mr. gaissal. >> thank you for the opportunity to testify to the of the oversight of the department programs in iraq and afghanistan since standing up its overseas offices in 2008, the office of the inspector general, a white sheet, has conducted 31 investigations and issued 21 reports related to iraq, conducted 14 investigations and issued 22 reports related to afghanistan and issued 11 reports of activities affecting the department program and transition issues in iraq and afghanistan. our efforts during fy 2011

resulted in more than $200 million in question costs and funds put to better use. 16.6 million in investigative recoveries and 20 contractor suspensions. these results demonstrate the impact that oig has achieved in the this publishing presence in afghanistan and kabul. as a result of congressional support, oig has fulfilled its commitment to vigorously oversee the department's transition and soon will be one of the few remaining oversight entities in iraq. the challenges the department faces in the transition to the civilian licht presence in iraq or significant. dod's planned withdrawals of its troops by the end of this month requires that the departments to provide security, life support, transportation and other logistical support that of the dod presently provides an iraq. our office of inspections has issued two reports, jul come 2009 inspection of embassy baghdad and in october 2010

compliance fall will preview which addresses the embassy's transition planning efforts. in response to the csrl, the department appointed a washington-based ambassador in february, 2011 to manage the iraq transition process to be we also issued reviews in august of 2009 and may 2011 of the department efforts to transition to the civilian let presence in iraq. both reviews found that the transition was taking place in an operating environment that remains violent and unpredictable. the october 2009 report on the transition planning efforts recommend that in the seabeck data develop a unified transition plan and assign a senior transition coordinator in iraq establish a work force planned to timely completion of large infrastructure projects managed by the embassy determined what will to cut services and contract management personnel would be required and verifiable resources needed to meet the increased support requirements following the departure. all of these recommendations of

the enclosed. the may 2011 report noted that the embassy baghdad in the department had still pushed planning and management mechanisms to transition to the civilian blood presence. it also mentioned that while the department had made progress in several key decisions are pending. some planning could not be final and progress was slipping in some areas. we remain concerned that some reconstruction projects were still experiencing delays and were not expected to be completed until may 2012 and the distortion the viable diplomatic mission without the support and funding would require considerable resources, making it difficult to develop detailed budget estimates. the department generally agree with and was responsive to the intent of the recommendations. looking forward, we have to 15 investigations related to iraq and nine related to afghanistan. our 2012 iraq and ken astana oversight plans include six of

its plus the proposed joint audit with dod baiji of programs and dhaka and kabul. in baghdad we will look at the world wide protective services contracts for embassy baghdad, medical locations in iraq and the department's oversight of the task order in losel. we also proposed that we undertake a joint auditor of transition execution and iraq including implementation of the baghdad master plan. in kabul we plan to audit the task order for the embassy security force, contracts to build prisons and the task order for mazar-i-sharif. for 20 called our office of inspections as planned inspections of the office of the coordinator for counterterrorism and the office to monitor and combat the trafficking and persons. the office of what it is following up on its work in the region regarding treatment by contractors of the third country

nationals and the office of investigations also are actively engaged on this issue. we will continue to provide the department and the converse with the copper inspector of audits and inspections and investigations of post transition activities in iraq and preparations for the planning and operations in afghanistan. mr. chairman, mr. tierney and members of the subcommittee, thank you once again for the opportunity to appear today and i am ready to answer your questions to it >> we will now recognize the inspector general let usaid. >> thank you. ranking member tierney, members of the subcommittee, i appreciate the opportunity to appear before you today to describe our work is generally and specifically in iraq and afghanistan if i could read it like to begin explaining how we are structured, uniquely structured to provide oversight. like the agency, the oig is a foreign affairs foreign service organization and more than

two-thirds of the auditors and investigators are foreign service operators permanently assigned to usaid oig. so that worldwide availability gives us a great deal of flexibility to put people where they need to be when they need to become and in addition to that, even though we participated in the process by statute we are exempt from countries staffing level feelings, so why this has never been an issue and i don't think it ever will be, we can put people where we need to put people regardless of what the situation is on the ground with staffing in the different embassies, and again, that gives a great deal of flexibility in over the past eight years a couple of examples or opening country offices in iraq afghanistan and pakistan, doubling the size of the staff in south africa to oversee the money for aids and infectious

diseases in sub-saharan africa and then opening the satellite office on a small satellite office in port-au-prince haiti to help the regional office in el salvador oversee the humanitarian assistance and reconstruction of the post earthquake haiti. so i think that regardless whether it is a contingency operation or just a standard agency coming u.s. aid obligation i think we uniquely situated to do that work to do the oversight work. in iraq we started the oversight in 2003 long-term and when the embassy got up and running and the mission got up and running we established an office of seven auditors and investigators so we have been there pretty much with sigr from the beginning. on the programs and iraq are sort of leveling off to the traditional country office machine operation at about $270 million we are going to

reduce the size of the staff to the auditors to the investigators move the additional people over to egypt of the regional offices and then provide iraq, provide oversight of iraq from egypt and from iraq. in afghanistan we develop a little bit differently. clearly the infrastructure wasn't available early on so we were doing most of our work from the philippines. we created a virtual country office in the philippines and we were literally on the ground full-time in afghanistan with auditors and investigators doing the work. as the program increased in scope and complexity we worked out with the embassy to put an office there and now we have seven auditors for the foreign service national auditors we have for american u.s. direct higher investigators, 14 and national investigator and we are going to put on one more investigator so we are committed both through iraq and afghanistan in providing audit oversight and investigated over

side of the programs in afghanistan. with that, i would appreciate -- thank you for the opportunity to appear before you and i would welcome any questions you might have about our oversight activity and the activities to improve that going forward to it specs before. we will now recognize the honorable steward bowen who is the inspector general for the iraqi reconstruction through 64 ranking member to me, members of the committee for the opportunity to appear before you begin and address over oversight work in iraq, and also to take up the issue of improving oversight in contingency operations. i just returned to weeks ago from my 31st trip to iraq over the last eight years, met with might and auditors and investigators while i was there and we are busy still addressing significant issues regarding the substantial u.s. funds being expended in iraq. it's true the military is departing at the end of this

month a footprint is shrinking, but billions of dollars in taxpayers' money is still being spent and that money requires firm and effective oversight for the coming year and the years thereafter. on monday we appear before the house committee on foreign affairs to address the largest expenditure plan for next year by the state department and that is the billion dollars for the police development program. real questions raised about the preparation for that much work remains to be done to ensure that it can succeed. why why was an iraq i met with ambassador jeffrey, and our ambassador to iraq and the assistant in charge of the development program and they concur with our findings and taking action vigorously to implement them. however, i remain concerned about a couple of matters that occurred over the last month regarding our presence there and one is the review process at the state department is implemented to require us to get the

information that we normally get for the reports back through offices here in washington which will impede our responsiveness. you've come to rely on the reports for the quick trip on what's going on in iraq and we want to maintain a capacity. we hope that we can overcome that limitation and there's also been an investigation problem that all identified in my statement that's relative to the capacity to get information and carry out investigations. these continue the capacity to execute effective oversight in iraq. i also want to address the the government's capacity to execute effective oversight in contingency operations of the wartime commission in its final report a few months ago rightly recognized that the united states can improve its ability to oversee, oversee contingency operations recommending the provision of a special inspector general in other words personalizing what we've been

doing, what's my colleague mr. trent and his staff are doing in afghanistan. and i concur with their recommendation because it will provide funds, savings of money in iraq. that's the bottom line. in iraq, afghanistan, the contingencies going forward. the specialist victor general for the overseas contingency would save taxpayer dollars. we've done that in iraq. it's being done in afghanistan. would be done in the future contingency operations. but we take very quickly the three objections to it that have been raised. one, it would be a layer of additional oversight. the opposite is true. the experience of sigr in iraq has been that we have coalesced and focused oversight of the iraq reconstruction mission, and as a result of generated more effective work, more output, work that would have been more difficult to accomplish there had been three, four, five inspector general's office is operating, and we triet the iraq

inspector general counsel and as was pointed out we worked very closely from the beginning and with the states and with the dod over time through the process to generate better work. it has been a effective catalyst to sinner jul is oversight efforts in country, not the layer. ..

we've submitted a budget that could operate on an affect deus, very limited amount for the time necessary and tell it occurred and that would be directed by the congress that the congress has called to provide oversight and contingencies as they arrive. db2 for the congress, boomed attacks to save money in these times has $15 trillion debt. thank you, mr. chairman. >> i know as much as a discussion about this proposal as well. i now recognize mr. trent, inspector general in afghanistan reconstruction. you're recognized for five minutes. >> thank you, mr. chair. ranking member tierney and members of the committee. i'm pleased to be here with my colleagues to discuss ways to strengthen oversight of reconstruction in afghanistan. the president has requested more

than $18 billion neophyte 20 total budget to assist afghanistan. repurpose will bring appropriations to $90 billion, the largest rebuilding effort since the marshall. congress started 72. the 10 auditors and investigators about a positive positive impact on reconstruction effort. it issued 49 odder reports and make what hundred 49 recommendations that have led to greater accountability contract or management. just to see her auditors had identified $70 million in funds that should be returned to u.s. government. investigators think an important role does detect and deterring fraud. the work has resulted in the recent successful prosecution of the largest to date from afghanistan. they say they produce $51 million in fines, penalties cost for features, features and savings. however, i believe sigar must do

more to strengthen oversight of this critical transition period. we take aggressive steps on the most critical areas of the reconstruction effort. we have developed a fiscal year 2012 out of plan that identifies five critical areas to successful afghanistan reconstruction. their private security contractors come afghan governance capacity sustainability, contract to become a program results and evaluations, fraud detection and litigation. we've also added a section is to provide timely assessments of infrastructure projects. these rapid reviews will verify that the work was performed correctly and achieve the intended outcomes. most importantly this work can help determine the projects are sustainable. we are also adding a series of audits to examine contract expenditures. these audits will allow to accurately assess whether u.s. government has been billed properly. along with sister oversight agencies be consistently

courteney to avoid duplicating each other's work. however we know we need a more comprehensive and targeted approach. therefore, along with our colleagues here at developing a strategic framework to guide the ig communities work in afghanistan reconstruction and intend to identify issues most important to lawmakers and policymakers in the same issues to drive results of the i.t. community to work. sigar hosted the first meaning of this effort last week. finally, sigar takes a leadership leadership role in holding contract is accountable in afghanistan. for expanding investigative presence in afghanistan to build criminal cases. we have 111 criminal investigations, 68 of procurement fraud. criminal and civil legal proceedings however can take substantial periods of time so sigar has enhanced his suspension program to address the need for more timely and targeted action. sigar is currently on track to

make approximately 80 suspension department referrals by the end of this year. sigar takes important steps to enhance oversight. implementing agencies also have a responsibility to strengthen oversight of their own operations. during a recent trip to afghanistan and met with high-level u.s. civilian and military officials to discuss what steps they take to improve contractor program management. a continued to engage in important discussions is also hoped to better target set to sort. let me conclude by saying we've listen closely to the committee's questions about oversight and we are heeding your concerns. the congress has provided enormous resources for afghanistan reconstruction in a difficult budgetary requirements and a set to ensure oversight not only protects the investment that helps u.s. implementing agencies produce better results. thank you, mr. chair. >> thank you for your service. i'll recognize myself for five

minutes. mr. heddell, let me start with you. the defense contracting agency is a little bit outside of our lane, but i'd appreciate if you'd offer to wartime contracting and indicated they were praying 56,000 -- 56,000 contracts behind in terms of auditing these contracts. why is it? how is that the dod can be so far behind in this? >> mr. chairman, my office is actually done a lot of work with respect to dcaa. i would just say chocolate for stuff that i think they probably are underresourced and need help in that respect. but historically, dcaa has been a very challenged organization. they do a tremendous amount of work for a lot of agencies.

not just inside the department of defense, but outside the department of defense. in the last three to four years the dcaa has undergone some sweeping changes as a result of some fairly significant criticisms of their leadership, the processes and not meeting next patience. as a result of that, he has new leadership today with pat fitzgerald who is the director of the army audit and taken on a gigantic job and with the work my office has done to try and help them identify vulnerabilities and their management, in their processes and how to be an affect your organization. for the last two years their focus has been, and mrs. gordon heddell talking, more internal than external. so under ideal circumstances,

they would've been focusing outward turning great work, doing lots of audits that very experienced and good leadership. they've had to focus inward to correct management decisions pleasing vulnerability. that's partially a result of this backlog and nodded. >> and my understanding is they been participating and spending a lot of money and resources. if that expenditure gone up, help me understand what's happening with the actual auditors themselves because you have been appropriated my money. >> absolutely. i've been a fortune organization and in the last three to four years, the dod office of inspector general has flushed up $787 million, mr. chairman. i doubt that any other ig can say that. congress has been very supportive of me. and for that matter, so has the department of defense.

>> have you been spending my money? >> know, the problem there is that the budget -- the $87 million that i have received have not been annualized. and what that means is although i'm very fortunate to get these, i'm not able to use that money to hire permanent staff. so i can hire contract juries. i can do other things without money, but because it has not been annualized by the department, i cannot run the risk of hiring people and then having to risk them the following year for fear that i don't have enough money in my budget to pay them. >> out that $87 million in cotton, how much did you actually spend? >> well, we've spent almost all of it. >> but you hire outside contractors --

>> yes, sir. we hire outside contractors and creatively doing work that is positive and meets the needs of both the congress and the department of the american people. but for instance, in the early 2000, there's two things that have been that have come to haunt us today. one is what we spent our military forces into southwest asia to fight two wars, there is a mistaken belief by many of the civilian agencies that they could fight those two wars in the continental united states. my own organization being one of them. it wasn't until three or four years ago that we came to realization you cannot do that. he must be present and you have to have the people in place. you have to have the footprint. the second thing that happened is that the department of defense budget doubled to about

$650 billion. and at the same time the contract acquisition and contract management work for is in fact was reduced in size, meaning that we lack thousands and thousands of needy contracting specialist that are not there to oversight these contracts, better not dare to raise their hand and say stop the assembly line. we are spending money that we are not watching. we are not surveilling it. those are two major issues. >> well, thank you. i think this highlights a multibillion dollars challenge and problems that we certainly need to address can fix because there's a definite need pervasive in congress, both have senate to make sure these functions are in place. with the monies appropriated is obvious he falling short of feeling. i've overstayed my time. we know recognize the ranking member, mr. tierney from

massachusetts for five minutes. >> thank you, mr. chair. mr. chaffetz, i think we hollowed out collaboration seems in keeping at least the personnel on board and to manage contracts every time we have a hearing on that respect. if we contract outcome which is not always a good idea, then at least we have to keep on board enough people to manage these things for everybody's benefit. in your report, mr. chaffetz, the sub prime contract for afghanistan used on while those are provided the projects required by the contract to defend statistics agency failed to provide contract costs performance. specifically you found the agency overpaid the vendor a hundred million dollars in transportation costs, pick another $455 million to jewish pressures vegetables without equipping core requirements and allowed to build over

$50 million in costs would erode the perp reaching here. what recourse do you have this inspector general in the agency fails to properly manage a contract that leads to hundreds of millions of dollars in losses to taxpayer. >> well, thank you congressman tierney. obviously this is an example of just about how bad it can get. and clearly this happened. this contract was created in 2005. it wasn't a well-designed, well thought out contract. what probably like many contracts during that period, consequently we spent some $3 billion on this contract. nics that, we overpaid the prime vendor in 90 days -- $98 million in transportation costs. we overpaid and 25.9 million travel cost of corrugated boxes

and so on. and as you indicated, $455 million in services to air lift fruit and vegetables from the united arab emirates into afghanistan without including not in the contract. all of that is a result of not cleaning properly and using our contract, designer contract does not in the best interest of the american people. now my organization has gone to the defend statistics agency and we told them i want that money back. and the defense logistics agency agrees with us. beginning in october they began this past october of 11, they began to make efforts to determine first about what are the fair and reasonable prices that should have been charged? imagine a contract created in 2005 and now and december of 2011, we are just now

determining what should've been the reasonable and fair prices to pay. okay, david greig, mr. ranking member to do that and they are currently in face-to-face negotiations with supreme and the timeline projections for a resolution on this and i would never hold my breath and get it all back. at a resolution for this is actually scheduled for december 9 this week. so i am hopeful that when we talk again, that i can say to you we've been able to recover a great deal of these funds. >> you recall that from a contracts that we look that make tracking situation in afghanistan. the lack of vision or ability to look at a contracts, subcontract some tiny detail of those who just never written in to begin with. so mr. bowen, and a special inspector general to help alleviate this problem is sending people in and getting

partway down the road before you see these mistakes are happening? >> one, there will be focus and preparation in place at the time the agency begins to deploy. there'll be a commitment to deployment. as my friend mr. chaffetz pointed out, with the other ig is in moving forward and be in. >> one of the licenses you have to be there to do the work. a special inspector general thought this would be hiring people who know when they sang on, though: deploy and carry a oversight in the conflicts on. finally this is a good example of how it could make a difference. something unique to a special ig that institutional toe house. that means i can dig into problems like this and find out if it's dod money being wasted

or aid money, however that money may be going away we can get to adding it to a faster and thus save it. >> thank you, mr. chair. >> i will recognize myself for five minutes. mr. trance, the obama administration increased rent assistance to the afghan government from approximately $665 million in fy 09 to roughly $2 billion in fy 10. this program is designed to provide u.s. taxpayer money quickly to the karzai government for purpose of carrying out reconstruction projects. is it logical to assume one of the most current governors will have proper stewardship of u.s. taxpayer money? [booing] it's a very good question, congressman. sigar has conducted a number of audits and has a number of

candidates planned. a rtf in the past. looking on among other things than those capacity of the afghan government to administer afghan direct funds. we have a significant and serious challenge in the karzai government in afghanistan. the efforts with corruption in afghanistan are almost insurmountable. clearly we need more of a concerted well by the government there and we need a much stronger and robust criminal justice which they simply don't have. so we do it we can to monitor those funds and will continue to do that. i can't say if i'm optimistic or not with regard to the corruption and control of those funds. >> what should we be doing? if you're not confident -- i'm not confident either. what should we be doing?

you said something that we need a more robust criminal system. well, they all have one. it are not proper procedures are proper oversight people. so what should we be doing? >> well, were doing about all we can. we need to continue with the rule of law efforts there. we can't give up on that, notwithstanding the corruption laws that we've encountered with that. we have to continue to bring pressure wherever possible on the government itself to show a concerted effort in the area and prosecute and continue to conduct audits and continue to work on the investigative side with the afghan authorities we can work with to pursue ascii or my others. >> mr. bhavan, right now the police development program for iraq going forward and there's

some evidence that iraqis don't even want this program. the view your stats to ask iraqi police force if they need the program at the obama administration plan to spend the development program click >> yes, we reported that in our last quarterly no damned the senior official said quote, she didn't see any real benefit from the police development program, unquote. i addressed that with him bananas in iraq a couple weeks ago and asked him, did you mean what you said? his response was we welcome any support that the american government would provide us. however my statement as quoted in your recent quarterly are still posted on the website. >> so why is the administration spending $5 million year to provide his program.

>> there is a belief that security continues to be a challenging issue and iraq -- a well-founded belief given the events of this week. killings of pilgrims again on the way to the eve of posture. the focus on trying to address those problems has been a widely scattered, high-level training program involving 150 police trainers who as we see again this week will have a very difficult time moving about the country. >> so what other problems have been found if any? >> several. he pointed out in our audit that found in the congress requires from iraq by law, that is a contribution of 50% to such programs has not been secured. that's a great concern, especially for a ministry that

has a budget for over 6 billion. a government that just approved $100 billion budget for next year. it's not afghanistan. this is a country that has significant wealth, should be all to contribute, that has not been forced to do so in a program is crucial as this. >> i know i've run out of time, that mr. geisel d.o. comments on this? >> well, first of all i am not going to second-guess my friend and colleague on by his people found. and of course the people you need to bring up here are the people from the state department to comment on what he found. i saw that the department published a document, a 21 page document that includes goals and measures of performance for the police development program. but if my friends baby, not

nine. thematic thank you very much. i look at five-minute now to mr. welch from vermont. >> thank you very much, mr. labrador. i want to thank each and everyone of you for the terrific work you're doing. a lot of situations here in covering reflect the impossible expectations oftentimes congress has and if it were as easy as writing a check and having police force in iraq and afghanistan be established could be no problem. against her better judgment sometimes we spend money and surprise surprise can you tell us a lot of it is being wasted. i really do applaud the work that you're doing. i am going to be introducing legislation that does stricker disbarment proceedings for contractors convicted of violating provisions of the foreign corrupt practices act.

there is some debate between my office and the attorney general's office as to how strict that should be. that is a very critical troll for you. my view is that the department of authority hasn't been adequately exercised in a war zone. i may ask you, inspector general trend. i know that sigar has her best suspension and disbarment programs, did you believe it dod usaid are adequately and appropriately using the authority within iraq and afghanistan? if not, what are the barriers to its use its use and how cool it worked for them to ensure that taxpayer dollars are not getting ripped off? >> congressmen, we do have aggressive and somewhat effective suspension department program in sigar. and i am somewhat aware of your pending legislation on me at cpa

issue. with to my colleagues at these suspension departments, it has been a tool available to contract authorities acquisition authorities and inspector generals as far as proposals for some time. in my experiences in the last several years in the southwest asia i felt that we could increase that use and when i came to sigar i took steps to do that. >> so it is an effective tool and should be used? >> congressmen, i believe it's a very effective tool and in the afghanistan case it is a tool in terms of corruption and contract management and implementation. >> let me ask you one more question. i just got back from afghanistan. one of the people we've met with was found the attorney general's office and the anticorruption

unit. and they repair training afghan civil servants about how to detect corruption. when i asked the attorney general has a coin, he said we had to in the program. he says because we're teaching them how to detect it they were using information to do it. [laughter] so that is a real challenge that we face. but when we visited the commanders sent home and in kandahar, one of the things they were promoting was the developments quick chat key dam which costs about $475 million in benefits are obviously implemented. a provide electricity, maybe some irrigation. but the question is it's not coming out of their budget. it would be a supplemental expenditure. it's not like the military would take it out of their ability to do their job. so they look a bit skeptical because it's easy to prevent the expenditure of somebody else's

money. bottom line, that is the conflict zone and significant questions about whether this could be done. my question to you is does it make sense at this point to as the taxpayers to spend $475 million on hydroelectric project that would have extensive transmission lines? olivet could be easily attachable by insurgents who doesn't make sense to put that on hold? >> congressmen, sigar does not look at the college at usaid has done work in that area. we have what god couple of power plants and energy sec or with audits, but specifically we have that. i believe my friend at usaid has done it to market my area. >> yes, sir. i'm running on the edge of time,

but with the indulgence of the chairman. >> i think you're initially asked a political or administration question about the utility of going forward with the program. would you consider the difficult environment in which it would be implemented. we have done a couple audits and in talking to ambassador crocker this week, it seems to be a priority at the embassy and government to move forward with that. it looks like the army corps of engineers is going to undertake a major part of the program and ait would also be responsible for doing work that ticky-tacky pm. so primarily, the problem up there has been security and now it's getting difficult to get contract are on the work when you consider the security situation that they are. so overall is the power sector

and important sector? absolutely. but it's a very difficult environment to work in up there. >> wanaque five minutes to mr. yarmouth. >> thank you, mr. chair. i thank you offer testimony and appreciate the work you do also. we now face because of the debt ceiling deal that we did a possible sequester funds and large amount of that sequester funds in 2013 would come from defense department. secretary pineda has said the such a cut is project that under the sequester process would be devastating to the defense department and our security. and yet we listened to these stories can we talk about essentially the inability to get

a handle on it -- on these contracts in real time. how are we going to know, mr. heddell, if the sequester is really going to have an impact on defense when we don't have a grasp on the hundreds of millions and billions of dollars for spending no? >> although i can't comment on the sequester congressman yarmouth, i can tell you in the last three or four beers i has seen significant progress in inspector general community in terms of its oversight. and i love the same progress with respect to the way the commanders -- in fact they just got back from afghanistan myself. and i've seen progress in terms of the approach that we're taking. for instance, this year one of the things that we've started

doing was assisting the mod and the emboli, ministers of defense and interior with respect to core capabilities, meaning ability to manage government, something we had not done before so that we have a way of teaching them how to do it and then going back and making sure that they are accountable. and so we are creating systems and processes. i can't assure you that is going to work, but it's something we should have done before. the other thing, the inspector general community itself, which is a significant tool in overcoming so many challenges, four years ago the statement that if you've seen one ig, you've seen one night she was really true. today it is not true. once the amendment to the inspector general act was passed a few years ago, what has happened is similar to what is

happening live enforcement. all of the big things in our tenant task force says. they are done in teams. where you have ig is now getting together to solve a common problem. you have one person agencies working on task forces to address corruption. and by the way, you mentioned -- or it was mentioned earlier that the use of tool such as department -- while that's a great tool, but you have to realize that what happens when we do bari company in afghanistan, what happens is they just go back and change their name and reapply and get a new contract. that happens over and over again. so the answer is simply department. and obviously the thought almost no success in prosecuting companies in the prosecuting attorney in afghanistan. so we have to find ways to influence the leadership to do the right thing.

i think what the oversight community we've done it. i can't comment on what the sequester enough funds might amount to. the department is working hard -- >> them are interested in the overall process. obviously this is broader than just iraq and afghanistan, but one of the things that has occurred to me recently as we have a world that is moving at 80 miles an hour and we have a government that is structured to rent 30 miles an hour. it's taken this long in iraq and afghanistan to get a pm on this. seems to me we have a fundamental structural problem that we don't know how to keep up with the situations we find ourselves. we're habitually late. i said that earlier in my testimony. when we had four military services fighting in southwest asia in 01 and 03, civilian

agencies are finding that were back here in the continental united states. it took us until 2,742,000 make you realize you cannot successfully fight a war unless everyone's involved. it's taken us three or four years to get there, but i think were getting much closer to getting where we need to be. >> thank you. i don't have an answer to the problem. thank you fair match. >> thank you, mr. chair. i'm going to give myself not five minutes and follow-up on most questions. one of the things that's most frustrating to me as a freshman year in congress is that there are some things that both sides agree on that we need to be working on and you're not doing it. i look at the oversight committee. i don't think there's a lot of difference. or maybe some small differences between the two sides, but it seems like we can identify things at the $500 billion was spent on iraq police force that

they don't even want. we should be finding things in common that we could be saving on. if we could put on -- add transparency here in president obama, i'm not using this to embarrass anybody, the president obama has sat on his website that he's committed to making his administration the most open and transparent in history. he wants a window for all americans into the business of the government and that's something i want. i actually agree with him on this issue. but yet, this panelists representing ig office principle in iraq and afghanistan. as of january for the next year, for the hypothesis will not have an ig. i am concerned about that. i want everybody to comment. you know whether the president has nominated anyone to fill these vacancies? if so, who has been nominated?

have you made any recommendations and do you think the absence of permanent ig's will actually harm our efforts in oversight and anyone can take this question. >> i certainly like to comment. number one, i don't no the names of anyone that might have been nominated or who is being considered to be nominated. number two, i can tell you the nomination and confirmation process that we have is cumbersome and slow and it has an adverse impact on the leadership of these organizations. number three, when i took over as an act in inspector general in july 2008, the dod ig at the top had been vacant for so many years over the past 10, 12 years come you can't imagine hearing so to run organization using imap team inspect or general as

a leader is for harding, you can do it for a few months, but she cannot succeed over years and decades. and that is what is happening. >> does anyone know why that has happened? is there any reason why this seems like both sides would agree that we need a robust ig in all these agencies. does anyone have comments on that? mr. carroll. >> i can't comment on what the white house is doing. i went to assure you that i'm a usaid, one of the great things was that was truly a partnership between him and i criticize energy into the acting role, other than the fact that the workload issue for me, the workers on in the leadership philosophy continues. i just want to ensure the subcommittee that there'll be no degradation in our effectiveness or what our work is going to be

for as long as it takes for the president to make a decision. >> i know that mr. bowen has been a staunch advocate of sunoco. is that something the rest of the panel agrees is necessary? if you don't think it's necessary, why? mr. geisel. >> why didn't volunteer, but i'll be happy to tell you what i think. >> you look so willing to answer this question. >> i think in this testimony, the written testimony especially my colleagues made some very good points. one of the key point is that the concept is sigar and his own office has had a wonderful advantage or not is that they have hiring authorities and they have generous funding that the statutory ig didn't have.

another way to approach that issue is to give us the statutory ig's those same authorities and robust funding. now i can't complain about funding because since i came to the department in 2008, congress has tossed us out marvelously. at those hiring authorities would make a real difference. and i agree with what he said this authorities are crucial to doing the kind of job you like us to do. >> what concerns me about the idea is that something we do here in washington all the time, something isn't working. what we end up doing is creating a whole new agency or department instead of giving authority to the people already in charge of giving them the responsibility. it seems like we do it agencies. what we create is another layer

is responsibility. i just find a way to use the existing authorities that are trying to create a reach. but i do understand his concern and i think we all share the can and that we should be saving taxpayer money for the american people and there's ways we can agree to do it and we just need to get it done. anyway, i now recognize the ranking member mr. tierney. >> your timing is perfect. let's explore this a bit. it's a healthy debate and i appreciate iran's position on this. the special inspector general for contingency operations would not be duplicative if it's carried out in the way the legislation is drafted in the way it's intended. currently there's nobody responsible for the operations on a specially appointed on a case-by-case situation when it arises in the congress decides to implement.

all of the existing inspector general said a handful of doing what they're doing within respective agencies. so if you are mr. heddell coming in the present moment with nothing to do. i mean, their hands are full doing things within the area of failing on my and i suspect it could be busy for as long as they want to keep that position. so let's allow you to do some testimony on that. the sunoco concept would be different in what ways? would be non-duplicative in what ways? you mention your first testimony let's reiterate because i think it's healthy to know this. >> yes, mr. tierney, first and foremost, it would be cross jurisdictional. as hard as the congress might try as much as my friend and fellow ig would play, they have to stay within their stovepipe to do their oversight, which

means each of them have to be present. as my friend gordon heddell noted. as we've learned in iraq and see in afghanistan, programs much money. when they manage money, you'll ultimately have different ig is attacking it or perhaps no one addressing it because of the merger. pseudocode allowed to cross jurisdictional power. could be the primary mission to carry out this oversight. we know that in 2003 we would have averted the wasted billions of dollars. we know that had said to exist in a 2002 would have averted the wasted billions of dollars because the aggressive presence of audit on the ground that would've been there. third, you would have a staff that when they sign-up, they sign-up to go to conflict. that is not something my friends and colleagues can require of

their staff now. they can say you're going to orszag to do oversight. that is a problem in 2005, 2006, 2007, getting people to volunteer. still is. afghanistan is today. and finally as i said in my testimony, this would save money. that's the watch for this area. this is the oversight and government reform committee. the latter rubric should be applied when it can be applied in a money-saving way. sunoco would be one of those ways. >> manchester by my colleagues that all these different nagy is that the respective agencies and departments are busy all the time. so you have a contingency operation to ramp up and try to do other things you're doing consuming all of your time and going over to other areas. you're actually focusing another inspector general on a much-needed area to do that work on me constantly available to achieve it and get it done.

i think that's a constructive part of that. there's other issues you raise, but i tank that you can use the sustainability of products that my colleagues raised earlier, the whole wartime contracting commission, which incidentally we had to get over there because of the issues and contingency contract and get the imac to look way things were dredged out in the beginning. their final chapter sums up the whole issue of tragic sustainability by saying the commission sees no reason they are making adequate plans to ensure that those nations will deal to operate and maintain u.s. funded projects on their own. nor are they taking sustainability risk into account. just for the panel, to refinance still to be the case for other things being meant to include sustainability risk in their projects as they move forward

and particularly in iraq is in the thought of that area in afghanistan and elsewhere? whoever might want to volunteer. >> as far as oversight of that question in every one of our performance audit in iraq and afghanistan, we've been audit objective for sustainability. to be honest what we found to date is that it is sort of a mixed bag. i wouldn't say it's a very successful picture historically or even moving forward. but i think realistically to answer the question, yes, the agency is helping sustainability in the design of their projects, but you're dealing with the afghan government particularly going forward here and that's going to be problematic. we've been finding problems for sustainability and programs in afghanistan. >> the problem we have with the kabul power plant, where you do

decide to spend $300 billion of taxpayer money and then decided that they could get electricity cheaper on that basis, to a know why that happened or what we missed i'm not? >> well, i am not sure exactly why the embassy and aad decided to build the project way they did with diesel fuel that could or could not be shipped in and then decided to move in a different direction. the way it's described now is that the kabul power plant is that a fallback and a surge capacity with the larger infrastructure that they are putting forward. so i would say from sustainability pointing out that maybe with a well thought out, but i think you've learned since that time. >> i think i would be constructive if you note the areas and attend something that won't be happening again. at the church to you if you would. i guess you're not prepared to answer today. you can go back and find out

what happened and this is about now a backup plan, something might add as an excuse. i think everybody novus on that. and now they're going to find some region, but we need to ask you to go back and find that while iraq and put in place a plan to make sure it doesn't happen again. >> thank you. i now recognize mr. welch. two of the recurring questions about the expenditure of these monies is whether we have a reliable partner and whether security on the ground is adequate so that the work can actually be done. both of those are huge impediments. and i am just going to -- a constant conflict to some extent with policy object is, where let's say in afghanistan as desire to build a civil society.

mr. carroll commuter departed there so much of the responsibility for implementation of some of these projects. it's a predicate question that should be asked and answered by some authority whether a project has a reliable partner such that there can be a reasonable degree of conference to be implemented. i'm thinking very much about -- pardon me, the iraqi police training. or is there a security situation so the work can be done? that might be relevant to something like the dam project. if you like either or both of those, does it make any sense under any circumstances to do a mary pass on a major expenditure , hoping meadow have been just because we'd like it to have been. >> well, aad -- you are right. they are the meat and potatoes

of civil society. his education and service programs. they do reconstruction in iraq and they've done it to an extent in afghanistan. and i think it would be news if i were to say it was difficult to do development in the middle of a war insert after problematic through mr. bowen is on that thread afghanistan. you ask about reliable partners. aid historically has implemented their programs through nongovernmental organizations primarily. a lot of those are u.s.-based. some international, multinational agencies and that sort of thing. so they are reliable partners. it is now moving in a direction towards funding more development assistance through afghan ministries and they have a

process in place to do some capacity assessment of the systems in place and the ministry's ability to do the work. as they convince themselves or as the data presented south comment they move forward or not on their programs. the website for the traditional aid programs, civil society, democracy and governments, health education, that sort of thing. there are reliable partners. there is a willingness on behalf of the afghan people to make these things happen. >> i'm going to interrupt you right there. that is a meaningless statement. the afghan people. who are they? you know what i mean? in a general sense, the afghan people is desirous to have good things happen as we are. but there's not a structure. there's not a political implementation program.

there's not sufficient security. you know, i've met contractors who are confined to basically the embassy compound. how do you manage your program? it would be like mr. bell and bowen and auditing all done about iraq and afghanistan, mr. trent in afghanistan from capitol hill. i mean, it just doesn't work. you know, this is an enormous frustration are you, but i think there's an illusion and congress is the one primarily responsible because we will have the money go out under circumstances where there is no part goal possibility it will be well used and then we'll get angry at you when you report to us that hey, a lot of money went missing. so there is a predicate question here. we probably should be asking it. i'm wondering whether the organization might have to certify that for this project we have reliable governmental

people or we've got sufficient security that can be done. >> already. i yield back. >> thank you very much. i want to thank the panelists are being here and taking time for the work you're doing. have a great day, thank you. >> thank you, mr. chairman.