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May 27, 2008


Ken Huffman


ROI's from OPM IG audits of health insurance contractor audits are a scam which work to the perpetual benefit of the IG. Audit ROI's in the OPM IG are based on findings from boilerplate financial compliance audits of FEHBP contracts which yield predictably recurring overcharges to govt. If appropriate internal controls were implemented in the contracting processes of OPM's insurance programs, most of these overcharges could be pre-empted by the program office before IG audits were conducted. However, this would preclude the IG from having high dollar recovery findings to report semi-annually to congress. Consequently, since 1990, the IG has forbidden substantive and objective evaluation and inspection of OPM insurance program operations. Through 2003, ROI's from OPM IG investigations primarily resulted from the IG making piggyback FEHBP claims on health care fraud investigations conducted by other govt. agencies such as Justice and HHS.


Ken H. - Outstanding point! But I wouldn't necessarily expect the ROI to ever increase absolutely proportionate to the increase in staffing, and certainly not in the first three years of any major staffing increase. The question is, are the additional bodies recovering more than they are costing? In hard dollars? And if I read you correctly, you're implying that OIG's pad their numbers to show inflated Returns on Investments. I would be delighted to see a system-wide study on the matter. But recently proposed legislation to give IGs more independence (by making IG appointments last 7 years) would partly cure such issues much as it minimized political interference in the FBI when its director was granted a 10-year term. Too bad our elected representatives are trying to water down the new IG legislation.

Ken Huffman

No AJ, it can't be said for all OIG's, particularly the OPM IG. Fraud is estimated at 15 percent of all health care dollars spent nationwide. OPM administers a 30 billiion per year Federal Employees Health Benefit Program trust fund. FEHBP health insurance contractors must give the feds their lowest annual premiums as the nation's largest purchaser of employer sponsored health benefits but they don't. They routinely and knowingly defraud the govt. every year through contract overcharges. The OPM IG uses 70 percent of his staff to audit samples of these FEHBP contracts and these accountants identify between sixty and one hundred million in contractor overcharges each year. However, as IG resources have increased by over 200 percent, the ratio of dollar recovery to auditor costs only increased by about 40 percent. Further, OPM annually dismisses up to a third of the IG's dollar recovery recommendations without substantial dispute by the IG. Since the IG refuses to allow substantive examination of OPM insurance programs, of contract negotiating processes, and, of insurance program internal controls, contract overcharges are always certain to recur. This operating strategy guarantees that the IG has tens of millions in dollar recovery recommendations to report in each semi-annual to congress; that contentiousness with agency officials is avoided; that the OIG never needs to innovate; and, that health insurance contractors who regularly defraud the govt. can play the odds and win. Great for the IG - not so hot for taxpayers. How many more OIG auditors do you think would help at OPM?

Ken Woodard

"Carlyle Buys Booz Allen Unit In Bid to Tap Boom in Defense, Wall Street Journal May 17, 2008; Page A1"

This is important because it is likely to hurt the morale of government workers (both those paid directly by government and those paid through contracting companies). Why should someone feel their work has patriotic value when they see this kind of stuff going on?

I assure you the contractors would much rather work directly for the government rather than being forced to go through contracting companies like Booz Allen. Positive legislation would allow workers to hold their own security clearances rather than removing their ability to make a living if they try to change employers. Positive legislation would allow workers to contract directly with the government. Positive legislation would also bring transparency to career government officials who stand idly by while folks like Booz Allen rip off the taxpayer with no-bid deals.

Transparency is especially important in defense work if you want people to have a strong commitment to their department’s or agency’s mission.


The same can probably be said for every OIG. Look at mortgage fraud, health care fraud, or fraud that is expanding in any other industry and you'll likely see that the respective OIGs have not increased in staffing or budget relative to the increased missions before them. All of this despite, in many cases, record-setting Returns On Investment (ROI). It's as if someone is counting on the inefficiency and ineffectiveness of understaffed watchdogs. Hmmmmm....wonder who that could be?

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