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April 30, 2004:

The Honorable Charles E. Grassley:

Chairman:

The Honorable Max Baucus:

Ranking Minority Member:

Committee on Finance:

United States Senate:

Subject: HHS OIG: Allegations of Misspending Were Unsubstantiated:

The Department of Health and Human Service's (HHS) Office of Inspector 
General (OIG) plays a vital role in auditing and investigating 
allegations of fraud and abuse in federal health and welfare programs. 
Because it independently evaluates various programs, activities, and 
functions, the OIG must act with integrity at all times. In the fall of 
2003, anonymous allegations charged that certain officials in the HHS 
OIG's Office of Evaluation and Inspections (OEI) sponsored training and 
management meetings for nonwork purposes and improperly renovated a 
regional office.

The allegations primarily focused on the actions of the Acting OEI 
Deputy Inspector General in relation to specific events that took place 
from July through September 2003. The allegations charged that she (1) 
sponsored training at a Florida resort to facilitate vacation time for 
staff, (2) scheduled several follow-up training meetings as a way of 
providing staff with leisure time, and (3) held a managers' meeting in 
New York as a pretext for participants to attend a retirement 
celebration for one of OEI's managers. A fourth allegation charged that 
the Acting OEI Deputy Inspector General, along with an Acting OEI 
Regional Inspector General, improperly renovated and refurnished office 
space in one of OEI's regions. At your request, this report examines 
these allegations.

To perform our work, we examined documentation--such as meeting 
agendas, approval documents, and travel vouchers--related to the 
allegations; conducted interviews with OIG officials, including 
managers and participants in events related to the allegations; and 
reviewed relevant HHS and OIG conference planning and procurement 
policies and the General Services Administration (GSA) office 
renovation guidelines.[Footnote 1] We determined OEI officials' 
rationale for their decisions, steps taken to plan or approve various 
events, and the extent of involvement by those accused of wrongdoing. 
Our work assessed the allegations that meetings were held for nonwork 
purposes and that OEI regional office renovations were improper. We did 
not conduct a comprehensive review of OEI's compliance with laws and 
regulations applicable to these activities. We performed our work from 
November 2003 through April 2004 in accordance with generally accepted 
government auditing standards.

In summary, we found no basis for the allegations against the Acting 
OEI Deputy Inspector General and an Acting Regional Inspector General 
regarding the sponsorship of training and other meetings and the 
completion of office renovations. We found that those responsible for 
organizing OEI training and management meetings followed HHS and OIG 
requirements for planning and approving these activities. Further, we 
did not find evidence to support the allegations that the training 
included leisure activities during business hours at the Florida 
training, the follow-up training meetings, and the New York meeting. 
According to the agendas and to OIG officials, the Florida and follow-
up training meetings provided staff with details on organizational 
goals and evaluation skills, and served as an exchange of information 
on analytical approaches. Likewise, attendees at the New York managers' 
meeting concentrated on OEI management-related issues. With respect to 
allegations of inappropriate renovations in one of OEI's regional 
offices, documents that we reviewed indicated that OEI officials 
followed applicable GSA and OIG policies to reconfigure office space 
and purchase furniture. In commenting on a draft of this report, the 
OIG agreed with our findings.

Background:

OEI, one of five components within the HHS OIG, conducts short-term 
management evaluations of HHS programs.[Footnote 2] OEI is headed by a 
Deputy Inspector General (DIG), and has staff in Washington, D.C.; 
Baltimore, Maryland; and eight regional offices. Each regional office 
is headed by a Regional Inspector General (RIG).

Over the past 2 years, the HHS OIG was the subject of concern in regard 
to its leadership and operations. During this time, numerous management 
changes occurred. This included the resignation of the then Inspector 
General on March 4, 2003, and her subsequent departure from the agency 
on June 1, 2003. In addition, in July 2003, a new Acting DIG was 
assigned to lead OEI.[Footnote 3] It was in the midst of this 
uncertainty and change that OEI initiated the following events that 
were related to the allegations.

Florida training: For about 15 years, OEI has sponsored a national 
training event, such as the one held in Florida, on an annual or 
biennial basis. OEI management considers this training to be very 
important in enhancing analysts' evaluation skills.[Footnote 4] In 
2002, a planning committee was formed to organize and conduct the July 
2003 training. The committee, which consisted of 12 OEI staff from the 
Washington, D.C., and Baltimore offices and each of the eight regions, 
was cochaired by two analysts. The committee was responsible for making 
logistical decisions, such as selecting a site for the training, and 
developing the agenda.

Follow-up training meetings: In the spring of 2003, OEI's Career 
Development Steering Committee[Footnote 5] recommended holding inter-
regional meetings to improve communication and the exchange of 
information among OEI staff. As follow-up to the Florida training, 
three inter-regional meetings, which lasted about 2 days each, took 
place from July through September 2003, involving OEI staff and RIGs. 
The Chicago/Dallas meeting took place in Bridgman, Michigan; the New 
York/Philadelphia meeting took place in Long Branch, New Jersey; and 
the Kansas City/San Francisco meeting took place in Tucson, Arizona.

New York managers' meeting: In August 2003, OEI held a regional 
managers' meeting in its New York regional office. The stated purpose 
of the meeting was for the Acting OEI DIG, RIGs, Assistant RIGs, and 
certain managers from OEI headquarters to address various issues, 
including OEI's work plan, the timeliness of OEI reports, and the way 
OEI reports should be written.

Office space renovation: In the spring of 2003, the Acting OEI RIG in 
Atlanta ordered the renovation of office space after concluding that 
the work environment needed to be improved. A secure storage closet and 
four enclosed team leader offices with floor-to-ceiling walls were 
constructed. In addition, furniture was purchased for these new 
offices.

Allegations of Misspending Were Unsubstantiated:

We did not find evidence supporting the allegations against either the 
Acting OEI DIG or the Acting OEI RIG in Atlanta. According to the 
agendas, the 2003 OEI national training and the subsequent training 
meetings were not designed to provide OEI staff with leisure time. Our 
review also confirmed that the regional managers' meeting held in New 
York addressed management issues. We found nothing to support the 
allegation that this meeting was a pretext for holding a retirement 
party for the New York OEI RIG. Lastly, we did not find any basis for 
questioning the Atlanta regional office's renovation; the stated needs 
of that office supported the renovation.

2003 OEI National Training Focused on Enhancing Analysts' Skills:

Contrary to allegations that the Acting OEI DIG conducted training in 
2003 to offer leisure time to her staff, our review indicated that 
OEI's July 2003 national training, held in St. Petersburg, Florida, 
provided staff with 3 and a half days of instruction on programmatic 
issues and evaluation skills. According to OEI documents related to the 
2003 training, its objectives were to enhance OEI's methods for 
gathering and presenting evidence and to build a sound collaborative 
foundation within OEI in order to produce high-quality evaluations. Our 
review of training evaluations completed by OEI attendees, as well as 
our interviews with several OEI participants, indicated that the 
training was tightly scheduled with meetings and classes. According to 
the agenda, the training offered nine general meetings and 28 breakout 
sessions, covering 15 different topics. In addition, three managers' 
meetings were held to discuss issues related to OEI's structure, 
product quality, and overall performance.

The planning committee responsible for organizing the training selected 
the Florida location because, after evaluating 10 candidate sites, it 
determined that the Florida location would be the most conducive to 
accomplishing the objectives of the 2003 training. For example, the 
Florida site offered many amenities, such as a large number of meeting 
rooms, soundproof walls, and responsive hotel staff--all necessary to 
ensure the effectiveness of the training. According to the two cochairs 
of the planning committee, these features were particularly important, 
given that the training was a large event with numerous breakout 
sessions. They further stated that the Florida location met three other 
important criteria. First, the OEI DIG at the time asked that the 
training be held in an eastern location, and the planning committee 
members agreed because the previous two training events were held in 
western states. Also, this hotel was in proximity to the airport and 
accommodations were offered at the federal government per diem rate.

We found that some OEI officials were concerned about the perception of 
holding the 2003 OEI national training at a Florida resort, even though 
the training was scheduled for July, during off-season. One senior OEI 
official told us that OEI management is always cautious about holding 
training at locations that may give an impression that federal funds 
are being used to finance leisure activities for employees.[Footnote 6] 
Whereas Thursday afternoon traditionally had been reserved for an off-
site networking event, the committee replaced this time with additional 
training sessions at the hotel. In addition, the chairman of OEI's 
Career Development Steering Committee, who was responsible for 
approving certain key decisions made by the planning committee, 
discussed his concern with the OEI DIG at the time and a senior OIG 
official in the Office of Management and Policy.[Footnote 7] They 
concluded that holding the training at the chosen location was 
appropriate--especially in light of the additional training that 
replaced the networking session.

Finally, while the allegations contended that the Acting OEI DIG 
decided to hold the 2003 OEI national training in Florida, the event 
was actually approved by this official's predecessor. After the 
planning committee evaluated the candidate sites in the summer of 2002, 
it presented its recommendation to the former OEI DIG, who approved the 
Florida location. OEI then signed a contract with the hotel in August 
2002. Due to budget uncertainties in the fall and winter of 
2002,[Footnote 8] the training was canceled and later reinstated in 
April 2003 when the budget issues were resolved. The entire planning 
and approval process for the Florida training--including the initial 
cancellation and reinstatement--took place during the former OEI DIG's 
tenure. The Acting OEI DIG cited in the allegation did not assume her 
duties until a week before the Florida training occurred.

Follow-up Meetings Designed for Skills and Teamwork Training:

Our review of the three meeting agendas and interviews with an attendee 
from each of the three inter-regional meetings indicated that the 
meetings were designed for training, sharing of ideas, and teamwork, as 
opposed to providing leisure time. Attendees included RIGs and analysts 
from the participating regions. The Chicago/Dallas meeting agenda 
included exercises on developing evaluation objectives, an analysis 
plan, and appropriate methodology. The New York/Philadelphia meeting 
agenda identified topics such as improving communication within OEI, 
methods of analyzing data, the process of reviewing OEI draft reports 
to ensure accuracy and timeliness of OEI products, and OEI staff 
skills. The Kansas City/San Francisco agenda focused on various items, 
including how the two regions perform their evaluation work, evidence 
necessary for their evaluations, review of OEI products to ensure 
quality, and presentations on health policy issues. Each meeting agenda 
also included a closing session discussing future inter-regional 
collaboration among the participants. According to OEI officials, the 
need for such meetings was emphasized at the July 2003 Florida training 
when staff from several regions suggested that additional regional 
coordination and exchange of information would assist OEI in meeting 
its goals and objectives. An OEI RIG reported that the meetings were 
held outside participating regional offices to ensure that attendees 
were able to focus on the established meeting objectives without 
interference from their day-to-day office responsibilities.

We found that the Acting OEI DIG's involvement in approving the inter-
regional meetings was limited, contrary to the allegation. Upon 
learning about the meetings, she reported that she agreed with the 
concept of the regions pairing up to plan follow-up meetings. However, 
we found that the OEI RIGs in each of the participating offices 
approved the substance and logistics of these meetings, including the 
travel orders for regional staff who attended, and the Acting OEI DIG 
authorized the travel orders for the RIGs who attended.

New York Regional Managers' Meeting Focused on OEI Work Issues:

We found no support for the allegation that the New York meeting was 
held as a pretext for participants to attend a retirement celebration. 
The Acting OEI DIG initiated and approved this meeting in New York to 
address with RIGs and Assistant RIGs, and certain managers from OEI 
headquarters, issues raised at the Florida training. In addition, she 
explained that she needed to meet with the managers to develop OEI's 
annual work plan, which was due approximately 1 month after the New 
York meeting. While leisure activities were not incorporated into the 
workday, a retirement dinner was held one evening for New York's OEI 
RIG. Attendees reported using their own funds for the dinner and 
contributing their own money to purchase a gift for the retiring RIG. 
Our review of participants' travel vouchers and statements by several 
OEI managers revealed no evidence that federal funds were used for 
these purposes.

Renovation of an OEI Regional Office Followed Applicable Policies:

The Acting OEI DIG named in the allegation was not involved in the 
planning and approval of renovations in the Atlanta regional office. In 
addition, we found nothing to substantiate the allegation that the 
actions were inappropriate. Instead, we found that the decision to 
renovate the office was supported by office needs. The Acting OEI RIG 
advised us that he approved the renovations because the Atlanta office 
did not provide secure storage for sensitive documents and because the 
region needed additional team meeting rooms. According to documentation 
we reviewed, the region's existing storage areas were inadequate and 
not conducive to housing documents for an ongoing investigation--
materials were stored in basement space that was susceptible to 
flooding and was not readily accessible to OEI.[Footnote 9] Officials 
also stated that furniture needed to be purchased for the new offices 
because the existing cubicle furniture was not suitable for team 
meetings. We found that the Acting RIG consulted with the 
administrative officer for cost estimates and renovation plans, and 
then obtained the necessary approvals and oversight from GSA for the 
refurbishing and furniture purchase. All displaced furnishings were 
transferred to another federal agency.

Agency Comments:

In commenting on a draft of this report, the HHS OIG concurred with our 
findings. HHS OIG comments are reprinted in the enclosure.

As agreed with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
after its date. We will then send copies of this report to the 
Secretary of HHS and the Acting Principal Deputy Inspector General of 
HHS and other interested parties. We will make copies available to 
others upon request. In addition, the report will be available at no 
charge on GAO's Web site at http://www.gao.gov.

If you or your staff have questions about this report, please contact 
me at (312) 220-7600. Shirin Hormozi, Pauline Seretakis, Sari B. 
Shuman, and Behn Kelly made key contributions to this report.

Signed by: 

Leslie G. Aronovitz:

Director, Health Care--Program Administration and Integrity Issues:

Enclosure:

Comments for the Department of Health and Human Services Office of 
Inspector General:

DEPARTMENT OF HEALTH & HUMAN SERVICES	
Office of Inspector General:

APR 23 2004:

Leslie G. Aronovitz:
Director, Health Care-Program Administration and Integrity Issues 
United States General Accounting Office 
441 G Street, NW -Room 5A14 
Washington, DC 20548:

GAO Draft Report 04-618R:

Dear Ms. Aronovitz:

Thank you for your very thorough and professional review of the 
anonymous allegations lodged against two senior level managers of our 
office. Your findings clearly demonstrate that the allegations were not 
based on fact and were without merit. The results of your review 
confirm our own extensive internal inquiry into these matters.

Thank you for the opportunity to review and comment on the draft 
report. I hope that the final report will be issued publicly as soon as 
possible and that its release will bring closure to this matter.

Sincerely,

Signed by: 

Dara Corrigan: 
Acting Principal Deputy Inspector General:

(290335):

FOOTNOTES

[1] GSA is responsible for managing federal property and procurements 
and promulgating guidance and regulations for both activities.

[2] The other four components are the Office of Audit Services, the 
Office of Investigations, the Office of Counsel to the Inspector 
General, and the Office of Management and Policy.



[3] In March 2004, a permanent OEI DIG was selected. At that time the 
Acting OEI DIG was expected to return to her prior duties in another 
OIG component.

[4] Prior to 2001, only OEI analysts attended this training. In 2001, 
OEI expanded the training to include administrative staff.



[5] OEI's Career Development Steering Committee is tasked with 
identifying and enhancing the range of skills required to perform OIG 
evaluations.

[6] According to HHS guidance on domestic travel policies, "meeting 
sponsors shall not hold meetings at resort areas to which the general 
public is attracted because of recreational facilities, unless that 
area is the location best suited for the purpose of the meeting in 
terms of program needs and cost factors." (HHS Chapter 1-20, Travel 
Manual, 1-20-20, part G.)



[7] Within OIG, the Office of Management and Policy oversees and 
assists various OIG components in policy development and implementation 
and in budget formulation and execution.



[8] At the time, HHS was operating under a continuing resolution, which 
restricted its spending to levels equal to or below spending levels in 
the previous year. 

[9] According to a regional memo, several boxes of records had been 
destroyed by previous flooding.