Subcommittee on Investigations and Oversight of the House Science Committee hears an Update on the American Recovery and Reinvestment Act

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Publication date: 
20 January 2012
Number: 
8

“Congress  has an obligation to make sure that if taxpayer money is going to be spent,  that it is done appropriately.   Minimizing waste, fraud, and abuse is a nonpartisan endeavor that I am  sure we can all agree with.”  -  Subcommittee Chairman Paul Broun (R-GA) 

The  House Subcommittee on Investigations and Oversight met on November 30, 2011 to  receive an update on accountability, transparency, and performance issues  associated with the American Recovery and Reinvestment Act (ARRA).  The hearing focused on efforts by agency  Inspector General Offices; the Government Accountability Office (GAO); and the  Recovery, Accountability, and Transparency Board to monitor ARRA spending. 

The  subcommittee is chaired by Rep. Paul Broun; Rep. Paul Tonko (D-NY) is the Ranking  Member.  There were some differences in  the tone of their opening statements, though both representatives spoke of the  importance of using the ARRA funds wisely.   Broun expressed concern about the Department of Energy (DOE) Loan  Guarantee Program because of the rushed nature of the Solyndra and Beacon Power  loans.  Tonko highlighted the fact that  other DOE loans may be just as risky, particularly in the nuclear sector, where  taxpayers’ financial exposure “dwarfs that of the Solyndra loan.”  He went on to add that “just one of these  nuclear energy loans is 16 times the size of the award made to Solyndra” while  urging the Department to take steps to reevaluate the size of their commitments  in the loan guarantee program.

As  to the effectiveness of the ARRA legislation, Tonko stated “public investment  in innovative technologies and infrastructure not only creates jobs, it lays  the foundation for private sector job creation.   The American Recovery and Reinvestment Act made a significant difference  in stopping the precipitous loss of nearly 800,000 jobs per month that occurred  prior to its enactment.  Without the  Recovery Act, millions more Americans would be facing unemployment and we would  be months further behind in the admittedly sluggish economic recovery.” 

Broun,  however, questioned the effectiveness of the Act in his opening statement as  well as in his questions to the witnesses.   He noted that “a lot of the work done on accountability has focused on  being able to track where money is going and for what purpose.  While this is important, evaluations of  accountability should also address whether the intended goals of the Act have  been met.”

Director  of the Natural Resources and Environment Team, Frank Rusco testified on behalf  of the GAO to summarize the status of science-related ARRA funding according to  their findings as of September 30, 2011.   The Department of Commerce, National Aeronautics and Space  Administration (NASA), and the National Science Foundation (NSF) had each  obligated nearly all of their science-related funding.  DOE reported that it had obligated $34.6  billion (98%) and had spent $18.9 billion (54%); the funds for DOE went  primarily to the Energy Efficiency and Conservation Block Grant Program, the Loan  Guarantee Program, the Office of Environmental Management, and to the  Weatherization Assistance Program.

In  his testimony, Michael Wood, Executive Director of the Recovery Accountability  and Transparency Board, highlighted the activities of the Recovery Board,  stating that it achieves transparency of Recovery Act spending through  reporting on the use of funds.  The  Recovery Board also conducts and coordinates oversight of Recovery Act funds to  prevent and detect fraud, waste, and mismanagement of funds in an effort to  drive accountability.

DOE  Inspector General Gregory Friedman gave an overview of his observations of the  challenges faced by DOE.  He explained  that “many departmental programs required extensive advance planning,  organizational enhancements, additional staffing, and training at the Federal,  state and local levels.  A fairly  consistent pattern of delays existed in the pace at which Recovery Act funds  had been spent by grant and other financial assistance recipients.”  He noted difficulties with the DOE’s ability  to meet its Recovery Act goals which included quality problems in the work done  for the Weatherization Program, Loan Guarantee Program documentation concerns, a  lack of instituted policies for ARPA-E, and the need for additional safeguards  implemented by the Western Area Power Administration.  He also stated that “a combination of massive  funding, high expectations, and inadequate infrastructure resulted, at times,  in less than optimal performance.” Friedman also told the subcommittee a positive outcome of the DOE’s  implementation of the funds was that the Office of Science and its laboratory  system were found to have generally complied with Recovery Act requirements,  expended funds in a timely manner, and employed sound project management  practices.

Commerce  Department Inspector General Zinser gave an overview of the implementation of  ARRA funds within the Department of Commerce.   He testified that since the passage of the Recovery Act, the Department  has issued 15 audits and evaluations providing improvements in operational  efficiency and has performed over 100 separate training and fraud prevention  sessions for about 5,500 program officials and potential grant recipients.  As of September 30, 2011, the Department had  obligated almost all of the remaining $6.8 billion of Recovery Act funds and  disbursed approximately $2.9 billion.  In  a July 2011 audit report the Department was found to have implemented effective  internal controls over its Recovery Act recipient reporting.  There were, however, contract system issues  resulting in the need for grants and contracts personnel to perform many manual  procedures to compensate for these inadequacies.  Setting up new programs and the length of  time needed to complete construction projects has resulted in some of the  Department’s spending being incomplete.   Despite this, “the Department’s Recovery Act-funded programs represent a  promising mix of new programs and continued vital support of projects that  advance the United States’ role as a world leader in science and technology.”

NSF  Inspector General Allison Lerner testified that the NSF received $3 billion in  ARRA funding which was delegated to three core appropriations accounts:  Research and Related Activities, Education and Human Resources, and Major  Research Equipment and Facilities Construction.   ARRA funds were also designated to provide transparency through  reporting requirements, accountability measures, and oversight and the  Inspector General’s office received $2 million in ARRA funding to conduct  necessary oversight.  Though Lerner  agreed that the ARRA “came at a time of great need in our nation and with it  came great hopes for job growth and economic stability,” she noted that “the  ARRA also brought with it significant transparency and accountability  requirements that had never been seen before within government.” Her office worked to use the resources to  develop and implement an oversight protocol “that combines proactive  business-system monitoring with a more traditional audit and investigative  approach,” a model, she stated, that was a valuable tool for the NSF. 

The  final testimony was that of Gail Robinson, Deputy Inspector General of NASA.  In her testimony, she stated that NASA  primarily used its Recovery Act funding to augment ongoing research and  development activities in several program areas including Science (with an  emphasis on Earth Science and Astrophysics), Exploration, and Aeronautics  Research, as well as to restore buildings at Johnson Space Center that were damaged  by Hurricane Ike in 2008.  Robinson  further noted that NASA had allocated the majority of the funds to ongoing  rather than new projects, and that NASA “took proactive steps early in the  Recovery Act process to help ensure compliance with the Act’s requirements and  as a result NASA has been generally successful in ensuring that its Recovery  Act funds were used in accordance with requirements and goals of the Act and OMB’s  implementing guidance.” 

Following  the testimonies, Members had the opportunity to raise questions and concerns to  the panel of witnesses.  Broun opened  this dialogue by asking what happens to ARRA funding in the case when a company  declares bankruptcy or if the funds are not used by the OMB required  deadlines.  The panelists responded that  they were unsure of the exact procedure that would take place in either of  these cases, though the general assumption was that the funding would go back  to the US Treasury.    Broun also pressed  Robinson regarding the jobs created by the ARRA funding that went to the James  Webb Space Telescope; she responded that many of these jobs were contract  rather than permanent positions.  In  response to Broun’s questions about FutureGen programs and tracking funding  usage, Zinser stated that there are websites that demonstrate the effectiveness  of NOAA environment programs and which analyze the use of ARRA funds for other  programs. 

Tonko  asked Rusco for his reassurance that nuclear projects, which had been  considered favorably in the grant process, receive the same tough scrutiny as  other loan programs.  Rusco and Friedman  responded that the reports issued by their respective agencies were accurate  with respect to the risks and lack of documentation of the nuclear  programs.  They agreed with the actions  taken by their Departments about these findings in the reports.  Lastly, Tonko questioned the reporting  requirements for ARRA funding, emphasizing the need for government transparency,  but questioning whether or not the reporting requirements were onerous.  Rusco responded that improving guidance to  agencies would help with the extensive reporting requirements.  Friedman also admitted that this is a lesson  learned from the stimulus funding.   Lerner concurred with the view that the reporting was a burden for the  recipients of the funding since recipients need to report data in many  reporting systems.   

Rep.  Larry Bucshon (R-IN) questioned the unemployment rate before and after the  passage of the Recovery Act, pointing out that currently the US unemployment  rate is still high.  He questioned  whether the Departments that were issued funding request and actually need  those funds.  Friedman responded that the  funds were used to make significant and necessary changes within DOE; Lerner  pointed out that NSF wanted to raise the acceptance rate of funding research  projects and that they were able to do so with the Recovery Act funding  received.  This increased the  possibilities for the current science workforce as well as the next generation  of scientists.

Rep.  Jerry McNerney (D-CA) inquired as to whether the panel felt that the increased  checks and balances that were a result of ARRA funding will help reduce fraud  and waste in the future.  Rusco responded  that the extra oversight has uncovered fraud, waste, and abuse and that the agencies  have, as a result of these findings, become more careful.  This has resulted in the agencies examining  and creating better processes for their own oversight for current and future  projects.  Wood stated that he felt that  the enhanced transparency and reporting system was worth the cost.  McNerney also pressed the panel regarding any  employment impact from the ARRA funding, but the responses he received as to  this question were statements about the difficulty of attaining such data. 

Rep.  Sandy Adams (R-FL) questioned the effect of the ARRA on the US unemployment  rate and offered other questions as to her concerns with the bill.  Rep. Randy Hultgren (D-IL) inquired whether a  study had been done on the effect of ARRA funding to DOE national labs.  While a study to those effects has not been  performed, Hultgren and the panelists agreed that national labs did benefit  from ARRA and use their funding effectively. 

While  there was much discussion during the hearing about government waste, fraud, and  abuse of funding, the panelists did highlight that the ARRA was found to have  helped discover these problems and to provide the financial means for agencies  to begin correcting the issues they discovered during the investigation and  oversight process. 

The  hearing charter and hearing webcast can be found here.