Today, the Senate Committee on Homeland Security and Governmental Affairs held a hearing entitled Follow the Money: An Update on Stimulus Spending, Transparency, and Fraud Prevention. Chairman Joseph I. Lieberman (ID-CT) stated that the initiative of the hearing was to "[t]ake a status check" on what has been done so far, including analyzing "the performance of all levels of government," in implementing the American Recovery and Reinvestment Act (ARRA) since its enactment in February. In addition Ranking Member Susan M. Collins (R-ME) was particularly interested in what the Office of Management and Budget and Federal Trade Commission have done and will do to prevent fraud and waste in the execution of stimulus funding.
The following witnesses testified before the Committee:
Robert L. Nabors II, Deputy Director, Office of Management and Budget (OMB)
Jon D. Leibowitz, Chairman, Federal Trade Commission (FTC)
Earl E. Devaney, Chairman, Recovery Accountability and Transparency Board (Recovery Board)
J. Christopher Mihm, Managing Director, Strategic Issues, U. S. Government Accountability Office (GAO)
Mr. Nabors led off his testimony stating that the ARRA "is working," and that agencies have outlayed nearly $94 billion so far, up from about $12 billion since the beginning of April, with budgetary effects of the ARRA currently exceeding $159 billion. According to Mr. Nabors, "[t]his pace of spending is consistent with [the OMB's] original goal of outlaying 70 percent of funds – or about $551 billion – by the end of FY 2010." The OMB is "further committed" to continuing active communication with stakeholders, including funding recipients, and has "taken increased measures to make sure that states are notified promptly of grants and contracts that are awarded within their jurisdiction." Mr. Nabors further stressed that OMB is undertaking "ongoing discussions" with the FTC, Department of Justice, and Inspector Generals to incorporate "real time lessons learned" and implement "best practices management" to prevent waste and abuse of stimulus funding.
Mr. Leibowitz discussed the basic premise that ARRA presents criminals with an "opportunity to prey on the economic distress" of consumers, and further discussed Operation Short Change, "a law enforcement sweep [the FTC] announced on July 1st that targeted, and continues to target, entities defrauding American consumers hit by the economic downturn." Mr. Leibowitz also noted that the FTC is actively monitoring the Internet to "identify those websites promoting ways to obtain a piece of the economic stimulus," and reviewing its databases to screen those persons and entities it believes are perpetrating fraud under the ARRA. In discussions with Mr. Leibowitz, Senator Jon Tester (D-MT) stressed his particular concern that the FTC, itself, does not have the authority to criminally prosecute those advocating fraudulent stimulus programs to consumers.
Mr. Devaney addressed previous suggestions put forth by the Committee that the Recovery Board seek the assistance of the American Association of Retired Persons and TRIAD in publicizing and creating awareness of ARRA-related scams, "given that perpetrators of scams frequently target the senior population." Mr. Devaney stated that the Recovery Board has "reached out to both of these organizations, as well as the Federal Trade Commission and the National Association of Attorneys General, to establish working relationships and to ensure a general awareness of such schemes." To further achieve the goal of minimizing fraud, waste, and mismanagement of funds, the Recovery Board is "coordinating its oversight activities with federal agencies, including IGs, and state officials," including "working with OMB to develop a process whereby agencies, OMB, and IGs will work together to identify programs with the highest risk."
Mr. Mihm briefly discussed the GAO report released today (GAO-09-908T) entitled States’ and Localities’ Current and Planned Uses of Funds While Facing Fiscal Stresses which addresses (1) selected states’ and localities’ uses of Recovery Act funds, (2) the approaches taken by the selected states and localities to ensure accountability for ARRA funds, and (3) states’ plans to evaluate the impact of ARRA funds. According to the report, as of August 28, 2009, Treasury had outlayed about $45 billion of the estimated $49 billion in Recovery Act funds projected for use in states and localities in fiscal year 2009. The GAO's Forensic Audits and Special Investigations unit is currently pursuing 8 ARRA-related fraud allegations, which include wasteful and improper spending, conflicts of interest, supplanting of ARRA funds, and contract fraud.