their superiors and the contractor. this committee has, over the years, applauded and will continue to applaud that most contracts have that characteristic. they're not always awarded the way contractors like, but they are based on best value to the taxpayer. in this case, at least for this chair and our draft report, we don't believe that occurred, and that's the reason we're continuing her investigation. i would now like to recognize and thank the ranking member for being my full partner in this investigation. >> thank you very much, mr. chairman. i want to a first of all thank you for calling this hearing. it is command the, a very important year in. and it is interesting, this hearing is to examine allegations against a company named strong castle that has

been awarded $51 million in obligations under permission technology contract with the internal revenue service. the first allegation made against strong castle bus december was the the companies are, a local businessman from northern virginia named braulo castillo took improper manage of a historically underutilized businesses on program, while setting up his company's share in washington d.c. let me say from the outset that i had a tremendous interest in these zones. i've lived in what would be considered one for 32 years. in the same house where i would imagine that black unemployment,

male unemployment is probably 35 percent. where businesses trouble trying to become a part of this economy and trying to do well and i have lived long enough and seen enough to deal to tell you that i have worked with a lot of those small business people who have felt quite often that they were not on the playing field. as a matter of fact, that doubt that there were not even in the stadium. and they have lived long enough and strong will long enough. and i've seen many of them died. chasing a dream, trying to get their, looking for a playing field that is simply level, but they can't even get on the field so the purpose of the program is to help small businesses

increase employment, investment and economic development. historically underutilized business areas. as part of this program which is overseen by a small business of ministration, companies may receive preferred status when bidding on federal contracts. in order to qualify, mr. braulo castillo opened one small office in of zone near chinatown, the chinatown neighborhood of washington d.c. he then worked with the head football coach at catholic university, his former college roommate, to hire college students living in a different hubs on near the school. mr. braulo castillo former employer and current competitor, government acquisitions ink filed protests with the sba in the government accountability office. the company accused mr. braulo

castillo of engaging in a shell game with multiple businesses and employees. it also accused them of manipulating the facts to gain the preferred status. the sba investigating these allegations and certified his company has a hub design contract on may 203rd 2013. i ask unanimous consent that the sba decertification letter be placed into the hearing record. >> without objection so ordered. >> thank you. >> s.p.a. determined that his company submitted employee records that were off and inaccurate. it also concluded that the company does not have the adequate internal controls to independently verify employee records, despite these findings, i credit mr. braulo castillo for

appearing before the committee today. he participated in an nine hour interview with committee staff. he provided documents us and the sba, and he is here to explain his actions. community staff also conducted extensive interviews with almost all of his employees. another major allegation involves his personal relationship with an irs employee named craig grossman. mr. grossman did not disclose his relationship to the contracting officers who awarded contracts to strong council, to his direct supervisor at the irs or to the irs office of general legal services. this concerns everybody on the status mr. rose man was not the contract in officer. , but he participated in the

contracting process as of voting member of the contract review board for two of these contracts . no irs officials reported having any knowledge of mr. castillo's relationship. in addition, no contract officials or other irs employee interviewed by the committee the reported any inappropriate input on the contract in process. nevertheless, the evidence obtained by the committee indicates at least in appearance of impropriety because mr. rose men did not disclose his relationship or recuse himself from the contracting process regarding their personal relationship. he stated during his interview with committee staff, gray and diaphragms. in addition, may 15th, 2013, the treasury inspector for tax administration reported that

they had exchanged text mesge on their personal cell phones that contained inappropriate language and lacked professional decorum. 300 of these text messages included both work-related and personal communications and also included obviously inappropriate communications with juvenile and offensive homosexual slurs and mocking references to another irs employee. he has been reassigned pending the completion of the inspector general review and is no longer oversee procurement matters. earlier this week his attorney wrote to the committee indicating that he is invoking his fifth amendment right not to testify today. i am not here to defend his actions, but this is his right under the constitution, and as members of congress we are bound to respect that right.

just one other note. the chairman talked about the tremendous responsibility that the ira's will now -- has been facing with regard to the affordable care act. and i've said it before, but i'll say it again. we, all of us, everybody appear have fired people. all this. and bad actors to not stop the show. this is the united states of america. we have problems in an institution. people are not doing their jobs they have to go. that doesn't mean that the law, the law, the affordable care act should not and cannot be administered by an agency. we are a can-do nation. and it is part of our obligation , los, to make sure

that as the chairman said, we put this shipwright and make sure that its sales so that it can accomplish the things that the congress has voted for and that we have stood up for and that is the law. and with that, mr. chairman, i look forward to hearing from our witnesses and yell back. >> all members will have seven days to submit opening statements for the record. we now recognize our panel's. senior adviser for compensation service for the veterans benefits administration at the u.s. veterans of ministration. mr. michael is the associate administrator of the office of the entrepreneurial development at the u.s. small business ministration. ms. beth tucker is the deputy commissioner for operations port at the internal revenue service.

mr. gregory roseman is the deputy director for enterprise networks and systems support at the internal revenue service, and i believe that is a previous title. we will use it for now. deputy commissioner for federal acquisition services at the general services administration. welcome. and president and chief executive officer of strong castle. pursuant to the committee regulations, would you please all rise and raise your right hands to take the oath. to use where or from the testimony you're about to give will be the truth, the altered, and nothing but the truth? but the record reflect. please be seated. let the record reflect that all witnesses answer in the affirmative. before i continue and because this committee is acutely aware

today's hearing will cover topics including waste, fraud, abuse.

as deputy director of enterprise networks that subject with us. what is your title at the irs? >> mr. chairman, i was deputy director of enterprise network and tier systems procurement. >> to whom the report at the gas?

>> i respectfully decline to answer any questions and invoke my fifth amendment privilege. >> would you do that once again, i apologize. >> mr. chairman, on the advice of counsel i respectfully decline to answer any questions and invoke my fifth ame privilege to remain silent. >> when did you first become aware of a company known as strong castle? >> mr. chairman, on the advice of counsel i respectfully decline to answer any questions and about my fifth amendment privilege to remain silent. >> are you currently employed by the irs? >> mr. chairman, on the advice of counsel i respectfully decline to answer any questions and invoke my fifth amendment privilege to remain silent. >> lastly, are you prepared to answer any questions here today about your role in the irs

acquisitions in information technology products and services from strong castle? >> mr. chairman, no. >> mr. cummings, do you have any questions before i dismiss the witness? >> i have no questions. as we respect the witness's right to remain silent consistent with the fifth amendment's. so i have no objections with the chairman dismissing this witness. >> given that the witness has indicated that he does not intend answer any questions and out of respect for his right under the constitution, i will now ask the committee to excuse the witness, take away his name, and we will take a short recess so that we can reset the table.

you're excused. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> the committee will come to order. i'd like to thank all the witnesses for their forbearance. the chair would like to make sure we allows sufficient time. even though we are slightly smaller now, it's still a large panel, so i ask you to recognize that your entire opening statements be placed in the record and to stay within the five minutes or very close to it. is that -- you're recognized for five minutes. >> thank you, mr. chairman. ranking member comings and members of this committee. i appreciate the opportunity to appear before you this morning to discuss the department of veterans affairs processes for granting service connections for disabled veterans and verify service disabled veteran of small-business is an better known small businesses. that the a is committed to

making accurate decisions and plans for disability compensation as reflected in our goal of 98 percent accuracy by 2015 and monitoring that the u.s. the program. oversight for these programs insures that qualified veterans receive the benefits and business qualifications they h thr service to our nation. disability compensation is a monthly benefit payable the veterans who have a disability or disabilities resulting from injury or disease incurred in or aggravated by active military service. such service concludes active duty, active duty for training, during which the individual concerned was disabled or died from disease or injury incurred or aggravated in the line of duty and an active do the training during which the individual concerned was disable or died from injuries incurred or aggravated in line of duty. service consisting solely at any one of the preparatory schools of the service academy may

constitute active duty or active duty for training for the purposes depending on the circumstances of the individual. the office of general counsel held in president and opinions issued in '94 and '95 that the characterization of an individual service and the united states academy preparatory school for purposes of entitlement to veterans' benefits depends upon the status with the individual enters the school. service by a person entering the school as a reservist called to duty for the sole purpose of attending the school of about one who is in listed from civilian life or national guard duty to attend a school constitutes active duty for training. in contrast, persons to enroll directly from active duty and a prior enlistment remain on active duty with an that meeting of ten of 38 during their attendance. as individuals selected for enrollment are in the military. they wear the uniform, are paid

based upon military rank, subject to the uniform cut military justice, and upon release from that training their issued tv booktv.org. honorable service or other than hon. order the characterization may be. in november 1995 the a.m. and its regulations. the statutory authority to compensate veterans for disability resulting from service stated in 38 united states cut section 1110 is now limited to providing compensation for disabilities caused by military service. the statutory authority is to compensate veterans for disability incurred in or aggravated by service. once an individual takes the oath to serve and protect the united states they are on duty 24 hours a day seven days a week

. if you're she is injured or develops a chronic disease, whether in combat are doing routine activities the clans process is prepared with a disability rating decision to determine entitlement to the amount of any disability benefits that may be payable. in determining whether disability is related to military service their must be evidence of an injury or disease or an exposure in service, medical or in certain circumstances weigh evidence of a current disability and evidence of a medical or scientific nexis or link between the current conditions and the in services and. they're is a statutory duty to assist claimants in gathering evidence which includes certain supporting evidence and ordering an examination are requesting a medical opinion as necessary. they're is a review of documents pertaining to military service and service treatment records obtained from the particular

military service and also request evidence identified by the claimant that may be pertinent to the claim and medical experts are private providers remain aware of. the carefully evaluate all available evidence to determine if entitlements to service connection is established and if so the level of severity of the disability. the standard of proof in making these determinations is reasonable doubt. in addition to requesting records for military service department newly hired claims processors are provided training and military records which include identifying any noted alterations or suspected records. each regional office also has a military record specialist with expertise in military records who serves as a liaison with other government agencies. viejo employees are aware that the responsibility to ensure benefits are awarded to those are entitled to them. upon a determination of what has h respect toa preliminary

adjusting or terminating a word. the beneficiary is provided due process rights including notice of the action to be taken, the reason for the adjustment, the right to representation, and the right to present evidence to about the evidence serving as the basis for the proposed adjustment. no evidence is presented the award is adjusted in the cases referred to the office of the inspector general for review and any further action that office may deem necessary. the office of the inspector general court and its investigation with the united states attorney's office, state and local prosecutors -- >> could you summarize please. >> this hour. that actually summarizes my statements. >> thank you. >> you're welcome. >> chairman, ranking member, distinguished members of the committee, thank you for inviting me to testify about the small business administration's or sba role in awarding of

certain contracts to strong castle. our firm recently decertified as a historically underutilized businesses owned or hubs on entity. before discussing the specifics of the case i would like to briefly describe the program and some of its recent successes. its aim is to help small firms in underserved communities gain access to federal contract opportunities. generally the zones are urban or rural areas with very low median household incomes and are very high employment. the program requires certified companies have their principal office in this hot sun and to employ individuals who reside in them with the intention of spurring economic growth in the community. as of may 312013 there were 5,029 certified small business zones. over $8 billion were awarded to certified firms for work performed in all 50 states, including d.c., upper rico,

guam, the virgin islands, and the northern mariana islands. in the case of the sci the firm applied for ads on certification and was certified on june 22. awarded a blanket purchase agreement by the irs on or about december 7th 2012. a status protest was filed by convening -- competing firm. they could not process the protests based on applicable jurisdictional rules. however, that believe the information contained in a protest called into question the heads on eligibility. as a result it promptly began the investigation into the eligibility for the program in late december of 2012 based on the facts in evidence found during this investigation, the proposed sci for decertification on january 312013. it is important to note this investigation and the resulting

proposed decertification took place before an independent of the committee investigation. after a thorough review the information provided in response to the proposed decertification, there were decertify the may 23, 2013. s.p.a. takes very seriously is to the tet read out fraud, waste and abuse and all of the federal small business contracting programs. our top priority is to ensure the benefits of our programs flow to the intended recipients. our government contracting programs are critical and effective tool kit for small businesses. we have no tolerance for fraud, waste and abuse in the programs. for this reason we have a comprehensive 3-prong strategy to identify, prevent, and pursue noncompliance or fraud. first is effective certification processes. clear and comprehensive eligibility screening on the front and insures that only

qualified eligible firms participate in our programs. second, continued surveillance and monitoring, targeted and thorough examinations, reviews, and on-site visits identify potentially fraudulent terms for those that no longer qualify. and robust and timely enforcement, prompt pro-active enforcement removes bad actors, deters wrongdoing and provides integrity to our contract and programs. we are especially proud of our corps partnership with the office of inspector general whose assistance is critical to the success of our improvement efforts. your ongoing and proactive collaboration with the government accountability office and are stakeholders s.p.a. intends to protect the federal government commitment to aid and assist small business. this strategy and efforts described in my testimony reflect an integrated approach that utilize resources across our office of government contracting and business development, general counsel, and are 68 district offices.

as demonstrated by the initiatives and efforts described in his testimony, we have taken great strides to strengthen the small business contracting programs and implement a robust strategy to combat fraud, waste and abuse. work remains to be done to completely eliminate fraud, waste, and abuse in our programs as bad actors regrettably still attempt to take advantage of government benefits to be where we have made significant progress continue to look for ways to identify further opportunities for improvement and maximize small business access to this important source of revenue so they can start, grow, and create jobs. thank you for the opportunity to testify before you today, and i'm happy to answer any questions you may have. >> thank you. >> chairman, ranking member, distinguished members of the committee cannot my name is best tucker command and the deputy commissioner for operations support at the internal revenue

service. i appreciate the opportunity to appear before you today. i have been an irs employee for 29 years, started my iras during 1984 as a revenue agent. i am very proud of my government service, and it is an honor for me to work alongside the dedicated men and women of the internal revenue service. our agency is vital to the functioning of government and keeping our economy strong. our role as tax administrators, we collect 92 percent of all federal receipts. last year we issued more than $330 billion in refunds to individual taxpayers. in my role as deputy commissioner i oversee the support functions of the internal revenue service, including technology, human capitol, budget, real-estate, physical security, and procurement. ..

for tax administration. it's important to note that investigation is still ongoing. in mid may, i was informed by them about inappropriate and unacceptable personal text messages sent by one of our procurement managers, greg roseman, to contractors doing business with the irs from his personal phone. as soon as i became aware of this situation, i took steps to

have mr. roseman reassigned to a nonsuper viz i are position that doesn't awarding or administration of contracts pending the outcome of the investigation. and then just yesterday the committee released information related to this matter that the internal revenue service had not been previously apprised. of the new information is deeply troubling. it raises additional questions that they must investigate. let me be clear, these types of communication should not, should not occur between a procurement and employee and contractor. we expect all of our employee to act with professionalism and integrity. we are taking steps to separate the irs from any ongoing business relationship with strong castle. subject are need --

critical resources. under the teaming agreement with ibm that has been talked about in the days since the report was issued, there's a number that is rolling around about strong castle receiving $500 million potentially in award from that contract. let me be clear they haven't received anywhere near that amount of money from the software teaming arrangement. in fact 98% of the value of the contract, if it was awarded would go direct to ibm. as i mentioned, we are taking steps to sever this relationship. in response to the committee's february letter, i also directed officials with an procurement office and the office of chief counsel to review the documentation and response related to these two contracts. in addition, as a result of the issue that surfaced we're doing a fop to bottom procurement

review. everything from internal control and business and staffing practices. i asked the department of treasury to expand the routine assessment of irs procurement to include a review of small business programs. based on the troubling information that we have received, we will also further enhance employee training with regards to ethic, with the focus on rule of conflict of interest, impartiality and misuse of official position. let me be clear, i have seen -- not seen anything with the procurement organization. i think this is also backed up by the extensive interview the committee have done with the host of irs officials. inappropriate behavior on the part of any other irs procurement employee. these are 400 hard working, mr.r

procurement community has a strong ethics and wants to support our agency. bottom line, we will continue to work with the committee to provide you with updates on the results of our continuing review and partnership with tigda. we would also implore the committee to please share with us the full set of information that you have obtained in your interviews, because i do believe it would greatly assist the internal revenue service as well as the treasury inspector general in bringing this matter to conclusion. with that, i conclude my statement and i'm happy to answer any questions. >> thank you. just to note, since you made a direct request that it is our intention to share fully with the ig this information. i must admit that it's been a one-way street. we're still waiting on a awful lot of documents from the irs

that are long overdue. mr. sisk. >> good morning. my name is bill sisk, i'm the acting deputy commission. i have spent over twenty years at gsa, i started in against a regional office in atlanta in 1990 and served in a number of management positions including assistant regional administrator and regional commissioner. in my capacity as regional commission i represented their assisted networking services and personal property. i have also served as assistant petitioner in in the office of general supplies and services within the federal acquisition service. and appoint the to the u.s. ability one commission which is unique program that provides employment opportunity for individuals who are blind or who have other significant disabilities. i appreciate the opportunity to appear here today to discuss against a information and the

process by which they review schedule 70 applications. it's the largest most widely used vehicle in the federal government. schedule ownership -- multiple award schedule providing direct access to it product and services from private sector partners around the country. there are currently 4,853 businesses under schedule 70 and 4,172 of these more than 85% are small businesses. many of these small businesses have sober owe economic designations. 720 are a8. 120 are hub zone. 381 are service disabled. 333 are veteran owned. 1,027 are women-owned. through june 2013, about $11.5 billion has gone through.

and $4.5 billion of that, 39% went to small business. schedule 70 has helped federal agencies save time and money while ensuring a good value in the goods and service. in addition, schedule 70 is one of the two schedules available to state and local governments through the cooperative purchasing program. allowing them to leverage the buying power. by allowing our partner agencies to purchase from preapproved vendors, they can receive goods and services faster. while having a schedule contract is not the only way to do business with the government, having a schedule contract allows venders and agencies to cut down on administrative costs. cost savings are also generated through prenegotiated price dealings which provide significant discount from commercial pricing. and serve as a starting point for additional competition and negotiations. gsa as han established process by which to evaluate

applications and make a determination whether or not to approve businesses to get on schedule. over the past three years, gsa has processed approximately 3800 applications for schedule 70. currently the average application processing time is approximately 110 days. contractors can apply through bees system. after an pack is submitted electronically in to our system it's assigned to a contracting officer reviews the package for completeness. after the initial review, the contracting officer or contract specialist sends the offer in administrative letter identifying any areas for which additional information is required. when a package is complete, the contracting office or contracting specialist consultants a responsibility determination using far part 9 together with bees officer of

credit and finance are for review and approval. in the review the contracting officer or specialist will utilize for award management to review offers representation, certification, past awards and performance, and ensure that all information correct, accurate, and complete. after the responsibility determination is complete, they prepare a prenegotiation memo outlining negotiations strategy in any remaining positions. if the negotiations are successful, a final proposal revision letter is sent to the offerer. if the offerer accepts the fbr, they conduct a final review of the offer and prepares and finalizes the price negotiation memo. after all the required form and additional information are completed and signed. they input the offer to the system and prepares a package to send to the vender. gsa schedule 70 can be an important school in meeting the

i.t. needs. and they have an accomplished process to review the applications in a timely fashion. i appreciate the opportunity to be here today. i would be happy to answer any questions you have. thank you. >> thank you. >> mr. castillo. >> members of the committee, my name is braulio castillo i'm president and ceo of strong castle. in january of 2012, my wife and i purchased a small company called sigma computers inc. they had over fifteen years of experience as a government contractors. because i have significant experience, our plan was to transform it to a small business that officially focused on irs i.t. procurement. when considered how we could best position the company we came to learn that the irs desired to -- decides to pursue hub zone and service disabled veteran owned small business credentials. we have never received any

improper preferential treatment and competed fairly for every irs contract that we received. in the short time frame we have owned strong castle our company has made meaningful contributions to the irs offered the government cost-effective solutions to very difficult problems. we have been instrumental in forming teams with large software and hardware suppliers and the irs. in order to improve the company's competitive posture in 2012 as we began working with the department of veteran affairs and the small business administration to have strong castle qualified as a service disabled veteran owned small business concern and a hub zone business concern, we understood that these credentials were important because the irs increased focus on awarding contracts to small business. in order to achieve small business participation goals, the irs drafted some solicitation to give hub zone concerns. in order to compete, we approached the va and the sba to

apply for verification and hub zone certification. we worked closely with the va throughout the application process. for example, we attended multiple hub zone boot camp, presentations which representatives of the hub zone officer were speakers, after meeting them we continued to commute frequently and regularly with them often on a daily basises. they advised us on the hub zone qualification including the establishment of the pribs. office in a hub zone and hiring of college student employees. because we believe the hub zone status would be significant benefit to the company we consulted them on every detail of the application and plans. we worked diligently in enormous personal and -- financial expense and respond to all of the committee's request for documents. we have produced over 20,000 documents including business records, e-mail communications, text messages and personal information. the cost of our effort to cooperate with the committee has been tremendous.

the mischaracterization of the facts have caused strong castle to lose contracting partners with line of credit, and good will among our important customers. it hurt our reputation. having respond to the committee's request i believe we have addressed the central issue of the committee. it's not true that strong castle received $5 million in irs contracts. they successfully competed for purchase pursuant to which they may or may not issue subsequent order. and in reality they received from the irs value contracts of approximately $50 million for which as miss tucker previous mentionly $49 million went to the large business providers. a good amount of an approximately $1 million to strong castle. last year, our company lost a approximately 140,000. second, it is something not true that strong castle had no track record of past performance on government exasht. the company we purchased had experience contracting with the government i personally work with the irs for almost fifteen

years. my prior experience is directly relevant to the work we purchase at the irs. as a company we are uniquely -- based on years of past performance. they have not received inappropriate treatment. we competed fairly and any contract order we received. to my knowledge, we have never received any contract award as a result of inappropriate treatment. four, strong castle has been entirely open, truthful and forthcoming. because of hub zone status with significantly important to the company, we took extreme care to work closely in consultation with the hub zone office and sought approval and guidance throughout the certification process. strong castle has not -- [inaudible] received unfair advantage in the pursuit of any contract government. we're responsible small business unfortunately other companies companies are able to use that as challenges as competitive weapons against us.deite these g

castle remains committed to delivering result as a valued small business partner to the united states and the irs as i have done for nearly fifteen years. >> thank you. >> thank you. >> mr. castillo, you talk about the experience of your company in fifteen years. how many common employees do you have? in other words how many employees at your firm have been there fifteen years? >> no one has been there fifteen years. >> ten years. >> of the employees? >> ten years? >> none of them have been there ten years. >> five years? >> i don't believe -- >> one year? >> one year? all of them have been there one year or less. >> in january of -- [inaudible conversations] you made an assertion of prior experience. the fact is the company you bought and the employees of your current company have nothing in common. i ran a company. i built a company over twenty years. where is the legacy experience that you're claiming your company has?

name an employee that when you bought the company that never done more than 250,000 in contracting. name the employee part of that experience. that is with you here today. >> what timeline sir? >> you claim fifteen years. you bought the company a year and a half ago. how many employees came when you bought the company? >> two employees, and the owner at the time. >> and where are they today? >> the owner left in september of last year, and one of the two -- we bought a small company. one is still there. >> okay. i want the public to understand you're claiming this experience at legacy and not you're claiming -- now you're claiming that in reality three employees grows one many employer. only one of which is with you today. quite frankly, you swore an oath to tell the truth and the whole truth. that's shading the truth pretty close to claim fifteen years with experience with essentially no employees.

for all practical purposes. miss trucker, our committee when we sent the letter to you and the acting treasury secretary and you got involved back in february and march. we asked you about this, and at that time, you said there was no there or there. do you standby that today? in the case of this investigation? [inaudible] >> turn your mic on please. >> yes, sir. let me be clear, the information that we have seen about the personal relationship with mr. roseman, mr. castillo is inappropriate. mr. roseman should have recused himself immediately from any involvement whatsoever, and any irs interactions with strong castle. let be clear also, i think members interviewed --

extensively irs procurement officials. they all stated on the record they were unaware of any relationship with mr. roseman. >> i understand. and -- >> and -- >> miss tucker you can't have it both says. you can't -- what your people said in our interview. let me use my time more briefly. just this past monday you indicated your are were not going to cancel the $2266 million contract to strong castle. my understanding a few minutes ago, you are now going to cancel it and put it on hold. it's not important to be reworked. >> mr. chairman, what i told members of your staff on monday was that we were exploring options. >> okay. well, nowlet goat this part about the money. when you provide a contract -- when the federal government you

provide a contract to a disabled veteran, like mr. castillo, in a hub zone. the irs, as i understand it, took full credit for this hundreds of millions of dollars as though they went to the company. isn't that true? you didn't take credit for 1% going a disabled veteran and hub zone. you took credit for a 00 million. isn't that correct? >> mr. chairman, internal revenue service -- >> ma'am, you're not a witness. i'm terribly thrilled today. we did ignore this until we pressed and pressed. i'll go to mr. -- either of the other two witnesses. when the irs awards $500 million. they don't do it on the net that might go. the skilled off the top profit for absolutely no participation in the actual delivery of services. they take the gross amount.

it's scored as hundreds of millions of dollars going to a hub zone, isn't that correct? >> mr. chairman, the ultimate credit for the contract is for the dollars incurred and the dollars incurred are . >> okay. for the american people today, one of the frauds on the american people, and for us on the day is we get the report cards talking about hundreds of millions of and billions of dollars going to our disabled veterans. hundreds and millions of dollars going in to these blighted zones that we're trying to encourage -- i call them enterprise zone. hub zone happens to be one form. we are scoring $500 million then somebody comes here, miss tucker i'm picking on you for a reason. and tries to say it's minuscule. our indication is the contract costs more than it would have cost if competitive bid to the principle and every clearly

every cent mr. castillo got from what we can tell, without having a true principle operation, and the witnesses did make it pretty clear they don't go there. the people who have real money continue go there. a few college students show up and surf the internet looking for potential new contracts. that, in fact, was scored as hundreds of millions of dollars to help people in blighted areas and disabled veteran who turns out, played college ball for years and didn't limp or have a problem until he got ready to apply for this special status. i have a scoring problem here today. i think my ranking member and everyone on the dais, you didn't get a chance. i'm going to have ranking member now. bear in mind, it's not about mr. castillo, per se. he may not have broken a single rule. that's for others to determine under the law. we were shocked to discover that we're scoring as though we are doing a lot of good for disabled veteran.

not people who turn their angle and have no problem for twenty seven years until it's time to conveniently become a disabled veteran. we were scoring impact to blighted communities when in fact that score is at best fraudulent. we are scoring apparently $1 million. but writing it in as ten times or 100 times that. so that's part of what the hearing is here today. that's what the ranking member and i why we are teammates in this. it's an example of an agency that conveniently had a large contract, may or may not have gotten the best value are for the american payer. but certainly for the two gentleman to your right, miss tucker. they are in a position where complying with the law. they are not seeing you deliver the value appropriately to to the american people for these set-aside type of events. mr. cummings. >> thank you, mr. chairman. miss tucker, i want to pick up

where the chairman left off. help me with this, you apparently had not made a decision on an ibm contract on monday; is that right? >> that's correct. we were exploring options. we were troubled but we are -- we had not immediately canceled the contract because the ibm software is critical to the mainframe operation. >> as i understand. so what happened -- what information came to you between monday and this morning that caused you to say what you said? when was that decision made to sever the relationship, if i'm misstating. you tell me. i think that's what you said. >> so yesterday afternoon, when we received the report from the committee, and the procurement executive team and i met and

based on the e-mail exchanges that we're seeing in the report that we had not been made priefe to, and candidly based on the fact that mr. roseman was repeatedly asked by his superiors if he had a personal relationship with mr. castillo and strong castle. he deny it. i believe the detail we saw exerted in the report has raised considerable concern that we are in the process of separating our relationship with strong castle. >> would the gentleman yield for a second. i'll give additional time. >> miss tucker, i want to make sure the ranking members the e-mails you are horrified about you gave us. it was part of the discovery. your organization reads them before they deliver them to us. >> yes, sir, that's incorrect. that's not the e-mail i'm referring to.

we did provide e-mails from the internal revenue service. >> the e-mails you provided did not lead you -- were not enough to get you to feel that there should be a severing. is that correct? >> correct. it's actually text messages. >> text messages; right. >> as i said in my opening statement it's text messages from mr. roseman's personal phone to mr. castillo that had not shared with the internal revenue service and we were unaware of. >> it was basically the straw that broke the camel'sback; is that correct and. >> yes, sir. >> very briefly. i have to talk to mr. castillo. tell me, how many certifications you have done, you have all have done. you you know over the last four

or five years. give us any idea. i'm trying to figure out how unique it is. the certification. >> thank you, representative cummings. i can get you a full spread for the last five years of all the certifications. i believe we discertified approximately 1500 or 1600 firms over the course of the last year. some have been due changes in the hub zone, qualifying census track maps. some have been due to specific issues with particular companies. >> mr. castillo, i reviewed your testimony, i have admit you are troubled. you seem to take no personal responsibility for any of your own actions. in fact, you criticize everyone else but yourself. do you even blame your inherit problem, let me quote this. the volatile business and political environment of the day. whatever that means. i would like to read from the letter that sba sent to you on

may 23rd about one month ago formally notifying you your company's hub zone status was revoked. then i would like to get your response. the sba letter said that you, i quote, admitted that records provided were false and inaccurate. i want do you put a pen on that. it says you. , quote, did not provide sba with reliable and accurate payroll records, end of quote. it said you do not have, quote, adequate internal internal control, end of quote. it said that you tried to claim your program manager, quote, is not an employee at all, but rather a contractor, end of quote. it says you have, quote, a attitude with regard to the accuracy of records, end of quote.

you know, michael jackson had the "man in the mirror" you need to look in the mirror. it says your employees, quote, can record time worked as they please. wouldn't we all like to have that job in so with all of that, mr. castillo, let me now give you a chance to respond. do you admit you submitted false records to sba? >> sba did discertify us based on the records we have put measures in place to -- >> that's not what i asked you. do you admit you submitted false records to sba? >> yes. >> how do you respond to other allegations the sba letter states that you only corrected thes errors, and i quote, after being confronted with conflicting evidence being presented by sba. there weren't problems you were

identifying, were they? >> no , sir, they identified them and we contracted them. >> and so, mr. chos do, let me turn to you, you are here representing sba, what is your response to mr. castillo, do you standby your findings? >> yes. -- yes, representative cummings. >> going back to you mr. castillo, what do you say about the sba saying you did not have adequate internal controls? what is is your response to that? i want to give you an -- opportunity respond. >> yes, sir. >> there are some problems here. >> yes, sir. they pointed out some inaccuracy. we put correction in place from a time reporting perspective. >> so you admit that there were some problems with internal probes? >> yes, sir. >> let me get to something that

the chairman talked about that is extremely troubling to me. you know, i told you in my opening statement i live in an area where black male unemployment is probably -- what businesses struggling. i want the programs to run properly as i know the chairman does. the question is, can you tell me outside of the catholic university student and fake sincerity tell me how many other people outside of those that you employ from the the hub zone? >> our ten employees, sir, not counting the college students. we have one other hub zone resident. ..

>> then i guess if you were in my district, the folks on talking about, they would not get a job for you unless there were at the university. hello. >> no, sir. i would not agree with that characterization. >> let me ask one other question, mr. chairman. it seems clear from the evidence that you wanted to take full advantage of the program, not to help residents or underutilized neighborhoods, but to maximize your on profits.

during a transcribed interview said this, i knew it was important, being from the industry. and so we went at it that way. that's what you said. is that right? >> i don't recall saying it, but i stand by it. >> finally, what does that mean? >> we moved our operations from northern virginia to washington d.c. and we established our principal office there. that's what i mean by that. >> thank you. >> with the gentleman yield for just one moment. a straight yes or no. we have your interview, your wives and someone. isn't it true that all of the people who potentially sell or work on that contract live and effectively work elsewhere? the testimony of years, your wife command of the principles

is that they don't often go to that principle location. in fresh, it is not manned full-time. when it is it was mostly by college students who were looking for other contract potential. your accounting operation and all those sort of key functions someone would think of those corporate headquarters or never located in the building. >> you're right. the principles. they don't report to an office. >> so -- may be out cut this down because i'm really on our time. you don't work out of that office. your wife doesn't work out of that office. those previous individuals that were from the previous company don't live in the area. one lives in boston and one in florida. in fact, when we really look at it the college -- this contract

thus far until a few days ago basically college students showed up there and served a few sites which was not a direct part of in the execution of this contract. is that true? hub zone headquarters was in name only. it was not your principal place that you did business executing these contracts. >> you mean me? >> you, your wife, or anybody other than these college students. >> i work out of our leesburg hub zone location. my wife works out of our home. >> in the richest county in the country. >> yes, sir. tending to our five children, four of them under the age of ten or under. the college students and any other worker that reported to an office reports to the washington d.c. office which is why we established that as a principal office. we did have, as you mentioned, an employee from florida, former irs executive who lives there

and retired to that area. the gym and you're referring to in boston actually works in a top-secret facility on an air force base. that is not located in boston. >> just one last question based upon what the chairman just said. i want to remind you are growth. a lot test his question. don't you think he manipulated. >> what you see that? >> that's why said that. >> you just admitted he lied with regards to the accuracy of information. >> we provided inaccurate information on our time sheets, not on our peril statements, which we shared and have collected sense and put processes in place to correct an. >> thank you. >> thank you. >> thank you.

>> ms. tucker, your title is deputy commissioner for operations support. you oversee the procurement process for the irs and personnel involved. >> yes sir. >> and you gave a statement, i guess pretty much waving the flag in support of some of the ira's actions. i'm sure there are thousands of people who every day get up and do a good job for the irs. representing people in the district of florida, anywhere i go i hear more complaints about the ira's. and the key have been in sort of a meltdown of scandals, the targeting of certain political organizations. we held a hearing a few weeks ago on conferences gone wild, spending with the ira's. i think on the wire today there

is a story about credit-card abuses. i don't know if you ever see that. >> system that is part of our organization. >> that, again, is just an embarrassment. this hearing on procurement process that, kim, has come out of hand. i think we have lost great confidence and probably for very good reason. it sounds like mr. braulo castillo came -- kent the system. >> based upon my understanding. >> okay. let me ask you a question. let's go back to before the committee contacted you about this, have you or any employees of the ira's, have you all been contacted about what was going on? >> yes. >> wait.

my question was, before the committee contacted you on the matter of this relationship, were you or any of the employees notified that something was going on? >> no. >> absolutely no. >> no sir. >> since then you have been rather reluctant until you had the awakening just in the last few days that something was going on, had gone wrong here. does it sound like the sba was gained by this player? >> congressman, it appears -- >> she just told you he provided you inaccurate information. >> yes. as a result of learning that the information was, in fact, an accurate, it's a pretty fundamental principle the we have certified. >> you agree he gave you. now, it appears you also gained

the veterans administration. we want our veterans with disabilities to have some special preference and standing. the only incidents o disability was at prep school? was there anything in active military service were you sustained disability or injury? >> the injury that i sustained was during my time at the prep school. >> but that was my question. did you sustain an injury, again, an active military service or were you disabled during that time? ". >> i'm not -- >> active military service. were you in combat? and injury? >> my injury is not combat related. it was doing my -- >> it sounds like he has been to the system. would you agree?

>> server -- >> yes or no. >> based on discussions that we had with your staff last week we are not able to provide specific informations regarding this claim. >> it sounds to me like he has. that is not what congress intended. i'm sad that that determination cannot be made publicly. let me just also say, you had a few contacts or number of contacts, either by phone, text, cellphone, or other contacts. how would you -- cell phone contact. a few, many? text, a, many?

meetings, a few, many? >> i probably met with him over the last five years about ten times are so. there were text messages where we provided to the committee as part of the investigation >> the chairman just testified, again, a few times between may and october. the two exchanged over 100 telephone calls. don't you think that that is in excess of what you just testified to? >> i don't believe there were telephone calls. i think you're referring to text messages. >> again, we have phone calls or through the text in, over 100 messages. and then in particular, you had a 21 minute telephone conversation between yourself on the seventh of june 2012.

it's a refresh your memory, that was the night before he sent you the request for an $80 million laptop disk top acquisition. so you testified or you just indicate you have very few contacts contrary to over 100 contacts by phone that we have. secondly, do you want to comment on your 21 minute conversation prior -- >> digital must time has expired. please answer. >> i believe i testified i have met with them about ten times e so for the last five years. i did not comment on the number. i stated that believe you're referring to text messages that we turned over versus telephone. >> chairman -- >> sell or phone, text, and meetings. three different -- >> julie noted. >> i don't know the number of telephone calls. i believe the text message i am very much aware with because i met with committee staffers in council last week or so and we

went over them. i don't recall what the conversation was about. >> as i go, i know he said that there was not a french ship. i believe you have repeatedly said there was. you have not been -- you been on the opposite side of that. so not unexpected in the you said you do have a long relationship. >> i worked in support of the irs for about 15 years so. the last ten years -- >> since 2003 he has been what you would characterize as a friend. >> i would say a customer. i met him to my previous employer. there were very good friends, and we have a contract there. my previous employer. >> so customer and not friend is your testimony today. >> no, sir. i did not say that. we have a business relationship, but i believe that we are friendly. i'm not changing that testimony.

>> i'm think he was trying to get to the question based on this communication because we do have a witness not here today who has said to the irs that you were n friends. yes or no, are you friends under your definition of friends? >> yes, i would think have been clear or stated that. >> thank you. i just want to make sure because i know the treasury wants to understand the disparity in interpretation of france between an individual who did not disclose and yourself. i'm not trying to put anyone on the spot but i think he deserves a yes or no on that. >> i'm not sure he asked me if we were friends are followed characterize it. based upon my ten years of working with them i would say we have a good business relationship and would consider him a friend undermine definition. to be clear, i wish she was here to testify. i'm a small business owner of

ten or so folks and i am here willingly and actively participate. i have attended everything you ever ask me to attend. i've made every emp

i do appreciate and want to know for the record that, yes, from the gift you have come in and said tonight on believe i did. thank you for your indulgence. >> and thank you. let me preface my question by indicating that when this program was initiated in market system and capitalism with his concern for the inner city. at that time of the democrats to

control the congress, its share was so disgusted with the program because there would have been hearings and all the major cities showing terrible abuse. they went to the media and said we have no evidence that the program was like it was when those hearings were held throughout the united states, big companies had up wholesale abuse of the notion, but obviously -- so i do think the program must have improved or as we would have heard more about that by this time. but i can say the same for what i'm hearing today. i have to tell you, this hits a bit close to home. you, of course, do not live in

d.c. that is allowed. you're from a wealthy virginia suburb. that is allowed. you rent a tiny office, and then you recruit students from catholic university to do the work after you receive the contract. why didn't you go toward seven and eight which, of course, is the part of the city, if you are not going to do it in your own zone, which is a part of the city where employment is high, classically a part of the city where you could have found people to do the work and the notion embodied that people who live in disadvantaged areas would have investment in the area and could get employment,

whereas they could not before. why did you go to seven and eight? >> man, i don't know the words very well and apologized. i'm not -- >> you know it well enough to get a catholic university. >> and just to state, the college employees that we hired were hired before the awards. we put together to initiatives. >> whether there were hired before or after, the purpose is to hire disadvantaged people. were these catholic university students disadvantaged people? >> residents of the zone that we employed. >> you say under your testimony all of our actions were taken in consultation with the sba, and we never sought to deceive the government. do you believe that hiring college students to go to an expensive private university is

in keeping with the goals of this program? >> yes, ma'am. >> do you believe that hiring students who go to a private university, an expensive one at that, is in keeping with the goals of the program? >> thank you representative. the answer to your question is this. the program, as you said, is designed to spur investment in an economic development and place based -- >> to you believe that the hiring of students at a private university meets the goals of the program? >> we have seen many entities throughout time the hire students, many students who take on great debt in order to better themselves and their family. >> hired a student except until

recently -- no employees except students from the sound and then we learn in may he did in fact hire someone who was not a catholic university student. i'm trying to i'm very what those zone is about with the actions that we're taking here, and i want to know whether you believe can weather the s.p.a. believes this is in keeping with the goals of the program. >> so long as they are residents of the community. >> so as far as you know people are going and find people who are by definition advantage to and maybe hiring college students all over the united states. you don't even know that these catholic university students or residents of the district of columbia. while they live here, they are residents in the and leaving a dormitory. but you don't even know that

they are residents of the city or that they meet the notions of disadvantaged embodied in the hub zone itself. >> will we know is what they certify which is that they're residents and they're planning to live -- >> i'm going to have to ask whether not you would be willing ask hub zone recipients whether they hire college students so that we will know how widespread this practices. >> let me say this. we agree with you completely. the purpose of the program is not to focus upon college students but to focus upon employment. >> that isn't the practice, not only of braulo castillo, but many like him across the united states. >> i consider the practice

occurs in various places in various times. i do not have the data of exactly how many employees. >> i would very much appreciate your seeing if the date is available. a simple questionnaire, how many of your employees are college students are going to help us to make sure that the chairman, we wanted to have immediate reforms . there may be no sense until this case cannot that that could amount to an abuse. i am not against the college students. i'm saying, it is a systematic practice, you can see what the effect would be if the purpose was to make sure that disadvantaged people in the neighborhood were employed. so lastly you submit within 30 days whenever you can find on that. and one more question, if i may,

you indicated something about most of the money went to the parent company or to the large company. you made in million dollars, your company may million dollars what is the value of your company? >> last year we reported $8 million in sales and lost $140,000 based upon the sale. >> you just testified that 49 million, your company and amelya that. >> yes, ma'am. in gross profit, not net profit. >> i submit for $8 million, $1 million from one contract is very lucrative or, as you sit in one of your emil's to your wife. thank you. >> thank you. i might note for the record thay

years, if i chose to pay myself the salary i might make half a million dollars. if i so choose to pay myself have to million dollars, might make no money. so was he and his wife as principal employees to my want to be cleared that the balance sheet in the income statement by someone not the same as what is a fortune 500 company interpretation. >> clearly without these contracts it will be less. with that we get to the gentleman from ohio. >> you have been a the address 29 years. you knew the debt the commissioner. how many other? >> to. >> anyone between the deputy commissioner and the commissioner? >> no. >> you're right near the top. >> yes. >> one monsoonal inspector general gave the committee information that he inform the irs on may 30th 2012 that

targeting of conservative political groups was taking place. if we can put that up on the screen this is from the time line he gave this committee. he says in that meeting these terms are used. there were three people in that committee or in that meeting when a lawyer with the irs. now, you testified a month ago in this committee that was the first time he knew targeting was taking place. was that the first time you nobody? >> that was the first time i was aware of the situation. >> mr. miller, we have also been informed that there was an internal investigation launched by mr. miller in march of 2012. they do know about that? >> nasser. >> the result of that was mr. miller knew about was going on may 3rd 2012. did you know the results? >> no.

>> the earliest you knew was the same time that he testified in what you're testifying today, may 30th of last year. and you're familiar with the fact that mr. schulman testified in front of the ways and means committee in march of last year where he said this, can you give us assurances that the irs is not targeting political groups. i can give you a assurances. we apply ourselves on being nonpolitical, non-partisan organizations. he gave assurances. usually when you give assurance there is some basis. were you part of the basis that mr. shulman gave the ways and means committee in march of 2012? >> no. >> she did have any conversations before you went and testified? >> no. >> in the meeting that took place on may 30th, the meeting that is highlighted there, when the tarrying was taking place, was the reaction? was it we have to do something?

>> if i might, the treasury inspector general comes in once a month to meet with -- >> get to the chase. we will was the reaction? you find out the starting six months before presidential alexian. we will was the reaction? >> reporting the information that they were looking into the audit and then at that point in time they completed their investigation. >> us now what they told you. tea party patriot 912, identifying turns to put groups on the list to whenever given the tax-exempt status. in some cases there been trying to get it for three years. you learned at may 30, 2012 and your reaction was louis is let it keep going.

>> no. >> earlier you said it would be helpful if this committee would share information with us in the address about the issue in front of the committee today. it would have been helpful if once you get that information you share it with this committee. we had the committee had asked for the other in the first place. it would like to announce six months before an election the targeting was going on. >> search -- >> did you tell him, this is important information. we just now learned this is going on. ♪ of you may want to share that with the oversight committee? >> no. that was not my responsibility. i have responsibility at internal revenue service. >> but the point is you were in the meeting. the other two guys are gone. you're the highest-ranking official at the irs in that

meeting. you knew about a year ago. did you think it was incumbent upon you to set the record straight? your boss had just testified two months earlier and told congress nothing was going on and finds out two months later it is. you're the highest-ranking official and you didn't think it was appropriate to tell congress what was taking place? >> the organization does not report to me. >> why did you correct the record. why didn't you come to this committee and say, you know what, did you tell him he should correct the record? >> no, i did not. >> have you been disciplined for not correcting the record? >> no. it is not in my purview. >> you are deputy commissioner. you're in the meeting. >> he told us in his routine monthly meeting that they were doing an investigation. >> we'll understand that.

all i'm asking is the mother has to be some reason why you did feel like any obligation. the inspector general told the irs was going on. did not feel it incumbent to tell the committee. >> we had to deputy commissioners that had very clearly delineated -- >> the chairman's time has expired. this year and we may finish. >> the internal revenue service, to deputy commissioners with very clearly delineated responses i did not have responsibility for the service enforcement program. >> where were you in the meeting? why did they think it's important? >> they come in every month and brief on all their investigation

. >> well they have expired, i am sure will get back to this. >> thirty additional seconds. >> i don't mind. >> can't even get our hands around. >> the gentleman may have 30 additional seconds. >> in that meeting did you discuss -- >> what you're saying is mr. miller had -- that was his area of jurisdiction. >> that's correct. >> did you tell him, you should come forward until congress was going on? >> no. at this meeting -- >> was this discussed? >> if i could please allow the meeting -- they come in once a month to the internal revenue service to brief the commissioner and the two deputies about their audit, there open audit. on any given meeting that they can make, they could be talking.

there are lots of oversight and investigations that happened at the internal revenue service. those meetings are typically coming in and saying, we opened an investigation on x program. reopen the investigation on another program. if it is an issue that is under my jurisdiction, like procurement, the irs budgets, are realistic portfolio, then i am the responsible party. but what i'm trying to convey to you is i do not have oversight responsibility for the program. >> thank you. >> thank you, mr. chairman. this hearing is very troubling because this case really shows how things can go wrong. i want to support our -- want these to be successful, but i am absolutely appalled by the it

manages that have been taken. i know you cannot discuss the case because you would need his permission. that's why you cannot answer the question earlier. my understandi ao is that the bba specifically is bound by legislation that says a certain condition has a certain disability rating. it justice. >> that's correct. >> it seems like there is an opportunity here further legislative fixes to the system. is it true that any rating, even if it's just 5 percent would qualify someone for a service connected disability, service connected disability and business? >> so long as they qualify under the rules for service connected disability, that is adequate for the self certification. >> thank you. >> thank you for being here today. >> you're welcome.

>> does your left foot heard? >> yes. >> my feet hurt too. in fact, the balls of my feet burn continuously in the field is in there being hammered into my right heel. i c understand pain and suffering and how service connection can actually cause long-term unremitting, unyielding, unstoppable pain. i'm sorry that twisting your ankle in high-school has now come back to her you. such a painful way. it is also opportune feeding gain the status for your business as you compete for contracts. i also understand why someone -- something can take years to manifest from when you heard. in fact i have a dear friend who sprayed agent orange out of his humvee in vietnam and it took 40 years for the leukemia to actually manifest itself and he died six months later. i can see how military service,

while at the time you seem very healthy, could 40 years later results in devastating injury. can you tell me if you hurt your left foot again during a football career subsequently to testing in and high school? >> i don't understand. >> prep school. >> before college. prep school. did you enter your left foot again after prep school? >> i'm not sure i understand the question. >> he played football in college. >> yes. >> did you enjoy that subsequently? >> not to my recommend to the recollection. >> it was inaccurate when it was.

>> i don't feel that it is inaccurate. would you like me to address that? >> go ahead. >> one of my doctors that submitted letters. one doctor from san diego has also treat me for the first injury that has suffered on active duty. a broken foot injury. finally when i moved to virginia i went to a doctor and a continued tired. he established that. ironically also stationed -- >> i had to cut you off because of running at a time. >> let me finish. in talking to dr. wilson who was a disabled veteran he was the

one that talk to me. this may be something i was connected. >> i have to cut you off. i'm talking. i'm up here. to you feel that the 30 percent rating you have for the stars and pain is accurate the decision is accurate in your case. >> yes, i do. >> you know, my right arm was essentially blown off and reattached. over a dozen surgery's command in fact we doubt we would lose my arm, and i still in danger. i can feel it. >> in your letter to a government official i think it's

the sba to my attention, you said my family and i have made considerable sacrifices for our country. my service connected disability should serve as the testimony to that end. i can't play with my kids because i can't walk without pain. i take twice daily pain medication so i can work a normal day's work. these are crosses that i bear due to my service to our country, and i would do it again to protect this great country. i'm so glad if you would be willing to play ball and prep school again. shame on you. you may not have broken any law, were not sure yet. you did misrepresent, but you certainly broke the trust of this great nation. you broke the trust of veterans. veterans are waiting in average of 237 days for an initial disability rating and it is because people like you who are gaming the system are adding to

that backlog so that young men and women who are suffering from post-traumatic stress with missing limbs cannot get the compensation and help that they need. i'm sure you played through the pain of that put through college. let me tell you something, recovered with a and man, i navy corpsman, while he was running into an ambush with his marine search had his leg knocked off within our pg. he put a tourniquet on himself and crawled forward. he is to play through the pain. you did not. deticked advantage of our system describe your status today that other companies are using the special status is as competitive weapons against you. you who never picked up a weapon in defense of this great nation very cynically tick advantage of the system and broke the fate of this nation in the men and women who lie in hospitals right now at walter reed and bethesda,

brooke army medical center. you broke the faith with them command of this nation stops funding veterans' health care and calls into question why veterans deserve their benefits, it is because cases like you have poisoned the public opinion on these programs. i hope to you think twice about the example you're setting for your children. i'll be think twice about what you're doing to the nation's veterans who are willing to die to protect this nation, twisting your ankle in prep school is not defending or serving this nation you pin very intelligent. i yield back. >> the time was well spent. i cannot add on to that except to make sure that the record is clear some surrender of. he said there were broken in your testimony just now. my understanding from staff is that the x-rays taken at the time of year injury did not show a break.

additionally i want to make this clear for the record, and you can clear the record up if we understand it. in your application you claim that your twisted ankle came from football. however, in your transcribed interview before this committee said he slipped on a rock in orienteering. for the record which one is the truth? >> i believe that dr. wilson submitted that i was hurt playing football, that i told him that. so when meeting with the committee i told them in preparation for meeting with them i notice that the date of injury noted on my -- from patterson hospital with november 19th which was after football season. my response was that it could not have happened during football. the letter that was submitted stated that he had said that i

told him, and i think i told mr. davis that i would check. i went back and asked him with his recollection of a conversation we had in 2005 that led him to write the letter in support of deasy application which was to be submitted by doctors who treated me for my injury. he said to his best recollection , i told them i was replying football. he submitted that. the dates did not lineup. i did suffer a subsequent injury i believe that what he said is based on the injury suffered it was partly a relapse or cost and aggravation of the injury. so you have three in there. to you have others? adelle remember all three. >> viejo, football, orientation, and whether it was a break. you said your testimony just a few minutes ago that it was broken.

>> yes. so first and foremost, your service to this great country is well known. so i didn't set by 30 percent disability or your 20 percent disability. >> your taking advantage of it and went after that disability rating for the benefit of your company because, as you said, other companies are using the statices of a -- as a competitive weapon. he said that today. >> i said that time that they're using the protest process of the procurement, not my disability. i apologize if i and all stated that there were using my disability as a competitive weapon. i meant that there were protesting as competitive weapons against our country. thank you for allowing me to clear that up. again, i don't set the rating. it was in keeping these said

that i may be able to qualify. >> you may decision to apply for disability rating for a twisted ankle from either football. you haven't even answered the chairman's question. you were there. did you trust your ankle or twisted play football? tuna remember? >> to answer your question, it was not a sprained ankle but a broken foot. i believe that the x-ray technician wrote that there was -- i'm not a doctor. it was in essence x-ray. they showed a sufficient change in the malformation. seven speaking with the doctor said, can you really simplify that? that's we told me. >> i think the original 80, and i would trust that the viejo can take note of testimony here today and reopen the case to at least it to an accurate record

and then an accurate determination. we now go to a medical doctor from tennessee. >> thank you. and as a former physician and someone who had the privilege of creating many of our veterans to my do think that one thing that is very important is a good history. where is your injury occur? >> the initial injury, fall 1984. the second injury, november november 19th 1984. >> in 1984 out of the first injury occur and will read doing? >> i believe i was an e to in this to soldier. >> in prep school? had the injury happened? >> i believe the initial injury happened playing football. >> u.n. gun next and that's when it to do was broken. >> no. the initial injury was not.

i was treated by trainers. >> home was the second injury? >> november 19th 1984. >> how many months apart? >> a month apart. >> you have a second injury and were playing football at that time. >> no. i was third in the field. >> you get an extra at that time. >> yes. >> and that is when it that was broken. >> yes. >> it he'll then six to eight weeks. you were put in a cast, on crutches. >> on crutches. well, orthotics. >> walking on it again. when did you play football again? next year? how many years did you play football? what about your -- did you play golf, any other sport? >> i've played golf very poorly. and played some softball. >> said he still play golf? >> no. >> okay. when is the last time you participate in sports? >> a couple of weeks ago i went

out with some buddies. >> so you can still get around on it okay despite having a 30 percent disability? >> yes. ahead of use in the navicular area. >> so 27 years later you decided that this must of been from the original injury? that's what the doctors decided? >> no. after suffering for 20 plus years i went and saw a doctor. he established a broken foot and did the fusion, the three fusion . fusion surgery. >> i'm sure that doesn't make you feel much better, but thank you for updating as a ministry. he invoked his fifth amendment rights against incrimination and did not testify. the deputy commissioner of the irs, is it your expectation an irs employee will appear of for the committee to testify about

official action taken within the scope of his duties? >> we expect all irs employees to cooperate with members of congress. >> but he didn't. >> it did not. >> ms. lynyrd did not. >> each of these individuals said -- wind up their constitutional rights. >> you been with this agency 29 years. as the irs taking any disciplinary action? >> when i became aware from the treasury inspector general inspective of investigation has hard evidence that they have found regarding inappropriate testing, directed the procurement organization, his superiors to reassign him from the management position.

>> you agree he would be uniquely qualified? >> yes. >> of the fact that the end of his fifth amendment is his right. the fact that lowe's letter did and the american people want answers. we have targeting of conservatives, excess of spending, situations like this. i understand you want to be proud of you work for and should be, but how will we get justice? de think the need to bring people to justice to make your in on these meetings. they ask you what the initial reaction was a nobody has given us a reaction. do you agree that targeting conservative groups is wrong? >> search -- >> to you agree is wrong? can someone in the irs said this was wrong? >> i think the information that was released by or acting commissioner shows that the lists were ipriately used

acro mulple criteria. yes. that criteria was incorrect. >> the irs crew up. someone needs to be held accountable. who is in charge of appointing the commissioner? >> that's a presidential appointment. >> okay. someone needs to be held responsible. >> all of us have to be responsible for the administration of our agency. >> the american people will be very relieved when they get this news of who might be held accountable. see you have any ideas? >> i think the investigation underway is exactly what this is intended to do. our acting commissioner stated numerous times that we all want to get to the truth. >> the american people want to stick it to the truth. thank you for being here and openness in the process. i yield back. >> the gentleman ask you, did

you think it was wrong to target conservative groups. he said it was incorrect. can you answer vigilance question kamal was it wrong? >> make sure that everyone understand, the meeting that i was in when russell of georgia and his team came in to share their routine. basically said we are initiating an audit. >> that's not the question. the doctor asked you a fairly straightforward question. you are now aware that these were used to target and delayed for up to three years in a legitimate answer to people's applications based upon their ideology. the you think that was wrong? >> what i'm trying to tell you is, that's not what i was told in that mting.

>> of not asking about the meeting but what is now known. >> so when they issued a final report, in april, early may of this year, yes, i think all of that a troubled. >> i just asked him about writer ron, and that's what the doctor was asking about, not was incorrect, but this is virtually a simple question for almost every citizen to answer. was it right or wrong to do what you now know from the ig report, was it right or wrong? >> here is what i know based on what was told -- >> i'm not going to get an answer and i don't have any time. i think your next. >> it began. thank you very much. i think all of the witnesses. i also want to thank you and the

ranking member for honing this -- holding this hearing. i think we learned a great deal or we have for some of us reinforcements of thinking and thoughts, especially of want to relieve myself to the question of the ranking member and that a delegate more who is questioning revealed that so often in communities their designated to benefit from program activity, that there are ways to manipulate, scheme and get around to the point where the designation means absolutely nothing to the community or neighborhood that is supposed to benefit. and for those who have helped create hubs on this, advocates,

they look for the benefit. did not see much benefit from this particular business transaction. so let me ask you that braulo castillo erroneously characterized the individuals as contractors rather than employees in order to maintain the 35% eligibility requirements

for the poor ran. how would you classify someone as a contractor rather than an employee? >> if i understand your question, representative, when the facts came to our attention that the people who were running the company essentially for a managerial charge of the company were listed as independent contractors rather than as employees, we look to the substance rather than the form of whether or not they're actually employees of the company and were able to determine that under a totality test that, in fact, they were for all meaningful purposes employees of the company and thus the test was not met. >> let me read from the sba

certification letter. fbi is telling the government two different stories. to the internal revenue service, the individual is a valued and key member of the management team and its proposed program manager and to the sba she is merely an independent contractor in the espy a few, the management team and its program manager are not rolls that are normally subcontracted out to third parties. let me ask you, why is it important to prick german officials that they know how to the proposed program manager is for a particular contract? >> sir, from the folks in our

procurement organization, from what they tell me, as we are interacting on contracts like the one we're talking about today, the project manager is indispensable in communicating with the internal revenue service business owners to make sure whenever service a product we are contacting for is being delivered appropriately. that is very important. >> mr. braulo castillo -- and i agree with you that you did not make the rules. you did not write the regulations. he did not pass the bills, so you did not create the opportunities that existed for you to try and do business under these arrangements. let me ask, how do you explain telling the internal revenue service that someone will be the

key program manager for the contract and then telling a small business and ministration that that person is an independent contractor? >> so, the person is an independent contractor and that she works in support of several companies. i think she supported our company at that time and was at 1099 employee. the program manager, why i understand it is important, does not necessarily make that person an employee, and i will tell you, being in the consulting field, program manager can be contacted out and is often contract it out. ..

open other jobs through other companies. and the dis-- distinct we made the other person owned a company and supported five other companies, and the other one didn't work for us. she supported us during the maternity leave. she did it as a favor to us. >> my time is expired. thank you very much. nevertheless, you described who different ways when you were dealing with the procurement opportunity. thank you, mr. chairman. i yield back. >> thank you. the chair now recognizes the gentleman from south carolina. >> thank you, mr. chairman. i also want to thank my friend

from north carolina for yielding me. mr. chairman, i want to thank our colleague from illinois for her service to our country. her moral standing to discuss service and sacrifice is unimpeachable. i want to publicly thank you again for your service to our country. miss tucker more people have invoked -- than my former job. i was a prosecutor. that's saying a lot. and two of them are current government employees. and just so there's no misunderstanding, they are invoking their fifth amendment privilege in connection with with their official duty. we're not discussing bank robbery or narcotics trafficking. we are discussing their official duties. and they feel the need to invoke their fifth amendment privilege. i want to ask you to do something for me. okay. have you seen the text from

mr. roseman? >> yesterday when the committee released the report, yes. >> okay. so you have seen these despicable homophobic slurs? >> yes, sir, i saw the information in the committee report. >> here is what i'm going to ask you to do. for me and, frankly, for our fellow citizens, before the close of business today, if you can, issue a statement on behalf of the irs as to why he is still employed and still drawing a paycheck. if you'd seen the text i have seen, i would like an explanation as how to you keep your job if you say things he said in your official capacity. can you do that? can you explain to us how you can keep your job and your paycheck despite these homophobic slurs? >> sir, if i might. as i said in my opening statement, based on the

information in the committee report yesterday, i am sickened -- >> i appreciate that -- >> -- not only as an irs official. ingly preer appreciate that. >> my question was a little more specific. can you issue a statement by 5:today as to how someone who used this ealing wage in the official capacity as a government employee is still employed and drawing a paycheck. can you explain to us by close of business today? >> sir, if i might. we are having discussions at internal revenue service. >> how long do you anticipate the discussions will last? i just read the text this morning, and i've already reached my conclusion. how long do you think it's going take you all? >> we are having discussions with our general counsel --

>> how about close of business tomorrow? >> sir, we're going our very best to follow due process but candidly to make sure we do it appropriately. because i think the committee is aware of the federal personnel -- rules. >> if it doesn't violate them, miss tucker, we need to change them. >> yes, sir, we are doing everything can to make sure befollow the proper procedure. >> i will be anxiously awaiting an explanation how you can say what this person said if your official capacity, and keep your job and paycheck. i will anxiously await that explanation. mr. castillo, why did mr. roseman invoke his fifth amendment privilege? >> i have no idea, sir. >> you don't know? what conduct he could be worried about? >> i think he spoke about one of them. no , sir. i don't know why he did. i wish he was here to speak about him. >> we do too, mr. cans it is --

castillo. did you discuss it with him before today? >> no , sir, i did not. >> when is the last time you talked to him. >> before february 20th. >> do you know what criminal exemployee sure she's concerned about? no , sir, i don't. >> you don't have any idea. >> no , sir. >> did he ever solicit gifts 0 from you. it. >> did you offer gifts to him. >> humor me and answer it again. >> so we went a ball game around the 2005, time fram when i work at government acquisition. he paid for it. i gave him a receipt. >> as he discussed employment with you post irs? >> no , sir, he has not. >> will you describe the nature of your relationship with mr. roseman to us? >> i would say it's centered on my doing business with irs and his -- for ten years or so. >> can d you discuss contracts

you were competing for or interested in with mr. roseman prior to the issuing of those contracts of the awarding of those contracts? >> not to my -- i'm not sure i understand the questioning. >> i'm trying to figure out whether or not you -- if you were seeking work other people were also seeking. >> no , sir, i'm not aware i have an unfair advantage in any of them. >> how about any advantage unfair or fair. did his relationship with you give you an advantage? >> no , sir. >> you've never discussed future employment with him? >> no , sir. >> well, this is my last question, because my time is run out. mr. castillo, have you read the text from mr. roseman? >> sir, i provided them to the committee. i have read them. >> you still say he's your

friend? >> so, to be clear -- >> i want you to be clear. i just read them. i want you to be clear. you read them. you know what is in them. the home foppic slurs and his official capacity. you still friends? >> i'm deeply offended. as you aware they were targeted toward me. >> i am. >> i'm offended. if you can appreciate that he's the customer, and it's not job to go around correcting what the customer does or doesn't say. and -- >> do you think it's appropriate for a government employee to say those things about someone? >> no , sir. >> in their official capacity. >> no , sir. how long would it take you to get rid of an employee. >> i think it's well noted so. employees we have terminated -- it would take me -- >> for a lot less. >> would not take me until 5:00. >> you did it quick for for a lot less. >> mr. go i did, --

gowdy, if i might. my folks here in the room believe the specific text messages you are referring to, we actually have not seen yet at irs. >> would you like to walk them down to you? >> i would like at some point to receive those. let me be clear, when i said that i was deeply disturbed, that was based even on the myth the text messages that were already in the report. >> well, here, let me make sure you get them before you leave. if you thought you were deeply disturbed, you may u reach another whole level of disturb ya. >> thank you, sir. i appreciate that. >> thank you. the chair now recognizes the gentlewoman from illinois, mrs. kelly. >> thank you, mr. chairman. this committee serves two purposes oversight and reform. and i would like to get to reform the agencies are looking at. we have seen how a contract has been able to game the system to

get an advantage on his competitors for millions millions in government contracts. i want to know how we are going prevent it from happening in the future. is the sba taking any remedial step in light of the findings in this case? >> thank you, representative kelly. let me say that that the agency did take an immediate step when it found out there was a problem in december and january at the end of last year and the beginning of this year which was to discertify the firm at dually looking to the fact and getting the correct fact. in term of moving forward, the agency is always looking for opportunities to make the program more effective and to identify ways to work closely with our colleagues at va and gsa to align and coordinate our different rules about procurement so they work in the same direction. so we have proposed rules under the jobs act that are in process now as we speak. that seem to make issues

involving use of the hub zone program clearer, more straightforward, and which will improve our opportunity for straightforward oversight. >> you read the desertification letter already, is sba considering app candidate -- applicants to -- who work on behalf of the company such as contractor? >> yes. i believe the change has already been instituted. >> okay. great. as committee staff interviewed isr procurement officials. they identify those personnel additional training at procurement ethics as well as specific training about the type of relationship that are our procurement officials are prohibited, excuse me, from having with contractors. miss tucker, can you describe the steps they are taking? >> yes, ma'am, we have a whole host of actions underway

including an annual ethics training that will be providing to apll of ocurement employees. in addition to what they already have that will be delivered by our chief counsel organization. and in fact, we're doing an all-employee meeting today with our work force to reemphasize that the positions we hold, ethicses is the out most importance. and so i can assure you and give you personal assurance that our training programs will be significantly enhanced in the dais and weeks ahead. >> is there any other remedial action that you are taking that you would like to share? >> you know, the findings of regarding, what i believe, totally inappropriate relationship between one of our procurement employees and

mr. castillo, while i -- i believe at my core that the men and women of our procurement organization are operating with the highest ethics and integrity every day. i know, one bad actor can cast disparity on our organization. and so as a result we are doing a stop to bottom review of the entire procurement organization, reassuring ourselves that we are following proper policy and procedures. i asked the treasury department procurement executives, they do routine reviews at the irs. i asked them to come in. i also launched an independent review, and in addition, i think, you know, the focus that we are going to be putting on, you know, more routine briefing we do a quarterly performance review with the procurement

organization, i believe all of our existing internal control -- we need double down on to reassure ourselves that this type of behavior is not prief lent. i have no reason to believe, ma'am, it exists beyond what the unfortunate situation. >> all right. thank you. how about -- anything to add? >> we're currently continuing our review of the particular case to make sure all the proper rule and regulations were followed in addition we are taking look at the internal management controls to see if they need to be inventorien in any particular area in light of some of the questions that came out of the committee. >> thank you, ma'am. in my particular area of expertise, veteran's benefits. i don't have a lot of the information about the sb -- small business. i will be glad to take any questionses from the record and provide them to you. >> thank you. thank you. i hope we continue to look

another the issue and make improvement to gain the publics' trust back. thank you, mr. chairman. >> thank you. mr. meadows. >> thank you, mr. chairman. miss tucker, some of of the testimony you have given recently is troubling. it's a direct conflict with testimony we neared this very room for mr. george. and so with that, to make sure that we have a continue continuity. i'm going yield my time back to mr. jordan. i yield to the gentleman from oh. >> i thank the gentleman. you are number two at the revenue service. you learned on may 30 that political targeting of conservative groups are taking place. the number one at thers irs testified in front of congress just to the opposite. you told me in the first round of questioning because it doesn't fall around your jurisdiction you didn't feel obligated to set the record straight? >> sir -- >> how does that encourage whistle blowers to come forward

when you are the number two and you don't come forward and set the record straight. >> sir, if i might. maybe i'm not making myself clear. the meeting i was in, what mr. george told to the best of my recollection, in the meeting was that his team was opening an audit on the tg organizations, and that part of that audit is that they were looking at the bow low list. to the best of my recollection, sir, until mr. george issued the report in april, where he revealed that inappropriate targeting had appeared to have taken place based on the bolo list, sir, that was the first time that i actually had seen the result of mr. george's investigation. >> well, football i could, the

gentle -- cut me off if you need to, congressman. this is from the hearing -- the chairman asked inspector general may 30th, ig function that the miller and tucker specifically the criteria targeting tea party patriot and other words were used to reviewing application for brief. that was your note. mr. george response. yes. that is correct. so it was very specific. you were briefed on that day. yet, you didn't feel compelled to do anything. >> mr. george was briefing on the start to, to my recollection of 77 their audit. obviously as he talked about they were looking at these words being used, yes. >> will the gentleman db. >> i thank the gentleman. >> miss tucker, that is in direct conflict with what mr. george said sitting on this end right here. what he said, the may 30th

meeting, he went over preliminary results of the investigation they've had, and let you, mr. shewelman, and mr. miller know it was not the start of the audit. it was preliminary results where targeting actually happened. you don't recall that? >> sir -- >> i'm finding a lot of members of the irs have very great detail on recalling things at other times. and other they lack the memory. you don't recall that he said that? >> sir, i recall the meeting the monthly meetings we have with mr. george, and his team -- >> there was nothing unusual about the may 30th meeting. there was nothing unusual? it was a normal routine update that he saw fit to go four days later to chief counsel and let them know about it? that was mr. george's testimony. your testimony and his are not matching up. >> sir, i'm -- i do not reck recollect --

i have to keep going back to. they cover a whole host of irs -- >> there was nothing unusual about this particular time? that may 30th meeting, there was nothing unusual about that? this was just a normal routine update a this you get every month? >> sir, obviously, when mr. george conveyed to the internal revenue service that in the course of their examination, or their audit they looking in to -- >> it was preliminary results, miss tucker. not looking in to. it was preliminary results. where targeting was identified. >> and sir, based on the testimony that i've seen from mr. miller, following that discussion, to the best of my recollection, was he took action to ask for an independent review. >> now, that happened actually before. let me --

because we -- you earlier on -- if the chairman woman indulges. you earlier on said that this committee needs to continue to give you information. but yet you're the one that is paid for managing this whole organization. you're the one that gets paid for it. we have oversight. and yet what we're finding out is we are having to discover and manage the process which you are getting paid for. and here we are, you said eight times let me be clear. so let me be clear that the internal investigation at the irs happened actually before may 30th. it was concluded the first part of may. it was started the day after mr. shewelman gave testimony to the ways & means committee saying -- he could give ashiewrns there was no targeting. and you started an internal investigation the very next day. so your timelines don't match up, mistucker. how do you -- how do we respond to the

american people, because all they want, the ranking member said it. they want truth, so that yet, again, they can trust. how do we respond to that? >> sir. the gentle haiti may answer. the time is expired. >> sir, i'm trying to share with you the truth from what i know and what programs i have responsibility for. irs is an organization of 100,000 people, and multiple programs. i am the deputy commissioner for operations support. i do not not have responsibility, sir, for oversight in the administration of the service and enforcement programs. >> i thank the gentlelady. we go to the gentle march from virginia, mr. connelly. >> thank you, mr. chairman. i might say to my colleagues, mr. jordan, if we are going to cite the testimony of the inspector general, i would cite the question and answer period between inspector general and

myself, which i directly asked the inspector general whether in fact progressive groups could also have been targeted in the unidentified 202 organizations that were looked at. and his answer, in light of recent facts, is at best elusive. i certainly think that if we want to cite the inspector general. we thought have him come back here under oath as the day we had him. and allow them to clarify the answer. they certainly look strange to some. >> would the gentleman yield? >> if the clock will stop. >> just if you could answer what are you asking have the ig come back? >> mr. chairman, i would ask the clock to stop. >> we'll hold the clock. >> i want to -- [inaudible conversations] >> you request what the request is? >> the request is now there is serious confusion about the answer the inspector general gave to my direct questioning. whether he knew that in fact

progressive groups, not just conservative groups, were also in the filter of the bolo. did he know that when he answered my question? because he enfevered from the an he did not. that those were all unidentified. we now now that's not true. did he know that? did he know it when he testified under oath before this committee? >> okay. we'll look at how we can do that. >> thank you. >> will the agenda lman yield? >> i'm afraid my time is running out. i'm going proceed with questioning. i thank my colleagues. during the course of the committee's investigation, it's been clear that strong castle provided inaccurate information to sba on multiple times. to the letter certifying strong castle. they provided inaccurate payroll records for two employees. they stated, quote, admitted the record provided false an

inaccurate. is that correct? >> they were inaccurate. >> yes, sir. >>. >> and the sba decision goes ton explain they confirmed the one instance and identified another the former ceo castillo. i guess that's your wife? >> yes, sir. >> said that when he discovered in the payroll record, she didn't check to see where whether there were additionaller ares in other months. with she was asked how do you know there weren't other errors she replied, i don't. is that the kind of recordkeeping you kept at your company? >> sir i don't know of her testimony. but rest assure i'm aware too that you're talking about the student worked six hourses in one day and eight hours in the

other and transcribed in the week and that a student employee had written that he worked eight hour on one day when he meant that he worked the other day. i'm aware of those. and so we have put steps in place including the person you mentioned, my wife, resigning from the company. i have taken over that. we have put steps in place to ensure that we have tighter recordkeeping around that. >> well, including assigning people on a day to data basis that logging hours and report and supervised hour. >> thank you. how can sba base certifications decision and payroll records from companies when they can't verify actual employment by their own admission? >> companies have a duty to provide accurate information to the sba because, of course, the sba needs accurate information on an ongoing basis in order to originally certify and decide if

the company is still in compliance. >> so is there sort of an honor system? we rely on them to be verify and tell the truth? >> well, we always expect folks to act in an honorable way. but the regulations require that they provide accurate information on an ongoing basis. it's a regulatory requirement. not just a trust system. >> in this case, the certification provided previously was the defense between, well, qualifying for a hub zone but also the 35% requirement; is that right? >> i'm sorry. i don't understand the question. >> the information provided by former employee, michelle castillo, meant that strong castle made the difference with the 35% resident sincerity requirement; is that correct? >> well. >> this wasn't just an error?

this was sort of -- >> this went to two issues. it went to whether the status of employees and whether or not employees were actually spending their time at the principle location as represented. >> is sba looking in to the issue in this case of fraud? >> the sergeant ba continuing to receive information and has had a number of communications with the committee and welcomes all information on the topic. and also, as we have indicated from the committee since at least march the sba has been in regular communication with our inspector general and has sharedded up of the information available to us with our ieg. it's an ongoing process of evaluating information as it becomes available. >> thank you. my time is expired. >> i thank the gentleman. we recognize the gentleman from michigan. >> thank you, mr. chairman. members of congress are elect the by the person people. we are expected to answer to our

constituents. every two years, they have the ability to fire us. the american taxpayerings do not have the ability to do this with irs officials who have repeatedly let them down. we saw this with the targeting, no tax exempt groups, the egregious waste of taxpayer dollars on conference spending and now, again, with the discovery of an improper relationship between an irs procurement official and contractor. it's not common for witnesses to assert the privilege not testify before congress. but today, again, we have an irs official who has refused to answer questions about actions he took in its official capacity. this is the second time in the last month that an irs official has refused to answer this committee's questions. how many more irs officials are going to come before this committee and refuse to answer

to the american people? as it is. we're learning the necessary facts because of these refusal to testify. this problem is not just about strong castle, and mr. roseman's refusal to testify today. this problem is bigger than strong castle. this problem is about irs mismanagement. the agency's failure to the american people, and the agency's refusal to answer for what it is done. and the american people deserve better. mr. chairman, i served in iraq and vietnam, and i am 50% disabled for neck injury i suffered in iraq. mr. castillo, -- i think congresswoman duckworth said it all for me. i'm going to ask you one simple question.

mr. castillo, i understand you have produced text messages between yourself and mr. roseman that you have access to. there are; however, text messages you have stated were lost in the iphone migration. will you agree to work with the committee and the at&t and ab attempt to recover these messages? >> yes. and i have. >> thank you. mr. chairman, i yield back. >> would the gentleman yield? >> yes. i thank you. and thank you for helping us with at&t. we'll work on that after the meeting. i want to sort of dwell just a moment on with mr. thor on the veteran's standing. in the tribed interviews, which will make available to the va, mr. castillo, has some little bit of confusion in his statement, but essentially -- i'll paraphrase that he was

aware that the doctor's view it was a football injury was inaccurate. but didn't think it was material. if we provide that transcript to you, does that empower you to review and get accurate the original filing so you can make an assessment as to whether or not the sequence of events, the injury, and the doctor's opinion would support all the m elements necessary for a 30% disability? ..

incredibly severely injured in a line of duty, whether or not the assessment was correct. and i think her view and rightfully so is, there were a lot of veterans on a long waiting list and a lot of veterans to see at 30 percent disability for what appears to be of relatively minor injury along time ago. the question that. as the only reason that in light of the testimony and the confusion that we would expect that they would reopen, reevaluate, and then make a second accurate assessment based on, if you will, reevaluating the doctor's statement which

apparently was an accurate. having said that, i served for ten years on active duty. everyone of us got something broken and bent. i'm very aware that for better or worse almost all of us have hearing loss or something. most people who served as veterans are, in fact, to at least some small extent -- and the gentleman from michigan is of fairly large extent because service connected disabled. that is the point you're making. congress is left you a little wiggle room if you're at the prep school, if something occurs and you are not in a criminal relationship, in the line of duty, in fact, that is service connected disability eligible. rihanna asking you to be right along. we do think that getting it right as to percentages is important to so many veterans who essentially say i cannot

work, but they also often find themselves far below 50%. >> as i stated, we will be glad to look it anything you have the you want us to look at. we certainly will make you aware . >> a appreciate that. we now go to the other gentleman from michigan. >> i think the chairman. just responding to one of our colleagues, certainly i think we of come to realize there was targeting in dealing with conservative and religious groups and also progressives. the differences progresses got their certifications. there were approved. the issue, the targeting of the non progressive, the conservative, religious organizations, they're still waiting for approvals. that is unconscionable.

>> to as the strong castle cert affect the contracts currently in place of the organization? >> as i mentioned earlier, the irs is in the process of separating ourselves from strong castle. >> so you plan to into the contracts? >> it's our intention to begin the proceedings to separate ourselves. yes. >> what would keep you from separating? >> i'm not aware of anything that would prohibit us. that is what our council organization are reviewing today >> we can expect there will be a separation? >> that is our intention, to separate ourselves from the relationship. >> to you plan as well to stop ordering from the 266 million ibm contracts that were awarded

december 2012? >> as i mentioned earlier, the contract in question, the one with laptops, the irs never placed an order, nor do we have any reason to do so. and our team has already begun the process to separate ourselves, the relationship on the ibm contract as well. >> will any of the dollar's obligated count toward the irs small-business goals? >> i believe my colleague from s.p.a. indicated earlier. the only time -- and this is to my understanding, that those obligations go against the goal is if dollars are ultimately awarded to the contract. so based on the decertification, i'm looking to my colleague. it is my understanding that

based upon the facts that strong castle has been decertified -- in this is just my understanding , so i will need some help, that they would not count toward a small business award. >> so ordinarily, congressman, the certification are prospective from the date of certification and no further contract actions can occur with the entity until it is certified, but contracts which have already been awarded or are being performed before and remain in effect unless there is a reason to terminate them. if an award had been made and was performed then there will -- it will be listed as a small business contract if it was before the certification? that also occurs with suspension and disbarment. ordinarily those actions are prospective. >> the treasury department recently recognize strong castle as the 2012 small business prime contractor of the year. in light of recent developments

should this award be reconsidered? just for the record? >> the recognition was given by the department of treasury. strong castle was not nominated by internal revenue service. but i believe -- this is my personal opinion because i cannot speak for treasury. i do think what has been revealed does cast doubt in my mind. >> i would hope so. i would say these hearings that continue with the type of egregious culture of moral vacuum going on, it is just another example of big government and what we can expect to go mark. when we see a government so large that it is willing to allow these type of things to happen, in fact, foster because

of friendships or otherwise. we've even seen in the recent supreme court decision. we think more about personal desires than we do about the best good for children are the best good for taxpayers or the best cared for our economy. we deal with promoting entities like this. this is a perfect example of the burst case that can go on. i see my time has expired. i think the gentleman for is time and comments. we now go to the john and from florida. >> thank you, mr. chairman. i have to tell you, the upshot of these past couple of months, the irs and i, an institution that is terminally ill, we had a mission that the agency abused his power by targeting conservative groups which effectively silenced a substantial number of americans. the irs commissioner at that time came before us two x up

responsibility for the malfeasance and said it happened on my watch, but i'm not responsible. that would not fly in virtually any other aspect of life. if a navy ship runs aground in the capitol were to say, yeah, we ran in the ground, but that's actually some -- responsibility, you would be done immediately. lois minor came in front of the committee an inductor fifth amendment right against self-incrimination. i think she waved her fifth amendment right and the committee will have something to say this week. she is placed on leave and is still with the agency. we head interesting hearing in which an irs official was questioned about lavish spending , $30,500 suites, $50,000 plus for star trek parity videos. they did not know exactly how much the video cost because they did not keep receipts for the expenses. all we got was an apology.

theras were investigating in american and they said they did not bother to keep receipts or offer an apology that probably would be the end of it. but to my knowledge we have not done any accountability with his lavish spending. we need better procedures, more training. here we are. we see a clear example of cronyism and a waste of taxpayer money but as my colleague from south carolina point out, no accountability. i appreciate when you mentioned to process, but it seems to me where is the due process for the american taxpayer? why did they have to take that back seat? why is there so little accountability in this incredibly powerful bureaucracy? it's almost as if they have all this power but some of their officials are held to a lower

standard demo we would expect in private business and even in other aspects of the government. to me that is not acceptable. if that means many to change some of the laws that govern this, i think we absolutely have to. i think this is a profound cultural arrogance and the american people are sick of it. with that, i yield back my time. >> i think we have a video that i would ask that we que la. a follow-up of some of the questioning, line of questioning that we had. if we have that. i think the chair. >> a thank the gentleman. i think the gentleman from florida. i now recognize the ranking member for closing statement. >> mr. chairman, could you pause for a moment? i'm being told -- i'm sorry.

if the remaining time can be given to mr. meadows, it's a minute 40. use it. >> on a time when the you give us come on may 209th 2012 the audit brief to the ig in advance of the irs commissioner's meeting. may 30 if ig infection has briefed the irs commissioner and the deputy commissioner on the audit. specifically criteria targeting tea party patriots and other policies issues were being used in reviewing applications for tax-exempt status. >> yes. >> what do you say?

they are targeting these groups. that's confirmation. you reach the conclusion. >> just to be clear, i did not. these things are accurate. >> i'm using is because there were delivered from your staff. on may 30th you briefed mr. shulman and two others. on june 4th you went off -- >> ms. tucker, your testimony does not agree with that testimony. who is right? >> when you ask me the earlier question, you asked me without -- was i present at the briefing that mr. george give the internal revenue service. i recall being at that briefing. >> what your testimony said, this was a normal briefing talking about not it. this was obviously results of which she said it was just talking about going -- >> sir, if i could, they come

into internal revenue service monthly. mr. george -- and we will be glad to try and produce this. mr. george priest the internal revenue service on multiple topics at each one of those meetings. to the best of my recollection his discussion of their investigation was only one of the topics that i recollect from that briefing. let me also be clear, when he communicated to the internal revenue service, to the best of my recollection about concerns with the list and that terms that he was talking about, it was then the agency's response as the investigation is underway right now to say, yes, use of those terms are inappropriate. that's why there is an investigation under way to get to the bottom. >> but you had already had an

internal investigation that indicated that what concluded on the first part of may. why would that be a surprise? >> i was not privy to any -- >> but he was. >> mr. miller is the deputy commissioner. >> my time has expired. >> with the gentleman yield. hopefully i can bring a common answer. i'm not trying to put words in your mouth, but let me try to paraphrase. the ig said there was a there there. you were in the meeting. you heard it. your testimony today seems to be primarily the regardless of that you said to yourself their is a process. it is not my job because it's not within my lane. is that a fair paraphrasing? >> the deputy commissioner structured the internal revenue service just as if there were there giving feedback on and on a or report that is about to be

issued. then the responsibility for the follow-up action, just like to report someone referenced earlier today, the purchase card audit, the brief the irs in one of these monthly meetings and said, we have done an audit. here is what our findings showed. ninety-nine and three-quarters percent of the purchase cards are correct. there are some concerns. that is my take away. high on that enmarbled. it is my job to follow up and make sure corrective actions take place. >> thank you. >> go ahead. >> i just want to clarify. want to be really clear. i've been sitting here watching you just listening. i want you to know, i believe you. i don't know what that means to you, but it means a lot to me.

>> it means a lot to me. >> the reason why i say that is as i understand it the irs, you have a top person and then you have to deputies. a think you tried to explain it to us probably ten times now. you are on one side deal in with itn all this stuff. the nuts and bolts. and the other side deals with things like -- >> like the audits, collections. >> and so just going back to what the chairman was asking, when you hear -- even when you hear this stuff, regarding tax-exempt and stuff like that, i'm just guessing -- i guess sitting there saying okay. did you know, that is not could. but i'm zeroing in on one arm

supposed to do. how many employees come under you? >> roughly 11,000. >> so it's not that you didn't care. >> no. and i am troubled if that is the impression that some on the committee are ticking away from this. to the best of my recollection. again, the irs is a very large organization. we do multiple oversight audits for the internal revenue service. they are in briefing the commissioner and the two deputies monthly, if not more often in light of recent events. they're not coming in weekly to brief on issues. based on my recollection of what was shared at that meeting, george was talking about an audit. he also was talking about concern.

it was my take away based on that meeting that the irs would then be taking appropriate action to deal with that, not that it was something that was then my responsibility to leave the room and began working with folks to take any action. and i implore you, that is not be trying to shirk responsibilities. that is me focusing on what my responsibilities are. >> thank you. >> thank you. >> does that answer your question how do you have further follow-up? >> if i could -- >> recognized. >> i think the chairman for is intelligence. the gravity of what took place here, it seemed to me everyone in a position of influence will want to come forward and set the record straight. i just want to put up one e-mail this is an e-mail from march march 9th 2012.

mr. floyd williams in response to an inquiry about the 501c4 situation. kendis, a myriad rules the latest filing in the battle. it's important to note who was copy of this e-mail. tucker was copied. ingram, marks, lois, more -- this is not your area. she had nothing to do with it. she's getting the latest in the battle about the scandal this going on. today she continues to say it it had nothing to do with her. why should copied in on nino that focused on this very issue. with that i yield back. >> the gentle lady mansart. there was a question. >> of legislative affairs function routinely copied the commissioners and deputy commissioners correspondent saw

under way. that is not an unusual situation >> why is the term battle used? >> i have no idea. >> thank you very much. >> i want to thank all of our witnesses for being here today. i must tell you, your testimony is alarming. it concerns me greatly, and i'm sure as it does other members of this committee. while i said it in a joking way, when i referred to michael jackson's song man in a mirror, i really -- and when i read your testimony and then listened to what you said, you have to look closer in the mirror. you know, i tell my kids, you're

constantly complaining that people are doing you wrong. sometimes you need to look it yourself. if you consistently find yourself in a position. the main thing that i think we need to try to straighten out -- and of glen to you all were taking the steps that you all are taking. our country -- i think we deserve a strong program. i was just telling the chairman about how much i admired his ability to do business and come from a small company and to make a successful. i want everybody to have those kinds of opportunities, to open the door. there will never get there if we

abuse programs that help them get there. and so i just hope that when you go back you will reiterate that to your people, looking at all of these procurements so that we can have that balance so that we can actually help people achieve their dreams and not be let the people that talk about my opening statement who work so hard for so long pushing, knocking it doors, trying to get to opportunity and then die before they get there. and so the dreams are locked up with them. so with that i want to thank you. i again, i think it was a good hearing. >> in closing often i hearing is about a specific action. it appears as though a great deal will come as a result of the preparation for this hearing and the report we put out.

i will work with the ranking member to turn that into a full committee report. it is essentially a staff draft at this point. we will follow what was immobile reminder today. i am going to include in all likelihood in that report, an additional series of letters, number of things that i could not help but recognize today. i think that the iris is an organization currently in crisis . i have some confidence and a lot of hope that the new commissioner, acting commissioner will be able to bring that about. i wish you well in doing that. it's important to the american people. this is not about you but in fact this hearing i believe was illustrative of some problems of our governments. i believe that our committee is

going to be sending a number of things. undoubtedly working on with this that is that in at time of limited resources we do need to define service connected disabled in a way that does not automatically trigger virtually every american is served, myself included, from qualifying. we also need to be better and more consistent on whether not -- and we can legally empowered you to be more accurate. correct that a strain, a crack, a twisted ankle 27 years later that clearly did not impair the performance of somebody going to their life, if we were dealing with workers, we would not be as generous as to turn that into a $6,000 a year for the rest of their life and other benefits. there is no question this is far

greater in the current dollars than i think the taxpayers believe for what the record appears to show. that is not to take away from the legitimacy of an application , but congress has an obligation to work with the veterans administration to get these numbers better at the same time i no you're acutely aware that we are dismayed at how long our iraqi and afghanistan veterans are waiting to get a determination. the fact is you got a little bit of a pass here today, but i must tell you, i am disturbed that the process and the numbers are such that without either regulation changing or coming to congress with a series of changes the need, we are not accurately reflecting the zones are accurately reflecting the real benefit that is boeing to the people that we want to see

get it. much of it may be legislated, but i would urge you to go back to your cabinet, secretaries, and say we'll congress some proposed changes, whether it's cost savings or benefit being more targeted. i believe this is part of what this hearing is showing. there clearly were some violations of the rules and incorrect statements made, but i think even if none of those were made we still would probably from this side of the day is on the unanimous basis of seen a travesty of what was intended verses what was allowed. we will was achieved verses what was scored. so i would hope that as you go back to they recognize that we will send at a minimum letters asking you to be part of the process of getting the reform.

the gao is our partner, and it's critical that we have your support. you're constantly bringing us some of these items. perhaps you will be and your organization on behalf of those of us in congress. it is the intention of this german to bring to the committees of jurisdictions specific recommendations for change that could narrow or prevent this from happening in the future. i want to thank you all for your testimony today. i will close with one thing. a message, i think, for the irs and is a message for the irs, the state department, and for every part of governments, this committee over my short tenure as chairman has a consistent frustration. that is, messages are received that should allow people.

often it is now within their lane, not their job, but it is still bothersome that every single american worker in the federal government doesn't say we have to get the truth out there. the world is seeing this crisis right now with a vague suggestion that somehow it is because nobody was listening. this committee is listening. we want to hear. every federal employee owes it to congress and the american taxpayer to be a whistle-blower. even if it is benign as an acting commissioner say we are not targeting in india, where in some way that there is a likelihood that they are targeting and that congress is not aware they have been misled. that was true for ten months. it was flipped -- true for a similar amount of time here. ..

it's okay to be wrong as a whistleblower and it's really wrong to keep a secret you think his wrongdoing. lastly, i would be remiss if i didn't mention every part of government has an inspector general and the igs are the first and most logical report and i hope they will always do that. with that mr. cummings we stand adjourned.