that translates into fewer audits and collection cases and we estimate the government will lose at least $2 billion in revenue that otherwise would have been collected. additionally, the reductions have forced us to make cuts in taxpayer service. this is troublesome because he we can't provide the services taxpayers need to fulfill their tax obligations voluntary compliance will fall. this concludes my statements that i would be happy to take your questions. >> mr. estevez? >> thank you.

appreciate the opportunity to appear before you to discuss a couple of years of high-risk identified by gao specifically supply chain management, weapons acquisition. the department of defense has made measurable progress in addressing these areas as well as in the areas of contractor management and infrastructure. the department is dedicated to improving our supply chain and acquisition processes to ensure effective support for our warfighters. supply chain management and weapon system acquisition of complex areas that until some level of risk. we develop and field the best weapon systems in the world and our logistics capabilities are unparalleled as demonstrate in the last 13 years of war. however, due to the scale and complexity of these functions, inside the department of defense, there will be some deficiencies. therefore, we must continually strive to improve.

today that dod supply chain simultaneous existing forces in afghanistan, supporting the war on isil and completing the mission to control a ball. at the height of operation in afghanistan we provided 1.1 million gallons of fuel delivered medical supplies, construction materials and spare parts to sustain our combat power at record levels of readiness. dod manages over 5 million items valued at over $90 billion. our actions to improve inventory performance while maintaining overarching focus of reducing risk to our warfighters helped produce substantial results that have been acknowledged by gao. for example, since 2010 dod is redoubling our comprehensive inventory management improvement plan. since 2012 root reduced inventory by 14 points for billion dollars first reduction in government inventory since the '90s. we are implement a new forecast a methodology which is producing approved material availability

decrease back orders were just determined. with that said there's more work to be done on improving our supply chain performance and we remain focused on doing so. second area of high-risk i want to address this weapon system acquisition. important to recognize the weapon system acquisition process has provided the united states with the dominant military capabilities. the rise of foreign capability coupled with the ongoing combat operations global commitments in reduced budgets is jeopardizing our technological superiority. our weapons system acquisition process must deliver capability to our warfighters as effectively as possible to our program in this area that we call better buying power is focused on that goal. g. eight oh -- gao, under bpp to depart sets and enforces affordability task on all major weapons system.

we're tracking performance against established caps to ensure compliance. the caps tied to record. bbp drives active engagement. during weapons system development to ensure the requirements associated with program address the warfighter needs in a cost effective affordable way. we revise our principal opposition policy which institutionalizes bbp and the improvements resulting from the weapons system acquisition reform act including emphasis on systems engineering, cost analysis and testing. in addition to the actions already mentioned we are measuring our own performance. the first two annual report on performance provided data the department is using to increase the performance of the acquisition process and gao is also using those reports. in summary beauty will continue

to work with the gao to address the underlying root causes that are resulting in a high risk that the nation. we are and continue to be focused on removing ourselves from this list by correcting our deficiencies. for the benefit of our warfighters and the taxpayer. thank you for the opportunity and look forward to your questions. >> thank you. mr. macwilliams. >> thank you chairman chaffetz and ranking member cummings, numbers of the commuter appreciate the opportunity to appear before you to discuss the department of energy's efforts at improving our management of our capital asset projects. this is a topic of great importance. secretary moniz and our deputy secretary sherwood randall. d.o.e. manages some of the largest most complex and technically challenging projects in either the public nor the private sector due to its diverse mission. the portfolio of large projects undertaken by d.o.e. is unique not only from other projects in the public and private sectors

but also each d.o.e. project is unique from other d.o.e. projects. these projects are truly one-of-a-kind with uncommon challenges such as handling radioactive conditions or producing extremely bright x-rays for nanoscience. in light of these challenges d.o.e. has historically struggled with project in contractor management and we have been on the gao's high risk since the list inception in 1990. we have made some important progress, however, that has been recognized by gao and others. in 2009 we were removed, gao remove the office of science from high-risk list, and in 2013 gao again narrowed its d.o.e. focused to projects over $750 million in the department's office of environmental management and the national nuclear security administration.

the department remains very focused on getting off this list entirely. to meet this challenge the secretary is instituting changes to improve departmental performance on major projects. one of the first actions he took when he became secretary was to create an undersecretary for management and performance to focus specifically on improving project management and providing direct supervision of many of d.o.e.'s most challenging projects. in august 2013 the secretary also established a working group which he asked me to lead to conduct an in depth analysis of project management. this working group was comprised of d.o.e.'s seniormost project management experts. we took a coverage look at the challenges that dod faces, and the group provided opinions as to why projects either fail or succeed in the d.o.e.

environment. the working group's findings were issued in the report which was released in december and that report you can find on our website at the department of energy. the report led to several recent implications to improve project management. first we strengthen the energy systems acquisition advisory board. we will now review all projects with an estimate cost of $100 million up. it used to be willie look at seven and 50 million at the. at the board which is chaired by the deputy secretary and comprised of the seniormost departmental officials will now meet at least quarterly and will focus on projects that are deemed to be at risk of not meeting their performance baselines. second, we've established a new committee the project committee management risked. this is comprised of the senior project managers who are the same folks that wrote the report that i just referenced and that is provided risk assessment and it's nice to the department

senior leadership reviewing and analyzing projects before all critical decisions and baseline change proposals and providing peer reviews and then as consulting to projects across the department. finally, the secretary has taken a series of actions aimed at improving lines of responsibility and improving our peer review process. the department is improving accountability by ensuring that for each project the appropriate undersecretary must now designate a clear owner to its budgetary and programmatic responsibility. there must also be a clear line of responsibly that extends from the undersecretary to the project owner to the federal project director. in addition where it doesn't exist already each undersecretary is now establishing a project assessment office. the reforms and processes where institute at the we with respect to project management are critical steps to meet our

solemn responsibility to be responsible historians -- we're encouraged by the work that's been done over the last you which has been focused on affecting permanent, structural and cultural change in the way the department manages its projects. thank you. i would be pleased to answer your questions. >> thank you. members should be advised there is a vote on the floor. we have three votes. the intention is to have the next two gentlemen give their opening statement but we will not get to questions until after votes. so we anticipate that that will happen no sooner than 5:15. each of you two gentlemen have up to five minutes. please be swift and careful statement will be entered into the record. doctor. >> thank you. chairman chaffetz, ranking member cummings, and neighbors ofof the committee think of invitation to discuss the cms operations of these programs. we share this commitment to

protecting beneficiaries on taxpayer dollars and preserving these programs for generations to come. simas appreciates the work of the gao. medicare is a large and complex program serving 54 million beneficiaries and working with over 1.5 million provided we but we pay over 1 billion claims per year from these pr while the gao continues to classify med kits a high risk program, there is good news to report to the last two years saw the slowest growth in real per capita national health expenditures on record. 2014 medicare trustees report projects the trust fund which finances medicare insurance coverage will remain solvent until 2030. four years beyond what was projected just last year. but also promised improvements in the quality of care furnished a beneficiary. simas initiatives that contribute to an estimated 50,000 your patient deaths in hospitals and 1.3 million fewer hospital-acquired conditions. saving $12 million over three years. medical review studies the result in over my billion

dollars of savings and just last fiscal year. -- over $5 billion. we remain focused on preventing waste and abuse and fraud before it occurs. these issues are not merely about cost or different beneficiary held to a mrs. services, substandard care dangers prescribed and a host of other problems. since 2011 seen as has been using its fraud prevention system to apply advanced analytics on all medicare fee-for-service claims. the system incorporates beneficiary complaints made through 1-800 medicare and worked with other inputs to generate and prioritize leads for further review and investigation. cms so that takes administered action to stop problematic behaviors through the suspension of payments, medical review of claims, and removal from the program but as we reported to congress, our advanced analytic system has generated a five to one return on investment. another couple of our efforts is

to strengthen and provide our by verifying the legitimacy of new and existing medical providers through a risk based approach. we're screening those opposed the highest risk to the program using routine daily checks of life insurance criminal record scheduled and unscheduled site visits and fingerprinted. we have removed over 450,000 medicare enrollments since 2010 and importantly denied thousands of applications which means these providers never gained the ability or lose the ability to build a medicare program. these unprecedented examples of success have been positively acknowledged by gao. additionally we are engaging with the private sector a new ways to better share information and transform insights into action to the health care fraud prevention partnership is currently made up of 38 private federal and state members and continues to gain membership to the partnership has completed studies to take substantive actions and is developing additional studies based on these results.

the president's fy '16 budget includes a proposal to allow both public and private partners to support this partnership by providing funds. cms has made progress in integrating proven private sector tools in our operations including advanced analytics, prior authorization and the use of automated prepayment claims. these net hundreds of millions of dollars in savings every year. finally cms' focus on moving the medicare program away from the misaligned incentives of fee-for-service reimbursement by paying the number of tests performed instead of paying for quality and outcomes. cms is testing different payment models where providers are held accountable for the quality and cost of their care and providers have a financial senator courtney care for the patients.

as if these myself but ultimately care most about the health of patients which i am reminded of daily as i work with seamless colleagues to improve the delivery of health care services. our health care system should offer the highest quality and most appropriate care possible to ensure the well being of individuals and populations. i look forward to answering the committee's questions, and thank you for your time spent mr. lightfoot. >> thank you, mr. chairman ranking member cummings, members of the committee. appreciate the opportunity to educate discussed nasa's efforts to improve acquisition management. nasa to those missions and capabilities expand the frontiers of knowledge capability up or killed in space and on earth. by their nature of our mission our activities are high risk. at the same time recognize the critical importance of managing our projects as effective stewards of taxpayer dollars. this means managing our projects to deliver them on cost on schedule and identify risk as quickly as possible. we have made significant

improvements both in managing our projects and preparing our managers to these improvements are yielding results particularly with our small and medium class missions. we have seen a reduction in the number of projects that exceed the baselines. several projects have launched within the baselines including juno, the mars atmosphere and alltel evolution and just two weeks ago the soil moisture active and passive mission. are larger more complex projects typically involve technical come to involve the develop in a significant number of new technologies which present greater tactical risks. by david james webb space telescope which was originally confirmed under a gulf coast policies that were used and had exceeded its original baseline has benefited from our improved process. it has remained on track to meet the new cost and schedule basement we established in accordance with the new policy three years ago.

this joint conference level analysis enables nasa to estimate the probability of completing a project with a certain lifecycle cost and schedule based on on individual projects unique to the programmatic characteristics. a key benefit drives and integrate analysis to the cost, schedule and technical risk. nasa is taking steps to enhance the agencies earned value management capabilities. as well as on the knowledge we gained with each new project. and introduces the tools to assess whether our projects are on track to make their own cost. i would like to thank the gao for the hard work and develop

insights. would pressure the open dialog we've had over the last two years as we have both improved and refined our project management capabilities. as a result i think what what i think there's a lot of work to be done i'm confident we're on the right track to improve program management at nasa. thank you for the opportunity to be and i look forward to the questions. >> the committee will stand in recess. win votes conclude we will continue and we thank you again for your patience. [inaudible conversations] >> the committee will come to order. i thank you all for your patience with votes on the floor. we got delayed. actually would like to stop her recognize the gentleman from north carolina, chairman of one of our subcommittees on covert operations. the gentleman from north carolina mr. meadows, for five minutes. >> thank you, mr. chairman. thank each of you for being incredibly flexible today. really i guess the underlying

concern that i have is as we are celebrating the 25th anniversary as we got to get away to get off the high risk list it's not a very high benchmark. world if you look at the components of that it is just making a real concerted effort. and so i'm looking forward to each one of you putting together a plan to make sure that we can do that. doctor, let me come to you. ii sent you a text and want to compliment you, actually send you e-mail. want to call them what you on the fact on the weekend he responded via e-mail, which was shockingly surprisingly surprising, and i just want to say thank you. do you have the automatic reenrolled numbers that i've been requesting from cms? have they given us to? >> thanks for the question, and happy to be accessible whenever you need.

so the answer is i think we're still working on it. that is part of the agency that i don't have a direct oversight over. mitogen is that you had numerous conversations with ceo of the marketplace and that they're working on assembling those numbers. i think as you know our focus is certainly in getting the numbers out to you and the public but making sure that they are accurate when we get. >> so what you're saying is you have not seen the numbers for the automatically enrollment. you have never seen any total? >> i have not correct. >> it's my understanding that we have those numbers and we've been trying for 60 days to get it. any reason why it would take that long to verify numbers of? >> i think it's just confirming the numbers, the numbers we can stand behind, making sure they're good numbers about to be released. again, i believe that the same as our in touch with your staff and you been in touch with the -- >> we have been in touch. they have not really been in

touch from a follow-up. it's amazing to me that we can have the response time for those that get recorded messages or wait times for spanish-speaking operators, and we know that down to the second, or actually 10th of a second and yet we can get automatic re- enrollment numbers from cms. when can we expect those? >> i don't have a particular timeline. >> let me go on for the because i've got limited time. let's look at medicare. you're going from 14000 lines of code to 68000 codes in terms of medicare reimbursement, is that correct? >> are you talking that i see the? >> yes. >> so we're going to different codes of? >> yes. >> doctors and hospitals put in the wrong code will come out as an improper payment or fraud, is

that correct? >> not necessarily. >> or improper payments. >> in may to the importance of -- >> why would he go from 14,000 codes to 68,000 coats? how could that make it more efficient? >> first let me say the agency is adopting these codes that are established outside of agency processes and with the input of the provider community. in fact, it was really the provider community searching for specificity in the ability to really define exactly what they were seeing. >> so they get -- but let me ask you, i mean, i went through and look at your code. we've got code should now that one in particular says if you unexpectedly or are missing her big toe, unexpectedly missing a big toe gets echoed. there are six different codes for squirrels. at me so if a squirrel bites you, if it's the first time our second time, if it scratches you. do you not see that we've got

unbelievable lines of code that more codes will not make it more efficient? >> i -- >> there's one code for spending too much time in a freezer. i mean, it's incredibly ridiculous. and let me tell you the physicians that i talk to in the hospitals i talk to are spending millions of dollars in compliance trying to figure out your code and yet we're going to increase those by fourfold. why would you do that? >> well again i would just be careful be sadly there is a code for an orca attack as well. >> and there is spent i don't imagine in my own practice i would be using that one or many of the others spent let me ask you. is a mouse the road and? >> i assume it is. >> well, but you have a different code for a road and down the mouse. what i'm saying is its so-called did you make it so complicated that nobody -- >> to be clear, the agency's

recipient of -- just as other agencies are. >> but you're in control of that, are you not? on a limiting that your program into equity? >> there are numerous parts of the agency. we are required to implement icd 10 but i realize congress has delayed implementation of that requirement but at some point we are required to let icd 10 investment you know the codesign so for something cms is engaged in to it is designed to improve both epidemiologic understanding of administrative data to make sure administrative data reflects what's going on in the real world. clinically and providers of that extensive input into these codes that's. i don't just going to put but i believe we are as much or second of icd-10 as other agencies that are implement it across the board. >> my time has expired. i what you will about speed to recognize the ranking member for five minutes. >> and dr. agrawal, i want to

thank you for pairing today to cms has undertaken a number of new initiative to reduce fraud and improper payments in the medicare program. i'm just concerned about how they work and how effective they are and what you see the future. i'd like to ask you about the city. the aca requires increased scrutiny of providers and suppliers who historically pose a higher risk of fraud or abuse. this heightened screening process applies to providers and suppliers that are attempting to either newly enrolled in the medicare program or revalidate their participation. can you describe the different risk-based screening levels designations and the various requirements that providers and suppliers in these categories are subject to? >> sure. by provider type essential are subdivided among three risky

categories limited medium and high. and as you go up the chain of risk, more screening strategies and approaches are implement it to screen those types of providers, again whether their newly enrolling or we validated it. there are automated background checks that would be performed. they are perform for all provider types to ensure adequate licensure, lack of relevant criminal background or felony record that would keep a provider out of the program. but in addition high risk the highest risk of providers face site visits, fingerprint-based background checks. so multitude of different screening approaches for the highest risk providers and also includes providers who are attempting to reenroll after having a program integrity action taken against them in the past. the result of all of this work, to date we have revalidated over 1 million of the 1.5 billion providers and medicare.

but the talent of all this work on both newly enrolling and revalidation is that we have removed the building privileges of over 450,000 enrollment in medicare today. and i can tell you that these new enrollment requirements are also allowing as to deny more applications at the front in so providers never make it into the program because they do not qualified. >> that's what i was about to ask you. so as opposed to chasing money, you do some prevented things, is that right of? >> i think a lot of our work really solidly lands on the prevented category because it really is designed to keep folks after the program that don't belong. so if we conduct a site visit to determine your not operation provided, then you never make it into the program or if we check a criminal background record or check your licensure and to tell you that a properly licensed or you have a relevant felony conviction, did indeed we deny your enrollment application. >> let me ask you about the

demonstration program. allen to the agencies demonstration of power mobility devices complement cms is program integrity efforts because thank you for the question. one of the central challenges in the improper payment rate is that there is a disconnect between the medical record documentation that underlies a medical service or indicates what happened over the course of that medical interaction. the claim that comes into cms the bill for that interaction, what prior authorization does was allows us to ensure that medical necessity requirements and documentation requirements are being met on the front end before the service is even offered to the beneficiary. the demonstration and generally the way we've approached prior authorization is to take the risk based approach. the demonstration was implemented around power mobility devices first. we are actually we put out a

proposal that would look to expandexpand that to of the high cost supplies and and there are elements in the president's budget that looked to expand it to things like hyperbaric oxygen and scheduled ambulance transportation. but all of it is the same principle which the private sector uses everyday, evaluating the service before it is provided, determining that it is okay and then the beneficiary gets the service and the provider gets paid. >> is the beneficiary adversely affected? >> i think that's an important aspect of this. so by checking on the front end before the service is even provided that the documentation is appropriate and that medical appropriateness and necessity are there, it prevents the beneficiary of necessary potentially being on the hook for 89 decline. so the service was never provided right so that we neither the provider is on the fourth service that they provided by event are not

getting paid for in the beneficiary is not enough for having received a service that the provider is not going to get paid for. >> thank you mr. chairman. >> the gentleman yields back. now recognized mr. duncan. >> thank you, mr. chairman. mr. estevez, yesterday the hill newspaper said in an article before signing on increase pentagon spending to its highest level ever congress should insist on a serious effort to identify and address wasteful spending by the pentagon. among major federal agencies that depend on never want to submit let alone passed a full audit. another article said pentagon leaders have requested to step up production of the f-35 the beleaguered jetfighter that is proven to be a massive drain on resources with no end in sight, 7.5 billion sunk into the f-35 in fiscal year 2014 alone with a massive cost overruns and egregious acquisition failures. over the years i have read so many articles about waste at the

pentagon and i sometimes wonder if there are any fiscal conservatives at the pentagon. what do you say? how much do you have any estimate as to how much was spent on the f-35 so far? and are you concerned about this article that is in the hill today that talks about wasteful spending by the pentagon? >> thank you for the question, congressman. first, we are always concerned that any wasteful spending at the pentagon, and we have a number of processes in place to address spending in general. including look at our rov function of looking at our acquisition processes. let me address the f-35 but i don't have the total number spent today. f-35 cost per plane had gone down below our estimation since 2010. it's actually producing a pretty good airplane, and i --

>> do you have disputed f-35 is stuck on old news. >> you are the principal deputy for acquisition and do you have any rough guess as to how much we spend on the f-35 thus far? wild rough just? >> i will be happy to get the two for the record. it goes back to 2004 congressman. >> right. dr. agrawal i met last week with hospitals from east tennessee, and they told me that many hospitals in tennessee are either going up to clothes or about to go under or probably end up being sold to some big out of state corporation because of the unfairness in their medicare wage index. and they said that the system that cms has now rewards very expensive inefficient hospitals

and penalizes hospitals that held their costs down or that it continually lowered their costs. have you looked into this? i mean the difference between what hospitals are being paid, say in san francisco, in comparison to tennessee or mississippi or places like that it's just almost unbelievable. these hospitals are being paid twice as much for some, mostly the same type of work. what can you tell me about that? is the mess looking into into this or concerned about these huge discrepancies at all? >> i appreciate the question. we do have processes for hospitals and other providers who engage us in terms of wage discrepancies like that. i can tell you we have a very proactive approach to say than this value to coach we know exist and reevaluating those those codes, ensured that our coding approach and members would approach is paying for valuable

services that taxpayers expect that we all want the program to provide. so there is i think the core message is there is a process for doing that and we're happy to engage with hospitals and providers on these types of questions. >> i will take this. i don't have much time left, but years ago a hospital administered in small town in minnesota be dashed in tennessee, he said he didn't have hospitals, you don't get doctors annie duke doctors you don't get people. and there are many rural hospitals that are really struggling in this country today because of these discrepancies between what they're getting in comparison to some of the very wasteful, very inefficient big city hospitals. and i think that's something that you would need to take a look at because it's very unfair, and i can give you all kinds of statistics about that but it won't bother with you with it but it's getting to be a very series problem in my state. thank you very much, mr. chairman. >> recognized number spent on

seniority. the gentleman up next is from softer line mr. mulvaney. recognized for five minutes. >> thanks, mr. chairman. mr. koskinen, when i sat down to do the research on the gao report which is subject of today's hearing, i so got sidetracked. i want to talk about other things because 11 of the things i've founded in research was report what you think about today being reported today, voucher agency is reporting that the tax refund fraud will be $21 billion this year, up about 300% for just a couple of years ago and that number stunned me. just a curiosity i think it was forthe entire department of agriculture but you could run the treasure, the judiciary the sec and your irs with that money and still have a couple billion dollars left over. mr. estevez, just out of curiosity, you could buy you 140 f-35. i just am what we're going to

lose this year in tax refund fraud but you could run my states after one for three years on that money. that's not all the fraud occurring in the irs but it's just a tax refund fraud. that research led to research on want ask you that which is your testimony last week before the senate where senator grassley asses of questions about the impact within the irs and within your department of what the president has done on executive amnesty. you would back and forth with senator grassley and he asked you about people who are benefiting from the amnesty claiming the earned income tax credit in arrears for up to three years. duno by that testament with senator grassley? >> idea. >> i don't know if we established what that would cost. do you know what the total cost of the program would be? >> i have not. to forget not. to forgive out of nowhere the 31 billion in refund fraud came from -- 21 drinking from.

gao testified we stopped lest you about 16 billion with refund fraud and a 5 billion is her estimate went through which is still a big number and we are worried about but it isn't 21 or $31 billion that is going out of the door. with regard to the question you asked earlier to be eligible for the earned income tax credit you have to work. it's in the earned income tax credit. to apply be able to apply for a jeff abbott social security number. so if you are we have about 700,000 numbers out there by illegal immigrants who are paying taxes but they're not eligible to apply because they don't have a social security number spent by the several million will get sole custody numbers, right? >> if you were to be eligible to apply for the earned income tax credit. you will get an amount depending on your situation but if you're an individual working at applying for the individual tax cut, the maximum you can get

will depend, it's in the range of about five or six speed is $500 but let's drill down a little bit because there was some apparent lack of clarity in the interpretation of what you said in the senate. i want to clear this up. is the earned income tax credit only going to be available to illegal immigrants who file taxes previous or is it be available to all of them perished it's also scary numbers under the new program? >> it turns out there was a lack of clarity about that. if you get a social security number you can then file for this year if you are working and if you earned income in the three years before that and filed you will be eligible. if you did not file you will have to file a return and you have to father demonstrate with this information anybody else would that you earned income and, therefore, are eligible. so there's some assumption that you get the earned income tax credit auto not whether you're working or not. >> it will be a viable to everyone who was working even if

they didn't file the previous three years of? >> that is my understanding yes. >> you have no idea how much this will cost? >> i don't know how many people get social steady numbers. >> we do this all the time. get to the white house not ask you to estimate that? >> i haven't talked to the white house about this at all. >> did anyone at the white house and to consult with your office before the issued the executive order that gave rise to the executive amnesty? >> they didn't consult with me. i am not aware of any consultation. >> are you a what if we were to do what the president did by legislation that he did by executive order, the would have to go and get an estimate of exactly what we are talking about today? >> from the joint committee on taxation or cdo yes sir. >> we did the same thing. would have to know the answer to the question that the president doesn't have to know the answer before he did what it is? >> the president may know. you would encompass necessary to get the answer. he would go to omb.

>> but he didn't ask for input. did ask you about any increase in the risk of fraud speak with no. we had no conversations with white house that i'm aware. i personally have never talked to the white house about any of it. >> thank you mr. koskinen but i appreciate that. >> mr. jordan. >> i thank the chairman. i wanted to talk about the irs targeting groups and, frankly the pattern of deception and delay we've seen from this initiation. you don't have take my word for it. just yesterday in the hill front page, the fed won't release virus targeting documents but don't take my word. the editor of the hill respected mainstream journalist talk about the deception and delay. remember the whole socket at february 2012 lois lerner told this committee staff that there was no targeting going on. turned out to be a lot of course. march 23, 2012, doug shulman

been commission told the ways and means committee he could give assurances that no targeting going on, also a false statement. may 2013 that day when lois lerner went in front of a bar association here in these with a planted question unprecedented to get in front of took the wind in front of the ig and release a report that talked about the targeting by the irs of consumer groups. i quote from, remember, she talk to treasury and the white house about this from mr. cusack's article yesterday and i quote then chief of staff at treasury informed the white house about the plan to disclose the targeting quotes of the widest wouldn't be surprised by the news. think about this. planted question before the ig report comes out, she discloses that and the white house and the treasure already knew it was going on. of course, we have ms. warner talking about cincinnati was the problem, not washington. that was false. the white house says it's a phony scandal, no correction which brings me to mr. koskinen.

occur commissioner peck figure 14 flashy we subpoenaed you for all of lois lerner's e-mails. put up slide number one. just a few weeks later, march 26 in this committee room the chairman of the committee mr. chaffetz asked your question or are you going to provide all of lois lerner's e-mails? and your response was yes will do that to you remember that? >> i do remember that conversation do you have reminded me of a couple of times. >> the american people are frustrated and mad with the irs did to them regarding the first amendment free speech rights. june 13 come use another to send financing we lost lois lerner's e-mails and destroyed the hard drive has been destroyed remember that letter you sent? >> i do remember. >> ten days later he came back and we asked you some questions. i asked you specifically what date did you learn and you could get all for e-mails? number that conversation?

>> i remember that conversation. >> and your response was i learned in april. so my question to you is today will you admit that you misled this committee, this congress and more important the american people just like this one was to go just like mr. schulman was doing? will you admit you misled congress and the american people? >> absolutely not. >> you don't think he misled and? >> no. >> you told mr. chaffetz yes will give you offer enough. a few days later you learned in april, that was march. enable you learned you can't. and you wait two months to tell us that you don't think that is misleading the american people? >> i do not. we waited six weeks to tell you and we waited those times to find his been enough as we could and as speedy let me ask you this. did you send the chairman a letter that what you told on march 26 yes, we will get you all for e-mails. did use another say what i told you in march 26 isn't a true?

>> as i noted in area with its governance, i will still tell you we will give you all of lois lerner's e-mails. we gave all the e-mails we had. as i told you once before we could make of lois lerner e-mails we didn't have a. we gave you all the e-mails that we had and -- >> then you write a letter but to send financing you lost them. you destroyed them to have anything to correct the record? >> action we didn't lose them. they were lost in a period of time in 2012 and when we testified, testified in june i testified we waited six weeks what we try to provide you as much e-mails as a good and there were 20,000 -- >> put up slide for. this is the letter you sent. you said you can confirm no backup tapes existed. you confirm that you couldn't get us all for e-mails and to do nothing to correct the record when he told mr. chaffetz you were not going to give all of them. you waited two months before you

told us that you lost them. spent i waited six weeks away to provide you all the e-mails we could find. we have provided you with 24,000 e-mails from the time of her hard drive crashed and we said in the backup tapes did not exist because they had been recorded over. we at that time gave you all -- >> i have one more question. last 10 seconds if i could. have you withdrawn political edge to it that now tigta has told us that e-mails are not recoverable on the backup tapes have you withdrawn the letter that you sent to senate finance were you confirmed that those tapes were not there? on to bring this up mr. chairman, because of this committee has some experience with letters being withdrawn. in 2011, the justice department after making an active statements regarding "fast and furious" sent a letter to then chairman issa and they said this the fact comes like that during the course of this investigation that indicates a

letter fiber for the letter contains inaccuracies. because of this the turbine now formally withdraws the february 4 letter. so what i want to know mr. koskinen, when are you going to be square with the american people and withdraw false and misleading statements used into this committee? and the letter you sent to the senate finance. are you going to withdraw the letter? >> apsley not. tigta i don't have spent six months and untold amounts of money trying to extract those e-mails from those backup tapes. the idea that we could -- >> you said you could confirm they didn't exist. >> if you go through my record you'll find i said that backup tapes -- >> will you withdraw the letter? >> there is no reason no falsehoods and no reasons to withdraw the letter. i stand by that letter. >> the gentleman's time has expired. mr. walberg. >> thank you, mr. chairman. mr. koskinen monday, tuesday of

this week i did to live tunnels like my district and one tele-town hall. and that two of those events the issue that was brought up, same story that came out in the "washingtonthe"washington post" with headlines ieither as we had hundreds of ex-employees with troubled records. it basically came up from my constituents saying, you know why can we not get away with the same thing? in the article indicated that between 2010 january and september 2013 the irs retired 7000 employees. a great jobs program and we're always glad when people are employed but the question comes from my people as to why over 800 of those 7000 we hired irs employees were retired with prior substantial employment is

choose, including 11 individuals were engaged in on authorized access to taxpayer information. and that really discourages and frustrates my citizens. that these people, 11 of them who engaged in unauthorized access to taxpayer information which is a crime as i understand, were rehired. why? >> the both of those employers are temporaries or seasonals who were hired for four to six eight months a year depending on the time. they should not be rehired. >> even though they commit a crime. why were they retired? >> because the process at the point in time in 2009 and 2011 into 2012 followed as the ig said the opm rules and regulations which, in fact, would've allowed those people to be applied. we consolidate in 2012 all of us hiring issues into our personal security division, and i have made sure that if you have

violated section 12 '03 b. if you worked for the irs and violated section 12 with review will not be rehired. >> according to tigta, they said it still remains concerned because in 20 oh and 2013 i recite individuals with prior significant irs substantial to conduct and performance issues. what are you doing ashman this is such want to that spent with the ig recommended, the ig again in the report said that was all pursuedpursuant and we filed pursuant when we followed the opm rules. with the ig said is we should make sure that we make sure before we hire someone with actually reviewed all of this but and as i said he now do that we took the ig's recommendation and i've talked with our personal people since the ig started raising this issue which i think is important issue in december and to make sure that if your violated 1203 be which is willful violation, you will

not be hired. spent let me proceed further than and i hope this is a general trend. the audit identified 141 individuals that were retired that had a prior tax issue. with five and having been found by management to willfully not filed their taxes. how many of these employees are still working? >> they are seasonal employers want to know, love them don't come back the next your site about how many of those that were but i would note that the wanted 41 we take the requirement of irs employees to be tax compliant very sagely. our compliance rate is over 99%. we hold people accountable even if their mistakes or inadvertent, even if they make modest mistakes. we count that as not comply but what we're concerned about is the implosion mention that have willfully, have been found to willfully not pay the taxes. and those people are subject to termination. >> could you get us information of people were we are referring

to are still avoid? >> i will find information. the 141 if you had a minor attempt, minor mistake, those you would get cited for but those are the basis for termination. the five you mentioned that had a willful violation i will find out and get back it back to you. >> i appreciate that. what about those not the tax issue, but had substantial prior employment issues, attendance issues misrepresentation of what they were doing if they were on the job -- >> again, as i say, consolidation we have a personal security department but reviews every author before it is made to make sure we have gone over all of that. some personal activities are, you didn't show up for work for today's but others argue have a significant problem and we distinguished between those and the opm rules are very clear about that that if you just come because you have a performance issue in your file doesn't mean

you can never work again for the irs. it depends on the nature and the duration but it is important for people, even though 80% of the tigta report 80% are temporary and seasonal so they don't necessarily work for happier. it is important to make sure that we have the appropriate people working. so i take the tigta report i'm a big supporter of igs because they continue to review these issues. we take it seriously. we've implement the recommendations. we have a personal group now come if you violate 12 '03 be you don't get hired and either other conduct issues, not only are going to follow the opm rules were going to review those for a broken his work at the irs and i think it's important people to be culpable that we do take a system and the people working for the irs out to be tax compliant we're collecting your taxes. spent i appreciate that at what i would like the definition of

those that are still employed again under these 824. >> the 824 covers a lot of -- >> i thank the gentleman. time done. mr. palmer. >> thank you, mr. chairman. i want to give mr. koskinen a break year for a minute and talk to mr. like to come if that's okay -- >> i don't want you to think that's not appreciated. >> that doesn't mean i won't come back to you. mr. lightfoot, nasa has done a good job in making progress on getting off the high risk list that there's still some issues. i am actually from alabama. nasa's has a major presence in our state. there've been some issues with rebaselining cause scheduled on light and management and technical issues. can you address that on some of your projects? >> yes sir.

we have the process we go through what we review these projects are routine basis, we have while we've had some that do very well we continue to make progress on eight out of the last nine to once we go through confirmation, will the call confirmation of a project which moves it from formula to development, that's when we make a commitment for a certain cost and schedule that we're going to try to lived too. the process we have where we review those monthly competition we have one that pops up and it gives us an issue. we've had two of those. spacecraft sustained system that we have and the i set to project which are two issues with going. we are required to go back and baseline. when you rebaselining go through a process of alternatives, another way to get that particular mission accomplished can you do scope the existing mission. so that the process we go through. each one of those has lessened. those lessons, one of the things

we been working on is factoring is back in a continuing to improve our process as we go forward for the rest of those projects. >> at a prior time in my life i worked for a couple of major engineering companies, and one of the things that drives a client crazy, particular the one thing the bills is change orders. you've got some projects that i don't know if it's a result of design changes or poor design to begin with that are running some substantial overruns on change orders. could you address that? >> yes, sir. i think the waiter talk about is the ground systems project that we had. this is the first time we applied the same project management methodology that we had for spacecraft that we been flying to a ground system. one of the things that's an upgrade to our crowded network that action committees with all the satellites we have. that system is basically becomes

obsolete to what we did is we went out and tried, we knew we had a pretty large job in front of us and we tried those techniques that we been doing for spacecraft, one of kind thanks to aggressive to the we have learnt a few lessons in the process. number one, the first one is that we have to be very clear on the requirement, much to which are talking about, and understand, make sure we understand that the contractor that is the network understands those requirements as well. we've gone back and forth in terms of trying to define better the expectations we have for the contract and managing that contractor put in this particular case we've changed the entire contract management team and the team in terms of our managing it. since we've done that, we have managed to stay from an earned value perspective, we stay at the levels we expect. >> would you say this is the result of a design the project that the schedule dictated by

design or is this something where you're entering a new area and you were designing as you go? >> i think this is a case where we underestimated the type of work we needed to do to do with the obsolescence issues in terms of the software system we're putting a in place with the new equipment. >> all right. i believe that's all i had. to i would yield the balance of my time. >> now recognize the gentleman from georgia for five minutes. >> thank you, chairman, and mr. koskinen syngenta break, i thought it only appropriate to come back to you and ask you a couple of questions that were on my mind in particular. based on previous testimony, you made it clear the ability of the irs to make progress in the areas that have been outlined by the gao have been largely hindered due to reductions in

funding. and this is kind of a personal question to me because of my involvement with nonprofit organizations. and the irs has sent millions of dollars to basically rewrite the governing rules for 501(c)(4)s or what have you, different nonprofit organizations specifically potentially removing tax-exempt status if those organizations are involved in political activity. my question is multiple. it's a rather amazing personally that there would be an issue of trying to enter speech of americans. my specific question really comes down to how much money, can you tell me how much money the irs has spent on writing and the attempt to rewrite that specific section of the

501(c)(4) ruling? i know it was withdrawn but my understanding is that there is an attempt now to rewrite that. i'm curious how much money has been spent spent the only money that is being spent is the lawyers that have been working on the drafting of this and they haven't been spending full-time so it is not a large that i could try to get an estimate of how many people worked on it. work on the first version was done before i got there but if you would like to try to figure out on a rough estimate and man hours by doing time spent was a relatively small number of lawyers who who working on everybody would note that the goal is not to hinder but as i said when i started and and kind of inherited all of this, but coal is, in fact, to try to make clear what the rules are in a way that is fair to everybody all of the organizations, clear and easy to administer. right now the rule that's been a long time is to judge both the determination as whether you're eligible to be a 501(c)(4) and then whether you're performed under the statute by facts and

circumstances. so that means anybody running an organization is running the risk looking over their shoulder saying if someone could have a different view of the facts and circumstances? so my sense is that we ought not to be hindering political speech. we ought not to be changing the way people act but what we ought to have is a much ig in his recommendation said the treasury department and the irs should clear up what the standard is what about how much of what the definition is of a political activity you can engage in. and my sense is it not to be possible to have a rule that would be more clear-cut issue for people in those organizations running them to understand and fair to everyone and would not be hindering our political speech. so it's not my intention anyway in looking at that to do that. my sins and concern is that the present system has over the last several years by the ig's analysis turned out to be unworkable. everything would be in everybody's interest if they get it could be clear what the rules are without hindering people and they could run organizations

confident that someone will not come in and second-guess them on the facts and circumstances that they've been operating under. >> we certainly need clarification but i would also strongly urged a very clear understanding of the freedoms of americans, that just because so is part of a nonprofit organization they have not waived their first amendment rights, and that is a tremendous threat that the irs has in my opinion no business interfering with and that is a deep concern. concern. >> i agree with you. ..