Episode Transcript
Speaker 1 00:00:05 Okay. Good morning, everyone. Um, I would, uh, like to welcome you to this podcast, uh, segment sponsored by Affiliated Monitors. Uh, my name is Eric Feldman, Senior Vice President and Managing Director for Corporate Ethics and Compliance Programs at Affiliated Monitors. And we've got a special panel here today to talk about the role of inspectors general, um, and monitors and how the use of monitors might fit in in various ways to the inspector general function. Um, I'd like to introduce our panel members. Uh, first we have Melinda Miguel, who was appointed by Governor DeSantis in January, 2019 as Chief Inspector General in the executive office of the Governor State of Florida. She was also appointed to the same role by Governor Christ in 2007 and Governor Scott in 2011. Uh, n needless to say, no one knows more about being an Inspector General in the state of Florida, um, or probably any state than than Melinda.
Speaker 1 00:01:16 Melinda also has over 30 years of government service and is a statutorily appointed member of the Florida Cybersecurity Advisory Council. She was also appointed by Governor Jeff Bush to serve on the Council of State Agency igs in 2008, to make recommendations to the governor and legislature on modifications to the Florida IG Act. Melinda's, the National President, uh, and has also been, uh, the past president of the Association of Inspectors General. Uh, and I neglected to mention she also served as Deputy IG for the US Architect of the Capital and as IG for the US Government Publishing Office, both in Washington dc And as a result of those positions, was on the council of the Inspectors general on Integrity and incredible state. And Uhhow is currently the Executive managing Director at DeLuca Advisory Services, a private, uh, consulting firm specializing in investigations, ethics and compliance programs, integrity monitoring and other areas.
Speaker 1 00:02:37 He retired as the acting IG at the Port Authority of New York and New Jersey, and served as the Deputy and Assistant Inspector General. Uh, there for 15 years. He led the Port Authorities' Fraud Prevention Program for major capital construction projects, such as the World Trade Center. Prior to Port author, Steve had more than 26 years with the New York City Department of Investigations, where he served as an assistant commissioner for his last 12 years, uh, while also serving as the IG of the New York City Housing Authority. Uh, during his tenure at the Department of Investigations, Steve held a number of other IG positions at various New York agencies. Steve is a certified Fraud Examiner and a member of the Board of the Association of Inspectors General. And last, but certainly not least, Nick Schuler is a litigation attorney at Qk and Tech. Am I pronouncing that correctly? Yeah, you are.
Speaker 1 00:03:39 To and, and, uh, Chicago. His practice includes internal investigations and consulting on compliance and ethics issues. Nick previously served as the Inspector General for the Chicago Public Schools, where he fought hard to ensure that a modern professional watchdog agency was taking citizen complaints seriously, and he cleared access to government records necessary to complete investigations during his tenure with Chicago Public Schools. Nick led an internal investigation into a kickback scheme that involved CPS ceo, Barbara Bird Bennett, which developed into a joint investigation with federal authorities. Uh, as a result, uh, Ms. Bennett, uh, pled guilty to federal wire fraud. Uh, Nick also served as an assistant inspector general for the City of Chicago, and I didn't know this before studying law. Nick was a Chicago Police Sergeant and Internal Affairs investigator. Uh, so we have just a, an incredible amount of experience, uh, here on this panel.
Speaker 1 00:04:47 Today. What I thought we would do is kind of start off, uh, with just a little baseline setting for those who, who are listening to us about what igs are, uh, and what their function is. And to do that, we all need to chime in because, uh, there's def not just one flavor of IG out there. And when I served as the Inspector General of the National Reconnaissance Office and Deputy IG at the cia, um, initially I, my world was federal igs. And until I got involved in the Association of Inspectors General, I had no idea there were that many of us that had permeated government, um, around the country at various levels and how important it it was to be able to learn from one another. Um, maybe Melinda, you could start out with giving us a little bit of history and purpose of the, uh, National Association of igs from that perspective and how the state igs, uh, developed and what, what their roles are.
Speaker 2 00:05:58 Certainly. Well, good morning everyone. It's nice to be here. Thanks for the opportunity, Eric, to, uh, to talk today about things that are near and dear to our hearts as it relates to inspectors general. Um, as the former president of the National Association of igs, I had the privilege of meeting Steve Pass Chow at one of the aig uh, meetings back in the day. Um, the, the National Association of Inspectors General was created, uh, we signed our bylaws in 1996, and this was on the heels of several state and local igs, uh, being formed in various levels of government in Florida. The association, uh, of inspectors general was particularly important to me cuz I was on one of the first membership committees and helped design the first membership brochure and, uh, worked, uh, closely with some of the colleagues here in Florida and Florida was, was kind of unique across the country cuz we had inspectors general in each state agency.
Speaker 2 00:07:01 Um, the reason for that was because Senator Child had served on Capital Q and he brought, uh, when he was elected governor, he brought the Inspector General Act to Florida in 1994. And, um, there were several state and local igs across the country. Most of them had, um, been created in the eighties, um, and Florida coming in in the nineties as, uh, state and local igs were kind of cropping up around the country. Uh, Stephen was from, uh, the New York New Jersey Port Authority. So he represented a cadre of, of professionals that were up in, in the northeastern area. There were many of the igs that were created up in New York, New Jersey, Massachusetts, um, prior to Florida's IG system being created. Many of us are similar in a lot of ways, but we also differ. Uh, some of us have subpoena power, some of us have criminal law enforcement powers. Uh, some of us are just administrative, uh, investigators only. So there's a broad spectrum of inspectors general, uh, even to this day.
Speaker 1 00:08:14 Well, great. Um, Steve, uh, great follow up from you. Tell, tell us a little bit about, um, how the Port Authority IG operated, um, and, you know, its, its scope in authorities.
Speaker 3 00:08:28 Well, if, if I might, I I'm gonna go back in time a little more. Um, you know, I know the federal IG Act was in 1978, and in fact in 1978 when, uh, New York Mayor Ed K was, uh, voted in, he, uh, created his own IG system in 1978, which is when I then first joined the IG system in New York City. So, and, and that was a little bifurcated where the igs reported to the New York City Department investigation. At the same time, they reported dual function to the agency that they were the IG for. And so there were, back then 26 igs for all the mayoral agencies and many of the commissions and and boards. And so that was the first time New York, although New York had igs previous to that in some of the larger agencies like Human Resources. That was really the first formal system of igs.
Speaker 3 00:09:20 And fast forward, I was at DOI for many, many years, as you mentioned. And then, uh, in 2004, I joined the Port Authority, the Port author's ig, and that's a by state agency, which is not that common in the, in the country. Um, but that, that IG was created in the early 1990s and was more formalized in about 1996. Um, and, uh, and the IG office grew over the years. In 2004, when I joined the IG took over the internal audit function similar to the federal system where you've got an IG investigation division, an audit division. Um, so the Port Authority was sort of modeled a a little bit after the federal IG system, but also over the years we gained law enforcement powers. We never did get subpoena power. That was the one thing we didn't get. And we, we did strive to get it, but we didn't, but we got law enforcement powers otherwise, and powers of arrest and executing search warrants and so forth.
Speaker 3 00:10:20 And that was very, very useful. Um, and so in the Port Authority, you know, again, you know, dealing with monitorships, uh, that was very important for the rebuilding of the trade center site and other new facilities, new bridges, and the various rehabilitation of the airport. So there was a major use focus on the use of monitors as there was at department investigation. There was the use in the nineties with the use of corporate monitorships when a company would get into somehow water. And then with, uh, nine 11 and terrace attacks, we used the monitors to oversee the cleanup in ground zero. And that was the first time that we were using as a sort of like a project type monitor.
Speaker 1 00:11:02 You know, I like how, uh, you know, you've, you've drawn that connection between the role of the IG and, uh, the public interest. Uh, you normally think of igs as, as the watchdog and, and igs are watchdogs, and you think of them being the ones that, you know, are, are chasing fraud, which is critical. But you've pointed out that having effective oversight through the igs is critical to building basic infrastructure, are rebuilding after the, the tragedy of, of the, uh, of nine 11. Um, and, you know, real keeping bridges, uh, operating, I mean, all of these things. And, and that's kind of the nexus to the, to the private sector as well, which we're gonna gonna be discussing just in a moment. Nick, tell us a little bit about how an IG functioned at the municipal level.
Speaker 4 00:12:02 Yeah, so I'm happy to, um, just by short background, uh, you know, Chicago was a famously, uh, a one party town. And, uh, the IG there had been sort of ig like entities for a while, but, you know, I, I don't think they, they were hardly known by anybody outside of the municipal world, and certainly not by the citizens. And, uh, I think it's maybe 2004, 2005, I don't remember the exact year, but, um, in the wake of a, a scandal, um, uh, uh, involving asphalt and other things, um, the mayor of Chicago at the time, I think was basically pressured into having to appoint somebody that, um, the federal authorities who were kind of looking into the matter at the time would, would, would accept somebody that they thought would be, uh, independent. So they wound up, uh, pointing David Hoffman was a, uh, from the US Attorney's Office here.
Speaker 4 00:12:53 And, uh, I can tell you, I remember that day the way people remember the Kennedy assassination or, or the, the, uh, challenger explosion, things like that. Um, uh, you know, I can tell you where I was because it was such a sort of a earth shattering moment in my, in my mind at least, that, that somebody who, uh, had that kind of chops, um, uh, would, would be that taking that the office, cuz uh, I figured he would, uh, be sort of independent <laugh> and, and not, and not listen and, and, and kind of run with things. So that's what he did. And I, so I, shortly after that, I went to go work for him after I saw what he was doing in the city. And, um, so I think, uh, I think I and a few other people kinda learned, uh, how to be an IG from, uh, working there and this idea of, uh, oversight and independence and, um, um, and as, as we'll talk about, I, I think there was a concentration on sort of how to develop bigger cases, uh, stronger cases than, than the offices sort of had done in the past.
Speaker 4 00:13:57 And, um, and then also is that is then also matured through, through the years to an idea that, um, uh, that it could help influence policy and help, uh, with vendors making them good, uh, uh, citizens, things like this that I, so I think there was a, there was just a whole, uh, sort of, uh, you know, dis synergized and grew into a, a bigger movement. And so I think this, the, uh, IG community in Chicago is, uh, pretty robust sort of through that sort of what stemmed out of, uh, uh, uh, a corruption scandal nearly 20 years ago now, I'd say. Um, and it, uh, it's a fairly decent, robust, uh, uh, a well known sort of civic. Uh, I think there's like a civic duty, you know, that people recognize with the IG is well respected.
Speaker 1 00:14:44 You know, I wish all government entities, you know, when they did experience some level of corruption or a failure in, uh, ethical and integrity systems would respond to it in the same way that City of Chicago did in creating a, uh, strong independent, uh, IG in, in the various entities, um, you know, Chicago, uh, to, to me that there just aren't enough cities that have that kind of strong ig. And you'd think, you look at some of the big cities in the United States and how much money they spend, you know, what their budgets are. Some of them are bigger than, uh, most states. Uh, some of them are larger than any of the federal agencies that have igs. Uh, so it, it's, to me, it's, it's a critical function. Um, I thought maybe I just spent a minute, um, kind of level setting on the federal igs and the federal IG system.
Speaker 1 00:15:46 Uh, both Steve and Melinda alluded to the fact that, uh, the IG Act of 1978 created, uh, inspectors general in every, uh, federal agency. Most, I shouldn't say every, most federal agencies. Um, and the purpose of the igs under the ACT was to prevent and detect fraud, waste, abuse, and mismanagement. That's a pretty broad remit. Um, my experience has been that not a lot of prevention going on, a lot of, a lot of detection, uh, with audits and investigations. Um, you might say that there's a deterrent effect that is preventive. Uh, but in terms of really getting in and preventing fraud, waste and abuse, I, I never saw that as an area that was, uh, particularly focused on by igs. Maybe the reason was that there, it's tough to have metrics on prevention. How, how do you define, and how do you identify how much fraud I prevented this year?
Speaker 1 00:16:54 It's easier to talk about success of an IG entity through, um, uh, co prosecutions, convictions and recoveries, right? Um, but how much did I prevent? I, it's a little bit tougher. So it's hard for the igs to, to show that, um, my, a lot of my experience, not all, but a lot of it was in the intelligence community, and those igs were not strengthened until the CIA got an IG as part of the National Security Act. Um, and then after that, the igs that the Intelligence Community Agencies, uh, all became statutory, uh, appointed by the president, confirmed by the Senate, uh, can only be removed, uh, by a two thirds vote. So, um, it's a very interesting, uh, system that we have, uh, to try to protect taxpayer dollars. Um, if, uh, what I thought I'd do is, is just talk a little bit about monitors.
Speaker 1 00:18:01 And you all have heard this story. When I left being an ig, I left the federal government. I didn't know what a retired IG did. You know, Nick, you've got a law degree. So you, you know, you came from law, you went back to law. I had nothing to go back to. Everything was, was being an ig. That's all I ever did. Uh, so I had no clue what I would do. Uh, and, you know, I, I had met VCI affiliated monitors, and, and there was just such a link between what igs do and what monitors do, except on kind of the privatized side of that equation. And an independent monitor really is an entity that, uh, provides oversight of a private entity, a company, um, in response to some kind of a settlement agreement. Uh, there has already been an investigation, uh, some kind of investigation of, in most cases, not all wrongdoing.
Speaker 1 00:19:06 Uh, the company agrees to do certain things, and the monitor is the entity that demonstrates whether the company has done those things. The monitor needs to be completely independent, can't have, uh, is not an advocate of, of those organizations. Uh, the Monitor reports to both the government and the company. Uh, the Monitor in many cases, most cases, um, gets paid for by the company, the corporate monitors anyway, uh, yet they don't work for the company. That presents interesting challenges at times. Um, and, you know, we can go into some of those things, uh, although that would take, you know, probably days to talk about the, uh, the, all the challenges relating to that. But I always thought from the beginning that igs could make use of monitors, uh, when cases are settled, uh, and that the monitor as a privatized entity could add to the oversight process. Um, Linda, maybe you can start and kind of give us your views of that and how you think, uh, monitors could be used by igs.
Speaker 2 00:20:32 Sure. You know, um, I reflect a minute on something that Steven said about the offices of inspectors general. Many of us also have auditors, uh, or an audit function within the purview of the ig. And auditors oftentimes, um, can, uh, add significant value to, um, any government program and can detect fraud, waste, and abuse in addition to those more reactive responses, such as the investigative process. But as you mentioned, as I sort of reflect on the ways that an independent monitor could be used, and in fact, I was, I was doing an investigation of a public hospital, and they had already entered into a settlement agreement with the Department of, of, um, Health and Human Services and had an independent monitor that was already working in that hospital district to, um, provide some enhanced, uh, oversight. And I find that with the limited resources that the Inspector General community has, and this, and the degree that we are privatized, especially here in the state of Florida, there's opportunities, uh, to engage an independent monitor, uh, even proactively before an investigation or as part of a contract, for instance.
Speaker 2 00:21:59 So, you know, there's, there's oftentimes a program that's implemented and in order to build in a, um, robust program, Sorry, I'm losing my voice. In order to build in a, a robust program to detect fraud, waste, and abuse is to bake into that process, uh, an independent monitor so that there's that reporting mechanism, there's that, uh, point of contact that handles fraud, waste, and abuse, Maybe even, uh, a vendor that provides some enhanced oversight, like data analytics, even on, uh, say some programmatic, uh, like eligibility programs. So I, you know, I see an opportunity for independent monitors to be used, uh, whether it's it's proactive like, um, in the privatization model, or even reactive, more on the back end after prosecution or in settlement or mediation to bring in a monitor. So I believe that there's an, a great opportunity for, um, us to partner with, with monitors out of the IG community.
Speaker 1 00:23:11 You know, when it kind of, uh, addresses a lot of concerns about the cost of oversight because, you know, the, the government is not paying for the monitor. It is the company that is paying for the monitor. And it sort of is, um, you know, it extends the reach of the, uh, of the IG office, uh, and making sure that, uh, situations that have been found are, are remedy. Steve, can you tell us, because I think you know, the model that, uh, I mean, you use several models, uh, of using monitors as an IG and, uh, they, they were each successful in their own ways. Tell us about how that went.
Speaker 3 00:23:53 Sure. Just, just to pick up on things that you had mentioned, Eric and Mullin had mentioned as far as the corporate monitorships, where it's sort of post non prosecution agreement or deferred prosecutor, we've actually used them both at the Port Authority and New York City, um, for when there's a pending investigation or where there was maybe a search warrant executed. And, you know, there's a government concern about an ongoing investigation, or maybe even that company, uh, has a proposal in for a new contract. And, you know, what do we do about that? And what if it's, if it's for a commodity or service that's, you know, the, the, the competition is limited, we would impose a monitor on the company as well. And for the most part, most companies, cuz business is business, they need it. Um, they go into opt in and, and agreed to, you know, the monitorship.
Speaker 3 00:24:40 So we successfully used, you know, corporate monitorships in various, uh, scenarios. And then they're the project monitors, which I touched on with ground zero with the cleanup. We brought in four different monitors to handle the four different quadrants at ground zero. And then with the rebuilding, the trade center, we imposed, not imposed, but we actually, and this is where government pays for it, like the ground zero, uh, it was all femur reimbursable at ground zero. And then for the rebuilding of the trade center, it was part of our capital expenditures that, you know, the commissioners or the Port Authority saw the wisdom in bringing in, uh, this, uh, augmentation of the igs office. They were basically, in a sense, the way I viewed it, additional staff that I could call upon to help me oversee the rebuilding. And we had one for each of the projects at the trade center. And, uh, it was, again, it was government spended, it was through an RFP process, and I found it incredibly valuable and we continue to use it, you know, for all major capital construction projects at the Port Authority. Um, and that continues to today.
Speaker 1 00:25:48 Yeah. You know, that, that's, it's very interesting, you know, having the model of, of a monitor, uh, actually real time, uh, watching contractors watching what they're doing, uh, why wait until there's fraud that's prosecuted and there's a settlement agreement, Uh, have them there real time.
Speaker 3 00:26:09 Yeah. Just to, just to pick up on that, Eric, it's such a good point. I mean, real time. Um, you know, when we first started, we, the Rebuilding the Trade Center, the Director of World Trade Reconstruction, um, he, he actually invited us in. I mean, he was really very, very good at, at, at seeing the wisdom and bringing, uh, us and the monitors. And, you know, when people would, he would joke, people would say, You're, you're doing what? You're, you're, you, you wanna be shoulder to shoulders to the IG and the Integrity Monitor. But it was valuable. And the real time is we're on the, you know, boots on the ground. If we see certain issues, you know, we would bring it to their attention, They would be able to correct it real time. Sure, there's gonna be criminal investigations, and there were many of them, but majority of the things that the Monitor would see is whether it's safety issues or invoicing or whatever it may be that surrounds a construction project. And like you said, real time is, is probably the most valuable, um, asset of, of an integrity monitor.
Speaker 1 00:27:08 Great. So, Nick, I, I, I know from our work together and our, uh, experience with, with you at Chicago Public Schools, um, that you, uh, with the first there to make use of monitors in overseeing vendors, suppliers, and, and contractors. Tell us how that developed.
Speaker 4 00:27:30 Yeah, so, you know, as we pointed out, everybody said here that, you know, the resources are sort of limited in the, uh, IG world. And, um, as you were saying, Eric, CPS was, is huge. You know, it's about an 8 billion budget, very comparable to the city of Chicago's budget itself. So is these big thing. And we only had about 17 people, I think at the time. The office is bigger now, but we had very few people to oversee. So, um, you know, the idea of the monitor is attractive because, um, it, it was basically picking up on investigation work. Um, and we'd make it, you know, we were making, uh, recommendations, disciplinary recommendations against these vendors, but it was a way for them to, uh, continue to work with cps, uh, and, and have somebody else do the work, uh, and, and sort of, you know, report and report to the board and, uh, to the, the school board and to us about the progress they made.
Speaker 4 00:28:28 And so, I guess, you know, what's, in one case, it was sort of a big educational, uh, content provider and, you know, I, you know, the phrase too big to fail sort of comes to mind there. If, if they, if they had been de barred for what they, you know, for their conduct, um, it would've left sort of a vacuum in, in the competition area. There, there aren't a lot of, there's through consolidation, there aren't a lot of, uh, people in this space anymore. So it, it, it debarring them, you know, is either for a term of years or forever, might have, you know, been impractical. So, um, in that case, it was a way to, um, get them to think about contracting with, uh, you know, a municipality, a school district in a way that they might think of, a big company might think of, you know, okay, if we're gonna contract with, you know, Boeing or somebody or a big defense contract, they're aware, they're aware that there's all these rules about, um, whining and dining and gratuities.
Speaker 4 00:29:27 And I think we were ex, you know, I think our experience was that a lot of, uh, these vendors sort of, uh, weren't aware of these rules. They, they weren't well known. They were, they were sort of, they were there, but you, they might have to look for them. So it was sort of a way to get them to, uh, you know, continue doing work with us. And I think start appreciating that, uh, that these rules exist sort of at the municipal level, and that they have to account for this. They can train this and their, their sales people and, you know, their, their executive sort of sales team needs a consider this and that there might be, uh, boundaries that maybe they hadn't been thinking of, or maybe this is the way the business had been done in the past. And similarly, there was another fairly large case where, um, uh, I don't think it was too big to fail, but, uh, was a school that was, uh, it was a educational provider that was providing, um, uh, basically, uh, management services and, and, uh, education services on a contract basis.
Speaker 4 00:30:27 And then, so they were sort of woven into the fabric of what, uh, this public school system was doing. And again, just kind of, uh, uh, you know, getting rid of them, um, would've been complicated and maybe not the best solution for a lot of reasons, especially the kids that they were, they were, uh, uh, uh, attending to. And it's, so, it's the case. Maybe, you know, uh, there were still a lot of good being done. They were providing services and maybe some of the, uh, kind of like the off the books lobbying efforts that maybe were going on weren't the right way. So again, this is, I think it's a way to get, um, uh, for the IG to sort of, these were significant cases for our office. And so it's an a way for, uh, kind of to hand the ball off to somebody who can, um, keep, you know, uh, monitor them and keep track of them and make sure that they're, they're making, you know, and can provide, uh, benchmarks and goals for them to meet so that they can sort of be good, you know, vendor citizens again, uh, or for the, you know, uh, that, So it was very valuable that way.
Speaker 1 00:31:29 Well, yeah, I mean, and, and that, that was just a, a terrific, and, and at the time, an innovative approach to dealing with it, and really is nothing more frustrating for an IG than to do an investigation, find fraud on the part of a contractor. Uh, the contractor settles the case somehow with prosecutors, uh, and they continue to operate, and the government is reluctant to do anything about it. They're reluctant to suspend or to bar them because of the operational need. And as you said, it might not be too big to fail, but it might be, Hey, you know, we need this vendor to do this public function. And nowhere is that, as I have, I seen it as big as in some of these federal agencies, particularly in defense department. I've got several, one in particular I'm thinking of right now, um, where, uh, a company, uh, there was a falsification of test results, um, of steel that went into a very sensitive weapon system. And, you know, what do you do with a company that is the, the only vendor in the United States? You can't buy your stuff from China. They're not going to debar them. So there's got to be some other way to hold them accountable and to protect the taxpayer, which is what suspension and department's supposed to do. It's not punitive. Prosecution is punitive suspension, and debarment is supposed to protect public. And so, you know, using a monitor to watch them is a, i, I think a, um, the right solution.
Speaker 2 00:33:14 Absolutely. Eric, you know, I, you're causing me to reflect on a, a couple of, uh, things that I've seen. And, um, one of the things is that there, there might be an opportunity to contract with an independent monitor. And in Florida they oftentimes call that an independent verification or validation process. Uh, what, what the flaw is, is is that oftentimes that independent verification and validation vendor reports to the vendor that they're supposed to oversee. So having the model like Steve Steven's talking about up in New York, New Jersey, um, where the independent monitor reports to the Inspector general, I think would give a, a best practice example of how it should be done. You know, having that independent verification, validation, independent monitor, uh, model, I think could improve in its ness by leaps and bounds, by having it report to the inspector general.
Speaker 1 00:34:18 That's an interesting concept. You know, it's a habit report to the inspector general. Um, and that kind of gives the ig some continuing, uh, responsibility to ensure the oversight takes place. Uh, you know, I, Steve, I I, I like to get your perspective, what, during a lot of your monitorships you, your agency did the kind of the coordination and oversight of the monitoring, right? What, It didn't go back to any other government entity
Speaker 3 00:34:51 That, That's correct. Both for the corporate monitorship. So where there was an investigation, even if we weren't the one conducting the investigation, it was another law enforcement agency prosecutor, but we learned about it, you know, we would then be responsible for bringing in the company, you know, and consulting with the law enforcement agency and drafting up that monitoring agreement and, you know, basically imposing upon it with concurrence from the agency. But we would then be responsible for overseeing the monitor, reviewing the bills, making sure the bills were paid by the monitored company, and then moving to the project, same thing. So with those project monitors at the trade center and elsewhere that's, you know, government funded, we would draft the rfp, we would devise it, and we would manage those monitors as if they were part of our staff. And we don't see, we just saw that's the best way to do it, cuz we have the best experience related to those two types of monitors. Um, you know, they're looking for direction monitors. They don't wanna just be left out there in the cold. They want direction from government or from whoever is engaging them. And so who better than the IG and managing their day to day operations and giving them, or approving their work plans and their budgets
Speaker 2 00:36:05 Mm-hmm. <affirmative>.
Speaker 1 00:36:06 Yeah, that's a terrific model because there's really is nothing worse than a monitor going through all of the effort to produce a report, and then it's sent to a black hole in a government agency, and there's really no attention, no response. Um, and what message does that send to the company if the government agencies really aren't paying attention to what the monitor is saying, and if the IG is responsible for, Boy, that, that's a, that's a whole different thing. Now, DOJ and DOJ monitorships, they've been pretty good at reviewing the reports and when certain people were at, uh, at doj, uh, they even told us how they wanted us to write the reports, um, that they were involved. Uh, but I've got some agencies, some federal agencies suspending and Debarring officials who I, I question whether they're even reading the report. Mm. And that doesn't help me as a monitor.
Speaker 2 00:37:09 Mm-hmm. <affirmative>. Sure. You know, some of the other benefits of, um, of having an independent monitoring is, is that force multiplier for the inspector general. Um, but it also builds a partnership in creating a, um, zero tolerance kind of policy for fraud waste and abuse, uh, through that partnership that an IG can develop with an independent monitor. Um, I, uh, one of the examples that I think about in Florida is where if it's, if the expenditures are reviewed by an independent monitor, then potentially, hopefully our clawbacks or our risk of de obligation of those funds on the back end of a grant are minimized.
Speaker 1 00:37:55 Well, that's, I mean, there you get banged for the buck, really, and you can demonstrate how much you've saved. I could even see in that scenario, the IG being able to report out cost savings based on the monitor that the government didn't pay for.
Speaker 3 00:38:11 It's funny you say that. So at the trade center with ground zero, um, we actually, the monitors through the monitors was able to make recommendations for cost savings of like 80 million, you know, in the same thing at the trade center and the rebuilding, you know, multiple millions and millions of dollars worth of recommended savings. And so you're absolutely right, Melinda, it's, it, it's valuable in that sense. It's a great prevention tool. And it's prevention, you know, it's the upfront prevention, you know, as Eric was talking before, traditionally igs are, you come in after the fact investigator, you do the post, uh, the audit, post payments and so forth. Here it's real time boots to the ground reviewing change orders, reviewing, you know, decisions that are being made, uh, timely. So it, it, it's really very valuable.
Speaker 2 00:39:00 Nick mentioned the impracticality of debarring, um, certain contractors from doing business. And if, if you can get into a, a culture where you're just baking in that, uh, oversight ahead of time, then you can avoid fraud wasting abuse altogether. And, uh, you know, instead of, of going through a debarment activity, just bake in that oversight at the front end to avoid litigation costs or avoid penalties or avoid a contract from melting down.
Speaker 4 00:39:36 Melinda, I think you're absolutely right. And, uh, from my experience, I, I think, you know, this, the struggle to get kind of a culture change in Chicago, um, uh, you know, just having, having, uh, the monitoring and having sort of these big, uh, vendors, uh, with the public know that they have to change and they're gonna start dealing with the, the contracting people at the, at the government side differently. And that's gonna, that's gonna set a tone that's gonna, that's gonna change how, um, they interact. So it's gonna, it's gonna sort of provide, uh, you know, leverage force from the vendor side, you know, which is not the way you would typically expect to see it coming. So, you know, be, you know, between the IG and the vendors, the, the independent monitoring and hopefully, you know, uh, some, some changes, uh, some, some, some real changes of heart at, at, uh, at the government side, you know, uh, to, to more modern, transparent sort of operating mode. You know, that's, that's the idea, is that you can get a synergy coming from a lot of different places. And, uh, it's not all just resting on the, uh, inspector general's, uh, over tax office, you know?
Speaker 2 00:40:47 Sure. With a lot of this pandemic funding, you know, there's such an opportunity to avoid, uh, the, the, you know, the clawbacks and avoid the de obligations or avoid the scandal altogether. If we can build in that oversight and that independent monitoring in oversight of the pandemic funding, just, just think of the opportunities to avoid all of the, the Broadway and abuse.
Speaker 1 00:41:14 Um, Nick can tell me, um, how did you go about, uh, introducing the concept of, as a result of an IG investigation and recommendation, uh, that the, the city ought to require the procurement office needs to require a monitor? I mean, how, how did you convince them of that? Um, cause that, that's the toughest thing, right? Is to convince the, the agencies that you guys are, you guys are providing oversight that are often is not, you know, a warm, fuzzy relationship between the IG and the agencies that it oversees. Um, how do you convince them to do this?
Speaker 4 00:41:57 Yeah, so I, I think it's easier in places that have a, a, you know, more of the, the, uh, independent, uh, powers baked in, and one of 'em is the strongest one. One of the strongest one in my mind is the ability to, um, uh, public out report about what you do. So, you know, uh, we, we, uh, we basically, in our report that went to the board, there'd be a summary report and, you know, we, we included that recommendation there, you know, um, as a way to, uh, uh, put it there. And that would be in the public report, that that was, uh, what we were recommending and that, you know, we were, we thought this was a good way for it, especially maybe in that too big to debar situation. So, uh, you know, to me, that's the challenge. What you were saying is sending it to the black hole.
Speaker 4 00:42:43 To me, you know, the, you know, if it gets sent to the government black hole, to me it's the, uh, Raiders of the lost Arc warehouse. That's my analogy. You know, if, if it gets stamped and sent there, you know, that's the end of it, right? And so that's what you're trying to avoid, is you're trying to make, So I think that's, for us, I think it was the ability that we, um, we could outport and, uh, the press was, uh, following our, uh, what I, what we did and reported. So I think that that provided, you know, the stick part of the carrot, uh, end of the deal. I think, like we've said, I think it was a big, big carrot part of independent monitoring. Um, but that was, that was a stick I think for us, you know, that they, uh, made a lot, It just made a lot of sense for a lot of reasons to approach it that way. And, and, um, uh, you know, I, from, I gather even after I, I'm no longer there. I, I think the CPS isn't warmed up to this idea a lot, and they, they, they, they like it because it, it's, it's, it's kind of shows them that they're, they're able to use it as a way to show that they're on the right side of things and, and, uh, enforcing vendor compliance and trying to be part of this, this change of culture about, uh, uh, you know, how things should be contracted for.
Speaker 1 00:43:55 Steve, you were going to, uh, say something,
Speaker 3 00:43:58 I was just gonna pick up on, um, Melinda's comments about that pandemic, uh, funding, if that's, if that's timely right now.
Speaker 1 00:44:05 Oh, that's a big one.
Speaker 3 00:44:06 Yeah. So, I mean, this is really important. I mean, you know, at Luca, we were brought in by some of the counties in New Jersey to help them manage and oversee the funding that they got Cares Act. And then arpa, uh, New Jersey I think is unique where the governor back during Super storm stand, Sandy, Super Storm Sandy required monitors to oversee the money that came in from femur and another client in other federal agencies, and required agencies that were managing those funds to have monitors, the governor, Governor Murphy Institute, the same type of Im ACT for the, uh, pandemic money. And any agency that is receiving more than 20 million needs to bring in is required to bring in a monitor to basically, you know, do a risk assessment, to do an audit of, of the funding and, and the expenses. So we talk about prevention. I mean, I think that's a really good model.
Speaker 3 00:45:04 Um, and, you know, it certainly works, but unfortunately it's only one state that I'm aware of that is doing it. And, you know, with all the federal money, I mean, and there's limited resources at the federal level, and it's the state and local level. So what better than to augment it with, you know, these integrity monitors who have the expertise, uh, to, to watch over the federal money. We, we don't wanna see a lot of money going out, like, you know, unemployment insurance and the billions of dollars lost and, and others. So, uh, I think, uh, it's a good, it's a good, uh, tool tool,
Speaker 1 00:45:35 You know, and, and requiring that, uh, that kind of approach legislatively seems to me from a, a political standpoint to be one of those few, uh, bipartisan issues that might be left. Uh, because you're, you're talking about just protecting dollars that have already been, um, appropriated at, at whatever governmental level we're talking about. Uh, the political decisions have already been made. Uh, you're privatizing that oversight. You're not increasing the expenditure of, of taxpayer dollars to provide oversight. You're privatizing it, it doesn't cost anything. Why wouldn't you want to, uh, ensure that those dollars were spent for their intended purpose? Uh, it just seems to me to be, you know, what, one of those, you know, few issues that I think every anyone can get on board with
Speaker 3 00:46:31 Agreed
Speaker 1 00:46:33 <laugh> you, you would hope. Um, yes. But, you know, talking about prevention for, for a minute, one of the things that, that, um, we kind of alluded to before is that this concept of what, um, you know, some igs and some independent monitors, um, are doing, which is looking at corporate compliance programs, ethics and compliance. I know you do that, Steve. Uh, we have a, a big emphasis on that. And more and more of the work that we're doing is proactive where companies are asking us to come in and evaluate their ethics and compliance programs using, at, at least in part, the new DOJ guidance, which lays out what DOJ expects of a, um, a bonafide and effective compliance, uh, program in a company. Um, what do you think the possibilities are of, um, municipalities states requiring that their contractors, uh, similar to something that Melinda said before, have, you know, some kind of independent assessment under their belt, if they're going to be a contractor for the municipality?
Speaker 3 00:47:51 I mean, just to pick up on that, I mean, and we, we talked about this previously, Eric, as far as the federal government requiring, I think in certain large contracts, certain things, whether it's a whistleblower line or a code of conduct compliance program, I, I'm an advocate of that for a government. I mean, I, you know, when I was with government, I was an advocate for it. You know, let's start big. I mean, any contract over a, you know, a hundred million dollars, you know, let's put it in the proposal that that company's gotta have a whistleblower hotline code of conduct compliance program training, you know, the basics at least. So we're, you know, at least for those large contractors, they're starting at a higher level, you know, more is expected of them. So I think that that is the way to move, uh, that's the direction that government should be moving in.
Speaker 1 00:48:37 Well, and that's what we did back in, um, God's been a long time, a 2008, um, when we added to the far, um, the, uh, current fraud task force working under, uh, Deputy Ag McNulty, uh, we added to the far the requirement that, uh, there be mandatory disclosure of fraud in companies. And that companies, uh, above a certain dollar threshold will have, uh, codes of conduct reporting, hotlines, things of that nature. Um, and that has been the basis of a lot of suspension and the barment activity at the federal level. I don't see it as much in, in, uh, outside of the federal government holding companies to that, that kind of standard. How about at the state level? Um, Melin,
Speaker 2 00:49:33 Um, I don't see what you're talking about in the state level right now. Um, but I at least not when it, it specifically comes to ethics, but I am seeing a similar trend in cyber security where if you're doing business with a firm that's, you know, providing certain cyber security, they've gotta have a certain type of audit, you've gotta meet at a certain threshold, um, they've got to have a certain level of maturity in their cyber program. I do wish that I would see more of it in at the, uh, state government level, though.
Speaker 1 00:50:08 And Nick, if you were gonna say something about that.
Speaker 4 00:50:11 No, I was good. Steve, you go
Speaker 3 00:50:14 Ahead. Just to follow up on the state level. Cause with the Port authority before I left, there were new code of conduct and new rules of vendor code of conduct, a code of conduct for lessee. So, you know, there was the institution of the requirement that vendors have to, uh, report misconduct, you know, but also, but also imposing upon them a code of conduct for those people outside the, the agency. So we, we began to move the agency and it continues to move in the right direction. I'm
Speaker 1 00:50:42 Sorry, so like a, like a vendor code of conduct?
Speaker 3 00:50:45 Yeah. Yes, yes. Code of conduct was, you know, was implemented as well as a less at the airports. You know, there're lessees, but everybody working or on the airport grounds for the port authorities, you know, five major airports. Um, they also now have a code of conduct.
Speaker 4 00:51:05 I was just gonna kind throw in a question. Uh, maybe people listening, you know what, maybe throw out to the panel, uh, let's make sure that the, uh, costs of the monitoring just don't get passed back along, you know, and, uh, to the public. What, what kind of mechanisms you use to make sure that doesn't happen.
Speaker 1 00:51:25 Yeah. Let's talk about costs. Cause I think, you know, before we wrap up, we do need to talk about the reality of cost. I mean, there are situations where, uh, and examples where monitors have, have really, uh, overdone it in terms of how they charge companies. There are egregious cases of, of some monitors really, um, uh, you know, financially putting stress on companies, uh, to a ridiculous point. Uh, the costs need to be reasonable. The, the work product needs to be reasonable, and there, there needs to be a, um, you know, a value proposition to the company here as well. So how the monitor is selected, uh, as Steve mentioned before, oversight of that monitor by, you know, a, the, the right entity in the agency, the ig, i, I believe would be the right place. Um, or, you know, one option, um, you know, the, the monitor can't run a mark here.
Speaker 1 00:52:30 Uh, and, and you know, that that's important to the integrity of, of this kind of a, um, and this kind of, of a process. Also, not allowing the, the company to pass along the costs is a really good point, Nick, because at the federal level, you can't, they make sure that the cost of the monitor, it's very specific in the far that the cost of the monitor shall not be included in the overhead calculation. Uh, you, they can't get reimbursed for that because then, you know, where they have no skin in the game, right? They committed a fraud in the reactive cases, Uh, they agreed to have a monitor, and then the taxpayer's gonna pay for the monitor. Um, I don't think that's appropriate in ca in fraud cases. Anyway. Well, you know, we've been, uh, we could go on here for probably another hour because I think we're all impassionately dedicated to, to this, this topic. Um, why don't we, you know, let, let's give some final thoughts on, uh, monitors igs, the, the use of monitors, and where do we go from here? Uh, Belinda, why don't we start with you?
Speaker 2 00:53:49 Okay, awesome. So, um, all of the comments today have, uh, resonated with me. Um, in, in fact, I'm gonna take some of these tips and pointers that everyone has shared with us to a meeting this afternoon, and hopefully we'll be able to move the needle a little bit even further. Um, I love the idea of, of having the independent monitors being a force multiplier for the inspector general. I think that, uh, you know, we're already challenged with, uh, limited resources, and oftentimes we have, uh, unfunded mandates that come down the pike legislatively for us to take on, um, additional, uh, work and, uh, oftentimes without additional funding. So to have a model like this in Florida, I think would be a game changer. Um, so I'm really hopeful and optimistic. I love the pointers that you made about, um, you know, the New York having a 20 million or more that if it's required, uh, to have an independent monitor to conduct risk assessment audit of the funding, a preventative, uh, perspective, maybe some, even some data analytics for fraud detection, for timely referral for prosecution or follow up in investigation, maybe even some grant closeout type audits.
Speaker 2 00:55:14 Uh, whenever we're doing some grant closeout work, uh, checking on the accuracy of reporting for the pandemic funding, I think would be another great opportunity for us to, to look at. Uh, one that I wanna explore a little bit further is, is the pointers that you made, um, Eric surrounding the compliance and ethics programs of these vendors that are doing business with government. You know, it's ever more important for us to have vendor codes of conduct to have reporting, maybe even for them to have their own whistleblower hotlines. And, um, you know, our D O T does a lot of vendor training as they're onboarding contractors to do work with them in the state of Florida, and they, they offer that vendor, um, you know, some exposure to what the IG does and, uh, the requirement for certain reporting, uh, to be made to the Inspector general. So all of those are great tips and, and really good pointers that I've gleaned from this conversation today. And I really hope that, uh, maybe in a year or so, uh, maybe less that, we'll, we'll have some success stories, uh, surrounding this, um, concept of baking in the independent monitor into these contracting and oversight decisions.
Speaker 1 00:56:31 Terrific. Um, I, I wish you luck in, in doing that. And, you know, maybe, uh, Flora can serve as a model, um, as it has for so many other things relating to the ig uh, community. Um, Nick, any, any final thoughts?
Speaker 4 00:56:46 Just a final thought. I think it stem out of our experience, um, at cps, uh, is, you know, make the, a key that we didn't talk about is it's just that, uh, the, uh, the people drafting the agreement or the scope of the, uh, monitoring, you have to make sure that there we, that the, there's enough access to the documents, uh, that are needed. And I think, uh, I think that's key. And, you know, and an, an entity, an agency doing this for the first time would need to consider that. Maybe they'll, like anything, they'll be a learning curve. But, uh, the sooner you can make sure that you're getting access to what needs to be monitored, the better too.
Speaker 1 00:57:23 That's a great point on scope. We could talk about that for <laugh> for a long time. All right, Steve, you get the final word.
Speaker 3 00:57:31 Oh, thank you. Um, this has been great, Eric. Thank you for the opportunity. Uh, look, there's no, uh, secret that I'm an advocate of the IG uh, concept. Having spent over 41 years of my government service in the IG community. Um, the last 25 was managing and utilizing integrity monitors. So I, I don't say it lightly that I could not have done my job, whether it was overseeing and preventing Freud ground zero for the cleanup, or preventing Freud and overseeing the rebuilding of the Trade Center site and other sites. Um, I didn't have the staff, I didn't have a resources, and frankly, we didn't have the expertise cuz you need engineers and other experts to oversee these things. So I'm a believer it, it, it worked for me. Um, I, I advocated because I believe it is the best practice for government to use at times when there's limited resources for igs and other government entities. Um, and so therefore, I, I hope that this podcast will get to the years of, of many government, uh, people who have some decision making authority. Thank you.
Speaker 1 00:58:36 Well, terrific way. That's a great way to wrap it up. Well, listen, I know all of you are are very busy and, and I wanna thank you for taking the time outta your schedules to, uh, to share this information with, um, hopefully a, a pretty broad audience of people, um, who will get something out of it. Uh, so thank you again for coming. Thank
Speaker 3 00:58:57 You.
Speaker 2 00:58:57 Thank you, Eric. I really appreciate the opportunity. Look forward to talking to you.
Speaker 1 00:59:01 Thank you.
Speaker 3 00:59:02 Bye bye.
