[Senate Hearing 112-547]
[From the U.S. Government Publishing Office]
S. Hrg. 112-547
WHISTLEBLOWER PROTECTIONS FOR GOVERNMENT CONTRACTORS
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HEARING
before the
AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
DECEMBER 6, 2011
__________
Available via http://www.fdsys.gov
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and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska JERRY MORAN, Kansas
Michael L. Alexander, Staff Director
Nicholas A. Rossi, Minority Staff Director and Chief Counsel
Trina Driessnack Tyrer, Chief Clerk
Joyce Ward, Publications Clerk and GPO Detailee
AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT
CLAIRE McCASKILL, Chairman
THOMAS R. CARPER, Delaware ROB PORTMAN, Ohio
MARK L. PRYOR, Arkansas SUSAN M. COLLINS, Maine
JON TESTER, Montana JOHN McCAIN, Arizona
MARK BEGICH, Alaska JERRY MORAN, Kansas
Margaret Daum, Staff Director
Brian Callanan, Minority Staff Director
Kelsey Stroud, Chief Clerk
C O N T E N T S
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Opening statement:
Page
Senator McCaskill............................................ 1
Senator Portman.............................................. 3
WITNESSES
Tuesday, December 6, 2011
Hon. Peggy E. Gustafson, Inspector General, U.S. Small Business
Administration................................................. 5
Marguerite C. Garrison, Deputy Inspector General for
Administrative Investigations, U.S. Department of Defense...... 7
Walter L. Tamosaitis, Ph.D., URS Corporation, and Former Research
and Technology Manager, Waste Treatment Project, Hanford Waste
Treatment Plant................................................ 17
Angela Canterbury, Director of Public Policy, Project on
Government Oversight........................................... 19
Alphabetical List of Witnesses
Canterbury, Angela:
Testimony.................................................... 19
Prepared statement........................................... 67
Garrison, Marguerite C.:
Testimony.................................................... 7
Prepared statement........................................... 33
Gustafson, Hon. Peggy E.:
Testimony.................................................... 5
Prepared statement........................................... 29
Tamosaitis, Walter L. Ph.D.:
Testimony.................................................... 17
Prepared statement........................................... 46
APPENDIX
Chart submitted by Senator McCaskill............................. 78
Letter with enclosure submitted by the Department of Energy...... 79
Questions and Responses for the Record from:
Ms. Gustafson................................................ 83
Ms. Garrison................................................. 85
Ms. Canterbury............................................... 88
WHISTLEBLOWER PROTECTIONS FOR GOVERNMENT CONTRACTORS
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TUESDAY, DECEMBER 6, 2011
U.S. Senate,
Ad Hoc Subcommittee on Contracting Oversight,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:05 a.m., in
Room SD-342, Dirksen Senate Office Building, Hon. Claire
McCaskill, Chairman of the Subcommittee, presiding.
Present: Senators McCaskill, Tester, and Portman.
OPENING STATEMENT OF SENATOR McCASKILL
Senator McCaskill. Good morning. Thank you all for being
here today.
We are going to hold a hearing today on whistleblower
protections, and just briefly I wanted to talk overall about
this subject matter because I think it is incredibly important.
This is probably not the best attended hearing that will be
held on the Hill today, but those of you that are here
understand the importance of whistleblowers in terms of
government oversight.
I really do not think there is anything that is more
important than whistleblowers because if you look around, it is
very clear that whistleblowers have made a difference time and
time again in terms of ferreting out serious and significant
problems in the Federal Government. I can look no further than
Arlington and Dover, and I can give many other examples where
the reason that problems were identified and the reason we had
the ability to go in and correct problems was because somebody
who worked there told someone, someone who saw the problem said
to themselves, ``I cannot deal with this anymore. Someone has
to do something about this.'' And that is the best instincts,
and those are the instincts that we must protect. And a
whistleblower that has reprisals against them is something that
we cannot stand for in this government. And that is what this
hearing is about.
I am proud to have been active in working in this area
since the time I came to the Senate, and there are changes that
we have been able to make in the law as it relates to
whistleblower protections. There are now proposals that have
been put forth both in the Senate and in the House, and I think
that they are deficient in a major way. And the way I think
they are deficient is because they do not fully address those
people who work for contractors. And that is why we are here
today.
Now, there is a dirty little secret that people like to
ignore, and, frankly, one of the reasons I voted against the
Republican proposal last week on the extension of the payroll
tax is because it was all about limiting Federal employees. It
did not say a word about contractors. Anyone who thinks they
are going to get at the problem of the growth of the Federal
Government and the spending that is occurring in the Federal
Government, if they think they can do that by leaving
contractors out of the equation, they do not understand the
Federal Government right now.
Agency after agency, we have more contractors working for
those agencies than we have Federal employees. We have more
contractors working at many agencies than we have Federal
employees. So if we are not including contractors in the
protection of the whistleblower legislation, then we have a
huge problem here. If the whistleblowers that work for
contractors do not have the same protections as Federal
employees, we are saying to contractors we do not think
wrongdoing by you is that important. We do not think waste and
fraud and abuse that occurs in a contract capacity is as
important as waste or fraud or violating rules of regulations
or the law, that somehow your sins are not as worthy of being
reported and protection for that reporter than the sins that
may be occurring by people who directly work for the Federal
Government.
So I think it is really important that we expand the
protections for whistleblowers to people who work for
contractors. We have been able to do that in two important
respects. Senator Collins and I sponsored an amendment to the
National Defense Authorization Act in 2008 that extends
protections to whistleblowers for contractors that work for the
Department of Defense. We also did the same thing for
contractors that were receiving any of the money under the
stimulus act.
So it is not that this is without precedent. We have now
done it for stimulus dollars, and we have done it for
contractors that work for the Department of Defense (DOD). Why
not the rest of government? Why is this important to do with
contractors who work for DOD and not with contractors that work
for the Department of Energy (DOE) or contractors that work for
Homeland Security (DHS)? I think we have thousands, and
thousands, and thousands.
I will never forget the day when I asked the head of the
Department of Homeland Security, Secretary Chertoff, when I
first arrived at the Senate, how many contractors worked there.
He had no idea. He had no idea how many contractors worked at
the Department of Homeland Security. Suffice it to say, I
believe that there are more contractors that work for the
Department of Homeland Security than there are employees.
So that is what this hearing is about. I have introduced
legislation, along with my friend Jim Webb, that will expand
the protection of whistleblowers to any whistleblower, whether
they are an employee or whether they are a Federal contractor.
And if there is a reason we should distinguish between the two,
I hope someone today points it out because I would be anxious
to hear what that reasoning is.
So that is why we are here, and I think this will be a good
hearing to explain the underpinnings of the legislation we have
proposed, and I now will turn the microphone over to the
Ranking Member of the Subcommittee, my friend, who has been a
great Senator to work with on this Subcommittee, Senator
Portman.
OPENING STATEMENT OF SENATOR PORTMAN
Senator Portman. Thank you, Chairman McCaskill. I
appreciate it. And thanks to the witnesses for being here
today, and thanks for holding this hearing on a truly important
topic, particularly at a time when we are looking at bigger and
bigger debt, $15 trillion now, and a deficit of about $1.3
trillion this year. We need to focus on waste and mismanagement
of taxpayer dollars more than ever. So it is an appropriate
hearing.
The stopping of wasteful spending and detecting it and
preventing it ultimately is something that whistleblowers play
a key role in. There are others as well. We need official
oversight and monitoring, including by contracting officers in
the agencies and Inspectors General and law enforcement
authorities. But whistleblowers are often the eyes and ears for
all of us and for the American taxpayer to be sure we are
detecting, preventing, and stopping wasteful spending. And they
often serve as a vital communication link, too, between what is
really happening in the daily operations of major Federal
programs and the policymakers here in Congress and in the
Executive Branch who are responsible for oversight of these
programs.
The laws that are currently in place, whistleblower
protection laws, are necessary to give individual employees
that confidence to be able to speak up, to do the right thing
without fear of retaliation. Today, as I counted, we have a
patchwork of those kinds of protections. I think there are 19
different laws, depending on how you count them, that deal with
whistleblower protections. As I think we will hear this
morning, we have found that some of them work better than
others.
The Whistleblower Protection Act of 1989 is sort of the
standard protection for Federal Government employees who report
misconduct, and in October I was pleased to join with my
colleagues in this Subcommittee on both sides of the aisle to
support legislation to strengthen that statute for government
employees in significant ways, including broadening the scope
of protected disclosures.
But unlike these public sector protections, there is no
standard whistleblower statute that covers private sector
employees. Instead, Congress has taken a more piecemeal
approach to that, creating whistleblower protections to address
abuses in specific areas: Sarbanes-Oxley would be one in the
securities and bank fraud areas; within specific departments
such as the Department of Energy whistleblower provisions; or
more recently to major new spending commitments. There were
provisions, for instance, in the 2009 stimulus bill.
I think it is fair to say that whistleblower protections
for non-Federal employees are nowhere more necessary and
appropriate than in Federal contracting. After all, that is the
jurisdiction of this Subcommittee, so it is appropriate for us
to take a look at this.
We now spend over half a trillion dollars a year in
contracts annually. Think about that. That is 15 percent of all
Federal spending now goes into government contracting. That was
about $539 billion last year.
When we are dealing with taxpayer dollars of that
magnitude, there can be no question that we have to take every
effort to ensure good stewardship. The law provides a number of
protections for contractor employees from the False Claims Act
to civilian protections in the Federal Acquisition Regulation
(FAR) 3.9, to defense contractor protections in Section 2409. I
would be interested to hear from our witnesses today on how
these existing protections for contractors have proven
effective and where they might fall short.
I am also very interested in exploring some of the unique
issues raised by extension of these whistleblower protections
to private sector employees such as contractor employees. One
of the issues is the need to ensure that the law does not
disrupt or undermine a company's own internal compliance and
reporting processes. I do not think that would be in our
interest.
There was a recent Law Review article in the Harvard Law
Review that notes that there is now a large body of research
that shows that these internal whistleblowings can actually be
more effective at stopping organizational wrongdoing and waste
than the external reporting. So we do not want to disrupt the
internal processes that are in place. And given our finite
resources for enforcement and investigation, we want to
encourage strong internal private compliance efforts to detect
and correct wrongdoing.
Ideally, I think the law should encourage firms to be self-
policing to the extent possible, and that means whistleblowing
protections should extend to both the internal and external
reporting of wrongdoing.
Unfortunately, many whistleblower laws are one-sided in
this respect. I give you as one example the securities
whistleblower provisions in Dodd-Frank. It fails to protect
employees who report security violations internally and instead
offers large financial incentives to bypass those internal
controls and immediately report out.
The Federal Acquisition Regulation suffers, I think, from a
similar flaw. It protects contractor employees who report to
government officials but not those who choose to go through the
internal chain of command.
I think these are serious concerns and something I would
like to hear more about today because I think they may permit
some abuses to go undiscovered while actually impeding good-
faith internal compliance efforts. On this point, I think
Senator McCaskill's whistleblower reform proposal gets it right
by extending protections to employees who report misconduct to
the management of their organization.
Another important consideration is the need to ensure these
rights are clear and well defined for both employers and
employees. Would-be whistleblowers would be more likely to stay
silent if they do not understand their rights, and by the same
token, employers may be overlawyered or overburdened if they
are exposed to unclear requirements or ambiguous liabilities in
this area. For that reason, I think the parameters should be
very carefully defined in law and carefully understood.
So with that, I look forward to hearing from our witnesses
on how best to protect contractor whistleblowers and how best
to save taxpayer dollars.
Thank you, Madam Chairman.
Senator McCaskill. Thank you, Senator Portman, and we will
begin with our witnesses.
First, we have Peg Gustafson, the Inspector General for the
Small Business Administration and the Chair of the Legislation
Committee of the Council of Inspectors General on Integrity and
Efficiency (CIGIE). Prior to becoming Inspector General, Ms.
Gustafson was my General Counsel, where she wisely advised me
on oversight issues and helped to write the legislation that
has strengthened the Offices of Inspectors General (OIG). From
1997 to 2007, Ms. Gustafson was, in fact, General Counsel when
I served as State Auditor of Missouri. It is great to see you,
Peg.
Marguerite Garrison is the Deputy Inspector General for
Administrative Investigations at the Department of Defense.
Prior to becoming the Deputy IG, Ms. Garrison was a career Army
Military Police officer where she achieved the rank of Colonel.
Before retiring from that position, Ms. Garrison served as the
Chief of the initiatives group in the army where she identified
and coordinated key issues of strategy, police, future
concepts, and comprehensive army information requirements
across the Army staff.
It is the custom of this Subcommittee to swear in all
witnesses that appear before us, so if you do not mind, I would
ask you to stand and raise your hand. Do you swear that the
testimony you will give before this Subcommittee is the truth,
the whole truth, and nothing but the truth, so help you God?
Ms. Gustafson. I do.
Ms. Garrison. I do.
Senator McCaskill. Thank you both.
We will turn to you first, Ms. Gustafson, for your
testimony.
TESTIMONY OF HON. PEGGY E. GUSTAFSON,\1\ INSPECTOR GENERAL,
U.S. SMALL BUSINESS ADMINISTRATION
Ms. Gustafson. Madam Chairman, Ranking Member Portman,
thank you very much for the opportunity to be here today and
for your continued support of the work of Inspectors General. I
am happy to be here in my capacity as Chair of the Legislation
Committee for the Council of Inspectors General on Integrity
and Efficiency, which I will also call ``CIGIE'' from now on in
my testimony.
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\1\ The prepared statement of Ms. Gustafson appears in the appendix
on page 29.
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Inspectors General are strongly supportive of essential
safeguards for whistleblowers. Tools to incentivize and protect
whistleblowers, whose actions are often brave and selfless, are
encouraged and needed by Inspectors General.
Offices of Inspectors General play an important role in
investigating allegations brought forward by whistleblowers.
Given our experience and resources, IGs are well positioned to
receive information from whistleblowers, protect their
confidentiality, and fully investigate the allegations in a
fair, timely, and unbiased manner.
The CIGIE Legislation Committee has sought to obtain an
accurate sense of the IG community on certain whistleblower-
related legislative proposals by conducting several surveys
within the past 2 years on matters involving whistleblowers.
One such survey involves the perspective of IGs in agencies
that were allocated funds under the American Recovery and
Reinvestment Act (ARRA) or the stimulus act, which includes a
provision aimed at protecting State and local government
contractor whistleblowers.
During the timeframe of February 2009 through April 2011,
IGs who had responded to the survey had received 1,652
complaints regarding ARRA transactions from employees of non-
Federal entities. The complaints related to approximately 323
distinct ARRA transactions, meaning that multiple complaints
had been received on some of these transactions. Of the 1,652
complaints, 35 percent, or 580, resulted in the opening of an
investigation, audit, or other Office of Inspector General
review, and 150 others at the time of the survey were still
being considered for IG action. Though the judicial and
criminal investigative process can be lengthy and may still be
ongoing in some of these cases, responding OIGs indicated that
their investigations and reviews of the whistleblower
complaints had resulted in recovery of approximately $1.85
million as of April of this year.
One of the key provisions of ARRA is Section 1553 that
gives the authority of OIGs to investigate reprisal complaints
from non-Federal employee whistleblowers. Of the surveyed IGs,
8 of the OIGs had received a total of 18 reprisal complaints,
and 11 of those had been accepted for investigation. The
majority of IGs that had received these complaints had not
experienced any problems or concerns with implementing Section
1553 or in responding to the complainants' request to access
the completed investigation file.
As a community, IGs are always concerned about statutory
requirements ordering them to conduct an investigation and
statutory deadlines mandating completion of an investigation
within a prescribed period of time. These mandates undermine
the ability of IGs to independently set priorities and create
the potential for finite resources to be diverted from other
high-impact investigations that may better serve taxpayers'
interest.
By expanding the potential pool of non-Federal employee
whistleblower complaints beyond ARRA to encompass all
government contracts, grants, and payments, a significant
impact on IG resources is anticipated. And, therefore, efforts
to provide for IG discretion on whether to open an
investigation or the timeframes will be crucial going forward
in this endeavor.
The ability of IGs to carry out their mission is dependent
on the authority to access records pertinent to the
investigation of the complaint. In instances of IGs having
authority to access the records of State, local, and private
sector employers who received ARRA funds, the IGs believe that
Section 1515 of the Recovery Act serves as a viable model for
giving IGs this access.
One additional area of concern is the requirement that IGs
disclose pending investigations of a whistleblower's reprisal
complaint to the whistleblower's employer. There is a concern
that these disclosure requirements could jeopardize the ability
to obtain accurate information for the investigation and may
jeopardize the whistleblower status with the employer if they
were to figure out who the whistleblower was. Therefore,
efforts to provide IGs with greater discretion on whether or
when to disclose the investigation to the employer may assist
OIG investigation efforts.
CIGIE shares the perspective that IGs are well positioned
to investigate these complaints but believes the scope of the
legislative proposal does necessitate that IGs have the
authority to access these records and give IGs the flexibility
to conduct these investigations as balanced with the other IG
priorities. We also believe the IGs' role should be narrow,
where the IGs are conducting the investigation and reporting
the findings to the agency officials authorized to make the
ensuing decisions.
I want to thank you again for the opportunity to speak with
you and look forward to working with you going forward on this.
Thanks.
Senator McCaskill. Thank you, Ms. Gustafson. Ms. Garrison.
TESTIMONY OF MARGUERITE C. GARRISON,\1\ DEPUTY INSPECTOR
GENERAL FOR ADMINISTRATIVE INVESTIGATIONS, U.S. DEPARTMENT OF
DEFENSE
Ms. Garrison. Madam Chairman and Ranking Member Portman,
thank you for the opportunity to appear before you this morning
to discuss whistleblower protections for government contractor
employees.
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\1\ The prepared statement of Ms. Garrison appears in the appendix
on page 33.
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The Inspector General Act of 1978, as amended, entrusts us
with responsibility for improving the economy, efficiency, and
effectiveness of the Department's operations through prevention
and detection of fraud, waste, and mismanagement. To do so, the
Department of Defense IG (DOD IG), conducts audits,
evaluations, and investigations--many of which arise from
disclosures brought to light by whistleblowers. Under the broad
authority of the IG Act, we may investigate any matter of
concern.
DOD IG is somewhat unique among IG offices in that our
responsibility to investigate whistleblower reprisal complaints
derives not only from the IG Act but also from several other
statutes.
DOD IG has overall responsibility for the whistleblower
protection program across the Department. A strong
whistleblower protection program includes a confidential
channel for the disclosure of wrongdoing, reliable protection
against reprisal for making protected disclosures, and
assurance that everyone concerned understands their rights and
responsibilities under the law.
Since the late 1980s, Congress has passed a series of laws
protecting members of the Armed Forces, appropriated and non-
appropriated fund employees, and DOD contractor employees from
reprisal. DOD IG has the authority to investigate these
complaints and to oversee allegations conducted by Department
of Defense component Inspectors General.
Additionally, pursuant to the American Recovery and
Reinvestment Act of 2009, DOD IG has the authority to
investigate complaints of reprisal filed by employees of non-
Federal employers who make disclosures related to possible
fraud, waste, or abuse of Recovery Act funds.
Our authority with respect to DOD contractor employees is
drawn from Title 10, United States Code, Section 2409, as
amended in 2008. Since 1986 the statute has been amended on
multiple occasions. The 2008 amendment expanded the types of
protected disclosures and their authorized recipients. It also
imposed additional deadlines for agency heads to resolve
reprisal complaints. We welcomed those enhancements to
protections for defense contractor whistleblowers.
In 2008, we recommended legislation to require defense
contractors to inform their employees in writing of their
whistleblower rights under the statute. Our recommendation
resulted in the inclusion of that requirement in the National
Defense Authorization Act for Fiscal Year 2009.
While the protections under Section 2409 have been
strengthened over the years, in our experience there are
certain features in the law that may have impacted the
potential substantiation of some complaints. For example, the
law fails to protect defense contractor employees from reprisal
for reporting wrongdoing to company management. It also does
not protect employees from actions directed by government
officials. Nor does it protect employees of subcontractors. The
lack of protections in these areas stands in contrast to other
similar whistleblower protection statutes, such as the American
Recovery and Reinvestment Act.
We are proud of the role that Congress has assigned our
agency to objectively and thoroughly investigate whistleblower
reprisal complaints. For over 20 years, we have maintained a
robust whistleblower protection program which has been a top
priority of the DOD IG. Whistleblowers perform an important
public service, often at great professional and personal risk,
by exposing fraud, waste, and abuse within the programs and
operations of the Department.
In closing, I would like to thank the Subcommittee for the
opportunity to discuss the important topic of whistleblower
protections for government contractor employees. I look forward
to answering your questions.
Senator McCaskill. Thank you very much to both of you.
Let me start with you, Ms. Gustafson. You talk in your
testimony about resources and the fact that if we mandate an
investigation to be completed within a certain period of time,
that would--and I understand this--really be tough in terms of
potential resources and understanding--as you well remember,
there were all kinds of laws that said I had to do so many
audits that we could not do because we did not have the
personnel, so we had to prioritize based on where we thought
risk was.
The problem is that if we do not mandate the investigation
and we do not mandate a time period for the investigation, I
think we lose some of the public accountability.
Have you given any thought and has the Council given any
thought to maybe mandating some kind of public accountability
as to why an investigation was not pursued?
Ms. Gustafson. Well, I think that actually there has
definitely been thought given to that, and I think actually S.
241 has some provisions in there that the IGs are very
supportive of, which is to say there is an investigation that
needs to be done, there is some discretion given to the IGs
with an accountability in the semiannual reports as to why an
investigation has not been completed within a certain length of
time. And there is also accountability built in when you have
to report to the whistleblower if you have decided not to
undertake that investigation.
So I actually think that this is there and that is
something the IG community is very supportive of. And it goes
on to then give the whistleblower access to the court
immediately after that so that the whistleblower's rights are
not estopped by an IG. Some of these IG shops are three people,
four people.
Senator McCaskill. Right.
Ms. Gustafson. And some are thousands of people. So, I
think it is actually a schematic that has been devised to kind
of allow for robust investigations when that can happen without
estopping the whistleblower from going elsewhere in times when
it simply cannot.
Senator McCaskill. So do you think the way that S. 241 has
been drafted, the legislation that we have drafted, do you
think it gives enough discretion to the Inspectors General?
Ms. Gustafson. Well, it gives complete discretion to the
Inspectors General.
Senator McCaskill. OK, good. I am confused, Ms. Garrison,
about the number--since we changed the law and the standards, I
am confused about the number of complaints that you have had as
to whistleblower retaliation among the contractor community and
the total investigated, and the fact that there have been none
substantiated. But more troubling, whether or not they have
been substantiated, you had the law changed in 2008. You had 44
complaints in 2009, 51 in 2010, and 68 in 2011. And of all of
those, there have only been five investigations. Why is that?
Ms. Garrison. Well, many times when we look at the incoming
complaint, there are several reasons for that, Madam Chairman.
No. 1 is that the complaint is from a subcontractor and not a
contractor employee. Another reason may be that the employee
made the complaint to a company management official, not a
government official.
A third reason could be that the government official
directed the unfavorable personnel action rather than the
contractor because they saw that there was some deficiency in
the performance of the employee.
So those are some of the reasons why, but mostly because
they have been subcontractor employees and not contractors.
Senator McCaskill. OK. On the last point you made, I am
confused. What was the last point, that----
Ms. Garrison. The last point was that--excuse me, Madam
Chairman.
Senator McCaskill. That is OK.
Ms. Garrison. The last point was that the unfavorable
personnel action that was directed against the employee came as
a result of a government official perceiving a deficiency in
the duty performance of the individual and, therefore----
Senator McCaskill. Isn't that always the defense?
Ms. Garrison. Pardon me?
Senator McCaskill. Isn't that what would have to be
investigated? Isn't the government always going to say the
reprisal was not because they were whistleblowers but because
they were not a good employee?
Ms. Garrison. No, the contractor is the one that let the
employee go based upon what the government official said, and
it was a perceived deficiency in the duty performance, so no.
But in some cases, if we see that the government employee
directed that unfavorable personnel action because of some
disclosure that the employee made, then under the IG Act we
have the authority to----
Senator McCaskill. But how do you know that without
investigating? How do you know that they were let go for
performance as opposed to being a whistleblower if you never
investigate it?
Ms. Garrison. Well, we have conducted preliminary inquiries
and looked at the basis of the fact of the termination of the
employment, and based upon our initial inquiry, we have
determined that the performance of that employee was deficient
prior to the protected disclosure.
Senator McCaskill. Oh, so you are saying that there is
documented evidence that there were performance issues prior to
any whistleblowing activity?
Ms. Garrison. Yes.
Senator McCaskill. OK. We were told in a briefing that DOD
IG was also relying on the previous standards in the law as
opposed to the standards that were put in place in 2008 based
on the fact that the contract was executed before 2008. Is that
correct?
Ms. Garrison. That is correct.
Senator McCaskill. On what legal basis are you all making
that decision? Because this is not about protecting
contractors. This is about protecting whistleblowers. And I do
not know why the date of the contract execution would have
legal bearing on what standard would be applied. Is that a
lawyer inside the Department of Defense that is giving you that
advice?
Ms. Garrison. When we looked at the 1994 statute, we look
at the date of the contract and when the contract was let. The
provision that was in place at the time of the contract is what
we are looking at. So, for example, we had a contract that was
executed in 2007. The 2008 amendment was not in place at that
time, so we look at the statute of 1994 to determine where we
are going to head in that investigation or whether we are going
to pursue it.
Senator McCaskill. But why would you do that? On what legal
basis? Because there is nothing that I am aware of in the law--
and I admit that I am one, a lawyer. I am not aware--since the
law is focused on protecting the whistleblower, it has no
bearing on not telling contractors what they can or cannot do.
It is telling them that it is basically protecting a
whistleblower. Why would the date of execution of the contract
be the controlling date as opposed to the standard that we have
put in the law going forward?
Ms. Garrison. Well, it has been our experience thus far
that the complaints we have received have been on contracts
that are before two thousand----
Senator McCaskill. You do not understand my question. On
what legal basis are you--is there any--did you get a legal
opinion from someone that told you that the old law needed to
control protections for whistleblowers as opposed to the new
law for any contract that had been executed before 2008 or
2009?
Ms. Garrison. I would like to take that one for the record.
Senator McCaskill. That would be great. And if there was a
legal opinion, I would love to review it. I would love to see
it and get the basis for that, because I do not believe that is
correct in the law. I think that the standard that should be
used should apply across the board going forward, because this
is not something that materially impacts the contract
provisions for the contractor. It materially impacts the
protections for the whistleblower. And I think that is a
distinction with a real difference. So I would love to see
where that decision was made and how it was made and get the
backup documentation for it.
Thank you, Ms. Garrison. Senator Portman.
Senator Portman. Thank you, Madam Chairman, and thank you
all for your testimony.
Ms. Garrison, I was just curious about one thing you said
in response to the Chair's questions about subcontractors and
the reporting under--you said that many of the whistleblower
complaints are subcontractors and, therefore, are not
investigated. Should whistleblower protections extend to
employees of subcontractors?
Ms. Garrison. We see that S. 241 does extend it to
subcontractors, and we see that as a positive, so yes.
Senator Portman. OK. Who should these reports of wrongdoing
be made to--the prime contractor first?
Ms. Garrison. We also see in S. 241 that the disclosures
have been expanded so that they can be made internally and that
we could also be involved from a DOD IG's perspective.
Senator Portman. On the internal disclosures, as I noted in
my statement, I do think it is very important to have greater
symmetry between the protections for external reporting and
internal reporting, and the fact is that most whistleblowers
report inside their organization first, and I think we should
be encouraging them rather than, in effect, telling
whistleblowers to circumvent the internal company procedure in
order to be guaranteed protection.
To what extend do you believe this gap in the law has
prevented whistleblowers from coming forward or prevented
substantiation of their reprisal allegations?
Ms. Garrison. It is hard for us to speculate on the
substantiation rates or what kind of effect that would have.
However, we do believe with the passage of S. 241, since the
whistleblower protections will be expanded, we may see an
increase in the number of cases from subcontractor employees as
long as we have a good education after the law is passed.
Senator Portman. And what other tools do you think we
should be using other than S. 241 to promote internal reporting
and better self-regulating?
Ms. Garrison. Well, as I said previously, the 2009 NDAA,
made it mandatory that a written clause be included in all
contracts and that the employers would have to inform their
employees of all the whistleblower protections. We see that as
one means of doing it. We also could have a communications
campaign where we would have various posters about internal
disclosures, and we would have to educate our contracting
officer representatives (CORs) and our government contracting
offices on how to expand those protections.
Senator Portman. And, Ms. Gustafson, about internal
reporting, do you have some thoughts on that? How do you
believe this gap has affected folks coming forward and what
tools can you see are necessary to promote more internal
reporting and better self-regulating?
Ms. Gustafson. I do think it is always kind of hard to know
what the gap is because it is kind of what do we not know, but
I will say that just from my experience as an Inspector
General, to Ms. Garrison's point, letting people know what they
can do and where they should go is always very helpful. I find
that both internally as an Inspector General letting the SBA
employees know that we are there and they should be telling us
allegations of wrongdoing or things they see that might be
fraud, waste, and abuse, and I would think that would be true
across the board, be it a private employer or Federal
contractor or any agencies.
Senator Portman. I was curious. Ms. Garrison, in your
testimony you talked about complaints of reprisal filed by
members of our military where you are at DOD, and you said that
those reprisal complaints far outnumber those filed by
contractors--436 military whistleblower reprisal allegations in
fiscal year 2011 compared to 68 defense contractor employee
reprisal allegations in the same space of time.
In your view, what accounts for this disparity?
Ms. Garrison. Yes, Senator. We believe that the disparity
is accounted for because we have done a great job of going out
and advising the military population and various service IGs
and Department of Defense component IGs about the whistleblower
protections under 1034. That increases the number of, we
believe, incoming complaints.
We are not so sure that the contractors are as well
informed about the whistleblower protections as our military
personnel.
Senator Portman. And can you comment on that across the
agencies or, Ms. Gustafson, maybe you could comment on that? In
other words, is this something that is just DOD or is this
consistent, this disparity, across the civilian agencies?
Ms. Gustafson. Well, I guess I would say I have no reason
to think it would be just across DOD. I do not know why it
would. And I do think that one of the issues maybe even with
ARRA is, the stimulus bill went pretty far in applying
whistleblower protections, but, of course, it had to be related
to just ARRA funds. And so you really did have a relatively
small subset of people who would be able to take advantage of
those provisions when you compare it to all Federal moneys. And
I think that may have had something of a tamping-down effect,
too, because that is something that you would have to know in
order to go forward. You have to know that the rights are
there, know it is an ARRA project, and then know where to go.
Senator Portman. On advance notice of whistleblower rights,
getting back to contractors, Ms. Garrison, you said that you
believe that some notification through internal means--you
mentioned posters or other sort of campaigns to let folks know
might be helpful, and you said that in your contracts you
require that the private sector make those rights known. I
think that is under Section 1034.
I am just wondering if you all could both comment on this.
Do you think the contractor workforce is sufficiently aware
today of the protections under Section 2409 or the FAR 3.9? Do
you think that is generally known among contractor employees?
Ms. Gustafson. With all due respect, Senator, I really do
not know the answer to that question, and I would hate to
guess. That is something that we have not taken the temperature
of the IG community on, so I really do not think I can speak to
that. DOD may have a better view.
Ms. Garrison. We believe the inclusion of the language in
the DFARS has caused an increased awareness. However, I do not
know how much of an increase that is across the Department.
Senator Portman. And do you have other thoughts as to how
that notification could be improved other than the thoughts you
gave us earlier? Either one of you. Ms. Gustafson, has your
group looked at this?
Ms. Gustafson. We have not, Senator. So that is something
we----
Senator Portman. Is that something you could look at and
get back to us on?
Ms. Gustafson. We could certainly for the Subcommittee seek
opinions of the IG community. That is something I would be
happy to do, sure.
Senator Portman. OK.
With regard to the statute of limitations, I was curious to
see that there are, in effect, sort of open rights here without
a statutory period. No question we want a robust, effective
whistleblower protection. We want it to be clear and well
defined, as I said earlier. But I do not think we want these
protections to be misused either.
As I look at it--and tell me if I am wrong--it seems as
though the statute of limitations is open. For instance, we
would not want whistleblower reprisal allegations to serve as a
pretext for an unrelated dispute with an employer--you talked a
little about that earlier, Ms. Garrison--or as a defense
against what were considered to be legitimate personnel
actions. And often, there is a statute of limitations that is
tolled upon discovery of the potential wrongdoing.
My understanding is that the whistleblower protections in
Section 1533--and this is in the American Recovery and
Reinvestment Act, in the stimulus--contained no time limit
within which to file an IG complaint to secure protection
against reprisals, and there is no limit within which a civil
action must be filed after the employee has exhausted the
administrative remedies.
I just wondered what you all thought about that. Do you
think that is the right approach? Do you think there should be
a statute of limitations both on the filing of the reprisal
complaint and bringing a civil action?
Ms. Gustafson. Senator Portman, I do not--in the survey of
the IG community, I would note that nobody had brought that up
as an issue, which I find, I guess, telling enough that I want
to point out that nobody had brought up whether that was a
concern. It may be that ARRA is so recent that it has not yet
become a question. So it may be something moving forward, as it
becomes not just about ARRA but whether S. 241 becomes the law
of the land. We might have something we want to look at. But as
of right now, even though I am a lawyer, quite frankly, I have
not thought about that question, and so that might be something
that we going forward would want to work on. Whether it would
go back to a different whistleblower--refer back to a different
whistleblower law already in place to have the kind of symmetry
that you talked about where there is a uniformity among laws
might be one alternative.
Senator Portman. Would you be willing to have your group
look at that, too, and report back to the Subcommittee what you
think on the statute of limitations?
Ms. Gustafson. I can certainly take the views of the IG
community and get back to you.
Senator Portman. And again, Section 1553 could become a
template for further action, including some of the legislative
proposals talked about today, so we would like to get your
input on that.
Ms. Gustafson. OK.
Senator Portman. Any thoughts on that, Ms. Garrison?
Ms. Garrison. Yes, Senator. On the statute of limitations,
we found that a statute of limitations results in a more timely
investigation, and that evidence can become stale, so the
longer it takes to file the complaint, the more stale the
evidence will become.
Senator Portman. OK. Good. Thanks very much.
Thanks, Madam Chairman.
Senator McCaskill. So you are saying actually, Ms.
Garrison, that a statute of limitations might help the strength
of these cases in terms of our ability to investigate them
because it provides some kind of deadline for everybody to
either come forward or not come forward?
Ms. Garrison. Yes, Madam Chairman.
Senator McCaskill. I understand that.
Welcome, Senator Tester. Good to see you.
Senator Tester. Thank you, Madam Chairman.
Senator McCaskill. Would you like to ask some questions of
these witnesses?
Senator Tester. I sure would.
First of all, I want to express my appreciation for you and
the Ranking Member holding this hearing. I appreciate your work
that you have done on cutting waste, fraud, and abuse during
your tenure here. As we look to balance the budget, this is the
low-hanging fruit. We have just got to be able to make sure
that we know about it so we can deal with it, and how we can
enhance our ability to get the information about waste, fraud,
and abuse is critically important. And I want to thank the
Members for testifying. Sorry I was not here. I had a previous
conflict.
But I just want to ask either or both of you, just from
your perspective, how important are whistleblowers when it
comes to ferreting out----
Ms. Gustafson. Well, I think it is very clear and is pretty
much the unanimous opinion of the IG community that much of our
work could not be done if we did not have people on the ground
telling us or pointing us to issues that they see involving
abuse or waste or fraud of Federal funds, be it a Federal
contractor employee, somebody sitting at a desk at DHS or DOD,
or just be it the Federal money that is flowing out and is
eventually being used to build planes or build roads.
The IG community is substantially far too small to be able
to do that without having people who are firsthand witnesses to
that tell us what is going on, so it is crucial.
Senator Tester. Would you agree with that?
Ms. Garrison. Yes, we would. We have found in our
experience that internal allegations or reprisal complaints
that come forward.
Senator Tester. OK, good. So how can we enhance their
ability to come forward? Because I am sure there is a lot that
goes on that we do not know about, and so how can we enhance
their ability to come forward with--and sometimes it is a fine
line because you do not want to get in the situation where
somebody is having a fight with somebody. But the other side of
the coin is that, it is a significant problem, I think, and we
need every attack avenue we can get.
So how do we enhance whistleblowers to come forward? Any
ideas?
Ms. Gustafson. Well, first you have to make sure that if
they do come forward, there will be some way for them to get
restitution if they start getting reprised against and have an
avenue to seek redress if somebody were to retaliate against
them for coming forward. But, also, I do think a lot of it is
education and letting them know what the avenues are to report
these types of activities, be it internally, be it to the IG,
be it to the RAT Board for the Recovery Act. That is crucial
because a lot of times people, if they do not know where to go
to begin with, they might be stymied from the get-go.
Ms. Garrison. I agree with my colleague.
Senator Tester. OK. Some have noted the low instance of
fraud in the Recovery Act. Were there things in the Recovery
Act that we should apply to other pieces of legislation that
come to your mind that would prevent--or as far as that goes,
is there anything we should be putting in pieces of legislation
that would help prevent waste, fraud, and abuse?
Ms. Gustafson. Well, there are a couple of provisions of
the Recovery Act that I think were really new and that the
Inspectors General have found to be tremendously useful. One is
the level of transparency that has come about as a result of
the reporting requirements and the very robust Web site that
the RAT Board has put up where you really can see where the
money was going and whether it is an ARRA project. Another are
the whistleblower protections that were in there. I do think
everybody has been very heartened by the low levels of fraud. I
would hasten to add it is not over yet, but I think people have
been surprised. And those have been two of the big changes, and
so it would be--it seems clear that they have had some impact
on why it is so.
Senator Tester. OK. Anything to add to that?
Ms. Garrison. No.
Senator Tester. OK. I know your positions. I do not want
you to incriminate yourselves. But compared to the media,
compared to Inspectors General, compared to auditors,
regulatory organizations, where would you stack whistleblowers
in that as far as their ability to stop waste, fraud, and
abuse? Inspectors General, No. 1, I am sure. [Laughter.]
Ms. Gustafson. There are a lot of people who work for me
that would be very disappointed if I did not say that. But,
again, there is only so much that we can do. I can speak just,
for example, for SBA. A lot of the risk that comes from my--and
the Small Business Administration deals with the lending going
on that is done under delegated authority. And, quite frankly,
if we did not have a good relationship with lenders to tell us
about those problems, for example, we simply would not know. So
it is not even just about outsourcing. It is really just about
the nature of the beast that a lot of this really happens once
the money is finally done, and we are simply not there. So how
about even footing?
Senator Tester. All right. Even keel all the way across.
How is that? Well, I want to thank you both for your testimony
and for being here today.
Thank you, Madam Chairman.
Senator McCaskill. Thank you, Senator Tester.
I think that one of the things we have tried to get at in
241--and I just want to put this on the record--kind of goes to
the point you were making, Ms. Garrison, earlier about the
government asking for something to happen with an employee as
opposed to the contractor asking something to happen or the
subcontractor asking something to happen with the employee.
Right now the DOD provision just covers retaliation by the
employer. It does not even cover retaliation by the government.
So just so the example is made clear, let us say there is a
contractor over in Afghanistan working on a highway, and they
learn that somebody that is part of the military is involved in
getting a kickback from some of the money we are paying for
security. This is just a hypothetical example. If that
government official finds out that this employee knows this,
that government official could retaliate against that employee
and it would not be covered in this law because it only covers
action by their employer and not by the government, correct, in
the DOD provision now?
Ms. Garrison. Yes, ma'am.
Senator McCaskill. Which we fix in 241.
Ms. Garrison. Yes, ma'am.
Senator McCaskill. So that the retaliation, no matter where
it occurs, whether it occurs by the government or whether it
occurs by the employer, be it a contractor or subcontractor,
would all be covered. And I assume that you would agree that
would be a major improvement in terms of us being able to
protect whistleblowers.
Ms. Garrison. Yes, Madam Chairman, we would agree.
Senator McCaskill. OK, great. Thank you.
I do not have anything else for this panel. Do you have
anything else for this panel?
Senator Portman. No. Thank you.
Senator McCaskill. Thank you both very much. I appreciate
you both being here. And please tell all the men and women that
work for you that, as far as I am concerned--and I think many
of the people who serve in an oversight capacity in the
Senate--they are the unsung heroes in terms of us trying to get
at the problems we have with the government spending money in
ways it should not. So thank all of them for us, please.
Ms. Gustafson. Thank you.
Senator McCaskill. Thank you.
Let me introduce this panel. First we have Dr. Walter
Tamosaitis. Am I saying that right?
Dr. Tamosaitis. That is very good.
Senator McCaskill. Thank you. Dr. Tamosaitis was the
Research and Technology Manager (R&T) and Assistant Chief
Process Engineer for the Waste Treatment Project at the Hanford
nuclear site in Washington State. Mr. Tamosaitis has a Ph.D. in
systems engineering and systems management, and he has over 40
years of experience. As a contractor employee at the Waste
Treatment Project, Dr. Tamosaitis raised serious safety
concerns about project testing.
And Angela Canterbury is the Director of public policy for
the Project on Government Oversight (POGO). In this capacity
Ms. Canterbury has advanced public policies to combat
corruption and promote openness and accountability in
government. She has been an effective advocate for legislation
that has improved the financial regulatory system, lobbying and
congressional ethics rules, whistleblower protections, the
Freedom of Information Act, and other open-government
initiatives. Prior to joining POGO, Ms. Canterbury served as
the Director of advocacy for Public Citizen's Congress Watch
Division.
As I said before, it is the custom of this Subcommittee to
swear in our witnesses, so if you all would mind standing for
me, raising your hand. Do you swear that the testimony you will
give today before the Subcommittee will be the truth, the whole
truth, and nothing but the truth, so help you, God?
Dr. Tamosaitis. I do.
Ms. Canterbury. I do.
Senator McCaskill. Thank you both, and we will begin with
you, Dr. Tamosaitis.
Dr. Tamosaitis. I may go a tad more than 5 minutes.
Senator McCaskill. That is fine.
TESTIMONY OF WALTER L. TAMOSAITIS,\1\ PH.D., URS CORPORATION,
AND FORMER RESEARCH AND TECHNOLOGY MANAGER, WASTE TREATMENT
PROJECT, HANFORD NUCLEAR SITE
Dr. Tamosaitis. Good morning. My name is Walt Tamosaitis
and I live in Richland, Washington. I am here speaking and
representing myself today. Thank you for giving me this
opportunity to provide this testimony. I also think it is a
very important topic. As a contractor employee, I am living the
experience today.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Tamosaitis appears in the
appendix on page 46.
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I have a B.S., M.S., and Ph.D. in engineering, a
certificate in business, and a professional engineering
license, over 42 years industrial experience with DuPont and
chemical plant operations with URS in DOE nuclear work.
My last position was that of the Research & Technology
Manager in the $13 billion Waste Treatment Plant (WTP) project
in Hanford, Washington. It is known as the WTP or the VIT
plant.
The objective of the WTP is to put 56 million gallons of
hazardous nuclear waste into a stable waste form to eliminate
an environmental and safety threat. This material is in 177
aging waste tanks that long ago have exceeded their design
life. One-third of those tanks have already leaked. Any delay
in startup or throughput of the WTP increases the chance of
additional radioactive leaks to the environment.
I am an advocate for the WTP, but it must be built to run
safely and efficiently. While an advocate, I am opposed to
corner cutting to earn fees and meet artificial schedules. This
especially applies when the taxpayer cost is now over $13
billion and predicted to go to around $20 billion. The original
cost for this plant was $4.6 billion.
The safety threats in the WTP are very serious. They
include the trapping of explosive hydrogen gas in the waste
which can lead to fires or an explosion; solids buildup, which
can lead to a criticality; erosion and vessel and pipe
pluggages that can render the plant totally inoperable. Several
of these relate to mixing in the vessels. Because of the design
of the plant, making changes later is not really an option and
would be extremely costly, if it was even possible.
Bechtel is the prime contractor in the WTP. The DOE
contract gives them the design authority and the design agency
responsibility for the project. This means Bechtel decides what
needs to be done and how it will be done. They then get
rewarded for cost and schedule performance, but will have no
operating responsibility. Their focus is profits, not
performance.
At 7 a.m. on July 1, 2010, I was suddenly terminated from
the WTP job and escorted off the premises after I continued to
raise valid safety and technical concerns during a time when
Bechtel was attempting to meet a June 30th deadline for closing
the mixing issue.
Meeting the June 30th deadline was very important because
there was a $5 million award fee on the line for them, and
there was also an additional $50 million in Congress that they
were trying to get. And we have e-mails which indicate that
they were fearful if they did not close M3, they would have
lost all that money.
Two days earlier, I submitted a list of nearly 50 technical
issues, many of which included mixing concerns. On July 1, I
went into work to finalize the details of my team's next
assignment in WTP. I found my e-mail account had been turned
off the night before. I was directed to go into an office and
told, ``Hand over your badge, your BlackBerry, and your
phone.'' I was then unceremoniously escorted off the WTP site.
I was not allowed to talk to anyone and could not go to my
office to get any of my personal belongings.
My termination sent a chill through the WTP and the
community. After termination from my WTP job, my employer, URS,
assigned me to a basement office that housed two working
copying machines. I have been sitting in a basement office now
for nearly 16 months. I have little meaningful work and no
contact from URS management. I have not been invited to any
safety or staff meetings, which are the staple of normal
operations.
I went to the Department of Energy Employee Concerns
Program immediately after this happened. I was told that they
had not seen such a flagrant case of retaliation and that I
should seek help outside, which they then gave me the name of a
person and I did.
I found no help for whistleblowers in the State of
Washington, no help from the IG, and very little help from the
Department of Labor (DOL). The DOE Inspector General was
supposed to look into my termination but stopped as soon as
they learned I had filed a claim with the DOL. After a year,
the DOL time expired, and with no outcome I asked for my case
to be moved to Federal court. Any information we received from
the IG in DOL was so heavily redacted, it was virtually
useless. It will be nearly 2 years before a trial first occurs.
Meanwhile, Bechtel gets reimbursed for their efforts. For
example, in their most recent survey, which they released last
week, ``Addressing the Culture,'' it is estimated to have cost
taxpayers nearly $2 million.
I wrote a letter to the Defense Nuclear Facilities Safety
Board (DNFSB) which prompted several investigations and a
public hearing last October. The Defense Board has
substantiated my technical and cultural concerns. The cultural
issues in the WTP with Bechtel surround anyone who challenges
Bechtel engineering, especially when cost and schedule is on
the line and they can earn fee against it. Even their own
survey released last week identified the problems of delay and
working difficulties within the WTP.
The contractors need regulation. Contractor whistleblowers
and concerned employees need protection. With no whistleblower
protection, the contractors do what they want. They actually
make more money in DOE by not doing it right the first time.
They get paid to build it, and then they get paid more to fix
it, if it will run at all. And this cost the taxpayers billions
at a time when our country's budget cannot afford it. The
original WTP cost was about $4.6 billion, and now it is at over
$13 billion in 10 years.
I encourage you to pass laws to strengthen protection for
whistleblowers. I encourage you to see that DOE contracts are
reviewed with more rigor and end the DOE practice of appointing
one company as the design authority and the design agency. I
encourage you to eliminate taxpayer reimbursement to companies
for defending improper practices. I also encourage you to
increase the Defense Board's scope and to give them enforcement
responsibility because without teeth they can be ignored.
Despite my career being ended, I would do it again because
it was the right thing to do. Given the tools, more people like
me will stand up against waste, fraud, abuse, bad practices,
and poor quality in government contracts.
Thank you, and I will be glad to entertain any questions
you may have.
Senator McCaskill. Thank you, Dr. Tamosaitis. Ms.
Canterbury.
TESTIMONY OF ANGELA CANTERBURY,\1\ DIRECTOR OF PUBLIC POLICY,
PROJECT ON GOVERNMENT OVERSIGHT
Ms. Canterbury. Thank you and good morning. I am the
Director of Public Policy at the Project On Government
Oversight a 30-year-old nonpartisan, independent watchdog that
champions good government reforms.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Canterbury appears in the
appendix on page 67.
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Whistleblowers are the guardians of the public trust and
safety and among the best partners in crime fighting. It is
well known that whistleblowers have saved countless lives and
billions of taxpayer dollars. Studies have also shown that
whistleblowers play a bigger role in exposing corporate fraud
than auditors, government regulators, or the media.
But perhaps the best illustration of how whistleblowers
save taxpayer dollars is the more than $27 billion recovered
since 1987 through the hugely successful False Claims Act
(FCA). As you well know, the law not only acts as a deterrent
to fraud, but also incentivizes whistleblowing through the
financial awards and strong protections against retaliation.
However, the FCA does not cover a host of other wrongdoing,
in spite of the government's huge exposure to these risks given
the amount of Federal dollars distributed to non-Federal
entities. According to USAspending.gov, out of nearly $3.8
trillion in the Federal budget, roughly half was spent on prime
awards to contractors, grantees, States, and localities.
A recent POGO report on the costs of contractors notes that
this workforce now dwarfs the Federal employee workforce by
approximately four-fold, and yet most of those on the front
lines do not have protections to come forward when they witness
waste, fraud, and abuse. The accountability loopholes are many
in the patchwork of laws that protect only some Federal fund
recipients and only under very limited circumstances.
In addition to the FCA, there are also some extremely
narrow protections under 42 U.S.C., Section 4705, but this is
fairly flimsy policy, and few contractor employees can or
should rely on those protections. However, in 2005, nuclear
contractor employee rights were slightly upgraded. Also,
progress has been made in closing other loopholes for the
Department of Defense contractor whistleblowers.
In 2009, the protected types of disclosures and recipients
were expanded. However, these still lack some basic best
practices found in other modern private sector whistleblower
laws and, thus, have not yielded the kind of accountability
that is needed. This is apparent in Iraq and Afghanistan where
the Commission on Wartime Contracting recently estimated $31 to
$60 billion has been lost to waste and fraud.
However, there is a model whistleblower protection for
Federal fund recipients. It simply needs to be expanded beyond
its original scope. The American Recovery and Reinvestment Act
of 2009 included excellent whistleblower protections for
employees of entities funded by the Recovery Act. Notably, the
stimulus spending so far has experienced extremely low
incidence of fraud, as acknowledged here today and also by the
GAO and others.
The Non-Federal Employee Whistleblower Protection Act (WPA)
of 2001, S. 241, builds on the success of the Recovery Act and
mirrors many of its provisions. Introduced earlier this year by
Madam Chair McCaskill, along with Senator Webb, S. 241 would
bridge the wide gaps in current coverage and comprehensively
apply best practice protections to employees of all entities
that receive Federal funds. Like the Recovery Act, it would do
the following:
It would protect the most common disclosures made by
employees, those made internally.
It would cover disclosures of gross mismanagement, gross
waste, substantial and specific to public health and safety,
abuse of authority, or a violation of a law, rule, or
regulation.
It would require an Inspector General to review and report
all claims of retaliation and investigate non-frivolous claims
within a reasonable timeframe.
It would provide effective remedies, including compensatory
damages and enforcement when reprisal is confirmed.
It would grant normal access to a jury trial and ensure
whistleblowers do not get stuck in administrative limbo for
longer than a year.
In sum, S. 241 would substantially reduce the risks for
whistleblowers and encourage more to come forward and create
far more accountability to taxpayers. However, we do have a few
suggested improvements.
First, every Federal fund recipient should be required to
post notices of their rights and remedies under this section at
work sites.
Second, we should require IGs to separately investigate the
wrongdoing that the whistleblower exposed in the first place.
Last, though it may be beyond the scope of this particular
piece of legislation, we would like to see incentives for
whistleblowing expanded to emulate the successful FCA award
program.
In these tough economic times, with a ballooning Federal
deficit, it is just plain common sense to have more
``deputies'' to safeguard taxpayer dollars and the public
trust. This is why POGO and partners of ours in the Make It
Safe Coalition strongly support better whistleblower
protections for Federal contractors.
We urge you to support enactment of S. 241, and I thank you
for the opportunity to testify today.
Senator McCaskill. Thank you very much, Ms. Canterbury.
Let me start. I think it is important to focus in on the
independent investigation of the Defense Nuclear Facilities
Safety Board as it relates to your case, Dr. Tamosaitis. They
reviewed 30,000 pages of documents and did 45 different witness
interviews and then released a report that--and I believe that
report was released in June of this year--that was highly
critical of Bechtel and the management of safety at Hanford.
According to this report, done by this independent review
board, safety board, Bechtel had created a chilled atmosphere
adverse to safety, and it specifically recommended that DOE
investigate. They found the Energy Department and contractor
management suppressed technical dissent, and I am quoting from
their report.
So I know that DOE kind of said, ``Well, since you talked
to Labor, we are going to let Labor handle it.'' Have you
circled back around with DOE since this report was issued to--
have you gotten any response from them about in light of what
this independent review board found, did they feel any need to
pick the mantle back up and look carefully at what happened
surrounding the concerns you had raised and what happened to
your employment as a result of that?
Dr. Tamosaitis. Regarding me, no. They have announced that
they are going to do another Health Safety Security (HSS)
survey, but that is as much as I know of.
Senator McCaskill. And I assume Bechtel is still in charge?
Dr. Tamosaitis. Bechtel is still in charge of the project,
yes, Senator.
Senator McCaskill. And everyone sees you go to work in the
basement with no windows?
Dr. Tamosaitis. Yes, ma'am.
Senator McCaskill. And knows that you are not allowed to
work even though you are there onsite and getting paid?
Dr. Tamosaitis. Correct.
Senator McCaskill. So every day you are an example to all
the workers there, whether they are Federal employees or
Bechtel employees, ``Do not say anything, or you, too, will be
banished to the basement''?
Dr. Tamosaitis. Yes, Senator. Very directly. It is a very
visible example of what happens if you speak up.
Senator McCaskill. It is just unbelievable to me that we
have allowed this to occur. And I know that you have a case in
court, but it is----
Dr. Tamosaitis. Yes, I want----
Senator McCaskill. It would be one thing if this was an
initial stage and you did not have this independent review. It
would be another thing if this was, frankly, I mean, I am all
about trying to save money, but this is about safety. And that
is what is really of concern.
Dr. Tamosaitis. It is safety and it is billions of dollars,
and the reimbursement for Bechtel to be--while they pursue
their defense, for example--I am requoting my verbal testimony,
but the survey they released last week cost taxpayers nearly $2
million.
Senator McCaskill. I am speechless about the reality of you
still going there every day as a walking billboard to everyone
to keep their mouth shut, because that is essentially what you
are.
Dr. Tamosaitis. Yes, Senator, and that is why I took action
because I did not want the people, especially the young
engineers, to think that what happened to me was right or that
they should manage that way.
Senator McCaskill. Were you working--I assume you worked
side by side with Federal employees at Hanford, at the waste
treatment----
Dr. Tamosaitis. Yes, ma'am.
Senator McCaskill. Now, if a DOE employee reports waste of
government funds, they are fully protected from retaliation;
whereas, it is not clear that you as a contractor employee have
that same protection.
Dr. Tamosaitis. I am not sure what the DOE employees--what
coverage they have. In the State of Washington, there is
essentially no whistleblower remedies. The Hanford site, a
Supreme Court decision in the State of Washington said that any
Hanford whistleblower cases had to take the Federal route and
go to the DOL.
Senator McCaskill. Right.
Dr. Tamosaitis. And then their year timed out, and now we
have made a motion to move to Federal court. In Federal court,
we have named DOE as a defendant because we have sufficient
information that indicates that the Federal project manager
played a role in my termination.
Senator McCaskill. So is the government reimbursing Bechtel
for the costs of the legal suit against you, do you know?
Dr. Tamosaitis. Yes. It is my clear understanding that they
are being reimbursed, and it is my understanding that if they
are found guilty, they could have to repay. But if they are not
found guilty, which means if they settle at the end of whatever
period of time and admit no guilt, they are fully reimbursed.
The survey, again----
Senator McCaskill. For the settlement amount, too, or just
for the costs of the defense; do you know?
Dr. Tamosaitis. I do not know that.
Senator McCaskill. Ms. Canterbury, do you know what the
situation is? And is this common that the government is funding
the defense for these cases across the board for contractors?
Ms. Canterbury. It was my understanding that the change
that was made in 2005 disallowed DOE to pay for the defense of
contractors. So if that is ongoing, that is a problem.
Senator McCaskill. So we need to look into that. We need to
ask some significant questions of DOE about who is paying for
the defense of this case and whether or not taxpayers are----
Dr. Tamosaitis. Senator, it is my clear understanding they
are being reimbursed for it.
Senator McCaskill. I think this is an area that we need to
get more information on, and I will task the staff to look at
the funding of the defense of these lawsuits and the funding of
any settlement. If the case is settled without an admission of
guilt, which is the rule not the exception in most lawsuits, do
the settlement monies come out of Bechtel's profits, or do they
come out of the treasury? And I think it is important that we
get to the bottom of that.
Have you been able to look at the investigative files of
the Department of Labor?
Dr. Tamosaitis. They were heavily redacted. Very difficult
to understand for the information that we received. My
understanding is Bechtel and URS did not provide full
information, and I do not have a summary of the totality of
what they provided.
Senator McCaskill. Do you know if the information that the
Safety Defense Board looked at, do you know if it was as
heavily redacted as what you have been able to see?
Dr. Tamosaitis. No, Senator, I do not know what they looked
at. I will say that the Defense Board was the only group that
looked at the issue in a timely manner and identified the issue
correctly.
Senator McCaskill. So the administrative remedies that we
have in the law for whistleblowers completely failed you?
Dr. Tamosaitis. Yes, ma'am.
Senator McCaskill. So you had the Safety Board that did the
job they were supposed to do, and then you have had to turn to
the courts because the administrative--which, of course, we
have designed the administrative process in order to try to
avoid the courts, and, clearly, that is not working out.
Dr. Tamosaitis. Again, the administrative process
internally, Bill Taylor of the Employee Concerns Program (ECP),
told me to seek help outside, which I did.
Senator McCaskill. So, in fact, the people who are tasked
with the administrative process are the ones who advised you,
Get out of Dodge, so to speak, and get into the civil court
system because the administrative system is not going to be
adequate in terms of addressing your problem?
Dr. Tamosaitis. Correct. One hundred percent correct.
Senator McCaskill. OK. Thank you very much. Senator
Portman.
Senator Portman. Thank you, Madam Chairman, and I
appreciate the testimony.
I wanted to followup, Ms. Canterbury, if I could, on some
of your comments on the policy side, and I appreciate what you
said about providing additional notification to private sector
employees in response to my earlier question to the last panel
and fleshing that out a little further.
Let me hear from both of you, if you have answers to this.
I am just trying to get at what works and what does not work
with regard to existing protections for private sector--for
Federal contractors, non-Federal employees.
You have the False Claims Act, which you mentioned, and
that gives whistleblowers the right to file the suits against
contractors. ``Qui tam'' I think is the Latin for it, the qui
tam suits, and then others for defrauding the government. So it
can be a suit against contractors or anyone, right, for
defrauding the government? And then there is the DOD statute we
talked about earlier, Section 2409, and for the civilian
agencies, FAR 3.9, which prohibits any contractor from
``discharging, demoting, or otherwise discriminating against''
an employee for reprisals for reporting substantial violations
of law related to a contract, and complaints under those
provisions are brought to the IG, as we heard about earlier, of
the relevant agency, so the Inspector General in this case of
DOE.
Just if you could tell us on the record, what do you see as
the major gaps in these existing protections that have either
prevented whistleblowers from coming forward or resulted in
unprotected reprisals? And then, Ms. Canterbury, if you could,
just give me any specific investigations of contractors that
you believe would have been more effective with stronger
whistleblower protections.
Ms. Canterbury. Thank you, Senator, for that question. As I
mentioned in my testimony, that particular statute, which is
under the FAR Rule 3.9, is rather flimsy. Substantial
violations of law are the only disclosures which are protected,
and I think there is a lot of concern about what
``substantial'' might be and in what context that might be
substantiated.
Beyond that, there are no time limitations on
investigations that might be conducted by an IG, no time
limitation on agency actions, so it is conceivable that there
could be interminable limbo for a whistleblower who might try
to rely on those protections. And as I said, I would not advise
any contractor to do so.
In terms of cases in which with better protections we might
have had more accountability or the whistleblower might have
found justice, it is very hard to say. In fact, most of the
cases of which we are aware have come under the False Claims
Act. Because of its underlying very strong public policy, that
is the avenue through which most contractors have sought to
bring to light instances of fraud or to seek protections from
retaliation. And so those are the cases we are most familiar
with, and I think that there are certainly many more who have
not come forward at all, and billions in taxpayer dollars that
have been wasted. I believe the public has been put in jeopardy
in terms of health and safety because there has not been a
strong public policy for whistleblowers.
Senator Portman. Do you think as a general matter that
Federal employees are more likely to step forward with reports
of waste or abuse than non-Federal employees?
Ms. Canterbury. I think that is true. We have had the
Whistleblower Protection Enhancement Act in place for many
years, but as you noted in your opening remarks, that law also
is in desperate need of enhancement, and this Subcommittee has
moved a bill that will do that, that will strengthen the
Whistleblower Protection Act.
So, yes, they do have more rights under the law currently
as Federal employees than a non-Federal employee who may be
sitting alongside doing the same type of work.
Senator Portman. And one issue that you talked about and
that we talked about earlier was just notifying non-Federal
employees of their rights and being sure it is understood is
the administrative procedure. I talked about the importance of
having an internal process that works, which sometimes works
and sometimes does not. And then we talked about just some of
the statutory provisions that might be less than clear and that
there is sort of a patchwork on the non-Federal side and that
legislation that we did pass--I think it was unanimous out of
this Subcommittee, in fact, on the Federal side----
Ms. Canterbury. Yes.
Senator Portman [continuing]. Helped to clean up the
Federal side. But we have not done that on the non-Federal
side.
Dr. Tamosaitis, your contracting comments I found
interesting, and I do not know as much about Hanford and how
that cleanup is going. I have been involved in some other
cleanups and found that if it is a cost-plus contract,
sometimes it results in some of the concerns you raised, not
specifically about safety but about the taxpayer dollars being
wasted. Is that a cost-plus contract, do you know?
Dr. Tamosaitis. The project, no. The project has award fees
in it. It is not a cost-plus. It is a capital project. They
have intermediate milestones and I will say incentives for
meeting various targets.
Senator Portman. Is it a fixed-cost contract then with
awards? Would that be the right way to describe it?
Dr. Tamosaitis. Well, no, I would say not fixed cost. It is
going up by billions.
Senator Portman. Yes, that is what it sounded like from
what you said earlier.
Dr. Tamosaitis. It is a capital project, and they continue
to reforecast what the total price will be. Congress allots
$690 million a year in funding, ``capital funding,'' and they
are getting an additional $50 million, which Bechtel was after.
If they had not closed the M3, the mixing issue, in June, the
$50 million was in jeopardy. So this coming year they would
have $740 million. They wanted to go for more money. But I do
not know the status of that additional money.
Senator Portman. Yes, well, I appreciate that, and I am not
expecting you to be the lawyer on this, but I do think some of
the waste that we hear about in this Subcommittee, talking
about contracting generally and some of the things that you
raised, are related to the incentives. As you said earlier,
companies who are paid to build something and then when it does
not work are paid to fix it would be another example of that,
where the structure of the contract itself leads to some of
these excessive taxpayer payments that you typically would not
see in the private sector on a fixed-cost basis.
Dr. Tamosaitis. In this contract, they will be gone when
they push the button, basically right when they push the button
to start it up. So they will have limited to no operating
responsibility. There is a very limited performance
requirement, but I will say in my view that continues to
decrease as time goes on as to what the plan has to do over
what period of time when they start it up. A major issue in my
mind is the design authority/design agency confounding,
deciding what needs to be done and how it needs to be done. I
have used the term that is like putting the fox in the henhouse
to guard it. They then have schedule and cost milestones they
have to meet, and if you are deciding what needs to be done and
how it needs to be done and it has to be done here, you are
pretty well going to meet it. And then you are not going to be
there to operate it.
In answer to an earlier question on the adequacy of the
whistleblower laws, I think the laws clearly have to be
improved, stepped up. There is also for the management of the
company, attention needs to be given on that side because what
really provides a memory is publicity and money. So if they--I
will say not so much the law may be written, sitting on a
shelf. So the companies need to see that there is a sting to
them and money will be memory as well as the bad publicity. And
until the management of the companies see that, it is a
continual uphill battle.
Senator Portman. Well, thank you both for your testimony. I
appreciate it.
Senator McCaskill. It is interesting, the award fee stuff
we saw over and over again in Iraq and Afghanistan where there
had been terrible execution of the contracts and they got the
performance fees. We did a whole hearing on it in the Armed
Services Committee, and it was shocking to me. And basically
the culture was, ``Well, we just give them those fees. No
matter how good a job they did, just everybody knows they get
them.'' I am, like, ``Well, why is it considered some reward
then if you are giving them to folks who are not doing a good
job?''
Let me just finally say this: This has been a very helpful
hearing. I think both Senator Portman and I have asked for
additional information from the Inspectors General community
and others in this hearing that we want to followup with. I
hope that Senator Portman takes a hard look at Senate bill 241.
I would love to have his help with it in making it the best we
can possibly make it.
The one thing I would say to you, Ms. Canterbury, we have
this chart\1\ that we prepared for this hearing, and this is
the various different provisions for whistleblowers in
different parts of the law--who is protected, what disclosures
are protected, who to disclose to, additional protections and
remedies. And they are different. And one of the things I would
really like to see us get done in S. 241 is to clean up this
patchwork, because how in the world can we expect people to
know what their rights are if it depends on which contract you
are working under, where you are working, whether you are in
stimulus dollars, or whether you are DOD? Our attempt to try to
clean this up, all of this was done with good intentions. It is
like our job training programs. We have 47, 48 of them, and
every one of them was created by a Member of Congress that had
good intentions in terms of job training. But we have created
this labyrinth of job training that ultimately falls in terms
of its effectiveness because of the weight and complexity of
the myriad programs.
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\1\ The chart submitted by Senator McCaskill appears in the
appendix on page 78.
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So any help that your organization can give us in terms of
making sure that what we have done with S. 241 is to try to
clean this up--and it is complicated by the fact that Issa's
bill has a pilot program for contractors, which I think we know
we do not need a pilot program. And Senator Akaka's bill does
not include contractors at all. So we have right now in
Congress three different pieces of legislation that are going
to make this worse, not better. So hopefully we can all get
together and try to clean this up because I think that is how
we are going to get to more effective protection of
whistleblowers and ultimately then more effective expenditure
of Federal dollars.
Thank you very much for being here. Thank you for attending
the hearing. Thank you, Senator Portman.
Ms. Canterbury. Thank you.
Mr. Tamosaitis. Thank you.
[Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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