Transcripts For CSPAN2 Federal Waste And Fraud 20170426

Come to order. I want to welcome our witnesses, i appreciate your time and testimony, i look forward to your oral testimony and answering what will be some pretty interesting questions. I frequently say from the podium that the general Inspector Generals, your are go to agencies and government. Youre doing so much to root out and identify and eliminate waste fraud, abuse, dictated programs which is what this hearing is about. The reports by the gao that really started with a Pretty Simple. [inaudible] offering 2010 by senator colborne in the. [inaudible] something we all hate to do but if were going to do it its nice to get some measure of control and a Pretty Simple concept is asking the gao to issue reports and inspections on different programs as resulted in 75 billion of savings over seven years. This is pretty remarkable. Based on the amount of Budget Authority that the gao has, 3. 8 billion over that timeframe that a 20 one investment. Put the microphone on for this. 112 to one. They have a good return to rate as well. I have unanimous consent that might written remarks, written statement were get written in the record. I want to start with a couple i prepared for the hearing. Just to put things in context. We got a recent Congressional Budget Office report on longterm then deficit. They always report these things as percentage of gdp and we go through a fair amount of effort to convert those dollars because that makes us meaningful. The last number of years, its been a couple of years since they updated their production. Ive said theres a 30 year projected deficit is a hundred trillion dollars. We move forward in time and we havent solved the problem and now, fourthly, the projected deficit is 129 trillion. Thats 10 trillion over the next decade, 37 in the second decade, 82 quintillion in the third decade and put that in perspective the entire net private acid all assets held by businesses and households is equal to a hundred 28 trillion. This is by the way 62000 for every man woman and child in america. What is unfortunate is it seems that nobody is really paying attention to this. Were not addressing it in congress, obviously, from a change from 103 for the next 30 years. I want to put that in congress under context. This also puts in 75 in context , to a no way shape or form want this distracting from your efforts which i think are laudatory but just so everyone understands that same sevenyear period where the gao was doing great work, 20 one save 75 million we spent 25 trillion, we borrowed 6. 6 trillion of that and 26 . Twentysix cents for every dollar we spent, we borrowed. Again, showing the magnitude of the problem here. I want to thank all the witnesses. I think well have a pretty good discussion with the Inspector General for tax and ministration talking about the refundable tax credits and improper Payments Fraud abuse of that program. Obviously, one of our Favorite Institution is universities and one dear to my heart, all three of my kids went to the university of wisconsin in madison. We have the chancellor talking about the duplication of different regulations imposed on researcher universities, in general, the overregulation of the difficult time the universities have to dealing with federal regulation on their operation and then we have mr. Keith repko from the Va Health Systems talking about the problems dealing with the regulations and constructing Healthcare Facilities for the finest among us. Again, this will be a good discussion. Again, all laid before us because of a Pretty Simple amendment by senator Thanh Coleman seven years ago and the excellent work of jean darlow and his good people working at the Government Accountability office. With that ill turn it over to my Ranking Member. I want to echo many of the comments of the chairman. I am continue to be frustrated along with my colleague and former Ranking Member, senator karp who has carved on improper payments for as long as i can remember. I think gao is an important ally to this committee and i want to think this opportunity as i take to make sure all the people in that building that their work does matter even though it is too often ignored or set aside what you all do is important and you are tremendous Public Servants and i love associating with the auditors a gao is a former auditor. Your annual duplication report sets out some important work that you have done in investigating how the federal government has been spent tax dollars. You consistently concrete steps that we can take and the executive branch can take to eliminate wasteful spending. You all have saved so much money for this country but there is obviously a lot more work to do. Id like to welcome the other witnesses to the hearing. I especially want to welcome keith repko who is here as the leader of the va facilities in st. Louis and i dont think any of the members of the committee can appreciate how nice it is to have this roll off my tongue since we struggled in st. Louis trying to fill this position for literally years on end. I think people need to realize some of the management problems in the va can be bared out by the fact that we would open the head of the va facility st. Louis job position and no one would apply. Now, that tells you something. That tells you that there is a real problem in either the support these managers are getting or what were paying them but when you open a job that has that kind of responsibility and no one wants it, it means that we have a lot of work to do in figuring out so, thank you. Thank you for filling this position, its been badly needed. Were thrilled to have you today. The reason youre here today is one of the things pointed out in this years report is the problem the va has managing construction. It is clearly we put a lot of capital in the va. Ive been somebody banging on the table to get that done. I want to make our facilities are firstrate and adequate. I want to make sure that it is a lack of facilities that is causing undue delay or problem with our veterans getting healthcare. Clearly this report points out that this is not always being managed well. In terms of how these projects are being undertaken and how theyre being executed. We want to spend a little bit of time on the management of those Construction Projects. I also want to echo about the tax credits. It is particularly im glad youre here, doctor blank to talk about grants and the problems in terms of Administrative Burden on grant recipients and also, Administrative Burdens on reporting Crime Statistics that are difficult for our universities right now. But i am also glad you are here because we need to talk about the growth and improper payments in a new form of tax credit refundable tax credit and that is the amount of easily determined overpayments in the American Opportunity tax credit. It may not be as large as the other refundable tax credits but it doesnt mean that it wont be we the notion that its as simple as double checking with universities and seeing how many hours someone is going to college is pretty jawdropping that we are allowing a billion dollars to go out the door every year without the rudimentary checks and balances as to whether those tax credits have actually been earned by students attending higher education. Thank you all for being here. Thank you chairman for having us at this hearing and i look forward to questions and comments as we move forward. It is the square in witnesses so if you will all raise on the rise and raise her right hand. Do you swear the testimony you get before this committee will be the truth, the whole truth, and nothing but the truth, so help you god. I do. Our first witness is eugene darrow. Hes been the comptroller general of the United States Government Accountability office since you 2010 and has more than 40 years of experience at the agency including as acting comptroller junior, chief operating officer in the accounting division. Thank you. Good morning to you. Its a pleasure to be here and i appreciate very much the words that you said complementing gao. I will make sure to pass it along to all the people in the agency. We had such a dedicated talented workforce and they deserve to hear such complement. I also want to assure this committee before i get into talking about duplication report that i am worried about the overall physical health of the federal government. The issue special report this past january basically saying that the federal government is on a longterm unsustainable fiscal path. I call for an action plan by the congress to deal with fiscal policy changes that are needed to be made. While there need to be changes made in fiscal policy, both on spending and revenue side, particularly, there are some things to be done. Addressing overlap duplication, improper payments and the tax gap are among those areas. This year this is our seventh report on overlap duplication fragmentation. We report on what happened over the last six years with the 645 recommendations that we made to date in the first six years. 51 of those have been implemented by the congress and executive branch. 31 had been partially addressed and 18 have not been addressed at all. As you pointed out, mr. Chairman , 75 billion is artie accrued in savings but theres another 61 billion in the pipeline that will be accrued because of actions that have been taken so the total amount of saving is a hundred 36 million so far. This years report has 79 new actions and 29 different areas that range across the federal government from the Defense Department that could save millions of dollars by better managing their Virtual Training programs, integrating them in simple things like advertising for recruitment purposes where there are seven different advertising programs competing in the same market to hundreds of millions of dollars that can be saved in implementing the recommendations on medicare and medicaid. Dealing with such things as providing not adequate compensation for uncompensated care that hospitals give. We think the formula is outdated and doesnt really reflect the true amount of uncompensated care particularly since its going down with the expansion medicaid, for example. Other areas where they could reduce proper payments and medicare and medicaid we have a number of recommendations in that regard. Most of the improper payments of the 144 billion come from medicare, medicaid and the earned income tax credits. Im glad were addressing that today and im glad russell is here to talk about that issue as well. The new areas were adding, 395 open areas of gaos recommendation. I recently met with director mulvaney and i mentioned to him that we would be sending letters to each of the departments in the agencies outlining our open recommendations and giving priority attention to those i think the head of the agency needs personal attention to over the coming months. As ive done in last two years, this will breed particularly helpful as they go through their exercise of looking at reorganizing, streamlining and gaining some more efficiencies. Most of our open recommendations are addressed to the executive branch. But i also have what i call senator langford a tent appendix where he asks every year, what can the congress do. Give us a list. We have 61 open matters for the congress to consider. I would comment that most of the savings that have occurred would have come from Congress Taking action and most of our savings, theres tens of billions of dollars that are still on the table that could be implemented and successfully achieved by implementing our recommendations i look forward to working with congress and continuing to work with the executive branch which im committed to do and in the process now to meet all new cabinet officials and talk about a working relationship and recommendations that gao ao has to make their operations more effective and efficient. Thank you for the opportunity to be here today and i look forward to answering questions at the appropriate time be back thank you very much. I have a couple charts. Lets put up the first and proper payment charts. To lay the groundwork in terms of improper payments on refundable tax credits, just in these three programs. This is 2015, correct . 69. 8 billion in additional Child Tax Credit is 28. 5 million and the American Opportunity tax is 4. 4 billion. Those are the refundable tax credits, improper payments are 25. 1 billion about 24 . The next chart shows how this has been a problem for the seven years of the duplication report as i was telling the respect Inspector General i had of time its been going on for 20 years. In spite of all the good efforts in publicizing this year after year after year, it doesnt look like were making a whole lot of progress. As you can see, how much money is being sent on the tax expenditure and how the improper payment rates is still above 20 just a really stuck there. Again, this is the backdrop for our next witness. Mr. J russell george. Since becoming nominated by president george w. Bush in 2005 mr. George has served as the treasury secretary protect the ministration. Prior to assuming this role he served as the Inspector General of the corporate and in addition to his work is Inspector General he served as a member of the Integrity Committee of the council for integrity and intensity. Mr. George. Thank you, chairman johnson and members of the committee. I appreciate the opportunity to testify on tax related improper payments. Since weve conducted a number of views that evaluate the irs to eradicate erroneous backs tax credits. This will highlight our ongoing work. Refundable credits are designed to help lower income individuals reduce their tax burden or to provide incentives for other activities. Because these tax credits are refundable they are vulnerable to unscrupulous individuals who file fraudulent claims. Todays earned him remains the only refundable credit the irs has designated as high risk for improper payments. However, this has continued to report that the irs Risk Assessment with the additional Child Tax Credit in the American Opportunity tax credit also known as the education credit, substantially understate the risk of improper payments for these credits. These credits collectively count for more of 100 million claim during tax year 2015. For fiscal year 2016, the irs issued an estimated 25 billion and potentially erroneous payments for these credits. This represents a significant loss to the federal government. In addition, the assessment to the risk related to premium tax credits improper payments continues to prevent challenges for the irs. This credit created by the Affordable Care act assist individuals in paying for their health insurance. Unlike other refundable credits the irs is not solely responsible for administrating the premium tax credit. As a result, the irs cannot effectively assess the risk of improper payments for this credit on its own. The irs and the department of health and Human Services continue to work on a methodology to effectively measure improper payments relating to this credit. To reduce certain fraudulent and improper payments, congress enacted the protecting americans from tax hike act. Among other positions it moves up the deadline for forms w2 and wage and tax statements and other income information related documents and provides the irs additional time to verify earned income tax and additional tax credits. This is based on income individuals report on their tax returns. According to the House Committee the integrity provisions are projected to save roughly 7 billion over ten years by reducing fraud abuse and improper payments and refundable tax credit programs. To date our work related to this legislation has found the irs has properly withheld refunds for returns with earned income in additional tax credit claims and released those returns that were not identified for additional review. Irs management informs that these claims are being verified solely against w2 data to identify claims that have unsupported income. Irs management indicated that for the 27 team season they do not plan to use other income supporting documents to systematically verify income reported on tax returns with refundable credit claims. The irs has cited a number of technical challenges in timing issues that need to be addressed in order to use this information to verify income at the time tax returns are processed. In addition, the irs was unable to implement processes to identify erroneous claims for the 2016 season for taxpayers following prior years to claim certain refundable credits referred to as retroactive planes. Our review of tax 2014, tax returns filed and processed during the 2016 Filing Season identified 35 million in refundable credits that were erroneously paid to taxpayers following retroactive planes. Finally, the irs does not have the authority. [inaudible] in which the information provided by the taxpayer does not match Information Available to the irs. As a result, the irs must have an audit to address the erroneous claims but without correctable authority the irs cannot address those erroneous refundable credit claims that it identifies remains limited. Mr. Chairman, members of the committee, we attempt to remain serious in our mandate to provide independent oversight of the irs and its administration of the nations tax system. As such, we plan to provide continuing coverage of the irss effort to identify and reduce improper refundable tax credit payments. Thank you for the opportunity to present my views. Thank you. I feel i want to point out the total on that refundable tax credit is 441 million in the improper payments is over 100 billion. This shows the magnitude of the problem in just those three refundable tax credits and with obamacare, the house plan, were looking at more refundable tax credits. Our next witness is ms. Rebecca blank and mr. Blank became chancellor of the university of wisconsin madison in july 2013. Prior to serving as chancellor, she served as the obama ministration faculty of commerce chancellor bank. Thank you. I appreciate having a chance to say a few words about the regulation of federal research in our nations top university. I was an economist prior to becoming chancellor at the university of wisconsin madison and i believe deeply that we must do everything we can to help Research Universities right these institutions hold the key to our future economic prosperity. Theyve also become some of the most regulated entities in this nation. At least 35 federal agencies regulate our research at the university of wisconsin with multiple interpretations of the rules and many confusing, duplicative and unnecessary request. My message today is very clear. We have added layer upon layer of regulation and were at a point where this is seriously impeding the productivity of our scientist. There is many 23 different administrative responsibilities associated with every federal research grant. Each of those steps requires time for from either the researcher or their support staff. Ten years ago, at dw, we had 50 fulltime staff handing both precatory compliance issues on human and Animal Research project. Today we have 80. There is not another function on campus that has added 30 fulltime positions at a moment in time when we have been working hard to increase efficiency and reduce staff. Still much of the burden falls not on staff but on teachers and researchers taking valuable time away from both the classroom and lab. The latest federal demonstration survey indicates a nationwide scientist with federal funding spent 42 of their time on regulatory and administrative activities. About four hours in a nine hour day. We recently surveyed our scientist who do research involving Research Human subject half of them said they had given up or almost given up on at least one Research Study because of the red tape involved. We cant afford to sideline potentially lifesaving research the 21st century care effect in the American Innovation and competitive act took some big steps in reducing these in ministry to burdens but as the gao notes in the report, there is more to be done. Let me give you two recommendations. First, to key provisions of the 21st century and the American Intervention competitive act should be prioritized implementation. The new Research Policy board should be set up and streamlined Grant Application and reporting requirements need to be put in place as soon as possible. Right now, almost every agency has different format for submitting a Research Proposal recording on research project, reporting on efforts, reporting back on what the results are, i demonstrate compliance with regulations. The agencies have very different roles on how results should be saved and be made publicly available. Thats confusing, costly and inefficient. Recently there was a report by the National Academy of sciences the details that these problems that i encourage any of you who have an interest in should read. Secondly, the implementation of the final rules should be prioritized which allows low risk projects to be subject to different restrictions that high risk projects. The recently adopted final rule scheduled to take effect in january 2018, aims to reduce Regulatory Burden on human subjects research. This poses little to no risk to participants. For example, survey research, should be subject to different rules the medical research that may be testing medical pictures on human beings. Without clear guidance to address differences and how these regulations are interpreted and applied, i promise you, the problems will persist. Let me give you an example. One of our pediatricians is wanting to create a registry to track Health Information from children across the state of wisconsin with a very serious but relatively rare condition that can cause heart attacks at a young age. Sharing that information can improve medical care and help keep costs down. Were six months into the effort to try to get approval into this project. We still have not been able to do so because there are multiple sites that provide information to this registry and every site is interpreting the regulations differently and therefore, every site is demanding different information from us and in different restrictions. Let me be clear that i am not arguing that we should do away with all of the regulations governing research. Federal regulations help ensure research integrity, increase access to Research Data and results in the pub protect human and animal subjects in research. But we need to be smart about the regulations that we have and how we implement them. I have spoken today about the regulations affecting our Research Enterprise but let me note that our written testimony is the number of examples of excessive regulation that increases unnecessary costs and interferes with how we serve students. No nation on earth has been successful as the United States at building remarkable institutions that offer an outstanding education and conduct the kind of basic research that fuels innovation and help solve immediate problems in the real war. Thats why the west of the nation wants to send us their best and brightest students. Excessive regulation of Research University can only erode the success over time. Thank you for your commitment to helping bring this unwieldy system under control and with your help, Great Research institutions like the university of wisconsin, missouri, michigan , montana will continue to keep this nation on the cutting edge of innovation. Thank you. Thank you. Again, i want to thank you for bringing this to my attention when you came to my office a couple of years ago. The Small Business administration has a cost complying with 2 trillion. Year which you divide that by the number of household is almost 15000. Year. Household. I appreciate the fact that the university is grappling with this project and youre highlighting the entire nation, the entire economies as well. This is a good testimony. I appreciate it. Following this, final witness is keith repko. He serves as the medical director of the vet affairs in the st. Louis Healthcare System where he oversees 3000 employees prior to becoming Medical Center director he served as Deputy Director where he led efforts to reduce veterans access time to be in the top 25 of all the eight the facilities. Good morning, chairman johnson. Thank you for the opportunity to participate in this hearing. To discuss the design and projection projects at the Jefferson Barracks and john of the va Healthcare System. The st. Louis Healthcare System is a dual affiliated, fullservice Health Providing inpatient and Outpatient Care and medicines, surgery, neurology, psychology, rehab and many other subspecialties. Its a two Division Facility that serves veterans in east central missouri, southwest illinois. The John Cochran Division named after the late missouri congressman is located in midtown st. Louis and comprises the Medical Centers surgical capabilities, ambulatory care units, intensive care units, Outpatient Care clinics in our emergency department. One of the Top Priorities for the department have been improving access to care. It st. Louis, weve taken it to heart. While more work remains to be done both the va and st. Louis has made real progress. In fiscal year 2016 st. Louis has hired 285 staff including 36 positions, for physician assistants, 93 nurses and 252 other critical occupations. With extended clinic hours to five of our locations and hold saturday clinics at two of them. Additionally, we have increased the delivery of care by using telephone consult and secure messaging to better use our providers time. It will improve access to meet veterans cares needs where its convenient for them. The barracks division is a multicampus, multi building campus overlooking the Mississippi River in south st. Louis county. It provides psychiatric treatment, spinal cord injury treatment, geriatric care, Rehab Services and has it. [inaudible] facility for our homeless veterans. We are pursuing a Major Construction progress on this campus. Itll enable us to serve veterans help decades to come. If a joint vha, nca adventure and will construct five new buildings. The project will relocate primary care, Mental Health and special care clinics out of its current 1920s building into a modern environment and allow for expansion of care. Will also construct a new patient aquatic and rehab facility, replaced an older facility that frequently we have to shut down in the heat of the summer due to lack of adequate airconditioning. Lastly, the project will replace fire alarm system, construct a new support building, provide 800 net new Parking Spaces and constructive facility to replace our obsolete engineering and consolidated warehouses. Upon the completion of the project will decrease the amount of infrastructure maintained and operated by vha to the demolition of energy and efficiency and underutilized buildings. Will also provide approximately 30 acres to the nca for the expansion of the Jefferson Barracks national cemetery. Without this land the cemetery will be closed for burials in several years. The total project cost is 366 million and was approved as a va later in 2004, partially funded in 2007, design in 2008, started construction in 2010, scheduled to be completed in 2020. Currently the project is 52 complete and has no cost overruns. The john cochran campus also has a major project that was funded by design in 2010. The project proposes the construct a new inpatient bed tower that will allow for the expansion of Specialty Care clinics with an estimated cost of 433 million. In 2015 all vas Major Products including the john cochran project were reevaluated and rescored to the skate process. To ensure the project requirements are still valid and the project remained a high priority for the department. St. Louis john cochran project did not score high enough to be included in the 2015, 2016 budget cycle and is therefore not actively being devout developed. However, its eligible to be wreak considered for funding in a future budget year. In closing, each date we move toward our goal is improving and streamlining our processes in order to provide an Exceptional Care that veterans earned and deserved. This concludes my statement, mr. Chairman. Thank you for this opportunity to testify and i am pleased to respond to any questions from you in the committee. Thank you mr. Repko. Ill start the questioning with gene dodaro. When you take a look at the number of recommendations that have not been addressed at all in government surprisingly low. The fact that you have over 50 fully implemented 30 some partially fermented and less than 20 not, is really testament to what you been able to accomplish of getting your recommendations implement it. You said that congress has passed laws which is the primary reason for doing that and you 61 recommendations now. Can you give us some sense of how many different laws and in general, it took to get that level of implementation and what you would complicate contemplate would be a recognitions right now . Would you suggest this Committee Try to put the 60 recommendations and get this on the floor . Is this more effectively done on the individual bill by individual bill . The approaches that have been taken in the past have mostly been billed by bill. Theyve taken advantage for example, in the direct payments to farmers which duplicated other programs. Congress led the ethanol tax credit so lapsed so they didnt do anything and when and when away. I think any legislative vehicle that you can come up with would be an appropriate vehicle. Some of the ones that we have recommendations to the congress for action havent been addressed for a number of years. Im concerned that they could get stuck in the normal legislative process and perhaps having combined. [inaudible] package of these bills would help. Any legislative vehicle would be good. Would force the agencies to do this. Id love to work with senator mccaskill and work with the gao and lets craft something that will impose that requirement on the agencies to implement these things. The past efforts have been focused on all of our recommendations they have to respond to. It be better if you target the specific recommendations that youre comfortable with and that weve included, particularly, in the 61 that congress should take exxon. There are other opportunities for congress to put some pressure on the administration to implement some of the other suggestions. Will work in bipartisan step with your staff and other senators and figure out what that list is and get a piece of legislation, senator mcconnell will be very open. Lets deftly do that. Mr. George. I remember, in 2012 report you listed ten addresses with the earned income tax credit where there were multiple filings. The top address was 24000 filings with requesting and obtaining 46 million of refundable tax credits that the earned income tax credit . There are so many instances of people taking advantage of the tax system using that scheme it may have been the earned income tax credit but it could also have been the first time homebuyers credit or the additional child. My question was one address, 24000 claims, 46 million and i know were meant making a lot of progress but have we at least close down that abuse after all these years . Or is the irs to fill in a park . Again, i can i noted in my testing, the iss irs is given some credit but as we spoke out in the hall and is discussed during the opening remarks in my comments, the amount of improper payments was in excess of 20 billion a year, if user go. Even though its now roughly 16, 17 billion it still moving in the right direction. Even though there was a slight uptake. My question is it would be Pretty Simple to look at an address and say whether or not cannot allow if theres more than ten refundable tax credits claimed, will take a look at that its absurd that 24000 claims went through one address. No, no, they have not picks it. They still have the problem, sir. Part of the problem is the individual tax identification number. Thats correct. Can you describe that . Congress passed legislation that now requires the use of a Social Security number if youre a green card holder the use of that number for the earned income tax credit. However, for the additional Child Tax Credits which again is a growing problem while we at the igs office believe that federal law does require that same restriction, the irs has taken a different position on an issue. Again, we have debated this back and forth with the lawyers of the department. Lets tack that on to our gao p legislation here. Chancellor blank i want to give you an opportunity because i thought your written test wing was pretty powerful. As im hearing your testimony, what youre asking for is not no regulation but some common regulation. Some uniformity so that youre not trying to comply with umpteen different reporting requirements that could all be grouped together and provide common forms. Is that could you talk about other parts. Thats aptly correct. Right now we have different forms for conflict of interest. [inaudible] reporting, submitting, saving data and it becomes complex for the University Like wisconsin and other big Research Universities that are Getting Research funding from many federal agencies and everyone has different garments. In my written test money i taught not just about the Research Issues but the issues related to students. One of the regulatory that i find most compelling relates to the. [inaudible] which regulates how we deal with Crime Statistics on our campus. Its an important act and very useful, valuable to us to tracking but certain interpretations of what the cleary act, what the department has put nonnas include such thing as any place where our students spend more than two nights, we have to collect local Crime Statistics and report them as if they were on their campus. Whether our students . We had engineering students go to in elon musk competition and recently rfid teams often will spend multiple nights and that takes an enormous amount of time and effort working with local police in those areas and quite honestly result in reporting of Crime Statistics that have nothing to do with our students and is simply a misperception about what type of crime is happening on campus. That type of interpretation of the law makes life very difficult and increases art expenses in ways that are not helpful. Ill come back. Thank you. When we do the va, gene dodaro talks about your report talks about the construction project. Basically what i gather from the report is that you got an Agency Within the va that supposed to be overseeing this and each local site but there isnt appropriate coordination between the onsite personnel and this part of va thats mostly managing all these Construction Projects. Is that a fair summary . Theres really not good coordination. Generally speaking, va is decentralized organization with very little oversight and accountability from the Central Organization of va. I can say that broadly speaking. That applies to healthcare, that applies to disability as well. In this case, the change orders that were being approved werent going through regular timely process and design changes. You can see these add to the cost of the project and so we asked them to put that under a better control process so they could be approved in time. Everybody knew what the consequence would be of the change in orders and design processes there as well. I think the big change that really congress requires now Going Forward any project over a hundred Million Dollars is to be run by outside the va. Most of the ones right now are run by the army corps of engineers and you have people that are experts in Construction Projects. The ones under a hundred Million Dollars are still being run by va and some of the ones that are over a hundred Million Dollars that were new were transferred, like the denver project that iran into problems. The only responsibility is the construction is done by the corps of engineers or another organization is for the va to come up with costs of activating the facility, actually putting the medical equipment in there, preparing it for operations and so, that should help a lot by taking the big new Construction Projects out of the hands of va and put them with the core, army corps or another comp organization. The army corps will be doing the project that is as large as cochran . Anything over a hundred million. The legislation requires someone other than pa. The army corps has been gone with so far, but the army corps is the only one so far. Im proud that we dont have cost overrun with the projects in st. Louis. Mr. Repko, thats terrific. I know where a little bit schedule but that has to do with how quickly va has decided to request the money. I think, one thing americans need to realize is that congress has been very generous to va since fiscal year 2008 we funded 177 of the request and we founded 189 in 2089. 100 in 2011. 2012 was the first time that we requested no one else in government has a track record in terms of securing appropriations , particularly for capital even in the military. Even the military doesnt have that success rate. Im glad there were not overrun. I do want to bring to your attention that i have recently learned that there have been some concerns regarding the quality of the ongoing construction at the facility at jb, Jefferson Barracks. We have been in contact with the va it about this and we have been assured that they are looking into it. Are you aware of any of these concerns about integrity and quality of the construction that is ongoing there . I know its not your direct responsibility but are you aware of any problems . Have they been brought to your attention . Just recently working with your staff in preparing for this i became aware of some. I can tell you what weve had a very Good Relationship from the facility. We have a team that works for the Medical Center. Works for my office that interfaces and thats a full job being interfaced with the construction folks in Central Office for va. Our project is managed by the va construction Facility Management it was prior to that other regulation. I can tell you we have daily conversations, my staff do, with the cf staff in managing the projects and myself and my associate director have weekly and monthly meetings with our staff. At this point, we have no concern of any serious issues in this project either moving forward either in quality i can tell you i served as chief engineer for 12 years. In that those years i managed a lot of projects. I can tell you theres no such thing as a hundred perfect contractor or project. I would say contractors would say theres no thing as a hundred customer. In our project, cfm is working through any issues and like i said before, theres nothing significant either in quality that im aware of or any concern that would jeopardize this project. Moving on to the tax credit, i tried to take a look at the education tax credit and one of the things that jumped out at me , mr. George, of the 3. 6 million returns with questionable education credit claims, 49 of them almost half of them were prepared by a tax preparer. Dont we have something in place that if there is tax preparers that are doing this, is that white one address is responsible for all those because that someone who put a single out any community saying let me prepare your tax returns . There have been examples of that, senator. The irs in response to recommendations that we have made and concerns expressed by congress they we have begun outreach to tax preparers who in all candor are at the front line in terms of helping to avoid tax fraud. You think 50 of these questionable educational being prepares didnt know any better or were they trying to get over . I dont want to impugn everyones reputation but theres no question that some of it is ignorance, and some was malfeasance. Id be interested if possible to know if these tax preparers were individuals proprietors or if they were some of the large chains. Obviously, if this is something thats endemic, it seems to me that the basics of making sure that the refundable tax credit that your agency is preparing for a client would follow the rules as to the 1098 and as to how longer in school and the appropriate institutions that qualify. These are the three big ones on that particular credit that always reza flag. Ill endeavor to give you that information. I dont want the irs to completely off the hook. The irs has not used every avenue that he could to confirm that someone who applies for that credit is entitled to it. For example, the department of education has a list of databases which the irs for free or for a nominal fee, at least, could have access to. And theyre not doing that . They are not. Thats totally ridiculous. And applies to additional credits too. I said this many times before and at other hearings but whenever theres thirdparty reporting of income theres almost a 99 compliant right. Once the irs fails to have access to that thirdparty reporting and relies on an individual, the compliance rate drops dramatically. Finally, i really would like and if i can wait to the next round for you to answer but i think its important when you report to the committee or any other committee that you at least give us a sense of whether or not the lack of staff just like their event dramatic staff cuts at irs. No question we are leaving money on the table. I am not aware of any business that is in the kind of financial trouble were in the decides its a good idea to cut the receivables department. For some reason, for politics, we have decided around here that the weight were going to make points with our constituents is to cut the irs. That is like cutting off our nose to spite our faith. These are the people we need to bring in the receivable. It doesnt make sense to me and i like for you at some point, i know im two minutes over and the chairman has been indulgent. Weve given the irs more responsibility in these things as well. Its a real problem, i want to be clear, the address used on a tax return is the taxpayers address, not the prepares address. Again, 24000 returns implies theres 24000 People Living at that address which again, is a simple check. Its a very crowded house thats what that is. [laughter] thanks for being here and the work youre doing. We appreciate that very much. We have talked often about a bill that we have worked on and tried to get done in the last session of comments called the taxpayers right to know. What we try to get accomplished in the last session and what we can get accomplished soon is to be able to get this evaluation tools out there. Were missing a tool and youre missing a tool. We wait for this report yearly and when it comes out its something we should be able to pull immediately with just the agencies making the Information Available. Every taxpayer should be able to pull this information, we should be able to see how things are evaluated, we should be able to see the basics of in patterns and should not be a Rocket Science request of our agencies. They arty have the information to make it available. So any other comments . I would urge congress to complete passage of the bill. And send it to the president for signature. It would make a huge difference in identifying overlap implementation overlap and provide a better accountability for the congress and agencies. It severely lacking. One of the biggest difficulties weve had in executing our responsibility under the requirement that produces this report is the lack of information is available on what it costs for programs, how they been evaluated, with the evaluation, this would have that information automatically available and be a much more efficient way to address this issue. I would encourage its passage. We look forward to that. It was passed unanimously in house and it seems to get caught up in the senate. Will try to work toward the final passage and get that done. You mentioned in your report this year the uncompensated care issues in hospitals. This is incredibly difficult to wrap your head around and i like you to talk through anything you can on. This bounces out on whether hospitals are paid for uncompensated care whether medicaid, medicare portion, talk us through that thats a billiondollar savings but its also big issue to hospital. Yes. Been a big issue for years. The problems that we identified is right now in order to determine how to pay uncompensated care the center for the decayed, medicare study, tms, uses the medicaid workload of that particular hospital. They dont have actual numbers on what the uncompensated care has been. They use a proxy. That proxy is not a good proxy. Of course, with the expansion of medicaid under the Affordable Care act there are more people insured and there should be less uncomplicated care, in theory. Right now, thats not the case. The second part of this problem is when tms goes to the Medicare Program goes to give people to the hospitals for uncompensated care they dont take into consideration what theyve already paid under the medicaid program. Theres a possibility that you could be compensating more than once for the same cost. Weve recommended tms that they collect the actual cost figures for uncompensated care and reimburse the hospital a certain percentage of the actual uncompensated care. Theyve agreed with that but they dont plan to implement it till 2021. They want to give the hospitals plan to adjust. I would encourage that congress to encourage them to act more quickly. Given the unsustainable nature of these two programs and reduce the cost. You brought the cms that you identified before with the Affordable Care act and the way subsidies are done in areas that there is fraud, potential there. You brought to them eight recommendations of what to do, cms said they would do it and didnt implement any of those. Yeah. Theyre still trying to work doing the Risk Assessment. We understand is almost complete we are looking now at the premium tax credit, implementation of both cms and irs. We should have that report available sometime this summer for the congress. That will be our first look at that whole process as mr. George mentioned, russell mentioned, both irs and cms have responsibilities. Thank you. Russell, weve talked before about this as well. The fcc and all the refundable tax credits often the irs will come back and say this falls under prepares as you mention about half of them have actually a prepare. Irs has said that if we get a certification on these prepares then well get fewer mistakes they attempted to do that six years ago and failed and now theyre trying to come back at it again. The recommendations been made to the irs before instead of doing a requirement that they mandatorily file your prepares to go through certification, you just say to the prepares, if youre going to get faster returns, you then have to go through the certification. If you are going to be a prepare , your return, if youre not certified, may take three months to get back. If youre certified, it may take 21 days. If you want to be a certified irs tax preparer and get faster returns your clients then you have to do this. Then they get training. Why would an hour . Senator, before responding and i neglected to do this at the outside of my comments questions. Since president reagan every president has issued a directive that tax policy is within the sole discretion of the assistant secretary for tax policy. The answers im giving you are not on behalf of the department or an ministration. Theres no question that there is an ideal that is worthy of consideration. As you pointed out that there was a sensible proposal to have certification and for some reason, again, whether it was the industry or others, it was not accepted. I could add on to this point. We recommend that the irs several years ago that they should regulate the tax preparers. They went ahead with a proposal, it got taken to court, the court found they didnt have the statutory authority. Congress could give some authority in this area. It could be a good program but congressional support would be important. We have an outstanding recommendation to do this and this is one of the things we mentioned. Senator mccaskill mentioned theres a high error rate associated with paid prepares. We sent undercover teams into 19 taxpayers to see if they give us the right answers. Only two of the 19 gave us the right answers. Thats not surprising in some ways but stunning. One quick comment, thank you for stepping up and taking the lead in the va areas. We have a brandnew director in the Oklahoma City va who is doing a fantastic job in trying to help us in a turnaround and we are the poster child to what gao has mentioned on construction issues. Currently our seventh floor is not usable, our thirdfloor book is not usable and we cant get a parking lot finished outside and its been a chain, the elevator doesnt work and its been a chain of issues with contractors. This issue has been an ongoing issue, its not new but i appreciate everyone stepping up. Thank you. It is my privilege and honor to serve. Thank you. Thank you mr. Chairman. Thank you to each of our witnesses. For your testimony, we appreciate. Doctor blank, iou and a special debt of gratitude not solely because of your long track record in Public Service which is distinguished but you are the former dean of the gerald r form ford at the university michigan. It was one of the excellent jobs i had in the past. That was in the right answer to that. [laughter] she is not big blue anymore. She is all badger my friend. [laughter] point well taken. I will tell you, i have several on my staff including some of the folks who are in this room today who appreciate your service at the university of michigan. Gene dodaro, i would like to add to my comments thank you for your staff for your tireless work in putting this report together as well as your other report. Im encouraged to hear that 75 billiondollar figure will grow quite rapidly as well and its because of the tireless work of everybody there. Add my thanks to the other things that you have received from my colleagues. I also want, id like to join in your efforts to get greater compliance with these limitations as well. In fact, im working with senator gardner, if a bill before this committee pulled the cost savings revolution which requires hearings from the relevant committees on these reports. However that may integrate with what you and senator mccaskill are doing, theres a great opportunity to come together and make sure what we have seen a performance continues. The first question i have goes back to, relates to, what were talking about fairmount today. This is the payments for earned income tax credits, compliance and the figures are stunning. The fact that your 20000 returns going to one address is stunning and i say that in the fact that im a Founding Member of the payments caucus and im looking at modern Payments Technology and i had a chance to be a one of these Payment Companies to see what theyre doing in fraud detection. The private sector has really figured this out. Fraud is not just a problem, any payment youre making as a company and if youre in the payment business there is a lot of fraud out there. They have made Great Strides and have limited substantially in the new technologies that are coming on board are really incredible impressive. To what extent do you think we need to be looking at modern Payments Technology . It seems like the irs is not used any of it . Thank you, sir. I will say this. The irs is not any position to not disclose the stakes that occur or thought that occurs when it is questioned by congress or the ig or eight gao. I worked in the private sector and im not questioning your point directly but a lot of times banks Wont Disclose when their systems are breached because they dont want to shock stockholders or regulators or what have you. The irs is not working in that position. Theres no question that the irs in theory could not implement changes in their processes that could make it more difficult for people to engage in scurrilous behavior. They are so malleable and being the bad guys, i call them, its very difficult for the irs to keep up with it. As senator mccaskill pointed out , it is a partially resource issue. As i pointed out before the irs sometimes simply doesnt implement changes which we think would be simple. I believe you are in the room when we talked about more information about other departments such as the Education Department as it relates to American Opportunity tax credit. This is the little fact that i wanted to make sure that i convey to you before the end of this hearing. The irs did make on its own request to congress for correctable error authority which would allow them, if they saw mistakes or different types of information that they have versus what the taxpayer provided, they would be able to change the taxpayers, tax filing forms and give the taxpayers the opportunity to give to contest and cause more liability than they think theyre entitled to. If the irs was given that authority, we estimate that it would cost the irs approximately 1. 50 to implement that change. But without that the only way the irs can do it is to do an audit of the tax return and the audit cost roughly 300 for each taxpayer. There are changes that could be made but the irs needs more authority and they need to cooperate more with the government agencies. Go ahead. One other question. Then we can talk further. I want to draw attention to the issue with the duplication report that the challenges we face in maintaining monitoring capabilities. On the Ranking Member and and youve identified work the case in between the department of defense and noah and what we need to do in have these essential capabilities operating you speak generally on how the Defense Department may need to rely and collaborate on noah and other agencies in this issue moving forward. Its very important to have collaboration between the department of defense and noah. Noah is the gateway to International Agreement that we have with satellite systems around the world. That could be available to provide assistance for example of that, thats one of the problems weve identified in the Defense Department efforts. They did some outreach for noah but didnt really follow up and didnt have a formal process and as a result, they made some inaccurate assumptions about the availability of the european satellite and this would dictate what kind of coverage they had both for cloud characterization as well as indefensible theaters of imagery of weather situations that they would need for combat purposes. As a result, they had to redo their study. They had to come up with different plans to do this. This could have been avoided through a more formal process. We suggested they do that and theyve signed some agreements with the air force. For example, with no up but it doesnt cover the rest of the department of defense. It doesnt focus on the Actual Exchange of data. That would occur or should occur between the parties. This is a longstanding problem. As you know, the next project before there was supposed to be coordination on the whole development of stationery and polar orbiting satellites but they are supposed to have combined requirements and they could never come together after years of effort and billions of dollars, they couldnt reach an agreement. The obama initiation said fine, go develop your own efforts individually. Because no is responsible for orbiting satellites for the afternoon orbit in the Defense Department is responsible for the polar orbiting satellites in the morning activities, so they each have their own activities and what were saying now, okay, if thats the policy decision but you need to talk to one another and you need to coordinate. They could use their smarts, exchange it just makes eminent sense. For some reason, they just are too sluggish in implementing this recommendation. Weve got broader issues with the space programs. There are 60 different entities operating. No one is in charge and we made recommendations that there needs to be some organizational structure changes. Id be happy to talk with you more about this issue along with our experts in the area but its very frustrating. Billions of dollars get spent here without adequate management coordination. I would like to have further conversation with you about that it make sense to coordinate that im also concerned in the president s budget significant cuts to noah and what that would mean for our satellites and the satellite as you mentioned are important for the department of defense, as well. The cut on that weather forecasting capability as impact not only with civilian operations but Defense Operations as well. We have to think about this in a coordinated way. I definitely agree. The fire mental we had concerns about gaps and environmental satellite Data Coverage that could have significant consequences both in the dod and their operations but also to weather forecasting within the United States that could have public safety, economic consequences if we dont get adequate warnings that people could take precautionary measures. Im concerned about this and id be happy to talk with you about it. I appreciate it. Reporter i want to pick up two comments that you made. Your comment that we cant get this thing done and the air Correction Authority. As a business guy, my controller comes into me and says we can recollect correct this for a buck 50 or we can argue and itll cost 300 bucks. It makes eminent sense if you go the route where itll cost you a buck 50 but for some reason, can you describe why we havent done this . Is there been an attempt in law . Has someone tried to block this . Is there any rationale for not giving this air Correction Authority so we can do a bar of about 50 . I have no idea if there was resistance in congress but they do need legislative authority to do that and they currently, do not have it. The irs has been given the authority for very specific types of tax credits and other issues. They havent been given the Broader Authority that russell suggested. Weve made some of the same recommendations and i think with proper safeguards, perhaps concerns congress has is giving them too much authority but in this area it makes sense, theres a good case with proper safeguards, nobody wants a disadvantage that the taxpayer and due process that they have. That be the resistance. Legitimate resistance giving the irs more power than it already has. Being a subset suspect agency. Thank you so much. Very important topic and as we look at narrower and narrower spending opportunities, more and more cuts, honestly, eliminating duplication and making this work right is critical. An area that senator langford and i had is federal hiring. Last congress i induced introduced a higher act to help the federal government hire and retain vibrant, federal workers. This is critical to supporting the work that the government does. This idea came out of the challenges that we had during the balkan explosion and taking a look at the challenges we have hiring Border Patrol and Border Protection folks on the northern border. That will get us people that get away from duplication and, with great ideas click. Through one of the things that we suggest are the hiring efforts. There are 105 different hiring authorities there are only 20 authorities to hire 91 to the people hired during the prior year. So we questioned which ones were the most effective. Said the agencies are not using a fully. The so far we only look at the evaluated system . At the aging of the federal work force a and trying to replace those that would retire so how do we anchorage for autonomy on the part to the agencies to still maintain a systematic approach . One of the first things to appropriate the money on time. But operating under the continuing resolution. We all agree with the bis said now that does not happen. You have to have opm. Is on the execution on the part of the agencys a there is a cultural problem the most of the personnel departments reviewed their responsibilities as opposed to making sure they are proactive to help the managers bring in the people they need is to impossible. And so the chief to change that approach to make it much more proactive. I have no problem hiring good people we can bring an end i have other departments but opm is not providing leadership in this area then you should look for more and leadership and those capital officers put more pressure on them to be more aggressive fed this is a major focus of the subcommittee if fully listened to new we would be better what we do. Thanks for the great work that gao does and what you do personally. Could morning i apologize to be in and out the we are working on cloning here in the congress i think in administration will put out a tax reform proposal today and we will see the details but in sanders and with the cbo maybe by trillions of dollars into one offset that would be growth. One but what you are talking about what to find other ways to do the work with that is costeffective Going Forward. And didnt understand why were so intent we already have operations in the offices the three counties and in delaware tax relating to the irs one but overtime it has been degraded because we make changes in the tax code could then to add insult to injury whether through technology or people it is mindboggling to me. It actually increases revenues. Is there anything along these lines . To have a good return on the dollar investment for every dollar they give additional money. But what we noted they cannot tell you which specific enforcement dexterity lead to a greater return on investment. So we think they ought to collect it use better information to determine what is the most effective way to get the Additional Bank for the black to have better bang for the buck to have better resources in a better way. We believe for every extra dollar we heard other estimates are even higher that sounds like real money to be. Mr george bass to see you. One of the things the irs has asked for this call streamlining that is something you know, a little bit about. Because the technical nature of the responsibilities to compete with private sector entities to be in the expertise needed to fill those positions and a disparity that pay differential but enough very effective cover workers in that expired recently as they lost every single one of the people that were hired so we highly support that the authority was provided once again to the irs. But those who were preparing taxes in getting paid for it not cpa or accountant but maybe those using tens of millions of tax returns. Earlier we spoke about this but we have a test of acting the role of the endeavor of the response was less than two 2 accuracy. What would you suggest that we do . With those limited resources they rely on volunteer tax centers. Those that our hopeful that are computer literate or Senior Citizens will or not able to gain access cannot take advantage of that. There are ways to address this. We have an outstanding recommendation to require some certification of these tax prepares with some novel educational Certification Requirements because there are so many tax returns prepared by these prepares one thing that they could do is lower the threshold to electronically filed tax returns. Right now you have to have to hundred 50 employees were if you lower that then you are rica okay. I received 18 million paper returns even though more cut in electronically because paper returns have to be canceled and converted and it would be helpful to give the irs to expand the mandates to file electronically as well there are complicated to seize entities we talked earlier about giving them a broader Tax Authority to correct the errors when things come in with the proper safeguard one if they think they have been treated fairly. In order to fix those they could fix right away because them 1. 50 right there than to launch an audit that would cost 300 between gao and the irs we could check to make sure theyre using those authorities properly stiff neck the words of my father are ringing in my ears. Just use common sense. That is a good idea. We will have a vote call the 11 30 a. M. But i want to go back . Because of the duplication hearing and with your testimony be mind me how or how many does the diversity report to crack. 43. Sea would like the common form of standard. Absolutely spend each agency has a raw process to develop their questionnaire questionnaire, how much do you think just for one example we are talking about the the real issue is the time the researchers use the paperwork. So let me guess example brother was a great deal of interest to use a variety of samples like medical tissue samples it takeover of one year for the researchers to work their way through a variety of approval process to give up bob the project entirely it was closely related to alzheimers with the potential to expand research in that area but they simply could not because there for not enough different agencies. Theyll require different things. Not to point a finger but usda or hhs or. All of the major agencies and usda, energy, the big funders i may also say that often doing very good work is a problem they may disagree with the agencys although certain standards so they hold us accountable the way they told us to do them. So better and coordination means that we have to different agencies coming at us with two different standards. We do use the exact same language. Layer upon layer of different controls designed to prevent us from wasting dollars all those layers and regulations to provide a uniform standard than some of these things conflict. With that system is it true there would have to do something to get the irs for old master file . Yes. The s assayed believes needs to be an amendment for spirit that is definitely going into the legislation that we cannot figure out before we pay them. We have talked about this we have to figure out how to not pay up front instead of paying and chasing that is just basic the federal government cannot figure out who is dead there is no hope [laughter] there is no hope. I and im painfully aware of how laborious that particular requirement is. And to allow os 2 get apples to apples comparison between communities end in fact, the report talks about there is 16 different ways Sexual Assault is defined against four different agencies collecting data. But the data that we are collecting is the done in the way but there is no question this is a problem with the be willing to use the same standards . We would be delighted. Is a problem that the state requires us to be in a different format we have different standards. Q have query he and standard and state and then the same definition you can compare communities to campus and i made the mistake frankly i was not as articulate as you are i descended is messed up and somebody came down on my head. That is not what i intended with the daybed to be good in the department to spend most of their time catching people who were doing bad things rather than trying to figure out. I also want to say if we cannot get nih especially and nsa to agree on one standard for reporting and have that interchangeable would do a lot for medical Research Facilities in the country. So reporting on conflicts of interest where it gets filed with the Research Requirement will be going into effect to file the data for all research that is federally funded. Every agency does this different we have many projects that are funded by multiple agencies. By the way than the data is not even make sense and so we add another layer. So to talk about the problem that the irs to make sure they dont have adequate resources. Right now the taxpayer has a serious problem there the customer single the full waiting to talk to a person the customer is waiting 10 hours this is all under the ada to make sure the irs cut it because we all hate the irs and how we can serve the taxpayer and deserve to catch the People Better trying to get the tax credits that they do deserve is the generating Revenue Generating hour rapid government in needs them to help compile with their Tax Obligations if you make it easier to comply the more likely they are to do so but if i could take one . Minute in response to the chairman pdf multiple refunds going to tens of thousands of addresses. The irs has instituted some changes that in april of this year with 92,000 illgotten gains half a billion dollars. I have been making this point quite some time so talk about tax reform rather talk about tax simplification and rationalization into dead does a job for the american taxpayer but it is about tax simplification and we can Work Together on that and a bipartisan fashion. Again this hearing plc this committee working in a bipartisan fashion to try to address what has been highlighted this is in a bipartisan action with at the record low remain open 15 days for submissions of statement and questions. We are adjourned. [inaudible conversations] [inaudible conversations] in the race is not then issue so it took Oliver Wendell holmes, jr. So for them to violate the due process clause that was a huge moment to put in criminal trials on the liberal agenda with race. V guest room going to as a british house of commons in the final question in time before the june 80 election. This is one of