OFFICE OF INSPECTOR GENERAL STATEMENT OF JULIAN W. De La ROSA, INSPECTOR GENERAL ACCOMPANIED BY: E.J. GERMAN, ASSISTANT INSPECTOR GENERAL FOR RESOURCE MAN- GERALD W. PETERSON, ASSISTANT INSPECTOR GENERAL FOR AUDIT GUSTAVE A. SCHICK, ASSISTANT INSPECTOR GENERAL FOR LABOR JAMES E. MCMULLEN, DIRECTOR, OFFICE OF BUDGET INTRODUCTION OF ASSOCIATES Senator HARKIN. We are now turning to the inspector general of the Department of Labor. We will now hear from the Labor Department's Inspector General, Mr. De La Rosa. The inspector general's office is responsible for conducting broad oversight of Department of Labor Programs. A major part of that responsibility includes recommending policies to detect and prevent fraud, waste, and abuse in Labor Department programs, as well as the investigation of potential criminal activities. Your entire prepared statement will be made a part of the record, Mr. De La Rosa, and we ask you to give a brief oral summary of your budget request. Again, welcome back to the committee, and please proceed as you so desire. Mr. DE LA ROSA. Thank you, Mr. Chairman. With your permission, I would like to introduce my associates for the record. Senator HARKIN. Please. Mr. DE LA ROSA. At my extreme left, your right, I have Mr. Peterson, who is the assistant inspector general for the Office of Audit. To my left is Mr. German, who is the assistant inspector general for Resource Management and Legislative Assessment. To my immediate right is Mr. Schick, who is the assistant inspector general for the Office of Labor Racketeering. To his right, Mr. Bar sett, who is the assistant inspector general for the Office of Investigations. And of course you know Mr. McMullen, who is with th Department's Budget Office. SUMMARY STATEMENT I will very briefly summarize the statement which as you indicat ed will be in the record in its entirety. Mr. Chairman, members of the subcommittee, I appreciate this opportunity to appear before you to discuss the fiscal 1992 budget request for the Office of Inspector General of the Department of Labor. The 1992 budget request of the Office of the Inspector Gen (103) eral is $51,326,000. This represents a net increase of $2,825,000 above the 1991 level. This requested increase will cover selected mandatory increases and allow the Office of Inspector General to finance 541 full-time equivalents, 12 fewer than the estimated 1991 level. PREPARED STATEMENT The inspector general's total budget figure is distributed among four basic activity centers: the Office of Audit; the Office of Investigation; the Office of Labor Racketeering; and an executive direction and management activity. With that summation, I would be available for your questions, sir. [The statement follows:] STATEMENT BY JULIAN W. DE LA ROSA Mr. Chairman and members of the subcommittee, I appreciate this opportunity to appear before you to discuss the fiscal year 1992 budget request for the Office of Inspector General (OIG), Department of Labor (DOL). The 1992 Budget request of the Office of Inspector General is for $51,326,000. This represents a net increase of $2,825,000 above the 1991 level. This requested increase will cover selected mandatory increases and allow the OIG to finance 541 FTE's, 12 fewer than the estimated 1991 level. OIG's total budget figure is distributed among our four basic activity centers: the Office of Audit, the Office of Investigations, the Office of Labor Racketeering, and an Executive Direction and Management activity. Included in the request is a proposed transfer of $961,000 from audit contract funds to Executive Direction and Management to support implementation of the field portion of OIG's ADP Modernization Program in fiscal year 1992. OFFICE OF AUDIT The request for the Office of Audit (OA) totals $24,770,000 and 247 FTE's. A comparative transfer of $300,000 to Departmental Management is included for the continued preparation of DOL financial statements, which were previously prepared by the OIG. In fiscal year 1992, OA's prime responsibility will be to implement the specific requirements assigned to the OIG by the Chief Financial Officers Act of 1990. Beyond that effort, OA will maintain the broadest possible audit coverage of Departmental program operations and management. Substantial fiscal year 1992 audit coverage will be dedicated to the areas of: Departmental Financial Management; Job Training Partnership Act; Pension and Welfare Benefits Administration; Unemployment Insurance; and Information Technology and Resources Management. The amount requested for OA includes $6.4 million in audit contracting funds, which is the equivalent of 68 FTE's. Coupled with OA's 247 FTE's, OA anticipates performing 206 audits, reviews, and studies, and issuing 390 audit reports under the Single Audit Act. OFFICE OF INVESTIGATIONS The request for the Office of Investigations (OI) totals $8,838,000 and 109 FTE's. During fiscal year 1992, OI investigative priorities will be in the areas of the Job Training Partnership Act, the Federal Employees' Compensation Act, and DOL employee misconduct. In addition, OI will be resuming investigative activity in several areas which were discontinued by OI after the 1989 Office of Legal Counsel opinion, such as fraud related to the Black Lung and Unemployment Insurance Trust Funds. OI's caseload projections for 1992 are lower, which is consistent with plans to develop a caseload emphasizing investigations of greater complexity and potential rewards in terms of recoveries, improvements and impact. OFFICE OF LABOR RACKETEERING The request for the Office of Labor Racketeering (OLR) totals $11,322,000 and 126 FTE's. OLR's enforcement program is founded on the premise that organized criminal groups have penetrated certain labor organizations and used unions as vehicles to abuse affiliated employee benefit plans and create criminal monopolies in labor intensive industries. These industries include the building and construction, waterfront, garment, trucking, waste disposal and tourism trades. A unique feature of this enforcement effort is its commitment to long-term investigative projects designed to reach beyond the most visible violations and perpetrators in order to remove insulated persons who represent the infrastructure of corruption. Such a concentrated focus also is intended to promote a continuous law enforcement presence in historically corrupt areas in an effort to create a credible de terrent. OLR will continue, as in past fiscal years, to conduct criminal investigations in the following priority areas: employee benefit plans, labor-management relations, and internal union affairs. Within the benefit plan arena, the primary focus will be upon welfare plans, including the burgeoning problem of fraudulent self-funded group health plans and fraudulent multiple employer welfare arrangements (MEWA's) EXECUTIVE DIRECTION AND MANAGEMENT The request for the Executive Direction and Management (EDM) activity totals $6,396,000 and 59 FTE's. The EDM activity provides for overall management direction as well as policy development, planning and review, legal counsel, legislative and regulatory assessment, and resources management, as well as information and administrative support functions necessary to carry out the nationwide responsibilities of the OIG on a timely and cost-effective basis. The OIG has developed plans for the replacement of its eight aged minicomputers with DOL-standard microcomputer technology. At this time, the OIG estimates that $961,000 will be required in fiscal year 1992 to implement this phase of the OIG's ADP Modernization Program. Mr. Chairman, this concludes my prepared statement. I would be pleased to answer your questions. BIOGRAPHY OF JULIAN W. DE LA ROSA Mr. De La Rosa became the Inspector General (IG) for the Department of Labor on August 6, 1990, after 30 years of service with the Federal Bureau of Investigations. As IG, he oversees the audits and investigations of all Departmental programs. In 1989 Mr. De La Rosa retired from the FBI and accepted the position of Secretary to the Board of Police Commissioners of the St. Louis Police Department. In this position, he was the Executive Officer responsible to the Governor of Missouri and to the Board for the administration, personnel operation, and budgetary aspects of a major law enforcement agency with over 2,200 officers and employees. In 1988 he was promoted to Special Agent-in-Charge (SAC) of the St. Louis FBI Field Office. As SAC, he was responsible for over 100 Special Agents conducting investigations in Eastern Missouri. In 1987 Mr. De La Rosa returned to FBI Headquarters as the Executive Officer in charge of background investigations of nominees for political appointments. In 1979 he was promoted to Assistant SAC of the San Antonio Field Office. In 1972 Mr. De La Rosa was promoted to FBI headquarters. In this position he supervised Field Office investigations of criminal violations and participated in personnel and administrative policy implementation. He was also instrumental in the establishment of the FBI's Office of Equal Opportunity Affairs. Mr. De La Rosa began his law enforcement career in 1959, with the FBI in the San Antonio, Texas office. In 1963 he was appointed as a Special Agent and served in many posts, conducting civil, criminal, labor racketeering, and foreign counterintelligence investigations. A Texas native, he was graduated from St. Mary's University in San Antonio in 1963 with a B.A. degree in political science. Mr. De La Rosa is the recipient of over 70 special commendations from the FBI in recognition of meritorious accomplishments. He is a member of the International Association of Chiefs of Police, and the Texas Police and Sheriff's Associations. He is married and has three children. BUILT-IN INCREASES Senator HARKIN. Thank you, Mr. De La Rosa, for being so succinct. Let me ask you this. You are asking for $2 million more than last year, but you are cutting 12-you have 12 fewer people full time. Mr. DE LA ROSA. Yes, sir; that is the estimate as it stands now. In addition, the impact of the Federal Law Enforcement Pay Reform Act of 1990 will be about $1 million while the request provides only $450,000. The other $550,000 we have to take from other services. Since we are an investigative and auditing entity we must maintain a certain level of nonpersonnel activities, such as travel and other services, and that is reflected in our budgetary adjustments by a reduction of 12 FTE. Senator HARKIN. Staff just gave me this. The increases are built in here, I guess. It looks like most of it is for increased salaries, right? Increased pay? Mr. DE LA ROSA. Increased pay and such things as locality pay, the administratively uncontrollable overtime, which is part of the compensation provided to our criminal investigators-of whom we have 196 at this time-and other related law enforcement costs. Senator Harkin. We would like to take a look at some of this. I have some questions on some of these items. To provide for increased cost of audit contracts, $323,000. Why is that so much more? Mr. DE LA ROSA. I am sorry, sir. I did not hear the specific reference you made. Senator HARKIN. Well, it was to provide for increased cost of audit contracts. I do not expect you to answer that right here. I am just looking at the list and I am saying it sticks out like a sore thumb here. I am wondering about some of these big increases here. I can understand the pay. Mr. DE LA ROSA. Those are all simply inflationary increases. But we would certainly be willing to explain them and furnish our responses for the record. Senator HARKIN. I might ask you about some of those. Some of those look a little bit high there. But we might give you a few questions on them. Mr. DE LA ROSA. Certainly. JOB TRAINING PARTNERSHIP ACT Senator HARKIN. I want to get back to the job training fraud and abuse. You probably heard me ask the secretary about that. I wanted to ask you about that. You have already suggested legislation? Do you believe that regulations are sufficient to deal with the problem, or do you still think we need legislation? Mr. DE LA ROSA. We have not seen the final draft of the proposed regulations, and that process is going to take some time. But I believe regulations could be an improvement. But whether they would, in and of themselves, take care of the problem, as grave as we believe it to be-at this point I do not really think so. I think legislative action such as the bill that was proposed is going to be necessary. Senator HARKIN. How soon are you going to get these regulations? Do you have any idea? Mr. DE LA ROSA. We are working with Assistant Secretary Bob Jones and his ETA people in that regard, and I really cannot speak to when the regulations are going to come out. We can determine that and advise you. Senator HARKIN. Well, if you have any suggested changes from the legislation that came up last year, would you let us know soon? Mr. DE LA ROSA. Yes, sir. Senator HARKIN. If we are going to address that this year, we ought to get on it pretty soon. And at the staff level, would you please work on this? Mr. DE LA ROSA. The JTPA issues, as you may be aware and are probably aware, are a high priority in both our audit and our investigative entities, and we consider them to be one of the things that we will continue to pursue in the forthcoming fiscal year as well. Senator HARKIN. Do you believe-can you state now that-this evidence of fraud and abuse, is it just really localized or is it widespread throughout the whole-is it spread around? Mr. DE LA ROSA. I would like Mr. Peterson to comment more specifically-but, based on the reviews that I have conducted within the Office of Inspector General, we find it to be quite widespread. And in fact, I believe just about every program we look at we find a problem that could be corrected by both these regulations or by the legislation as we see it. Would you like Mr. Peterson's comments on this? Senator HARKIN. Yes, please. Mr. PETERSON. I certainly concur with the inspector general that the abuses are widespread. Just going back to your previous ques tion, Mr. Chairman, we testified several times last year in the House in support of the House amendments, and we continue to support amendments that look very much like those which the House passed 1 year ago. I know that they could not get that done in conference at the end of the last session, but we continue to support amendments that look very much like what the House passed 1 year ago. PENSION AND WELFARE BENEFITS ADMINISTRATION Senator HARKIN. I have covered that. One question I wanted to cover with you. Does your office get involved in any audits and looking at some of the problems in the pension benefit garanty administration? Mr. DE LA ROSA. Yes, sir, we audit in the ERISA area. Mr. DE LA ROSA. Regarding ERISA and DOL's Pension and Wel fare Benefits Administration, yes, we do, on a regular basis. In fact, we are in constant discussion with them. We conduct investigationa in the criminal ERISA area, and we conduct oversight audia d their activities in general. We have test, working with them. I am sorry, I may have mantersub-cd you way, the Pension, Venst Guaranty Corporation & the Penant Helfare Penetra komunite tration? |