Government Auditing Standards, effective in January 2003,  call for auditors to “be free, both in fact and appearance from personal,  external, and organizational impairments to independence.” These  standards also require that auditors “avoid situations that could lead  reasonable third parties with knowledge of the relevant facts and  circumstances to conclude that the auditor is not capable of exercising  objective and impartial judgment . . ..” Given that their independence and  impartiality is so critical, inspectors general need to be sensitive to how  their actions might be perceived and interpreted by their staffs, the  administration, Congress, and the public. Some employees questioned the  Inspector General’s judgment in regard to her possession of a firearm in  the office, as well as law enforcement credentials. Evaluation of OIG Productivity

The OIG conducts a variety of activities that aim to improve program  operations, identify and recover overpayments, and investigate and  sanction those who violate statutes and regulations governing HHS  programs. Second, it is difficult to compare performance from one year to the next  because the results in one period are heavily dependent on work in the  pipeline that was initiated in prior years. Many of  the OIG’s productivity measures remain comparable to prior years or  showed increases, but we found that several other key indicators of  performance have declined since the Inspector General took office. Also, the number of convictions resulting from the OIG’s investigative  referrals has steadily increased over the last 6 years. The OIG Chief Counsel  explained that, in 2002, the Department of Education became responsible  for processing most of the exclusions of health care providers who had  defaulted on the repayment of their federally funded student loans. For  example, we noted reductions in the number of settlements and recovery  amounts that result from the OIG’s False Claims Act referrals to DOJ. As shown in table 4, the number of these cases had a marked  decline since fiscal year 2000. OEI  management decided to combine the results of both projects into a single  report. Measure of Employee Morale

Based on our survey and extensive interviews, we found in the aggregate  that employee views about the organization, management, and their  personal job satisfaction remained positive and relatively unchanged  between 2002 and 2003. Our survey revealed a substantial deterioration in OEI employees’ views of  the organization, management, and their personal job satisfaction. Our  results also showed that 54 percent of OCIG employees lack trust and  confidence in their organization. The decline in the views of OCIG staff  can, in part, be attributed to changes implemented by the Inspector  General, and the atmosphere of anxiety and distrust that her actions  created. We also provided them with a copy of  our draft report. In written comments on a draft of this report, the  Inspector General disagreed with some of our findings and  characterizations of certain events. The Office of the Secretary did not  provide comments. In reference to our discussion about the OIG’s productivity, the Inspector  General stated that the OIG had achieved substantial accomplishments  under her leadership and direction and cited the savings attributable to its  work in fiscal year 2002. For example, senior managers were  considerably more disturbed than all other employees about OIG  leadership. Further, headquarters employees expressed less satisfaction  with the organization and leadership than their counterparts in the field. We continue to believe that the  Inspector General’s decision to intervene at the request of senior officials  in the Florida governor’s office and her subsequent instructions to her  staff to delay the audit created a perception that her independence was  compromised. The Inspector General noted that most  of the individuals who left the OIG following her changes were in new  positions that were “at least equal to or better than” the ones they  occupied at the OIG and that she always promoted from within the  organization. In our draft report, we also discussed the OIG’s budgetary difficulties. Appendix I: Scope and Methodology

To conduct our review, we focused on three key areas—the leadership  exhibited by the current Inspector General, Janet Rehnquist, the  productivity of the Office of Inspector General (OIG) in recent years, and  employee morale. Analysis of OIG Performance Measures

To determine whether the OIG has experienced any changes in  productivity since the current Inspector General took office in August  2001, we reviewed OIG publications, such as its semi-annual reports, to  determine how savings, recommendations, and other performance  indicators changed since fiscal year 2000.
Why GAO Did This Study

Janet Rehnquist became the Inspector General of the Department of Health and Human Services (HHS) in August 2001. GAO was asked to conduct a review of the Inspector General's organization and assess her leadership, independence, and judgment in carrying out the mission of the Office of Inspector General (OIG). GAO examined indicators of the OIG's productivity and compared them to the organization's past performance. GAO also determined whether employee morale has been sustained by surveying all OIG employees and comparing the results to those obtained through an identical survey administered in 2002. On March 4, 2003, the Inspector General resigned her office effective June 1, 2003. However, in this report we refer to Ms. Rehnquist as the Inspector General.

What GAO Found

The credibility of inspectors general is largely premised on their ability to act objectively and impartially--both in substance and in perception. Some of the HHS Inspector General's actions--including her decision to delay a politically sensitive audit--created the perception that she lacked appropriate independence in certain situations. The Inspector General exhibited serious lapses in judgment that further troubled many OIG staff. For example, she inappropriately obtained a firearm that she briefly possessed at her workplace and OIG credentials that identified her as a law enforcement officer. The Inspector General also initiated a variety of personnel changes in a manner that resulted in the resignation or retirement of a significant portion of senior management, disillusioned a number of higher level OIG officials and other employees, and fostered an atmosphere of anxiety and distrust. Ultimately, the collective effect of these actions compromised her ability to serve as an effective leader of HHS's Office of Inspector General. Examining productivity trends is difficult because the work of the OIG often involves multiyear efforts and the results recorded for a single year are heavily dependent on work initiated in prior years. Similarly, savings achieved in any one year can be attributable to the culmination of efforts made over several years. Given these constraints, GAO noted that productivity at the OIG over the last 3 years increased in some areas and declined in others. Overall savings attributable to the OIG's efforts--as reported in its semiannual reports to the Congress--increased from $15.6 billion in fiscal year 2000 to $21.8 billion in fiscal year 2002. The number of individuals convicted for violating HHS program statutes and regulations--another key indicator of the OIG's performance--also increased. On the other hand, declines were noted in the number of settlements with providers who submitted false claims to the government and the OIG's education and outreach activities. GAO's survey results showed that employees' overall views of the organization, management, and their personal job satisfaction generally remained positive and relatively unchanged between 2002 and 2003. However, field office staff and those in lower level positions were considerably more positive in their views of the organization than their counterparts in headquarters and at the highest levels of management. Two units in particular--the OIG's Office of Counsel and the Office of Evaluation and Inspections--also had marked declines in morale. Both reported significantly lower levels of trust and confidence in the organization and less job satisfaction, compared to 1 year earlier. The Inspector General generally disagreed with some of our findings. In our response, we address why these findings raise concerns about the management of the OIG. We also provided our draft report to the Office of the HHS Secretary, but did not receive comments.