In the first of a series of columns on the lessons he has learned as Chairman of the Recovery Board, Earl E. Devaney describes how the Board’s fraud prevention program has encouraged federal investigators and agencies to work closely together.
Everybody loves a comfort zone. There’s no risk, no surprises. But sometimes, to succeed, it’s necessary to adjust your thinking and do things differently. The development of the Recovery Board’s oversight plan for the $787 billion stimulus program is a case in point.First, some background: In February 2009, the President appointed me to serve as Chairman of the Recovery Board, a job that requires a sustained commitment to transparency and accountability.
Soon after we set up shop, it became apparent to me and my 12 fellow Inspectors General on the Board that the old way of monitoring government spending-detecting fraud, then pursuing lost funds-wouldn’t be sufficient this time around.
The Recovery program was simply too big. A paradigm shift was needed–and a quick one at that–if we were to keep the taxpayers’ pockets from being picked.
So we put our heads together and decided to focus our oversight plan on preventing fraud. I should explain: In the oversight community, we visualize fraud occurring on a continuum, as opposed to a distinct moment in time. In this scenario, there are many steps between the front end of the continuum when a lawbreaker first decides to commit a crime and the back end when the fraudster has absconded with the money.
The idea, then, is to prevent the crime, or at the least, interrupt it in the earliest stages.
I am confident we have succeeded, perhaps even beyond our own expectations.
Central to our plan was creating the Recovery Operations Center. The ROC, as it’s known within the Board, was designed with fraud prevention in mind. Our skilled analysts look for early warning signs of trouble, using software to search massive amounts of data for criminal convictions, lawsuits, tax liens, bankruptcies, risky financial deals and other telltale signs of problems.
When fraud prevention is the common goal, you see remarkable teamwork between the Inspector General community and the managers of federal agencies.
Once a problem with an award is identified, analysts perform an in-depth review and forward their report to the relevant Inspector General for additional inquiry.
For example, based on our analysis, federal agencies have canceled contracts worth millions of dollars. Our analysts discovered that the recipient companies were on the federal list of debarred contractors and were therefore prohibited from receiving government funds. That information was immediately routed to the appropriate federal agencies.
Sounds like the kind of thing all government agencies should be doing to protect your tax dollars. In reality, though, the federal government normally uses analytical tools such as those employed in the ROC only in counter-terrorism and law enforcement cases. Given our successes, several agencies and IGs recently began using the ROC to see if a similar plan can be implemented within their own operations.
Of course, there is more to preventive oversight than running through data sets all day long. Many audit and investigative eyes and ears, at the local, state and federal level, are following the Recovery money.
Moreover, the Inspector General community has trained more than 130,000 people in the last two years in a concerted effort to step up oversight of the program.
The bottom line is this: Recipients of Recovery funds have submitted 261,000 award reports to the Board since October 1, 2009, detailing their spending of Recovery funds. Of that number, only 1,493 awards, or about half a percent, are under investigation.
So, what is the lesson to take away from all this?
Typically, when the goal is fraud detection, IGs rush to the table with a great deal of enthusiasm while agency managers understandably stand aside. But when fraud prevention
is the common goal, you see remarkable teamwork between the two. Prevention, it seems, is the name of the game.