The Inspectors General COVID Committee Has an ‘Enormous Responsibility'
“We've really changed the way we as federal IGs do business,” says Michael Horowitz, Justice Department inspector general and chair of the Pandemic Response Accountability Committee.
The head of a pandemic oversight committee overseeing more than $5 trillion in relief said their work will forever change the way federal watchdogs operate.
The CARES Act of 2020 established the Pandemic Response Accountability Committee to coordinate and support oversight of pandemic relief programs and spending, which is now over $5 trillion.
In early April 2020 President Trump, ousted Glenn Fine from the Defense Department’s acting IG position, thus stripping him of the ability to lead the committee. It is now led by Michael Horowitz, the Justice Department’s inspector general, and its membership includes other IGs.
“We've really changed the way we as federal IGs do business,” through closely collaborating with oversight partners and federal prosecutors and new data analytics efforts, Horowitz said in a recent interview. He speculated that it will be months if not years before we know how much COVID-19 relief was subject to fraud.
As part of our series examining the pandemic oversight bodies, Government Executive talked to Horowitz on March 31 about the committee’s work over the past two years. This has been lightly edited for length and clarity.
GE: How much of the coronavirus relief funds fall under the PRAC’s jurisdiction? How much, if you know, has been subject to fraud so far?
Horowitz: When we were first created back in March of 2020 in the CARES act, we oversaw at the time, the extraordinary amount of $2 trillion-plus. That's grown now. We now oversee over $5 trillion in pandemic relief spending in light of successive bills that have been passed by Congress and signed into law. Our oversight is now over $5 trillion of funding. And just to give you a sense of the scope of that: that's roughly actually a little bit more than the total federal budget, discretionary budget, in fiscal year 2019.
So, we have an enormous responsibility there in terms of our oversight. With regard to the amount of fraud that we've seen, it's simply too early for me to give you an accurate number there. This is something that's going to continue to develop over time. As we develop more and more evidence and information, as we hear more from the public about returns they have, issues they've seen we learn more and more about fraud.
For example, the number of victims of identity theft are getting 1099s now claiming that they received unemployment insurance benefits. When in fact what occurred is that individuals stole their identity, used their identity to get the benefits, but now in the 1099 forms, the tax forms are being sent out, those are going to the victims of the identity theft. And of course, at that point, we're hearing more about additional problems.
So, we're going to continue to work at it. We're not going to stop at any point here other than when we run out of evidence and leads. We're going to follow the evidence wherever it goes and where that number ultimately lands and what it ultimately is, we'll be able to tell. But my guess is where we're at least months, if not years from sorting that out.
GE: Now over the last two years what type of systems and procedures have you had to implement to scrutinize this massive amount of money?
Horowitz: We've had to undertake a number of steps…given our responsibilities and our oversight. I think the biggest step we've taken and the one that has had [and] will have the greatest impact and will be the biggest change in how we do business as federal inspectors general is our use of data analytics. Congress funded us last year in the American Rescue Plan to enable us to build a data analytics platform. It’s something we asked for, it's something we recognize that we critically need. You can't oversee $5 trillion dollars in pandemic spending without using data.
[The Pandemic Analytics Center of Excellence] has allowed us to identify significant issues, potential improper payments, potential fraud, and allow us to assist other IGS in their oversight efforts. So for example, one of the things that the Small Business Administration IG struggled with early on was the enormous increase in complaints that they received through their hotline…We were able to use data analytics to search for and to score the various complaints to enable the SBA IG, to prioritize which complaints were the ones they should look at first, the ones that had the greatest likelihood of a condition of wrongdoing.
GE: Now kind of going off from that point, in a post commemorating the two-year anniversary, the PRAC said that “data quality issues remain one of our greatest challenges.” Can you elaborate on what that issue is and what you’d like to see happen?
Horowitz: It has been a very substantial issue for us first. First it was simply getting data. One of the challenges we had early on in 2020 was getting data from all the programs that were out there in a timely fashion.
For example, again, the Small Business Administration and the [Paycheck Protection Program] loan information and their idle loan information, were very slow to release the information. In fact, refused to release the information for months. Several news organizations actually sued them and the news authorizations ultimately prevailed in [Freedom of Information Act] litigation. So, it was something that we should have gotten earlier. The SBA IG should have gotten [it] earlier. The Government Accountability Office complained about their lack of access to that data and that meant a delay in our ability to conduct oversight and that happened in several programs where information was slow to be released. Information was slow to be managed. And so, for the first many months, our challenge wasn't the nature of the data that we were getting, our challenge was we weren't getting data at all. And when we finally did get the data and were able to put it up on our website, pandemicoversight.gov that we launched within 30 days of our creation,...what we empowered citizens to do was to look at that data and to give us the lead and give us information about what might be improper payments, what might be partially payments…So we finally started getting data, but then what we saw was the quality of the data wasn't what we were hoping for him.
For example, we did a report recently where we examined grants and the data that was included with grants. And we looked at about 15,000 or so grants and when we looked at those, they accounted for about $33 billion worth of funding and that they had meaningless descriptions. We couldn't make heads or tails of it and we’re obviously the professionals who should be able to understand it, let alone in the public at large looking at it. So, you know, we had $10 billion worth of childcare development grants that had a word description that said “CCC5-2021.” There's no one who's going to understand or know what that money went to.
We had similar challenges with regard to block grants where money was given out in a large chunk to a first level recipient: states, other localities. But then we're having trouble tracking where the money went downstream from there because those organizations distributed the money further, creating a challenge for us to try and find where the money went. Because you need to know where the money went to not only assess whether there was fraud or improper payments, but critically whether the program had value, whether the program delivered aid to the people it was intended to deliver aid to.
GE: President Biden said during his State of the Union on March 1 that “the watchdogs are back,” particularly in regard to coronavirus oversight. Can I get your reaction to that – as the PRAC was established under the Trump administration – and some of the other related announcements the administration has made about this?
We’ve had a very strong relationship with the White House team that has been overseeing this effort, as well as, critically, the Office of Management and Budget team that has been overseeing this effort. We’ve worked very closely with them to identify the various risks we've seen so that they can take action and follow up on what we're recommending.
We meet weekly, for example, with Gene Sperling, the team he leads at the White House overseeing implementation of the pandemic effort, as well as the leadership of OMB. We have joint meetings with them every week. It allows us an opportunity to highlight for them the problems and challenges we're seeing, issues we may be having or our inspectors general may be having with their agencies. Those have been very productive, those meetings and that ability to have those discussions.
As an aside, they parallel what occurred back in 2009 when the recovery board was created back then to oversee the money that was appropriated and helped with the Great Recession and the American Recovery Act… Vice President Biden was in charge of the effort to coordinate with the [Recovery Accountability Transparency] Board led by then-IG Earl Devaney and they met weekly and I talked with Early Devaney when I first undertook this effort back in March 2020. We talked about all the very impressive steps he took, and the board took and he talked about how critical those weekly meetings were with the vice president and his staff. We found the same thing here since we've been having those meetings starting in early 2021.
We also have had the support through the funding of the American Rescue Plan, which included the $40 million dollars that allowed us to undertake the data analytics effort that I mentioned earlier.
GE: How has the PRAC been working with the new COVID-19 fraud prosecutor that the Justice Department announced on March 10? And how does that fit into your other collaboration efforts?
Horowitz: A great question; a very important issue. You can't oversee $5 billion without working close and collaborating with one another across the oversight community.
So, before I talk about DOJ, let me just mention…We've had very strong relationships over the years with the Government Accountability Office. But what we've done here in the last two years is take our relationship and collaboration with our state and local oversight partners to a new level. And it's been critical.
With the DOJ, we had started our own federal fraud task force at the PRAC to coordinate among IGs and with our federal law enforcement partners. The DOJ announced their fraud task force. We're very pleased to be a member of that. I've had very close interactions with the new prosecutor leading that effort.
Let me just say, as inspectors general, we not only have the authority to investigate criminally, we have the ability to look at civil violations, so we're working not only with criminal prosecutors, but with civil prosecutors to recover money for the taxpayers.
We also have the ability to use our administrative tools like suspension and debarment and forfeiture to seize assets, like the various fancy automobiles, Lamborghinis and other cars that we've seen fraudsters use money to buy. We’re seizing those, we're seizing bank accounts, we're recovering the money for the taxpayers. But in order to do that most effectively, we need to be able to work closely with federal prosecutors: civil and criminal. And so that partnership has been very important and we're looking forward to continuing working closely with them.
GE: In closing, is there anything else …you would like to note about the two-year anniversary of the PRAC or COVID-19 oversight overall?
Horowitz: We've made enormous progress. We've really changed the way we as federal IGs do business by working in close collaboration with our oversight partners [and by building the analytics from scratch that has enabled us to most effectively undertake that effort. We're working more closely than ever with our federal prosecutors around the country to recover monies [and] we're looking at and using novel ways of helping one another. One of the things that I am most proud of is that we've used the hiring authorities that Congress gave us at the PRAC to hire data science fellows, an area that's been a big challenge for the federal government, to get the high quality personnel to come in and support data analytics and our mathematical efforts…We’ve now used PRAC money to hire close to 20 data science fellows and to place them with IG offices to help them move forward with their own analytics efforts. We’ve gotten some tremendous talent through that program: recent graduates from undergraduate universities, from graduate programs who have been drawn to the federal government to help this enormously important effort and our hope of course, is to keep them on board and to build a cadre of future talent that will be meeting the IG community forward.
So, we've done a tremendous amount in two years. We've got a lot of work ahead of us. We were created with a five-year existence, so we have three more years after. And I’m looking forward to continuing our efforts to oversee this money for the public.