The Origin and Implementation of the Inspector General Act

By Naughton, James R. | The Government Accountants Journal, Fall 1998 | Go to article overview

The Origin and Implementation of the Inspector General Act


Naughton, James R., The Government Accountants Journal


EVENTS LEADING TO INSPECTOR GENERAL LEGISLATION

Presidentially appointed inspectors general (Igs) are currently authorized at 27 federal departments and agencies; with the exception of the Central Intelligence Agency; offices of inspector general (OIGs) at all of these agencies operate under the provisions of the Inspector General Act of 1978, Aas ammended.1

How did it happen? The United States has had military inspectors general since the 18th Century. However, despite the similar name, the civilian offices of inspector general were not inspired by or patented after military inspector general units. Nor were they fashioned after statutory office of Inspector General for Foreign Aid that was established around 1960 and abolished in the 1970s.

The chief sponsor of the IG legislation was thenCongressman L. H. Fountain of North Carolina, the chairman of the House Government Operations subcommittee (the Intergovernmental Relations and Human Resources Subcommittee), which initiated the legislation. Congressman Fountain and members of his subcommittee were motivated in large part by three events related to subcommittee investigations.

The first event, which began in 1962, involved an extensive subcommittee investigation of the operations of Texas swindler Billie Sol Estes. Estes' activities, the subcommittee discovered, had been the subject of an "almost unbelievable number" of inquiries and investigations by agencies of the federal government over a period of nearly 10 years. However, because of the lack of effective coordination and communication between or within the departments, agencies and subunits involved, Estes was able to continue to expand his illegal activities until they were eventually exposed in a 1962 newspaper story.

The subcommittee investigation further disclosed that audit and investigative activities of the U.S. Department of Agriculture (USDA) were being conducted by a number of separate and uncoordinated units that reported to officials directly responsible for the programs being reviewed. Disclosure of these organizational and procedural deficiencies led then-Secretary of Agriculture Orville Freeman to consolidate USDA auditing and investigative responsibilities under a nonstatutory inspector general reporting directly to the secretary.

The second event was the 1974 decision by then-Secretary of Agriculture Earl Butz to dismantle the department's nonstatutory office of inspector general, which clearly demonstrated that a statutory basis was needed to assure the continued existence of IG offices.

The third event, which began shortly after the untimely demise of the Agriculture Department's OIG, was a comprehensive review by the Fountain subcommittee of the procedures and resources being used by the U.S. Department of Health, Education and Welfare (HEW) to prevent and detect fraud and program abuse in its operations. HEW then had more than 129,000 employees and was responsible for about 300 programs involving total expenditures of more than $118 billion annually-a third of the entire federal budget at that time. Despite HEW's massive expenditures, its central investigative unit had only 10 investigators with a 10-year backlog of uninvestigated cases; moreover, the unit could not initiate an investigation without specific approval of the secretary or undersecretary.

Other units responsible for promoting economy and efficiency and combating fraud and abuse in HEW programs were scattered throughout the department with no overall leadership or coordination. For example, two separate HEW units were investigating fraud and abuse in the Medicare and Medicaid programs. Although some medical providers were undoubtedly defrauding both programs, HEW regulations prohibited either investigative unit from telling the other which providers they were investigating or what problems they were finding.

The HEW Inpsector General Act

In January 1976, a Fountain subcommittee report on the HEW situation was issued by the House Committee on Government Operations. …

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