OIG/95A-19 - Adequacy of the Controls to Prevent Violations of Ethics Requirements
- Report Synopsis
- Survey Results
- Personnel Appointments
- Commercial Procurements
- DOE Lab Work Oversight
- Scope and Methodology
- U.S. NRC Functional Organization Chart
- Major Contributors to this Report
- Glossary: Office of the Inspector General Products
Office of The Inspector General
U.S. Nuclear Regulatory Commission
Washington, DC 20555
Adequacy of The Controls to Prevent Violations of Ethics Requirements
November 30, 1995
|Memorandum To:||James M. Taylor
Executive Director for Operations
|From:||Thomas J. Barchi
Assistant Inspector General for Audits
|Subject:||Adequacy of the Controls to Prevent Violations of Ethics Requirements|
Attached is the Office of the Inspector General's report on the results of our subject survey conducted at the Chairman's request.
We did not obtain agency comments on this report because it does not contain recommendations; however, we welcome any thoughts you may have on our final report.
|cc:|| H. Thompson, EDO
J. Milhoan, EDO
K. Cyr, OGC
J. Hoyle, SECY
D. Rathbun, OCA
J. Blaha, EDO
R. Scroggins, OC
P. Norry, ADM
G. Cranford, IRM
R. Bangart, OSP
W. Russell, NRR
E. Jordan, AEOD
D. Morrison, RES
C. Paperiello, NMSS
J. Funches, ICC
W. Beecher, OPA
T. Martin, RI
S. Ebneter, RII
H. Miller, RIII
L. Callan, RIV
OPA-RIV: Walnut Creek
At the request of the Chairman, the Office of the Inspector General (OIG) surveyed the adequacy of the controls to prevent ethics violations by individual experts obtained by personnel appointment and commercial contract. OIG also examined the features of the oversight function for work placed with the Department of Energy laboratories.
Overall, our survey disclosed that the management controls governing this area appear adequate for both personnel appointed and commercially procured individuals. NRC has taken steps to prevent ethics rules violations by increasing employees knowledge of the requirements. Also, NRC has a broad-based oversight function for work placed with the laboratories. However, the success of these measures depends on how aggressively the agency implements them and the level of accountability taken by relevant offices.
At the request of the Chairman, the Office of the Inspector General (OIG) conducted a survey of the adequacy of the controls to prevent ethics violations by individual experts serving the U.S. Nuclear Regulatory Commission (NRC). Two previous OIG reports concerning conflict of interest violations by a former NRC employee triggered the Chairman's concern over this area. On October 12 and 17, 1995, OIG briefed the Chairman and Commissioner Rogers, respectively, on our survey results.
We note that this survey did not address the appropriateness or the management of the personnel appointments and commercial procurements to obtain expert services. Also, for the sake of this report, the term "expert services" includes consultants, members, experts, selected limited-term employees, and individuals providing technical assistance, regardless of the appointment or procurement method used to obtain them. Appendix I provides more information on this survey's scope and methodology.
A February 28, 1995 OIG investigation report confirmed a conflict of interest with a former NRC employee's grant proposal submitted three months after leaving NRC. The investigation determined that while employed by NRC, the employee worked directly and substantially on issues in the same subject area as that of the grant proposal.
Under the provision of Title 18, USC, 207, a former Government employee is prohibited from representing, or acting as an agent for anyone before the Government, in any matter that the employee participated in personally and substantially while employed. Moreover, the investigation confirmed that the former employee relied substantially on non-public NRC information when preparing the grant application.
On May 11, 1995, OIG issued a regulatory review report on the above matter emphasizing the need for additional safeguards to prevent recurrence of this type conflict of interest.
Based primarily on these two reports, the Chairman requested OIG to assess the adequacy of the controls to prevent violations of ethics and post-employment rules by individuals providing expert services to the agency. The Chairman was interested in the controls covering individual experts obtained by personnel appointment and commercial procurement and the oversight function for work placed with Department of Energy (DOE) laboratories.
As part of our background research of this area, we reviewed other OIG investigative reports disclosing violations of ethics rules or other similar problems. We identified six other reports involving violations of post-employment restrictions; unauthorized possession of NRC non-public records; abuse of expense reimbursement for advisory committee members; falsification of scientific research; and erroneous billings. We considered the controls implemented/needed to prevent recurrence of such acts.
In an August 14, 1995 memorandum, the Chairman advised the Inspector General of actions taken and proposed to address the issues raised in OIG's May 1995 report referenced above. The actions involved additional management controls in four areas. We examined these controls during our survey.
We examined the management controls to ensure compliance with ethics rules by individual experts obtained through personnel appointment and commercial procurement. We also reviewed the features of the oversight function for work placed with DOE labs. Overall, we believe the management controls established to prevent ethics rules violations appear adequate for experts obtained by both personnel appointment and commercial contract. The specific results of our work follows for each of the above categories.
Information provided by the Office of Personnel (OP) showed that NRC can obtain individual expert services in two categories using about 10 different appointment methods. The special Government employees category includes members to NRC advisory committees and the consultants appointed by OP for all NRC offices. The limited-term category includes a variety of appointments, such as statutory, non-career, temporary, professional term, visiting fellows, and appointments under the Intergovernmental Personnel Act. All employees serving as individual experts are subject to NRC's ethics rules and requirements, which include disclosing financial information and taking ethics training.
As stated earlier, the Chairman, in an August 1995 memorandum, advised OIG of additional controls to enhance the prevention of ethics violations. The additional controls relate to individuals obtained by personnel appointment and required:
For all prospective limited-term employees to serve as experts, a meeting among the employee, the supervisor, and a representative from OP and the Office of the General Counsel (OGC) to discuss the limitations of the appointment.
The completion of a formal agreement with the academic institutions to document expectations of the agency and the employee's obligations for limited appointments with individuals who anticipate returning to their former organization. A copy of the agreement is to be provided to the prospective employee prior to appointment.
That a written summary of the guidelines regarding ethics and post-employment restrictions be given to visiting professors and other such limited-term employees as part of the offer package.
The agency to take additional measures to decrease the likelihood that terminating employees will wrongfully use non-public NRC information.
Our review of the controls and discussions with OP and OGC officials disclosed that the measures seem adequate. However, we were unable to test their adequacy because the controls had only recently or had not yet been implemented at the time of our survey.
Also, our survey determined that NRC needed the above controls to provide reasonable assurance that its employees are adequately advised of ethics requirements and post-employment restrictions. Without these controls, NRC would be less protected from additional violations of such rules.
We reviewed the contract files for a sample of the small contracts with individuals and discussed the controls and requirements with Division of Contracts (DC) and OGC officials. DC did not have any large contracts for the expert services targeted.
Our survey disclosed that the ethics requirements for NRC employees do not apply to contractors. Contractors are not required to take ethics training and OGC does not routinely check to ensure a contractor's compliance with ethics rules. Upon request, OGC provides ad hoc assistance to DC to answer legal questions concerning a given contract.
The emphasis for commercial procurements is more on organizational rather than individual conflicts of interest, even though an individual can be considered an organization. Contractors are required to provide information on their work for other organizations and NRC judges whether a conflict exists.
Our survey indicates that NRC's controls are consistent with the Federal Acquisition Regulations. Also, a DC official stated that NRC's controls are viewed by industry as being more stringent than the conflict of interest requirements for other Federal agencies. We believe the existing controls appear adequate and note that NRC has apparently not experienced problems in this area.
DOE Lab Work Oversight
We reviewed the features of the DOE lab work oversight function performed by DC. The oversight function is multi-facetted, composed of various measures to bring about financial and accountability improvements. The features include:
- Management Directive 11.7 covering the placement and monitoring of work placed with DOE labs;
- An MD 11.7 Users Group;
- Comprehensive file review audits of selected projects;
- Training for NRC managers and project officers;
- Daily ad hoc assistance to NRC managers and staff to resolve issues;
- Reviews of monthly status reports submitted by the labs;
- Quarterly reports covering activities in this area;
- The Director, DC, serving as the agency's competition advocate and in this position, reviewing the statement of work and the program offices' justification for using a lab to perform a given task.
MD 11.7 is the foundation of the oversight function and a good first step at enhancing fiscal and manager accountability over work placed with DOE labs. The annual comprehensive file audits of selected projects give DC a thorough look at what transpired on that project; however the number of file reviews conducted in a year is small due to limited resources. DC expects to conduct about 12 to 18 file reviews of the estimated over 100 new projects a year. The sample includes projects from all program offices. While we agree that the number of file reviews is small, this is not especially troubling considering the other measures taken to oversee this area, including the requirements of MD 11.7, the training for key employees, and the communication among offices.
In addition to DC's oversight function, OIG issued several reports that resulted in improvements and continues to assess NRC's management of work placed with the labs. OIG is presently reviewing this area as part of the Chief Financial Officers Act audit work.
Overall, our survey disclosed that NRC has instituted measures to improve its management of work placed with the labs and has a broad based oversight function. However, the success of these measures depends on how aggressively the agency implements them and the level of accountability taken by relevant offices. This should be revealed in time.
NRC has taken steps to prevent the recurrence of ethics rules violations by increasing employees knowledge of the requirements. We believe NRC needed the additional measures to reduce the likelihood of inadvertent ethics problems. The management controls governing this area appear adequate for both personnel appointed and commercially procured individuals.
Also, DC has a broad-based oversight function for work placed with DOE labs, even though individual features are limited due to resources. In addition to DC's oversight function, OIG continues to assess NRC's management of work placed with the labs.
The test of time will demonstrate the above measures' effectiveness at preventing conflict of interest and other ethics problems. The success of these measures also depends on whether NRC aggressively implements them and the level of accountability assumed by key offices.
Scope and Methodology
At the request of the Chairman, the Office of the Inspector General (OIG) conducted a survey of the adequacy of the controls to prevent conflict of interest and other violations of ethics rules primarily during August and September 1995. On October 12 and 17, 1995, OIG briefed the Chairman and Commissioner Rogers, respectively, on our survey results.
We examined the management controls to ensure compliance with ethics rules by individual experts obtained through personnel appointment and commercial procurement. We also reviewed the features of the oversight function for work placed with DOE labs. We conducted a limited survey in accordance with Government auditing standards.
We note that this survey did not address the appropriateness or the management of the personnel appointments and commercial procurements to obtain expert services. Also, for the sake of this report, the term "expert services" includes consultants, members, experts, selected limited-term employees, and individuals providing technical assistance, regardless of the appointment or procurement method used to obtain them.
U.S. NRC Functional Organization Chart
Major Contributors to this Report
Corenthis B. Kelley
Michael A. Cummins
Glossary: Office of the Inspector General Products
1. Investigative Report - White Cover
An Investigative Report documents pertinent facts of a case and describes available evidence relevant to allegations against individuals, including aspects of an allegation not substantiated. Investigative reports do not recommend disciplinary action against individual employees. Investigative reports are sensitive documents and contain information subject to the Privacy Act restrictions. Reports are given to officials and managers who have a need to know in order to properly determine whether administrative action is warranted. The agency is expected to advise the OIG within 90 days of receiving the investigative report as to what disciplinary or other action has been taken in response to investigative report findings.
2. Event Inquiry - Green Cover
The Event Inquiry is an investigative product that documents the examination of events or agency actions that do not focus specifically on individual misconduct. These reports identify institutional weaknesses that led to or allowed a problem to occur. The agency is requested to advise the OIG of managerial initiatives taken in response to issues identified in these reports but tracking its recommendations is not required.
3. Management Implications Report (MIR) - Memorandum
MIRs provide a "ROOT CAUSE" analysis sufficient for managers to facilitate correction of problems and to avoid similar issues in the future. Agency tracking of recommendations is not required.
4. Audit Report - Blue Cover
An Audit Report is the documentation of the review, recommendations, and findings resulting from an objective assessment of a program, function, or activity. Audits follow a defined procedure that allows for agency review and comment on draft audit reports. The audit results are also reported in the OIG's "Semiannual Report" to the Congress. Tracking of audit report recommendations and agency response is required.
5. Special Evaluation Report - Burgundy Cover
A Special Evaluation Report documents the results of short-term, limited assessments. It provides an initial, quick response to a question or issue, and data to determine whether an in-depth independent audit should be planned. Agency tracking of recommendations is not required.
6. Regulatory Commentary - Brown Cover
Regulatory Commentary is the review of existing and proposed legislation, regulations, and policies so as to assist the agency in preventing and detecting fraud, waste, and abuse in programs and operations. Commentaries cite the IG Act as authority for the review, state the specific law, regulation or policy examined, pertinent background information considered and identifies OIG concerns, observations, and objections. Significant observations regarding action or inaction by the agency are reported in the OIG Semiannual Report to Congress. Each report indicates whether a response is required.