[House Hearing, 115 Congress] [From the U.S. Government Publishing Office] AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS FOR 2018 _______________________________________________________________________ HEARING BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION _________ SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES ROBERT B. ADERHOLT, Alabama, Chairman KEVIN YODER, Kansas SANFORD D. BISHOP, Jr., Georgia THOMAS J. ROONEY, Florida ROSA L. DeLAURO, Connecticut DAVID G. VALADAO, California CHELLIE PINGREE, Maine ANDY HARRIS, Maryland MARK POCAN, Wisconsin DAVID YOUNG, Iowa STEVEN M. PALAZZO, Mississippi NOTE: Under committee rules, Mr. Frelinghuysen, as chairman of the full committee, and Mrs. Lowey, as ranking minority member of the full committee, are authorized to sit as members of all subcommittees. Tom O'Brien, Pam Miller, Andrew Cooper, Justin Masucci, and Elizabeth King Subcommittee Staff ________ PART 4 USDA OFFICE OF THE INSPECTOR GENERAL [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ______ Printed for the use of the Committee on Appropriations U.S. GOVERNMENT PUBLISHING OFFICE 28-273 WASHINGTON : 2018 COMMITTEE ON APPROPRIATIONS ---------- RODNEY P. FRELINGHUYSEN, New Jersey, Chairman HAROLD ROGERS, Kentucky \1\ NITA M. LOWEY, New York ROBERT B. ADERHOLT, Alabama MARCY KAPTUR, Ohio KAY GRANGER, Texas PETER J. VISCLOSKY, Indiana MICHAEL K. SIMPSON, Idaho JOSE E. SERRANO, New York JOHN ABNEY CULBERSON, Texas ROSA L. DeLAURO, Connecticut JOHN R. CARTER, Texas DAVID E. PRICE, North Carolina KEN CALVERT, California LUCILLE ROYBAL-ALLARD, California TOM COLE, Oklahoma SANFORD D. BISHOP, Jr., Georgia MARIO DIAZ-BALART, Florida BARBARA LEE, California CHARLES W. DENT, Pennsylvania BETTY McCOLLUM, Minnesota TOM GRAVES, Georgia TIM RYAN, Ohio KEVIN YODER, Kansas C. A. DUTCH RUPPERSBERGER, Maryland STEVE WOMACK, Arkansas DEBBIE WASSERMAN SCHULTZ, Florida JEFF FORTENBERRY, Nebraska HENRY CUELLAR, Texas THOMAS J. ROONEY, Florida CHELLIE PINGREE, Maine CHARLES J. FLEISCHMANN, Tennessee MIKE QUIGLEY, Illinois JAIME HERRERA BEUTLER, Washington DEREK KILMER, Washington DAVID P. JOYCE, Ohio MATT CARTWRIGHT, Pennsylvania DAVID G. VALADAO, California GRACE MENG, New York ANDY HARRIS, Maryland MARK POCAN, Wisconsin MARTHA ROBY, Alabama KATHERINE M. CLARK, Massachusetts MARK E. AMODEI, Nevada PETE AGUILAR, California CHRIS STEWART, Utah DAVID YOUNG, Iowa EVAN H. JENKINS, West Virginia STEVEN M. PALAZZO, Mississippi DAN NEWHOUSE, Washington JOHN R. MOOLENAAR, Michigan SCOTT TAYLOR, Virginia ---------- \1\}Chairman Emeritus Nancy Fox, Clerk and Staff Director (ii) AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS FOR 2018 ---------- Wednesday, February 15, 2017. OVERSIGHT HEARING--OFFICE OF THE INSPECTOR GENERAL, U.S. DEPARTMENT OF AGRICULTURE WITNESSES PHYLLIS K. FONG, INSPECTOR GENERAL GIL H. HARDEN, ASSISTANT INSPECTOR GENERAL FOR AUDIT ANN COFFEY, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS Mr. Aderholt. Well, good morning. The subcommittee will come to order. We welcome everyone to the Agriculture Subcommittee of Appropriations. And this is the first hearing of 115th Congress, and today we have the U.S. Department of Agriculture Inspector General. Welcome. Glad to have you here. First and foremost, before we get started, I want to congratulate and welcome our new ranking member, Sanford Bishop from Georgia. I have had the pleasure of working with Congressman Bishop over the last several years, I think since you first came on the Appropriations Committee in 2003. Is that correct? Mr. Bishop. That is correct. Mr. Aderholt. And, of course, we both share a passion for the great work that the Appropriations Committee does and, in particular, what the Agriculture Subcommittee does. We both represent a district where agriculture plays a big role, a very crucial role in the livelihood of our constituents. And Mr. Bishop is well respected as a principal member of this committee, and he is not afraid to reach across the aisle--and I appreciate that--to solve real issues that everyday people have out in America, whether it be in Georgia, Alabama, or whatever State it may be. I look forward to working with him. And so, Mr. Bishop, welcome, and glad to have you in that role in this new Congress. I would also like to welcome back all the other members of the subcommittee. We are, oddly enough--I say ``oddly enough,'' but I think it is ``fortunately''--we are one of two subcommittees that membership did not change on the majority side. Everybody was happy, wanted to stay where they were, and that was great. On the minority side, we did welcome the addition of our new member from the Second District of Wisconsin, Mr. Pocan, and we look forward to working with you. And I view the popularity of this subcommittee to be a very positive sign of the interest in this subcommittee in dealing with the real world changes, and so we want to welcome you today for this first hearing of the 115th Congress. opening statement--mr. aderholt Due to the typical delays of any new administration, we may not see the fiscal year 2018 budget request for another month or so, but I would like to share in some detail some of the themes that we would like to set as a guideline for the subcommittee's work for fiscal year 2018. Our first theme builds off on our oversight activities over the past several years. It is about evaluating and accounting for taxpayer dollars to ensure efficiency and accountability. We will continue to work to eliminate and prevent burdensome regulation, to improve agency accountability, eliminate duplicative programs and initiatives, ensure proper staffing levels, and make investments improving ineffective programs with a demonstrated benefit to American families. The second theme is investing in rural infrastructure as a catalyst for growth. I want us to make smart investments in critical utility infrastructure, such as broadband, electricity, water systems, and housing for our vulnerable populations; assist rural businesses to create unique economic opportunities; and provide funding that helps to grow economic development and jobs. The third theme is about ensuring support for our farmers, ranchers, and producers. This includes providing opportunities for our constituents through access to domestic and international trade; providing credit to producers; ensuring free and fair markets; supporting science and research to promote productivity and sustainability; and guaranteeing the safety net is there for those who need it the most. Our fourth and final theme is protecting the health and safety of people, plants, and animals. We will work to protect our safe and healthy food supply; control or eradicate plants and animal pests and disease that threaten agricultural industries; ensure safety and effectiveness of human and animal drug and medical products; deliver nutrition assistance to vulnerable populations; and provide for the efficient use of funds for nutritional research and education. As for today's hearing, Ms. Fong, we would like to thank you for being here today and with your team. I believe this marks your 15th straight year, if my information is correct, that you have appeared before this subcommittee. That was before I came on the subcommittee, but you certainly have had a long time being here, and you should feel right at home this morning. So, needless to say, we have a deeply experienced team at the Office of the Inspector General as this new administration fills its leadership positions. I look forward to discussing the ongoing challenges that are faced by the Department that have arisen over the last 8 years. I would also like to get your input on future problems that may arise in programs, policies, and practices that may be of concern to you and, of course, to your organization. Based upon your written testimony, it appears that the last administration failed to fix problems in a number of high- priority areas, such as financial management, information technology, security, and the integrity of benefits. The work you do covers so many different aspects of American lives, from housing, to electricity, business development, farm safety net, food safety, and making sure people don't go hungry, things that most citizens don't really realize that goes on on a day- to-day basis. Your job is incredibly important to the integrity and success of the Department. The U.S. taxpayer should also be supportive of your work due to the risk exposure of USDA's financial activities. Most Americans would be surprised to know that USDA has over $200 billion in assets, $143 billion in annual spending, and more than $100 billion in loans. The outstanding recommendations offered by the Office of the Inspector General over the past 8 years could yield $700 million in savings. These are areas that you have identified, and it appears that no final action was taken during the previous administration. One example of the success of your work is the recent drop in improper payments for the crop insurance program. As a result of the Office of Inspector General's annual reviews and recommendations, this rate is at a record low of 2 percent and has dropped for the past 2 consecutive years. Among other things, we plan to discuss issues related to your audits and investigations that range from the Farm Bill, the Supplemental Nutrition Assistance Program, information technology, accounting deficiencies, and USDA's 3-year delay in setting up the Under Secretary for Trade and Foreign Agricultural Affairs. That was mandated in the 2014 Farm Bill. The subcommittee would also like to highlight the fact that you have once again received the outstanding recognition of your excellent work among the IG community. You received five awards and recognitions in 2016 from the Council of Inspectors General on Integrity and Efficiency, which encompasses the entirety of the IG community across the Federal Government. So I extend my congratulations for those achievements, as I know the subcommittee here does as well. Before I recognize our ranking member from Georgia, Mr. Sanford Bishop, for his opening statement, I want to remind everyone that we will try to abide as closely as possible to the 5-minute rule when we go to the Q&A, but make sure you do hit the ``talk'' button on your microphone before and after you speak. As some of you know, we got a refurbishing of the Subcommittee hearing room, and so we have some new buttons and gadgets up here. So, at this time, I would like to recognize the ranking member, Mr. Bishop. opening statement--mr. bishop Mr. Bishop. Thank you very much, Mr. Chairman. This is my first hearing in my capacity as the new ranking member, and I want to just say thank you for your welcome and for the friendship and collegiality that we have had over the years. I look forward to working with you and the members of the committee, as well as both of our staffs. I think we have started off on a very good note, and I think we will get a lot of things done for the American people. Let me just say that I also would like to welcome my new member on the minority side, Mr. Pocan. We are all excited about the challenges that we are faced with. And I want you to know that I think I can speak for all of us that the program that you have outlined in terms of oversight activities, infrastructure development, health and safety, and looking after our communities, particularly the rural development, has been well received on our side, and we look forward to working together on that. With that said, I would like to welcome Ms. Fong, Mr. Harden, and Ms. Coffey to the committee once again. It is a very distinguished panel. And judging by the many years that you have collectively served in the USDA Office of Inspector General, you have obviously found your work rewarding. And, of course, as the Chairman indicated, the high quality of your work has been repeatedly recognized, most recently with your award, Ms. Fong, when your IG colleagues gave you an outstanding award there for your investigation into food safety issues. It led to the recall of 8.7 million pounds of meat, but it was ultimately in protection of the consuming public, and congratulations on that, and we appreciate your diligence. We are sort of in an odd situation budget-wise at the moment, as the Chairman alluded to, with the 2017 bills not finished and no clear path forward in 2018, but I assure you that we always find a way to get the job done, and I hope that this year will be no exception. I have an abiding interest in your work. We have got to do everything that we can to root out fraud, abuse, mismanagement, and, of course, we have got to improve efficiency and effectiveness. And, of course, you are charged with investigating criminal activity in USDA programs. In a number of cases, State and local governments actually administer programs on behalf of the Federal Government, but like their Federal partners, their budgets are very tight and they struggle with staffing and training. And I fear that further restraints on our spending will make it harder and harder to administer the programs properly, and so I look forward to discussing that challenge with you as well as the other important issues that we will face. So I thank you, Mr. Chairman. We look forward to going forward with our responsibilities. Mr. Aderholt. Thank you, Mr. Bishop. Ms. Fong, again, welcome, and you may proceed with your testimony. opening statement--ms. fong Ms. Fong. Well, thank you, Mr. Chairman, Ranking Member Bishop, and members of the subcommittee. We are very happy to be here today to talk about our work, and we appreciate the very warm welcome from all of you. On behalf of all of our staff, our auditors, investigators, attorneys, and everyone around the country, we thank you for your support and interest and your recognition of the tough job that we do every day. Today I am hoping that we can build on our ongoing, very positive, and constructive dialogue on a number of issues. As you mentioned, we have Gil Harden, who is head of our audit operation, and Ann Coffey, who is head of our investigations operation. They are very experienced and knowledgeable, and I know that they will add a lot to the conversation. As many of you know, our job within OIG is to help USDA deliver its programs as effectively as possible with integrity. We do that through audits and investigations, and we make recommendations, but ultimately it is up to the Department to take the corrective actions that are necessary. You have my written statement for the record, which summarizes much of our work and our ongoing activities, and I am just going to hit very quickly on some of the high points here, and we can, after that, get into the question-and-answer session. Of particular note, I want to thank the chairman and Mr. Farr, who was the ranking member at the time, for the request that you all made to us with respect to U.S. MARC and the research activities that were going on at that center. We finished a review of that this year and recommended that USDA improve its oversight of animal welfare at that site. Even though we found that many of the published media statements were without basis, we did feel that ARS could do a better job. In the larger context of scientific integrity and research, we have some ongoing work, which we will be happy to talk about during the question session. We also recently issued audits in the SNAP program with respect to a number of aspects of the SNAP program. We have done work on the administrative costs of managing that program and delivering it through the State and local governments. We have looked at the Able-Bodied Adults Without Dependents provisions, and we have also looked at data analysis of potential fraud. So we have got a number of reports there that we can talk about, with recommendations for improvement. And, as you know, we continue to do investigations in that area. We continue to have high-dollar results and convictions. In the area of farm programs, we reviewed how USDA agencies should be sharing data for program eligibility purposes. We have looked at NRCS wetland conservation activities, primarily in the Prairie Pothole Region, and we had a number of recommendations for improvement in those areas as well. Finally, I want to note that financial management continues to be a significant challenge for the Department. While USDA has made some progress, we believe that much more needs to be done, especially to attain an unmodified opinion on its financial statements both at the consolidated level as well as at the agency level. We also need to provide sustained attention to the rising improper payment rates overall at USDA, and this will require sustained attention from leadership at the Department over the next year and beyond. So, in closing, I want to thank the subcommittee for your interest in our work, your continuing support over the years, our very constructive dialogue with all of your members, and we look forward to continuing that relationship. Thank you, and we are ready to answer questions. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] DEPARTMENTAL OVERSIGHT Mr. Aderholt. Thank you, Ms. Fong. Thank you for your testimony. This morning we want to discuss a wide range of issues that affect USDA and get your opinion on what the major challenges are as you move forward and as we all move forward. As I mentioned in my opening statement, over the last 8 years, Congress has played a large role in the oversight of the Department. A lot of these challenges were never fully addressed by the previous administration, and now we have to hope you and the new administration fix some critical issues. Examples: $700 million in unaddressed savings; $2.2 billion in faulty accounting estimates at the Commodity Credit Corporation; 5 consecutive years of violating the improper payment laws; chronic flaws in IT security; hundreds of millions of dollars wasted on farm program systems that have failed our farmers and our ranchers; and consistently delayed and deficient financial statements. In a nutshell, I guess my question is, how can we help you? As Chairman of this subcommittee for the past 4 years, many times I have grown frustrated, and I know many Members and the staff have grown frustrated, with the Department as they roll out new initiatives that actually grabbed a lot of headlines at the time, but they neglected several basic housekeeping items. So can you tell us how you plan to raise the issues you have identified with the new Secretary and the others on his leadership team, and how you may offer solutions? Ms. Fong. Well, that is a very wide-ranging and deep question, and---- Mr. Aderholt. So you can take it the way you want to. Ms. Fong. Thank you. Well, we are looking forward to working with the new administration, the new Secretary, and his subcabinet when they are confirmed. And, as you note, leadership at the top is critical, tone at the top is critical to bringing a sense of urgency and priority to many of the issues that we have identified. And so our intent and our plan is to start out quickly out of the box with briefing the new team coming in on the issues that we are reporting, in particular some of the key challenges that you have raised: financial management at the Department, unresolved audit recommendations, improper payments, the full litany of challenges that we have identified. Now, in terms of how all of us go forward, you are absolutely correct that many of these issues are longstanding and have deep roots. Many of the other issues that we see may be a little more ephemeral; they may be easier to address. And I think we all have our roles to play. It is our job within the IG's Office to identify these issues, to report them out to the decisionmakers, to bring them to your attention, to track resolution, and, if resolution doesn't occur, to point that out. What we have found very helpful in the past is to have leadership at the Department who views management as a critical responsibility and who is willing to work with us as we surface issues. What we have also found very helpful is, in our experience, when you at this subcommittee level, or any of the oversight committees, have a concern about a particular issue, you have been very active in terms of raising it with us and with the Secretary through hearings, letters, and questions. And we have seen that, when there is that level of interest from the oversight bodies, that tends to generate more activity in a quicker timeframe. Similarly, if you ask us to do a review, we take those requests very seriously. We engage in dialogue with all of you to see what we can do to help bring some additional information and perspective to the issue. So we stand ready to do that. IMPROPER PAYMENTS Mr. Aderholt. OK. Let me just briefly, I have just got a few seconds here left, but one of the issues that I think boggles the mind is the four programs under the Food and Nutrition Services that have not complied with the improper payment laws for the past 4 years. In just a nutshell, are there ways that we can assist you in bringing attention, solutions to the mistakes that keep on seem to be occurring over and over again? Ms. Fong. The improper payment laws have a whole architecture of how you approach these issues. And I think where we are now with USDA is, with respect to SNAP, there needs to be a way for FNS to move forward to identify an improper payment rate. They did not report one for fiscal year 2015, and we can talk about that. With respect to other programs, there are--and this is for both the farm programs as well as FNS--there are requirements that the Department move forward with corrective action plans, and they must provide those plans to Congress and OMB. And I believe the Department has developed plans and has sent them forward. We can work with you to find those and provide them. Mr. Aderholt. OK. [The information follows:] We have the corrective action plans for the 18 USDA programs deemed to be high risk for improper payments. We will deliver them to you and your staff under separate cover. These programs are as follows: Farm Service Agency (FSA): Loan Deficiency Program (LDP) Livestock Forage Disaster Program (LFP) Livestock Indemnity Program (LIP) Supplemental Revenue Assistance Payments Program (SURE) Noninsured Crop Disaster Assistance Program (NAP) Hurricane Sandy--Emergency Conservation Program (ECP) Hurricane Sandy--Emergency Forest Restoration Program (EFRP) Food and Nutrition Service (FNS): Supplemental Nutrition Assistance Program (SNAP) National School Lunch Program (NSLP) School Breakfast Program (SBP) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Child and Adult Care Food Program (CACFP) Forest Service (FS): Hurricane Sandy--Emergency Forestry Restoration Program (EFRP) Hurricane Sandy Capital Improvement and Maintenance (CIM) Natural Resources Conservation Service: Farm Security and Rural Investment Act Programs (FSRIP) Hurricane Sandy--Emergency Watershed Protection Program (EWPP) Risk Management Agency (RMA): Federal Crop Insurance Corporation (FCIC) Program Fund Rural House Service (RHS): Rental Assistance Program (RAP) All right. Mr. Bishop. IG RECOMMENDATIONS Mr. Bishop. Thank you very much, Mr. Chairman. Let me just sort of look at big-picture issues, resources. As we look over your reports, there are recurring recommendations regarding the lack of management, oversight, and adequate training and so forth. The recommendations are critical to running programs properly and to safeguarding our taxpayer dollars, but they also cost money. When Secretary Vilsack testified before us last year, he said that USDA employees had made significant advancement in achieving goals and that they have done it essentially with the same discretionary funding level in fiscal year 2015 as in fiscal year 2009 and with 9,354 fewer total staff years in 2015 than in 2009. During that same period, mandatory spending grew from $88 billion to $125 billion. So, while the number of people at USDA who have to implement and oversee programs has declined significantly, discretionary spending is flat, and mandatory spending has increased significantly. In that environment, can you tell me briefly how agencies can take on all the additional actions that you recommend in your reports? And, of course, that is rhetorical since we know that you don't control the budgets of other agencies or the States or local governments, but it is something that we have got to think about. So I would welcome your comments on ways in which USDA and State and local governments can build capacity to properly administer and oversee the programs. Ms. Fong. That is a difficult question, and I think all of us have seen in the Federal Government over the past 7 or 8 years the challenge of trying to deliver more programs and more spending with fewer resources. Certainly we in the OIG's Office have experienced the same challenges. And what I can offer--and I will ask Gil to offer some comments as well--is that we are very mindful of those challenges. We know that program managers' first priority is to deliver the program. What we try to do when we make our recommendations is to point out that, in many ways, if we can figure out a more effective and efficient way to deliver those programs, in the end, it helps the program managers as well as the integrity of the program. And we are very mindful of the fact that the State and local governments do deliver many of the programs for USDA, and their budgets are also constrained. I think it became very clear to us as we did our work in the SNAP program in particular that clarity from FNS at the national level in a number of areas as to what the regulations, policies, and laws mean would make it much easier for the States and counties to do a better job of delivering programs if that clarity were there. Gil. Mr. Harden. Yeah. I would just build on that a little bit. It is stressing the oversight of things in going along with program delivery and then prioritizing what is really important and what people need to focus on. SCIENTIFIC INTEGRITY Mr. Bishop. Thank you very much. Let me switch gears quickly. You mentioned in your testimony that you are looking at the issue of scientific integrity as it affects USDA scientists. The issue hits home for me because my State has major ARS research locations, Athens, Barron, Dawson, Griffin and Tifton, and hundreds of scientists and staff who work there. I am kind of troubled by the implication of the topic. Open and transparent scientific research investigations are one of the hallmarks of a prosperous agricultural society. And while I understand the investigation is in its early stages, can you share with us what agencies are included; was it an Employee Viewpoint Survey that prompted the assessment or the result of an anonymous report on compromised scientific integrity to USDA Office of the Chief Scientist; and, lastly, when you would expect the report to be completed? Ms. Fong. Let me just offer some introductory comments. We started this review last year in response to a number of concerns from the media, from complainants, and from Congress that the integrity of scientific research was a significant concern. And I think in the wake of the U.S. MARC situation, people were very sensitive to these issues. So we have an audit ongoing--we are nearing completion on it, actually--that is looking at the whole situation of whether researchers feel that they can carry out their research independently and surface their findings in a way without inappropriate constraints. As part of our review, we are conducting a survey of scientists themselves to see what their perceptions are as well as doing our own independent assessment of the policy and its implementation. Mr. Harden. And to follow on from that, we are expecting that audit to come out later in the spring, probably in the May or June timeframe. And the survey that Phyllis referred to, in terms of the agencies involved, it is ARS, APHIS, NRCS, and I am going to forget the last one off the top of my head---- Ms. Fong. Forest Service. Mr. Harden [continuing]. Forest Service, but we put that survey out to all of the scientists, and we had a very good response rate. There was something like 60 percent of the scientists responded. So we got a lot of good data in terms of how they feel about how things are working. Mr. Bishop. Thank you very much. Mr. Aderholt. Mr. Yoder. BROADBAND LOAN PROGRAM Mr. Yoder. Thank you, Mr. Chairman. Ms. Fong and Mr. Harden and Ms. Coffey, thank you. Welcome back to the Committee. We appreciate your work to help us be better stewards of taxpayer dollars. I think it is great the chairman starts with this being our first hearing of the year because it allows us get some context and some ideas as we then have an opportunity to have hearings with other Cabinet officials and administrators that can be responsive to some of the concerns you have raised. Ms. Fong, in the past, you have raised a number of concerns regarding the Rural Utilities Service broadband loan program, and I wondered if you might discuss that a little bit again today for the Committee in terms of where we are, where we need to go, what your recommendations would be. I think, by some accounts, during the period after the stimulus, they spent roughly $3 billion pledging to bring broadband to 7 million homes, and only 240,000 actually got it. Where are we in terms of current status? And what are your thoughts on redirecting the funds into a grant program that ensures funds go to underserved rural communities that are truly unserved? Ms. Fong. Well, I think the broadband program has certainly been a topic of interest to our office over the last 10 years, I would say. We have done a series of audits, as you know, and The Recovery Act provided some additional funding, and we looked at that at that time. We have not been back to that program in the last 2 or 3 years. So it may be time for us to factor that into our audit planning process for fiscal year 2018 to see what the risk is. As you point out, the issues that we were finding over the last several audits were whether the funds were going to truly underserved communities, and we saw some issues with that as well as with the definition of ``rural'' and how that was applied. I think what I would say to you at this point is that we need to go back and factor that into our planning. Mr. Yoder. OK. Well, I think the Committee probably shares your interest in ensuring that the dollars are used most effectively, but we do have, of course, many parts of our districts and across the country that are underserved, and I think it is a continuing concern that dollars spent did not get to those people and may have been wasted in the process. And so I think this Committee needs to direct the administration and encourage them in the right direction. So we would appreciate you taking another look at that and maybe making some recommendations. MARC Another topic that we have discussed in previous years that I know you had an audit regarding at the end of 2016 were the incidents surrounding the January 2015 New York Times article regarding the Meat Animal Research Center in Nebraska. And there were some pretty salacious allegations in that article. And in the world of fake news, now we have to really vet everything that is being said because there were some allegations there that were pretty shocking to the committee. I know you took a number of years, or at least since 2015, to identify and investigate 33 statements that were in that article that you tried to determine whether they were accurate. And I think your report found that 7 were materially accurate, 26 were inaccurate, lacked sufficient context, or were uncorroborated, a 21 percent material accuracy rate. This committee is fully supportive of important research that is being done at ARS, but we also want to ensure that it is being done ethically and appropriately and is consistent with our American values. In the statements that you tried to corroborate, a number of them you noted that we have no observations on the status at this time. There were also a number of statements that were redacted. I guess I would ask, is your work complete on this matter? How are we able to complete our oversight in areas in which you have no observations on the status of the statements or that they were redacted? I think we still would like to get to the facts and the truth of this matter, and it has been raised in this committee before, and I think we have an obligation to do so. And so your report helps us in that direction, but I feel like there is some incomplete work and wondered if that is something you are going to continue, or does this committee need to continue to seek out the facts of that article and what is truly happening? And I don't want to repeat the allegations, but many on this Committee who have been on here a number of years remember some of the disturbing statements that were made. Ms. Fong. Let me offer a few comments, and Gil might have some more. We have finished our audit of U.S. MARC. We issued two reports. There was an interim report last year and then a final report several months later. And so, at this time, we do not have any ongoing work planned or in process. Now, I think, with respect to the redactions, we had some sensitive information in our report that impacted on potentially personal privacy issues. They involved some allegations, and there was a potential consequence for the safety of individuals, which is why the public-facing version of that report has some redactions. We would be happy to brief you and your staff in a little more detail on that if you would like that. And, Gil, I will offer---- Mr. Harden. That was the main point I wanted to add. We have come to conclusions on all 33 statements, but because of some of the redactions, you can't see it in the public-facing report, but we would be happy to set up a time to brief you on that. Mr. Yoder. OK. Well, I think I would be interested in that, and I think maybe the committee might be interested in more clarity on some of the statements. In the areas in which you were unable to verify or corroborate the statements, I think we still have an obligation to find the truth. And so I would like to also probably know why you couldn't get the information, why you couldn't interview people; what was the blockade that allowed us to not actually find out what happened in many of these situations? I yield back, Mr. Chairman. Mr. Harden. A lot of that is explained in the unredacted version. So we can get that information to you. Mr. Aderholt. OK. [The information follows:] We would be pleased to set up a time to brief you and your staff to provide more clarity on the statements in our audit report. Ms. DeLauro. ANIMAL WELFARE Ms. DeLauro. Thank you very much, Mr. Chairman. And welcome. Good to see you again, and I am grateful for your longevity and the accolades that you received because of your great professional work. A couple of quick things before I ask a couple of questions and I get into it. I just want to be clear on this last ARS animal welfare report. It is not a question of whether or not the allegations, if you will, were unfounded; it is that there was the inability or whatever the circumstances were around corroboration versus whether or not the allegations, et cetera, were unfounded. Mr. Harden. No. I would say some of the allegations were unfounded, based on the work that we were able to do. Ms. DeLauro. But was it--and that was--did you--were you able to corroborate that they were---- Mr. Harden. Yes. Some of them we were able to corroborate that they were accurate. Others we weren't able to find information to corroborate that they were true. Ms. DeLauro. When you are dealing with context, what was the context? What does ``lacking context mean? Mr. Harden. That there was other information available, say, in ARS' files at MARC or in discussions with people that put different light around what was being said in the article. Ms. DeLauro. But what I am just trying to get to, there is--that doesn't necessarily make it wrong. It means that there was other information. I think the point is, is to try to get at the accuracy, to get at the information to let us know what happened here and what we need to be mindful of so that it is not putting needed to come to light didn't come to light, and it may not be that the allegation was wrong. There was a different set of circumstances, different information that people brought to this issue. I just think that this is particularly important, and I think we have to be careful with language and how we describe, in essence, what this is all about because it is a very critically serious issue which we need to address in some way. HIRING FREEZE Also just very, very quickly, you talked about improper payments. That includes, and I believe the Chairman talked about the nutrition programs, but farm programs as well have improper payments in terms of reporting. The crop insurance program has an improper payment rate, which is about 2.2 percent. That is high enough for a program to be at high risk. Conservation farm programs, as I understand it, have an improper payment rate of about 22 percent. What I would love to get from you, if I can, I want to see all of the improper payment rates, the error rates of all of the farm programs that you deal with so that we can have some way to take a look at where the high priorities are. [The information follows:] Not all farm programs are considered high risk for improper payments. Only those programs that are designated as being high risk for improper payments must report improper payment error rates. The following farm programs were considered high risk for improper payment rates and reported the following improper payment rates in USDA's FY 2016 annual financial report:\1\ --------------------------------------------------------------------------- \1\ https://www.ocfo.usda.gov/docs/ FY2016Agency_Financial_Report.pdf. See pp. 194-200. --------------------------------------------------------------------------- Farm Service Agency (FSA): Loan Deficiency Program--3.21% Livestock Forage Disaster Program--4.74% Livestock Indemnity Program--12.87% Supplemental Revenue Assistance Payments Program--11.53% Noninsured Crop Disaster Assistance Program--5.47% Hurricane Sandy--Emergency Conservation Program--0.18% Hurricane Sandy--Emergency Forest Restoration Program-- 1.43% Natural Resources Conservation Service (NRCS): Farm Security and Rural Investment Act Programs--2.38% Hurricane Sandy--Emergency Watershed Protection Program--0% Risk Management Agency (RMA): Federal Crop Insurance Corporation (FCIC) Program Fund-- 2.02% Let me just get to this, really because this Committee has tried to provide all of you with the resources that you need to do your job. So I was struck that your testimony mentions that you are again at the lowest staffing level since 1978 due to a number of staff losses. There has recently been--the administration has put a hiring freeze as of the 23rd of January. The memorandum regarding the hiring freeze, how will that impact the mission of your work, and do you feel that you have the adequate resources and the staffing to pursue criminal activity beyond just the SNAP program, by which you spend about almost 60 percent of your resources? Ms. Fong. Yes. The hiring---- Ms. DeLauro. I mean, 56 percent of your resources. I take that back--59 percent. I need to get my numbers right: 59 percent almost of your resources go to the SNAP effort. Ms. Fong. The hiring freeze does impact us, as it does every part of the Federal Government. Ms. DeLauro. How? What does that mean? Ms. Fong. Well, we have about 40 vacancies right now, and we need to figure out how we can move forward to identify the critical vacancies involved with health and safety, which are potentially exempt from the freeze, as well as other priority vacancies, which would require approval. Ms. DeLauro. What task--because I have 14 seconds left. Tell me what you will not be able to do as a result of a hiring freeze. Ms. Fong. If we were able to fully fund all 40 of those jobs, we would be able to do more investigations and more audits. And we could provide you some additional concrete information. [The information follows:] OIG provided information to Rep. DeLauro and the Subcommittee's leadership on March 10, 2017. Ms. DeLauro. Anything further? Ms. Fong. Thank you for your support. Mr. Aderholt. Mr. Young. WETLANDS DETERMINATIONS Mr. Young. Thank you, Mr. Chairman, Ranking Member, my colleagues. Welcome, Inspector General, Mr. Harden and Ms. Coffey. I want to reflect on something my counterpart here, Mr. Yoder, said about the USDA's Rural Utilities Service broadband program. Good intentions can really make a difference, but it has been fraught with some real trouble. It sounds like the last time you did an audit on the program was in 2013. It has been a few years, and we may need to relook at this issue because we want to make sure that taxpayer dollars are used appropriately and they are not being used to compete against services that already exist, that is, where people really had skin in the game and are risking their own capital. We want to make sure the priority is for unserved areas. So we may be back asking further questions throughout this process. You mentioned in your testimony about the Prairie Pothole Region, and Iowa is one of those States in the Prairie Pothole Region. The NRCS administers the wetlands provisions in the Prairie Pothole Region. The NRCS has discretion and responsibility in making those determinations, but recently, they have changed their ways in making those determinations. How did you find out that they were changing their ways? Was it a whistleblower? Mr. Harden, do you have an answer for that? Mr. Harden. Yeah. We did receive a couple whistleblower complaints---- Mr. Young. OK. Mr. Harden [continuing]. That made the allegations, and then we followed up from that and learned as we went through the process basically how they were making determinations in that region of the country contradicted how they have made determinations for the last 20 years. Mr. Young. So what were the pre-1996 determinations? How were they different from before? Mr. Harden. They weren't accepting them being wetland determinations unless additional work was done with regard to the pre-1996 determinations. They weren't accepting them on their face. Mr. Young. OK. So they totally changed their playbook on this? Mr. Harden. That was the way we understood it. Mr. Young. When they did this, did they provide any written guidance or notice to folks? Mr. Harden. No. And that was also a part of our problem or our concerns with it. Mr. Young. Since then you have done your due diligence and investigated this. Are you confident that the NRCS has heard the message and the intent of the original law and rules? Are they back to square one and being consistent? Are they providing certainty? Mr. Harden. I would have to wait and see how they actually implement the recommendations. They agreed to the recommendations we made in terms of providing additional clarity as to how you were supposed to be using those pre-1996 determinations. Mr. Young. How long should we wait for them to let us know that? Mr. Harden. I think that I would have to go back and get the exact date of when they were going to have that implemented. I think it is going to be later this spring. So, maybe, you know, in the fall. You know, somewhere in the fall, they should be able to explain what they are doing. Mr. Young. OK. Will you relook at this issue to make sure it is being done in a satisfactory manner? Mr. Harden. We can take that on, yes. Mr. Young. OK. I may be contacting you folks and asking you for some help because we want to make sure that there is consistency, there is transparency, and farmers know what the rules are each and every year as we go along with this. AUDIT RECOMMENDATIONS I sit next to Mr. Palazzo here, an auditor, and he was peeking at one of my questions, and he said, ``Hey, I am the accountant; you stick to the wetlands questions.'' But I think it may be something that is always on our minds about what you do. You audit, and you have investigations, and you make recommendations on corrective actions. How much monitoring do you do to see if they carry out these recommendations? And is it your job, or is that something we should all be looking at? I know that is partly why we are here, but how much do you do to make sure that they are following up on recommendations, or at least reminding them of them. Mr. Harden. We try to do a fair amount of it because following up on audit recommendations is--to do that, you have to follow audit standards, you have to follow up on prior work that you have done and recommendations that you have made. So it is just a standard course for a lot of it. Sometimes we do specific areas, like conservation stewardship, to see that they implemented what they said they were going to do; Prairie Pothole, we do things like that; with food safety, we have had stuff. This year, we also undertook an audit to look at what the CFO's office does in terms of tracking final action. Mr. Young. So you look at it, but you need some better partners here--and that is Congress--in doing oversight and ensuring that some of these recommendations are followed through. How much enforcement do you have? What boundaries or leeway do you really have? Or do you have any at all, aside from the public shaming through your reports and working with us to bring these things to light? Ms. Fong. We don't have any operational authority. Mr. Young. OK. I just wanted to verify that. Ms. Fong. We have a soapbox to make recommendations. Mr. Young. OK. Thank you for being here. Thanks for your testimony. Mr. Chairman. Mr. Aderholt. Ms. Pingree. ORGANICS Ms. Pingree. Thank you, Mr. Chair. Thank you very much to all of you for being with us today and for your many years of service and dedication to helping us with this, supporting this Department, and making sure it works efficiently. First, I just want to thank the Ranking Member for asking some of the questions around scientific integrity. I appreciate the fact that your report is coming out soon. Thank you for digging into that. There have been recent questions around scientific integrity and if any information is being shut down at executive branch departments. So it is very timely. But, as you know, I also sent a letter in 2015 about allegations that researchers at the USDA doing research around neonicotinoids were being suppressed, and so I have had an interest in this, and certainly my constituents and others have, for a while. So we will really be looking forward to that report and will probably have some questions when it comes out, but thank you for doing that. I just want to ask about a different topic. I think you know there has been a huge growth in the organic market. According to the USDA's 2014 survey, certified and exempt organic farms in the United States sold a total of $5.5 billion in organic products back in 2014. That is about a 72-percent increase since 2008. So, from my perspective, that is a huge opportunity for farmers in my district, but virtually every district represented here has had farmers who have benefited from being able to sell into this market, often with higher prices and less competition. So it is a great area for economic growth for our farmers. And it is not just specialty crops. It is commodity crops. It is really in every area. There is no question: we haven't been able to keep up with demand. From the most giant of the food processors in this country to the smallest farmers markets, the demand is bigger than we can handle, especially for organic grains. So there is a lot of product being imported into the United States. According to the USDA, in 2013, the value of U.S. organic imports that are tracked was $1.4 billion. That is 2013. There has been enormous growth, and we are already in 2017. So that is a lot of money. And consumers more than anything else want to know that the products that they buy are everything that they are paying for. And they want to know that imported products are grown to the same high standards that we require here in the United States. So I am wondering if you have looked into organic products at all, but specifically this idea of organic imports, and are there things you are doing to assure customers that all of the organic products coming in from other countries are produced with the same organic certification? Ms. Fong. Let me just quickly offer a comment. We do have some ongoing audit work on precisely that issue, which I will ask Gil to comment on. I also want to note that, on our investigation side, we have had a few cases over the past few years alleging that certificates or statements of organics have not been true, and we have had some very successful convictions and prosecutions there involving grains and fertilizers as well. So Ann might want to comment on those. Ms. Pingree. That is great. Mr. Harden. Currently, we are finishing work on AMS' oversight of international trade arrangements and agreements. And the basic objective of that work is to understand how AMS evaluates the equivalency of foreign countries' organic processes so that we know what is being imported into the U.S. meets our standards as well. We expect that report to be out later this spring as well. Ms. Coffey. Well, I was going to mention that we just completed an investigation involving a fraud scheme where a producer basically was claiming that his product, which was alfalfa, was organic, but, in fact, it was not. It was grown conventionally. And the profit margin that he obtained by being able to claim that his product was organic was over $2 million. So he was sentenced and convicted recently, and we got restitution of $3 million. So we do pursue those investigations when we become aware of them. Although we haven't had any related to the import, but I anticipate probably that will be something we will be looking at in the future. Ms. Pingree. Well, I do appreciate that, and am aware of some of the investigations you have done in the United States. And I think those are critically important, because, as we know, inputs, and the techniques that are used for organic processing, can be much more expensive. It is devastating to those farmers who play by the rules, and it is devastating to consumers because this has been a very protected brand. Anything that happens to lose that credibility of the brand, I think, is a real loss to those farmers. Again, it is a great market for the farmers who are able to participate in it. There is still a lot of competition there. The prices are better. So it has been my contention that the USDA--and this isn't your side of it--but that the USDA should be doing more to assist farmers with organic research, with organic transition, making it easier for farmers to get into what is sometimes a challenge to change to. I think one of the critically important facts to have is, because so much is being brought in from foreign markets, an understanding of how much of that is actually fraudulent, how much is being purchased today that really isn't up to the same standards. It is something consumers want to know, but I think it is also a fact that could help push the USDA to assist more farmers in moving to the organic markets. So I am way out of time, but thank you very much for the work you are doing. And I will look forward to following up on what you are seeing in foreign imports. Thank you, Mr. Chair. Mr. Aderholt. Thank you. Mr. Palazzo. CCC FINANCIAL STATEMENTS Mr. Palazzo. Well, thank you, Mr. Chairman. Ms. Fong and company, thank you all for being here today. Last year, we discussed the Commodity Credit Corporation's delayed financial statement. This year, you mentioned in your testimony the CCC's weakness and deficiencies in its financial statements for fiscal year 2016. Several deficiencies were identified with the CCC's balance sheets and internal processes that resulted in significant issues with the CCC's accounting systems. This year is one of the highest funding levels for the CCC on record at $21 billion, yet the Congressional Budget Office is estimating the CCC alone will save $14 billion more than it did compared to its original 2014 Farm Bill estimate. Additionally, the difference between the estimates provided to the Committee for the CCC in August of 2016 and the actual net realized losses was about $3 billion. With the upcoming Farm Bill negotiations, it is important that we have accurate accounting estimates. For example, the discrepancy of $3 billion provided to the Committee earlier this year could have resulted in a $30 billion difference over the 10-year window which the Congressional Budget Office uses to score. So I guess my question would be, can you tell me a little bit how you see accounting estimates, how important it is to try to make that amount--we know it is an estimate, but how important it is to provide us with the best estimates possible and that we get this right? And this is a huge concern of ours. Mr. Harden. I mean, I would agree with you that we want them to be as best as they can be. Some of the things that we saw and that you have seen in their financial statements for 2016 was they had a significant problem getting the estimates together, or they came late in the year. So I think some of those will be better going forward because they have gotten a better process down. One of them with ARC/PLC, they didn't include all the crops that they were supposed to to begin with, and so they had to go back and redo the estimate toward the end of the year. So that amount was understated for financial reporting purposes, but we continue to work with KPMG, who is the main auditor for them, but also knowing how they are going about developing those estimates and having them grounded in the right accounting theories and things of that nature. Mr. Palazzo. Was this the first time they audited the financial statements? Mr. Harden. No. Mr. Palazzo. OK. So it is not a new auditor coming onboard? Mr. Harden. No. This is the second year for KPMG, but KPMG has also done it on a prior cycle as well. Mr. Palazzo. Now, is our understanding that this review of the CCC was one-time, like taking a snapshot of the financials? Do you believe that we should do a deeper review? And if so, is there something that is restricting you all from doing that, such as funding or personnel? Mr. Harden. I don't think there is something that is keeping us from doing a deeper dive. They have had annual financial statements for a number of years because they are required to do so. In 2015, they got the disclaimer, and so coming back off of that--and that also drove the disclaimer for the Department. So, starting in 2016, they started with a balance-sheet-only approach to get to final balances, and what they are hoping to do is to go to full statements this year, all five statements. We are in discussions with them and KPMG right now as to understanding their readiness to withstand an audit in going forward, and we will be--I would like to probably get back with you after we have had some other discussions as part of that planning to have a more detailed answer. Mr. Palazzo. Can you tell me what actions are being taken to correct the deficiencies and the findings from the audit report? Mr. Harden. I would have to pull the corrective action plans, but they have things they are doing to address the weaknesses. [The information follows:] In CCC's FY 2016 Balance Sheet audit, KPMG made six recommendations related to maintenance of accounting records and accounting estimates. CCC has agreed to take corrective actions on these six recommendations as follows: Implement processes, procedures, and controls to ensure data used in its accounting estimates are complete and accurate. Ensure that accounting estimates are prepared by qualified personnel with a full understanding of the underlying accounting requirements. Document the review and approval process for accounting estimates including the concurrence with the relevant factors, assumptions, and reasonableness of the resulting estimates. Implement independent review and reconciliations of Fund Balance with Treasury for USAID, and monitor internal controls regarding FBWT reconciliations in accordance with guidelines in the ``Treasury Financial Manual.'' Management will have sufficient documentation to support the balances reported by the child and thoroughly document their evidence of review. In addition, CCC will document their review and reconciliation process in the form of a Standard Operating Procedure (SOP) or White Paper. Reconcile accounts to ensure transactions are timely and accurately recorded in the general ledger system and research and resolve all existing differences. Migrate database servers out of WebFarm. For FY 2017, CCC's entire financial statements (which are comprised of the balance sheet and statements of net cost, changes in net position, and budgetary resources) will be audited. However, the FY 2017 financial statements will not be comparative to FY 2016 as only the balance sheet of CCC's financial statements in FY 2016 was audited. Mr. Palazzo. And how often do you all monitor that to see that they are clearing the deficiencies and findings? Mr. Harden. That is part of the standard audit process for the financial statement auditors. And as the overseers of the ones doing it for KPMG, we are on the calls with them weekly and all the discussions that they have with CCC. Mr. Palazzo. Are they clearing any of these deficiencies and findings from year to year? So, I mean, are they improving their internal controls? What would be your thoughts? Mr. Harden. From 2015 to 2016, the wording of them changed, but some of the same issues were there, and in 2016, because they only did the balance sheet audit, we didn't look at the ones that impacted the Statement of Budgetary Resources. So we will have to be--as part of this year's review, that will get to be part of what is looked at and what they have done. Mr. Palazzo. Thank you. Ms. Fong. Ms. Fong. I would just like to offer some higher level comment in response to your questions. As we have seen at USDA, CCC had a disclaimer last year, and NRCS has had a disclaimer for 6 or 7 years, and as a result, last year, the consolidated for the whole Department was disclaimed. This part year, the most recent year, because we moved to a balance-sheet-only approach for NRCS and CCC and the Department, they were able to make some forward progress. But in order to really bring the whole Department to a full, clean opinion, it is going to take some concerted effort. What we have seen in the past with NRCS, and before that with Forest Service, was when those agencies received their initial disclaimed opinion, it took them, with NRCS and Forest Service 5, 6, 7 years of intense effort, high management priority, resources at the agency level, and a commitment to really fix the underlying issues in order to move those agencies to the clean stage, and we are still working with NRCS on that. So, with respect to CCC, we are cautiously optimistic. We know that they want to get to the finish line. We will be keeping a very close eye on this, and we will have to just keep you all apprised of that progress. Mr. Palazzo. OK. Well, thank you. And, of course, senior leaders need to buy in to the importance of financial statements and audits because the end users who use this information, I mean, they make decisions, as well as Congress does, on what is provided to us, and so it needs to be accurate, and it needs to be complete. So thank you for your testimony. I yield back. Mr. Aderholt. Mr. Pocan. SNAP IN WISCONSIN Mr. Pocan. Thank you, Mr. Chairman. I appreciate it. And thank you for being here today. I have to say that I am really heartened to hear the chairman and the ranking member, Mr. Yoder and Mr. Young, all bring up rural broadband because, in my district, it is one of the biggest issues. And I can get a little obsessive on it. My office is probably glad I am talking to someone else about it rather than them right now. I live in a rural town of 800 people. My district, with Madison, about a third of it, I would argue 40, 50 percent, is very rural, and this is a huge issue. So, when it comes to Rural Utilities Service loans, while they are very important, we also would love to see you look at some of the best practices and what States are doing effectively with the dollars. Wisconsin gets some of the lowest speeds in the country. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] And as you know, 1 mbps, there is a lot of 1-mbps out there, but 8 is about what is the minimum for satisfactory level. So what we don't have is speed. We actually have a lot of people who have lines, but they don't have any speed. And the neighbors down my street, the kids can't do homework. So I guess it is not so much a question, as I want to echo that. And I hope that this arbitrary hiring freeze doesn't affect the ability to do an important audit on something that you are getting this bipartisan kind of chorus on, but you will hear me talk about rural broadband a lot, and this is something that I would like to encourage as well whatever we can do in that area. Two other areas I would like to get to on SNAP and specifically in Wisconsin. So, when you look at programs, Wisconsin, we have some problems with how we do it: one, how we count job placements. If the first part of a month you have a job and the second part of the month you have a different job, they count that as two separate job placements, and some of the numbers are kind of arbitrary. There have been complaints filed with the Department of Labor on the companies that people are told they have to work at in order to get the benefits are actually putting people in jeopardy who are just trying to get simple food assistance in the State. And we have had very uneven results across the State in how it has been. So I guess the question is, as we have a lot of resources going in to ensure that SNAP works as intended, can you look at or have you looked at States like Wisconsin to investigate how they are potentially mismanaging these Federal resources and putting people in jeopardy through the program. Ms. Fong. Yeah. Let me just comment on that. We did an audit this year of the Able-Bodied Adults Without Dependents provisions, which I think discussed some of the very complex issues with respect to work requirements and waivers and eligibility. And our main conclusion from that audit was that it is a very complex area. The States are administering it many different ways. FNS could do a much better job of providing some clarity and some consistency on interpretation from the national level to enable the States to really get to providing the assistance where it is deserved. Gil, do you want to---- Mr. Harden. Just adding to that, as we learned doing that work, that those provisions are some of the most complicated ones that States have to deal with, and they really didn't have the guidance they needed from FNS to do what they needed to do. So a lot of them were just without direction and knowing what to do. The recommendations we made are aimed at getting more clarity to them, more communications, what are best practices, what some States do that others don't that could be spread. Mr. Pocan. And a quick followup on that report. I think, you know, you talked about 55 percent or so of the research is devoted to ensuring SNAP works as intended. Some of that is on fraud, and some of it simply on payment arrears. Can you just talk a--drop on that because I want to get to another subject in my minute and a half, if I can? Mr. Harden. A couple years ago, we did a report on the QC error rate, and, yes, we found that, you know, States were, I don't want to say gaming the system, but there were many ways that they were going out and determining their rates and working to make their rates lower as opposed to knowing what the actual rate was, but it wasn't necessarily fraud. It was overpayments and underpayments. POULTRY INSPECTIONS Mr. Pocan. And then I guess the last area I can get into is on meat inspectors. There has been a new chemical, PAA, I think, that has been used pretty widely, sprayed on people in poultry packing processing plants. And it is a highly corrosive agent, and the workers are being exposed to it. And I think there are some questions about how this got approved and whether or not it is impacting workers. A number of us did a letter to a couple Secretaries on this issue, but I was just kind of wondering, you know, no one seems to really exactly understand the process and how this was approved, and if you have looked at that, if there is a way to look at that so we can get more clarity on something that people are concerned for the health of the workers in these facilities. Mr. Harden. We haven't done specific work, but I can go back and ask some questions to find out. [The information follows:] Peracetic acid (PAA) is approved by the Food and Drug Administration (FDA) and regulated by the Food Safety and Inspection Service (FSIS). Although we have not done any work regarding PAA, we are aware that the Government Accountability Office (GAO) is currently conducting an audit of Meat and Poultry Worker Safety. As part of its work, we understand that GAO has examined FSIS' coordination with OSHA as it relates to control and use of PAA. Per our discussion with GAO, their work is still ongoing. Further, we have initiated an audit to review FSIS' implementation of New Poultry Inspection System (NPIS). Through a phased approach, we plan to examine the policies and procedures HIS used to implement and guide the program and review FSIS' oversight to determine whether improvements can be made. Also, we plan to examine NPIS implementation at the plant-level to determine whether FSIS could make further improvements to NPIS. To avoid duplication of our audit effort with GAO, we will not look at PAA in our NPIS work. Mr. Pocan. If you could, it would be much appreciated. And, again, anything on rural broadband would be awesome because we formed a Rural Broadband Caucus, bipartisan caucus. We have a lot of Members. There are six of us, three Democrats and six Republicans, who are co-chairing it. Just a real, real big priority for businesses and for education in my district. And I will yield back. Thank you, Mr. Chairman. Mr. Aderholt. Mr. Valadao. MULTI-FAMILY HOUSING PROGRAM Mr. Valadao. Thank you, Chairman. Good morning. In prior reports, USDA's Office of Inspector General has identified cases of fraud, waste, and abuse in Multifamily Housing Program. In some instances, applicants had not provided accurate household income information and therefore were not eligible for all or part of the financial assistance they received. OIG found the primary cause for payment errors is tenants not accurately reporting incomes and household circumstances on their certifications, and property owners do not have the independent source, any wage-matching mechanism to verify this information. The report went on to recommend that USDA Rural Development seek the same authorities that the Department of Housing and Urban Development, HUD, has for family property managers to access Federal income and benefits database and implement wage matching of the tenants applying for rental subsidies. This committee provided the legislative authority that would enable USDA's Rural Housing Service access to databases managed by the Department of Health and Human Services, Social Security Administration, and the Internal Revenue Service, similar to what HUD uses for income verification, in the fiscal year 2016 funding law. The authority we provided should have enabled USDA to access the data through the HUD systems. The question is: HHS has stated the legislative authority we provided does not enable USDA to access databases through HUD systems. We agreed with your prior recommendation to provide access to these databases, but continue to look for a way to implement a means to access that does not require reworking the Tax Code or other statutory authorities. Could you provide any insight into making this recommendation a reality? Ms. Fong. I think this information is very interesting and useful to us. We were not aware of that development. And we can certainly go back and see what we can find out, see if we can come up with any thoughts on that. Mr. Valadao. All right. [The information follows:] The prior recommendation referenced above relates to audit report 04099-339-AT, Rural Housing Service (RHS) Subsidy Payment Accuracy in Multi-Family Housing Program, issued in March 2005. (https://www.usda.gov/oig/webdocs/04099-339- AT.pdf). We recommended RHS request legislative authority to, similar to HUD, access Federal and State income information data files and provide the information to apartment managers to assist them in certifying tenant households. As stated by Representative Valadao above, the Committee granted this authority in the FY 2016 funding bill, but Department of Health and Human Services (HHS) explained to Congress that the authority granted to RHS did not allow them to access HUD systems for income information. We discussed with RHS what actions are needed by Congress to assist with fully implementing our recommendation and gaining access to HUD's systems. RHS stated that, in 2016, an attempt was made to do this indirectly as a general provision and HHS told RHS that it was not sufficient. RHS stated that HHS would only accept an amendment to the Social Security Act that would allow RHS access to the New Hires Data Base information for Rental Assistance. According to RHS, the Office of Management and Budget put forward a government-wide proposal in the 2017 President's budget to request the amendment. If Congress approves the amendment to the Social Security Act, RHS officials have stated that USDA would have the appropriate access to fully implement OIG's recommendation. Ms. Fong. Yeah. Thank you. IMPROPER PAYMENTS Mr. Valadao. I will go to my other question. In the September audit report on reducing improper payments, OIG states that in fiscal year 2015 USDA had a decrease of more than 92 percent in high dollar overpayments from the previous year. That sounds pretty impressive, but then the report notes that OMB issued new higher overpayment thresholds from 5,000 to 25,000 for individuals, and from 25,000 to 100,000 for entities for fiscal year 2015. When these thresholds are raised, naturally, the number and sum of overpayments is going to decrease. USDA had a total of 1,301 high dollar overpayments reported in fiscal year 2014, and that dropped to 99 in fiscal year 2015 under the OMB's new threshold. When the previous administration raised these thresholds, seems like they swept a lot of improper payments under the rug. Do you believe having a higher threshold is a disservice to taxpayers and serves to cover up the amount of improper payments? Ms. Fong. Well, I think we need to look at that development in the overall context of all the improper payment rules, regulations, and work that goes on. It is true that the high dollar thresholds were raised, and so that had an impact, and we give the Department credit for making progress, but I think perhaps more important is looking at the work we are doing on the overall improper payment rate for the Department, which we found in fiscal year 2016 actually went up significantly from fiscal year 2015. The fiscal year 2015 overall improper payment rate for the high-risk programs was 5.7 percent. In fiscal year 2016, it went up to 8.86 percent, and that to me is perhaps a more meaningful number for us to focus on in terms of what can be done to address the overall portfolio of improper payments. Mr. Valadao. All right. I understand that some States are interested in doing more to combat fraud. This requires States to have access to the same information FNS, OIG, and others use at the Federal level. I believe your report says that the two systems containing retailer information and transactions, STARS and ALERT, are used by FNS program personnel, FNS investigators, and OIG investigators. Do States have access to this information? And if not, do you see any harm in the States having access to this information as well, if they want to detect and stop fraudulent activities? Ms. Fong. Yeah. We don't know if the States have access to ALERT and STARS. I think there are other tools that the States have that they can use to address potential fraud; eDRS, I think, is one of the systems. They certainly can deal with Social Security numbers and some other tools. So I think there are opportunities out there for the States to do data matching and address indicators of fraud, and those tools are available. We are right now assessing how well the States are looking at eligibility questions. We should have a number of reports coming out this year on how well they are doing. Mr. Valadao. All right. Well it would make sense: more information for some of these States and some of my other questions to help remove the waste, fraud, and abuse. So I appreciate your time. Thank you. Chairman, I yield back. Mr. Aderholt. Dr. Harris. AUDIT REPORTS Dr. Harris. Thank you very much. I am going to just ask a couple questions about the two reports here, the audit reports. The first one, the FNS controls over SNAP benefits for Able-Bodied Adults Without Dependents, you know, it is kind of striking. The report indicates that it is a very difficult program to implement in States and that States game the difficulty a little bit. You know, I will quote from page 5. You know, the report says: ``Due to the burden of implementing the ABAWD provisions, officials in three States told us they specifically requested time-limit waivers in as many parts of the State as possible to minimize the areas where they needed to track the time limits''. I guess the conclusion is that it is difficult to tell what is what, and actually your conclusion in that paragraph on page 5 is: ``Therefore, the ABADWs may or may not be required to work depending on the State they live in''. I don't think that is the intent of Congress, that actually this is implemented differently in different States depending on whether they want to collect data or not. Do the management recommendations you make, do you think they can end this practice of this heterogeneity of how this program is administered or managed? Mr. Harden. I would say that we would hope that it should. I mean, we will have to go back and look and see how they put forth those best practices. You know, this is another time when we didn't feel like FNS was playing the right oversight role with the States in communicating with folks and really knowing what is going on. This hopefully brings back to the table; they can have some discussions and decide how they are going to move forward. But then we would have to go back in and do followup work to find out how well it took. Dr. Harris. How many, if I might ask, because I didn't dig through this, how many States did you investigate for this audit report, for that audit report? Do you know? Mr. Harden. Off the top of my head, I think it was three or four. We went to three or four States. Dr. Harris. Three or four. Mr. Harden. I can get you the names if need be. Dr. Harris. OK. And I guess, based on that, it was so consistent in this--the heterogeneity was so consistent that I guess you extrapolate that this existed across the country? Mr. Harden. No, no. Let me back up. I had a better memory as you were saying that. Because I think we contact--we went to a handful of States, but then we also talked to a lot of other States. So it wasn't just a handful that we would be extrapolating from, but talking to them about their difficulties with the program and how they operated it. Dr. Harris. Thank you very much for doing that because, as you know, a lot of us feel that people fall on tough times, but able-bodied adults without dependents, you know, should be out getting a job if they can and working and not necessarily depending upon, you know, the Federal government. Now, the other report, the SNAP administrative costs report, I think what is striking to me is that--in this report, my understanding is you did only look at three States, is that right, for this. Mr. Harden. [Nonverbal response.] Dr. Harris. But in looking at those three States--one of the States was California. I guess because it was an outlier in what the administrative costs were, but the conclusion was that there was a, I will call it a clawback, I guess, of $111 million where the obligation should be clawed back. Is that right? Ms. Fong. [Nonverbal response.] Dr. Harris. Wow, that is a lot of money, you know, which I think points to one of the problems with this program in and of itself, that the States don't have a lot of skin in the game. It is not their $111 million unless we go after it and claw it back. Given that you only looked at three States, do you think the problem that you saw in California exists in other States and that, in fact, we are not looking at only $111 million in clawbacks but, in fact, that the number nationwide would be quite larger if we looked at all the States? Mr. Harden. I think it could if you looked at more States. Now, the ones that have county-administered programs, there are only 10 States that do it county-administered, but the reason we focused on those is they have half of the administrative costs, like $1.8 billion of the $3.6 billion for 2014, which is the number we started with. And what we also found was that FNS wasn't consistent in how they were doing their reviews. Using the California example as a way of explaining it--they were a big State for the western region. The western region only looked at California itself once every 5 years. The western regional office for FNS didn't even go down to the counties where they administer them. Compare that to the northeast region--looking at New York and New York City; they go to New York City every year and New York every year because of the size. So different regions approach it differently, and part of our message to FNS was there needs to be some consistency, and if you have lots of money in the game, you really probably ought to be out there more often. Dr. Harris. And was your finding that they used estimates instead of actual expenditures, that was one of the major findings, do you think that is true whether or not it is county-administered? I mean, was this done in the State-level- administered programs as well, or hard to say? Mr. Harden. That, I don't know, but, yeah, the western region was very lax with California. And what it did was it fed misinformation back to what you could look at the national level in terms of what your actual costs were. Dr. Harris. OK. Thank you very much. I yield back. RESTITUTION Mr. Aderholt. Thank you. Ms. Fong, you mentioned in your written testimony that there are several different examples of monetary restitution, to include almost $100 million under the SNAP program, $7.6 million in a case involving child nutrition programs, $3.3 million in a case involving FSA loans, and a total of $30.8 million in other farm programs. Can you tell us how much of this money the Federal Government will recoup and will actually go back to the U.S. Treasury? Ms. Fong. Let me offer some comments and invite Ann to comment as well. The restitution orders are the end result of the judicial process, and the court will order the restitution based on the amount of loss to the government program. You raise a very good question as to how much of that will actually be recovered, and I think that that could range depending on the situation. It may not be 100 percent. And I don't believe we track that. Ms. Coffey. We don't. Once we complete our judicial process, the tracking for whatever restitution gets paid is done by the Department of Justice. Any moneys that are ordered for restitution should be returned to the U.S. Treasury, but we do not track that information. Once the restitution amounts are set by the court, the Department of Justice is the entity that tracks that information as to what percentage actually goes back to the Treasury. Ms. Fong. And just to add on, the money goes to the general fund, not to USDA. Ms. Coffey. That is correct. Mr. Aderholt. Yes, right. The U.S. Treasury. Is there anything or any advice or suggestions that we could do in Congress to help agencies to recover these funds that were obtained illegally or fraudulently, or something more than what we are doing now? Ms. Fong. Well, I think with respect to restitution, actual payment of an order of restitution will depend on the defendant's assets and whether they have sufficient assets to pay it back. Now, there are other times when we make recommendations to the Department that it go after money that is owed to the Department. It may not be in the context of a criminal sentence of restitution. It may be in the context of an audit recommendation, for example, the one we were just discussing with California and SNAP, $111 million, where we recommend to FNS that FNS go back and recoup that money. And I think in those situations, attention and oversight from the committee would be very helpful to make sure that those recommendations get implemented and resolved. TRADE AGREEMENT Mr. Aderholt. Okay. Let me move on to one other issue that I think is pertinent here for us in this Subcommittee. In a recent audit report that you did on effectiveness of the Foreign Agricultural Services monitoring coordination of trade agreements, you identified that there are four areas where USDA was lacking, and these areas that were key to trade negotiations involved a lack of internal control process, goal setting, and overall coordination. Of course, we understand that the U.S. Trade Representative is the lead agency for negotiating trade agreements, but USDA plays an important role in providing support for the agriculture sector in removing nontariff trade barriers, such as phytosanitary obstacles. Just yesterday, on the Senate side, it was made clear the stakes for U.S. agricultural team and new market access were very important. That was in the Finance Committee over on the Senate side. This subcommittee has been one of the main proponents on the Hill for completing the farm bill mandate that USDA establish an Under Secretary for Trade and Agricultural Affairs. At my request, money was included in the fiscal year 2015 appropriations bill to do a study since the one mandated by the farm bill is now almost 3 years late. In fiscal year 2016, at my request, money was also included to help with implementation of this new Under Secretary. That money still remains available for use. Is it your opinion that having an Under Secretary in place that focuses on trade issues would help with the coordination and also complete your recommendation with the report? Ms. Fong. Well, let me just mention that I recall we discussed this issue last year, and at that time, there had not been an Under Secretary appointed. And at that time, FAS was in the middle of doing its study, at least that was our understanding. We have not really been tracking that issue. I think it is fair to say that, as with any other issue, leadership is critical to making progress on our recommendations, and that leadership from the policy level is important, whether it is from the Secretary or the subcabinet, whoever it may be at the time. What we see in the trade arena is the need for FAS to really focus on how it measures success? Is that measurement objective? Is it based on data? Are there performance measures that can be reported to Congress where you can say, `` Yes, this is what we did, and this is how we did it,'' and it is documented and measurable? That is what the gist of our recommendations goes to. And to the extent that leadership from the Department can bring focus to that, we would welcome that. Mr. Aderholt. So it will be safe to say you have not received any request from an active consultant setting up with a new Secretary regarding this? Ms. Fong. To the best of my knowledge, we have not been consulted on this issue. Mr. Aderholt. Okay. Well, I think now may be an opportune time during this transition to set up this new under Secretary, and so we would encourage that any way possible as you move forward. Mr. Harden. I would add that I was tracking how the last administration was handling this, and I noticed when the prior Secretary said that they were basically pushing it down the road, because I was trying to find out when they were going to say what they were going to say so we could figure out how we were going to proceed with it to whether it would be a good job or not. So it is something that is on our radar screen to look at. Mr. Aderholt. OK. Thank you. Mr. Bishop. BUY AMERICAN Mr. Bishop. Thank you very much. I want to go back to something Ms. Pingree started, but I want to deal with some problems with AMS procurement inspection of fruits and vegetables. The Agricultural Marketing Service acts as the agent for the Food Nutrition Service and, at their request, buys the food for the school nutrition programs and other USDA feeding programs. In your audit last year, you found a number of serious problems with the agency's work, including the failure to properly close out accounts and failure to ensure that products met the proper standards. I would like to focus on another problem that you found, the failure to ensure that all products were 100 percent U.S. in origin. In fact, you found that in a sample of 97 purchase orders, 29 of them did not have sufficient documentation to prove that they were in compliance with the Buy American Act, and you found that almost $35 million in purchases were not proven to be of U.S. origin. I was somewhat shocked at this finding because compliance with Buy American is critically important to our farmers. They count on the government to abide by this requirement, and so do consumers. Would you discuss the problems and what AMS agreed to do to remedy them? And then I have another question regarding SNAP. Mr. Harden. They did agree with our recommendations. And it is kind of like I said with other matters, you know. They did recognize there was a problem; they shouldn't have done it. We will have to do some followup on that to see how it got implemented in terms of corrective actions. Ms. Fong. We can certainly look at that and get back to you and your staff on whether the recommendations have been implemented, and if not, what is the time frame for that. [The information follows:] In February 2016, we issued our report on AMS Procurement and Inspection of Fruits and Vegetables.\2\ In our report we noted that for FYs 2013 and 2014, AMS could not provide assurance that commodities for 29 of 97 sampled purchase orders were of domestic origin. This occurred because AMS had not obtained sufficient documentation, such as growers' list and scale tickets, to verify product origin. As a result, almost $35 million of commodities purchased for USDA programs may not have been obtained in accordance with the Buy American Act. --------------------------------------------------------------------------- \2\ Audit Report 01601-0001-41, AMS Procurement and Inspection of Fruits and Vegetables, Feb. 2016. --------------------------------------------------------------------------- AMS agreed to strengthen enforcement of the Notice to the Trade, Domestic Origin Requirement, dated September 16, 2010, by assigning Specialty Crop Inspection (SCI)'s Inspection Operations responsibility for ensuring that the contractors provide complete documentation. Any incomplete trace-backs will be returned to the contractor(s) by SCI for completion. If the contractor does not comply, SCI immediately will notify Commodity Procurement Staff, which will take action based on the guidance outlined in the Federal Acquisition Regulation, which could result in rejection of product. AMS further agreed to develop and deliver to SCI employees a Train-the-Tracer class that will cover: conducting thorough trace-backs; ensuring contractor compliance with trace-back responsibilities; reviewing trace-backs; and AMS' established process for conducting headquarters reviews of field trace- backs to support effective product traces. This will be mandatory training for SCI staff involved with the activities associated with commodity procurement. AMS advised that it expects corrective action to be completed by August 2017. Mr. Bishop. Thank you. I appreciate that very much. SNAP RETAILERS Let's talk about data analysis and SNAP retailers. About a month ago, you issued a report that looked at SNAP retailer and transaction data, and you used special software to check Social Security numbers and ages of retailers. I fully support your work on this and other government programs, but I wanted you to go over your findings related to Social Security numbers and birth dates so that we can all view them in the proper perspective. In looking at both Social Security numbers and ages, you found very few discrepancies among the owners of the more than 200,000 authorized retailers. For each, that was 99 percent accuracy. FNS deserves credit for that, I think, for issuing guidance to their staff on these issues quite a few years before your audit. Am I correct that you accepted the FNS management decision on all of your recommendations? And on the Social Security matching issue, FNS says it does not have the legal authority to access Social Security numbers for this purpose, so they can't do a match. They need legislative authority to do so. Do you agree that FNS doesn't have the legal authority to match Social Security numbers? Mr. Harden. Sir, I would have to go back and look, because I thought we were using some of the Social Security information that they already had in doing our analysis, but let me go back and take a closer look on that question. Mr. Bishop. Thank you. [The information follows:] OIG's audit report, Detecting Potential SNAP Trafficking Using Data Analysis (27901-0002-13), recommended FNS design and implement a control to identify SNAP retail owners whose information matches that of deceased persons, and correct or update this information as needed. In response to our recommendation to identify deceased owners, FNS stated that it does not currently have the authority to match SSNs on the Death Master File (DMF) for this purpose. However, FNS stated that it would attempt to perform a match with the other data it has available, such as first, middle, and last name, and date of birth. Further, FNS' response stated that there is value in conducting a SSN match on an on-going basis and if FNS is granted future legislative authority to use DMF for matching purposes, it will perform matches on an on-going basis. We believe that there are potentially different interpretations regarding the relevant authorities. USDA's Office of the General Counsel would be the appropriate USDA office to interpret FNS' related authority. 2501 PROGRAM I have got about a minute left, so let me ask you about the 2501 Program update. In keeping with my theme last year of increasing diversity access across the Department, I would like to inquire about the 2501 Program, which has been critical in providing assistance or support to disadvantaged farmers, to HBCUs, and to others. In your fiscal year 2017 budget justification, OIG cited Section 2501 Program as its first example of recent progress within the Department. Can you provide us with an update on current operations and management of the 2501 Program and whether it is meeting its statutory mandate and mission? Ms. Fong. OK. We have not done recent work on that issue. When we issued our audit report, the agency agreed with our recommendations. And I think at this point what we could do is go back and find out the status of our recommendations to make sure that they have actually implemented them. Mr. Bishop. Thank you. [The information follows:] As of June 2017, the agency reported that they have implemented all agreed to corrective actions for audit 91099- 0003-21, Section 2501 Grants Awarded FYs 2010-2011, March 2015. Mr. Aderholt. Mr. Young. IT SECURITY Mr. Young. Thank you, Mr. Chairman. Looking over your testimony and some of the programs that you have been investigating and auditing, I am stuck on IT security. And you have a relationship with the Office of Chief Information Officer, probably a closer relationship because of the Federal Information Security Modernization Act, which became law in 2014. It says, ``in fiscal years 2009 through 2015, the OIG made 61 recommendations for improving the overall security of the USDA systems, 18 of which are overdue for completion.'' That was in 2015. Do you know if those 18 overdue recommendations have been addressed since 2015 when you did that last audit or investigation? Mr. Harden. We will have to--that will be something that we will also follow up in this year's cycle. As we finished last year's cycle last November, they were overdue. Some of them may have gotten completed since then, but, you know, we are just starting up this year's review. Mr. Young. OK. And then it says: ``Moreover, our testing identified that security weaknesses still exist in three of the 39 closed recommendations.'' With information technology security weaknesses and holes that are--and it is through private industry; it is through our personal computers; it is through public systems--at the USDA, what is at risk? What information is at risk? Ms. Fong. Well, I think, as you know, all of the Federal agencies are dependent on IT to deliver their programs. And so, at USDA, you are looking at a broad array of databases in the farm program agencies, certainly the---- Mr. Young. So we are looking at data, but we are also looking at the names of producers who receive payments, individuals and families receiving benefits, whether it is SNAP, WIC, and loan and grant recipient information. Could their identifying information be subject to hacking and being stolen because of some information that is attached to these names, like Social Security numbers, USDA account information, or bank information? The reason I ask this is because I lead a bipartisan task force with Kyrsten Sinema, a Democrat from Arizona, and it is a Congressional task force to prevent identity theft and fraud. There are a lot of frauds and scams out there. But we also need to make sure that, if we are being a caretaker of the taxpayers and their personal information, we need to be doing a better job. Do you think the Social Security information, bank account information, names, and addresses are subject to risk with the holes that you found in the IT systems at the USDA? Ms. Fong. I think you have really put your finger on the risk to the Department. The risk to the Department is significant. We believe it is a material risk, that the data systems currently are not sufficiently secured at the Department level and as they roll down through the agencies. And, of course, there is all kinds of data in the Department systems. And, you know, you mentioned the outstanding recommendations that we have with respect to IT security. We have seen the Department make some progress, but there is a long way to go. And we all are very aware of some of the breaches around the Federal government and other departments and agencies, we are aware that that risk exists for USDA as well. Mr. Young. Would you know how many times the USDA tests its systems, or would that be a question for the Office of the Chief Information Officer? Mr. Harden. OCIO would have a probably more ready answer, but we will go back and look and see what we can find out. [The information follows:] The Department's Risk Management Framework Guide states that the Department is to annually test its systems based upon the National Institute of Standards and Technology (NIST) Special Publication 800-53, Security and Privacy Controls for Federal Information Systems and Organizations (April 2013). Key controls are tested annually, while other controls are tested on a cyclical basis; one third per year until all have been tested at the end of the 3-year cycle. The extent of the testing depends on the risk categorization (Low, Moderate, or High). Low categorized systems have fewer controls to test while High systems have more. The Office of Chief Information Officer can better answer what other testing is done. Due to the decentralized nature of USDA, additional testing may be done at each individual agency. OIG's FY 2016 Federal Information Security Modernization Act audit found that the Department had implemented this framework and it was operating as intended.\3\ --------------------------------------------------------------------------- \3\ Audit Report 50501-0012-12, U.S. Department of Agriculture, Office of the Chief Information Officer, Fiscal Year 2016 Federal Information Security Modernization Act, Nov. 2016. Mr. Young. We will be in touch. Thank you for being here today. I yield back. Mr. Aderholt. Ms. DeLauro. ETHICS INVESTIGATIONS Ms. DeLauro. Thank you very much, Mr. Chairman. Ms. Fong, I am just going to ask, but I will put it in writing as well, I want to ask you to put in writing for this Committee what the effect of the hiring freeze will mean for your department. I want to know what the 40 slots are and what areas that they cover. [The information follows:] OIG provided information to Rep. DeLauro and Subcommittee leadership on March 10, 2017. As I listened to my colleagues this morning, we have talked about RUS, ARS, organics, housing, trade, recently IT security, all areas of great interest to this Committee, and 58.5 percent of your current resources are spent on the SNAP program. We have an interest in the SNAP program. It has a big claim on what we do. But there are a lot of issues here that truly are going begging, and you now have a hiring freeze. So I want it detailed, and I also want to know what those error reports, error numbers, are on improper payments for all of the farm programs under your jurisdiction. Let me get to an ethics question. Everyone here is aware of the issue involving the promotion of Ivanka Trump's clothing line by the White House staffer, Kellyanne Conway. Chairman Chaffetz, and in a bipartisan way, sent a letter which said that the remarks were clearly over the line. He and Ranking Member Cummings asked the Office of Government Ethics to investigate, recommend appropriate disciplinary action. There are other examples as well. Press Secretary Spicer talked about ``go to the Trump International Hotel; it is stunning,'' et cetera. Now, the White House does not have an inspector general. There is no inspector general there. So the only option may be to go to the Office of Government Ethics. Consistent with legislation that passed the House by a landslide in the 104th Congress, I have introduced a bill to provide for an IG at the White House. I am wondering, though, about your role at USDA on ethics matters. First, I understand that many agencies have standard penalties for employee misconduct, like what happened with Ms. Conway. Example, employees at Customs and Border Protection reportedly are subject to a 14-day suspension for a first offense and removal from their position for a second offense. Do you have at USDA standard penalties like what CBP has for such misconduct? Can you tell us what they are? Can you tell us approximately how many ethics issues you take up annually? Ms. Fong. Let me offer some comments, and then Ann will have some additional comments. We do have jurisdiction over allegations that the ethics rules, regulations and statutes have been violated, and the Department requires in its regulations that any concern or allegations about violations be brought to our attention so that we can evaluate them and handle them. With respect to potential violations, if it is a violation of a criminal ethics statute, which sometimes those violations can exist, primarily conflict-of-interest or post-employment issues, there are statutory penalties that could involve imprisonment or monetary fines, and that would go through the justice process. Ms. DeLauro. But you, then, have established there are fines and penalties that---- Ms. Fong. For potential criminal violations. Ms. DeLauro. For--well, I am talking about civil issues as well. Ms. Fong. Right. And on the administrative or civil side, if it doesn't rise to the level of a criminal violation but it is an administrative violation, the Department has tables of penalties, I believe we call them, which we can provide. [The information follows:] Please see link to the USDA Guide for Disciplinary Penalties which includes various sections on ethics violations: https://www.dm.usda.gov/employ/docs/ DisciplinaryPenaltyGuide.pdf. Ms. DeLauro. OK. I would like to see that. Do you take up these issues at all, the civil ethics issues? Ms. Fong. It would depend on the situation. We would evaluate any incoming allegation and determine whether it is appropriate for us to move forward on that. We take these very seriously. Ms. DeLauro. How many do you do a year? Ms. Coffey. Within fiscal year 2015 and fiscal year 2016, we have about 10 cases that have come in relative to ethics violations. Ms. DeLauro. But you have a system in place to deal with this? Ms. Coffey. We do. Ms. DeLauro. And all--most of the agencies have that system in place, as I understand it. The only place that does not have an IG is the White House. They don't have an inspector general? You don't have to answer that question. I know the answer to that question. They don't. There is no inspector general there to deal with these civil kinds of efforts. MARC Let me get back on the ARS piece, if I can, for a moment. My understanding is that, and this is the animal welfare issue, that these were not unannounced inspections. They were essentially designed to see how the facility stood in terms of overall compliance so that, while ARS' policy for many years has been that its facilities must comply with the AWA, it is obvious that the policy was not enforced. APHIS inspectors found more than 150 AWA issues at the 20 facilities. Almost half of the issues related to the facilities' institutional review committees. That was just a key issue that was raised in that New York Times story. Many others related to basic care of animals. The facility that was the subject of the New York Times story had by far the most problems. Inspectors identified a total of 33 AWA issues, problems, and MARC had to have three inspections, as I understand it, before it came up, quote, ``clean.'' So, in essence, the Times was on target. But can you give us your thoughts on how agencies fall again and again into the trap of not making sure that their own policies, that their own policies, are not effectively implemented? Now, it was, I think, my colleague, our colleague, Congressman Farr, who said, none of this would have happened had it not been for The New York Times story. How do agencies continue to fall into this trap? And let me get your thoughts on that. Mr. Harden. That is interesting. We had a very good conversation with the agency administrator as we were closing this one out. And what really caused---- Ms. DeLauro. It has been closed out? Mr. Harden. In closing out the audit and coming to what was being reported on and talking to them about what the cause was. And from all of our work, we could tell that they had not made a priority of following those policies or making sure that they were followed. She was concerned that we worded it that way, but in the end, she said, ``You know, you are right. We didn't place the right priority on overseeing and implementing those policies as we should, and we need to do better.'' So it was a lack of priority. Ms. DeLauro. But this continues to happen. So what is it that we should do, if you have thoughts about what we should do, in terms of addressing this issue, which continues to happen? And, again, if there had not been a New York Times story, this would never have reached the public; it would have never gotten anyone's attention on this subcommittee. So what is it that--and we need to think about what we should do in order to prevent these kinds of efforts from occurring again. It was 150 animal welfare issues at these 20 facilities. Can you give us your advice on what kind of legislation would assist you in what you have to do? Ms. Fong. Well, I think you are putting your finger on the very basic challenge that faces program managers, and Mr. Chairman identified that in his initial question as well: What can Congress do? What role do we play in the IG's office in terms of bringing some urgency to these issues? And in our experience and our observation, what we have found has been really effective is when you all, in the case of U.S. MARC, the Chairman and the Ranking Member both asked us to do a review of it based on The New York Times article, and that was very effective. We were able to go in there and shine some light on it. I think that is the role that Congress plays. We have made some recommendations. Now it is time to oversee the implementation. Ms. DeLauro. And, Mr. Chairman, thank you for your thoughtfulness in the time. Final question, which goes back to my first question. You don't have the resources today to dig into the corners that we need to dig into in order to protect the public safety in terms of food, in order to deal with broadband, in order to look at international organics coming into this effort, in order to deal with the housing issues that have been talked about here, IT security, the whole 9 yards. You don't have the resources, as far as I can tell, with 40 open slots, to be able to dig into what you are charged with doing. And we keep asking you questions about this, but at some point, just say flat out: we don't have the resources and the staff to be able to go in the direction that the Members of Congress would like us to go in and---- Mr. Aderholt. Your time is up. Let me say, in closing, regarding The New York Times article, approximately how many, what percentage, of that article was either inaccurate, lacked context, or uncorroborated? Mr. Harden. I can't put a percentage on the article. We---- Mr. Aderholt. Over 50 percent? Mr. Harden. I can't put a percentage on the whole article. We had to look at statements in that article that we felt we could objectively analyze and see if we could find evidence to support it or not, and that is where we came up with the 33 statements that we picked. Those were judgmentally picked to look at to see if we could corroborate what was being said. Mr. Aderholt. Were those 33 statements a big portion of the article, or was that just a very small portion of the article? Mr. Harden. Let me go back and get a better percentage of the article. I am trying to remember how many pages the article was. I remember reading a multipage article. And so I will get you an answer for that. [The information follows: After reviewing The New York Times article, we non- statistically selected 33 specific statements from the article to evaluate in an attempt to determine the accuracy of the expressed concerns. These statements were selected based on references to specified dates or timeframes, specific facts or figures (for example, a specific number of animal deaths), and/ or sufficient details the audit team could examine. Mr. Aderholt. OK. All right. Ms. Fong. Let me also observe that, during the course of our audit, we tried numerous times to interview and speak with the writer, the author of the article, to gain his perspectives on it. And we told him where we were going to end up with our conclusions, and they did not want to engage. Mr. Harden. Right. Mr. Aderholt. The reporter didn't want to engage. Ms. Fong. The reporter or the editor--or his editor. Yeah. Both. Mr. Aderholt. OK. Mr. Palazzo. U.N. ORGANIZATIONS Mr. Palazzo. Thank you, Mr. Chairman. The Inspector General performs a number of audits and investigations of third-party organizations receiving taxpayer money each year. In a recent draft executive order leaked to the press, the Trump Administration called for the audit of funding to groups associated with the United Nations. One of the largest U.N. organizations that this subcommittee gives funding to is the World Food Programme. The U.S. Government has given almost $8 billion to this organization over the past 5 years. The World Food Programme uses an external auditor that rotates amongst various nations serving 6-year terms. Currently, it is under the responsibility of the French Government's auditing body. In your experience as Inspector General, have you ever performed an audit of the World Food Programme or another international body? Mr. Harden. No. And, actually, in researching this question, the money that goes through CCC for the World Food Programme actually is passed through USAID for delivery to the World Food Programme. So it is kind of overseen by the IG's Office at USAID. I would need to go back and talk to them about what oversight they have done of that piece of the program. Mr. Palazzo. So USAID is maybe doing their audit for---- Mr. Harden. Right. I would just have to see if they have done any work on it. Mr. Palazzo. OK. And that would have been good to know before I asked the question. I have a whole bunch of followup questions that really don't pertain to you all right now. So that would be great if you could get that information to me. [The information follows:] See OIG response to Questions 55-64 in submitted questions for the record. Mr. Harden. We have looked at the USDA side of it, which is the Food for Progress Program, on several occasions and found weaknesses in how those programs are run as well. Mr. Palazzo. Would you all like to audit the World Food Programme? Mr. Harden. I would have to look and see if we would have jurisdiction and get---- Mr. Palazzo. You need more staff, right? All right. Well, Mr. Chairman, I yield back. Mr. Aderholt. Ms. Pingree. ANIMAL WELFARE DOCUMENTS Ms. Pingree. Great. Thank you very much, Mr. Chair. Thank you again for your time with us today and your work. I just want to reemphasize a few things that my colleagues have said. Certainly I think there is a great understanding that through the kind of audit and oversight facilities that you provide, it really gives us the opportunity to understand where money is well spent, where it isn't, where programs are performing. I just want to emphasize the concerns that my colleagues have brought up about making sure you have adequate funding and making sure you let us know when some of these things can't be performed because of that funding as we are making those critical decisions. I want to just reemphasize again on Buy American, organic. I see two really critical roles that are performed by the USDA, which the Chair mentioned earlier in his remarks. It is just critically important to farmers that we are supporting them in the markets that are available to them. To have 30 percent, potentially, of the Buy American products not be procured from the United States or not, that is just a huge lost opportunity when we want to see growth in our farming sector and our agriculture sector and strengthening those markets. The same with organic, with increasing imports that are going on. So I just can't say enough about following that. Of course, I am very supportive of broadband. I think I come from the most rural State in the Nation. I don't even want to tell you the low rates of broadband in many communities in my State and the challenges that we face not having the resources. I think there will be just huge bipartisan interest in that as we go forward, and we will really look forward to the insights you can give us into that. And a more recent issue that I am sure you haven't had time to investigate, but I just want to throw it on your radar screen. I know there was just a letter sent to the new administration about some of the issues at APHIS around scrubbing the website of animal welfare documents. You have probably read about it if you are not aware of it, but certainly that is a concern. It had 101 signatures on that letter, very bipartisan in a time when it is not always easy to get bipartisan concerns about this. Republicans and Democrats alike have shown concerns about the importance of the public having access to that information. As my colleague from Connecticut was just mentioning we shouldn't have to turn to the newspaper all the time to figure out where the problems are. Some of the ways that the public can have access to this kind of information is by being able to see it on the website. So, understanding that information has been scrubbed and the importance of putting it back and this bipartisan concern about it and the importance of just being able to continue to use sunshine as a disinfectant, as my Republican colleagues have said in their comments around this letter. I hope that you will make one of your priorities going forward to look into that lack of access to information and I think, in the future, any removal of useful information to consumers and to lawmakers about what is going on. And, in this case, we can see that there are high levels of concern about animal welfare. If you have any comments about that, I would be interested to hear. I just really think it fits into the theme of many things that we are talking about today, and I think a lot of us were shocked to see that information removed. Any comments or--I doubt that you have already done the thorough investigation yet, but---- Ms. Fong. We are very much aware of the situation. As you mentioned, it has been in the news, the Congressional interest. We have been watching as it unfolds. We understand it is a complex issue. The Department is working with the Department of Justice. There is some litigation involved, which adds another layer of complexity, but we will be watching it. And if anyone on the Committee has a particular aspect of it that you would want to bring to our attention, we would appreciate that. Ms. Pingree. Great. Well, we will send a followup letter about that. And then we would be happy to hear back from you about ways that we could work moving forward on it and other insights you could bring to us. So, again, thanks for your work. And thank you, Mr. Chair. I yield back the balance of my time. Mr. Aderholt. Mr. Pocan. FOOD AID PROGRAMS Mr. Pocan. Thank you, Mr. Chairman. On my previous Committees, we usually don't get a second round, so I was trying to rush everything in the first round with three, but I do just have one additional question. In the OIG 2017 annual plan that outlines the goals for improvement initiatives for the FSA commodity purchases for the international food assistance programs, can you elaborate on some of those initiatives? We had a question from a constituent. Mr. Harden. Let me go back and look at that. That is something that is in the plan that we haven't started yet, and so I would need to go back and do a little research on what the initiatives are. [The information follows:] We are currently conducting fieldwork for our Audit report on FSA Commodity Purchases for International Food Assistance Programs. We expect to issue the final report in Spring 2018. OIG categorizes its audit work into one of three goals: safety and security, integrity of benefits, and management improvement initiatives. This report is categorized under ``management improvement initiatives'' since the audit will focus on strengthening management through more efficient program operations and improving financial management. The objectives of this audit are to evaluate whether FSA's commodity procurement process for international food assistance programs is: (1) conducting outreach to prospective vendors to meet its goals of promoting competition, (2) adhering to applicable Federal Acquisition Regulation vendor qualification requirements and ensuring only qualified vendors are able to submit bids, (3) performing contract closeout procedures timely, and (4) monitoring unliquidated obligations from commodity contracts to ensure these funds are de-obligated. Mr. Pocan. All right. I appreciate it. Thank you. I yield back. Mr. Aderholt. Well, thank you. Mr. Young, just one comment, I understand? Mr. Young. I just have a comment, and echoing some of the remarks of my colleague Ms. Pingree about transparency and the information that has been taken down, whether it is this administration, the last administration, or a future administration, the more transparency the better. Whether you agree with an issue or not, having that information out there is important. As you said, sunshine is the best disinfectant. It is up to putting that information out there and allowing the public to see these things and make up their minds for themselves. But I think it is our obligation to make sure that we have transparency, not only within Congress, but across the board of the Federal government in doing our oversight. And so I thank you for bringing that up. THIRD-PARTY REVIEWS Mr. Aderholt. Let me just say, in closing, Congress has the ability to ask for a third-party entity review of Federal programs and actions to obtain an objective assessment of how a process or program is being implemented. For example, under the fiscal year 2016 Omnibus Appropriations Act, Congress directed the National Academy of Medicine to review the process used to establish Dietary Guidelines for Americans and ensure the guidelines better address the health concerns facing Americans. The concern is, and we have heard from constituents also concerned, that this review is not being conducted according to statute and report language. Would it be in the OIG's purview to review how this study is being conducted and to look into USDA's involvement with NAM process to ensure that the statute is being followed? Ms. Fong. I think we would want to give some thought to that. Generally, our jurisdiction extends to any expenditure of USDA funds or any USDA activity. If there is a contract involved between a USDA agency and the National Academy, that would give us a basis to think about work. So let's get in touch with your staff on this and get some additional information. Mr. Aderholt. OK. We will follow up with you, but we will be happy to try to discuss more and get your thoughts, then, on the process. Have you got one more question you want to ask? Ms. DeLauro. Just a quick question. Mr. Aderholt. We will do that. That will be fine if anybody has got any burning questions. We want to try to---- Mr. Bishop. Mine is very short, but if you want to---- Ms. DeLauro. Why don't you go ahead, Ranking Member. DIVERSITY Mr. Bishop. Last year, I raised the issue of diversity within USDA. And not to sound like a broken record, but I asked for an update on OIG's overall accomplishments and related activities in the area of diversity in USDA last year and your goals for fiscal year 2017. And I recognize that you are operating under a CR and now the hiring freeze was just instituted, but I would like to know where we are now 1 year later on diversity. Ms. Fong. OK. Last year, we had an audit started to look at the Office of the Assistant Secretary for Civil Rights and their operations in terms of processing complaints of discrimination. During the course of that audit, we had some investigative work that we needed to accomplish. And during the investigative work, we found answers to the objectives that our audit was looking at, and so we closed out the audit. Now, that being said, we are very much aware of what is going on within civil rights programs at USDA. We are keeping an eye on all of the litigation in terms of Keepseagle, BFDL, Garcia, Love to just make sure that things are rolling out and to address any concerns that might happen. If you have a specific issue you would like us to look at, we would be very happy to talk to you about that. Mr. Bishop. Well, and I appreciate that, and I have a followup, but I would like to know statistically what the breakdown is of the workforce within the respective agencies and the level broken down by the demographics. Ms. Fong. OK. Mr. Bishop. And you can submit that for the record. [The information follows:] See OIG response to Question 70 in submitted questions for the record. Mr. Bishop. I think it is important that we be able to monitor that progress, and hopefully there is progress. Ms. Fong. We will do what we can to find that information for you. Mr. Bishop. Thank you. Mr. Aderholt. Ms. DeLauro. HOG HIMP Ms. DeLauro. Thank you. I will move quickly. This is about the Hog HACCP-based Inspection Model Project, HIMP program. In May 2013, you issued a report, an audit, of the Food Safety and Inspection Service, ``Inspection and Enforcement Activities at Swine Slaughter Plants.'' Your report pointed out that, even though the HIMP pilot had been in operation for nearly 15 years, the agency had never performed an evaluation of the pilot to determine whether the pilot was achieving food safety objectives. In the last regulatory agenda published by the Obama Administration, FSIS planned on publishing a proposed rule in March of this year, 2017, to expand HIMP to all swine slaughter facilities. Has the OIG performed any followup with FSIS on the inspection program in swine slaughter facilities since 2013? Do you believe FSIS is ready to move ahead with expanding HIMP to all swine slaughter facilities at this time, given that they have yet to determine whether expanding HIMP will jeopardize food safety? Mr. Harden. We haven't done any followup work since 2013 because of our other food safety issues we have been tracking. I would need to go and find out how they implemented this and what they were planning to do to put in a reg to know, to be able to come to some conclusion as to whether they are ready or not. Ms. DeLauro. OK. Then does that mean that this March 2017 date on a proposed rule, is that going to be held up? Mr. Harden. That, I don't know. I would have to go to back and ask FSIS. Ms. DeLauro. Well, we need to know whether or not that is going to be held up. OK. Thank you. [The information follows:] In May 2013, we issued our report on FSIS' inspection and enforcement activities at swine slaughter plants. In our report, we noted that the swine HIMP program has shown no measurable improvement to the inspection process since the program's inception. Overall, we issued a number of recommendations for FSIS to determine what measurable improvements the HIMP program achieved and its suit-ability as a permanent program and to develop criteria to terminate plants from HIMP that have a pattern of serious violations. FSIS has since reached closure for each of the recommendations issued. While we do not have any work planned in this area for the near future, we are closely tracking the status of FSIS' issuance of the proposed rule for hog HIMP. On June 10, 2017, FSIS submitted a copy of the proposed rule to the Office of Management and Budget (OMB) for review. Mr. Aderholt. All right. Ms. DeLauro. Thank you Mr. Chairman. Mr. Aderholt. Thank you. Well, thank you all for being here, Ms. Coffey, Ms. Fong, and Mr. Harden. Thank you for your testimony here this morning. We have had a good hearing, some issues that I think you will follow up with us on and we will follow up with you on. We will look forward to working on those issues, but, again, we congratulate your team and everybody over there at the Office of Inspector General for all your hard work and the good work that you all do and your accolades that you have been awarded over the years. So, again, all the best to you and as you go through this new transition, and we look forward to being in touch. The hearing is adjourned. [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]