RECOVERY OVERSIGHT OFFICE (ROO)

1. RECOVERY OVERSIGHT OFFICE (ROO) FRAUD AWARENESS BRIEFING OFFICE OF INSPECTOR GENERAL U.S. DEPARTMENT OF THE INTERIOR

2. Opening VIDEO INTRODUCTION Jerry McGuire (Tom Cruise) = US Federal Government with Grant money Rod Tidwell (Cuba Gooding Jr) = Agency seeking Financial Assistance Office Staff and onlookers = Grant Managers RECOVERY OVERSIGHT OFFICE

3. Opening VIDEO INTRODUCTION Jerry McGuire (Tom Cruise) = US Federal Government with Grant money Rod Tidwell (Cuba Gooding Jr) = Agency seeking Financial Assistance Office Staff and onlookers = Grant Managers RECOVERY OVERSIGHT OFFICE

4. PRESENTATION AGENDA • Discuss the Office of Inspector General (OIG) mission and authority • Discuss the American Recovery and Reinvestment Act (ARRA) • Discuss the Recovery Oversight Office (ROO) • Present an overview of fraud with some examples • Discuss the impact fraud has on the Department of the Interior (DOI) • Review indicators for detection and prevention of fraud • Explain ways to report suspected fraud RECOVERY OVERSIGHT OFFICE

5. LET’S ASK OURSELVES... • Are our Department and Bureau programs vulnerable to fraud? • Do we have adequate controls to detect fraud directed against our programs? • Do you know what a fraud is? • Do you know when and how to report instances of suspected fraud? RECOVERY OVERSIGHT OFFICE

6. Inspectors general • Council on Inspectors General on Integrity and Efficiency (CIGIE) consist of 67 members at the federal level • 28 Offices of Inspectors General with agencies receiving ARRA funds • 11,600 employees of multiple disciplines • $1.9 billion annually in expenditures RECOVERY OVERSIGHT OFFICE

7. Results of ig activity (FY 2007)* • $16.5 billion in potential savings from audit recommendations and investigative recoveries • Over 300,000 hotline complaints processed • Over 17,000 indictments, prosecutions, and civil actions • 4,296 suspensions or debarments • 5,807 adverse personnel actions *PCIE and ECIE Progress Report to the President FY 2007 RECOVERY OVERSIGHT OFFICE

8. MISSION OF OIGs • Promote Excellence, integrity and accountability in the programs, operations, and management • Promote effective financial, grant and procurement activities • Promote the highest standards of integrity, impartiality and professionalism • Promote effective coordination & improved management practices among Department components RECOVERY OVERSIGHT OFFICE

9. Inspector general AUTHORITY • Derived from the Inspector General Act of 1978, as amended • To conduct and supervise audits and investigations relating to programs and operations of the Department • To prevent and detect fraud, waste and mismanagement in programs and operations • To have access to all records, reports, audits, reviews, documents, papers, recommendations, or other material relating to programs and operations RECOVERY OVERSIGHT OFFICE

10. What is fraud? An intentional misrepresentation which causes the suffering of damages and usually monetary losses • Fraud is cheating for profit • Fraud is characterized by acts of guile, trickery, concealment, or breach of confidence, which are used to gain some unfair or dishonest advantage involving money, property, or services RECOVERY OVERSIGHT OFFICE

11. THE SILENT CRIME Differs from other crimes: • Ordinary criminal attempts to conceal identity. For example, a burglary will be detected; the burglar conceals his identity by timing the crime to utilize darkness or lack of witnesses. • Fraudster attempts to conceal the crime itself. For example, a bookkeeper hides embezzlement by creating false accounts. Once the false accounts are detected it is usually obvious who did it. RECOVERY OVERSIGHT OFFICE

12. Who commits fraud? • Government contractors • Prime contractors • Sub-contractors • Government employees • Financial assistance recipients • Sub-recipients • Contractors • Vendors seeking government business RECOVERY OVERSIGHT OFFICE

13. Common fraud schemes • Defective Pricing • False Representations • False/Dual Billing • Kickbacks • Product Substitution • Cost Mischarging RECOVERY OVERSIGHT OFFICE

14. fraud CRIMINAL violations • Forgery • Mail Fraud • Conspiracy • False Claim • Embezzlement • False Statement • Theft and Bribery • Conflict of Interest • Obstruction of Federal Audit • Fraud by wire, radio, or television • Major Fraud Against the United States RECOVERY OVERSIGHT OFFICE

15. Product substitution The intentional submission by the contractor to the government directly or indirectly of goods and/or services that do not conform to the contract specifications or requirements. • Example: • Contractor awarded contract to install fire retardant paneling • Contractor installs non-fire retardant paneling • Contractor submits invoice to government reflecting that fire retardant paneling was purchased and installed RECOVERY OVERSIGHT OFFICE

16. False representation • Misrepresentation of qualifications, certifications, knowledge, pricing or costs which is then presented to the government to further a fraud scheme. • Examples: • False Certification • False/Inflated Resumes • False Statements/Invoices RECOVERY OVERSIGHT OFFICE

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19. Impact of fraud- doi budget Department of the Interior budget FY 2009 = $11.3 billion*** *Includes Central Utah Project Completion Act **Includes DM, OIA, SOL, OIG, OST, PILT, HAZMAT, NRDAR, FBMS, Latino Commission Grant and Wildland Firefighting w/ Supps. ***Derived from Omnibus Appropriations Act for 2009 (Public Law 111-8) RECOVERY OVERSIGHT OFFICE

20. Potential fraud loss by bureau The Association of Certified Fraud Examiners estimates that the typical organization loses 7% of its annual revenues to fraud.* Approximately $791 million of our total budget could be at risk to fraudulent activity as reflected below by bureau: • USGS = $ 73M • BOR = $ 78.2M • OSM = $ 11.5M • BIA = $ 166.3M • NPS = $ 176.7M • MMS = $ 11.4M • FWS = $ 100.8M • BLM = $ 72.7M • DO/DWP= $ 100.1M *Derived from 2008 ACFE Report to the Nation on Occupational Fraud and Abuse RECOVERY OVERSIGHT OFFICE

21. Indicators of fraud • Conflicts of interest • Exceeding appointed authority • Unauthorized transactions • Duplicate or inflated charges • Inadequate, missing, or altered records • Unsupported or unauthorized draw-downs • Identical values or sequence in bids and proposals RECOVERY OVERSIGHT OFFICE

22. WHISTLEBLOWER PROTECTION ARRA expands protection to non-federal employees who reasonably believe there is reasonable evidence of: • Gross mismanagement of contract or grant • Gross waste of ARRA funds • Substantial danger to health and safety • Abuse of authority • Violation of law, rule or regulation regarding contract or grant • *FAR 1.603-2 and FAR 2.101 RECOVERY OVERSIGHT OFFICE

23. Preventing fraud • Perform audits and inventories • Reconcile financial records • Compare bids and proposals • Perform only authorized transactions • Protect government and proprietary information • Maintain supporting documentation • Establish and follow effective internal controls • Report suspicious activity RECOVERY OVERSIGHT OFFICE

24. Remaining objective • Ensuring you are our “first defense” • Avoid conflicts of interest – follow the rules • Always imagine how your actions look without explanation – no audio • Be fair and reasonable • Work within the limits of your authority • Be aware of contractor efforts to influence or steer you Remember - very few contractors are bad RECOVERY OVERSIGHT OFFICE

25. Reporting suspected fraud • Immediately report any suspected fraud • Making your report • Reporting to your supervisor • Reporting to the OIG • Collect details of suspected activity • When making your report, try to identify: • Who • What • Do not discuss your suspicions with others • Do not investigate on your own! • How • Why • When • Where RECOVERY OVERSIGHT OFFICE

26. Where to report (doi) • Web: http://www.doioig.gov/hotline • Mail: U.S. Department of the Interior • Office of Inspector General • Attn: Fraud Hotline • 1849 C Street NW - Mail Stop 4428 • Washington, D.C. 20240 • Phone Hotline: Toll Free 1-800-424-5081 • (in Washington DC area: 202-208-5300) RECOVERY OVERSIGHT OFFICE

27. RECOVERY OVERSIGHT OFFICE (ROO) GETTING TO KNOW THE ROO OFFICE OF INSPECTOR GENERAL U.S. DEPARTMENT OF THE INTERIOR

28. AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) of 2009 • Congress appropriated about $787 billion • DOI received approximately $3 billion • The Act requires obligation of these dollars at an unprecedented speed www.recovery.gov recovery.doi.gov RECOVERY OVERSIGHT OFFICE

29. ARRA distribution ($3.05 billion) Bureau of Reclamation--------------------$1 billion National Park Service----------------------$750 million Bureau of Indian Affairs-------------------$500 million Bureau of Land Management------------$320 million U.S. Fish and Wildlife Service------------$280 million U.S. Geological Survey--------------------$140 million Office of Inspector General--------------$15 million RECOVERY OVERSIGHT OFFICE

30. ACCOUNTABILITY AND TRANSPARENCY IN ARRA • The Act creates new means of accountability and transparency for all entities that receive stimulus oversight money • DOI OIG received $15 million www.doioig.gov/recovery RECOVERY OVERSIGHT OFFICE

31. $15 MILLION . . . FOR WHAT? • The Recovery Oversight Office (ROO) • Comprised of a diverse staff including: • Auditors • Evaluators • Investigators • Analysts • Speed --- Innovation --- Flexibility --- Diligence RECOVERY OVERSIGHT OFFICE

32. ROO STRATEGY PREVENTION REPORTING DETECTION RECOVERY OVERSIGHT OFFICE

33. PREVENTION • Fraud awareness briefings • Single audit education • Real time liaison with the Department • Monitor contract and grant awards • Review internal and financial management controls RECOVERY OVERSIGHT OFFICE

34. DETECTION • Critical Point Evaluations • Compliance with ARRA and internal controls • Review of risk management plans and project outcomes • Forensic Analysis • Periodic monitoring of contracting databases • Collaboration with the OIG Hotline staff • Proactive Initiatives • Site inspections • Integrity testing RECOVERY OVERSIGHT OFFICE

35. REPORTING • Management Notifications to DOI and Bureaus • Recovery Oversight Advisories • Recovery Flash Reports • Best Practices Reports • Website Management • Semi-Annual Reporting • Recovery & Accountability Transparency • (RAT) Board • Financial Reporting (www.recovery.gov) RECOVERY OVERSIGHT OFFICE

36. QUESTIONS? RECOVERY OVERSIGHT OFFICE