PDT 2020 - Session M100: Conversation with the U.S. Comptroller General

By Mary Margaret Yodzis 

U.S. Comptroller General Gene Dodaro opened AGA’s PDT 2020 last Monday, July 20, in conversation with AGA CEO Ann Ebberts. As head of the Government Accountability Office (GAO), he shared the latest news and insights into activities related to the federal government’s COVID-19 response

Ann: What are GAO’s responsibilities in response to the pandemic?

Gene: Our broad responsibilities are to look at and evaluate the uses and impacts of all funds appropriated by the legislation Congress passed and the administration is working to implement. This includes over $2.6 trillion in appropriations. Our job is to determine the impact of these relief efforts on public health, the economy, homeland security, and public and private sector institutions. 

We also have responsibilities to look at the use and impact of federal contracting and the loan guarantees and other efforts established by the Federal Reserve, U.S. Department of the Treasury (Treasury), the Small Business Administration (SBA) and others across the government. We are required to provide timely reporting — in this case, monthly briefings to key members of Congress and the appropriate committees charged with oversight of the coronavirus legislation. 

Ann: What had GAO worked on toward pandemic preparedness before the coronavirus?

Gene: We reviewed preparedness efforts and the government’s response to a number of prior outbreaks of communicable disease; for example, H1N1, SARS, Ebola. We also looked at the national biodefense strategy. Since we are in both a healthcare crisis and an economic downturn and dislocation, we looked at the Recovery Act and the global financial crisis. 

We’ve had a lot of experience in public health responses and the government’s efforts to deal with serious economic situations and circumstances, so there are some lessons learned that we are carrying forward with our reporting under the COVID-19 responsibilities as well — the need for greater clarity in roles and responsibilities, not only in our federal agencies but also at the state and local levels; the need for consistent and effective communication strategies; the need for better data in order to manage the response. In this case, we recommended a stronger approach to testing to ensure more consistent and comprehensive results, which the Department of Health and Human Services (HHS) is moving toward. Lastly, there is the need to focus on transparency and accountability issues early in the process. We continue to refine those lessons learned as we gain experience, not only with prior national emergencies but also the current situation.

In 2015, following the SARS and Ebola outbreaks, we recommended the Transportation Department create a national security program for aviation safety during communicable disease outbreaks. Unfortunately, five years later there is still no plan. So, I elevated this to a matter for congressional consideration so that Congress can give clear directions. It hasn’t happened because of bureaucratic wrangling about who is responsible for doing the plan, but I’m hopeful Congress will respond to that request.

Ann: At the end of June, you testified before Congress on the first of GAO’s COVID-19 reports. You spoke for close to two hours. What did you tell them on the Hill, and what was their focus on questions for you?

Gene: In the first two months after the legislation passed, as of the end of May, agencies had distributed about $1.2 trillion of the assistance. So, they got a lot of the money out fast. While there was great focus by the agencies on providing a quick response — and this was appropriate given the urgency of the health situation as well as the economic situation —trade-offs were made in the areas of transparency and accountability. We gave them good marks for getting the money out fast, but said they only made limited progress in the transparency and accountability goals established by the legislation. 

We specifically mentioned the Paycheck Protection Program (PPP), administered by SBA. They stood up a national program in a short period of time; however, there was a lot of confusion associated with it — evolving, constantly changing guidance; reliance on self-certifications. So, we recommended SBA establish a more comprehensive oversight and monitoring plan to protect program integrity, meet its objectives, and deter and address any fraud already beginning to show in the program.

In the unemployment insurance area, federal, state and local governments needed additional guidance. We suggested the Labor Department provide the guidance to the states to ensure individuals were not receiving funds through PPP and collecting unemployment. While we want to help people, we don’t want to pay them twice! 

Another big effort involved the stimulus payments IRS put out. The Treasury inspector general (IG) for tax administration pointed out that IRS distributed over 1.2 million payments (so, $1.4 billion) to deceased individuals. They stopped doing this after the third round of payments, due to a new interpretation by Treasury, but we feel the money could and should be properly returned to the government. Our recommendation was that IRS take proactive measures to try to recover that money. 

We also elevated three matters for congressional consideration:

  • Clarify responsibility for developing an aviation security plan. The vehicle for the global spread of this coronavirus was the transportation system. We will always be behind the curve unless we take early actions to stop this through appropriate measures in air travel. 
  • Give Treasury’s Bureau of the Fiscal Service access to the full “death master file” from the Social Security Administration, so they can stop payments to deceased individuals, not only for stimulus checks but also across the board in federal payment activities. 
  •  A new GAO formula for more timely, targeted temporary assistance in Medicaid to help deal with economic downturns. 

In terms of Congress’s response, I got a wide range of questions and concerns. We had some access problems with data from SBA and did not receive it in time for the June report. We have since received it for recipients of PPP loans, and we’re analyzing that now. They were kind of incredulous that IRS had been paying deceased individuals, so I explained how that happened and what we recommend to stop it going forward, since there will likely be additional payments. 

We talked about problems in nursing homes and the work we need to do there. We had done reports on the inspection of nursing homes for a number of years prior to the pandemic. Over 82% of nursing homes across the country had been cited for violations in the infection area for improper procedures. About 40-50% of them had violations in multiple years. This was a problem before the pandemic and obviously became greatly accentuated. 

We also talked about GAO involvement in the development of vaccines. We were asked to provide real-time auditing in that arena, which we agreed to do and already planned to do. So, it was a very good hearing, I thought. A lot of good questions by the members, and they were very actively engaged. Obviously, there are important consequences to the government’s response here, both from a health standpoint and from the standpoint of trying to stabilize our economy and get it back on track.

Ann: An awful lot of money has been moving. What else has GAO been doing that is related to Covid?

Gene: We have a wide range of work here, Ann. 

  • FEMA’s role in the response and the challenges they face. 
  • FDA’s overseas investigations of the development of medical drugs. The vast majority of ingredients for our medical drugs, products and devices are developed in foreign countries and, obviously, we are not able to inspect those facilities now. 
  • Considerations agencies should give in returning federal workers to the workplace.
  • Challenges in the Veterans Administration supply chain management for medical supplies and personal protective equipment. 
  • Our new science and technology group put out a series of “spotlights” meant to explain the science in an easily understandable way. They are two pages long and explain some underlying science in things like social distancing, COVID-19 testing, vaccine development. We just put out one on herd immunity, and we’re working on one about contact tracing. 
  •  We also have about 50 different audits underway, so we’ll have a number of very specific reports. We have to do one on all of the loan guarantee areas, but we will also do specific audits — on PPP, for example, testing, vaccines and the strategic national stockpile.

Ann: Needless to say, you all are super-busy.

Gene: We are at full employment for GAO right now.

Ann: Many of us remember the intense oversight efforts after the Recovery Act stimulus. Now we effectively have a COVID-19 stimulus that needs special oversight. Many of us have heard about the Pandemic Response Accountability Committee (PRAC). Can you explain what PRAC is, who is involved, and what role GAO plays in relation to it?

Gene: PRAC is a part of the Council of Inspectors General for Economy and Efficiency (CIGIE). It is made up of about 21 IGs. Some are statutorily designated in legislation; others were added by CIGIE leadership. Their job is to oversee the funds. They were given responsibilities for creating a website to display how funds are used. Unfortunately, the first reporting won’t occur until next month at the earliest or, perhaps, a little later. There is a direct link on the website to all GAO reports, so there’s good overview of response that people can see. We meet on a regular basis with PRAC and continue to coordinate with individual IGs of departments and agencies on the audits. It’s very similar to what we did in the Recovery Act and what we do after an earthquake or a hurricane.

Ann: The CARES Act provided around $250 million to fund oversight. How do you determine how much oversight is enough to alleviate the public’s fears about fraud and misuse versus overkill?  

Gene: In determining the proper amount of oversight, you have to factor in several issues: 

  • The amount of money being spent. In this case, it’s $2.6 trillion and will likely be more. 
  • It is being spent in a rapid fashion, which brings with it inherent risk and elevates the need for oversight.
  • It is being carried out by multiple agencies. 
  • New programs have been established, including PPP, so it is not all being done through existing programs, again elevating the risk. 

If you look at the $250 million compared to $2.6 trillion, it is decimal points less than 1% of the total spent. Actually, it is a 50% increase in the total amount of the federal government’s spend budget. There are already indications of fraud. The Secret Service indicated organized crime in unemployment insurance. There have been investigations in PPP, with some indictments there already. 

In just one area — the $1.4 billion to deceased individuals —I expect IRS to recover enough of that money to pay for the $250 million, maybe several times over. That’s just one example of where, I think, the oversight has already paid off. So, I believe additional funding for oversight activities is needed in congressional efforts to expand federal response. I think it is warranted, based on the facts.

Ann: What are some specific COVID-19 issues related to state and local governments?

Gene: The biggest area is unemployment insurance. We went from around 3% to 4% unemployment to 14% in a matter of months! It has come down now a little bit. The federal government not only supported continuing state programs, but also created new programs to provide special economic assistance for the pandemic on top of the state programs, which required states to ramp up activities for normal unemployment benefits and implement the new federal efforts. Also, for the gig economy, they provided additional payments.

The states have very antiquated IT systems, so that’s a problem. They cut back on their staffs because the unemployment rate had been low for so long, so they needed to bring in additional people. Also, fraudsters are trying to take advantage of the situation, and states have to combat that. They have had to process close to 50 million new claims. This will test the solvency of the funds states have collected or borrowed from Treasury, which they’re permitted to do in order to pay these claims, but that will all have to be paid back over time. So there are consequences for state and local finances as a result of this effort as well.

There are other issues as well:

  • The Medicaid program has new facets. 
  • The Supplemental Nutrition Assistance Program expanded in terms of people filing claims. 
  • States have responsibilities in testing, and their public health systems have been really challenged in cases. 

So the state and local governments are, as usual, the first line of defense here, and they’re facing a wide range of challenges. GAO will be focused on state and local as well as the federal level.

Ann: How do you manage the COVID-19 crisis as an agency head? What does it mean to be a leader in this time, as we are all teleworking?

Gene: Several things are essential, Ann. 

  • You must take timely and decisive action. In this case, I closed our field offices across the U.S. on March 13. We closed the headquarters building for GAO people shortly thereafter and went to a completely telework environment. My top priorities are to protect the health and safety of the people who work for GAO. We have a tremendous, talented, dedicated workforce. We’ve invested a tremendous amount in them, and we need to protect them and their families while accomplishing our missions for Congress, which we’re able to do, largely through a remote environment. We had in place good technology and infrastructure and a robust telework program before, but we took it to new levels in order to protect people.  
  • You must effectively communicate with people in uncertain times. We’ve already had seven virtual GAO town hall meetings to explain what we’re doing, why we’re doing it, and the uncertainties and special circumstances. We have had 2,800-2,900 people in GAO on these calls, out of 3,100 people. We also record the calls so those unable to make it can listen later and everybody is fully informed. We established a COVID-19 website at GAO to post the latest scientific information. Also, we created a task force to focus on the science and health response, because I want to make fact-based, science-at-the-core decisions about what to do here to protect our people and make sure we’re doing the right thing.
  • You have to remain flexible. We’ve expanded our work hours — from 5 a.m. to midnight and on Saturdays — to give people more flexibility to get their work done while coping with responsibilities. For example, with schools closed and daycare facilities unavailable, we’re giving those with small children some administrative time.

This is not a time for leaders to wonder about things. You have to make the best available decisions considering the circumstances and be flexible, because, in this case, circumstances are changing daily, if not more frequently. Our executive committee meets at least once a day, sometimes more than twice a day on a regular basis to assess the situation and provide additional refinements as we go through. 

It’s also important to show leadership beyond your organization. I’ve worked with our international association of national audit offices around the world in a special effort to focus on the pandemic. Of 195 countries, many advocated to work remotely, but many did not. We’re trying to get them some additional assistance, technologies and training activities. 

Ann: in our audience poll, the majority said they are getting the information they need from their leadership most of the time. But about 7% said they are not getting the information they need. Does that surprise you?

Gene: [chuckles] It’s what I would expect. You’re never going to get everybody to think they have everything they should have, because people like to receive information in different ways. I try to put it out there in different ways — verbally, in writing, make it available when they believe they need it through websites and everything. So I’m not surprised by these results. 

Ann: About GAO’s science and technology team: it sounds like it was just in time. Do they have specific focus areas?

Gene: We’ve been producing a lot of reports in a wide range of areas. 

 We have a special medallion on our website for people who are interested to use to look at all of the science and technology work we’ve issued. We have found there is a great need for people to understand what these technologies are — quantum computing, for example. 

  • We’ve also been doing in-depth technical assessments.  
  • One on forensic technology, the algorithms used by law enforcement for probabilistic DNA genotyping and its strengths and weaknesses.
    • One with the National Institute of Medicine and National Academy of Sciences on the use of AI in drug development to expedite development and reduce time. 
    • We looked at 5G technologies and issues there, particularly in national security. \
    • We developed a technology readiness guide that can be used to evaluate the maturity of technology. We find with efforts to move technology into production before it has matured enough come great risk, additional costs, and schedule problems. This guide is designed to help you make technology decisions before full-scale production. We use it for weapons systems and other technologies. 
    •  We hired more people; for example, a microbiologist with expertise in vaccine technologies and development. 
    • We worked on infectious disease modeling and put out a couple of reports on that — one related to COVID-19, another more general.
    • A report on antibiotic resistant bacteria and the potential overuse of antibiotics.
    • A report on upgrading our nuclear enterprise across government to develop new weapons systems and address energy issues. 

These all have underpinnings in science and technology. This group is essential to GAO’s responsiveness to Congress going forward, so we’re continuing to expand the group.

Ann: With CARES Act emergency spending, the general state of the economy with revenue down at potentially all levels of government, and new concerns about more waves of the coronavirus, what are your concerns about our deficit and debt level?

Gene: We need to do — as a government — everything we need to do to deal with this emergency. We need to provide help for healthcare and stabilize our economy, because the consequences of not dealing with those things are far in excess of some of the issues associated with the debt that we are accumulating at a fairly rapid pace here. But soon after the situation gets better and we’re on a better trajectory, we need to deal with the long-term debt and deficit issues. 
The report we issued in early March showed that the debt held by the public could surpass the historical high of 106% by 2031, according to our simulations and, shortly thereafter, by simulations of the Congressional Budget Office (CBO) and Office of Management and Budget (OMB). But this year, with the debt increase between March and June, CBO estimates our debt to GDP ratio for fiscal year 2020 will be 101%. So, we’ve gone from 79% in 2019 of debt held by the public as a percentage of GDP to over 100% in just one year! The debt went up from $23.4 trillion in March to $26.2 trillion at the end of June. That’s a huge increase of almost $2.8 trillion in just two months. It took us three years to accumulate that in the past, so the situation is significant.
 It will affect:

  • The pension benefit guarantee corporation to the extent companies go bankrupt. 
  • The multi-employer venture program, already due to be unable to pay claims by 2025. 
  • The economic downturn will mean less payroll tax going into social security and Medicare trust funds, so it likely will advance the dates they won’t be able to fully pay claims. 
  • The Medicare hospital trust fund was already set [to run out] in 2024 and the Social Security old-age survivors program in 2034. This will move those dates up, and we will have to confront these issues earlier than otherwise. 

We’ve got to get ourselves out of this situation first, but we can’t lose a moment to then develop a plan to deal with our long-term fiscal sustainability. 

Ann: We’ve all read a lot about IG vacancies and other issues concerning the IG community. What is your response to this?

Gene: I’ve been very concerned about the IG situation, and I felt it was important to speak out on this issue. On June 8, GAO issued a report outlining the principles of IG independence and considerations for reform. We talked about the importance of structuring IG organizations to ensure independence. They have to be independent, using a conceptual framework in the auditing standards, in both fact and appearance. 
The independence of IGs, particularly those who may have been appointed as acting IGs and may have management responsibilities at the agencies, [demands] specific safeguards. We offered various areas for reform, which includes putting in a very specific process when there is a vacancy so the position is filled by the first deputy IG, who would have been in place for a while. 

Other recommendations were made to strengthen IG independence; for example, specifying for-cause reasons for being removed and providing specific information to Congress up front, prior to their removal, so Congress can weigh in as well. If there is an acting IG for these current situations, they should be required to notify Congress as to how they are going to ensure their independence, particularly as it relates to whistleblowers in the agency.