Recovery Blog

Opening the Government’s Books

Posted in Uncategorized by on May 9, 2012

Transparency advocates would like to see the government do a better job tracking federal spending, which reached $3.6 trillion in fiscal 2011.  They may soon get their wish. In a recent vote, the House of Representatives approved a bill requiring the government to clearly show how and where taxpayers’ money is being spent.

Quite simply, say proponents of the Digital Accountability and Transparency Act of 2012, or DATA Act, the vote represents a major step forward in efforts to bring full transparency to government spending. Or, as Rep. Dennis Ross, R-FL, a strong proponent of the bill, put it during debate: “The DATA Act finally does what America wants: Opens up the books of government and lets the taxpayers see what is being spent….This common sense, bipartisan bill will bring much needed accountability and transparency to federal spending.”

The DATA Act is designed to build on the successes of the Recovery Board. Under the $840 billion Recovery program, the Board collects data from recipients of contracts, grants and loans and displays detailed spending information on its website, Proponents were quick to applaud the Board’s dedication to transparency and accountability.

“The DATA Act … will literally track those trillions of dollars in a way not done outside the Recovery Act,’’ Rep. Darrell Issa, R-CA, the driving force behind the legislation, said during the debate. “Quite frankly, we owe a debt of gratitude to the Recovery Board for showing us an effective system on which we could build.’’

Rep. Elijah E. Cummings, D-MD, the ranking member of the House Oversight and Government Reform Committee, where the legislation was born, praised the Board for its successful oversight program. Under its watchful eye, he said, “the Recovery Act had historically low levels of waste, fraud, and abuse.’’

The DATA Act would replace the Recovery Board with a new, independent five-member commission to collect and display spending information for all government agencies on a single public website. The panel members, to be appointed by the President and confirmed by the Senate, would also be responsible for ensuring that government funds are not stolen or wasted.

The fate of the DATA Act now rests with the Senate. Amendments are likely, and no one knows if the legislation will be adopted. But it is clear that the idea has a lot more supporters now than it did when Rep. Issa and Sen. Mark Warner, D-VA, first proposed the measure last year.

Michael Wood, Executive Director, Recovery Board

IG Details Lessons Learned on Energy Spending

Posted in Accountability by on May 7, 2012

The Department of Energy is a major player in the $840 billion economic stimulus program. Indeed, the Department has received more than $35 billion to support science, energy and environmental projects along with the authority to make or guarantee another $52 billion in energy-related loans. Put simply, that amount of funding makes the Energy Department one of the largest federal agency recipients of Recovery Act funds.

Given our professional responsibilities in the DOE Office of Inspector General, my colleagues and I keep a close eye on how that money is spent to ensure that the taxpayer’s interests are protected and that the funds are not wasted. It’s a big job. By last April, my office had completed nearly 80 reviews and a number of investigations that pinpointed serious problems in Energy’s Recovery programs. We discovered, for instance, that work done under Energy’s $5 billion weatherization program was often of poor quality. To cite another example, my auditors found that poor record-keeping made it difficult for DOE managers to document the decision-making process in a major loan guarantee program designed to encourage development of alternative energy sources.

What to make from all of this? What are the lessons learned? The overarching takeaway is that, if after the expenditure of such an enormous amount of taxpayer funds, the Department has not learned a great deal about the efficient and effective delivery of public services, an important opportunity has been lost. Drawing on our oversight experience, we developed a series of recommendations intended to help Department officials make better decisions. These were captured in a January 2012 special report entitled, “Lessons Learned/Best Practices during the Department of Energy’s Implementation of the American Recovery and Reinvestment Act of 2009.”

The report points out that Energy officials were required to push a lot of Recovery money out the door quite rapidly. This expansion of existing programs strained the Department’s resources and led to both notable successes and failures. Given that backdrop, we offered a number of lessons in the report that can benefit the Department. They include:

  • Implementing a rigorous system of risk management practices to ensure that program decisions are made after due diligence, that risks are continuously monitored and adjustments made as needed, and that performance metrics ensure programs meet their intended objectives.
  • Using spending plans and project baselines to manage and account for changes in financial resources and to ensure the information being reported on program and project progress is correct.
  • Ensuring that staffing levels and employee skills match the demands of the work being performed.
  • Anticipating and planning for the impact of regulatory requirements on DOE operations, a recommendation that would help the Department and its grant and contract recipients achieve a high level of program performance.
  • Monitoring program activities more closely to improve the quality of work and addressing fraud complaints from the public in a more effective and timely manner.

Department officials have assured us that they intend to implement management reforms to ensure that program risks are more clearly identified and minimized, that Recovery Act staffing and oversight activities have been improved, and that best practices derived from the Recovery Act experience will be applied more broadly in departmental operations. DOE management has also vowed to work closely with my office to achieve more efficient and effective implementation of Recovery Act programs. This is good news, considering that substantial funds have yet to be spent, which will require continued oversight activities for several more years.

– Gregory H. Friedman, Inspector General, Department of Energy & Member of the Recovery Board

Assessing the Government’s Recovery Implementation

Posted in Accountability, Inspector General Reports, Recovery Act by on April 23, 2012

What was the government’s experience in implementing the Recovery Act?

That’s the underlying question of a study being undertaken by the federal Inspector General community on behalf of the Recovery Board over the next several months involving the $840 billion Recovery program. What mechanisms did agencies use to disburse funds? Were they effective? What obstacles did they face in implementing and administering the programs receiving Recovery money?

And what about the Inspectors General — how did they perform their oversight role? Did they develop new oversight mechanisms to counter fraud? Did they work well with the agencies they oversee?

The IGs are calling the study a “lessons learned’’ report and expect to issue their findings later this year.

The Recovery Board, consisting of 12 IGs, has been developing this idea for some time along with others in the IG community. Mary Kendall, the Acting Inspector General at the Department of the Interior, has been at the forefront in pushing this idea and is serving as the chair of the review.  Along with the Interior IG’s office, we have 15 other IGs who will help gather information from their respective agencies.

Last month, I sent out letters to the agencies whose IGs are conducting the review. Here is what I told them:

“The objective of the Lessons Learned Review is to identify which actions, processes, and mechanisms have been either beneficial or posed challenges to agencies, departments, and their respective Offices of Inspectors General (OIGs) in meeting the requirements of the Recovery Act …. Each OIG will review and assess agency/departmental implementation efforts as well as the OIG’s own oversight efforts.’’

The study is designed to determine, among other things, how federal agencies communicated with recipients of Recovery funds and how they communicated instructions and new policies.  We also want to know whether agencies required recipients to submit formal plans on how they might use Recovery funds. Another area of interest: How well did the agencies oversee spending by recipients?

The study also seeks to elicit feedback from agencies and Inspectors General on how well the Recovery Board and its staff did in overseeing Recovery spending.

For example: “What feedback do OIGs have regarding how the [Recovery Board] conducted oversight of Recovery Act funds? Which particular practices or examples of [Recovery Board] oversight did the OIGs find most useful? Which practices did the OIGs consider to be the least helpful to them in their own oversight of Recovery Act funds?”

Please stay tuned. You’ll hear from me again on this subject.

                                                                               – Kathleen S. Tighe, Chair, Recovery Board

First Time Homebuyer Tax Credits Reviewed

Posted in Benefits & Tax Credits by on April 16, 2012

On April 16, 2012, the Treasury Inspector General for Tax Administration, (TIGTA) will publicly release its Interim Filing Season Report.  As part of its oversight of the Internal Revenue Service (IRS), TIGTA protects the integrity of the United States system of tax administration and prevents waste, fraud, and abuse in the administration of the nation’s tax laws.

Since the inception of the American Reinvestment and Recovery Act of 2009 (Recovery Act), TIGTA has conducted extensive oversight work on related funds.  You can easily access these reports here.

Each year TIGTA completes an audit of the IRS’s “filing season,” which is the critical time of year when most individuals file their income tax returns and contact the IRS if they have questions about specific tax laws or filing procedures.  TIGTA reports initial filing season results in March, resulting in the so-called “interim filing season report,” and then again in the early fall on the complete filing season.   Here is an example of Recovery Act oversight that is included in today’s Interim Filing Season Report:

First-Time Homebuyer Credit: TIGTA has issued several reports on the IRS’s implementation of the First-Time Homebuyer Credit (Homebuyer Credit).  The Housing and Economic Recovery Act of 2008 (HERA) allowed first-time homebuyers who purchased a principal residence after April 8, 2008, and before July 1, 2009, to claim a refundable credit equal to 10 percent of the purchase price of the home, limited to $7,500.  The Homebuyer Credit served as an interest-free loan to be paid back over a 15-year period beginning two years after the Homebuyer Credit was claimed.

Section 1006 of the Recovery Act extended the Homebuyer Credit to include purchases made on or after January 1, 2009, and before December 1, 2009, increased the maximum Homebuyer Credit to $8,000, and eliminated the repayment requirement as long as the taxpayers retain the home as their principal residence for at least 36 months.  Individuals who purchased a home between April 9 and December 31, 2008, and claimed the credit were required to repay the credit in installments beginning with their Tax Year 2010 tax return.

As part of our Interim Filing Season report, TIGTA reviewed the IRS’s performance in collecting taxpayer repayments of the Credit.  As of March 7, 2012, a total of 535,344 taxpayers reported Homebuyer Credit repayments totaling more than $175 million.

TIGTA found that the IRS improved its processing of Homebuyer Credit installment repayments; however, some were still not processed accurately.  This resulted in more than $1.6 million being either refunded erroneously or not assessed.  More than 4,100 tax returns were impacted by this error.  TIGTA notified the IRS of this issue on February 21, 2012 and recommended changes be made to ensure that Homebuyer Credit installment repayments are correctly assessed.

In response, the IRS said it will analyze tax return data to identify affected taxpayers and to correct the tax returns.

To read TIGTA’s complete Interim Filing Season report, or recent audits of the Homebuyer Credit, visit TIGTA’s website.

 — J. Russell George, Treasury Inspector General for Tax Administration

Students Take On Transparency

Posted in Transparency by on April 11, 2012

If you’re wondering whether the concept of transparency in government has taken hold outside Washington, D.C., you have only to look at the Utah Transparency Project, the brainchild of twelve students in the Honors Think Tank on Transparency and Privacy at the University of Utah.  This initiative to improve government transparency across the entire state is the result of their recent study of the rapidly evolving and often clashing paradigms of privacy and transparency, particularly as they impact government and people.

The students have developed Five Transparency Best Practices for Local Governments that will be distributed to all local governments with a request that officials adopt the Best Practices in principle and that they implement as soon as possible the practices they deem immediately feasible; governments should work toward implementing the remaining practices.  The students will also be reviewing existing transparency practices in 16 Utah cities and counties.

Additionally, the Think Tank students are also conducting an independent, statewide survey to assess whether Utahans are interested in transparency in government. One group definitely is: The Utah League of Women Voters has officially endorsed the Best Practices. The students also plan on expanding the Transparency Project to local student groups in Utah.

Alice Siempelkamp, Assistant Director, Content,

The Board’s Mr. Go-To

Posted in Recovery Board by on April 4, 2012

In its three years of existence, the Recovery Board has won many accolades for its commitment to transparency and accountability. The praise often has centered on the development of our websites, and, the principal vehicles we use to collect and display spending data from recipients of Recovery Act contracts, grants and loans.

The big winner, of course, is the public. If you are looking for what happened to a contract or grant award — where the money went, how many jobs were funded — all you have to do is visit and you’ll get what you need.

The Board fortunately has an excellent staff working behind the scenes. The other day, we lost one of our best, James Warren, a technology wizard who was on loan to the Board from the Department of Interior since the Recovery program began in February 2009. Like many creative people, Jim believed his job was done and it was time to move on to the next challenge. He decided to go back to the Office of the Chief Information Officer at Interior.

Jim is a rare commodity — brilliant, but never one looking for credit. When I joined the Board three years ago, the first guy I went looking for was Jim Warren. He worked around the clock in developing the information technology systems you see when you visit and The Recovery Operations Center, our prized analytical operation, has Jim’s stamp on it. He also is the architect of the ROC’s case management system.

Last year, the President created the Government Accountability and Transparency Board.  Jim worked with that Board on spending data issues and developing a centralized technology framework for fraud detection and prevention. His ideas are central to many of the recommendations in the GAT Board’s report sent to the President in December.

Jim was our go-to guy. He remains available to consult as needed but we will miss his day-to-day presence.

-- Michael Wood, Executive Director, Recovery Board

Photo of the Week – Paving Project

Posted in Photo of the Week by on April 2, 2012

Photo Contributed to the Flickr Group by Virginia DOT


Asphalt paving on the Fort Eustis Boulevard widening project.  An ARRA funded project. (Photo by D. Allen Covey, VDOT)

To see more photos of Recovery projects or add your own photos, visit the Flickr Group.

Shaming the Scofflaws

Posted in Accountability, Recipient reporting by on March 28, 2012

We like to call it the “Wall of Shame.’’

That’s the nickname we’ve given to the list of recipients who fail to submit quarterly spending reports as required by the Recovery Act. Each quarter, after spending reports are filed, the Office of Management and Budget provides the Recovery Board with the names of recipients who failed to comply with the law. Federal agencies that distribute funds for contracts, grants and loans certify the accuracy of these so-called non-compliers.

Oversight of spending is an important function of the Recovery Board.  If recipients don’t file reports detailing how they spent their Recovery funds and how many jobs were funded, then we can’t report to the American public on how those tax dollars were used.

First, a little history would help. Early on in the Recovery program, non-compliance was a bigger problem. In our first reporting period ending in September 2009, recipients failed to submit 4,359 reports.

What to do? The Board decided that if recipients would thumb their noses, then it made sense to point the finger at them. We established a quarterly posting of non-compliers on

The Board, of course, was not the only federal agency concerned with the non-compliance issue. In April 2010, the President turned up the heat on non-compliant recipients, issuing a get-tough directive to agencies that distribute Recovery funds. In a nutshell, the agencies were directed “wherever authorized and appropriate’’ to terminate awards, reclaim funds, and initiate suspension and debarment proceedings against violators.

The pressure seems to have worked.  In the quarter ending December 31, recipients filed 171,304 reports with the Recovery Board.  Only 418 reports were not submitted and most were one-time offenders, according to the latest compliance figures. Agencies continue pressing recipients to file their reports, in some cases withholding future payments.

Still, the excuses for non-compliance come fast and furious. One federal agency said that a company with $4 million in contracts didn’t file because its officials were “out of the office.” Other recipients blamed layoffs, firings, sickness and retirements for their failures.  Many recipients, contacted by the awarding agencies, cited technical and administrative issues. In some cases, however, the answer was really quite simple:  The recipients acknowledged missing the reporting deadline.

-- Michael Wood, Executive Director, Recovery Board

More Soldiers, Bigger Hospital

Posted in Recovery Projects/Awards by on March 26, 2012

Workers are one year into constructing an Army hospital to replace an aging facility that was never intended to handle as many patients as it does today.

The Carl R. Darnall Army Medical Center, slated for a 2015 opening at Fort Hood in Texas, is both the largest Pentagon contract funded by the Recovery Act – $530 million – and the largest medical facility project in the military.

The original Darnall hospital opened in 1965 to serve 17,000 soldiers; an addition in 1984 expanded capacity to 39,000 troops. Today, the hospital serves roughly 45,000 soldiers as well as nearly 125,000 family members and retirees within a 40-mile radius.

The new medical center will be nearly 60 percent larger than the current facility and will include a six-story hospital, three out-patient clinic buildings, and three parking garages.

Balfour Beatty/McCarthy, based in Dallas, designed and is building the medical center.

Demolishing old building to make way for new medical center, left; drilling for placement of massive, concrete piers for foundation.

Artist’s drawing of lobby of new Carl R. Darnall Army Medical Center.

Artist’s drawing of lobby of new Carl R. Darnall Army Medical Center.

Training Equals Taxpayer Savings

Posted in From the Recovery Board Chair by on March 22, 2012

During the three-year history of the $840 billion economic stimulus program, the Recovery Board and its oversight partners in the Inspector General community have trained nearly 150,000 people in federal, state, and local governments. Participants learn about contracts and grant management, the requirements of the Recovery Act, and the elements of fraud both in the civil and criminal areas.

This rigorous effort to keep close tabs on the Recovery program has paid off, as demonstrated in a recent investigation at the Department of Education where I serve as the Inspector General.  Because of the quick thinking of an Education grant officer who went through an IG training course, a crook won’t be feasting on taxpayer dollars; instead, he’ll be dining on prison food for the next 30 months.

Take a step back to late 2009. William Hamel, the Assistant Inspector General for Investigation, and Marta Erceg, the Counsel to the Inspector General, put their heads together and developed a fraud awareness training program for more than 500 grant officers in the Education Department. The training, offered six different times to ensure all grant officers would be able to attend, focused on the elements of civil and criminal fraud, red flags and vulnerabilities in grant programs, and regulations on how federal funds can be spent.

“We decided we wanted people to have a better understanding of what constitutes fraud,’’ Hamel says. “About two or three days after one of the sessions, I got a call from a grant officer who said, ‘I really don’t know if there is anything there, but I just had the training session and I want to tell you about something that doesn’t look right.’”

Reviewing a purported grant award notification, the grant officer noticed that the paperwork contained a program number that did not exist in federal government files.  According to Hamel, the grant officer suspected that the paperwork was fraudulent and recommended a “further investigation.’’

As it turned out, the information provided by the grant officer led investigators to uncover what can only be described as a bizarre scheme to defraud the federal government.  In the end, the investigation undertaken by Education IG investigators in New York saved taxpayers at least $3.4 million.

The case involved a man named Robert Friedland, who was an instructor with the Prep for Success program administered by the City University of New York Research Foundation. The program prepares low-income high school students for college. According to investigators, Friedland forged a grant award notification indicating that that the Department of Education had awarded approximately $3.4 million to him.

The Education investigation also discovered that the ever creative Friedland had earlier falsified a document to get his job as an instructor. When he applied for the job in 2008, investigators said, the university’s foundation did a background check revealing he had previously been convicted of a crime. However, Friedland presented the foundation with a fraudulent court order that claimed he had been the victim of identity theft.

Friedland was convicted on three counts of fraud in June 2011. In mid-March, a federal judge in New York sentenced him to 30 months in prison.

“I think training heightens the awareness and acuity of the people we rely on to serve as our fiduciaries for the United States government,’’ Hamel says. “We train thousands of financial aid administrators every year and we get a lot of referrals from training. The Friedland case helps demonstrate the validity of our training program.’’

Kathleen S. Tighe, Chair, Recovery Board


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